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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, 2000
                         -------------------------------------------------------

                                      OR

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

For the transition period from _______________________ to ______________________

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

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

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

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

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

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

                        Common Stock, $.0001 par Value
                        Preferred Stock Purchase Rights
--------------------------------------------------------------------------------
                              Title of each class

     Indicate by check mark whether each of the Registrants (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes  X   No____
                                               ---

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

     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
28, 2001, was $109,851,950.  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 28, 2001, 24,996,676 shares of Class A Common
Stock, $.0001 par value per share, were outstanding.

     As of March 28, 2001, 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
          31, 2001 - Part III.

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

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                                    PART I


ITEM 1.  BUSINESS

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

     HCC owns all of the outstanding common stock of Hollywood Casino - Aurora,
Inc. ("HCA"), HWCC - Tunica, Inc. ("HCT"), HWCC-Louisiana, Inc. ("HCL") and
HWCC-Shreveport, Inc. ("Shreveport Management").  HCA is an Illinois corporation
organized by the Pratt family during 1990 which owns and operates the Aurora
Casino.  HCT is a Texas corporation formed by HCC during 1993 to acquire and
complete the Tunica Casino.  HCL is a Louisiana corporation formed by HCC in
1993 to pursue gaming opportunities in Louisiana.  HCL owns the partnership (the
"Shreveport Partnership") which has an effective 100% ownership interest in the
Shreveport Casino.  HCC's joint venture partner holds a  residual interest in
the event that the Shreveport Casino is ever sold amounting to 10% plus any
capital contributions made by the joint venture partner to the Shreveport
Partnership or otherwise credited to their account.  The joint venture partner's
interest is included in minority interest on the accompanying consolidated
balance sheets. Shreveport Management is a Louisiana corporation formed by HCC
in 1997 which holds the management contract for the Shreveport Casino.

     During May 1999, HCC issued $310,000,000 of 11.25% Senior Secured Notes due
May 1, 2007 and $50,000,000 of floating rate Senior Secured Notes due May 1,
2006 (collectively, the "Senior Secured Notes").  The Senior Secured Notes are
unconditionally guaranteed on a senior secured basis by HCT, Shreveport
Management and by certain future subsidiaries of HCC.  The Senior Secured Notes
are secured by, among other things, (1) substantially all of the assets of HCT,
(2) a limited lien on substantially all of the assets of HCA and (3) a pledge of
the capital stock of certain subsidiaries of HCC including HCA and HCT.
Accordingly, the financial statements of HCA and HCT are also included herein.
Shreveport Management currently has no significant operations or assets;
accordingly, separate financial statements are not included herein because
management has determined that such information is not material to investors.
HCL has been designated an "Unrestricted Subsidiary" of HCC and the operations
of the Shreveport Casino, other than management fees paid to Shreveport
Management, will not provide credit support for the Senior Secured Notes.

     Proceeds of the debt offering were used to refinance previously outstanding
debt, to fund a portion of HCC's equity investment in the Shreveport Casino and,
during October 1999, to purchase and terminate the management and consulting
agreements on the Aurora Casino and Tunica Casino.  The

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remaining proceeds are planned to be used for, among other things, a proposed
expansion of the Aurora Casino's operating facilities.

     During August 1999, the Shreveport Partnership issued $150,000,000 of 13%
First Mortgage Notes, with contingent interest, which are non-recourse to HCC.
Because the partnership is effectively owned and controlled by HCL, the
financial statements of the partnership, including its debt obligations, are
included in the accompanying consolidated financial statements of HCC.

     The Company's casinos use casino information technology developed by
Advanced Casino Systems Corporation ("ACSC"), a subsidiary of Greate Bay Casino
Corporation ("GBCC"), which is approximately 36%-owned by the Pratt Family.
ACSC's technology includes table game and slot machine monitoring systems that
enable the casinos to track and rate patron play through the use of a casino
player's card. These systems provide management with the key characteristics of
patron play as slot machines and table games are connected with its data base
monitoring system. When patrons use the casino player's card at slot machines or
table games, the information is immediately available to management and allows
management to implement marketing programs to recognize and reward patrons
during their visits to the casino. Such promotions and complimentaries are
generally provided through direct mail programs and specialized invitations and
include food, hotel accommodations, special player events, retail merchandise,
sweepstake giveaways and "cash-back" programs based on slot machine patrons'
gross wagering. Management believes that its ability to reward customers on a
same-visit basis is valuable in developing a loyal base of higher value patrons.
The casino system also enables the Company's properties to capture and maintain
patron information necessary in implementing its casino player's card and other
database marketing programs. In addition, ACSC's systems allow management to
monitor, analyze and control the granting of gaming credit, promotional expenses
and other marketing costs.

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

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

     During 1998, the Company adopted a strategic plan that consisted of: (1)
refinancing its outstanding public indebtedness, (2) maintaining strong market
positions in Aurora and Tunica, (3) expanding the Aurora Casino, (4) developing
the Shreveport Casino and (5) acquiring the management and consulting contracts
with respect to the Aurora Casino and Tunica Casino in order to terminate the
Company's obligation to pay fees to GBCC.

     HCC successfully completed the refinancing of its outstanding public
indebtedness in May 1999, acquired its management and consulting contracts from
GBCC in October 1999 and successfully completed and opened the Shreveport Casino
in December 2000.  The Company's continuing efforts with respect to the second
and third points of the strategic plan are discussed below under the captions
"Aurora Casino"and "Tunica Casino". Management believes that its successful
completion of the first and fifth points of the strategic plan have
significantly simplified HCC's organizational structure.  The execution of the
remainder of the plan is designed to enhance HCC's operating performance.  The
opening of the Shreveport Casino completed the fourth point of the strategic
plan and management has announced the commencement of construction of the Aurora
Casino expansion (see "Business - The

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Aurora Casino" below). Accordingly, the maintenance of HCC's market positions in
Aurora, Tunica and now Shreveport, will constitute the final, ongoing effort
with respect to the strategic plan.

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

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

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

     The Aurora Casino's two riverboat casinos contain an aggregate of
approximately 32,000 square feet of gaming space with approximately 1,050 slot
machines and approximately 45 table games.  The Aurora Casino also includes an
approximately 64,000 square foot, land-based pavilion featuring a glass-domed,
four-story atrium with two upscale lounges, the award-winning Fairbanks(R)
gourmet steakhouse, the Hollywood Epic Buffet(R), a 1950's-style diner, a high-
end customer lounge and a private, intimate dinning room, called the "Gold
Room," for premium players. In March 2000, the Aurora Casino opened an Asian-
themed restaurant which has a full service bar and a lounge for players.  The
Aurora Casino's two parking garages provide convenient access for approximately
1,340 cars.  The Aurora Casino also offers retail items at the Hollywood Casino
Studio Store(SM), a highly-themed shopping facility that offers movies on video,
soundtrack compact discs and logo merchandise from major Hollywood studios.

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

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

     The Chicago gaming market is the third largest gaming market in the United
States after Las Vegas and Atlantic City.  Based on published reports for the
year 2000, the Aurora Casino generated 10.8% of total gaming revenues in the
Chicago gaming market with only 9.1% of the market's gaming positions, resulting
in the Aurora Casino capturing 119.1% of its "fair share" of the market's gaming
revenues. The casinos that operate in the Chicago gaming market include four
Illinois casinos, including the Aurora Casino, and five northern Indiana casinos
located within 50 miles of downtown Chicago.  The Chicago gaming market
experienced a significant increase in gaming revenues due to the  increase in
capacity from the opening of the five northern Indiana riverboats in 1996 and
1997 and from the advent of dockside gaming in Illinois in 1999 (see below).  In
2000, the Chicago gaming market generated approximately $2 billion in gaming
revenues, an increase of approximately 13.9% over 1999.

     On June 25, 1999, the Governor of Illinois signed into law legislation
passed by the Illinois legislature allowing dockside gaming for existing
licensees. As a result of this legislation, the Aurora

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Casino's riverboats no longer cruise, but are operating as dockside gaming
facilities. The Aurora Casino's patrons are now able to freely enter and exit
the docked riverboats during its operating hours.

     The Aurora Casino Expansion.  The Aurora Casino currently operates two
     ---------------------------
riverboat casinos, City of Lights I and City of Lights II, with approximately
32,000 combined square feet of gaming space. Management believes that the
operating results of the Aurora Casino have been limited by the size of City of
Lights II, which is significantly smaller than City of Lights I.  As a result of
the 1999 dockside legislation, the Company recently announced the commencement
of a major expansion of the Aurora Casino, to be highlighted by the construction
of a new dockside facility to replace both City of Lights I and City of Lights
II.  The new facility will feature a 53,000 square foot single level casino with
high ceilings and wide aisles for customer comfort and will feature a forty-one
foot high atrium in the center of the casino floor.  Plans for the new dockside
facility also provide for a 42,000 square foot mezzanine level which will
provide a dramatic view of the casino floor through the atrium, as well as a new
restaurant and entertainment lounge.  The expansion of the Aurora Casino, as
currently planned, will also include substantial improvements to the pavilion,
including a major expansion of the Hollywood Epic Buffet(R).  Management
believes that the $40 million in proceeds from HCC's May 1999 issue of the
Senior Secured Notes (see "Properties - The Aurora Casino" below) designated for
the development of a new riverboat casino together with funds from operations
will be sufficient for the estimated $75 million cost to complete the Aurora
Casino expansion.  The Company received regulatory approval for the planned
dockside casino from the Illinois Gaming Board in April 2000 and construction
began in March 2001.  The Aurora Casino expansion is expected to be completed
and opened by the summer of 2002.

     The commencement of construction of the new dockside facility had
previously been delayed as a result of a complaint filed in late 1999 in an
Illinois state court concerning the constitutionality of a portion of the
legislation that enabled dockside gaming in Illinois. Although the
constitutional challenge centers on the relocation of one of the existing gaming
licenses, a finding that such portion of the legislation is unconstitutional
could result in a finding that all or a portion of the legislation, including
dockside gaming, is invalid. In January 2001, the presiding judge dismissed the
complaint because the plaintiffs lacked standing and failed to exhaust their
administrative remedies. The plaintiffs have filed an appeal of the ruling. If
an appellate court overturns the trial court's original ruling and the state
court rules that all or a portion of the legislation is invalid, management
believes that it may be able to continue to operate its existing riverboats on a
dockside basis pending a final resolution of the litigation. In the unlikely
event that the provisions in question are found to be unconstitutional after all
appeals, and the entire legislation is invalidated so that dockside gaming is
not permitted, the Company will be able to use its two riverboats to conduct
gaming.

     Without regard to the Company's plan to construct the new dockside gaming
facility, management undertook and completed construction of an expansion link
barge in August 2000 to connect its two existing riverboats.  The project cost
approximately $4.7 million to complete, including approximately $1.6 million in
docking facilities that can be used for the new dockside casino.  The casino
link barge provides a large, open space allowing casino patrons to move freely
between the two existing boats.  The link barge also contains a cashier's cage,
a promotions booth and a cocktail lounge for casino patrons. Management believes
the reconfigured link barge facility has enhanced current operations and
maximizes the dockside gaming potential of the Aurora Casino pending the
replacement of its existing riverboats with the new dockside facility.

     The Company plans to build the new dockside casino in two halves, which
will be connected to form a single dockside casino. The first half of the
dockside casino will be towed into place and opened several months earlier than
the second half. It is anticipated that this strategy will minimize disruption
of the Aurora Casino's operations during the construction period.

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     Casino Credit.  Casino operations are conducted on both a credit and a cash
     -------------
basis.  Gaming debts arising at the Aurora Casino in accordance with applicable
regulations are enforceable under Illinois law. For the year ended December 31,
2000, gaming credit extended to customers accounted for less than 2% of overall
wagering.  At December 31, 2000, gaming receivables amounted to $1.9  million
before allowances for uncollectible gaming receivables which amounted to
$942,000.  Management of the Aurora Casino believes that the allowances for
uncollectible gaming receivables are adequate.

     Employees and Labor Relations.   At December 31, 2000 there were
     -----------------------------
approximately 1,600 employees at the Aurora Casino, none of whom are represented
under collective bargaining agreements. Management considers its labor relations
to be good.

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

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

     The Tunica Casino  features a 54,000 square foot, single level casino with
approximately 1,500 slot machines and approximately 50 table games.  The Tunica
Casino's 506-room hotel and 123-space recreational vehicle park provide
overnight accommodations for its patrons.  The casino includes the highly-themed
Adventure Slots(R) gaming area, featuring multimedia displays of memorabilia
from famous adventure motion pictures and over 200 slot machines.  Additional
entertainment amenities provided by the Tunica Casino include its award-winning
Fairbanks gourmet steakhouse, the Hollywood Epic Buffet, a 1950's-style diner,
public and private entertainment lounges, a themed bar facility, an indoor pool
and showroom, banquet and meeting facilities.  Also, in November 1998, the
Tunica Casino opened an 18-hole championship golf course adjacent to the
facility through a joint venture with Harrah's Entertainment, Inc. and Boyd
Gaming Corporation.  The Tunica Casino also offers parking for 1,635 cars.

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

     The Tunica Casino has historically been one of the leading operators in the
North River Region gaming market, which is comprised of ten casinos in north
Tunica County and one casino in Coahoma County.  Based on published market
information for 2000, the Tunica Casino generated 9.3 % of the total gaming
revenues in its gaming market with 8.9% of the market's gaming positions,
resulting in the Tunica Casino capturing approximately 105.2% of its "fair
share" of the market's gaming revenues. These results were achieved despite
intensified competition and a hold percentage for table games significantly
below historical averages.   The North River Region market has rapidly become
the fifth largest gaming market in the United States after Las Vegas, Atlantic
City, Chicago and the Connecticut Native American casinos, generating
approximately $1.2 billion in gaming revenues in 2000.

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

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

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

     Casino Credit.  Casino operations are conducted on both a credit and a cash
     -------------
basis.  Gaming debts arising at the Tunica Casino in accordance with applicable
regulations are enforceable under Mississippi law.  During the year ended
December 31, 2000, gaming credit extended to customers accounted for 1.4% of
overall wagering.  At December 31, 2000, gaming receivables amounted to $4.2
million before allowances for uncollectible gaming receivables amounting to $1.6
million.  Management believes that the allowances for uncollectible gaming
receivables are adequate.

     Employees and Labor Relations.  At December 31, 2000, there were
     -----------------------------
approximately 1,330 employees at the Tunica Casino, none of whom are represented
under collective bargaining agreements. Management considers its labor relations
to be good.

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

     The Shreveport Casino commenced operations on December 20, 2000.  The
destination resort consists of  a 403-room, all suite, art deco-style hotel, and
a three-level riverboat dockside casino.  The riverboat casino contains
approximately 59,000 square feet of space with approximately 1,434 slot machines
and approximately 68 table games.  The riverboat casino floats in a concrete and
steel basin that raises the riverboat nearly 20 feet above the river.  The basin
virtually eliminates variation in the water height and allows the boat to be
permanently moored to the land-based pavilion.  The Shreveport Casino's
computerized pumping system is designed to regulate the water level of the basin
to a variance of no more than three inches.

     The centerpiece of the resort is an approximately 170,000 square foot land-
based pavilion housing numerous restaurants and entertainment amenities with an
85-foot wide seamless entrance to the casino from the land-based pavilion on all
three levels, resulting in the feel of a land-based casino.  The pavilion
features a dramatic 60-foot high atrium enabling patrons to see the casino floor
from almost anywhere in the pavilion.  Other amenities include the award-winning
Fairbanks(R) gourmet steakhouse, the Hollywood Epic Buffet(R), a 1950's-style
casual diner (the Hollywood Diner(SM)), a premium players' club (the Hollywood
Director's Club(SM)) and an entertainment show room (the Hollywood Celebrity
Lounge(SM).  The pavilion also includes a deli and ice cream shop, VIP check-in,
a premium quality bar, meeting rooms and the Hollywood Casino Studio Store(SM),
a highly-themed shopping facility that offers movies on video, soundtrack
compact discs and logo merchandise from major Hollywood studios.

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     The Shreveport Casino offers three parking facilities, including two
parking lots and an eight-story parking garage located directly across the
street and connected to the pavilion by an enclosed, movie-themed walkway. The
three parking facilities provide space for approximately 2,000 cars, including
valet parking for approximately 340 cars.

     The Shreveport Casino features HCC's uniquely entertaining Hollywood theme,
which is utilized throughout the property.   Management believes that the use of
the Hollywood theme throughout the Shreveport Casino's gaming, dining and
entertainment facilities has broad patron appeal and distinguishes the
Shreveport Casino from its competitors.  Additionally, the nature of the theming
permits periodic and cost effective updating, which management believes
encourages both initial and repeat visits.  The Hollywood theme has been used
successfully at HCC's other casino facilities in Aurora and Tunica.

     The Shreveport Casino is located near the Shreveport Civic Theater.  The
1,720-seat auditorium will be used by the Shreveport Casino to provide headliner
entertainment for customers.  Entertainers booked or expected to be booked
include Tony Bennett, Jay Leno, Natalie Cole, Travis Tritt and Brooks and Dunn.

     The Shreveport Casino was built next to an existing riverboat gaming and
hotel facility operated by Harrah's.  The two casinos form  the first and only
"cluster" in the Shreveport/Bossier City market, allowing patrons to park once
and easily walk between the two facilities.  The Harrah's property completed
construction and opened a new 514-room hotel tower during the first quarter of
2001.  With the opening of the Shreveport Casino, there are now a total of five
casinos operating in the Shreveport/Bossier City gaming market.  In 2000, the
Shreveport market was the eighth largest gaming market in the United States and
the largest in Louisiana.  Prior to April 1, 2001, the Shreveport market was the
only riverboat gaming market in Louisiana that permitted continuous dockside
gaming without cruising requirements or simulated cruising schedules, allowing
casinos to operate 24 hours a day with uninterrupted access.  The four
previously established operators generated approximately $678.8 million in
gaming revenues in 2000, an increase of approximately 5.8% over 1999.

     The principal target markets for the Shreveport Casino are patrons from the
Dallas/Ft. Worth Metroplex and East Texas.  There are approximately 7.2 million
adults who reside within 200 miles of Shreveport/Bossier City.  The Shreveport
Casino is located approximately 180 miles east of Dallas and can be reached by
car in less than three hours.  The Shreveport Regional Airport has 41 in-bound
flights per day, including 16 from Dallas and seven from Houston with flight
times of less than one hour.

     The Shreveport Casino employs a marketing strategy designed to take
advantage of its proximity to the large population base of the greater
Dallas/Ft. Worth metropolitan area and other major markets by targeting the
local day-trip market and by utilizing its hotel rooms to expand its patron mix
to include overnight visitors. Plans to develop a nearby golf course will
further promote such overnight stays. Management also utilizes its casino
information systems to identify premium patrons. Such information is then used
to encourage participation in its casino player's card program and tailor
promotions and special events to cater to this market segment. Management
believes that the location of HCC's executive offices in Dallas will result in a
competitive advantage in attracting customers to the Shreveport Casino from its
target markets in Texas.

     The Shreveport Casino is owned by the Shreveport Partnership which, through
HCS I, Inc. and HCS II, Inc., is in turn owned by HCL.   The Shreveport
Partnership will operate the Shreveport Casino under a management agreement with
Shreveport Management.  The management agreement provides that the Shreveport
Partnership will pay a management fee of 2% of net revenues plus an increasing
percentage (5-10%) of the Shreveport Casino's annual earnings before interest,
taxes, depreciation and amortization ("EBITDA") above $25 million.

                                       8
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     Casino Credit.  Casino operations are conducted on both a credit and a cash
     -------------
basis.  Gaming debts arising at the Shreveport Casino in accordance with
applicable regulations are enforceable under Louisiana law.  For the period from
opening through December 31, 2000, gaming credit extended to customers accounted
for less than 1% of overall wagering.  At December 31, 2000, gaming receivables
amounted to $617,000 before allowances for uncollectible gaming receivables
which amounted to $90,000.  Management of the Shreveport Casino believes that
the allowances for uncollectible gaming receivables are adequate.

     Employees and Labor Relations.   At December 31, 2000 there were
     -----------------------------
approximately 1,790 employees at the Shreveport Casino, none of whom are
represented under collective bargaining agreements.  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 and other forms of legalized gaming in the United States and other
jurisdictions.  Legalized gambling is currently permitted in various forms
throughout the United States, in several Canadian provinces, as well as on
Native American reservations in certain states including Louisiana and
Mississippi.  Other jurisdictions may legalize gaming in the near future through
the introduction of proposals to legalize gaming in their state legislatures.
In addition, established gaming jurisdictions could award additional gaming
licenses or permit the expansion of existing gaming operations.  New or expanded
operations by other persons can be expected to increase competition for the
Company's present and proposed gaming operations and could have a material
adverse impact on the Company.

     The Aurora Casino

     The Illinois Riverboat Gambling Act (the "Riverboat Act") and the rules
promulgated by the Illinois Gaming Board under the Riverboat Act authorize only
ten owner's licenses for riverboat gaming operations in Illinois and permit a
maximum of 1,200 gaming positions at any time for each of the ten licensed
sites.  All authorized owner's licenses have been granted and no additional
licenses or gaming positions can be permitted without further state legislation.
One licensed site ceased gaming operations in July 1997.  Under the 1999
legislative changes that permitted dockside gaming, the holder of that license
was allowed to apply to the Illinois Gaming Board to relocate its license to
Rosemont, Illinois, which is within the Aurora Casino's principal market. In
January 2001, the Illinois Gaming Board denied that license holder's application
for renewal and relocation of its operations to the Rosemont site.  The license
holder has filed an appeal of the ruling; management is currently unable to
estimate the time required to resolve the appeal or otherwise dispose of the
tenth license.  Four riverboat sites, including the Aurora Casino, are currently
licensed in Illinois within 50 miles of downtown Chicago.  Two of these
riverboat sites are in Joliet, approximately 40 miles southwest of downtown
Chicago, and a third is in Elgin, Illinois, approximately 20 miles from Aurora,
40 miles from downtown Chicago and amid the affluent northern and western
suburbs.  In addition, the Aurora Casino competes directly with five riverboat
operations opened since 1996 in northwestern Indiana within 50 miles of downtown
Chicago. Increased competition from casinos in Indiana has resulted in greater
competition for patrons from the downtown Chicago market and from the suburban
Chicago market.  Legislation may be introduced in Indiana to permit dockside
gaming.  The approval of such legislation would further increase competition in
the Chicago-area 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

                                       9
<PAGE>

Chicago. In addition, three casinos in Detroit, Michigan are now operating which
generated $743 million in revenues during 2000. Native American tribes are
seeking to open casino facilities in northwestern Indiana, Michigan and
Wisconsin under the Indian Gaming Regulatory Act. The opening of additional
casinos proximate to Chicago, including the potential casino in Rosemont
discussed above, could have a material adverse impact on the Aurora Casino.

     The Tunica Casino

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

     During July 1996, Grand Casinos opened a casino complex immediately north
of Casino Center with 140,000 square feet of gaming space including
approximately 3,227 slot machines and 124 table games. Three hotels with an
aggregate of 1,366 rooms, a conference center and a golf course are currently
available and other amenities are scheduled for later completion. The opening of
this casino space, the largest in Mississippi, increased casino capacity in
Tunica County by 24%.

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

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

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

     The Shreveport Casino

     The Shreveport Casino competes directly with Binion's Horseshoe, Harrah's,
the Isle of Capri and Casino Magic in the Shreveport/Bossier City market.  Some
of these competitors have higher profile

                                       10
<PAGE>

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

     Also, there can be no assurance that the Shreveport Casino will be able to
effectively compete against any other future gaming operations that Louisiana or
other authorities may authorize in the gaming market in which it will operate.
For example, in 1997, the Louisiana legislature adopted legislation permitting
up to 15,000 square feet of slot machine gaming at pari-mutual wagering
facilities located in parishes in Louisiana that approve slot machine gaming in
a referendum election.  Shortly thereafter, a referendum election was held that
approved slot machine gaming at Louisiana Downs, which is located in Bossier
City, approximately nine miles from the Shreveport Casino.  In March 2001,
Louisiana Downs announced plans for an $86 million expanded entertainment
facility to include approximately 1,750 slot machines, a dining buffet, lounge
and sports bar to be completed in the first quarter of 2002.  Additional plans
announced call for the construction of a 300- to 400-room hotel and recreational
vehicle park by the end of 2002.  The completion of this facility will result in
another source of competition for the Shreveport Casino.  The Shreveport Casino
will also face competition from other forms of gaming, such as state-sponsored
lotteries and video lottery terminals, pari-mutual betting on horse and dog
racing and bingo parlors, as well as other forms of entertainment in Louisiana
and other places from which it will draw customers.

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

     Illinois

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

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

     An owner's license is issued for an initial period of three years and may
be renewed for successive periods of up to four years thereafter. An owner's
license is eligible for renewal upon payment of the applicable fee and a
determination by the Illinois Gaming Board that the licensee continues to meet
all of the requirements of the Riverboat Act, the Illinois Gaming Board's rules
and any conditions placed on a

                                       11
<PAGE>

prior license renewal. The Illinois Gaming Board also requires that officers,
directors and employees of a gaming operation and suppliers of gaming equipment,
devices and supplies and certain other suppliers be licensed. Licenses issued by
the Illinois Gaming Board may not be transferred to another person or entity.
All licensed persons and entities 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 prior approval from the Illinois Gaming Board for changes proposed in the
following areas; (1) key persons, (2) type of entity, (3) equity and debt
capitalization  of the entity, (4) investors and/or debt holders, (5) source of
funds, (6) economic development plans or proposals, (7) riverboat capacity or
significant design change, (8) gaming positions, (9) anticipated economic
impact, or (10) agreements, oral or written, relating to the acquisition or
disposition of property (real or personal) of a value greater than $1 million.

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

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

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

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

                                       12
<PAGE>

     A $2 per person admission tax is imposed on the owner of a riverboat
operation.  Such admission tax for the Aurora Casino amounted to $5.3 million,
$6.1 million and $6.6 million, respectively, during 2000, 1999 and 1998.
Additionally, a wagering tax is imposed on the adjusted gross receipts, as
defined in the Riverboat Act, at graduated rates ranging from 15% to 35%.  The
licensee is required to wire transfer all such gaming tax payments to the
Illinois Gaming Board.  The wagering tax for the Aurora Casino amounted to $63.6
million, $54.3 million and $42.4 million, respectively, for the years 2000, 1999
and 1998.

     The Illinois Gaming Board is authorized to conduct investigations into the
conduct of gaming employees and into alleged violations of the Riverboat Act and
to take such disciplinary and enforcement action as it may deem necessary and
proper.  Employees and agents of the Illinois Gaming Board have access to and
may inspect any facilities relating to the riverboat gaming operations at all
times.

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

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

     Mississippi

     The ownership and operation of casino gaming facilities in Mississippi are
subject to extensive state and local regulations including the Mississippi
Gaming Control Act (the "Mississippi Act"). Gaming in Mississippi can be legally
conducted only on vessels of a certain minimum size in navigable waters of
counties bordering the Mississippi River or in waters of the State of
Mississippi which lie adjacent to the coastline of the three counties bordering
the Gulf of Mexico and counties in which gaming has been approved by the voters.

     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

                                       13
<PAGE>

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 need to be renewed
periodically.  The ownership license for the Tunica Casino has been renewed
through October 18, 2001.  Presently, the policy of the Mississippi Commission
is to award casino licenses for two-year periods, subject to renewal.  The
Mississippi Commission has the power to deny, limit, condition, revoke and
suspend any license, finding of suitability or registration, and to fine any
person as it deems reasonable and in the public interest, subject to an
opportunity for a hearing.

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

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

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

                                       14
<PAGE>

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

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

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

     License fees and taxes are based on a percentage of the gross gaming
revenues received by a casino operation and on the number of slot machines and
table games operated by such casino. In particular, gaming licensees must pay an
annual $5,000 license fee and an additional fee based on the number of gaming
devices. A state gross revenues fee of 8% is due on adjusted gross gaming
revenues. Several local governments have been authorized to impose additional
gross fees on adjusted gross gaming revenues of up to 4% and annual license fees
based on the number of gaming devices on board. Tunica County imposes a fee of
4% on adjusted gross gaming revenues. Gaming taxes for the Tunica Casino
amounted to $13.1 million, $12.2 million and $11.7 million during 2000, 1999 and
1998, respectively. Gross gaming taxes paid to the state are allowed as a credit
against Mississippi state income taxes.

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

     Louisiana

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

     The laws and regulations of Louisiana seek to:

     .    prevent unsavory or unsuitable persons from having any direct or
          indirect involvement with gaming at any time or in any capacity;

     .    establish and maintain responsible accounting practices and
          procedures;

     .    maintain effective control over the financial practices of licensees,
          including establishing procedures for reliable record keeping and
          making periodic reports to the LGCB;

                                       15
<PAGE>

     .    prevent cheating and fraudulent practices;

     .    provide a source of state and local revenues through fees;

     .    and ensure that gaming licensees, to the extent practicable, employ
          and contract with Louisiana residents, women and minorities.

     The Louisiana Act specifies certain restrictions and conditions relating to
the operation of riverboat gaming, including but not limited to the following:
(1) in parishes bordering the Red River, which includes the site for the
Shreveport Casino, gaming may be conducted dockside; however, in all other
authorized locations gaming is not permitted while a riverboat is docked, other
than for forty-five minutes between excursions, unless dangerous weather or
water conditions exist as certified by the riverboat's master; (2) each round
trip riverboat cruise may not be less than three nor more than eight hours in
duration, subject to specified exceptions; (3) agents of the LGCB are permitted
on board at any time during gaming operations; (4) gaming devices, equipment and
supplies may be purchased or leased only from permitted suppliers; (5) gaming
may only take place in the designated gaming area while the riverboat is upon a
designated river or waterway; (6) gaming equipment may not be possessed,
maintained, or exhibited by any person on a riverboat except in the specifically
designated gaming area, or a secure area used for inspection, repair, or storage
of such equipment; (7) wagers may be received only from a person present on a
licensed riverboat; (8) persons under 21 are not permitted on gaming vessels;
(9) except for slot machine play, wagers may be made only with tokens, chips, or
electronic cards purchased from the licensee aboard a riverboat; (10) licensees
may only use dockside facilities and routes for which they are licensed and may
only board and discharge passengers at the riverboat's licensed berth; (11)
licensees must have adequate protection and indemnity insurance; (12) licensees
must have all necessary federal and state licenses, certificates and other
regulatory approvals prior to operating a riverboat; and (13) gaming may only be
conducted in accordance with the terms of the license, the Louisiana Act and the
rules and regulations adopted by the LGCB.

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

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

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

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

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

                                       16
<PAGE>

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

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

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

     .    the applicant is of good moral character.

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

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

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

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

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

     The Louisiana Act imposes franchise and license fees amounting to 18.5% of
net gaming proceeds and $50,000 per riverboat for the first year and $100,000
for subsequent years.  Several local governments have been authorized to impose
additional fees on adjusted gross gaming revenues and/or other fees.  The
Shreveport Casino is required to make certain payments to the City of Shreveport
under its ground lease agreement in lieu of boarding fees.  Franchise and
license fees and payments in lieu of boarding fees for the Shreveport Casino
amounted to $1.9 million during 2000.

     In March 2001, the Louisiana legislature approved an increase in the gaming
tax on riverboat casinos to 21.5% of net gaming proceeds from the current 18.5%
and eliminated the cruising requirement for those boats previously required to
cruise.  The tax increase will be phased in over a 25-month period

                                       17
<PAGE>

for all riverboats in the Shreveport/Bossier City area, which were not subject
to the cruising requirements. Accordingly, the gaming tax imposed on the
Shreveport Casino will increase to 19.5% effective April 1, 2001 with additional
1% increases on April 1, 2002 and April 1, 2003. Had the entire 3% gaming tax
been in effect during the period that the Shreveport Casino was open in 2000,
its operating expenses would have increased by $243,000.

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

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

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

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

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

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 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.

                                       18
<PAGE>

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

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

ITEM 2.  PROPERTIES

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

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

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

     The Aurora Casino is currently pledged as collateral to the extent of
approximately $66 million (subject to future borrowings on HCA's intercompany
note to HCC up to a maximum of $108 million) with respect to the Senior Secured
Notes in the face amount of $360 million issued by HCC on May 19, 1999.  The
Senior Secured Notes consist of $310 million of 11.25% notes due May 1, 2007 and
$50 million of floating rate notes due May 1, 2006.  The current interest rate
on the floating rate notes is 13% per annum and is reset semiannually.

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

     The Tunica Casino consists of a 60,000 square foot, single level casino
with 54,000 square feet of gaming space, 506 hotel rooms and suites and support
facilities that include two restaurants, a buffet, an arcade and a gift shop,
banquet space, an enclosed pool and atrium, a showroom and administrative
offices. The Tunica Casino also includes a 123-space recreational vehicle park
and surface lots with 1,635 parking spaces.

     The ground lease for the Tunica Casino has an initial term of five years
from the date gaming operations commenced with options to extend the lease for
nine successive five-year terms. Rent during the initial term is equal to the
greater of 4% of Gross Revenues (as defined in the lease) or $1.1 million per
year. Because the ground lease for the Tunica Casino covers approximately 70
acres, there is sufficient land for future expansion should circumstances
warrant an expansion.

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

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

     The Shreveport Casino consists of a 403-room, all suite, art deco-style
hotel, and a three-level riverboat dockside casino. The riverboat casino
contains approximately 59,000 square feet of space with

                                       19
<PAGE>

approximately 1,434 slot machines and approximately 68 table games. The complex
also offers three parking facilities, including two parking lots and an eight-
story parking garage located directly across the street and connected to the
pavilion by a covered, movie-themed walkway. The three parking facilities
provide space for approximately 2,000 cars, including valet parking for
approximately 340 cars.

