SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C.  20549

                                    FORM 10-K

  [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

    [ ]  Transition Report Pursuant to Section 13 or 15(d) of the Securities
                              Exchange Act of 1934

                        Commission file number 333-18295

                             COLONIAL HOLDINGS, INC.
             (Exact Name of Registrant as Specified in Its Charter)

          VIRGINIA                                      54-1826807
 (State or Other Jurisdiction of          (I.R.S. Employer Identification No.)
  Incorporation or Organization)

                          10515 Colonial Downs Parkway
                               New Kent, VA  23124
                    (Address of Principal Executive Offices)

                                 (804) 966-7223
              (Registrant's telephone number, including area code)

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

           Securities registered pursuant to Section 12(g) of the Act:
Title  of  Each  Class  on  Which  Registered          Name  of  Each  Exchange
Class A Common Stock, par value $0.01 per share  Over the counter bulletin board

Indicate by check mark whether the registrant (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 the registrant'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. Yes[  ] No[X]

    Number of Shares of Class A Common Stock outstanding as of March 27, 2001 -
                                    5,025,239
    Number of Shares of Class B Common Stock outstanding as of March 27, 2001 -
                                    2,242,500

                   DOCUMENTS INCORPORATED BY REFERENCE - None

<PAGE>
                                     PART I

ITEM  1.     BUSINESS

GENERAL

     Colonial  Holdings, Inc., (the "Company") formerly Colonial Downs Holdings,
Inc.,  a  Virginia  Corporation, was incorporated in 1996.  The Company owns and
operates,  through  its wholly-owned subsidiaries, Colonial Downs Racetrack (the
"Track") in New Kent, Virginia, which primarily conducts pari-mutuel wagering on
thoroughbred  and standardbred horse racing.  The Company also owns and operates
four  satellite  wagering facilities ("Racing Centers"), which provide simulcast
pari-mutuel wagering on thoroughbred and standardbred horse racing from selected
racetracks  throughout  the  United  States.  In addition, in February 2001, the
Company,  through  its  wholly  owned  subsidiary, Colonial Holdings Management,
began  managing  certain  truckstops  in  Louisiana  that  were  acquired  by an
affiliate  of  the  Company's  principal  shareholder.

     The  Company  sends  its  live  race  signal from the Track to out-of-state
satellite  wagering  facilities  and  receives  race  signals  from out-of-state
racetracks.  Under  Virginia  law,  the majority portion of the pooled wagers is
paid  out as winnings, a portion is paid to the applicable local governments and
the  Commonwealth of Virginia, a portion is paid to the Virginia Breeders' Fund,
a  portion  is  distributed  to  the Track's horsemen in the form of "purses", a
portion  is  paid  to  the  racetrack  from  which the signal originates and the
remainder  is  retained  by  the  Company.

     The  Company's  revenues  are comprised of (i) pari-mutuel commissions from
wagering on races broadcast from out-of-state racetracks to the Company's Racing
Centers  and the Track using import simulcasting; (ii) wagering at the Track and
the  Company's  Racing  Centers on its live races; (iii) admission fees, program
and  racing form sales, and certain other ancillary activities; (iv) commissions
from  food  and  beverage  sales  and  concessions;  (v)  fees  from wagering at
out-of-state  locations  on races run at the Track using export simulcasting and
(vi)  starting  in  2001,  management  fees  from  truckstops  in  Louisiana.

STRATEGY

     The  Company  intends  to  be  a  leading  participant  in  the industry by
capitalizing  upon  its unique dirt and turf track capabilities for live racing,
expansion  of  its  Racing Center network, and its alliance with Maryland Jockey
Club  to  provide  experienced  management  for  the  Track  and Racing Centers.

     Track - The Track's one and a quarter mile dirt track is one of the largest
tracks in the United States and its 180 foot wide mile turf track is the largest
turf  track in North America.  These unique configurations have and are expected
to  continue  to attract quality horses to the Track.  The Track was host to the
1998  Breeders  Crown,  one  of  the  premier North American standardbred racing
events,  in  November  1998.  The  Virginia  Derby,  a  race  for three-year old
thoroughbreds,  was  held  in  October 1998, 1999 and 2000 on the Company's turf
track.  The  Company  intends  to  continue  to  develop the Virginia Derby as a
graded stakes race as a warm up to the Breeders' Cup.  The Company believes that
by  hosting  and  creating  marquee  racing  events, the Company will be able to
improve  its  market visibility, attract additional patrons to the Track and its
Racing  Centers,  and  enhance  its ancillary revenues from export simulcasting,
corporate  sponsorships,  group  sales  events,  and  food  and  beverage sales.

<PAGE>
     The  track  facility  was  designed  to  provide  patrons  with  a pleasant
atmosphere  to  enjoy quality horse racing.  The outside grandstand area located
on  the  first  floor  of  the  track  facility  has  an  occupancy  capacity of
approximately  4,000  patrons.  Also  located  on  the  first floor of the track
facility  are  two  simulcast/TV amphitheaters, two covered patio-seating areas,
four bars, a large concession food court, gift shop, and wagering locations with
approximately  sixty  tellers.  The Jockey Club, which is in the main grandstand
area  located  on the third floor of the track facility, includes a full-service
dining  area  with a seating capacity of 548 patrons, two separate lounge areas,
and  additional  wagering  locations  with 24 tellers.  The Turf Club, a private
club, as well as 10 luxury suites with skybox seating, are located on the fourth
floor  of  the  track  facility.

     Racing  Centers  -  By  state law, the Company can operate up to six Racing
Centers  in Virginia. The Company currently operates four Racing Centers located
in  Richmond,  Chesapeake, Hampton, and Alberta, Virginia.  These Racing Centers
employ  state-of-the-art  audio/visual technology for maintaining quality import
simulcast  thoroughbred and standardbred races from nationally known racetracks.
The  Racing  Centers  are structured to accommodate the needs of various patrons
from the seasoned handicapper to the novice wagerer.  The Racing Centers provide
patrons  with a comfortable upscale environment including a full bar and a range
of restaurant services.  In addition, self-serve automated wagering equipment is
available  to patrons in order to make wagering more user-friendly to the novice
and  more  efficient  for  the  expert.  This  automated wagering equipment with
touch-screen interactive terminals and personalized portable wagering terminals,
provide  patrons  with  current odds information and enable them to place wagers
and  credit  winning  tickets  to  their accounts without waiting in line. Under
current  law,  before  the  Company  can open its last two Racing Centers, it is
required  to win approval through a local referendum process in the municipality
in  which  the  facility  will  be  located.

     Strategic  Alliance  - The Company entered into a Management and Consulting
Agreement  (the  "Agreement")  with  Maryland-Virginia  Racing  Circuit, Inc. an
affiliate of the Maryland Jockey Club ("MJC"), to provide experienced management
for  the Track and Racing Centers and to create a Virginia-Maryland thoroughbred
racing circuit.  Under the Agreement, MJC agreed to suspend live racing at their
racetracks,  Laurel  Park  and  Pimlico  Race  Course, during the Company's live
thoroughbred  meets.  Parties to the Agreement also agreed to exchange simulcast
signals  for  their  live meets at no cost to either party.  An amendment to the
Agreement  (the  "Amended  Agreement") was signed by both parties on January 15,
1999,  which  restructured  among other terms, MJC's responsibilities as manager
and  the  management  fee  paid  to MJC.  On July 1, 1999, MJC assumed operating
responsibilities  for  the  Company's  Racing  Centers  as  well  as  the  live
standardbred and thoroughbred meets.  Prior to the Amended Agreement, MJC agreed
to  manage  the Company's thoroughbred meet, and the Company agreed to reimburse
MJC  for  the  personnel  it  provided  to  manage such meet.  Under the amended
agreement,  MJC  is  no  longer reimbursed for expenses incurred while acting as
manager  of these operations.  Also, under the Amended Agreement, the management
fees  were reduced from 2% of amounts wagered at the Company's facilities (other
than on live standardbred meets conducted at the Track) to 1.0% of the first $75
million  of  the  aggregate  gross  amounts  wagered in any calendar year in the
Commonwealth  of  Virginia excluding certain conditions specified in the Amended
Agreement  ("Handle")  and  2.0%  of  all  Handle  in  excess of $75 million per
calendar year.  Management fees relating to the Company's new Racing Centers, if
any,  will be either 2% or 3.25% of Handle depending upon their location and the
amount  of  Handle.

<PAGE>
PURSE  STRUCTURE

     The  Company  contributes  to  the  thoroughbred  and  standardbred  purse
accounts,  respectively,  a  certain  percentage  of  all  thoroughbred  and
standardbred wagers at its Racing Centers and the Track.  The purse structure is
negotiated  with  the  respective  horsemen's  groups,  the  Virginia Horsemen's
Benevolent  and  Protective Association ("VaHBPA") for thoroughbred horsemen and
the  Virginia Harness Horse Association ("VHHA") for standardbred horsemen.  The
current  agreements  with both the VaHBPA and the VHHA expire December 31, 2001;
however,  the VaHBPA agreement is subject to a three year renewal term at either
party's  election  and  subject  to  the  Virginia Racing Commission's approval.

