<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, 1999
                          ---------------------------------------------------

                                       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         33-48887
                     --------------------------------

                         HOLLYWOOD CASINO CORPORATION
                               HWCC-TUNICA, INC.
 ------------------------------------------------------------------------------
          (Exact name of each registrant as specified in its charter)

                 DELAWARE                                    75-2352412
                  TEXAS                                      75-2513808
------------------------------------------   ----------------------------------
 (States or other jurisdictions of                       (I.R.S. Employer
 incorporation or organization)                         Identification No.'s)

       Two Galleria Tower, Suite 2200
          13455 Noel Road, LB 48
               Dallas, Texas                                75240
------------------------------------------   ----------------------------------
 (Address of principal executive offices)                (Zip Code)

(Registrant's telephone number, including area code):       (972) 392-7777
                                                      -------------------------

       Securities registered pursuant to Section 12(b) of the Act:  None
          Securities registered pursuant to Section 12(g) of the Act:

                        Common Stock, $.0001 par Value
                        Preferred Stock Purchase Rights
------------------------------------------------------------------------------
                              Title of each 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
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.         Yes  X         No
                                                     ------        ------

   Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Hollywood Casino Corporation's knowledge, in definitive  proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [  ]

   The aggregate market value of the voting stock held by non-affiliates of
Hollywood Casino Corporation, based on the closing price of such stock on March
27, 2000, was $44,651,137. For the purposes of this computation, all officers,
directors and 5% beneficial owners of Hollywood Casino Corporation are deemed to
be affiliates. Such determination should not be deemed an admission that such
officer, directors and beneficial owners are in fact, affiliates of Hollywood
Casino Corporation. As of March 27, 2000, 24,953,476 shares of Class A Common
Stock, $.0001 par value per share, were outstanding.

   As of March 27, 2000, 1,000 shares of Common Stock of HWCC-Tunica, Inc., $.01
par value per share, were outstanding, all of which were held by an affiliate of
HWCC-Tunica, Inc.

                      DOCUMENTS INCORPORATED BY REFERENCE

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

   (1) Definitive proxy statement filed pursuant to Regulation 14A in connection
       with the Annual Meeting of Shareholders to be held on May 23, 2000 - Part
       III.

   HWCC-Tunica, Inc. meets the conditions set forth in General Instruction
(I)(l)(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
-------

   Hollywood Casino Corporation ("HCC" or the "Company") develops, owns and
operates distinctively themed casino entertainment facilities under the service
mark Hollywood Casino(R).  Through its subsidiaries, HCC currently owns and
operates a riverboat casino and entertainment facility in Aurora, Illinois
approximately 35 miles west of downtown Chicago (the "Aurora Casino"), and a
casino, hotel and entertainment complex in Tunica County, Mississippi located
approximately 30 miles south of Memphis, Tennessee (the "Tunica Casino").  Both
the Aurora Casino and Tunica Casino feature the Company's unique Hollywood
theme, which incorporates the excitement and glamour of the motion picture
industry by utilizing designs inspired by famous movies, displays of motion
picture memorabilia and movie themed gaming, entertainment and dining areas.  In
addition, the Company has a license to own and operate and is currently
constructing a destination gaming resort to be located in Shreveport, Louisiana,
approximately 180 miles east of Dallas, Texas (the "Shreveport Casino").
Approximately 46% of HCC's outstanding common shares are listed and traded on
the American Stock Exchange under the symbol "HWD".  The remaining outstanding
HCC common shares are owned by Jack E. Pratt, Edward T. Pratt, Jr. and William
D. Pratt and by certain general partnerships and trusts controlled by the Pratts
and by other family members.

   HCC owns all of the outstanding common stock of Hollywood Casino - Aurora,
Inc. ("HCA"), HWCC - Tunica, Inc. ("HCT"), HWCC-Louisiana, Inc. ("HCL") and
HWCC-Shreveport, Inc. ("HCS"). HCA is an Illinois corporation organized by the
Pratt family during 1990 which owns and operates the Aurora Casino.  HCT is a
Texas corporation formed by HCC during 1993 to acquire and complete the Tunica
Casino.  HCL is a Louisiana corporation formed by HCC in 1993 to pursue gaming
opportunities in Louisiana.  HCL effectively owns and is currently constructing
the Shreveport Casino.  HCS is a Louisiana corporation formed by HCC in 1997
which will hold the management contract for the Shreveport Casino.

   In April 1999, the Company entered into a voting agreement with Greate Bay
Casino Corporation ("GBCC") and certain of its wholly owned subsidiaries,
including PRT Funding Corp. ("PRT Funding") and Pratt Casino Corporation
("PCC"), and the holders of substantially all of the $85 million of unsecured
senior notes issued by PRT Funding and guaranteed by PCC (the "PRT Funding
Notes") which were in default. Under the terms of the voting agreement, the
Company was to purchase the stock of PCC from GBCC for nominal consideration and
fund the payment of PCC's obligations as part of a debt restructuring of PRT
Funding, PCC and other subsidiaries of PCC.  When acquired by HCC, PCC's assets
were to consist of its limited partnership interest in Pratt Management, L.P.
("PML"), which held the management contract for the Aurora Casino, and its
consulting agreement for the Tunica Casino.  PCC's liabilities were to consist
of a new $40.3 million obligation payable in satisfaction of the PRT Funding
Notes. Prior to December 31, 1996, GBCC was an approximately 80% owned
subsidiary of HCC.  On December 31, 1996, HCC distributed the GBCC common stock
it owned to its shareholders and GBCC ceased to be an HCC subsidiary.

   PCC and PRT Funding filed for protection under Chapter 11 of the United
States Bankruptcy Code on May 25, 1999 with the above transactions included as
part of a pre-negotiated plan of reorganization. Such plan was confirmed by the
United States Bankruptcy Court for the District of Delaware in October 1999.  At
such time, HCC completed its acquisition of PCC and settled PCC's obligations.
The acquisition and subsequent termination of the management contract and
consulting agreement resulted in a fourth quarter charge to expense by the
Company in the amount of $40.4 million since, for financial reporting purposes,
no asset value was attributed to the contracts when acquired.

                                       2
<PAGE>

   HCC had acquired the general partnership interest in PML effective April 1,
1997 from another subsidiary of GBCC.  As discussed above, HCC acquired the
remaining limited partnership interest in PML when it acquired PCC in October
1999, at which time the Aurora Casino management contract was terminated.
Accordingly, PML is reflected as a consolidated subsidiary of HCC for the period
from April 1, 1997 to October 14, 1999.  For such period, the remaining limited
partnership interest was held by PCC and was reflected on the accompanying
consolidated financial statements as a minority interest.

   In September 1998, a joint venture (the "Shreveport Partnership") in which
HCL was a partner received approval to develop, own and operate the Shreveport
Casino.  HCL originally planned to develop the Shreveport Casino with two joint
venture partners  and would have had an interest of approximately 50%. HCL's 50%
investment in the joint venture ($2.5 million) was reflected on the accompanying
consolidated balance sheet at December 31, 1998 as an investment in
unconsolidated affiliate.

   On March 31, 1999, HCL entered into a definitive agreement with one of the
joint venture partners to acquire its interest in the Shreveport Partnership.
The acquisition price was $2.5 million (the amount the joint venture partner
contributed to the project), $1,000 of which was paid at closing with the
remainder to be paid six months after the opening of the Shreveport Casino.  The
revised structure of the joint venture received approval by the Louisiana Gaming
Control Board (the "LGCB") on April 20, 1999.  As a result, HCL now has an
effective 100% ownership interest in the Shreveport Casino with the remaining
joint venture partner holding a 10% residual interest in the event the project
is ever sold.  The joint venture partner's interest is included in minority
interest on the accompanying consolidated balance sheet at December 31, 1999 in
the amount of $2 million.  The acquisition was accounted for under the purchase
method of accounting.  Accordingly, effective with the April 23, 1999 closing of
HCL's acquisition of the additional joint venture interest, the Shreveport
Partnership is consolidated in the financial statements of HCC.  The acquired
company had no significant operating activities prior to the acquisition date.

   The Company's casinos use casino information technology developed by Advanced
Casino Systems Corporation ("ACSC"), a subsidiary of GBCC.  The technology
includes table game and slot machine monitoring systems that enable the casinos
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 are generally provided
through direct mail programs and specialized invitations and include food, hotel
accommodations, special player events, retail merchandise, sweepstake giveaways
and "cash-back" programs based on slot machine patrons' gross wagering.
Management believes that its ability to reward customers on a same-visit basis
is valuable in developing a loyal base of higher value patrons.  The casino
system also enables the Company's properties to capture and maintain patron
information necessary in implementing its casino player's card and other
database marketing programs.  In addition, ACSC's systems allow management to
monitor, analyze and control the granting of gaming credit, promotional expenses
and other marketing costs.

   Management uses the databases to focus marketing efforts on patrons who have
been identified as higher value patrons.  Management believes that the 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 Company's casinos.

   The Company 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 HCC's gaming facilities and the
casino player's card program, the database capabilities are used to direct
market to these patrons in an attempt to convert them into higher value patrons.

                                       3
<PAGE>

   During 1998, the Company began implementing a strategic plan that consisted
of: (1) refinancing its outstanding public indebtedness, (2) maintaining strong
market positions in Aurora and Tunica, (3) expanding the Aurora Casino, (4)
developing the Shreveport Casino and (5) acquiring the management and consulting
contracts with respect to the Aurora Casino and Tunica Casino in order to
terminate the Company's obligation to pay fees to GBCC.  Management believes
that its successful execution of this plan to date and the anticipated
completion of the plan will enhance HCC's operating performance and simplify its
organizational structure.

   HCC successfully completed the refinancing of its outstanding public
indebtedness in May 1999.  The Company's continuing efforts with respect to the
second, third and fourth points of the strategic plan are discussed below under
the captions "Aurora Casino", "Tunica Casino" and "Shreveport Casino."  The
acquisition of the management and consulting contracts was completed in October
1999, as discussed above.

   The principal executive offices of HCC are located at Two Galleria Tower,
Suite 2200, 13455 Noel Road, Dallas, Texas  75240, telephone (972) 392-7777.

The Aurora Casino
-----------------

   The Aurora Casino commenced operations in June 1993.  The Aurora Casino's
primary market is the affluent suburbs north and west of Chicago.  Approximately
5.9 million adults live within a 50-mile radius and approximately 8.5 million
adults live within a 100-mile radius of Chicago.  The facility is easily
accessible from major highways, can be reached by train from downtown Chicago in
approximately 50 minutes and is approximately 30 miles from both O'Hare
International and Midway airports.

   The Aurora Casino's two riverboat casinos contain an aggregate of
approximately 29,550 square feet of gaming space with approximately 1,000 slot
machines and approximately 55 table games.  The Aurora Casino also includes an
approximately 64,000 square foot, land-based pavilion featuring a glass-domed,
four-story atrium with two upscale lounges, the award-winning Fairbanks(R)
gourmet steakhouse, The Hollywood Epic Buffet(R), a 1950's-style diner, a
high-end customer lounge and a private, intimate dinning room, called the "Gold
Room," for premium players. The Aurora Casino's two parking garages provide
convenient access for approximately 1,340 cars. The Aurora Casino also offers
retail items at the Hollywood Casino Studio Store/SM/ a highly-themed shopping
facility that offers movies on video, soundtrack compact discs and logo
merchandise from major Hollywood studios.

   The Aurora Casino was the first of HCC's properties to feature the
distinctive Hollywood theme. Management believes that the use of the Hollywood
theme throughout the Aurora Casino's gaming, dining and entertainment facilities
provides a uniquely entertaining atmosphere for patrons and encourages both
initial and repeat visits.  The Aurora Casino also includes themed gaming areas
featuring slot machines with custom graphics and the use of movie star
look-alikes to entertain guests.

   The Aurora Casino is located near the Paramount Arts Center.  This
1,900-seat, art deco-style theater was completely renovated by the City of
Aurora in 1992. The Aurora Casino uses the Paramount Theater to provide
headliner entertainment for customers. Entertainers booked at the Paramount have
included Tom Jones, Ann-Margret, The Temptations, Willie Nelson, Engelbert
Humperdinck, Paul Anka, Bill Cosby, The Beach Boys, Aretha Franklin, Kenny
Rogers, Frankie Valli, Julio Iglesias and Lou Rawls.

   The Chicago gaming market is the fourth largest gaming market in the United
States after Las Vegas, Atlantic City and the Connecticut Native American
casinos.  Based on published reports, the Aurora Casino generated 10.8% of total
gaming revenues in the Chicago gaming market with only 9.2% of the market's
gaming positions, resulting in the Aurora Casino capturing 117.5% of its "fair
share" of the market's gaming revenues in 1999.  The casinos that operate in the
Chicago gaming market include four Illinois casinos, including the Aurora
Casino, and five northern Indiana casinos located within 50 miles of downtown

                                       4
<PAGE>

Chicago.  The Chicago gaming market experienced a significant increase in gaming
revenues due to the increase in capacity from the opening of the five northern
Indiana riverboats in 1996 and 1997 and from the advent of dockside gaming in
Illinois in 1999 (see below).  In 1999, the Chicago gaming market generated
approximately $1.8 billion in gaming revenues, an increase of approximately
16.9% over 1998.

   On June 25, 1999, the Governor of Illinois signed into law legislation passed
by the Illinois legislature allowing dockside gaming for existing licensees.  As
a result of this legislation, the Aurora Casino's riverboats no longer cruise,
but are operating as dockside gaming facilities.  The Aurora Casino's patrons
are now able to freely enter and exit the docked riverboats during its operating
hours.

   The Aurora Casino Expansion.  The Aurora Casino currently operates two
   ---------------------------
riverboat casinos, City of Lights I and City of Lights II, with approximately
29,550 combined square feet of gaming space.  City of Lights I is significantly
larger than City of Lights II.  Management believes that the operating results
of the Aurora Casino have been limited by the small size of City of Lights II.
Management originally planned to replace the smaller and less spacious City of
Lights II with a larger, newly constructed riverboat.  As a result of the recent
legislation, plans now call for the replacement of both City of Lights I and
City of Lights II with a new dockside facility which will feature a 50,000
square foot main gaming level with high ceilings and wide aisles for customer
comfort.  Plans for the new dockside facility also currently provide for a
25,000 square foot mezzanine level that will include a poker room, a 150-seat
1950's-style diner, a 30-seat walk-up delicatessen and a 200-seat show lounge.
Management believes that the $40 million in proceeds from HCC's May 1999 issue
of the Senior Secured Notes (see "Properties - The Aurora Casino" below)
designated for the development of a new riverboat casino together with funds
from operations will be sufficient for the estimated $60-65 million cost to
develop the dockside gaming facility.  Construction of the dockside casino is
expected to begin as soon as possible following receipt of required regulatory
approvals and the resolution of the litigation described below.  The new
dockside facility is expected to be completed and opened approximately 14 months
after the commencement of construction.

   The Company intends to build the new dockside casino in two halves, which
will be connected to form a single dockside casino.  The Company is now
considering proceeding with the construction of the first half of  the dockside
casino prior to final resolution of the litigation described below.  If the
Company proceeds with this approach, it would attempt to place all of its gaming
positions on the first half of the dockside casino and would not develop the
second half of the facility until the litigation is resolved.

   A complaint was filed in late 1999 in an Illinois state court concerning the
constitutionality of a portion of the legislation that enabled dockside gaming
in Illinois.  Although the constitutional challenge centers on the relocation of
one of the existing gaming licenses, a finding that such portion of the
legislation is unconstitutional could result in a finding that all or a portion
of the legislation, including dockside gaming, is invalid.  Pending the
resolution of this litigation, the Company's planned dockside expansion of the
Aurora Casino has been delayed.  If the state court rules that all or a portion
of the legislation is invalid, management believes that it may be able to
continue to operate its existing riverboats on a dockside basis pending a final
resolution of the litigation.  If the provisions in question are found to be
unconstitutional after all appeals, and the entire legislation is invalidated
and it appears that the Illinois legislature will not pass new legislation
enabling dockside gaming, then the Company would likely modify its expansion
plans for the Aurora Casino. Under this scenario, the Company would likely
proceed with the development of a new, larger riverboat to replace City of
Lights II.

   Pending resolution of the litigation and without regard to its decision of
whether to build the first half of the dockside casino, management is
implementing a plan to connect its two existing riverboats with a new casino
barge.  The project will cost approximately $3.5 million to complete, including
approximately $1.3 million in docking facilities that can be used by the new
dockside casino should it be built.  Construction of the barge is expected to
commence as soon as the necessary approvals are obtained and is expected to open
in mid-July of 2000.  The casino barge will allow patrons to move freely between
the two existing boats and

                                       5
<PAGE>

will enable management to reconfigure its casino space for increased patron
comfort. Management believes that the reconfigured facility will significantly
enhance its current operations until the Company is able to replace its existing
riverboats with the new dockside facility.

   Casino Credit.  Casino operations are conducted on both a credit and a cash
   -------------
basis.  Gaming debts arising at the Aurora Casino in accordance with applicable
regulations are enforceable under Illinois law. For the year ended December 31,
1999, gaming credit extended to customers accounted for less than 2% of overall
wagering.  At December 31, 1999, gaming receivables amounted to $1.6 million
before allowances for uncollectible gaming receivables which amounted to
$836,000.  Management of the Aurora Casino believes that the allowances for
uncollectible gaming receivables are adequate.

   Employees and Labor Relations.   At December 31, 1999 there were
   -----------------------------
approximately 1,600 employees at the Aurora Casino, none of whom are represented
under collective bargaining agreements.  Management considers its labor
relations to be good.

The Tunica Casino
-----------------

   The Tunica Casino commenced operations in August 1994.  Tunica County is the
closest gaming jurisdiction to, and is easily accessible from, the Memphis
metropolitan area.  Approximately 4.9 million adults live within a 200-mile
radius of Tunica County, approximately 900,000 of whom reside within 50 miles of
Memphis.  In addition, Memphis hosts more than 8 million visitors each year.
The Tunica market has become a regional destination resort, attracting customers
from markets such as Nashville, Atlanta, St. Louis, Little Rock and Tulsa.   The
Tunica Casino is accessible to its customers via Highway 61 and Interstate 55.

   The Tunica Casino  features a 54,000 square foot, single level casino with
approximately 1,500 slot machines and approximately 50 table games.  The Tunica
Casino's 506-room hotel and 123-space recreational vehicle park provide
overnight accommodations for its patrons.  The casino includes the highly-themed
Adventure Slots(R) gaming area, featuring special effects, multimedia displays
of memorabilia from famous adventure motion pictures and over 200 slot machines.
Additional entertainment amenities provided by the Tunica Casino include its
award-winning Fairbanks gourmet steakhouse, The Hollywood Epic Buffet, a
1950's-style diner, public and private entertainment lounges, a themed bar
facility, an indoor pool and showroom, banquet and meeting facilities. Also, in
November 1998, the Tunica Casino opened an 18-hole championship golf course
adjacent to the facility through a joint venture with Harrah's Entertainment,
Inc. and Boyd Gaming Corporation. The Tunica Casino also offers parking for
1,883 cars.

   The Company's Hollywood theme is utilized throughout the Tunica Casino, which
is designed to resemble a large motion picture sound stage complete with
catwalks and movie-set style lighting.  In addition, numerous movie props and
pieces of motion picture memorabilia are displayed throughout the facility.  In
1998, the Tunica Casino installed one of its largest and most dramatic
memorabilia pieces--a 28-foot long model ship used in the filming of the Academy
Award(R) winning movie Titanic, which is depicted sinking into the Atlantic
Ocean.  The Tunica Casino also provides headliner entertainment for its
customers. Entertainers who have performed at the Tunica Casino include The
Commodores, Collin Raye and The Smothers Brothers.

   The Tunica Casino has historically been one of the leading operators in the
Tunica gaming market. Based on published market information for 1999, the Tunica
Casino generated 8.7% of the total gaming revenues in the Tunica gaming market
with 8.8% of the market's gaming positions, resulting in the Tunica Casino
capturing approximately 98.5% of its "fair share" of the market's gaming
revenues, despite intensified competition and a hold percentage for table games
significantly below historical averages.  There are currently ten casinos
operating in the Tunica market, including the Tunica Casino.  The market has
rapidly become the fifth largest gaming market in the United States after Las
Vegas, Atlantic City, the

                                       6
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Connecticut Native American casinos and Chicago, generating approximately $1.2
billion in gaming revenues in 1999.

   The Tunica Casino is located in a cluster with gaming facilities operated by
Harrah's Entertainment, Inc., Boyd Gaming Corporation and Isle of Capri Casinos,
Inc.  The casinos have named their cluster "Casino Strip" in order to establish
a marketing identity for the cluster.  Three of the four properties operate a
free shuttle bus service between their casinos and have also conducted joint
marketing activities including a billboard campaign and radio advertising.
Furthermore, the four properties conduct joint special events to attract
customers to the cluster.

   In 1998, management launched a $13 million upgrade which it believes has
enhanced the Tunica Casino's position as one of the highest quality facilities
in the Tunica gaming market.  The improvement program included adding  255 new
state of the art slot machines, replacing an additional 136 slot machines,
expanding the number of recreational vehicle parking spaces and upgrading  all
of the Tunica Casino's hotel rooms and suites.  Additional improvements were
the opening of an 18-hole championship golf course, development of a new VIP
check-in and private entertainment lounge to enhance the level of service
provided to the Tunica Casino's premium gaming patrons and enhancements to all
public areas and the facility's exterior.

   The Tunica Casino employs a marketing strategy designed to take advantage of
its proximity to the large population base of the greater Memphis metropolitan
area and other major markets by targeting the local day-trip market and by
utilizing its hotel rooms, recreational vehicle park and golf course to expand
its patron mix to include overnight visitors.  Management also utilizes the ACSC
developed casino information technology to identify premium patrons; such
information is then used to encourage participation in its casino player's card
program and tailor promotions and special events to cater to this market
segment.

   Management believes that the Tunica Casino's unique theme has broad patron
appeal and distinguishes the Tunica Casino from its competitors.  Additionally,
the nature of the theming permits for periodic and cost effective updating which
management believes stimulates repeat visits.

   Casino Credit.  Casino operations are conducted on both a credit and a cash
   -------------
basis.  Gaming debts arising at the Tunica Casino in accordance with applicable
regulations are enforceable under Mississippi law. During 1999, gaming credit
extended to customers accounted for 1.4% of overall wagering.  At December 31,
1999, gaming receivables amounted to $3.3 million before allowances for
uncollectible gaming receivables amounting to $990,000.  Management believes
that the allowances for uncollectible gaming receivables are adequate.

   Employees and Labor Relations.  At December 31, 1999, there were
   -----------------------------
approximately 1,300 employees at the Tunica Casino, none of whom are represented
under collective bargaining agreements.  Management considers its labor
relations to be good.

The Shreveport Casino
---------------------

   In September 1998, the Shreveport Partnership received approval to develop,
own and operate the Shreveport Casino.  The destination resort is currently
designed to include a 405-room, all suite, art deco-style hotel, and a three-
level dockside casino.  The resort is also designed to include a large land-
based pavilion housing numerous restaurants and entertainment amenities, an 85-
foot wide seamless entrance to the casino from the land-based pavilion on all
three levels, which will give it the feel of a land-based casino, and over
40,000 square feet of retail space.  Management plans to have the retail space
developed by a group that includes the principal developer of Beale Street in
Memphis, Tennessee.  The Shreveport Casino will feature the Company's unique
Hollywood theme, which will be utilized throughout the resort.  The project is
on schedule for its targeted opening in early November 2000.

                                       7
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   The Shreveport Casino will be located next to an existing dockside gaming
facility operated by Harrah's which together will form  the first cluster in the
Shreveport/Bossier City market.  Once completed, the Shreveport Casino will be
the fifth casino operating in the Shreveport/Bossier City gaming market.  The
four existing operators generated approximately $641.5 million in gaming
revenues in 1999, an increase of approximately 7.1% over 1998.

   The principal target markets for the Shreveport Casino will be patrons from
the Dallas/Ft. Worth Metroplex and East Texas.  There are approximately 7.2
million adults who reside within 200 miles of Shreveport/Bossier City.
Management believes that the location of HCC's executive offices in Dallas will
result in a competitive advantage in attracting customers to the Shreveport
Casino from these markets.

   The Shreveport Casino is owned by the Shreveport Partnership, which is in
turn owned by HCL.  HCL and the Shreveport Partnership are not subject to the
limitations imposed by the terms of the indenture governing HCC's Senior Secured
Notes.  HCS will operate the Shreveport Casino under a management agreement with
the Shreveport Partnership.  The management agreement provides that the
Shreveport Partnership will pay a management fee to HCS of 2% of net revenues
plus an increasing percentage (5-10%) of the Shreveport Casino's annual earnings
before interest, taxes, depreciation and amortization ("EBITDA") above $25
million.

Competition
-----------

   The gaming industry is highly fragmented and characterized by a high degree
of competition among a large number of participants, some of which have greater
financial and other resources than the Company. Competitive gaming activities
include land-based casinos, dockside casinos, riverboat casinos, video lottery
terminals and other forms of legalized gaming in the United States and other
jurisdictions.  Legalized gambling is currently permitted in various forms
throughout the United States, in several Canadian provinces, as well as on
Native American reservations in certain states including Louisiana and
Mississippi.  Other jurisdictions may legalize gaming in the near future through
the introduction of proposals to legalize gaming in their state legislatures.
In addition, established gaming jurisdictions could award additional gaming
licenses or permit the expansion of existing gaming operations.  New or expanded
operations by other persons can be expected to increase competition for the
Company's present and proposed gaming operations and could have a material
adverse impact on the Company.

   The Aurora Casino

   The Illinois Riverboat Gambling Act (the "Riverboat Act") and the rules
promulgated by the Illinois Gaming Board under the Riverboat Act authorize only
ten owner's licenses for riverboat gaming operations in Illinois and permit a
maximum of 1,200 gaming positions at any time for each of the ten licensed
sites. All authorized owner's licenses have been granted and no additional
licenses or gaming positions can be permitted without further state legislation.
One licensed site ceased gaming operations in July 1997.  The holder of that
license was allowed under the legislation that permitted dockside gaming to
apply to the Illinois Gaming Board to relocate its license.  The license holder
has made such an application and management believes that this license will
likely be relocated and will commence operations at a new site in Rosemont,
Illinois, which is within the Aurora Casino's principal market.  Four riverboat
sites, including the Aurora Casino, are currently licensed in Illinois within 50
miles of downtown Chicago.  Two of these riverboat sites are in Joliet,
approximately 40 miles southwest of downtown Chicago, and a third is in Elgin,
Illinois, approximately 20 miles from Aurora, 40 miles from downtown Chicago and
amid the affluent northern and western suburbs.  In addition, the Aurora Casino
competes directly with five riverboat operations opened since 1996 in
northwestern Indiana within 50 miles of downtown Chicago.  Increased competition
from casinos in Indiana has resulted in greater competition for patrons from the
downtown Chicago market and from the suburban Chicago market.

                                       8
<PAGE>

   The next closest operating casinos are in Milwaukee, Wisconsin, approximately
90 miles from downtown Chicago, and in Peoria, and Rock Island, Illinois,
approximately 160 miles from downtown Chicago.  In addition, three casinos in
the Detroit, Michigan area have opened or are nearing completion. Native
American tribes are seeking to open casino facilities in northwestern Indiana,
Michigan and Wisconsin under the Indian Gaming Regulatory Act.  The opening of
additional casinos proximate to Chicago could have a material adverse impact on
the Aurora Casino.

   The Tunica Casino

   The Tunica Casino faces intense competition from the other ten  casinos
operating in north Tunica County and Coahoma County.  Within the Casino Strip
cluster, the Tunica Casino competes with Sam's Town, Harrah's Mardi Gras and,
since July 1999, Isle of Capri.  A three casino cluster called "Casino Center"
consists of Binion's Horseshoe, Sheraton Casino and Goldstrike Casino and is
located north of the Casino Strip cluster and closer to the Memphis market.
Bally's operates a casino and hotel adjacent to, but not connected with, the
Casino Center.  Fitzgeralds is located between Casino Center and the Casino
Strip cluster.  In addition, Lady Luck operates a casino in Coahoma County which
is located approximately 40 miles south of the Casino Strip cluster.

   During July 1996, Grand Casinos opened a casino complex immediately north of
Casino Center with 140,000 square feet of gaming space including approximately
3,240 slot machines and 120 table games. Three hotels with an aggregate of 1,366
rooms, a conference center and a golf course are currently available and other
amenities are scheduled for later completion.  The opening of this casino space,
the largest in Mississippi, increased casino capacity in Tunica County by 24%.

   Management believes the shortage of hotel rooms in the Tunica market was a
restriction to growth in prior years.  However, a number of casino operations
have completed and opened hotel facilities from 1996 through the present.
During 1997 and early 1998, the Goldstrike Casino completed a 31-story, 1,200-
room hotel tower and Binion's opened a 300-room hotel tower.  Sheraton Casino
also completed construction of 150 hotel rooms.  The total current number of
hotel rooms in Tunica County has increased to approximately 5,700 rooms from
1,250 at the end of 1995, an increase of more than 350%.  The additional hotel
capacity has made the Casino Center increasingly competitive in attracting
overnight visitors.

   The Mississippi Gaming Control Act does not limit the number of licenses that
may be granted.  Any significant increase in new capacity in Tunica County could
negatively impact the operations of the Tunica Casino.

   Although management does not believe that the Tunica Casino faces significant
competition from casinos outside of the Tunica gaming market, legalized gaming
operations are established in and around Mississippi, including 12 casinos on
the Gulf Coast.  Beau Rivage, a large casino complex, opened on the Gulf Coast
in March 1999 and could potentially compete for customers with the casinos in
the Tunica gaming market.  In addition, the Tunica Casino may eventually face
competition from the opening of gaming casinos closer to Memphis, including
DeSoto County, Mississippi, which is the only county between Tunica County and
the Tennessee border.  DeSoto County has defeated gaming proposals on three
separate occasions, most recently in November 1996, and by statute cannot vote
on such issue again until 2004. Casino gaming is not currently legalized in
Tennessee or Arkansas.  Although management does not anticipate such legislation
in the near term, the legalization of gaming in either Tennessee or Arkansas
could have a material adverse impact on the Tunica Casino.

   The Shreveport Casino

   Upon the anticipated completion of the Shreveport Casino in early November
2000, the facility will compete directly with Binion's Horseshoe, Harrah's, the
Isle of Capri and Casino Magic in the

                                       9
<PAGE>

Shreveport/Bossier City market. Some of these competitors have higher profile
brand names in the Shreveport/Bossier City market and greater financial
resources than HCC. There can be no assurance that the Shreveport Casino will be
able to effectively compete against these four established casinos, three of
which have been in operation since 1994, or that the Shreveport/Bossier City
market is large enough to allow more than four casinos to operate profitably.
Furthermore, the fifteenth and final riverboat gaming license available in
Louisiana could ultimately be granted in, or one or more of the current
operators in other parts of Louisiana could relocate to, the Shreveport/Bossier
City market which would directly increase competition in the market.

   Also, there can be no assurance that the Shreveport Casino will be able to
effectively compete against any other future gaming operations that Louisiana or
other authorities may authorize in the gaming market in which it will operate.
For example, in 1997, the Louisiana legislature adopted legislation permitting
up to 15,000 square feet of slot machine gaming at pari-mutual wagering
facilities located in parishes in Louisiana that approve slot machine gaming in
a referendum election.  Shortly thereafter, a referendum election was held that
approved slot machine gaming at Louisiana Downs, which is located in Bossier
City, approximately nine miles from the site of the Shreveport Casino.
Management believes slot machine gaming at Louisiana Downs could commence
sometime later this year.  The Shreveport Casino will also face competition from
other forms of gaming, such as state-sponsored lotteries and video lottery
terminals, pari-mutual betting on horse and dog racing and bingo parlors, as
well as other forms of entertainment in Louisiana and other places from which it
will draw customers.

Casino Regulation
-----------------

   Illinois

   The Riverboat Act currently authorizes dockside riverboat gaming on navigable
streams within or forming a boundary of the State of Illinois except for Lake
Michigan.  The Riverboat Act strictly regulates the facilities, persons,
associations  and practices related to gaming operations pursuant to the police
powers of the State of Illinois, including comprehensive law enforcement
supervision.  The Riverboat Act grants the Illinois Gaming Board specific powers
and duties, and all other powers necessary and proper to fully and effectively
execute the Riverboat Act for the purpose of administering, regulating and
enforcing the system of riverboat gaming.  The Illinois Gaming Board's
jurisdiction extends to every person, association, corporation, partnership and
trust involved in riverboat gaming operations in the State of Illinois.

   Owner's Licenses.  The Riverboat Act requires the owner of a riverboat gaming
   ----------------
operation to hold an owner's license issued by the Illinois Gaming Board.  The
Aurora Casino's owner's license was renewed in 1999 and expires in December
2000.  The Illinois Gaming Board is authorized to issue ten owner's licenses
statewide.  Each owner's license permits up to two boats as a part of the
riverboat gaming operation.  In addition to the ten owner's licenses which may
be authorized under the Riverboat Act, the Illinois Gaming Board may issue
special event licenses allowing persons who are not otherwise licensed to
conduct riverboat gaming to conduct such gaming on a specified date or series of
dates.  Riverboat gaming under such a license may take place on a riverboat not
normally used for riverboat gaming.

   An owner's license is issued for an initial period of three years and may be
renewed for successive periods of up to four years thereafter.  An owner's
license is eligible for renewal upon payment of the applicable fee and a
determination by the Illinois Gaming Board that the licensee continues to meet
all of the requirements of the Riverboat Act, the Illinois Gaming Board's rules
and any conditions placed on a prior license renewal.  The Illinois Gaming Board
also requires that officers, directors and employees of a gaming operation and
suppliers of gaming equipment, devices and supplies and certain other suppliers
be licensed. Licenses issued by the Illinois Gaming Board may not be transferred
to another person or entity.  All licensees must maintain their suitability for
licensure and have a continuing duty to disclose any material changes in
information provided to the Illinois Gaming Board.

                                       10
<PAGE>

   Applicants for and holders of an owner's license are required to obtain
formal prior approval from the Illinois Gaming Board for changes proposed in the
following areas; (1) key persons, (2) type of entity, (3) equity and debt
capitalization  of the entity, (4) investors and/or debt holders, (5) source of
funds, (6) economic development plans or proposals, (7) riverboat capacity or
significant design change, (8) gaming positions, (9) anticipated economic
impact, or (10) agreements, oral or written, relating to the acquisition or
disposition of property (real or personal) of a value greater than $1 million.

   A holder of an owner's license is allowed to make distributions to its
partners, stockholders or itself only to the extent that such distribution would
not impair the financial viability of the gaming operation. Factors to be
considered by the licensee include, but are not limited to, the following:  (1)
cash flow, casino cash and working capital requirements, (2) debt service
requirements and covenants associated with financial instruments, (3)
requirements for repairs, maintenance and capital improvements, (4) employment
or economic development requirements of the Riverboat Act and (5) a licensee's
financial projections.

   The Illinois Gaming Board will require a business entity or personal
disclosure form and approval as a key person for any business entity or
individual with an ownership interest or voting rights of more than 5% in a
licensee, the trustee of any trust holding such ownership interest or voting
rights, the directors of the licensee and its chief executive officer, president
and chief operating officer, as well as any other individual or entities deemed
by the board to hold a position or a level of ownership, control or influence
that is material to the regulatory concerns and obligations of the board.  Each
key person must file, on an annual basis, a disclosure affidavit, updated
personal and background information, and updated tax and financial information.
Key persons are required to promptly disclose to the board any material changes
in status or information previously provided to the board and to maintain their
suitability as key persons.  In order for the board to identify potential key
persons, each holder of an owner's license is required to file a table of
organization, ownership and control with the Illinois Gaming Board to identify
the individuals or entities that through direct or indirect means manage, own or
control the interests and assets of the licensee.  Based upon findings from an
investigation into the character, reputation, experience, associations, business
probity and financial integrity of a key person, the Illinois Gaming Board may
enter an order upon the licensee to require economic disassociation of a key
person.  Each licensee is required to provide a means for the economic
disassociation of a key person in the event such disassociation is required.

   An ownership interest in a holder of an owner's license may be transferred or
pledged as collateral only with the consent of the Illinois Gaming Board.

   Regulation of Gaming Operations.  The Riverboat Act does not limit the
   -------------------------------
maximum bet or per patron loss and licensees may set any maximum or minimum bets
or other limits on wagering. No person under the age of 21 is permitted to
wager.  Vessels must have the capacity to hold a minimum of 500 persons if
operating on the Mississippi River or the Illinois River south of Marshall
County, and a minimum of 400 persons on any other waterway.  The number of
gaming positions is limited to a maximum of 1,200 per license.  A licensee may
conduct riverboat gambling regardless of whether it conducts excursion cruises.
A licensee may permit the continuous ingress and egress of passengers for the
purpose of gambling.

   A $2 per person admission tax is imposed on the owner of a riverboat
operation.  Such admission tax for the Aurora Casino amounted to $6.1 million,
$6.6 million and $7.2 million , respectively, during 1999, 1998 and 1997.
Additionally, a wagering tax is imposed on the adjusted gross receipts, as
defined in the Riverboat Act.  This gaming tax increased significantly in 1998.
The tax rate changed from a flat 20% to graduated rates ranging from 15% to 35%.
The licensee is required to wire transfer all such gaming tax payments to the
Illinois Gaming Board.  The wagering tax for the Aurora Casino amounted to $54.3
million, $42.4 million and $30.7 million, respectively, for the years 1999, 1998
and 1997.

   The Illinois Gaming Board is authorized to conduct investigations into the
conduct of gaming employees and into alleged violations of the Riverboat Act and
to take such disciplinary and enforcement

                                       11
<PAGE>

action as it may deem necessary and proper. Employees and agents of the Illinois
Gaming Board have access to and may inspect any facilities relating to the
riverboat gaming operations at all times.

   A holder of any license is subject to imposition of penalties and fines,
suspension or revocation of the license, or other action for any act or failure
to act by the holder or his or her agents or employees, that is injurious to the
public health, safety, morals, good order and general welfare of the people of
the State of Illinois, or that would discredit or tend to discredit the Illinois
gaming industry or the State of Illinois.  Any riverboat operation not conducted
in compliance with the Riverboat Act may constitute an illegal gaming place and
consequently may be subject to criminal penalties, which penalties include
possible seizure, confiscation and destruction of illegal gaming devices and
seizure and sale of riverboats and dock facilities to pay any unsatisfied
judgment that may be recovered and any unsatisfied fine that may be levied.  The
Riverboat Act also provides for civil penalties equal to the amount of gross
receipts derived from wagering on the gaming, whether unauthorized  or
authorized, conducted on the day of any violation.  The Illinois Gaming Board
may revoke or suspend licenses, as the Board may see fit and in compliance with
applicable laws of Illinois regarding administrative procedures, and may suspend
an owner's license, without notice or hearing, upon a determination that the
safety or health of patrons or employees is jeopardized by continuing a
riverboat's operation.  The suspension may remain in effect until the Illinois
Gaming Board determines that the cause for suspension has been abated and it may
revoke the owner's license upon a determination that the owner has not made
satisfactory progress toward abating the hazard.

