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                                   FORM 10-K
                       SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON, D.C.
(Mark One)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
     ACT OF 1934

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

                                       OR

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

For the transition period from            to

Commission file number                    33-48887
                                          --------

                         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                                        NOT APPLICABLE
       ----                                        --------------
Title of each class                     Name of exchange on which registered

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

          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 25, 1997, was $45,917,944.  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 25, 1997, 24,759,968 shares of Class
A Common Stock, $.0001 par value per share, were outstanding.

          As of March 25, 1997, 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 29, 1997 -- Part
     III.

          HWCC-Tunica, Inc. meets the conditions set forth in General
Instruction (J)(l)(a) and (b) of Form 10-K and is therefore filing this Form
with the reduced disclosure format.

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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 gaming facility located in Aurora, Illinois (the
"Aurora Casino") approximately 40 miles west of downtown Chicago, and a casino
and hotel complex in Tunica County, Mississippi (the "Tunica Casino") located
approximately 27 miles south of Memphis, Tennessee.  Both the Aurora and Tunica
facilities feature the Company's unique theme (the "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.  The
Company is also actively pursuing potential gaming opportunities in domestic and
foreign jurisdictions where gaming is legalized or is being actively considered.
Approximately 47% of HCC's outstanding common shares are listed and traded on
the Nasdaq National Market tier of the Nasdaq Stock Market under the symbol
HWCC.  The remaining outstanding HCC common shares are owned by certain general
partnerships and trusts controlled by Jack E. Pratt, Edward T. Pratt, Jr. and
William D. Pratt and by other family members (collectively, the "Pratt Family").

          HCC owns all of the outstanding common stock of both Hollywood Casino
- Aurora, Inc. ("HCA") and HWCC - Tunica, Inc. ("HCT").  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 which
owns and operates the Tunica Casino.  Prior to December 31, 1996, the Company
also owned approximately 80% of the common stock of Greate Bay Casino
Corporation ("GBCC," formerly known as Pratt Hotel Corporation).  On December
31, 1996, HCC distributed the common stock of GBCC owned by HCC to its
shareholders.  As a result of the dividend, GBCC is no longer a subsidiary of
HCC. GBCC's principal assets were the Sands Hotel and Casino (the "Sands") in
Atlantic City, New Jersey and management and consulting contracts with the
Aurora Casino and Tunica Casino.  GBCC's common stock is listed and traded on
the American Stock Exchange under the symbol GBY.

          GBCC's subsidiaries were all indirect subsidiaries of HCC prior to the
distribution of GBCC's common stock.  PPI Corporation ("PPI"), a wholly owned
subsidiary of GBCC, owns various entities related to GBCC's Atlantic City gaming
operations.  Subsidiaries of PPI include: GB Property Funding Corp., the issuer
of $185 million of 10 7/8% First Mortgage Notes, due 2004 (the "10 7/8% First
Mortgage Notes"); PRT Funding Corp., the issuer of $85 million of 11 5/8% senior
notes, due 2004 ("the PRT Funding Notes"); New Jersey Management, Inc. ("NJMI"),
which manages the operations of the Sands; Pratt Management, L.P. ("PML"), which
manages the operations of the Aurora Casino; Pratt Casino Corporation ("PCC"),
which earns consulting fees from the Tunica Casino; and Greate Bay Hotel and
Casino, Inc. ("GBHC"), which owns the Sands.  Subject to regulatory approval and
effective as of April 1, 1997, HCC will acquire the general partnership interest
in PML from PPI.

          The Company's casinos, as well as the Sands, use casino information
technology developed by Advanced Casino Systems Corporation ("ACSC"), a
subsidiary of GBCC.  Such information technology includes ACSC's table game and
slot monitoring systems that provide the casinos with the ability to capture and
maintain information necessary to track and rate patron play through the use of
a casino players' card. These systems provide management with the key
characteristics of patron play as each slot machine and table game pit is
connected with its data base monitoring system.  When patrons utilize the casino
players' card at slot machines and 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

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casino.  Such promotions and complimentaries include free food, admissions,
retail merchandise and sweepstakes giveaways.  Management believes that its
ability to reward its higher value patrons on a "same-visit" basis is valuable
in implementing its strategy of developing a loyal patron base of premium rated
players.  In addition, ACSC's systems allow the casinos to monitor, analyze and
control the granting of gaming credit, promotional expenses and other marketing
costs.

          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 on June 17, 1993 and is one of
only four casinos in Illinois now operating within 50 miles of downtown Chicago.
The Aurora Casino currently consists of two multi-level riverboat casinos
containing an aggregate of approximately 32,100 square feet of gaming space with
approximately 975 slot machines and approximately 56 table games.  The Aurora
Casino also includes an approximately 64,000 square foot land-based Pavilion
through which patrons board the facility's two riverboat casinos via enclosed
passenger loading ramps.  The highly themed Pavilion features a glass-domed,
four-story atrium with two grand staircases, two upscale lounges, two gourmet
restaurants, a large buffet and a diner.  Patrons of the Aurora Casino are
offered valet and self-parking in two multi-level parking garages that
accommodate approximately 1,340 cars, as well as other available surface
parking.

          Since a majority of the facility's patrons arrive by car, the Company
completed construction during 1996 of a new five-story, approximately 500-space
parking garage directly across the street from the Pavilion designed to enhance
access to the Aurora Casino.  The parking garage is connected to the Pavilion
through a climate controlled tunnel.  The new structure also contains
approximately 1,500 square feet of retail space, the "Hollywood Casino(R) Studio
Store," a highly themed store selling logo items licensed from motion picture
studios as well as first-run movies on videocassette.  See "Properties - The
Aurora Casino".

          In order to enhance the operating performance of the Aurora Casino,
the Company completed a major expansion and renovation of the Aurora facility in
1995.  The first phase of this project was completed on May 10, 1995 with the
opening of a 10,000 square foot expansion of one of the Aurora Casino's
riverboats.  Management believes that prior to the expansion, the Aurora
Casino's gaming facilities were capacity constrained during peak periods, which
limited the property's operating performance.  The casino expansion increased
the Aurora Casino's gaming space by approximately 45% to the current 32,100
square feet, allowed the facility to offer patrons the maximum number of gaming
positions permitted by Illinois gaming regulations in a spacious, highly-themed
setting.  The Company also completed a renovation of the Aurora Casino's second
riverboat casino in September 1995 which included the installation of new
interior decor more extensively utilizing the Company's Hollywood Theme and the
reconfiguration of gaming areas to provide a more spacious and comfortable
setting.

          Business Strategy.  The Aurora facility's primary market is the
affluent suburbs north and west of Chicago.  Based on a sampling of its patrons,
the Company believes that the casino drew approximately 40% of its patrons from
such suburbs during 1996.  Approximately 7.1 million people live within a 40-
mile radius and approximately 11.6 million people live within a 100-mile radius
of the Aurora Casino.  The facility is easily accessible from major highways,
can be reached from downtown Chicago in approximately 50 minutes by trains which
average 20 trips a day, and is approximately 30 miles from O'Hare International
Airport.  The four operating Chicago-area casinos, including the Aurora Casino,
have approximately 132,000 square feet of combined gaming space.  No additional
casinos may be licensed in Illinois without the passage of new state
legislation.

          The Aurora Casino's riverboats currently depart from their landings
for as many as 18 cruises daily, commencing at various times from 8:30 a.m.
until 4:30 a.m.  This schedule may be varied, based on

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experience and seasonal factors.  The use of a staggered cruise schedule with
two vessels significantly reduces the waiting time until the next gaming session
for patrons who miss a cruise departure.  Once passengers board, they are
permitted to game during the half hour prior to the time the riverboat departs.
After the excursion, passengers are permitted to game for another half hour
before new passengers board, for a total of two to three hours of gaming per
cruise, depending on the cruising schedule.  In addition, Illinois regulations
permit dockside gaming if the riverboat captain reasonably determines that it is
unsafe to cruise due to inclement weather, mechanical or structural problems or
river icing.  During dockside gaming, the Aurora riverboats operate on their
normal schedules and passengers may leave the vessels at any time but may board
only during the half hour prior to the regularly scheduled start of the cruise.

          The Aurora Casino employs a marketing strategy designed to take
advantage of its proximity to the affluent northern and western suburbs of
Chicago and the large population base of the Chicago metropolitan area.
Management uses a patron data base developed through ACSC's systems to focus its
marketing efforts on patrons who have been identified through the system as
having the characteristics of a higher value patron.  Given the limited number
of gaming positions available on each daily casino excursion,  management
believes that its process of identifying the premium patron, encouraging
participation in its various casino players' card programs and tailoring
promotions and special events to cater to this market segment will enhance
profitability.

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

          Management believes that the Aurora Casino's facilities, in particular
its highly themed dockside Pavilion and its close proximity to the Paramount
Theatre, an 1,800-seat art deco theatre in which the Company features headliner
entertainment, are appealing to both the premium and mass casino patron markets.
Entertainers who have appeared include Frank Sinatra, Tom Jones, Ann-Margaret,
the Temptations, Howie Mandel, Willie Nelson and the Bolshoi Ballet.

          Casino Credit.  Casino operations are conducted on both a credit and a
cash basis.  Gaming debts arising in Aurora in accordance with applicable
regulations are enforceable under Illinois law.  For the year ended December 31,
1996, gaming credit extended to customers accounted for approximately 13.9% of
overall table game wagering, while table game wagering accounted for
approximately 13.8% of overall casino wagering during the period.  At December
31, 1996, gaming receivables amounted to $2.1 million before allowances for
uncollectible gaming receivables which amounted to $690,000.  Management of the
Aurora Casino believes that the allowances for uncollectible gaming receivables
are adequate.

          Employees and Labor Relations.  In Aurora, all casino employees must
be licensed by the Illinois Gaming Board.  At December 31, 1996 there were
approximately 1,650 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 opened on August 8, 1994 and is part of a four
casino cluster located in north Tunica County.  The Tunica Casino  features a
54,000 square foot casino with approximately 1,370 slot machines and 50 table
games.  With the completion of its new hotel tower in 1996, the facility
currently has 506 hotel rooms; other amenities include an entertainment lounge,
themed bar facilities, three restaurants, a large themed buffet, an indoor pool,
banquet and meeting facilities, a showroom, parking for 1,850 cars and a 50-
space recreational vehicle park.

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          The Company completed construction in the third quarter of 1996 of an
eight-story, approximately 350-room hotel tower expansion at the Tunica Casino,
including additional banquet and meeting facilities, a themed indoor pool and
atrium and a showroom.  In addition to satisfying the existing  demand for its
hotel accommodations (the Tunica Casino's hotel experienced overall occupancy
rates in excess of 96% during 1995 with occupancy rates approaching 99% during
weekend and other peak periods), management believes that the additional hotel
capacity will allow the Tunica Casino to more effectively market to and attract
overnight and extended stay patrons.  The Tunica hotel expansion cost
approximately $31.8 million. In February 1996, the Tunica Casino opened a themed
gaming area, the "Adventure Slots" attraction, which consists of an
approximately 12,500 square foot, adventure themed gaming and entertainment area
featuring interactive special effects, multimedia displays of memorabilia from
famous adventure motion pictures and approximately 210 slot machines with custom
graphic details.  Construction of the Adventure Slots cost approximately $5.1
million.

          Business Strategy.  Tunica County is currently the closest legalized
gaming jurisdiction to, and is easily accessible from, Memphis.  Approximately
4.1 million residents live within a 150 mile radius of Tunica County
(approximately one million of whom live in the greater Memphis metropolitan
area). Memphis also hosts approximately 3.5 million tourists each year.  Other
markets within 250 miles of Tunica County include Little Rock, Jonesboro and
Pine Bluff, Arkansas; Nashville and Jackson, Tennessee, and Southeast Missouri.
The Tunica Casino is accessible to its primary geographic market via Highway 61
and Interstate 55.  The Tunica Casino is located in a cluster with gaming
facilities operated by Harrah's Entertainment, Inc. ("Harrah's" and "Mardi
Gras") and Boyd Gaming Corporation ("Sam's Town"), which gives potential patrons
a variety of gaming options.  The four casinos have named their cluster "Casino
Strip" in order to establish a marketing identity for the cluster and have
entered into a joint billboard campaign promoting the Casino Strip name.  These
properties also operate a free shuttle bus service between the four casinos.
Additional joint marketing activities, including radio advertising and joint
special events, are currently being conducted.  Management believes that the
critical mass of the four property cluster, together with the ability of
visitors to move freely among these properties and to access the cluster from
the main Tunica highways, generates significant patron traffic to the Tunica
Casino.  In November 1996, the Casino Strip resorts announced plans for the
joint construction and operation of an 18-hole championship golf course
scheduled to open in the fall of 1998 on approximately 190 acres of land
adjacent to the Casino Strip.  Management believes that the golf course will
help strengthen the Casino Strip as a gaming and convention resort destination.

          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 (i) targeting the local day-trip
market and (ii) by utilizing its hotel rooms and recreational vehicle park to
expand its patron mix to include overnight visitors.  Management also utilizes
the ACSC developed casino information technology to identify the premium Memphis
area patron; such information is then used to encourage participation in its
casino players' card program and tailor promotions and special events to cater
to this market segment.

          Management believes that the Tunica Casino's  unique theme (the casino
was constructed to resemble a large Hollywood sound stage set with authentic and
replica movie props presented in multimedia display cases with larger props
suspended from the ceiling) has broad patron appeal and distinguishes the Tunica
Casino from its competitors.  Additionally, the nature of the theming will allow
for periodic and cost effective updating which management believes will
stimulate repeat visitors.

          Casino Credit.  Casino operations are conducted on both a credit and a
cash basis.  Gaming debts arising in Tunica in accordance with applicable
regulations are enforceable under Mississippi law.  During 1996, gaming credit
extended to customers accounted for approximately 16% of overall wagering.  At
December 31, 1996, gaming receivables amounted to $1.6 million before allowances
for uncollectible

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gaming receivables amounting to $621,000.  Management of the Tunica Casino
believes that the allowances for uncollectible gaming receivables are adequate.

          Employees and Labor Relations.  At December 31, 1996, there were
approximately 1,200 employees at the Tunica Casino, none of whom are represented
under collective bargaining agreements.  Management considers its labor
relations to be good.

THE SANDS

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

          Business Strategy. The Sands' marketing strategy in the highly
competitive Atlantic City market has consisted of seeking higher-value repeat
patrons through its ongoing capital improvements program and its use of
sophisticated casino information technology to monitor and control certain
casino operations and to target marketing efforts toward frequent visitors.
Traditionally, the Sands has been successful in its marketing efforts toward the
high end, frequent table game and slot patron through its offering of private,
limited-access facilities and related amenities to premium patrons.  While the
Sands has strived to maintain its position in this segment, the completion of
the Sands' expansion in 1994 has allowed the Sands to broaden its appeal to the
mass drive-in patron for continued growth in this market segment.  The Sands
markets to the "mass" casino patron market segment through various forms of
advertising media as well as through group and bus tour packages.  Once new
patrons are introduced to the Sands' gaming facilities and the casino player's
card program, management uses its data base capabilities to direct market to
these patrons in an attempt to convert them into higher value patrons.

          Industry Developments.  A number of significant changes to the
regulations governing the casino industry have been approved by New Jersey
regulators in recent years.  Additional deregulation of the industry occurred in
1995 with the enactment of legislation amending the New Jersey Casino Control
Act (the "Casino Act").  The amendments generally lessened regulatory and
licensing requirements and allowed for additional gaming space under certain
conditions.  Partly as a result of such regulatory changes, the Atlantic City
gaming industry has continued to grow.  Revenues have increased from $3.4
billion in 1994 to $3.7 billion in 1995 (an increase from the previous year of
9.5%) and to $3.8 billion in 1996 (an increase from the previous year of 1.8%).
The 1996 increase resulted primarily from an overall expansion of gaming space
to approximately one million square feet at the end of 1996 from approximately
950,000 square feet at the end of 1995, to an increase in the number of hotel
rooms available in the Atlantic City market and to an intense marketing campaign
undertaken by the industry during most of 1996.

          Casino/hotel operators have also benefited in recent years from a
trend toward increased slot play as slot machines have increasingly become more
popular than table games with loyal and frequent patrons, as well as with
recreational and other casual visitors.  Casino operators have been catering
increasingly to slot patrons through new forms of promotions and incentives such
as slot machines which are linked between the various casinos to pay out a
pooled jackpot and more attractive gaming machines. As a result, slot machine
revenue growth has significantly outpaced table game revenue growth in recent
years to the point where for 1996 slot win accounted for approximately 68.9% of
total Atlantic City gaming win.  Table games remain important, however, in
catering to the higher-end segment of gaming patrons as well as in adding to the
gaming ambience and providing a varied gaming experience.

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

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to $15.5 million.  Management of the Sands believes that the allowances for
uncollectible gaming receivables are adequate.

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

          Employees and Labor Relations.  In Atlantic City, all casino
employees, except certain hotel employees, must be licensed under the Casino
Act.  Due to the seasonality of the operations of the Sands, the number of
employees varies during the course of the year.  At December 31, 1996, there
were approximately 3,200 employees at the Sands.  The Sands has collective
bargaining agreements with two unions that represent approximately 1,000 hotel
employees, substantially all of whom are represented by the Hotel, Restaurant
Employees and Bartenders International Union, AFL-CIO, Local 54.  The collective
bargaining agreements expire in September 1999.  Management considers its labor
relations to be good.

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, Indian gaming and other forms of legalized gaming in
the United States and other jurisdictions.  Casino gaming is currently permitted
in a number of states, including Colorado, Illinois, Indiana, Iowa, Louisiana,
Michigan, Mississippi, Missouri, Montana, Nevada, New Jersey and South Dakota,
and in Windsor, Ontario, Canada, as well as on Native American Indian lands in
certain states. 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 and the rules promulgated by the
Illinois Gaming Board thereunder (the "Riverboat Act") authorizes only ten
owner's licenses for riverboat gaming operations in Illinois and permits a
maximum of 1,200 gaming positions (as defined by the Illinois Gaming Board) 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.  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 42
miles southwest of downtown Chicago, and a third is in Elgin, Illinois,
approximately 20 miles from Aurora, 45 miles from downtown Chicago and amid the
affluent northern and western suburbs.  The Company has also experienced
increased competition from three riverboat operations opened during 1996 in
northwestern Indiana within 25 miles of downtown Chicago.  An additional
riverboat operation with approximately 50,000 square feet of gaming space is
anticipated to open in East Chicago, Indiana in May 1997.  Increased competition
from casinos in Indiana has resulted in greater competition for patrons from the
downtown Chicago market and from the suburban Chicago market.  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.  The Company understands that legislation may be
introduced in the Illinois legislature to authorize one or more land-based
and/or riverboat casinos in downtown Chicago and/or the granting of additional
casino licenses elsewhere in Illinois including within the Company's principal
market.  In

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addition, the authorization for up to three casinos in Detroit, Michigan was
approved in late 1996.  Several major competitors have expressed an interest in
the Detroit market; however, the establishment of a regulatory system and
subsequent licensing have yet to be accomplished.  Accordingly, it is not
anticipated that any casino will be operational until late 1997 or 1998.  Native
American Indian tribes are seeking to open casino facilities in northwestern
Indiana and Michigan 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 casinos
operating in north Tunica County.  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.  Within the Casino Strip cluster, Sam's Town has 90,000 square
feet of gaming space with approximately 1,900 slot machines and 75 table games
and approximately 850 hotel rooms; Harrah's currently has 24,000 square feet of
gaming space with approximately 930 slot machines and 40 table games; and
Harrah's Mardi Gras which opened in the former Southern Belle facility in April
1996, currently has 55,000 square feet of gaming space with approximately 1,150
slot machines and 56 table games.  Harrah's recently announced plans to either
sell or close its smaller facility during 1997.

          A three casino cluster consisting of Binion's Horseshoe, ITT Sheraton
and Circus Circus ("Casino Center") is located north of the Casino Strip cluster
and closer to the Memphis market.  Bally's, which previously operated a casino
at Mhoon Landing (located approximately 15 miles south of the Tunica Casino),
reopened its casino at the Lady Luck Olympia Hotel site adjacent to, but not
connected with, the Casino Center as part of a joint venture agreement with Lady
Luck.  Fitzgeralds is located between Casino Center and the Casino Strip
cluster.  Due to increased competition in the Tunica gaming market, all four
casinos that previously operated at Mhoon Landing have ceased operations and
certain other casinos in Tunica County have reduced their work forces.  Despite
the recent closings and work force reductions, the number of casinos and gaming
positions in north Tunica County continues to increase.  The increase in
competition in the north Tunica County casino market could have a material
adverse effect on the Tunica Casino.

          Immediately north of Casino Center, Grand Gaming Corp. has completed
the first phase of a project which, based on plans announced, will include a
casino complex with 140,000 square feet of gaming space with approximately 3,175
slot machines and 160 table games (the largest casino in Mississippi), two
hotels with an aggregate of 800 rooms, a golf course, convention center and
other amenities.  The casino opened in July 1996 and was followed by the opening
of 188 hotel rooms in September 1996.  An additional 600 hotel rooms are
scheduled to open in March 1997 and the golf course and other amenities are
scheduled for later completion.  The opening of this casino space increased
casino capacity in Tunica County by 24%.

          The Company believes that the most significant restrictions to the
growth of gaming in the Tunica market are the lack of an effective
infrastructure and the shortage of hotel rooms.  The Mississippi Department of
Transportation ("MDOT") embarked on a road widening development program which
expanded the two-lane highway leading to Tunica County from Memphis (Highway 61)
during 1996. Additionally, MDOT plans to improve the highway from eastern
Mississippi (Highway 304) to four lanes. A number of casino operations completed
and opened hotel facilities during 1996.  Including the addition of
approximately 350 rooms at the Tunica Casino, the total number of hotel rooms in
Tunica County increased to 3,176 rooms at the end of 1996 from 2,136 at the end
of 1995, an increase of 48.7%.

          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

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recently in November 1996.  In addition, gaming has been legalized in Coahoma
County (immediately south of Tunica County and more accessible from Little Rock,
Arkansas) where Lady Luck has relocated its Mhoon Landing casino to the
Mississippi side of the Helena, Arkansas bridge over the Mississippi River.
Farther south, in Greenville, Washington County, two casinos are now operating,
and in Vicksburg, Warren County, there are four casinos open.  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 SANDS

          The Sands faced intense competition from the 11 other existing
Atlantic City casinos.  According to reports of the New Jersey Casino Control
Commission (the "Casino Commission"), the twelve Atlantic City casinos currently
offer over one million square feet of gaming space.  With the December 31, 1996
distribution by HCC of its GBCC common stock, HCC has exited the Atlantic City
market.

CASINO REGULATION

          ILLINOIS

          The Riverboat Act authorizes riverboat gaming on navigable streams
within or forming a boundary of the State of Illinois except for Lake Michigan
and any waterway in Cook County, which includes Chicago.  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 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.  No entity may be licensed as the owner of more than one riverboat
gaming operation in Illinois, although a licensed owner may hold up to 10% of a
second riverboat gaming operation in Illinois.  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
must be renewed annually 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 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.

          Applicants for and holders of an owner's license are required to
obtain formal approval from the Illinois Gaming Board for changes in the
following areas; (i) key persons, (ii) type of entity, (iii) equity and debt
capitalization  of the entity, (iv) investors and/or debt holders, (v) source of
funds, (vi) applicant's

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<PAGE>

economic development plan, (vii) riverboat capacity or significant design
change, (viii) gaming positions, (ix) anticipated economic impact, or (x) pro
forma budgets and financial statements.  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:  (i) working capital requirements, (ii) debt
service requirements, (iii) requirements for repairs and maintenance, and (iv)
capital expenditure requirements.

          The Illinois Gaming Board will require a personal disclosure from any
person or entity (unless such person or entity qualifies as an institutional
investor) who or which, individually or in association with others, acquires,
directly or indirectly, beneficial ownership of more than 5% of any class of
voting securities or non-voting securities convertible into voting securities of
a publicly traded corporation which holds an ownership  interest or a beneficial
interest in the holder of an owner's license.  If the Illinois Gaming Board
denies an application for such an acquisition, commencing as of the date the
Illinois Gaming Board issues a notice that it denies such application, it will
be unlawful for such applicant to receive any dividends or interest on his or
its securities, to exercise, directly or indirectly, any right conferred by such
securities, or to receive any remuneration in any form from any person or entity
holding any license under the Riverboat Act for services rendered or otherwise.
If the Illinois Gaming Board denies an application for such a transfer and if no
hearing is requested or if the Illinois Gaming Board issues a final order of
disqualification, the holder of the affected owner's license shall purchase all
of the disqualified person's or entity's securities at the lesser of either the
market price or the purchase price of such securities.

          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
limits on wagering. 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.  Gaming
sessions are limited to a four hour duration; however, special event extended
cruises may be authorized by the Illinois Gaming Board.

          If a riverboat captain reasonably determines for reasons of safety
that although seaworthy, the riverboat should not leave the dock or should
return immediately thereto, due to inclement weather, river icing, or
mechanical or structural difficulties, a gaming excursion may commence or
continue while the gangplank or its equivalent is raised and remains raised, in
which event the riverboat is not considered docked.  Recently, the Illinois
Gaming Board amended its rules to clarify the circumstances under which dockside
gaming will be permitted and to require the imposition of a fine for violations
of the cruising requirements.

          A $2 per person admission tax is imposed on the owner of a riverboat
operation.  Such admission tax for the Aurora Casino amounted to $6.4 million,
$5.4 million and $4.7 million , respectively, during 1996, 1995 and 1994.
Additionally, a wagering tax is imposed on the adjusted gross receipts, as
defined in the Riverboat Act, of a riverboat operation at the rate of 20%.  The
licensee is required to wire transfer all such gaming tax payments to the
Illinois Gaming Board.  Such wagering tax for the Aurora Casino amounted to
$31.3 million, $29.3 million and $27.9 million, respectively, for the years
1996, 1995 and 1994.

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

                                       10
<PAGE>

          A holder of any license is subject to imposition of penalties and
fines, suspension or revocation of such license, or other action for any act or
failure to act by such 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 regulation 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.  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 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 will need to be
renewed periodically. 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

                                       11
<PAGE>

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 (i) pays the unsuitable person any distributions or
interest upon any securities of HCT or any payments or distribution of any kind
whatsoever (ii) recognizes the exercise, directly or indirectly, of any voting
rights in its securities by the unsuitable person, or (iii) 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 10 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
has 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 upon a percentage of the gross gaming
revenues received by a casino operation, or the number of slot machines operated
by such casino, or the number of table games operated by such casino.  In
particular, gaming licensees must pay an annual $5,000 license fee and an

                                       12
<PAGE>

additional fee based on the number of table games.  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% or, alternatively, per person boarding fees, and annual
license fees based on the number of gaming devices on board.  The City of Tunica
and Tunica County impose a combined fee of 4% on adjusted gross gaming revenues.
Such gaming taxes for the Tunica Casino amounted to $10.7 million, $10.7 million
and $3.7 million during 1996, 1995 and 1994, respectively.  Gross gaming taxes
paid to the state are allowed as a credit against Mississippi state income tax
liability.

          NEW JERSEY

          Casino gaming is strictly regulated in Atlantic City under the Casino
Act and the rules and regulations of the Casino Commission, which affect
virtually all aspects of the operations of the Sands. The laws, rules and
regulations affecting Atlantic City gaming operations concern primarily the
financial stability, integrity and character of casino operators, their
employees, their debt and equity security holders and others financially
interested in casino operations; the nature of casino/hotel facilities; the
operation methods (including rules of games and credit granting procedures); and
financial and accounting practices used in connection with casino operations.

          Casino Licenses.  The Casino Act requires that all casino operations
be licensed by the Casino Commission and that all employees (except for certain
non-casino  job positions), major shareholders and other persons or entities
financially interested in the casino operation be either licensed or approved by
the Casino Commission.  A license is not transferable and may be revoked or
suspended under certain circumstances by the Casino Commission.  A plenary
license authorizes the operation of a casino with the games authorized in an
operation certificate issued by the Casino Commission, and the operation
certificate may be issued only on a finding that the casino conforms to the
requirements of the Casino Act and applicable regulations and that the casino is
prepared to entertain the public.  Under such determination, GBHC and NJMI were
issued plenary casino licenses, and GBCC was approved as a holding company of a
casino licensee.

          The Casino Act provides for a casino license fee of not less than
$200,000 based upon the cost of the investigation and consideration of the
license application, and a renewal fee of not less than $100,000 or $200,000 for
a one year or four year renewal, respectively, based upon the cost of
maintaining control and regulatory activities.  In addition, a licensee must pay
annual taxes of 8% of casino win (as defined in the Casino Act), net of a
provision for uncollectible accounts of up to 4% of casino win.  During the
years ended December 31, 1996, 1995 and 1994, the taxes assessed by, and the
license and other fees paid by the Sands to the Casino Commission amounted to
$23.5 million, $25 million and $24.5 million, respectively.

          The Casino Act also requires a casino licensee to make certain
approved investments in New Jersey, of at least 1.25% of its gross casino
revenues (as defined in the Casino Act) or pay an investment alternative tax of
2.5% of its gross casino revenues.  Approved investments include the purchase of
bonds issued by the Casino Reinvestment Development Authority ("CRDA"), a
governmental agency which administers the statutorily mandated investments made
by casino licenses.

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

                                       13
<PAGE>

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.

          All shipboard employees of the Company, even those who have nothing to
do with the marine operations of the vessel (such as dealers, waiters and
security personnel), may be subject to the Jones Act which, among other things,
exempts those employees from state limits on workers' compensation awards.

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.

                                       14
<PAGE>

DEVELOPMENT ACTIVITIES

          On March 13, 1997, the Louisiana Gaming Control Board voted
unanimously to grant the fifteenth and final riverboat license in Louisiana to
Hollywood/DeBartolo Entertainment Louisiana, L.L.C. ("Hollywood/DeBartolo"), a
company owned 50% by a subsidiary of HCC.  Subject to receiving certain
remaining approvals, Hollywood/DeBartolo has announced plans to construct a $194
million resort complex in Bossier City, Louisiana, approximately 200 miles east
of Dallas, Texas.  As presently planned, the complex will include a riverboat
gaming facility with 30,000 square feet of gaming space; a 400-room hotel with a
30,000 square foot convention facility; an 80,000 square foot, themed pavilion;
an 18-hole golf course and a highly themed, retail entertainment center.  A
subsidiary of HCC will operate the complex, other than the retail entertainment
center, under a long-term management contract.

          Management believes that a proactive business development strategy is
critical to the Company's long-term growth and continued success, and is
committed to a development program that will maximize the Company's future
opportunities.  Accordingly, the Company will continue to actively pursue
development of new casino entertainment venues by promoting the expansion of
legalized gaming and by exploring opportunities where gaming is already
sanctioned.

OTHER OPERATIONS

          During 1996 and early 1997, GBCC disposed of its remaining non-casino
hotel operations.  GBCC managed and had an ownership interest (but no obligation
to fund losses) in the hotel operations of the Sands Hotel and Casino in San
Juan, Puerto Rico.  GBCC also managed two non-casino hotels and had an ownership
interest in one of the hotels.  For the year ended December 31, 1996, earnings
before interest, taxes, depreciation and amortization attributable to such
operations amounted to $1.2 million.  As of December 31, 1996, all of GBCC's
non-casino hotel related indebtedness was extinguished.

ITEM 2.  PROPERTIES

THE AURORA CASINO

          The Aurora Casino consists of two, four-level riverboats, City of
Lights I and II, which have combined casino space of approximately 32,100 square
feet and approximately 1,200 gaming positions. The complex also includes the
four-story, approximately 64,000 square foot land based Pavilion and two parking
garages.

          The first parking garage contains approximately 18,000 square feet of
office space for administrative offices and approximately 13,000 square feet of
office space.  HCA leases the parking garage, including the office and retail
space, from the City of Aurora under a 30 year lease ending June 2023, with HCA
having the right to extend the term to a maximum of 99 years.