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

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

ITEM 3.  LEGAL PROCEEDINGS

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

     In 1996, Planet Hollywood International, Inc. and Planet Hollywood (Region
IV), Inc. filed a complaint in the United States District Court for the Northern
District of Illinois, Eastern Division, against HCC and certain of its
subsidiaries and affiliates seeking (1) a declaratory judgment that it was
entitled to use the name "Planet Hollywood" for a casino and (2) damages.  In
its complaint, Planet Hollywood alleged, among other things, that HCC had, in
operating the Hollywood Casino concept, infringed on their trademark, service
mark and trade dress and had engaged in unfair competition and deceptive trade
practices.  HCC, its subsidiaries and affiliates filed counterclaims seeking (1)
a declaratory judgment that Planet Hollywood was not entitled to use the name
"Planet Hollywood" for a casino and (2) damages.  The counterclaims alleged,
among other things, that Planet Hollywood had, through its planned use of its
mark in connection with casino services, infringed on HCC's service marks and
trade dress and had engaged in unfair competition.  The trial commenced on July
19, 1999 and was completed on July 26, 1999.  On August 25, 1999, HCC and the
other defendants filed a motion to dismiss the declaratory judgment claims of
all parties asserting, among other things, that as a result of Planet
Hollywood's reported deteriorating financial condition and perceived inability
to enter into the casino business, there was no longer any actual case or
controversy.  On October 12, 1999, Planet Hollywood (Region IV), Inc. filed a
petition for reorganization under Chapter 11 of the United States Bankruptcy
Code.  On December 3, 1999 the judge entered a judgment in favor of HCC with
respect to the damage claims brought by Planet Hollywood and granted HCC's
motion to dismiss the declaratory judgment claims of all parties.  Planet
Hollywood filed a notice of appeal of the judgment with the Seventh Circuit
Court of Appeals; however, pursuant to a joint motion filed by the parties, such
appeal was dismissed effective as of November 2, 2000.

                                       20
<PAGE>

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

     On October 8, 1998, the Company filed a complaint against its former
independent accountants and tax advisors in the District Court of Dallas County,
Texas.  On September 8, 2000, a mutually acceptable agreement was reached
concluding the dispute and resulting in the dismissal of the lawsuit. Terms of
the settlement are confidential.

     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 2000, the Company did not submit any matters
to a vote of security holders through the solicitation of proxies or otherwise.

                                    PART II

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

     HCC's Class A common stock, 50,000,000 shares at $.0001 par value per
share, is HCC's sole voting security. HCC's common stock trades on the American
Stock Exchange under the Symbol HWD. The prices set forth in the following table
represent actual transactions.


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

    2000    First Quarter            $  4.50     $3.00
            Second Quarter              8.00      3.13
            Third Quarter               9.50      5.88
            Fourth Quarter             11.25      7.38

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


     As of March 28, 2001, there were approximately 500 holders of record of
HCC's voting common stock.

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

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

     HCT did not pay any dividends during 2000; any such dividends would be
payable to HCC.

                                       21
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

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

     The following tables present selected financial data for HCC and its
subsidiaries and are qualified in their entirety by the consolidated financial
statements and accompanying footnotes appearing elsewhere in this Form 10-K.
The data as of December 31, 2000 and 1999, and for the years ended December 31,
2000, 1999, and 1998, have been derived from the audited consolidated financial
statements of HCC presented in Item 8.  The statement of operations data for
1996 includes the results of operations of Greate Bay Casino Corporation
("GBCC") which was formerly an approximately 80%-owned subsidiary of HCC.  The
common stock of GBCC owned by HCC was distributed to HCC's shareholders on
December 31, 1996.

<TABLE>
<CAPTION>
Statement of Operations Data:                                          Year Ended December 31,
                                                       ------------------------------------------------------
                                                         2000         1999       1998       1997       1996
                                                       --------     --------   --------   --------   --------
                                                              (in thousands, except per share amounts)
<S>                                                    <C>          <C>        <C>        <C>        <C>
Net revenues.........................................  $348,182     $307,372   $268,760   $267,757   $530,580
                                                       --------     --------   --------   --------   --------
Expenses:
 Departmental........................................   251,582      221,968    197,836    185,753    426,769
 General and administrative..........................    20,368       19,235     17,778     16,790     37,169
 Management and consulting fees......................         -          939      1,200      3,927          -
 Depreciation and amortization.......................    13,647       14,163     15,610     17,563     38,792
 Development and preopening..........................    15,852        1,787        779      1,480      1,065
 Termination of management and consulting
   agreements........................................         -       40,389          -          -          -
 Write down of assets................................         -       13,322          -     19,678     22,141
                                                       --------     --------   --------   --------   --------
   Total expenses....................................   301,449      311,803    233,203    245,191    525,936
                                                       --------     --------   --------   --------   --------
 Income (loss) income from operations................    46,733       (4,431)    35,557     22,566      4,644
                                                       --------     --------   --------   --------   --------
Non-operating income (expenses):
 Interest income.....................................    11,349        7,868      2,844      1,896      3,101
 Interest expense....................................   (55,191)     (47,050)   (31,212)   (31,775)   (61,134)
 Gain on settlement of litigation, net...............     7,220            -          -          -          -
 Tax settlement costs................................         -            -     (1,087)         -          -
 Equity in losses of unconsolidated affiliate........       (55)        (141)         -          -          -
 Gain (loss) on disposal of assets...................       190         (567)       (61)       552     (1,841)
                                                       --------     --------   --------   --------   --------
    Total non-operating expenses, net................   (36,487)     (39,890)   (29,516)   (29,327)   (59,874)
                                                       --------     --------   --------   --------   --------
Income (loss) before income taxes, extraordinary
 and other items.....................................    10,246      (44,321)     6,041     (6,761)   (55,230)
Income tax provision.................................    (1,873)      (1,196)      (816)    (5,359)       (63)
                                                       --------     --------   --------   --------   --------
Income (loss) before extraordinary and other
 items...............................................     8,373      (45,517)     5,225    (12,120)   (55,293)
Minority interest in Hollywood Casino Shreveport.....       (78)           -          -          -          -
Minority interest in earnings of Limited
 Partnership.........................................         -       (5,801)    (6,494)    (5,012)         -
                                                       --------     --------   --------   --------   --------
Income (loss) before extraordinary item..............     8,295      (51,318)    (1,269)   (17,132)   (55,293)
Extraordinary item:
 Early extinguishment of debt,
  net of related tax benefits (1)....................         -      (30,353)      (336)      (215)         -
                                                       --------     --------   --------   --------   --------
Net income (loss)....................................  $  8,295     $(81,671)  $ (1,605)  $(17,347)  $(55,293)
                                                       ========     ========   ========   ========   ========
Basic income (loss) per common share:
 Income (loss) before extraordinary item.............  $    .33     $  (2.05)  $   (.05)  $   (.69)  $  (2.24)
 Extraordinary item..................................         -        (1.22)      (.01)      (.01)         -
                                                       --------     --------   --------   --------   --------
     Net income (loss)...............................  $    .33     $  (3.27)  $   (.06)  $   (.70)  $  (2.24)
                                                       ========     ========   ========   ========   ========
Diluted income (loss) per common share:
 Income (loss) before extraordinary item.............  $    .31     $  (2.05)  $   (.05)  $   (.69)  $  (2.24)
 Extraordinary item..................................         -        (1.22)      (.01)      (.01)         -
                                                       --------     --------   --------   --------   --------
     Net income (loss)...............................  $    .31     $  (3.27)  $   (.06)  $   (.70)  $  (2.24)
                                                       ========     ========   ========   ========   ========

<CAPTION>
Balance Sheet Data:                                                          December 31,
                                                       ------------------------------------------------------
                                                         2000         1999       1998       1997       1996
                                                       --------     --------   --------   --------   --------
                                                                             (in thousands)
<S>                                                    <C>          <C>        <C>        <C>        <C>
Total assets.........................................  $577,900     $525,817   $270,740   $276,218   $308,158
Total debt, including capital
 lease obligations...................................   567,721      538,458    227,529    226,922    232,046
Shareholders' (deficit) equity.......................   (65,760)     (74,157)     7,512      9,117     38,836
</TABLE>

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

                                       22
<PAGE>

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

   The following tables set forth selected financial information for HCA and for
HCT and its subsidiary and are qualified in their entirety by, and should be
read in conjunction with, HCA's Financial Statements and HCT's Consolidated
Financial Statements and accompanying footnotes appearing elsewhere in this Form
10-K. HCA and HCT commenced operations on June 17, 1993 and August 8, 1994,
respectively. The data as of December 31, 2000 and 1999 and for the years ended
December 31, 2000, 1999 and 1998 have been derived from the audited financial
statements of HCA and HCT presented in Item 8.

                         HOLLYWOOD CASINO-AURORA, INC.

Statement of Operations Data:

<TABLE>
<CAPTION>
                                                        Year Ended December 31,
                                         ----------------------------------------------------
                                           2000       1999       1998       1997       1996
                                         --------   --------   --------   --------   --------
                                                             (in thousands)
<S>                                      <C>        <C>        <C>        <C>        <C>
Net revenues...........................  $224,376   $197,250   $162,947   $160,307   $163,391
                                         --------   --------   --------   --------   --------

Expenses:
   Departmental........................   153,907    137,086    118,459    108,653    114,006
   General and administrative..........     5,319     12,758     14,136     14,673     14,645
   Depreciation and amortization.......     7,107      7,050      7,350      7,491      8,834
   Termination of management contract..         -     37,000          -          -          -
                                         --------   --------   --------   --------   --------
     Total expenses....................   166,333    193,894    139,945    130,817    137,485
                                         --------   --------   --------   --------   --------
Income from operations.................    58,043      3,356     23,002     29,490     25,906
                                         --------   --------   --------   --------   --------
Non-operating income (expense):
   Interest income.....................     1,124        533        112        156        205
   Interest expense....................    (9,034)    (6,145)    (6,046)    (6,847)    (6,704)
   (Loss) gain on disposal of assets...        (6)      (510)         4        134          -
                                         --------   --------   --------   --------   --------
     Total non-operating expense, net..    (7,916)    (6,122)    (5,930)    (6,557)    (6,499)
                                         --------   --------   --------   --------   --------

Income (loss) before income taxes......    50,127     (2,766)    17,072     22,933     19,407
Income tax provision...................   (18,422)      (367)    (6,559)    (8,419)    (6,883)
                                         --------   --------   --------   --------   --------

Net income (loss)......................  $ 31,705   $ (3,133)  $ 10,513   $ 14,514   $ 12,524
                                         ========   ========   ========   ========   ========

<CAPTION>
Balance Sheet Data:
                                                            December 31,
                                         ----------------------------------------------------
                                           2000       1999       1998       1997       1996
                                         --------   --------   --------   --------   --------
                                                             (in thousands)
<S>                                      <C>        <C>        <C>        <C>        <C>
Total assets...........................  $110,782   $111,759   $100,310   $104,071   $107,449
Total debt, including capital lease
  obligations..........................    86,113     87,907     54,248     58,972     65,430
Shareholder's equity...................     6,190      6,047     28,720     28,948     28,033
</TABLE>

                                       23
<PAGE>

                       HWCC-TUNICA, INC. AND SUBSIDIARY

Statement of Operations Data:

<TABLE>
<CAPTION>
                                                      Year Ended December 31,
                                       ----------------------------------------------------
                                         2000       1999       1998       1997       1996
                                       --------   --------   --------   --------   --------
                                                          (in thousands)
<S>                                    <C>        <C>        <C>        <C>        <C>
Net revenues.........................  $116,027   $110,122   $105,773   $107,263   $ 94,524
                                       --------   --------   --------   --------   --------

Expenses:
 Departmental........................    91,813     84,882     79,328     77,058     72,602
 General and administrative..........     5,173      5,679      5,813      5,769      5,962
 Depreciation and amortization.......     5,841      7,066      8,123      9,916     10,906
 Termination of consulting
   agreement.........................         -      3,329          -          -          -
                                       --------   --------   --------   --------   --------
   Total expenses....................   102,827    100,956     93,264     92,743     89,470
                                       --------   --------   --------   --------   --------

Income from operations...............    13,200      9,166     12,509     14,520      5,054
                                       --------   --------   --------   --------   --------

Non-operating income (expenses):.....
 Interest income.....................       280        340        587        281        835
 Interest expense....................   (10,019)   (10,308)   (10,937)   (10,980)   (10,060)
 Equity in losses of unconsolidated
   affiliate.........................       (55)      (141)         -          -          -
 Gain (loss) on disposal of assets...         5        (57)       (65)         6        (45)
                                       --------   --------   --------   --------   --------
   Total non-operating expenses,
    net..............................    (9,789)   (10,166)   (10,415)   (10,693)    (9,270)
                                       --------   --------   --------   --------   --------

Income (loss) before income taxes....     3,411     (1,000)     2,094      3,827     (4,216)
Income tax (provision) benefit.......      (375)       323       (689)       845          -
                                       --------   --------   --------   --------   --------

Net income (loss)....................  $  3,036   $   (677)  $  1,405   $  4,672   $ (4,216)
                                       ========   ========   ========   ========   ========

Balance Sheet Data:
                                                           December 31,
                                       ----------------------------------------------------
                                         2000       1999       1998       1997       1996
                                       --------   --------   --------   --------   --------
                                                          (in thousands)
<S>                                    <C>        <C>        <C>        <C>        <C>
Total assets.........................  $116,106   $112,398   $120,461   $118,727   $116,620
Total debt, including capital lease
  obligations........................    88,651     90,140     85,798     85,683     86,645
Shareholder's equity.................    15,646     12,610     25,287     23,882     19,210
</TABLE>

                                       24
<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, operating results, cash flows, financial condition,
construction and development activities, expansion projects and prospects of the
Company. The actual results could differ materially from those indicated by the
forward-looking statements because of various risks and uncertainties including,
among other things, changes in competition, economic conditions, tax
regulations, state regulations or legislation applicable to the gaming industry
in general or the Company in particular, decisions of courts 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. Similarly, statements herein that describe
the Company's business strategy, outlook, objectives, plans, intentions or goals
are also forward-looking statements.

RESULTS OF OPERATIONS

          The following table summarizes HCC's consolidated income from
operations reflecting departmental operations at each of its casino properties.
Departmental operations include, as applicable, casino, rooms, food and beverage
and other. Accordingly, departmental profit, as used in the discussion which
follows, consists of departmental revenues less departmental expenses and
represents income from operations before general and administrative expenses,
depreciation and amortization.

<TABLE>
<CAPTION>
                                                     Year Ended December 31,
                                             -----------------------------------------
                                                 2000          1999           1998
                                             ------------  ------------   ------------
<S>                                          <C>           <C>            <C>
Net Revenues:
 Aurora Casino                               $224,376,000  $197,250,000   $162,947,000
 Tunica Casino                                116,027,000   110,122,000    105,773,000
 Shreveport Casino                              7,779,000             -              -
 Other                                                  -             -         40,000
                                             ------------  ------------   ------------

  Net revenues                                348,182,000   307,372,000    268,760,000
                                             ------------  ------------   ------------

Departmental Expenses:
 Aurora Casino                                153,907,000   137,086,000    118,459,000
 Tunica Casino                                 91,813,000    84,882,000     79,328,000
 Shreveport Casino                              5,862,000             -              -
 Other                                                  -             -         49,000
                                             ------------  ------------   ------------

  Total departmental expenses                 251,582,000   221,968,000    197,836,000
                                             ------------  ------------   ------------

  Departmental profit                          96,600,000    85,404,000     70,924,000
                                             ------------  ------------   ------------

Other Operating Expenses:
 General and administrative                    20,368,000    20,174,000     18,978,000
 Depreciation and amortization                 13,647,000    14,163,000     15,610,000
 Termination of management and consulting
  agreements                                            -    40,389,000              -
 Write down of assets                                   -    13,322,000              -
 Preopening                                    14,794,000       841,000              -
 Development                                    1,058,000       946,000        779,000
                                             ------------  ------------   ------------

  Total other operating expenses               49,867,000    89,835,000     35,367,000
                                             ------------  ------------   ------------

Income (loss) from operations                $ 46,733,000  $ (4,431,000)  $ 35,557,000
                                             ============  ============   ============
</TABLE>

                                       25
<PAGE>

   Management's discussion and analysis of the results of operations is
organized using the format presented above. Departmental profit for each
operating property will be discussed separately, to be followed by comments
addressing other items on a consolidated basis. The discussion will continue
with consolidated non-operating income and expenses, taxes and extraordinary
items as presented in the consolidated financial statements of HCC.

Aurora Casino
-------------

   Departmental profit from operations at the Aurora Casino is summarized in the
following table:

                                         Year Ended December 31,
                                 ------------------------------------------
                                     2000          1999            1998
                                 ------------   ------------   ------------

Departmental Revenues:
 Casino                          $217,704,000   $190,608,000   $156,404,000
 Food and beverage                 15,787,000     14,560,000     13,771,000
 Other                              3,356,000      3,272,000      2,816,000
 Promotional allowances           (12,471,000)   (11,190,000)   (10,044,000)
                                 ------------   ------------   ------------

  Net revenues                    224,376,000    197,250,000    162,947,000
                                 ------------   ------------   ------------

Departmental Expenses:
 Casino                           147,807,000    131,143,000    112,272,000
 Food and beverage                  5,021,000      4,829,000      4,855,000
 Other                              1,079,000      1,114,000      1,332,000
                                 ------------   ------------   ------------

  Total departmental expenses     153,907,000    137,086,000    118,459,000
                                 ------------   ------------   ------------

  Departmental profit            $ 70,469,000   $ 60,164,000   $ 44,488,000
                                 ============   ============   ============

Departmental profit margin               31.4%          30.5%          27.3%

   Revenues

   Total gross wagering at the Aurora Casino, as measured by the total value of
chips purchased for table games ("drop") and the total amount of coins wagered
in slot machines ("handle"), increased by 17.5% and 22.2%, respectively, during
2000 compared to 1999 and during 1999 compared to 1998. The increases in gross
wagering are primarily attributable to the advent of dockside gaming on June 26,
1999 together with a combination of new and proven marketing programs designed
to enhance the Aurora Casino's position in the Chicago marketplace. Casino
revenues consist of the portion of gross wagering retained by the casino and, as
a percentage of gross wagering, is referred to as the "hold percentage." The
2000 increase in casino revenues compared to the prior year period reflects the
increases in gross wagering noted above, partially offset by a decline in the
table games hold percentage. The 1999 increase in casino revenues compared to
the prior year period reflects increases in gross wagering combined with small
increases in the hold percentages. Poker revenues also increased during 2000
compared to the prior year primarily due to the expansion of the poker room's
operating hours beginning in the fourth quarter of 1999. As a result of the
closing of a competitor's poker room in August 2000, the Aurora Casino is now
the sole Illinois provider of poker in Chicago-area casinos.

   The increases in food and beverage revenues during 2000 and 1999 compared to
the prior year periods reflect the increased patron volume resulting from
dockside gaming and the opening of a new food outlet in April 2000. Most of the
additional revenue reflects complimentary meals and has resulted in a
corresponding increase in promotional allowances (see below).

   Other revenues did not change significantly during 2000 compared to 1999.
The increase in other revenues during 1999 compared to 1998 result from
increases in parking fees and commission revenues.

                                       26
<PAGE>

   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 65.1%, 62.8% and 60.6%, respectively, during the years ended
December 31, 2000, 1999 and 1998.  The 2000 and 1999 increases over the prior
year periods reflect increases in promotional activities, primarily in food
complimentaries, as part of the Aurora Casino's marketing efforts.

   Departmental Expenses

   Casino expense increases during 2000 and 1999 compared to the prior year
periods resulted primarily from additional gaming taxes resulting from the
increase in casino revenues as well as to increased marketing expenses.  Gaming
taxes increased by $9.2 million and $12 million, respectively, in 2000 and 1999
compared to the prior year periods while marketing expenses increased by $5.5
million and $5.9 million, respectively.

   Food and beverage and other expenses did not change significantly during 2000
compared to 1999 or during 1999 compared to 1998.  Increases in food and
beverage costs resulting from increased volume,  higher food costs and the
opening of a new restaurant in April 2000 were offset by increased allocations
to the casino department as part of various marketing programs.

   Other expenses did not change significantly during 2000 compared to 1999.
Other expenses decreased 16.4% in 1999 compared to 1998 due to reductions in
personnel and to reduced marine department costs as a result of the advent of
dockside gaming.

Tunica Casino
-------------

   Departmental profit from operations at the Tunica Casino is summarized in the
following table:

<TABLE>
<CAPTION>
                                          Year Ended December 31,
                                 ------------------------------------------
                                     2000           1999           1998
                                 ------------   ------------   ------------
<S>                              <C>            <C>            <C>
Departmental Revenues:
 Casino                          $108,529,000   $102,312,000   $ 96,459,000
 Rooms                             10,690,000     10,457,000      9,386,000
 Food and beverage                 16,656,000     15,274,000     15,039,000
 Other                              1,462,000      1,542,000      1,373,000
 Promotional allowances           (21,310,000)   (19,463,000)   (16,484,000)
                                 ------------   ------------   ------------

  Net revenues                    116,027,000    110,122,000    105,773,000
                                 ------------   ------------   ------------

Departmental Expenses:
 Casino                            86,023,000     78,880,000     72,317,000
 Rooms                              1,102,000      1,161,000      1,752,000
 Food and beverage                  3,897,000      3,704,000      3,923,000
 Other                                791,000      1,137,000      1,336,000
                                 ------------   ------------   ------------

  Total departmental expenses      91,813,000     84,882,000     79,328,000
                                 ------------   ------------   ------------

  Departmental profit            $ 24,214,000   $ 25,240,000   $ 26,445,000
                                 ============   ============   ============

Departmental profit margin               20.9%          22.9%          25.0%
</TABLE>

   Revenues

   Total gross wagering at the Tunica Casino as measured by table game drop and
slot machine handle increased by 8.2% and 5.4%, respectively, during 2000 and
1999 compared to the prior year periods.  Management believes the increases are
attributable to its continued refinement of its core

                                       27
<PAGE>

marketing programs as well as its emphasis on customer service. Such marketing
efforts include branded television advertising that focuses on quality service
and the message of "winning". Other direct marketing programs have been designed
to reward existing high value customers as well as to attract new customers to
the facility. Although patron volume declined slightly during 2000 compared to
1999, gross wagering continued to increase, indicating that the Tunica Casino
has been successful in attracting higher value patrons.

   Increased wagering is the primary cause of the improvement in casino revenues
shown in the table above.  The percentage increase in casino revenues of 6.1% in
2000 is somewhat less than that for gross wagering due to decreases in the hold
percentages during 2000 compared to 1999.  The 6.1% increase in 1999 casino
revenues over the prior year reflects the increase in wagering combined with a
slight increase in the slot machine hold percentage.  Poker revenues also
contributed to the overall increase in casino revenues primarily as a result of
scheduling changes implemented by the Tunica Casino and to new patrons obtained
as a result of remodeling disruptions at a competitor's poker room.

   Room revenues increased slightly during 2000 compared to 1999 following an
increase of 11.4% in 1999 compared to 1998.  Hotel occupancy rates declined
slightly to 84.2% in 2000; however, such decrease was offset by an increase in
the average daily room rate to $66 from $64 in 1999.  Hotel occupancy rates in
1999 declined to 85.5% from 89.7% in 1998 due to increased competition for
overnight patrons resulting from the addition of 600 guest rooms in the Tunica
market during the second quarter of 1999.  Accordingly, the improvement in hotel
revenues during 1999 resulted from an increase in the average daily room rate to
$64 in 1999 from $55 in 1998.

   Food and beverage revenues increased by 9% during 2000 compared to the prior
year period as a result of increased marketing efforts and increases in food and
beverage prices.  Food and beverage revenues did not change significantly during
1999 compared to 1998.

   Other revenues decreased 5.2% during 2000 compared to 1999 after increasing
by 12.3% in 1999 compared to 1998.  The 2000 decrease is a result of the decline
in patron volume discussed above, whereas the 1999 increase reflects increased
patron volume utilizing such services.

   Promotional allowances represent the estimated value of goods and services
provided free of charge to casino customers under various marketing programs.
Such allowances, as a percentage of rooms, food and beverage and other revenues,
increased to 74% in 2000 compared to 71.4% during 1999 and 63.9% during 1998.
The increases primarily reflect the more targeted use of food and beverage
complimentaries as part of the Tunica Casino's increased marketing efforts.

   Departmental Expenses

   Casino expenses increased $7.1 million (9.1%) during 2000 compared to 1999
and $6.6 million (9.1%) during 1999 compared to 1998.  The increases are
primarily the result of increased marketing efforts including the allocation of
additional costs from other operating departments to the casino department.

   Rooms expense decreased 5.1% and 33.7% during 2000 and 1999 compared to the
respective prior year periods reflecting additional allocations of hotel costs
associated with marketing programs to the casino department.

   The 5.2% increase in food and beverage expenses during  2000 compared to 1999
results from increases in volume and higher food and beverage costs.  Such
increases are partially offset by increased allocations to the casino department
as a result of the Tunica Casino's marketing efforts.  The 5.6% decrease in food
and beverage costs during 1999 compared to 1998 was primarily due to increased
allocations to the casino department as part of the Tunica Casino's marketing
efforts.

   Decreases in other departmental expenses during 2000 and 1999 compared to the
prior year periods are due to increased allocations to the casino department.

                                       28
<PAGE>

Shreveport Casino
-----------------

   The Shreveport Casino commenced operations on December 20, 2000; all
activities prior to that date relate to its development and construction.  The
results of its departmental operations through December 31, 2000 are summarized
in the following table:


Departmental Revenues:
  Casino                                             $   7,194,000
  Rooms                                                    302,000
  Food and beverage                                      1,330,000
  Other                                                     74,000
  Promotional allowances                                (1,121,000)
                                                     -------------

  Net revenues                                           7,779,000
                                                     -------------

Departmental Expenses:
  Casino                                                 5,218,000
  Rooms                                                     88,000
  Food and beverage                                        413,000
  Other                                                    143,000
                                                     -------------

  Total departmental expenses                            5,862,000
                                                     -------------

Departmental profit                                  $   1,917,000
                                                     =============

Departmental profit margin                                    24.6%

   The Shreveport Casino experienced the typical operating inefficiencies
associated with the opening of a new, major resort.  The large volume of
business generated by the property during its first 12 days of operations in
2000, coupled with a difficult labor market in Shreveport, exacerbated these
inefficiencies. As a result, management concentrated its efforts in January and
early February 2001 on fully implementing operating and training programs to
ensure that customers were provided with a superior level of service.  With
these programs completed, the Shreveport Casino launched major marketing
programs in late February and March.  Delays in commencing its marketing
efforts, together with inclement weather and increased competitive pressures in
the Shreveport market, resulted in lower gaming activity at the Shreveport
Casino in January and February 2001 than management originally anticipated.
Since implementing its marketing programs, the Shreveport Casino has experienced
a favorable trend in its gaming revenues with significant increases in both
February and March compared to the prior month periods.

   Gaming Operations

   Total gross wagering at the Shreveport Casino as measured by table game drop
and slot machine handle amounted to $83.3 million subsequent to opening in 2000.

   Revenues

   Casino revenues totaled $7.2 million during 2000 of which slot machine and
table game revenues accounted for 81.3% and 18.7%, respectively.

   Rooms revenues amounted to $302,000 during 2000 with a hotel occupancy rate
of 71.4% and an average daily rate of $108.

   Food and beverage and other revenues amounted to $1.3 million and $74,000,
respectively in the 2000 period since opening.

                                       29
<PAGE>

   Promotional allowances represent the estimated value of goods and services
provided free of charge to casino customers under various marketing programs.
These allowances, as a percentage of rooms, food and beverage and other
revenues, amounted to 65.7% since opening in 2000. This percentage, which
reflects opening period promotional activities, is consistent with the
historical experience of other HCC-owned gaming operations.

   Departmental Expenses

   Departmental expenses as a percentage of the associated revenues are set
forth below:

                                                         Expense     Percent
                                                       ------------  -------

   Casino expense                                      $  5,218,000     72.5%
   Rooms expense                                             88,000     29.1%
   Food and beverage expense                                413,000     31.1%
   Other expense                                            143,000    193.2%

   With the exception of other departmental expenses, these expense ratios are
consistent with, or only slightly higher than, the historical experience during
initial operating periods of other new gaming facilities operated by HCC. A
significant portion of other departmental expenses during 2000 were related to
opening day activities; accordingly, management anticipates that such costs, as
a percentage of the associated revenues, should decline in future periods.

   In March 2001, the Louisiana legislature approved an increase in the gaming
tax on riverboat casinos to 21.5% of net gaming proceeds from the current 18.5%.
The tax increase will be phased in over a 25-month period for all riverboats in
the Shreveport/Bossier City area; accordingly, the gaming tax imposed on the
Shreveport Casino will increase to 19.5% effective April 1, 2001 with additional
1% increases on April 1, 2002 and April 1, 2003. Had the entire 3% gaming tax
been in effect during the period that the Shreveport Casino was open in 2000,
its operating expenses would have increased by $243,000.

Other Consolidated Items
------------------------

   Other operating expenses of HCC and its subsidiaries, exclusive of casino
departmental expenses, consist primarily of general and administrative expenses,
depreciation and amortization, preopening costs associated with the Shreveport
Casino and development expenses incurred in connection with the pursuit of
additional gaming venues. These and other nonrecurring operating expenses are
discussed below.

   General and Administrative

   General and administrative expenses increased by less than 1% during 2000
after increasing by 6.3% during 1999, in each case compared to the prior year
period. Excluding management fees incurred of $939,000 in 1999 and $1.2 million
in 1998, general and administrative expenses increased by $1.1 million (5.9%)
and $1.5 million (8.2%), respectively, in 2000 and 1999 compared to the prior
year periods. Exclusive of management fees during 1999, such expenses at the
Aurora Casino increased by 5.8% during 2000 primarily as a result of additional
overhead costs now charged to the Aurora Casino which, prior to October 1999,
were charged to its management company. The Aurora Casino's general and
administrative expenses, excluding management fees, decreased by 4.5% during
1999 primarily as a result of a reduction in legal and professional fees. The
Tunica Casino experienced increases in general and administrative expenses,
excluding management fees, of 9.1% and 2.8%, respectively, during 2000 and 1999
compared to the prior year periods primarily as a result of increases in
personnel costs and professional fees. The Shreveport Casino added general and
administrative expenses of $165,000, excluding management fees paid to a
subsidiary of HCC, during the 2000 period subsequent to its opening. The
remaining increases in corporate general and administrative expenses of 2.6% and
19.9%, respectively, in 2000 and 1999 compared to the prior year periods result
from increases in corporate overhead costs consisting primarily of legal fees,
franchise taxes and personnel costs.

                                       30
<PAGE>

   Depreciation and Amortization

   Depreciation and amortization expense decreased 3.6% and 9.3%, respectively,
during 2000 and 1999 compared to the prior year periods. The decrease during
2000 occurred despite substantially all of the Shreveport Casino's fixed assets
being placed in service in December 2000 resulting in depreciation expense of
$506,000. The 2000 and 1999 decreases are primarily due to certain operating
equipment at the Tunica Casino becoming fully depreciated during the latter part
of 1999.

   Development Expenses

   Development expenses represent costs incurred in connection with HCC's
pursuit of potential gaming opportunities in jurisdictions where gaming has not
been legalized. Such costs increased by 11.8% and 21.4%, respectively, during
2000 and 1999 compared to the prior year periods due to additional costs
incurred with respect to potential gaming opportunities in Mexico and in states
contemplating the legalization of gaming.

   Preopening Costs

   Preopening costs are the start up costs associated with the development of
the Shreveport Casino which, in accordance with existing accounting
pronouncements, are required to be expensed as incurred. Such costs include,
among other things, organizational costs, marketing and promotional costs,
hiring and training of new employees and other operating costs incurred prior to
the opening of the project. Preopening costs amounted to $14.8 million and
$841,000, respectively, during 2000 and 1999.

   Termination of Management and Consulting Agreements

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

   Write Down of Assets

   The $12.3 million remaining estimated net realizable balance of certain notes
issued by GBCC was fully reserved in 1999 due, in part, to the termination of
the Aurora Casino management contract and the Tunica Casino consulting
agreement. These agreements provided a source of funds to GBCC which is now no
longer available. In addition, ACSC, which is GBCC's only remaining operating
subsidiary, experienced a loss from operations in 1999, further reducing cash
flows available for repayment of the PPI Funding Notes. For the same reasons,
HCC wrote down the interest receivable balance associated with certain demand
notes from GBCC by $1 million during 1999.

   The remaining combined receivable balance of the notes and interest of $6.5
million at December 31, 2000 reflects management's best estimate of the value of
the collateral associated with such obligations.

                                       31
<PAGE>

Non-operating Income (Expenses)
-------------------------------

   Interest Income

   Interest income increased 44.2% and 176.7%, respectively, during 2000 and
1999 compared to the prior year periods. Such increases reflect interest on the
unexpended cash proceeds of HCC's issue of Senior Secured Notes on May 19, 1999
and Hollywood Casino Shreveport's debt issue on August 10, 1999 (see "Liquidity
and Capital Resources - Financing Activities").

   Interest Expense

   Interest expense increased by 17.3% and 50.7%, respectively, during 2000 and
1999 compared to the prior year periods due primarily to the increase in HCC's
long-term indebtedness from the May 1999 issuance of the Senior Secured Notes
and the August 1999 issuance of $150 million of 13% Shreveport First Mortgage
Notes. Although the issuance of the Senior Secured Notes increased HCC's
indebtedness to a face value of $360 million from a face value of $204.7
million, the initial effective interest rate fell to 11.27% from 13.75%. The
interest rate on $50 million of the Senior Secured Notes is equal to the six-
month LIBOR rate plus 6.28% and is reset semiannually. On November 1, 2000, the
interest rate on such notes increased to 13% from 12.89%, effectively increasing
the Company's annual interest expense by $56,000. A portion of the interest on
the Shreveport First Mortgage Notes was capitalized during the construction
period ($ 11.8 million and $1.1 million, respectively, during 2000 and 1999).

   Gain (Loss) on Disposal of Assets

   The gain recognized during 2000 results from the sale of a parcel of land
acquired in Texas as a potential gaming development site. During 1999, the
Aurora Casino wrote off costs associated with its planned construction of a new,
larger boat to replace the smaller of its two current boats. The advent of
dockside gaming in June 1999 resulted in new plans to construct a dockside
casino facility (see "Liquidity and Capital Resources - Capital Expenditures and
Other Investing Activities"). The 1998 loss results primarily from the sale of
certain slot machines at the Tunica Casino as part of its program to update such
equipment.