   The Illinois Gaming Board may waive any licensing requirement or procedure
provided by rule if it determines that such waiver is in the best interests of
the public and the gaming industry.

   Mississippi

   The ownership and operation of casino gaming facilities in Mississippi are
subject to extensive state and local regulations including the Mississippi
Gaming Control Act (the "Mississippi Act").  Gaming in Mississippi can be
legally conducted only on vessels of a certain minimum size in navigable waters
of counties bordering the Mississippi River or in waters of the State of
Mississippi which lie adjacent to the coastline of the three counties bordering
the Gulf of Mexico and counties in which gaming has been approved by the voters.
An amendment to the Mississippi Constitution has been proposed for adoption
through the initiative and referendum process which, if a sufficient number of
signatures are gathered to place the matter on the ballot and if adopted by the
voters of the state, would prohibit gaming in Mississippi.

   Mississippi's gaming operations are subject to the licensing and regulatory
control of the Mississippi Gaming Commission (the "Mississippi Commission") and
various federal, state and county regulatory agencies.  The Mississippi Act does
not restrict the amount or percentage of space on a vessel that may be utilized
for gaming nor does it limit the number of licenses that the Mississippi
Commission can grant for a particular area.

   Each of HCT's directors, officers and certain key employees who are actively
and directly engaged in the administration or supervision of gaming in
Mississippi, or who have any other significant involvement with the gaming
activities of the Tunica Casino, must be found suitable therefor and may be
required to be licensed by the Mississippi Commission.  All personnel
responsible for the direction and management of the Tunica Casino have been
found suitable by the Mississippi Commission.  The finding of suitability is
comparable to licensing, and both require submission of detailed personal
financial information followed by a thorough investigation.  An application for
licensing may be denied for any cause deemed reasonable by the issuing agency.
Changes in licensed positions must be reported to the issuing agency and the
Mississippi Commission has jurisdiction to disapprove a change in licensed
positions.  If the Mississippi Commission were to find a director, officer or
key employee unsuitable for licensing or unsuitable to continue having a
relationship with HCT, HCT would have to suspend, dismiss and sever all
relationships with such person

                                       12
<PAGE>

or lose its license. HCT would have similar obligations with regard to any
person who refuses to file appropriate applications. Each gaming employee must
obtain a work permit.

   The licenses obtained by HCT are not transferable and need to be renewed
periodically.  The ownership license for the Tunica Casino has been renewed
through October 18, 2001.  Presently, the policy of the Mississippi Commission
is to award casino licenses for two-year periods, subject to renewal.  The
Mississippi Commission has the power to deny, limit, condition, revoke and
suspend any license, finding of suitability or registration, and to fine any
person as it deems reasonable and in the public interest, subject to an
opportunity for a hearing.

   Any individual who is found to have a material relationship to, or material
involvement with, HCT may be required to be investigated in order to be found
suitable or to be licensed as a business associate of HCT. Key employees,
controlling persons or others who exercise significant influence upon the
management or affairs of HCT may also be deemed to have such a relationship or
involvement.  Additionally, certain beneficial owners, lenders and landlords of
HCT may be required to be licensed.  The landlord under the ground lease for the
Tunica Casino has been found suitable by the Mississippi Commission.

   The statutes and regulations give the Mississippi Commission the discretion
to require a suitability finding with respect to anyone who acquires any debt or
equity security of HCT regardless of the percentage of ownership.  In addition,
the Mississippi Commission has discretionary authority to require a holder of
any debt to file an application, to be investigated and to be found suitable.
While the Mississippi Commission generally does not require the individual
holders of obligations to be investigated and found suitable, the Mississippi
Commission retains the discretion to do so for any reason, including but not
limited to a default or where the holder of a debt instrument exercises a
material influence over the gaming operations of the entity in question.  The
applicant is required to pay all costs of investigation.

   Any owner of debt or equity securities found unsuitable and who holds,
directly or indirectly, any beneficial ownership of debt or equity interests in
HCT beyond such period of time as may be prescribed by the Mississippi
Commission may be guilty of a misdemeanor.  Any person who fails or refuses to
apply for a finding of suitability or a license within 30 days after being
ordered to do so by the Mississippi Commission may be found unsuitable.  HCT is
subject to disciplinary action if, after it receives notice that a person is
unsuitable to be an owner of its debt or equity securities or to have any other
relationship with it, HCT (1) pays the unsuitable person any distributions or
interest upon any securities of HCT or any payments or distribution of any kind
whatsoever, (2) recognizes the exercise, directly or indirectly, of any voting
rights in its securities by the unsuitable person, or (3) pays the unsuitable
person any remuneration in any form for services rendered or otherwise, except
in certain  limited and specific circumstances.  In addition, if the Mississippi
Commission finds any owner unsuitable, such owner must immediately offer all of
such owner's securities in HCT for purchase, and HCT shall, in turn, purchase
the securities so offered, for cash at fair market value, within ten days of the
date of such offer.

   The Mississippi Commission has the power to impose additional restrictions on
the holders of HCT's securities at any time through its power to regulate
licensees.

   Mississippi gaming regulations provide that a change in control of HCT may
not occur without the prior approval of the Mississippi Commission.  Mississippi
law prohibits HCT from making a public offering of its securities without the
approval of the Mississippi Commission if any part of the proceeds of the
offering is to be used to finance the construction, acquisition or operation of
gaming facilities in Mississippi, or to retire or extend obligations incurred
for one or more of such purposes.

   Because HCT is licensed to conduct gaming in Mississippi, neither HCT nor any
affiliates may engage in gaming activities outside of Mississippi without the
prior approval of the Mississippi Commission.  The Mississippi Commission has
adopted regulations related to foreign gaming approval, and HCT and its

                                       13
<PAGE>

affiliates have been approved by the Mississippi Commission under its
regulations to engage in gaming activities in certain jurisdictions outside of
Mississippi.

   License fees and taxes are based on a percentage of the gross gaming revenues
received by a casino operation and on the number of slot machines and table
games operated by such casino.  In particular, gaming licensees must pay an
annual $5,000 license fee and an additional fee based on the number of gaming
devices.  A state gross revenues fee of 8% is due on adjusted gross gaming
revenues.  Several local governments have been authorized to impose additional
gross fees on adjusted gross gaming revenues of up to 4% and annual license fees
based on the number of gaming devices on board.  Tunica County imposes a fee of
4% on adjusted gross gaming revenues.  Gaming taxes for the Tunica Casino
amounted to $12.2 million, $11.7 million and $11.9 million during 1999, 1998 and
1997, respectively.  Gross gaming taxes paid to the state are allowed as a
credit against Mississippi state income tax liability.

   During January 1999, the Mississippi Commission adopted a regulation
requiring that new casino applicants invest a minimum of 100% of the higher of
the appraised value of their casino or the construction cost of their casino in
land-based facilities.  These facilities shall include any of the following: the
construction of a minimum of 250 hotel rooms for each casino, a theme park, golf
courses, marinas, a tennis complex, entertainment facilities or any other
facility approved by the Mississippi Commission.  The regulation will apply to
all new casino projects.

   Louisiana

   The ownership and operation of a riverboat gaming vessel is subject to the
Louisiana Riverboat Economic Development and Gaming Control Act (the "Louisiana
Act").  As of May 1, 1996, gaming activities are regulated by the Louisiana
Gaming Control Board (the "LGCB").  The LGCB is responsible for issuing gaming
licenses and enforcing the laws, rules and regulations relative to riverboat
gaming activities.  The LGCB is empowered to issue up to 15 licences to conduct
gaming activities on a riverboat of new construction in accordance with
applicable law.  However, no more than six licenses may be granted to riverboats
operating from any one parish.

   The laws and regulations of Louisiana seek to prevent unsavory or unsuitable
persons from having any direct or indirect involvement with gaming at any time
or in any capacity; establish and maintain responsible accounting practices and
procedures; maintain effective control over the financial practices of
licensees, including establishing procedures for reliable record keeping and
making periodic reports to the LGCB; prevent cheating and fraudulent practices;
provide a source of state and local revenues through fees; and ensure that
gaming licensees, to the extent practicable, employ and contract with Louisiana
residents, women and minorities.

   The Louisiana Act specifies certain restrictions and conditions relating to
the operation of riverboat gaming, including but not limited to the following:
(1) in parishes bordering the Red River, which includes the site for the
Shreveport Casino, gaming may be conducted dockside; however, in all other
authorized locations gaming is not permitted while a riverboat is docked, other
than for forty-five minutes between excursions, unless dangerous weather or
water conditions exist as certified by the riverboat's master; (2) each round
trip riverboat cruise may not be less than three nor more than eight hours in
duration, subject to specified exceptions; (3) agents of the LGCB are permitted
on board at any time during gaming operations; (4) gaming devices, equipment and
supplies may be purchased or leased only from permitted suppliers; (5) gaming
may only take place in the designated gaming area while the riverboat is upon a
designated river or waterway; (6) gaming equipment may not be possessed,
maintained, or exhibited by any person on a riverboat except in the specifically
designated gaming area, or a secure area used for inspection, repair, or storage
of such equipment; (7) wagers may be received only from a person present on a
licensed riverboat; (8) persons under 21 are not permitted on gaming vessels;
(9) except for slot machine play, wagers may be made only with tokens, chips, or
electronic cards purchased from the licensee aboard a riverboat; (10)

                                       14
<PAGE>

licensees may only use dockside facilities and routes for which they are
licenced and may only board and discharge passengers at the riverboat's licensed
berth; (11) licensees must have adequate protection and indemnity insurance;
(12) licensees must have all necessary federal and state licenses, certificates
and other regulatory approvals prior to operating a riverboat; and (13) gaming
may only be conducted in accordance with the terms of the license, the Louisiana
Act and the rules and regulations adopted by the LGCB.

   No person may receive any percentage of the profits from the Shreveport
Casino without first being found suitable.  In September 1998, HCC, its
officers, key personnel, partners and persons holding a 5% or greater interest
in HCS were found suitable by the LGCB.  A gaming license is deemed to be a
privilege under Louisiana law and as such may be denied, revoked, suspended,
conditioned or limited at any time by the LGCB.  In issuing a license, the LGCB
must find that the applicant is a person of good character, honesty and
integrity and that the applicant is a person whose prior activities, criminal
record, if any, reputation, habits and associations do not pose a threat to the
public interest of the State of Louisiana or to the effective regulation and
control of gaming, or create or enhance the dangers of unsuitable, unfair or
illegal practices, methods, and activities in the conduct of gaming or the
carrying on of business and financial arrangements in connection therewith.  The
LGCB will not grant any licenses unless it finds that:

   .  the applicant is capable of conducting gaming operations, which means that
      the applicant can demonstrate the capability, either through training,
      education, business experience, or a combination of the above, to operate
      a gaming casino;

   .  the proposed financing of the riverboat and the gaming operations is
      adequate for the nature of the proposed operation and from a source
      suitable and acceptable to the LGCB;

   .  the applicant demonstrates a proven ability to operate a vessel of
      comparable size, capacity and complexity to a riverboat in its application
      for a license so as to ensure the safety of its passengers;

   .  the applicant designates the docking facilities to be used by the
      riverboat;

   .  the applicant shows adequate financial ability to construct and maintain a
      riverboat;

   .  the applicant submits a detailed plan of design of the riverboat in its
      application for a license;

   .  the applicant has a good faith plan to recruit, train and upgrade
      minorities in all employment classifications; and

   .  the applicant is of good moral character.

   The LGCB may not award a license to any applicant who fails to provide
information and documentation to reveal any fact material to qualifications or
who supplies information which is untrue or misleading as to a material fact
pertaining to the qualification criteria; who has been convicted of or pled nolo
contendere to an offense punishable by imprisonment of more than one year; who
is currently being prosecuted for or regarding whom charges are pending in any
jurisdiction of an offense punishable by more than one year imprisonment; or if
any holder of 5% or more in the profits and losses of the applicant has been
convicted of or pled guilty or nolo contendere to an offense which at the time
of conviction is punishable as a felony.

   The transfer of a license is prohibited.  The sale, assignment, transfer,
pledge, or disposition of securities which represent 5% or more of the total
outstanding shares issued by a holder of a license is subject to prior LGCB
approval.  A security issued by a holder of a license must generally disclose
these restrictions.

                                       15
<PAGE>

   The failure of a licensee to comply with the requirements set forth above may
result in the suspension or revocation of that licensee's gaming license.
Additionally, if the LGCB finds that the individual owner or holder of a
security of a corporate licensee or intermediary company or any person with an
economic interest in a licensee is not qualified under the Louisiana Act, the
LGCB may require, under penalty of suspension or revocation of the license, that
the person not receive dividends or interest on securities of the corporation;
exercise directly or indirectly a right conferred by securities of the
corporation; receive remuneration or economic benefit from the licensee; or
continue in an ownership or economic interest in the licensee.

   A licensee must periodically report the following information to the LGCB,
which is not confidential and is to be available for public inspection: the
licensee's net gaming proceeds from all authorized games; the amount of net
gaming proceeds tax paid; and all quarterly and annual financial statements
presenting historical data that are submitted to the LGCB, including annual
financial statements that have been audited by an independent certified public
accountant.

   The LGCB has adopted rules governing the method for approval of the area of
operations and the rules and odds of authorized games and devices permitted, and
prescribing grounds and procedures for the revocation, limitation or suspension
of licenses and permits.

   On April 19, 1996, the Louisiana legislature adopted legislation requiring
statewide local elections on a parish-by-parish basis to determine whether to
prohibit or continue to permit licensed riverboat gaming, licensed video poker
gaming, and licensed land-based gaming in Louisiana parishes.  The applicable
local election took place on November 5, 1996, and the voters in the parishes in
which riverboats are currently located voted to continue licensed riverboat
gaming.  However, it is noteworthy that the current legislation does not provide
for any moratorium on future elections on gaming.

Non-Gaming Regulation
---------------------

   The Company is subject to certain federal, state and local safety and health
laws, regulations and ordinances that apply to non-gaming businesses generally,
such as the Clean Air Act, Clean Water Act, Occupational Safety and Health Act,
Resource Conservation Recovery Act and the Comprehensive Environmental Response,
Compensation and Liability Act.  The Company has not made, and does not
anticipate making, material expenditures with respect to such environmental laws
and regulations.  However, the coverage and attendant compliance costs
associated with such laws, regulations and ordinances may result in future
additional costs to the Company's operations.  For example, in 1990 the U.S.
Congress enacted the Oil Pollution Act to consolidate and rationalize mechanisms
under various oil spill response laws.  The Department of Transportation has
proposed regulations requiring owners and operators of certain vessels to
establish through the U.S. Coast Guard evidence of financial responsibility  in
the amount of $5.5 million for clean-up of oil pollution.  This requirement
would be satisfied by either proof of adequate insurance, including self-
insurance, or the posting of a surety bond or guaranty.

   The riverboats operated by the Company must comply with U.S. Coast Guard
requirements as to boat design, on-board facilities, equipment, personnel and
safety.  Each of them must hold a Certificate of Seaworthiness or must be
approved by the American Bureau of Shipping ("ABS") for stabilization and
flotation, and may also be subject to local zoning and building codes.  The U.S.
Coast Guard requirements establish design standards, set limits on the operation
of the vessels and require individual licensing of all personnel involved with
the operation of the vessels.  Loss of a vessel's Certificate of Seaworthiness
or ABS approval would preclude its use as a floating casino.

   Marine operation employees of the Company may be subject to the Jones Act
which, among other things, exempts those employees from state limits on workers'
compensation awards.

                                       16
<PAGE>

Trademarks
----------

   The Company uses the service mark "Hollywood Casino" which is registered with
the United States Patent and Trademark Office.  The Company considers its rights
to the "Hollywood Casino" service mark to be well established and to have
significant competitive value to the Company's business.  The loss of its right
to use the "Hollywood Casino" service mark and to prevent others from using the
same or a deceptively similar mark could have a material adverse effect on the
Company.

   The Company also uses the service mark "Hollywood" and other "Hollywood-
formative" marks to promote its casino and related services.  These marks are
either registered or are the subject of pending registration applications with
the United States Patent and Trademark Office.

Development Activities
----------------------

   Management maintains a proactive business development strategy in order to
enhance the Company's long-term growth.  The Company is currently pursuing
various development opportunities, including those in jurisdictions which are
considering legalizing gaming.

ITEM 2.  PROPERTIES

The Aurora Casino
-----------------

   The Aurora Casino consists of two, four-level riverboats, City of Lights I
and City of Lights II, which have combined casino space of approximately 29,550
square feet and approximately 1,200 gaming positions. The complex also includes
a four-story, approximately 64,000 square foot land based pavilion and two
parking garages under capital lease agreements.

   The first parking garage contains approximately 31,000 square feet of office
space of which approximately 22,600 square feet are currently being used for
administrative offices.  HCA leases the parking garage, including the office
space, from the City of Aurora under a 30-year lease ending June 2023, with HCA
having the right to extend the term under renewal options for an additional 67
years.  The second garage, completed in 1996, has approximately 500 parking
spaces and includes approximately 1,500 square feet of retail space.  The
facility is owned by a governmental agency and operated by HCA pursuant to a
lease with an initial term expiring in 2026 with the right to extend the lease
for up to 20 additional years.

   The Aurora Casino is currently pledged as collateral to the extent of
approximately $66 million (subject to future borrowings on HCA's intercompany
note to HCC up to a maximum of $108 million) with respect to the Senior Secured
Notes in the face amount of $360 million issued by HCC on May 19, 1999. The
Senior Secured Notes consist of $310 million of 11.25% notes due May 1, 2007 and
$50 million of floating rate notes due May 1, 2006.  The current interest rate
on the floating rate notes is 12.41% per annum and is reset semiannually.

The Tunica Casino
-----------------

   The Tunica Casino consists of a 60,000 square foot, single level casino with
54,000 square feet of gaming space, 506 hotel rooms and suites and support
facilities that include two restaurants, a buffet, an arcade and a gift shop,
banquet space, an enclosed pool and atrium, a showroom and administrative
offices. The Tunica Casino also includes a 123-space recreational vehicle park
and surface lots with 1,883 parking spaces.

   The ground lease for the Tunica Casino has an initial term of five years from
the date gaming operations commenced with options to extend the lease for nine
successive five-year terms.  Rent during the

                                       17
<PAGE>

initial term is equal to the greater of 4% of Gross Revenues (as defined in the
lease) or $1.1 million per year. Because the ground lease for the Tunica Casino
covers approximately 70 acres, there is sufficient land for future expansion
should circumstances warrant an expansion.

   Substantially all of the assets of the Tunica Casino are pledged as
collateral for HCC's Senior Secured Notes discussed above.

The Shreveport Casino
---------------------

   The Shreveport Casino is currently being constructed on a site in Shreveport,
Louisiana, approximately 180 miles east of Dallas, Texas.  When completed, the
Shreveport Casino will include the largest dockside riverboat casino in its
gaming market with approximately 1,370 slot machines and 75 table games on three
levels.  The casino will be attached to a 170,000 square foot pavilion by
85-foot wide seamless entrances and will feature 20-foot high ceilings on all
three levels, providing patrons with the feel of a "land based" casino. The
casino interior will feature the Hollywood theme. The pavilion will house three
restaurants, a highly themed entertainment lounge and a premium players' club,
as well as meeting rooms, retail shopping and other amenities. The hotel
currently under construction will offer 380 single room suites and 25 multiple
room suites, all in an art deco style. An eight story parking garage and two
parking lots will provide spaces for approximately 2,000 cars within one block
of the facility. In addition, a 42,000 square foot dining and entertainment
promenade is being developed by third parties across the street from the
pavilion and adjacent to the parking garage. The developers have announced plans
to develop approximately 55,000 square feet of additional restaurant, retail and
entertainment space adjacent to the promenade. Construction of the Shreveport
Casino is on schedule for its targeted opening date in early November 2000.

   The ground lease for the Shreveport Casino has an initial term ending on the
tenth anniversary of the opening of the Shreveport Casino with options to renew
on the same terms for up to an additional 40 years and with further renewals
available at prevailing rates and terms.  Base rental payments under the lease
are $10,000 per month during the construction period increasing to $450,000 per
year upon opening and continuing at that amount for the remainder of the initial
ten-year lease term.  In addition to base rent, the Shreveport Casino will pay
monthly percentage rent of not less than $500,000 per year equal to 1% of
monthly adjusted gross revenues and the amount, if any, by which monthly parking
facilities net income exceeds the parking income credit, as all such terms are
defined in the ground lease.

   Substantially all of the assets of the Shreveport Casino other than assets
secured by up to $35 million in furniture, fixtures and equipment financing are
pledged as collateral for $150 million of 13% First Mortgage Notes with
contingent interest ("the Shreveport First Mortgage Notes") issued by the
Shreveport Partnership during August 1999 and guaranteed by HCL.  The Shreveport
First Mortgage Notes are nonrecourse to HCC.  Contingent interest on the
Shreveport First Mortgage Notes will be equal to 5% of the Shreveport Casino's
cash flow, as defined, for the prior two fiscal quarters up to a maximum of $5
million for any four consecutive fiscal quarters.

Development Sites
-----------------

   The Company holds an option to purchase approximately 159 acres of land in
Palmer, Massachusetts for possible development of a gaming resort complex in the
event that gaming is approved by the state legislature.  The Company also holds
one land parcel in the Houston, Texas area for resale.

                                       18
<PAGE>

ITEM 3.  LEGAL PROCEEDINGS

Planet Hollywood Litigation
---------------------------

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

Other Litigation
----------------

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

   HCC and its subsidiaries are also parties in various other legal proceedings
with respect to the conduct of casino and hotel operations.  Although a possible
range of loss cannot 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 on the consolidated financial position or results of
operations of HCC and its subsidiaries.


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

   During the fourth quarter of 1999, the Company did not submit any matters to
a vote of security holders through the solicitation of proxies or otherwise.

                                       19
<PAGE>

                                    PART II

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

   HCC's Class A common stock, 50,000,000 shares at $.0001 par value per share,
is HCC's sole voting security.  HCC's common stock trades on the American Stock
Exchange under the Symbol HWD.  Prior to 1999, HCC's stock traded on the Nasdaq
National Market tier of the Nasdaq Stock Market under the symbol HWCC.  The
prices set forth  in the following table represent actual transactions.

                         Period                   High      Low
                         ------                 -------   -------

                  1999
                      First Quarter             $  1.56   $  1.00
                      Second Quarter               1.97      1.03
                      Third Quarter                3.25      1.25
                      Fourth Quarter               4.63      2.38

                  1998
                      First Quarter             $  2.31   $  1.41
                      Second Quarter               2.13      1.66
                      Third Quarter                1.94      1.16
                      Fourth Quarter               1.56      0.97

    As of March 27, 2000, there were approximately 500 holders of record of
HCC's voting common stock.

    HCC has not paid cash dividends on its common stock in the past and has no
plans to pay cash dividends on its common stock in the foreseeable future.  See
Note 3 of "Notes to Consolidated Financial Statements" for a description of
certain agreements that impose specified restrictions on the transfer of funds
between certain subsidiaries.

    HCT's common stock, 1,000 shares with par value of $.01 per share, is its
sole voting security; all of the 1,000 shares outstanding are owned by HCC.

    HCT paid dividends amounting to $12,000,000 during 1999; all such dividends
were paid to HCC.

                                       20
<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA

Hollywood Casino Corporation and Subsidiaries
---------------------------------------------

   The following tables present selected financial data for HCC and its
subsidiaries and are qualified in their entirety by the consolidated financial
statements and accompanying footnotes appearing elsewhere in this Form 10-K.
The data as of December 31, 1999 and 1998, and for the years ended December 31,
1999, 1998 and 1997, have been derived from the audited consolidated financial
statements of HCC presented in Item 8.

<TABLE>
<CAPTION>

Statement of Operations Data:                                        Year Ended December 31,
                                                    --------------------------------------------------------------
                                                        1999         1998         1997         1996        1995
                                                    ------------  -----------  -----------  -----------  ---------
                                                               (in thousands, except per share amounts)
<S>                                                 <C>           <C>          <C>          <C>          <C>

Net revenues......................................     $307,377     $268,760   $267,757     $530,580     $539,943
                                                       --------     --------   --------     --------     --------
Expenses:
  Departmental....................................      221,969      197,836    185,753      426,769      396,157
  General and administrative......................       19,239       17,778     16,790       37,169       36,914
  Management and consulting fees..................          939        1,200      3,927            -            -
  Depreciation and amortization...................       15,673       16,562     18,901       40,836       40,955
  Development and preopening......................        1,787          779      1,480        1,065        6,765
  Termination of management and consulting
    agreements....................................       40,389            -          -            -            -
  Write down of assets............................       13,322            -     19,678       22,141            -
                                                       --------     --------   --------     --------     --------
    Total expenses................................      313,318      234,155    246,529      527,980      480,791
                                                       --------     --------   --------     --------     --------

  (Loss) income from operations...................       (5,941)      34,605     21,228        2,600       59,152
                                                       --------     --------   --------     --------     --------
Non-operating income (expenses):
  Interest income.................................        7,868        2,844      1,896        3,101        3,708
  Interest expense................................      (45,540)     (30,260)   (30,437)     (59,090)     (55,558)
  Tax settlement costs............................            -       (1,087)         -            -            -
  Equity in losses of unconsolidated affiliate....         (141)           -          -            -            -
 (Loss) gain on disposal of assets................         (567)         (61)       552       (1,841)        (514)
                                                       --------     --------   --------     --------     --------
     Total non-operating expenses, net............      (38,380)     (28,564)   (27,989)     (57,830)     (52,364)
                                                       --------     --------   --------     --------     --------
Income (loss) before income taxes, extraordinary
  and other items.................................      (44,321)       6,041     (6,761)     (55,230)       6,788
Income tax provision..............................       (1,196)        (816)    (5,359)         (63)        (268)
                                                       --------     --------   --------     --------     --------
Income (loss) before extraordinary and other
  items...........................................      (45,517)       5,225    (12,120)     (55,293)       6,520
Minority interest in earnings of Limited
  Partnership.....................................       (5,801)      (6,494)    (5,012)           -            -
                                                       --------     --------   --------     --------     --------
(Loss) income before extraordinary item...........      (51,318)      (1,269)   (17,132)     (55,293)       6,520
Extraordinary item:
  Early extinguishment of debt,
   net of related tax benefits (1)................      (30,353)        (336)      (215)           -      (23,808)
                                                       --------     --------   --------     --------     --------
Net (loss) income.................................     $(81,671)    $ (1,605)  $(17,347)    $(55,293)    $(17,288)
                                                       ========     ========   ========     ========     ========
Basic (loss) income per common share:
  (Loss) income before extraordinary item.........     $  (2.05)    $   (.05)  $   (.69)    $  (2.24)    $    .27
  Extraordinary item..............................        (1.22)        (.01)      (.01)           -         (.97)
                                                       --------     --------   --------     --------     --------
      Net (loss) income...........................     $  (3.27)    $   (.06)  $   (.70)    $  (2.24)    $   (.70)
                                                       ========     ========   ========     ========     ========
Diluted (loss) income per common share:
  (Loss) income before extraordinary item.........     $  (2.05)    $   (.05)  $   (.69)    $  (2.24)    $    .26
  Extraordinary item..............................        (1.22)        (.01)      (.01)           -         (.96)
                                                       --------     --------   --------     --------     --------
    Net (loss) income.............................     $  (3.27)    $   (.06)  $   (.70)    $  (2.24)    $   (.70)
                                                       ========     ========   ========     ========     ========

Balance Sheet Data:                                                           December 31,
                                                       ----------------------------------------------------------
                                                         1999         1998      1997(1)      1996(1)       1995
                                                       --------     --------   --------     --------     --------
                                                                             (in thousands)

Total assets......................................     $525,817     $270,740   $276,218     $308,158     $514,463
Total debt, including capital
  lease obligations...............................      538,458      227,529    226,922      232,046      496,847
Shareholders' (deficit) equity....................      (74,157)       7,512      9,117       38,836      (57,233)
</TABLE>

(1) Includes the following items: (i) for 1999, costs associated with the May
    1999 issuance of the Senior Secured Notes, (ii) for 1998 and 1997, costs
    associated with HCC's mandatory redemption of outstanding debt, net of
    related tax benefit and (iii) for 1995, costs associated with the October
    1995 issuance of public indebtedness by HCC.

                                       21
<PAGE>

Hollywood Casino-Aurora, Inc. and HWCC-Tunica, Inc.
----------------------------------------------------

   The following tables set forth selected financial information for HCA and HCT
and are qualified in their entirety by, and should be read in conjunction with,
HCA and HCT's Financial Statements and accompanying footnotes appearing
elsewhere in this Form 10-K.  HCA and HCT commenced operations on June 17, 1993
and August 8, 1994, respectively.  The data as of December 31, 1999 and 1998 and
for the years ended December 31, 1999, 1998 and 1997 have been derived from the
audited financial statements of HCA and HCT presented in Item 8.

                         HOLLYWOOD CASINO-AURORA, INC.

Statement of Operations Data:
<TABLE>
<CAPTION>

                                                          Year Ended December 31,
                                           -----------------------------------------------------
                                             1999       1998       1997       1996       1995
                                           ---------  ---------  ---------  ---------  ---------
                                                              (in thousands)
<S>                                        <C>        <C>        <C>        <C>        <C>

Net revenues.............................  $197,250   $162,947   $160,307   $163,391   $152,508
                                           --------   --------   --------   --------   --------

Expenses:
   Departmental..........................   137,086    118,459    108,653    114,006    102,780
   General and administrative............    12,758     14,136     14,673     14,645     14,406
   Depreciation and amortization.........     7,050      7,350      7,491      8,834      9,172
   Termination of management contract....    37,000          -          -          -          -
                                           --------   --------   --------   --------   --------
     Total expenses......................   193,894    139,945    130,817    137,485    126,358
                                           --------   --------   --------   --------   --------
Income from operations...................     3,356     23,002     29,490     25,906     26,150
                                           --------   --------   --------   --------   --------
Non-operating income (expense):
   Interest income.......................       533        112        156        205        306
   Interest expense......................    (6,145)    (6,046)    (6,847)    (6,704)    (6,493)
   (Loss) gain on disposal of assets.....      (510)         4        134          -          -
                                           --------   --------   --------   --------   --------
     Total non-operating expense, net....    (6,122)    (5,930)    (6,557)    (6,499)    (6,187)
                                           --------   --------   --------   --------   --------

(Loss) income before income taxes and
  extraordinary item.....................    (2,766)    17,072     22,933     19,407     19,963
Income tax provision.....................      (367)    (6,559)    (8,419)    (6,883)    (7,554)
                                           --------   --------   --------   --------   --------

(Loss) income before extraordinary item..    (3,133)    10,513     14,514     12,524     12,409
Extraordinary item.......................         -          -          -          -       (989)
                                           --------   --------   --------   --------   --------

Net (loss) income........................  $ (3,133)  $ 10,513   $ 14,514   $ 12,524   $ 11,420
                                           ========   ========   ========   ========   ========


Balance Sheet Data:
                                                                December 31,
                                           ----------------------------------------------------
                                             1999       1998       1997       1996       1995
                                           --------   --------   --------   --------   --------
                                                              (in thousands)

Total assets.............................  $111,759   $100,310   $104,071   $107,449   $ 93,196
Total debt, including capital lease
  obligations............................    87,907     54,248     58,972     65,430     55,829
Shareholder's equity.....................     6,047     28,720     28,948     28,033     25,549

</TABLE>

                                       22
<PAGE>

                               HWCC-TUNICA, INC.

Statement of Operations Data:
<TABLE>
<CAPTION>
                                                                         Year Ended December 31,
                                                        ----------------------------------------------------
                                                          1999       1998       1997       1996       1995
                                                        --------   --------   --------   --------   --------
                                                                           (in thousands)
<S>                                                     <C>        <C>        <C>        <C>        <C>
Net revenues...........................                 $110,122   $105,773   $107,263   $ 94,524   $ 94,416
                                                        --------   --------   --------   --------   --------

Expenses:
 Departmental..........................                   84,882     79,328     77,058     72,602     63,842
 General and administrative............                    5,679      5,813      5,769      5,962      5,711
 Depreciation and amortization.........                    7,066      8,123      9,916     10,906     10,356
 Termination of consulting
   agreement...........................                    3,329          -          -          -          -
                                                        --------   --------   --------   --------   --------
   Total expenses......................                  100,956     93,264     92,743     89,470     79,909
                                                        --------   --------   --------   --------   --------

Income from operations.................                    9,166     12,509     14,520      5,054     14,507
                                                        --------   --------   --------   --------   --------

Non-operating income (expenses):.......
 Interest income.......................                      340        587        281        835        637
 Interest expense......................                  (10,308)   (10,937)   (10,980)   (10,060)   (10,792)
 Equity in losses of unconsolidated
   affiliate...........................                     (141)         -          -          -          -
 (Loss) gain on disposal of assets.....                      (57)       (65)         6        (45)      (505)
                                                        --------   --------   --------   --------   --------
   Total non-operating expenses,
    net................................                  (10,166)   (10,415)   (10,693)    (9,270)   (10,660)
                                                        --------   --------   --------   --------   --------

(Loss) income before income taxes and
 extraordinary items...................                   (1,000)     2,094      3,827     (4,216)     3,847
Income tax benefit (provision).........                      323       (689)       845          -        694
                                                        --------   --------   --------   --------   --------

(Loss) income before extraordinary
  items................................                     (677)     1,405      4,672     (4,216)     4,541
Extraordinary items, net of tax
 benefit...............................                        -          -          -          -     (9,614)
                                                        --------   --------   --------   --------   --------

Net (loss) income......................                 $   (677)  $  1,405   $  4,672   $ (4,216)  $ (5,073)
                                                        ========   ========   ========   ========   ========

Balance Sheet Data:
                                                                            December 31,
                                                        ----------------------------------------------------
                                                           1999      1998       1997       1996       1995
                                                        --------   --------   --------   --------   --------
                                                                           (in thousands)

Total assets...........................                 $112,398   $120,461   $118,727   $116,620   $122,240
Total debt, including capital lease
  obligations..........................                   90,140     85,798     85,683     86,645     88,340
Shareholder's equity...................                   12,610     25,287     23,882     19,210     23,426

</TABLE>

                                       23
<PAGE>

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

   This Annual Report on Form 10-K contains forward-looking statements about the
business, results of operations, cash flows, financial condition and prospects
of the Company.  The actual results could differ materially from those indicated
by the forward-looking statements because of various competition, economic
conditions, tax regulations, state regulations applicable to the gaming industry
in general or the Company in particular, and other risks indicated in the
Company's 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 the Company or its management are intended to identify forward-looking
statements.

   RESULTS OF OPERATIONS

   Net revenues of HCC for 1999 reflect an increase of $38.6 million (14.4%)
from the $268.8 million generated during 1998.  The 1999 increase was realized
by improved net revenues at the Aurora Casino of $34.3 million and at the Tunica
Casino of $4.3 million.  Net revenues for the year ended December 31, 1998 were
$268.8 million, an increase of less than 1% over net revenues of $267.8 million
in 1997.  The 1998 increase reflects improved net revenues at the Aurora Casino
which more than offset declines at the Tunica Casino.

   The combination of a 14.4% increase in net revenues during 1999 over the
prior year and only a 10.9% increase in operating expenses, exclusive of the
costs of terminating the management and consulting contracts ($40.4 million) and
the write downs of assets ($13.3 million), results in HCC's income from ongoing
operations improving by $13.2 million (38%) to $47.8 million in 1999 from $34.6
million in 1998. The 1998 decline in income from ongoing operations of $6.3
million (15.4%) compared to 1997 reflects the slight increase in net revenues
offset by a $7.3 million (3.2%) increase in operating expenses other than asset
write downs.  The increase in ongoing operating expenses primarily resulted from
increased gaming taxes at the Aurora Casino as well as from higher marketing and
promotional expenses in response to increased competition at both the Aurora
Casino and the Tunica Casino.

Aurora Casino

   General

   Income from operations at the Aurora Casino, adjusted to exclude management
fees ($7.7 million) and costs associated with the termination of its management
contract ($37 million), amounted to $48.1 million for the year ended December
31, 1999 compared to $31.9 million and $39.1 million, respectively, during 1998
and 1997.  The 1999 increase results primarily from the 21.9% improvement in
casino revenues largely attributable to dockside gaming while volume based
operating expense increases were held to only 12.1%. Net revenues for 1999 were
the highest annual net revenues generated by the Aurora Casino since its
opening.  As a result of regulatory changes, dockside gaming began at the Aurora
Casino on June 26, 1999, eliminating prior cruising requirements and enabling
patrons to enter and exit the boats without restrictions. Management anticipates
that this higher level of gaming revenues will continue in future periods and
has announced plans to construct a new dockside facility to capitalize on the
regulatory change (see "Liquidity and Capital Resources - Capital Expenditures
and Other Investing Activities").  The 1998 decrease from the prior year is
primarily due to an increase in the Illinois wagering tax rate which took effect
on January 1, 1998.  The new tax structure consists of a graduated tax rate
system with rates ranging from 15% to 35% based on total adjusted gross
receipts.  For the years ended December 31, 1998 and 1997, the Aurora Casino
paid or accrued wagering taxes of $42.4 million and $30.7 million, respectively.
The 1998 operating income decrease is also attributable to increased competition
from the opening in northern Indiana of two riverboat gaming operations during
April and August 1997.  These two operations added approximately 3,700 new
gaming positions to the Chicago market area, an increase of nearly 35%.

                                       24
<PAGE>

   Gaming Operations

   The following table sets forth certain unaudited financial and operating data
for the Aurora Casino for the years ended December 31, 1999, 1998 and 1997.

                                       Year Ended December 31,
                                -------------------------------------
                                   1999         1998         1997
                                -----------  -----------  -----------
                                 (in thousands, except percentages)
Revenues:
 Table games                    $   44,428   $   42,942   $   47,206
 Slot machines                     143,539      111,192      105,413
 Poker revenues                      2,641        2,270        1,346
                                ----------   ----------   ----------

  Total                         $  190,608   $  156,404   $  153,965
                                ==========   ==========   ==========

Table games:
 Gross wagering (drop) (1)      $  252,678   $  247,911   $  273,689
 Hold percentages (2)                 17.6%        17.3%        17.3%

Slot machines:
 Gross wagering (handle) (1)    $2,474,986   $1,983,873   $1,866,687
 Hold percentages (2)                  5.8%         5.6%         5.7%
-----------------------

(1) Gross wagering consists of the total value of chips purchased for table
    games ("drop") and coins wagered in slot machines ("handle").

(2) Casino revenues consist of the portion of gross wagering that a casino
    retains and, as a percentage of gross wagering, is referred to as the "hold
    percentage".