          In September 1996, HCA and the Aurora Metropolitan Exposition,
Auditorium and Office Building Authority ("ACCA"), a governmental agency,
completed the joint construction of a new five-story, approximately 500-space
parking garage directly across the street from, and connected by a climate-
controlled tunnel to, the Aurora Casino's Pavilion.  The new garage provides
additional parking for casino patrons and includes approximately 1,500 square
feet of retail space.  ACCA financed a portion of the construction costs through
an $11.5 million, 7.5% industrial revenue bond issue which yielded proceeds of
approximately $10.5 million.  HCA funded all remaining construction costs.  The
facility is owned by ACCA and operated by HCA pursuant to a 30-year lease with
the right to extend the lease for up to 20 additional years.  Rental payments
during the first 15 years equal ACCA's debt service costs related to the
industrial revenue bond issue.  In addition, HCA pays ACCA 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 ACCA's North

                                       15
<PAGE>

Island Center banquet and meeting facilities.  HCA is also responsible for
additional rent, consisting of costs such as any real estate taxes, maintenance
costs, insurance premiums and utilities arising out of its operation of the
garage.  The lease is treated as a capital lease for financial reporting
purposes.

          The Aurora Casino is pledged as collateral to the extent of $39
million, for $210 million face amount of senior secured notes, due November 1,
2003 (the "Senior Secured Notes") issued by HCC on October 17, 1995.  The Senior
Secured Notes bear interest, payable semiannually, at the rate of 12 3/4%
discounted to yield 13 3/4% per annum.  The Senior Secured Notes are redeemable
at the option of HCC any time on or after November 1, 1999 at 106.375% of the
then outstanding principal amount, decreasing to 103.1875% and 100%,
respectively, on November 1, 2000 and 2001.  Commencing with the November 1,
1997 interest payment date and at each subsequent interest payment date, HCC
will be required to make an offer to purchase not more than $2,500,000 in
principal amount of the Senior Secured Notes at a price of 106.375% of the
principal amount tendered.

          The indenture to 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
or any future guarantor; and enter into transactions with certain affiliates.

THE TUNICA CASINO

          The Tunica Casino currently consists of a one-story, 60,000 square
foot casino, including 54,000 square feet of gaming space, 506 hotel rooms and
suites and support facilities that includes three restaurants, a buffet, an
arcade and a gift shop, banquet space, an enclosed pool and atrium, a showroom
and administrative offices.  The 1996 construction on an eight-story,
approximately 350-room hotel tower was completed with a portion of the proceeds
from the Senior Secured Notes discussed above.  The Tunica facility also
includes a 50-space recreational vehicle park and a 1,850-space surface parking
area.

          The ground lease for the Tunica site has an initial term of five years
from the date gaming operations commence, and an option to extend the lease for
nine successive five-year terms.  Rent during the 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 site covers approximately 70
acres, there is sufficient land for future expansion should circumstances
warrant.

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

THE SANDS

          As of December 31, 1996, the entity which owns the Sands is no longer
an indirect subsidiary of HCC.  The Sands is located in Atlantic City, New
Jersey on approximately 4.8 acres of land one-half block from the boardwalk at
Brighton Park between Indiana Avenue and Dr. Martin Luther King, Jr. Boulevard.
The Sands facility consists of a casino and simulcasting facility with
approximately 76,000 square feet of gaming space containing approximately 2,000
slot machines and 125 table games; a hotel with 532 rooms (including 58 suites);
six restaurants; a cocktail lounge; two private lounges for invited guests (the
Plaza Club and the Island Club); an 800-seat cabaret theater; retail space; an
adjacent nine-story executive office building with 77,000 square feet of office
space for its executive, financial and administrative personnel; the "People
Mover", an elevated, enclosed, one-way moving sidewalk connecting the Sands to
the Boardwalk; and parking for approximately 1,900 vehicles.  In addition, a
warehouse near Atlantic City and

                                       16
<PAGE>

a building located in Atlantic City that houses a print shop and auto shop
support the operations of the Sands.

DEVELOPMENT SITES

          The Company holds options to purchase approximately 86 acres of land
in Bossier City, Louisiana for its planned development of a resort complex as
described under "Item 1. Business - Development Activities" above.

          The Company acquired two sites in the Houston, Texas area, one on
Clear Lake in the City of Seabrook and the other on Lake Houston, as well as one
lakeside site in the Dallas, Texas area in the north Dallas suburb of Farmers
Branch, for development in the event that Texas passed enabling legislation to
legalize gaming.  Such legislation failed to pass in 1995, and although it is
expected to be reintroduced during the 1997 legislative session, passage is
believed to be highly doubtful.  During 1996, management concluded that the
properties should be offered for sale.  An evaluation of net realizable value
resulted in the Company recognizing an anticipated loss from the disposition of
such properties of approximately $3.4 million.

OTHER OPERATIONS

          Prior to sale of the property in November 1996, GBCC had a 50%
partnership interest with an unrelated third party in the Sheraton Plaza, a 496-
room hotel located in Orlando, Florida.  GBCC agreed to contribute up to $3.9
million as an additional investment in the Sheraton Plaza hotel partnership to
refurbish the hotel facility.  GBCC contributed $2.5 million toward such
commitment through 1996.  Such contributions were in recognition of GBCC's
partner having agreed to make $5 million in principal reductions on the
underlying mortgage note on the facility of which $4 million were made through
1996. GBCC was required to pay approximately $2.9 million to retire its share of
the underlying indebtedness on the property in connection with the sale.

          Prior to sale of the property in September 1996, GBCC operated the
Holiday Inn located at the north entrance of the Dallas/Fort Worth Airport ("DFW
North") which was owned by Metroplex Hotel Limited ("Metroplex"), a partnership
controlled by certain members of the Pratt Family.  During 1996 and 1995, GBCC
made capital expenditures under the hotel operating agreement totaling
approximately $2.6 million toward property improvements.  GBCC was also
obligated by the hotel operating agreement to make minimum rental payments equal
to Metroplex's principal and interest payments on the underlying indebtedness of
this hotel.  During February 1994, GBCC utilized funds borrowed from HCC to
purchase such underlying indebtedness with a principal balance of $13.8 million
from third parties at a cost of $6.8 million and subject to third party
indebtedness amounting to $2.7 million.  The required minimum rental payments
(net of debt service receipts since the February 1994 note acquisition date)
amounted to $397,000, $530,000 and $678,000, respectively, during the years
ended December 31, 1996, 1995 and 1994.  GBCC recorded the note receivable from
Metroplex, which accrued interest at the rate of 9 1/2% per annum, at
acquisition cost.  Upon the sale of the hotel by Metroplex, GBCC received
proceeds sufficient to repay the third party indebtedness of $1.9 million,
recover its $6.8 million acquisition cost of the underlying indebtedness,
recover $2.6 million of its total investment in property improvements and
receive additional cash of approximately $770,000.

          GBCC also had a 46% interest in Southmark San Juan, Inc. ("Southmark
San Juan"), a subsidiary of Southmark Corporation ("Southmark") which owned the
420-room Sands Hotel and Casino located in San Juan, Puerto Rico (the "Sands San
Juan") prior to its sale in February 1997.  GBCC operated this facility under a
management agreement with Southmark San Juan and earned management fees of
$504,000,  $513,000 and $488,000 during the years ended December 31, 1996, 1995
and 1994, respectively.  GBCC received a termination fee of approximately $1.5
million in connection with the sale

                                       17
<PAGE>

and has agreed to continue to provide management services on a month to month
basis through October 1997 subject to cancellation by the new owners.  GBCC had
not recognized losses incurred by Southmark San Juan since 1990 as its
investment was eliminated through the recognition of prior years' losses.

ITEM 3.  LEGAL PROCEEDINGS

PLANET HOLLYWOOD LITIGATION

          Planet Hollywood International, Inc., a Delaware corporation, and
Planet Hollywood (Region IV), Inc., a Minnesota corporation (collectively,
"PHII"), filed a complaint in the United States District Court for the Northern
District of Illinois, Eastern Division on July 29, 1996 against HCC, HCA and a
member of the Pratt Family (collectively, the "Original Hollywood Defendants").
The Original Hollywood Defendants filed with the Court on September 18, 1996 an
answer to PHII's lawsuit, along with numerous counterclaims against PHII, Robert
Earl and Keith Barish (collectively, the "PHII Defendants").  PHII filed with
the Court on January 21, 1997, an amendment to their complaint which, among
other things, added HCT (together with the Original Hollywood Defendants, the
"Hollywood Defendants") and GBCC as defendants.  The Original Hollywood
Defendants filed with the Court on February 4, 1997, and GBCC and HCT filed with
the Court on February 20, 1997, answers and counterclaims to such amended
complaint.

          In its lawsuit, PHII alleges, among other things, that the Hollywood
Defendants and GBCC have, in opening and operating the Hollywood Casino concept,
infringed on PHII's trademark, service mark and trade dress and have engaged in
unfair competition and deceptive trade practices.  In their counterclaims, the
Hollywood Defendants and GBCC allege, among other things, that the PHII
Defendants have, through their planned use of their mark in connection with
casino services, infringed on certain of HCC's service marks and trade dress and
have engaged in unfair competition.

          Given the uncertainties inherent in litigation, no assurance can be
given that the Hollywood Defendants will prevail in this litigation; however,
the Hollywood Defendants believe that PHII's claims are without merit and intend
to defend their position and pursue their counterclaims vigorously.  The
accompanying consolidated financial statements do not include any adjustments
that might result from the outcome of the uncertainties described above.

OTHER LITIGATION

          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 1996, no matter was submitted to a vote
of security holders through the solicitation of proxies or otherwise.

                                       18
<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.  Since May 28, 1993, HCC's common stock
has 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.
<TABLE>
<CAPTION>

      PERIOD          High    Low
-------------------  ------  -----
<S>                  <C>     <C>

1996
   First Quarter     $ 4.63  $3.13
   Second Quarter      8.50   3.38
   Third Quarter      10.75   4.63
   Fourth Quarter      6.13   2.88


1995
  First Quarter      $ 6.75  $4.75
  Second Quarter      10.25   5.88
  Third Quarter       10.13   6.63
  Fourth Quarter       7.00   3.63

</TABLE>

          As of March 25, 1997, there were approximately 500 holders of record
of HCC's voting common stock.

          No cash dividends have been paid on HCC's common stock in the past and
HCC has no plans to pay cash dividends on its common stock in the foreseeable
future.  See Note 4 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 has not paid dividends in the past and has no plans to pay any
dividends in the foreseeable future.

                                       19
<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA

HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

          The following tables present selected financial data for HCC and are
qualified in their entirety by the consolidated financial statements, including
the notes thereto, appearing elsewhere herein.  The selected financial data for
HCC has been presented as though HCC, which was incorporated during November
1990, owned its subsidiaries for all periods presented.  See Note 1 to Notes to
the Consolidated Financial Statements of HCC appearing elsewhere herein.  The
data as of December 31, 1996 and 1995, and for the years ended December 31,
1996, 1995 and 1994, have been derived from the audited consolidated financial
statements of HCC contained elsewhere in Item 8.
<TABLE>
<CAPTION>

STATEMENT OF OPERATIONS DATA:                                                                 YEAR ENDED DECEMBER 31,
                                                                              -----------------------------------------------------
                                                                                1996       1995       1994       1993       1992
                                                                              ---------  ---------  ---------  ---------  ---------
                                                                                     (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                                           <C>        <C>        <C>        <C>        <C>
Net revenues.............................................................     $530,580   $539,943   $464,384   $343,340   $275,584
                                                                              --------   --------   --------   --------   --------
Expenses:
  Departmental...........................................................      426,769    396,157    338,776    249,139    209,268
  General and administrative.............................................       37,169     36,914     33,189     31,989     30,507
  Depreciation and amortization..........................................       40,836     40,955     30,960     25,003     21,064
  Amortization of preopening costs.......................................            -     11,002      2,120          -
  Development............................................................        1,065      6,765      5,154      1,926          -
  Write down of properties held for
   sale..................................................................        3,400          -          -          -          -
                                                                              --------   --------   --------   --------   --------
    Total expenses.......................................................      509,239    480,791    419,081    310,177    260,839
                                                                              --------   --------   --------   --------   --------
Income from operations...................................................       21,341     59,152     45,303     33,163     14,745
                                                                              --------   --------   --------   --------   --------
Nonoperating income (expenses):
  Interest income........................................................        3,101      3,708      4,227      3,437      3,800
  Interest expense.......................................................      (59,090)   (55,558)   (46,233)   (43,141)   (40,924)
  Write-off deferred pre-acquisition costs...............................            -          -          -          -    (13,086)
  Loss on disposition of assets..........................................       (1,841)      (514)       (26)         -          -
                                                                              --------   --------   --------   --------   --------
    Total nonoperating expenses, net.....................................      (57,830)   (52,364)   (42,032)   (39,704)   (50,210)
                                                                              --------   --------   --------   --------   --------
(Loss) income before income taxes, nonrecurring
   and extraordinary items...............................................      (36,489)     6,788      3,271     (6,541)   (35,465)
Valuation provision on affiliate receivables.............................      (18,741)         -          -          -          -
                                                                              --------   --------   --------   --------   --------
(Loss) income before income taxes and
   extraordinary item....................................................      (55,230)     6,788      3,271     (6,541)   (35,465)
Income tax (provision) benefit...........................................          (63)      (268)    (1,527)     7,069       (657)
                                                                              --------   --------   --------   --------   --------
(Loss) income before extraordinary item..................................      (55,293)     6,520      1,744        528    (36,122)
Extraordinary item:
  Early extinguishment of debt,
    net of related tax benefits (1)......................................            -    (23,808)       126    (13,069)         -
                                                                              --------   --------   --------   --------   --------
Net (loss) income........................................................     $(55,293)  $(17,288)  $  1,870   $(12,541)  $(36,122)
                                                                              ========   ========   ========   ========   ========
Per common share:
  (Loss) income before extraordinary item................................     $  (2.24)  $    .26   $    .07   $    .02   $  (1.81)
  Extraordinary item.....................................................            -       (.96)       .01       (.57)         -
                                                                              --------   --------   --------   --------   --------
    Net (loss) income....................................................     $  (2.24)  $   (.70)  $    .08   $   (.55)  $  (1.81)
                                                                              ========   ========   ========   ========   ========

BALANCE SHEET DATA:                                                                                 DECEMBER 31,
                                                                              ----------------------------------------------------
                                                                                1996       1995       1994       1993       1992
                                                                              --------   --------   --------   --------   --------
                                                                                                    (IN THOUSANDS)

Total assets.............................................................     $308,085   $514,463   $464,135   $369,255   $279,547
Total debt, including capital
  lease obligations......................................................      232,046    496,847    432,117    345,451    328,555
Shareholders' equity (deficit)...........................................       45,144    (57,233)   (39,947)   (41,818)   (97,538)

</TABLE>
--------------------
(1)  Includes the following items: (i) for 1995, costs associated with the
     October 1995 issuance of the Senior Secured Notes by HCC and (ii) for 1993,
     the accrual of $14 million of costs associated with a 1994 recapitalization
     of GBCC, net of related tax benefit.

                                       20
<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 notes thereto contained
elsewhere herein.  HCA and HCT commenced operations on June 17, 1993 and August
8, 1994, respectively.  The data as of December 31, 1996 and 1995 and for the
years ended December 31, 1996, 1995 and 1994 have been derived from the audited
financial statements of HCA and HCT contained elsewhere in Item 8.

                         HOLLYWOOD CASINO-AURORA, INC.

STATEMENT OF OPERATIONS DATA:
<TABLE>
<CAPTION>

                                                                     YEAR ENDED DECEMBER 31,
                                                      -----------------------------------------------------
                                                        1996       1995       1994      1993(1)      1992
                                                      ---------  ---------  ---------  ----------  --------
                                                                         (IN THOUSANDS)
<S>                                                   <C>        <C>        <C>        <C>         <C>

Net revenues.......................................   $163,391   $152,508   $148,000   $71,628     $     -
                                                      --------   --------   --------   -------     -------

Expenses:
   Departmental....................................    114,006    102,780     95,495    45,047           -
   General and administrative......................     14,645     14,406     11,926     8,200           -
   Depreciation and amortization...................      8,834      9,172      7,121     3,582         494
   Amortization of preopening costs................          -          -      5,863     2,120           -
                                                      --------   --------   --------   -------     -------
    Total expenses.................................    137,485    126,358    120,405    58,949         494
                                                      --------   --------   --------   -------     -------
   Income from operations..........................     25,906     26,150     27,595    12,679        (494)
                                                      --------   --------   --------   -------     -------
Non-operating income (expense):
   Interest income.................................        205        306        458       432           -
   Interest expense................................     (6,704)    (6,493)    (6,654)   (3,930)          -
                                                      --------   --------   --------   -------     -------
    Total non-operating expenses, net..............     (6,499)    (6,187)    (6,196)   (3,498)          -
                                                      --------   --------   --------   -------     -------

Income before income taxes.........................     19,407     19,963     21,399     9,181        (494)
Income tax provision...............................     (6,883)    (7,554)    (7,557)   (3,567)          -
                                                      --------   --------   --------   -------     -------

Income before extraordinary item...................     12,524     12,409     13,842     5,614        (494)
Extraordinary item.................................          -       (989)         -         -           -
                                                      --------   --------   --------   -------     -------

Net income.........................................   $ 12,524   $ 11,420   $ 13,842   $ 5,614     $  (494)
                                                      ========   ========   ========   =======     =======


BALANCE SHEET DATA:
                                                                            DECEMBER 31,
                                                      ----------------------------------------------------
                                                        1996       1995       1994      1993        1992
                                                      --------   --------   --------   -------     -------

Total assets.......................................   $107,449   $ 93,196   $ 73,356   $77,113     $17,716
Total debt, including capital lease obligations....     65,430     55,829     50,141    54,624      13,767
Shareholder's equity...............................     28,033     25,549     14,071    10,659       1,507

</TABLE>
(1)  The Aurora Casino commenced operations on June 17, 1993.

                                       21
<PAGE>

                               HWCC-TUNICA, INC.

STATEMENT OF OPERATIONS DATA:
<TABLE>
<CAPTION>

                                                                               YEAR ENDED DECEMBER 31,
                                                                           --------------------------------
                                                                             1996       1995      1994(1)
                                                                           ---------  ---------  ----------
                                                                                   (IN THOUSANDS)
<S>                                                                        <C>        <C>        <C>

Net revenues..............................................                 $ 94,524   $ 94,416   $32,413
                                                                           --------   --------   -------

Expenses:
 Departmental.............................................                   72,602     63,842    22,623
 General and administrative...............................                    5,962      5,711     2,425
 Depreciation and amortization............................                   10,906     10,356     3,610
 Amortization of preopening costs.........................                        -          -     5,939
                                                                           --------   --------   -------
  Total expenses..........................................                   89,470     79,909    34,597
                                                                           --------   --------   -------

 Income (loss) from operations............................                    5,054     14,507    (2,184)
                                                                           --------   --------   -------

Non-operating income (expenses):..........................
 Interest income..........................................                      835        637       374
 Interest expense.........................................                  (10,060)   (10,792)   (4,454)
 Loss on sale of assets...................................                      (45)      (505)        -
                                                                           --------   --------   -------
  Total non-operating expenses, net.......................                   (9,270)   (10,660)   (4,080)
                                                                           --------   --------   -------

(Loss) income before income taxes and extraordinary item..                   (4,216)     3,847    (6,264)
Income tax benefit........................................                        -        694         -
                                                                           --------   --------   -------

(Loss) income before extraordinary item...................                   (4,216)     4,541    (6,264)
Extraordinary item........................................                        -     (9,614)      126
                                                                           --------   --------   -------

Net loss..................................................                 $ (4,216)  $ (5,073)  $(6,138)
                                                                           ========   ========   =======


BALANCE SHEET DATA:
                                                                                      DECEMBER 31,
                                                                           ------------------------------
                                                                             1996       1995       1994
                                                                           ---------  --------   --------

Total assets..............................................                 $116,620   $122,240   $99,889
Total debt, including capital lease obligations...........                   86,645     88,340    61,789
Shareholder's equity......................................                   19,210     23,426    28,499

</TABLE>

(1)  The Tunica Casino commenced operations on August 8, 1994.

                                       22
<PAGE>

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

          This Annual Report on Form 10-K contains forward-looking statements
about the business, financial condition and prospects of 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.

          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.  For the years ended December 31, 1996, 1995 and 1994,
however, the operations of GBCC are included in the consolidated results of
operations of HCC.  In future periods, HCC's results of operations will not
include the operations of GBCC and its subsidiaries.  Because HCC and the HCC
subsidiaries that own and operate the Aurora Casino and the Tunica Casino are
not obligated for GBCC's indebtedness and because GBCC and its subsidiaries are
restricted in their ability to pay or advance funds to HCC and its subsidiaries,
management's discussion and analysis of HCC's financial condition and results of
operations is divided into separate analyses of:  (i) HCC, including all of its
subsidiaries other than GBCC and its subsidiaries (the "HCC Group") and (ii)
GBCC and its subsidiaries which include the Sands (the "GBCC Group").

          The following table sets forth the pro forma results of operations of
HCC for the year ended December 31, 1996 as if the distribution of GBCC common
stock had occurred at December 31, 1995 and, as a result, the GBCC Group had not
been consolidated with HCC.  Such pro forma information for years prior to 1996
is not believed to be relevant as the operations of the Tunica Casino and the
Aurora Casino would be for less than full years.

Net revenues                                $ 258,487,000
Total expenses                               (241,545,000)
                                             ------------

Income from operations                         16,942,000
                                             ------------

Non-operating expenses:
 Interest expense, net                        (26,563,000)
 Loss on disposal of assets                       (46,000)
                                             ------------

Total non-operating expenses                  (26,609,000)
                                             ------------

Loss before income taxes                       (9,667,000)

Income tax provision                             (695,000)
                                             ------------

Net loss                                     $(10,362,000)
                                             ============

Net loss per common share                          $(0.42)
                                             ============



                                       23
<PAGE>

RESULTS OF OPERATIONS

HCC GROUP

Selected financial information of the HCC Group is presented below:

<TABLE>
<CAPTION>
                                                                                 YEAR ENDED DECEMBER 31,
                                                                       ------------------------------------------
                                                                           1996           1995           1994
                                                                       ------------   ------------   ------------
                                                                                     (in thousands)
<S>                                                                    <C>            <C>            <C>
Casino revenues................................................        $    244,485   $    234,570   $    169,877
Other departmental revenues....................................              36,660         30,915         29,739
Less - promotional allowances..................................             (22,658)       (18,226)       (19,067)
                                                                       ------------   ------------   ------------

  Net revenues.................................................             258,487        247,259        180,549
                                                                       ------------   ------------   ------------

Casino expenses................................................             174,032        154,584        109,256
Other departmental expenses....................................              12,716         11,907          8,670
General and administrative expenses............................              29,326         26,523         21,654
Depreciation and amortization..................................              21,006         20,432         11,413
Amortization of preopening costs...............................                   -              -         11,802
Development expenses...........................................               1,065          6,765          5,154
Write down of properties held for sale.........................               3,400              -              -
                                                                       ------------   ------------   ------------

  Total expenses...............................................             241,545        220,211        167,949
                                                                       ------------   ------------   ------------

  Income from operations.......................................        $     16,942   $     27,048   $     12,600
                                                                       ============   ============   ============
</TABLE>
          Net revenues of the HCC Group for the year ended December 31, 1996
were $258.5 million, an increase of 4.5% from net revenues of $247.3 million in
1995.  The 1995 net revenues reflected an increase of $66.7 million (36.9%) from
the $180.5 million earned during 1994.  Most of the 1996 increase was realized
by improved net revenues at the Aurora Casino; net revenues at the Tunica Casino
were virtually unchanged in 1996 compared to 1995.  The Tunica Casino, which
opened in August 1994, provided  incremental net revenues of $62 million during
1995, accounting for substantially all of the HCC Group's increase.  The 1995
increased revenues also included an increase in net revenues at the Aurora
Casino of $4.5 million compared to 1994.  As explained below, an expansion
project at the Aurora Casino, which commenced during the first quarter of 1995
and required the removal from service of one of the Aurora Casino's two
riverboats for a period of 30 days during the second quarter of 1995, resulted
in a decline in revenues during the second quarter of 1995.

          As explained in greater detail below, the 4.5% increase in 1996 net
revenues was offset by a $21.3 million (9.7%) increase in operating expenses,
resulting in a decline in income from operations of $10.1 million (37.4%) in
1996 compared to 1995.  The increase in operating expenses primarily resulted
from higher marketing and promotional expenses in response to increased
competition at both the Aurora Casino and the Tunica Casino.  The 1995 increase
in revenues over the prior year enabled the HCC Group's income from operations
to improve $14.4 million to $27 million in 1995 from $12.6 million in 1994.  The
Tunica Casino contributed an incremental $16.7 million in income from operations
after consulting fees; as a result of the aforementioned construction and the
advent of additional competition in its market area, income from operations at
the Aurora Casino declined by $1.4 million during 1995 compared with 1994.

                                       24
<PAGE>

AURORA CASINO

          GENERAL

          Income from operations at the Aurora Casino, adjusted to exclude
management fees payable to a subsidiary of GBCC, amounted to $35.3 million for
the year ended December 31, 1996 compared to $35.6 million and $37.6 million,
respectively, during 1995 and 1994.  During the second quarter of 1995, the
expansion of one of the Aurora Casino's two riverboats was completed, increasing
gaming capacity by 10,000 square feet and slot machine capacity by 34%.  The
increase in space generated significant increases in gross wagering and gaming
revenues during the first half of 1996 compared to the first half of 1995.
Operating results during the last half of 1996 were negatively impacted by the
opening of three gaming facilities in northern Indiana during June and severe
local flooding in July.  During the period of their operations in 1996, the
northern Indiana casinos generated nearly $3 billion of gross wagering and $230
million of casino revenues.  While the flooding caused only minor damage to the
Aurora Casino, several cruises had to be cancelled and the surrounding area
suffered extensive damage which reduced casino volume for the remainder of the
third quarter.  During the 1995 expansion one riverboat was out of service for
30 days prior to completion of the construction in May; however, through a
combination of cruise schedule revisions and special marketing efforts, casino
revenues during this period approximated 72% of those earned during the same
period  in 1994.  Such performance was achieved despite a 48% reduction in
gaming positions and the additional competition in 1995 from a riverboat
operation in nearby Elgin, which opened in October 1994.

          GAMING OPERATIONS

          The following table sets forth certain unaudited financial and
operating data for the Aurora Casino's operations for the years ended December
31, 1996, 1995 and 1994.

<TABLE>
<CAPTION>

                                       YEAR ENDED DECEMBER 31,
                                -------------------------------------
                                   1996         1995         1994
                                -----------  -----------  -----------
                                 (IN THOUSANDS, EXCEPT PERCENTAGES)
<S>                             <C>          <C>          <C>
REVENUES:
 Table games.................   $   51,230   $   57,008   $   64,763
 Slot machines...............      105,894       89,273       74,674
                                ----------   ----------   ----------

  Total......................   $  157,124   $  146,281   $  139,437
                                ==========   ==========   ==========

TABLE GAMES:
 Gross wagering (drop) (1)...   $  304,851   $  320,822   $  356,381
 Hold percentages (2):
  HCA........................         16.8%        17.8%        18.2%
  Other Chicago-area (3).....         18.8%        19.0%        18.4%

SLOT MACHINES:
 Gross wagering (handle) (1).   $1,902,642   $1,499,768   $1,182,594
 Hold percentages (2):
  HCA........................          5.6%         6.0%         6.3%
  Other Chicago-area (3).....          5.7%         5.9%         6.3%
</TABLE>
_______________________

                                       25
<PAGE>

(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".

(3)  Comprised of Empress and DPD/Harrah's Casinos located in Joliet, Illinois
     and Grand Victoria's Casino located in Elgin, Illinois (which opened
     October 6, 1994).  Percentages have been calculated based on information
     published by the Illinois Gaming Board.

          Total gross wagering at the Aurora Casino as measured by table drop
and slot machine handle increased by $386.9 million during 1996 compared to 1995
primarily due to the expansion of gaming space in 1995 which increased slot
machine capacity by 34%.  Slot machine handle during 1996 increased $402.9
million (26.9%) while table drop decreased slightly.  The increase in slot
machine handle during the first four months of 1996 was 76.3% compared to the
pre-expansion and construction periods in 1995; however, as a result of flooding
and the competition from new boats in Indiana, slot machine handle during the
last six months of 1996 was only 2% above the 1995 comparable period.

          The 26.9% increase in slot machine handle during 1996 compares
favorably to the 3.4% increase experienced by other Chicago-area riverboat
operators.  Other Chicago-area operators also experienced a decrease in table
game wagering of 10.8% compared to a 5% decrease at the Aurora Casino.
Accordingly, the Aurora Casino increased both its slot machine and table games
market share during 1996 as the additional competition from Indiana riverboats
had a greater negative impact on Chicago-area operators closer to Indiana than
on the Aurora Casino.

          Total gross wagering increased $281.6 million during 1995 compared to
1994 in spite of the removal of one of the facility's two riverboats  from
service for 30 days as discussed previously.  The overall increase in casino
wagering reflects the expanded gaming space, as well as the continuing
refinement of the Aurora Casino's marketing strategy, including the growth of
its data base of Chicago area patrons and the growth in membership of its patron
recognition casino players' card programs which identify higher value patrons.

          The Aurora Casino's decrease in table drop of 10% during the year
ended  December 31, 1995 (a decrease of 3.3% during the six month period ended
December 31, 1995 subsequent to the expansion of gaming space) compares with an
increase in table drop for other Chicago-area riverboat operators of 39.9%.  The
significant Chicago market increase and the resulting decrease in table games
market share for the Aurora Casino is primarily due to increased competition
from the Elgin facility, which was able to provide more spacious surroundings
for its table game patrons.  Exclusive of the Elgin  facility, table drop for
the other Chicago-area riverboat operators increased by only 2.5%.  Slot machine
handle at the Aurora Casino increased 26.8% overall during 1995 compared to 1994
and 38.4% during the last six months of 1995 compared to the same period in
1994.  The 1995 increase compares unfavorably to the 62.8% increase experienced
by other Chicago-area riverboat operators; however, excluding the increase
resulting from the Elgin facility's opening in October 1994, the other Chicago-
area increase in slot machine handle was only 20.2%.

          REVENUES

          Casino revenues increased $10.8 million (7.4%) during the year ended
December 31, 1996 compared to 1995.  Such increase resulted from a $16.6 million
increase in slot machine revenues offset, in part, by a $5.8 million decline in
table game revenues.  The 26.9% increase in slot machine handle during 1996 was
partially offset by a decrease in the slot machine hold percentage to 5.6% from
6%, resulting in a slot machine revenue increase of $16.6 million (18.6%).  The
slight decline in table game wagering discussed

                                       26
<PAGE>

previously was further compounded by a decline in the table game hold percentage
to 16.8% in 1996 from 17.8% in 1995.  These factors combined to bring about a
decrease in table game revenues of $5.8 million (10.1%).

          Total casino revenues increased $6.8 million (4.9%) during 1995
compared to 1994.  Table games revenue decreased $7.8 million (12%) during 1995
compared to 1994.  The aforementioned 10% decrease in drop during 1995 compared
to 1994 was compounded by the decrease in the table game hold percentage to
17.8% in 1995 from 18% in 1994.  The 26.8% increase in slot machine handle
during 1995 was partially offset by a decline in the slot hold percentage,
resulting in a 1995 slot machine revenue increase of $14.6 million (19.6%)
compared to 1994.

          Food and beverage revenues increased $2.1 million (17.7%) during 1996
compared to 1995 as a result of increased complimentaries resulting from
marketing programs.  Food and beverage revenues at the Aurora Casino increased
by $728,000 (6.6%) during 1995 compared to 1994 due to increases in patron
volume and enhancements at the Epic Buffet and other banquet facilities.