   Income Taxes

   Management believes that it is more likely than not that future consolidated
taxable income of HCC will be sufficient to utilize at least a portion of the
NOL's, tax credits and other deferred tax assets resulting from temporary
differences. Current federal income taxes for the year ended December 31, 2000,
other than alternative minimum tax obligations, were offset through the use of
such NOL's. Accordingly, under the provisions of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes", the consolidated
balance sheet reflects a net deferred tax asset of $5.5 million as of December
31, 2000.

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

   Gain on Settlement of Litigation

   On October 8, 1998, the Company filed a complaint against its former
accountants and tax advisors in the District Court of Dallas County, Texas. On
September 8, 2000, a mutually acceptable agreement was reached concluding the
dispute and resulting in the dismissal of the lawsuit. Terms of the settlement

                                       32
<PAGE>

are confidential; however, the Company recognized a pretax gain on the
settlement, net of related legal fees and other expenses, amounting to $7.2
million.

   Tax Settlement Costs

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

   Minority Interest in Hollywood Casino Shreveport

   In accordance with the terms of its joint venture agreement, HCC's joint
venture partner is to receive, among other things, an amount equal to 1% of
"complex net revenues", as defined, earned by the Shreveport Casino. Allocations
of this interest are reflected as minority interest in Hollywood Casino
Shreveport. Such interest, which commenced upon the opening of the Shreveport
Casino, amounted to $78,000 during 2000.

   Minority Interest in Earnings of Limited Partnership

   The minority interest in the earnings of the limited partnership which held
the management contract for the Aurora Casino amounted to $5.8 million and $6.5
million, respectively, during 1999 and 1998. This minority interest ended with
the acquisition and termination of the management contract on October 13, 1999.
The acquisition of such minority interest resulted in a charge during the fourth
quarter of 1999 of $37 million.

   Extraordinary Item

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

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

Other Items
-----------

   Year 2000 Compliance

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

   In preparation for the Year 2000, management conducted a program to prepare
the Company's computer systems and applications as well as its non-information
technology (embedded microchip) systems. The two major information technology
systems identified as not Year 2000-compliant were replaced. The cost of
acquiring, testing and converting HCC's systems was less than $1 million. The
majority of these costs were included in capital expenditures during 1999.

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

                                       33
<PAGE>

   Inflation

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

   Market Risk

   The Company has $50 million of floating rate Senior Secured Notes outstanding
(see "Liquidity and Capital Resources - Financing Activities" below). Interest
on the floating rate notes is at the LIBOR rate plus 6.28% and is reset
semiannually. Accordingly, an increase in the LIBOR rate of 1% would increase
interest expense by $500,000 per year. Management also has a $30 million
financing arrangement for the lease of furniture, fixtures and equipment for the
Shreveport Casino which includes variable interest to be reset quarterly.
Accordingly, an increase in the underlying base rate of 1% would increase
interest expense by as much as $300,000 per annum.

   The floating rate loan and the furniture, fixture and equipment financing
were entered into for non-trading purposes as sources of funding for the Company
and management believes that these financings have no other material market
risks other than interest rate risk. Such interest rate risk is beyond
management's control; however, the resulting obligations could be prepaid should
increases in the underlying interest rate result in an excessive financing cost;
however, prepayment of the floating rate notes would require a premium in the
amount of 4% as of May 1, 2000, decreasing by 1% each subsequent May 1.

   The Shreveport First Mortgage Notes issued to finance construction of the
Shreveport Casino include interest at the rate of 13% payable semiannually as
well as contingent interest once the Shreveport Casino opens. The contingent
interest will be equal to 5% of consolidated cash flow for the applicable period
subject to a maximum contingent interest of $5 million for any four consecutive
fiscal quarters. Accordingly, the maximum potential interest with respect to the
Shreveport First Mortgage Notes for a fiscal year could be $24.5 million,
resulting in an effective annual interest rate of 16.33%. This maximum would
assume that the annual consolidated cash flow of the Shreveport Casino was at
least $100 million. The contingent component of interest under the Shreveport
First Mortgage Notes was negotiated with the Shreveport Partnership's lenders as
part of determining the fixed rate component of interest. Management believes
that because the contingent interest component is determined by cash flows and
can only be paid if certain coverage ratios are met, liquidity and capital
resources of the Shreveport Partnership will not be compromised by the payment,
if any, of contingent interest.

   Changes in the market interest rate would also impact the fair market value
of the Company's outstanding fixed rate debt instruments. Management estimates
that an increase of 1% in the market interest rate would result in a decrease in
the fair market value of HCC's debt securities of approximately $20.5 million.

   Seasonality and Other Fluctuations

   Historically, the Aurora Casino's operations have experienced some
seasonality due to severe winter weather. Consequently, the results of HCC's
operations for the first and fourth quarters have traditionally been less
profitable than the other quarters of the fiscal year. Furthermore, management
believes that seasonality may also cause fluctuations in reported results at the
Tunica Casino and the Shreveport Casino. In addition, the operations of HCC's
casinos 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.

                                       34
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

   Operating Activities

   During 2000, the operations of the Aurora Casino and Tunica Casino continued
to be HCC's primary sources of liquidity and capital resources. The Aurora
Casino contributed approximately $40.6 million of cash flow from operations
during 2000 while the Tunica Casino provided $10.9 million of cash from
operations. Operating cash flow generated by the Shreveport Casino for the 2000
period after its opening on December 20, 2000 was approximately $971,000 before
management fees incurred to a subsidiary of HCC. Management believes that the
Shreveport Casino will be a significant source of operating cash flow in 2001
and future years. HCC's other primary source of funds consists of interest
income earned on temporary investments ($3.9 million). The $7.2 million
settlement of litigation discussed previously also contributed operating cash
during 2000. In addition to operating expenses at its three casino facilities,
uses of operating cash by HCC during 2000 included interest payments ($24
million), costs to pursue development opportunities ($1.1 million) and corporate
overhead costs ($9.7 million).

   The Internal Revenue Service has completed its examination of the
consolidated federal income tax returns of HCC for the years 1993 and 1994. The
additional current federal income tax obligation resulting from such examination
is included in current federal income taxes payable on the accompanying
consolidated balance sheets at December 31, 2000 and 1999. HCC's consolidated
net deferred tax asset has also been adjusted to reflect the results of the tax
audit. The Internal Revenue Service is continuing its examination of the
consolidated federal income tax returns of HCC for 1995 and 1996. Management
believes that it will have adequate capital resources to meet the additional tax
payments, if any, resulting from such examinations.

   Financing Activities

   Senior Secured Notes -

   During May 1999, HCC completed the refinancing of its outstanding 12.75%
Senior Secured Notes through a private debt offering of $310 million of 11.25%
Senior Secured Notes due May 1, 2007 and $50 million of floating rate Senior
Secured Notes due May 1, 2006 (collectively, the "Senior Secured Notes").
Interest on the floating rate notes is equal to the six-month LIBOR rate plus
6.28% and is reset semiannually. Effective November 1, 2000, the interest rate
increased to 13%. In addition to refinancing existing debt, the Company used
proceeds from the debt offering to fund a portion of the Company's equity
investment in the Shreveport Casino and, during October 1999, to acquire the
management and consulting contracts on the Aurora Casino and Tunica Casino. The
Company also plans to use proceeds from the debt offering to finance
construction of a new, dockside gaming facility at the Aurora Casino (see
"Liquidity and Capital Resources - Capital Expenditures and Other Investing
Activities"), and, to the extent available, for working capital purposes.
Interest on the Senior Secured Notes is payable semiannually each May 1 and
November 1. The Senior Secured Notes are unconditionally guaranteed on a senior
secured basis by HCT and Shreveport Management and may be guaranteed by certain
future subsidiaries of HCC. Neither HCA nor HCL are guarantors. The Senior
Secured Notes and related guarantees are secured by, among other things, (1)
substantially all of the assets of HCT and future guarantors, (2) a lien not to
exceed approximately $108 million on substantially all of the assets of HCA, (3)
a pledge of the capital stock of certain subsidiaries of HCC, including HCA and
HCT, and (4) the collateral assignment of the management contract for the
Shreveport Casino. The lien described in (2) above is currently limited to
approximately $66 million.

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

                                       35
<PAGE>

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

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

   Shreveport First Mortgage Notes -

   On August 10, 1999 the Shreveport Partnership issued $150 million of 13%
First Mortgage Notes, with contingent interest, due 2006 (the "Shreveport First
Mortgage Notes"), which are non-recourse to HCC. Fixed interest on the
Shreveport First Mortgage Notes is payable semiannually on each February 1 and
August 1. In addition, contingent interest accrues and is payable on each
interest payment date after the Shreveport Casino begins operations. The amount
of the contingent interest is equal to 5% of the Shreveport Casino's cash flow,
as defined, for the prior two fiscal quarters up to a maximum of $5 million for
any four consecutive fiscal quarters. The notes are collateralized by a first
priority security interest in substantially all of the Shreveport Partnership's
existing and future assets other than furniture, fixtures and equipment for
which up to $35 million of financing has been or may be obtained as well as by a
pledge of the common stock of the HCC subsidiaries which hold the partnership
interests.

   The Shreveport First Mortgage Notes are redeemable at the option of the
Shreveport Partnership at any time on or after August 1, 2003 at 106.5% of the
then outstanding principal amount, decreasing to 103.25% on August 1, 2004 and
100% on or after August 1, 2005. Up to 35% of the original aggregate amount of
the Shreveport First Mortgage Notes may also be redeemed at a price of 113% plus
accrued interest at any time prior to August 1, 2002 with proceeds of
contributions to the Shreveport Partnership made by HCC from certain offerings
of equity securities by HCC.

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

   Other -

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

   HCC and PPI Corporation have entered into agreements to defer all payments of
principal and interest on the note otherwise due during the period from March 1,
2000 through March 1, 2001 while negotiations continue between GBCC and HCC to
restructure certain indebtedness owed by GBCC to HCC. These deferrals do not
extend the final maturity of the note or represent a forgiveness of either

                                       36
<PAGE>

principal or interest as all past due amounts, if not otherwise restructured,
will become due and payable on the extended payment due date of April 1, 2001.
During October 2000, HCC received $900,000 of the outstanding principal balance
from GBCC and agreed to offset an additional $146,000 of principal against other
payables due to GBCC while negotiations to restructure the debt continue.

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

   HCT had a $1.3 million bank credit facility available to borrow against
through September 30, 1998. Outstanding borrowings on the line of credit
($89,000 at December 31, 2000) are being repaid in monthly installments over 36
months and accrue interest at the rate of 8.875% per annum.

   The Shreveport Partnership entered into a lease financing agreement with
third party lessors for $30 million used to acquire furniture, fixtures and
equipment for the Shreveport Casino. Borrowings under the lease agreement accrue
interest at the rate of LIBOR plus 4% (currently 10.57%). During the
construction period, the Shreveport Partnership paid only interest on
outstanding borrowings as well as a fee of .5% per annum on the undrawn portion
of the $30 million. Effective with the opening of the Shreveport Casino, the
outstanding borrowings became payable in equal quarterly installments plus
interest over a three year period to fully amortize the obligation. The lease is
treated as a capital lease for financial reporting purposes. Borrowings under
the lease are collateralized by the furniture, fixtures and equipment purchased.
The lease agreement contains certain covenants substantially similar to those
included in the indenture for the Shreveport First Mortgage Notes.

   The Shreveport Partnership entered into a ground lease with the city of
Shreveport for the land on which the Shreveport Casino was built. The lease has
an initial term of ten years from the date the Shreveport Casino opened with
subsequent renewals for up to an additional 40 years. Base rental payments under
the lease began when construction commenced and were $10,000 per month during
the construction period. The base rental amount increased to $450,000 per year
upon opening and continue at that amount for the remainder of the initial ten-
year lease term. In addition to the base rent, the Shreveport Partnership pays
monthly percentage rent equal to the greater of (1) $500,000 per year or (2) the
sum of 1% of adjusted gross revenues of the Shreveport Casino and the amount by
which 50% of the net income from the parking facilities exceeds a specified
parking income credit. Ground lease rentals amounted to $213,000 during 2000. In
addition, the ground lease agreement also calls for payments in lieu of
admission fees to the City of Shreveport and payments to the local school board
amounting to 3.225% and .5375% of Net Gaming Proceeds (as defined in the
agreement), respectively. The payments in lieu of admission fees are subject to
an initial credit of $600,000. These additional charges amounted to $304,000
during the 2000 period subsequent to opening.

   It was originally anticipated that the Shreveport Partnership would develop
the Shreveport Casino with each of HCL and Sodak Louisiana, L.L.C. ("Sodak"), a
former partner, having a 50% interest in the development and subsequent
operations. On March 31, 1999, HCL entered into a definitive agreement with
Sodak's parent to acquire Sodak for the $2.5 million Sodak had contributed to
the Shreveport Partnership, with $1,000 to be paid at closing and the remainder
to be paid six months after the opening of the Shreveport Casino. The revised
structure of the joint venture received approval by the Louisiana Gaming Control
Board on April 20, 1999. As a result, effective as of April 23, 1999, HCL has an
effective 100% ownership interest in the Shreveport Casino with the remaining
joint venture partner holding a 10% residual interest in the event the project
is sold.

   During November 2000, the Shreveport Partnership entered into bank revolving
credit facilities of $2 million for working capital needs and $4 million to meet
liquidity requirements under Louisiana gaming regulations. The facilities are
available for a period of one year and advances under both facilities accrue
interest at the Wall Street Journal Prime Rate plus 2%. The agreements contain
certain

                                       37
<PAGE>

reporting requirements and advances are subject to specified collateral
agreements. No amounts were outstanding under the credit facilities at December
31, 2000.

   As of December 31, 2000, HCC's scheduled maturities of long-term debt and
payments under capital leases during 2001 are approximately $5.5 million and
$11.1 million, respectively.

   Capital Expenditures and Other Investing Activities

   Aurora Casino -

   Capital expenditures at the Aurora Casino during 2000 (exclusive of barge
costs - see below) were $3.5 million; management anticipates spending $4.5
million during 2001 toward its ongoing capital improvements program. Significant
projects planned for 2001 include new slot machines, renovations to restaurants
and other departmental expenditures. In addition, the Company has commenced a
major expansion of the Aurora Casino, highlighted by the construction of a new
dockside facility to replace the Aurora Casino's two riverboats. The new
dockside facility should significantly increase passenger capacity and provide a
premier gaming and entertainment facility for the Aurora Casino's patrons. The
Aurora Casino expansion, as currently planned, is projected to cost
approximately $75 million and is expected to be completed and opened by the
summer of 2002. The Company received regulatory approval for its planned
dockside casino from the Illinois Gaming Board in April 2000 and construction
began in March 2001. Approximately $40 million of the estimated $75 million in
project costs for the proposed Aurora Casino expansion were obtained from HCC's
debt offering completed in May 1999 with the remainder to come from cash on hand
and cash available from operations.

   The commencement of construction of the new dockside facility had previously
been delayed as a result of a complaint filed in late 1999 in an Illinois state
court concerning the constitutionality of a portion of the legislation that
enabled dockside gaming in Illinois. Although the constitutional challenge
centers on the relocation of one of the existing gaming licenses, a finding that
such portion of the legislation is unconstitutional could result in a finding
that all or a portion of the legislation, including dockside gaming, is invalid.
In January 2001, the presiding judge dismissed the complaint because the
plaintiffs lacked standing and failed to exhaust their administrative remedies.
The plaintiffs have filed an appeal of the ruling. If an appellate court
overturns the trial court's original ruling and the state court rules that all
or a portion of the legislation is invalid, management believes that it may be
able to continue to operate its existing riverboats on a dockside basis pending
a final resolution of the litigation. In the unlikely event that the provisions
in question are found to be unconstitutional after all appeals, and the entire
legislation is invalidated so that dockside gaming is not permitted, the Company
will be able to use its two riverboats to conduct gaming.

   Without regard to the Company's plan to construct the new dockside gaming
facility, management undertook and completed construction of an expansion link
barge in August 2000 to connect its two existing riverboats. The project cost
approximately $4.7 million to complete, including approximately $1.6 million in
docking facilities that can be used for the new dockside casino. The casino link
barge provides a large, open space allowing casino patrons to move freely
between the two existing boats. The link barge also contains a cashier's cage, a
promotions booth and a cocktail lounge for casino patrons. Management believes
the reconfigured link barge facility has enhanced current operations and
maximizes the dockside gaming potential of the Aurora Casino pending the
replacement of its existing riverboats with the new dockside facility.

   The Company plans to build the new dockside casino in two halves, which will
be connected to form a single dockside casino. The first half of the dockside
casino will be towed into place and opened several months earlier than the
second half. It is anticipated that this strategy will minimize disruption of
the Aurora Casino's operations during the construction period. The Aurora Casino
will prospectively

                                       38
<PAGE>

adjust the remaining useful lives of its existing riverboats and other fixed
assets being replaced to reduce the recorded net book value of such assets
(approximately $34.6 million at December 31, 2000) to their estimated net
realizable value at the time they are removed from service. As a result,
depreciation expense during the construction period will increase by
approximately $2.2 million per month.

   Tunica Casino -

   Capital expenditures at the Tunica Casino during 2000 amounted to $3.7
million; management anticipates spending $4.5 million during 2001. Expenditures
during 2000 included updating slot machines, upgrades to marketing systems,
renovations to hotel suites and other departmental expenditures. Projects
included in $4.5 million budget for 2001consist primarily of updating existing
and acquiring new slot machines, replacing the casino carpeting and other
departmental expenditures. In addition, the Company is considering the
construction of a new buffet to replace the existing facility. The new Hollywood
Epic Buffet would feature a new design and the latest in kitchen and serving
equipment. The new buffet, as currently planned, would more than double the
existing seating capacity. Construction of the buffet, which would cost an
estimated $9 million, could begin in 2001 with a scheduled opening in late 2001
or early 2002.

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

   Shreveport Casino -

   The total estimated cost of the Shreveport Casino was approximately $230
million, of which approximately $205 million had been spent as of December 31,
2000. Construction related obligations at December 31, 2000 amounted to
approximately $15 million. HCL contributed approximately $54.9 million as an
equity investment in the project with the other joint venture partner
contributing $1 million to the project with the proceeds of a loan from HCL. The
loan accrues interest at the rate of prime commencing with the opening of the
Shreveport Casino and is payable monthly. Principle on the loan is payable on
December 20, 2010. The joint venture partner was also given credit for an
additional $1 million capital contribution upon the closing of the Shreveport
First Mortgage Notes and payment of the $5 million obligation discussed below.
The credit was in recognition of guarantees provided by an affiliate of the
partner which were necessary for the Shreveport Partnership to obtain approval
of its license. The $2 million equity interest of the partner is reflected as
minority interest on the consolidated financial statements of HCC.

   In addition to the capital contributions, funding for the remaining
construction and preopening costs was provided by the Shreveport First Mortgage
Notes which are non-recourse to HCC (see "Liquidity and Capital Resources -
Financing Activities") and by $30 million of furniture, fixture and equipment
financing. In addition, HCC agreed to contribute up to an additional $5 million
in equity to the Shreveport Casino under certain circumstances which include
cost overruns or delays. On April 23, 2000, the construction site for the
Shreveport Casino suffered tornado damage which delayed the opening of the
facility. Management filed damage claims and received reimbursements from its
insurance carrier during 2000 in the amount of approximately $1,700,000 to cover
the damage incurred. In addition, management is seeking to recover lost profits
and related claims under its business interruption insurance coverage. The
recovery of these amounts is currently subject to litigation and management is
unable to determine the amount, if any, that will ultimately be received.

   Capital expenditures at the Shreveport Casino during 2000 to construct, equip
and open the resort amounted to $116.1 million. Management anticipates spending
$6 million during 2001, including $3 million to finish out construction of the
Shreveport Casino's spa and certain of its hotel suites and $3 million toward
its ongoing program of capital improvements.

                                       39
<PAGE>

   In September 1998, HCL and its partners acquired their interests in the
Shreveport Partnership from its former partners who, prior to October 1997,
conducted riverboat gaming operations in New Orleans. In connection with moving
the license to Shreveport, the current and former partners negotiated a
settlement with the City of New Orleans which among other things, required that
one of the former partners pay $5 million to the City. The current partners
agreed that the Shreveport Casino would pay the City of New Orleans $5 million
upon securing financing for construction of their project (the Shreveport
Casino); such payment was made in August 1999. In addition, the current partners
agreed that the Shreveport Casino would reimburse the former partner $2 million
of the amount it paid to the City; such repayment is to be made in monthly
installments of $200,000, without interest, commencing with the opening of the
Shreveport Casino. The $2 million liability, net of a discount in the original
amount of $308,000, and the related adjustment to the recorded value of project
costs were recorded upon issuance of the Shreveport First Mortgage Notes in
August 1999.

   The Shreveport Partnership entered into an agreement with a third party
during 2000 providing for the joint construction and ownership of a golf course.
Contributions by the Shreveport Partnership during 2000 to the limited liability
corporation formed to develop and operate the golf course were $48,000;
contributions expected to be made during 2001 are approximately $2.6 million.

   Other -

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

   Conclusion

   Management anticipates that HCC's funding requirements for its operating
activities will continue to be satisfied by existing cash and cash generated by
the Aurora Casino, Tunica Casino and Shreveport Casino.  Approximately $40
million of proceeds remaining from the Senior Secured Notes, together with cash
on hand and cash available from operations, are expected to be used for the
planned expansion of the Aurora Casino.

                                       40
<PAGE>

ITEM 8.  INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                  Page
                                                                                  ----
<S>                                                                               <C>
Hollywood Casino Corporation and Subsidiaries:

 Independent Auditors' Report...................................................   42

 Consolidated Balance Sheets as of December 31, 2000
   and 1999.....................................................................   43

 Consolidated Statements of Operations for the Years
   Ended December 31, 2000, 1999 and 1998.......................................   45

 Consolidated Statement of Changes in Shareholders'
   Deficit for the Three Years Ended December 31, 2000..........................   46

 Consolidated Statements of Cash Flows for the Years
   Ended December 31, 2000, 1999 and 1998.......................................   47

 Notes to Consolidated Financial Statements.....................................   48

Hollywood Casino-Aurora, Inc.

 Independent Auditors' Report...................................................   77

 Balance Sheets as of December 31, 2000 and 1999................................   78

 Statements of Operations for the Years Ended
  December 31, 2000, 1999 and 1998..............................................   80

 Statement of Changes in Shareholder's Equity for the Three Years
  Ended December 31, 2000.......................................................   81

 Statements of Cash Flows for the Years Ended December 31, 2000, 1999
  and 1998......................................................................   82

 Notes to Financial Statements..................................................   83

HWCC-Tunica, Inc.

 Independent Auditors' Report...................................................   95

 Consolidated Balance Sheets as of December 31, 2000 and 1999...................   96

 Consolidated Statements of Operations for the Years
  Ended December 31, 2000, 1999 and 1998........................................   98

 Consolidated Statement of Changes in Shareholder's Equity for the Three Years
  Ended December 31, 2000.......................................................   99

 Consolidated Statements of Cash Flows for the Years Ended
  December 31, 2000, 1999 and 1998..............................................  100

 Notes to Consolidated Financial Statements.....................................  101
</TABLE>

                                       41
<PAGE>

INDEPENDENT AUDITORS' REPORT


To Hollywood Casino Corporation:

We have audited the accompanying consolidated balance sheets of Hollywood Casino
Corporation (the Company and a Delaware corporation) and subsidiaries as of
December 31, 2000 and 1999, 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, 2000.  These financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion,  the consolidated financial statements present fairly, in all
material respects, the financial position of Hollywood Casino Corporation and
subsidiaries as of December 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States of America.



Deloitte & Touche LLP
Dallas, Texas
March 15, 2001

                                       42
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS

                                    ASSETS
<TABLE>
<CAPTION>
                                                                December 31,
                                                        -----------------------------
                                                             2000           1999
                                                        -------------   ------------
<S>                                                     <C>             <C>
Current Assets:
 Cash and cash equivalents                              $ 155,570,000   $115,351,000
 Receivables, net of allowances of
  $2,668,000 and $1,826,000, respectively                   5,552,000      4,010,000
 Inventories                                                3,603,000      1,630,000
 Deferred income taxes                                      3,054,000      1,776,000
 Refundable deposits and other
  current assets                                            4,153,000      4,096,000
 Due from affiliates, net of valuation allowances           6,661,000      7,705,000
                                                        -------------   ------------

  Total current assets                                    178,593,000    134,568,000
                                                        -------------   ------------


Property and Equipment:
 Land                                                       9,594,000      7,948,000
 Buildings and improvements                               222,637,000    122,122,000
 Riverboats and barges                                     89,421,000     40,367,000
 Operating equipment                                      134,362,000     85,812,000
 Construction in progress                                   4,849,000     44,331,000
                                                        -------------   ------------

                                                          460,863,000    300,580,000
 Less - accumulated depreciation
  and amortization                                       (105,406,000)   (92,958,000)
                                                        -------------   ------------

  Net property and equipment                              355,457,000    207,622,000
                                                        -------------   ------------

Cash restricted for construction projects                   9,530,000    147,310,000
                                                        -------------   ------------

Other Assets:
 Deferred financing costs                                  14,875,000     15,256,000
 Land rights                                                6,843,000      7,047,000
 Land held for sale, net of a valuation allowance of
  $3,084,000 in 1999                                                -      2,216,000
 Other assets                                              12,602,000     11,798,000
                                                        -------------   ------------

  Total other assets                                       34,320,000     36,317,000
                                                        -------------   ------------

                                                        $ 577,900,000   $525,817,000
                                                        =============   ============
</TABLE>


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

                                       43
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS

                     LIABILITIES AND SHAREHOLDERS' DEFICIT
<TABLE>
<CAPTION>

                                                                         December 31,
                                                                ------------------------------
                                                                    2000             1999
                                                                -------------   -------------
<S>                                                             <C>             <C>
Current Liabilities:
 Current maturities of long-term debt
  and capital lease obligations                                 $  16,493,000   $   4,538,000
 Note payable                                                       2,499,000               -
 Accounts payable                                                  22,177,000      15,293,000
 Accrued liabilities -
  Salaries and wages                                                9,657,000       6,019,000
  Interest                                                         18,067,000      16,784,000
  Gaming and other taxes                                            3,229,000       2,586,000
  Insurance                                                         2,816,000       2,890,000
  Other                                                             5,398,000       4,330,000
 Federal income taxes payable                                       3,299,000       3,234,000
 Other current liabilities                                          3,560,000       2,749,000
                                                                -------------   -------------

  Total current liabilities                                        87,195,000      58,423,000
                                                                -------------   -------------

Long-Term Debt                                                    510,868,000     514,959,000
                                                                -------------   -------------

Capital Lease Obligations                                          37,861,000      18,961,000
                                                                -------------   -------------

Other Noncurrent Liabilities                                        5,658,000       5,631,000
                                                                -------------   -------------

Commitments and Contingencies

Minority Interest (Note 7)                                          2,078,000       2,000,000
                                                                -------------   -------------

Shareholders' Deficit:
 Common Stock -
  Class A common stock, $.0001 par value per share;
     50,000,000 shares authorized; 24,997,000 and 24,950,000
   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                                       217,030,000     216,928,000
 Accumulated deficit                                             (282,792,000)   (291,087,000)
                                                                -------------   -------------

  Total shareholders' deficit                                     (65,760,000)    (74,157,000)
                                                                -------------   -------------

                                                                $ 577,900,000   $ 525,817,000
                                                                =============   =============
</TABLE>


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

                                       44
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                         Year Ended December 31,
                                                                 ------------------------------------------
                                                                     2000          1999            1998
                                                                 ------------   ------------   ------------
<S>                                                              <C>            <C>            <C>
Revenues:
 Casino                                                          $333,427,000   $292,920,000   $252,863,000
 Rooms                                                             10,992,000     10,457,000      9,386,000
 Food and beverage                                                 33,773,000     29,834,000     28,810,000
 Other                                                              4,892,000      4,814,000      4,229,000
                                                                 ------------   ------------   ------------
                                                                  383,084,000    338,025,000    295,288,000
 Less - promotional allowances                                    (34,902,000)   (30,653,000)   (26,528,000)
                                                                 ------------   ------------   ------------

  Net revenues                                                    348,182,000    307,372,000    268,760,000
                                                                 ------------   ------------   ------------
Expenses:
 Casino                                                           239,048,000    210,023,000    184,589,000
 Rooms                                                              1,190,000      1,161,000      1,752,000
 Food and beverage                                                  9,331,000      8,533,000      8,778,000
 Other                                                              2,013,000      2,251,000      2,717,000
 General and administrative                                        20,368,000     20,174,000     18,978,000
 Depreciation and amortization                                     13,647,000     14,163,000     15,610,000
 Development                                                        1,058,000        946,000        779,000
 Preopening                                                        14,794,000        841,000              -
 Termination of management and consulting agreements                        -     40,389,000              -
 Write down of assets                                                       -     13,322,000              -
                                                                 ------------   ------------   ------------
   Total expenses                                                 301,449,000    311,803,000    233,203,000
                                                                 ------------   ------------   ------------

Income (loss) from operations                                      46,733,000     (4,431,000)    35,557,000
                                                                 ------------   ------------   ------------
Non-operating income (expenses):
 Interest income                                                   11,349,000      7,868,000      2,844,000
 Interest expense, net of capitalized interest
  of $11,814,000 in 2000 and $1,052,000 in 1999                   (55,191,000)   (47,050,000)   (31,212,000)
 Tax settlement costs                                                       -              -     (1,087,000)
 Gain on settlement of litigation, net                              7,220,000              -              -
 Equity in losses of unconsolidated affiliate                         (55,000)      (141,000)             -
 Gain (loss) on disposal of assets                                    190,000       (567,000)       (61,000)
                                                                 ------------   ------------   ------------
  Total non-operating expenses, net                               (36,487,000)   (39,890,000)   (29,516,000)
                                                                 ------------   ------------   ------------

Income (loss) before income taxes, extraordinary
 and other items                                                   10,246,000    (44,321,000)     6,041,000
Income tax provision                                               (1,873,000)    (1,196,000)      (816,000)
                                                                 ------------   ------------   ------------

Income (loss) before extraordinary and other items                  8,373,000    (45,517,000)     5,225,000
Minority interest in Hollywood Casino Shreveport (Note 7)             (78,000)             -              -
Minority interest in earnings of Limited Partnership (Note 1)               -     (5,801,000)    (6,494,000)
                                                                 ------------   ------------   ------------

Income (loss) before extraordinary item                             8,295,000    (51,318,000)    (1,269,000)
Extraordinary item:
 Loss on early extinguishment of debt                                       -    (30,353,000)      (336,000)
                                                                 ------------   ------------   ------------

Net income (loss)                                                $  8,295,000   $(81,671,000)  $ (1,605,000)
                                                                 ============   ============   ============

Basic net income (loss) per common share:
 Income (loss) before extraordinary item                         $        .33   $      (2.05)  $       (.05)
 Extraordinary item                                                         -          (1.22)          (.01)
                                                                 ------------   ------------   ------------

 Net income (loss)                                               $        .33   $      (3.27)  $       (.06)
                                                                 ============   ============   ============

Diluted net income (loss) per common share:
 Income (loss) before extraordinary item                         $        .31   $      (2.05)  $       (.05)
 Extraordinary item                                                         -          (1.22)          (.01)
                                                                 ------------   ------------   ------------

 Net income (loss)                                               $        .31   $      (3.27)  $       (.06)
                                                                 ============   ============   ============
</TABLE>

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

                                       45
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES
      CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
                  For the Three Years Ended December 31, 2000

<TABLE>
<CAPTION>
                                          Class A           Additional
                                       Common Stock           Paid-in     Accumulated
                                   -----------------------
                                     Shares       Amount       Capital       Deficit
                                   ----------  -----------  ------------  -------------
<S>                                <C>         <C>          <C>           <C>
BALANCES, January 1, 1998          24,910,000  $     2,000  $216,926,000  $(207,811,000)
 Exercise of stock options             40,000            -             -              -
 Net loss                                   -            -             -     (1,605,000)
                                   ----------  -----------  ------------  -------------

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

BALANCES, December 31, 1999        24,950,000        2,000   216,928,000   (291,087,000)
                                   ----------  -----------  ------------  -------------

 Grant of stock options to non-
   employee directors                       -            -        15,000              -
 Exercise of stock options             47,000            -        87,000              -
 Net income                                 -            -             -      8,295,000
                                   ----------  -----------  ------------  -------------

BALANCES, December 31, 2000        24,997,000  $     2,000  $217,030,000  $(282,792,000)
                                   ==========  ===========  ============  =============
</TABLE>

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

                                       46
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                   Year Ended December 31,
                                                                         --------------------------------------------
                                                                              2000           1999           1998
                                                                         -------------   -------------   ------------
<S>                                                                      <C>             <C>             <C>
OPERATING ACTIVITIES:
 Net income (loss)                                                       $   8,295,000   $ (81,671,000)  $ (1,605,000)
 Adjustments to reconcile net income (loss) to net cash provided by
  operating activities:
  Extraordinary item                                                                 -      30,353,000        336,000
  Depreciation and amortization, including accretion of debt discount       16,166,000      16,135,000     17,581,000
  Write down of assets                                                               -      13,322,000              -
  (Gain) loss on disposal of assets                                           (190,000)        567,000         61,000
  Minority interest in Hollywood Casino Shreveport                              78,000               -              -
  Minority interest in earnings of Limited Partnership                               -       5,801,000      6,494,000
  Grant of stock options                                                        15,000           2,000              -
  Equity in losses of unconsolidated affiliate                                  55,000         141,000              -
  Provision for doubtful accounts                                            1,461,000         804,000        756,000
  Deferred income tax (benefit) provision                                     (286,000)     (3,403,000)        81,000
  Increase in receivables                                                   (3,003,000)     (1,103,000)      (384,000)
  Increase in accounts payable and accrued expenses                         13,503,000      23,871,000      2,035,000
  Increase (decrease) in federal taxes payable                                  65,000       3,234,000     (6,878,000)
  Net change in other current assets and liabilities                        (1,250,000)     (4,280,000)        62,000
  Net change in other noncurrent assets and liabilities                     (1,714,000)       (342,000)    (1,774,000)
                                                                         -------------   -------------   ------------

   Net cash provided by operating activities                                33,195,000       3,431,000     16,765,000
                                                                         -------------   -------------   ------------

INVESTING ACTIVITIES:
 Purchases of property and equipment                                      (128,842,000)    (49,758,000)   (12,051,000)
 Collections on notes receivable                                               900,000               -      6,000,000
 Proceeds from sale of assets                                                2,492,000       3,959,000        129,000
 Increase in cash from acquisition                                                   -       1,525,000              -
 Loan to joint venture partner                                                       -      (1,000,000)             -
 Short-term investments                                                              -       3,905,000        (29,000)
 Investments in unconsolidated affiliates                                      (48,000)        (45,000)    (2,553,000)
 Net change in cash restricted for construction projects                   137,780,000    (147,310,000)             -
                                                                         -------------   -------------   ------------

  Net cash provided by (used in) investing activities                       12,282,000    (188,724,000)    (8,504,000)
                                                                         -------------   -------------   ------------

FINANCING ACTIVITIES:
 Proceeds from issuance of long-term debt                                      139,000     493,474,000      2,687,000
 Deferred financing costs                                                   (1,955,000)    (17,134,000)      (248,000)
 Repayments of long-term debt                                               (2,542,000)   (210,006,000)    (2,334,000)
 Payments on capital lease obligations                                        (987,000)       (893,000)      (861,000)
 Issuance of common stock                                                       87,000               -              -
 Investment by joint venture partner                                                 -       1,000,000              -
 Limited partnership distributions                                                   -      (7,915,000)    (5,646,000)
                                                                         -------------   -------------   ------------

  Net cash (used in) provided by financing activities                       (5,258,000)    258,526,000     (6,402,000)
                                                                         -------------   -------------   ------------

  Net increase in cash and cash equivalents                                 40,219,000      73,233,000      1,859,000
   Cash and cash equivalents at beginning of year                          115,351,000      42,118,000     40,259,000
                                                                         -------------   -------------   ------------

   Cash and cash equivalents at end of year                              $ 155,570,000   $ 115,351,000   $ 42,118,000
                                                                         =============   =============   ============
</TABLE>

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

                                       47
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(1)  Organization and Business

     Hollywood Casino Corporation ("HCC" or the "Company"), is a Delaware
corporation which was organized and incorporated on November 5, 1990.
Approximately 54% of the issued and outstanding stock of HCC is owned by Jack E.
Pratt, Edward T. Pratt, Jr. and William D. Pratt (the "Pratt Brothers"), by
certain general partnerships and trusts controlled by the Pratt Brothers and by
other family members (collectively, the "Pratt Family"). The Pratt Family also
owns approximately 36% of the outstanding common stock of Greate Bay Casino
Corporation ("GBCC"), a Delaware corporation, which previously held management
and consulting contracts with casino properties owned by HCC.