     The Company's purses have been competitive with purses at racetracks in the
mid-Atlantic  market  that  conduct meets concurrently with the Company's meets,
with  the possible exception of Delaware Park, which has video lottery terminals
("VLTs")  or  slot  machines.  Revenues  from VLTs have enabled Delaware Park to
increase  the  purses  offered.  The  racetrack  in  Charlestown,  West Virginia
operates  slot  machines  and  the  purses  it offers are competitive with those
offered  by  the  Company  but  are  expected  to  continue  to  increase.

COMPETITION

     The  Company  competes  with racetracks located outside Virginia (including
several  in  Delaware,  Maryland,  New  Jersey, New York, Pennsylvania, and West
Virginia) and other forms of gaming, such as land-based casinos, including those
in  Atlantic  City,  and statewide lotteries in Virginia and neighboring states.
The  Company  also faces competition from a wide range of entertainment options,
including  live  and televised sporting events and other recreational activities
such  as  theme  parks (Kings Dominion to the northwest and Busch Gardens to the
southeast)  and  more  recently  internet based pari-mutuel wagering and account
wagering  on  horse  racing  that  operates  from  Pennsylvania.

     The  possible  legalization  of  other forms of gaming in Virginia, such as
Indian  and  riverboat  casinos  could  have  an adverse effect on the Company's
performance.  Although  bills  for the creation of riverboat casinos have failed
in  the  Virginia  legislature,  proponents  of riverboat gaming in Virginia may
continue  to  seek  legislative  approval.  It is not possible, at this time, to
determine if or when additional forms of gaming will be permitted in Virginia or
neighboring  states  and,  if  so,  the  impact,  if  any,  on  the  Company.

     The  Company  competes  and will compete for wagering dollars and simulcast
fees  with  live  racing  and  races  simulcast from racetracks in other states,
particularly  racetracks  in  neighboring  states  such  as Charles Town in West
Virginia,  Pimlico  Race Course, Laurel Park, and Rosecroft Raceway in Maryland,
and  Delaware  Park  in  Delaware.  The  Company  believes  that  the Management
Agreement  with MJC will continue to promote coordination of thoroughbred events
between  Maryland  and  Virginia.  However,  if  the Virginia or Maryland Racing
Commissions  do  not  approve  the  party's  proposed  racing  days,  or  if the
Virginia-Maryland  thoroughbred  racing  circuit  is otherwise unsuccessful, the
Track may compete directly with Pimlico Race Course and Laurel Park in Maryland.

     The  Company  anticipates  that it will experience adverse effects from the
continued  legalization  of VLTs and slot machines in neighboring states such as
Delaware and West Virginia.  Racetracks with VLTs and/or slot machines generally
are required to devote a significant portion of VLT and/or slot machine revenues
to  the  purses for which horses race.  As a result, such racetracks may be able
to  offer  higher purses, which can make it difficult for the Company to attract
horsemen  to  race  at  the Track.  The Company also is encountering competition
with  patrons in Virginia that are participating in account wagering operated in
Pennsylvania  through  the ability to watch live horse racing via home satellite
television.  Although  illegal  in  Virginia,  patrons are establishing accounts
with  operators  in  Pennsylvania  and  placing  wagers over the telephone while
watching  races  at  home  via  satellite.
<PAGE>

REGULATION

     The  Company's  success  is  dependent upon continued government and public
acceptance  of horse racing as a form of legalized gaming.  Although the Company
believes  that pari-mutuel wagering on horse racing will continue to be legal in
Virginia, gaming has come under increasing scrutiny nationally and locally.  The
National  Gaming  Commission  (the  "NGC")  conducted  a comprehensive legal and
factual  study of gambling in the United States and existing federal, state, and
local  policies and practices with respect to the legalization or prohibition of
gambling  activities.  The  NGC  published  its  findings and recommendations in
1999.  It  is  not  possible  to  predict  the  future  impact  of  any of these
recommendations  on  the  Company and its operations; however, adoption of these
recommendations  could have a material adverse effect on the Company's business.
Opposition  to the Virginia Racing Act has been unsuccessfully introduced in the
Virginia  legislature  in  the  past,  but additional legislative opposition may
arise  in  the  future.  If  the  Virginia Racing Act was repealed or materially
amended,  such  action  could  have  a  material adverse effect on the Company's
business  of  pari-mutuel  wagering.

     Virginia  Racing  Act  - Under the Virginia Racing Act, the Virginia Racing
Commission  is  vested  with  control  over  all  aspects  of  horse racing with
pari-mutuel wagering and the power to prescribe regulations and conditions under
which such racing and wagering are conducted.  The Virginia Racing Commission is
responsible  for,  among  other  things, (i) conducting a review annually of the
Company's  Track  and  Racing  Center  licenses,  (ii)  annually  approving  the
Company's  proposed  schedule  of  racing  days, (iii) approving new or modified
types  of  pari-mutuel  wagering  pools  requested  by the Company, (iv) issuing
permits to all officers, directors, racing officials, and other employees of the
Company,  and  (v)  approving simulcast schedules at the Track and at the Racing
Centers.  The  Virginia  Racing  Commission also has the authority to promulgate
regulations  pertaining to the Company's Track facilities, equipment, safety and
security  measures,  and  controls  the  issuing  of  licenses  and  permits for
participants in pari-mutuel racing, including Company employees at the Track and
at the Racing Centers.  In addition, the Virginia Racing Commission must approve
any  acquisition  or  continuing  ownership  of  a 5% or greater interest in the
Company.  Action by the Virginia Racing Commission that is inconsistent with the
Company's  business  plan  could  have a material adverse effect on the Company.

     During  the  2000 session of the Virginia General Assembly, an amendment to
the Racing Act was passed that requires the Company to enter into contracts with
each  representative horsemen group and provides for the Company to contribute a
minimum  of  5% of the first $75 million of simulcast Handle, 6% of the next $75
million  and  7%  of  all  Handle  over $150 million to the purse account of the
respective  breed.  The  existing  contracts  with  the VaHBPA and VHHA were not
affected  by the change.  The amendment also provides for the breakage generated
by  pari-mutuel  wagering to be allocated 70% to capital expenditures and 30% to
backstretch benevolent activities. Prior to this amendment, the Company received
all  breakage.  Finally,  the  amendment  empowers  the  Commission to summarily
suspend  the Company's licenses if it believes the Racing Act or the regulations
have  been  violated.

<PAGE>

     The  licenses  issued  by the Virginia Racing Commission to the Company are
for  a period of not less than 20 years, but are subject to annual review by the
Virginia  Racing  Commission.  It  is  possible  that  such licenses will not be
renewed  or  that  such  licenses  could be suspended or revoked by the Virginia
Racing  Commission  for violations of the Virginia Racing Act or Virginia Racing
Commission  rules.

     Other  State  and Local Regulation - The Company, the Track, and the Racing
Centers  are  also subject to a variety of other laws and regulations, including
zoning,  construction,  and  land-use  laws  and the regulations of the Virginia
Alcoholic  Beverage  Control  Board.  Such  laws  and regulations may affect the
selection  of  Racing  Center  sites because of parking, traffic flow, and other
similar  considerations.  Any  interruption  or  termination  of  the  Company's
ability, or that of its concessionaires, to serve alcoholic beverages could have
a  material  adverse  effect  on  the  Company.

     Federal  Regulation  -  The  Company's  interstate simulcast operations are
subject  to  the  provisions  of  the Federal Interstate Horse Racing Act, which
regulates interstate off-track wagering.  In order to conduct wagering on import
simulcasting  at the Track or any Racing Center, the Interstate Horse Racing Act
requires  the  Company  to obtain the consent of the Virginia Racing Commission,
the  consent  of  the racing commission of the state where the horse racing meet
originates  and  the  consent  of  the  representative  horsemen  groups  in the
origination  state.  To conduct export simulcasting, the Company must obtain the
consent  of the Virginia Horseman's Benevolent and Protective Association or the
Virginia  Harness  Horse Association, and the Virginia Racing Commission.  Also,
in the case of off-track wagering to be conducted at any of the Company's Racing
Centers,  the  Interstate  Horse  Racing  Act requires the Company to obtain the
approval  of  all currently operating horse racetracks within sixty miles of the
Racing Centers or if there are no currently operating tracks within sixty miles,
the  approval  of the closest operating horse racetrack, if any, in an adjoining
state.  Significant delay in obtaining such consents and approvals or failure to
obtain  such  consents  or approvals could have a material adverse effect on the
Company.

Future  Regulation  -  The Company's operations may become subject to additional
regulation  from  any  of the foregoing or from other governmental bodies.  Such
additional  regulation  could  have  a  material  adverse effect on the Company.