          Other revenues decreased $1 million (21%) during 1996 compared to 1995
due to reductions in parking fees generated in response to competitive
pressures.  Admission and other revenues decreased by $8.9 million (64.3%)
during 1995 compared to 1994 primarily as the result of admission fees being
discontinued in response to competitive pressures in the Chicago area together
with decreases in retail revenue resulting from changes in certain retail-
oriented promotional activities.

          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 64.5%, 62.6% and 65.5%, respectively, during
the years ended December 31, 1996, 1995 and 1994.  The 1996 increase reflects
the increase in dining promotional activities partially offset by the
elimination of complimentary parking fees.  The 1995 decrease from the prior
year reflects (i) the discontinuance of admission fees and, consequently,
complimentary admissions, and (ii) the elimination of complimentary beverages to
conform to a clarification of existing liquor laws.

          DEPARTMENTAL EXPENSES

          Casino expenses increased by $10.8 million (11.2%) in 1996 compared to
1995 primarily due to the increases in casino wagering noted above together with
increased promotional activity.   Casino expenses increased by $8.6 million
(9.7%) during 1995 over 1994.  Such increase exceeded the corresponding increase
in casino revenues and is primarily due to additional costs associated with the
opening of the expanded riverboat in May 1995 and to the implementation of new
marketing programs and expansion of existing programs.

          Food and beverage expenses increased slightly during 1996 as increases
in payroll and food costs were virtually offset by increased allocations to the
casino department as a result of promotional activities.  Food and beverage
expenses decreased $721,000 (12.9%) during 1995 compared to 1994.  Such decrease
was a result of an increase in food complimentaries charged to casino expenses
and was partially offset by higher food costs primarily due to increased
patronage and the Aurora Casino's efforts to upgrade the quality of its Epic
Buffet food service.  Food and beverage services to casino patrons are, for the
most part, ancillary to the casino operation.  Accordingly, these departments
are not expected to contribute significantly to income from operations.

          Other expenses increased $324,000 (43.7%) in 1996 compared to 1995 as
fewer expenses were allocated to the casino department, primarily as a result of
reduced parking costs.  Other expenses

                                       27
<PAGE>

decreased $577,000 (43.7%) during 1995 as compared to 1994 primarily due to
increased allocations to the casino department.

TUNICA CASINO

          GENERAL

          The Tunica Casino earned income from operations, adjusted to exclude
consulting fees payable to a subsidiary of GBCC, of $6.3 million in 1996
compared to $15.7 million in 1995 and a loss of $1.8 million for 1994 (the
Tunica Casino opened on August 8, 1994).  The 1996 decrease results primarily
from increased competition in the Tunica market as evidenced by the opening of
new casinos in December 1995 and April and July 1996.  The additional
competition resulted in increased marketing and promotional expenditures to
protect market share.

     GAMING OPERATIONS

     The following table sets forth certain unaudited financial and operating
data relating to the operations of the Tunica facility for the years ended
December 31, 1996 and 1995 and for the period from opening on August 8, 1994
through December 31, 1994.  Published local and state-wide industry information
is limited in both detail and availability.  Accordingly, relevant comparisons
between the Tunica Casino and its market competitors can not be presented.

<TABLE>
<CAPTION>

                                                        YEAR ENDED
                                                       DECEMBER 31,           PERIOD FROM
                                               --------------------------   OPENING THROUGH
                                                  1996          1995       DECEMBER 31, 1994
                                               -----------  -------------  ------------------
                                                     (in thousands, except percentages)
<S>                                            <C>          <C>                     <C>
CASINO REVENUES:
  Table games.............................     $   16,650     $   17,782            $  7,384
  Slot machines...........................         69,644         69,256              22,521
  Poker revenues..........................          1,067          1,251                 535
                                               ----------     ----------            --------

           Total..........................     $   87,361     $   88,289            $ 30,440
                                               ==========     ==========            ========

TABLE GAMES:
  Gross wagering (drop) (1)...............     $   82,350     $   80,348            $ 38,039
  Hold percentage (2).....................           20.2%          22.1%               19.4%

SLOT MACHINES:
  Gross wagering (handle) (1).............     $1,332,949     $1,345,983            $409,938
  Hold percentage (2).....................            5.2%           5.1%                5.5%

</TABLE>
--------------
(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 decreased slightly (less than 1%) during 1996 as
compared to 1995.  Table game wagering increased $2 million (2.5%); however,
slot machine handle decreased $13 million (1%), more than offsetting the table
game increase.

                                       28
<PAGE>

          During the first quarter of 1996, the Tunica Casino opened its new
"Adventure Slots" attraction, a highly themed area of the casino floor which
features interactive memorabilia displays and entertainment. Although a
significant portion of the casino's slot machine capacity was removed from the
casino floor during the first six weeks of 1996 for construction of this new
attraction, increased patron volume subsequent to its mid-February opening
resulted in an overall increase in slot machine handle of 6% for the first
quarter of 1996 compared to the same period of 1995.  Such increase was offset
during the remainder of 1996 by the opening in April 1996 of a fourth casino in
the Casino Strip cluster and the opening in July 1996 of the largest casino in
Tunica County, Grand Casino, which is located north of the Casino Strip and
closer to the primary gaming market of Memphis, Tennessee.

          REVENUES

          Total casino revenues decreased slightly by $928,000 (1.1%) during
1996 compared to 1995.  The increase in table game wagering was offset by a
decrease in the table hold percentage to 20.2% from 22.1%, resulting in a
decrease in table game revenues of $1.1 million (6.4%).  Although slot machine
wagering showed a decrease in 1996, the hold percentage improved to 5.2% from
5.1%, resulting in a slight increase in slot machine revenues of $388,000 (less
than 1%).

          Casino revenues increased $57.9 million (190%) during the year ended
December 31, 1995 compared to the period of time the Tunica Casino was in
operation during 1994.  On a more comparable basis, annualization of the
reported amounts of revenues during the 1994 period of operations indicates that
table revenues declined and slot machine revenues increased during 1995 in
comparison to 1994.  The Tunica Casino reduced the number of table games by
approximately 10% and slightly increased the number of slot machines compared to
the initial period of its operations in 1994 reflecting changes in the table
game and slot machine components of its customer mix.  Such changes resulted, in
part, from the opening in February 1995 of an additional casino which heavily
promotes its table game business, from the introduction by the Tunica Casino of
additional marketing programs geared toward slot patrons and to refinements in
the type of slot machines offered to meet customers' preferences.  Table game
revenues also benefitted from an increase in the hold percentage for table games
to 22.1% during 1995 compared to 19.4% during the period from opening to
December 31, 1994.  Slot machine revenue growth in 1995 was a result of
significant increases in slot machine gross wagering, partially offset by a
decline in the slot machine hold percentage to 5.1% during 1995 compared to 5.5%
during the period from opening to December 31, 1994.

          Rooms revenues increased $2.1 million (67.2%) during 1996 compared to
1995.  This increase results from the opening of the Tunica Casino's new 352-
room hotel tower during the third quarter of 1996, increasing the number of
guest rooms by almost 130%.  Hotel occupancy rates have decreased slightly as a
result of the additional rooms, declining to an average of 88% for the period
from August through December 1996 from an average of 99.7% from January through
July 1996 and an average of 96% in 1995.  Hotel room revenues increased $2.3
million (152.5%) in 1995 compared to 1994 primarily as a result of the hotel
facility opening approximately one month after the casino opened in the third
quarter of 1994 and to improved occupancy rates, which have increased from an
average of approximately 86% in 1994 to approximately 96% in 1995.

          Food and beverage revenues increased $2.3 million (24.1%) during 1996
compared to 1995 as a result of increased overnight patron volume from the newly
completed hotel tower,  the opening of a new dining outlet and increased
promotional activities.  The $6.1 million (174.3%) increase in food and beverage
revenues during 1995 compared to the partial year in 1994 is comparable to the
increases noted in casino revenues and reflects additional patron volume.

          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

                                       29
<PAGE>

and beverage and other revenues, increased to 61.1% from 56% during 1995 and
58.9% during the period from opening to December 31, 1994.  The 1996 increase
results from the increased use of hotel and food and beverage complimentaries as
part of the Tunica Casino's promotional programs.  The 1995 decrease from the
prior period primarily resulted from decreased utilization of complimentaries
compared with the initial period of operations, during which more
complimentaries were used to attract new casino patrons.

          DEPARTMENTAL EXPENSES

          Casino expenses increased $8.6 million (15%) in 1996 compared to 1995
primarily due to increases in advertising and marketing costs and other
promotional activities.  Such costs increased in 1996 with the advent of
additional competition as discussed under "Gaming Operations" above and the
opening of the new hotel tower and the "Adventure Slots" attraction.  Additional
promotional activities also resulted in increased allocations of rooms and food
and beverage costs to the casino department.  Casino expenses increased $36.7
million (177.8%) in 1995 compared to the partial year of operations in 1994.
Such increase is comparable to the increase in casino revenues and reflects
increased patron volume.

          Rooms expenses decreased $314,000 (16.6%) in 1996 compared to 1995 in
spite of the addition of the new hotel tower.  The decrease is primarily due to
increases in promotional activities resulting in increased allocations of room
costs to the casino department.  Rooms expenses increased $1.4 million (281.2%)
in 1995 compared to the partial year of operations in 1994.  In addition to the
increase resulting from increased patron volume, the near capacity hotel
occupancy rate of 96% in 1995 allowed for less hotel room promotional activity,
thus reducing the allocation of such costs to the casino department.

          The increase in other expenses of $72,000 (6.1%) during 1996 compared
to 1995 results from increased merchandise costs with respect to retail sales,
to increases in entertainment expenses and to increased public area maintenance
costs.  The $826,000 (228.8%) increase in other expenses in 1995 compared to the
period from opening in 1994 reflects the additional casino volume and a decrease
in promotional activities after the initial start up period.

GBCC GROUP

          Selected financial information of the GBCC Group is presented below:

<TABLE>
<CAPTION>

                                                         YEAR ENDED DECEMBER 31,
                                                      ------------------------------
                                                        1996       1995       1994
                                                      ---------  ---------  ---------
<S>                                                   <C>        <C>        <C>
                                                               (in thousands)
Casino revenues....................................   $242,889   $264,048   $256,207
Other departmental revenues........................     68,680     67,372     64,653
Less - promotional allowances......................    (27,929)   (27,083)   (24,943)
                                                      --------   --------   --------

 Net revenues......................................    283,640    304,337    295,917
                                                      --------   --------   --------

Casino expenses....................................    218,990    209,282    198,270
Other departmental expenses........................     21,031     20,384     22,482
General and administrative expenses................     19,363     21,983     22,916
Depreciation and amortization......................     19,868     20,553     19,547
                                                      --------   --------   --------

 Total expenses....................................    279,252    272,202    263,215
                                                      --------   --------   --------

 Income from operations............................   $  4,388   $ 32,135   $ 32,702
                                                      ========   ========   ========
</TABLE>

                                       30
<PAGE>

          The GBCC Group's primary sources of revenues are the operations of the
Sands and management and consulting fees earned from the Aurora Casino and the
Tunica Casino. Results of operations for the Aurora Casino, on which such
management fees are based, were discussed above as part of the HCC Group. Since
January 1994, the GBCC Group has earned a fixed consulting fee from the Tunica
Casino of $100,000 per month.  The GBCC Group has reduced its losses from
noncasino hotels during recent years through the sale of certain owned
properties and the termination of management contracts on certain managed
properties.

          The GBCC Group's consolidated net revenues declined to $283.6 million
during 1996 from $304.3 million for 1995 which, combined with higher operating
costs at the Sands, resulted in a decline in income from operations to $4.4
million in 1996 from $32.1 million in 1995.  Operating results have been
adversely affected in 1996 by the advent of unprecedented and highly aggressive
marketing programs instituted by certain other Atlantic City casinos seeking to
increase their market share and to a lesser degree by severe winter snowstorms
in January and February.  These factors, as well as declines in both the table
games and slot machine hold percentages, resulted in a decline in net revenues
at the Sands of 6.8% (to $264.8 million in 1996 from $284 million in 1995).  In
addition, marketing and advertising costs increased by $10.9 million (17.3%)
during 1996 compared to 1995 in response to competitive pressures.

          GAMING OPERATIONS

          The following table sets forth certain unaudited financial and
operating data relating to the Sands' operations:

<TABLE>
<CAPTION>

                                 YEAR ENDED DECEMBER 31,
                          -------------------------------------
                             1996         1995         1994
                          -----------  -----------  -----------
                           (IN THOUSANDS, EXCEPT PERCENTAGES)
<S>                       <C>          <C>          <C>

REVENUES:
 Table games...........   $   79,127   $   95,835   $   96,485
 Slot machines.........      159,972      163,821      155,381
 Other (1).............        3,790        4,392        4,341
                          ----------   ----------   ----------

  Total................   $  242,889   $  264,048   $  256,207
                          ==========   ==========   ==========

TABLE GAMES:
 Gross Wagering
  (Drop) (2)...........   $  576,577   $  606,283   $  605,854
                          ==========   ==========   ==========

 Hold Percentages: (3)
  Sands................         13.7%        15.8%        15.9%
  Atlantic City Casino
   Gaming Industry.....         15.5%        15.9%        15.8%

SLOT MACHINES:
 Gross Wagering
  (Handle) (2).........   $1,954,612   $1,892,159   $1,760,279
                          ==========   ==========   ==========

 Hold Percentage:(3)
  Sands (4)............          8.2%         8.7%         8.8%
</TABLE>
____________________________

                                       31
<PAGE>

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

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

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

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

  Table games drop at the Sands declined $29.7 million (4.9%) during 1996
compared with 1995 and did not change significantly during 1995 compared with
1994.  The Sands' 1996 decrease in table drop compares with an increase of 5% in
table drop for all other Atlantic City casinos during the same period. As a
result, the Sands' 1996 table game market share (expressed as a percentage of
the Atlantic City industry aggregate table game drop) declined to 7.7% from 8.5%
during 1995.  Table game drop throughout 1996 was adversely impacted by the
increase in competitive pressures in the rated table market segment, of which a
significant portion was in the "high end" and midmarket segments.  The second
half of 1996 also saw a decline in the unrated table market segment as
expansions at competing properties, construction on roadways into the city and
other factors all served to reduce unrated table play at the Sands. The Sands'
slight decrease in drop during 1995 compares with an increase of 4.7% in table
drop for all other Atlantic City casinos during the same period.  As a result,
the Sands' table game market share decreased to 8.5% during 1995 from 8.8% in
1994.  The Sands' table game drop decrease was again largely attributable to
competitive pressures in the rated table market segment; however, such decreases
were partially offset by increases in the unrated table segment.  As a result of
the Grand Opening on July 1, 1994, the number of  table games, excluding poker,
increased significantly and table games were made more accessible to casino
patrons boosting table drop during the second half of 1994.  However, a number
of factors adversely affected the 1994 first six months' table games performance
including:  (i) the relocation of many blackjack tables to a less accessible
temporary gaming space during construction and the periodic closing of selected
tables on the main casino floor as construction neared completion; (ii) the
severe winter weather during the first quarter, particularly on weekend periods
which generally affect the Sands to a greater degree than its competitors since
the Sands caters to premium table players who concentrate their visits over
weekend periods; (iii) the overall trend in the Atlantic City marketplace
towards slot machine play and (iv) competitive pressures, particularly in the
high-end table patron segment.

  Slot machine handle increased $62.5 million (3.3%) and $131.9 million (7.5%)
for the years ended December 31, 1996 and 1995, respectively, compared with the
previous years.  The Sands' slot machine handle increases compare with 4.9% and
15.7% increases, respectively, in slot machine handle for all other Atlantic
City casinos during the same periods.  As a result, the Sands' market share
decreased to 6.1% in 1996 from 6.2% during 1995 and 6.7% during 1994.  The
increases in slot machine handle are largely attributable to increases in
marketing programs, such as coin incentive and direct marketing programs, which
resulted in significant increases in the number  of bus patrons for 1996
compared to 1995.  The Sands' average number of slot machines increased by less
than 1% during 1996 compared to an increase of 11.3% for all other Atlantic City
casinos.  The greater percentage increase in the number of slot machines for
other Atlantic City casinos reflects, in part, expansions of certain facilities
during 1996 which resulted in an overall increase of approximately 121,000
square feet of casino space and further contributed to the Sands' decline in
market share.  Although the Sands' increase in the average number of slot
machines during 1995 was comparable to the overall Atlantic City industry
increase, the Sands' increase in slot machine handle lagged the 15.7% increase
in handle for all other Atlantic City casinos.  During the

                                       32
<PAGE>

second  quarter of 1995, the Sands discontinued certain marketing programs and
promotions (particularly slot promotions which included cash giveaways) which
management deemed to be only marginally profitable.  This strategy worked well
during the 1995 second quarter; however, entering the peak summer season, many
of the Sands' competitors increased such spending programs and the Sands lost
market share in the highly profitable mass market segment.

  REVENUES

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

  During 1995, casino revenues at the Sands increased by $7.8 million (3.1%)
compared with 1994. Casino revenues during the second quarter of 1994 included
the recognition of approximately $1 million resulting from the reversal of
certain progressive jackpot liabilities; the exclusion of such amount from 1994
revenues results in a 1995 increase in casino revenues of 3.5%.  Casino revenues
were also negatively impacted by decreases in both the table games and slot
machine hold percentages at the Sands during 1995 compared to 1994.

  Rooms revenues decreased $1.3 million (8.5%) during 1996 compared with 1995,
but did not change significantly during 1995 compared with 1994.  The 1996
decrease reflects the sale in September 1996 of a hotel property operated by the
GBCC Group under a joint operating agreement.  Room revenues for such property
were $1.4 million during the fourth quarter of 1995.  Food and beverage revenues
increased by $1 million (2.9%) and by $3.3 million (10.6%), respectively, during
1996 and 1995 compared with the prior years.  These increases were primarily the
result of the opening of the Epic Buffet at the Sands during the third quarter
of 1995, partially offset in 1996 by the aforementioned sale of a hotel
property.  Other revenues increased $1.6 million (8.8%) during 1996 compared to
1995 primarily due to increases in theater entertainment revenue at the Sands.
Other revenues decreased $1.1 million (5.8%) during 1995 compared to 1994
primarily due to decreased revenues from GBCC's computer services subsidiary.

  Promotional allowances represent the estimated value of goods and services
provided free of charge to casino customers under various marketing programs.
As a percentage of rooms, food and beverage and other revenues at the Sands,
these allowances decreased to 56.1% in 1996 from 57.6% in 1995 and 56.9% in
1994.  The 1996 decrease is primarily attributable to increases in other types
of marketing programs in lieu of promotional allowances.  The 1995 increase is
primarily attributable to promotional activity associated with the 1995 opening
of the Epic Buffet.

  DEPARTMENTAL EXPENSES

  Casino expenses at the Sands increased $9.7 million (4.6%) during 1996 and $11
million (5.6%) during 1995 compared with the prior years.  The 1996 increase is
primarily due to the expansion of various marketing programs in response to
competitive pressures.  During much of 1996, an unprecedented and highly
aggressive industry wide attempt to increase market share resulted in
significantly higher costs with respect to coin incentive packages offered to
bus patrons.  The additional costs of such programs result in greater allocation
of rooms, food and beverage and other expenses to casino expense.  The 1995
increase results from higher operating costs during the first half of 1995 due
to increased casino patronage at the expanded Sands facility.  The increased
costs were most apparent during the first quarter of 1995, which saw a $7.4
million increase (17.1%) compared to the first quarter of 1994.  Higher
operating costs were

                                       33
<PAGE>

substantially offset during the remainder of 1995 by decreases in marketing
programs as previously discussed and by other cost containment measures
implemented by management.

  Rooms expense decreased $529,000 (10.6%) during 1996 compared to 1995, but did
not change significantly during 1995 compared with the prior year.  The 1996
decrease reflects the sale of a hotel property in September 1996 and is
comparable to the decline in associated rooms revenues.

  Food and beverage expense did not change significantly during 1996 compared
with 1995 or during 1995 compared with 1994.  Increased costs associated with
the 1995 third quarter opening of the Epic Buffet were offset by increases in
food and beverage complimentaries allocated to the casino department.

  Other expenses increased $808,000 (21.6%) during 1996 compared with 1995 as
increases in theater entertainment costs at the Sands were partially offset by
increased allocations to the casino department. Other expenses decreased $1.5
million (29.3%) during 1995 compared with 1994 primarily due to reductions in
entertainment costs associated with headliner entertainment at the Sands.

OTHER CONSOLIDATED ITEMS

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

  GENERAL AND ADMINISTRATIVE

  General and administrative expenses did not increase significantly during 1996
compared to 1995 and increased $3.7  million (11.2%) during  1995 compared to
1994.  As a result of the Tunica Casino only operating for a partial year in
1994, HCC's incremental general and administrative expenses were $3.3 million
during 1995.

  DEPRECIATION AND AMORTIZATION

  Depreciation and amortization expense did not change significantly during 1996
compared to 1995 following an increase of $10 million (32.3%) during 1995
compared to 1994.  Although the addition of a valet parking garage at the Aurora
Casino in August 1996 and a hotel tower at the Tunica Casino in September 1996
resulted in more depreciable assets, the revision of estimated economic lives of
existing assets as explained in Note 2 of the Notes to Consolidated Financial
Statements offset any increase in depreciation and amortization attributable to
property additions.  The 1995 increase was primarily due to increased
depreciation and amortization resulting from the opening of the Tunica Casino.
Such opening resulted in an additional $6.7 million of depreciation and
amortization during 1995 compared to 1994.

  AMORTIZATION OF PREOPENING COSTS

  Amortization of deferred preopening costs represents the amortization of costs
incurred in connection with the openings of  the Aurora Casino and the Tunica
Casino.  Such costs, which include preopening training and general and
administrative costs, were fully amortized in 1994.

                                       34
<PAGE>

  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.
Such costs decreased $5.7 million (84.3%) in 1996 compared to 1995 primarily as
a result of an overall decrease in prospective venues and projects.  Development
expenses increased by $1.6 million (31.3%) in 1995 compared to 1994 primarily as
a result of the 1995 abandonment and write off of $1.7 million of costs deferred
during 1994 for certain development projects which proved infeasible.
Additional 1995 project costs written off amounted to approximately $1.1
million.  Excluding the effect of such write offs, development expenses
decreased by approximately $1.2 million in 1995 as a result of an overall
decrease in suitable venues and projects.

  WRITE DOWN OF PROPERTIES HELD FOR SALE

  During 1996, management determined that certain properties in Texas acquired
as potential sites for future development should be offered for sale.  An
evaluation of net realizable value for such sites resulted in a write down for
the anticipated loss on disposal of the properties of $3.4 million.

  INTEREST

  Interest income decreased $607,000 (16.4%) for the year ended December 31,
1996 compared with 1995 and $519,000 (12.3%) for the year ended December 31,
1995 compared with 1994.  The 1996 decrease in interest income is primarily due
to the expenditure of cash on construction projects from funds reserved for such
purposes and the overall decline in cash generated from operations at the Sands,
both of which reduced the amount of cash available for temporary cash
investments.  The 1995 decrease results from comparison to an unusually high
level of interest income in 1994.

  Interest expense increased $3.5 million (6.4%) and $9.3 million (20.2%),
respectively, during 1996 and 1995 compared to the prior years.  Substantially
all of the 1996 interest expense increase was experienced by the HCC Group and
is attributable to interest incurred on $210 million of Senior Secured Notes
issued during October 1995, partially offset by the elimination of interest from
the retirement of previously outstanding debt.  Such increases were partially
offset by the increased capitalization of interest on construction projects.
Substantially all of the 1995 interest expense increase was again experienced by
the HCC Group and is attributable to incremental interest incurred on certain
debt issued in June 1994 in connection with construction of the Tunica Casino
and the Senior Secured Notes, partially offset by reductions of interest from
the retirement of previously outstanding debt.  The 1995 increase was compounded
by the 1994 capitalization of interest expense associated with the construction
of the Tunica Casino ($3.3 million).

  LOSS ON DISPOSAL OF ASSETS

  During 1996, GBCC experienced a loss on disposal of assets amounting to $1.8
million resulting from the write off of deferred option costs with respect to
the planned purchase of a site for future expansion.  Loss on disposal of assets
during 1995 includes the sale of excess barges by HCT which were acquired in
January 1994 together with other assets of the partially completed Tunica
project from the project's previous owner.  The barges were sold to third
parties at a price below management's estimate of net realizable value,
resulting in a loss on the sale.

  WRITE DOWN OF AFFILIATE RECEIVABLES

  In connection with a refinancing of its indebtedness in 1994, GBCC issued
$40.5 million discounted principal amount of deferred interest notes (the "PPI
Funding Notes") to HCC in exchange for

                                       35
<PAGE>

$38.8 million principal amount of 15 1/2% notes issued by another GBCC
subsidiary and held by HCC. It was anticipated that HCC's primary method of
collection with respect to the new notes would be through the utilization of
existing tax net operating losses of the GBCC Group.  As a result of HCC's
distribution of GBCC stock, GBCC's tax net operating losses will no longer be
available for utilization in HCC's consolidated tax returns; accordingly, HCC
evaluated the collectability of the $54.3 million PPI Funding Notes outstanding
at December 31, 1996.  Based on (i) the planned utilization of $7.6 million of
such notes in connection with the acquisition from GBCC of the general
partnership interest in the limited partnership which holds the Aurora
Management contract (see "Liquidity and Capital Resources - HCC Group -Financing
Activities" below); (ii) management's intention, subject to the approval of the
independent directors of GBCC, to utilize additional notes to acquire other
assets from GBCC; and (iii) an evaluation of the future prospects for repayment
based on cash flow projections and other available information, HCC established
a valuation allowance in the amount of $18.7 million at December 31, 1996 to
adjust the carrying amount of the PPI Funding Notes to their estimated
realizable value.

  INCOME TAX (PROVISION) BENEFIT

  HCC and its subsidiaries have tax net operating loss carryforwards ("NOL's")
totaling approximately $20 million, none of which begin to expire until the year
2007.  Additionally, HCC and its subsidiaries have various tax credits available
totaling approximately $200,000 which do not begin to expire until the year
2008.

  Based on the operating results of the Aurora Casino and the Tunica Casino
since commencement of their operations, management believes that it is more
likely than not that future consolidated taxable income will be sufficient to
utilize at least 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 sheets reflect the recording of a net deferred
tax asset of $6.5 million as of December 31, 1996.  Subject to a "change of
control" as discussed below not occurring, the ultimate recognition of this
amount of deferred tax assets will be dependent on HCC and its subsidiaries'
ability to generate approximately $19 million of taxable income for federal tax
purposes prior to the expiration dates of the NOL's and tax credit carryforwards
and the reversal of other temporary differences.

  NET OPERATING LOSS CARRYFORWARDS

  Sales by HCC or existing stockholders of common stock by a five percent
stockholder, as defined in the Internal Revenue Code of 1986, as amended (the
"Code"), can cause a "change of control", as defined in Section 382 of 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 future utilization of its loss
carryforwards.

                                       36
<PAGE>

  EXTRAORDINARY ITEM

  During October 1995, HCC completed the refinancing of $90 million of 14%
Senior Notes as well as other debt incurred in connection with the construction
of the Tunica Casino.  As a result, costs and fees incurred, together with the
write off of unamortized transaction costs, resulted in the recording of an
extraordinary item in the amount of $23.8 million  in 1995.

  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.

  SEASONALITY

  Historically, the Sands' operations have been highly seasonal in nature, with
the peak activity occurring from May to September.  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, the Aurora
Casino has also experienced seasonality, but to a lesser degree than the Sands,
and management believes that seasonality may also cause fluctuations in reported
results at the Tunica Casino. In addition, the operations of the Aurora Casino,
the Tunica Casino, and the Sands 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.

LIQUIDITY AND CAPITAL RESOURCES

  Since their openings on June 17, 1993 and August 8, 1994, respectively, the
Aurora Casino and the Tunica Casino have become the principal sources of
liquidity and capital resources for HCC.  Prior to the commencement of
operations of the Aurora facility, HCC's principal business activities were
limited to its approximate 80% ownership of GBCC.  GBCC's principal sources of
liquidity and capital resources for the last several years have been cash flow
from the Sands, proceeds from debt financings and proceeds from asset sales.

HCC GROUP

  OPERATING ACTIVITIES

  The operations of the Aurora Casino continue to be the HCC Group's primary
source of liquidity and capital resources, having contributed approximately
$21.8 million of cash flow from operations during 1996 after deducting the
payment of $9.4 million of management fees to the GBCC Group.  The Tunica Casino
provided $6.5 million of cash from operations during 1996 after deducting the
payment of $1.2 million of consulting fees to the GBCC Group.  The HCC Group's
other sources of funds have included the repayment of principal and interest on
intercompany loans made to the GBCC Group and interest income earned on
temporary investments.  In addition to operating expenses at the Aurora Casino
and the Tunica Casino, uses of operating cash by the HCC Group included interest
payments on the 14% Senior Notes ($27.8 million), costs to pursue development
opportunities ($1 million) and corporate overhead costs ($8.7 million).

  During 1995, cash flow from operations, together with existing cash, $5
million in debt financing and the repayment of $5.5 million of indebtedness from
the GBCC Group were used by the HCC Group to fund capital expenditures of
approximately $45.2 million, to repay third party indebtedness of approximately
$4 million and to make payments under capital lease obligations of $2.4 million.

                                       37
<PAGE>

  Subsequent to its distribution of GBCC common stock, the HCC Group has tax net
operating loss carryforwards totaling approximately $20 million and tax credits
available totaling approximately $200,000.  Due to the availability of such net
operating loss and tax credit carryforwards, management presently does not
anticipate HCC and its subsidiaries being required to make significant tax
payments in the near future.

  FINANCING ACTIVITIES

  During October 1995, the HCC Group completed the refinancing of its 14% Senior
Notes and 13 1/2% First Mortgage Notes through a public offering of $210 million
of 12 3/4% Senior Secured Notes due November 1, 2003, discounted to yield
13 3/4% per annum (the "HCC Refinancing").  In addition to refinancing existing
debt, proceeds from the HCC Refinancing were used to finance construction of a
352-room hotel tower and related amenities and to fund development and
construction of the "Adventure Slots" attraction, a themed gaming area, at the
Tunica Casino; to fund HCA's required contribution of $4 million for
construction of a new 500-space parking garage; and, to the extent available,
for working capital purposes.  Interest on the Senior Secured Notes is payable
semiannually on May 1 and November 1 of each year commencing on May 1, 1996.
The Senior Secured Notes are unconditionally guaranteed on a senior secured
basis by HCT and by certain future subsidiaries of HCC.  Neither HCA nor GBCC
and its subsidiaries are guarantors.  The Senior Secured Notes and related
guarantees are secured by, among other things, (i) substantially all of the
assets of HCT and future guarantors, (ii) a first mortgage limited to
approximately $39 million on substantially all of the assets of HCA, (iii) a
pledge of the capital stock of certain subsidiaries of HCC and (iv) the
collateral assignment of any future management contracts entered into by HCC.

  The Senior Secured Notes are redeemable at the option of HCC any time on or
after November 1, 1999 at 106.375% of the then outstanding principal amount,
decreasing to 103.1875% and 100%, respectively, on November 1, 2000 and 2001.
Commencing with the November 1, 1997 interest payment date and at each
subsequent interest payment date, HCC will be required to make an offer to
purchase not more than $2.5 million in principal amount of the Senior Secured
Notes at a price of 106.375% of the principal amount tendered.

  The indenture to 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 or
any future guarantor; and enter into transactions with certain affiliates.

  During 1995, HCA obtained a $5 million unsecured bank promissory note with
respect to its riverboat expansion project.  Principal payments are based on a
30-month amortization with the final payment due in February 1998.

  At December 31, 1996, HCT had a $1 million bank credit facility available
through August 15, 1997.  Borrowings on the line of credit accrue interest at
the rate of prime plus 1 1/2% per annum.  During the first quarter of 1997, HCT
borrowed $1 million on this credit facility.