     HCC owns all of the outstanding common stock of Hollywood Casino - Aurora,
Inc. ("HCA"), HWCC - Tunica, Inc. ("HCT"), HWCC-Louisiana, Inc. ("HCL") and
HWCC-Shreveport, Inc. ("Shreveport Management").  HCA is an Illinois corporation
organized during 1990 which owns and operates a riverboat gaming operation with
approximately 32,000 square feet of gaming space together with docking and other
entertainment facilities under the service mark Hollywood Casino(R) in Aurora,
Illinois approximately 35 miles west of downtown Chicago (the "Aurora Casino").
HCT is a Texas corporation formed by HCC during 1993 which owns and operates a
54,000 square foot gaming facility, adjacent support facilities and a 506-room
hotel complex under the service mark Hollywood Casino(R) in northern Tunica
County, Mississippi approximately 30 miles south of Memphis, Tennessee (the
"Tunica Casino").  HCL is a Louisiana corporation formed by HCC in 1993 which
owns and operates a 59,000 square foot dockside gaming facility, adjacent
support facilities, and a 403-room, all suite, art deco style hotel in
Shreveport, Louisiana approximately 180 miles east of Dallas, Texas (the
"Shreveport Casino"). Shreveport Management is a Louisiana corporation formed by
HCC in 1997 which will hold the management contract for the Shreveport Casino.
The Aurora Casino, the Tunica Casino and the Shreveport Casino commenced
operations in June 1993, August 1994 and December 2000, respectively.

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

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

     HCC acquired all of the capital stock of PCC from GBCC in October 1999.
When acquired by HCC, PCC's assets consisted of its management contract for the
Aurora Casino and its consulting agreement with the Tunica Casino and its
liabilities consisted of a $40.3 million obligation payable in satisfaction of
certain notes issued by a subsidiary of PCC and guaranteed by PCC. The payment
of the $40.3 million in obligation by HCC in October 1999 resulted in the
termination of the management contract and consulting agreement and was
reflected as a charge to expense by the affected entities during 1999.

                                       48
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


     In September 1998, a joint venture in which HCL was a partner (the
"Shreveport Partnership") received approval to develop, own and operate the
Shreveport Casino. HCL originally planned to develop the Shreveport Casino with
two partners in a joint venture in which it would have had an interest of
approximately 50%. On March 31, 1999, HCL entered into a definitive agreement
with one of the joint venture partners to acquire its interest in the Shreveport
Partnership. As a result, HCL obtained an effective 100% ownership interest in
the Shreveport Casino with the remaining joint venture partner holding a
residual interest in the event the project is ever sold amounting to 10% plus
any capital contributions made by the joint venture partner to the Shreveport
Partnership or otherwise credited to their account. The remaining joint venture
partner's interest is reflected as minority interest on the accompanying
consolidated balance sheets at December 31, 2000 and 1999 (see Note 7 with
respect to other transactions with the joint venture partner). The acquisition
of the joint venture interest was accounted for under the purchase method of
accounting. For periods subsequent to the April 23, 1999 acquisition, the
Shreveport Partnership has been included in the consolidated financial
statements of HCC. The acquired company had no significant operating activities
prior to the acquisition date.

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

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

(2)  Summary of Significant Accounting Policies

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

 Principles of consolidation -

     The consolidated financial statements include the accounts of HCC and its
wholly owned subsidiaries and, for periods subsequent to April 23, 1999, the
accounts of the Shreveport Partnership. All significant intercompany balances
and transactions have been eliminated. Investments in

                                       49
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


unconsolidated affiliates including joint ventures that were 50% or less owned
are accounted for by the equity method.

 Casino revenues, promotional allowances and departmental expenses -

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

     The estimated value of rooms, food and beverage and other items which were
provided to customers without charge has been included in revenues and a
corresponding amount has been deducted as promotional allowances. The costs of
such complimentaries have been included as casino expenses on the accompanying
consolidated statements of operations. Costs of complimentaries allocated from
the rooms, food and beverage and other operating departments to the casino
department during the years ended December 31, 2000, 1999 and 1998 are as
follows:

                                             2000         1999         1998
                                          -----------  -----------  -----------

Rooms                                     $ 3,230,000  $ 2,742,000  $ 1,940,000
Food and beverage                          26,338,000   22,613,000   20,887,000
Other                                       1,701,000    1,394,000    1,431,000
                                          -----------  -----------  -----------

                                          $31,269,000  $26,749,000  $24,258,000
                                          ===========  ===========  ===========

Cash and cash equivalents -

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

 Cash restricted for construction project -

     Cash restricted for construction project consists of investments in
government securities which are to be used for specified purposes and which were
purchased with net proceeds from the Shreveport First Mortgage Notes (see Note
3) as required by the indenture for the Shreveport First Mortgage Notes. Prior
to the opening of the Shreveport Casino on December 20, 2000, such restricted
cash included (1) funds to be used for construction which were subject to
meeting certain conditions prior to their disbursement and (2) funds to be used
to complete and open the Shreveport Casino in the event the construction funds
in (1) above were not sufficient. Restricted cash also includes an account with
funds to be used to make the first three semiannual interest payments with
respect to the Shreveport First Mortgage Notes; the restrictions on such account
were removed when the third interest payment was made on February 1, 2001.
Interest earned, but not yet received, on restricted cash investments is
included in interest receivable on the accompanying consolidated balance sheets.
Upon receipt, interest is included in cash restricted for construction project.

                                       50
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


     Cash restricted for construction project is comprised of the following:


                                             December 31,  December 31,
                                                2000           1999
                                             ------------  ------------

     Construction reserve                    $          -  $114,964,000
     Interest reserve                           9,530,000    27,275,000
     Completion reserve                                 -     5,071,000
                                             ------------  ------------

                                             $  9,530,000  $147,310,000
                                             ============  ============
 Allowance for doubtful accounts -

     The allowance for doubtful accounts is maintained at a level considered
adequate to provide for possible future losses. Provisions for doubtful accounts
amounting to $1,461,000, $804,000 and $756,000 were made during the years ended
December 31, 2000, 1999 and 1998, 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 the estimated useful lives of the assets
as follows:

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

     A portion of the interest incurred on construction financing is capitalized
during the construction period. Capitalized interest amounted to $11,814,000 and
$1,052,000, respectively, during the years ended December 31, 2000 and 1999.
Such capitalized costs are allocated to the individual components of property
and equipment and other assets and, once placed in service, are amortized over
the useful lives of the related assets.

 Deferred financing costs -

     The costs of issuing long-term debt, including all underwriting, licensing,
legal and accounting fees, have been deferred and are being amortized over the
term of the related debt issues using either the effective interest method or,
where appropriate, the straight-line method approximating the effective interest
method. Amortization of such costs was $2,429,000, $1,510,000 and $952,000 for
the years ended December 31, 2000, 1999 and 1998, respectively, and is included
in interest expense on the accompanying consolidated statements of operations.
Deferred financing costs, net of accumulated amortization, amounting to
$4,182,000 and $62,000, respectively, were written off during 1999 and 1998 with
respect to the reacquisition of outstanding debt. An additional $978,000 of
deferred financing costs were written off in 1999 with respect to the
acquisition of PCC.

                                       51
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


 Long-lived assets -

     Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
requires, among other things, that an entity review its long-lived assets and
certain related intangibles for impairment whenever changes in circumstances
indicate that the carrying amount of an asset may not be fully recoverable. HCC
does not believe that any such events or changes occurred during the year ended
December 31, 2000.

     On February 26, 2001, management announced the commencement of construction
of a significant expansion of the Aurora Casino (see Note 15). As a result of
such plans, management conducted a review of its long-lived assets for possible
impairment. Based on the undiscounted cash flows anticipated to be earned during
the construction period, management has concluded that no impairment of the
Aurora Casino's assets exists and no write down of its assets is required. The
Aurora Casino will prospectively adjust the remaining useful lives of its
existing riverboats and other fixed assets being replaced to reduce the recorded
net book value of such assets (approximately $34.6 million at December 31, 2000)
to their estimated net realizable value at the time they are removed from
service. As a result, depreciation expense during the construction period will
increase by approximately $2,200,000 per month.

     Land held for sale was carried at the lower of carrying amount or estimated
fair value less selling costs. During 2000, HCC sold a parcel of real property
realizing a gain on the sale of $190,000. During 1999, a parcel of real property
was sold at a price approximating its net book value; accordingly, no gain or
loss was recognized on the sale.

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

 Preopening costs -

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

 Interest expense -

     Interest expense includes the accretion of debt discount amounting to
$154,000, $491,000 and $1,019,000 during the years ended December 31, 2000, 1999
and 1998, respectively.

                                       52
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


 Land rights -

     Land rights are being amortized on a straight-line basis over the estimated
useful life of the Tunica facility, which is less than the term of the ground
lease including renewals (see Note 10); such amortization commenced with the
opening of the Tunica Casino. Management presently intends to renew the ground
lease at least through the estimated 40-year useful life of the facility.
Accumulated amortization of such land rights amounted to $1,602,000 and
$1,398,000, respectively, at December 31, 2000 and 1999.

 Employee Stock Options -

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

 Earnings per common share -

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

     The weighted average number of shares of common stock and potential common
shares outstanding used for the calculation of earnings per share is as follows:

                                                  Year Ended December 31,
                                             ----------------------------------
                                                2000        1999        1998
                                             ----------  ----------  ----------

Shares used in the calculation of:

Basic net income per share                   24,965,804  24,949,976  24,946,359
Diluted net income per share                 26,533,382  24,949,976  24,946,359

     The number of shares used in the calculation of diluted earnings per share
for the year ended December 31, 2000 has been adjusted to include potential
common shares arising from stock options held by certain employees and
directors. The calculation of diluted earnings per share for each of the three
years ended December 31, 2000 excludes certain options to purchase common stock
which would be

                                       53
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


antidilutive to the diluted earnings per share calculation. The weighted average
number of options excluded was 2,675 for 2000, 2,056,806 for 1999 and 973,059
for 1998.

 Recent Accounting Pronouncement -

     In June 1998, the Financial Accounting Standards Board issued a new
statement, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133"), which has been amended to be effective for fiscal years beginning after
June 15, 2000.  SFAS 133 requires, among other things, that derivatives be
recorded on the balance sheet at fair value.  Changes in the fair value of
derivatives may, depending on circumstances, be recognized in earnings or
deferred as a component of shareholders' equity until a hedged transaction
occurs.  The adoption of SFAS 133 on January 1, 2001 had no impact on the
consolidated financial position or results of operations of HCC.

 Reclassifications -

     Certain reclassifications have been made to the prior years' consolidated
financial statements to conform to the 2000 consolidated financial statement
presentation.

(3)  Long-Term Debt and Pledge of Assets

     Substantially all of HCC's assets are pledged in connection with its long-
term indebtedness.  The obligations of HCL and its subsidiaries are non-recourse
to HCC.

<TABLE>
<CAPTION>
                                                           December 31,   December 31,
                                                               2000           1999
                                                           ------------   ------------
<S>                                                        <C>            <C>
Indebtedness of HCC:
 11.25% Senior Secured Notes, due 2007 (a)                 $310,000,000   $310,000,000
 Floating rate Senior Secured Notes, due 2006 (a)            50,000,000     50,000,000
 Promissory note due to affiliate (Note 7)                    1,893,000      2,033,000
                                                           ------------   ------------
                                                            361,893,000    362,033,000
                                                           ------------   ------------
Indebtedness of HCA:
 Promissory note to bank (b)                                  1,145,000      1,952,000
                                                           ------------   ------------
Indebtedness of HCT:
 Equipment loans (c)                                          1,188,000      2,488,000
 Bank credit facility (d)                                        89,000        278,000
                                                           ------------   ------------
                                                              1,277,000      2,766,000
                                                           ------------   ------------
Indebtedness of HCL which is non-recourse to HCC:
 13% Shreveport First Mortgage Notes, with contingent
  interest, due 2006 (e)                                    150,000,000    150,000,000
 Note payable, net of discount of $87,000 and
  $241,000, respectively (f)                                  1,913,000      1,759,000
  Other                                                          33,000              -
                                                           ------------   ------------
                                                            151,946,000    151,759,000
                                                           ------------   ------------

 Total indebtedness                                         516,261,000    518,510,000
  Less - current maturities                                  (5,393,000)    (3,551,000)
                                                           ------------   ------------

   Total long-term debt                                    $510,868,000   $514,959,000
                                                           ============   ============
</TABLE>

______________________

                                       54
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


(a)  During May 1999, HCC completed the refinancing of its outstanding 12.75%
     senior secured notes through a debt offering of $310,000,000 of 11.25%
     Senior Secured Notes due May 1, 2007 and $50,000,000 of floating rate
     Senior Secured Notes due May 1, 2006 (collectively, the "Senior Secured
     Notes").  Interest on the floating rate notes is equal to the six-month
     LIBOR rate plus 6.28% and is reset semiannually.  Interest on the floating
     rate notes has been adjusted from an initial rate of 11.36% to 12.41% per
     annum effective November 1, 1999, to $12.89% effective May 1, 2000 and to
     13% effective November 1, 2000.  In addition to refinancing existing debt,
     the Company used proceeds from the debt offering to fund a portion of its
     equity investment in the Shreveport Casino and, during October 1999, to
     acquire the management and consulting contracts on the Aurora Casino and
     Tunica Casino (see Note 1).  The Company also plans to use proceeds from
     the debt offering to finance construction of a new, dockside gaming
     facility at the Aurora Casino and, to the extent available, for working
     capital purposes.  Interest on the Senior Secured Notes is payable each May
     1 and November 1.  The Senior Secured Notes are unconditionally guaranteed
     on a senior secured basis by HCT and Shreveport Management and may be
     guaranteed by certain future subsidiaries of HCC.  Neither HCA nor HCL are
     guarantors. The Senior Secured Notes and related guarantees are secured by,
     among other things, (1) substantially all of the assets of HCT and future
     guarantors, (2) a lien not to exceed approximately $108,000,000 on
     substantially all of the assets of HCA, (3) a  pledge of the capital stock
     of certain subsidiaries of HCC, including HCA and HCT, and (4) the
     collateral assignment of the management contract for the Shreveport Casino.
     The limitation on the lien described in (2) above is currently $66,007,000.

     The fixed rate Senior Secured Notes are redeemable at the option of HCC any
     time on or after May 1, 2003 at 107% of the then outstanding principal
     amount, decreasing to 104.666%, 102.333% and 100%, respectively, on May 1,
     2004, 2005 and 2006.  The Company may also redeem up to 35% of the fixed
     rate Senior Secured Notes at a redemption price of 111.25% plus accrued
     interest at any time prior to May 1, 2002 with the proceeds from an
     offering of HCC's common stock if net proceeds to the Company from any such
     offering are at least $20,000,000.

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

     The indenture for the Senior Secured Notes contains various provisions
     limiting the ability of HCC and certain defined subsidiaries to, among
     other things, pay dividends or make other restricted payments; incur
     additional indebtedness or issue preferred stock, create liens, create
     dividend or other payment restrictions affecting certain defined
     subsidiaries; enter into mergers or consolidations or make sales of all or
     substantially all assets of HCC, HCT, Shreveport Management or any future
     guarantor; or enter into certain transactions with affiliates.  The
     indenture also requires certain financial reporting information (see Note
     13).

(b)  During September 1998, HCA entered into a bank loan agreement to borrow up
     to $2,000,000 on an unsecured basis.  Borrowings under the agreement are
     payable in 36 monthly installments of $62,000 including interest at the
     rate of 7.5% per annum.  HCA borrowed $2,000,000 under the agreement during
     October 1998.

                                       55
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


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

(c)  The equipment loans are payable monthly including interest at effective
     rates ranging from 8.5% to 12.9% per annum and mature at various dates
     between 2001 and 2002.

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

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

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

     The Shreveport First Mortgage Notes are redeemable at the option of the
     Shreveport Partnership at any time on or after August 1, 2003 at 106.5% of
     the then outstanding principal amount, decreasing to 103.25% on August 1,
     2004 and 100% on or after August 1, 2005.  Up to 35% of the original
     aggregate amount of the Shreveport First Mortgage Notes may also be
     redeemed at a price of 113% plus accrued interest at any time prior to
     August 1, 2002 with proceeds of contributions to the Shreveport Partnership
     made by HCC from certain offerings of equity securities by HCC.

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

(f)  In September 1998, HCC and its partners acquired their interests in the
     Shreveport Partnership from its former partners who, prior to October 1997,
     conducted riverboat gaming operations in New Orleans. In connection with
     moving the licensed site to Shreveport, the current and former partners
     negotiated a settlement with the City of New Orleans which, among other
     things, required that one of the former partners pay $5,000,000 to the
     City. The current partners agreed that the Shreveport Casino would pay the
     City an additional $5,000,000 upon securing financing

                                       56
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


     for construction of the project (the Shreveport Casino); such payment was
     made in August 1999. In addition, the current partners agreed that the
     Shreveport Casino would, contingent on securing financing, reimburse the
     former partner $2,000,000 of the amount it paid to the City; such repayment
     being made in monthly installments of $200,000, without interest,
     commencing with the opening of the Shreveport Casino. The $2,000,000
     liability, net of a discount in the original amount of $308,000, and the
     associated project costs were recorded upon the issuance of the Shreveport
     First Mortgage Notes in August 1999.

     Scheduled payments of long-term debt as of December 31, 2000 are set forth
below:

       2001                                            $  5,480,000
       2002                                                 602,000
       2003                                                 178,000
       2004                                                  82,000
       2005                                                   6,000
       Thereafter                                       510,000,000
                                                       ------------

         Total                                         $516,348,000
                                                       ============

     Interest paid, net of amounts capitalized, amounted to $51,252,000,
$33,991,000 and $29,161,000, respectively, during the years ended December 31,
2000, 1999 and 1998.

(4)  Leases

     Capital leases -

     HCA leases two parking garages under capital lease agreements.  The first
lease has an initial 30-year term ending in June 2023 with the right to extend
the term under renewal options for an additional 67 years.  Rental payments
through June 2012 equal the City of Aurora's financing costs related to its
general obligation bond issue used to finance the construction of the parking
garage.  The general obligation bond issue includes interest at rates between 7%
and 7.625% per annum. The second lease has an initial term ending in September
2026 with the right to extend the lease for up to 20 additional years. Rental
payments during the first 15 years equal the lessor's debt service costs related
to the industrial revenue bond issue used to finance a portion of the
construction costs of the parking garage.  The remaining construction costs were
funded by HCA.  In addition, HCA pays base rent equal to $15,000 per month,
subject to a credit of $10,000 per month expiring in October 2001, for
improvements made to the lessor's North Island Center banquet and meeting
facilities.  HCA is also responsible for additional rent, consisting of costs
such as maintenance costs, insurance premiums and utilities arising out of its
operation of both parking garages.

     The Shreveport Partnership entered into a financing lease agreement with
third party lessors for $30,000,000 to acquire furniture, fixtures and equipment
for the Shreveport Casino.  During the construction period, the Shreveport
Partnership paid only interest on outstanding borrowings together with a fee of
 .5% per annum on the undrawn portion of the $30,000,000.  Effective with the
opening of the Shreveport Casino, the outstanding borrowings became payable in
equal quarterly installments plus interest at LIBOR plus 4% (currently 10.57%)
over a three year period to fully amortize the obligation.

                                       57
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


The lease is treated as a capital lease for financial reporting purposes.
Borrowings under the lease are collateralized by the furniture, fixture and
equipment purchased. The lease agreement contains certain covenants
substantially similar to those included in the indenture for the Shreveport
First Mortgage Notes (see Note 3).

     The Tunica Casino previously leased certain gaming and other equipment
under capital lease agreements which expired in 1997. No future payment
obligations exist with respect to these capital leases although the equipment
remains in use.

     Assets under capital leases and the related accumulated amortization are
included on the accompanying consolidated balance sheet as follows:

<TABLE>
<CAPTION>

                                                   December 31,   December 31,
                                                       2000           1999
                                                   ------------   ------------
<S>                                                <C>            <C>
Buildings                                          $ 27,358,000   $ 27,358,000
Operating equipment                                  34,892,000      7,013,000
                                                   ------------   ------------

                                                     62,250,000     34,371,000
Less - accumulated amortization                     (11,579,000)   (11,292,000)
                                                   ------------   ------------

                                                   $ 50,671,000   $ 23,079,000
                                                   ============   ============
</TABLE>

     Amortization expense with respect to these assets amounted to $1,081,000,
$909,000 and $1,207,000, respectively, during the years ended December 31, 2000,
1999 and 1998.  Fully amortized operating equipment under capital lease
agreements with a cost of $794,000 were written off during the year ended
December 31, 2000.

     Future minimum lease payments under capital lease obligations as of
December 31, 2000 are as follows:

          2001                                     $ 15,272,000
          2002                                       14,339,000
          2003                                       13,312,000
          2004                                        2,677,000
          2005                                        2,477,000
          Thereafter                                 16,262,000
                                                   ------------

          Total minimum lease payments               64,339,000
          Less amount representing interest         (15,378,000)
                                                   ------------
          Present value of future
            minimum lease payments                   48,961,000
          Current capital lease obligation          (11,100,000)
                                                   ------------

          Long-term capital lease obligation       $ 37,861,000
                                                   ============

                                       58
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



    Operating Leases -

    Other than the ground leases for the Tunica Casino and Shreveport Casino
discussed in Note 10, HCC and its subsidiaries also lease property and operating
equipment under various lease agreements accounted for as operating leases.
Although most of the operating lease agreements are either cancellable or have
initial terms of one year or less, certain other lease agreements expire at
various dates through the year 2008 and several contain automatic renewals
unless notice of termination is given. Some of the operating leases also include
contingent rental payments based on levels of use; such contingent rentals have
not been significant.  Exclusive of the ground leases, total rental expense
amounted to $3,203,000, $2,401,000 and $1,416,000, respectively, during the
years ended December 31, 2000, 1999 and 1998.

    Future minimum lease payments as of December 31, 2000 under operating leases
having an initial or remaining noncancelable lease term in excess of one year
are as follows:

          2001                                     $ 1,073,000
          2002                                         835,000
          2003                                         467,000
          2004                                         288,000
          2005                                         206,000
          Thereafter                                   212,000
                                                   -----------

                                                   $ 3,081,000
                                                   ===========

(5) Income Taxes

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

<TABLE>
<CAPTION>
                                                                            Year Ended December 31,
                                                               --------------------------------------------------
                                                                    2000               1999             1998
                                                               -------------      -------------     -------------
 <S>                                                           <C>                <C>               <C>
 Current income tax (provision):
  Federal                                                      $   (200,000)      $ (3,359,000)     $          -
  State                                                          (1,959,000)        (1,240,000)         (735,000)
 Deferred income tax (provision) benefit :
  Federal                                                        (1,630,000)        10,948,000           731,000
  State                                                             (85,000)            44,000          (103,000)
 Change in valuation allowance                                    2,001,000         (7,589,000)         (709,000)
                                                               -------------      -------------     -------------

                                                               $ (1,873,000)      $ (1,196,000)     $   (816,000)
                                                               ============       ============      =============
</TABLE>

    Total federal income tax payments of $335,000, $338,000 and $7,253,000,
respectively, were made during the years ended December 31, 2000, 1999 and 1998.
State tax payments of $2,503,000, $900,000 and $797,000, respectively, were made
during the years ended December 31, 2000, 1999 and 1998.

                                       59
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



   A reconciliation between the calculated tax (provision) benefit on income
based on the statutory rates in effect and the effective tax rates follows:

<TABLE>
<CAPTION>

                                                                Year Ended December 31,
                                                   --------------------------------------------------
                                                        2000              1999              1998
                                                   -------------      -------------     -------------
<S>                                                <C>                <C>               <C>
Calculated income tax (provision) benefit          $  (3,457,000)     $  27,362,000     $     268,000
Valuation allowance change                             2,001,000         (7,589,000)         (709,000)
Acquisition of management contracts                            -        (13,712,000)                -
Lobbying costs                                           (94,000)          (121,000)          (98,000)
Disallowance of meals and
  entertainment                                         (158,000)           (86,000)          (64,000)
State income taxes, net of federal benefit            (1,350,000)          (789,000)         (553,000)
Utilization of net operating loss carryforwards
 and other                                             1,185,000         (6,261,000)          340,000
                                                   -------------      -------------     -------------
Tax provision as shown on
  consolidated statements of operations            $  (1,873,000)     $  (1,196,000)    $    (816,000)
                                                   =============      =============     =============
</TABLE>

   At December 31, 2000, HCC and its subsidiaries have net operating loss
carryforwards ("NOL's") for federal income tax purposes totaling approximately
$46,000,000, none of which begin to expire until the year 2019.  Additionally,
HCC and its subsidiaries have alternative minimum and other tax credits
available totaling $5,018,000 and $741,000, respectively.  Alternative minimum
tax credits do not expire and none of the other tax credits begin to expire
until the year 2010. Existing accounting pronouncements require that the tax
benefit of such NOL's and credit carryforwards, together with the tax benefit of
deferred tax assets resulting from temporary differences, be recorded as an
asset and, to the extent that management can not assess that the utilization of
all or a portion of such NOL's and deferred tax assets is more likely than not,
a valuation allowance should be recorded.  Management believes that it is more
likely than not that future consolidated taxable income of HCC will be
sufficient to utilize a portion of the net deferred tax assets.  Accordingly,
valuation allowances have been established which result in net deferred tax
assets of $5,532,000 and $5,246,000 at December 31, 2000 and 1999, respectively.

                                       60
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



   The components of the net deferred tax asset and classification on the
accompanying consolidated balance sheets are as follows:

<TABLE>
<CAPTION>

                                                          December 31,
                                                  ---------------------------
                                                      2000           1999
                                                  ------------   ------------
<S>                                               <C>            <C>
Deferred tax assets:
 Net operating loss carryforwards                 $ 16,958,000   $ 16,359,000
 Valuation and other allowances                        937,000      1,303,000
 Alternative minimum tax credit                      5,018,000      6,273,000
 Investment and jobs tax credits                       741,000        627,000
 Preopening                                          6,272,000              -
 Other liabilities and accruals                      2,882,000      4,392,000
 Benefits accrual                                    1,688,000      1,720,000
 Other                                               1,065,000      1,526,000
                                                  ------------   ------------

  Total deferred tax assets                         35,561,000     32,200,000
                                                  ------------   ------------

Deferred tax liabilities:
 Depreciation and amortization                     (11,277,000)    (6,201,000)
                                                  ------------   ------------

Net deferred tax asset                              24,284,000     25,999,000
Valuation allowance                                (18,752,000)   (20,753,000)
                                                  ------------   ------------

                                                  $  5,532,000   $  5,246,000
                                                  ============   ============
Classified as:
 Current deferred income tax asset                $  3,054,000   $  1,776,000
 Other assets                                        3,159,000      4,043,000
 Other noncurrent liabilities                         (681,000)      (573,000)
</TABLE>

   No deferred tax benefit was attributed to the extraordinary items in 1999.

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

   The Internal Revenue Service has completed its examination of the
consolidated federal income tax returns of HCC for the years 1993 and 1994.  The
additional estimated current federal income tax obligation resulting from such
examination is included in current federal income taxes payable on the
accompanying consolidated balance sheets at December 31, 2000 and 1999.  HCC's
consolidated net deferred tax asset has also been adjusted to reflect the
results of the tax audit.  The Internal Revenue Service is continuing its
examination of the consolidated federal income tax returns of HCC for 1995 and

                                       61
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



1996.  Management believes that the results of such examination will not have a
material adverse effect on the consolidated financial position or results of
operations of HCC.

(6)  Stock Option 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 287,500 and 653,000,
respectively, remain available for future grant as of December 31, 2000.

     The 1996 Plan and the 1992 Plan are administered by committees of HCC's
Board of Directors. Options granted under the 1996 Plan become vested at the
discretion of the Committee of the Board of Directors (however, vesting for
certain officers, directors and shareholders may not be less than six months)
and may be exercised for a period of not more than ten years (five years in the
case of incentive stock options) from the date of grant. No more than 500,000
shares may be awarded to any individual during any fiscal year and incentive
stock options are subject to a $100,000 calendar year limitation. Options
granted under the 1992 Plan become vested over a three year period, are
exercisable for a term ending not more than seven years (five years in the case
of incentive stock options) from the date of the grant and incentive stock
options are subject to limitations on the quantity exercised in a calendar year.
All options granted through December 31, 2000 under both the 1996 Plan and the
1992 Plan have been granted at an exercise price equal to the fair market value
as of the date of the grant. As of December 31, 2000, options to purchase
2,690,800 shares remain outstanding under the 1996 Plan, of which approximately
44% are at an exercise price of $1.25 per share. An additional 42% have exercise
prices ranging from $1.75 per share to $3.13 per share; the remaining 14% have
exercise prices ranging from $5.06 per share to $11.00 per share. Options
outstanding under the 1996 plan have a weighted average exercise price of $2.36
and a weighted average remaining contractual life of 53 months. As of December
31, 2000, no options are outstanding under the 1992 Plan.

                                       62
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



   The following table sets forth the combined activity of the 1996 Plan and the
1992 Plan:

<TABLE>
<CAPTION>
                                                                  Year Ended December 31,
                                   -------------------------------------------------------------------------------------
                                              2000                        1999                          1998
                                   -------------------------    --------------------------    --------------------------
                                                   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                 2,347,000    $      1.86      1,090,000    $      2.51        660,008    $      2.86
  Options cancelled                    (7,500)          1.25        (27,000)          1.25        (50,000)          2.06
  Options granted                     373,000           5.40      1,284,000           1.30        520,000           1.83
  Options exercised                   (21,700)          1.25              -              -        (40,008)         .0006
                                   ----------    -----------    -----------    -----------    -----------    -----------
Outstanding options
  at end of year                    2,690,800    $      2.36      2,347,000    $      1.86      1,090,000    $      2.51
                                   ==========    ===========    ===========    ===========    ===========    ===========
Exercisable options
  at end of year                    2,046,180    $      1.91      1,956,400    $      1.91        920,000    $      2.62
</TABLE>

   During 1996, HCC also adopted the Hollywood Casino Corporation 1996 Non-
Employee Director Stock Plan (the "Directors' Plan") providing for the grant of
non-qualified stock options of Class A common stock of HCC.  The Directors' Plan
was amended during 2000 to provide for the granting of 200,000 shares of Class A
common stock of which 135,000 remain available for future grant as of December
31, 2000.  An initial option grant of 10,000 shares was made to the two non-
employee directors upon adoption of the plan; additional outside directors
receive an option grant of 10,000 shares upon election to the Board of
Directors.  The 2000 amendment to the Directors' Plan increased the yearly grant
to each outside director to 5,000 shares from 2,500 shares.  All such grants are
at an exercise price equal to the fair market value as of the date of the grant,
vest either immediately or six months after grant 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, 2000, 40,000 shares
remain outstanding at a weighted average exercise price of $2.64 per share.