TAXATION

     The  Company  is subject to a number of federal, state, and local taxes and
fees.  These  include fees to support the Virginia Breeders' Fund, taxes payable
to the Commonwealth of Virginia, taxes and admission charges payable to New Kent
County  where  the  Track  is  located, and taxes payable to localities in which
Racing  Centers  are located based upon the amount of monies wagered both at the
Track and at the Company's Racing Centers.  The Company believes that the public
acceptance  of  pari-mutuel  wagering  on horse races, as well as other forms of
gaming,  is based, in part, on the governmental revenues it generates from taxes
and  fees  on such activities.  It is possible that gaming activities, including
horse  racing, may become a target for additional federal, state, or local taxes
and  fees.  A  significant  increase  in  such  taxes or fees or the creation of
significant additional taxes or fees could have a material adverse effect on the
Company.

<PAGE>

EMPLOYEES

     As of December 31, 2000, the Company had approximately 92 full-time and 167
part-time  employees.  During  the  live  meets,  the  Company employs up to 150
temporary  employees.  The Company considers its relations with its employees to
be  good.

ITEM  2.     PROPERTIES

     Information  regarding  the Company's facilities as of December 31, 2000 is
as  follows:

<TABLE>
<CAPTION>

                                                                           Size
       Location                    Use                     Leased/Owned  (Sq. Ft.)
      ---------                  ------                    ------------  ---------
<S>                        <C>                     <C>     <C>           <C>
Colonial Downs Racetrack
-------------------------
New Kent, VA (1)           Race Track and                      Owned      152,000
                           Administrative Offices

Racing Centers
---------------
Richmond, VA               Satellite Wagering                  Owned       20,000
Chesapeake, VA             Satellite Wagering                  Leased      15,000
Hampton, VA                Satellite Wagering                  Owned       13,500
Alberta, VA                Satellite Wagering                  Owned        8,000
</TABLE>

(1)  Colonial Downs Racetrack is located on approximately 345 acres of land with
paved parking to accommodate over 1,825 vehicles.  Additional unpaved parking is
available  for  large  and  capacity  crowds.

ITEM  3.     LEGAL  PROCEEDINGS

     Mechanic's  Lien  Litigation.  In  connection  with the construction of the
Racetrack,  there  remained two unresolved mechanic's lien litigation matters as
of  December  31,  2000.  In  Baker  Roofing Company v. Colonial Downs Holdings,
                              --------------------------------------------------
Inc.,  et  al  (New Kent County Cir. Ct. Case No. CH98-76), a roofing contractor
-------------
sought  payments  of  approximately $137,800 and its contractor, in turn, sought
payment  of  approximately  $40,500  in NCI Building Components v. Baker Roofing
                                        ----------------------------------------
Company,  et  al  (New  Kent  County  Cir.  Ct.  Case No. CH98-78).  The Company
----------------
contested these matters vigorously and ultimately settled these matters in March
2001  for  not  materially  more  than  previously  accrued.

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

     None.

<PAGE>

                                     PART II

ITEM  5.     MARKET  FOR  COMMON  EQUITY  AND  RELATED  STOCKHOLDER  MATTERS

     The  Company's  Common  Stock  is  quoted  on  the  NASDAQ over the counter
bulletin  board  as  of October 19, 2000 under the symbol "CHLD".  The Company's
stock  began  trading on March 18, 1997.  The following table sets forth for the
periods  indicated  the  high  and low closing prices per share of the Company's
Common Stock as reported on the NASDAQ Small Cap Market and the over the counter
bulletin  board.

<TABLE>
<CAPTION>
              2000  -  By  Quarter          1999  -  By  Quarter
           1ST    2ND    3RD    4TH       1ST    2ND    3RD    4TH
          -----  -----  -----  -----     -----  -----  -----  -----
<S>       <C>    <C>    <C>    <C>       <C>    <C>    <C>    <C>
High Bid  $1.56  $1.22  $0.97  $0.53     $1.69  $2.56  $2.63  $1.50
Low Bid   $0.75  $0.75  $0.38  $0.16     $0.63  $1.38  $1.00  $0.81
</TABLE>

     The  closing  price  as  of  March  27, 2001 was $0.69 per share of Class A
Common  Stock.  There were approximately 726 holders of record of Class A Common
Stock  on  March  27,  2001.

     There  is  no  established  market for the Class B Common Stock.  There are
three  holders  of  record  of  Class  B  Common  Stock.

     Dividend  Policy  - The Company has not paid any dividends to date and does
not  anticipate  paying  any  dividends  on any class of its Common Stock in the
foreseeable future and intends to retain earnings to finance the development and
expansion of its operations.  The payment of any future dividends will be at the
discretion of the Company's Board of Directors and will depend upon, among other
things,  future  earnings,  operations,  capital  requirements,  the  financial
condition  of  the  Company  and  general  business  conditions.  Current  debt
covenants  with  a  lender  preclude  the  Company  from  declaring  and  paying
dividends.

     On  October  19,  2000,  the  Company received notification from The NASDAQ
Small  Cap  Market  that  the  Company  had  failed  to  meet  certain  market
capitalization  criteria.  As  a result, the Company's stock was delisted and is
now  traded  on  the  over  the  counter  bulletin  board.

<PAGE>
ITEM  6.     SELECTED  FINANCIAL  DATA

     The  following  table sets forth selected historical financial data derived
from  the  Company's financial statements and should be read in conjunction with
Management's  Discussion  and  Analysis  of  Financial  Condition and Results of
Operations  and  the  Financial Statements and Notes thereto, included elsewhere
herein.

<TABLE>
<CAPTION>
                                                        (In  thousands)
                                                  Years  Ended  December  31,
                                              2000      1999       1998       1997
                                            -------   --------   --------   --------
<S>                                         <C>       <C>        <C>        <C>
Income Statement Data:
Total revenues                              $29,202   $ 29,351   $ 29,447   $ 23,647
Income (loss) from operations                  (166)     1,701     (3,597)      (467)
Net earnings (loss) before income taxes      (2,869)    (1,139)    (5,372)        92
Net earnings (loss)                          (2,869)    (1,139)    (5,288)         8

Basic and diluted net earnings (loss)
  per share                                 $ (0.39)  $  (0.16)  $  (0.73)  $   0.01

Balance Sheet Data (at period end):
Working capital (deficiency)                $(4,129)  $(26,565)  $(14,661)  $ (9,466)
Total assets                                 65,853     67,405     68,581     67,875
Current maturities of long-term debt            936     24,774      9,184      1,373
Long-term debt excluding current
  maturities                                 26,898      2,975     15,008     15,390
Stockholders' equity                         32,657     35,526     36,634     36,922

Cash Flow Data:
Net cash provided by (used in)
  operating activities                      $   121   $    632   $ (2,289)  $  3,053
Net cash used in investing activities        (2,249)    (1,546)    (5,884)   (48,851)
Net cash provided by financing activities     1,934      1,072      5,980     47,766

EBITDA (1)                                  $ 1,530   $  3,540   $ (1,995)  $    188
</TABLE>

(1)     EBITDA  is  defined as the sum of the Company's net earnings (loss), net
interest  expense,  income  taxes,  depreciation,  and  amortization.  EBITDA is
presented  because  it  is  a widely accepted financial indicator of a company's
ability to service and incur debt.  EBITDA should not be considered in isolation
from  or  as  a  substitute  for  net  income  or cash flow measures prepared in
accordance  with  generally  accepted accounting principles or as a measure of a
company's  profitability  or  liquidity.

<PAGE>

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

     The  following  is  an  analysis  of the financial condition and results of
operations of the Company.  This analysis should be read in conjunction with the
Company's  Financial  Statements  and Notes thereto, appearing elsewhere herein.

GENERAL

     The  Company,  through its subsidiaries, holds the only licenses to own and
operate  a  racetrack  and  Racing  Centers  in Virginia.  The Company currently
operates Racing Centers in Chesapeake, Richmond, Hampton, and Alberta, Virginia,
and  may  open  two  additional  Racing  Centers  if  suitable opportunities are
identified.

     The  Company's  revenues  are comprised of (i) pari-mutuel commissions from
wagering on races broadcast from out-of-state racetracks to the Company's Racing
Centers  and the Track using import simulcasting; (ii) wagering at the Track and
the  Company's  Racing  Centers on its live races; (iii) admission fees, program
and  racing  form sales, and certain other ancillary activities; (iv) net income
from  food  and  beverage  sales  and concessions; and (v) fees from wagering at
out-of-state  locations on races run at the Track using export simulcasting; and
(vi)  commencing  in  February  2001,  management  fees  for  the  operation  of
truckstops  and  gaming  assets  owned  by an affiliate of the Company's largest
shareholder.

     The  Company's  revenues  are  heavily  dependent  on the operations of its
Racing Centers. Revenues from the Racing Centers help support live racing at the
Track.  The amount of revenue the Company earns from each wager depends on where
the  race  is  run  and  where  the  wagering takes place.  Revenues from import
simulcasting  of  out-of-state  races  and from wagering at the Track and at the
Racing  Centers on races run at the Track consist of the total amount wagered at
the  Company's  facilities,  less  the  amount  paid  as  winning  wagers.  The
percentage  of  each  dollar wagered on horse races that must be returned to the
public  as  winning  wagers  (typically about 79%) is legislated by the state in
which a race takes place.  Revenues from export simulcasting consists of amounts
payable  to  the  Company  by  the  out-of-state  racetracks and their simulcast
facilities  with  respect  to  wagering  on  races  run  at  the  Track.