  Subject to regulatory approval and effective as of April 1, 1997, HCC will
acquire from the GBCC Group the general partnership interest in the limited
partnership which holds the Aurora Management contract.  The acquisition price
for the general partnership interest will include a note in the amount of $3.8
million and the assignment of $7.6 million of PPI Funding Notes to the GBCC
Group.  Annual principal and interest payments by HCC on the $3.8 million note
will approximate the general partner's share of annual partnership distributions
which will now be made to HCC.

                                       38
<PAGE>

  In connection with the GBCC Group recapitalization discussed below, HCC loaned
$15 million on a junior subordinated basis to the GBCC Group at 14 5/8% interest
(the "Junior Subordinated Notes"); payment of principle and interest on this
loan is subject to certain members of the GBCC Group meeting certain financial
coverage and other payment restriction tests.  As of December 31, 1996, HCC had
assigned the entire principal amount of the Junior Subordinated Notes together
with accrued interest thereon to the GBCC Group in consideration for tax net
operating losses of the GBCC Group utilized by the HCC Group in 1994 ($6.3
million principal and $1.9 million interest) and as a capital contribution in
connection with the distribution of GBCC stock to HCC's shareholders ($8.7
million principal and $1.8 million interest).

  As of December 31, 1996, the HCC Group's scheduled maturities of long-term
debt and payments under capital leases during 1997 are approximately $6.3
million and $3.7 million, respectively.

  CAPITAL EXPENDITURES AND OTHER INVESTING ACTIVITIES

  In September 1996, HCA and the Aurora Metropolitan Exposition, Auditorium and
Office Building Authority ("ACCA") completed the joint construction of a new
five-story, approximately 500-space parking garage directly across the street
from, and connected by a climate-controlled tunnel to, the Aurora Casino's
Pavilion.  The garage provides additional parking for patrons of the Aurora
Casino and contains approximately 1,500  square feet of retail space.  ACCA
financed a portion of the construction costs through an $11.5 million, 7.5%
industrial revenue bond issue which yielded proceeds of approximately $10.5
million.  HCA funded all remaining construction costs and escrowed $3,500,000 at
the rate of $400,000 per month towards satisfaction of its obligations under the
agreement.  HCA also agreed to make payments to ACCA equal to the financing
costs relating to the ACCA industrial revenue bond issue due in July 1996.

  Other capital expenditures at the Aurora Casino during 1996 were approximately
$5.8 million, including $1.8 million for construction of a pedestrian bridge to
improve access from the existing self park garage to the Pavillion, $1.3 million
for new slot machines, $300,000 for a new dining outlet and other departmental
expenditures.  Management anticipates spending $3.1 million during 1997
primarily for its ongoing capital improvements program with no major projects
currently scheduled.

  Capital expenditures at the Tunica Casino for 1996 amounted to $35 million.
Of such expenditures, $31.1 million was spent toward the construction of an
adjacent eight-story hotel tower, including 352 additional rooms, additional
banquet space, an enclosed pool/atrium and a showroom and $2.1 million was spent
on construction of the "Adventure Slots" attraction.  Additional expenditures
included approximately $1 million for new signage and other departmental
expenditures.  Management anticipates spending $2.5 million in 1997 primarily
for its ongoing program of capital improvements.

  HCT has entered into a partnership agreement providing for the joint
construction and ownership of a golf course in conjunction with two other casino
operators.  Management estimates that its contributions to the partnership will
aggregate $2 million.

  During November 1995, HCC loaned $10 million of the proceeds from the HCC
Refinancing to an unaffiliated gaming company in the form of two $5 million
notes (Series A and Series B).  The loans earn interest at the rate of prime
plus one percent per annum and are payable in quarterly installments of
principal and interest commencing in November 1997 with the final payment due in
August 2000.  All principal payments received are to be applied first to the
Series A note.  In connection with the loans, HCC received warrants to acquire
up to a 10% equity interest in the gaming company at any time between November
15, 1998 and November 15, 2000 at an exercise price of $500,000 per 1/2%
interest.  Under the terms of the loan agreement, the gaming company may require
HCC to exercise warrants to acquire a 5% equity interest on November 15, 1998 at
a cost not to exceed $5 million, payable through the

                                       39
<PAGE>

reduction of the outstanding principal balance and, to the extent applicable,
the forgiveness of accrued interest on the Series B note.

  HCC is pursuing several potential gaming opportunities.  HCC intends to
finance any future ventures with cash flow from operations, together with
private, public or bank financing, which might include non-recourse project
financing.

  SUMMARY

  As a result of the distribution to its shareholders of GBCC stock, HCC's
funding requirements for 1997 will consist of those required for the HCC Group,
as previously defined.  Management anticipates that the HCC Group's funding
requirements for the next twelve months will be satisfied by existing cash and
cash generated by the Aurora and Tunica Casinos.

THE GBCC GROUP

  OPERATING ACTIVITIES

  The  GBCC Group  receives a base management fee equal to 5% of operating
revenues (as defined in the management agreement) subject to a maximum of $5.5
million annually, and an incentive fee equal to 10% of gross operating profit
(as defined in the management agreement) from the operation of the Aurora
Casino.  Management fees received during 1996 amounted to $9.4 million.  During
1994, the GBCC Group entered into a consulting agreement with HCT with respect
to the Tunica Casino which provides for the payment of $1.2 million annually by
the Tunica Casino for consulting services and for reimbursement of direct costs
and expenses incurred.

  Prior to 1996, the Sands' earnings before depreciation, interest,
amortization, taxes and intercompany management fees were sufficient to meet its
debt service obligations (other than certain maturities of principal that have
been refinanced) and to fund a substantial portion of its capital expenditures.
Historically, the Sands has also utilized borrowings to fund seasonal cash needs
and for certain capital projects.

  During 1996, the GBCC Group's  net cash used in operating activities (after
net interest expense and income taxes) amounted to $3 million compared with cash
provided by operating activities of $29.2 million during 1995.  The change in
net cash from operating activities compared to 1995 results primarily from a
substantial decline in operating cash flow generated by the Sands.  The Sands
sustained an operating cash flow deficit of $6.1 million during 1996 compared to
net cash generated from operations of $20.7 million during 1995, resulting in an
aggregate decline in operating cash flow of $26.8 million and a decline in
working capital of $28.2 million compared to December 31, 1995.  The GBCC Group
utilized existing cash together with proceeds from the repayment of an
outstanding note receivable, borrowings on GBHC's short-term credit facility and
net borrowings from HCC during 1996 to meet its operating needs, to fund capital
additions ($8.1 million), to make obligatory investments at the Sands ($3.1
million) and to retire its share of the underlying indebtedness of an
unconsolidated partnership in connection with the sale of a Florida hotel
property ($2.9 million).

  In prior years GBCC's hotel operations required substantial infusions of
operating funds; however, the disposition of substantially all of its hotel
properties has greatly reduced the cash required to fund hotel operations (see
"Capital Expenditures and Other Investments" below).

                                       40
<PAGE>

  FINANCING ACTIVITIES

  During February 1994, the GBCC Group completed the refinancing of virtually
all of its casino-related outstanding debt.  The refinancing was completed
through a public offering of $270 million of debt securities consisting of $185
million of 10 7/8% First Mortgage Notes due January 15, 2004 and $85 million of
11 5/8% PRT Funding Notes due April 15, 2004.  Proceeds from the debt offerings
were used, in part, to refinance outstanding mortgage notes on the Sands and
other indebtedness scheduled to mature in 1994, to repay $58.4 million of
publicly held PCPI Notes and to provide partial funding for an expansion of
gaming space at the Sands.  During 1996, the GBCC Group repaid long-term
indebtedness of $2.4 million.

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

  During the third quarter of 1996, the GBCC Group borrowed $6.5 million from
HCC which accrues interest at the rate of 13 3/4% per annum payable quarterly
commencing October 1, 1996.  GBCC loaned such funds to GBHC on similar terms.
Also during the third quarter of 1996, the GBCC Group repaid $4.8 million it
previously borrowed from HCC with respect to the purchase of the underlying
indebtedness of a non-casino hotel property it operated (see below).

  CAPITAL EXPENDITURES AND OTHER INVESTMENTS

  Property and equipment additions during 1996 totaled $8.1 million, of which
capital expenditures at the Sands amounted to approximately $5.5  million.
Additional capital expenditures by the GBCC Group during 1996 included
approximately $2.6 million of property improvements at a non-casino hotel
property it operated under an agreement with Metroplex Hotel Limited (see Note 8
of Notes to Consolidated Financial Statements).

  The Sands is required by the New Jersey Casino Control Act to make certain
investments with the CRDA, a governmental agency which administers the
statutorily mandated investments made by casino licensees.  Deposit requirements
for 1996 totaled $3.1 million.

  GBCC agreed to contribute up to $3.9 million (approximately $2.5 million of
which was paid) as an additional investment in an unconsolidated hotel
partnership to refurbish the hotel facility in Orlando, Florida.  No such
contributions were required during 1996.  Such contributions were in recognition
of GBCC's partner having agreed to make $5 million in principal reductions on
the underlying mortgage note on the facility of which $4 million was made.
During November 1996, the Partnership sold the hotel facility; GBCC was required
to pay approximately $2.9 million to retire its share of the underlying
indebtedness of the property.

  Also during the fourth quarter of 1996, another unconsolidated partnership in
which a GBCC subsidiary holds a 50% interest entered into a contract for the
sale of a casino/hotel in San Juan, Puerto Rico owned by the partnership and
managed by a GBCC subsidiary.  The sale was completed in February 1997; the GBCC
subsidiary received a fee of approximately $1.5 million with respect to the
termination of its management agreement and agreed to provide management
services on a month to month basis through October 1997 subject to cancellation
by the new owners.

                                       41
<PAGE>

  SUMMARY

  As discussed previously, the GBCC Group is no longer a consolidated subsidiary
of HCC. Accordingly, liquidity and capital resource requirements of the GBCC
Group are no longer relevant to management's discussion and analysis of HCC's
financial condition.

                                       42
<PAGE>

ITEM 8.  INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                               PAGE
                                                               ----
<S>                                                             <C>
HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES:

   Report of Independent Public Accountants.................... 44

   Consolidated Balance Sheets as of December 31, 1996
    and 1995................................................... 45

   Consolidated Statements of Operations for the Years
    Ended December 31, 1996, 1995 and 1994..................... 47

   Consolidated Statement of Changes in Shareholders' Equity
    (Deficit) for the Three Years Ended December 31, 1996...... 48

   Consolidated Statements of Cash Flows for the Years
    Ended December 31, 1996, 1995 and 1994..................... 49

   Notes to Consolidated Financial Statements.................. 50

HOLLYWOOD CASINO-AURORA, INC.

   Report of Independent Public Accountants.................... 74

   Balance Sheets as of December 31, 1996 and 1995............. 75

   Statements of Operations for the Years Ended
    December 31, 1996, 1995 and 1994........................... 77

   Statement of Changes in Shareholder's Equity for the
    Three Years Ended December 31, 1996........................ 78

   Statements of Cash Flows for the Years Ended
    December 31, 1996, 1995, and 1994.......................... 79

   Notes to Financial Statements............................... 80


HWCC-TUNICA, INC.

   Report of Independent Public Accountants.................... 91

   Consolidated Balance Sheets as of December 31,
    1996 and 1995.............................................. 92

   Consolidated Statements of Operations for the Years
    Ended December 31, 1996, 1995 and 1994..................... 94

   Consolidated Statement of Changes in Shareholder's
    Equity for the Three Years Ended December 31, 1996......... 95

   Consolidated Statements of Cash Flows for the Years Ended
    December 31, 1996, 1995 and 1994........................... 96

   Notes to Consolidated Financial Statements.................. 97

</TABLE>

                                       43
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                    ----------------------------------------


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, 1996 and 1995, 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, 1996.  These
financial statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

          In our opinion, the 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, 1996 and 1995,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles.

                                                 ARTHUR ANDERSEN LLP



Roseland, New Jersey
March 21, 1997

                                       44
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED BALANCE SHEETS (NOTE 1)

                                     ASSETS
<TABLE>
<CAPTION>
                                                           DECEMBER 31,
                                                   -----------------------------
                                                       1996            1995
                                                   -------------  --------------
<S>                                                <C>            <C>
Current Assets:
 Cash and cash equivalents.......................  $ 21,488,000   $  56,538,000
 Accounts receivable, net of allowances of
  $1,693,000 and $17,675,000, respectively.......     3,140,000      16,410,000
 Inventories.....................................     1,620,000       5,837,000
 Prepaid expenses................................     1,363,000       3,530,000
 Deferred income taxes...........................     4,271,000      10,585,000
 Refundable deposits and other
  current assets.................................       328,000         950,000
 Due from affiliates.............................     7,641,000               -
                                                   ------------   -------------

  Total current assets...........................    39,851,000      93,850,000
                                                   ------------   -------------

Property and Equipment:
 Land............................................    20,346,000      61,643,000
 Buildings and improvements......................   119,501,000     255,646,000
 Riverboats and barges...........................    69,713,000      39,491,000
 Operating equipment.............................    39,494,000     149,051,000
 Construction in progress........................       687,000       7,378,000
                                                   ------------   -------------

                                                    249,741,000     513,209,000
 Less - accumulated depreciation
  and amortization...............................   (49,740,000)   (179,073,000)
                                                   ------------   -------------

  Net property and equipment.....................   200,001,000     334,136,000
                                                   ------------   -------------

Cash Restricted for Construction Projects........             -      29,874,000
                                                   ------------   -------------

Other Assets:
 Obligatory investments..........................             -       5,521,000
 Deferred financing costs........................     6,565,000      16,136,000
 Notes receivable................................    10,000,000      19,222,000
 Land rights.....................................     7,658,000       7,962,000
 Due from affiliate, net of valuation allowance..    36,597,000               -
 Other assets....................................     7,413,000       7,762,000
                                                   ------------   -------------

  Total other assets.............................    68,233,000      56,603,000
                                                   ------------   -------------

                                                   $308,085,000   $ 514,463,000
                                                   ============   =============

</TABLE>

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

                                       45
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED BALANCE SHEETS (NOTE 1)

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

                                                                   DECEMBER 31,
                                                          ------------------------------
                                                               1996            1995
                                                          --------------  --------------
<S>                                                       <C>             <C>
Current Liabilities:
 Current maturities of long-term debt
  and capital lease obligations........................   $   8,282,000   $   9,325,000
 Accounts payable......................................       5,407,000      14,054,000
 Accrued liabilities -
  Salaries and wages...................................       3,531,000       9,593,000
  Interest.............................................       4,734,000      16,964,000
  Insurance............................................       2,268,000       4,319,000
  Other................................................       5,368,000      10,767,000
 Due to affiliates.....................................       2,534,000               -
 Other current liabilities.............................       1,550,000       7,331,000
                                                          -------------   -------------

  Total current liabilities............................      33,674,000      72,353,000
                                                          -------------   -------------

Long-Term Debt.........................................     202,057,000     476,829,000
                                                          -------------   -------------

Capital Lease Obligations..............................      21,707,000      10,693,000
                                                          -------------   -------------

Other Noncurrent Liabilities...........................       5,503,000      11,821,000
                                                          -------------   -------------

Commitments and Contingencies

Shareholders' Equity (Deficit):
 Common Stock:
  Class A common stock, $.0001 par value per share;
   50,000,000 shares authorized; 24,760,000 and
   24,720,000 shares issued and outstanding,
   respectively........................................           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............................     235,606,000      77,936,000
 Accumulated deficit...................................    (190,464,000)   (135,171,000)
                                                          -------------   -------------

  Total shareholders' equity (deficit).................      45,144,000     (57,233,000)
                                                          -------------   -------------

                                                          $ 308,085,000   $ 514,463,000
                                                          =============   =============
</TABLE>


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

                                       46
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF OPERATIONS (NOTE 1)
<TABLE>
<CAPTION>
                                                                                 YEAR ENDED DECEMBER 31,
                                                                      -------------------------------------------
                                                                           1996           1995           1994
                                                                      --------------  -------------  -------------
<S>                                                                    <C>            <C>            <C>
Revenues:
 Casino...........................................................     $487,374,000   $498,618,000   $426,084,000
 Rooms............................................................       18,834,000     17,950,000     15,191,000
 Food and beverage................................................       61,620,000     56,225,000     46,022,000
 Other............................................................       13,339,000     12,459,000     21,097,000
                                                                       ------------   ------------   ------------

                                                                        581,167,000    585,252,000    508,394,000
 Less - Promotional allowances....................................      (50,587,000)   (45,309,000)   (44,010,000)
                                                                       ------------   ------------   ------------

  Net revenues....................................................      530,580,000    539,943,000    464,384,000
                                                                       ------------   ------------   ------------
Expenses:
 Casino...........................................................      393,022,000    363,867,000    307,525,000
 Rooms............................................................        6,029,000      6,871,000      5,644,000
 Food and beverage................................................       20,708,000     19,884,000     18,735,000
 Other............................................................        7,010,000      5,535,000      6,872,000
 General and administrative.......................................       37,169,000     36,914,000     33,189,000
 Depreciation and amortization....................................       40,836,000     40,955,000     30,960,000
 Amortization of preopening costs.................................                -              -     11,002,000
 Development......................................................        1,065,000      6,765,000      5,154,000
 Write down of properties held for sale...........................        3,400,000              -              -
                                                                       ------------   ------------   ------------

   Total expenses.................................................      509,239,000    480,791,000    419,081,000
                                                                       ------------   ------------   ------------

Income from operations............................................       21,341,000     59,152,000     45,303,000
                                                                       ------------   ------------   ------------
Non-operating income (expenses):
 Interest income..................................................        3,101,000      3,708,000      4,227,000
 Interest expense, net of capitalized interest
  of $1,006,000, $354,000 and $4,065,000, respectively............      (59,090,000)   (55,558,000)   (46,233,000)
 Loss on disposal of assets.......................................       (1,841,000)      (514,000)       (26,000)
                                                                       ------------   ------------   ------------

  Total non-operating expenses, net...............................      (57,830,000)   (52,364,000)   (42,032,000)
                                                                       ------------   ------------   ------------
(Loss) income before income taxes, nonrecurring and
 extraordinary items..............................................      (36,489,000)     6,788,000      3,271,000
Valuation provision on affiliate receivables......................      (18,741,000)             -              -
                                                                       ------------   ------------   ------------

(Loss) income before income taxes and extraordinary item..........      (55,230,000)     6,788,000      3,271,000
Income tax provision..............................................          (63,000)      (268,000)    (1,527,000)
                                                                       ------------   ------------   ------------

 (Loss) income before extraordinary item..........................      (55,293,000)     6,520,000      1,744,000
Extraordinary item:
 (Loss) gain on early extinguishment of debt, net of
  related tax benefit.............................................                -    (23,808,000)       126,000
                                                                       ------------   ------------   ------------

Net (loss) income.................................................     $(55,293,000)  $(17,288,000)  $  1,870,000
                                                                       ============   ============   ============

Net (loss) income per common share:
 (Loss) income before extraordinary item..........................           $(2.24)          $.26           $.07
 Extraordinary item...............................................                -           (.96)           .01
                                                                       ------------   ------------   ------------

 Net (loss) income................................................           $(2.24)         $(.70)          $.08
                                                                       ============   ============   ============
</TABLE>

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

                                       47
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES
  CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT) (NOTE 1)
                  FOR THE THREE YEARS ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>

                                                          CLASS A
                                                        COMMON STOCK      ADDITIONAL
                                                     ------------------     PAID-IN     ACCUMULATED
                                                       SHARES    AMOUNT     CAPITAL       DEFICIT
                                                     ----------  ------  ------------  -------------
<S>                                                  <C>         <C>     <C>           <C>
BALANCE, JANUARY 1, 1994.........................    22,720,000  $2,000  $ 77,933,000  $(119,753,000)
   Exercise of stock warrants....................     1,140,000       -         1,000              -
   Exercise of stock options.....................       532,000       -             -              -
   Net income....................................             -       -             -      1,870,000
                                                     ----------  ------  ------------  -------------

BALANCE, DECEMBER 31, 1994.......................    24,392,000   2,000    77,934,000   (117,883,000)
   Exercise of stock options.....................       328,000       -         2,000              -
   Net loss......................................             -       -             -    (17,288,000)
                                                     ----------  ------  ------------  -------------

BALANCE, DECEMBER 31, 1995.......................    24,720,000   2,000    77,936,000   (135,171,000)
   Distribution of Greate Bay Casino
     Corporation common stock....................             -       -   157,670,000              -
   Exercise of stock options.....................        40,000       -             -              -
   Net loss......................................             -       -             -    (55,293,000)
                                                     ----------  ------  ------------  -------------

BALANCE, DECEMBER 31, 1996.......................    24,760,000  $2,000  $235,606,000  $(190,464,000)
                                                     ==========  ======  ============  =============

</TABLE>



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

                                       48
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF CASH FLOWS (NOTE 1)
<TABLE>
<CAPTION>
                                                                                                YEAR ENDED DECEMBER 31,
                                                                                    ---------------------------------------------
                                                                                        1996            1995            1994
                                                                                    -------------  --------------  --------------
<S>                                                                                 <C>            <C>             <C>
OPERATING ACTIVITIES:
 Net (loss) income..............................................................    $(55,293,000)  $ (17,288,000)  $   1,870,000
 Adjustments to reconcile net (loss) income to net cash provided by
  operating activities:
  Extraordinary item............................................................               -      23,808,000        (126,000)
  Depreciation and amortization, including accretion of debt discount...........      41,621,000      41,477,000      42,420,000
  Valuation provision on affiliate receivables..................................      18,741,000               -               -
  Write down of properties held for sale........................................       3,400,000               -               -
  Loss on sale of assets........................................................       1,841,000         514,000          26,000
  Provision for doubtful accounts...............................................       3,031,000       3,774,000       3,830,000
  Deferred income tax provision (benefit).......................................          46,000        (419,000)      1,947,000
  Increase in accounts receivable...............................................        (769,000)     (3,890,000)     (4,081,000)
  Net increase in accounts payable and accrued expenses.........................         649,000       3,008,000         724,000
  Net change in other current assets and liabilities............................        (677,000)      2,754,000      (2,111,000)
  Net change in other noncurrent assets and liabilities.........................        (281,000)       (211,000)     (4,060,000)
                                                                                    ------------   -------------   -------------

   Net cash provided by operating activities....................................      12,309,000      53,527,000      40,439,000
                                                                                    ------------   -------------   -------------

INVESTING ACTIVITIES:
 Net property and equipment additions...........................................     (53,078,000)    (55,009,000)   (101,729,000)
 Collections on notes receivable................................................       9,361,000         103,000       7,614,000
 Issuance of notes receivable...................................................               -     (10,000,000)              -
 Proceeds from dispositions of assets...........................................       2,699,000         236,000          73,000
 Obligatory investments.........................................................      (3,062,000)     (2,967,000)       (826,000)
 Purchase of mortgage note......................................................               -               -      (5,750,000)
 Short-term investments.........................................................      (2,000,000)              -               -
 Cost of acquisition, net of cash acquired......................................               -               -      (8,998,000)
 Deferred preopening costs......................................................               -               -      (5,140,000)
 Investments in unconsolidated affiliates.......................................      (2,946,000)     (1,675,000)       (660,000)
 Distribution of GBCC cash and cash equivalents.................................     (22,991,000)              -               -
 (Increase) decrease in cash restricted for construction projects...............      29,874,000     (29,874,000)              -
                                                                                    ------------   -------------   -------------

 Net cash used in investing activities..........................................     (42,143,000)    (99,186,000)   (115,416,000)
                                                                                    ------------   -------------   -------------

FINANCING ACTIVITIES:
 Repayments of short-term debt..................................................               -               -     (21,000,000)
 Proceeds from issuance of long-term debt.......................................       2,203,000     204,939,000     327,500,000
 Net borrowings on short-term credit facilities.................................       2,000,000               -               -
 Cost of early retirement of debt...............................................               -     (16,635,000)              -
 Deferred financing costs.......................................................        (126,000)     (7,634,000)    (14,714,000)
 Repayments of long-term debt...................................................      (6,840,000)   (142,554,000)   (237,411,000)
 Payments on capital lease obligations..........................................      (2,453,000)     (2,412,000)     (1,559,000)
 Issuance of common stock.......................................................               -           2,000           1,000
                                                                                    ------------   -------------   -------------

  Net cash (used in) provided by financing activities...........................      (5,216,000)     35,706,000      52,817,000
                                                                                    ------------   -------------   -------------

  Net decrease in cash and cash equivalents.....................................     (35,050,000)     (9,953,000)    (22,160,000)
   Cash and cash equivalents at beginning of year...............................      56,538,000      66,491,000      88,651,000
                                                                                    ------------   -------------   -------------

   Cash and cash equivalents at end of year.....................................    $ 21,488,000   $  56,538,000   $  66,491,000
                                                                                    ============   =============   =============
</TABLE>

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

                                       49
<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.  On June
4, 1993, HCC completed an initial public offering of 4,800,000 shares of its
Class A Common Stock (the "Stock Offering").  As a result of the Stock Offering
and the subsequent exercise of warrants to purchase common stock, certain
general partnerships and trusts controlled by Jack E. Pratt, Edward T. Pratt,
Jr. and William D. Pratt and by other family members (collectively, the "Pratt
Family") currently own approximately 53% of the issued and outstanding stock of
HCC.

  HCC owns all of the outstanding common stock of both Hollywood Casino -
Aurora, Inc. ("HCA") and HWCC - Tunica, Inc. ("HCT").  HCA is an Illinois
corporation organized during 1990 which owns and operates a 32,100 square foot
riverboat gaming operation together with docking and other entertainment
facilities under the service mark Hollywood Casino(R) located in Aurora,
Illinois (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 (the "Tunica Casino").  The
Aurora Casino and the Tunica Casino commenced operations in June 1993 and August
1994, respectively.

  Prior to December 31, 1996, HCC also owned approximately 80% of the common
stock of Greate Bay Casino Corporation ("GBCC", formerly known as Pratt Hotel
Corporation), also 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.  GBCC's principal
assets were the Sands Hotel and Casino in Atlantic City, New Jersey (the
"Sands") and management and consulting contracts with the Aurora Casino and the
Tunica  Casino, respectively.  GBCC's other operations in the United States and
Puerto Rico, including various ventures in which GBCC had an interest, were
managed by GBCC or its subsidiaries.

  The Company estimates that its gaming operations derive a significant amount
of their gaming revenues from patrons living in areas surrounding the sites
where the Company's gaming operations are located.  Competition within the
Company's gaming markets is intense and management believes that this
competition will continue in the future.

  The Board of Directors approved the adoption in May 1993 of a Rights
Agreement, which provides 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, they are not included as common stock equivalents in the
computation of net (loss) income per common share.

                                       50
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Contined)



(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, prior to December 31, 1996, GBCC (which was
majority owned) and GBCC's wholly owned subsidiaries.  At December 31, 1996,
GBCC is no longer a subsidiary of HCC.  The accompanying consolidated financial
statements include GBCC's operations and cash flows through the date of
disposition (December 31, 1996).  However, the accompanying consolidated balance
sheet at December 31, 1996 no longer reflects GBCC on a consolidated basis and
reflects the dividend of GBCC's common stock to HCC's shareholders (adjusted for
related transactions) as an adjustment to additional paid-in capital.  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.  To the extent that losses
incurred in prior years by GBCC have exceeded the minority shareholders'
interest associated with such shares, such losses have been allocated to HCC.

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

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

                                       51
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Contined)


food and beverage and other operating departments to the casino department
during the years ended December 31, 1996, 1995 and 1994 are as follows:

<TABLE>
<CAPTION>

                        1996         1995         1994
                     -----------  -----------  -----------
<S>                  <C>          <C>          <C>

Rooms..............  $ 7,332,000  $ 6,677,000  $ 6,253,000
Food and beverage..   49,860,000   45,639,000   35,128,000
Other..............    5,956,000    6,309,000    6,094,000
                     -----------  -----------  -----------

                     $63,148,000  $58,625,000  $47,475,000
                     ===========  ===========  ===========
</TABLE>

CASH AND CASH EQUIVALENTS -

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

 ALLOWANCE FOR DOUBTFUL ACCOUNTS -

          The allowance for doubtful accounts is maintained at a level
considered adequate to provide for possible future losses.  Provisions for
doubtful accounts amounting to $3,031,000, $3,774,000 and $3,830,000 were made
during the years ended December 31, 1996, 1995 and 1994, respectively.

 INVENTORIES -

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

 PROPERTY AND EQUIPMENT -

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

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

          On October 1, 1996, HCC revised the estimated useful lives of its
buildings, barges and related land rights (see below) from 25 years to 40 years;
of certain parking facilities under a capital lease from 25 years to 30 years;
and of certain operating equipment from three years to five years.  Management
believes the changes in estimated lives more appropriately reflect the timing of
the economic benefits to be received from these assets.  For the year ended
December 31, 1996, the effect of these changes reduced depreciation and
amortization expense and net loss by approximately $1,893,000 and reduced net
loss per share by $.08.

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

                                       52
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Contined)


 DEFERRED FINANCING COSTS -

          The costs of issuing long-term debt, including all underwriting,
licensing, legal and accounting fees, have been capitalized and are being
amortized over the term of the related debt issue.  Amortization of such costs
was $2,044,000, $3,016,000 and $2,578,000 for the years ended December 31, 1996,
1995 and 1994, respectively.  Deferred financing costs, net of accumulated
amortization, amounting to $5,853,000 and $104,000 were written off during 1995
and 1994, respectively, with respect to the reacquisition of outstanding debt.

 LONG-LIVED ASSETS -

          Statement of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets" requires, among other things, that an
entity review its long-lived assets and certain related intangibles for
impairment whenever changes in circumstances indicate that the carrying amount
of an asset may not be fully recoverable.  During 1996, certain real property
held as potential gaming development sites in Texas was offered for sale;
consequently management conducted a review to determine its estimate of net
realizable value with respect to these properties.  As a result of its review,
HCC has recorded an anticipated loss from the disposition of assets held for
sale of $3,400,000 for the year ended December 31, 1996 related to its long-
lived assets.

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

 INCOME TAXES -

          HCC complies with the provisions of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"), which utilizes
the liability method and 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.

 INTEREST EXPENSE -

          Interest expense includes the accretion of debt discount amounting to
$785,000, $522,000 and $458,000 during the years ended December 31, 1996, 1995
and 1994, 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 13); such amortization commenced with
the opening of the Tunica Casino.  The estimated economic benefit of the land
rights was increased from 25 years to 40 years effective on October 1, 1996
consistent with the change in estimated

                                       53
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Contined)


useful life of the Tunica facility as discussed under "Property and Equipment"
above.  Management presently intends to renew the ground lease at least through
its currently estimated 40-year useful life of the facility.  Accumulated
amortization of such land rights amounted to $787,000 and $483,000,
respectively, at December 31, 1996 and 1995.

 EMPLOYEE STOCK OPTIONS -

          During 1996, HCC adopted 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 7.

 NET (LOSS) INCOME PER COMMON SHARE -

          Net (loss) income per common share for all periods is calculated by
dividing the net (loss) income by the weighted average number of shares of
common stock and common stock equivalents outstanding. All common stock
equivalents are excluded from the calculation of net loss per share for periods
during which a loss was incurred as the effect of their inclusion would be
antidilutive.  Common stock equivalents are included in the calculation of net
income per share for periods during which income was realized.  The weighted
average number of shares of common stock and common stock equivalents
outstanding used for earnings per share calculation purposes was 24,721,000 for
the year ended December 31, 1996 and 24,850,000 for each of the years ended
December 31, 1995 and 1994.

          The Financial Accounting Standards Board has issued a new standard,
"Earnings per Share" ("SFAS 128").  SFAS 128 provides for revisions to the
current method of calculating earnings per share and for the disclosure of
certain information about the capital structure of the reporting entity.  SFAS
128 will become effective on December 15, 1997; early adoption is not permitted.
HCC does not believe the new pronouncement will impact its present calculation
of earnings per share.