   The following table lists the activity of the Directors' Plan:

<TABLE>
<CAPTION>
                                                                  Year Ended December 31,
                                   --------------------------------------------------------------------------------------
                                              2000                        1999                          1998
                                   -------------------------    --------------------------    ---------------------------
                                                   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                    50,000    $      1.64         42,500    $      1.72         35,000 (1) $      4.93
  Options granted                      15,000           5.56          7,500           1.19          7,500            1.56
  Options exercised                   (25,000)          2.38             -              -              -               -
                                   ----------    -----------    -----------    -----------    -----------     -----------
Outstanding options at
 end of year                           40,000    $      2.64         50,000    $      1.64         42,500     $      1.72
                                   ==========    ===========    ===========    ===========    ===========     ===========
Exercisable options at
  end of year                          40,000    $      2.64         50,000    $      1.64         42,500     $      1.72
</TABLE>

                                       63
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



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

     The Company has elected to apply Opinion 25 with respect to accounting for
options.  Based on such election, no compensation expense has been recognized in
the accompanying consolidated financial statements as a result of the granting
of stock options.  Had compensation expense been determined consistent with SFAS
123, the net income (loss) (net of income taxes) for the years ended December
31, 2000, 1999 and 1998 would have (decreased) increased by approximately
$254,000, $213,000 and $124,000, respectively, increasing both basic and diluted
net income (loss) per common share for each year by $.01.

     The fair value of each option grant was estimated on the date of grant
using a method approximating the Black-Scholes option pricing model. The
assumptions applied are set forth below:

                                              Year Ended December 31,
                                   --------------------------------------------
                                      2000             1999             1998
                                   ----------       ----------       ----------

Risk free interest rate                  6.8%             4.8%             5.4%
Dividend yield                             -                -                -
Expected life                      1-5 years        1-5 years        1-4 years
Volatility                              69.9%            54.8%            45.5%
Weighted average fair value       $     2.62       $      .33       $      .42

 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.  Adjustments to the
funding obligation resulted in a net reduction of the liability in the amount of
$93,000 for the year ended December 31, 2000.  Amounts charged to expense under
the agreements for the years ended December 31, 1999 and 1998 were $25,000 and
$4,000, respectively.  Obligations accrued under the agreements at December 31,
2000 and 1999 amounted to $4,965,000 and $5,058,000, respectively, and are
included in other noncurrent liabilities on the accompanying consolidated
balance sheets.

 Employee Retirement Savings Plan -

     The Company has a retirement savings plan under Section 401(k) of the
Internal Revenue Code covering all of its employees who meet certain eligibility
requirements as to age and period of

                                       64
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



employment. The plan allows employees to contribute up to 15% of their salary on
a pre-tax basis (subject to statutory limitations) and invest such monies in a
choice of mutual funds on a tax-deferred basis. The Company matches a portion of
the participating employees' contributions to the plan and may, from time to
time, make additional discretionary contributions. For the years ended December
31, 2000, 1999 and 1998, HCC expensed $582,000, $652,000 and $778,000,
respectively, as company contributions to the plan

(7)  Transactions with Related Parties

     GBCC and its Subsidiaries -

     HCC had loans outstanding to GBCC amounting to $5,704,000 and $6,750,000 as
of December 31, 2000 and 1999, respectively.  During 1996, HCC issued a
$6,500,000 demand note to GBCC with interest at the rate of 13.75% per annum
payable quarterly commencing October 1, 1996.  HCC also has an additional
$250,000 note from GBCC which became due on April 1, 1998 for which payment has
not been received.  GBCC has begun negotiations with HCC to restructure these
obligations as well as those described in the following paragraph.  During
October 2000, HCC received $900,000 of the outstanding principal balance and
agreed to offset an additional $146,000 of principal against certain payables
due to GBCC while negotiations to restructure the debt continue.  Effective as
of January 1, 1999, interest earned on the outstanding obligations from GBCC is
being fully reserved for the same reasons as discussed below with respect to the
PPI Funding Notes. In addition, the unpaid interest receivable on the notes was
reserved by an additional $1,000,000 during 1999.  Interest income earned on
loans and advances to GBCC amounted to $942,000, during the year ended December
31, 1998.  Interest receivable amounting to $781,000, net of valuation
allowances of $2,855,000, and $1,942,000, respectively, is included in due from
affiliates on the accompanying consolidated balance sheets at December 31, 2000
and 1999.

     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 certain
unsecured notes held by HCC which were issued by another subsidiary of GBCC.
The PPI Funding Notes were discounted to yield interest at the rate of 14.875%
per annum and had an original face value of $110,636,000.  Principal payments by
PPI Funding Corp. during 1996, the assignment of $13,750,000 undiscounted
principal amount to PPI Corporation during 1997 as partial consideration for
HCC's acquisition of the general partnership interest in PML and the 1997
forgiveness of $37,000,000 undiscounted principal amount necessitated by the
filing for bankruptcy of GBCC's most significant operating subsidiary reduced
the final maturity value to $47,603,000.  Payment of interest is deferred
through February 17, 2001 at which time interest will become payable
semiannually, with the unpaid principal balance due on February 17, 2006.   The
remaining discount on the PPI Funding Notes ($915,000 and $7,156,000 at December
31, 2000 and 1999, respectively) together with valuation allowances provided for
by HCC, have resulted in the PPI Funding Notes being reflected on the
accompanying consolidated balance sheets at no value.

     As partial consideration for its April 1, 1997 acquisition of the general
partnership interest in PML (see Note 1), HCC issued a five-year note in the
original amount of $3,800,000 to PPI Corporation.  The

                                       65
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



note payable to PPI Corporation was amended as of the October 1999 acquisition
of PCC (see Note 1) to provide for monthly installments of $83,000 including
interest and additional quarterly principal payments of $21,000 beginning
January 1, 2000. HCC and PPI Corporation have entered into agreements to defer
all payments of principal and interest on the note otherwise due during the
period from March 1, 2000 through March 1, 2001 while negotiations continue
between GBCC and HCC to restructure the indebtedness owed by GBCC to HCC as
described in the previous paragraphs. These deferrals do not extend the final
maturity of the note or represent a forgiveness of either principal or interest
as all past due amounts, if not otherwise restructured, will become due and
payable on the extended payment due date of April 1, 2001.

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

     Advanced Casino Systems Corporation ("ACSC"), a subsidiary of GBCC,
provides computer, marketing and other administrative services to HCC and its
subsidiaries. Computer services provided include hardware, software and operator
support and, for the most part, such services are billed by ACSC at its direct
costs plus expenses incurred. ACSC and HCT entered into a Computer Services
Agreement renewed through December 31, 1999 to provide such services and to
license or sublicense to HCT computer software necessary to operate HCT's
casino, hotel and related facilities and business operations. HCT paid ACSC for
such equipment and licensed such software at amounts and on terms and conditions
that ACSC provided to unrelated third parties. HCT also paid ACSC a fixed
license fee of $33,600 per month through December 31, 1999. ACSC also provided
services to HCA through HCA's management agreement with PML. The service
agreements with PML and HCT terminated on October 13 and December 31, 1999,
respectively. ACSC continued to provide services to HCA on an as needed basis at
third party consulting rates. HCT and HCA entered into new maintenance and
support agreements with ACSC effective as of January 1, 2000 which provide for
an aggregate monthly fee of $26,000 (subject to change upon 60 days written
notice) plus additional services at rates charged by ACSC to third parties. The
agreements have an initial term of one year with automatic annual renewals
unless notice of termination is given. The Shreveport Partnership entered into a
similar maintenance and support agreement with ACSC effective as of October 12,
2000 at a monthly fee of $11,000 commencing 90 days after installation of ACSC's
systems (see below). ACSC's billings to HCC and its subsidiaries for such
products and services during the years ended December 31, 2000, 1999 and 1998
amounted to $950,000, $1,315,000 and $1,147,000, respectively. At December 31,
2000 and 1999, unpaid charges of $109,000 and $67,000, respectively, are
included in due to affiliates on the accompanying consolidated balance sheets.

     The Shreveport Casino's casino system software was provided and installed
by ACSC. Total costs incurred in connection with the installation of the
software system amounting to $2,626,000 are included in operating equipment on
the accompanying consolidated balance sheet at December 31, 2000. Unpaid charges
of $156,000 are included in due to affiliates on the accompanying consolidated
balance sheet at December 31, 2000.

                                       66
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



   HCC allocates certain general and administrative costs to GBCC and its
subsidiaries pursuant to services agreements.  Such allocated costs and fees
amounted to $307,000, $604,000 and $974,000, respectively, during the years
ended December 31, 2000, 1999 and 1998.  Receivables from GBCC and its
subsidiaries in the amount of $19,000 and $20,000 are included in due from
affiliates on the accompanying consolidated balance sheets at December 31, 2000
and 1999, respectively.

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

   Shreveport Partnership -

   In accordance with the amended and restated partnership agreement, HCL loaned
$1,000,000 to its joint venture partner which it used to make a $1,000,000
capital contribution to the Shreveport Partnership.  The loan accrues interest
at the rate of prime payable monthly commencing with the opening of the
Shreveport Casino.  Principal on the loan is payable on December 20, 2010.  The
loan, net of a $64,000 discount at December 31, 1999, is included in other
noncurrent assets on the accompanying consolidated balance sheets.  The joint
venture partner was also given credit for an additional $1,000,000 capital
contribution upon the closing of the Shreveport First Mortgage Notes and payment
of the $5,000,000 obligation as discussed in Note 3(f).  The credit was  in
recognition of guarantees provided by an affiliate of the joint venture partner
which were necessary for the Shreveport Partnership to obtain approval of its
development plans.  The $2,000,000 equity interest of the joint venture partner
is included in minority interest on the accompanying consolidated balance sheets
of HCC at December 31, 2000 and 1999.

   For so long as it remains a joint venture partner, HCL's joint venture
partner will receive, among other things, an amount equal to 1% of "complex net
revenues" of the Shreveport Casino, as defined, which approximates net revenues.
Such payment is in exchange for the assignment by the partner of its interest in
the partnership to HCL.  Allocations to the joint venture partner amounted to
$78,000 during 2000 and are reflected as minority interest in Hollywood Casino
Shreveport on the accompanying consolidated statement of operations for the year
ended December 31, 2000.

   The Shreveport Partnership has also entered into an agreement with HCL's
joint venture partner to provide certain marine services for so long as it
remains a joint venture partner.  The Marine Services

                                       67
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



Agreement became effective on September 22, 1998 and, in addition to the
reimbursement of the partner for its direct expenses incurred, the Shreveport
Casino will pay a monthly fee of $30,000 effective with its opening. Fees
incurred during 2000 amounted to $12,000 under the agreement and a liability for
such amount is included in due to affiliates on the accompanying consolidated
balance sheet at December 31, 2000.

(8)  State Gaming Regulations

     Riverboat gaming operations in Illinois are subject to regulatory control
by the Illinois Gaming Board. Illinois law requires that HCA maintain its
Owners' License in order to operate. HCA's Owners' License was renewed by the
Illinois Gaming Board in December 2000 for a period of four years to December
2004. Gaming operations in Mississippi are subject to regulatory control by the
Mississippi Gaming Commission. Under the provisions of the Mississippi gaming
regulations, HCT is required to maintain all necessary licenses. The ownership
license for the Tunica Casino has been renewed until October 2001. Management
intends to request renewal of HCT's ownership license at the appropriate time in
2001 and anticipates that such renewal will be approved by the Mississippi
Gaming Commission. HCL and the Shreveport Partnership are subject to regulatory
control by the LGCB and must maintain all required licenses. The ownership
license for the Shreveport Casino was renewed in October 1999 for a period of
five years.

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

(9)  Litigation

 Planet Hollywood Litigation -

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

                                       68
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



Bankruptcy Code. On December 3, 1999 the judge entered a judgment in favor of
HCC with respect to the damage claims brought by Planet Hollywood and granted
HCC's motion to dismiss the declaratory judgment claims of all parties. Planet
Hollywood filed a notice of appeal of the judgment with the Seventh Circuit
Court of Appeals; however, pursuant to a joint motion filed by the parties, such
appeal was dismissed effective as of November 2, 2000.

 Other Litigation -

     On October 8, 1998, the Company filed a complaint against its former
independent accountants and tax advisors in the District Court of Dallas County,
Texas.  On September 8, 2000, a mutually acceptable agreement was reached
concluding the dispute and resulting in the dismissal of the lawsuit. Terms of
the settlement are confidential; however, the Company recognized a pre-tax gain
on the settlement, net of related legal fees and other expenses, amounting to
$7,220,000, which is included in other non-operating income on the accompanying
consolidated statement of operations for the year ended December 31, 2000.

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

     HCC and its subsidiaries are parties in various legal proceedings with
respect to the conduct of casino and hotel operations.  Although a possible
range of loss cannot be estimated, in the opinion of management, based upon the
advice of counsel, settlement or resolution of these proceedings should not have
a material adverse impact on the consolidated financial position or results of
operations of HCC and its subsidiaries.

(10) Commitments and Contingencies

     Ground Leases -

     HCT entered into a ground lease covering 70 acres of land on which the
Tunica Casino was constructed. The ground lease was for an initial term of five
years from the opening date of the facility and, at HCT's option, may be renewed
for nine additional five-year periods. The lease is currently in its first five-
year renewal term. Obligations under the ground lease include both minimum
monthly fixed payments and percentage rent, which in the aggregate will be the
greater of 4% of Gross Revenues, as defined, or $1,100,000 per year. HCT is
responsible for all operating and other expenses of the property in accordance
with the lease terms. HCT expensed $4,367,000, $4,138,000 and $3,899,000,
respectively, during the years ended December 31, 2000, 1999 and 1998 in
connection with the ground lease.

     In May 1999, the Shreveport Partnership entered into a ground lease with
the City of Shreveport for the land on which the Shreveport Casino was built.
The term of the lease began when construction

                                       69
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



commenced and will end on the tenth anniversary of the date the Shreveport
Casino opens. The Shreveport Partnership has options to renew the lease on the
same terms for up to an additional forty years. The lease may be further renewed
after that time at prevailing rates and terms for similar leases. The City of
Shreveport may terminate the lease as a result of, among other things, a default
by the Shreveport Partnership under the lease. The Shreveport Partnership may
terminate the lease at any time if the operation of the Shreveport Casino
becomes uneconomic. Base rental payments under the lease were $10,000 per month
during the construction period. The base rental amount increased to $450,000 per
year upon opening and continue at that amount for the remainder of the initial
ten-year lease term. During the first five-year renewal term, the annual base
rental will be $402,500. Subsequent renewal period base rental payments will
increase by 15% during each of the next four five-year renewal terms with no
further increases. In addition to the base rent, the Shreveport Partnership will
pay monthly percentage rent of not less than $500,000 per year equal to 1% of
monthly adjusted gross revenues and the amount, if any, by which monthly parking
facilities net income exceeds the parking income credit, as all such terms are
defined in the lease agreement. Ground lease rentals amounted to $213,000 and
$56,000, respectively, for the years ended December 31, 2000 and 1999, including
percentage rentals amounting to $78,000 in 2000. Costs incurred under the ground
lease during the construction period were capitalized. In addition, the ground
lease agreement also calls for payments in lieu of admission fees to the City of
Shreveport and payments to the local school board amounting to 3.225% and .5375%
of Net Gaming Proceeds (as defined in the agreement), respectively. The payments
in lieu of admission fees are subject to an initial credit of $600,000. These
additional charges amounted to $304,000 during the 2000 period subsequent to
opening.

     Other -

     On April 23, 2000, the construction site for the Shreveport Casino suffered
tornado damage which delayed the opening of the facility. Management filed
damage claims and received reimbursements from its insurance carrier during 2000
in the amount of approximately $1,700,000 to cover the damage incurred. In
addition, management is seeking to recover lost profits and related claims under
its business interruption insurance coverage. The recovery of these amounts is
currently subject to litigation and management is unable to determine the
amount, if any, that will ultimately be received.

     During November 2000, the Shreveport Partnership entered into bank
revolving credit facilities of $2,000,000 for working capital needs and
$4,000,000 to meet liquidity requirements under Louisiana gaming regulations.
The facilities are available for a period of one year and advances under both
facilities accrue interest at the Wall Street Journal Prime Rate plus 2%. The
agreements contain certain reporting requirements and advances are subject to
specified collateral agreements. No amounts were outstanding under the credit
facilities at December 31, 2000.

(11) Supplemental Cash Flow Information

     During 2000 the Shreveport Partnership obtained proceeds under capital
lease obligations amounting to $30,000,000 used to purchase fixed assets during
the construction period (Note 4).

                                       70
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



     During 2000, HCC offset $146,000 of the outstanding principal balance of
certain demand notes due from GBCC against certain payables HCC owed to GBCC
(Note 7).  This offset has been excluded from the accompanying consolidated
statement of cash flows as a noncash transaction.

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

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

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

     Fair value of non-cash assets acquired                 $ 1,465,000
     Cash acquired                                            1,525,000
     Contingent liability for purchase                       (2,499,000)
     Preacquisition losses attributable to joint venture
       partner                                                   12,000
     Cash paid for capital stock                                 (1,000)
                                                            -----------

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

     The contingent liability of $2,499,000 shown above was converted to a note
payable during 2000. The note is payable on June 20, 2000 and is included in
notes payable on the accompanying consolidated balance sheet at December 31,
2000.  The recording of the note is excluded from the accompanying consolidated
statement of cash flows for the year ended December 31, 2000 as a non-cash
transaction.

(12) Disclosures about Fair Value of Financial Instruments

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

     Cash and cash equivalents -  The carrying amount approximates fair value
     -------------------------
because of the short maturity of these instruments.

     Cash restricted for construction project - The carrying amount approximates
     ----------------------------------------
fair value because of the short maturity of these instruments.

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

                                       71
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



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

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

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

<TABLE>
<CAPTION>
                                                    December 31, 2000                    December 31, 1999
                                             --------------------------------    --------------------------------
                                               Carrying                            Carrying
                                                Amount           Fair Value         Amount           Fair Value
                                             --------------    --------------    --------------    --------------
<S>                                          <C>               <C>               <C>               <C>
Financial Assets
 Cash and cash equivalents                   $  155,570,000    $  155,570,000    $  115,351,000    $  115,351,000
 Interest receivable                                297,000           297,000         1,479,000         1,479,000
 Cash restricted for construction
  project                                         9,530,000         9,530,000       147,310,000       147,310,000
 Notes receivable - affiliates                    5,704,000         5,704,000         6,750,000         6,750,000
 PPI Funding Notes                                        -                 -                 -                 -

Financial Liabilities
 Interest payable                            $   18,067,000    $   18,067,000    $   16,784,000    $   16,784,000
 Note payable to Sodak                            2,499,000         2,499,000                 -                 -
 11.25% Senior Secured Notes                    310,000,000       319,300,000       310,000,000       320,850,000
 Floating rate Senior Secured
    Notes                                        50,000,000        51,375,000        50,000,000        50,625,000
 13% Shreveport First Mortgage
  Notes                                         150,000,000       159,375,000       150,000,000       160,500,000
 Note payable                                     1,913,000         1,913,000                 -                 -
 Equipment loans                                  1,188,000         1,188,000         2,488,000         2,514,000
 Bank debt                                        1,145,000         1,123,000         1,952,000         1,936,000
 Bank credit facility                                89,000            88,000           278,000           278,000
 Note payable - affiliate                         1,893,000         1,893,000         2,033,000         2,033,000
 Other debt                                          33,000            33,000         1,759,000         1,748,000
</TABLE>

(13) Unrestricted Subsidiaries (Unaudited)

     Under the terms of the indenture to the Senior Secured Notes (see Note
3(a)), certain subsidiaries and investees of HCC have been designated as
"Unrestricted Subsidiaries." Unrestricted Subsidiaries generally do not provide
credit support for the Senior Secured Notes and obligations of Unrestricted
Subsidiaries are non-recourse to HCC. Unrestricted Subsidiaries of HCC during
2000 consisted of HCL and its subsidiaries; HWCC-Holdings, Inc.; and HWCC-Golf
Course Partners, Inc. The following presentation summarizes the financial
position and results of operations of the Company reflecting its

                                       72
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



Unrestricted Subsidiaries under the equity method of accounting. Such
information is not intended to be a presentation in conformity with generally
accepted accounting principles and is included for purposes of complying with
certain reporting requirements as contained in the indenture to the Senior
Secured Notes.

                            Condensed Balance Sheet
                               December 31, 2000
                            (amounts in thousands)


Current Assets:
Cash and cash items                                             $ 114,821
Accounts receivable, net of allowance
  of $2,578                                                         4,676
Inventories                                                         1,777
Prepaid expenses and other current assets                           5,579
Due from affiliates                                                 6,661
                                                                ---------

                                                                  133,514
                                                                ---------

Investment in and advances to
  Unrestricted Subsidiaries                                        37,667
                                                                ---------
Property and equipment, net of
  accumulated depreciation and
  amortization of $104,895                                        164,686
                                                                ---------

Other Assets:
Deferred finance costs                                              8,897
Other assets                                                       15,959
                                                                ---------
                                                                   24,856
                                                                ---------
                                                                $ 360,723
                                                                =========

Current Liabilities:
Current maturities of long-
  term debt and capital leases                                  $   4,574
Accounts payable and accrued
  liabilities                                                      34,733
Other current liabilities                                           2,829
                                                                ---------
                                                                   42,136
                                                                ---------

Long-term debt                                                    360,841
                                                                ---------

Capital lease obligations                                          17,861
                                                                ---------
Other noncurrent liabilities                                        5,645
                                                                ---------

Shareholders' deficit:
Common stock                                                            2
Additional paid-in capital                                        217,030
Accumulated deficit                                              (282,792)
                                                                ---------

                                                                  (65,760)
                                                                ---------

                                                                $ 360,723
                                                                =========

                                       73
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



                       Condensed Statement of Operations
                         Year Ended December 31, 2000
                            (amounts in thousands)


Net revenues                                                         $340,559
                                                                     --------

Expenses:
 Departmental expenses                                                245,720
 General and administrative                                            19,934
 Depreciation and amortization                                         13,138
 Development                                                            1,058
                                                                     --------

    Total expenses                                                    279,850
                                                                     --------

Income from operations                                                 60,709
Non-operating expense, net                                            (32,489)
                                                                     --------

Income before taxes and other item                                     28,220
Provision for taxes                                                    (1,873)
                                                                     --------

Income before other item                                               26,347
Equity in losses of unrestricted subsidiaries                         (18,052)
                                                                     --------

Net income                                                           $  8,295
                                                                     ========

                                       74
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



(14) Selected Quarterly Financial Data (Unaudited)

<TABLE>
<CAPTION>
                                                              Quarter
                                        -------------------------------------------------------
                                           First         Second         Third         Fourth
                                        -----------   ------------   -----------   ------------
<S>                                     <C>           <C>            <C>           <C>
Year ended December 31, 2000:

Net revenues                            $84,015,000   $ 85,805,000   $89,027,000   $ 89,335,000
                                        ===========   ============   ===========   ============

Net income (loss)                       $ 2,812,000   $  2,233,000   $10,515,000   $ (7,265,000)
                                        ===========   ============   ===========   ============

Basic net income (loss) per
  common share (1)                      $       .11   $        .09   $       .42   $       (.29)
                                        ===========   ============   ===========   ============

Diluted net income (loss) per common
  share (1)                             $       .11   $        .08   $       .39   $       (.29)
                                        ===========   ============   ===========   ============

Year ended December 31, 1999:

Net revenues                            $69,769,000   $ 76,151,000   $82,948,000   $ 78,504,000
                                        ===========   ============   ===========   ============

Net income (loss)                       $   330,000   $(28,131,000)  $ 1,102,000   $(54,972,000)
                                        ===========   ============   ===========   ============

Basic net income (loss) per
  common share (1)                      $       .01   $      (1.13)  $       .05   $      (2.20)
                                        ===========   ============   ===========   ============

Diluted net income (loss) per common
  share (1)                             $       .01   $      (1.12)  $       .04    $     (2.20)
                                        ===========   ============   ===========    ===========
</TABLE>

_____________________

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

(15) Subsequent Event

     On February 26, 2001, the Company announced the commencement of a major
expansion of the Aurora Casino, highlighted by the construction of a new
dockside facility to replace the Aurora Casino's two riverboats.  The Aurora
Casino expansion, as currently planned, is projected to cost approximately
$75,000,000 and is expected to be completed and opened by the summer of 2002.
The Company received regulatory approval for its planned dockside casino from
the Illinois Gaming Board in April 2000 and construction began in March 2001.
Approximately $40,000,000 of the estimated $75,000,000 in project costs for the
proposed Aurora Casino expansion were obtained from HCC's issuance of the Senior
Secured Notes (see Note 3(a)) with the remainder to come from cash on hand and
cash available from operations.

     The commencement of construction of the new dockside facility had
previously been delayed as a result of a complaint filed in late 1999 in an
Illinois state court concerning the constitutionality of a portion of the
legislation that enabled dockside gaming in Illinois. Although the
constitutional challenge

                                       75
<PAGE>

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



centers on the relocation of one of the existing gaming licenses, a finding that
such portion of the legislation is unconstitutional could result in a finding
that all or a portion of the legislation, including dockside gaming, is invalid.
In January 2001, the presiding judge dismissed the complaint because the
plaintiffs lacked standing and failed to exhaust their administrative remedies.
The plaintiffs have filed an appeal of the ruling.  If an appellate court
overturns the trial court's original ruling and the state court rules that all
or a portion of the legislation is invalid, management believes that it may be
able to continue to operate its existing riverboats on a dockside basis pending
a final resolution of the litigation. In the unlikely event that the provisions
in question are found to be unconstitutional after all appeals, and the entire
legislation is invalidated so that dockside gaming is not permitted, the Company
will be able to use its two riverboats to conduct gaming.

                                       76
<PAGE>

INDEPENDENT AUDITORS' REPORT


To Hollywood Casino - Aurora, Inc.:

We have audited the accompanying balance sheets of Hollywood Casino - Aurora,
Inc. (the Company and an Illinois corporation) as of December 31, 2000 and 1999,
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, 2000.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

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

In our opinion, the financial statements present fairly, in all material
respects, the financial position of Hollywood Casino - Aurora, Inc. as of
December 31, 2000 and 1999, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2000, in conformity
with accounting principles generally accepted in the United States of America.



Deloitte & Touche LLP
Dallas, Texas
March 15, 2001

                                       77
<PAGE>

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

                                BALANCE SHEETS

                                    ASSETS

<TABLE>
<CAPTION>
                                                             December 31,
                                                     ---------------------------
                                                         2000           1999
                                                     ------------   ------------
<S>                                                  <C>            <C>
Current Assets:
 Cash and cash equivalents                           $ 21,164,000   $ 22,148,000
 Accounts receivable, net of allowances
  of $942,000 and $836,000, respectively                1,188,000        992,000
 Inventories                                              997,000        845,000
 Deferred income taxes                                  1,958,000      1,809,000
 Due from affiliates                                      129,000      1,956,000
 Prepaid expenses and other current assets              1,033,000        758,000
                                                     ------------   ------------

  Total current assets                                 26,469,000     28,508,000
                                                     ------------   ------------

Property and Equipment:
 Land improvements                                      3,167,000      3,167,000
 Buildings and improvements                            46,205,000     46,205,000
 Riverboats                                            42,377,000     37,843,000
 Operating equipment                                   42,996,000     39,898,000
 Construction in progress                               2,137,000      1,625,000
                                                     ------------   ------------

                                                      136,882,000    128,738,000
 Less - accumulated depreciation and amortization     (54,782,000)   (47,717,000)
                                                     ------------   ------------

  Net property and equipment                           82,100,000     81,021,000
                                                     ------------   ------------

Other Assets                                            2,213,000      2,230,000
                                                     ------------   ------------

                                                     $110,782,000   $111,759,000
                                                     ============   ============
</TABLE>

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

                                       78
<PAGE>

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

                                BALANCE SHEETS

                     LIABILITIES AND SHAREHOLDER'S EQUITY

<TABLE>
<CAPTION>
                                                    December 31,
                                            ---------------------------
                                                2000           1999
                                            ------------   ------------
<S>                                         <C>            <C>
Current Liabilities:
 Current maturities of long-term debt
  and capital lease obligations             $  1,847,000   $  1,794,000
 Accounts payable                              1,659,000      1,857,000
 Accrued liabilities -
  Salaries and wages                           2,819,000      2,758,000
  Interest                                     1,756,000      1,769,000
  Gaming and other taxes                       1,573,000      1,129,000
  Insurance                                      746,000      1,051,000
  Other                                        1,865,000      2,115,000
 Due to affiliates                               482,000        218,000
 Other current liabilities                     1,361,000      1,479,000
                                            ------------   ------------

  Total current liabilities                   14,108,000     14,170,000
                                            ------------   ------------

Long-Term Debt                                66,405,000     67,152,000
                                            ------------   ------------

Capital Lease Obligations                     17,861,000     18,961,000
                                            ------------   ------------

Deferred Income Taxes                          6,218,000      5,429,000
                                            ------------   ------------

Commitments and Contingencies

Shareholder's Equity:
 Common stock, $.01 par value per share;
  2,000,000 shares authorized; 1,501,000
  shares issued and outstanding                   15,000         15,000
 Additional paid-in capital                   25,541,000     25,541,000
 Accumulated deficit                         (19,366,000)   (19,509,000)
                                            ------------   ------------

  Total shareholder's equity                   6,190,000      6,047,000
                                            ------------   ------------

                                            $110,782,000   $111,759,000
                                            ============   ============
</TABLE>

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

                                       79
<PAGE>

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

                           STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                 Year Ended December 31,
                                       ------------------------------------------
                                           2000           1999           1998
                                       ------------   ------------   ------------
<S>                                    <C>            <C>            <C>
Revenues:
 Casino                                $217,704,000   $190,608,000   $156,404,000
 Food and beverage                       15,787,000     14,560,000     13,771,000
 Other                                    3,356,000      3,272,000      2,816,000
                                       ------------   ------------   ------------

                                        236,847,000    208,440,000    172,991,000
 Less - promotional allowances          (12,471,000)   (11,190,000)   (10,044,000)
                                       ------------   ------------   ------------

 Net revenues                           224,376,000    197,250,000    162,947,000
                                       ------------   ------------   ------------

Expenses:
 Casino                                 147,807,000    131,143,000    112,272,000
 Food and beverage                        5,021,000      4,829,000      4,855,000
 Other                                    1,079,000      1,114,000      1,332,000
 General and administrative               5,319,000     12,758,000     14,136,000
 Termination of management contract               -     37,000,000              -
 Depreciation and amortization            7,107,000      7,050,000      7,350,000
                                       ------------   ------------   ------------

  Total expenses                        166,333,000    193,894,000    139,945,000
                                       ------------   ------------   ------------

Income from operations                   58,043,000      3,356,000     23,002,000
                                       ------------   ------------   ------------

Non-operating income (expense):
 Interest income                          1,124,000        533,000        112,000
 Interest expense                        (9,034,000)    (6,145,000)    (6,046,000)
 (Loss) gain on disposal of assets           (6,000)      (510,000)         4,000
                                       ------------   ------------   ------------

  Total non-operating expense, net       (7,916,000)    (6,122,000)    (5,930,000)
                                       ------------   ------------   ------------

Income (loss) before income taxes        50,127,000     (2,766,000)    17,072,000

Income tax provision                    (18,422,000)      (367,000)    (6,559,000)
                                       ------------   ------------   ------------

Net income (loss)                      $ 31,705,000   $ (3,133,000)  $ 10,513,000
                                       ============   ============   ============
</TABLE>

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

                                       80
<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, 2000

<TABLE>
<CAPTION>
                                                                       Retained
                                                        Additional     Earnings
                                    Common Stock          Paid-in    (Accumulated
                               ----------------------
                                  Shares      Amount      Capital       Deficit)
                               ------------  --------  ------------  -------------
<S>                            <C>           <C>       <C>           <C>
BALANCES, January 1, 1998         1,501,000  $ 15,000  $ 24,541,000  $  4,392,000

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

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

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

BALANCES, December 31, 1999       1,501,000    15,000    25,541,000   (19,509,000)

  Net income                              -         -             -    31,705,000
  Dividends                               -         -             -   (31,562,000)
                               ------------  --------  ------------  ------------

BALANCES, December 31, 2000       1,501,000  $ 15,000  $ 25,541,000  $(19,366,000)
                               ============  ========  ============  ============
</TABLE>

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

                                       81
<PAGE>

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

                           STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                              Year Ended December 31,
                                                                     ------------------------------------------
                                                                         2000          1999            1998
                                                                     ------------   ------------   ------------
<S>                                                                  <C>            <C>            <C>
OPERATING ACTIVITIES:
 Net income (loss)                                                   $ 31,705,000   $ (3,133,000)  $ 10,513,000
 Adjustments to reconcile net income (loss) to net
  cash provided by operating activities:
  Depreciation and amortization                                         7,107,000      7,050,000      7,350,000
  Provision for doubtful accounts                                         165,000        300,000        273,000
  Loss (gain) loss on disposal of assets                                    6,000        510,000         (4,000)
  Deferred income tax provision (benefit)                                 640,000       (203,000)     1,018,000
  (Increase) decrease in accounts receivable                             (361,000)      (169,000)       199,000
  (Decrease) increase in accounts payable and accrued liabilities        (261,000)     2,020,000        261,000
  Net change in intercompany balances                                   2,091,000     (3,419,000)        54,000
  Net change in other current assets and liabilities                     (545,000)       504,000       (103,000)
  Net change in other noncurrent assets and liabilities                    17,000        (57,000)       (33,000)
                                                                     ------------   ------------   ------------

 Net cash provided by operating activities                             40,564,000      3,403,000     19,528,000
                                                                     ------------   ------------   ------------

INVESTING ACTIVITIES:
 Purchases of property and equipment                                   (8,200,000)    (5,109,000)    (5,986,000)
 Proceeds from sale of assets                                               8,000         17,000         47,000
                                                                     ------------   ------------   ------------

 Net cash used in investing activities                                 (8,192,000)    (5,092,000)    (5,939,000)
                                                                     ------------   ------------   ------------

FINANCING ACTIVITIES:
 Proceeds from issuance of long-term debt                                       -     66,757,000      2,000,000
 Capital contributions                                                          -              -      1,000,000
 Repayments of long-term debt                                            (807,000)   (32,205,000)    (5,863,000)
 Payments on capital lease obligations                                   (987,000)      (893,000)      (861,000)
 Dividends                                                            (31,562,000)   (19,540,000)   (11,741,000)
                                                                     ------------   ------------   ------------

 Net cash (used in) provided by financing activities                  (33,356,000)    14,119,000    (15,465,000)
                                                                     ------------   ------------   ------------

 Net (decrease) increase in cash and cash equivalents                    (984,000)    12,430,000     (1,876,000)

 Cash and cash equivalents at beginning of year                        22,148,000      9,718,000     11,594,000
                                                                     ------------   ------------   ------------

 Cash and cash equivalents at end of year                            $ 21,164,000   $ 22,148,000   $  9,718,000
                                                                     ============   ============   ============
</TABLE>

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

                                       82
<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.