     The  immediate challenge facing the Company is its liquidity.  However, the
Company  expects  that  cash flows from operations and the availability of other
capital  and  financial  resources,  primarily  through support of its principal
shareholder,  will  provide  sufficient  liquidity  to meet its normal operating
requirements  and  capital  expenditure  plans  over  the  next  twelve  months.

<PAGE>
The  following  table  sets  forth  certain operating results as a percentage of
total  revenues  for  the  periods  indicated:

<TABLE>
<CAPTION>

                                              (Percentage  of  Net  Revenues)
                                                 Years Ended December 31,
                                                -------------------------
                                                 2000     1999     1998
                                                ------   ------   ------
<S>                                            <C>      <C>     <C>      <C>
Revenues:
     Pari-mutuel and simulcasting commissions    93.7%    93.0%    90.8%
     Other                                        6.3%     7.0%     9.2%
                                                ------   ------   ------
          Total revenues                        100.0%   100.0%   100.0%
Direct operating expenses:
     Purses, fees, and pari-mutuel taxes         40.3%    32.6%    39.1%
     Simulcast and other direct expenses         40.9%    38.9%    46.8%
                                                ------   ------   ------
          Total direct operating expenses        81.2%    71.5%    85.9%
Selling, general, and administrative expenses    13.6%    16.4%    20.9%
Depreciation and amortization                     5.8%     6.3%     5.4%
                                                ------   ------   ------
Income (loss) from operations                    (0.6)%    5.8%   (12.2)%
Interest expense, net                            (9.2)%   (9.7)%   (6.0)%
                                                ------   ------   ------
Earnings (loss) before taxes                     (9.8)%   (3.9)%  (18.2)%
                                                ======   ======   ======
</TABLE>

COMPARISON  OF  FISCAL  YEARS  2000  AND  1999

     Total  Revenues.  Total  revenues in 2000 were $29.2 million, a decrease of
$.1  million  from  1999  revenues  of  $29.3 million.  Total revenue reflects a
decrease of  $.1 million in live harness meet revenue and a $.4 million decrease
in  revenues  from  the  Racing Centers, offset by an increase of $.4 million in
thoroughbred  meet  revenue.  The  decrease  in  live  harness meet revenues was
primarily  due  to a decrease in attendance despite an increase in the number of
race  days  (from  30  in  1999 to 40 in 2000).  Attendance appears to have been
adversely  affected by changing the harness meet from May through August in 1999
to  October  through  December  in 2000.  The increase in live thoroughbred meet
revenue  was primarily due to an increase in the number of race days (from 25 in
1999  to  32  in  2000).  Revenues  at  the Hampton and Brunswick Racing Centers
increased  $.3  million  and  $.1  million,  respectively, while revenues at the
Richmond and Chesapeake Racing Centers decreased by $.6 million and $.2 million,
respectively  compared  to  1999.  Current  year  revenues  have  been adversely
affected  by  passage of legislation sponsored by the Virginia Racing Commission
in  April  2000  requiring  the  Company  to  remit  30%  of breakage revenue to
horseman's benevolent associations.  Prior to enactment of this law, the Company
was  entitled to retain all breakage.  The reduction in breakage revenue in 2000
due  to  this  change  was  approximately  $.1  million.

     Direct  Operating  Expenses.  As a percentage of revenues, direct operating
expenses  increased  9.7%, or $2.7 million from the prior year.  The increase in
operating  expenses  was  principally  attributed to increases in purse expense,
fees,  and simulcast and other direct expenses.  Purse expense increased to $5.7
million  for  2000 from $3.5 million for 1999 due to the new agreements with the
VaHBPA  and  the  VHHA.

<PAGE>

     Selling,  General and Administrative Expenses ("SG&A").  As a percentage of
revenues,  SG&A decreased approximately 2.8% from 1999.  The decrease in SG&A as
a  percentage  of  revenues  was  due  primarily  to reductions in professional,
consulting  and legal fees of approximately $.9 million.  This reduction was due
to the termination of the consulting agreement with Premier Development Company,
the settlement of the Norglass litigation and the non recurring expenses in 1999
related  to  the  Company's unsuccessful effort to obtain a racetrack license in
Dumfries,  Virginia.  Other Racing Center and corporate SG&A costs increased $.1
million  attributable  primarily  to  increased  insurance  costs  offsetting
reductions  in  other  areas.

     Interest Expense, Net.  Interest expense, net of interest income, decreased
$.1  million to $2.7 million in 2000 from $2.8 million in 1999.  The decrease in
net  interest  expense is due to the nonrecurring $.3 million interest provision
related  to  the  Norglass arbitration award recorded in June 1999, cessation of
guarantee  fees in August 2000 due to the refinancing of the Company's debt, and
an  increase in interest income offset by a slight increase in debt and a slight
rise  in  interest  rates.

     Net  Loss.  Net loss increased to $2.9 million in 2000 from $1.1 million in
1999.  The  increase  in  net  loss was a result of the factors discussed above.

COMPARISON  OF  FISCAL  YEARS  1999  AND  1998

     Total  Revenues.  Total  revenues in 1999 were $29.3 million, a decrease of
$.1  million  from  1998  revenues  of  $29.4 million.  Total revenue reflects a
decrease of $1.2 million in live harness meet revenue and a $.3 million decrease
in  live thoroughbred meet revenue, offset by an increase of $1.4 million at the
Racing Centers.  The decrease in live harness meet revenues was primarily due to
the  reduction  in the number of race days (from 46 in 1998 to 30 in 1999).  The
decrease  in  live  thoroughbred  meet  revenue  was  affected  by a decrease in
attendance.  In  an  effort to maximize export simulcasting revenue, the Company
scheduled  the  thoroughbred  meet  with  a mid afternoon post time of 3:00.  In
doing  so,  attendance  was  negatively affected.  Through effective advertising
campaigns,  the  Company was able to increase revenue at the Racing Centers even
though  the  Brunswick Racing Center was only opened five days per week in 1999.
From  January  until  late  April 1998, Brunswick Racing Center was opened seven
days  per  week.

     Direct  Operating  Expenses.  As a percentage of revenues, direct operating
expenses  decreased 14.4%, or $4.3 million from the prior year.  The decrease in
operating  expenses  was  principally  attributed to decreases in purse expense,
fees,  and simulcast and other direct expenses.  Purse expense decreased to $3.5
million  for  1999  from  $6.1  million for 1998 due to the new thoroughbred and
amended  harness  horsemen's contracts.  This purse expense reduction was offset
by an increase in the fees due to MJC of $.6 million.  The decrease in simulcast
and  other  direct  expenses  was  primarily  a  result  of the changes in Track
operations  (approximately  $2.0  million  of  the  decrease in direct operating
expenses)  due  to  the  reduction  in  live  race  days,  a  reduction  in  the
thoroughbred  meet management costs due to the revised and amended MJC agreement
and  the  implementation  of cost saving measures, and improvements in operating
efficiencies.  Signal  fees  and  pari-mutuel taxes increased $.4 million at the
Racing  Centers  due  to  the  increase in revenue.  Cost saving measures in the
Racing  Centers  reduced  other  direct  operating  expenses  by  $.7  million.

<PAGE>

     Selling,  General and Administrative Expenses ("SG&A").  As a percentage of
revenues,  SG&A  decreased 4.5% from 1998.  The decrease in SG&A as a percentage
of  revenues  was  primarily attributed to efforts to reduce personnel and other
expenses  and  resulted  in  net  cost savings of $1.3 million from 1998.  These
savings  were  achieved  in  spite  of  non-recurring  legal and consulting fees
relating  to  the  Norglass  arbitration  of approximately $.7 million and costs
relating  to  the  Dumfries  project,  an  unsuccessful  effort to develop a new
racetrack  and  simulcast wagering center in Dumfries, Virginia, of $.3 million.

     Interest Expense, Net.  Interest expense, net of interest income, increased
$1.1  million  from  1998  to  $2.8  million for 1999.  The increase in interest
expense  was  primarily  a  result  of an increase in debt from $24.2 million at
December  31,  1998  to  $27.7  million  at December 31, 1999, the provision for
interest  of  $.3  million  relating  to  the Norglass arbitration award and $.4
million  loan guarantee fee to a shareholder which had been waived in 1998.  The
increase in debt is largely attributable to the issuance of $1.8 million note to
Norglass  in  settlement  of  an  award  ordered  by  the  American  Arbitration
Association and the issuance of notes payable of $.9 million and $.6 million for
1999  thoroughbred  purses  to  an  affiliate  of a shareholder and the Maryland
Jockey  Club,  respectively.  The  Company  also  received loans aggregating $.9
million from an affiliate of a shareholder and converted $.2 million of accounts
payable  to  a  note.