 RECLASSIFICATIONS -

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

                                       54
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


(3)  SHORT-TERM CREDIT FACILITIES

          During June 1994, a subsidiary of GBCC entered into an agreement for a
bank line of credit in the amount of $5,000,000.  The agreement, which was
renewed in April 1995, provided for interest on borrowings at the bank's prime
lending rate plus 3/4% per annum.  Borrowings under the line of credit were
guaranteed to the extent of $2,000,000 by another subsidiary of GBCC.  As of
April 30, 1996, the GBCC subsidiary extended $2,000,000 of the line of credit
until April 30, 1997.  Additionally, the guarantor pledged a certificate of
deposit in the face amount of $2,000,000 as collateral for the line of credit.
During 1996, $2,000,000 was borrowed under  the line of credit; no borrowings
were outstanding at December 31, 1995.

          As of December 31, 1996, HCT had a $1,000,000 bank credit facility
available through August 15, 1997 on which no borrowings had been made.
Borrowings under the line of credit accrue interest at the rate of the bank's
prime lending rate plus 1 1/2% per annum.  The line of credit agreement requires
the maintenance of certain financial ratios and balances in addition to the
provision of certain financial reports. During the first quarter of 1997, HCT
borrowed $1,000,000 on this credit facility.

(4)  LONG-TERM DEBT AND PLEDGE OF ASSETS

          Substantially all of HCC's assets are pledged in connection with HCC's
long-term indebtedness; HCC was not obligated for GBCC's indebtedness.  The
indenture to HCC's Senior Secured Notes, as defined below, did not contain
cross-default provisions with respect to GBCC's indebtedness.  Substantially all
of GBCC's assets were pledged in connection with GBCC's long-term indebtedness.

                                       55
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


<TABLE>
<CAPTION>

                                                                    DECEMBER 31,
                                                            ----------------------------
                                                                1996           1995
                                                            -------------  -------------
<S>                                                         <C>            <C>
Indebtedness of HCC:
 12 3/4% Senior Secured Notes, due 2003, net
  of discount of $9,127,000 and $9,912,000, respectively    $200,873,000   $200,088,000
 Term note, due 1999                                           2,150,000      2,300,000
                                                            ------------   ------------

                                                             203,023,000    202,388,000
                                                            ------------   ------------

Indebtedness of HCA:
 Promissory note to bank (b)                                   2,472,000      4,402,000
 Equipment loans                                               1,472,000      2,412,000
                                                            ------------   ------------

                                                               3,944,000      6,814,000
                                                            ------------   ------------

Indebtedness of HCT for which HCC is
 not obligated:
 Equipment loans                                               1,401,000      1,367,000
                                                            ------------   ------------

                                                               1,401,000      1,367,000
                                                            ------------   ------------

GBCC indebtedness for which HCC was
 not obligated:
 10 7/8% first mortgage notes, due 2004 (c)                            -    185,000,000
 11 5/8% senior notes, due 2004 (d)                                    -     85,000,000
 Other                                                                 -      3,342,000
                                                            ------------   ------------

                                                                       -    273,342,000
                                                            ------------   ------------

Total indebtedness                                           208,368,000    483,911,000
  Less - current maturities                                   (6,311,000)    (7,082,000)
                                                            ------------   ------------

Total long-term debt                                        $202,057,000   $476,829,000
                                                            ============   ============
</TABLE>
--------------------------
(a)  During October 1995, HCC completed the refinancing of certain outstanding
     indebtedness through a public offering of $210,000,000 of 12 3/4% Senior
     Secured Notes (the "Senior Secured Notes") due November 1, 2003, discounted
     to yield 13 3/4% per annum (the "HCC Refinancing").  In addition to
     refinancing existing debt, proceeds from the HCC Refinancing were used to
     finance construction of a 352-room hotel tower and related amenities and to
     fund development and construction of the "Adventure Slots" attraction, a
     themed gaming area, at the Tunica Casino; to fund HCA's required
     contribution of $4,000,000 for construction of a new 500-space parking
     garage (see Note 5); and, to the extent available, for working capital
     purposes.  The unexpended construction funds are included in cash
     restricted for construction projects  in the accompanying

                                       56
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


     consolidated balance sheet at December 31, 1995.  Interest on the Senior
     Secured Notes is payable semiannually on May 1 and November 1 of each year
     commencing on May 1, 1996.

     The Senior Secured Notes are unconditionally guaranteed on a senior secured
     basis by HCT and may be guaranteed by certain future subsidiaries of HCC.
     HCA is not and GBCC and its subsidiaries were not guarantors. The Senior
     Secured Notes and related guarantees are secured by, among other things,
     (i) substantially all of the assets of HCT and future guarantors, (ii) a
     first mortgage limited to approximately $39 million on substantially all of
     the assets of HCA, (iii) a pledge of the capital stock of certain
     subsidiaries of HCC and (iv) the collateral assignment of any future
     management contracts entered into by HCC.

     The Senior Secured Notes are redeemable at the option of HCC any time on or
     after November 1, 1999 at 106.375% of the then outstanding principal
     amount, decreasing to 103.1875% and 100%, respectively, on November 1, 2000
     and 2001. Commencing with the November 1, 1997 interest payment date and at
     each subsequent interest payment date, HCC will be required to make an
     offer to purchase not more than $2,500,000 in principal amount of the
     Senior Secured Notes at a price of 106.375% of the principal amount
     tendered.

     The indenture to 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 or any future guarantor; and enter
     into transactions with certain affiliates.

(b)  During February 1995, HCA entered into a $5,000,000 bank promissory note
     agreement.  The note accrues interest at the bank's prime lending rate plus
     1% per annum.  Interest only was payable during the first six months.
     Commencing September 1, 1995, principal and interest are payable monthly
     based on a 30-month amortization schedule with the final payment due on
     February 1, 1998.

(c)  On February 17, 1994, a subsidiary of GBCC issued $185,000,000 of non-
     recourse first mortgage notes due January 15, 2004 (the "10 7/8% First
     Mortgage Notes") and collateralized by a first mortgage on the Sands.
     Interest on the notes accrued at the rate of 10 7/8% per annum, payable
     semiannually commencing July 15, 1994 with the balance due at maturity.
     Interest only was payable during the first three years.

(d)  On February 17, 1994, a subsidiary of GBCC issued $85,000,000 of unsecured
     senior notes due April  15, 2004 (the "PRT Funding Notes").  Interest on
     the PRT Funding Notes accrued at the rate of 11 5/8% per annum, payable
     semiannually commencing October 15, 1994.

                                       57
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


        Scheduled payments of long-term debt as of December 31, 1996 are set
forth below:

        1997          $  6,311,000
        1998             6,294,000
        1999             7,055,000
        2000             5,335,000
        2001             5,000,000
        Thereafter     187,500,000
                      ------------

         Total        $217,495,000
                      ============


        Interest paid, net of capitalized interest and commitment fees, amounted
to $59,404,000, $58,401,000 and $36,439,000, respectively, during the years
ended December 31, 1996, 1995 and 1994.

(5)     CAPITAL LEASES

        HCA leases two parking garages under capital lease agreements.  The
first such lease has an initial term of 30 years commencing in June 1993 with
the right to extend the term to a maximum of 99 years. Rental payments during
the first 20 years equal the City of Aurora's financing costs related to its
$10,000,000 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 5/8% per annum.  In September 1996, HCA and the Aurora
Metropolitan Exposition, Auditorium and Office Building Authority ("ACCA")
completed the joint construction of a new five-story, approximately 500-space
parking garage directly across the street from, and connected by a climate-
controlled tunnel to, the Aurora Casino's Pavilion.  The garage provides
additional parking for patrons of the Aurora Casino and contains approximately
1,500 square feet of retail space.  ACCA financed a portion of the construction
costs through an $11,500,000, 7.5% industrial revenue bond issue which yielded
proceeds of approximately $10,500,000.  HCA funded all remaining construction
costs and escrowed a total of $3,500,000 at the rate of $400,000 per month
beginning in September 1995 towards satisfaction of its obligations under the
agreement.  HCA additionally agreed to make payments to ACCA during construction
equal to the financing costs due in July 1996 relating to the ACCA industrial
revenue bond issue.  Such escrow and financing payments were included in cash
restricted for construction projects  in the accompanying consolidated balance
sheet at December 31, 1995.  The facility is owned by ACCA and operated by HCA
pursuant to a 30-year lease with the right to extend the lease for up to 20
additional years.  Rental payments during the first 15 years equal ACCA's debt
service costs related to the industrial revenue bond issue.  In addition, HCA
pays ACCA 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 ACCA's North Island
Center banquet and meeting facilities.  HCA is also responsible for additional
rent, consisting of costs such as real estate taxes, maintenance costs,
insurance premiums and utilities, arising out of its operation of both parking
garages.

          HCA also leases certain equipment under capital lease agreements which
provide for interest at the rate of 11.2% and expire at various dates through
1998.  HCT leases certain gaming and other equipment under capital lease
agreements which provide for interest at rates ranging up to 13 1/4% per annum
and which expire during 1997.

                                       58
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

        The original cost of HCA's parking garages is included in buildings in
the accompanying consolidated balance sheets at December 31, 1996 and 1995 in
the amounts of $27,476,000 and $10,000,000, respectively.  Assets under capital
leases with an original cost of $7,143,000 and $7,342,000, are included in
operating equipment in the accompanying consolidated balance sheets at December
31, 1996 and 1995, respectively.  Amortization expense with respect to assets
under capital leases amounted to $2,723,000, $2,725,000 and $1,551,000 during
the years ended December 31, 1996, 1995 and 1994, respectively.

        Future minimum lease payments under capital lease obligations as of
December 31, 1996 were as follows:
                 1997                                   $  3,744,000
                 1998                                      2,494,000
                 1999                                      2,457,000
                 2000                                      2,483,000
                 2001                                      2,532,000
                 Thereafter                               26,719,000
                                                        ------------

                 Total minimum lease payments             40,429,000
                 Less amount representing interest       (16,751,000)
                                                        ------------
                 Present value of future
                  minimum lease payments                  23,678,000
                 Current capital lease obligation         (1,971,000)
                                                        ------------

                 Long-term capital lease obligation     $ 21,707,000
                                                        ============

(6)     INCOME TAXES

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

                                          YEAR ENDED DECEMBER 31,
                                    ---------------------------------
                                     1996          1995          1994
                                    ------        ------       ------

    Current:
     Federal                       $  (72,000)  $       -   $   (36,000)
     State                             55,000    (687,000)      456,000

    Deferred:
     Federal                                -           -      (450,000)
     State                            (46,000)    419,000    (1,497,000)
                                 ------------   ---------   -----------
                                   $  (63,000)  $(268,000)  $(1,527,000)
                                 ============   =========   ===========

        Total state and federal income taxes paid by HCC for the years ended
December 31, 1996, 1995 and 1994 amounted to $223,000, $522,000 and $1,107,000,
respectively.

                                       59
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

          A reconciliation between the calculated tax provision on income before
extraordinary item based on the statutory rates in effect and the effective tax
rates follows:
<TABLE>
<CAPTION>

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

Calculated income tax benefit (provision)
  at 34%                                                               $ 18,778,000       $(2,308,000)  $(1,112,000)
SFAS 109 recognition of net
  operating loss and tax
  credit carryforwards                                                            -                 -      (450,000)
Utilization of operating loss carryforwards                                       -         3,716,000     2,341,000
Tax benefit of operating losses
  not recognized                                                        (17,412,000)                -             -
Amortization of excess purchase
  price                                                                    (601,000)         (803,000)     (803,000)
Lobbying costs                                                             (306,000)         (227,000)     (427,000)
Disallowance of meals and
  entertainment                                                            (404,000)         (410,000)     (361,000)
State income taxes                                                            6,000          (177,000)     (687,000)
Other                                                                      (124,000)          (59,000)      (28,000)
                                                                       ------------       -----------   -----------
Tax provision as shown on
  consolidated statements of operations                                $    (63,000)      $  (268,000)  $(1,527,000)
                                                                       ============       ===========   ===========
</TABLE>

        At December 31, 1996, HCC and its subsidiaries had tax net operating
loss carryforwards ("NOL's") totaling approximately $20,000,000, none of which
begin to expire until the year 2007.  Additionally, HCC and its subsidiaries
have various tax credits available totaling approximately $213,000, which do not
begin to expire until the year 2008.  The provisions of SFAS 109 require that
the tax benefit of such NOL's and credit carryforwards 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.  At December 31, 1995, HCC and its subsidiaries
(including GBCC and its subsidiaries) had net deferred tax assets arising from
NOL's, tax credits and timing differences amounting to $34,263,000.  Continuing
losses of GBCC resulted in management's determination that it was more likely
than not that only a portion of such deferred tax assets would be utilized.
Accordingly, management established a valuation allowance which resulted in a
net deferred tax asset of $8,050,000 at December 31, 1995.  As a result of the
distribution by HCC of its 80% ownership of GBCC at December 31, 1996, the
NOL's, tax credits and net deferred tax assets attributable to GBCC are no
longer available to HCC. Management believes that it is more likely than not
that future consolidated taxable income of HCC (primarily from the Aurora Casino
and Tunica Casino) will be sufficient to utilize a portion of the remaining net
deferred tax assets of $12,885,000.  Accordingly, a valuation allowance has been
established at December 31, 1996 reducing the net deferred tax asset to
$6,513,000.  The ultimate recognition of this amount of NOL's and tax credits is
dependent on HCC and its subsidiaries' ability to generate approximately $19
million of taxable income for federal tax purposes prior to the expiration dates
of the NOL's and tax credit carryforwards.  The revaluation of the net deferred
tax asset resulting from the

                                       60
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


distribution of GBCC stock ($1,537,000) has been reflected in the accompanying
consolidated financial statements at December 31, 1996 as an adjustment to
additional paid-in capital.

          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
future utilization of its loss carryforwards.

          The Internal Revenue Service is currently examining the consolidated
Federal income tax returns of HCC for the years 1993 and 1994.  Management
believes that the results of such examination will not have a material adverse
effect on the consolidated financial position of HCC.

          The components of the net deferred tax asset were as follows:

                                            DECEMBER 31,
                                     ---------------------------
                                         1996          1995
                                     ------------  -------------
Deferred tax assets:
 Net operating loss carryforwards    $ 6,746,000   $ 25,316,000
 Allowance for doubtful accounts       7,316,000      7,251,000
 Investment and jobs tax credits         213,000      4,417,000
 Equity losses of unconsolidated
  subsidiaries and joint ventures              -      3,166,000
 Other liabilities and accruals        3,179,000      3,741,000
 Benefits accrual                      1,704,000      1,479,000
 Write off excess of cost of
  investment                                   -      1,543,000
 Other                                   750,000      2,276,000
                                     -----------   ------------
  Total deferred tax assets           19,908,000     49,189,000
                                     -----------   ------------
Deferred tax liabilities:
 Depreciation and amortization        (4,395,000)   (10,227,000)
 Amortization of note discount        (2,628,000)    (4,042,000)
 Other                                         -       (657,000)
                                     -----------   ------------
  Total deferred tax liabilities      (7,023,000)   (14,926,000)
                                     -----------   ------------
Net deferred tax asset                12,885,000     34,263,000
Valuation allowance                   (6,372,000)   (26,213,000)
                                     -----------   ------------
                                     $ 6,513,000   $  8,050,000
                                     ===========   ============

                                       61
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


(7)  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 2,680,000 and 147,006,
respectively, remain available for future grant as of December 31, 1996.

          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 150,000
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.
As of December 31, 1996, options to purchase 320,000 shares remain outstanding
at exercise prices ranging from $3.125 per share to $5.25 per share under the
1996 Plan.  Such options have a weighted average exercise price of $3.26 and a
weighted average remaining contractual life of 60 months.  None of the options
are currently exercisable.  As of December 31, 1996, options to purchase 90,008
shares remain outstanding at an exercise price of $.0006 per share under the
1992 Plan, all of which are currently exercisable and have a remaining
contractual life of 37 months.

          The following table lists the combined activity of the 1996 Plan and
the 1992 Plan:
<TABLE>
<CAPTION>

                                             YEAR ENDED DECEMBER 31,
                            ---------------------------------------------------------
                                     1996              1995             1994
                            ---------------------  ----------------  ----------------
                                       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     150,008     $  .80   478,340   $  .25   989,994   $.0006
       Options cancelled     (20,000)      6.00         -        -         -        -
       Options granted       320,000       3.26         -        -    20,000     6.00
       Options exercised     (40,000)     .0006  (328,332)   .0006  (531,654)   .0006
                             -------             --------           --------
Outstanding options
       at end of year        410,008     $ 2.54   150,008   $  .80   478,340   $  .25
                             =======             ========           ========
</TABLE>

                                       62
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


          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 130,000 remain available for future grant as of December 31, 1996.  An
initial option of 10,000 shares per non-employee director was granted upon
adoption of the plan with any future outside director to also receive an option
of 10,000 shares.  In addition, each outside director will receive 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, 1996, 20,000 shares remain outstanding and are currently
exercisable at a price of $6.25 per share.

          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 for the year ended December 31, 1996
would have increased by approximately $41,000 with no effect on reported loss
per share.

          The fair value of each option grant in 1996 was estimated on the date
of grant using a method approximating the Black-Scholes option pricing model
with the following assumptions:  risk free interest rate of 5.54%; no dividend
yield; expected life of one year and volatility of 62.1%.  The weighted average
fair value of options granted in 1996 was $.91.

 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, 1996, 1995 and
1994 were approximately $660,000, $315,000 and $218,000, respectively.
Obligations accrued under the agreements at December 31, 1996 and 1995 amounted
to $5,011,000 and $4,351,000, respectively, and are included in other noncurrent
liabilities in the accompanying consolidated balance sheets.

(8)  TRANSACTIONS WITH RELATED PARTIES

          As a result of the distribution by HCC of the GBCC common stock it
owned, GBCC is no longer a consolidated subsidiary.  Accordingly, intercompany
receivables and payables between HCC and GBCC and its subsidiaries which
previously eliminated in consolidation are now considered balances outstanding
with affiliates.

                                       63
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


          HCC has advanced funds to GBCC totaling $7,750,000 as of December 31,
1996.  Of the amounts advanced, $1,000,000, which is not due until April 1,
1998, is classified as noncurrent in the accompanying consolidated balance sheet
at December 31, 1996.  In addition, $250,000 is due on demand, or if no demand
is made, on April 1, 1998.  Such borrowings from HCC bear interest at the rate
of 14% per annum, payable semiannually.  During the third quarter of 1996, GBCC
borrowed $6,500,000 from HCC on a demand basis with interest at the rate of 13
3/4% per annum payable quarterly commencing October 1, 1996.  Interest
receivable amounting to $323,000 is included in due from affiliates in the
accompanying consolidated balance sheet at December 31, 1996.  The payment of
principal and interest to HCC on such borrowings is subject to the approval of
the Casino Commission.

          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 1/2%
unsecured notes (the "PCPI Notes") held by HCC and issued by PCPI Funding Corp.,
another subsidiary of GBCC.  The increased principal amount of the new notes
included a call premium on the exchange ($1,745,000) equal to 4 1/2% of the
principal amount of PCPI Notes exchanged; such premium was also paid to third
party holders of $58,364,000 principal amount of PCPI Notes concurrently
redeemed.  The PPI Funding Notes were discounted to yield interest at the rate
of 14 7/8% per annum and had an original face value of $110,636,000.  Subsequent
principal payments by PPI Funding Corp. have reduced the maturity value of the
notes to $98,353,000.  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.

          It was anticipated that HCC's primary method of collection with
respect to the PPI Funding Notes would be through the utilization of NOL's of
GBCC.  As GBCC is no longer a consolidated subsidiary for federal income tax
purposes, this means of collection is no longer available to HCC.  Accordingly,
at December 31, 1996, HCC established a valuation allowance in the amount of
$18,741,000 to reduce the outstanding principal balance on the PPI Funding Notes
to an estimated realizable value.  Management anticipates that the remaining
balance of $35,597,000, which is included in noncurrent due from affiliates on
the accompanying consolidated balance sheet at December 31, 1996 will be
realized through a combination of asset acquisitions from GBCC and its
subsidiaries (see Note 17) and repayments from GBCC.

          Pursuant to a management agreement, HCA pays to Pratt Management, L.P.
("PML"), a limited partnership wholly owned through 1996 by GBCC (see Note 17),
a base management fee equal to 5% of the Aurora Casino's operating revenues (as
defined in the agreement) subject to a maximum of $5,500,000 annually, and an
incentive fee equal to 10% of gross operating profit (as defined in the
agreement to generally include all revenues, less expenses other than
depreciation, interest, amortization and taxes). Unpaid fees amounting to
$2,096,000 are included in amounts due to affiliates in the accompanying
consolidated balance sheet at December 31, 1996.  Pursuant to a ten-year
consulting agreement with GBCC, HCT incurs a monthly consulting fee of $100,000.

                                       64
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


          Various subsidiaries of GBCC provide services to HCC and its
subsidiaries, including certain administrative and marketing services.  Unpaid
fees amounting to $203,000 are included in due to affiliates in the accompanying
consolidated balance sheet at December 31, 1996.

          HCT and Advanced Casino Systems Corporation ("ACSC"), a subsidiary of
GBCC, entered into a Computer Services Agreement dated as of January 1, 1994.
The term of the agreement was three years with an automatic renewal for an
additional three years becoming effective on January 1, 1997.  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 as well as a fixed license fee of $30,000 a month ($33,600
effective January 1, 1997).  HCT also reimburses ACSC for its direct costs and
expenses incurred under this agreement.  Unpaid charges amounting to $30,000 are
included in due to affiliates in the accompanying consolidated balance sheet at
December 31, 1996.

          HCA also receives certain computer-related services from ACSC
including hardware, software and operator support.  HCA reimburses ACSC for its
direct costs and any expenses incurred.  Unpaid charges amounting to $51,000 are
included in due to affiliates in the accompanying consolidated balance sheet at
December 31, 1996.

          Prior to sale of the property in September 1996, GBCC operated the
Holiday Inn located at the north entrance of the Dallas/Fort Worth Airport ("DFW
North") which was owned by Metroplex Hotel Limited ("Metroplex"), a partnership
controlled by certain members of the Pratt Family.  During 1996 and 1995, GBCC
made capital expenditures under the hotel operating agreement totaling
approximately $2,581,000 toward property improvements.  GBCC was also obligated
by the hotel operating agreement to make minimum rental payments equal to
Metroplex's principal and interest payments on the underlying indebtedness of
this hotel.  During February 1994, GBCC utilized funds borrowed from HCC to
purchase such underlying indebtedness with a principal balance of $13,756,000
from third parties at a cost of $6,750,000 and subject to third party
indebtedness amounting to $2,706,000.  The required minimum rental payments (net
of debt service receipts since the February 1994 note acquisition date) amounted
to $397,000, $530,000 and $678,000, respectively, during the years ended
December 31, 1996, 1995 and 1994.  GBCC recorded the note receivable from
Metroplex, which accrued interest at the rate of 9 1/2% per annum, at
acquisition cost; such note was included in notes receivable in the accompanying
consolidated balance sheet at December 31, 1995.  Upon the sale of the hotel by
Metroplex, GBCC received proceeds sufficient to repay the third party
indebtedness of $1,873,000, recover its $6,750,000 acquisition cost of the
underlying indebtedness, recover $2,581,000 of its total investment in property
improvements and receive additional cash of approximately $770,000.

          In September 1994, a subsidiary of HCC entered into an agreement with
an entity owned by a member of the Pratt Family to manage the operation and
maintenance of a Company-owned aircraft and to  make such aircraft available for
charters by third parties.  Expenses and commissions charged by the management
company under the agreement during 1996, 1995 and 1994 totaled $499,000,
$462,000 and $138,000, respectively.

                                       65
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



(9)       STATE GAMING REGULATIONS

          Riverboat gaming operations in Illinois are subject to regulatory
control by the Illinois Gaming Board.  Under the provisions of the Illinois
gaming regulations, HCA is required to maintain its ownership license.  Such
license was renewed in 1996 and expires in December 1997. 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 was renewed on September 25, 1995 until October 17, 1997.
Management intends to file for renewal of each of the licenses enumerated above
in Illinois and Mississippi and anticipates that such renewals will be approved
by the applicable regulatory agencies during 1997.

          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.

(10)      OBLIGATORY INVESTMENTS

          The New Jersey Casino Control Act requires casino licensees to make
certain approved investments in New Jersey or to pay an investment alternative
tax.  Casino licensees may obtain investment credits, which amount to 1.25% of
casino revenues, by purchasing bonds at below-market interest rates from the
Casino Reinvestment Development Authority (the "CRDA") or by making qualified
investments approved by the CRDA.  This governmental agency administers the
statutorily mandated investments made by casino licensees and is required to
expend the monies received by it for the eligible projects defined in the
statute. The investment alternative tax amounts to 2.5% of casino revenues.
Payments of the investment obligations must be made quarterly.  The Sands has
elected to comply with the requirements by obtaining investment credits or by
making qualified investments.

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

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

          The Sands has, from time to time, contributed certain amounts held in
escrow to the CRDA.  In consideration thereof, the CRDA granted the Sands
waivers of certain of its investment obligations in future periods.  The Sands
made such contributions of obligatory investments during the years ended
December 31, 1996, 1995 and 1994 totaling $1,500,000, $250,000 and $2,500,000,
respectively, resulting in waivers granted by the CRDA during 1995 totaling
$128,000.  No such waivers were granted by the CRDA during 1996 and 1994;
however, the contributions have been designated for projects expected to

                                       66
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


benefit the community and the Sands facility.  Accordingly, intangible assets of
$1,275,000 were included in other assets on the accompanying consolidated
balance sheet at December 31, 1995.  Amortization of waivers granted in prior
years totaled $128,000 and  $1,727,000, respectively, during 1995 and 1994.  At
December 31, 1995, all waivers were fully amortized.

(11) SUMMARIZED COMBINED FINANCIAL INFORMATION OF AND TRANSACTIONS WITH
     UNCONSOLIDATED AFFILIATES

     Certain summarized combined financial information of GBCC's unconsolidated
affiliates, which include joint ventures, is presented below.

                                    YEAR ENDED DECEMBER 31,
                          -------------------------------------------
                              1996           1995           1994
                          -------------  -------------  -------------

Net revenues              $ 39,314,000   $ 40,005,000   $ 38,897,000
Expenses                   (41,524,000)   (43,144,000)   (42,154,000)
                          ------------   ------------   ------------
Net loss                  $ (2,210,000)  $ (3,139,000)  $ (3,257,000)
                          ============   ============   ============

                                                        DECEMBER 31,
                                                            1995
                                                        ------------
Current assets                                          $  5,410,000
                                                        ============
Noncurrent assets                                       $ 58,011,000
                                                        ============
Current liabilities                                     $  7,398,000
                                                        ============
Noncurrent liabilities                                  $ 77,877,000
                                                        ============


          Income and losses of GBCC's unconsolidated affiliates have not been
reflected in the accompanying consolidated statements of operations for the
years ended December 31, 1996, 1995 or 1994 as GBCC's investments in such
affiliates were previously eliminated through the recognition of prior years'
losses.

          Prior to sale of the property in November 1996, GBCC had an ongoing
commitment to fund its proportionate share of operating cash deficits with
respect to its 50% ownership interest in the Sheraton Plaza located in Orlando,
Florida; GBCC was not required to make any such payments during 1996, 1995 and
1994.  GBCC also agreed to contribute up to $3,900,000 as an additional
investment in the Sheraton Plaza hotel partnership to refurbish the hotel
facility.  No such commitments were required during 1996; GBCC contributed
$1,675,000 and $660,000 during 1995 and 1994, respectively, toward such
commitment.  Such contributions were in recognition of GBCC's partner having
agreed to make $5,000,000 in principal reductions on the underlying mortgage
note on the facility.  GBCC was required to pay approximately $2,946,000 to
retire its share of the underlying indebtedness on the property in connection
with the sale.

                                       67
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



          GBCC earned management and project fees from unconsolidated affiliates
for the management and project supervision of certain hotel facilities.  During
the years ended December 31, 1996, 1995 and 1994, such fees amounted to
$1,167,000, $1,139,000 and $977,000, respectively.

(12)      LITIGATION

 PLANET HOLLYWOOD LITIGATION -

          Planet Hollywood International, Inc., a Delaware corporation, and
Planet Hollywood (Region IV), Inc., a Minnesota corporation (collectively,
"PHII"), filed a complaint in the United States District Court for the Northern
District of Illinois, Eastern Division on July 29, 1996 against HCC, HCA and a
member of the Pratt Family (collectively, the "Original Hollywood Defendants").
The Original Hollywood Defendants filed with the Court on September 18, 1996 an
answer to PHII's lawsuit, along with numerous counterclaims against PHII, Robert
Earl and Keith Barish (collectively, the "PHII Defendants").  PHII filed with
the Court on January 31, 1997, an amendment to their complaint which, among
other things, added HCT (together with the Original Hollywood Defendants, the
"Hollywood Defendants") and GBCC as defendants.  The Original Hollywood
Defendants filed with the Court on February 4, 1997, and GBCC and HCT filed with
the Court on February 20, 1997, answers and counterclaims to such amended
complaint.

          In its lawsuit, PHII alleges, among other things, that the Hollywood
Defendants and GBCC have, in opening and operating the Hollywood Casino concept,
infringed on PHII's trademark, service mark and trade dress and have engaged in
unfair competition and deceptive trade practices.  In their counterclaims, the
Hollywood Defendants and GBCC allege, among other things, that the PHII
Defendants have, through their planned use of their mark in connection with
casino services, infringed on certain of HCC's service marks and trade dress and
have engaged in unfair competition.

          Given the uncertainties inherent in litigation, no assurance can be
given that the Hollywood Defendants will prevail in this litigation; however,
the Hollywood Defendants believe that PHII's claims are without merit and intend
to defend their position and pursue their counterclaims vigorously.  The
accompanying consolidated financial statements do not include any adjustments
that might result from the outcome of the uncertainties described above.

 OTHER LITIGATION -

          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.

                                       68
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


(13)      COMMITMENTS AND CONTINGENCIES

          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 the option of HCT, 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.
HCT prepaid the first year fixed rental payments; such amount, together with all
rental payments made during the construction period, were taken as a credit
against rent payments as they became due during the first year of operations.
During 1996, 1995 and 1994, HCT expensed $3,486,000, $3,608,000 and $1,210,000,
respectively, in connection with the ground lease.

(14)      THIRD PARTY NOTES RECEIVABLE

          During November 1995, HCC loaned $10,000,000 of the proceeds from the
HCC Refinancing to an unaffiliated gaming company in the form of two $5,000,000
notes (Series A and Series B).  The loans earn interest at the rate of prime
plus one percent per annum and are payable in quarterly installments of
principal and interest commencing in November 1997 with the final payment due in
August 2000.  All principal payments received are to be applied first to the
Series A note.  In connection with the loans, HCC received warrants to acquire
up to a 10% equity interest in the gaming company at any time between November
15, 1998 and November 15, 2000 at an exercise price of $500,000 per 1/2%
interest.  Under the terms of the loan agreement, the gaming company may require
HCC to exercise warrants to acquire a 5% equity interest on November 15, 1998 at
a cost not to exceed $5,000,000 payable through the reduction of the outstanding
principal balance and, to the extent applicable, the forgiveness of accrued
interest on the Series B note.

(15)      SUPPLEMENTAL CASH FLOW INFORMATION

          During 1996, HCA entered into a capital lease obligation in the
original amount of $13,195,000 with respect to a second parking garage (see Note
5).  Additional escrowed construction and financing costs totaling $4,281,000
were capitalized as part of the cost of the facility.

          At December 31, 1996, HCC contributed certain receivables from GBCC
and its subsidiaries to GBCC.  Notes receivable amounting to $8,738,000 together
with accrued interest thereon totaling $1,753,000 and other receivables of
$4,283,000 with respect to pension obligations assumed during 1995 were
contributed to GBCC.