     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 1,340 parking spaces. HCA was responsible for the
design and construction of the parking garages; however, it leases the
facilities under long-term lease agreements. The leases are treated as capital
leases for financial reporting purposes (see Note 4).

     The Aurora Casino commenced operations on June 17, 1993. HCA's current
Owner's License was renewed by the Illinois Gaming Board in December 2000 for a
period of four years to December 2004. Gaming taxes imposed by the state of
Illinois are determined using a graduated tax rate applied to the licensee's
gaming revenues. HCA expenses such gaming taxes based on its anticipated annual
effective tax rate.

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

(2)  Summary of Significant Accounting Policies

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

 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 other accrued liabilities on the accompanying balance
sheets.

     The estimated value of food and beverage, admissions and other items which
were provided to customers without charge has been included in revenues and a
corresponding amount has been deducted

                                       83
<PAGE>

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

                   NOTES TO FINANCIAL STATEMENTS (Continued)

as promotional allowances. The costs of such complimentaries have been included
as casino expenses on the accompanying statements of operations. Costs of
complimentaries allocated from the food and beverage and other operating
departments to the casino department during the years ended December 31, 2000,
1999 and 1998 are as follows:

                                           2000          1999        1998
                                        -----------  -----------  ----------

Food and beverage                       $11,244,000  $ 9,903,000  $8,721,000
Other                                     1,062,000      956,000   1,131,000
                                        -----------  -----------  ----------

                                        $12,306,000  $10,859,000  $9,852,000
                                        ===========  ===========  ==========

 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 $165,000, $300,000 and $273,000, respectively, were made
during the years ended December 31, 2000, 1999 and 1998.

 Inventories -

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

 Property and equipment -

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

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

                                       84
<PAGE>

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

                   NOTES TO FINANCIAL STATEMENTS (Continued)

 Long-lived assets -

     Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
requires, among other things, that an entity review its long-lived assets and
certain related intangibles for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be fully
recoverable.  HCA does not believe that any such events or changes occurred
during the year ended December 31, 2000.

     On February 26, 2001, management announced the commencement of construction
of a significant expansion of the Aurora Casino (see Note 12).  As a result of
such plans, management conducted a review of its long-lived assets for possible
impairment.  Based on the undiscounted cash flows anticipated to be earned
during the construction period, management has concluded that no impairment of
the Aurora Casino's assets exists and no write down of its assets is required.
The Aurora Casino will prospectively adjust the remaining useful lives of its
existing riverboats and other fixed assets being replaced to reduce the recorded
net book value of such assets (approximately $34.6 million at December 31, 2000)
to their estimated net realizable value at the time they are removed from
service.  As a result, depreciation expense during the construction period will
increase by approximately $2,200,000 per month.

 Accrued insurance -

     HCA is self insured for a portion of its general liability, certain health
care and other liability exposures.  Accrued insurance includes estimates of
such accrued liabilities based on an evaluation of the merits of individual
claims and historical claims experience; accordingly, HCA's ultimate liability
may differ from the amounts accrued.

 Income taxes -

     HCA is included in HCC's consolidated federal income tax return. Pursuant
to agreements between HCC and HCA, HCA's provision for federal income taxes is
based on the amount of tax which would be provided if a separate federal income
tax return were filed. HCA paid $13,982,000, $1,182,000 and $4,691,000 to HCC in
connection with its current federal tax provisions for the years ended December
31, 2000, 1999 and 1998, respectively. For the years ended December 31, 2000,
1999 and 1998, HCA paid state income taxes of $2,503,000, $878,000 and $781,000,
respectively.

 Recent Accounting Pronouncement -

     In June 1998, the Financial Accounting Standards Board issued a new
statement, "Accounting for Derivative Instruments and Hedging Activities,"
("SFAS 133"), which has been amended to be effective for fiscal years beginning
after June 15, 2000. SFAS 133 requires, among other things, that derivatives be
recorded on the balance sheet at fair value. Changes in the fair value of
derivatives may, depending on circumstances, be recognized in earnings or
deferred as a component of shareholders' equity until a hedged transaction
occurs. The adoption of SFAS 133 on January 1, 2001 had no impact on the
financial position or results of operations of HCA.

                                       85
<PAGE>

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

                   NOTES TO FINANCIAL STATEMENTS (Continued)

 Reclassifications -

     Certain reclassifications have been made to the prior years' financial
statements to conform to the 2000 financial statement presentation.

(3)  Long-Term Debt and Pledge of Assets

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


                                          December 31,   December 31,
                                              2000           1999
                                          ------------   ------------

 11.25% Promissory note to HCC, due on
   May 1, 2007 (a)                        $ 66,007,000   $ 66,007,000
 Promissory notes to bank (b)                1,145,000      1,952,000
                                          ------------   ------------

 Total indebtedness                         67,152,000     67,959,000
 Less - current maturities                    (747,000)      (807,000)
                                          ------------   ------------

 Total long-term debt                     $ 66,405,000   $ 67,152,000
                                          ============   ============

__________________

(a)  The intercompany note was issued as of May 19, 1999 and accrues interest at
     the rate of 11.25% per annum. The initial borrowing on the note in the
     amount of $29,007,000 replaced a previous intercompany note with HCC which
     accrued interest at the rate of 12.75% per annum. During October 1999, HCA
     borrowed an additional $37,000,000 from HCC under the note agreement to
     acquire and terminate its management contract (see Note 6). HCA may borrow
     up to a total of $108,000,000 under the intercompany note agreement.
     Interest on advances is payable each October 15 and April 15. The
     intercompany note is pledged as security with respect to HCC's $360,000,000
     Senior Secured Notes due in 2006 and 2007. HCA is not a guarantor of HCC's
     indebtedness; however, the indebtedness is secured, in part, by a lien on
     substantially all of the assets of HCA and by a pledge of the capital stock
     of HCA. The lien is limited to the outstanding principal amount on the
     intercompany note to HCC.

(b)  During September 1998, HCA entered into a bank loan agreement to borrow up
     to $2,000,000 on an unsecured basis. Borrowings under the agreement are
     payable in 36 monthly installments of $62,000 including interest at the
     rate of 7.5% per annum. HCA borrowed $2,000,000 under the agreement during
     October 1998.

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

                                       86
<PAGE>

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

                   NOTES TO FINANCIAL STATEMENTS (Continued)

     As of December 31, 2000, future maturities of long-term debt are as
follows:


         2001                                          $   747,000
         2002                                              156,000
         2003                                              168,000
         2004                                               74,000
         2005                                                    -
       Thereafter                                       66,007,000
                                                       -----------

                                                       $67,152,000
                                                       ===========

     Interest paid for the years ended December 31, 2000, 1999 and 1998 amounted
to $9,047,000, $5,434,000 and $6,180,000, respectively.

(4)  Leases

     Capital Leases -

     HCA leases two parking garages under capital lease agreements. The first
lease has an initial 30-year term ending in June 2023 with the right to extend
the term under renewal options for an additional 67 years. Rental payments
through June 2012 equal the City of Aurora's financing costs related to its
general obligation bond issue used to finance the construction of the parking
garage. The general obligation bond issue includes interest at rates between 7%
and 7.625% per annum. The second lease has an initial term ending in September
2026 with the right to extend the lease for up to 20 additional years. Rental
payments during the first 15 years equal the lessor's debt service costs related
to the industrial revenue bond issue used to finance a portion of the
construction costs of the parking garage. The remaining construction costs were
funded by HCA. In addition, HCA pays base rent equal to $15,000 per month,
subject to a credit of $10,000 per month expiring in October 2001, for
improvements made to the lessor's North Island Center banquet and meeting
facilities. HCA is also responsible for additional rent, consisting of costs
such as maintenance costs, insurance premiums and utilities, arising out of its
operation of both parking garages.

     The original cost of HCA's parking garages is included in buildings and
improvements on the accompanying balance sheets at both December 31, 2000 and
1999 in the amount of $27,358,000. Amortization expense with respect to these
assets amounted to $909,000 during each of the years ended December 31, 2000,
1999 and 1998. Accumulated amortization at December 31, 2000 and 1999 with
respect to these assets amounted to $7,634,000 and $6,725,000, respectively.

                                       87
<PAGE>

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

                   NOTES TO FINANCIAL STATEMENTS (Continued)

   Future minimum lease payments under capital lease obligations as of
December 31, 2000 are as follows:

   2001                                              $  2,532,000
   2002                                                 2,643,000
   2003                                                 2,660,000
   2004                                                 2,677,000
   2005                                                 2,477,000
   Thereafter                                          16,262,000
                                                     ------------

   Total minimum lease payments                        29,251,000
   Less - amount representing interest                (10,290,000)
                                                     ------------

   Present value of future minimum lease payments      18,961,000
   Current capital lease obligation                    (1,100,000)
                                                     ------------

   Long-term capital lease obligation                $ 17,861,000
                                                     ============

   Operating Leases -

   HCA also leases property and operating equipment under various lease
agreements accounted for as operating leases.  Although most of the lease
agreements are either cancellable or have initial terms of one year or less,
certain other lease agreements expire at various dates through the year 2008 and
several contain automatic renewals unless notice of termination is given.  Some
of the operating leases also include contingent rental payments based on levels
of use; such contingent rentals have not been significant.  Total rental expense
amounted to $1,425,000, $983,000 and $669,000, respectively, during the years
ended December 31, 2000, 1999 and 1998.

   Future minimum lease payments as of December 31, 2000 under operating leases
having an initial or remaining noncancelable lease term in excess of one year
are as follows:

   2001                                                      $   109,000
   2002                                                          103,000
   2003                                                           79,000
   2004                                                           75,000
   2005                                                           75,000
   Thereafter                                                    212,000
                                                             -----------

                                                             $   653,000
                                                             ===========

                                       88
<PAGE>

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

                   NOTES TO FINANCIAL STATEMENTS (Continued)

(5)  Income Taxes

     HCA's provision for income taxes consists of the following:

<TABLE>
<CAPTION>
                                                                             Year Ended December 31,
                                                                    ----------------------------------------
                                                                        2000           1999          1998
                                                                    ------------   -----------   -----------
     <S>                                                            <C>            <C>           <C>
     Current (provision) benefit:
      Federal                                                       $(15,830,000)  $   659,000   $(4,856,000)
      State                                                           (1,952,000)   (1,229,000)     (685,000)
     Deferred (provision) benefit:
      Federal                                                           (556,000)      158,000      (915,000)
      State                                                              (84,000)       45,000      (103,000)
                                                                    ------------   -----------   -----------

                                                                    $(18,422,000)  $  (367,000)  $(6,559,000)
                                                                    ============   ===========   ===========
</TABLE>

     A reconciliation between the calculated tax provision on income based on
the statutory rates in effect and the effective tax rates for the years ended
December 31, 2000, 1999 and 1998 follows:

<TABLE>
<CAPTION>
                                                           Year Ended December 31,
                                                   --------------------------------------
                                                       2000         1999         1998
                                                   ------------   ---------   -----------
     <S>                                           <C>            <C>         <C>
     Calculated income tax (provision)
       benefit at statutory rate                   $(17,043,000)  $ 940,000   $(5,975,000)
     State income taxes, net of federal benefit      (1,344,000)   (781,000)     (512,000)
     Political contributions and lobbying costs         (47,000)    (53,000)      (43,000)
     Adjustments to prior years                               -    (430,000)            -
     Other                                               12,000     (43,000)      (29,000)
                                                   ------------   ---------   -----------
     Tax provision as shown on statements
       of operations                               $(18,422,000)  $(367,000)  $(6,559,000)
                                                   ============   =========   ===========
</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 other accruals.

                                       89
<PAGE>

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

                   NOTES TO FINANCIAL STATEMENTS (Continued)


    The components of HCA's net deferred tax liability are as follows:

                                                December 31,
                                         -------------------------
                                            2000          1999
                                         -----------   -----------

    Deferred tax assets:
      Allowance for doubtful accounts    $   345,000   $   306,000
      Other liabilities and reserves       1,613,000     1,576,000
      Other                                  134,000        77,000
                                         -----------   -----------

        Total deferred tax assets          2,092,000     1,959,000
                                         -----------   -----------

    Deferred tax liabilities:
      Depreciation and amortization       (6,352,000)   (5,579,000)
                                         -----------   -----------

    Net deferred tax liability           $(4,260,000)  $(3,620,000)
                                         ===========   ===========

    Receivables and payables to HCC in connection with the aforementioned tax
allocation agreements at December 31, 2000 and 1999 are as follows:

                                                December 31,
                                         -------------------------
                                            2000          1999
                                         -----------   -----------

    Deferred tax assets                  $ 1,745,000   $ 1,617,000
    Due from affiliates                       95,000     1,942,000
    Deferred tax liabilities              (5,538,000)   (4,854,000)


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

(6) Transactions with Related Parties

    Pursuant to a management services agreement which was terminated in October
1999 (see below), HCA paid base management and incentive fees to Pratt
Management, L.P. ("PML"), a limited partnership. HCC was the general partner of
PML; the limited partner of PML was a wholly owned subsidiary of Greate Bay
Casino Corporation ("GBCC"), a Delaware corporation which is approximately 36%-
owned by the Pratt Family.  The base management fee was equal to 5% of operating
revenues (as defined in the agreement) subject to a maximum of $5,500,000 in any
consecutive twelve month period.

                                       90
<PAGE>

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

                   NOTES TO FINANCIAL STATEMENTS (Continued)

The incentive fee was equal to 10% of gross operating profit (as defined in the
agreement to generally include all revenues less expenses other than
depreciation, interest, amortization and income taxes). HCA incurred such fees
totaling $7,730,000 and $8,872,000, respectively, during the period from January
1, 1999 through October 13, 1999 and for the year ended December 31, 1998.

     During October 1999, HCC acquired the GBCC subsidiary which held the
limited partnership interest in PML. HCA borrowed an additional $37,000,000
under its intercompany note with HCC (see Note 3) to acquire and terminate the
management contract. Accordingly, effective October 13, 1999, HCA no longer pays
a management fee. HCA reflected the $37,000,000 payment as an expense to
terminate the management contract during the fourth quarter of 1999.

     HCA incurred interest with respect to its promissory note payable to HCC
(see Note 3) amounting to $7,426,000, $4,424,000 and $4,361,000, respectively,
for the years ended December 31, 2000, 1999 and 1998. Interest payable to HCC on
such note amounted to $1,568,000 both at December 31, 2000 and 1999 and is
included in accrued interest payable on the accompanying balance sheets.

     HCA has acquired computer software and hardware from a subsidiary of GBCC.
HCA entered into a new maintenance and support agreement with the GBCC
subsidiary effective as of January 1, 2000 which provides for a monthly fee of
$13,000 (subject to change upon 60 days written notice) plus additional services
at rates charged by the GBCC subsidiary to third parties. The agreement has an
initial term of one year with automatic annual renewals unless notice of
termination is given. In addition, HCA has been allocated certain other expenses
from HCC and GBCC and is reimbursed by HCC and GBCC for certain administrative
and other services it performs on their behalf. Such transactions resulted in
net charges to HCA during the years ended December 31, 2000, 1999 and 1998
totaling $776,000, $504,000 and $280,000, respectively. At December 31, 2000 and
1999, HCA had net payables of $89,000 and $57,000, respectively, in connection
with such charges.

(7)  Illinois Regulatory Matters

     Riverboat gaming operations in Illinois are subject to regulatory control
by the Illinois Gaming Board. Illinois law requires that HCA maintain its
Owners' License in order to operate. HCA's Owner's License was renewed in
December 2000 for a period of four years. If it were determined that gaming laws
were violated by a licensee, the gaming licenses held by each licensee could be
limited, conditioned, suspended, or revoked. In addition, the licensees and
other persons involved could be subject to substantial fines. Limitation or
conditioning or suspension of any gaming license could, and revocation would,
have a materially adverse affect on the operations of HCA.

(8)  Commitments and Contingencies

 Planet Hollywood Litigation -

     In 1996, Planet Hollywood International, Inc. and Planet Hollywood (Region
IV), Inc. filed a complaint in the United States District Court for the Northern
District of Illinois, Eastern Division, against HCC and certain of its
subsidiaries and affiliates seeking (1) a declaratory judgment that it was
entitled to use the name "Planet Hollywood" for a casino and (2) damages. In its
complaint, Planet

                                       91
<PAGE>

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

                   NOTES TO FINANCIAL STATEMENTS (Continued)

Hollywood alleged, among other things, that HCC had, in operating the Hollywood
Casino concept, infringed on their trademark, service mark and trade dress and
had engaged in unfair competition and deceptive trade practices. HCC, its
subsidiaries and affiliates filed counterclaims seeking (1) a declaratory
judgment that Planet Hollywood was not entitled to use the name "Planet
Hollywood" for a casino and (2) damages. The counterclaims alleged, among other
things, that Planet Hollywood had, through its planned use of its mark in
connection with casino services, infringed on HCC's service marks and trade
dress and had engaged in unfair competition. The trial commenced on July 19,
1999 and was completed on July 26, 1999. On August 25, 1999, HCC and the other
defendants filed a motion to dismiss the declaratory judgment claims of all
parties asserting, among other things, that as a result of Planet Hollywood's
reported deteriorating financial condition and perceived inability to enter into
the casino business, there was no longer any actual case or controversy. On
October 12, 1999, Planet Hollywood (Region IV), Inc. filed a petition for
reorganization under Chapter 11 of the United States Bankruptcy Code. On
December 3, 1999 the judge entered a judgment in favor of HCC with respect to
the damage claims brought by Planet Hollywood and granted HCC's motion to
dismiss the declaratory judgment claims of all parties. Planet Hollywood filed a
notice of appeal of the judgment with the Seventh Circuit District Court of
Appeals; however, pursuant to a joint motion filed by the parties, such appeal
was dismissed effective as of November 2, 2000.

 Other Litigation -

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

(9)  Employee Retirement Savings Plan

     HCA participates in a retirement savings plan under Section 401(k) of the
Internal Revenue Code sponsored by HCC which covers all of its employees who
meet certain eligibility requirements as to age and period of employment.  The
plan allows employees to contribute up to 15% of their salary on a pre-tax basis
(subject to statutory limitations) and invest such monies in a choice of mutual
funds on a tax-deferred basis.  HCA matches a portion of the participating
employees' contributions to the plan and may, from time to time, make additional
discretionary contributions.  For the years ended December 31, 2000, 1999 and
1998, HCA expensed $304,000, $397,000 and $473,000, respectively, as company
contributions to the plan

(10) Disclosures About Fair Value of Financial Instruments

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

     Cash and cash equivalents - The carrying amounts approximate fair value
     -------------------------
because of the short maturity of these instruments.

                                       92
<PAGE>

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

                   NOTES TO FINANCIAL STATEMENTS (Continued)

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

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

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

<TABLE>
<CAPTION>
                                       December 31, 2000            December 31, 1999
                                   ------------------------  ------------------------------
                                    Carrying                  Carrying
                                     Amount     Fair Value     Amount        Fair Value
                                   -----------  -----------  -----------  -----------------
     <S>                           <C>          <C>          <C>          <C>
     Financial Assets:
       Cash and cash
         equivalents               $21,164,000  $21,164,000  $22,148,000        $22,148,000

     Financial Liabilities:
       Interest payable            $ 1,756,000  $ 1,756,000  $ 1,769,000        $ 1,769,000
       11.25% promissory note       66,007,000   67,964,000   66,007,000         68,111,000
       Promissory notes to bank      1,145,000    1,123,000    1,952,000          1,936,000
</TABLE>

(11) Selected Quarterly Financial Data (Unaudited)

<TABLE>
<CAPTION>
                                                           Quarter
                                     ---------------------------------------------------
                                        First       Second        Third        Fourth
                                     -----------  -----------  -----------  ------------
     <S>                             <C>          <C>          <C>          <C>
     Year Ended December 31, 2000
      Net revenues                   $55,474,000  $56,883,000  $58,287,000  $ 53,732,000
                                     ===========  ===========  ===========  ============

      Net income                     $ 8,229,000  $ 7,796,000  $ 8,687,000  $  6,993,000
                                     ===========  ===========  ===========  ============

     Year Ended December 31, 1999
      Net revenues                   $43,393,000  $47,864,000  $53,444,000  $ 52,549,000
                                     ===========  ===========  ===========  ============

      Net income (loss)              $ 2,956,000  $ 5,190,000  $ 5,761,000  $(17,040,000)
                                     ===========  ===========  ===========  ============
</TABLE>

(12) Subsequent Event

     On February 26, 2001, the Company announced the commencement of a major
expansion of the Aurora Casino, highlighted by the construction of a new
dockside facility to replace the Aurora Casino's two riverboats.  The Aurora
Casino expansion, as currently planned, is projected to cost approximately

                                       93
<PAGE>

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

                   NOTES TO FINANCIAL STATEMENTS (Continued)

$75,000,000 and is expected to be completed and opened by the summer of 2002.
The Company received regulatory approval for its planned dockside casino from
the Illinois Gaming Board in April 2000 and construction began in March 2001.
Approximately $40,000,000 of the estimated $75,000,000 in project costs for the
proposed Aurora Casino expansion will be obtained under HCA's available
intercompany borrowings from HCC (see Note 3(a)) with the remainder to come from
cash on hand and cash available from operations.

     The commencement of construction of the new dockside facility had
previously been delayed as a result of a complaint filed in late 1999 in an
Illinois state court concerning the constitutionality of a portion of the
legislation that enabled dockside gaming in Illinois. Although the
constitutional challenge centers on the relocation of one of the existing gaming
licenses, a finding that such portion of the legislation is unconstitutional
could result in a finding that all or a portion of the legislation, including
dockside gaming, is invalid. In January 2001, the presiding judge dismissed the
complaint because the plaintiffs lacked standing and failed to exhaust their
administrative remedies. The plaintiffs have filed an appeal of the ruling. If
an appellate court overturns the trial court's original ruling and the state
court rules that all or a portion of the legislation is invalid, management
believes that it may be able to continue to operate its existing riverboats on a
dockside basis pending a final resolution of the litigation. In the unlikely
event that the provisions in question are found to be unconstitutional after all
appeals, and the entire legislation is invalidated so that dockside gaming is
not permitted, the Company will be able to use its two riverboats to conduct
gaming.

                                       94
<PAGE>

INDEPENDENT AUDITORS' REPORT


To HWCC - Tunica, Inc.:

We have audited the accompanying consolidated balance sheets of HWCC - Tunica,
Inc. (the Company and a Texas Corporation) and subsidiary as of December 31,
2000 and 1999, 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, 2000. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements present fairly, in all material
respects, the consolidated financial position of HWCC - Tunica, Inc. and
subsidiary as of December 31, 2000 and 1999, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 2000, in conformity with accounting principles generally accepted in the
United States of America.



Deloitte & Touche LLP
Dallas, Texas
March 15, 2001

                                       95
<PAGE>

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

                          CONSOLIDATED BALANCE SHEETS

                                    ASSETS

<TABLE>
<CAPTION>
                                                              December 31,
                                                      ---------------------------
                                                          2000           1999
                                                      ------------   ------------
<S>                                                   <C>            <C>
Current Assets:
 Cash and cash equivalents                            $ 16,038,000   $ 10,339,000
 Accounts receivable, net of allowances of
  $1,636,000 and $990,000, respectively                  3,295,000      2,722,000
 Inventories                                               780,000        785,000
 Deferred income taxes                                   1,403,000      1,346,000
 Prepaid expenses and other current assets               1,182,000      1,190,000
 Due from affiliates                                       163,000        503,000
                                                      ------------   ------------

  Total current assets                                  22,861,000     16,885,000
                                                      ------------   ------------

Property and Equipment:
 Land and improvements                                   4,808,000      4,781,000
 Buildings                                              76,701,000     76,011,000
 Barges                                                  2,524,000      2,524,000
 Operating equipment                                    47,019,000     44,815,000
 Construction in progress                                   91,000        134,000
                                                      ------------   ------------

                                                       131,143,000    128,265,000
  Less - accumulated depreciation and amortization     (49,408,000)   (44,575,000)
                                                      ------------   ------------

 Net property and equipment                             81,735,000     83,690,000
                                                      ------------   ------------

Other Assets:
 Land rights                                             6,843,000      7,047,000
 Other assets                                            4,667,000      4,776,000
                                                      ------------   ------------

  Total other assets                                    11,510,000     11,823,000
                                                      ------------   ------------

                                                      $116,106,000   $112,398,000
                                                      ============   ============
</TABLE>

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

                                       96
<PAGE>

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

                          CONSOLIDATED BALANCE SHEETS

                     LIABILITIES AND SHAREHOLDER'S EQUITY

<TABLE>
<CAPTION>
                                                   December 31,
                                           ---------------------------
                                               2000           1999
                                           ------------   ------------
<S>                                        <C>            <C>
Current Liabilities:
 Current maturities of long-term debt      $  1,032,000   $  1,491,000
 Accounts payable                             1,890,000      1,081,000
 Accrued liabilities -
  Salaries and wages                          1,792,000      1,569,000
  Interest                                      437,000        437,000
  Gaming and other taxes                      1,473,000      1,340,000
  Insurance                                   1,986,000      1,839,000
  Other                                       2,856,000      2,214,000
 Other current liabilities                    1,375,000      1,168,000
                                           ------------   ------------

 Total current liabilities                   12,841,000     11,139,000
                                           ------------   ------------

Long-Term Debt                               87,619,000     88,649,000
                                           ------------   ------------

Commitments and Contingencies

Shareholder's Equity:
 Common stock, $.01 par value
  per share; 100,000 shares authorized;
  1,000 shares issued and outstanding                 -              -
 Additional paid-in capital                  22,637,000     22,637,000
 Accumulated deficit                         (6,991,000)   (10,027,000)
                                           ------------   ------------

  Total shareholder's equity                 15,646,000     12,610,000
                                           ------------   ------------

                                           $116,106,000   $112,398,000
                                           ============   ============
</TABLE>

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

                                       97
<PAGE>

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

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                 Year Ended December 31,
                                        ------------------------------------------
                                            2000           1999           1998
                                        ------------   ------------   ------------
<S>                                     <C>            <C>            <C>
Revenues:
 Casino                                 $108,529,000   $102,312,000   $ 96,459,000
 Rooms                                    10,690,000     10,457,000      9,386,000
 Food and beverage                        16,656,000     15,274,000     15,039,000
 Other                                     1,462,000      1,542,000      1,373,000
                                        ------------   ------------   ------------

                                         137,337,000    129,585,000    122,257,000
 Less - promotional allowances           (21,310,000)   (19,463,000)   (16,484,000)
                                        ------------   ------------   ------------

   Net revenues                          116,027,000    110,122,000    105,773,000
                                        ------------   ------------   ------------

Expenses:
 Casino                                   86,023,000     78,880,000     72,317,000
 Rooms                                     1,102,000      1,161,000      1,752,000
 Food and beverage                         3,897,000      3,704,000      3,923,000
 Other                                       791,000      1,137,000      1,336,000
 General and administrative                5,173,000      5,679,000      5,813,000
 Termination of consulting agreement               -      3,329,000              -
 Depreciation and amortization             5,841,000      7,066,000      8,123,000
                                        ------------   ------------   ------------

   Total expenses                        102,827,000    100,956,000     93,264,000
                                        ------------   ------------   ------------

Income from operations                    13,200,000      9,166,000     12,509,000
                                        ------------   ------------   ------------

Non-operating income (expenses):
 Interest income                             280,000        340,000        587,000
 Interest expense                        (10,019,000)   (10,308,000)   (10,937,000)
 Equity in losses of unconsolidated
   affiliate                                 (55,000)      (141,000)             -
 Gain (loss) on disposal of assets             5,000        (57,000)       (65,000)
                                        ------------   ------------   ------------

   Total non-operating expenses, net      (9,789,000)   (10,166,000)   (10,415,000)
                                        ------------   ------------   ------------

Income (loss) before income taxes          3,411,000     (1,000,000)     2,094,000
Income tax (provision) benefit              (375,000)       323,000       (689,000)
                                        ------------   ------------   ------------

Net income (loss)                       $  3,036,000   $   (677,000)  $  1,405,000
                                        ============   ============   ============
</TABLE>

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

                                       98
<PAGE>

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

           CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
                  For the Three Years Ended December 31, 2000

<TABLE>
<CAPTION>
                                                              Additional
                                           Common Stock         Paid-in       Accumulated
                                        ------------------
                                        Shares      Amount      Capital        Deficit
                                        ------      ------    ------------   ------------
<S>                                     <C>         <C>       <C>            <C>
BALANCES, January 1, 1998                1,000      $    -    $ 34,637,000   $(10,755,000)

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

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

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

BALANCES, December 31, 1999              1,000           -      22,637,000    (10,027,000)

 Net income                                  -           -               -      3,036,000
                                        ------      ------    ------------   ------------

BALANCES, December 31, 2000              1,000      $    -    $ 22,637,000   $ (6,991,000)
                                        ======      ======    ============   ============
</TABLE>

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

                                       99
<PAGE>

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

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                    Year Ended December 31,
                                                           ----------------------------------------
                                                               2000          1999          1998
                                                           -----------   ------------   -----------
<S>                                                        <C>           <C>            <C>
OPERATING ACTIVITIES:
 Net income (loss)                                         $ 3,036,000   $   (677,000)  $ 1,405,000
 Adjustments to reconcile net income (loss) to net cash
   provided by operating activities:
   Depreciation and amortization                             5,841,000      7,066,000     8,123,000
   (Gain) loss on disposal of assets                            (5,000)        57,000        65,000
   Provision for doubtful accounts                           1,206,000        504,000       483,000
   Equity in losses of unconsolidated affiliate                 55,000        141,000             -
   Deferred income tax provision (benefit)                           -       (133,000)      115,000
   Increase in accounts receivable                          (1,779,000)    (2,625,000)     (144,000)
   Increase in accounts payable and accrued
     expenses                                                1,954,000        387,000       256,000
   Net change in other current assets and
     liabilities                                               560,000       (562,000)      217,000
   Net change in other noncurrent assets
     and liabilities                                            (5,000)        14,000      (223,000)
                                                           -----------   ------------   -----------

     Net cash provided by operating
       activities                                           10,863,000      4,172,000    10,297,000
                                                           -----------   ------------   -----------

INVESTING ACTIVITIES:
 Purchases of property and equipment                        (3,682,000)    (6,415,000)   (5,938,000)
 Short-term investments                                              -      3,905,000       (29,000)
 Investment in unconsolidated affiliate                              -        (45,000)      (53,000)
 Proceeds from sale of assets                                    7,000         55,000        82,000
                                                           -----------   ------------   -----------

   Net cash used in investing activities                    (3,675,000)    (2,500,000)   (5,938,000)
                                                           -----------   ------------   -----------

FINANCING ACTIVITIES:
 Proceeds from issuance of long-term debt                      104,000     89,680,000       687,000
 Repayments of long-term debt                               (1,593,000)   (85,338,000)     (572,000)
 Dividends                                                           -    (12,000,000)            -
                                                           -----------   ------------   -----------

   Net cash (used in) provided by
     financing activities                                   (1,489,000)    (7,658,000)      115,000
                                                           -----------   ------------   -----------

   Net increase (decrease) in cash and cash equivalents      5,699,000     (5,986,000)    4,474,000
     Cash and cash equivalents at
       beginning of year                                    10,339,000     16,325,000    11,851,000
                                                           -----------   ------------   -----------

     Cash and cash equivalents at
       end of year                                         $16,038,000   $ 10,339,000   $16,325,000
                                                           ===========   ============   ===========
</TABLE>

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

                                      100
<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 30 miles
southwest of Memphis, Tennessee.  The facility (the "Tunica Casino") was
completed and commenced operations on August 8, 1994 under the service mark
Hollywood Casino(R).  The Tunica Casino currently includes a casino with 54,000
square feet of gaming space, 506 hotel rooms and suites, a 123-space
recreational vehicle park and related amenities.  HCT's gaming license has been
renewed by the Mississippi Gaming Commission through October 18, 2001.

     The accompanying consolidated financial statements include the accounts of
HCT and its wholly owned subsidiary, HWCC-Golf Course Partners, Inc. ("Golf").
All significant intercompany balances have been eliminated in consolidation.
Golf, a Delaware corporation, was formed in 1996 to own an initial one-third
interest in Tunica Golf Course LLC, a limited liability company organized to
develop and operate a golf course to be used by patrons of the Tunica Casino and
other participating casino/hotel properties.  The golf course opened for
business in November 1998.  Golf's investment in Tunica Golf Course, LLC is
accounted for under the equity method of accounting and is included in other
noncurrent assets on the accompanying consolidated balance sheets at December
31, 2000 and 1999.

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

(2)  Summary of Significant Accounting Policies

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

 Casino revenues, promotional allowances and departmental expenses -

     The Tunica Casino recognizes the net win from gaming activities (the
difference between gaming wins and losses) as casino revenues.  Casino revenues
are net of accruals for anticipated payouts of progressive slot machine jackpots
and certain progressive table game payouts.  Such anticipated jackpots and
payouts are reflected as current liabilities on the accompanying consolidated
balance sheets. The estimated value of rooms, food and beverage and other items
which are provided to customers without charge has been included in revenues and
a corresponding amount has been deducted as promotional

                                      101
<PAGE>

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

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

allowances. The costs of such complimentaries have been included as casino
expenses on the accompanying consolidated statements of operations. Costs of
complimentaries allocated from the rooms, food and beverage and other operating
departments to the casino department during the years ended December 31, 2000,
1999 and 1998 were as follows:

                                2000           1999           1998
                             -----------    -----------    -----------

        Rooms                $ 3,188,000    $ 2,742,000    $ 1,940,000
        Food and beverage     13,818,000     12,710,000     12,166,000
        Other                    590,000        438,000        300,000
                             -----------    -----------    -----------

                             $17,596,000    $15,890,000    $14,406,000
                             ===========    ===========    ===========

 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 $1,206,000, $504,000 and $483,000, respectively, were made
during the years ended December 31, 2000, 1999 and 1998.