     Net  Loss.  Net loss decreased to $1.1 million in 1999 from $5.3 million in
1998.  The  decrease  in  net  loss was a result of the factors discussed above.

     Effect of Hurricane Floyd.  The Company's operations were suspended for two
days in September 1999 due to treacherous weather conditions caused by Hurricane
Floyd.  The  loss of revenues is estimated to be $181,000.  As a good portion of
the  Company's  costs  are fixed, the loss of revenues' impact on net income was
severe.  The  impact  of  the loss on net income net of insurance recoveries was
approximately  $162,000.

LIQUIDITY  AND  CAPITAL  RESOURCES

     During  2000,  1999  and 1998, the Company incurred aggregate net losses of
approximately  $9.3 million and has a working capital deficit of $4.1 million at
December  31,  2000.  The  Company's  continued  existence is dependent upon its
ability  to obtain adequate working capital to support its operations until they
become  profitable.  The  Company has been and continues to be largely dependent
on  the  financial  support of its principal stockholder, who through affiliated
entities  and  related  parties  is the holder of $25.7 million of debt from the
Company  as  of  December  31, 2000.  The Company is seeking continued financial
support  from  this  stockholder.

     Cash  Flows.  After  adjusting  the  net  loss of $2.9 million for non-cash
items such as depreciation and amortization, $1.1 million in cash was used.  The
increase  in  accounts payable and other operating liabilities and the decreases
in  accounts  receivable  and  other  assets  and horsemen's deposits and purses
provided  $1.2  million  of  cash  resulting  in  net cash provided by operating
activities  of  $.1  million.  Investing  activities utilized approximately $2.2
million  of  cash,  with  $1.8  million  consisting  of  payments  on prior year
construction  related  liabilities  and  $.4  million  of  capital expenditures.
Financing  activities provided approximately $1.9 million of cash primarily from
the  refinancing  of  the  debt.

<PAGE>

     In  June  1999,  the  Company  entered  into a three-year contract with the
Virginia  Horsemen's  Benevolent  and  Protective  Association ("the VaHBPA") to
provide  for thoroughbred purses.  Under the contract, $3,125,000 was guaranteed
to  be  available  for  purses  for the 1999 thoroughbred meet.  Of this amount,
$1,500,000  was considered to be an advance of purse money due in years 2000 and
2001.  In  2000,  the  Company  paid 5 1/4% of the Handle generated on simulcast
thoroughbred  racing  to the thoroughbred purse account.  Then the VaHBPA repaid
$750,000  of  the  advance plus interest at approximately the prime rate back to
the  Company,  effectively  reducing  the  Company's  2000  purse  expense.  The
remaining  $750,000  balance  of  the advance plus interest at approximately the
prime  rate  will be repaid by the VaHBPA in 2001 from the 5 1/4% contributed by
the  Company  to  the  purse  account.

     EBITDA is a widely accepted financial indicator of  a  company's ability to
service and incur debt. The Company's EBITDA for 2000 and 1999 was approximately
$1.5  million  and  $3.5  million,  respectively.  The  decrease  in  EBITDA  is
primarily  due  to  lower  income  before  interest  and income taxes due to the
changes  in revenues, operating expenses and selling, general and administrative
expenses  discussed  in  "Results  of  Operations"  above.  EBITDA should not be
considered  in  isolation  from  or  as a substitute for net income or cash flow
measures prepared in accordance with generally accepted accounting principles or
as  a  measure  of a company's profitability or liquidity.  EBITDA is defined as
the  sum  of  income  before  interest,  income  taxes,  and  depreciation  and
amortization.

EFFECT  OF  INFLATION

     The  impact  of  inflation  on  the  Company's  operations  has  not  been
significant  in  recent  years.  There can be no assurance, however, that a high
rate of inflation in the future will not have an adverse effect on the Company's
operating  results.

SEASONALITY  AND  THE  EFFECT  OF  INCLEMENT  WEATHER

     Revenues  and expenses relating to the Track may be higher during scheduled
live  racing  than  at other times of the year.  In addition, weather conditions
such  as  those  from  Hurricane  Floyd, sometimes cause cancellation of outdoor
horse races or curtail attendance, both of which reduce wagering. Attendance and
wagering  at  both outdoor races and indoor Racing Centers also may be adversely
affected by certain holidays and professional and college sports seasons as well
as  other  recreational  activities.  Conversely, attendance and wagering may be
favorably  affected  by  special racing events which stimulate interest in horse
racing,  such as the Triple Crown races in May and June and the Breeders' Cup in
November.  As a result, the Company's revenues and net income may fluctuate from
quarter  to  quarter.  Given  that  a substantial portion of the Company's Track
expenses  are  fixed,  the  loss  of scheduled racing days could have a material
adverse  affect  on  the  Company's  profitability.  The  Company  believes that
simulcasting  diminishes  the  effect  of  inclement  weather  on  wagering.

GOING  PRIVATE  TRANSACTION

     On  March  1,  2001,  the  Company  announced  that  its Board of Directors
received an offer from Jeffrey P. Jacobs, Chairman of the Board, Chief Executive
Officer,  and  the  Company's largest shareholder, to acquire the Company.  Upon
receipt  of  the  offer,  the Company formed a Special Committee to evaluate the
proposal.

<PAGE>

     Mr. Jacobs indirectly owns approximately 43.5% of the stock of the Company.
He proposed  a transaction to purchase  all of the remaining shares  for a cash
price  of  $1.00  per  share.  U.S.  Bancorp  Libra,  a division of U.S. Bancorp
Investments, Inc. is acting as  advisor  to  Mr. Jacobs.  The Special Committee
intends to employ independent legal counsel and a financial advisor to assist it
in analyzing  the  offer  and  negotiating  with  Mr.  Jacobs.

     Consummation of the transaction is subject to various conditions, including
the  negotiation  and  execution  of  definitive  agreements,  approval  by  the
Company's  Board  of  Directors  and  shareholders,  the  obtaining  of  various
regulatory  approvals,  and Mr. Jacobs'  ability to  obtain financing  necessary
for the transaction.  If a transaction with Mr. Jacobs occurs, it is anticipated
that  it  would  close  in mid  to  late  summer  of  2001.

MANAGEMENT  AGREEMENT  WITH  JALOU

     The  Company's subsidiary, Colonial Holdings Management, Inc., has signed a
management contract with Jalou, an affiliate of Mr. Jacobs, the Chairman and CEO
of  the  Company,  to  manage  two  truckstops  that  Jalou recently acquired in
Louisiana  and  to  manage the rights to a portion of the gaming revenues from a
third  truckstop.  Under  the  management contract, the Company will oversee all
aspects  of the operations of the truckstops acquired.  The management agreement
calls for the Company to provide these services in return for a fee of 3% of the
truckstops'  revenue  and  5%  of the truckstops' EBITDA.  Each truckstop offers
fueling,  convenience  store and restaurant facilities as well as 50 video poker
gaming  devices.

NEW  ACCOUNTING  STANDARDS

     In  June  1998,  the  Financial  Accounting Standards Board ("FASB") issued
Statement  of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments"  ("SFAS  133").  SFAS  133,  as  amended  by  SFAS  137 and 138, is
effective for all fiscal quarters of fiscal years beginning after June 15, 2000.
SFAS  133  establishes  accounting  and  reporting  standards  for  derivative
instruments  and  for  hedging  activities.  SFAS  133  requires  that an entity
recognize  all  derivatives  as  either  assets or liabilities and measure those
instruments  at  fair  market  value.  Presently,  the  Company  does  not  use
derivative  instruments  either  in  hedging  activities  or  as  investments.
Accordingly,  the  Company's  adoption  of  SFAS 133, as amended, did not have a
material  impact  on  its  financial  position  or  results  of  operations.

     The  Securities  and  Exchange  Commission  ("SEC")  has  issued  Staff
Accounting Bulletin  No.  101,  "Revenue  Recognition in Financial Statements"
("SAB 101").  SAB  101  is  effective  in  the  fourth quarter of fiscal years
beginning after December  15, 1999.  SAB 101 summarizes appropriate criteria to
be considered in determining recognition of revenue.  Adoption of SAB 101 did
not have a material impact  on  the  Company's  financial  position  or results
of  operations.

     In March 2000, the FASB issued interpretation No. 44 ("FIN 44"), Accounting
For Certain Transactions Involving Stock Compensation,  an Interpretation of APB
Opinion No. 25.  FIN 44 clarifies the application of applying APB No. 25 for (a)
the definition of employee for purposes of applying APB 25, (b) the criteria for
determining  whether  a  plan  qualifies  as  a  noncompensatory  plan,  (c) the
accounting  consequences  of  various  modifications to a previously fixed stock
option  or  award  and  (d) the accounting for an exchange of stock compensation
awards  in  a  business  combination.  FIN 44 became effective July 2, 2000, but
certain  conclusions  cover specific events that occur after either December 15,

<PAGE>

1998  or January 12, 2000.  Adoption of FIN 44 did not have a material effect on
the  Company's  financial  position  or  results  of  operations.