   Total gross wagering at the Aurora Casino as measured by table game drop and
slot machine handle increased by $495.9 million (22.2%) during 1999 compared to
1998.  The increase reflects increased patron volume, primarily as a result of
the June 1999 implementation of dockside gaming previously discussed. Although
dockside gaming spurred revenue growth in the second half of 1999, gross
wagering improvement was seen in all quarters of 1999.  Aggressive marketing
efforts begun in 1998 helped increase overall wagering by 18.2% in the first
half of 1999 compared to the first half of 1998.

   Total gross wagering at the Aurora Casino increased by $91.4 million (4.3%)
during 1998 compared to 1997.  The increase resulted from the continuation of
aggressive marketing and promotional programs introduced in the second quarter
of 1998 to recapture market share in the Chicago area.  Declines in gross
wagering during the 1998 first quarter resulted from reductions in patron volume
due to changes in the Aurora Casino's cruising schedule.  In an effort to reduce
unprofitable operations in response to the increased wagering tax discussed
above, the smaller of the Aurora Casino's two riverboats ceased operating
daytime cruises on weekdays during January and February; however, all cruises
resumed in March.  Increased competition in the Chicago market due to the
opening of two new casinos in northern Indiana in April and August 1997 also
limited growth in casino wagering.

   Revenues

   Casino revenues increased $34.2 million (21.9%) during 1999 compared to 1998
due primarily to the significant increases in gross wagering.  The 1999 increase
reflects the 2% and 24.8% increases in drop and handle, respectively, coupled
with increases in the respective hold percentages.  Poker revenues did not
change significantly in 1999 from 1998.

   Casino revenues increased slightly (1.6%) during 1998 compared to 1997.
Table game revenues decreased $4.3 million (9%) during 1998 compared to 1997
reflecting the 9.4% decrease in drop.  Slot machine revenues during 1998
increased $5.8 million (5.5%) compared to 1997 reflecting the 6.3% increase

                                       25
<PAGE>

in slot wagering partially offset by the decline in the slot machine hold
percentage to 5.6% from 5.7%. Casino revenues were also favorably impacted by
the introduction of poker during the second quarter of 1997, which generated
casino revenues of $2.3 million during 1998 compared to $1.3 million during
1997.

   Food and beverage revenues increased $789,000 (5.7%) in 1999 from the 1998
results due primarily to increased patron volume.  Food and beverage revenues
did not change significantly during 1998 compared to 1997.

   Other revenues increased $456,000 (16.2%) in 1999 compared to 1998 reflecting
increases in parking fees and commission revenues.  Other revenues increased
$897,000 (46.7%) during 1998 compared to 1997 primarily due to management's
decision to reinstate valet and parking garage fees in 1998 which had been
eliminated during 1997 due to competitive pressures.

   Promotional allowances represent the estimated value of goods and services
provided free of charge to casino customers under various marketing programs.
These allowances, as a percentage of food and beverage and other revenues at the
Aurora Casino, were 62.8%, 60.6% and 60.7%, respectively, during the years ended
December 31, 1999, 1998 and 1997.  The 1999 increase reflects increases in
promotional activities as part of the Aurora Casino's marketing efforts; the
1998 change is not significant.

   Departmental Expenses

   Casino expenses increased $18.9 million (16.8%) during 1999 compared to 1998.
Such increase results primarily from additional gaming taxes associated with the
increase in casino revenues as well as to the higher marketing expenses
previously discussed.  Casino expenses increased $10.1 million (9.9%) during
1998 compared to 1997 primarily due to the wagering tax increase previously
discussed.  Higher marketing costs, partially offset by reductions in payroll
costs, also contributed to the 1998 increase.  Gaming taxes imposed by the State
of Illinois are determined using a graduated tax rate applied to the licensee's
gaming revenues.  The Aurora Casino expenses such gaming taxes based on its
anticipated annual effective tax rate.

   Food and beverage expenses did not change significantly during 1999 compared
to 1998 or during 1998 compared to 1997.  During 1999, higher costs associated
with the increased patron volume and slightly higher food and beverage costs
were offset by increased allocations to casino expenses as part of the Aurora
Casino's promotional activities.

   Other expenses decreased $218,000 (16.4%) during 1999 compared to 1998 and by
$309,000 (18.8%) during 1998 compared to 1997 reflecting reductions during both
years in personnel and other non-departmental operating expenses.

Tunica Casino

   General

   The Tunica Casino earned income from operations, adjusted to exclude
consulting fees payable to a subsidiary of GBCC ($939,000) and costs associated
with the termination of its consulting agreement ($3.3 million), of $13.4
million in 1999 compared to $13.7 million in 1998 and $15.7 million in 1997.
The declines in both 1999 and 1998 from the prior year periods are due to lower
than expected table game hold percentages and to increases in marketing and
other promotional expenses as a result of competitive pressures.  The increased
competition has resulted primarily from the opening of approximately 1,700 new
hotel rooms by other casino operators during the fourth quarter of 1997 and
early 1998, the opening of an additional 600 rooms in the second quarter of 1999
and from marketing promotions instituted by other casino operators.

                                       26
<PAGE>

   Gaming Operations

   The following table sets forth certain unaudited financial and operating data
for the Tunica Casino for the years ended December 31, 1999, 1998 and 1997.


                                       Year Ended December 31,
                                -------------------------------------
                                   1999         1998         1997
                                -----------  -----------  -----------
                                 (in thousands, except percentages)

Casino Revenues:
 Table games                    $   13,458   $   13,658   $   15,083
 Slot machines                      87,914       81,801       81,404
 Poker revenues                        940        1,000        1,019
                                ----------   ----------   ----------

  Total                         $  102,312   $   96,459   $   97,506
                                ==========   ==========   ==========

Table games:
 Gross wagering (drop) (1)      $   81,810   $   76,366   $   78,115
 Hold percentage (2)                  16.5%        17.9%        19.3%

Slot machines:
 Gross wagering (handle) (1)    $1,637,809   $1,555,316   $1,595,645
 Hold percentage (2)                   5.4%         5.3%         5.1%

----------------------------
(1)(2) See corresponding notes to the table at "Aurora Casino - Gaming
       Operations" above.

   Total gross wagering at the Tunica Casino as measured by table game drop and
slot machine handle increased $87.9 million (5.4%) during 1999 compared to 1998.
Slot machine handle increased by $82.5 million (5.3%) and table game drop
increased by $5.4 million (7.1%) during 1999 compared to 1998. Management
believes such increases are attributable to the implementation of a new, more
aggressive marketing campaign designed to reposition the Tunica Casino within
the Tunica gaming market.  Such marketing efforts have been supplemented with
increased use of the Tunica Casino's jointly owned golf course and the addition
of headliner entertainment to attract higher value patrons.  Improvement in slot
machine handle has also resulted from a significant increase in the number of
slot machines available and from management's program of updating machines to
enhance the patron's gaming experience.  Patron volume declined slightly during
1999 compared to 1998 indicating that the Tunica Casino has been successful in
attracting higher value patrons.

   Total gross wagering at the Tunica Casino decreased by $42.1 million (2.5%)
during 1998 compared to 1997.  The decreased patron volume is directly
attributable to increased competition in the Tunica market. Slot machine handle
decreased by $40.3 million (2.5%) and table game drop decreased by $1.8 million
(2.2%) during 1998 compared to 1997.

   Revenues

   Casino revenues increased $5.9  million (6.1%) during 1999 compared to 1998.
Table game revenues decreased 1.5% during 1999 as the increase in table drop
discussed above was negated by a decline in the table game hold percentage to
16.5% during 1999 from 17.9% during 1998.  The 14.8% and 13.3% table game hold
percentages during the third and fourth quarters, respectively, of 1999 were the
lowest two quarters since the opening of the Tunica Casino and represent an
overall decrease of 4.7 percentage points compared to the prior year six-month
period.  Slot machine revenue increased $6.1 million (7.5%) during 1999 compared
to 1998 reflecting the increase in gross wagering discussed above coupled with
an increase in the slot machine hold percentage to 5.4% in 1999 from 5.3% in
1998.  Poker revenues decreased by 6% during 1999 compared to 1998.

                                       27
<PAGE>

   Casino revenues decreased $1 million (1.1%) during 1998 compared to 1997.
Table game revenues decreased 9.4% during 1998 due to the previously discussed
decline in table drop coupled with an overall decline in the hold percentage to
17.9% in 1998 from 19.3% in 1997.  Slot machine revenues did not change
significantly during 1998 compared to the prior year as the change in gross
wagering was virtually offset by the impact of the change in the slot machine
hold percentage.  Poker revenues decreased 1.9% during 1998 compared to the
prior year primarily from a reduction in the number of poker tables from ten to
six during the period.

   Rooms revenue increased $1.1 million (11.4%) during 1999 compared to 1998.
Hotel occupancy rates declined to 85.5% in 1999 compared to 89.7% in 1998 due to
increased competition for overnight patrons resulting from the completion and
opening of an additional 600 guest rooms early in the second quarter of 1999.
Accordingly, the improvement in room revenues resulted from an increase in the
average daily room rate to $64 during 1999 from $55 during 1998.  Rooms revenue
decreased $265,000 (2.7%) during 1998 compared to 1997 due to increased
competition for overnight patrons.  Hotel occupancy rates decreased as a result
of  additional competition to approximately 82% in the first quarter of 1998
from approximately 88% during the same period of 1997.  Occupancy rates at the
Tunica Casino for the second, third and fourth quarters of 1998 rebounded to
approximately 92% (compared to 93% during the corresponding period of 1997) as
the market began to absorb the additional hotel room capacity.  Occupancy rates
during the period from September through December 1998 were also negatively
impacted by rooms being taken out of service for maintenance and upgrading.  The
addition of recreational vehicle parking spaces has also contributed to the
increases in rooms revenue.  Additions of 51 and 22 parking spaces,
respectively, were made to the RV Park at the Tunica Casino in 1998 and 1997
bringing the current total number of parking spaces to 123.

   Food and beverage revenues did not change significantly in 1999 compared to
1998.  Food and beverage revenues increased $719,000 (5%) during 1998 compared
to 1997 as a result of increases in both food prices and in the number of dining
patrons resulting from increased promotional activities.  Other revenues
increased $169,000 (12.3%) and $209,000  (18%), respectively, during 1999 and
1998 compared to the prior years due to increased patron volume using such
services.

   Promotional allowances represent the estimated value of goods and services
provided free of charge to casino customers under various marketing programs.
These allowances, as a percentage of rooms, food and beverage and other
revenues, increased to 71.4% in 1999 from 63.9% during 1998 and 61.2% in 1997.
The 1999 increase is the result of higher complimentary room and food and
beverage costs due to increased marketing efforts and increased competition for
overnight guests.  The 1998 increase results from increased complimentary food
and beverage and other services due to increased marketing efforts.

   Departmental Expenses

   Casino expense increased $6.6 million (9.1%) during 1999 compared to 1998
reflecting the implementation of marketing programs.  Casino expense increased
by $2.8 million (4.1%) during 1998 compared to 1997 as a result of additional
promotional activities instituted during the third quarter of 1998 in response
to competitive pressures.

   Rooms expense decreased $591,000 (33.7%) in 1999 compared to 1998 reflecting
the increased allocations to the casino department of hotel costs associated
with marketing programs.  Rooms expense did not change significantly during 1998
compared to 1997.

    Food and beverage expense decreased by $219,000 (5.6%) and other
departmental expenses decreased by $199,000 (14.9%) during 1999 compared to the
prior year primarily due to increased allocations to the casino department.
Food and beverage expenses decreased by $402,000 (9.3%) during 1998 compared to
1997 despite increases in food and beverage revenues during the 1998 period as
discussed above.  Such decrease results from the previously noted increase in
marketing activities with respect to food and beverage programs, the costs of
which are allocated to casino expenses.  The decrease in other expenses during
1998 compared to 1997 was not significant from a monetary amount.

                                       28
<PAGE>

HCC Consolidated
----------------

   The operating expenses of HCC, exclusive of the Aurora Casino and the Tunica
Casino consist primarily of general and administrative expenses, preopening
costs associated with the Shreveport Casino and expenses incurred in connection
with the pursuit of additional gaming venues.

   General and Administrative

   General and administrative expenses increased by $1.5 million (8.2%) during
1999 compared to 1998. Such expenses at the Aurora Casino (net of management
fees) decreased by 4.5% during 1999 primarily as a result of a reduction in
legal and professional fees.  The Tunica Casino experienced an increase in
general and administrative expenses (net of consulting fees) of 2.8% during 1999
compared to the prior year primarily as a result of increases in personnel costs
and professional fees.  The remaining corporate general and administrative
expense increase of $1.6 million (19.9%) during 1999 results from increases in
corporate overhead costs, primarily legal fees and personnel costs.  General and
administrative expenses increased $866,000 (5.5%) during 1998 compared to 1997.
Increases in such costs at the Aurora Casino of 3.9% and at the Tunica Casino of
1% were not significant; the remaining increase of $622,000 in corporate
overhead costs resulted primarily from increases in professional fees.

   Depreciation and Amortization

   Depreciation and amortization expense decreased by $889,000 (5.4%) in 1999
compared to 1998 and by $2.3 million (12.4%) in 1998 compared to 1997.  The
decreases results primarily from certain operating equipment at the Aurora
Casino and Tunica Casino becoming fully depreciated.

   Development Expenses

   Development expenses represent costs incurred in connection with HCC's
pursuit of potential gaming opportunities in jurisdictions where additional
gaming licenses may be available as well as those where gaming has not been
legalized. Development costs increased by $167,000 (21.4%) in 1999 compared to
the prior year primarily due to additional costs incurred with respect to
potential gaming opportunities in Mexico and Massachusetts.  The $701,000
(47.4%) decrease in 1998 development costs compared to 1997 reflects an
unusually high level of spending in 1997 not repeated in the current year.

   Preopening Costs

   Preopening costs are the start up costs associated with the development of
the Shreveport Casino which, in accordance with existing accounting
pronouncements, are required to be expensed as incurred. Such costs include,
among other things, organizational costs, marketing and promotional costs,
hiring and training of new employees and other operating costs incurred prior to
the opening of the project.

   Termination of Management and Consulting Agreements

   In connection with the acquisition of PCC in October 1999 (see "Liquidity and
Capital Resources -Pratt Casino Corporation Acquisition" below), HCC was able to
terminate the outstanding management agreement for the Aurora Casino and
consulting agreement for the Tunica Casino.  As part of its strategic plan, HCC
sought to terminate these agreements in order to eliminate fees paid to GBCC,
enhance future operating performance and simplify its organizational structure.
The acquisition of the agreements required that HCC satisfy certain obligations
of PCC amounting to $40.3 million.  As no asset value was attributed to the
management and consulting agreements for financial reporting purposes when
acquired and terminated, the $40.3 million payment, together with net expenses
from the acquisition amounting to $60,000, were charged to expense in 1999.
Expenses incurred under the management and consulting agreements amounted to
$6.7 million, $7.7 million and $8.9 million, respectively, during 1999 (prior to
the October termination date), 1998 and 1997.

                                       29
<PAGE>

   Write Down of Assets

   In connection with a refinancing of its indebtedness in 1994, GBCC issued
$40.5 million discounted principal amount (face amount of $110.6 million) of
deferred interest notes (the "PPI Funding Notes") to HCC in exchange for $38.8
million principal amount of 15 1/2% notes issued by another GBCC subsidiary and
held by HCC.  It was anticipated that one of HCC's primary methods of realizing
the carrying value of the new notes would be through the utilization of existing
tax net operating losses of GBCC and its subsidiaries.  As a result of HCC's
distribution of GBCC stock at December 31, 1996 to its shareholders, GBCC's tax
net operating losses are no longer available for utilization in HCC's
consolidated tax returns. Due to the filing for protection under Chapter 11 of
the United States Bankruptcy Code by GBCC's most significant operating
subsidiary on January 5, 1998, HCC took a write down during 1997 reducing the
carrying amount of the PPI Funding Notes to an estimated realizable value of
$12.3 million. This remaining estimated net realizable balance was fully
reserved in 1999 as the acquisition of PCC by HCC in October 1999 terminated the
Aurora Casino management contract and Tunica Casino consulting agreement.  These
agreements provided a source of funds to GBCC which is now no longer available.
In addition, ACSC, which is GBCC's only remaining operating subsidiary,
experienced a loss from operations in 1999, further reducing cash flows
available for repayment of the PPI Funding Notes.

   For the same reasons, HCC wrote down the interest receivable balance
associated with certain demand notes from GBCC by $1 million during 1999.  The
remaining combined receivable balance of the notes and interest of $7.5 million
at December 31, 1999 reflects management's best estimate of the value of the
collateral associated with such obligations.

   During November 1995, HCC loaned $10 million of the proceeds from its October
1995 debt offering to an unaffiliated gaming company in the form of two $5
million notes.  On February 27, 1998, both parties agreed to settle the
outstanding obligations with the payment of $4.4 million and the issuance of two
new, short-term obligations totaling $1.6 million, which were paid in April
1998.  The $4 million difference between the $10 million carrying amount of the
notes receivable and the agreed upon settlement was reflected as a write down of
the notes receivable during 1997.

   Interest Income

   Interest income increased $5 million (176.7%) during 1999 compared to 1998
reflecting interest on the unexpended cash proceeds of HCC's issue of Senior
Secured Notes on May 19, 1999 and Hollywood Casino Shreveport's debt issue on
August 10, 1999 (see "Liquidity and Capital Resources - Financing Activities").
Interest income increased $948,000 (50%) during 1998 compared to 1997 as a
result of more cash being available for investment purposes during 1998.

   Interest Expense

   Interest expense increased by $15.3 million (50.5%) during 1999 compared to
the prior year due primarily to the increase in HCC's long-term indebtedness
from the May 1999 issuance of the Senior Secured Notes and the August 1999
issuance of $150 million of 13% First Mortgage Notes with respect to the
Shreveport Casino.  Although the issuance of the Senior Secured Notes increased
HCC's indebtedness to a face value of $360 million from a face value of $204.7
million, the effective interest rate fell to 11.27% from 13.75%. The interest
rate on $50 million of the Senior Secured Notes is equal to the six-month LIBOR
rate plus 6.28% and is reset semiannually.  On November 1, 1999, the interest
rate on such notes increased to 12.41% from 11.36%, effectively increasing the
Company's annual interest expense by $525,000.  A portion of the interest on the
13% First Mortgage Notes is being capitalized during the construction period
($1.1 million during 1999).  Interest expense did not change significantly
during 1998 compared to 1997.

                                       30
<PAGE>

   (Loss) Gain on Disposal of Assets

   During 1999, the Aurora Casino wrote off costs associated with its planned
construction of a new, larger boat to replace the smaller of its two current
boats.  The advent of dockside gaming in June 1999 resulted in new plans to
construct a dockside casino facility (see "Liquidity and Capital Resources -
Capital Expenditures and Other Investing Activities").  The 1998 loss results
primarily from the sale of certain slot machines at the Tunica Casino as part of
its program to update such equipment; the 1997 gain resulted primarily from the
sale of a company-owned aircraft.

   Income Taxes

   Management believes that it is more likely than not that future consolidated
taxable income of HCC (primarily from the Aurora Casino and the Tunica Casino)
will be sufficient to utilize a portion of the NOL's, tax credits and other
deferred tax assets resulting from temporary differences.  Accordingly, under
the provisions of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes", the consolidated balance sheet reflects net
deferred tax assets of $5.2 million as of December 31, 1999.

   Sales by HCC or existing stockholders of common stock can 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 HCC or its subsidiaries to utilize
these loss carryforwards in later tax periods.  Should such a change of control
occur, the amount of loss carryforwards available for use in any one year would
most likely be substantially reduced.  Future treasury regulations,
administrative rulings or court decisions may also effect HCC's future
utilization of its loss carryforwards.

   Tax Settlement Costs

   Tax settlement costs of $1.1 million in 1998 represent costs incurred arising
from and directly related to HCC's tax treatment of the spin-off of GBCC.

   Minority Interest in Earnings of Limited Partnership

   The minority interest in the earnings of the limited partnership which held
the management contract for the Aurora Casino decreased by $693,000 (10.7%)
during 1999 compared to 1998.  As a result of the acquisition and termination of
the management contract, such minority interest was not incurred subsequent to
October 13, 1999 (see "Liquidity and Capital Resources - Pratt Casino
Corporation Acquisition" below). For the period prior to the termination of the
management contract, the minority interest increased by $618,000 (11.9%)
compared to the same partial year period during 1998.  This increase results
primarily from increases in the management fees paid by the Aurora Casino to the
limited partnership as a result of improved operating revenues and profits on
which such fees are based, coupled with a slight decline in the limited
partnership's operating expenses during 1999.  The minority interest increased
by $1.5 million (30%) in 1998 compared to 1997 as the minority interest came
into effect on April 1, 1997 following the acquisition of the general
partnership interest in PML by HCC.  For the period from April 1, 1998 through
December 31, 1998 (a period comparable to the 1997 post-acquisition date),
minority interest decreased by $438,000 (8.7%) compared to 1997 reflecting the
decrease in the Aurora Casino's operating profits due to the increase in gaming
taxes previously discussed.

   Extraordinary Item

   During May 1999, HCC completed the refinancing of its outstanding 12.75% debt
obligations.  The extraordinary loss from early retirement of debt includes the
premium paid and redemption fees associated with the debt retired together with
the write off of related unamortized financing costs.

   Prior to May 1999, HCC was required to make an offer to purchase not more
than $2.5 million in principal amount of  its then outstanding 12.75% Senior
Secured Notes at each semiannual interest payment date.  During 1998, HCC made
two redemption offers and redeemed $2.8 million of the notes resulting in an
extraordinary loss of $336,000.  During 1997, HCC made one such offer and
redeemed $2.5 million of

                                       31
<PAGE>

the notes. The 1997 redemption resulted in an extraordinary loss of $326,000,
reduced by an estimated income tax benefit of $111,000.

   Year 2000 Compliance

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

   In preparation for the Year 2000, management conducted a program to prepare
the Company's computer systems and applications as well as its non-information
technology (embedded microchip) systems. The two major information technology
systems identified as not Year 2000-compliant were replaced.  The cost of
acquiring, testing and converting HCC's systems was less than $1 million.  The
majority of these costs were included in capital expenditures (see "Liquidity
and Capital Resources - Capital Expenditures and Other Investing Activities"
below).

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

   Inflation

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

   Market Risk

   The Company has $50 million of floating rate Senior Secured Notes outstanding
(see "Liquidity and Capital Resources - Financing Activities" below).  Interest
on the floating rate notes is at the LIBOR rate plus 6.28% and is reset
semiannually.  Accordingly, an increase in the LIBOR rate of 1% would increase
interest expense by $500,000 per year.  Management has also secured a commitment
to finance the lease of furniture, fixtures and equipment for the Shreveport
Casino.  The $30 million commitment includes variable interest to be reset
quarterly.  Accordingly, an increase in the underlying base rate of 1% would
increase interest expense by $300,000 per annum.  Management believes that the
Company has no other material market risks.

   Seasonality and Other Fluctuations

   Historically, the Aurora Casino's operations have experienced some
seasonality due to severe winter weather.  Consequently, the results of HCC's
operations for the first and fourth quarters have traditionally been less
profitable than the other quarters of the fiscal year.  Furthermore, management
believes that seasonality may also cause fluctuations in reported results at the
Tunica Casino. In addition, the operations of the Aurora Casino and the Tunica
Casino may fluctuate significantly due to a number of factors, including chance.
Such seasonality and fluctuations may materially affect HCC's casino revenues
and overall profitability.

                                       32
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

   Operating Activities

   The operations of the Aurora Casino and Tunica Casino continue to be HCC's
primary sources of liquidity and capital resources.  The Aurora Casino
contributed approximately $3.4 million of cash flow from operations during 1999
after deducting the payment of $9.8 million of management fees.  The Tunica
Casino provided $4.2 million of cash from operations during 1999 after deducting
the payment of $939,000 of consulting fees to GBCC.  Operating cash flows at the
Aurora Casino and Tunica Casino were negatively impacted during 1999 by
expenditures of $37 million and $3.3 million, respectively, for the acquisition
and termination of their management and consulting agreements.  HCC's other
sources of funds include interest income earned on temporary investments ($3.4
million).  In addition to operating expenses at the Aurora Casino and the Tunica
Casino, uses of operating cash by HCC during 1999 included preopening costs with
respect to the Shreveport Casino ($841,000), costs to pursue development
opportunities ($946,000) and corporate overhead costs ($9.5 million).

   During 1999, consolidated cash flow provided by operations ($3.4 million),
from the redemption of short-term investments ($3.9 million), from the sale of
assets ($4 million) and from equipment financing ($1.4 million) were used by
HCC, together with available cash, to fund capital expenditures (exclusive of
Shreveport Casino project costs) of $11.6 million, to repay third party
indebtedness (other than HCC's 12.75% Senior Secured Notes) of $2.8 million, to
make payments under capital lease obligations of $893,000 and to pay
distributions amounting to $7.9 million to PCC as limited partner in PML.  As a
result of the acquisition of PCC discussed below, distributions to PCC were
discontinued during October 1999. Shreveport Casino project costs have, for the
most part, been funded with proceeds from borrowings (see "Liquidity and Capital
Resources - Capital Expenditures and Other Investing Activities") and from HCC's
available cash.

   The Internal Revenue Service recently completed its examination of the
consolidated federal income tax returns of HCC for the years 1993 and 1994.  The
additional current federal income tax obligation resulting from such examination
is included in current federal income taxes payable on the accompanying
consolidated balance sheet at December 31, 1999.  HCC's consolidated net
deferred tax asset has also been adjusted to reflect the results of the tax
audit.  The Internal Revenue Service is continuing its examination of the
consolidated federal income tax returns of HCC for 1995 and 1996.  Management
believes that it will have adequate capital resources to meet the additional tax
payments, if any, resulting from such examinations.

   Pratt Casino Corporation Acquisition

   On April 28, 1999, the Company entered into a voting agreement with GBCC and
certain of its wholly owned subsidiaries, including PRT Funding and PCC, and the
holders of substantially all of the $85 million of senior notes issued by PRT
Funding and guaranteed by PCC which were in default.  Under the terms of the
voting agreement, the Company was to purchase the stock of PCC from GBCC for
nominal consideration and fund the payment of PCC's obligations as part of a
debt restructuring of PRT Funding, PCC and other subsidiaries of PCC.  When
acquired by HCC, PCC's assets were to consist of its limited partnership
interest in PML and its consulting agreement with the Tunica Casino and its
liabilities were to consist of a new $40.3 million obligation payable in
satisfaction of the PRT Funding Notes.  The funds necessary to satisfy such
obligation were obtained as part of the May 1999 refinancing and were placed in
escrow for such purpose.

   In order to complete the Restructuring, PCC and PRT Funding filed for
protection under Chapter 11 of the United States Bankruptcy Code on May 25, 1999
with the above transactions included as part of a pre-negotiated plan of
reorganization.  The plan of reorganization was confirmed by the bankruptcy
court in October 1999.  At such time, HCC completed its acquisition of PCC and
settled PCC's obligations.

                                       33
<PAGE>

   Financing Activities

   During May 1999, HCC completed the refinancing of its outstanding 12.75%
Senior Secured Notes through a private debt offering of $310 million of 11.25%
Senior Secured Notes due May 1, 2007 and $50 million of floating rate Senior
Secured Notes due May 1, 2006 (collectively, the "Senior Secured Notes").
Interest on the floating rate notes is equal to the six-month LIBOR rate plus
6.28% and is reset semiannually.  Effective November 1, 1999, the interest rate
increased to 12.41% from an initial rate of 11.36% per annum.  In addition to
refinancing existing debt, the Company used proceeds from the debt offering to
fund a portion of the Company's equity investment in the Shreveport Casino and,
during October 1999, to acquire the management and consulting contracts on the
Aurora and Tunica casinos.  The Company also  plans to use proceeds from the
debt offering to finance construction of a new, dockside gaming facility at the
Aurora Casino (see "Liquidity and Capital Resources - Capital Expenditures and
Other Investing Activities"), and, to the extent available, for working capital
purposes.  Interest on the Senior Secured Notes is payable semiannually on May 1
and November 1 commencing on November 1, 1999.  The Senior Secured Notes are
unconditionally guaranteed on a senior secured basis by HCT and HCS and may be
guaranteed by certain future subsidiaries of HCC.  Neither HCA nor HCL are
guarantors.  The Senior Secured Notes and related guarantees are secured by,
among other things, (1) substantially all of the assets of HCT and future
guarantors, (2) a lien not to exceed approximately $108 million on substantially
all of the assets of HCA, (3) a pledge of the capital stock of certain
subsidiaries of HCC and (4) the collateral assignment of the management contract
for the Shreveport Casino.

   The fixed rate Senior Secured Notes are redeemable at the option of HCC any
time on or after May 1, 2003 at 107% of the then outstanding principal amount,
decreasing to 104.666%, 102.333% and 100%, respectively, on May 1, 2004, 2005
and 2006.  The Company may also redeem up to 35% of the fixed rate Senior
Secured Notes at a redemption price of 111.25% plus accrued interest at any time
prior to May 1, 2002 with the proceeds from an offering of the HCC's common
stock if net proceeds to the Company from any such offering are at least $20
million.

   The floating rate Senior Secured Notes may be redeemed at the option of HCC
at any time at an initial redemption price of 105% plus accrued interest with
the redemption premium decreasing by 1% on May 1 of each year beginning May 1,
2000.

   The indenture for the Senior Secured Notes contains various provisions
limiting the ability of HCC and certain defined subsidiaries to, among other
things, pay dividends or make other restricted payments; incur additional
indebtedness or issue preferred stock, create liens, create dividend or other
payment restrictions affecting certain defined subsidiaries; enter into mergers
or consolidations or make sales of all or substantially all assets of HCC, HCT,
HCS or any future guarantor; or enter into certain transactions with affiliates.

   On August 10, 1999 the Shreveport Partnership issued $150 million of 13%
First Mortgage Notes due 2006 with contingent interest, the net proceeds of
which, together with capital contributions from HCL and $30 million of
furniture, fixture and equipment financing for which a commitment has been
obtained, will provide the approximately $230 million of funds necessary to
build, equip and open the Shreveport Casino (see "Liquidity and Capital
Resources - Capital Expenditures and Other Investing Activities").  The
Shreveport First Mortgage Notes are non-recourse to HCC.  Fixed interest on the
Shreveport First Mortgage Notes is payable semiannually on February 1 and August
1 of each year commencing on February 1, 2000. In addition, contingent interest
will be payable on each interest payment date after the opening of the
Shreveport Casino.  The amount of the contingent interest will be equal to 5% of
the Shreveport Casino's cash flow, as defined, for the prior two fiscal quarters
up to a maximum of $5 million for any four consecutive fiscal quarters.  The
notes are collateralized by a first priority security interest in substantially
all of the Shreveport Partnership's existing and future assets other than
furniture, fixtures and equipment for which up to $35 million of financing has
been or will be obtained as well as by a pledge of the common stock of the HCC
subsidiaries which hold the partnership interests.

   The Shreveport First Mortgage Notes are redeemable at the option of the
Shreveport Partnership any time on or after August 1, 2003 at 106.5% of the then
outstanding principal amount, decreasing to 103.25%

                                       34
<PAGE>

on August 1, 2004 and 100% on or after August 1, 2005. Up to 35% of the original
aggregate amount of the Shreveport First Mortgage Notes may also be redeemed at
any time or prior to August 1, 2002 with proceeds of contributions to the
Shreveport Partnership made by HCC from certain offerings of equity securities
by HCC.

   The indenture for the Shreveport First Mortgage Notes contains various
provisions limiting the ability the Shreveport Partnership to borrow money, pay
dividends, make investments, pledge or sell its assets or enter into mergers or
consolidations.  The indenture also limits the ability of certain HCC
subsidiaries which guarantee the debt to acquire additional assets, become
liable for additional obligations or engage in any business activities other
than holding the partnership interests or acting as managing general partner of
the Shreveport Partnership.

   During September 1998, HCA entered into a bank loan agreement to borrow up to
$2 million on an unsecured basis.  Borrowings under the agreement are payable in
36 monthly installments including interest at the rate of 7.5% per annum.  HCA
borrowed $2 million under the agreement during October 1998.  During May 1999,
HCA borrowed an additional $750,000 from the bank on an unsecured basis to be
repaid over 60 months.  Interest on such loan is at 7.5% per annum.

   HCT had a $1.3 million bank credit facility available to borrow against
through September 30, 1998. Outstanding borrowings on the line of credit
($278,000 at December 31, 1999) are being repaid in monthly installments over 36
months and accrue interest at the rate of 8.875% per annum.

   Prior to October 14, 1999, HCC was the general partner in the limited
partnership which held the Aurora management agreement, having acquired such
interest in April 1997.  HCC's original acquisition price for the general
partnership interest included a note in the amount of $3.8 million and the
assignment of $13.8 million undiscounted principal amount of PPI Funding Notes
and $350,000 accrued interest due from GBCC to PPI Corporation.  Annual
principal and interest payments by HCC on the $3.8 million note approximated the
general partner's share of partnership distributions which were made to HCC
prior to the liquidation of the general partnership in October 1999.  Effective
November 1, 1999, HCC continues to make monthly payments of principal and
interest totaling $83,000 which, together with additional quarterly principal
payments of $21,000 beginning in January 2000, will approximate HCC's payment
obligations while the management contract was in effect.

   As of December 31, 1999, HCC's scheduled maturities of long-term debt and
payments under capital leases during 2000 are approximately $3.6 million and
$2.5 million, respectively.

   Capital Expenditures and Other Investing Activities

   Aurora Casino -

   Capital expenditures at the Aurora Casino during 1999 were $5.1 million;
management anticipates spending $3.6 million during 2000 toward its ongoing
capital improvements program.  Significant projects planned for 2000 include new
slot machines, renovations to restaurants and other departmental expenditures.
In addition, the Company is currently finalizing plans to replace the Aurora
Casino's two riverboats with a newly constructed, permanently moored dockside
casino.  As currently planned, the new facility will significantly increase
passenger capacity and provide a premier gaming and entertainment facility for
the Aurora Casino's patrons.  The new facility is projected to cost
approximately $60-65 million and will require a construction period of 14
months.  Construction of the dockside casino is expected to begin as soon as
possible following receipt of required regulatory approvals and the resolution
of certain litigation as described below.  Upon the finalization of plans, the
receipt of all required approvals and the resolution of the litigation, the
Aurora Casino will amortize the remaining net book value of its existing
riverboats (approximately $30.9 million at December 31, 1999) over the estimated
14-month construction period prior to the boats being removed from service.  As
a result, depreciation expense during 2000 could be significantly greater than
during 1999.  Approximately $40 million of the estimated $60-65 million in
project

                                       35
<PAGE>

costs for the proposed dockside facility were obtained from HCC's debt offering
completed in May 1999 with the remainder to come from operating cash flow.

   The Company intends to build its new dockside casino in two halves, which
will be connected to form a single dockside casino.  The Company is considering
proceeding with the construction of the first half of the dockside casino prior
to the final resolution of the litigation described below.  If the Company
proceeds with this approach, it would attempt to place all of its gaming
positions on the first half of the dockside casino and would not develop the
second half of the facility until the litigation is resolved.

   A complaint was filed in late 1999 in an Illinois state court concerning the
constitutionality of a portion of the legislation that enabled dockside gaming
in Illinois.  Although the constitutional challenge centers on the relocation of
one of the existing gaming licenses, a finding that such portion of the
legislation is unconstitutional could result in a finding that all or a portion
of the legislation, including dockside gaming, is invalid.  Pending the
resolution of this litigation, the Company's planned dockside expansion of the
Aurora Casino has been delayed.  If the state court rules that all or a portion
of the legislation is invalid, management believes that it may be able to
continue to operate its existing riverboats on a dockside basis pending a final
resolution of the litigation.  If the provisions in question are found to be
unconstitutional after all appeals, and the entire legislation is invalidated
and it appears that the Illinois legislature will not pass new legislation
enabling dockside gaming, then the Company will likely modify its expansion
plans for the Aurora Casino. Under this scenario, the Company would proceed with
the development of a new, larger riverboat to replace the smaller of its two
existing riverboats.

   Pending resolution of the litigation and without regard to its decision of
whether to build the first half of the dockside casino, management is
implementing a plan to connect its two existing riverboats with a new casino
barge.  The project will cost approximately $3.5 million to complete, including
approximately $1.3 million in docking facilities that can be used by the new
dockside casino should it be built.  Construction of the new barge is expected
to commence as soon as the necessary approvals are obtained and is expected to
open in mid-July of 2000.  The casino barge will allow patrons to move freely
between the two existing boats and will enable management to reconfigure its
casino space for increased patron comfort.  Management believes that the
reconfigured facility will significantly enhance its current operations until
the Company is able to replace its existing riverboats with the new dockside
facility.

   Tunica Casino -

   Capital expenditures at the Tunica Casino during 1999 amounted to $6.4
million; management anticipates spending $4 million during 2000. Expenditures
during 1999 were part of a two-year capital improvement plan which included the
upgrading of hotel accommodations and public areas, the replacement of certain
slot machines, the development of a new VIP check-in and private entertainment
lounge, upgrades to hotel rooms, the completion of an 18-hole championship golf
course and the expansion of the recreational vehicle parking area.  Projects
planned for 2000 include updating slot machines, upgrades to marketing systems,
renovations to hotel suites and other departmental expenditures.

   HCT entered into an agreement with two other casino operators during 1996
providing for the joint construction and ownership of a golf course.
Contributions by HCT to the limited liability corporation formed to develop and
operate the golf course, which opened in November 1998, have totalled
approximately $2.1 million.

   Shreveport Casino -

   In September 1998, the Shreveport Partnership received approval to develop,
own and operate a Hollywood-themed hotel and casino complex on the Red River in
Shreveport, Louisiana.  HCL originally planned to develop the Shreveport Casino
with two partners in a joint venture in which HCL would have had an interest of
approximately 50%.  On March 31, 1999, HCL entered into a definitive agreement
with one of the joint venture partners to acquire its interest in the Shreveport
Partnership for $2.5 million (the amount the joint venture partner contributed
to the project), $1,000 of which was paid at closing with the remainder

                                       36
<PAGE>

to be paid six months after the opening of the Shreveport Casino. The revised
structure of the joint venture received approval by the Louisiana Gaming Control
Board on April 20, 1999. As a result, effective as of April 23, 1999, HCL has an
effective 100% ownership interest in the Shreveport Casino with the remaining
joint venture partner holding a 10% residual interest in the event the project
is sold.