 Inventories -

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

 Property and equipment -

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

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

 Land rights -

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

                                      102
<PAGE>

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

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

amortization commenced with the opening of the Tunica Casino. Management
presently intends to renew the ground lease at least through the estimated 40-
year useful life of the facility. Accumulated amortization of such land rights
amounted to $1,602,000 and $1,398,000, respectively, at December 31, 2000 and
1999.

 Long-lived assets -

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

 Accrued insurance -

     HCT is self insured for a portion of its general liability, certain health
care and other liability exposures.  Accrued insurance includes estimates of
such accrued liabilities based on an evaluation of the merits of individual
claims and historical claims experience; accordingly, HCT's ultimate liability
may differ from the amounts accrued.

 Income taxes -

     HCT is included in HCC's consolidated federal income tax return.  HCT's
provision for federal income taxes is based on the amount of tax which would be
provided if a separate federal income tax return were filed.  HCT made payments
to HCC in lieu of federal income taxes amounting to $33,000, $288,000 and
$307,000 during the years ended December 31, 2000, 1999 and 1998, respectively.
HCT paid no state income taxes during 2000, 1999 or 1998.

 Recent Accounting Pronouncement  -

     In June 1998, the Financial Accounting Standards Board issued a new
statement, "Accounting for Derivative Instruments and Hedging Activities,"
("SFAS 133"), which has been amended to be effective for fiscal years beginning
after June 15, 2000.  SFAS 133 requires, among other things, that derivatives be
recorded on the balance sheet at fair value.  Changes in the fair value of
derivatives may, depending on circumstances, be recognized in earnings or
deferred as a component of shareholders' equity until a hedged transaction
occurs.  The adoption of SFAS 133 on January 1, 2001 had no impact on the
consolidated financial position or results of operations of HCT.

 Reclassifications -

     Certain reclassifications have been made to the prior years' consolidated
financial statements to conform to the 2000 consolidated financial statement
presentation.

                                      103
<PAGE>

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

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(3)  Long-Term Debt and Pledge of Assets

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

<TABLE>
<CAPTION>
                                                       December 31,   December 31,
                                                           2000           1999
                                                       ------------   ------------
 <S>                                                   <C>            <C>
 11.25% Promissory note to HCC due May 1, 2007 (a)     $ 87,045,000   $ 87,045,000
 Note payable to HCC (a)                                    329,000        329,000
 Equipment loans (b)                                      1,188,000      2,488,000
 Bank credit facility (c)                                    89,000        278,000
                                                       ------------   ------------

   Total indebtedness                                    88,651,000     90,140,000
  Less - current maturities                              (1,032,000)    (1,491,000)
                                                       ------------   ------------

   Total long-term debt                                $ 87,619,000   $ 88,649,000
                                                       ============   ============
</TABLE>

_____________________

(a)  The intercompany note was issued as of May 19, 1999 and accrues interest at
     the rate of 11.25% per annum.  The initial borrowing on the note in the
     amount of $84,045,000 replaced previous intercompany notes with HCC which
     accrued interest at the rate of 12.75% per annum.  During October 1999, HCT
     borrowed an additional $3,000,000 available under the intercompany note
     with HCC as well as an additional $329,000 under a new note agreement with
     HCC to acquire and terminate its consulting agreement (see Note 6).
     Interest on advances is payable each April 15 and October 15.  The
     intercompany note is pledged as security with respect to HCC's $360,000,000
     Senior Secured Notes due in 2006 and 2007 which are unconditionally
     guaranteed on a senior secured basis by HCT and by certain other current
     and future subsidiaries of HCC. HCC's Senior Secured Notes and related
     guarantees are secured by, among other things, (1) substantially all of the
     assets of HCT and other future guarantors, (2) a limited lien on
     substantially all of the assets of another gaming facility operated by a
     wholly owned subsidiary of HCC, (3) a pledge of the capital stock of HCT
     and certain other subsidiaries of HCC and (4) the collateral assignment of
     any future management contracts entered into by HCC.  The limitation on the
     lien described in (2) above is currently $66,007,000 and may be increased
     as a result of additional borrowings up to a maximum of $108,000,000.

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

                                      104
<PAGE>

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

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

(b)  The equipment loans are payable monthly including interest at effective
     rates ranging  from 8.5% to 12.3% per annum and mature at various dates
     between 2001 and 2003.

(c)  HCT had a bank credit facility in the amount of $1,300,000 available to
     borrow against until September 30, 1998.  HCT borrowed $541,000 under the
     credit facility during 1998 at the rate of 8.875% per annum.  Borrowings
     under the credit facility are to be repaid in 36 monthly installments of
     $17,000 and are collateralized by equipment purchased with the loan
     proceeds. The credit facility was not renewed by HCT.

     Scheduled payments of long-term debt as of December 31, 2000 are set forth
below:

                    2001                     $ 1,032,000
                    2002                         242,000
                    2003                           3,000
                    2004                               -
                    2005                               -
                    Thereafter                87,374,000
                                             -----------

                      Total                  $88,651,000
                                             ===========

     Interest paid amounted to $10,019,000, $10,347,000 and $10,937,000,
respectively, during the years ended December 31, 2000, 1999 and 1998.

(4)  Leases

     Capital Leases -

     HCT previously leased certain gaming and other equipment under capital
lease agreements which expired in 1997.  Assets under capital leases with an
original cost of $3,773,000 and $4,567,000, respectively, are included in
operating equipment on the accompanying consolidated balance sheets at December
31, 2000 and 1999.  There was no amortization expense with respect to such
assets for either of the years ended December 31, 2000 or 1999; amortization
expense for the year ended December 31, 1998 was $298,000.  Accumulated
amortization at December 31, 2000 and 1999 with respect to these assets amounted
to $3,773,000 and $4,567,000, respectively.  No future payment obligations exist
with respect to these capital leases.

     Operating Leases -

     HCT also leases property and operating equipment under various lease
agreements accounted for as operating leases.  Except for the ground lease (see
Note 8), virtually all of the lease agreements are

                                      105
<PAGE>

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

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

either cancellable or have initial terms of one year or less. A number of the
leases contain automatic renewal options unless notice of termination is given
and some include contingent rental payments based on levels of use; such
contingent rentals have not been significant. Total rental expense amounted to
$951,000, $905,000 and $326,000, respectively, during the years ended December
31, 2000, 1999 and 1998.

     Future minimum lease payments as of December 31, 2000 under operating
leases having an initial or remaining noncancelable lease term in excess of one
year are as follows:

     2000                                          $  16,000
     2001                                              8,000
     2002                                              1,000
                                                   ---------

                                                   $  25,000
                                                   =========

(5)  Income Taxes

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

<TABLE>
<CAPTION>
                                                         Year Ended December 31,
                                                    ---------------------------------
                                                      2000        1999        1998
                                                    ---------   ---------   ---------
<S>                                                 <C>         <C>         <C>
Federal income tax (provision) benefit:
 Current                                            $(375,000)  $ 190,000   $(574,000)
 Deferred                                            (868,000)     54,000    (185,000)
Change in valuation allowance                         868,000      79,000      70,000
                                                    ---------   ---------   ---------

                                                    $(375,000)  $ 323,000   $(689,000)
                                                    =========   =========   =========
</TABLE>

     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.

                                      106
<PAGE>

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

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


     A reconciliation between the calculated tax (provision) benefit on income
(loss) based on the statutory rates in effect and the effective tax rates for
the years ended December 31, 2000, 1999 and 1998 follows:

<TABLE>
<CAPTION>
                                                      Year Ended December 31,
                                                 ----------------------------------
                                                     2000        1999        1998
                                                 -----------   --------   ---------
<S>                                              <C>           <C>        <C>
Calculated income tax (provision) benefit        $(1,160,000)  $340,000   $(712,000)
Valuation allowance change                           868,000     79,000      70,000
Adjustments to prior years                                 -    (32,000)          -
Disallowance of meals and entertainment              (50,000)   (38,000)    (32,000)
Other                                                (33,000)   (26,000)    (15,000)
                                                 -----------   --------   ---------

Tax (provision) benefit as shown on statement
  of operations                                  $  (375,000)  $323,000   $(689,000)
                                                 ===========   ========   =========
</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 other accruals.

     At December 31, 2000, HCT has net operating loss carryforwards ("NOL's")
totaling approximately $3,700,000, which do not begin to expire until the year
2010. Additionally, HCT has alternative minimum and other tax credits available
totaling $985,000 and $326,000, respectively. Alternative minimum tax credits do
not expire and none of the other tax credits begin to expire before the year
2009. Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes", requires that the tax benefit of such NOL's and credit
carryforwards, together with the tax benefit of deferred tax assets resulting
from temporary differences, be recorded as an asset and, to the extent that
management can not assess that the utilization of all or a portion of such
deferred tax assets is more likely than not, a valuation allowance should be
recorded. Based on the taxable income earned by HCT during 2000 and 1999 (before
non-recurring items), and the expectation of future taxable income, management
believes that it is more likely than not that a portion of the NOL's and
deferred tax assets will be utilized. Accordingly, a valuation allowance has
been established which has resulted in the recording of net deferred tax assets
of $2,125,000 at both December 31, 2000 and 1999.

                                      107
<PAGE>

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

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


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

<TABLE>
<CAPTION>
                                                              December 31,
                                                       -------------------------
                                                           2000          1999
                                                       -----------   -----------
      <S>                                              <C>           <C>
      Deferred tax assets:
        Net operating loss carryforwards               $ 1,251,000   $ 2,868,000
        Alternative minimum tax credit carryforward        985,000       610,000
        Tax credit carryforwards                           326,000       251,000
        Allowance for doubtful accounts                    556,000       337,000
        Other liabilities and accruals                   1,546,000     1,168,000
                                                       -----------   -----------

          Total deferred tax assets                      4,664,000     5,234,000

      Deferred tax liabilities:
        Depreciation and amortization                     (986,000)     (688,000)
                                                       -----------   -----------

      Net deferred tax asset                             3,678,000     4,546,000
      Valuation allowance                               (1,553,000)   (2,421,000)
                                                       -----------   -----------

                                                       $ 2,125,000   $ 2,125,000
                                                       ===========   ===========
</TABLE>

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

<TABLE>
<CAPTION>
                                                              December 31,
                                                       -------------------------
                                                           2000          1999
                                                       -----------   -----------
     <S>                                               <C>           <C>
       Due from affiliates                             $   136,000   $   478,000
       Deferred income taxes                             1,403,000     1,346,000
       Other noncurrent assets                             722,000       779,000
</TABLE>

     The Internal Revenue Service has completed its examination of the
consolidated federal income tax returns of HCC for the years 1993 and 1994 as
they pertain to HCT.  The intercompany tax receivable under the tax sharing
agreement and the net deferred tax asset have been adjusted to reflect the
results of such examination.  The Internal Revenue Service is continuing its
examination of the consolidated federal income tax returns of HCC for 1995 and
1996.  Management believes that the results of such examination will not have a
material effect on the consolidated financial position or results of operations
of HCT.

                                      108
<PAGE>

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

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


(6)  Transactions with Related Parties

     Pursuant to a consulting agreement which was terminated during October
1999, HCT incurred a monthly consulting fee of $100,000 to Pratt Casino
Corporation ("PCC"), an affiliated company. Such fees amounted to $939,000 and
$1,200,000, respectively, during the years ended December 31, 1999 and 1998.
During October 1999, HCC acquired all of the common stock of PCC. HCT borrowed
an additional $3,329,000 from HCC (see Note 3) to acquire and terminate the
consulting agreement. Accordingly, effective October 13, 1999, HCT no longer
pays a consulting fee. HCT reflected the $3,329,000 payment as an expense to
terminate the consulting agreement during the fourth quarter of 1999.

     HCT and Advanced Casino Systems Corporation ("ACSC"), an affiliated
company, entered into a Computer Services Agreement which was renewed through
December 31, 1999. The agreement provided, among other things, that ACSC sell
HCT computer hardware and information systems equipment and license or
sublicense to HCT computer software necessary to operate HCT's casino, hotel and
related facilities and business operations. HCT paid ACSC for such equipment and
licensed such software at amounts and on terms and conditions that ACSC provided
to unrelated third parties. HCT also paid ACSC a fixed license fee of $33,600
per month and reimbursed ACSC for its direct costs and expenses incurred under
the agreement. HCT entered into a new maintenance and support agreement with
ACSC effective as of January 1, 2000 which provides for a monthly fee of $14,000
(subject to change upon 60 days written notice) plus additional services at
rates charged by ACSC to third parties. The agreement has an initial term of one
year with automatic annual renewals unless notice of termination is given. ACSC
also performs and bills HCT for certain administrative and marketing services.
Total charges incurred by HCT amounted to $390,000, $776,000 and $656,000,
respectively, for the years ended December 31, 2000, 1999 and 1998. At December
31, 2000 and 1999, HCT had payables of $42,000 and $22,000, respectively,
included in accounts payable with respect to such charges.

     HCT is charged for certain legal, accounting, and other expenses incurred
by HCC and its subsidiaries that relate to HCT's business. HCT also bills HCC
and its subsidiaries for services provided to those companies. For the years
ended December 31, 2000, 1999 and 1998, such transactions resulted in net
charges to HCT totaling $137,000, $158,000 and $167,000, respectively. At
December 31, 2000 and 1999, intercompany balances with respect to such charges
were not significant.

(7)  Mississippi Regulatory Matters

     Gaming operations in Mississippi are subject to regulatory control by the
Mississippi Gaming Commission.  Under the provisions of the Mississippi gaming
regulations, HCT is required to maintain all necessary licenses.  The ownership
license for the Tunica Casino has been renewed through October 18, 2001.
Management intends to request renewal of HCT's ownership license at the
appropriate time in 2001 and anticipates that such renewal will be approved by
the Mississippi Gaming Commission.  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.

                                      109
<PAGE>

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

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


(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 was for an initial term of five
years from the opening date of the facility and, at HCT's option, may be renewed
for nine additional five-year periods. The lease is currently in its first five-
year renewal term. Obligations under the ground lease include both minimum
monthly fixed payments and percentage rent, which in the aggregate will be the
greater of 4% of Gross Revenues, as defined, or $1,100,000 per year. HCT is
responsible for all operating and other expenses of the property in accordance
with the lease terms. During 2000, 1999 and 1998, HCT expensed $4,367,000,
$4,138,000 and $3,899,000, respectively, in connection with the ground lease.

 Planet Hollywood Litigation -

     In 1996, Planet Hollywood International, Inc. and Planet Hollywood (Region
IV), Inc. filed a complaint in the United States District Court for the Northern
District of Illinois, Eastern Division, against HCC and certain of its
subsidiaries and affiliates seeking (1) a declaratory judgment that it was
entitled to use the name "Planet Hollywood" for a casino and (2) damages.  In
its complaint, Planet Hollywood alleged, among other things, that HCC had, in
operating the Hollywood Casino concept, infringed on their trademark, service
mark and trade dress and had engaged in unfair competition and deceptive trade
practices.  HCC, its subsidiaries and affiliates filed counterclaims seeking (1)
a declaratory judgment that Planet Hollywood was not entitled to use the name
"Planet Hollywood" for a casino and (2) damages.  The counterclaims alleged,
among other things, that Planet Hollywood had, through its planned use of its
mark in connection with casino services, infringed on HCC's service marks and
trade dress and had engaged in unfair competition.  The trial commenced on July
19, 1999 and was completed on July 26, 1999.  On August 25, 1999, HCC and the
other defendants filed a motion to dismiss the declaratory judgment claims of
all parties asserting, among other things, that as a result of Planet
Hollywood's reported deteriorating  financial condition and perceived inability
to enter into the casino business, there was no longer any actual case or
controversy.  On October 12, 1999, Planet Hollywood (Region IV), Inc. filed a
petition for reorganization under Chapter 11 of the United States Bankruptcy
Code.  On December 3, 1999 the judge entered a judgment in favor of HCC with
respect to the damage claims brought by Planet Hollywood and granted HCC's
motion to dismiss the declaratory judgment claims of all parties.  Planet
Hollywood filed a notice of appeal of the judgment with the Seventh Circuit
Court of Appeals; however, pursuant to a joint motion filed by the parties, such
appeal was dismissed effective as of November 2, 2000.

 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.

                                      110
<PAGE>

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

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


(9)  Employee Retirement Savings Plan -

     HCT participates in a retirement savings plan under Section 401(k) of the
Internal Revenue Code sponsored by HCC which covers all of its employees who
meet certain eligibility requirements as to age and period of employment.  The
plan allows employees to contribute up to 15% of their salary on a pre-tax basis
(subject to statutory limitations) and invest such monies in a choice of mutual
funds on a tax-deferred basis.  HCT matches a portion of the participating
employees' contributions to the plan and may, from time to time, make additional
discretionary contributions.  For the years ended December 31, 2000, 1999 and
1998, HCT expensed $187,000, $176,000 and $203,000, respectively, as company
contributions to the plan

(10) Disclosures about Fair Value of Financial Instruments

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

     Cash and cash equivalents - The carrying amounts approximate fair value
     -------------------------
because of the short maturity of these instruments.

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

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

     The estimated carrying amounts and fair values of HCT's financial
instruments are as follows:

<TABLE>
<CAPTION>
                                       December 31, 2000           December 31, 1999
                                  --------------------------  ---------------------------
                                    Carrying                    Carrying
                                     Amount      Fair Value      Amount       Fair Value
                                  -----------   ------------  ------------   ------------
<S>                               <C>           <C>           <C>            <C>
Financial Assets
 Cash and cash equivalents        $ 16,038,000  $ 16,038,000  $ 10,339,000   $ 10,339,000

Financial Liabilities
 Interest payable                 $    437,000  $    437,000  $    437,000   $    437,000
 11.25% Promissory Note to HCC      87,045,000    89,626,000    87,045,000     89,773,000
 Note payable to HCC                   329,000       338,000       329,000        340,000
 Equipment loans                     1,188,000     1,188,000     2,488,000      2,514,000
 Bank credit facility                   89,000        88,000       278,000        278,000
</TABLE>

                                      111
<PAGE>

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

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


(11) Selected Quarterly Financial Data (Unaudited)

<TABLE>
<CAPTION>
                                                       Quarter
                                  --------------------------------------------------
                                     First       Second        Third       Fourth
                                  -----------  -----------  -----------  -----------
<S>                               <C>          <C>          <C>          <C>
Year Ended December 31, 2000:

 Net revenues                     $28,541,000  $28,922,000  $30,740,000  $27,824,000
                                  ===========  ===========  ===========  ===========

 Net income                       $ 1,127,000  $   385,000  $ 1,330,000  $   194,000
                                  ===========  ===========  ===========  ===========

Year Ended December 31, 1999:

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

 Net income (loss)                $   892,000  $   733,000  $   286,000  $(2,588,000)
                                  ===========  ===========  ===========  ===========
</TABLE>

                                      112
<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 31,
2001 (the "Definitive Proxy Statement") under the captions "Election of
Directors" and "Management."

ITEM 11.    EXECUTIVE COMPENSATION

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

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

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

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

                                    PART IV

ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

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

     1.   Financial Statements

          The financial statements filed as part of this report are listed on
     the Index to Financial Statements on page 41.

     2.   Financial Statement Schedules

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

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

                                      113
<PAGE>

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

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

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

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

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

         3. Exhibits

 **2.1  --  Agreement of Merger dated as of May 15, 1992, between PBC, Inc. and
            HCC and Certificate of Correction of Agreement of Merger dated as of
            June 16, 1992. (Exhibit 2.1)
@@@3.1  --  Certificate of Incorporation of HCC, as amended. (Exhibit 3.1)
@@@3.2  --  Amended Bylaws of HCC. (Exhibit 3.2)
 ##3.3  --  Second Amended and Restated Bylaws of HCC. (Exhibit 3.3)
 @@3.4  --  Articles of Incorporation of HCT. (Exhibit 3.1).
 @@3.5  --  Bylaws of HCT. (Exhibit 3.2)
+++3.6  --  Third Amended and Restated Joint Venture Agreement of Hollywood
            Casino Shreveport by and among Shreveport Paddlewheels, L.L.C., HCS
            I, Inc. and HCS II, Inc., dated as of July 21, 1999. (Exhibit 3.1)
+++3.7  --  August 1999 Amendment to Third Amended and Restated Joint Venture
            Agreement between Shreveport Paddlewheels, L.L.C., HCS I, Inc. and
            HCS II, Inc. (Exhibit 3.2)
+++4.1  --  Indenture among HCC as Issuer, and HWCC-Shreveport, Inc. and HCT as
            Guarantors, and State Street Bank and Trust Company, as Trustee,
            dated as of May 19, 1999. (Exhibit 4.1)
+++4.2  --  Security Agreement made by HCC, as Debtor, to State Street Bank and
            Trust Company, as Trustee and Secured Party, dated as of May 19,
            1999. (Exhibit 4.2)
+++4.3  --  Stock Pledge Agreement made by HCC, as Pledgor, in favor of State
            Street Bank and Trust Company, as Trustee and Secured Party, dated
            as of May 19, 1999. (Exhibit 4.3)
+++4.4  --  Trademark Security Agreement made by HCC, as Grantor, to State
            Street Bank and Trust Company, as Trustee and Secured Party, dated
            as of May 19, 1999. (Exhibit 4.4)
+++4.5  --  Escrow and Control Agreement by and among HCC and State Street Bank
            and Trust Company, as Trustee and Escrow Agent, dated as of May 19,
            1999. (Exhibit 4.5)
+++4.6  --  Control Agreement dated as of May 19, 1999 by and among HCC and
            State Street Bank and Trust Company, as Trustee. (Exhibit 4.6)
+++4.7  --  Security Agreement made by HCT, as Debtor, to State Street Bank and
            Trust Company, as Trustee and Secured Party, dated as of May 19,
            1999. (Exhibit 4.7)
+++4.8  --  First Leasehold Deed of Trust, Security Agreement, Assignment of
            Leases and Rents, Fixture Filing, and Financing Statement made by
            HCT in favor of Phillip A. Poitevin, as Trustee for the benefit of
            State Street Bank and Trust Company, as Indenture Trustee, dated as
            of May 19, 1999. (Exhibit 4.8)
+++4.9  --  First Preferred Ship Mortgage made and given by HCT, as Mortgagor,
            in favor of State Street Bank and Trust Company, as Trustee and
            Mortgagee (relating to Vessel No. 534006), dated as of May 19, 1999.
            (Exhibit 4.9)
+++4.10 --  Intercompany Security Agreement made by HCT, as Debtor, to HCC, as
            Secured Party, and collaterally assigned to State Street Bank and
            Trust Company, as Trustee, dated as of May 19, 1999. (Exhibit 4.11)
+++4.11 --  Second Leasehold Deed of Trust, Security Agreement, Fixture Filing,
            and Financing Statement from HCT, as Grantor, in favor of Jim B.
            Tobhill, Trustee, for the benefit of HCC, dated as of May 19, 1999.
            (Exhibit 4.12)
+++4.12 --  Collateral Assignment of Second Leasehold Deed of Trust, Security
            Agreement, Assignment of Leases and Rents, Fixture Filing and
            Financing Statement made by HCC, as Mortgagee

                                      114
<PAGE>

            and Assignor, in favor of State Street Bank and Trust Company, as
            Trustee and Assignee, dated as of May 19, 1999. (Exhibit 4.13)
+++4.13 --  Assignment of Second Preferred Fleet Mortgage by HCC, as Mortgagee
            and Assignor (relating to Vessel No. 534006) in favor of State
            Street Bank and Trust Company, as Trustee and Assignee, dated as of
            May 19, 1999. (Exhibit 4.15)
+++4.14 --  Intercompany Security Agreement dated as of May 19, 1999 made by
            HCA, as Debtor, to HCC, as Secured Party, and collaterally assigned
            to State Street Bank and Trust Company, as Trustee. (Exhibit 4.17)
+++4.15 --  Collateral Assignment of Mortgage, Leasehold Mortgage, Security
            Agreement, Assignment of Leases and Rents, Fixture Filing and
            Financing Statement made by HCC, as Mortgagee and Assignor, in favor
            of State Street Bank and Trust Company, as Trustee and Assignee,
            dated as of May 19, 1999. (Exhibit 4.19)
+++4.16 --  Assignment of First Preferred Fleet Mortgage by HCC, as Mortgagee
            and Assignor (relating to Vessel Nos. 993836, 993837 and 1029229) in
            favor of State Street Bank and Trust Company, as Trustee and
            Assignee, dated as of May 19, 1999. (Exhibit 4.21)
+++4.17 --  Security Agreement made by HWCC-Shreveport, Inc. as Debtor, to State
            Street Bank and Trust Company, as Trustee and Secured Party, dated
            as of May 19, 1999. (Exhibit 4.22)
  +4.18 --  Indenture among Hollywood Casino Shreveport and Shreveport Capital
            Corporation ("SCC") as Co-Issuers, and HWCC-Louisiana, Inc. ("HCL"),
            HCS I, Inc. and HCS II, Inc., as Guarantors, and State Street Bank
            and Trust Company, as Trustee, dated as of August 10, 1999. (Exhibit
            4.1)
  +4.19 --  Registration Rights Agreement, dated as of August 10, 1999, by and
            among Hollywood Casino Shreveport, SCC, the Guarantors named therein
            and the Initial Purchasers. (Exhibit 4.2)
  +4.20 --  Collateral Assignment of Contracts and Documents dated August 10,
            1999 between Hollywood Casino Shreveport and State Street Bank and
            Trust Company, as Trustee. (Exhibit 4.3)
  +4.21 --  Security Agreement dated August 10, 1999 between Hollywood Casino
            Shreveport and State Street Bank and Trust Company, as Trustee.
            (Exhibit 4.4)
  +4.22 --  Partnership Interest Pledge Agreement dated August 10, 1999 made by
            HCS I, Inc. in favor of State Street Bank and Trust Company, as
            Trustee and Secured Party. (Exhibit 4.5)
  +4.23 --  Cash Collateral and Disbursement Agreement dated August 10, 1999
            between Hollywood Casino Shreveport, SCC, First American Title
            Insurance Company, as Disbursement Agent and State Street Bank and
            Trust Company, as Trustee. (Exhibit 4.6)
 ##4.24 --  First Amendment to Cash Collateral and Disbursement Agreement dated
            January 1, 2000 between Hollywood Casino Shreveport, SCC, First
            American Title Insurance Company and State Street Bank and Trust
            Company. (Exhibit 4.24)
  +4.25 --  Stock Pledge Agreement dated August 10, 1999 made by HCL in favor of
            State Street Bank and Trust Company, as Trustee. (Exhibit 4.7)
  +4.26 --  Security Agreement dated August 10, 1999 made by SCC, HCL, HCS I,
            Inc. and HCS II, Inc. to State Street Bank and Trust Company, as
            Trustee and Secured Party. (Exhibit 4.8)
  +4.27 --  Security Agreement - Vessel Construction dated August 10, 1999
            between Hollywood Casino Shreveport and State Street Bank and Trust
            Company, as Trustee. (Exhibit 4.9)
  +4.28 --  Mortgage, Leasehold Mortgage and Assignment of Leases and Rents made
            by Hollywood Casino Shreveport in favor of State Street Bank and
            Trust Company, as Mortgagee, dated August 10, 1999. (Exhibit 4.10)
  +4.29 --  Partnership Interest Pledge Agreement dated August 10, 1999 made by
            HCS II, Inc. in favor of State Street Bank and Trust Company, as
            Trustee and Secured Party. (Exhibit 4.11)
  +4.30 --  First Amendment to Security Agreement dated August 10, 1999 between
            HWCC-Shreveport, Inc. and State Street Bank and Trust Company, as
            Trustee. (Exhibit 4.12)
 ###9.1 --  Voting Trust Agreement dated as of December 29, 1998 by and among
            Jill Pratt LaFerney, formerly Jill A. Pratt, and John R. Pratt and
            Jack E. Pratt, Sr. (Exhibit 9.1)
 ###9.2 --  Voting Trust Agreement dated as of December 29, 1998 by and among
            Shawn Denise Bradshaw and Michael Shannon Pratt and William D.
            Pratt, Sr. (Exhibit 9.2)
 ###9.3 --  Voting Trust Agreement dated as of December 29, 1998 by and among
            Carolyn S. Hickey, Diana Pratt-Wyatt, formerly Diana L. Heisler, and
            Sharon A. Naftel, formerly Sharon R. Nash, and Edward T. Pratt III.
            (Exhibit 9.3)

                                      115
<PAGE>

    ##9.4 --  Voting Trust Agreement dated as of December 17, 1999 by and
              between Jack E. Pratt, Jr. as Trustee of the J.E. Pratt Gift Trust
              and Jack E. Pratt, Sr. (Exhibit 9.4)
  ***10.1 --  Seventh Amendment to Employment Agreement dated January 1, 2000,
              between HCC and Jack E. Pratt. (Exhibit 10.1)
  ***10.2 --  Seventh Amendment to Employment Agreement dated January 1, 2000,
              between HCC and Edward T. Pratt, Jr. (Exhibit 10.2)
  ***10.3 --  Seventh Amendment to Employment Agreement dated January 1, 2000,
              between HCC and William D. Pratt. (Exhibit 10.3)
   ##10.4 --  Employment Agreement dated January 1, 2000, between HCC and Edward
              T. Pratt III. (Exhibit 10.4)
    *10.5 --  Development Agreement dated as of June 4, 1991, between the City
              of Aurora, Illinois and HCA. (Exhibit 10.33)
    *10.6 --  Parking lease Agreement June 4, 1991, between the City of Aurora,
              Illinois and HCA. (Exhibit 10.39)
    *10.7 --  Purchase and Sale Agreement dated June 4, 1991, between the City
              of Aurora, Illinois and HCA. (Exhibit 10.40)
    @10.8 --  Rights Agreement, dated as of May 7, 1993 between HCC and
              Continental Stock Transfer & Trust Company, as Rights Agent.
              (Exhibit 10.45)
  @@@10.9 --  Hollywood Casino Corporation Stock Option Plan.  (Exhibit 10.46)
  @@10.10 --  Ground Lease dated as of October 11, 1993 between R.M. Leatherman
              and Hugh M. Mageveney, III, as Landlord, and SRCT, as Tenant.
              (Exhibit 10.4)
  @@10.11 --  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)
  @@10.12 --  Blanket Conveyance, Bill of Sale and Assignment and Assumption
              Agreement dated as of May 31, 1994 between SRCT and STP. (Exhibit
              10.6)
  @@10.13 --  Assignment of Lease and Assumption Agreement dated as of May 31,
              1994 between SRCT and STP (relating to Ground Lease). (Exhibit
              10.7)
@@@@10.14 --  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)
   #10.15 --  Hollywood Casino Corporation 1996 Long-Term Incentive Plan, as
              amended. (Exhibit 10.28)
   #10.16 --  Hollywood Casino Corporation 1996 Non-Employee Director Stock
              Plan. (Exhibit 10.29)
  ##10.17 --  Employment Agreement dated as of January 1, 2000 by and between
              HCC and Paul C. Yates. (Exhibit 10.20)
 ###10.18 --  Management and Administrative Services Agreement dated as of
              October 1, 1998 by and between HCC and Greate Bay Casino
              Corporation. (Exhibit 10.31)
 ###10.19 --  Membership Interest Purchase Agreement dated as of March 31, 1999
              by and among HWCC-Louisiana, Inc., Sodak Gaming, Inc. and Sodak
              Louisiana, L.L.C. (Exhibit 10.32)
   +10.20 --  Amended and Restated Federal Income Tax Sharing Agreement dated
              August 10, 1999 by and among HCC, HWCC Development Corporation,
              Hollywood Management, Inc., HCT, Golf, HCA, HWCC-Shreveport, Inc.,
              HWCC-Argentina, Inc., HCL, HWCC Holdings, Inc., HWCC-Aurora
              Management, Inc., HWCC-Transportation, Inc., HCS I, Inc. and HCS
              II, Inc. (Exhibit 10.16)
  ++10.21 --  Completion Capital Agreement, dated as of August 10, 1999, by and
              among Hollywood Casino Shreveport, HCL, HCS I, Inc., HCS II, Inc.
              and HCC. (Exhibit 10.2)
  ++10.22 --  Manager Subordination Agreement, dated as of August 10, 1999, by
              and among State Street Bank and Trust Company, as Trustee, HWCC-
              Shreveport, Inc. and Hollywood Casino Shreveport. (Exhibit 10.3)
   +10.23 --  Technical Services Agreement, dated as of September 22, 1998, by
              and between QNOV and HWCC-Shreveport, Inc. (Exhibit 10.4)
   +10.24 --  Employment Agreement, dated August 4, 1999, by and between HWCC
              Development Corporation and Juris Basens. (Exhibit 10.6)
   +10.25 --  Compromise Agreement, dated September 15, 1998, by and among
              Hilton New Orleans Corporation, New Orleans Paddlewheels, Inc.,
              Queen of New Orleans at the Hilton Joint Venture and the City of
              New Orleans. (Exhibit 10.7)
   +10.26 --  Loan and Settlement Agreement, dated January 16, 1998, by and
              among New Orleans Paddlewheels, Inc., Shreveport Paddlewheels,
              L.L.C., HCL, Sodak Louisiana L.L.C. and

                                      116
<PAGE>

              Hilton New Orleans Corporation.  (Exhibit 10.11)
   +10.27 --  Retail Space Lease, executed as of June 3, 1999 by and between
              QNOV and Red River Entertainment Company, L.L.C. (Exhibit 10.12)
   +10.28 --  Ground Lease, dated May 19, 1999, by and between the City of
              Shreveport, Louisiana and QNOV. (Exhibit 10.13)
   +10.29 --  Marine Services Agreement dated September 22, 1998 between QNOV
              and Shreveport Paddlewheels, L.L.C. (Exhibit 10.17)
   +10.30 --  Side Agreement dated January 16, 1998 between Queen of New Orleans
              at the Hilton Joint Venture, HCL, and Sodak, L.L.C. (Exhibit
              10.18)
   +10.31 --  Loan Agreement dated August 10, 1999 between Shreveport
              Paddlewheels, L.L.C. and HCL. (Exhibit 10.19)
   +10.32 --  Promissory note dated August 10, 1999 in the original principal
              amount of $1,000,000 made by Shreveport Paddlewheels, L.L.C., as
              Borrower to HCL, as Lender. (Exhibit 10.20)
   +10.33 --  Security Agreement dated August 10, 1999 made by Shreveport
              Paddlehwheels, L.L.C., as Debtor, in favor of HCL, as Secured
              Party. (Exhibit 10.21)
   +10.34 --  Guaranty Agreement dated August 10, 1999 made by New Orleans
              Paddlewheels, L.L.C. in favor of HCL. (Exhibit 10.22)
   +10.35 --  Contribution and Assumption Agreement dated July 21, 1999 among
              HCL, HCS I, Inc., HCS II, Inc. and Shreveport Paddlewheels, L.L.C.
              (Exhibit 10.24)
     21.1 --  Subsidiaries of HCC.