FORWARD  LOOKING  INFORMATION

     The  statements  contained  in  this report which are not historical facts,
including,  but not limited to, statements found under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations" above,
are forward looking statements that involve a number of risks and uncertainties.
The  actual  results  of  the  future  events  described in such forward looking
statements  in  this  report  could differ materially from those contemplated by
such  forward  looking  statements.  Among  the  factors that could cause actual
results  to  differ  materially are the risks and uncertainties discussed in the
report,  including without limitations the portions of such statements under the
caption  referenced  above, and the uncertainties set forth from time to time in
the  Company's  other public reports, filings and public statements.  Such risks
include  but  are  not  limited  to  acts  by parties outside the control of the
Company, including the Maryland Jockey Club, horsemen associations, the Virginia
Racing  Commission,  political  trends,  the effects of adverse general economic
conditions,  the  approval  of  future  Racing  Centers  by referenda and/or the
Commission  and  governmental  regulation.

ITEM  7A.     QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

     Most  of  the  Company's  debt obligations at December 31, 2000 were either
fixed  rate  obligations  or  variable  rate  obligations  with  its  majority
shareholder,  which  provide the Company various options in determining the rate
of  interest.  Management  therefore  does  not believe that the Company has any
material  market  risk  from  its  debt  obligations.

<PAGE>

ITEM  8.     FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA

<TABLE>
<CAPTION>
                                INDEX TO FINANCIAL STATEMENTS


                                                                               Page
                                                                              ------
<S>                                                      <C>                  <C>
Report of Independent Certified Public Accountants                              18

Consolidated Balance Sheets at year end 2000 and 1999                           19

Consolidated Statements of Operations for years 2000, 1999 and 1998             20

Consolidated Statements of Changes in Stockholders' Equity for years
  2000, 1999 and 1998                                                           21

Consolidated Statements of Cash Flows for years 2000, 1999 and 1998             22

Notes to Consolidated Financial Statements                                      23-38
</TABLE>

<PAGE>
               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To  the  Board  of  Directors  and  Stockholders  of  Colonial  Holdings,  Inc.

We  have  audited  the  accompanying  consolidated  balance  sheets  of Colonial
Holdings,  Inc.  and  subsidiaries  as  of  December  31, 2000 and 1999, and the
related  consolidated  statements  of  operations, stockholders' 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 consolidated financial statements referred to above present
fairly,  in  all material respects, the financial position of Colonial Holdings,
Inc.  and  subsidiaries  at 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.

The  Company  has  been  and  continues to be largely dependent on the financial
support  of  its  principal stockholder, who through an affiliated entity is the
holder  of  $25.7  million of debt from the Company as of December 31, 2000.  In
addition,  on  March 1, 2001, the Company's Board of Directors received an offer
from  its  principal stockholder, who beneficially owns approximately 43% of the
Company's  outstanding shares, to acquire all of the remaining shares for a cash
price  of  $1.00  per  share.  The  Company  has  formed  a special committee to
evaluate  the  proposal.


                                           /s/     BDO  Seidman,  LLP

Richmond,  Virginia
March  23,  2001
<PAGE>

<TABLE>
<CAPTION>

                                          COLONIAL HOLDINGS, INC.
                                        CONSOLIDATED BALANCE SHEETS
                                    (In Thousands, Except Per Share Data)

                                                                    December  31,  December  31,
                                                                         2000         1999
                                                                    ------------   ------------
                  ASSETS
<S>                                                                    <C>          <C>
Current assets:
  Cash and cash equivalents                                            $  1,119     $ 1,313
  Horsemen's deposits                                                       602         659
  Accounts receivable                                                       351         253
  Prepaid expenses and other assets                                          97         114
                                                                    ------------   -----------
       Total current assets                                               2,169       2,339

Property, plant and equipment
  Land and improvements                                                  15,640      15,554
  Buildings and improvements                                             48,586      48,472
  Equipment, furnishings, and fixtures                                    2,972       2,853
  Leasehold improvements                                                  1,124       1,124
                                                                    -----------    -----------
                                                                         68,322      68,003
  Less accumulated depreciation and amortization                          5,433       3,817
                                                                    -----------    -----------
       Property, plant and equipment, net                                62,889      64,186
Licensing costs, net of accumulated amortization of $337
 and $311, respectively                                                     703         729
Other assets                                                                 92         151
                                                                    -----------    -----------
       Total assets                                                    $ 65,853     $67,405
                                                                    ===========    ===========
      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                                     $  2,967     $ 2,764
  Purses due horsemen                                                       306         182
  Accrued liabilities and other                                           2,089       1,184
  Current maturities of long-term debt, and capital lease obligations       936      15,974
  Current maturities of long-term debt - related parties                      -       8,800
                                                                    -----------    -----------
       Total current liabilities                                          6,298      28,904
Long-term debt and capital lease obligations                              1,160       1,750
Notes payable - related parties                                          25,738       1,225
                                                                    -----------    -----------
       Total liabilities                                                 33,196      31,879

Commitments and contingencies

Stockholders' equity
  Class A, common stock, $0.01 par value; 12,000 shares authorized;
   5,025 shares issued and outstanding                                       50          50
  Class B, common stock, $0.01 par value; 3,000 shares authorized;
   2,242 shares issued and outstanding                                       23          23
  Additional paid-in capital                                             42,873      42,873
  Accumulated deficit                                                   (10,289)     (7,420)
                                                                    -----------    -----------
       Total stockholders' equity                                        32,657      35,526
                                                                    -----------    -----------
  Total liabilities and stockholders' equity                           $ 65,853     $67,405
                                                                    ===========    ===========
</TABLE>
     The accompanying notes are an integral part of the consolidated financial
                                   statements.

<PAGE>

<TABLE>
<CAPTION>
                                        COLONIAL HOLDINGS, INC.
                                 CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (In Thousands, Except Per Share Data)

                                                          Years  Ended  December  31,
                                                 -----------------------------------------
                                                    2000            1999            1998
                                                 --------        --------        ---------
<S>                                              <C>             <C>             <C>
Revenues
  Pari-mutuel and simulcasting commissions        $27,366         $27,285         $26,737
  Other                                             1,836           2,066           2,710
                                                 --------        --------        ---------
       Total revenues                              29,202          29,351          29,447

Operating expenses
  Direct operating expenses
       Purses, fees, and pari-mutuel taxes         11,767           9,564          11,509
       Simulcast and other direct expenses         11,936          11,418          13,791
                                                 --------        --------        ---------
            Total direct operating expenses        23,703          20,982          25,300

  Selling, general, and administrative expenses     3,969           4,829           6,142
  Depreciation and amortization                     1,696           1,839           1,602
                                                 --------        --------        ---------
       Total operating expenses                    29,368          27,650          33,044
                                                 ========        ========        ========

Income (loss) from operations                        (166)          1,701          (3,597)
Interest expense                                   (2,826)         (2,905)         (1,825)
Interest income                                       123              65              50
                                                 --------        --------        ---------
  Loss before income taxes                         (2,869)         (1,139)         (5,372)
Provision for (benefit from) income taxes               -               -             (84)
                                                 --------        --------        ---------
            Net Loss                              $(2,869)        $(1,139)        $(5,288)
                                                 ========        ========        ========
Loss per share data:
  Basic and diluted loss per share                $ (0.39)        $ (0.16)        $ (0.73)
  Weighted average number of shares outstanding     7,267           7,260           7,250
</TABLE>
     The accompanying notes are an integral part of the consolidated financial
                                   statements.
<PAGE>

<TABLE>
<CAPTION>
                                      COLONIAL HOLDINGS, INC.
                          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                           (In Thousands)

                                        Common  Stock            Additional               Total
                             -----------------------------------
                                 Class  A           Class  B       Paid-In  Accumulated Stockholders'
                             Shares     Amount   Shares   Amount   Capital   (Deficit)    Equity
                             ------     ------   ------   ------   -------    --------    ------
<S>                         <C>         <C>      <C>      <C>      <C>       <C>         <C>
Balance at December 31,
  1997                        5,000      $50      2,250     $23    $37,842   $  (993)    $36,922
  Conversion of Class B           8        -         (8)      -          -         -           -
  Land contribution               -        -          -       -      5,000         -       5,000
  Net loss                        -        -          -       -          -    (5,288)     (5,288)
                             ------     ------   ------   ------   -------   --------     -------
Balance at December 31,
  1998                        5,008       50      2,242      23     42,842    (6,281)     36,634
Stock in lieu of
  directors' fees                17        -          -       -         31         -          31
Net loss                          -        -          -       -          -    (1,139)     (1,139)
                             ------      -----   ------   ------   -------   --------    --------
Balance at December 31,
  1999                        5,025       50      2,242      23     42,873    (7,420)     35,526
Net loss                          -        -          -       -          -    (2,869)     (2,869)
                             ------      -----   ------   ------   -------   --------    --------
Balance at December 31,
  2000                        5,025      $50      2,242     $23    $42,873  $(10,289)    $32,657
                             ======      =====   ======   ======   =======   ========    ========
</TABLE>
     The accompanying notes are an integral part of the consolidated financial
                                   statements.
<PAGE>