   The total estimated cost of the Shreveport Casino is approximately $230
million, of which approximately $34.8 million has been spent as of December 31,
1999.  HCL has contributed approximately $49 million as an equity investment in
the project with the other joint venture partner having contributed $1 million
to the project with the proceeds of a loan from HCL.  The loan accrues interest
at the rate of prime commencing with the opening of the Shreveport Casino and
will be payable monthly.  Principle on the loan is payable on the tenth
anniversary of the opening of the Shreveport Casino.  The joint venture partner
was also given credit for an additional $1 million capital contribution upon the
closing of the Shreveport First Mortgage Notes and payment of the $5 million
obligation discussed below.  The credit was  in recognition of guarantees
provided by an affiliate of the partner which were necessary for the Shreveport
Partnership to obtain approval of its license.  The $2 million equity interest
of the partner is reflected as minority interest on the consolidated financial
statements of HCC.

   In addition to the capital contributions, other construction and preopening
costs, estimated at $180 million, are being funded by the Shreveport First
Mortgage Notes which are non-recourse to HCC  (see "Liquidity and Capital
Resources - Financing Activities") and by $30 million of furniture, fixture and
equipment financing for which a commitment letter has been obtained.  In
addition, HCC has agreed to contribute up to an additional $5 million in equity
to the Shreveport Casino under certain circumstances which include cost overruns
or delays.  Construction of the Shreveport Casino began in August 1999 with a
planned opening date in early November 2000.

   The former partners of the Shreveport Partnership's predecessor conducted
riverboat gaming operations in New Orleans until October 1997.  In connection
with their proposed change in site to Shreveport, the former partners negotiated
a settlement with the City of New Orleans to pay $10 million with respect to
claims asserted by the City in connection with the relocation.  During September
1998, the current partners and the former partners of the Shreveport Partnership
entered into a Compromise Agreement with the City of New Orleans under which it
was agreed that one of the former partners would pay $5 million to the City with
the former partners being released from any further relocation claims.  The
current partners agreed that the Shreveport Casino would pay the City of New
Orleans $5 million  upon securing financing for construction of their project
(the Shreveport Casino); such payment was made in August 1999.  In addition, the
current partners agreed that the Shreveport Casino would reimburse the former
partner $2 million of the amount it paid to the City; such repayment is to be
made upon the earlier of the termination of construction of the Shreveport
Casino or in monthly installments of $200,000 commencing with the opening of the
Shreveport Casino.

   Other -

   HCC continues to pursue several additional potential gaming opportunities.
HCC intends to finance any future ventures with cash flow from operations,
together with third party financing, including non-recourse project financing.

                                       37
<PAGE>

   Conclusion

   Management anticipates that HCC's funding requirements for its operating
activities will continue to be satisfied by existing cash and cash generated by
the Aurora Casino and Tunica Casino.  Proceeds from the Senior Secured Notes
have been used to fund a portion of HCC's equity investment in the Shreveport
Casino and for the acquisition of the management and consulting agreements for
the Aurora Casino and Tunica Casino.  The remaining proceeds are expected to be
used for the planned expansion of the Aurora Casino.  Construction financing for
the planned Shreveport Casino has been provided from the August 1999 issuance of
project specific, non-recourse financing, together with capital contributions
and equipment financing.  In the absence of construction overruns, management
believes that, once the Shreveport Casino opens, cash flow from operations will
be sufficient to meet its liquidity and capital resource needs for the next 24
months.

                                       38
<PAGE>

ITEM 8.  INDEX TO FINANCIAL STATEMENTS

                                                                            Page
                                                                            ----
Hollywood Casino Corporation and Subsidiaries:

 Independent Auditors' Report...............................................  40

 Consolidated Balance Sheets as of December 31, 1999
   and 1998.................................................................  41

 Consolidated Statements of Operations for the Years
   Ended December 31, 1999, 1998 and 1997...................................  43

 Consolidated Statement of Changes in Shareholders' Equity
   (Deficit) for the Three Years Ended December 31, 1999....................  44

 Consolidated Statements of Cash Flows for the Years
   Ended December 31, 1999, 1998 and 1997...................................  45

 Notes to Consolidated Financial Statements.................................  46

Hollywood Casino-Aurora, Inc.

 Independent Auditors' Report...............................................  75

 Balance Sheets as of December 31, 1999 and 1998............................  76

 Statements of Operations for the Years Ended
   December 31, 1999, 1998 and 1997.........................................  78

 Statement of Changes in Shareholder's Equity for the
   Three Years Ended December 31, 1999......................................  79

 Statements of Cash Flows for the Years Ended
   December 31, 1999, 1998 and 1997.........................................  80

 Notes to Financial Statements..............................................  81


HWCC-Tunica, Inc.

 Independent Auditors' Report...............................................  93

 Consolidated Balance Sheets as of
  December 31, 1999 and 1998................................................  94

 Consolidated Statements of Operations for the Years
  Ended December 31, 1999, 1998 and 1997....................................  96

 Consolidated Statement of Changes in Shareholder's Equity for the
  Three Years Ended December 31, 1999.......................................  97

 Consolidated Statements of Cash Flows for the Years Ended
  December 31, 1999, 1998 and 1997..........................................  98

 Notes to Consolidated Financial Statements.................................  99


                                       39
<PAGE>

INDEPENDENT AUDITORS' REPORT


To Hollywood Casino Corporation:

We have audited the accompanying consolidated balance sheets of Hollywood Casino
Corporation (the Company and a Delaware corporation) and subsidiaries as of
December 31, 1999 and 1998, and the related consolidated statements of
operations, changes in shareholders' equity (deficit) and cash flows for each of
the three years in the period ended December 31, 1999.  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, based on our audits, the consolidated financial statements
referred to above present fairly, in all material respects, the financial
position of Hollywood Casino Corporation and subsidiaries as of December 31,
1999 and 1998, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1999 in conformity with
generally accepted accounting principles.





Deloitte & Touche LLP
Dallas, Texas
February 25, 2000

                                       40
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS

                                     ASSETS
<TABLE>
<CAPTION>
                                                             December 31,
                                                     ----------------------------
                                                         1999           1998
                                                     -------------  -------------
<S>                                                  <C>            <C>
Current Assets:
 Cash and cash equivalents                           $115,351,000   $ 42,118,000
 Short-term investments                                         -      3,905,000
 Receivables, net of allowances of
  $1,826,000 and $1,468,000, respectively               5,489,000      2,368,000
 Inventories                                            1,714,000      1,385,000
 Deferred income taxes                                  1,776,000        890,000
 Refundable deposits and other
  current assets                                        2,617,000      1,908,000
 Due from affiliates, net of valuation allowances       7,705,000      8,893,000
                                                     ------------   ------------

  Total current assets                                134,652,000     61,467,000
                                                     ------------   ------------

Investment in unconsolidated affiliates                 1,957,000      4,581,000
                                                     ------------   ------------

Property and Equipment:
 Land                                                   7,948,000      7,812,000
 Buildings and improvements                           122,122,000    120,060,000
 Riverboats and barges                                 40,367,000     40,166,000
 Operating equipment                                   85,728,000     77,192,000
 Construction in progress                              44,331,000      3,227,000
                                                     ------------   ------------

                                                      300,496,000    248,457,000
 Less - accumulated depreciation
  and amortization                                    (92,958,000)   (80,642,000)
                                                     ------------   ------------

  Net property and equipment                          207,538,000    167,815,000
                                                     ------------   ------------

Cash restricted for construction projects             147,310,000              -
                                                     ------------   ------------

Other Assets:
 Deferred financing costs                              15,256,000      4,792,000
 Land rights                                            7,047,000      7,250,000
 Due from affiliates, net of valuation allowances               -     12,359,000
 Land held for sale, net of valuation allowances        2,216,000      6,232,000
 Other assets                                           9,841,000      6,244,000
                                                     ------------   ------------

  Total other assets                                   34,360,000     36,877,000
                                                     ------------   ------------

                                                     $525,817,000   $270,740,000
                                                     ============   ============
</TABLE>
       The accompanying notes to consolidated financial statements are an
              integral part of these consolidated balance sheets.

                                       41
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS

                 LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
<TABLE>
<CAPTION>

                                                                December 31,
                                                       ------------------------------
                                                            1999            1998
                                                       --------------  --------------
<S>                                                    <C>             <C>
Current Liabilities:
 Current maturities of long-term debt
  and capital lease obligations                        $   4,538,000   $   7,914,000
 Accounts payable                                         15,293,000       4,578,000
 Accrued liabilities -
  Salaries and wages                                       6,019,000       5,023,000
  Interest                                                16,784,000       4,872,000
  Gaming and other taxes                                   2,586,000       1,613,000
  Insurance                                                2,890,000       2,940,000
  Other                                                    4,330,000       4,503,000
 Federal income taxes payable                              3,234,000               -
 Other current liabilities                                 2,749,000       3,311,000
                                                       -------------   -------------

  Total current liabilities                               58,423,000      34,754,000
                                                       -------------   -------------

Long-Term Debt                                           514,959,000     199,667,000
                                                       -------------   -------------

Capital Lease Obligations                                 18,961,000      19,948,000
                                                       -------------   -------------


Other Noncurrent Liabilities                               5,631,000       5,755,000
                                                       -------------   -------------

Commitments and Contingencies

Minority Interest                                          2,000,000       3,104,000
                                                       -------------   -------------

Shareholders' (Deficit) Equity:
 Common Stock -
  Class A common stock, $.0001 par value per share;
     50,000,000 shares authorized; 24,950,000
   shares issued and outstanding                               2,000           2,000
  Class B, non-voting, $.01 par value per share;
    10,000,000 shares authorized; no shares issued                 -               -
 Additional paid-in capital                              216,928,000     216,926,000
 Accumulated deficit                                    (291,087,000)   (209,416,000)
                                                       -------------   -------------

  Total shareholders' (deficit) equity                   (74,157,000)      7,512,000
                                                       -------------   -------------

                                                       $ 525,817,000   $ 270,740,000
                                                       =============   =============

</TABLE>

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

                                       42
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                                           Year Ended December 31,
                                                                 -------------------------------------------
                                                                     1999           1998           1997
                                                                 -------------  -------------  -------------
<S>                                                              <C>            <C>            <C>
Revenues:
 Casino                                                          $292,920,000   $252,863,000   $251,471,000
 Rooms                                                             10,457,000      9,386,000      9,651,000
 Food and beverage                                                 29,834,000     28,810,000     28,533,000
 Other                                                              4,819,000      4,229,000      3,270,000
                                                                 ------------   ------------   ------------

                                                                  338,030,000    295,288,000    292,925,000
 Less - promotional allowances                                    (30,653,000)   (26,528,000)   (25,168,000)
                                                                 ------------   ------------   ------------

  Net revenues                                                    307,377,000    268,760,000    267,757,000
                                                                 ------------   ------------   ------------
Expenses:
 Casino                                                           210,023,000    184,589,000    171,623,000
 Rooms                                                              1,161,000      1,752,000      1,835,000
 Food and beverage                                                  8,533,000      8,778,000      9,210,000
 Other                                                              2,252,000      2,717,000      3,085,000
 General and administrative                                        19,239,000     17,778,000     16,790,000
 Management and consulting fees                                       939,000      1,200,000      3,927,000
 Depreciation and amortization                                     15,673,000     16,562,000     18,901,000
 Development                                                          946,000        779,000      1,480,000
 Preopening                                                           841,000              -              -
 Termination of management and consulting agreements               40,389,000              -              -
 Write down of assets                                              13,322,000              -     19,678,000
                                                                 ------------   ------------   ------------

   Total expenses                                                 313,318,000    234,155,000    246,529,000
                                                                 ------------   ------------   ------------

(Loss) income from operations                                      (5,941,000)    34,605,000     21,228,000
                                                                 ------------   ------------   ------------
Non-operating income (expenses):
 Interest income                                                    7,868,000      2,844,000      1,896,000
 Interest expense, net of capitalized interest
  of $1,052,000 in 1999                                           (45,540,000)   (30,260,000)   (30,437,000)
 Tax settlement costs                                                       -     (1,087,000)             -
 Equity in losses of unconsolidated affiliate                        (141,000)             -              -
 (Loss) gain on disposal of assets                                   (567,000)       (61,000)       552,000
                                                                 ------------   ------------   ------------

  Total non-operating expenses, net                               (38,380,000)   (28,564,000)   (27,989,000)
                                                                 ------------   ------------   ------------

(Loss) income before income taxes, extraordinary
 and other items                                                  (44,321,000)     6,041,000     (6,761,000)
Income tax provision                                               (1,196,000)      (816,000)    (5,359,000)
                                                                 ------------   ------------   ------------

(Loss) income before extraordinary and other items                (45,517,000)     5,225,000    (12,120,000)
Minority interest in earnings of Limited Partnership (Note 1)      (5,801,000)    (6,494,000)    (5,012,000)
                                                                 ------------   ------------   ------------

Loss before extraordinary item                                    (51,318,000)    (1,269,000)   (17,132,000)
Extraordinary item:
 Loss on early extinguishment of debt, net of
  related tax benefit in 1997                                     (30,353,000)      (336,000)      (215,000)
                                                                 ------------   ------------   ------------

Net loss                                                         $(81,671,000)  $ (1,605,000)  $(17,347,000)
                                                                 ============   ============   ============

Basic and diluted net loss per common share:
 Loss before extraordinary item                                  $      (2.05)  $       (.05)  $       (.69)
 Extraordinary item                                                     (1.22)          (.01)          (.01)
                                                                 ------------   ------------   ------------

 Net  loss                                                       $      (3.27)  $       (.06)  $       (.70)
                                                                 ============   ============   ============
</TABLE>
       The accompanying notes to consolidated financial statements are an
                integral part of these consolidated statements.

                                       43
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES
      CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
                  For the Three Years Ended December 31, 1999

<TABLE>
<CAPTION>
                                            Class A
                                          Common Stock     Additional
                                       ------------------   Paid-in       Accumulated
                                         Shares    Amount   Capital         Deficit
                                       ----------  ------  ------------  --------------
<S>                                    <C>         <C>     <C>            <C>
BALANCE, January 1, 1997               24,760,000  $2,000  $229,298,000   $(190,464,000)
 Stock issued for loan commitment         100,000       -       375,000               -
 Acquisition of general partnership
  interest                                      -       -   (12,747,000)              -
 Exercise of stock options                 50,000       -             -               -
 Net loss                                       -       -             -     (17,347,000)
                                       ----------  ------  ------------   -------------

BALANCE, December 31, 1997             24,910,000   2,000   216,926,000    (207,811,000)
 Exercise of stock options                 40,000       -             -               -
 Net loss                                       -       -             -      (1,605,000)
                                       ----------  ------  ------------   -------------

BALANCE, December 31, 1998             24,950,000   2,000   216,926,000    (209,416,000)
 Grant of stock options to non-
   employee directors                           -       -         2,000               -
 Net loss                                       -       -             -     (81,671,000)
                                       ----------  ------  ------------   -------------

BALANCE, December 31, 1999             24,950,000  $2,000  $216,928,000   $(291,087,000)
                                       ==========  ======  ============   =============

</TABLE>



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

                                       44
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                   Year Ended December 31,
                                                                         --------------------------------------------
                                                                              1999           1998           1997
                                                                         --------------  -------------  -------------
<S>                                                                      <C>             <C>            <C>
OPERATING ACTIVITIES:
 Net loss                                                                $ (81,671,000)  $ (1,605,000)  $(17,347,000)
 Adjustments to reconcile net loss to net cash provided by
  operating activities:
  Extraordinary item                                                        30,353,000        336,000        215,000
  Depreciation and amortization, including accretion of debt discount       16,135,000     17,581,000     19,801,000
  Write down of assets                                                      13,322,000              -     19,678,000
  Loss (gain) on disposal of assets                                            567,000         61,000       (552,000)
  Minority interest in earnings of Limited Partnership                       5,801,000      6,494,000      5,012,000
  Grant of stock options                                                         2,000              -              -
  Equity in losses of unconsolidated affiliate                                 141,000              -              -
  Provision for doubtful accounts                                              804,000        756,000        698,000
  Deferred income tax provision (benefit)                                   (3,403,000)        81,000        592,000
  Increase in receivables                                                   (3,993,000)      (377,000)      (305,000)
  Increase in accounts payable and accrued expenses                         23,871,000      2,035,000        116,000
  Increase (decrease) in federal taxes payable                               3,234,000     (6,878,000)     4,678,000
  Net change in other current assets and liabilities                        (1,390,000)        41,000     (1,107,000)
  Net change in other noncurrent assets and liabilities                       (342,000)    (1,774,000)       134,000
                                                                         -------------   ------------   ------------

   Net cash provided by operating activities                                 3,431,000     16,751,000     31,613,000
                                                                         -------------   ------------   ------------

INVESTING ACTIVITIES:
 Purchases of property and equipment                                       (49,758,000)   (12,037,000)    (5,101,000)
 Collections on notes receivable                                                     -      6,000,000              -
 Proceeds from sale of assets                                                3,959,000        129,000     12,487,000
 Increase in cash from acquisition                                           1,525,000              -              -
 Loan to joint venture partner                                              (1,000,000)             -              -
 Short-term investments                                                      3,905,000        (29,000)    (3,876,000)
 Investments in unconsolidated affiliates                                      (45,000)    (2,553,000)    (2,000,000)
 Increase in cash from purchase of limited partnership interest                      -              -        451,000
 Increase in cash restricted for construction projects                    (147,310,000)             -              -
                                                                         -------------   ------------   ------------

  Net cash (used in) provided by investing activities                     (188,724,000)    (8,490,000)     1,961,000
                                                                         -------------   ------------   ------------

FINANCING ACTIVITIES:
 Proceeds from issuance of long-term debt                                  493,474,000      2,687,000        601,000
 Deferred financing costs                                                  (17,134,000)      (248,000)       (24,000)
 Repayments of long-term debt                                             (210,006,000)    (2,334,000)    (8,548,000)
 Payments on capital lease obligations                                        (893,000)      (861,000)    (1,976,000)
 Investment by joint venture partner                                         1,000,000              -              -
 Limited partnership distributions                                          (7,915,000)    (5,646,000)    (4,856,000)
                                                                         -------------   ------------   ------------

  Net cash provided by (used in) financing activities                      258,526,000     (6,402,000)   (14,803,000)
                                                                         -------------   ------------   ------------

  Net increase in cash and cash equivalents                                 73,233,000      1,859,000     18,771,000
   Cash and cash equivalents at beginning of year                           42,118,000     40,259,000     21,488,000
                                                                         -------------   ------------   ------------

   Cash and cash equivalents at end of year                              $ 115,351,000   $ 42,118,000   $ 40,259,000
                                                                         =============   ============   ============
</TABLE>
       The accompanying notes to consolidated financial statements are an
                integral part of these consolidated statements.

                                       45
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(1) Organization and Business

    Hollywood Casino Corporation ("HCC" or the "Company"), is a Delaware
corporation which was organized and incorporated on November 5, 1990.
Approximately 54% of the issued and outstanding stock of HCC is owned by Jack E.
Pratt, Edward T. Pratt, Jr. and William D. Pratt (the "Pratt Brothers"), by
certain general partnerships and trusts controlled by the Pratt Brothers and by
other family members (collectively, the "Pratt Family").

    HCC owns all of the outstanding common stock of Hollywood Casino - Aurora,
Inc. ("HCA"), HWCC - Tunica, Inc. ("HCT"), HWCC-Louisiana, Inc. ("HCL") and
HWCC-Shreveport, Inc. ("HCS"). HCA is an Illinois corporation organized during
1990 which owns and operates a riverboat gaming operation with approximately
30,000 square feet of gaming space together with docking and other entertainment
facilities under the service mark Hollywood Casino(R) in Aurora, Illinois
approximately 35 miles west of downtown Chicago (the "Aurora Casino").  HCT is a
Texas corporation formed by HCC during 1993 which owns and operates a 54,000
square foot gaming facility, adjacent support facilities and a 506-room hotel
complex under the service mark Hollywood Casino(R) in northern Tunica County,
Mississippi approximately 30 miles south of Memphis, Tennessee (the "Tunica
Casino").  The Aurora Casino and the Tunica Casino commenced operations in June
1993 and August 1994, respectively.  HCL is a Louisiana corporation formed by
HCC in 1993 to pursue gaming opportunities in Louisiana which is currently
constructing a destination gaming resort including a dockside casino, all suite
hotel and other entertainment facilities in Shreveport, Louisiana approximately
180 miles east of Dallas, Texas (the "Shreveport Casino").  HCS is a Louisiana
corporation formed by HCC in 1997 which will hold the management contract for
the Shreveport Casino.

    The Company believes that its two currently operating gaming facilities
derive a significant amount of their gaming revenues from patrons living in the
surrounding areas.  Competition within the Company's gaming markets is intense
and management believes that this competition will continue or intensify in the
future.

    Prior to December 31, 1996, HCC also owned approximately 80% of the common
stock of Greate Bay Casino Corporation ("GBCC"), a Delaware corporation.  On
December 31, 1996, HCC distributed to its shareholders the common stock of GBCC
owned by HCC.  As a result of the dividend, GBCC is no longer a subsidiary of
HCC.  While owned by HCC, GBCC's principal asset was the Sands Hotel and Casino
in Atlantic City, New Jersey (the "Sands").

    Prior to October 14, 1999, HCC was the general partner in Pratt Management
L.P. ("PML"), having acquired such interest in April 1997 from PPI Corporation,
a wholly owned subsidiary of GBCC.  PML held the management contract on and
earned management fees from the Aurora Casino and incurred operating and other
expenses with respect to its management thereof.  As general partner, HCC
received 99% of the first $84,000 of net income earned by PML each month
together with 1% of any income earned above such amount.  The remaining limited
partnership interest was held by Pratt Casino Corporation ("PCC"), which until
its acquisition by HCC in October 1999, was a wholly owned subsidiary of GBCC.
For those periods that PCC was owned by GBCC, the limited partnership interest
was reflected on the accompanying consolidated financial statements as a
minority interest.  PCC also had a consulting contract with the Tunica Casino
(see Note 7).

    On April 28, 1999, HCC entered into a voting agreement with GBCC and certain
of its wholly owned subsidiaries, including PCC and PRT Funding Corp. ("PRT
Funding"), and the holders of substantially all of the $85,000,000 of unsecured
senior notes (the "PRT Funding Notes") issued by PRT Funding which were in
default.  The PRT Funding Notes were guaranteed by PCC.  Under the terms of the
voting agreement, HCC was to purchase the stock of PCC from GBCC for nominal
consideration and fund the payment of

                                       46
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


PCC's obligations as part of a debt restructuring of PRT Funding, PCC and other
subsidiaries of PCC. When acquired by HCC, PCC's assets were to consist of its
limited partnership interest in PML and its consulting contract for the Tunica
Casino and its liabilities were to consist of a new $40,329,000 obligation
payable in satisfaction of the PRT Funding Notes.

    In order to complete the restructuring, PCC and PRT Funding filed for
protection under Chapter 11 of the United States Bankruptcy Code on May 25, 1999
with the above transactions included as part of a pre-negotiated plan of
reorganization.  Such plan was confirmed by the United States Bankruptcy Court
for the District of Delaware in October 1999.  At such time, HCC completed its
acquisition of PCC and settled PCC's obligations.  The acquisition and
subsequent termination of the management contract and consulting agreement
resulted in a fourth quarter charge to expense by the Company in the amount of
$40,389,000 as no asset value was attributed to such contracts for financial
reporting purposes when acquired.

    The accompanying consolidated financial statements also reflect HCT's
one-third investment in Tunica Golf Course LLC under the equity method of
accounting. This limited liability company was organized in 1996 to develop and
operate a golf course to be used by patrons of the Tunica Casino and other
participating casino/hotel properties. The golf course was completed and opened
for play in November 1998.

    In September 1998, a joint venture in which HCL was a partner (the
"Shreveport Partnership") received approval to develop, own and operate the
Shreveport Casino.  HCL originally planned to develop the Shreveport Casino with
two partners in a joint venture in which it would have had an interest of
approximately 50%.  HCL's 50% investment in the joint venture ($2,500,000) was
reflected on the accompanying consolidated balance sheet at December 31, 1998 as
an investment in unconsolidated affiliate.

    On March 31, 1999, HCL entered into a definitive agreement with one of the
joint venture partners to acquire its interest in the Shreveport Partnership.
The acquisition price was $2,500,000 (the amount the joint venture partner
contributed to the project), $1,000 of which was paid at closing with the
remainder to be paid six months after the opening of the Shreveport Casino.  The
revised structure of the joint venture received approval by the Louisiana Gaming
Control Board (the "LGCB") on April 20, 1999.  As a result, HCL now has an
effective 100% ownership interest in the Shreveport Casino with the remaining
joint venture partner holding a 10% residual interest in the event the project
is ever sold.  The joint venture partner's interest is included in minority
interest on the accompanying consolidated balance sheet at December 31, 1999 in
the amount of $2,000,000.  The acquisition was accounted for under the purchase
method of accounting.  Accordingly, effective with the April 23, 1999 closing of
HCL's acquisition of the additional joint venture interest, the Shreveport
Partnership is included in the consolidated financial statements of HCC.  The
acquired company had no significant operating activities prior to the
acquisition date.

    The $150,000,000 Shreveport First Mortgage Notes (see Note 3), together with
$49,000,000 of capital contributions from HCL, a $1,000,000 capital contribution
from HCL's joint venture partner made with funds loaned by HCL and $30,000,000
in furniture, fixture and equipment financing for which a commitment letter has
been obtained (see Note 10) are expected to provide the estimated $230,000,000
needed to construct and open the Shreveport Casino.  In addition, HCC has agreed
to contribute up to an additional $5,000,000 in equity to the Shreveport Casino
under certain circumstances which include cost overruns or delays.  As currently
planned, the Shreveport Casino will consist of a  three-level dockside casino
with approximately 1,370 slot machines and 75 table games; a 405-room, all
suite, art deco-style hotel; and approximately 42,000 square feet of restaurant
and entertainment facilities. Construction began in August 1999 with a planned
opening date in early November 2000.

                                       47
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



    The Board of Directors approved the adoption in May 1993 of a Rights
Agreement  providing that stockholders of HCC receive rights to acquire Series A
Junior Participating Preferred Stock of HCC at an initial price of $60 per one
one-hundredth of a share, subject to adjustment, for each share of HCC Common
Stock owned.  The rights become exercisable if a person (other than the Pratt
Family) acquires 20% or more, or announces a tender offer for 20% or more, of
the Company's Common Stock.  If the Company is acquired in a merger or other
business combination, each right will enable the holder to exercise such right
for Common Stock of the acquiring company at a 50% discount.  The rights, which
expire on May 7, 2003, may be redeemed by the Company at its option at a price
of $.0001 per right at any time prior to the earlier of 10 days following the
date after which a person has acquired at least 20% of the Company's outstanding
shares or May 7, 2003.  Until such time as it becomes likely that the rights
will be exercised, the calculation of basic and diluted earnings per share does
not reflect the retroactive adjustment for the bonus element of the Rights
Agreement.

(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.

 Principles of consolidation -

     The consolidated financial statements include the accounts of HCC and its
wholly owned subsidiaries and, for periods subsequent to April 23, 1999, the
accounts of the Shreveport Partnership.  All significant intercompany balances
and transactions have been eliminated.  Investments in unconsolidated affiliates
including joint ventures that were 50% or less owned are accounted for by the
equity method.

 Casino revenues, promotional allowances and departmental expenses -

     HCC 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 other accrued liabilities on the accompanying
consolidated balance sheets.

     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 on the accompanying
consolidated statements of operations.  Costs of complimentaries allocated from
the rooms, food and

                                       48
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


beverage and other operating departments to the casino department during the
years ended December 31, 1999, 1998 and 1997 are as follows:


                        1999         1998         1997
                     -----------  -----------  -----------

Rooms                $ 2,742,000  $ 1,940,000  $ 1,870,000
Food and beverage     22,613,000   20,887,000   19,894,000
Other                  1,394,000    1,431,000    1,061,000
                     -----------  -----------  -----------

                     $26,749,000  $24,258,000  $22,825,000
                     ===========  ===========  ===========

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.

 Cash restricted for construction project -

   Cash restricted for construction project consists of investments in
government securities which are to be used for specified purposes and which were
purchased with net proceeds from the Shreveport First Mortgage Notes (see Note
3) as required by the indenture for the Shreveport First Mortgage Notes.  Such
restricted cash includes (1) funds to be used for construction which are subject
to meeting certain conditions prior to their disbursement, (2) funds to be used
to make the first three semiannual interest payments with respect to the
Shreveport First Mortgage Notes and (3) funds to be used to complete and open
the Shreveport Casino in the event the construction funds in (1) above are not
sufficient.  Interest earned, but not yet received, on such investments is
included in interest receivable on the accompanying consolidated balance sheet
at December 31, 1999.  Upon receipt, interest is included in cash restricted for
construction project.

   At December 31, 1999, cash restricted for construction project is comprised
of the following:

   Construction reserve         $  114,964,000
   Interest reserve                 27,275,000
   Completion reserve                5,071,000
                                --------------

                                $  147,310,000
                                ==============

 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 $804,000, $756,000 and $698,000 were made during the years
ended December 31, 1999, 1998 and 1997, respectively.

 Inventories -

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

                                       49
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



Property and equipment -

   Property and equipment have  been recorded at cost and are being depreciated
utilizing the straight-line method over the estimated useful lives of the assets
as follows:

   Buildings and improvements            10-40 years
   Riverboats and barges                 25-40 years
   Operating equipment                    3-15 years

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

   Costs associated with the construction of the Shreveport Casino are being
deferred.  Construction costs, including the applicable interest on the
construction financing of $1,052,000 at December 31, 1999, are being capitalized
and, commencing with the opening of the Shreveport Casino, will be amortized
over the estimated useful lives of the resulting assets.  Capitalized costs will
be allocated to the individual components of property and equipment when such
assets are ready to be placed in service.

Deferred financing costs -

   The costs of issuing long-term debt, including all underwriting, licensing,
legal and accounting fees, have been deferred and are being amortized over the
term of the related debt issue using the straight-line method which approximates
the effective interest method.  Amortization of such costs was $1,510,000,
$952,000 and $963,000 for the years ended December 31, 1999, 1998 and 1997,
respectively, and is included in depreciation and amortization expense on the
accompanying consolidated statements of operations. Deferred financing costs,
net of accumulated amortization, amounting to $4,182,000, $62,000 and $68,000,
respectively were written off during 1999 and 1998 and 1997, with respect to the
reacquisition of outstanding debt.  An additional $978,000 of deferred financing
costs were written off in 1999 with respect to the acquisition of PCC.

Long-lived assets -

   Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
requires, among other things, that an entity review its long-lived assets and
certain related intangibles for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be fully
recoverable.  Long-lived assets held for sale are carried at the lower of
carrying amount or fair value less cost to sell.

   During 1999, a parcel of real property was sold at a price approximating its
net book value; accordingly, no gain or loss was recognized on the sale.  Land
held for sale is shown net of valuation allowances of $3,084,000 and $3,432,000,
respectively, on the accompanying consolidated balance sheets at December 31,
1999 and 1998.

Accrued insurance -

   HCC 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

                                       50
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


merits of individual claims and historical claims experience; accordingly, HCC's
ultimate liability may differ from the amounts accrued.

 Income taxes -

   HCC accounts for income taxes using the liability method which results in the
determination of deferred taxes based on the estimated future tax effects of
differences between the financial statement and tax bases of assets and
liabilities.

 Preopening costs -

   Preopening costs include, among other things, organizational costs, marketing
and promotional costs, hiring and training of new employees and other operating
costs which have been incurred with respect to the Shreveport Casino.  Such
costs are accounted for under the provisions of Statement of Position 98-5
issued by the American Institute of Certified Public Accountants which requires
that such costs be expensed as incurred.

 Interest expense -

   Interest expense includes the accretion of debt discount amounting to
$491,000, $1,019,000 and $900,000 during the years ended December 31, 1999, 1998
and 1997, respectively.

 Land rights -

   Land rights are being amortized on a straight-line basis over the estimated
useful life of the Tunica facility, which is less than the term of the ground
lease including renewals (see Note 10); such amortization commenced with the
opening of the Tunica Casino.  Management presently intends to renew the ground
lease at least through the estimated 40-year useful life of the facility.
Accumulated amortization of such land rights amounted to $1,398,000 and
$1,195,000, respectively, at December 31, 1999 and 1998.

 Employee Stock Options -

   HCC follows the provisions of statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation" ("SFAS 123").  SFAS 123 requires
that an entity account for employee stock compensation under a fair value based
method.  However, SFAS 123 also allows an entity to continue to measure
compensation cost for employee stock-based compensation plans using the
intrinsic value based method of accounting prescribed by Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("Opinion 25").
Entities electing to remain with the accounting under Opinion 25 are required to
make pro forma disclosures of net income and earnings per share as if the fair
value based method of accounting under SFAS 123 had been applied.  HCC has
elected to continue to account for employee stock-based compensation under
Opinion 25 with the requisite additional disclosures included in Note 6.

 Net (loss) income per common share -

   Earnings per share is presented for both earnings per common share assuming
no dilution (basic earnings per share) and earnings per common share assuming
full dilution (diluted earnings per share).  Basic (loss) earnings per common
share is calculated by dividing the net (loss) income by the weighted average
number of shares of common stock outstanding.  Diluted (loss) earnings per
common share is calculated for

                                       51
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


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

   The weighted average number of shares of common stock outstanding used for
the calculation of both basic and diluted loss per share before extraordinary
item and basic and diluted net loss per share was 24,949,976 for 1999,
24,946,359 for 1998 and 24,833,393 for 1997.  No potential common shares were
included in the calculation of diluted earnings per share for the years ended
December 31, 1999, 1998 and 1997 as the inclusion of such shares would have been
antidilutive due to the net losses from continuing operations incurred in all
years.  The weighted average number of shares excluded was 2,057,266 in 1999,
973,059 in 1998 and 535,296 in 1997.

 Recent Accounting Pronouncement -

   In June 1998, the Financial Accounting Standards Board issued a new
statement, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133"), which has been amended to be effective for fiscal years beginning after
June 15, 2000.  SFAS 133 requires, among other things, that derivatives be
recorded on the balance sheet at fair value.  Changes in the fair value of
derivatives may, depending on circumstances, be recognized in earnings or
deferred as a component of shareholders' equity until a hedged transaction
occurs.  The Company does not believe the adoption of SFAS 133 will have a
significant impact on its financial position or results of operations.

 Reclassifications -

   Certain reclassifications have been made to the prior years' consolidated
financial statements to conform to the 1999 consolidated financial statement
presentation.

                                       52
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(3)  Long-Term Debt and Pledge of Assets

     Substantially all of HCC's assets are pledged in connection with its long-
term indebtedness.  The obligations of HCL and its subsidiaries are non-recourse
to HCC.
<TABLE>
<CAPTION>
                                                           December 31,   December 31,
                                                               1999           1998
                                                           -------------  -------------
<S>                                                        <C>            <C>
Indebtedness of HCC:
 11.25% Senior Secured Notes, due 2007 (a)                 $310,000,000   $          -
 Floating rate Senior Secured Notes, due 2006 (a)            50,000,000              -
 12.75% Senior Secured Notes, due 2003, net of discount
  of $7,013,000 at December 31, 1998 (b)                              -    200,199,000
 Promissory note due to affiliate (Note 7)                    2,033,000      2,836,000
                                                           ------------   ------------

                                                            362,033,000    203,035,000
                                                           ------------   ------------
Indebtedness of HCA:
 Promissory note to bank (c)                                  1,952,000      1,900,000
                                                           ------------   ------------
Indebtedness of HCT :
 Equipment loans (d)                                          2,488,000      1,291,000
 Bank credit facility (e)                                       278,000        462,000
                                                           ------------   ------------

                                                              2,766,000      1,753,000
                                                           ------------   ------------

Indebtedness of HCL which is non-recourse to HCC:
 13% Shreveport First Mortgage Notes, with contingent
  interest, due 2006 (f)                                    150,000,000              -
 Other, net of discount of $241,000 at
  December 31, 1999(g)                                        1,759,000              -
                                                           ------------   ------------

                                                            151,759,000              -
                                                           ------------   ------------

 Total indebtedness                                         518,510,000    206,688,000
  Less - current maturities                                  (3,551,000)    (7,021,000)
                                                           ------------   ------------

   Total long-term debt                                    $514,959,000   $199,667,000
                                                           ============   ============
</TABLE>
-------------------------
(a)  During May 1999, HCC completed the refinancing of its outstanding 12.75%
     senior secured notes (see (b) below) through a debt offering of
     $310,000,000 of 11.25% Senior Secured Notes due May 1, 2007 and $50,000,000
     of floating rate Senior Secured Notes due May 1, 2006 (collectively, the
     "Senior Secured Notes").  Interest on the floating rate notes is equal to
     the six-month LIBOR rate plus 6.28% and is reset semiannually.  Interest on
     the floating rate notes was adjusted from an initial rate of 11.36% to
     12.41% per annum effective November 1, 1999.  In addition to refinancing
     existing debt, the Company has used proceeds from the debt offering to fund
     a portion of its equity investment in the Shreveport Casino (see Note 1)
     and, during October 1999, to acquire the management and consulting
     contracts on the Aurora Casino and Tunica Casino (see Note 1).  The Company
     also plans to use proceeds from the debt offering to finance construction
     of a new, dockside gaming facility at the Aurora Casino and, to the extent
     available, for working capital purposes.  Interest on the Senior Secured
     Notes is payable semiannually on May 1 and November 1

                                       53
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


     commencing on November 1, 1999. The Senior Secured Notes are
     unconditionally guaranteed on a senior secured basis by HCT and HCS and may
     be guaranteed by certain future subsidiaries of HCC. Neither HCA nor HCL
     are guarantors. The Senior Secured Notes and related guarantees are secured
     by, among other things, (1) substantially all of the assets of HCT and
     future guarantors, (2) a lien not to exceed approximately $108,000,000 on
     substantially all of the assets of HCA, (3) a pledge of the capital stock
     of certain subsidiaries of HCC and (4) the collateral assignment of the
     management contract for the Shreveport Casino.

     The fixed rate Senior Secured notes are redeemable at the option of HCC any
     time on or after May 1, 2003 at 107% of the then outstanding principal
     amount, decreasing to 104.666%, 102.333% and 100%, respectively, on May 1,
     2004, 2005 and 2006.  The Company may also redeem up to 35% of the fixed
     rate Senior Secured Notes at a redemption price of 111.25% plus accrued
     interest at any time prior to May 1, 2002 with the proceeds from an
     offering of HCC's common stock if net proceeds to the Company from any such
     offering are at least $20 million.

     The floating rate Senior Secured Notes may be redeemed at the option of HCC
     at any time at an initial redemption price of 105% plus accrued interest
     with the redemption premium decreasing by 1% on May 1 of each year
     beginning May 1, 2000.

     The indenture for the Senior Secured Notes contains various provisions
     limiting the ability of HCC and certain defined subsidiaries to, among
     other things, pay dividends or make other restricted payments; incur
     additional indebtedness or issue preferred stock, create liens, create
     dividend or other payment restrictions affecting certain defined
     subsidiaries; enter into mergers or consolidations or make sales of all or
     substantially all assets of HCC, HCT, HCS or any future guarantor; or enter
     into certain transactions with affiliates.  The indenture also requires
     certain financial reporting information (see Note 14).