                                       69
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


          At December 31, 1996, HCC distributed the common stock of GBCC it
owned to its shareholders. The following net liabilities were distributed to
HCC's shareholders in the form of a dividend:

Long-term debt...............................................  $ 326,024,000
Short-term borrowings........................................      8,750,000
Other current liabilities....................................     41,186,000
Other noncurrent liabilities.................................      4,592,000
Net property and equipment...................................   (156,887,000)
Accounts receivable, net of allowance........................    (10,656,000)
Net book value of other assets distributed (excluding cash)..    (30,811,000)
                                                               -------------
 Net liabilities distributed.................................  $ 182,198,000
                                                               =============

          During 1995, HCA acquired certain equipment at a cost of $2,985,000
under financing agreements with a third party vendor.

          During 1994, HCT entered into capital lease obligations totaling
$5,013,000 for new equipment (see Note 5).

          During 1994, HCT acquired certain equipment at a cost of $5,169,000
under financing agreements with certain third party vendors.

          In connection with the acquisition of the Tunica Casino site by HCT
during January 1994, liabilities were assumed as follows:

Fair value of assets acquired................................... $10,577,000
Land rights.....................................................   8,445,000
Cash paid for capital stock and
limited partnership interest....................................  (7,986,000)
Notes issued for capital stock and
limited partnership interest....................................  (6,000,000)
                                                                 -----------
Liabilities assumed............................................. $ 5,036,000
                                                                 ===========

          During 1994, GBCC acquired the underlying indebtedness of the DFW
North Holiday Inn subject to third party indebtedness totaling $2,706,000 (see
Note 8).

(16)      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, CASH EQUIVALENTS AND CASH RESTRICTED FOR CONSTRUCTION PROJECTS -
The carrying amounts approximate fair value because of the short maturity of
these instruments.

                                       70
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


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

          NOTES RECEIVABLE - The fair value of notes receivable is estimated
based on the discounting of net cash flows at current market rates for notes of
similar remaining maturities and collateral or 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 prices of the 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.

           The estimated carrying amounts and fair values of HCC's financial
instruments are as follows:
<TABLE>
<CAPTION>

                                                 DECEMBER 31, 1996               DECEMBER 31, 1995
                                            -------------------------  -------------------------------------
                                              CARRYING                     CARRYING
                                               AMOUNT      FAIR VALUE        AMOUNT           FAIR VALUE
                                            ------------  ------------  -----------------  -----------------
<S>                                         <C>           <C>           <C>                <C>

Financial Assets
           Cash and cash equivalents......  $ 21,488,000  $ 21,488,000       $ 56,538,000       $ 56,538,000
           Restricted cash................             -             -         29,874,000         29,874,000
           Notes receivable...............    10,000,000    10,000,000         19,222,000         19,222,000
           Notes receivable - affiliates..     7,750,000     7,750,000                  -                  -
           PPI Funding Notes..............    35,597,000    35,597,000                  -                  -
           Obligatory investments.........             -             -          5,521,000          5,521,000

Financial Liabilities
           Interest payable...............  $  4,734,000  $  4,734,000       $ 16,964,000       $ 16,964,000
           12 3/4% Senior Secured Notes...   210,000,000   201,600,000        210,000,000        191,100,000
           10 7/8% First Mortgage Notes...             -             -        185,000,000        160,950,000
           11 5/8% PRT Funding Notes......             -             -         85,000,000         62,900,000
           Equipment loans................     2,873,000     2,879,000          3,779,000          3,785,000
           Note payable...................     2,150,000     2,150,000          2,300,000          2,300,000
           Other..........................     2,472,000     2,472,000          7,744,000          7,596,000
</TABLE>

                                       71
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


(17)      SUBSEQUENT EVENT

          Subject to regulatory approval and effective as of April 1, 1997, HCC
will acquire the general partnership interest in Pratt Management, L.P. ("PML"),
the limited partnership owned by subsidiaries of GBCC which holds the management
contract on the Aurora Casino.  PML earns management fees from the Aurora Casino
and incurs operating and other expenses with respect to its management thereof.
As general partner, HCC will receive 99% of the first $84,000 of net income
earned by the partnership each month and 1% of any income earned above such
amount.  HCC will issue a five-year note in the original amount of $3,800,000,
and assign $7,597,000 principal amount of PPI Funding Notes (see Note 8) to a
GBCC subsidiary in exchange for the general partnership interest.

          HCC further intends to enter into negotiations during 1997 to acquire
the capital stock of ACSC, a company engaged in the development, installation
and servicing of computer software related to the gaming industry, which is
currently wholly-owned by a subsidiary of GBCC.  ACSC installed and continues to
service certain gaming software applications at the Company's Aurora and Tunica
casinos (see Note 8).

(18)      SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
                                                                 QUARTER
                                        ----------------------------------------------------------
                                            FIRST         SECOND          THIRD         FOURTH
                                        -------------  -------------  -------------  -------------
<S>                                     <C>            <C>            <C>            <C>
YEAR ENDED DECEMBER 31, 1996:

Net revenues, as previously reported..  $132,980,000   $138,109,000   $136,244,000   $122,960,000
Reclassifications.....................       135,000        152,000              -              -
                                        ------------   ------------   ------------   ------------

Net revenues..........................  $133,115,000   $138,261,000   $136,244,000   $122,960,000
                                        ============   ============   ============   ============

Net loss..............................  $ (6,660,000)  $ (8,250,000)  $ (8,421,000)  $(31,962,000)
                                        ============   ============   ============   ============

Net loss per
  common share (1)....................  $       (.27)  $       (.33)  $       (.34)  $      (1.29)
                                        ============   ============   ============   ============

YEAR ENDED DECEMBER 31, 1995:

Net revenues, as previously reported..  $128,668,000   $131,520,000   $147,304,000   $131,907,000
Reclassifications.....................       150,000        150,000         94,000        150,000
                                        ------------   ------------   ------------   ------------

Net revenues..........................  $128,818,000   $131,670,000   $147,398,000   $132,057,000
                                        ============   ============   ============   ============

Net income (loss).....................  $  1,243,000   $  3,126,000   $  7,144,000   $(28,801,000)
                                        ============   ============   ============   ============

Net income (loss)  per
  common share (1)....................  $        .05   $        .13   $        .29   $      (1.17)
                                        ============   ============   ============   ============
</TABLE>

                                       72
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


(1)  In accordance with the provisions of APB Opinion No. 15, earnings per share
     are calculated separately for each quarter and the full year.  Accordingly,
     annual earnings per share will not necessarily equal the total of the
     interim periods.

                                       73
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


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, 1996 and 1995,
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, 1996.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

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

   In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hollywood Casino - Aurora, Inc.
as of December 31, 1996 and 1995, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles.

                         ARTHUR ANDERSEN LLP



Roseland, New Jersey
March 21, 1997

                                       74
<PAGE>

                        HOLLYWOOD CASINO - AURORA, INC.
                 (WHOLLY OWNED BY HOLLYWOOD CASINO CORPORATION)

                                 BALANCE SHEETS

                                     ASSETS

                                                             DECEMBER 31,
                                                     ---------------------------
                                                         1996           1995
                                                     -------------  ------------
Current Assets:
 Cash and cash equivalents.........................  $ 9,034,000   $  8,996,000
 Accounts receivable, net of allowances
  of $1,071,000 and $866,000, respectively.........    1,895,000      2,613,000
 Inventories.......................................      948,000        482,000
 Deferred income taxes.............................    1,421,000        765,000
 Due from affiliates...............................    1,046,000        322,000
 Prepaid expenses and other current assets.........      854,000        719,000
                                                    ------------   ------------
  Total current assets.............................   15,198,000     13,897,000
                                                    ------------   ------------
Property and Equipment:
 Land improvements.................................    2,786,000      2,756,000
 Buildings and improvements........................   46,247,000     26,615,000
 Riverboats........................................   36,970,000     36,967,000
 Operating equipment...............................   30,766,000     27,114,000
 Construction in progress..........................      276,000        294,000
                                                    ------------   ------------
                                                     117,045,000     93,746,000
 Less - accumulated depreciation and amortization..  (26,814,000)   (17,980,000)
                                                    ------------   ------------
  Net property and equipment.......................   90,231,000     75,766,000
                                                    ------------   ------------
Cash Restricted for Construction Project...........            -      1,955,000
                                                    ------------   ------------
Other Assets.......................................    2,020,000      1,578,000
                                                    ------------   ------------
                                                    $107,449,000   $ 93,196,000
                                                    ============   ============


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


                                       75
<PAGE>

                        HOLLYWOOD CASINO - AURORA, INC.
                 (WHOLLY OWNED BY HOLLYWOOD CASINO CORPORATION)

                                 BALANCE SHEETS

                      LIABILITIES AND SHAREHOLDER'S EQUITY


                                                  DECEMBER 31,
                                            -------------------------
                                                1996         1995
                                            ------------  -----------
Current Liabilities:
 Current maturities of long-term debt
  and capital lease obligations..........   $  6,456,000  $ 3,376,000
 Accounts payable........................      2,131,000    2,288,000
 Accrued liabilities -
  Salaries and wages.....................      2,117,000    1,868,000
  Interest...............................      1,315,000    1,120,000
  Gaming and other taxes.................        497,000      920,000
  Insurance..............................      1,393,000      773,000
  Other..................................      1,351,000      881,000
 Due to affiliates.......................      2,278,000    2,324,000
 Other current liabilities...............        861,000    1,315,000
                                            ------------  -----------
  Total current liabilities..............     18,399,000   14,865,000
                                            ------------  -----------
Long-Term Debt...........................     37,267,000   42,959,000
                                            ------------  -----------
Capital Lease Obligations................     21,707,000    9,494,000
                                            ------------  -----------
Deferred Income Taxes....................      2,043,000      329,000
                                            ------------  -----------

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..............     24,541,000   24,541,000
 Retained earnings.......................      3,477,000      993,000
                                            ------------  -----------
  Total shareholder's equity.............     28,033,000   25,549,000
                                            ------------  -----------
                                            $107,449,000  $93,196,000
                                            ============  ===========



             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)

                            STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                        YEAR ENDED DECEMBER 31,
                                              -------------------------------------------
                                                  1996           1995           1994
                                              -------------  -------------  -------------
<S>                                           <C>            <C>            <C>
Revenues:
 Casino...................................    $157,124,000   $146,281,000   $139,437,000
 Food and beverage........................      13,780,000     11,712,000     10,984,000
 Admissions...............................               -              -      7,855,000
 Other....................................       3,895,000      4,933,000      5,964,000
                                              ------------   ------------   ------------
                                               174,799,000    162,926,000    164,240,000
 Less - promotional allowances............     (11,408,000)   (10,418,000)   (16,240,000)
                                              ------------   ------------   ------------
 Net revenues.............................     163,391,000    152,508,000    148,000,000
                                              ------------   ------------   ------------
Expenses:
 Casino...................................     108,014,000     97,173,000     88,590,000
 Food and beverage........................       4,926,000      4,865,000      5,586,000
 Other....................................       1,066,000        742,000      1,319,000
 General and administrative...............      14,645,000     14,406,000     11,926,000
 Depreciation and amortization............       8,834,000      9,172,000      7,121,000
 Amortization of preopening costs.........               -              -      5,863,000
                                              ------------   ------------   ------------
  Total expenses..........................     137,485,000    126,358,000    120,405,000
                                              ------------   ------------   ------------
Income from operations....................      25,906,000     26,150,000     27,595,000
                                              ------------   ------------   ------------

Non-operating income (expense):
 Interest income..........................         205,000        306,000        458,000
 Interest expense, net of capitalized
  interest of $354,000 in 1995............      (6,704,000)    (6,493,000)    (6,654,000)
                                              ------------   ------------   ------------
  Total non-operating expenses, net.......      (6,499,000)    (6,187,000)    (6,196,000)
                                              ------------   ------------   ------------
Income before income taxes and
 extraordinary item.......................      19,407,000     19,963,000     21,399,000

Income tax provision......................      (6,883,000)    (7,554,000)    (7,557,000)
                                              ------------   ------------   ------------
Income before extraordinary item..........      12,524,000     12,409,000     13,842,000
Extraordinary item:
 Loss on early extinguishment of debt, net
 of related tax benefit...................               -       (989,000)             -
                                              ------------   ------------   ------------
Net income................................    $ 12,524,000   $ 11,420,000   $ 13,842,000
                                              ============   ============   ============
</TABLE>
             The accompanying notes to financial statements are an
                  integral part of these financial statements.

                                       77
<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, 1996
<TABLE>
<CAPTION>


                                                                        (ACCUMULATED
                                         COMMON STOCK      ADDITIONAL      DEFICIT)
                                   ----------------------    PAID-IN      RETAINED
                                      SHARES      AMOUNT     CAPITAL      EARNINGS
                                   ------------  --------  -----------  -------------
<S>                                <C>           <C>       <C>          <C>
BALANCE, JANUARY 1, 1994.........     1,501,000  $15,000   $ 9,986,000  $    658,000

  Capital contributions..........             -        -     4,555,000             -
  Net income.....................             -        -             -    13,842,000
  Dividends......................             -        -             -   (14,985,000)
                                   ------------  -------   -----------  ------------

BALANCE, DECEMBER 31, 1994.......     1,501,000   15,000    14,541,000      (485,000)

  Capital contributions..........             -        -    10,000,000             -
  Net income.....................             -        -             -    11,420,000
  Dividends......................             -        -             -    (9,942,000)
                                   ------------  -------   -----------  ------------

BALANCE, DECEMBER 31, 1995.......     1,501,000   15,000    24,541,000       993,000

  Net income.....................             -        -             -    12,524,000
  Dividends......................             -        -             -   (10,040,000)
                                   ------------  -------   -----------  ------------

BALANCE, DECEMBER 31, 1996.......     1,501,000  $15,000   $24,541,000  $  3,477,000
                                   ============  =======   ===========  ============

</TABLE>



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

                                       78
<PAGE>

                        HOLLYWOOD CASINO - AURORA, INC.
                 (WHOLLY OWNED BY HOLLYWOOD CASINO CORPORATION)

                            STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

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

OPERATING ACTIVITIES:
 Net income...........................................................          $ 12,524,000   $ 11,420,000   $ 13,842,000
 Adjustments to reconcile net income to net
  cash provided by operating activities:
  Extraordinary item..................................................                     -        989,000              -
  Depreciation and amortization.......................................             8,834,000      9,172,000     12,984,000
  Provision for doubtful accounts.....................................               325,000        337,000        441,000
  Deferred income tax provision (benefit).............................             1,119,000      1,095,000     (1,444,000)
  Decrease (increase) in receivables..................................               393,000     (1,309,000)      (402,000)
  Increase in accounts payable and accrued liabilities................               954,000      2,537,000        419,000
  Decrease in due to affiliates.......................................              (770,000)       (47,000)    (1,979,000)
  Net change in other current assets and liabilities..................            (1,116,000)     1,426,000     (2,137,000)
  Net change in other assets and liabilities..........................              (442,000)      (784,000)      (702,000)
                                                                                ------------   ------------   ------------

 Net cash provided by operating activities............................            21,821,000     24,836,000     21,022,000
                                                                                ------------   ------------   ------------

INVESTING ACTIVITIES:
 Net property and equipment additions.................................           (10,104,000)   (27,633,000)    (9,499,000)
 Decrease (increase) in cash restricted for construction projects.....             1,955,000     (1,955,000)             -
                                                                                ------------   ------------   ------------

 Net cash used in investing activities................................            (8,149,000)   (29,588,000)    (9,499,000)
                                                                                ------------   ------------   ------------

FINANCING ACTIVITIES:
 Proceeds from issuance of debt.......................................                     -      5,000,000              -
 Repayments of debt...................................................            (2,870,000)    (1,287,000)    (3,606,000)
 Payments on capital lease obligations................................              (724,000)    (1,010,000)      (877,000)
 Capital contributions................................................                     -     10,000,000      4,000,000
 Dividends............................................................           (10,040,000)    (9,942,000)   (14,985,000)
                                                                                ------------   ------------   ------------

 Net cash (used in) provided by financing activities..................           (13,634,000)     2,761,000    (15,468,000)
                                                                                ------------   ------------   ------------
 Net increase (decrease) in cash and cash equivalents.................                38,000     (1,991,000)    (3,945,000)

 Cash and cash equivalents at beginning of year.......................             8,996,000     10,987,000     14,932,000
                                                                                ------------   ------------   ------------
 Cash and cash equivalents at end of year.............................          $  9,034,000   $  8,996,000   $ 10,987,000
                                                                                ============   ============   ============

</TABLE>

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

                                       79
<PAGE>

                        HOLLYWOOD CASINO - AURORA, INC.
                 (WHOLLY OWNED BY HOLLYWOOD CASINO CORPORATION)

                         NOTES TO FINANCIAL STATEMENTS


(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," formerly known as
Pratt Hotel Corporation), a Delaware corporation which owns the entity with
which HCA has a management services contract.

          Under the provisions of an agreement between the city of Aurora,
Illinois (the "City") and HCA dated June 4, 1991, the City granted HCA the
exclusive right to develop the Aurora Casino on the Fox River.  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 5).

          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 northern Indiana 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.

 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 in 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 in

                                       80
<PAGE>

                        HOLLYWOOD CASINO - AURORA, INC.
                 (WHOLLY OWNED BY HOLLYWOOD CASINO CORPORATION)

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)


the accompanying statements of operations.  Costs of complimentaries allocated
from the food and beverage, admissions and other operating departments to the
casino department during the years ended December 31, 1996, 1995 and 1994 are as
follows:

                                        1996              1995         1994
                                     -----------      -----------    ----------

Food and beverage................. $  10,280,000     $  8,777,000  $  7,535,000
Admissions........................             -        5,446,000     3,986,000
Other.............................     1,318,000        2,569,000     2,661,000
                                     -----------      -----------    ----------
                                   $  11,598,000     $ 16,792,000  $ 14,182,000
                                     ===========      ===========   ===========


 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 $325,000, $337,000 and $441,000, respectively,
were made during the years ended December 31, 1996, 1995 and 1994.

 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 over their estimated useful lives utilizing the straight-line method
based on the following lives:

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

          On October 1, 1996, HCA revised the estimated useful life of its
pavilion from 25 years to 40 years, the estimated life of one of its parking
garages under a capital lease from 25 years to 30 years and the estimated life
of its slot machines from three years to five years.  Management believes the
changes in estimated lives more appropriately reflect the timing of the economic
benefits to be received from these assets.  For the year ended December 31,
1996, the effect of these changes reduced depreciation and amortization expense
and increased net income by approximately $274,000.

                                       81
<PAGE>

                        HOLLYWOOD CASINO - AURORA, INC.
                 (WHOLLY OWNED BY HOLLYWOOD CASINO CORPORATION)

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)


 DEFERRED FINANCING COSTS -

          The costs of issuing long-term debt, including all underwriting,
licensing, legal and accounting fees, are capitalized and are amortized over the
term of the related debt issue.  Amortization of such costs was $509,000 and
$643,000 for the years ended December 31, 1995 and 1994, respectively.

 LONG-LIVED ASSETS -

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

 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.

 INTEREST EXPENSE -

          Interest costs of $2,247,000 were capitalized during the initial
construction period together with capitalized interest of $555,000 contributed
by HCC in 1994 (see Note 10).  Interest costs totaling $354,000 were capitalized
during 1995 with respect to the expansion of one of the Aurora Casino's
riverboats.  Such capitalized interest costs are amortized over the useful lives
of the related assets.

 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 $6,774,000, $5,726,000 and
$10,293,000 to HCC in connection with its current federal tax provisions for the
years ended December 31, 1996, 1995 and 1994, respectively.  For the years ended
December 31, 1996, 1995 and 1994, HCA paid state income taxes of $28,000,
$100,000 and $641,000, respectively.

 RECLASSIFICATIONS -

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

                                       82
<PAGE>

                        HOLLYWOOD CASINO - AURORA, INC.
                 (WHOLLY OWNED BY HOLLYWOOD CASINO CORPORATION)

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)


(3)       BORROWINGS FROM AFFILIATE

          During 1994, HCA repaid outstanding borrowings from HCC of $2,000,000.
Such borrowings were due on demand and accrued interest at the rate of 14% per
annum.  Interest incurred on such loans amounted to $82,000 for the year ended
December 31, 1994.

(4)       LONG-TERM DEBT AND PLEDGE OF ASSETS

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


                                                 DECEMBER 31,
                                          --------------------------
                                              1996          1995
                                          ------------  ------------
12 3/4% Promissory Note to HCC, due on
 November 1, 2003  (a)..................  $39,007,000   $39,007,000
Promissory note to bank (b).............    2,472,000     4,402,000
Equipment loans (c).....................    1,472,000     2,412,000
                                          -----------   -----------
Total indebtedness......................   42,951,000    45,821,000
Less - current maturities...............   (5,684,000)   (2,862,000)
                                          -----------   -----------
Total long-term debt....................  $37,267,000   $42,959,000
                                          ===========   ===========

_____________________

(a)  The intercompany note accrues interest at the rate of 12 3/4% per annum
     payable semiannually on October 15 and April 15 of each year and requires
     semiannual principal repayments of $2,500,000 commencing October 15, 1997
     with the balance of the note due November 1, 2003.  The note is pledged as
     security with respect to HCC's 12 3/4% Senior Secured Notes due in 2003.
     HCA is not a guarantor of HCC's indebtedness; however, the indebtedness is
     secured, in part, by a first mortgage limited to approximately $39 million
     on substantially all of the assets of HCA and by a pledge of the capital
     stock of HCA.  The 12 3/4% intercompany note replaced a previous 14%
     intercompany note to HCC as a result of HCC's refinancing of its
     outstanding indebtedness during October 1995.

(b)  During February 1995, HCA entered into a $5,000,000 bank promissory note
     agreement.  The note accrues interest at the bank's prime lending rate plus
     1% per annum.  Interest only was payable during the first six months.
     Principal and interest are payable monthly with the final payment due on
     February 1, 1998.

(c)  HCA financed the purchase of certain equipment from vendors through the
     issuance of promissory notes totaling $2,985,000.  The promissory notes are
     payable in monthly installments, including interest at the approximate rate
     of 12 1/4% per annum, and mature at various dates in 1998.

                                       83
<PAGE>

                        HOLLYWOOD CASINO - AURORA, INC.
                 (WHOLLY OWNED BY HOLLYWOOD CASINO CORPORATION)

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)


     As of December 31, 1996, future maturities of long-term debt are as
follows:


                1997...................................$5,684,000
                1998................................... 5,760,000
                1999................................... 5,000,000
                2000................................... 5,000,000
                2001................................... 5,000,000
                Thereafter.............................16,507,000
                                                      -----------
                                                      $42,951,000
                                                      ===========

          Interest paid, net of amounts capitalized, for the years ended
December 31, 1996, 1995 and 1994 amounted to $6,509,000, $5,578,000 and
$6,666,000, respectively.

(5)       CAPITAL LEASES

          HCA leases two parking garages under capital lease agreements.  The
first such lease has an initial term of 30 years commencing in June 1993 with
the right to extend the term to a maximum of 99 years. Rental payments during
the first 20 years equal the City of Aurora's financing costs related to its
$10,000,000 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 5/8% per annum.  In September 1996, HCA and the Aurora
Metropolitan Exposition, Auditorium and Office Building Authority ("ACCA")
completed the joint construction of a new five-story approximately 500-space
parking garage directly across the street from, and connected by a climate-
controlled tunnel to, the Aurora Casino's Pavilion.  The garage provides
additional parking for patrons of the Aurora Casino and contains approximately
1,500 square feet of retail space.  ACCA financed a portion of the construction
costs through an $11,500,000, 7.5% industrial revenue bond issue which yielded
proceeds of approximately $10,500,000.  HCA funded all remaining construction
costs and escrowed $3,500,000 at the rate of $400,000 per month beginning in
September 1995 towards satisfaction of its obligations under the agreement.  HCA
additionally agreed to make payments to ACCA during construction equal to the
financing costs due in July 1996 relating to the ACCA industrial revenue bond
issue.  Such escrow and financing payments were included in cash restricted for
construction projects in the accompanying balance sheet at December 31, 1995.
The facility is owned by ACCA and operated by HCA pursuant to a 30-year lease
with the right to extend the lease for up to 20 additional years.  Rental
payments during the first 15 years equal ACCA's debt service costs related to
the industrial revenue bond issue.  In addition, HCA pays ACCA 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 ACCA's North Island Center  banquet and meeting
facilities.  HCA is also responsible for additional rent, consisting of costs
such as real estate taxes, maintenance costs, insurance premiums and utilities,
arising out of its operation of both parking garages.

          HCA also leases certain equipment under capital lease agreements which
provide for interest at the rate of 11.2% and expire at various dates through
1998.

          The original cost of HCA's parking garages is included in buildings
and improvements in the accompanying balance sheets at December 31, 1996 and
1995 in the amounts of $27,476,000 and

                                       84
<PAGE>

                        HOLLYWOOD CASINO - AURORA, INC.
                 (WHOLLY OWNED BY HOLLYWOOD CASINO CORPORATION)

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)


$10,000,000, respectively.  Assets under capital leases with an original cost of
$2,329,000 are included in operating equipment in the accompanying balance
sheets at December 31, 1996 and 1995.  Amortization expense with respect to
assets under capital leases amounted to $1,223,000 during the year ended
December 31, 1996 and $1,051,000 during each of the years ended December 31,
1995 and 1994.

        Future minimum lease payments under capital lease obligations as of
December 31, 1996 are as follows:

        1997...................................................  $  2,489,000
        1998...................................................     2,494,000
        1999...................................................     2,457,000
        2000...................................................     2,483,000
        2001...................................................     2,532,000
        Thereafter.............................................    26,719,000
                                                                  -----------
        Total minimum lease payments...........................    39,174,000
        Less - amount representing interest....................   (16,695,000)
                                                                 ------------
        Present value of future minimum lease payments.........    22,479,000
        Current capital lease obligation.......................      (772,000)
                                                                 ------------
        Long-term capital lease obligation                       $ 21,707,000
                                                                 ============

(6)     INCOME TAXES

Components of HCA's (provision) benefit for income taxes consist of the
 following:

                                              YEAR ENDED DECEMBER 31,
                                    -----------------------------------------
                                         1996           1995          1994
                                    ------------   ------------   -----------

Current:
  Federal.......................... $ (5,927,000)  $ (6,121,000)  $(8,957,000)
  State............................      163,000       (338,000)      (44,000)
 Deferred:
  Federal..........................   (1,125,000)    (1,034,000)    1,366,000
  State............................        6,000        (61,000)       78,000
                                    ------------   ------------   -----------
                                    $ (6,883,000)  $ (7,554,000)  $(7,557,000)
                                    ============   ============   ===========

 The tax benefit related to the extraordinary loss on early extinguishment of
debt was $564,000 in 1995.

                                       85
<PAGE>

                        HOLLYWOOD CASINO - AURORA, INC.
                 (WHOLLY OWNED BY HOLLYWOOD CASINO CORPORATION)

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)


          A reconciliation between the calculated tax provision on income before
extraordinary item based on the statutory rates in effect and the effective tax
rates for the years ended December 31, 1996, 1995 and 1994 follows:
<TABLE>
<CAPTION>

                                                         YEAR ENDED DECEMBER 31,
                                              ---------------------------------------------
                                                  1996            1995            1994
                                              ---------------  --------------  ------------
<S>                                           <C>              <C>             <C>
  Calculated income tax provision
 at statutory rate.........................   $(6,792,000)    $(6,987,000)     $(7,490,000)
State income taxes.........................       110,000        (259,000)        (283,000)
Adjustment to prior year income  taxes.....       (81,000)       (214,000)         305,000
Political contributions and lobbying costs.       (89,000)        (65,000)         (70,000)
Other......................................       (31,000)        (29,000)         (19,000)
                                              -----------    ------------      -----------
Tax provision as shown on statements
 of operations.............................   $(6,883,000)   $(7,554,000)      $(7,557,000)
                                              ===========    ===========       ===========
</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.

          The components of HCA's net deferred tax (liability) asset at December
31, 1996 and 1995 are as follows:


                                            DECEMBER 31,
                                      ------------------------
                                          1996         1995
                                      ------------  ----------
Deferred tax assets:
 Allowance for doubtful accounts....  $   375,000   $ 314,000
 Other liabilities and reserves.....    1,130,000     451,000
                                      -----------   ---------

  Total deferred tax assets.........    1,505,000     765,000
                                      -----------   ---------

Deferred tax liabilities:
 Depreciation and amortization......   (2,127,000)   (329,000)
                                      -----------   ---------

Net deferred tax (liability) asset..  $  (622,000)  $ 436,000
                                      ===========   =========

                                       86
<PAGE>

                        HOLLYWOOD CASINO - AURORA, INC.
                 (WHOLLY OWNED BY HOLLYWOOD CASINO CORPORATION)

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)


          Receivables and payables in connection with the aforementioned tax
allocation agreements at December 31, 1996 and 1995 are as follows:


                                            DECEMBER 31,
                                      ------------------------
                                          1996         1995
                                      ------------  ----------
          Deferred tax assets.......  $ 1,421,000   $ 739,000
          Due from affiliates.......    1,002,000     237,000
          Deferred tax liabilities..   (2,043,000)   (311,000)

(7)       TRANSACTIONS WITH RELATED PARTIES

          Pursuant to a management services contract, HCA pays base management
and incentive fees to Pratt Management, L.P. ("PML"), a limited partnership
wholly owned by GBCC.  The base management fee is equal to 5% of operating
revenues (as defined in the management services contract) subject to a maximum
of $5,500,000 in any consecutive twelve month period.  The incentive fee is
equal to 10% of gross operating profit (as defined in the management services
agreement to generally include all revenues less expenses other than
depreciation, interest, amortization and taxes).  HCA incurred such fees
totaling $9,360,000, $9,432,000 and $10,009,000,  respectively, during the years
ended December 31, 1996, 1995 and 1994.  Management and incentive fees payable
at December 31, 1996 and 1995 were $2,096,000 and $2,177,000, respectively.

          HCA incurred interest with respect to its promissory note payable to
HCC (see Note 4).  Such interest amounted to $4,973,000, $5,406,000 and
$5,537,000, respectively, for the years ended December 31, 1996, 1995 and 1994.
Interest payable to HCC on such notes amounted to $1,050,000 and $1,022,000,
respectively, at December 31, 1996 and 1995 and is included in accrued interest
payable in the accompanying balance sheets.

          HCA has acquired computer software and hardware and has been allocated
certain expenses, including legal, financing and payroll expenses from HCC and
its subsidiaries.  During the years ended December 31, 1996, 1995 and 1994, such
transactions totaled $720,000, $1,562,000 and $888,000, respectively.  At
December 31, 1996 and 1995, HCA had payables amounting to $138,000 and $130,000,
respectively, in connection with such charges.

(8)       ILLINOIS REGULATORY MATTERS

          Riverboat gaming operations in Illinois are subject to regulatory
control by the Illinois Gaming Board (the "IGB").  Under the provisions of the
Illinois gaming regulations, HCA and PML are required to maintain their
respective owner's and supplier's licenses.  HCA's owner's license expires in
July 1997 and PML's supplier's license expires in December 1997.  Management
intends to file for renewal of HCA's owner's license and PML's supplier's
license and anticipates that such renewals will be approved by the IGB during
1997.  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

                                       87
<PAGE>

                        HOLLYWOOD CASINO - AURORA, INC.
                 (WHOLLY OWNED BY HOLLYWOOD CASINO CORPORATION)

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)


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.