<TABLE>
<CAPTION>
                                        COLONIAL HOLDINGS, INC.
                                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                                            (IN THOUSANDS)

                                                                       Years  Ended
                                                         -------------------------------------------
                                                         December  31,  December  31,  December  31,
                                                             2000           1999           1998
                                                         ------------   ------------   ------------
<S>                                                       <C>            <C>            <C>
OPERATING ACTIVITIES
Net loss                                                   $(2,869)       $(1,139)       $(5,288)
Adjustments to reconcile net loss to
net cash provided by (used in) operating activities:
  Depreciation and amortization                              1,696          1,680          1,602
  Amortization of finance costs                                 28            159              -
  Deferred income taxes and other                                1             31            (78)
Changes in operating assets and liabilities:
  Decrease (increase) in accounts receivable and other assets  (23)            44            470
  Increase (decrease) in trade accounts payable and
    accrued liabilities                                      1,107            342            (51)
  Decrease (increase) in horsemen's deposits and purses        181           (485)         1,056
                                                          -----------   -----------   -------------
Net cash provided by (used in) operating activities            121            632         (2,289)
                                                          -----------   -----------   -------------

INVESTING ACTIVITIES:
  Capital expenditures                                        (399)          (500)        (5,884)
  Decrease in construction payables                         (1,850)        (1,046)             -
                                                          -----------   -----------   -------------
Net cash used in investing activities                       (2,249)        (1,546)        (5,884)
                                                          -----------   -----------   -------------

FINANCING ACTIVITIES:
  Proceeds from long-term debt and capital leases           25,932          2,375          6,398
  Payments on long-term debt and capital leases            (23,998)        (1,303)          (418)
                                                          -----------   -----------   -------------
Net cash provided by financing activities                    1,934          1,072          5,980
                                                          -----------   -----------   -------------
    Net change in cash and cash equivalents                   (194)           158         (2,193)
Cash and cash equivalents, beginning of year                 1,313          1,155          3,348
                                                          -----------   -----------   -------------
Cash and cash equivalents, end of year                      $1,119         $1,313         $1,155
                                                          ===========    ==========   =============

Supplemental Cash Flow Information:
  Supplemental disclosure of noncash investing and
   financing activities
     Land contribution                                      $    -         $    -         $5,000
  Cash paid for interest                                     2,320          2,083          1,915
  Conversion of accounts payable to long-term debt               -          2,485          1,450
</TABLE>
     The accompanying notes are an integral part of the consolidated financial
                                   statements.
<PAGE>

                             COLONIAL HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

1.     DESCRIPTION  OF  BUSINESS  AND  SIGNIFICANT  ACCOUNTING  POLICIES

Description  of  Business

     Colonial  Holdings,  Inc.,  ("Colonial")  formerly Colonial Downs Holdings,
Inc.,  a  Virginia  corporation,  was  incorporated  in 1996.  Colonial owns and
operates,  through  its wholly-owned subsidiaries, Colonial Downs Racetrack (the
"Track") in New Kent, Virginia, which primarily conducts pari-mutuel wagering on
thoroughbred  and  standardbred  horse  racing.  Colonial also owns and operates
four Racing Centers which provide simulcast pari-mutuel wagering on thoroughbred
and  standardbred  horse  racing  from selected racetracks throughout the United
States.

     The  Company  owns, directly, or through its wholly-owned subsidiaries, the
operating  licenses for the racetrack and the Chesapeake, Richmond, Hampton, and
Brunswick  Racing Centers; the property for the Richmond, Hampton, and Brunswick
Racing  Centers;  the  rights to apply for licenses to own and operate up to two
additional  Racing  Centers  in  Virginia;  the 345 acres on which the racetrack
exists;  and  the  racetrack  facilities  and  certain  related  infrastructure.

Principles  of  Consolidation

     The  consolidated  financial  statements  include  Colonial  and  its
subsidiaries,  Colonial  Downs,  L.P.  ("Partnership") and Stansley Racing Corp.
("SRC"  and collectively with Colonial and the Partnership, the "Company").  All
significant  intercompany  accounts  and  transactions  have  been  eliminated.

Use  of  Estimates

     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.

Cash  and  Cash  Equivalents

     The  Company  considers all demand deposits and time deposits with original
maturities  of  three  months  or  less  to  be  cash  equivalents.

Capitalized  Interest

     Interest  in  the  amount  of  $146,000  was  capitalized  during  1998, in
connection  with  the  construction  of  the Track and development of the Racing
Centers.  No  interest  was  capitalized  during  1999  and  2000.

<PAGE>
                             COLONIAL HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

1.     DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

Property,  Plant  and  Equipment

     Property,  plant and equipment are stated at historical cost.  Depreciation
is  computed  using the straight-line method based on the estimated useful lives
of  the  related  assets.  Estimated  useful  lives  used  are  as  follows:

<TABLE>
<CAPTION>
<S>                                   <C>
     Land improvements                     20 to 40 years
     Building and improvements              5 to 40 years
     Equipment, furnishings, and fixtures   2 to 20 years
     Leasehold improvements                 7 to 40 years
</TABLE>

     Depreciation  expense  was $1,666,000, $1,631,000 and $1,541,000 for fiscal
years  2000,  1999  and  1998,  respectively.

     Costs  of  betterments,  renewals,  and major replacements are capitalized.
Maintenance, repairs and minor replacements are expensed as incurred.  Gains and
losses  from  dispositions  are  included  in  the  results  from  operations.

Licensing  Costs  and  Amortization

     Licensing  costs,  which  are  being amortized over the twenty-year license
period,  consist  primarily of professional fees associated with the application
for  the  racetrack  licenses and related licensing fees for the Racing Centers.

Revenue

     The  Company  primarily  derives revenue from import simulcasting, which is
the  Company's share of wagering at its Racing Centers on races simulcasted from
other racetracks.  Revenue also is derived from live racing at the Track as well
as  export  simulcasting  of  its  live  racing  to  other  racetracks.

Horsemen's  Purse  and  Awards

     Amounts  due  under  agreements with the Virginia Horsemen's Benevolent and
Protective Association, Inc. and the Virginia Harness Horse Association (Note 9)
are  accrued  based on the terms of the agreements.  Funds for purses for future
live  race  meets are held in restricted cash accounts.  As of December 31, 2000
and  1999  approximately  $602,000  and $659,000, respectively, were held in the
restricted  cash  accounts.  The Company deposits 30% of breakage revenue into a
Benevolent  Fund  account,  as  required  by  law.  As  of  December  31,  2000,
approximately  $63,000  was  included  in  restricted  cash  accounts.

<PAGE>

                             COLONIAL HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

1.     DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

Long-Lived  Assets

     The  carrying  values  of  long-lived  assets,  principally  identifiable
intangibles,  property,  plant  and  equipment,  are  reviewed  for  potential
impairment  when  events  or changes in circumstances indicate that the carrying
amount  of  such  assets  may  not  be  recoverable,  as determined based on the
undiscounted  cash  flows  over  the  remaining  amortization  periods.  In  the
evidence  of  impairment,  the  carrying  value  of  the related assets would be
reduced  by  the  estimated  shortfall  of  discounted  cash  flows.

Fair  Value  of  Financial  Instruments

     The  following  methods and assumptions are used to estimate the fair value
of  each  class  of financial instruments for which it is practical to estimate.

     Cash and Cash Equivalents - The carrying amount approximates the fair value
due  to  the  short  maturity  of  the  cash  equivalents.

     Long-Term  Debt  and  Capital  Lease  Obligations  -  The fair value of the
Company's long-term debt and capital lease obligations is estimated based on the
quoted  market  prices  for  the  same or similar issues or on the current rates
offered  to the Company for debt of the same remaining maturities.  The carrying
amount  approximates  fair  value since the Company's interest rates approximate
current  interest  rates.

Reclassifications

     Certain  reclassifications  have  been  made  in the prior years' financial
statements  in  order  to  conform  to  the  December  31,  2000  presentation.

Concentration  of  Credit  Risk

     Financial  instruments which potentially subject the Company to credit risk
consist  of  cash  equivalents,  including  horsemen's  deposits,  and  accounts
receivable.  The  Company's  policy is to limit the amount of credit exposure to
any  one  financial  institution  and  place  funds  with financial institutions
evaluated  as  being  creditworthy.  At  December  31, 2000 the Company had cash
deposits  which  exceeded  federally insured limits by approximately $1,244,000.

<PAGE>

                             COLONIAL HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

1.     DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

New  Accounting  Standards

     In  June  1998,  the  Financial  Accounting Standards Board ("FASB") issued
Statement  of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments"  ("SFAS  133").  SFAS  133,  as  amended  by  SFAS  137 and 138, is
effective for all fiscal quarters of fiscal years beginning after June 15, 2000.
SFAS  133  establishes  accounting  and  reporting  standards  for  derivative
instruments  and  for  hedging  activities.  SFAS  133  requires  that an entity
recognize  all  derivatives  as  either  assets or liabilities and measure those
instruments  at  fair  market  value.  Presently,  the  Company  does  not  use
derivative  instruments  either  in  hedging  activities  or  as  investments.
Accordingly, the adoption of SFAS 133, as amended, did not have an impact on the
Company's  financial  position  or  results  of  operations.