(b)  During October 1995, HCC issued $210,000,000 of 12.75% Senior Secured Notes
     (the "12.75% Senior Secured Notes") due November 1, 2003, discounted to
     yield 13.75% per annum.  Interest on the 12.75% Senior Secured Notes was
     payable semiannually on May 1 and November 1 of each year. Commencing with
     the November 1, 1997 interest payment date and at each subsequent interest
     payment date, HCC was required to make an offer to purchase not more than
     $2,500,000 in principal amount of the 12.75% Senior Secured Notes at a
     price of 106.375% of the principal amount tendered.  A total of $5,288,000
     of 12.75% Senior Notes were purchased by the Company.  The remaining 12.75%
     Senior Secured Notes were repaid in May 1999 with a portion of the proceeds
     of the Senior Secured Notes (see (a) above).

(c)  During September 1998, HCA entered into a bank loan agreement to borrow up
     to $2,000,000 on an unsecured basis.  Borrowings under the agreement are
     payable in 36 monthly installments including interest at the rate of 7.5%
     per annum.  HCA borrowed $2,000,000 under the agreement during October
     1998.

     On May 19, 1999, HCA borrowed an additional $750,000 from the bank on an
     unsecured basis.  The loan is payable in monthly installments of $15,000
     including interest at the rate of 7.5% per annum.

(d)  The equipment loans are payable monthly including interest at effective
     rates ranging from 8.5% to 12.9% per annum and mature at various dates
     between 1999 and 2002.

                                       54
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


(e)  HCT had a bank credit facility in the amount of $1,300,000 available to
     borrow against through September 30, 1998.  HCT borrowed $541,000 under the
     credit facility during 1998 at the rate of 8.875% per annum.  Borrowings
     under the credit facility are to be repaid in monthly installments over a
     period of 36 months and are collateralized by equipment purchased with the
     loan proceeds. The credit facility was not renewed by HCT.

(f)  During August 1999, the partnership formed to develop the Shreveport Casino
     issued $150,000,000 of 13% First Mortgage Notes, with contingent interest
     (the "Shreveport First Mortgage Notes"), which are non-recourse to HCC.

     Interest on the Shreveport First Mortgage Notes is payable semiannually on
     February 1 and August 1 of each year commencing in February 2000.  In
     addition, contingent interest will be payable on each interest payment date
     after the opening of the Shreveport Casino.  The amount of the contingent
     interest will be equal to 5% of the Shreveport Casino's cash flow, as
     defined, for the prior two fiscal quarters up to a maximum of $5,000,000
     for any four consecutive fiscal quarters.  The notes are collateralized by
     a first priority secured interest in substantially all of the partnership's
     existing and future assets other than furniture, fixtures and equipment for
     which up to $35,000,000 of financing has been or will be obtained as well
     as by a pledge of the common stock of the HCC subsidiaries which hold the
     partnership interests.

     The Shreveport First Mortgage Notes are redeemable at the option of the
     partnership at any time on or after August 1, 2003 at 106.5% of the then
     outstanding principal amount, decreasing to 103.25% on August 1, 2004 and
     100% on or after August 1, 2005.  Up to 35% of the original aggregate
     amount of the Shreveport First Mortgage Notes may also be redeemed at any
     time prior to August 1, 2002 with proceeds of contributions to the
     partnership made by HCC from certain offerings of equity securities by HCC.

     The indenture for the Shreveport First Mortgage Notes contains various
     provisions limiting the ability of the partnership to borrow money, pay
     dividends, make investments, pledge or sell its assets or enter into
     mergers or consolidations.  The indenture also limits the ability of
     certain HCC subsidiaries which guarantee the debt to acquire additional
     assets, become liable for additional obligations or engage in any business
     activities other than holding the partnership interests or acting as
     managing general partner of the partnership.

(g)  The former partners of the Shreveport Partnership's predecessor conducted
     riverboat gaming operations in New Orleans prior to October 1997. In
     connection with their proposed change in site to Shreveport, the former
     partners negotiated a settlement with the City of New Orleans to pay
     $10,000,000 with respect to claims asserted by the City in connection with
     the relocation. During September 1998, the current partners and former
     partners of the Shreveport Partnership entered into a Compromise Agreement
     with the City of New Orleans under which it was agreed that one of the
     former partners would pay $5,000,000 to the City with the former partners
     being released from any further relocation claims. The current partners
     agreed that the Shreveport Casino would pay the City of New Orleans
     $5,000,000 upon securing financing for construction of their project (the
     Shreveport Casino); such payment was made in August 1999. In addition, the
     current partners agreed that the Shreveport Casino would, contingent on
     securing financing, reimburse the former partner $2,000,000 of the amount
     it paid to the City; such repayment is to be made upon the earlier of the
     termination of construction of the Shreveport Casino or in monthly
     installments of $200,000, without interest, commencing with the opening of
     the Shreveport Casino. The $2,000,000 liability, net of a discount

                                       55
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


     in the original amount of $308,000, and the associated project costs were
     recorded upon the issuance of the Shreveport First Mortgage Notes in August
     1999.

     Scheduled payments of long-term debt as of December 31, 1999 are set forth
below:

           2000                                                 $  3,551,000
           2001                                                    4,361,000
           2002                                                      597,000
           2003                                                      168,000
           2004                                                       74,000
          Thereafter                                             510,000,000
                                                                ------------

            Total                                               $518,751,000
                                                                ============

     Interest paid, net of amounts capitalized, amounted to $33,991,000,
$29,161,000 and $29,479,000, respectively, during the years ended December 31,
1999, 1998 and 1997.

(4)  Leases

     Capital leases -

     HCA leases two parking garages under capital lease agreements.  The first
lease has an initial 30-year term ending in June 2023 with the right to extend
the term under renewal options for an additional 67 years. Rental payments
through June 2012 equal the City of Aurora's financing costs related to its
general obligation bond issue used to finance the construction of the parking
garage.  The general obligation bond issue includes interest at rates between 7%
and 7.625% per annum. The second lease has an initial term ending in September
2026 with the right to extend the lease for up to 20 additional years.  Rental
payments during the first 15 years equal the lessor's debt service costs related
to the industrial revenue bond issue used to finance a portion of the
construction costs of the parking garage.  The remaining construction costs were
funded by HCA.  In addition, HCA pays base rent equal to $15,000 per month,
subject to a credit of $615,000 at the rate of $10,000 per month, for
improvements made to the lessor's North Island Center banquet and meeting
facilities.  HCA is also responsible for additional rent, consisting of costs
such as maintenance costs, insurance premiums and utilities arising out of its
operation of both parking garages.

     HCA also leased certain equipment under capital lease agreements which
provided for interest at the rate of 11.2% per annum and expired in 1998.  HCT
previously leased certain gaming equipment under capital lease agreements.

     The original cost of HCA's parking garages is included in buildings on the
accompanying consolidated balance sheets at both December 31, 1999 and 1998 in
the amount of $27,358,000.  Assets under capital leases with an original cost of
$7,013,000 and $7,260,000, respectively, are included in operating equipment on
the accompanying consolidated balance sheets at December 31, 1999 and 1998.
Amortization expense with respect to these assets amounted to $983,000,
$1,281,000 and $2,042,000 during the years ended December 31, 1999, 1998 and
1997, respectively.  Accumulated amortization at December 31, 1999 and 1998 with
respect to these assets amounted to $11,541,000 and $10,805,000, respectively.

                                       56
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


     Future minimum lease payments under capital lease obligations as of
December 31, 1999 are as follows:

          2000                                  $  2,483,000
          2001                                     2,532,000
          2002                                     2,643,000
          2003                                     2,660,000
          2004                                     2,677,000
          Thereafter                              18,739,000
                                                ------------

          Total minimum lease payments            31,734,000
          Less amount representing interest      (11,786,000)
                                                ------------
          Present value of future
            minimum lease payments                19,948,000
          Current capital lease obligation          (987,000)
                                                ------------

          Long-term capital lease obligation    $ 18,961,000
                                                ------------
     Operating Leases -

     Other than the ground leases for the Tunica Casino and Shreveport Casino
discussed in Note 10, HCC and its subsidiaries also lease property and operating
equipment under various lease agreements accounted for as operating leases.
Although most of the operating lease agreements are either cancellable or have
initial terms of one year or less, certain other lease agreements expire at
various dates through the year 2008 and several contain automatic renewals
unless notice of termination is given.  Some of the operating leases also
include contingent rental payments based on levels of use; such contingent
rentals have not been significant. Exclusive of the ground leases, total rental
expense amounted to $2,401,000, $1,416,000 and $1,381,000, respectively, during
the years ended December 31, 1999, 1998 and 1997.

     Future minimum lease payments as of December 31, 1999 under operating
leases having an initial or remaining noncancelable lease term in excess of one
year are as follows:

          2000                                  $  666,000
          2001                                     656,000
          2002                                     388,000
          2003                                      82,000
          2004                                      75,000
          Thereafter                               287,000
                                                ----------

                                                $2,154,000
                                                ==========

                                       57
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


(5)  Income Taxes

     Components of HCC's provision for income taxes consist of the following:

<TABLE>
<CAPTION>
                                                           Year Ended December 31,
                                                   --------------------------------------
                                                       1999         1998         1997
                                                   ------------  ----------  ------------
<S>                                                <C>           <C>         <C>
 Current income tax (provision):
  Federal                                          $(3,359,000)  $       -   $(4,678,000)
  State                                             (1,240,000)   (735,000)     (200,000)
 Deferred income tax benefit (provision):
  Federal                                           10,948,000     731,000     9,289,000
  State                                                 44,000    (103,000)     (205,000)
 Change in valuation allowance                      (7,589,000)   (709,000)   (9,565,000)
                                                   ------------  ----------  ------------

                                                   $(1,196,000)  $(816,000)  $(5,359,000)
                                                   ===========   =========   ===========
</TABLE>

     Total federal income tax payments of $338,000 and $7,253,000, respectively,
were made during the years ended December 31, 1999 and 1998; no such payments
were made during the year ended December 31, 1997.  State tax payments of
$900,000, $797,000 and $683,000, respectively, were made during the years ended
December 31, 1999, 1998 and 1997.

     A reconciliation between the calculated tax benefit on income based on the
statutory rates in effect and the effective tax rates follows:
<TABLE>
<CAPTION>
                                                           Year Ended December 31,
                                                   --------------------------------------
                                                       1999         1998         1997
                                                   ------------  ----------  ------------
<S>                                                <C>           <C>         <C>
Calculated income tax benefit                      $ 27,362,000   $ 268,000   $ 4,003,000
Valuation allowance change                           (7,589,000)   (709,000)   (9,565,000)
Acquisition of management contracts                 (13,712,000)          -             -
Lobbying costs                                         (121,000)    (98,000)     (168,000)
Disallowance of meals and
 entertainment                                          (86,000)    (64,000)      (76,000)
State income taxes, net of federal benefit             (789,000)   (553,000)     (267,000)
Utilization of net operating loss carryforwards
 and other                                           (6,261,000)    340,000       714,000
                                                   ------------   ---------   -----------
Tax provision as shown on
 consolidated statements of operations             $ (1,196,000)  $(816,000)  $(5,359,000)
                                                   ============   =========   ===========
</TABLE>

     At December 31, 1999, HCC and its subsidiaries have net operating loss
carryforwards ("NOL's") for federal income tax purposes totaling approximately
$48,000,000, none of which begin to expire until the year 2019.  Additionally,
HCC and its subsidiaries have alternative minimum and other tax credits
available totaling $6,273,000 and $613,000, respectively.  Alternative minimum
tax credits do not expire and none of

                                       58
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


the other tax credits begin to expire until the year 2010. Existing accounting
pronouncements require that the tax benefit of such NOL's and tax credit
carryforwards, together with the tax benefit of 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. Management believes that it is more likely than not that future
consolidated taxable income of HCC (primarily from the Aurora Casino and the
Tunica Casino) will be sufficient to utilize a portion of the net deferred tax
assets. Accordingly, valuation allowances have been established which result in
net deferred tax assets of $5,246,000 and $1,843,000 at December 31, 1999 and
1998, respectively.

     The components of the net deferred tax asset and classification on the
accompanying consolidated balance sheets are as follows:
<TABLE>
<CAPTION>
                                              December 31,
                                      ----------------------------
                                          1999           1998
                                      -------------  -------------
<S>                                   <C>            <C>
Deferred tax assets:
 Net operating loss carryforwards     $ 16,359,000   $  1,305,000
 Valuation and other allowances          1,303,000      8,241,000
 Alternative minimum tax credit          6,273,000      4,913,000
 Investment and jobs tax credits           627,000        415,000
 Basis in limited partnership                    -      2,890,000
 Other liabilities and accruals          4,392,000      4,145,000
 Benefits accrual                        1,720,000      1,711,000
 Other                                   1,526,000        724,000
                                      ------------   ------------

  Total deferred tax assets             32,200,000     24,344,000
                                      ------------   ------------

Deferred tax liabilities:
 Depreciation and amortization          (6,201,000)    (8,610,000)
 Basis in debt obligations                       -       (727,000)
                                      ------------   ------------

  Total deferred tax liabilities        (6,201,000)    (9,337,000)
                                      ------------   ------------

Net deferred tax asset                  25,999,000     15,007,000
Valuation allowance                    (20,753,000)   (13,164,000)
                                      ------------   ------------

                                      $  5,246,000   $  1,843,000
                                      ============   ============
Classified as:
 Current deferred income tax asset    $  1,776,000   $    890,000
 Other assets                            4,043,000      1,524,000
 Other noncurrent liabilities             (573,000)      (571,000)
</TABLE>

     No deferred tax benefit was attributed to the extraordinary items in 1999
and 1998. The deferred tax benefit attributed to the extraordinary loss on early
extinguishment of debt in 1997 was $111,000.

                                       59
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


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

     The Internal Revenue Service recently completed its examination of the
consolidated federal income tax returns of HCC for the years 1993 and 1994.  The
additional estimated current federal income tax obligation resulting from such
examination is included in current federal income taxes payable on the
accompanying consolidated balance sheet at December 31, 1999.  HCC's
consolidated net deferred tax asset has also been adjusted to reflect the
results of the tax audit.  The Internal Revenue Service is continuing its
examination of the consolidated federal income tax returns of HCC for 1995 and
1996.  Management believes that the results of such examination will not have a
material adverse effect on the consolidated financial position or results of
operations of HCC.

(6)  Stock Options and Compensation Plans

 Hollywood Casino Corporation Stock Option Plans -

     HCC currently has two employee stock option plans in effect:  the Hollywood
Casino Corporation 1996 Long-Term Incentive Plan (the "1996 Plan") and the
Hollywood Casino Corporation 1992 Stock Option Plan (the "1992  Plan").  The
1996 Plan and the 1992 Plan provide for the granting of nonqualified stock
options and incentive stock options that are intended to qualify for the special
tax treatment under the Internal Revenue Code; the 1996 Plan also provides for
the granting of restricted stock.  The shares to be offered under the 1996 Plan
and the 1992 Plan consist of shares of Class A Common Stock. The 1996 Plan and
the 1992 Plan provide for the granting of 3,000,000 and 1,197,000 shares,
respectively, of Class A Common Stock of which 653,000 and 147,006,
respectively, remain available for future grant as of December 31, 1999.

     The 1996 Plan and the 1992 Plan are administered by committees of HCC's
Board of Directors. Options granted under the 1996 Plan become vested at the
discretion of the Committee of the Board of Directors (however, vesting for
certain officers, directors and shareholders may not be less than six months)
and may be exercised for a period of not more than ten years (five years in the
case of incentive stock options) from the date of grant. No more than 500,000
shares may be awarded to any individual during any fiscal year and incentive
stock options are subject to a $100,000 calendar year limitation. Options
granted under the 1992 Plan become vested over a three year period, are
exercisable for a term ending not more than seven years (five years in the case
of incentive stock options) from the date of the grant and incentive stock
options are subject to limitations on the quantity exercised in a calendar year.
All options granted through December 31, 1999 under both the 1996 Plan and the
1992 Plan have been granted at an exercise price equal to the fair market value
as of the date of the grant. As of December 31, 1999, options to purchase
2,347,000 shares remain outstanding under the 1996 Plan, of which over 51% are
at an exercise price of $1.25 per share. An additional 48% have exercise prices
ranging from $1.75 per share to $3.13 per share; the remaining options have an
exercise price of $5.25 per share. Options outstanding under the 1996 plan have

                                       60
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


a weighted average exercise price of $1.87 and a weighted average remaining
contractual life of 56 months. As of December 31, 1999, no options are
outstanding under the 1992 Plan.

   The following table lists the combined activity of the 1996 Plan and the 1992
Plan:
<TABLE>
<CAPTION>
                                               Year Ended December 31,
                          --------------------------------------------------------------
                                   1999                 1998                 1997
                          --------------------  --------------------  ------------------
                                      Weighted              Weighted            Weighted
                                      Average               Average             Average
                                      Exercise              Exercise            Exercise
                           Options     Price     Options     Price    Options    Price
                          ----------  --------  ----------  --------  --------  --------
<S>                       <C>         <C>       <C>         <C>       <C>       <C>
Outstanding options at
 beginning of year        1,090,000   $   2.51    660,008   $ 2.86    410,008   $ 2.54
 Options cancelled          (27,000)      1.25    (50,000)    2.06          -        -
 Options granted          1,284,000       1.30    520,000     1.83    300,000     2.81
 Options exercised                -          -    (40,008)   .0006    (50,000)   .0006
                          ----------  --------  ----------            --------
Outstanding options
 at end of year           2,347,000   $   1.86  1,090,000   $ 2.51    660,008   $ 2.86
                          ==========  ========  ==========            ========
Exercisable options
 at end of year           1,956,400   $   1.91    920,000   $ 2.62    360,008   $ 2.90
</TABLE>

     During 1996, HCC also adopted the Hollywood Casino Corporation 1996 Non-
Employee Director Stock Plan (the "Directors' Plan") providing for the grant of
non-qualified stock options of Class A common stock of HCC.  The Directors' Plan
provides for the granting of 150,000 shares of Class A common stock of which
100,000 remain available for future grant as of December 31, 1999.  An initial
option grant of 10,000 shares was made to the two non-employee directors upon
adoption of the plan; future outside directors receive an option grant of 10,000
shares upon election to the Board of Directors.  In addition, each outside
director receives a grant of 2,500 shares on January 15 of each year.  All such
grants are at an exercise price equal to the fair market value as of the date of
the grant, vest after six months and expire no later than ten years from the
date of grant.  The Directors' Plan is administered by a Committee of the Board
of Directors.  As of December 31, 1999, 50,000 shares remain outstanding at a
weighted average exercise price of $1.64 per share.

                                       61
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


     The following table lists the activity of the Directors' Plan:
<TABLE>
<CAPTION>
                                              Year Ended December 31,
                           ----------------------------------------------------------
                                 1999                 1998               1997
                           -----------------  --------------------  -----------------
                                    Weighted              Weighted           Weighted
                                    Average               Average            Average
                                    Exercise              Exercise           Exercise
                           Options    Price   Options      Price    Options   Price
                           -------  --------  -------     --------  -------  --------
<S>                        <C>      <C>       <C>         <C>       <C>      <C>
Outstanding options at
 beginning of year          42,500  $   1.72   35,000(1)  $   4.93   20,000  $   6.25
 Options granted             7,500      1.19    7,500         1.56   15,000      3.17
 Options exercised             -         -        -            -        -         -
                           -------  --------  -------     --------  -------  --------
Outstanding options at
 end of year                50,000  $   1.64   42,500     $   1.72   35,000  $   4.93
                           =======  ========  =======     ========  =======  ========
Exercisable options at
 end of year                50,000  $   1.64   42,500      $   1.72   25,000  $   5.78
</TABLE>

---------------
(1) During June 1998, the Board of Directors authorized the repricing of options
    to purchase 35,000 shares of common stock granted during 1996 and 1997 to
    non-employee directors of the Company.  The exercise price was adjusted to
    $1.75 per share, the fair market value as of the date of the repricing; all
    of the repriced options are fully vested.  No shareholder owning 1% or more
    of the Company's common stock participated in the repricing.

     The Company has elected to apply Opinion 25 with respect to accounting for
options.  Based on such election, no compensation expense has been recognized in
the accompanying consolidated financial statements as a result of the granting
of stock options.  Had compensation expense been determined consistent with SFAS
123, the net loss (net of income taxes) for the years ended December 31, 1999,
1998 and 1997 would have increased by approximately $214,000, $136,000 and
$251,000, respectively, increasing both basic and diluted net loss per common
share for each year by $.01.

     The fair value of each option grant was estimated on the date of grant
using a method approximating the Black-Scholes option pricing model. The
assumptions applied are set forth below:
<TABLE>
<CAPTION>
                                   Year Ended December 31,
                               -------------------------------
                                  1999        1998      1997
                               ----------  ----------  -------
<S>                            <C>         <C>         <C>
Risk free interest rate              4.8%        5.4%     5.3%
Dividend yield                        -           -        -
Expected life                   1-5 years   1-4 years   1 year
Volatility                          54.8%       45.5%    57.6%
Weighted average fair value    $      .33  $      .42   $  .70
</TABLE>

                                       62
<PAGE>

  Compensation Plan -

     HCC has agreements with certain of its principal shareholders and key
executive officers providing for (1) lifetime pension benefits upon the
expiration of existing employment contracts and subsequent consulting agreements
and (2) death benefits to be paid for a period of ten years.  The obligations
under these agreements, which are not funded, are being charged to operations
over the remaining terms of the employment agreements.  Amounts charged to
expense under the agreements for the years ended December 31, 1999, 1998 and
1997 were $25,000, $4,000 and $18,000, respectively.  Obligations accrued under
the agreements at December 31, 1999 and 1998 amounted to $5,058,000 and
$5,033,000, respectively, and are included in other noncurrent liabilities on
the accompanying consolidated balance sheets.

  Employee Retirement Savings Plan -

     The Company has a retirement savings plan under Section 401(k) of the
Internal Revenue Code covering all of its employees who meet certain eligibility
requirements as to age and period of employment. The plan allows employees to
contribute up to 15% of their salary on a pre-tax basis (subject to statutory
limitations) and invest such monies in a choice of mutual funds on a tax-
deferred basis.  The Company matches a portion of the participating employees'
contributions to the plan and may, from time to time, make additional
discretionary contributions.  For the years ended December 31, 1999, 1998 and
1997, HCC made company contributions to the plan totaling $652,000, $778,000 and
$559,000, respectively.

(7)  Transactions with Related Parties

     GBCC and its Subsidiaries -

     HCC had loans outstanding to GBCC amounting to $6,750,000 as of both
December 31, 1999 and 1998. The loans consist of a $6,500,000 demand note issued
in the third quarter of 1996 with interest at the rate of 13.75% per annum
payable quarterly commencing October 1, 1996 and an additional $250,000 note
which became due on April 1, 1998 for which payment has not been received. The
$250,000 note continues to bear interest at the rate of 14% per annum, payable
semiannually. Effective as of January 1, 1999, interest earned on the
outstanding obligations from GBCC is being fully reserved for the same reasons
as discussed below with respect to the PPI Funding Notes. In addition, interest
receivable on the notes was reserved by an additional $1,000,000 during 1999.
Interest income earned on loans and advances to GBCC amounted to $942,000 and
$977,000, respectively, during the years ended December 31, 1998 and 1997.
Interest receivable amounting to $781,000, net of a valuation allowance of
$1,942,000, and $1,781,000 is included in due from affiliates on the
accompanying consolidated balance sheets at December 31, 1999 and 1998,
respectively.

     In connection with its April 1, 1997 acquisition of the general partnership
interest in PML (see Note 1), HCC issued a five-year note in the original amount
of $3,800,000 and assigned $13,750,000 undiscounted principal amount of PPI
Funding Notes (see below) and $350,000 accrued interest due from GBCC to PPI
Corporation.  The $3,800,000 note was payable in monthly installments of
$83,000, including interest at the rate of 14% per annum, commencing on May 1,
1997, with additional quarterly variable principal payments commencing on July
1, 1997 in an amount equal to the general partner's share of quarterly cash

                                       63
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


distributions, as defined, from PML.  The note payable to PPI was amended as of
the October 1999 acquisition of PCC (Note 1) to provide for monthly installments
of $83,000 including interest and additional quarterly principal payments of
$21,000 beginning January 1, 2000.  HCC incurred interest expense with respect
to the note amounting to $348,000, $439,000 and $383,000, respectively, during
the years ended December 31, 1999, 1998 and 1997.  Accrued interest of $24,000
and $34,000 with respect to the note is included in interest payable on the
accompanying consolidated balance sheets at December 31, 1999 and 1998,
respectively.

     On February 17, 1994, PPI Funding Corp., a subsidiary of GBCC, issued
$40,524,000 discounted principal amount of new deferred interest notes (the "PPI
Funding Notes") to HCC in exchange for $38,779,000 principal amount of 15.5%
unsecured notes (the "PCPI Notes") held by HCC and issued by PCPI Funding Corp.,
another subsidiary of GBCC.  The PPI Funding Notes were discounted to yield
interest at the rate of 14.875% per annum and had an original face value of
$110,636,000.  Subsequent principal payments by PPI Funding Corp. reduced the
maturity value of the notes to $98,353,000 at December 31, 1996.  During the
second quarter of 1997, HCC assigned $13,750,000 undiscounted principal amount
of the PPI Funding Notes to PPI Corporation as consideration, in part, for HCC's
acquisition of the general partnership interest in PML.  Such assignment reduced
the maturity value of the notes to $84,603,000.   On January 5, 1998, GBCC's
most significant subsidiary, Greate Bay Hotel and Casino, Inc. ("GBHC"), filed
for protection under Chapter 11 of the United States Bankruptcy Code.  It was
anticipated that GBCC's equity ownership of GBHC would be significantly reduced
in the reorganization under Chapter 11 and, as a consequence, HCC forgave
$37,000,000 undiscounted principal amount of the PPI Funding Notes at December
31, 1997, further reducing the maturity value to $47,603,000.  Payment  of
interest is deferred through February 17, 2001 at which time interest will
become payable semiannually, with the unpaid principal balance due on February
17, 2006.  The PPI Funding Notes are collateralized by a pledge of all of the
common stock of a subsidiary of GBCC.

     Prior to December 31, 1996, when GBCC and its subsidiaries were members of
the HCC consolidated group, it was anticipated that one of HCC's primary methods
of realizing the carrying value of the PPI Funding Notes would be through the
utilization of NOL's of GBCC.  As a result of HCC's distribution of GBCC stock
at December 31, 1996, GBCC's NOL's are no longer available for utilization in
HCC's consolidated federal income tax returns.  Accordingly, HCC provided a
valuation allowance in the amount of $18,741,000 during 1996 which reduced the
carrying amount of the PPI Funding Notes to their estimated realizable value of
$35,597,000 at December 31, 1996.  As a result of the 1997 forgiveness of debt
discussed above, the carrying amount of the PPI Funding Notes was further
reduced to an estimated realizable value of $12,322,000 which was reflected on
the accompanying consolidated balance sheet at December 31, 1998.

     The remaining estimated net realizable balance of $12,322,000 was fully
reserved in 1999 as the acquisition of PCC by HCC in October 1999 terminated the
Aurora Casino management contract and Tunica Casino consulting agreement.  These
agreements provided a source of funds to GBCC which is now no longer available.
In addition, ACSC, which is GBCC's only remaining operating subsidiary,
experienced a loss from operations in 1999, further reducing cash flows
available for repayment of the PPI Funding Notes.


                                       64
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


     HCT incurred a monthly consulting fee of $100,000 pursuant to a consulting
agreement with PCC prior to its termination on October 12, 1999.  Such fees
amounted to $939,000, $1,200,000 and $1,200,000, respectively, during 1999, 1998
and 1997.

     Advanced Casino Systems Corporation ("ACSC"), a subsidiary of GBCC,
provides computer, marketing and other administrative services to HCC and its
subsidiaries. Computer services provided include hardware, software, and
operator support and, for the most part, such services are billed by ACSC at its
direct costs plus expenses incurred. ACSC and HCT entered into a Computer
Services Agreement dated as of January 1, 1994 and renewed through December 31,
1999 to provide such services and to license or sublicense to HCT computer
software necessary to operate HCT's casino, hotel and related facilities and
business operations. HCT pays ACSC for such equipment and licenses such software
at amounts and on terms and conditions that ACSC provides to unrelated third
parties. HCT also paid ACSC a fixed license fee of $33,600 per month through
December 31, 1999. ACSC also provided services to HCA through HCA's management
agreement with PML. The service agreements with PML and HCT terminated on
October 13 and December 31, 1999, respectively. ACSC continues to provide
services to HCT and HCA on an as needed basis at third party consulting rates
while negotiations for new service agreements continue. ACSC's billings to HCC
and its subsidiaries for products and services during the years ended December
31, 1999, 1998 and 1997 amounted to $1,285,000, $1,147,000 and $809,000,
respectively. At December 31, 1999 and 1998, unpaid charges of $106,000 and
$122,000, respectively, are included in due to affiliates on the accompanying
consolidated balance sheets.

     HCC allocates certain general and administrative costs to GBCC and its
subsidiaries pursuant to services agreements.  Such allocated costs and fees
amounted to $610,000, $974,000 and $1,843,000, respectively, during the years
ended December 31, 1999, 1998 and 1997.  Receivables from GBCC and its
subsidiaries in the amount of $20,000 and $172,000 are included in due from
affiliates on the accompanying consolidated balance sheets at December 31, 1999
and 1998, respectively.

     During 1998, the Company determined that it should revise its tax treatment
of the spin-off of the stock of GBCC which occurred on December 31, 1996.  As a
result of the revised tax treatment for the spin-off of GBCC stock to HCC's
shareholders, shareholders of the Company on the distribution date would also
have been required to revise their method of reporting the distribution received
on their separate federal income tax returns.  The Company committed to assume
the obligation for additional federal income taxes owed by its shareholders
arising from the revised tax treatment.  Consequently, the Company reached an
agreement with the Internal Revenue Service to settle such obligations on behalf
of its shareholders, exclusive of the Pratt Family, for $100,000 and to issue
new tax reporting forms to the Pratt Family.  Such forms required the Pratt
Family members to amend their federal income tax returns for 1996 resulting in
substantial additional tax obligations totaling approximately $790,000.  The
shareholder obligations assumed by the Company are included in other accrued
liabilities on the accompanying consolidated balance sheet at December 31, 1998;
all of these obligations were settled during 1999.

     Shreveport Partnership -

     In accordance with the amended and restated partnership agreement, HCL
loaned $1,000,000 to its joint venture partner which it used to make a
$1,000,000 capital contribution to the Shreveport Partnership.

                                       65
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


The loan accrues interest at the rate of prime commencing with the opening of
the Shreveport Casino and will be payable monthly. Principal on the loan is
payable on the tenth anniversary of the opening of the Shreveport Casino. The
loan, net of a discount of $64,000 at December 31, 1999, is included in other
noncurrent assets on the accompanying consolidated balance sheet. The joint
venture partner was also given credit for an additional $1,000,000 capital
contribution upon the closing of the Shreveport First Mortgage Notes and payment
of the $5,000,000 obligation as discussed in Note 3(g). The credit was in
recognition of guarantees provided by an affiliate of the joint venture partner
which were necessary for the Shreveport Partnership to obtain approval of its
development plans. The $2,000,000 equity interest of the joint venture partner
is included in minority interest on the accompanying consolidated financial
statements of HCC at December 31, 1999.

     For so long as it remains a joint venture partner, HCL's joint venture
partner will receive, among other things, an amount equal to 1% of "complex net
revenues" of the Shreveport Casino, as defined, which approximates net revenues.
Such payment is in exchange for the assignment by the partner of its interest in
the partnership to HCL.

     The Shreveport Partnership has also entered into an agreement with HCL's
joint venture partner to provide certain marine services for so long as it
remains a joint venture partner.  The Marine Services Agreement became effective
on September 22, 1998 and, in addition to the reimbursement of the partner for
its direct expenses incurred, the Shreveport Casino will pay a monthly fee of
$30,000 effective with its opening.  No payments have been made under the
agreement as of December 31, 1999.

Other

     HCC has occasionally chartered aircraft from an entity owned by a member of
the Pratt family. Charter fees, expenses and commissions amounted to $20,000 and
$268,000, respectively, during the years ended December 31, 1998 and 1997.

(8)  State Gaming Regulations

     Riverboat gaming operations in Illinois are subject to regulatory control
by the Illinois Gaming Board. Illinois law requires that HCA maintain its
Owners' License in order to operate. HCA's Owners' License was renewed by the
Illinois Gaming Board in December 1999 for a period of one year to December
2000. Management intends to request renewal of HCA's Owners' License at the
appropriate time in 2000 and anticipates that such renewal will be approved in
December 2000. Gaming operations in Mississippi are subject to regulatory
control by the Mississippi Gaming Commission. Under the provisions of the
Mississippi gaming regulations, HCT is required to maintain all necessary
licenses. The ownership license for the Tunica Casino has been renewed until
October 2001. Although not currently operating, HCL and the Shreveport
Partnership are subject to regulatory control by the LGCB and must maintain all
required licenses. The ownership license for the Shreveport Casino was renewed
in October 1999 for a period of five years.

                                       66
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


     If it were determined that gaming laws were violated by a licensee, the
gaming licenses held by each licensee could be limited, conditioned, suspended
or revoked.  In addition, the licensees and other persons involved could be
subject to substantial fines.

(9)  Litigation

  Planet Hollywood Litigation -

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

  Other Litigation -

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

     Third parties could assert obligations against the Shreveport Partnership
for liabilities that have arisen or that might arise against its predecessor or
the partners of its predecessor with respect to any period prior to September
22, 1998, the date on which HCL and its partners acquired their interests in the
Shreveport Partnership. Management believes that in the event such a claim
arises, it would be adequately covered under either existing indemnification
agreements with the former partners or insurance policies maintained by the
partnership's predecessor or its partners.

                                       67
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


     HCC and its subsidiaries are parties in various legal proceedings with
respect to the conduct of casino and hotel operations. Although a possible range
of loss cannot 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 on the consolidated financial position or results of
operations of HCC and its subsidiaries.

(10) Commitments and Contingencies

     Ground Leases -

     HCT entered into a ground lease covering 70 acres of land on which the
Tunica Casino was constructed. The ground lease was for an initial term of five
years from the opening date of the facility and, at HCT's option, may be renewed
for nine additional five-year periods. The lease is currently in its first five-
year renewal term. Obligations under the ground lease include both minimum
monthly fixed payments and percentage rent, which in the aggregate will be the
greater of 4% of Gross Revenues, as defined, or $1,100,000 per year. HCT is
responsible for all operating and other expenses of the property in accordance
with the lease terms. HCT expensed $4,138,000, $3,899,000 and $3,935,000,
respectively, during the years ended December 31, 1999, 1998 and 1997 in
connection with the ground lease.

     In May 1999, the Shreveport Partnership entered into a ground lease with
the City of Shreveport for the land on which the Shreveport Casino will be
built. The term of the lease began when construction commenced and will end on
the tenth anniversary of the date the Shreveport Casino opens. The Shreveport
Partnership has options to renew the lease on the same terms for up to an
additional forty years. The lease may be further renewed after that time at
prevailing rates and terms for similar leases. The City of Shreveport may
terminate the lease as a result of, among other things, a default by the
Shreveport Partnership under the lease or the failure to substantially complete
construction within the time period established by the LGCB. The Shreveport
Partnership may terminate the lease at any time if the operation of the
Shreveport Casino becomes uneconomic. Base rental payments under the lease are
$10,000 per month during the construction period increasing to $450,000 per year
upon opening and continuing at that amount for the remainder of the initial ten-
year lease term. During the first five-year renewal term, the annual base rental
will be $402,500. Subsequent renewal period base rental payments will increase
by 15% during each of the next four five-year renewal terms with no further
increases. In addition to the base rent, the Shreveport Partnership will pay
monthly percentage rent of not less than $500,000 per year equal to 1% of
monthly adjusted gross revenues and the amount, if any, by which monthly parking
facilities net income exceeds the parking income credit, as all such terms are
defined in the lease agreement. The Shreveport Casino made payments totaling
$56,000 during the year ended December 31, 1999 in connection with the ground
lease. Such payments have been capitalized as part of the construction costs of
the Shreveport Casino.

     Shreveport Casino Lease Commitment -

     The Shreveport Partnership has entered into a lease commitment agreement
with a third party lessor for up to $30,000,000 to be used to acquire furniture,
fixtures and equipment for the Shreveport Casino. Borrowings under the lease
commitment may be made monthly during the construction period in amounts of at
least $5,000,000 and will accrue interest at the rate of LIBOR plus 4%. During
the construction period, the Shreveport Partnership will only pay interest on
outstanding borrowings as well as a fee of .5% per

                                       68
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


annum on the undrawn portion of the commitment. Upon opening of the Shreveport
Casino, the outstanding borrowings will become payable quarterly including
interest over a three year period to fully amortize the loan. The lease will be
treated as a capital lease for financial reporting purposes. Borrowings under
the lease commitment will be collateralized by the furniture, fixtures and
equipment purchased. The lease agreement will contain certain covenants
substantially similar to those included in the indenture for the Shreveport
First Mortgage Notes (see Note 3).

(11) Third Party Notes Receivable

     During 1995, HCC loaned $10,000,000 to an unaffiliated gaming company in
the form of two $5,000,000 notes. On February 27, 1998, both parties agreed to
settle the outstanding obligations with the payment of $4,400,000 and the
issuance of two new, short-term obligations totaling $1,600,000, which were paid
in April 1998. The $4,000,000 difference between the $10,000,000 carrying amount
of the notes receivable and the agreed upon settlement was reflected as a write
down of the notes receivable during 1997 and is included in write down of assets
on the accompanying consolidated statement of operations.

(12) Supplemental Cash Flow Information

     As a result of the acquisition of a joint venture partner's interest in the
Shreveport Partnership during April 1999 (see Note 1), the joint venture became
a consolidated subsidiary of HCC. The acquisition of the joint venture interest
and consolidation of the joint venture resulted in the assumption of liabilities
as follows:

   Fair value of non-cash assets acquired                   $ 1,523,000
   Cash acquired                                              1,525,000
   Contingent liability for purchase                         (2,499,000)
   Preacquisition earnings attributable to joint venture
     partner                                                    (46,000)
   Cash paid for capital stock                                   (1,000)
                                                            -----------

       Liabilities assumed                                  $   502,000
                                                            ===========

     The issuance of a note to a former partner of the predecessor to the
partnership developing the Shreveport Casino at a discounted face amount of
$1,692,000 (see Note 3(g)) and the associated project costs have been excluded
from the accompanying consolidated statement of cash flows for the year ended
December 31, 1999 as a non-cash transaction.