(9)       COMMITMENTS AND CONTINGENCIES

PLANET HOLLYWOOD LITIGATION

          Planet Hollywood International, Inc., a Delaware corporation, and
Planet Hollywood (Region IV), Inc., a Minnesota corporation (collectively,
"PHII"), filed a complaint in the United States District Court for the Northern
District of Illinois, Eastern Division on July 29, 1996 against HCC, HCA and a
member of the Pratt Family (collectively, the "Original Hollywood Defendants").
The Original Hollywood Defendants filed with the Court on September 18, 1996 an
answer to PHII's lawsuit, along with numerous counterclaims against PHII, Robert
Earl and Keith Barish (collectively, the "PHII Defendants").  PHII filed with
the Court on January 21, 1997, an amendment to their complaint which, among
other things, added the HCC subsidiary which owns and operates a casino in
Tunica, Mississippi, HWCC-Tunica, Inc. ("HCT", together with the Original
Hollywood Defendants, the "Hollywood Defendants"), and GBCC as defendants.  The
Original Hollywood Defendants filed with the Court on February 4, 1997, and GBCC
and HCT filed with the Court on February 20, 1997, answers and counterclaims to
such amended complaint.

          In its lawsuit, PHII alleges, among other things, that the Hollywood
Defendants and GBCC have, in opening and operating the Hollywood Casino concept,
infringed on PHII's trademark, service mark and trade dress and have engaged in
unfair competition and deceptive trade practices.  In their counterclaims, the
Hollywood Defendants allege, among other things, that the PHII Defendants have,
through their planned use of their mark in connection with casino services,
infringed on certain of HCC's service marks and trade dress and have engaged in
unfair competition.

          Given the uncertainties inherent in litigation, no assurance can be
given that the Hollywood Defendants will prevail in this litigation; however,
the Hollywood Defendants believe that PHII's claims are without merit and intend
to defend their position and pursue their counterclaims vigorously.  The
accompanying  financial statements do not include any adjustments that might
result from the outcome of the uncertainties described above.

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.

                                       88
<PAGE>

                        HOLLYWOOD CASINO - AURORA, INC.
                 (WHOLLY OWNED BY HOLLYWOOD CASINO CORPORATION)

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)


(10)      SUPPLEMENTAL CASH FLOW INFORMATION

          During 1996, HCA entered into a capital lease obligation in the
original amount of $13,195,000 with respect to a second parking garage (see Note
5).  Additional escrowed construction and financing costs totaling $4,281,000
were capitalized as part of the cost of the facility.

          During 1995, HCA acquired certain equipment at a cost of $2,985,000
under financing agreements with a third party vendor (see Note 4).

          During 1994, HCA incurred interest charges from HCC amounting to
$555,000 with respect to funding provided by HCC in connection with construction
of the Aurora Casino.  The resulting liability was subsequently contributed as
additional paid-in capital by HCC.

(11)      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, CASH EQUIVALENTS AND CASH RESTRICTED FOR CONSTRUCTION PROJECTS -
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 either the quoted market prices of the issue or on the discounted cash
flow of future payments utilizing current rates available to HCA for debt of
similar remaining maturities.  Debt obligations with a short remaining maturity
are valued at the carrying amount.

                                       89
<PAGE>

                        HOLLYWOOD CASINO - AURORA, INC.
                 (WHOLLY OWNED BY HOLLYWOOD CASINO CORPORATION)

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)


          The estimated carrying amounts and fair values of HCA's financial
instruments are as follows:
<TABLE>
<CAPTION>

                                DECEMBER 31, 1996             DECEMBER 31, 1995
                            ------------------------  ------------------------------------
                             CARRYING                    CARRYING
                              AMOUNT     FAIR VALUE        AMOUNT           FAIR VALUE
                            -----------  -----------  -----------------  -----------------
<S>                         <C>          <C>          <C>                <C>
Financial Assets:
 Cash and cash
  equivalents............   $ 9,034,000  $ 9,034,000        $ 8,996,000        $ 8,996,000
 Cash restricted for
  construction projects..             -            -          1,955,000          1,955,000

Financial Liabilities:
 Interest payable........   $ 1,315,000  $ 1,315,000        $ 1,120,000        $ 1,120,000
 12 3/4% promissory note.    39,007,000   37,447,000         39,007,000         35,496,000
 Promissory note to bank.     2,472,000    2,472,000          4,402,000          4,402,000
 Equipment loans.........     1,472,000    1,478,000          2,412,000          2,418,000
</TABLE>

(12) SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
                                                    QUARTER
                                -------------------------------------------------
                                   FIRST       SECOND        THIRD       FOURTH
                                -----------  -----------  -----------  -----------
<S>                             <C>          <C>          <C>          <C>

Year Ended December 31, 1996
 Net revenues................. $43,715,000  $43,039,000  $39,332,000  $37,305,000
                               ===========  ===========  ===========  ===========

 Net income................... $ 4,436,000  $ 4,138,000  $ 1,908,000  $ 2,042,000
                               ===========  ===========  ===========  ===========

Year Ended December 31, 1995
 Net revenues................. $35,111,000  $35,206,000  $41,965,000  $40,226,000
                               ===========  ===========  ===========  ===========

 Net income................... $ 3,163,000  $ 2,694,000  $ 3,513,000  $ 2,050,000
                               ===========  ===========  ===========  ===========

</TABLE>

                                       90
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To HWCC - Tunica, Inc.:

          We have audited the accompanying consolidated balance sheets of HWCC -
Tunica, Inc. and subsidiary (the Company and a Texas corporation) as of December
31, 1996 and 1995, 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, 1996.  These financial statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

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

          In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of HWCC - Tunica, Inc.
and subsidiary as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.

                         ARTHUR ANDERSEN LLP



Roseland, New Jersey
March 21, 1997

                                       91
<PAGE>

                       HWCC - TUNICA, INC. AND SUBSIDIARY
                 (WHOLLY OWNED BY HOLLYWOOD CASINO CORPORATION)

                          CONSOLIDATED BALANCE SHEETS

                                     ASSETS


                                                            DECEMBER 31,
                                                    ----------------------------
                                                        1996           1995
                                                    -------------  -------------
Current Assets:
 Cash and cash equivalents........................  $  9,321,000   $ 11,529,000
 Accounts receivable, net of allowances of
$622,000 and $313,000, respectively...............     1,363,000      1,428,000
 Inventories......................................       672,000        883,000
 Deferred income taxes............................       953,000        488,000
 Prepaid expenses and other current assets........       854,000        705,000
                                                    ------------   ------------
Total current assets..............................    13,163,000     15,033,000
                                                    ------------   ------------
Property and Equipment:
 Land and improvements............................     3,060,000      3,037,000
 Buildings........................................    73,348,000     44,048,000
 Barges...........................................     2,524,000      2,524,000
 Operating equipment..............................    35,724,000     26,360,000
 Construction in progress.........................       412,000      4,504,000
                                                    ------------   ------------
                                                     115,068,000     80,473,000
Less - accumulated depreciation and amortization     (22,275,000)   (12,178,000)
                                                    ------------   ------------
 Net property and equipment.......................    92,793,000     68,295,000
                                                    ------------   ------------

Cash Restricted for Construction Project..........             -     27,919,000
                                                    ------------   ------------
Other Assets:
 Land rights......................................     7,658,000      7,962,000
 Other assets.....................................     3,006,000      3,031,000
                                                    ------------   ------------
Total other assets................................    10,664,000     10,993,000
                                                    ------------   ------------
                                                    $116,620,000   $122,240,000
                                                    ============   ============



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

                                       92
<PAGE>

                       HWCC - TUNICA, INC. AND SUBSIDIARY
                 (WHOLLY OWNED BY HOLLYWOOD CASINO CORPORATION)

                          CONSOLIDATED BALANCE SHEETS

                      LIABILITIES AND SHAREHOLDER'S EQUITY



                                                 DECEMBER 31,
                                         ----------------------------
                                             1996           1995
                                         -------------  -------------

Current Liabilities:
 Current maturities of long-term debt
and capital lease obligations........... $  1,511,000   $  3,096,000
  Accounts payable......................    2,797,000      2,128,000
  Accrued liabilities -
Salaries and wages......................    1,254,000      1,630,000
Interest................................    2,262,000      2,203,000
Gaming and other taxes..................      813,000        519,000
Insurance...............................      875,000      1,207,000
Other...................................    2,012,000      1,605,000
  Other current liabilities.............      752,000      1,094,000
                                         ------------   ------------
  Total current liabilities.............   12,276,000     13,482,000
                                         ------------   ------------
Long-Term Debt..........................   85,134,000     84,045,000
                                         ------------   ------------
Capital Lease Obligations...............            -      1,199,000
                                         ------------   ------------
Other Noncurrent Liabilities............            -         88,000
                                         ------------   ------------
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............   34,637,000     34,637,000
  Accumulated deficit...................  (15,427,000)   (11,211,000)
                                         ------------   ------------
Total shareholder's equity..............   19,210,000     23,426,000
                                         ------------   ------------
                                         $116,620,000   $122,240,000
                                         ============   ============



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

                                       93
<PAGE>

                       HWCC - TUNICA, INC. AND SUBSIDIARY
                 (WHOLLY OWNED BY HOLLYWOOD CASINO CORPORATION)

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>


                                                              YEAR ENDED DECEMBER 31,
                                                   -------------------------------------------
                                                         1996           1995          1994
                                                   ---------------  -------------  ------------
<S>                                                 <C>               <C>            <C>
Revenues:
 Casino..........................................     $ 87,361,000   $ 88,289,000   $30,440,000
 Rooms...........................................        5,329,000      3,187,000       904,000
 Food and beverage...............................       11,987,000      9,657,000     3,520,000
 Other...........................................        1,097,000      1,091,000       376,000
                                                      ------------   ------------   -----------
                                                       105,774,000    102,224,000    35,240,000
 Less - promotional allowances...................      (11,250,000)    (7,808,000)   (2,827,000)
                                                      ------------   ------------   -----------
     Net revenues................................       94,524,000     94,416,000    32,413,000
                                                      ------------   ------------   -----------

Expenses:
 Casino..........................................       66,018,000     57,411,000    20,666,000
 Rooms...........................................        1,573,000      1,887,000       495,000
 Food and beverage...............................        3,752,000      3,357,000     1,101,000
 Other...........................................        1,259,000      1,187,000       361,000
 General and administrative......................        5,962,000      5,711,000     2,425,000
 Depreciation and amortization...................       10,906,000     10,356,000     3,610,000
 Amortization of preopening costs................                -              -     5,939,000
                                                      ------------   ------------   -----------
     Total expenses..............................       89,470,000     79,909,000    34,597,000
                                                      ------------   ------------   -----------

Income (loss) from operations....................        5,054,000     14,507,000    (2,184,000)
                                                      ------------   ------------   -----------

Non-operating income (expenses):
 Interest income.................................          835,000        637,000       374,000
 Interest expense, net of capitalized
  interest of $1,006,000 and
  $1,667,000 in 1996 and 1994,
  respectively...................................      (10,060,000)   (10,792,000)   (4,454,000)
 Loss on assets held for sale....................          (45,000)      (505,000)            -
                                                      ------------   ------------   -----------
  Total non-operating expenses, net..............       (9,270,000)   (10,660,000)   (4,080,000)
                                                      ------------   ------------   -----------
(Loss) income before income taxes and
 extraordinary item..............................       (4,216,000)     3,847,000    (6,264,000)
Income tax benefit...............................                -        694,000             -
                                                      ------------   ------------   -----------
(Loss) income before extraordinary item..........       (4,216,000)     4,541,000    (6,264,000)

Extraordinary item:
 (Loss) gain on early extinguishment
  of debt, net of taxes..........................                -     (9,614,000)      126,000
                                                      ------------   ------------   -----------
Net loss.........................................     $ (4,216,000)  $ (5,073,000)  $(6,138,000)
                                                      ============   ============   ===========
</TABLE>

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

                                       94
<PAGE>

                      HWCC - TUNICA, INC. AND SUBSIDIARY
                (WHOLLY OWNED BY HOLLYWOOD CASINO CORPORATION)

      CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY (NOTE 1)
                  FOR THE THREE YEARS ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
                                             COMMON STOCK          ADDITIONAL
                                          -----------------         PAID-IN    ACCUMULATED
                                          SHARES     AMOUNT         CAPITAL      DEFICIT
                                          ------     ------         ---------   ----------
<S>                                       <C>       <C>            <C>          <C>
BALANCE, JANUARY 1, 1994..............    1,000     $    -        $     1,000 $          -

 Capital contributions................        -          -         34,636,000            -
 Net loss.............................        -          -                  -   (6,138,000)
                                         ------     ------         ----------   ----------

BALANCE, DECEMBER 31, 1994............    1,000          -         34,637,000   (6,138,000)

 Net loss.............................        -          -                  -   (5,073,000)
                                         ------     ------         ----------   ----------

BALANCE, DECEMBER 31, 1995............    1,000          -         34,637,000  (11,211,000)

 Net loss.............................        -          -                  -   (4,216,000)
                                         ------     ------         ----------   ----------

BALANCE, DECEMBER 31, 1996............    1,000     $    -        $34,637,000 $(15,427,000)
                                         ======     ======         ==========   ==========

</TABLE>



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

                                       95
<PAGE>

                       HWCC - TUNICA, INC. AND SUBSIDIARY
                 (WHOLLY OWNED BY HOLLYWOOD CASINO CORPORATION)

                     CONSOLIDATED STATEMENTS OF CASH FLOWS



<TABLE>
<CAPTION>


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

OPERATING ACTIVITIES:
 Net loss...............................................     $ (4,216,000)  $ (5,073,000)  $ (6,138,000)
 Adjustments to reconcile net loss to net cash
  provided by operating activities:
  Extraordinary item ..................................                 -      9,614,000       (126,000)
  Depreciation and amortization........................        10,906,000     10,356,000      9,549,000
  Deferred income tax benefit..........................                 -       (626,000)       (68,000)
  Loss on assets held for sale.........................            45,000        505,000              -
  Provision for doubtful accounts......................           539,000        449,000        106,000
  Increase in accounts receivable......................          (474,000)    (1,159,000)      (824,000)
  Increase in accounts payable and accrued
    expenses...........................................           721,000      1,469,000      3,116,000
  Net change in other current assets and
    liabilities........................................          (280,000)      (127,000)       911,000
  Net change in other noncurrent assets
    and liabilities...................................           (740,000)      (939,000)    (1,167,000)
                                                             ------------   ------------   ------------

    Net cash provided by operating
     activities.......................................          6,501,000     14,469,000      5,359,000
                                                             ------------   ------------   ------------

INVESTING ACTIVITIES:
 Net property and equipment additions.................        (35,038,000)    (7,228,000)   (52,327,000)
 Proceeds from sale of assets.........................            105,000        180,000              -
 Decrease (increase) in cash restricted for
  construction projects...............................         27,919,000    (27,919,000)             -
 Cost of acquisition, net of cash acquired............                  -              -     (8,998,000)
 Deferred pre opening costs...........................                  -              -     (5,939,000)
                                                             ------------   ------------   ------------

  Net cash used in investing activities...............         (7,014,000)   (34,967,000)   (67,264,000)
                                                             ------------   ------------   ------------

FINANCING ACTIVITIES:
 Issuance of long-term debt...........................          1,503,000     84,045,000     55,000,000
 Deferred financing costs.............................                  -              -     (4,253,000)
 Repayments of long-term debt.........................         (1,469,000)   (55,862,000)    (8,500,000)
 Payments on capital lease obligations................         (1,729,000)    (1,402,000)      (683,000)
 Costs of early retirement of debt....................                  -     (7,414,000)             -
 Capital contribution.................................                  -              -     33,000,000
                                                             ------------   ------------   ------------

  Net cash (used in) provided by
    financing activities..............................         (1,695,000)    19,367,000     74,564,000
                                                             ------------   ------------   ------------

  Net (decrease) increase in cash and
   cash equivalents...................................         (2,208,000)    (1,131,000)    12,659,000
    Cash and cash equivalents at
     beginning of year................................         11,529,000     12,660,000          1,000
                                                             ------------   ------------   ------------

    Cash and cash equivalents at
     end of year......................................       $  9,321,000   $ 11,529,000   $ 12,660,000
                                                             ============   ============   ============

</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)

                   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.  In January 1994, HCC acquired from unrelated
third parties all of the common stock of Summit Riverboat Casinos - Tunica, Inc.
("SRCT") and all of the limited partnership interests of Summit Tunica
Partnership ("STP"), a Mississippi limited partnership.  STP completed
construction of the Tunica Casino at a cost of approximately $92.6 million.
Capital contributions from HCC totaling approximately $33 million provided the
initial funding for the project. On June 3, 1994, HCT issued $55 million of
first mortgage notes, the net proceeds of which (approximately $51.3 million),
together with equipment financing, were used to complete construction of the
facility.  The completed facility (the "Tunica Casino") which currently includes
a casino with 54,000 square feet of gaming space, 506 hotel rooms and suites and
related amenities commenced operations on August 8, 1994 under the service mark
Hollywood  Casino(R).

          On October 17, 1995, in connection with the HCC Refinancing (see Note
3), STP was dissolved and distributed all of its assets and liabilities to SRCT,
the general partner, and HCT, the sole limited partner.  In addition, SRCT
merged with and into HCT, which now owns and operates the Tunica Casino. As the
above entities were under common control, the merger was accounted for similar
to a pooling of interests; accordingly, the accompanying 1995 and 1994
consolidated financial statements have been presented as if the companies had
always been combined.

          The accompanying consolidated financial statements include the
accounts of HCT and its wholly owned subsidiary, HWCC-Golf Course Partners, Inc.
("Golf").  Golf, a Delaware corporation, was formed in 1996 to own an interest
in an as yet undeveloped golf course to be used by patrons of the Tunica Casino
and other participating casino/hotel properties.  All significant intercompany
balances have been eliminated in consolidation.

          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 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.

                                       97
<PAGE>

                      HWCC - TUNICA, INC. AND SUBSIDIARY
                (WHOLLY OWNED BY HOLLYWOOD CASINO CORPORATION)

           NOTES TO CONSOLIDATED FINANCIAL STATEMEMENTS (CONTINUED)


 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 included in other accrued liabilities in the accompanying
consolidated balance sheets at December 31, 1996 and 1995.

          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 of
such complimentaries have been included as casino expenses in 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, 1996 and 1995 and from the commencement of operations through
December 31, 1994 were as follows:



                                        1996         1995        1994
                                     -----------  ----------  ----------
             Rooms......... ......   $ 1,162,000  $  654,000  $  173,000
             Food and beverage....    10,223,000   8,603,000   2,982,000
             Other................       203,000     109,000      40,000
                                     -----------  ----------  ----------
                                     $11,588,000  $9,366,000  $3,195,000
                                      ==========  ==========  ==========


 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 $539,000, $449,000 and $106,000, respectively,  were made
during the years ended December 31, 1996 and 1995 and during the period from the
commencement of operations through December 31, 1994.

 INVENTORIES -

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

                                       98
<PAGE>

                      HWCC - TUNICA, INC. AND SUBSIDIARY
                (WHOLLY OWNED BY HOLLYWOOD CASINO CORPORATION)

           NOTES TO CONSOLIDATED FINANCIAL STATEMEMENTS (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:

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

          On October 1, 1996, HCT revised the estimated useful lives of its
buildings, barges and related land rights (see below) from 25 years to 40 years
and the estimated useful life of its slot machines from three years to five
years.  Management believes the changes in estimated lives more appropriately
reflect the timing of the economic benefits to be received from these assets.
For the year ended December 31, 1996, the effect of these changes reduced
depreciation and amortization expense and net loss by approximately $858,000.

          Interest incurred in connection with property and equipment
acquisitions totalling $1,006,000 in 1996 and $1,667,000 in 1994 has been
capitalized during the acquisition period and, together with $1,636,000 of
capitalized interest contributed by HCC during 1994 (see Note 10), is being
amortized over the useful lives of the related assets.

 DEFERRED FINANCING COSTS -

          Costs associated with issuing long-term debt, including all
underwriting, legal and accounting fees, are capitalized and are amortized over
the term of the related debt issue.  Deferred financing costs, net of
accumulated amortization, amounting to $2,954,000 and $104,000, respectively,
were written off during 1995 and 1994 with respect to the early extinguishment
of debt (see Note  3).

 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 commenced with the
opening of the Tunica Casino.  The estimated economic benefit of the land rights
was increased from 25 years to 40 years effective on October 1, 1996 consistent
with the change in estimated useful life of the Tunica facility as discussed
under "Property and Equipment" above.  Management presently intends to renew the
ground lease at least through its currently estimated 40-year useful life of the
facility.  Accumulated amortization of such land rights amounted to $787,000 and
$483,000, respectively, at December 31, 1996 and 1995.

 LONG-LIVED ASSETS -

          Statement of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets" requires, among other things, that an
entity review its long-lived assets and certain related

                                       99
<PAGE>

                      HWCC - TUNICA, INC. AND SUBSIDIARY
                (WHOLLY OWNED BY HOLLYWOOD CASINO CORPORATION)

           NOTES TO CONSOLIDATED FINANCIAL STATEMEMENTS (CONTINUED)


intangibles for impairment whenever changes in circumstances indicate that the
carrying amount of an asset may not be fully recoverable.  As a result of its
review, HCT does not believe that any material impairment currently exists
related to its long-lived assets.

 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 paid
no state or federal income taxes during the years ended December 31, 1996, 1995
and 1994.

 RECLASSIFICATIONS -

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

(3)       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,
                                              ----------------------------
                                                    1996       1995
                                              ------------- --------------


 Promissory notes to HCC (a)                  $ 84,045,000  $ 84,045,000
 Equipment loans (b)                             1,401,000     1,367,000
                                               -----------   -----------

        Total indebtedness                      85,446,000    85,412,000
    Less - current maturities                     (312,000)   (1,367,000)
                                               -----------   -----------

        Total long-term debt                  $ 85,134,000  $ 84,045,000
                                               ===========   ===========

_____________________

                                      100
<PAGE>

                      HWCC - TUNICA, INC. AND SUBSIDIARY
                (WHOLLY OWNED BY HOLLYWOOD CASINO CORPORATION)

           NOTES TO CONSOLIDATED FINANCIAL STATEMEMENTS (CONTINUED)


(a)  During October 1995, HCC loaned $54,045,000 to HCT to repay its outstanding
     mortgage indebtedness, together with the associated call premium and
     certain accrued interest thereon, and loaned an additional $30,000,000 to
     HCT to be used to finance construction of a 352-room hotel tower and
     related amenities and to fund development and construction of a themed
     gaming area. Such intercompany loans were made with a portion of the note
     proceeds from HCC's issue of $210,000,000 of 12 3/4% Senior Secured Notes
     (the "Senior Secured Notes") due November 1, 2003, discounted to yield 13
     3/4% per annum.  The unexpended portion of the construction loan was
     included in cash restricted for construction projects in the accompanying
     consolidated balance sheet at December 31, 1995.  Interest on the loans
     from HCC accrues at the rate of 12 3/4% per annum and is payable
     semiannually on April 15 and October 15 of each year.  The Senior Secured
     Notes are unconditionally guaranteed on a senior secured basis by HCT and
     by certain future subsidiaries of HCC.  The Senior Secured Notes and
     related guarantees are secured by, among other things, (i) substantially
     all of the assets of HCT and other future guarantors, (ii) a first mortgage
     limited to approximately $39 million on substantially all of the assets of
     another gaming facility operated by a wholly owned subsidiary of HCC, (iii)
     a pledge of the capital stock of HCT and certain other subsidiaries of HCC
     and (iv) the collateral assignment of any future management contracts
     entered into by HCC.

     The indenture to the 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
     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; and enter
     into transactions with certain affiliates.

(b)  The loans outstanding at December 31, 1996 are payable monthly including
     interest at rates ranging  from 11 1/4% to 12 3/8% per annum and are due in
     2000.  The loans outstanding at December 31, 1995 accrued interest at rates
     ranging from 12 1/2% to 12 3/4% and were repaid in 1996.

     Scheduled payments of long-term debt as of December 31, 1996 are set forth
below:

                1997............................. $   312,000
                1998.............................     354,000
                1999.............................     400,000
                2000.............................     335,000
                2001.............................           -
                Thereafter.......................  84,045,000
                                                  -----------
                Total                             $85,446,000
                                                  ===========

     Interest paid, net of amounts capitalized, amounted to $10,000,000,
$11,344,000 and $1,519,000, respectively, during the years ended December 31,
1996, 1995 and 1994.

                                      101
<PAGE>

                      HWCC - TUNICA, INC. AND SUBSIDIARY
                (WHOLLY OWNED BY HOLLYWOOD CASINO CORPORATION)

           NOTES TO CONSOLIDATED FINANCIAL STATEMEMENTS (CONTINUED)


(4)  CAPITAL LEASES

     HCT leases certain gaming and other equipment under capital lease
agreements which provide for interest at rates ranging up to 13 1/4% per annum
and which expire during 1997.  Assets under capital leases with an original cost
of $4,814,000 and $5,013,000 are included in operating equipment in the
accompanying consolidated balance sheets at December 31, 1996 and 1995.
Amortization expense for the years ended December 31, 1996, 1995 and 1994 was
$1,500,000, $1,674,000 and $500,000, respectively. Accumulated amortization at
December 31, 1996 and 1995 with respect to these assets amounted to $3,571,000
and $2,174,000, respectively.

     Future minimum lease payments under capital lease obligations as of
December 31, 1996 are $1,255,000 in 1997 of which $56,000 represents interest,
resulting in a current capital lease obligation of $1,199,000.

(5)  INCOME TAXES

     Components of HCT's benefit for income taxes for the years ended December
31, 1996, 1995 and 1994 consist of the following:

                                                      YEARS ENDED
                                                      DECEMBER 31,
                                            --------------------------------
                                              1996      1995        1994
                                            --------  --------  ------------

Benefit in lieu of federal income taxes:
 Current.................................   $      -  $ 68,000     $(68,000)
 Deferred................................          -   626,000       68,000
                                            --------  --------     --------
                                            $      -  $694,000     $      -
                                            ========  ========     ========

         The deferred tax benefit related to the extraordinary loss on early
extinguishment of debt was $343,000 in 1995.

         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.

                                      102
<PAGE>

                      HWCC - TUNICA, INC. AND SUBSIDIARY
                (WHOLLY OWNED BY HOLLYWOOD CASINO CORPORATION)

           NOTES TO CONSOLIDATED FINANCIAL STATEMEMENTS (CONTINUED)


         A reconciliation between the calculated tax benefit on (loss) income
before extraordinary item based on the statutory rates in effect and the
effective tax rates for the years ended December 31, 1996, 1995 and 1994
follows:
<TABLE>
<CAPTION>
                                                                     YEARS ENDED
                                                                    DECEMBER 31,
                                                   ---------------------------------------
                                                      1996         1995           1994
                                                   -----------   -----------  ------------
<S>                                               <C>            <C>           <C>
Calculated income tax benefit at 34%............   $ 1,433,000   $(1,308,000)  $ 2,087,000
Utilization of operating loss carryforward......             -     2,028,000             -
Tax benefit of operating loss not utilized......    (1,400,000)            -    (2,028,000)
Lobbying costs..................................        (3,000)       (6,000)      (56,000)
Disallowance of meals and entertainment.........       (25,000)      (20,000)       (3,000)
Other...........................................        (5,000)            -             -
                                                   -----------   -----------   -----------

Tax benefit as shown on statement of operations.   $         -   $   694,000   $         -
                                                   ===========   ===========   ===========
</TABLE>

          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, 1996, HCT had net operating loss carryforwards
("NOL's") totaling approximately $18,000,000, which do not begin to expire until
the year 2009.  Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes", requires that the tax benefit of such NOL's, 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 anticipation of
taxable income in the near future, management believes that it is more likely
than not that future taxable income will be sufficient to utilize at least a
portion of the NOL's and deferred tax assets.  Accordingly, a valuation
allowance has been established which has resulted in the recording of net
deferred tax assets of $1,037,000 at both December 31, 1996 and 1995.  The
ultimate recognition of this amount of deferred tax assets is dependent on HCT's
ability to generate approximately $3 million of taxable income for federal
income tax purposes prior to the expiration dates of the NOL's and the reversal
of other temporary differences.

                                      103
<PAGE>

                      HWCC - TUNICA, INC. AND SUBSIDIARY
                (WHOLLY OWNED BY HOLLYWOOD CASINO CORPORATION)

           NOTES TO CONSOLIDATED FINANCIAL STATEMEMENTS (CONTINUED)


        The components of the deferred tax asset are as follows:

                                                           DECEMBER 31,
                                                    --------------------------
                                                        1996          1995
                                                    ------------  ------------
        Deferred tax assets:
          Net operating loss carryforwards......... $ 6,138,000   $ 3,884,000
          Allowance for doubtful accounts..........     211,000       106,000
          Other liabilities and accruals...........     809,000       758,000
                                                    -----------   -----------

                Total deferred tax assets..........   7,158,000     4,748,000

        Deferred tax liabilities:
          Depreciation and amortization............  (1,668,000)     (711,000)
                                                    -----------   -----------

        Net deferred tax asset.....................   5,490,000     4,037,000
        Valuation allowance........................  (4,453,000)   (3,000,000)
                                                    -----------   -----------

                                                    $ 1,037,000   $ 1,037,000
                                                    ===========   ===========

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

                                                          DECEMBER 31,
                                                    ----------------------
                                                       1996         1995
                                                    ---------     --------

        Deferred income taxes......................  $953,000     $488,000
        Other noncurrent assets....................    84,000      549,000

(6)  TRANSACTIONS WITH RELATED PARTIES

        Pursuant to a ten-year consulting agreement with Pratt Casino
Corporation, an affiliated company, HCT incurs a monthly consulting fee of
$100,000. Such fees amounted to $1,200,000 during each of the years ended
December 31, 1996, 1995 and 1994.

        HCT and Advanced Casino Systems Corporation ("ACSC"), an affiliated
company, entered into a Computer Services Agreement dated as of January 1, 1994.
The term of the agreement was three years with an automatic renewal for an
additional three years becoming effective on January 1, 1997.  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 as well as a fixed license fee of $30,000 a month ($33,600
effective January 1, 1997).  HCT also reimburses ACSC for its direct costs and
expenses incurred under this agreement.  Total charges incurred

                                      104
<PAGE>

                      HWCC - TUNICA, INC. AND SUBSIDIARY
                (WHOLLY OWNED BY HOLLYWOOD CASINO CORPORATION)

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


under such agreement amounted to $511,000, $532,000 and $763,000, respectively,
for the years ended December 31, 1996, 1995 and 1994.

         Greate Bay Hotel and Casino, Inc. ("GBHC"), an affiliated company which
owns and operates the Sands Hotel and Casino in Atlantic City, New Jersey,
performs certain administrative and marketing services on behalf of HCT.  During
the years ended December 31, 1996, 1995 and 1994, fees charged to HCT by GBHC
totaled $653,000, $298,000 and $196,000, respectively.

         HCT is charged for certain legal, accounting, and other expenses
incurred by HCC and its subsidiaries that relate to HCT's business.  For the
years ended December 31, 1996, 1995 and 1994, such charges amounted to $509,000,
$241,000 and $506,000, respectively.

(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 17,
1997.  Management intends to file for renewal of HCT's ownership license and
anticipates that such renewal will be approved by the Mississippi Gaming
Commission during 1997.  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.
For the years ended December 31, 1996, 1995 and 1994, HCT expensed $3,486,000,
$3,608,000 and $1,210,000, respectively, in connection with the ground lease.

CREDIT FACILITY
---------------

         As of December 31, 1996, HCT had a $1,000,000 bank credit facility
available through August 15, 1997 on which no borrowings had been made.
Borrowings under the line of credit accrue interest at the rate of the bank's
prime lending rate plus 1 1/2% per annum.  The line of credit agreement requires
the maintenance of certain financial ratios and balances in addition to the
provision of certain financial reports. During the first quarter of 1997, HCT
borrowed $1,000,000 on the bank credit facility.