____________________

        *  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 filed
           in HCC's Quarterly Report on Form 10-Q for the quarter ended March
           31, 2000.

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

       @@  Incorporated by reference from the exhibit shown in parenthesis to
           Form S-1 Registration Statement (Registration No. 33-82182) for
           HWCC -Tunica, Inc. as filed with the SEC on September 29, 1994.

      @@@  Incorporated by reference from the exhibit shown in parenthesis to
           Form S-1 Registration Statement (Registration 33-58732) for HCC as
           filed with the SEC on May 27, 1993.

     @@@@  Incorporated by reference from the exhibit shown in parenthesis filed
           in HCC's Annual Report on Form 10-K for the fiscal year ended
           December 31, 1995.

        #  Incorporated by reference from the exhibit shown in parenthesis filed
           in HCC's Annual Report on Form 10-K for the fiscal year ended
           December 31, 1996.

       ##  Incorporated by reference from the exhibit shown in parenthesis filed
           in HCC's Annual Report on Form 10-K for the fiscal year ended
           December 31, 1999.

      ###  Incorporated by reference from the exhibit shown in parenthesis filed
           in HCC's Annual Report on Form 10-K for the fiscal year ended
           December 31, 1998.

     ####  Incorporated by reference to the exhibit shown in parenthesis filed
           in HCC's Quarterly Report on Form 10-Q for the quarter ended
           September 30, 1998 as filed with the SEC on November 13, 1998.

                                      117
<PAGE>

        +  Incorporated by reference to the exhibit shown in parenthesis
           included in Form S-4 Registration Statement of Hollywood Casino
           Shreveport and Shreveport Capital Corporation as filed with the SEC
           on October 8, 1999.

       ++  Incorporated by reference to the exhibit shown in parenthesis
           included in Form S-4 Registration Statement of Hollywood Casino
           Corporation as filed with the SEC on August 13, 1999.

      +++  Incorporated by reference to the exhibit shown in parenthesis
           included in Form S-4 Registration Statement of Hollywood Casino
           Corporation as filed with the SEC on July 16, 1999.

      (b)  Reports on Form 8-K.

           The Registrants did not file any Reports on Form 8-K during the
     quarter ended December 31, 2000.

                                      118
<PAGE>

                                  SIGNATURES

   Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Dallas,
State of Texas on March 29, 2001.

                                       HOLLYWOOD CASINO CORPORATION

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

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

<TABLE>
<CAPTION>

              Signature                            Title                     Date
              ---------                            -----                     ----
<S>                                       <C>                             <C>
          /s/ Jack E. Pratt               Chief Executive                 March 29, 2001
--------------------------------------                                    --------------
            Jack E. Pratt                   Officer and Director

       /s/ Edward T. Pratt, Jr.           Vice President, Treasurer       March 29, 2001
--------------------------------------                                    --------------
        Edward T. Pratt, Jr.                and Director

         /s/ William D. Pratt             Executive Vice President,       March 29, 2001
--------------------------------------                                    --------------
           William D. Pratt                 Secretary, General Counsel
                                            and Director

       /s/ Edward T. Pratt III            President, Chief Operating      March 29, 2001
--------------------------------------                                    --------------
         Edward T. Pratt III                Officer and Director

         /s/ Paul C. Yates                Executive Vice President        March 29, 2001
--------------------------------------                                    --------------
           Paul C. Yates                    and Chief Financial Officer

      /s/ Charles F. LaFrano III          Vice President - Finance and    March 29, 2001
--------------------------------------                                    --------------
         Charles F. LaFrano III             Principal Accounting Officer

         /s/ James A. Colquitt            Director                        March 29, 2001
--------------------------------------                                    --------------
         James A. Colquitt

       /s/ Theodore H. Strauss            Director                        March 29, 2001
--------------------------------------                                    --------------
         Theodore H. Strauss

       /s/ Oliver B. Revell III           Director                        March 29, 2001
--------------------------------------                                    --------------
         Oliver B. Revell III
</TABLE>

                                      119
<PAGE>

                                  SIGNATURES

   Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Dallas,
State of Texas on March 29, 2001.

                                        HWCC - TUNICA, INC.

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

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

<TABLE>
<CAPTION>
              Signature                             Title                     Date
              ---------                             -----                     ----
<S>                                      <C>                             <C>
         /s/ Jack E. Pratt               Chief Executive                 March 29, 2001
-------------------------------------                                    --------------
         Jack E. Pratt                     Officer and Director

      /s/ Edward T. Pratt, Jr.           Director                        March 29, 2001
-------------------------------------                                    --------------
        Edward T. Pratt, Jr.

        /s/ William D. Pratt             Executive Vice President,       March 29, 2001
-------------------------------------                                    --------------
         William D. Pratt                  Secretary, General Counsel
                                           and Director

      /s/ Edward T. Pratt III            President and Director          March 29, 2001
-------------------------------------                                    --------------
        Edward T. Pratt III

         /s/ John R. Osborne             Vice President of Operations    March 29, 2001
-------------------------------------                                    --------------
           John R. Osborne

     /s/ Charles F. LaFrano III          Vice President, Assistant       March 29, 2001
-------------------------------------                                    --------------
       Charles F. LaFrano III              Secretary and Principal
                                           Accounting Officer
</TABLE>

                                      120
<PAGE>

                    INDEX TO FINANCIAL STATEMENT SCHEDULES


Hollywood Casino Corporation and Subsidiaries

     --  Independent Auditors' Report

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

     --  Schedule II; Valuation and Qualifying Accounts

Hollywood Casino-Aurora, Inc.

     --  Independent Auditors' Report

     --  Schedule II; Valuation and Qualifying Accounts

HWCC-Tunica, Inc.

     --  Independent Auditors' Report

     --  Schedule II; Valuation and Qualifying Accounts

                                      121
<PAGE>

INDEPENDENT AUDITORS' REPORT

To Hollywood Casino Corporation:

We have audited the consolidated financial statements of Hollywood Casino
Corporation and subsidiaries as of, and for each of the three years in the
period ended December 31, 2000, and have issued our report thereon dated March
15, 2001; such report is included elsewhere in this Form 10-K. Our audits also
include the financial statement schedules of Hollywood Casino Corporation listed
in Item 14.  These financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits.  In our opinion, such financial statement schedules, when considered in
relation to the basic financial statements taken as a whole, present fairly in
all material respects the information set forth therein.




Deloitte & Touche LLP
Dallas, Texas
March 15, 2001

                                      122
<PAGE>

                                                                      SCHEDULE I
                                                                      Page 1
                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES
                 Condensed Financial Information of Registrant
                         Hollywood Casino Corporation
                               (Parent Company)

                                BALANCE SHEETS



<TABLE>
<CAPTION>
                                    ASSETS
                                                                December 31,
                                                       -----------------------------
                                                           2000           1999
                                                       -------------   -------------
<S>                                                    <C>             <C>
Cash and cash equivalents                              $  77,500,000   $  60,312,000
Accounts receivable                                          190,000         287,000
Due from affiliates, net of valuation allowances           8,700,000       9,746,000
Deferred federal income taxes                              2,840,000       1,584,000
Other current assets                                         270,000          68,000
                                                       -------------   -------------

 Total current assets                                     89,500,000      71,997,000
                                                       -------------   -------------

Investment in and advances to affiliates                  60,173,000      64,995,000
Property and equipment, net                                  921,000         233,000
Due from affiliates, net of valuation allowances         153,383,000     153,381,000
Land held for sale, net of allowance in 1999                       -       2,216,000
Other assets                                              12,321,000      14,480,000
                                                       -------------   -------------

                                                       $ 316,298,000   $ 307,302,000
                                                       =============   =============

                     LIABILITIES AND SHAREHOLDERS' DEFICIT

Current maturities of long-term debt                   $   1,695,000   $     853,000
Accounts payable and accrued liabilities                   2,148,000       2,084,000
Accrued interest payable                                   9,650,000       8,946,000
Federal income taxes payable                               3,299,000       3,234,000
                                                       -------------   -------------

 Total current liabilities                                16,792,000      15,117,000
                                                       -------------   -------------

Long-term debt                                           360,198,000     361,180,000
                                                       -------------   -------------

Other noncurrent liabilities                               4,965,000       5,059,000
                                                       -------------   -------------

Shareholders' deficit:
 Class A common stock, $.0001 par
  value per share, 50,000,000
  shares authorized, 24,997,000 and 24,950,000
  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                               43,049,000      42,947,000
 Accumulated deficit                                    (108,708,000)   (117,003,000)
                                                       -------------   -------------

  Total shareholders' deficit                            (65,657,000)    (74,054,000)
                                                       -------------   -------------

                                                       $ 316,298,000   $ 307,302,000
                                                       =============   =============
 </TABLE>

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

                                      123
<PAGE>

                                                                      SCHEDULE I
                                                                       Page 2

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

                 Condensed Financial Information of Registrant
                         Hollywood Casino Corporation
                               (Parent Company)

                           STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                        Year Ended December 31,
                                               ------------------------------------------
                                                   2000           1999           1998
                                               ------------   ------------   ------------
<S>                                            <C>            <C>            <C>
Revenues:
 Interest income                               $ 21,152,000   $ 17,670,000   $ 17,217,000
 Gain on settlement of litigation, net            7,220,000              -              -
 Gain on disposal of assets                         191,000              -              -
 Other income                                             -              -         41,000
                                               ------------   ------------   ------------

                                                 28,563,000     17,670,000     17,258,000
                                               ------------   ------------   ------------

Expenses:
 General and administrative                       8,104,000      7,984,000      5,488,000
 Interest                                        43,402,000     37,809,000     28,867,000
 Depreciation and amortization                      153,000        101,000        137,000
 Settlement costs                                         -              -      1,087,000
 Write down of assets                                     -     13,322,000              -
                                               ------------   ------------   ------------

  Total expenses                                 51,659,000     59,216,000     35,579,000
                                               ------------   ------------   ------------

Loss before income taxes, extraordinary
 and other items                                (23,096,000)   (41,546,000)   (18,321,000)
Income tax benefit                                  172,000              -              -
                                               ------------   ------------   ------------

 Loss before extraordinary
  and other items                               (22,924,000)   (41,546,000)   (18,321,000)

Extraordinary item:
 Loss on early extinguishment of debt                     -    (30,353,000)      (336,000)
                                               ------------   ------------   ------------

 Loss before other item                         (22,924,000)   (71,899,000)   (18,657,000)
Equity in income (losses) of consolidated
 subsidiaries                                    31,219,000     (9,772,000)    17,052,000
                                               ------------   ------------   ------------

Net income (loss)                              $  8,295,000   $(81,671,000)  $ (1,605,000)
                                               ============   ============   ============
</TABLE>

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

                                      124
<PAGE>

                                                                      SCHEDULE I
                                                                          Page 3

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

                 Condensed Financial Information of Registrant
                         Hollywood Casino Corporation
                               (Parent Company)

                           STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                  Year Ended December 31,
                                                          -----------------------------------------
                                                              2000           1999           1998
                                                          -----------   -------------   -----------
<S>                                                       <C>           <C>             <C>
NET CASH PROVIDED BY (USED IN)
  OPERATING ACTIVITIES                                    $23,798,000   $   9,997,000   $(6,876,000)
                                                          -----------   -------------   -----------

INVESTING ACTIVITIES:
 Net property and equipment additions                        (841,000)       (217,000)      (62,000)
 Proceeds from sale of assets                               2,492,000       3,887,000             -
 Collections on notes receivable                              900,000               -     6,000,000
 Investments in consolidated affiliates                    (9,108,000)    (51,478,000)   (2,937,000)
 Net (advances to) repayments from affiliates                       -     (37,829,000)    3,500,000
                                                          -----------   -------------   -----------

  Net cash (used in) provided by investing activities      (6,557,000)    (85,637,000)    6,501,000
                                                          -----------   -------------   -----------

FINANCING ACTIVITIES:
 Proceeds from issuance of long-term debt                           -     340,419,000             -
 Repayments of long-term debt                                (140,000)   (207,339,000)     (288,000)
 Issuance of common stock                                      87,000               -             -
 Deferred financing costs                                           -     (11,913,000)     (248,000)
                                                          -----------   -------------   -----------

  Net cash (used in) provided by financing activities         (53,000)    121,167,000      (536,000)
                                                          -----------   -------------   -----------

  Net increase (decrease) in cash and cash equivalents     17,188,000      45,527,000      (911,000)
    Cash and cash equivalents at beginning of year         60,312,000      14,785,000    15,696,000
                                                          -----------   -------------   -----------

    Cash and cash equivalents at end of year              $77,500,000   $  60,312,000   $14,785,000
                                                          ===========   =============   ===========
</TABLE>

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

                                      125
<PAGE>

                                                                      SCHEDULE I
                                                                          Page 4

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

                 Condensed Financial Information of Registrant
                         Hollywood Casino Corporation
                               (Parent Company)

                 NOTES TO PARENT COMPANY FINANCIAL STATEMENTS

(1)  Guarantees of Registrant

     As of December 31, 2000, Hollywood Casino Corporation ("HCC") had not
guaranteed any obligations of its subsidiaries or unconsolidated affiliates.

(2)  Scheduled Payments of Long-Term Debt of the Registrant

     Scheduled payments of long-term debt outstanding at December 31, 2000 are
$1,695,000 in 2001, $198,000 in 2002 and $360,000,000 subsequent to 2005.

(3)  Dividends and Distributions

     HCC received dividends from its consolidated subsidiaries amounting to
$31,562,000, $31,540,000 and $11,741,000, respectively, during the years ended
December 31, 2000, 1999 and 1998.

(4)  Supplemental Cash Flow Information

     During 2000, HCC offset $146,000 of the outstanding principal balance of
certain demand notes due from an affiliate against certain payables HCC owed the
affiliate.  This offset has been excluded from the accompanying parent company
statement of cash flows as a noncash transaction.

     During the fourth quarter of 1999, HCC assumed the $2,160,000 note payable
balance of one of its subsidiaries to an unconsolidated affiliate.  The
assumption of the note and adjustment to HCC's investment in the subsidiary is
excluded from the accompanying parent company statement of cash flows as a
noncash transaction.

(5)  Reclassifications

     Certain reclassifications have been made to the prior years' parent company
financial statements to conform to the 2000 parent company financial statement
presentation.

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

                                      126
<PAGE>

                                                                     SCHEDULE II

                 HOLLYWOOD CASINO CORPORATION AND SUBSIDIARIES

                       Valuation and Qualifying Accounts

<TABLE>
<CAPTION>
                                                    Amounts
                                    Balance at     Charged to                                           Balance
                                    Beginning      Costs and                          Other             at End
                                    of Period      Expenses      Deductions           Charges          of Period
                                   -----------    -----------   ------------        -----------       -----------
<S>                                <C>            <C>           <C>                 <C>              <C>
Year Ended December 31, 2000:
 Allowance for doubtful
  accounts receivable              $ 1,826,000    $1,461,000    $  (619,000) (1)    $         -       $ 2,668,000
 Allowance for affiliate
  receivable                        42,563,000     7,177,000       (199,000) (1)              -        49,541,000
 Allowance for properties held
  for sale                           3,084,000             -     (3,084,000)                  -                 -
                                   -----------    ----------    -----------         -----------       -----------

                                   $47,473,000    $8,638,000    $(3,902,000)        $         -       $52,209,000
                                   ===========    ==========    ===========         ===========       ===========

Year Ended December 31, 1999:
 Allowance for doubtful
  accounts receivable              $ 1,468,000    $  804,000    $  (446,000) (1)    $         -       $ 1,826,000
 Allowance for affiliate
  receivables                       22,808,000     6,433,000              -          13,322,000 (2)    42,563,000
 Allowance for properties held
  for sale                           3,432,000             -       (348,000) (3)              -         3,084,000
                                   -----------    ----------    -----------         -----------       -----------
                                   $27,708,000    $7,237,000    $  (794,000)        $13,322,000       $47,473,000
                                   ===========    ==========    ===========         ===========       ===========

Year Ended December 31, 1998:
 Allowance for doubtful
  accounts receivable              $ 1,188,000    $  756,000    $  (476,000) (1)    $         -       $ 1,468,000
 Allowance for affiliate
  receivables                       18,000,000     4,808,000              -                   -        22,808,000
 Allowance for notes receivable      4,000,000             -     (4,000,000) (1)              -                 -
 Allowance for properties held
  for sale                           3,400,000             -              -              32,000         3,432,000
                                   -----------    ----------    -----------         -----------       -----------

                                   $26,588,000    $5,564,000    $(4,476,000)        $    32,000       $27,708,000
                                   ===========    ==========    ===========         ===========       ===========
</TABLE>

_______________________

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

(2) Represents write down of affiliate receivables to estimated net realizable
    value.

(3) Represents utilization of allowance in connection with partial sale of land.

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

                                      127
<PAGE>

INDEPENDENT AUDITORS' REPORT


To Hollywood Casino - Aurora, Inc.:

We have audited the financial statements of Hollywood Casino - Aurora, Inc. as
of, and for each of the three years in the period ended December 31, 2000, and
have issued our report thereon dated March 15, 2001; such report is included
elsewhere in this Form 10-K.  Our audits also include the financial statement
schedule of Hollywood Casino - Aurora, Inc. listed in Item 14.  This financial
statement schedule is the responsibility of the Company's management.  Our
responsibility is to express an opinion based on our audits.  In our opinion,
such financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.



Deloitte & Touche LLP
Dallas, Texas
March 15, 2001

                                      128
<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, 2000:
 Allowance for doubtful
  accounts receivable             $   836,000    $  165,000    $   (59,000) (1)  $   942,000
                                  ===========    ==========    ===========       ===========

Year Ended December 31, 1999:
 Allowance for doubtful
  accounts receivable             $   655,000    $  300,000    $  (119,000) (1)  $   836,000
                                  ===========    ==========    ===========       ===========

Year Ended December 31, 1998:
 Allowance for doubtful
  accounts receivable             $   483,000    $  273,000    $  (101,000) (1)  $   655,000
                                  ===========    ==========    ===========       ===========
</TABLE>

________________________

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

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


                                      129
<PAGE>

INDEPENDENT AUDITORS' REPORT


To HWCC - Tunica, Inc.:

We have audited the consolidated financial statements of HWCC-Tunica, Inc. and
subsidiary as of, and for each of the three years in the period ended December
31, 2000, and have issued our report thereon dated March 15, 2001; such report
is included elsewhere in this Form 10-K.  Our audits also include the financial
statement schedule of HWCC-Tunica, Inc. listed in Item 14.  This financial
statement schedule is the responsibility of the Company's management.  Our
responsibility is to express an opinion based on our audits.  In our opinion,
such financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.



Deloitte & Touche LLP
Dallas, Texas
March 15, 2001

                                      130
<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, 2000:
 Allowance for doubtful
  accounts receivable             $   990,000   $1,206,000    $   (560,000) (1)  $ 1,636,000
                                  ===========   ==========    ============       ===========

Year Ended December 31, 1999:
 Allowance for doubtful
  accounts receivable             $   813,000   $  504,000    $   (327,000) (1)  $   990,000
                                  ===========   ==========    ============       ===========

Year Ended December 31, 1998:
 Allowance for doubtful
  accounts receivable             $   705,000   $  483,000    $   (375,000) (1)  $   813,000
                                  ===========   ==========    ============       ===========
</TABLE>

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

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

                                      131
<PAGE>

                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
                                                                                            Sequentially
Exhibit                                                                                       Numbered
Number                                                                                          Page
------                                                                                    ---------------
<S>                                                                                       <C>
  **2.1 --  Agreement of Merger dated as of May 15, 1992, between PBC, Inc.
            and HCC and Certificate of Correction of Agreement of Merger dated
            as of June 16, 1992. (Exhibit 2.1)
 @@@3.1 --  Certificate of Incorporation of HCC, as amended. (Exhibit 3.1)
 @@@3.2 --  Amended Bylaws of HCC. (Exhibit 3.2)
  ##3.3 --  Second Amended and Restated Bylaws of HCC.  (Exhibit 3.3)
  @@3.4 --  Articles of Incorporation of HCT. (Exhibit 3.1).
  @@3.5 --  Bylaws of HCT. (Exhibit 3.2)
 +++3.6 --  Third Amended and Restated Joint Venture Agreement of Hollywood
            Casino Shreveport by and among Shreveport Paddlewheels, L.L.C.,
            HCS I, Inc. and HCS II, Inc., dated as of July 21, 1999. (Exhibit
            3.1)
 +++3.7 --  August 1999 Amendment to Third Amended and Restated Joint
            Venture Agreement between Shreveport Paddlewheels, L.L.C., HCS I,
            Inc. and HCS II, Inc. (Exhibit 3.2)
 +++4.1 --  Indenture among HCC as Issuer, and HWCC-Shreveport, Inc. and
            HCT as Guarantors, and State Street Bank and Trust Company, as
            Trustee, dated as of May 19, 1999. (Exhibit 4.1)
 +++4.2 --  Security Agreement made by HCC, as Debtor, to State Street Bank
            and Trust Company, as Trustee and Secured Party, dated as of May 19,
            1999. (Exhibit 4.2)
 +++4.3 --  Stock Pledge Agreement made by HCC, as Pledgor, in favor of State
            Street Bank and Trust Company, as Trustee and Secured Party, dated
            as of May 19, 1999. (Exhibit 4.3)
 +++4.4 --  Trademark Security Agreement made by HCC, as Grantor, to State
            Street Bank and Trust Company, as Trustee and Secured Party, dated
            as of May 19, 1999.  (Exhibit 4.4)
 +++4.5 --  Escrow and Control Agreement by and among HCC and State Street
            Bank and Trust Company, as Trustee and Escrow Agent, dated as of
            May 19, 1999.  (Exhibit 4.5)
 +++4.6 --  Control Agreement dated as of May 19, 1999 by and among HCC and
            State Street Bank and Trust Company, as Trustee.  (Exhibit 4.6)
 +++4.7 --  Security Agreement made by HCT, as Debtor, to State Street Bank and
            Trust Company, as Trustee and Secured Party, dated as of May 19,
            1999.  (Exhibit 4.7)
 +++4.8 --  First Leasehold Deed of Trust, Security Agreement, Assignment of
            Leases and Rents, Fixture Filing, and Financing Statement made by
            HCT in favor of Phillip A. Poitevin, as Trustee for the benefit of
            State Street Bank and Trust Company, as Indenture Trustee, dated as
            of May 19, 1999. (Exhibit 4.8)
 +++4.9 --  First Preferred Ship Mortgage made and given by HCT, as Mortgagor,
            in favor of State Street Bank and Trust Company, as Trustee and
            Mortgagee (relating to Vessel No. 534006), dated as of May 19, 1999.
            (Exhibit 4.9)
+++4.10 --  Intercompany Security Agreement made by HCT, as Debtor, to HCC, as
            Secured Party, and collaterally assigned to State Street Bank and
            Trust Company, as Trustee, dated as of May 19, 1999. (Exhibit 4.11)
+++4.11 --  Second Leasehold Deed of Trust, Security Agreement, Fixture Filing,
            and Financing Statement from HCT, as Grantor, in favor of Jim B.
            Tobhill, Trustee, for the benefit of HCC, dated as of May 19, 1999.
</TABLE>
<PAGE>

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

             between Hollywood Casino Shreveport and State Street Bank and
             Trust Company, as Trustee.  (Exhibit 4.9)
    +4.28 -- Mortgage, Leasehold Mortgage and Assignment of Leases and Rents
             made by Hollywood Casino Shreveport in favor of State Street Bank
             and Trust Company, as Mortgagee, dated August 10, 1999. (Exhibit
             4.10)
    +4.29 -- Partnership Interest Pledge Agreement dated August 10, 1999 made by
             HCS II, Inc. in favor of State Street Bank and Trust Company, as
             Trustee and Secured Party. (Exhibit 4.11)
    +4.30 -- First Amendment to Security Agreement dated August 10, 1999 between
             HWCC-Shreveport, Inc. and State Street Bank and Trust Company, as
             Trustee. (Exhibit 4.12)
   ###9.1 -- Voting Trust Agreement dated as of December 29, 1998 by and among
             Jill Pratt LaFerney, formerly Jill A. Pratt, and John R. Pratt
             and Jack E. Pratt, Sr.  (Exhibit 9.1)
   ###9.2 -- Voting Trust Agreement dated as of December 29, 1998 by and among
             Shawn Denise Bradshaw and Michael Shannon Pratt and William D.
             Pratt, Sr.  (Exhibit 9.2)
   ###9.3 -- Voting Trust Agreement dated as of December 29, 1998 by and among
             Carolyn S. Hickey, Diana Pratt-Wyatt, formerly Diana L. Heisler,
             and Sharon A. Naftel, formerly Sharon R. Nash, and Edward T. Pratt
             III. (Exhibit 9.3)
    ##9.4 -- Voting Trust Agreement dated as of December 17, 1999 by and between
             Jack E. Pratt, Jr. as Trustee of the J.E. Pratt Gift Trust and Jack
             E. Pratt, Sr. (Exhibit 9.4)
  ***10.1 -- Seventh Amendment to Employment Agreement dated January 1,
             2000, between HCC and Jack E. Pratt.  (Exhibit 10.1)
  ***10.2 -- Seventh Amendment to Employment Agreement dated January 1, 2000,
             between HCC and Edward T. Pratt, Jr. (Exhibit 10.2)
  ***10.3 -- Seventh Amendment to Employment Agreement dated January 1, 2000,
             between HCC and William D. Pratt. (Exhibit 10.3)
   ##10.4 -- Employment Agreement dated January 1, 2000, between HCC and
             Edward T. Pratt III.  (Exhibit 10.4)
    *10.5 -- Development Agreement dated as of June 4, 1991, between the City of
             Aurora, Illinois and HCA.  (Exhibit 10.33)
    *10.6 -- Parking lease Agreement June 4, 1991, between the City of Aurora,
             Illinois and HCA.  (Exhibit 10.39)
    *10.7 -- Purchase and Sale Agreement dated June 4, 1991, between the City of
             Aurora, Illinois and HCA.  (Exhibit 10.40)
    @10.8 -- Rights Agreement, dated as of May 7, 1993 between HCC and
             Continental Stock Transfer & Trust Company, as Rights Agent.
             (Exhibit 10.45)
  @@@10.9 -- Hollywood Casino Corporation Stock Option Plan.  (Exhibit 10.46)
  @@10.10 -- Ground Lease dated as of October 11, 1993 between R.M. Leatherman
             and Hugh M. Mageveney, III, as Landlord, and SRCT, as Tenant.
             (Exhibit 10.4)
  @@10.11 -- 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)
  @@10.12 -- Blanket Conveyance, Bill of Sale and Assignment and Assumption
             Agreement dated as of May 31, 1994 between SRCT and STP.
             (Exhibit 10.6)
  @@10.13 -- Assignment of Lease and Assumption Agreement dated as of May 31,
             1994 between SRCT and STP (relating to Ground Lease). (Exhibit
             10.7)
@@@@10.14 -- North Island Center Expansion and Redevelopment Agreement dated
<PAGE>

             June 12, 1995 between HCA, the Aurora Metropolitan Exposition,
             Auditorium and Office Building Authority and the City of Aurora.
             (Exhibit 10.36)
   #10.15 -- Hollywood Casino Corporation 1996 Long-Term Incentive Plan, as
             amended.  (Exhibit 10.28)
   #10.16 -- Hollywood Casino Corporation 1996 Non-Employee Director Stock
             Plan.  (Exhibit 10.29)
  ##10.17 -- Employment Agreement dated as of January 1, 2000 by and between
             HCC and Paul C. Yates.  (Exhibit 10.20)
 ###10.18 -- Management and Administrative Services Agreement dated as of
             October 1, 1998 by and between HCC and Greate Bay Casino
             Corporation. (Exhibit 10.31)
 ###10.19 -- Membership Interest Purchase Agreement dated as of March 31, 1999
             by and among HWCC-Louisiana, Inc., Sodak Gaming, Inc. and Sodak
             Louisiana, L.L.C.  (Exhibit 10.32)
   +10.20 -- Amended and Restated Federal Income Tax Sharing Agreement dated
             August 10, 1999 by and among HCC, HWCC Development Corporation,
             Hollywood Management, Inc., HCT, Golf, HCA, HWCC-Shreveport, Inc.,
             HWCC-Argentina, Inc., HCL, HWCC Holdings, Inc., HWCC-Aurora
             Management, Inc., HWCC-Transportation, Inc., HCS I, Inc. and HCS
             II, Inc. (Exhibit 10.16)
  ++10.21 -- Completion Capital Agreement, dated as of August 10, 1999, by and
             among Hollywood Casino Shreveport, HCL, HCS I, Inc., HCS II, Inc.
             and HCC.  (Exhibit 10.2)
  ++10.22 -- Manager Subordination Agreement, dated as of August 10, 1999, by
             and among State Street Bank and Trust Company, as Trustee, HWCC-
             Shreveport, Inc. and Hollywood Casino Shreveport. (Exhibit 10.3)
   +10.23 -- Technical Services Agreement, dated as of September 22, 1998, by
             and between QNOV and HWCC-Shreveport, Inc. (Exhibit 10.4)
   +10.24 -- Employment Agreement, dated August 4, 1999, by and between HWCC
             Development Corporation and Juris Basens. (Exhibit 10.6)
   +10.25 -- Compromise Agreement, dated September 15, 1998, by and among Hilton
             New Orleans Corporation, New Orleans Paddlewheels, Inc., Queen of
             New Orleans at the Hilton Joint Venture and the City of New
             Orleans. (Exhibit 10.7)
   +10.26 -- Loan and Settlement Agreement, dated January 16, 1998, by and among
             New Orleans Paddlewheels, Inc., Shreveport Paddlewheels, L.L.C.,
             HCL, Sodak Louisiana L.L.C. and Hilton New Orleans Corporation.
             (Exhibit 10.11)
   +10.27 -- Retail Space Lease, executed as of June 3, 1999 by and between QNOV
             and Red River Entertainment Company, L.L.C. (Exhibit 10.12)
   +10.28 -- Ground Lease, dated May 19, 1999, by and between the City of
             Shreveport, Louisiana and QNOV.  (Exhibit 10.13)
   +10.29 -- Marine Services Agreement dated September 22, 1998 between
             QNOV and Shreveport Paddlewheels, L.L.C.  (Exhibit 10.17)
   +10.30 -- Side Agreement dated January 16, 1998 between Queen of New Orleans
             at the Hilton Joint Venture, HCL, and Sodak, L.L.C. (Exhibit 10.18)
   +10.31 -- Loan Agreement dated August 10, 1999 between Shreveport
             Paddlewheels, L.L.C. and HCL. (Exhibit 10.19)
   +10.32 -- Promissory note dated August 10, 1999 in the original principal
             amount of $1,000,000 made by Shreveport Paddlewheels, L.L.C., as
             Borrower to HCL, as Lender. (Exhibit 10.20)
   +10.33 -- Security Agreement dated August 10, 1999 made by Shreveport
             Paddlehwheels, L.L.C., as Debtor, in favor of HCL, as Secured
             Party. (Exhibit 10.21)
<PAGE>

   +10.34 -- Guaranty Agreement dated August 10, 1999 made by New Orleans
             Paddlewheels, L.L.C. in favor of HCL.  (Exhibit 10.22)
   +10.35 -- Contribution and Assumption Agreement dated July 21, 1999 among
             HCL, HCS I, Inc., HCS II, Inc. and Shreveport Paddlewheels, L.L.C.
             (Exhibit 10.24)
     21.1 -- Subsidiaries of HCC.


___________________

        *  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 filed
           in HCC's Quarterly Report on Form 10-Q for the quarter ended March
           31, 2000.

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

       @@  Incorporated by reference from the exhibit shown in parenthesis to
           Form S-1 Registration Statement (Registration No. 33-82182) for
           HWCC -Tunica, Inc. as filed with the SEC on September 29, 1994.

      @@@  Incorporated by reference from the exhibit shown in parenthesis to
           Form S-1 Registration Statement (Registration 33-58732) for HCC as
           filed with the SEC on May 27, 1993.

     @@@@  Incorporated by reference from the exhibit shown in parenthesis filed
           in HCC's Annual Report on Form 10-K for the fiscal year ended
           December 31, 1995.

        #  Incorporated by reference from the exhibit shown in parenthesis filed
           in HCC's Annual Report on Form 10-K for the fiscal year ended
           December 31, 1996.

       ##  Incorporated by reference from the exhibit shown in parenthesis filed
           in HCC's Annual Report on Form 10-K for the fiscal year ended
           December 31, 1999.

      ###  Incorporated by reference from the exhibit shown in parenthesis filed
           in HCC's Annual Report on Form 10-K for the fiscal year ended
           December 31 1998 .

     ####  Incorporated by reference to the exhibit shown in parenthesis filed
           in HCC's Quarterly Report on Form 10-Q for the quarter ended
           September 30, 1998 as filed with the SEC on November 13, 1998.

        +  Incorporated by reference to the exhibit shown in parenthesis
           included in Form S-4 Registration Statement of Hollywood Casino
           Shreveport and Shreveport Capital Corporation as filed with the SEC
           on October 8, 1999.
<PAGE>

       ++  Incorporated by reference to the exhibit shown in parenthesis
           included in Form S-4 Registration Statement of Hollywood Casino
           Corporation as filed with the SEC on August 13, 1999.

      +++  Incorporated by reference to the exhibit shown in parenthesis
           included in Form S-4 Registration Statement of Hollywood Casino
           Corporation as filed with the SEC on July 16, 1999.