     The additional $1,000,000 credit given to HCL's remaining joint venture
partner as an additional contribution to the Shreveport Partnership (see Note 7)
and the corresponding addition to construction in progress have been excluded
from the accompanying consolidated statement of cash flows for the year ended
December 31, 1999 as a non-cash transaction.

     During the second quarter of 1997, HCC issued 100,000 shares of its common
stock in exchange for a $10,000,000 loan commitment from unrelated third
parties.  The commitment fee was valued at $375,000, the fair market value of
the stock on the date of its issuance, and was expensed during 1997.

                                       69
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


     Also during the second quarter of 1997, HCC acquired the general
partnership interest in PML (see Notes 1 and 7). The purchase price included the
assignment of certain receivables from GBCC and the issuance of a note to GBCC.
In connection with the acquisition, certain liabilities were assumed as follows:

        Assignment of PPI Funding Notes       $(7,597,000)
        Assignment of interest receivable        (350,000)
        Note issued                            (3,800,000)
        Charge to paid-in capital (Note 1)     12,747,000
                                              -----------

        Net liabilities assumed               $ 1,000,000
                                              ===========

(13) 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 amount approximates fair value
     -------------------------
because of the short maturity of these instruments.

     Short-term investments - The carrying amount approximates fair value
     ----------------------
because of the short maturity of these investments.

     Restricted cash and cash restricted for construction project - The carrying
     ------------------------------------------------------------
amount approximates fair value because of the short maturity of these
investments.

     Notes receivable - The fair value of notes receivable is calculated based
     ----------------
on the estimated realizable value.

     Interest payable - The carrying amount of interest payable approximates
     ----------------
fair value because of the short maturity of the obligation.

     Long-term debt - The fair value of HCC's long-term debt is estimated based
     --------------
on either the quoted market price of the underlying debt issue or on the
discounted cash flow of future payments utilizing current rates available to HCC
for debt of similar remaining maturities.  Debt obligations with a short
remaining maturity are valued at the carrying amount.

                                       70
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


     The estimated carrying amounts and fair values of HCC's financial
instruments are as follows:
<TABLE>
<CAPTION>
                                           December 31, 1999            December 31, 1998
                                     --------------------------  -------------------------------
                                       Carrying                    Carrying
                                        Amount      Fair Value      Amount        Fair Value
                                     ------------  ------------  ------------  -----------------
<S>                                  <C>           <C>           <C>           <C>
Financial Assets
 Cash and cash equivalents           $115,351,000  $115,351,000  $ 42,118,000       $ 42,118,000
 Short-term investments                         -             -     3,905,000          3,905,000
 Cash restricted for construction
  project                             147,310,000   147,310,000             -                  -
 Notes receivable - affiliates          6,750,000     6,750,000     6,750,000          6,750,000
 PPI Funding Notes                              -             -    12,322,000         12,322,000

Financial Liabilities
 Interest payable                    $ 16,784,000  $ 16,784,000  $  4,872,000       $  4,872,000
 11.25% Senior Secured Notes          310,000,000   320,850,000             -                  -
 Floating rate Senior Secured
    Notes                              50,000,000    50,625,000             -                  -
 13% Shreveport First Mortgage
  Notes                               150,000,000   160,500,000             -                  -
 12 .75% Senior Secured Notes                   -             -   207,212,000        220,681,000
 Equipment loans                        2,488,000     2,514,000     1,291,000          1,335,000
 Bank debt                              1,952,000     1,936,000     1,900,000          1,900,000
 Bank credit facility                     278,000       278,000       462,000            462,000
 Note payable - affiliate               2,033,000     2,033,000     2,836,000          2,972,000
 Other debt                             1,759,000     1,748,000             -                  -
</TABLE>

(14) Unrestricted Subsidiaries (Unaudited)

     Under the terms of the indenture to the Senior Secured Notes (see Note 3),
certain subsidiaries and investees of HCC have been designated as "Unrestricted
Subsidiaries."  Unrestricted Subsidiaries generally do not provide credit
support for the Senior Secured Notes and obligations of Unrestricted
Subsidiaries are non-recourse to HCC.  Unrestricted Subsidiaries of HCC during
1999 consisted of HCL and its subsidiaries; HWCC-Holdings, Inc.; HWCC-Golf
Course Partners, Inc.; and PML.  The following presentation

                                       71
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


summarizes the financial position and results of operations of the Company
reflecting its Unrestricted Subsidiaries under the equity method of accounting.
Such information is not intended to be a presentation in conformity with
generally accepted accounting principles and is included for purposes of
complying with certain reporting requirements as contained in the indenture to
the Senior Secured Notes.
<TABLE>
<CAPTION>

                                                      Condensed Balance Sheet
                                                         December 31, 1999
                                                      (amounts in thousands)

<S>                                                <C>                     <C>                                        <C>
Current Assets:                                                            Current Liabilities:
Cash and cash items                                $ 93,020                Current maturities of long-
Accounts receivable, net of allowance                                      term debt and capital leases               $   4,138
  of $1,826                                           4,048                Accounts payable and accrued
Inventories                                           1,714                liabilities                                   28,429
Prepaid expenses and other current assets             3,754                Other current liabilities                      5,983
                                                                                                                      ---------
Due from affiliates                                   7,705                                                              38,550
                                                   --------                                                           ---------
                                                    110,241                Long-term debt                               363,600
                                                   --------                                                           ---------
Investment in and advances to                                              Capital lease obligations                     18,961
                                                                                                                      ---------
  Unrestricted Subsidiaries                          49,039                Other noncurrent liabilities                   5,631
                                                   --------                                                           ---------
Property and equipment, net of
  accumulated depreciation and                                             Shareholder's deficit:
  amortization of $92,956                           164,809                Common stock                                       2
                                                   --------
                                                                           Additional paid-in capital                   216,928
Other Assets:                                                              Accumulated deficit                         (291,087)
                                                                                                                      ---------
Deferred finance costs                               10,328
Other assets                                         18,168                                                             (74,157)
                                                   --------                                                           ---------
                                                     28,496
                                                   --------

                                                   $352,585                                                           $ 352,585
                                                   ========                                                           =========
</TABLE>

                                       72
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


                       Condensed Statement of Operations
                         Year Ended December 31, 1999
                            (amounts in thousands)


Net revenues                                           $307,377
                                                       --------
Expenses:
 Departmental expenses                                  221,969
 General and administrative                              18,153
 Management and consulting fees                           8,669
 Depreciation and amortization                           15,378
 Development                                                732
 Termination of management and consulting agreement      40,389
 Write down of assets                                    13,322
                                                       --------

    Total expenses                                      318,612
                                                       --------

Loss from operations                                    (11,235)
Non-operating expense, net                              (35,355)
                                                       --------
Loss before taxes, extraordinary and other items        (46,590)
Provision for taxes                                      (1,195)
                                                       --------
Loss before extraordinary and other items               (47,785)
Equity in losses of unrestricted subsidiaries            (3,533)
                                                       --------

Loss before extraordinary item                          (51,318)
Extraordinary item - loss from early
 extinguishment of debt                                 (30,353)
                                                       --------

Net loss                                               $(81,671)
                                                       ========

                                       73
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


(15) Selected Quarterly Financial Data (Unaudited)
<TABLE>
<CAPTION>
                                                                Quarter
                                        -------------------------------------------------------
                                           First         Second         Third         Fourth
                                        -----------   ------------   -----------   ------------
<S>                                     <C>           <C>            <C>           <C>
Year ended December 31, 1999:

Net revenues                            $69,773,000   $ 76,151,000   $82,948,000   $ 78,505,000
                                        ===========   ============   ===========   ============

Net income (loss)                       $   330,000   $(28,131,000)  $ 1,102,000   $(54,972,000)
                                        ===========   ============   ===========   ============
Basic net income (loss) per
  common share (1)                      $       .01   $      (1.13)  $       .05   $      (2.20)
                                        ===========   ============   ===========   ============
Diluted net income (loss) per common
  share (1)                             $       .01   $      (1.12)  $       .04   $      (2.20)
                                        ===========   ============   ===========   ============
Year ended December 31, 1998:

Net revenues                            $63,807,000   $ 66,353,000   $70,848,000   $ 67,752,000
                                        ===========   ============   ===========   ============

Net income (loss)                       $    69,000   $    145,000   $  (204,000)  $ (2,023,000)
                                        ===========   ============   ===========   ============
Basic and diluted net income
 (loss) per common share (1)            $       .00   $        .01   $       .01   $       (.08)
                                        ===========   ============   ===========   ============
</TABLE>

--------------------
(1) Earnings per share is calculated separately for each quarter and the full
    year.  Accordingly, annual earnings per share will not necessarily equal the
    total of the interim periods.

                                       74
<PAGE>

INDEPENDENT AUDITORS' REPORT


To Hollywood Casino - Aurora, Inc.:

We have audited the accompanying balance sheets of Hollywood Casino - Aurora,
Inc. (the Company and an Illinois corporation) as of December 31, 1999 and 1998,
and the related statements of operations, changes in shareholder's equity and
cash flows for each of the three years in the period ended December 31, 1999.
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 Hollywood Casino - Aurora, Inc.
as of December 31, 1999 and 1998, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1999 in
conformity with generally accepted accounting principles.



Deloitte & Touche LLP
Dallas, Texas
February 25, 2000

                                       75
<PAGE>

                        HOLLYWOOD CASINO - AURORA, INC.
                 (wholly owned by Hollywood Casino Corporation)

                                 BALANCE SHEETS

                                     ASSETS
<TABLE>
<CAPTION>
                                                             December 31,
                                                     ----------------------------
                                                         1999           1998
                                                     -------------  -------------
<S>                                                  <C>            <C>
Current Assets:
 Cash and cash equivalents                           $ 22,148,000   $  9,718,000
 Accounts receivable, net of allowances
  of $836,000 and $655,000, respectively                1,036,000      1,128,000
 Inventories                                              845,000        606,000
 Deferred income taxes                                  1,809,000      1,540,000
 Due from affiliates                                    1,956,000        428,000
 Prepaid expenses and other current assets                714,000      1,010,000
                                                     ------------   ------------

  Total current assets                                 28,508,000     14,430,000
                                                     ------------   ------------

Property and Equipment:
 Land improvements                                      3,167,000      3,167,000
 Buildings and improvements                            46,205,000     46,205,000
 Riverboats                                            37,843,000     37,642,000
 Operating equipment                                   39,898,000     37,192,000
 Construction in progress                               1,625,000        615,000
                                                     ------------   ------------

                                                      128,738,000    124,821,000
 Less - accumulated depreciation and amortization     (47,717,000)   (41,114,000)
                                                     ------------   ------------

  Net property and equipment                           81,021,000     83,707,000
                                                     ------------   ------------

Other Assets                                            2,230,000      2,173,000
                                                     ------------   ------------

                                                     $111,759,000   $100,310,000
                                                     ============   ============
</TABLE>

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

                                       76
<PAGE>

                        HOLLYWOOD CASINO - AURORA, INC.
                 (wholly owned by Hollywood Casino Corporation)

                                 BALANCE SHEETS

                      LIABILITIES AND SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
                                                   December 31,
                                            ---------------------------
                                                1999           1998
                                            -------------  ------------
<S>                                         <C>            <C>
Current Liabilities:
 Current maturities of long-term debt
  and capital lease obligations             $  1,794,000   $  6,517,000
 Accounts payable                              1,857,000      2,199,000
 Accrued liabilities -
  Salaries and wages                           2,758,000      2,300,000
  Interest                                     1,769,000      1,058,000
  Gaming and other taxes                       1,129,000        981,000
  Insurance                                    1,051,000        965,000
  Other                                        2,115,000      1,374,000
 Due to affiliates                               218,000      2,109,000
 Other current liabilities                     1,479,000        993,000
                                            ------------   ------------

  Total current liabilities                   14,170,000     18,496,000
                                            ------------   ------------

Long-Term Debt                                67,152,000     27,783,000
                                            ------------   ------------

Capital Lease Obligations                     18,961,000     19,948,000
                                            ------------   ------------

Deferred Income Taxes                          5,429,000      5,363,000
                                            ------------   ------------

Commitments and Contingencies

Shareholder's Equity:
 Common stock, $.01 par value per share;
  2,000,000 shares authorized; 1,501,000
  shares issued and outstanding                   15,000         15,000
 Additional paid-in capital                   25,541,000     25,541,000
 (Accumulated deficit) retained earnings     (19,509,000)     3,164,000
                                            ------------   ------------

  Total shareholder's equity                   6,047,000     28,720,000
                                            ------------   ------------

                                            $111,759,000   $100,310,000
                                            ============   ============
</TABLE>

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

                                       77
<PAGE>

                        HOLLYWOOD CASINO - AURORA, INC.
                 (wholly owned by Hollywood Casino Corporation)

                            STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                 Year Ended December 31,
                                       -------------------------------------------
                                           1999           1998           1997
                                       -------------  -------------  -------------
<S>                                    <C>            <C>            <C>
Revenues:
 Casino                                $190,608,000   $156,404,000   $153,965,000
 Food and beverage                       14,560,000     13,771,000     14,213,000
 Other                                    3,272,000      2,816,000      1,919,000
                                       ------------   ------------   ------------

                                        208,440,000    172,991,000    170,097,000
 Less - promotional allowances          (11,190,000)   (10,044,000)    (9,790,000)
                                       ------------   ------------   ------------

 Net revenues                           197,250,000    162,947,000    160,307,000
                                       ------------   ------------   ------------
Expenses:
 Casino                                 131,143,000    112,272,000    102,127,000
 Food and beverage                        4,829,000      4,855,000      4,885,000
 Other                                    1,114,000      1,332,000      1,641,000
 General and administrative              12,758,000     14,136,000     14,673,000
 Termination of management contract      37,000,000              -              -
 Depreciation and amortization            7,050,000      7,350,000      7,491,000
                                       ------------   ------------   ------------

  Total expenses                        193,894,000    139,945,000    130,817,000
                                       ------------   ------------   ------------

Income from operations                    3,356,000     23,002,000     29,490,000
                                       ------------   ------------   ------------
Non-operating income (expense):
 Interest income                            533,000        112,000        156,000
 Interest expense                        (6,145,000)    (6,046,000)    (6,847,000)
 (Loss) gain on disposal of assets         (510,000)         4,000        134,000
                                       ------------   ------------   ------------

  Total non-operating expense, net       (6,122,000)    (5,930,000)    (6,557,000)
                                       ------------   ------------   ------------

(Loss) income before income taxes        (2,766,000)    17,072,000     22,933,000

Income tax provision                       (367,000)    (6,559,000)    (8,419,000)
                                       ------------   ------------   ------------

Net (loss) income                      $ (3,133,000)  $ 10,513,000   $ 14,514,000
                                       ============   ============   ============
</TABLE>

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

                                       78
<PAGE>

                        HOLLYWOOD CASINO - AURORA, INC.
                 (wholly owned by Hollywood Casino Corporation)

                  STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
                  For the Three Years Ended December 31, 1999
<TABLE>
<CAPTION>
                                                                      Retained
                                    Common Stock      Additional      Earnings
                              ----------------------    Paid-in     (Accumulated
                                 Shares      Amount     Capital       Deficit)
                              ------------  --------  ------------  ------------
<S>                           <C>           <C>       <C>           <C>
BALANCE, January 1, 1997         1,501,000   $15,000   $24,541,000  $  3,477,000

 Net income                              -         -             -    14,514,000
 Dividends                               -         -             -   (13,599,000)
                              ------------  --------  ------------  ------------

BALANCE, December 31, 1997       1,501,000    15,000    24,541,000     4,392,000

  Capital contributions                  -         -     1,000,000             -
  Net income                             -         -             -    10,513,000
  Dividends                              -         -             -   (11,741,000)
                              ------------  --------  ------------  ------------

BALANCE, December 31, 1998       1,501,000    15,000    25,541,000     3,164,000

 Net loss                                -         -             -    (3,133,000)
 Dividends                               -         -             -   (19,540,000)
                              ------------  --------  ------------  ------------

BALANCE, December 31, 1999       1,501,000   $15,000   $25,541,000  $(19,509,000)
                              ============  ========  ============  ============
</TABLE>

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

                                       79
<PAGE>

                        HOLLYWOOD CASINO - AURORA, INC.
                 (wholly owned by Hollywood Casino Corporation)

                            STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                     Year Ended December 31,
                                                           -------------------------------------------
                                                               1999           1998           1997
                                                           -------------  -------------  -------------
<S>                                                        <C>            <C>            <C>
OPERATING ACTIVITIES:
 Net (loss) income                                         $ (3,133,000)  $ 10,513,000   $ 14,514,000
 Adjustments to reconcile net (loss) income to net
  cash provided by operating activities:
  Depreciation and amortization                               7,050,000      7,350,000      7,491,000
  Provision for doubtful accounts                               300,000        273,000        200,000
  Loss (gain) on disposal of assets                             510,000         (4,000)      (134,000)
  Deferred income tax (benefit) provision                      (203,000)     1,018,000      2,183,000
  (Increase) decrease in accounts receivable                   (208,000)       202,000         92,000
  Increase in accounts payable and accrued liabilities        2,020,000        261,000        151,000
  Net change in intercompany balances                        (3,419,000)        54,000        395,000
  Net change in other current assets and liabilities            543,000       (106,000)        85,000
  Net change in other noncurrent assets and liabilities         (57,000)       (33,000)      (120,000)
                                                           ------------   ------------   ------------

 Net cash provided by operating activities                    3,403,000     19,528,000     24,857,000
                                                           ------------   ------------   ------------

INVESTING ACTIVITIES:
 Purchases of property and equipment                         (5,109,000)    (5,986,000)    (2,413,000)
 Proceeds from sale of assets                                    17,000         47,000        173,000
                                                           ------------   ------------   ------------

 Net cash used in investing activities                       (5,092,000)    (5,939,000)    (2,240,000)
                                                           ------------   ------------   ------------

FINANCING ACTIVITIES:
 Proceeds from issuance of long-term debt                    66,757,000      2,000,000              -
 Capital contributions                                                -      1,000,000              -
 Repayments of long-term debt                               (32,205,000)    (5,863,000)    (5,681,000)
 Payments on capital lease obligations                         (893,000)      (861,000)      (777,000)
 Dividends                                                  (19,540,000)   (11,741,000)   (13,599,000)
                                                           ------------   ------------   ------------

 Net cash provided by (used in) financing activities         14,119,000    (15,465,000)   (20,057,000)
                                                           ------------   ------------   ------------

 Net increase (decrease) in cash and cash equivalents        12,430,000     (1,876,000)     2,560,000

 Cash and cash equivalents at beginning of year               9,718,000     11,594,000      9,034,000
                                                           ------------   ------------   ------------

 Cash and cash equivalents at end of year                  $ 22,148,000   $  9,718,000   $ 11,594,000
                                                           ============   ============   ============
</TABLE>

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

                                       80
<PAGE>

(1)  Organization and Business

     Hollywood Casino - Aurora, Inc. ("HCA") is an Illinois corporation and a
wholly owned subsidiary of Hollywood Casino Corporation ("HCC"), a Delaware
corporation. HCA was organized and incorporated during December 1990 by certain
relatives of Jack E. Pratt, Edward T. Pratt, Jr. and William D. Pratt
(collectively, the "Pratt Family") for the purpose of developing and holding the
ownership interest in a riverboat gaming operation located in Aurora, Illinois
(the "Aurora Casino").   In May 1992, HCC, which was then wholly owned by
members of the Pratt Family or by certain general partnerships and trusts
controlled by the Pratt Family, acquired all of the outstanding stock of HCA
through the issuance of HCC stock.  Prior to December 31, 1996, HCC also owned
approximately 80% of Greate Bay Casino Corporation ("GBCC"), a Delaware
corporation.  Prior to April 1, 1997, subsidiaries of GBCC held the management
services contract for the Aurora Casino (see Note 6).  A GBCC subsidiary
continued to hold a limited partnership interest in the entity which held such
management contract prior to the acquisition of such interest by HCC in October
1999.

     The Aurora Casino consists of two, four-level riverboats having a combined
casino space of approximately 32,000 square feet and a four-level pavilion and
docking facility which houses ticketing, food service, passenger waiting, and
various administrative functions.  The Aurora Casino also includes two parking
structures with approximately 1,350 parking spaces.  HCA was responsible for the
design and construction of the parking garages; however, it leases the
facilities under long-term lease agreements.  The leases are treated as capital
leases for financial reporting purposes (see Note 4).

     On June 17, 1993, the Illinois Gaming Board (the "IGB") issued HCA a
temporary operating permit and the Aurora Casino commenced operations.  The IGB
issued HCA an Owner's License on July 20, 1993 pursuant to the Illinois
Riverboat Gambling Act.  HCA's current Owner's License was renewed in December
1999 for a period of one year to December 2000.  Gaming taxes imposed by the
state of Illinois are determined using a graduated tax rate applied to the
licensee's gaming revenues.  HCA expenses such gaming taxes based on its
anticipated annual effective tax rate.

     HCA estimates that a significant amount of the Aurora Casino's revenues are
derived from patrons living in the Chicago area and surrounding northern and
western suburbs.  The Aurora Casino faces intense competition from other
riverboat gaming operations in Illinois and Indiana which serve the Chicago area
and management believes that this competition will continue in the future.

(2)  Summary of Significant Accounting Policies

     The significant accounting policies followed in the preparation of the
accompanying 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.

                                       81
<PAGE>

                        HOLLYWOOD CASINO - AURORA, INC.
                 (wholly owned by Hollywood Casino Corporation)

                   NOTES TO FINANCIAL STATEMENTS (Continued)


 Casino revenues, promotional allowances and departmental expenses -

     HCA 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 jackpots. Such anticipated jackpot
payouts are reflected as current liabilities on the accompanying balance sheets.

     The estimated value of food and beverage, admissions 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 on the accompanying
statements of operations.  Costs of complimentaries allocated from the food and
beverage and other operating departments to the casino department during the
years ended December 31, 1999, 1998 and 1997 are as follows:

                                               1999        1998        1997
                                           -----------  ----------  ----------

Food and beverage                          $ 9,903,000  $8,721,000  $9,057,000
Other                                          956,000   1,131,000     921,000
                                           -----------  ----------  ----------

                                           $10,859,000  $9,852,000  $9,978,000
                                           ===========  ==========  ==========

 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 treasury bills 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 $300,000, $273,000 and $200,000, respectively, were made
during the years ended December 31, 1999, 1998 and 1997.

 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 the estimated useful lives of the assets
as follows:

   Land improvements                                           20 years
   Buildings, riverboats and improvements                   25-40 years
   Operating equipment                                        3-7 years

                                       82
<PAGE>

                        HOLLYWOOD CASINO - AURORA, INC.
                 (wholly owned by Hollywood Casino Corporation)

                   NOTES TO FINANCIAL STATEMENTS (Continued)


 Long-lived assets -

     Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
requires, among other things, that an entity review its long-lived assets and
certain related intangibles for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be fully
recoverable.  HCA does not believe that any such events or changes have
occurred.

 Accrued insurance -

     HCA 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, HCA's ultimate liability
may differ from the amounts accrued.

 Income taxes -

     HCA is included in HCC's consolidated federal income tax return. Pursuant
to agreements between HCC and HCA, HCA's 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. HCA paid $1,182,000, $4,691,000 and $5,394,000 to HCC in
connection with its current federal tax provisions for the years ended December
31, 1999, 1998 and 1997, respectively. For the years ended December 31, 1999,
1998 and 1997, HCA paid state income taxes of $878,000, $781,000 and $682,000,
respectively.

 Recent Accounting Pronouncement -

   In June 1998, the Financial Accounting Standards Board issued a new
statement, "Accounting for Derivative Instruments and Hedging Activities,"
("SFAS 133"), which has been amended to be effective for fiscal years beginning
after June 15, 2000.  SFAS 133 requires, among other things, that derivatives be
recorded on the balance sheet at fair value.  Changes in the fair value of
derivatives may, depending on circumstances, be recognized in earnings or
deferred as a component of shareholders' equity until a hedged transaction
occurs.  HCA does not believe the adoption of SFAS 133 will have a significant
impact on its financial position or results of operations.

                                       83
<PAGE>

                        HOLLYWOOD CASINO - AURORA, INC.
                 (wholly owned by Hollywood Casino Corporation)

                   NOTES TO FINANCIAL STATEMENTS (Continued)



(3)  Long-Term Debt and Pledge of Assets

     HCA's long-term indebtedness consists of the following:

                                          December 31,   December 31,
                                              1999           1998
                                          -------------  -------------

 11.25% Promissory note to HCC, due on
   May 1, 2007 (a)                         $66,007,000    $         -
 12.75% Promissory note to HCC (b)                   -     31,507,000
 Promissory notes to bank (c)                1,952,000      1,900,000
                                           -----------    -----------

 Total indebtedness                         67,959,000     33,407,000
 Less - current maturities                    (807,000)    (5,624,000)
                                           -----------    -----------

 Total long-term debt                      $67,152,000    $27,783,000
                                           ===========    ===========

--------------------
(a) The intercompany note was issued as of May 19, 1999 and accrues interest at
    the rate of 11.25% per annum.  The initial borrowing on the note replaced
    the previous intercompany note with HCC described in (b) below.  During
    October 1999, HCA borrowed an additional $37,000,000 from HCC under the note
    agreement to acquire and terminate its management contract (see Note 6).
    HCA may borrow up to a total of $108,000,000 under the intercompany note
    agreement.  Interest on advances is payable semiannually on October 15 and
    April 15 of each year.  The intercompany note is pledged as security with
    respect to HCC's $360,000,000 Senior Secured Notes due in 2006 and 2007.
    HCA is not a guarantor of HCC's indebtedness; however, the indebtedness is
    secured, in part, by a lien limited to the outstanding principal amount on
    the intercompany note to HCC on substantially all of the assets of HCA and
    by a pledge of the capital stock of HCA.

(b) The intercompany note accrued interest at the rate of 12 .75% per annum
    payable semiannually on October 15 and April 15 of each year and required
    semiannual principal repayments of $2,500,000 commencing October 15, 1997
    with the balance of the note due November 1, 2003.  The note was refinanced
    on May 19, 1999 (see (a) above).

(c) During September 1998, HCA entered into a bank loan agreement to borrow up
    to $2,000,000 on an unsecured basis.  Borrowings under the agreement are
    payable in 36 monthly installments including interest at the rate of 7.5%
    per annum.  HCA borrowed $2,000,000 under the agreement during October 1998.

   On May 18, 1999, HCA borrowed an additional $750,000 from the bank on an
   unsecured basis.  The loan is payable in 60 monthly installments of $15,000
   including interest at the rate of 7.5% per annum.

                                       84
<PAGE>

                        HOLLYWOOD CASINO - AURORA, INC.
                 (wholly owned by Hollywood Casino Corporation)

                   NOTES TO FINANCIAL STATEMENTS (Continued)


     As of December 31, 1999, future maturities of long-term debt are as
follows:

                2000                             $   807,000
                2001                                 747,000
                2002                                 156,000
                2003                                 168,000
                2004                                  74,000
              Thereafter                          66,007,000
                                                 -----------

                                                 $67,959,000
                                                 ===========

     Interest paid for the years ended December 31, 1999, 1998 and 1997 amounted
to $5,434,000, $6,180,000 and $6,970,000, respectively.

(4)  Leases

     Capital Leases -

     HCA leases two parking garages under capital lease agreements.  The first
lease has an initial 30-year term ending in June 2023 with the right to extend
the term under renewal options for an additional 67 years. Rental payments
through June 2012 equal the City of Aurora's financing costs related to its
general obligation bond issue used to finance the construction of the parking
garage.  The general obligation bond issue includes interest at rates between 7%
and 7.625% per annum.  The second lease has an initial term ending in September
2026 with the right to extend the lease for up to 20 additional years.  Rental
payments during the first 15 years equal the lessor's debt service costs related
to the industrial revenue bond issue used to finance a portion of the
construction costs of the parking garage.  The remaining construction costs were
funded by HCA.  In addition, HCA pays base rent equal to $15,000 per month,
subject to a credit of $615,000 at the rate of $10,000 per month for
improvements made to the lessor's North Island Center banquet and meeting
facilities.  HCA is also responsible for additional rent, consisting of costs
such as  maintenance costs, insurance premiums and utilities, arising out of its
operation of both parking garages.

     HCA also leased certain equipment under capital lease agreements which
provided for interest at the rate of 11.2% and expired in 1998.

     The original cost of HCA's parking garages is included in buildings and
improvements on the accompanying balance sheets at both December 31, 1999 and
1998 in the amount of $27,358,000.  Assets under capital leases with an original
cost of $2,446,000 are included in operating equipment on the accompanying
balance sheets at both December 31, 1999 and 1998.  Amortization expense with
respect to these assets amounted to $983,000, $983,000 and $1,097,000,
respectively, during each of the years ended December 31, 1999, 1998 and 1997.
Accumulated amortization at December 31, 1999 and 1998 with respect to these
assets amounted to $6,974,000 and $5,991,000, respectively.

                                       85
<PAGE>

                        HOLLYWOOD CASINO - AURORA, INC.
                 (wholly owned by Hollywood Casino Corporation)

                   NOTES TO FINANCIAL STATEMENTS (Continued)


     Future minimum lease payments under capital lease obligations as of
December 31, 1999 are as follows:

     2000                                              $  2,483,000
     2001                                                 2,532,000
     2002                                                 2,643,000
     2003                                                 2,660,000
     2004                                                 2,677,000
     Thereafter                                          18,739,000
                                                       ------------

     Total minimum lease payments                        31,734,000
     Less - amount representing interest                (11,786,000)
                                                       ------------

     Present value of future minimum lease payments      19,948,000
     Current capital lease obligation                      (987,000)
                                                       ------------

     Long-term capital lease obligation                $ 18,961,000
                                                       ============
     Operating Leases -

     HCA also leases property and operating equipment under various lease
agreements accounted for as operating leases.  Although most of the lease
agreements are either cancellable or have initial terms of one year or less,
certain other lease agreements expire at various dates through the year 2008 and
several contain automatic renewals unless notice of termination is given.  Some
of the operating leases also include contingent rental payments based on levels
of use; such contingent rentals have not been significant.  Total rental expense
amounted to $983,000, $669,000 and $557,000, respectively, during the years
ended December 31, 1999, 1998 and 1997.

     Future minimum lease payments as of December 31, 1999 under operating
leases having an initial or remaining noncancelable lease term in excess of one
year are as follows:

     2000                                              $   124,000
     2001                                                  114,000
     2002                                                  107,000
     2003                                                   78,000
     2004                                                   75,000
     Thereafter                                            287,000
                                                       -----------

                                                       $   785,000
                                                       ===========

                                       86
<PAGE>

                        HOLLYWOOD CASINO - AURORA, INC.
                 (wholly owned by Hollywood Casino Corporation)

                   NOTES TO FINANCIAL STATEMENTS (Continued)


(5)  Income Taxes

     HCA's provision for income taxes consists of the following:
<TABLE>
<CAPTION>
                                                            Year Ended December 31,
                                                     ---------------------------------------
                                                        1999          1998          1997
                                                     -----------   -----------   -----------
<S>                                                  <C>           <C>           <C>
     Current benefit (provision):
      Federal                                        $   659,000   $(4,856,000)  $(5,859,000)
      State                                           (1,229,000)     (685,000)     (377,000)
     Deferred benefit (provision):
      Federal                                            158,000      (915,000)   (1,978,000)
      State                                               45,000      (103,000)     (205,000)
                                                     -----------   -----------   -----------

                                                     $  (367,000)  $(6,559,000)  $(8,419,000)
                                                     ===========   ===========   ===========
</TABLE>

     A reconciliation between the calculated tax provision on income based on
the statutory rates in effect and the effective tax rates for the years ended
December 31, 1999, 1998 and 1997 follows:
<TABLE>
<CAPTION>
                                                            Year Ended December 31,
                                                     ---------------------------------------
                                                        1999          1998          1997
                                                     -----------   -----------   -----------
<S>                                                  <C>           <C>           <C>
     Calculated income tax benefit (provision)
      at statutory rate                              $ 940,000     $(5,975,000)  $(8,027,000)
     State income taxes, net of federal benefit       (781,000)       (512,000)     (378,000)
     Political contributions and lobbying costs        (53,000)        (43,000)      (67,000)
     Adjustments to prior years                       (430,000)              -             -
     Other                                             (43,000)        (29,000)       53,000
                                                     ---------     -----------   -----------
     Tax provision as shown on statements
      of operations                                  $(367,000)    $(6,559,000)  $(8,419,000)
                                                     =========     ===========   ===========
</TABLE>

     Deferred taxes are computed based on the expected future tax consequences
of temporary differences between the carrying amounts and tax bases of assets
and liabilities, using enacted tax rates. 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
income tax purposes and differences in the timing of deductions taken between
tax and financial reporting purposes for the amortization of preopening costs
and other accruals.

                                       87
<PAGE>

                        HOLLYWOOD CASINO - AURORA, INC.
                 (wholly owned by Hollywood Casino Corporation)

                   NOTES TO FINANCIAL STATEMENTS (Continued)


    The components of HCA's net deferred tax liability are as follows:
<TABLE>
<CAPTION>
                                                December 31,
                                         --------------------------
                                             1999          1998
                                         ------------  ------------
<S>                                      <C>           <C>
    Deferred tax assets:
      Allowance for doubtful accounts    $   306,000   $   246,000
      Other liabilities and reserves       1,576,000     1,420,000
      Other                                   77,000             -
                                         -----------   -----------

        Total deferred tax assets          1,959,000     1,666,000
                                         -----------   -----------

    Deferred tax liabilities:
      Depreciation and amortization       (5,579,000)   (5,489,000)
                                         -----------   -----------

    Net deferred tax liability           $(3,620,000)  $(3,823,000)
                                         ===========   ===========
</TABLE>
    Receivables and payables to HCC in connection with the aforementioned tax
allocation agreements at December 31, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
                                                December 31,
                                         --------------------------
                                             1999          1998
                                         ------------  ------------
<S>                                      <C>           <C>
    Deferred tax assets                  $ 1,617,000   $ 1,373,000
    Due from affiliates                    1,942,000       347,000
    Deferred tax liabilities              (4,854,000)   (4,793,000)
</TABLE>

    The Internal Revenue Service recently completed its examination of the
consolidated federal income tax returns of HCC for the years 1993 and 1994 as
they pertain to HCA.  The additional expected current tax liability under the
tax allocation agreements resulting from such examination ($997,000) has been
applied against the current federal tax benefit for the year ended December 31,
1999.  The net deferred tax liability has also  been adjusted to reflect the
results of the tax audit. The Internal Revenue Service is continuing its
examination of the consolidated federal income tax returns of HCC for 1995 and
1996.  Management believes that the results of such examination will not have a
material adverse effect on the financial position or results of operations of
HCA.

(6) Transactions with Related Parties

    Pursuant to a management services agreement which was terminated in October
1999 (see below), HCA paid base management and incentive fees to Pratt
Management, L.P. ("PML"), a limited partnership. The base management fee was
equal to 5% of operating revenues (as defined in the agreement) subject to a
maximum of $5,500,000 in any consecutive twelve month period.  The incentive fee
was equal to 10% of gross operating profit (as defined in the agreement to
generally include all revenues less expenses other than

                                       88
<PAGE>

                        HOLLYWOOD CASINO - AURORA, INC.
                 (wholly owned by Hollywood Casino Corporation)

                   NOTES TO FINANCIAL STATEMENTS (Continued)


depreciation, interest, amortization and income taxes). HCA incurred such fees
totaling $7,730,000, $8,872,000 and $9,609,000, respectively, during the years
ended December 31, 1999, 1998 and 1997. Management and incentive fees payable at
December 31, 1998 amounting to $2,067,000 are included in due to affiliates on
the accompanying balance sheet.

     During October 1999, HCC acquired the GBCC subsidiary which held the
limited partnership in PML following the confirmation of the GBCC subsidiary's
plan of reorganization under Chapter 11 of the United States Bankruptcy Code.
When acquired by HCC, the subsidiary's assets consisted of its limited
partnership interest in PML and a consulting agreement with another casino
facility owned by HCC and its liabilities consisted of an obligation to pay
$40,329,000 in satisfaction of the subsidiary's guarantee of an affiliate's debt
issue. HCA borrowed an additional $37,000,000 under its intercompany note with
HCC (see Note 3) to acquire and terminate the management contract. Accordingly,
effective October 13, 1999, HCA will no longer pay a management fee. The
$37,000,000 payment by HCA, which was used by HCC to partially repay the GBCC
subsidiary's $40,329,000 obligation, was recorded by HCA as the cost of
terminating the management contract and is reflected as an expense during the
fourth quarter of 1999 on the accompanying statement of operations.

     HCA incurred interest with respect to its promissory note payable to HCC
(see Note 3) amounting to $4,424,000, $4,361,000 and $4,906,000, respectively,
for the years ended December 31, 1999, 1998 and 1997. Interest payable to HCC on
such note amounted to $1,568,000 and $848,000, respectively, at December 31,
1999 and 1998 and is included in accrued interest payable on the accompanying
balance sheets.

     HCA has acquired computer software and hardware from GBCC and has been
allocated certain other expenses from HCC and GBCC. In addition, HCA is
reimbursed by HCC and GBCC for certain administrative and other services it
performs on their behalf. Such transactions resulted in net charges to HCA
during the years ended December 31, 1999, 1998 and 1997 totaling $389,000,
$280,000 and $246,000, respectively. At December 31, 1999 and 1998, HCA had net
payables of $57,000 and net receivables of $30,000, respectively, in connection
with such charges.

(7)  Illinois Regulatory Matters

     Riverboat gaming operations in Illinois are subject to regulatory control
by the Illinois Gaming Board (the "IGB"). Illinois law requires that HCA
maintain its Owners' License in order to operate. HCA's Owner's License was
renewed by the IGB in December 1999 for a period of one year. Management intends
to request renewal of HCA's Owner's License at the appropriate time in 2000 and
anticipates that such renewal will be approved by the IGB in December 2000. If
it were determined that gaming laws were violated by a licensee, the gaming
licenses held by each licensee could be limited, conditioned, suspended, or
revoked. In addition, the licensees and other persons involved could be subject
to substantial fines. Limitation or conditioning or suspension of any gaming
license could, and revocation would, have a materially adverse affect on the
operations of HCA.

                                       89
<PAGE>

                        HOLLYWOOD CASINO - AURORA, INC.
                (wholly owned by Hollywood Casino Corporation)

                   NOTES TO FINANCIAL STATEMENTS (Continued)


(8)  Commitments and Contingencies

 Planet Hollywood Litigation -

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

 Other Litigation -

     HCA is a party in various legal proceedings with respect to the conduct of
casino 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 the proceedings should not have a material adverse impact on the
financial position or results of operations of HCA.