                                      105
<PAGE>

                      HWCC - TUNICA, INC. AND SUBSIDIARY
                (WHOLLY OWNED BY HOLLYWOOD CASINO CORPORATION)

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



PLANET HOLLYWOOD LITIGATION
---------------------------

         Planet Hollywood International, Inc., a Delaware corporation, and
Planet Hollywood (Region IV), Inc., a Minnesota corporation (collectively,
"PHII"), filed a complaint in the United States District Court for the Northern
District of Illinois, Eastern Division on July 29, 1996 against HCC, the wholly
owned subsidiary of HCC which owns and operates a casino in Aurora, Illinois and
a member of the Pratt Family (collectively, the "Original Hollywood
Defendants").  The Original Hollywood Defendants filed with the Court on
September 18, 1996 an answer to PHII's lawsuit, along with numerous
counterclaims against PHII, Robert Earl and Keith Barish (collectively, the
"PHII Defendants").  PHII filed with the Court on January 21, 1997, an amendment
to their complaint which, among other things, added HCT (together with the
Original Hollywood Defendants, the "Hollywood Defendants") and Greate Bay Casino
Corporation ("GBCC"), an affiliated company, as defendants.  The Original
Hollywood Defendants filed with the Court on February 4, 1997, and GBCC and HCT
filed with the Court on February 20, 1997, answers and counterclaims to such
amended complaint.

         In its lawsuit, PHII alleges, among other things, that the Hollywood
Defendants and GBCC have, in opening and operating the Hollywood Casino concept,
infringed on PHII's trademark, service mark and trade dress and have engaged in
unfair competition and deceptive trade practices.  In their counterclaims, the
Hollywood Defendants and GBCC allege, among other things, that the PHII
Defendants have, through their planned use of their mark in connection with
casino services, infringed on certain of HCC's service marks and trade dress and
have engaged in unfair competition.

         Given the uncertainties inherent in litigation, no assurance can be
given that the Hollywood Defendants will prevail in this litigation; however,
the Hollywood Defendants believe that PHII's claims are without merit and intend
to defend their position and pursue their counterclaims vigorously.  The
accompanying consolidated financial statements do not include any adjustments
that might result from the outcome of the uncertainties described above.

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.

(10) SUPPLEMENTAL CASH FLOW INFORMATION

         During 1994, HCT acquired certain equipment at a cost of $5,169,000
under financing agreements with third party vendors.

         During 1994, HCT entered into capital lease obligations totaling
$5,013,000 for new equipment (see Note 4).

                                      106
<PAGE>

                      HWCC - TUNICA, INC. AND SUBSIDIARY
                (WHOLLY OWNED BY HOLLYWOOD CASINO CORPORATION)

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


         During the third quarter of 1994, HCC contributed interest capitalized
in connection with the construction of the Tunica Casino to HCT.  The
contribution, which totaled $1,636,000, has been excluded from the accompanying
consolidated statement of cash flows as a noncash transaction.

         In connection with the acquisition of SRCT and STP by HCT during
January 1994, liabilities were assumed as follows:


  Fair value of assets acquired............................  $10,577,000
  Land rights..............................................    8,445,000
  Cash paid for capital stock and
    limited partnership interest...........................   (7,986,000)
  Notes issued for capital stock and
    limited partnership interest...........................   (6,000,000)
                                                             -----------

      Liabilities assumed..................................  $ 5,036,000
                                                             ===========

(11) 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, CASH EQUIVALENTS AND CASH RESTRICTED FOR CONSTRUCTION PROJECTS - 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 HCT's long-term debt is estimated based on
either the quoted market prices of the issue or on the discounted cash flow of
future payments utilizing current rates available to HCT for debt of similar
remaining maturities.  Debt obligations with a short remaining maturity are
valued at the carrying amount.

                                      107
<PAGE>

                       HWCC - TUNICA, INC. AND SUBSIDIARY
                 (WHOLLY OWNED BY HOLLYWOOD CASINO CORPORATION)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



          The estimated carrying amounts and fair values of HCT's financial
instruments at December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>

                                                                DECEMBER 31, 1996                DECEMBER 31, 1995
                                                           ------------------------------  -------------------------------
                                                            CARRYING                         CARRYING
                                                             AMOUNT        FAIR VALUE         AMOUNT        FAIR VALUE
                                                           -----------  -----------------  ------------  -----------------
<S>                                                        <C>          <C>                <C>           <C>
Financial Assets
  Cash and cash equivalents......................          $ 9,321,000        $ 9,321,000  $11,529,0000        $11,529,000
  Cash restricted for construction project.......                    -                  -    27,919,000         27,919,000
Financial Liabilities
  Interest payable...............................          $ 2,262,000        $ 2,262,000  $  2,203,000        $ 2,203,000
  Promissory notes to HCC........................           84,045,000         80,683,000    84,045,000         76,481,000
  Equipment loans................................            1,401,000          1,401,000     1,367,000          1,367,000
</TABLE>
(12) SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>

                                                               QUARTER
                                 ------------------------------------------------------
                                    FIRST         SECOND        THIRD         FOURTH
                                 ------------  ------------  ------------  ------------
<S>                              <C>           <C>           <C>           <C>
YEAR ENDED DECEMBER 31, 1996:

           Net revenues          $24,230,000   $21,907,000   $23,209,000   $25,178,000
                                 ===========   ===========   ===========   ===========

           Net (loss) income     $  (417,000)  $(3,158,000)  $  (769,000)  $   128,000
                                 ===========   ===========   ===========   ===========

YEAR ENDED DECEMBER 31, 1995:

           Net revenues          $23,420,000   $23,207,000   $25,217,000   $22,572,000
                                 ===========   ===========   ===========   ===========

           Net income (loss)     $ 1,620,000   $   791,000   $ 1,325,000   $(8,809.000)
                                 ===========   ===========   ===========   ===========
</TABLE>

                                      108
<PAGE>

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

          HCC and HCT had no disagreements with their independent accountants to
report under this item.

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 29, 1997 (the "Definitive Proxy Statement") under the caption "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 "Certain
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 43.

     2.  FINANCIAL STATEMENT SCHEDULES

         Hollywood Casino Corporation and Subsidiaries

     --  Report of Independent Public Accountants
     --  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

                                      109
<PAGE>

         Hollywood Casino - Aurora, Inc.

     --  Report of Independent Public Accountants
     --  Schedule II; Valuation and Qualifying Accounts

         HWCC-Tunica, Inc.

     --  Report of Independent Public Accountants
     --  Schedule II; Valuation and Qualifying Accounts

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


     3.   EXHIBITS

**2.1   --      Agreement of Merger dated as of May 15, 1992, of Correction of
                Agreement of Merger dated as of between PBC, Inc. and HCC and
                Certificate 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   --      Articles of Incorporation of HCT. (Exhibit 3.1).
@@3.4   --      Bylaws of HCT. (Exhibit 3.2)
++4.1   --      Indenture among the Company as Issuer, HCT as Guarantor and
                Shawmut Bank, National Association, as Trustee (including form
                of Note) dated as of October 17, 1995.  (Exhibit 4.1)
++4.2   --      Mortgage, Leasehold Mortgage, Security Agreement, Fixture
                Filing and Financing Statement made by HCA, as Mortgagor, for
                the benefit of the Company, as assigned to Shawmut Bank,
                National Association, as Trustee and Mortgagee.  (Exhibit 4.2)
++4.3   --      Leasehold Deed of Trust, Security Agreement, Fixture Filing and
                Financing Statement made by HCT, as Grantor, to Jim B. Tohill,
                as Deed Trustee, for the benefit of Shawmut Bank, National
                Association, as Trustee and Beneficiary (relating to a first-
                lien Deed of Trust securing the Indenture).  (Exhibit 4.3)
++4.4   --      Leasehold Deed of Trust, Security Agreement, by HCT, as
                Grantor, to Jim B. Tohill, as Deed Trustee, for the benefit of
                the Company, as assigned to Shawmut Bank, National Association,
                as Trustee and Beneficiary (relating to a second-lien Leasehold
                Deed of Trust securing the Intercompany Notes executed by HCT).
                (Exhibit 4.4)
++4.5   --      First Preferred Fleet Mortgage made and given assigned to
                Shawmut Bank, National Association, as Trustee and Mortgagee
                (relating to Vessel Nos. 993836, 993837, and 1029229) dated as
                of October 17, 1995. (Exhibit 4.5)
++4.6   --      First Preferred Ship Mortgage made and given by HCT, as
                Mortgagor, to Shawmut Bank, National Association, as Trustee and
                Mortgagee (relating to Vessel No. 534006) dated as of October
                17, 1995. (Exhibit 4.6)
++4.7   --      Second Preferred Ship Mortgage made and given by HCT, as
                Mortgagor, to the Company, as assigned to Shawmut Bank, National
                Association, as Trustee and Mortgagee (relating to Vessel No.
                534006) dated as of October 17, 1995. (Exhibit 4.7)
++4.8   --      Security Agreement (Stock Pledge) made by the Company, as
                Pledgor, in favor of Shawmut Bank, National Association, as
                Trustee and Secured Party dated October 17, 1995. (Exhibit 4.8)
++4.9   --      Security Agreement between the Company, as Debtor, and Shawmut
                Bank, National Association, as Trustee and Secured Party dated
                October 17, 1995. (Exhibit 4.9)
++4.10  --      First Amendment and Supplement to Security Agreement between the
                Company, as debtor, and Shawmut Bank, National Association, as
                Trustee, dated as of November 15, 1995. (Exhibit 4.10)
++4.11  --      Security Agreement between HCT, as Debtor, and Shawmut Bank,
                National Association, as Trustee and Secured Party dated October
                17, 1995. (Exhibit 4.11)
++4.12  --      Intercompany Security Agreement between HCT, as Debtor, and the
                Company, as assigned to Shawmut Bank, National Association, as
                Trustee and Secured Party (relating to a second-lien

                                      110
<PAGE>

                security agreement for HCT securing the Intercompany Note
                executed by it) dated October 17, 1995.  (Exhibit 4.12)
++4.13  --      Intercompany Security Agreement between HCA, as Debtor, and the
                Company, as assigned to Shawmut Bank, National Association, as
                Trustee and Secured Party (relating to a first-lien security
                agreement for HCA securing the Intercompany Note executed by it)
                dated October 17, 1995. (Exhibit 4.13)
++4.14  --      Assignment made and given by the Company, as Assignor, of First
                Preferred Fleet Mortgage made and given by HCA, as Mortgagor, to
                the Company, in favor of Shawmut Bank, National Association, as
                Trustee and Mortgagee (relating to Vessel Nos. 993836, 993837,
                and 1029229), dated October 17, 1995. (Exhibit 4.14).
++4.15  --      Assignment made and given by the Company, as Assignor, of Second
                Preferred Ship Mortgage made and given by HCT, as Mortgagor, to
                the Company, in favor of Shawmut Bank, National Association, as
                Trustee and Mortgagee (relating to Vessel No. 534006), dated
                October 17, 1995. (Exhibit 4.15)
++4.16  --      Promissory Note in the aggregate principal amount of $54,045,000
                issued by HCT to the Company, endorsed by the Company, dated
                October 17, 1995. (Exhibit 4.16)
++4.17  --      Promissory Note in the aggregate principal amount of $30 million
                issued by HCT to the Company, endorsed by the Company, dated
                October 17, 1995. (Exhibit 4.17)
++4.18  --      Amended and Restated Promissory Note in the aggregate principal
                amount of $39,006,818 issued by HCA to the Company, endorsed by
                the Company, dated October 17, 1995. (Exhibit 4.18)
++4.19  --      Assignment of Mortgage, Leasehold Mortgage, Security Agreement,
                Fixture Filing and Financing Statement made and given by the
                Company, as Assignor, in favor of Shawmut Bank, National
                Association, as Trustee and Assignee, dated October 17, 1995.
                (Exhibit 4.19)
++4.20  --      Assignment of Second Leasehold Deed of Trust, Security
                Agreement, Fixture Filing and Financing Statement made and given
                by the Company, as Assignor, in favor of Shawmut Bank, National
                Association, as Trustee and Assignee, dated October 17, 1995.
                (Exhibit 4.20)
  10.1  --      Fifth Amendment to Employment Agreement dated January 1, 1997,
                between HCC and Jack E. Pratt.
  10.2  --      Fifth Amendment to Employment Agreement dated January 1, 1997,
                between HCC and Edward T. Pratt, Jr.
  10.3  --      Fifth Amendment to Employment Agreement dated January 1, 1997,
                between HCC and William D. Pratt .
  10.4  --      Employment Agreement dated May 1, 1996, between HCC and Edward
                T. Pratt III.
++10.5  --      Employment Agreement dated as of June 1, 1992, between Greate
                Bay Casino Corporation and Richard D. Knight, as amended by HCC
                as of May 22, 1995. (Exhibit 10.17)
 *10.6  --      Development Agreement dated as of June 4, 1991, between the City
                of Aurora, Illinois and HCA. (Exhibit 10.3)
 *10.7  --      Management Services Agreement dated as of June 21, 1991, between
                HCA and Greate Bay Casino Corporation (the "Management Services
                Agreement"). (Exhibit 10.34)
 *10.8  --      First Amendment to the Management Services Agreement dated as of
                May 14, 1992. (Exhibit 10.35)
 *10.9  --      Tax Sharing Agreement dated May 13, 1992, by and among HCC, HCA
                and Pratt Hotel Corporation ("PHC", now known as GBCC). (Exhibit
                10.36)
 *10.10 --      Parking lease Agreement June 4, 1991, between the City of
                Aurora, Illinois and HCA. (Exhibit 10.39)
 *10.11 --      Purchase and Sale Agreement dated June 4, 1991, between the City
                of Aurora, Illinois and HCA. (Exhibit 10.40)
 *10.12 --      Technical Services Agreement dated February 21, 1992, between
                HCA and PHC (the "Technical Services Agreement"). (Exhibit
                10.42)
 *10.13 --      First Amendment to the Technical Services Agreement dated May
                14, 1992. (Exhibit 10.43)
 @10.14 --      Rights Agreement, dated as of May 7, 1993 between HCC and
                Continental Stock Transfer & Trust Company, as Rights Agent.
                (Exhibit 10.45)
 +10.15 --      Hollywood Casino Corporation Stock Option Plan.
 @10.16 --      Agreement of Limited Partnership of Pratt Management, L.P.
                (Exhibit 10.55)
@@10.17 --      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)

                                      111
<PAGE>

@@10.18 --      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)
@@10.19 --      Blanket Conveyance, Bill of Sale and Assignment and Assumption
                Agreement dated as of May 31, 1994 between SRCT and STP.
                (Exhibit 10.6)
@@10.20 --      Assignment of Lease and Assumption Agreement dated as of May 31,
                1994 between SRCT and STP (relating to Ground Lease). (Exhibit
                10.7)
@@10.21 --      Consulting Agreement dated as of January 1, 1994 between PCC, as
                the Consultant, and HCT (Exhibit 10.8)
@@10.22 --      Computer Services Agreement dated as of January 1, 1994 between
                STP and Advanced Casino Systems Corporation. (Exhibit 10.11)
++10.23 --      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)
++10.24 --      Note and Warrant Purchase Agreement dated November 16, 1995
                between Golden Gate Gaming, L.L.C., Edward J. DeBartolo, Jr.,
                Cynthia R. DeBartolo and HCC. (Exhibit 10.37)
++10.25 --      Promissory Notes (Series A and Series B), each in the aggregate
                amount of $5,000,000, issued by Golden Gate Gaming, LLC to the
                Company, dated November 16, 1995. (Exhibit 10.38)
++10.26 --      Warrant Certificates (Series A and Series B) by and between
                Golden Gate Gaming, LLC, Edward J. DeBartolo, Jr., Cynthia R.
                DeBartolo and the Company, dated November 16, 1995. (Exhibit
                10.39)
  10.27 --      Joint Venture Agreement dated August 1, 1996 by and between
                HWCC-Louisiana, Inc. and DeBartolo Entertainment Louisiana
                Gaming, Inc.
  10.28 --      Hollywood Casino Corporation 1996 Long-Term
  10.29 --      Hollywood Casino Corporation 1996 Non-Employee Director Stock
                Plan.
  11.1  --      Statement regarding Computation of Per Share Losses.
  21.1  --      Subsidiaries of HCC.
  23.1  --      Consent of Arthur Andersen LLP
  27.1  --      Financial Disclosure Schedule - Hollywood Casino Corporation and
                Subsidiaries
  27.2  --      Financial Disclosure Schedule - HWCC-Tunica, Inc. and Subsidiary

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

  +   Incorporated by reference from the exhibit shown in parenthesis to Form S-
      1 Registration Statement (Registration No. 33-58732) for Hollywood Casino
      Corporation as filed with the SEC on 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 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 Form S-
      1 Registration Statement (Registration No. 33-77502) for Hollywood Casino
      Corporation 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.

                                      112
<PAGE>

  (B)  REPORTS ON FORM 8-K.

      Neither HCC nor HCT filed any reports on Form 8-K during the quarter ended
December 31, 1996.

          On January 15, 1996, HCC filed a Form 8-K with the Securities and
Exchange Commission with respect to the distribution of its stock in GBCC to
HCC's shareholders.

                                      113
<PAGE>

                                   SIGNATURES

  Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Dallas,
State of Texas on March 27, 1997.

                                 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 27, 1997
----------------------------------                                  ---------------------
          Jack E. Pratt                Officer and Director

/s/       Edward T. Pratt, Jr.      Vice President, Treasurer           March 27, 1997
----------------------------------                                  ---------------------
          Edward T. Pratt, Jr.         and Director

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

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

/s/       Richard D. Knight         Executive Vice President -          March 27, 1997
----------------------------------                                  ---------------------
          Richard D. Knight            Operations

/s/       Charles F. LaFrano III    Vice President - Finance            March 27, 1997
----------------------------------                                  ---------------------
          Charles F. LaFrano III

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

/s/       James A. Colquitt         Director                            March 27, 1997
----------------------------------                                  ---------------------
          James A. Colquitt

/s/       Theodore H. Strauss       Director                            March 27, 1997
----------------------------------                                  ---------------------
          Theodore H. Strauss
</TABLE>

                                      114
<PAGE>

                                   SIGNATURES

          Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Dallas,
State of Texas on March 27, 1997.

                                 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 27, 1997
----------------------------------                                  ---------------------
          Jack E. Pratt                Officer and Director

/s/       Edward T. Pratt, Jr.      Director                            March 27, 1997
----------------------------------                                  ---------------------
          Edward T. Pratt, Jr.

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

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

/s/       Richard D. Knight         Executive Vice President            March 27, 1997
----------------------------------                                  ---------------------
          Richard D. Knight

/s/       John R. Osborne           Vice President - Finance            March 27, 1997
----------------------------------                                  ---------------------
          John R. Osborne

/s/       John C. Hull              Corporate Controller and            March 27, 1997
----------------------------------                                  ---------------------
          John C. Hull                 Principal Accounting
                                       Officer
</TABLE>

                                      115
<PAGE>

                    INDEX TO FINANCIAL STATEMENT SCHEDULES



HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

     --  Report of Independent Public Accountants

     --  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.

     --  Report of Independent Public Accountants

     --  Schedule II; Valuation and Qualifying Accounts

HWCC-TUNICA, INC.

     --  Report of Independent Public Accountants

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

                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Hollywood Casino Corporation:

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

                                            ARTHUR ANDERSEN LLP



Roseland, New Jersey
March 21, 1997
<PAGE>

                                                       SCHEDULE I
                                                       PAGE 1

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES
                 CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                         HOLLYWOOD CASINO CORPORATION
                               (PARENT COMPANY)

                            BALANCE SHEETS (NOTE 1)

                                    ASSETS

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

Cash and cash equivalents                   $  2,897,000  $  7,483,000
Accounts receivable                                8,000       333,000
Due from affiliates                           14,079,000    11,620,000
Deferred federal income taxes                  4,271,000     8,443,000
Other current assets                             101,000       178,000
                                            ------------  ------------

  Total current assets                        21,356,000    28,057,000
                                            ------------  ------------

Investment in and advances to affiliates      46,633,000    47,853,000
Property and equipment, net                   14,836,000    18,436,000
Due from affiliates                          158,984,000   184,116,000
Notes receivable                              10,000,000    10,000,000
Other assets                                   8,836,000     7,451,000
                                            ------------  ------------

                                            $260,645,000  $295,913,000
                                            ============  ============

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current maturities of long-term debt        $  2,815,000  $  2,300,000
Accounts payable and accrued liabilities       2,361,000     1,759,000
Accrued interest payable                       4,469,000     5,509,000
                                            ------------  ------------

  Total current liabilities                    9,645,000     9,568,000
                                            ------------  ------------

Long-term debt, net of discount              200,208,000   200,088,000
                                            ------------  ------------

Other noncurrent liabilities                   5,503,000     4,919,000
                                            ------------  ------------

Shareholders' equity:
 Class A common stock, $.0001 par
  value per share, 50,000,000
  shares authorized, 24,760,000 and
  24,720,000 shares issued and outstanding,
  respectively                                     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                   61,625,000    77,936,000
 Retained earnings                           (16,338,000)    3,400,000
                                            ------------  ------------

  Total shareholders' equity                  45,289,000    81,338,000
                                            ------------  ------------

                                            $260,645,000  $295,913,000
                                            ============  ============
</TABLE>
          The accompanying notes to consolidated financial statements
                     are an integral part of this schedule.
<PAGE>

                                                                      SCHEDULE I
                                                                          PAGE 2

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

                 CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                          HOLLYWOOD CASINO CORPORATION
                                (PARENT COMPANY)

                       STATEMENTS OF OPERATIONS (NOTE 1)
<TABLE>
<CAPTION>

                                                               YEAR ENDED DECEMBER 31,
                                                     -----------------------------------------
                                                        1996           1995           1994
                                                     -----------    ------------   -----------
<S>                                                 <C>             <C>            <C>
REVENUES:
 Interest income                                     $ 25,725,000   $ 17,015,000   $15,490,000
 Other income                                              60,000         66,000        93,000
                                                     ------------   ------------   -----------
                                                       25,785,000     17,081,000    15,583,000
                                                     ------------   ------------   -----------
EXPENSES:
 General and administrative                             7,376,000      5,063,000     6,558,000
 Interest                                              27,786,000     15,704,000    10,175,000
 Depreciation and amortization                          1,106,000        743,000       622,000
 Write down of properties held for sale                 3,400,000              -             -
 Other                                                          -        541,000             -
                                                     ------------   ------------   -----------
  Total expenses                                       39,668,000     22,051,000    17,355,000
                                                     ------------   ------------   -----------
Loss before income taxes, nonrecurring,
 extraordinary and other items                        (13,883,000)    (4,970,000)   (1,772,000)
Write down of affiliate receivables                   (18,741,000)             -             -
                                                     ------------   ------------   -----------
Loss before income taxes, extraordinary
 and other items                                      (32,624,000)             -             -
Income tax provision                                      (72,000)             -      (486,000)
                                                     ------------   ------------   -----------
 Loss before extraordinary
  and other items                                     (32,696,000)    (4,970,000)   (2,258,000)

Extraordinary item:
 (Loss) gain on early extinguishment of debt                    -    (12,298,000)   18,409,000
                                                     ------------   ------------   -----------

 Loss before other item                               (32,696,000)   (17,268,000)   16,151,000
Equity in income of consolidated
 subsidiaries                                          12,958,000      4,353,000     1,273,000
                                                     ------------   ------------   -----------
Net (loss) income                                    $(19,738,000)  $(12,915,000)  $17,424,000
                                                     ============   ============   ===========
</TABLE>

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

                                                                      SCHEDULE I
                                                                          PAGE 3

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

                 CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                          HOLLYWOOD CASINO CORPORATION
                                (PARENT COMPANY)

                       STATEMENTS OF CASH FLOWS (NOTE 1)

<TABLE>
<CAPTION>

                                                                   YEAR ENDED DECEMBER 31,
                                                          ------------------------------------------
                                                              1996          1995           1994
                                                          ------------  -------------  -------------
<S>                                                       <C>           <C>            <C>
NET CASH (USED IN) PROVIDED BY
  OPERATING ACTIVITIES                                    $  (150,000)  $ (4,234,000)  $  8,382,000
                                                          -----------   ------------   ------------
INVESTING ACTIVITIES:
  Net property and equipment additions                        (91,000)      (161,000)   (16,047,000)
  Proceeds from sale of assets                                142,000              -              -
 Issuance of notes receivable                                       -    (10,000,000)             -
  Investments in consolidated affiliates                   (2,621,000)   (16,974,000)   (51,384,000)
  Net repayments (advances to) from affiliates             (1,600,000)   (72,647,000)    12,292,000
                                                          -----------   ------------   ------------

   Net cash provided by (used in) investing activities     (4,170,000)   (99,782,000)   (55,139,000)
                                                          -----------   ------------   ------------

FINANCING ACTIVITIES:
  Net proceeds from issuance of long-term debt                      -    199,939,000      2,500,000
  Repayments of long-term debt                               (150,000)   (84,907,000)       (50,000)
  Cost of early retirement of debt                                  -     (9,221,000)             -
  Issuance of common stock                                          -          2,000          1,000
  Deferred financing costs                                   (116,000)    (7,602,000)             -
                                                          -----------   ------------   ------------

   Net cash (used in) provided by financing activities       (266,000)    98,211,000      2,451,000
                                                          -----------   ------------   ------------

   Net decrease in cash and cash equivalents               (4,586,000)    (5,805,000)   (44,306,000)
    Cash and cash equivalents at beginning of year          7,483,000     13,288,000     57,594,000
                                                          -----------   ------------   ------------

    Cash and cash equivalents at end of year              $ 2,897,000   $  7,483,000   $ 13,288,000
                                                          ===========   ============   ============

</TABLE>



          The accompanying notes to consolidated financial statements
                     are an integral part of this schedule.
<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)  BASIS OF PRESENTATION

     During October 1995, HWCC - Lake Houston, Inc., HWCC - Clearklake, Inc. and
HWCC -Farmer's Branch, Inc., all wholly owned subsidiaries of Hollywood Casino
Corporation ("HCC"), merged with and into the parent company. Such transaction
was reflected in the accompanying parent company financial statements as a
combination of entities under common control, a method of accounting similar to
a pooling of interests. Accordingly, the parent company 1995 and 1994 financial
statements have been adjusted to reflect the accounts and operations of these
entities as if they had always been combined.

(2)  GUARANTEES OF REGISTRANT

     As of December 31, 1996, HCC had not guaranteed any obligations of its
subsidiaries or unconsolidated affiliates .

(3)  SCHEDULED PAYMENTS OF LONG-TERM DEBT OF THE REGISTRANT

     Scheduled payments of long-term debt outstanding at December 31, 1996 are
set forth below:

<TABLE>
<CAPTION>

                 <S>                          <C>
                 1997                         $  2,815,000
                 1998                            5,180,000
                 1999                            6,655,000
                 2000                            5,000,000
                 2001                            5,000,000
                 Thereafter                    187,500,000
                                              ------------

                  Total                       $212,150,000
                                              ============
</TABLE>

(4)  DIVIDENDS AND DISTRIBUTIONS

     HCC received dividends from its consolidated subsidiaries amounting to
$10,040,000, $9,942,000 and $14,985,000, respectively, during the years ended
December 31, 1996, 1995 and 1994.

     On December 31, 1996, HCC distributed to its shareholders the common stock
of Greate Bay Casino Corporation ("GBCC", formerly known as Pratt Hotel
Corporation) owned by HCC.  Prior to the distribution, HCC owned approximately
80% of GBCC's outstanding common stock.
<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 (CONTINUED)

(5)  SUPPLEMENTAL CASH FLOW INFORMATION

     At December 31, 1996, HCC contributed certain receivables from GBCC and its
subsidiaries to GBCC.  Notes receivable amounting to $8,738,000 together with
accrued interest thereon totaling $1,753,000 and other receivables of $4,283,000
with respect to pension obligations assumed during 1995 were contributed to
GBCC.

(6)  RECLASSIFICATIONS

     Certain reclassifications have been made to the prior years' parent company
financial statements to conform to the 1996 financial statement presentation.



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

                                                                     SCHEDULE II

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

                       VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>

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

YEAR ENDED DECEMBER 31, 1996:
            Allowance for doubtful
                   accounts receivable    $17,675,000    $3,031,000    $(3,489,000)(1)   $(15,524,000)(3)  $ 1,693,000
           Allowance for obligatory
                   investments              3,792,000     1,344,000       (735,000)(2)     (4,401,000)(3)            -
                                          -----------    ----------    -----------       ------------      -----------
                                          $21,467,000    $4,375,000    $(4,224,000)      $(19,925,000)     $ 1,693,000
                                          ===========    ==========    ===========       ============      ===========

YEAR ENDED DECEMBER 31, 1995:
           Allowance for doubtful
                   accounts receivable    $16,119,000    $3,774,000    $(2,218,000)(1)   $          -      $17,675,000
           Allowance for obligatory
                   investments              2,458,000     1,457,000       (123,000)(2)              -        3,792,000
                                          -----------    ----------    -----------       ------------      -----------
                                          $18,577,000    $5,231,000    $(2,341,000)      $          -      $21,467,000
                                          ===========    ==========    ===========       ============      ===========

YEAR ENDED DECEMBER 31, 1994:
           Allowance for doubtful
                   accounts receivable    $15,089,000    $3,830,000    $(2,800,000)(1)   $          -      $16,119,000
           Allowance for obligatory
                   investments              3,065,000       617,000     (1,224,000)(2)              -        2,458,000
                                          -----------    ----------    -----------       ------------      -----------
                                          $18,154,000    $4,447,000    $(4,024,000)      $          -      $18,577,000
                                          ===========    ==========    ===========       ============      ===========
</TABLE>
________________________
(1)  Represents net write-offs of uncollectible accounts.

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

(3)  Related asset, net of valuation allowance set forth above, was distributed
     to shareholders in connection with Hollywood Casino Corporation's
     distribution of its ownership of the common stock of Greate Bay Casino
     Corporation on December 31, 1996.



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

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                    ----------------------------------------


To Hollywood Casino-Aurora, Inc.:

We have audited in accordance with generally accepted auditing standards, the
financial statements of Hollywood Casino-Aurora, Inc. included in this Form 10-K
and have issued our report thereon dated March 21, 1997.  Our audit was made for
the purpose of forming an opinion on the basic financial statements taken as a
whole.  The schedule listed in the index to financial statement schedules is the
responsibility of the Company's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic financial statements.  This schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.

                              ARTHUR ANDERSEN LLP



Roseland, New Jersey
March 21,  1997
<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, 1996:
  Allowance for doubtful
   accounts receivable                      $866,000    $325,000   $(120,000)(1)   $1,071,000
                                            ========    ========   ==========      ==========

YEAR ENDED DECEMBER 31, 1995:
  Allowance for doubtful
   accounts receivable                      $715,000    $337,000   $(186,000)(1)   $  866,000
                                            ========    ========   ==========      ==========

YEAR ENDED DECEMBER 31, 1994:
  Allowance for doubtful
   accounts receivable                      $274,000    $441,000   $        -      $  715,000
                                            ========    ========   ==========      ==========
</TABLE>
________________________
(1)  Represents net write-offs of uncollectible accounts.



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

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                    ----------------------------------------


To HWCC-Tunica, Inc.:

We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements of HWCC-Tunica, Inc. and subsidiary included
in this Form 10-K and have issued our report thereon dated March 21, 1997.  Our
audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole.  The schedule listed in the index to financial
statement schedules is the responsibility of the Company's management and is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements.  This
schedule has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.

                              ARTHUR ANDERSEN LLP



Roseland, New Jersey
March 21, 1997
<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, 1996:
  Allowance for doubtful
   accounts receivable                      $313,000    $539,000    $(230,000)(1)   $622,000
                                            ========    ========    ==========      ========

YEAR ENDED DECEMBER 31, 1995:
  Allowance for doubtful
   accounts receivable                      $106,000    $449,000    $(242,000)(1)   $313,000
                                            ========    ========    ==========      ========

YEAR ENDED DECEMBER 31, 1994:
  Allowance for doubtful
   accounts receivable                      $      -    $106,000    $        -      $106,000
                                            ========    ========    ==========      ========
</TABLE>
________________________________
(1) Represents net write-offs of uncollectible accounts.



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