(9) Employee Retirement Savings Plan

     HCA participates in a retirement savings plan under Section 401(k) of the
Internal Revenue Code sponsored by HCC which covers all of its employees who
meet certain eligibility requirements as to age and period of employment.  The
plan allows employees to contribute up to 15% of their salary on a pre-tax basis
(subject to statutory limitations) and invest such monies in a choice of mutual
funds on a tax-deferred basis. HCA matches a portion of the participating
employees' contributions to the plan and may, from time to time, make additional
discretionary contributions.  For the years ended December 31, 1999, 1998 and
1997, HCA made company contributions to the plan totaling $397,000, $473,000 and
$289,000, respectively.

                                       90
<PAGE>

                        HOLLYWOOD CASINO - AURORA, INC.
                (wholly owned by Hollywood Casino Corporation)

                   NOTES TO FINANCIAL STATEMENTS (Continued)


(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.

     Interest payable - The carrying amount of interest payable approximates
     ----------------
fair value because of the short maturity of the obligation.

     Long-term debt - The fair value of HCA's long-term debt is estimated based
     --------------
on the quoted market price of the underlying debt issue. Debt obligations with a
short remaining maturity are valued at the carrying amount.

     The estimated carrying amounts and fair values of HCA's financial
instruments are as follows:
<TABLE>
<CAPTION>
                                      December 31, 1999        December 31, 1998
                                  ------------------------  -----------------------
                                   Carrying                  Carrying
                                    Amount     Fair Value     Amount     Fair Value
                                  -----------  -----------  -----------  ----------
<S>                               <C>          <C>          <C>          <C>
    Financial Assets:
      Cash and cash
        equivalents               $22,148,000  $22,148,000  $ 9,718,000  $ 9,718,000

    Financial Liabilities:
      Interest payable            $ 1,769,000  $ 1,769,000  $ 1,058,000  $ 1,058,000
      11.25% promissory note       66,007,000   68,111,000            -            -
      12.75% promissory note                -            -   31,507,000   33,555,000
      Promissory notes to bank      1,952,000    1,936,000    1,900,000    1,900,000
</TABLE>

                                       91
<PAGE>

                        HOLLYWOOD CASINO - AURORA, INC.
                (wholly owned by Hollywood Casino Corporation)

                   NOTES TO 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, 1999
 Net revenues                   $43,393,000  $47,864,000  $53,444,000  $ 52,549,000
                                ===========  ===========  ===========  ============

 Net income (loss)              $ 2,956,000  $ 5,190,000  $ 5,761,000  $(17,040,000)
                                ===========  ===========  ===========  ============
Year Ended December 31, 1998
 Net revenues                   $38,720,000  $40,093,000  $41,712,000  $ 42,422,000
                                ===========  ===========  ===========  ============

 Net income                     $ 2,458,000  $ 3,061,000  $ 2,782,000  $  2,212,000
                                ===========  ===========  ===========  ============
</TABLE>

                                       92
<PAGE>

INDEPENDENT AUDITORS' REPORT


To HWCC - Tunica, Inc.:

We have audited the accompanying consolidated balance sheets of HWCC - Tunica,
Inc. (the Company and a Texas Corporation) and subsidiary as of December 31,
1999 and 1998, and the related consolidated statements of operations, changes in
shareholder's equity and cash flows for each of the three years in the period
ended December 31, 1999.  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 consolidated financial position of HWCC - Tunica,
Inc. and subsidiary as of December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999 in conformity with generally accepted accounting principles.



Deloitte & Touche LLP
Dallas, Texas
February 25, 2000

                                       93
<PAGE>

                       HWCC - TUNICA, INC. AND SUBSIDIARY
                 (wholly owned by Hollywood Casino Corporation)

                          CONSOLIDATED BALANCE SHEETS

                                     ASSETS
<TABLE>
<CAPTION>
                                                              December 31,
                                                      ----------------------------
                                                          1999           1998
                                                      -------------  -------------
<S>                                                   <C>            <C>
Current Assets:
 Cash and cash equivalents                            $ 10,339,000   $ 16,325,000
 Short-term investments                                          -      3,905,000
 Accounts receivable, net of allowances of
  $990,000 and $813,000, respectively                    2,725,000      1,018,000
 Inventories                                               869,000        779,000
 Deferred income taxes                                   1,346,000      1,451,000
 Prepaid expenses and other current assets               1,187,000        770,000
 Due from affiliates                                       503,000        149,000
                                                      ------------   ------------

  Total current assets                                  16,969,000     24,397,000
                                                      ------------   ------------

Property and Equipment:
 Land and improvements                                   4,781,000      4,645,000
 Buildings                                              76,011,000     73,948,000
 Barges                                                  2,524,000      2,524,000
 Operating equipment                                    44,731,000     39,169,000
 Construction in progress                                  134,000      2,612,000
                                                      ------------   ------------

                                                       128,181,000    122,898,000
  Less - accumulated depreciation and amortization     (44,575,000)   (38,910,000)
                                                      ------------   ------------

 Net property and equipment                             83,606,000     83,988,000
                                                      ------------   ------------

Other Assets:
 Land rights                                             7,047,000      7,250,000
 Other assets                                            4,776,000      4,826,000
                                                      ------------   ------------

  Total other assets                                    11,823,000     12,076,000
                                                      ------------   ------------

                                                      $112,398,000   $120,461,000
                                                      ============   ============
</TABLE>

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

                                       94
<PAGE>

                       HWCC - TUNICA, INC. AND SUBSIDIARY
                 (wholly owned by Hollywood Casino Corporation)

                          CONSOLIDATED BALANCE SHEETS

                      LIABILITIES AND SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
                                                   December 31,
                                           ----------------------------
                                               1999           1998
                                           -------------  -------------
<S>                                        <C>            <C>
Current Liabilities:
 Current maturities of long-term debt
  and capital lease obligations            $  1,491,000   $    775,000
 Accounts payable                             1,081,000      1,638,000
 Accrued liabilities -
  Salaries and wages                          1,569,000      1,685,000
  Interest                                      437,000        476,000
  Gaming and other taxes                      1,340,000        453,000
  Insurance                                   1,839,000      1,975,000
  Other                                       2,214,000      1,866,000
 Other current liabilities                    1,168,000      1,283,000
                                           ------------   ------------

 Total current liabilities                   11,139,000     10,151,000
                                           ------------   ------------

Long-Term Debt                               88,649,000     85,023,000
                                           ------------   ------------

Commitments and Contingencies

Shareholder's Equity:
 Common stock, $.01 par value
  per share; 100,000 shares authorized;
  1,000 shares issued and outstanding                 -              -
 Additional paid-in capital                  22,637,000     34,637,000
 Accumulated deficit                        (10,027,000)    (9,350,000)
                                           ------------   ------------

  Total shareholder's equity                 12,610,000     25,287,000
                                           ------------   ------------

                                           $112,398,000   $120,461,000
                                           ============   ============
</TABLE>

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

                                       95
<PAGE>

                       HWCC - TUNICA, INC. AND SUBSIDIARY
                 (wholly owned by Hollywood Casino Corporation)

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                  Year Ended December 31,
                                        -------------------------------------------
                                            1999           1998           1997
                                        -------------  -------------  -------------
<S>                                     <C>            <C>            <C>
Revenues:
 Casino                                 $102,312,000   $ 96,459,000   $ 97,506,000
 Rooms                                    10,457,000      9,386,000      9,651,000
 Food and beverage                        15,274,000     15,039,000     14,320,000
 Other                                     1,542,000      1,373,000      1,164,000
                                        ------------   ------------   ------------

                                         129,585,000    122,257,000    122,641,000
 Less - promotional allowances           (19,463,000)   (16,484,000)   (15,378,000)
                                        ------------   ------------   ------------

   Net revenues                          110,122,000    105,773,000    107,263,000
                                        ------------   ------------   ------------

Expenses:
 Casino                                   78,880,000     72,317,000     69,496,000
 Rooms                                     1,161,000      1,752,000      1,835,000
 Food and beverage                         3,704,000      3,923,000      4,325,000
 Other                                     1,137,000      1,336,000      1,402,000
 General and administrative                5,679,000      5,813,000      5,769,000
 Termination of consulting agreement       3,329,000              -              -
 Depreciation and amortization             7,066,000      8,123,000      9,916,000
                                        ------------   ------------   ------------

   Total expenses                        100,956,000     93,264,000     92,743,000
                                        ------------   ------------   ------------

Income from operations                     9,166,000     12,509,000     14,520,000
                                        ------------   ------------   ------------

Non-operating income (expenses):
 Interest income                             340,000        587,000        281,000
 Interest expense                        (10,308,000)   (10,937,000)   (10,980,000)
 Equity in losses of unconsolidated
   affiliate                                (141,000)             -              -
 (Loss) gain on disposal of assets           (57,000)       (65,000)         6,000
                                        ------------   ------------   ------------

   Total non-operating expenses, net     (10,166,000)   (10,415,000)   (10,693,000)
                                        ------------   ------------   ------------

(Loss) income before income taxes         (1,000,000)     2,094,000      3,827,000
Income tax benefit (provision)               323,000       (689,000)       845,000
                                        ------------   ------------   ------------

Net (loss) income                       $   (677,000)  $  1,405,000   $  4,672,000
                                        ============   ============   ============
</TABLE>

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

                                       96
<PAGE>

                       HWCC - TUNICA, INC. AND SUBSIDIARY
                 (wholly owned by Hollywood Casino Corporation)

           CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
                  For the Three Years Ended December 31, 1999

<TABLE>
<CAPTION>
                                           Common Stock          Additional
                                        ------------------        Paid-in        Accumulated
                                        Shares      Amount        Capital          Deficit
                                        ------      ------      ------------     ------------
<S>                                     <C>         <C>         <C>              <C>
BALANCE, January 1, 1997                 1,000      $    -      $ 34,637,000     $(15,427,000)

 Net income                                  -           -                 -        4,672,000
                                        ------      ------      ------------     ------------

BALANCE, December 31, 1997               1,000           -        34,637,000      (10,755,000)

 Net income                                  -           -                 -        1,405,000
                                        ------      ------      ------------     ------------

BALANCE, December 31, 1998               1,000           -        34,637,000       (9,350,000)

 Net loss                                    -           -                 -         (677,000)
 Dividends                                   -           -       (12,000,000)               -
                                        ------      ------       ------------     ------------

BALANCE, December 31, 1999               1,000      $    -       $ 22,637,000     $(10,027,000)
                                        ======      ======       ============     ============
</TABLE>

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

                                       97
<PAGE>

                       HWCC - TUNICA, INC. AND SUBSIDIARY
                 (wholly owned by Hollywood Casino Corporation)

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                    Year Ended December 31,
                                                           -----------------------------------------
                                                               1999           1998          1997
                                                           -------------  ------------  ------------
<S>                                                        <C>            <C>           <C>
OPERATING ACTIVITIES:
 Net (loss) income                                         $   (677,000)  $ 1,405,000   $ 4,672,000
 Adjustments to reconcile net (loss) income to net cash
   provided by operating activities:
   Depreciation and amortization                              7,066,000     8,123,000     9,916,000
   Loss (gain) on disposal of assets                             57,000        65,000        (6,000)
   Provision for doubtful accounts                              504,000       483,000       498,000
   Equity in losses of unconsolidated affiliate                 141,000             -             -
   Deferred income tax (benefit) provision                     (133,000)      115,000    (1,071,000)
   Increase in accounts receivable                           (2,565,000)     (140,000)     (645,000)
   Increase (decrease) in accounts payable and accrued
     expenses                                                   387,000       256,000    (2,097,000)
   Net change in other current assets and
     liabilities                                               (622,000)      199,000       232,000
   Net change in other noncurrent assets
     and liabilities                                             14,000      (223,000)      488,000
                                                           ------------   -----------   -----------

     Net cash provided by operating
       activities                                             4,172,000    10,283,000    11,987,000
                                                           ------------   -----------   -----------

INVESTING ACTIVITIES:
 Purchases of property and equipment                         (6,415,000)   (5,924,000)   (2,635,000)
 Short-term investments                                       3,905,000       (29,000)   (3,876,000)
 Investment in unconsolidated affiliate                         (45,000)      (53,000)   (2,000,000)
 Proceeds from sale of assets                                    55,000        82,000        16,000
                                                           ------------   -----------   -----------

   Net cash used in investing activities                     (2,500,000)   (5,924,000)   (8,495,000)
                                                           ------------   -----------   -----------

FINANCING ACTIVITIES:
 Proceeds from issuance of long-term debt                    89,680,000       687,000       601,000
 Repayments of long-term debt                               (85,338,000)     (572,000)     (364,000)
 Dividends                                                  (12,000,000)            -             -
 Payments on capital lease obligations                                -             -    (1,199,000)
                                                           ------------   -----------   -----------

   Net cash (used in) provided by
     financing activities                                    (7,658,000)      115,000      (962,000)
                                                           ------------   -----------   -----------

   Net (decrease) increase in cash and cash equivalents      (5,986,000)    4,474,000     2,530,000
     Cash and cash equivalents at
       beginning of year                                     16,325,000    11,851,000     9,321,000
                                                           ------------   -----------   -----------

     Cash and cash equivalents at
       end of year                                         $ 10,339,000   $16,325,000   $11,851,000
                                                           ============   ===========   ===========
</TABLE>

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

                                       98
<PAGE>

                       HWCC - TUNICA, INC. AND SUBSIDIARY
                 (wholly owned by Hollywood Casino Corporation)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(1)  Organization, Business and Basis of Presentation

     HWCC - Tunica, Inc. ("HCT") is a Texas corporation and a wholly owned
subsidiary of Hollywood Casino Corporation ("HCC"), a Delaware corporation.  HCT
was incorporated in December 1993 for the purpose of acquiring and completing a
gaming facility in northern Tunica County, Mississippi approximately 27 miles
southwest of Memphis, Tennessee.  The facility (the "Tunica Casino") was
completed and commenced operations on August 8, 1994 under the service mark
Hollywood Casino(R).  The Tunica Casino currently includes a casino with 54,000
square feet of gaming space, 506 hotel rooms and suites, a 123-space
recreational vehicle park and related amenities.  HCT's gaming license has been
renewed by the Mississippi Gaming Commission through October 18, 2001.

     The accompanying consolidated financial statements include the accounts of
HCT and its wholly owned subsidiary, HWCC-Golf Course Partners, Inc. ("Golf").
All significant intercompany balances have been eliminated in consolidation.
Golf, a Delaware corporation, was formed in 1996 to own an initial one-third
interest in Tunica Golf Course LLC, a limited liability company organized to
develop and operate a golf course to be used by patrons of the Tunica Casino and
other participating casino/hotel properties.  The golf course opened for
business in November 1998.  Golf's investment in Tunica Golf Course, LLC is
accounted for under the equity method of accounting and is included in other
noncurrent assets on the accompanying consolidated balance sheets at December
31, 1999 and 1998.

     HCT estimates that a significant amount of the Tunica Casino's revenues are
derived from patrons living in the Memphis, Tennessee area, northern Mississippi
and Arkansas.  The Tunica Casino faces intense competition from other casinos
operating in northern Tunica County and management believes that this
competition will continue in the future.

(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 Tunica Casino 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 slot machine jackpots
and certain progressive table game payouts.  Such anticipated jackpots and
payouts are reflected as current liabilities on the accompanying consolidated
balance sheets.  The estimated value of rooms, food and beverage and other items
which are provided to customers without charge has been included in revenues and
a corresponding amount has been deducted as promotional allowances.  The costs

                                       99
<PAGE>

                       HWCC - TUNICA, INC. AND SUBSIDIARY
                 (wholly owned by Hollywood Casino Corporation)

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


of such complimentaries have been included as casino expenses on the
accompanying consolidated statements of operations. Costs of complimentaries
allocated from the rooms, food and beverage and other operating departments to
the casino department during the years ended December 31, 1999, 1998 and 1997
were as follows:

                                1999         1998         1997
                             -----------  -----------  -----------

        Rooms                $ 2,742,000  $ 1,940,000  $ 1,870,000
        Food and beverage     12,710,000   12,166,000   10,837,000
        Other                    438,000      300,000      140,000
                             -----------  -----------  -----------

                             $15,890,000  $14,406,000  $12,847,000
                             ===========  ===========  ===========

 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 $504,000, $483,000 and $498,000, respectively, were made
during the years ended December 31, 1999, 1998 and 1997.

 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 the estimated useful lives of the assets
as follows:

     Hotel, dockside facilities and improvements            25-40 years
     Barges                                                 25-40 years
     Operating equipment                                    3 - 7 years

 Land rights -

     Land rights are being amortized on a straight-line basis over the
estimated useful life of the facility, which is less than the term of the ground
lease including renewals (see Note 8); such amortization

                                      100
<PAGE>

                       HWCC - TUNICA, INC. AND SUBSIDIARY
                 (wholly owned by Hollywood Casino Corporation)

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


commenced with the opening of the Tunica Casino. Management presently intends to
renew the ground lease at least through the estimated 40-year useful life of the
facility. Accumulated amortization of such land rights amounted to $1,398,000
and $1,195,000, respectively, at December 31, 1999 and 1998.

 Long-lived assets -

     Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
requires, among other things, that an entity review its long-lived assets and
certain related intangibles for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be fully
recoverable.  HCT does not believe that any such events or changes have
occurred.

 Accrued insurance -

     HCT 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, HCT's ultimate liability
may differ from the amounts accrued.

 Income taxes -

     HCT is included in HCC's consolidated federal income tax return.  HCT's
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.  HCT made payments
to HCC in lieu of federal income taxes amounting to $288,000, $307,000 and
$494,000 during the years ended December 31, 1999, 1998 and 1997, respectively.
HCT paid no state income taxes during 1999, 1998 or 1997.

 Recent Accounting Pronouncement  -

     In June 1998, the Financial Accounting Standards Board issued a new
statement, "Accounting for Derivative Instruments and Hedging Activities,"
("SFAS 133"), which has been amended to be effective for fiscal years beginning
after June 15, 2000.  SFAS 133 requires, among other things, that derivatives be
recorded on the balance sheet at fair value.  Changes in the fair value of
derivatives may, depending on circumstances, be recognized in earnings or
deferred as a component of shareholders' equity until a hedged transaction
occurs.  HCT does not believe the adoption of SFAS 133 will have a significant
impact on its financial position or results of operations.

                                      101
<PAGE>

                       HWCC - TUNICA, INC. AND SUBSIDIARY
                 (wholly owned by Hollywood Casino Corporation)

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


(3)  Long-Term Debt and Pledge of Assets

     Substantially all of HCT's assets are pledged in connection with its long-
term indebtedness.  Long-term debt consists of the following:

                                                      December 31,  December 31,
                                                         1999          1998
                                                      -----------   -----------

 11.25% Promissory note to HCC due May 1, 2007(a)     $87,045,000   $         -
 Note payable to HCC (a)                                  329,000             -
 12.75% Promissory notes to HCC (b)                             -    84,045,000
 Equipment loans (c)                                    2,488,000     1,291,000
 Bank credit facility (d)                                 278,000       462,000
                                                      -----------   -----------

   Total indebtedness                                  90,140,000    85,798,000
  Less - current maturities                            (1,491,000)     (775,000)
                                                      -----------   -----------

   Total long-term debt                               $88,649,000   $85,023,000
                                                      ===========   ===========

--------------------
(a)  The intercompany note was issued as of May 19, 1999 and accrues interest at
     the rate of 11.25% per annum.  The initial borrowing on the note replaced
     the previous intercompany notes with HCC (see (b) below).  HCT may borrow
     up to $87,045,000 under the intercompany note agreement.  During October
     1999, HCT borrowed the additional $3,000,000 available under the
     intercompany note with HCC as well as an additional $329,000 under a new
     note agreement with HCC to acquire and terminate its consulting agreement
     (see Note 6).  Interest on advances is payable semiannually on April 15 and
     October 15 of each year.  The intercompany note is pledged as security with
     respect to HCC's $360,000,000 Senior Secured Notes due in 2006 and 2007
     which are unconditionally guaranteed on a senior secured basis by HCT and
     by certain other current and future subsidiaries of HCC.  HCC's Senior
     Secured Notes and related guarantees are secured by, among other things,
     (1) substantially all of the assets of HCT and other future guarantors, (2)
     a limited lien on substantially all of the assets of another gaming
     facility operated by a wholly owned subsidiary of HCC, (3) a pledge of the
     capital stock of HCT and certain other subsidiaries of HCC and (4) the
     collateral assignment of any future management contracts entered into by
     HCC.  The limitation on the lien described in (2) above was increased to
     $66,007,000 in October 1999; such lien may be further increased as a result
     of additional borrowings up to a maximum of $108,000,000.

     The indenture for HCC's Senior Secured Notes contains various provisions
     limiting the ability of HCC, HCT and certain defined subsidiaries to, among
     other things, pay dividends or make other restricted payments; incur
     additional indebtedness or issue preferred stock; create liens; create

                                      102
<PAGE>

                       HWCC - TUNICA, INC. AND SUBSIDIARY
                 (wholly owned by Hollywood Casino Corporation)

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


     dividend or other payment restrictions affecting certain defined
     subsidiaries; enter into mergers or consolidations or make sales of all or
     substantially all assets of HCC, HCT or any future guarantor; or enter into
     certain transactions with affiliates.  Dividend payments by HCT to HCC are
     not restricted under the terms of the indenture.

(b)  The intercompany note accrued interest at the rate of 12.75% per annum
     payable semiannually on October 15 and April 15 of each year.  The note was
     refinanced on May 19, 1999 (see (a) above).

(c)  The equipment loans are payable monthly including interest at effective
     rates ranging  from 8.5% to 12.9% per annum and mature at various dates
     between 1999 and 2002.  One such loan with a balance of $51,000 at December
     31, 1999 and which matures in 2000 does not accrue interest.

(d)  HCT had a bank credit facility in the amount of $1,300,000 available to
     borrow against until September 30, 1998.  HCT borrowed $541,000 under the
     credit facility during 1998 at the rate of 8.875% per annum.  Borrowings
     under the credit facility are to be repaid in monthly installments over a
     period of 36 months and are collateralized by equipment purchased with the
     loan proceeds. The credit facility was not renewed by HCT.

     Scheduled payments of long-term debt as of December 31, 1999 are set forth
below:

               2000                      $ 1,491,000
               2001                        1,033,000
               2002                          242,000
               2003                                -
               2004                                -
               Thereafter                 87,374,000
                                         -----------

                 Total                   $90,140,000
                                         ===========

     Interest paid amounted to $10,347,000, $10,937,000 and $12,766,000,
respectively, during the years ended December 31, 1999, 1998 and 1997.

(4)  Leases

     Capital Leases -

     HCT leased certain gaming and other equipment under capital lease
agreements which provided for interest at rates ranging up to 13.25% per annum
and which expired during 1997.  Assets under capital leases with an original
cost of $4,567,000 and $4,814,000, respectively, are included in operating
equipment on the accompanying consolidated balance sheets at December 31, 1999
and 1998.  There was no amortization expense with respect to such assets for the
year ended December 31, 1999; amortization expense for the years ended December
31, 1998 and 1997 was $298,000 and $945,000, respectively.  Accumulated
amortization at December 31, 1999 and 1998 with respect to these assets amounted
to $4,567,000 and $4,814,000, respectively.  No future payment obligations exist
with respect to such capital leases.

                                      103
<PAGE>

                       HWCC - TUNICA, INC. AND SUBSIDIARY
                 (wholly owned by Hollywood Casino Corporation)

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


     Operating Leases -

     HCT also leases property and operating equipment under various lease
agreements accounted for as operating leases.  Except for the ground lease (see
Note 8), the lease agreements are either cancellable or have initial terms of
one year or less.  A number of the leases contain automatic renewal options
unless notice of termination is given and some include contingent rental
payments based on levels of use; such contingent rentals have not been
significant.  Total rental expense amounted to $905,000, $326,000 and $465,000,
respectively, during the years ended December 31, 1999, 1998 and 1997.

(5)  Income Taxes

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

                                                 Year Ended December 31,
                                           -----------------------------------
                                              1999        1998        1997
                                           ----------  ----------  -----------

Federal income tax benefit (provision):
 Current                                   $ 190,000   $(574,000)  $ (226,000)
 Deferred                                     54,000    (185,000)    (812,000)
Change in valuation allowance                 79,000      70,000    1,883,000
                                           ---------   ---------   ----------

                                           $ 323,000   $(689,000)  $  845,000
                                           =========   ==========  ==========


     State income taxes have not been provided for since a credit for state
gaming taxes based on gross revenues is allowed to offset income taxes incurred.
The credit is the lesser of total gaming taxes paid or the state income tax,
with no credit carryforward permitted.

     A reconciliation between the calculated tax benefit (provision) on (loss)
income based on the statutory rates in effect and the effective tax rates for
the years ended December 31, 1999, 1998 and 1997 follows:

                                                 Year Ended December 31,
                                           -----------------------------------
                                              1999        1998        1997
                                           ----------  ----------  -----------

Calculated income tax benefit (provision)  $  340,000  $ (712,000) $(1,301,000)
Valuation allowance change                     79,000      70,000    1,883,000
Adjustments to prior years                    (32,000)          -            -
Disallowance of meals and entertainment       (38,000)    (32,000)     (43,000)
Other                                         (26,000)    (15,000)     306,000
                                           ----------  ----------  -----------

Tax benefit (provision) as shown on
 statement of operations                   $  323,000  $ (689,000) $   845,000
                                           ==========  ==========  ===========

                                      104
<PAGE>

                       HWCC - TUNICA, INC. AND SUBSIDIARY
                 (wholly owned by Hollywood 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 income tax purposes and
differences in the timing of deductions taken between tax and financial
reporting purposes for the amortization of preopening costs and other accruals.

     At December 31, 1999, HCT has net operating loss carryforwards ("NOL's")
totaling approximately $8,400,000, which do not begin to expire until the year
2010.   Additionally, HCT has alternative minimum and other tax credits
available totaling $610,000 and $251,000, respectively.  Alternative minimum tax
credits do not expire and none of the other tax credits begin to expire before
the year 2009.  Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes", requires that the tax benefit of such NOL's and credit
carryforwards, together with the tax benefit of 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
deferred tax assets is more likely than not, a valuation allowance should be
recorded.  Based on the taxable income earned by HCT during 1999 before non-
recurring items and during 1998, and  the expectation of future taxable income,
management believes that it is more likely than not that a portion of the NOL's
and deferred tax assets will be utilized.  Accordingly, a valuation allowance
has been established which has resulted in the recording of net deferred tax
assets of $2,125,000 and $1,992,000, respectively, at December 31, 1999 and
1998.

     The components of HCT's net deferred tax asset are as follows:

                                                             December 31,
                                                      --------------------------
                                                          1999          1998
                                                      ------------  ------------
     Deferred tax assets:
       Net operating loss carryforwards               $ 2,868,000   $ 5,221,000
       Alternative minimum tax credit carryforward        610,000       800,000
       Allowance for doubtful accounts                    337,000       277,000
       Other liabilities and accruals                   1,419,000     1,286,000
                                                      -----------   -----------

         Total deferred tax assets                      5,234,000     7,584,000

     Deferred tax liabilities:
       Depreciation and amortization                     (688,000)   (3,092,000)
                                                      -----------   -----------

     Net deferred tax asset                             4,546,000     4,492,000
     Valuation allowance                               (2,421,000)   (2,500,000)
                                                      -----------   -----------

                                                      $ 2,125,000   $ 1,992,000
                                                      ===========   ===========

                                      105
<PAGE>

                       HWCC - TUNICA, INC. AND SUBSIDIARY
                 (wholly owned by Hollywood Casino Corporation)

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


     Receivables from HCC in connection with HCT's federal income taxes are
included in the accompanying consolidated financial statements as follows:

                                               December 31,
                                        --------------------------
                                           1999            1998
                                        ----------      ----------

       Due from affiliates              $  478,000      $        -
       Deferred income taxes             1,346,000       1,451,000
       Other noncurrent assets             779,000         541,000

     The Internal Revenue Service is  examining the consolidated federal income
tax returns of HCC for the years 1993 through 1996.  The results of such
examination for 1993 and 1994 with respect to HCT have been finalized resulting
in HCT's net operating loss carryforwards being significantly reduced.  However,
the audit findings did not  result in additional alternative minimum tax or
regular tax liability under HCT's existing tax allocation agreement with HCC.
The components of HCT's net deferred tax asset have also been adjusted to
reflect the results of the tax audit.  The Internal Revenue Service is
continuing its examination of the consolidated federal income tax returns of HCC
for 1995 and 1996.

(6)  Transactions with Related Parties

     Pursuant to a consulting agreement which was terminated during October 1999
(see below), HCT incurred a monthly consulting fee of $100,000.  The consulting
agreement was with Pratt Casino Corporation ("PCC"), an affiliated company.
Such fees amounted to $939,000, $1,200,000 and $1,200,000, respectively, during
each of the years ended December 31, 1999, 1998 and 1997.

     During October 1999, HCC acquired PCC following the confirmation of PCC's
plan of reorganization under Chapter 11 of the United States Bankruptcy Code.
When acquired by HCC, PCC's assets consisted of the consulting agreement with
the Tunica Casino and a limited partnership interest in the entity which held
the management contract on another casino facility owned by HCC and its
liabilities consisted of an obligation to pay $40,329,000 in satisfaction of
PCC's guarantee of an affiliate's debt issue.  HCT borrowed an additional
$3,329,000 from HCC (see Note 3) to acquire and terminate the consulting
agreement. Accordingly, effective October 13, 1999, HCT  no longer pays a
consulting fee.  The $3,329,000 payment by HCT, which was used by HCC to
partially repay PCC's $40,329,000 obligation, was recorded by HCT as the cost of
terminating the consulting agreement and is reflected as an expense during the
fourth quarter of 1999 on the accompanying consolidated statement of operations.

     HCT and Advanced Casino Systems Corporation ("ACSC"), an affiliated
company, entered into a Computer Services Agreement dated as of January 1, 1994
and renewed through December 31, 1999. The agreement provides, among other
things, that ACSC will sell HCT computer hardware and information systems
equipment and will license or sublicense to HCT computer software necessary to
operate HCT's casino, hotel and related facilities and business operations. HCT
pays ACSC for such equipment and licenses such software at amounts and on terms
and conditions that ACSC provides to unrelated third parties. HCT also paid ACSC
a fixed license fee of $33,600 per month and reimburses ACSC for its direct
costs and expenses incurred under the agreement. ACSC has continued to provide
services to HCT since the

                                      106
<PAGE>

                       HWCC - TUNICA, INC. AND SUBSIDIARY
                 (wholly owned by Hollywood Casino Corporation)

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


December 31, 1999 expiration of the Computer Services Agreement on an as needed
basis at third party consulting rates while negotiations for a new agreement
continue. Since the latter part of 1997, ACSC also performs and bills HCT for
certain administrative and marketing services. Total charges incurred by HCT
amounted to $776,000, $656,000 and $635,000, respectively, for the years ended
December 31, 1999, 1998 and 1997. At December 31, 1999 and 1998, HCT had
payables of $22,000 and $44,000, respectively, included in accounts payable with
respect to such charges.

     Prior to 1998, Greate Bay Hotel and Casino, Inc. ("GBHC"), an affiliated
company which owns and operates the Sands Hotel and Casino in Atlantic City, New
Jersey, performed certain administrative and marketing services on behalf of
HCT.  During the year ended December 31, 1997, fees charged to HCT by GBHC
totaled $428,000.

     HCT is charged for certain legal, accounting, and other expenses incurred
by HCC and its subsidiaries that relate to HCT's business. HCT also bills HCC
and its subsidiaries for services provided to those companies. For the years
ended December 31, 1999, 1998 and 1997, such transactions resulted in net
charges to HCT totaling $150,000, $162,000 and $362,000, respectively. At
December 31, 1999, no intercompany balances remained outstanding; at December
31, 1998, HCT had net receivables of $97,000 with respect to such charges.

(7)  Mississippi Regulatory Matters

     Gaming operations in Mississippi are subject to regulatory control by the
Mississippi Gaming Commission.  Under the provisions of the Mississippi gaming
regulations, HCT is required to maintain all necessary licenses.  The ownership
license for the Tunica Casino has been renewed through October 18, 2001.  If it
were determined that gaming laws were violated by a licensee, the gaming
licenses held by each licensee could be limited, conditioned, suspended or
revoked.  In addition, the licensees and other persons involved could be subject
to substantial fines.

(8)  Commitments and Contingencies

 Ground Lease -

     HCT entered into a ground lease covering 70 acres of land on which the
Tunica Casino was constructed. The ground lease is for an initial term of five
years from the opening date of the facility and, at HCT's option, may be renewed
for nine additional five-year periods. Obligations under the ground lease during
the initial term include both minimum monthly fixed payments and percentage
rent, which in the aggregate will be the greater of 4% of Gross Revenues, as
defined, or $1,100,000 per year. HCT is responsible for all operating and other
expenses of the property in accordance with the lease terms. During 1999, 1998
and 1997, HCT expensed $4,138,000, $3,899,000 and $3,935,000, respectively, in
connection with the ground lease.

                                      107
<PAGE>

                       HWCC - TUNICA, INC. AND SUBSIDIARY
                 (wholly owned by Hollywood Casino Corporation)

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


 Planet Hollywood Litigation -

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

 Other -

     HCT 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 the proceedings should not have a material adverse
impact on the consolidated financial position or results of operations of HCT.

(9)  Employee Retirement Savings Plan -

     HCT participates in a retirement savings plan under Section 401(k) of the
Internal Revenue Code sponsored by HCC which covers all of its employees who
meet certain eligibility requirements as to age and period of employment.  The
plan allows employees to contribute up to 15% of their salary on a pre-tax basis
(subject to statutory limitations) and invest such monies in a choice of mutual
funds on a tax-deferred basis. HCT matches a portion of the participating
employees' contributions to the plan and may, from time to time, make additional
discretionary contributions.  For the years ended December 31, 1999, 1998 and
1997, HCT made company contributions to the plan totaling $176,000, $203,000 and
$198,000, respectively.

                                      108
<PAGE>

                       HWCC - TUNICA, INC. AND SUBSIDIARY
                 (wholly owned by Hollywood Casino Corporation)

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


(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.

     Short-term investments - The carrying amounts approximate fair value
     ----------------------
because of the short maturity of these investments.

     Interest payable - The carrying amount of interest payable approximates
     ----------------
fair value because of the short maturity of the obligation.

     Long-term debt - The fair value of HCT's long-term debt is estimated based
     --------------
on either the quoted market price of the underlying debt issue or on the
discounted cash flow of future payments utilizing current rates available to HCT
for debt of similar remaining maturities.  Debt obligations with a short
remaining maturity are valued at the carrying amount.

     The estimated carrying amounts and fair values of HCT's financial
instruments are as follows:
<TABLE>
<CAPTION>
                                       December 31, 1999        December 31, 1998
                                   ------------------------  ------------------------
                                    Carrying                  Carrying
                                     Amount     Fair Value     Amount     Fair Value
                                   -----------  -----------  -----------  -----------
<S>                                <C>          <C>          <C>          <C>
Financial Assets
 Cash and cash equivalents         $10,339,000  $10,339,000  $16,325,000  $16,325,000
 Short-term investments                      -            -    3,905,000    3,905,000

Financial Liabilities
 Interest payable                  $   437,000  $   437,000  $   476,000  $   476,000
 11.25% Promissory Note to HCC      87,045,000   89,773,000            -            -
 Note payable to HCC                   329,000      340,000            -            -
 12.75% Promissory notes to HCC              -            -   84,045,000   89,508,000
 Equipment loans                     2,488,000    2,514,000    1,291,000    1,335,000
 Bank credit facility                  278,000      278,000      462,000      462,000
</TABLE>

                                      109
<PAGE>

                       HWCC - TUNICA, INC. AND SUBSIDIARY
                 (wholly owned by Hollywood 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, 1999:

 Net revenues                    $26,375,000  $28,287,000  $29,505,000  $25,955,000
                                 ===========  ===========  ===========  ===========

 Net income (loss)               $   892,000  $   733,000  $   286,000  $(2,588,000)
                                 ===========  ===========  ===========  ===========

Year Ended December 31, 1998:

 Net revenues                    $25,072,000  $26,245,000  $29,126,000  $25,330,000
                                 ===========  ===========  ===========  ===========

 Net income (loss)               $   732,000  $   153,000  $   639,000  $  (119,000)
                                 ===========  ===========  ===========  ===========
</TABLE>

                                      110
<PAGE>

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

     HCC filed a complaint on October 8, 1998 in the District Court of Dallas
County, Texas against Arthur Andersen LLP ("Andersen"), HCC's former certifying
accountants, and selected partners alleging negligent advice and breach of
contract with respect to the tax consequences resulting from the spin off of the
stock of Greate Bay Casino Corporation ("GBCC") to HCC's shareholders on
December 31, 1996.

     In view of the pending litigation discussed above, the Audit Committee of
the Company's Board of Directors voted on October 16, 1998 to terminate Andersen
as HCC's independent accountants. There were no disagreements with Andersen of
the type which would require disclosure under Item 304 of Regulation S-K.
Andersen's report on the consolidated financial statements of HCC for the past
two years was unqualified.

     The Company, with the consideration and approval of its Audit Committee,
engaged the firm of Deloitte & Touche LLP as its new certifying accountants.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information called for by this item is incorporated herein by reference
from HCC's definitive proxy statement filed with the Securities and Exchange
Commission relating to its Annual Meeting of Shareholders to be held on May 23,
2000 (the "Definitive Proxy Statement") under the captions "Election of
Directors" and "Management."

ITEM 11.  EXECUTIVE COMPENSATION

     The information called for by this item is incorporated herein by reference
from HCC's Definitive Proxy Statement under the caption "Remuneration of
Directors and Executive Officers."

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information called for by this item is incorporated herein by reference
from the HCC's Definitive Proxy Statement under the caption "Voting Rights and
Principal Stockholders".

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information called for by this item is incorporated herein by reference
from HCC's Definitive Proxy Statement under the caption "Transactions with
Management."

                                    PART IV

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 39.

                                      111
<PAGE>

   2. Financial Statement Schedules

   Hollywood Casino Corporation and Subsidiaries
   ---------------------------------------------

   -- Independent Auditors' Report
   -- Schedule I; Condensed Financial Information of Registrant, Hollywood
      Casino Corporation (Parent Company):
      --Balance Sheets
      --Statements of Operations
      --Statements of Cash Flows
      --Notes to Parent Company Financial Statements
   -- Schedule II; Valuation and Qualifying Accounts

   Hollywood Casino - Aurora, Inc.
   -------------------------------

   --  Independent Auditors' Report
   --  Schedule II; Valuation and Qualifying Accounts

   HWCC-Tunica, Inc.
   -----------------

   --  Independent Auditors' Report
   --  Schedule II; Valuation and Qualifying Accounts

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

    3. Exhibits

 **2.1 -- Agreement of Merger dated as of May 15, 1992, between PBC, Inc. and
          HCC and Certificate of Correction of Agreement of Merger dated as of
          June 16, 1992. (Exhibit 2.1)
@@@3.1 -- Certificate of Incorporation of HCC, as amended.  (Exhibit 3.1)
@@@3.2 -- Amended Bylaws of HCC.  (Exhibit 3.2)
   3.3 -- Second Amended and Restated Bylaws of HCC.
 @@3.4 -- Articles of Incorporation of HCT. (Exhibit 3.1).
 @@3.5 -- Bylaws of HCT. (Exhibit 3.2)
+++3.6 -- Third Amended and Restated Joint Venture Agreement of Hollywood Casino
          Shreveport by and among Shreveport Paddlewheels, L.L.C., HCS I, Inc.
          and HCS II, Inc., dated as of July 21, 1999. (Exhibit 3.1)
+++3.7 -- August 1999 Amendment to Third Amended and Restated Joint Venture
          Agreement between Shreveport Paddlewheels, L.L.C., HCS I, Inc. and HCS
          II, Inc. (Exhibit 3.2)
+++4.1 -- Indenture among HCC as Issuer, and HWCC-Shreveport, Inc. and HCT as
          Guarantors, State Street Bank and Trust Company, as Trustee, dated as
          of May 19, 1999. (Exhibit 4.1) and State
+++4.2 -- Security Agreement made by HCC, as Debtor, to State Street Bank and
          Trust Company, as Trustee and Secured Party, dated as of May 19, 1999.
          (Exhibit 4.2)
+++4.3 -- Stock Pledge Agreement made by HCC, as Pledgor, in favor of State
          Street Bank and Trust Company, as Trustee and Secured Party, dated as
          of May 19, 1999. (Exhibit 4.3)
+++4.4 -- Trademark Security Agreement made by HCC, as Grantor, to State Street
          Bank and Trust Company, as Trustee and Secured Party, dated as of May
          19, 1999. (Exhibit 4.4)
+++4.5 -- Escrow and Control Agreement by and among HCC and State Street Bank
          and Trust Company, as Trustee and Escrow Agent, dated as of May 19,
          1999. (Exhibit 4.5)
+++4.6 -- Control Agreement dated as of May 19, 1999 by and among HCC and State
          Bank and Trust Company as Trustee. (Exhibit 4.6)
+++4.7 -- Security Agreement made by HCT, as Debtor, to State Street Bank and
          Trust Company, as Trustee and Secured Party, dated as of May 19, 1999.
          (Exhibit 4.7)
+++4.8 -- First Leasehold Deed of Trust, Security Agreement, Assignment of
          Leases and Rents, Fixture Filing, and Financing Statement made by HCT
          in favor of Phillip A. Poitevin, as Trustee for the

                                      112
<PAGE>

           benefit of State Street Bank and Trust Company, as Indenture Trustee,
           dated as of May 19, 1999. (Exhibit 4.8)
 +++4.9 -- First Preferred Ship Mortgage made and given by HCT, as Mortgagor, in
           favor of State Street Bank and Trust Company, as Trustee and
           Mortgagee (relating to Vessel No. 534006), dated as of May 19, 1999.
           (Exhibit 4.9)
+++4.10 -- Intercompany Security Agreement made by HCT, as Debtor, to HCC, as
           Secured Party, and collaterally assigned to State Street Bank and
           Trust Company, as Trustee, dated as of May 19, 1999. (Exhibit 4.11)
+++4.11 -- Second Leasehold Deed of Trust, Security Agreement, Fixture Filing,
           and Financing Statement from HCT, as Grantor, in favor of Jim B.
           Tobhill, Trustee, for the benefit of HCC, dated as of May 19, 1999.
           (Exhibit 4.12)
+++4.12 -- Collateral Assignment of Second Leasehold Deed of Trust, Security
           Agreement, Assignment of Leases and Rents, Fixture Filing and
           Financing Statement made by HCC, as Mortgagee and Assignor, in favor
           of State Street Bank and Trust Company, as Trustee and Assignee,
           dated as of May 19, 1999. (Exhibit 4.13)
+++4.13 -- Assignment of Second Preferred Fleet Mortgage by HCC, as Mortgagee
           and Assignor (relating to Vessel No. 534006) in favor of State Street
           Bank and Trust Company, as Trustee and Assignee, dated as of May 19,
           1999. (Exhibit 4.15)
+++4.14 -- Intercompany Security Agreement dated as of May 19, 1999 made by HCA,
           as Debtor, to HCC, as Secured Party, and collaterally assigned to
           State Street Bank and Trust Company, as Trustee. (Exhibit 4.17)
+++4.15 -- Collateral Assignment of Mortgage, Leasehold Mortgage, Security
           Agreement, Assignment of Leases and Rents, Fixture Filing and
           Financing Statement made by HCC, as Mortgagee and Assignor, in favor
           of State Street Bank and Trust Company, as Trustee and Assignee,
           dated as of May 19, 1999. (Exhibit 4.19)
+++4.16 -- Assignment of First Preferred Fleet Mortgage by HCC, as Mortgagee and
           Assignor (relating to Vessel Nos. 993836, 993837 and 1029229) in
           favor of State Street Bank and Trust Company, as Trustee and
           Assignee, dated as of May 19, 1999. (Exhibit 4.21)
+++4.17 -- Security Agreement made by HWCC-Shreveport, Inc. as Debtor, to State
           Street Bank and Trust Company, as Trustee and Secured Party, dated as
           of May 19, 1999. (Exhibit 4.22)
  +4.18 -- Indenture among Hollywood Casino Shreveport and Shreveport Capital
           Corporation ("SCC") as Co-Issuers, and HWCC-Louisiana, Inc. ("HCL"),
           HCS I, Inc. and HCS II, Inc., as Guarantors, and State Street Bank
           and Trust Company, as Trustee, dated as of August 10, 1999. (Exhibit
           4.1)
  +4.19 -- Registration Rights Agreement, dated as of August 10, 1999, by and
           among Hollywood Casino Shreveport, SCC, the Guarantors named therein
           and the Initial Purchasers. (Exhibit 4.2)
  +4.20 -- Collateral Assignment of Contracts and Documents dated August 10,
           1999 between Casino Shreveport and State Street Bank and Trust
           Company, as Trustee. (Exhibit 4.3) Hollywood
  +4.21 -- Security Agreement dated August 10, 1999 between Hollywood Casino
           Shreveport and State Street Bank and Trust Company, as Trustee.
           (Exhibit 4.4)
  +4.22 -- Partnership Interest Pledge Agreement dated August 10, 1999 made by
           HCS I, Inc. in favor of State Street Bank and Trust Company, as
           Trustee and Secured Party. (Exhibit 4.5)
  +4.23 -- Cash Collateral and Disbursement Agreement dated August 10, 1999
           between Hollywood Casino Shreveport, SCC, First American Title
           Insurance Company, as Disbursement Agent and State Street Bank and
           Trust Company, as Trustee. (Exhibit 4.6)
   4.24 -- First Amendment to Cash Collateral and Disbursement Agreement dated
           January 1, 2000 between Hollywood Casino Shreveport, SCC, First
           American Title Insurance Company and State Street Bank and Trust
           Company.
  +4.25 -- Stock Pledge Agreement dated August 10, 1999 made by HCL in favor of
           State Street Bank and Trust Company, as Trustee. (Exhibit 4.7)
  +4.26 -- Security Agreement dated August 10, 1999 made by SCC, HCL, HCS I,
           Inc. and HCS II, Inc. to State Street Bank and Trust Company, as
           Trustee and Secured Party. (Exhibit 4.8)
  +4.27 -- Security Agreement - Vessel Construction dated August 10, 1999
           between Hollywood Casino Shreveport and State Street Bank and Trust
           Company, as Trustee. (Exhibit 4.9)
  +4.28 -- Mortgage, Leasehold Mortgage and Assignment of Leases and Rents made
           by Hollywood Casino Shreveport in favor of State Street Bank and
           Trust Company, as Mortgagee, dated August 10, 1999. (Exhibit 4.10)

                                      113
<PAGE>

    +4.29 -- Partnership Interest Pledge Agreement dated August 10, 1999 made by
             HCS II, Inc. in favor of State Street Bank and Trust Company, as
             Trustee and Secured Party. (Exhibit 4.11)
    +4.30 -- First Amendment to Security Agreement dated August 10, 1999 between
             HWCC-Shreveport, Inc. and State Street Bank and Trust Company, as
             Trustee. (Exhibit 4.12)
  ###9.1  -- Voting Trust Agreement dated as of December 29, 1998 by and among
             Jill Pratt LaFerney, formerly Jill A. Pratt, and John R. Pratt and
             Jack E. Pratt, Sr. (Exhibit 9.1)
  ###9.2  -- Voting Trust Agreement dated as of December 29, 1998 by and among
             Shawn Denise Bradshaw and Michael Shannon Pratt and William D.
             Pratt, Sr. (Exhibit 9.2)
  ###9.3  -- Voting Trust Agreement dated as of December 29, 1998 by and among
             Carolyn S. Hickey, Diana Pratt-Wyatt, formerly Diana L. Heisler,
             and Sharon A. Naftel, formerly Sharon R. Nash, and Edward T. Pratt
             III. (Exhibit 9.3)
     9.4  -- Voting Trust Agreement dated as of December 17, 1999 by and between
             Jack E. Pratt, Jr. as Trustee of the J.E. Pratt Gift Trust and Jack
             E. Pratt, Sr.
  ##10.1  -- Sixth Amendment to Employment Agreement dated January 1, 1998,
             between HCC and Jack E. Pratt. (Exhibit 10.1)
  ##10.2  -- Sixth Amendment to Employment Agreement dated January 1, 1998,
             between HCC and Edward T. Pratt, Jr. (Exhibit 10.2)
  ##10.3  -- Sixth Amendment to Employment Agreement dated January 1, 1998,
             between HCC and William D. Pratt. (Exhibit 10.3)
    10.4  -- Employment Agreement dated January 1, 2000, between HCC and Edward
             T. Pratt III.
####10.5  -- Agreement dated as of September 2, 1998 by and among GBHC, GB
             Holdings, Inc., and GB Property Funding Corp., on the one hand, and
             GBCC, PHC Acquisition Corp., Lieber Check Cashing, LLC, Jack E.
             Pratt, William D. Pratt, Edward T. Pratt, Jr. and HCC, on the
             other. (Exhibit 10.3)
   *10.6  -- Development Agreement dated as of June 4, 1991, between the City of
             Aurora, Illinois and HCA. (Exhibit 10.33)
   *10.7  -- Parking lease Agreement June 4, 1991, between the City of Aurora,
             Illinois and HCA. (Exhibit 10.39)
   *10.8  -- Purchase and Sale Agreement dated June 4, 1991, between the City of
             Aurora, Illinois and HCA. (Exhibit 10.40)
   @10.9  -- Rights Agreement, dated as of May 7, 1993 between HCC and
             Continental Stock Transfer & Trust Company, as Rights Agent.
             (Exhibit 10.45)
 @@@10.10 -- Hollywood Casino Corporation Stock Option Plan. (Exhibit 10.46)
  @@10.11 -- Ground Lease dated as of October 11, 1993 between R.M. Leatherman
             and Hugh M. Mageveney, III, as Landlord, and SRCT, as Tenant.
             (Exhibit 10.4)
  @@10.12 -- Letter Agreement dated as of October 11, 1993 between R.M.
             Leatherman and Hugh M. Mageveney, III, as Landlord, and SRCT, as
             Tenant (relating to Ground Lease). (Exhibit 10.5)
  @@10.13 -- Blanket Conveyance, Bill of Sale and Assignment and Assumption
             Agreement dated as of May 31, 1994 between SRCT and STP. (Exhibit
             10.6)
  @@10.14 -- Assignment of Lease and Assumption Agreement dated as of May 31,
             1994 between SRCT and STP (relating to Ground Lease). (Exhibit
             10.7)
@@@@10.15 -- North Island Center Expansion and Redevelopment Agreement dated
             June 12, 1995 between HCA, the Aurora Metropolitan Exposition,
             Auditorium and Office Building Authority and the City of Aurora.
             (Exhibit 10.36)
   #10.16 -- Hollywood Casino Corporation 1996 Long-Term Incentive Plan, as
             amended. (Exhibit 10.28)
   #10.17 -- Hollywood Casino Corporation 1996 Non-Employee Director Stock Plan.
             (Exhibit 10.29)
####10.18 -- Amended and Restated Joint Venture Agreement by and among
             Shreveport Paddlewheels, L.L.C., Sodak Louisiana, L.L.C. and HWCC-
             Louisiana, Inc. dated July 31, 1998. (Exhibit 10.1)
####10.19 -- September 1998 Amendment to the July Amended and Restated Joint
             Venture Agreement. (Exhibit 10.2 )
    10.20 -- Employment Agreement dated as of January 1, 2000 by and between HCC
             and Paul C. Yates.
 ###10.21 -- Management and Administrative Services Agreement dated as of
             October 1, 1998 by and between HCC and Greate Bay Casino
             Corporation.
 ###10.22 -- Membership Interest Purchase Agreement dated as of March 31, 1999
             by and among HWCC-Louisiana, Inc., Sodak Gaming, Inc. and Sodak
             Louisiana, L.L.C.
   +10.23 -- Amended and Restated Federal Income Tax Sharing Agreement dated
             August 10, 1999 by and among HCC, HWCC Development Corporation,
             Hollywood Management, Inc., HCT, Golf,

                                      114
<PAGE>

             HCA, HWCC-Shreveport, Inc., HWCC-Argentina, Inc., HCL, HWCC
             Holdings, Inc., HWCC-Aurora Management, Inc., HWCC-Transportation,
             Inc., HCS I, Inc. and HCS II, Inc. (Exhibit 10.16)
  ++10.24 -- Completion Capital Agreement, dated as of August 10, 1999, by and
             among Hollywood Casino Shreveport, HCL, HCS I, Inc., HCS II, Inc.
             and HCC. (Exhibit 10.2)
  ++10.25 -- Manager Subordination Agreement, dated as of August 10, 1999, by
             and among State Street Bank and Trust Company, as Trustee, HWCC-
             Shreveport, Inc. and Hollywood Casino Shreveport. (Exhibit 10.3)
   +10.26 -- Technical Services Agreement, dated as of September 22, 1998, by
             and between QNOV and HWCC-Shreveport, Inc. (Exhibit 10.4)
   +10.27 -- Vessel Construction Contract, dated July 16, 1999, by and between
             Leevac Shipyards, Inc. and Hollywood Casino Shreveport. (Exhibit
             10.5)
   +10.28 -- Employment Agreement, dated August 4, 1999, by and between HWCC
             Development Corporation and Juris Basens. (Exhibit 10.6)
   +10.29 -- Compromise Agreement, dated September 15, 1998, by and among Hilton
             New Orleans Corporation, New Orleans Paddlewheels, Inc., Queen of
             New Orleans at the Hilton Joint Venture and the City of New
             Orleans. (Exhibit 10.7)
   +10.30 -- Loan and Settlement Agreement, dated January 16, 1998, by and among
             New Orleans Paddlewheels, Inc., Shreveport Paddlewheels, L.L.C.,
             HCL, Sodak Louisiana L.L.C. and Hilton New Orleans Corporation.
             (Exhibit 10.11)
   +10.31 -- Retail Space Lease, executed as of June 3, 1999 by and between QNOV
             and Red River Entertainment Company, L.L.C. (Exhibit 10.12)
   +10.32 -- Ground Lease, dated May 19, 1999, by and between the City of
             Shreveport, Louisiana and QNOV. (Exhibit 10.13)
   +10.33 -- Marine Services Agreement dated September 22, 1998 between QNOV and
             Shreveport Paddlewheels, L.L.C. (Exhibit 10.17)
   +10.34 -- Side Agreement dated January 16, 1998 between Queen of New Orleans
             at the Hilton Joint Venture, HCL, and Sodak, L.L.C. (Exhibit 10.18)
   +10.35 -- Loan Agreement dated August 10, 1999 between Shreveport
             Paddlewheels, L.L.C. and HCL. (Exhibit 10.19)
   +10.36 -- Promissory note dated August 10, 1999 in the original principal
             amount of $1,000,000 made by Shreveport Paddlewheels, L.L.C., as
             Borrower to HCL, as Lender. (Exhibit 10.20)
   +10.37 -- Security Agreement dated August 10, 1999 made by Shreveport
             Paddlehwheels, L.L.C., as Debtor, in favor of HCL, as Secured
             Party. (Exhibit 10.21)
   +10.38 -- Guaranty Agreement dated August 10, 1999 made by New Orleans
             Paddlewheels, L.L.C. in favor of HCL. (Exhibit 10.22)
   +10.39 -- Contribution and Assumption Agreement dated July 21, 1999 among
             HCL, HCS I, Inc., HCS II, Inc. and Shreveport Paddlewheels, L.L.C.
             (Exhibit 10.24)
    11.1  -- Statement regarding computation of Per Share Losses.
    21.1  -- Subsidiaries of HCC.
    27.1  -- Financial Data Schedule of HCC.
    27.2  -- Financial Data Schedule of HWCC - Tunica, Inc.
 ***99.1  -- Petition filed on October 8, 1998 in the District Court of Dallas
             County, Texas by Hollywood Casino Corporation and Greate Bay Casino
             Corporation ("Plaintiffs") against Arthur Andersen L.L.P., Richard
             L. Robbins, Michael E. Gamache, Daniel J. Meehan, and Brent A.
             Railsback ("Defendants") (Exhibit 99.1)

--------------------
  * Incorporated by reference from the exhibit shown in parenthesis to that
    Registration Statement on Form 10 filed with the SEC on May 28, 1992 by PRT
    Corporation (now know as HCC).

 ** Incorporated by reference from the exhibit shown in parenthesis to that
    Registration Statement on Form 10, as amended, filed with the SEC on August
    13, 1992 by HCC.

*** Incorporated by reference from the exhibit shown in parenthesis to the Form
    8-K for HCC as filed with the SEC on October 22, 1998.

                                      115
<PAGE>

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

  @@ Incorporated by reference from the exhibit shown in parenthesis to Form S-1
     Registration Statement (Registration No. 33-82182) for HWCC - Tunica, Inc.
     as filed with the SEC on September 29, 1994.

 @@@ Incorporated by reference from the exhibit shown in parenthesis to Form S-1
     Registration Statement (Registration 33-58732) for HCC as filed with the
     SEC on May 27, 1993.

@@@@ Incorporated by reference from the exhibit shown in parenthesis filed in
     HCC's Annual Report on Form 10-K for the fiscal year ended December 31,
     1995.

   # Incorporated by reference from the exhibit shown in parenthesis filed in
     HCC's Annual Report on Form 10-K for the fiscal year ended December 31,
     1996.

  ## Incorporated by reference from the exhibit shown in parenthesis filed in
     HCC's Annual Report on Form 10-K for the fiscal year ended December 31,
     1997.

 ### Incorporated by reference from the exhibit shown in parenthesis filed in
     HCC's Annual Report on Form 10-K for the fiscal year ended December 31,
     1998.

#### Incorporated by reference to the exhibit shown in parenthesis filed in
     HCC's Quarterly Report on Form 10-Q for the quarter ended September 30,
     1998 as filed with the SEC on November 13, 1998.

   + Incorporated by reference to the exhibit shown in parenthesis included in
     Form S-4 Registration Statement of Hollywood Casino Shreveport and
     Shreveport Capital Corporation as filed with the SEC on October 8, 1999.

  ++ Incorporated by reference to the exhibit shown in parenthesis included in
     Form S-4 Registration Statement of Hollywood Casino Corporation as filed
     with the SEC on August 13, 1999.

 +++ Incorporated by reference to the exhibit shown in parenthesis included in
     Form S-4 Registration Statement of Hollywood Casino Corporation as filed
     with the SEC on July 16, 1999.

 (b) Reports on Form 8-K.

     On October 22, 1999, the Registrants filed a Report on Form 8-K to announce
the acquisition and termination of management and consulting agreements.

                                      116
<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 29, 2000.

                                 HOLLYWOOD CASINO CORPORATION

                                 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:
<TABLE>
<CAPTION>
              Signature                            Title                   Date
              ---------                            -----                   ----
<S>                                     <C>                           <C>
         /s/ Jack E. Pratt              Chief Executive               March 29, 2000
--------------------------------------  Officer and Director          --------------
         Jack E. Pratt

         /s/ Edward T. Pratt, Jr.       Vice President, Treasurer     March 29, 2000
--------------------------------------  and Director                  --------------
         Edward T. Pratt, Jr.

         /s/ William D. Pratt           Executive Vice President,     March 29, 2000
--------------------------------------  Secretary, General Counsel    --------------
         William D. Pratt               and Director

         /s/ Edward T. Pratt III        President, Chief Operating    March 29, 2000
--------------------------------------  Officer and Director          --------------
         Edward T. Pratt III

         /s/ Paul C. Yates              Executive Vice President      March 29, 2000
--------------------------------------  and Chief Financial Officer   --------------
         Paul C. Yates

         /s/ Charles F. LaFrano III     Vice President - Finance and  March 29, 2000
--------------------------------------  Principal Accounting Officer  --------------
         Charles F. LaFrano III

         /s/ James A. Colquitt          Director                      March 29, 2000
--------------------------------------                                --------------
         James A. Colquitt

         /s/ Theodore H. Strauss        Director                      March 29, 2000
--------------------------------------                                --------------
         Theodore H. Strauss

         /s/ Oliver B. Revell III       Director                      March 29, 2000
--------------------------------------                                --------------
         Oliver B. Revell III
</TABLE>

                                      117
<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 29, 2000.

                                           HWCC - TUNICA, 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:
<TABLE>
<CAPTION>
              Signature                           Title                   Date
              ---------                           -----                   ----
<S>                                    <C>                           <C>

         /s/ Jack E. Pratt             Chief Executive               March 29, 2000
-------------------------------------  Officer and Director          --------------
         Jack E. Pratt

         /s/ Edward T. Pratt, Jr.      Director                      March 29, 2000
-------------------------------------                                --------------
         Edward T. Pratt, Jr.

         /s/ William D. Pratt          Executive Vice President,     March 29, 2000
-------------------------------------  Secretary, General Counsel    --------------
         William D. Pratt              and Director

         /s/ Edward T. Pratt III       President and Director        March 29, 2000
-------------------------------------                                --------------
         Edward T. Pratt III

         /s/ John R. Osborne           Vice President of Operations  March 29, 2000
-------------------------------------                                --------------
         John R. Osborne

         /s/ Charles F. LaFrano III    Vice President, Assistant     March 29, 2000
-------------------------------------  Secretary and Principal       --------------
         Charles F. LaFrano III        Accounting Officer

</TABLE>

                                      118
<PAGE>

                     INDEX TO FINANCIAL STATEMENT SCHEDULES



Hollywood Casino Corporation and Subsidiaries

     --  Independent Auditors' Report

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

     --   Schedule II; Valuation and Qualifying Accounts

Hollywood Casino-Aurora, Inc.

     --  Independent Auditors' Report

     --  Schedule II; Valuation and Qualifying Accounts

HWCC-Tunica, Inc.

     --  Independent Auditors' Report

     --   Schedule II; Valuation and Qualifying Accounts

                                      119
<PAGE>

INDEPENDENT AUDITORS' REPORT

To Hollywood Casino Corporation:

We have audited the consolidated financial statements of Hollywood Casino
Corporation and subsidiaries as of December 31, 1999 and 1998, and for each of
the three years in the period ended December 31, 1999, and have issued our
report thereon dated February 25, 2000 (included elsewhere in this Form 10-K).
Our audits also include the financial statement schedules listed in the index to
financial statement schedules.  These financial statement schedules are the
responsibility of the Company's management.  Our responsibility is to express an
opinion based on our audits.  In our opinion, such financial statement
schedules, when considered in relation to the basic financial statements taken
as a whole, present fairly in all material respects the information set forth
therein.





Deloitte & Touche LLP
Dallas, Texas
February 25, 2000

                                      120
<PAGE>

                                                                      SCHEDULE I
                                                                       Page 1
                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES
                 Condensed Financial Information of Registrant
                          Hollywood Casino Corporation
                                (Parent Company)

                                 BALANCE SHEETS

                                     ASSETS
<TABLE>
<CAPTION>
                                                          December 31,
                                                   --------------------------
                                                       1999          1998
                                                   ------------  ------------
<S>                                                <C>           <C>
Cash and cash equivalents                          $ 60,312,000  $ 14,785,000
Accounts receivable                                     287,000       222,000
Due from affiliates, net of valuation allowance       9,746,000    16,463,000
Deferred federal income taxes                         1,584,000       721,000
Other current assets                                     68,000        31,000
                                                   ------------  ------------

 Total current assets                                71,997,000    32,222,000
                                                   ------------  ------------

Investment in and advances to affiliates             64,995,000    53,924,000
Property and equipment, net                             233,000       137,000
Due from affiliates, net of valuation allowance     153,381,000   122,874,000
Land held for sale, net of allowance                  2,216,000     6,232,000
Other assets                                         14,516,000     6,315,000
                                                   ------------  ------------

                                                   $307,338,000  $221,704,000
                                                   ============  ============

                 LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY

Current maturities of long-term debt             $     854,000   $  5,000,000
Accounts payable and accrued liabilities             2,083,000      4,092,000
Accrued interest payable                             8,946,000      4,628,000
Federal income taxes payable                         3,234,000              -
                                                 -------------   ------------

 Total current liabilities                          15,117,000     13,720,000
                                                 -------------   ------------

Long-term debt, net of discount in 1998            361,180,000    195,199,000
                                                 -------------   ------------

Other noncurrent liabilities                         5,095,000      5,170,000
                                                 -------------   ------------

Shareholders' (deficit) equity:
 Class A common stock, $.0001 par
  value per share, 50,000,000
  shares authorized, 24,950,000 shares
  issued and outstanding                                 2,000          2,000
 Class B common stock, non-voting, $.01
  par value per share; 10,000,000 authorized;
  no shares issued                                           -              -
 Additional paid-in capital                         42,947,000     42,945,000
 Accumulated deficit                              (117,003,000)   (35,332,000)
                                                 -------------   ------------

  Total shareholders' (deficit) equity             (74,054,000)     7,615,000
                                                 -------------   ------------

                                                  $307,338,000   $221,704,000
                                                  ============   ============
</TABLE>

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

                                      121
<PAGE>

                                                                      SCHEDULE I
                                                                       Page 2

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

                 Condensed Financial Information of Registrant
                          Hollywood Casino Corporation
                                (Parent Company)

                            STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                       Year Ended December 31,
                                             -------------------------------------------
                                                 1999           1998           1997
                                             -------------  -------------  -------------
<S>                                          <C>            <C>            <C>
Revenues:
 Interest income                             $ 17,670,000   $ 17,217,000   $ 17,189,000
 Other income                                           -         41,000         60,000
                                             ------------   ------------   ------------

                                               17,670,000     17,258,000     17,249,000
                                             ------------   ------------   ------------

Expenses:
 General and administrative                     8,065,000      5,509,000      5,021,000
 Interest                                      36,593,000     27,915,000     27,851,000
 Depreciation and amortization                  1,236,000      1,068,000      1,447,000
 Settlement costs                                       -      1,087,000              -
 Write down of assets                          13,322,000              -     19,678,000
                                             ------------   ------------   ------------

  Total expenses                               59,216,000     35,579,000     53,997,000
                                             ------------   ------------   ------------

Loss before income taxes, extraordinary
 and other items                              (41,546,000)   (18,321,000)   (36,748,000)
Income tax provision                                    -              -     (4,954,000)
                                             ------------   ------------   ------------

 Loss before extraordinary
  and other items                             (41,546,000)   (18,321,000)   (41,702,000)

Extraordinary item:
 Loss on early extinguishment of debt,
   net of income tax benefit in 1997          (30,353,000)      (336,000)      (215,000)
                                             ------------   ------------   ------------

 Loss before other item                       (71,899,000)   (18,657,000)   (41,917,000)
Equity in (losses) income of consolidated
 subsidiaries                                  (9,772,000)    17,052,000     24,570,000
                                             ------------   ------------   ------------

Net loss                                     $(81,671,000)  $ (1,605,000)  $(17,347,000)
                                             ============   ============   ============
</TABLE>

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

                                      122
<PAGE>

                                                                      SCHEDULE I
                                                                       Page 3

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

                 Condensed Financial Information of Registrant
                          Hollywood Casino Corporation
                                (Parent Company)

                            STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                   Year Ended December 31,
                                                          ------------------------------------------
                                                               1999           1998          1997
                                                          --------------  ------------  ------------
<S>                                                       <C>             <C>           <C>
NET CASH PROVIDED BY (USED IN)
  OPERATING ACTIVITIES                                    $   9,997,000   $(6,876,000)  $ 4,503,000
                                                          -------------   -----------   -----------

INVESTING ACTIVITIES:
 Net property and equipment additions                          (217,000)      (62,000)       (7,000)
 Proceeds from sale of assets                                 3,887,000             -     9,643,000
 Collections on notes receivable                                      -     6,000,000             -
 Investments in consolidated affiliates                     (51,478,000)   (2,937,000)   (1,316,000)
 Net (advances to) repayments from affiliates               (37,829,000)    3,500,000     4,650,000
                                                          -------------   -----------   -----------

  Net cash (used in) provided by investing activities       (85,637,000)    6,501,000    12,970,000
                                                          -------------   -----------   -----------

FINANCING ACTIVITIES:
 Proceeds from issuance of long-term debt                   340,419,000             -             -
 Repayments of long-term debt                              (207,339,000)     (288,000)   (4,650,000)
 Deferred financing costs                                   (11,913,000)     (248,000)      (24,000)
                                                          -------------   -----------   -----------

  Net cash provided by (used in) financing activities       121,167,000      (536,000)   (4,674,000)
                                                          -------------   -----------   -----------

  Net increase (decrease) in cash and cash equivalents       45,527,000      (911,000)   12,799,000
    Cash and cash equivalents at beginning of year           14,785,000    15,696,000     2,897,000
                                                          -------------   -----------   -----------

    Cash and cash equivalents at end of year              $  60,312,000   $14,785,000   $15,696,000
                                                          =============   ===========   ===========
</TABLE>

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

                                      123
<PAGE>

                                                                      SCHEDULE I
                                                                       Page 4

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

                 Condensed Financial Information of Registrant
                          Hollywood Casino Corporation
                                (Parent Company)

                  NOTES TO PARENT COMPANY FINANCIAL STATEMENTS

(1)  Guarantees of Registrant

     As of December 31, 1999, HCC had not guaranteed any obligations of its
subsidiaries or unconsolidated affiliates.

(2)  Scheduled Payments of Long-Term Debt of the Registrant

     Scheduled payments of long-term debt outstanding at December 31, 1999 are
set forth below:

               2000                           $    854,000
               2001                                981,000
               2002                                199,000
               2003                                      -
               2004                                      -
               Thereafter                      360,000,000
                                              ------------

                 Total                        $362,034,000
                                              ============
(3)  Dividends and Distributions

     HCC received dividends from its consolidated subsidiaries amounting to
$31,540,000, $11,741,000 and $13,599,000, respectively, during the years ended
December 31, 1999, 1998 and 1997.

(4)  Commitments

     A consolidated subsidiary of HCC is currently constructing a dockside
casino and hotel facility in Shreveport, Louisiana (the "Shreveport Casino").
HCC has entered into a completion capital agreement providing for the
contribution of up to $5,000,000 in cash if at any time there are insufficient
funds available to enable the Shreveport Casino to be operating by April 30,
2001. In addition, if the Shreveport Casino is not operating by April 30, 2001,
HCC will contribute to the subsidiary on that date $5,000,000 in additional
equity less any amounts previously contributed under the completion capital
agreement.

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

                                      124
<PAGE>

                                                                      SCHEDULE I
                                                                       Page 5

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

                 Condensed Financial Information of Registrant
                          Hollywood Casino Corporation
                                (Parent Company)

                  NOTES TO PARENT COMPANY FINANCIAL STATEMENTS

(5)  Supplemental Cash Flow Information

     During the fourth quarter of 1999, HCC assumed the $2,160,000 note payable
balance of one of its subsidiaries to an unconsolidated affiliate.  The
assumption of the note and adjustment to HCC's investment in the subsidiary is
excluded from the accompanying parent company statement of cash flows as a
noncash transaction.

     During 1997, HCC issued 100,000 shares of common stock in exchange for a
$10,000,000 loan commitment from unrelated third parties.  The commitment fee
was valued at $375,000, the fair market value of the stock on the date of its
issuance, and was expensed during 1997.

     Also during 1997, HCC made non-cash capital contributions consisting of
notes receivable with a net book value of $7,597,000 and accrued interest
receivable of $350,000 to a newly formed, wholly-owned subsidiary. The
subsidiary acquired a general partnership interest from an affiliated entity
using, in part, the contributed note and interest receivable. Because the
historical net book value of the partnership interest acquired was less than the
consideration paid, the subsidiary recorded a $12,747,000 change to paid-in
capital. HCC recorded a like charge to paid-in capital to reflect the reduction
in equity value of its investment in the subsidiary.

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

                                      125
<PAGE>

                                                                     SCHEDULE II

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

                       Valuation and Qualifying Accounts
<TABLE>
<CAPTION>
                                                 Amounts
                                   Balance at   Charged to                                       Balance
                                   Beginning    Costs and                         Other          at End
                                   of Period     Expenses    Deductions          Charges        of Period
                                   -----------  -----------  -----------       -----------      -----------
<S>                                <C>          <C>          <C>               <C>              <C>
Year Ended December 31, 1999:
 Allowance for doubtful
  accounts receivable              $ 1,468,000  $   804,000  $  (446,000) (1)  $         -      $ 1,826,000
 Allowance for affiliate
  receivables                       22,808,000    6,433,000            -        13,322,000 (2)   42,563,000
 Allowance for properties held
  for sale                           3,432,000            -     (348,000) (3)            -        3,084,000
                                   -----------  -----------  -----------       -----------      -----------
                                   $27,708,000  $ 7,237,000  $  (794,000)      $13,322,000      $47,473,000
                                   ===========  ===========  ===========       ===========      ===========

Year Ended December 31, 1998:
 Allowance for doubtful
  accounts receivable              $ 1,188,000  $   756,000  $  (476,000) (1)  $         -      $ 1,468,000
 Allowance for affiliate
  receivables                       18,000,000    4,808,000            -                 -       22,808,000
 Allowance for notes receivable      4,000,000            -   (4,000,000) (1)            -                -
 Allowance for properties held
  for sale                           3,400,000            -            -            32,000        3,432,000
                                   -----------  -----------  -----------       -----------      -----------

                                   $26,588,000  $ 5,564,000  $(4,476,000)      $    32,000      $27,708,000
                                   ===========  ===========  ===========       ===========      ===========

Year Ended December 31, 1997:
 Allowance for doubtful
  accounts receivable              $ 1,693,000  $   698,000  $(1,203,000) (1)  $         -      $ 1,188,000
 Allowance for affiliate
  receivable                        18,741,000    7,488,000   (7,953,000) (1)     (276,000)      18,000,000
 Allowance for notes receivable              -    4,000,000            -                 -        4,000,000
 Allowance for properties held
  for sale                           3,400,000            -            -                 -        3,400,000
                                   -----------  -----------  -----------       -----------      -----------

                                   $23,834,000  $12,186,000  $(9,156,000)      $  (276,000)     $26,588,000
                                   ===========  ===========  ===========       ===========      ===========
</TABLE>

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

(2) Represents write down of affiliate receivables to estimated net realizable
    value.

(3) Represents utilization of allowance in connection with partial sale of land.

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

                                      126
<PAGE>

INDEPENDENT AUDITORS' REPORT


To Hollywood Casino - Aurora, Inc.:

We have audited the financial statements of Hollywood Casino - Aurora, Inc. as
of December 31, 1999 and 1998 and for each of the three years in the period
ended December 31, 1999, and have issued our report thereon dated February 25,
2000 (included elsewhere in this Form 10-K).  Our audits also include the
financial statement schedule listed in the index to financial statement
schedules.  This financial statement schedule is the responsibility of the
Company's management.  Our responsibility is to express an opinion based on our
audits.  In our opinion, such financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents fairly in
all material respects the information set forth therein.



Deloitte & Touche LLP
Dallas, Texas
February 25, 2000

                                      127
<PAGE>

                                                                     SCHEDULE II

                         HOLLYWOOD CASINO-AURORA, INC.
                 (wholly owned by Hollywood Casino Corporation)

                       Valuation and Qualifying Accounts
<TABLE>
<CAPTION>
                                              Amounts
                                 Balance at  Charged to                  Balance
                                 Beginning   Costs and                    at End
                                 of Period    Expenses   Deductions      of Period
                                 ----------  ----------  ----------      ---------
<S>                              <C>         <C>         <C>             <C>
Year Ended December 31, 1999:
 Allowance for doubtful
  accounts receivable            $  655,000    $300,000  $(119,000) (1)  $836,000
                                 ==========    ========  =========       ========

Year Ended December 31, 1998:
 Allowance for doubtful
  accounts receivable            $  483,000    $273,000  $(101,000) (1)  $655,000
                                 ==========    ========  =========       ========

Year Ended December 31, 1997:
 Allowance for doubtful
  accounts receivable            $1,071,000    $200,000  $(788,000) (1)  $483,000
                                 ==========    ========  =========       ========
</TABLE>

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

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

                                      128
<PAGE>

INDEPENDENT AUDITORS' REPORT


To HWCC - Tunica, Inc.:

We have audited the consolidated financial statements of HWCC-Tunica, Inc. and
subsidiary as of December 31, 1999 and 1998 and for each of the three years in
the period ended December 31, 1999, and have issued our report thereon dated
February 25, 2000 (included elsewhere in this Form 10-K).  Our audits also
include the financial statement schedule listed in the index to financial
statement schedules. This financial statement schedule is the responsibility of
the Company's management.  Our responsibility is to express an opinion based on
our audits.  In our opinion, such financial statement schedule, when considered
in relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.



Deloitte & Touche LLP
Dallas, Texas
February 25, 2000

                                      129
<PAGE>

                                                                     SCHEDULE II

                        HWCC-TUNICA, INC. AND SUBSIDIARY
                 (wholly owned by Hollywood Casino Corporation)

                       Valuation and Qualifying Accounts
<TABLE>
<CAPTION>
                                              Amounts
                                 Balance at  Charged to                  Balance
                                 Beginning   Costs and                    at End
                                 of Period    Expenses   Deductions      of Period
                                 ----------  ----------  ----------      ---------
<S>                              <C>         <C>         <C>             <C>
Year Ended December 31, 1999:
 Allowance for doubtful
  accounts receivable              $813,000    $504,000  $(327,000) (1)  $990,000
                                  =========  ==========  =========       ========

Year Ended December 31, 1998:
 Allowance for doubtful
  accounts receivable              $705,000    $483,000  $(375,000) (1)  $813,000
                                  =========  ==========  =========       ========

 Year Ended December 31, 1997:
 Allowance for doubtful
  accounts receivable              $622,000    $498,000  $(415,000) (1)  $705,000
                                  =========  ==========  =========       ========
 </TABLE>

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

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

                                      130