     The  Securities and Exchange Commission ("SEC") has issued Staff Accounting
Bulletin  No.  101,  "Revenue  Recognition in Financial Statements" ("SAB 101").
SAB  101  is  effective  in  the  fourth quarter of fiscal years beginning after
December  15, 1999.  SAB 101 summarizes appropriate criteria to be considered in
determining recognition of revenue.  Adoption of SAB 101 did not have a material
impact  on  the  Company's  financial  position  or  results  of  operations.

     In March 2000, the FASB issued interpretation No. 44 ("FIN 44"), Accounting
For Certain Transactions Involving Stock Compensation,  an Interpretation of APB
Opinion No. 25.  FIN 44 clarifies the application of applying APB No. 25 for (a)
the definition of employee for purposes of applying APB 25, (b) the criteria for
determining  whether  a  plan  qualifies  as  a  noncompensatory  plan,  (c) the
accounting  consequences  of  various  modifications to a previously fixed stock
option  or  award  and  (d) the accounting for an exchange of stock compensation
awards  in  a  business  combination.  FIN 44 became effective July 2, 2000, but
certain  conclusions  cover specific events that occur after either December 15,
1998  or  January  12,  2000.

Earnings  (Loss)  Per  Share

     Basic earnings (loss) per share is computed by dividing income available to
common  shareholders by the weighted average number of common shares outstanding
for  the  period.  Diluted  earnings  per  share reflects the potential dilutive
effect  of  securities  (which  can  consist of stock options and warrants) that
could share in earnings of an entity.  The Company had no securities which had a
dilutive  effect  on  earnings per share for years ended December 31, 2000, 1999
and  1998.

2.     MANAGEMENT  AND  CONSULTING  AGREEMENT

     The  Company  entered  into  a  Management  and  Consulting  Agreement (the
"Agreement")  with  Maryland-Virginia  Racing Circuit, Inc., an affiliate of the
Maryland  Jockey  Club  ("MJC"), to provide experienced management for the Track
and  Racing  Centers  and  to  create  a  Virginia-Maryland  thoroughbred racing
circuit.  Under  the  Agreement,  Maryland  Jockey  Club  agreed to suspend live
racing  at  their  racetracks,  Laurel  Park and Pimlico Race Course, during the
Company's  live  thoroughbred  meets.  Parties  to  the Agreement also agreed to
exchange  simulcast signals for their live meets at no cost to either party.  An
amendment  to  the  Agreement  (the  "Amended  Agreement")  was  signed  by both
<PAGE>

                             COLONIAL HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

2.     MANAGEMENT  AND  CONSULTING  AGREEMENT-  (CONTINUED)

parties  on  January  15,  1999,  which  restructured  among  other  terms MJC's
responsibilities  as manager and the management fee paid to MJC.  Effective July
1,  1999, MJC became responsible for the Company's Racing Centers as well as the
live  standardbred  and  thoroughbred  meets.  MJC  no  longer is reimbursed for
expenses  incurred  while  acting  as  manager  of  these operations.  Under the
Amended  Agreement,  the management fees were reduced from 2% of amounts wagered
at  the Company's facilities (other than on live standardbred meets conducted at
the  Track),  to  1.0%  of  the first $75 million of the aggregate gross amounts
wagered  in  any calendar year in the Commonwealth of Virginia excluding certain
conditions specified in the Amended Agreement ("Handle") and 2.0% of all amounts
wagered in excess of $75 million per calendar year.  Management fees relating to
the  Company's new Racing Centers will be either 2% or 3.25% of Handle depending
upon  their  location  and  the  amount  of  Handle.

     The  Agreement  will  remain  in  effect  for  as long as the Company owns,
controls  or  operates  the  Track,  not  to  exceed a term of 50 years.  At the
Company's  option,  the  Company  may  terminate the agreement any time after 25
years  upon  payment  of a fee equal to 17 times the average management fee paid
during  the  three  years  immediately  preceding  such  termination.

     Management  fees  incurred in  2000,  1999 and 1998 were approximately $1.7
million, $1.7  million  and  $1.1  million,  respectively.

3.     LAND  CONVEYANCE

     Delmarva  Properties,  Inc.  and  Chesapeake  Forest  Products  Company
(collectively  "Delmarva")  and  the  Company entered into an agreement in which
Delmarva,  at  no  cost  to the Company, conveyed the land required to build the
racetrack  and  facilities in New Kent County.  The original agreement contained
certain  land  use  restrictions  and  a reconveyance provision.  On January 14,
1999,  Delmarva  and  the  Company  entered  into an agreement pursuant to which
Delmarva  agreed  to  relinquish  their  rights  to  require reconveyance of the
property  and to execute a deed of release to such effect.  Delmarva also agreed
to  the  following  additional  potential  uses  for the land and facilities: i)
performing arts center; ii) athletic training facility; or iii) hotel conference
center.  Additional  uses  for  the  facilities are allowed upon approval by all
parties.  As  of December 31, 1998, the $5.0 million estimated value of the land
was  recorded  by  the  Company  as  a  contribution  to  equity.

<PAGE>

4.     LONG-TERM  DEBT,  NOTES  PAYABLE-RELATED  PARTIES,  AND  CAPITAL  LEASES

     Long-Term  Debt,  Notes  Payable-Related  Parties,  and  Capital  Leases,
consisted  of  the  following:
<TABLE>
<CAPTION>
                                                                 December  31,   December  31,

                                                                     2000           1999
                                                                -------------   -------------
<S>                                                               <C>             <C>
Credit facility payable to CD Entertainment, Ltd., maturing
June 2005, with monthly interest payments at 9.96% and
principal payments of $1 million each due June 30, 2002,
2003 and 2004, with all unpaid principal and interest due
2005, collateralized by substantially all assets of
the Company                                                       $25,737,937    $        -

Note payable to Maryland Jockey Club, maturing December
2005, bearing interest at a rate of 7.75% payable quarterly for
the first two years and equal installments of interest and
principal to be paid quarterly over the remaining five year
term of the note, beginning in the first quarter of 2001            1,450,000     1,450,000

Note payable to Maryland Jockey Club, bearing interest at
the prime rate (9.5% at December 31, 2000), payable in two
equal installments during the years 2000 and 2001                     300,308       600,000

Note payable to a bank, maturing October 2001, bearing
interest at prime plus 1.0% (10.5% at December 31, 2000),
with monthly principal payment of $15,000, collateralized
by certain fixed assets                                               300,000       480,000

Notes payable to an insurance company, maturing January 2001,
and April 2001, bearing interest at 8.70% and 7.52%,
respectively                                                           45,398             -

Note payable to a bank maturing June 2000, bearing
interest at a variable rate, collateralized by
substantially all assets, except the Racing Centers,
of the Company and guaranteed by certain
shareholders and related parties                                            -    10,000,000

Note payable under the revolving credit facility with a bank,
bearing interest at a variable rate, due June 30, 2000,
collateralized by substantially all assets,
except the Racing Centers, of the Company and
guaranteed by certain shareholders and related parties                      -     5,000,000
<PAGE>

Convertible subordinated note payable to CD Entertainment,
Ltd., maturing September 2000, with interest payable quarterly
at a rate of 7.25%, collateralized by a second deed of
trust on the racetrack facility                                             -     5,500,000

Convertible subordinated note payable to CD Entertainment,
Ltd., maturing August 2000, with an interest rate of 8.5%,
collateralized by the Hampton Racing Center                                 -     1,000,000

Note payable to Norglass, Inc. maturing September 24, 2000,
monthly interest payment at a rate of 6% until maturity                     -     1,850,000

Note payable to CD Entertainment, Ltd., bearing interest
at the prime rate, payable in two equal installments during
the years 2000 and 2001                                                     -       900,000

Note payable to CD Entertainment, Ltd., maturing August 2001,
with monthly interest payment at the Lender's cost of funds
plus one-half percent                                                       -       300,000

Note payable to CD Entertainment, Ltd., maturing September
2001, with monthly interest payment at the Lender's cost of
funds plus one-half percent                                                 -       475,000

Installment loans and capitalized leases collateralized by
certain vehicles, machinery and equipment, maturing at
various dates through September 2000, at interest rates
ranging from 8.125% to 10.5%                                                -        51,543

Note payable to Ryan Incorporated Central, bearing monthly
interest at 10%, payable in six equal monthly payments
commencing January 1, 2000                                                  -       142,735
                                                                  -----------   -----------
                                                                   27,833,643    27,749,278
Less current maturities                                               935,706    15,974,278
Current maturities - related parties                                        -     8,800,000
                                                                  -----------   -----------
                                                                   26,897,937     2,975,000
Less long-term debt - related parties                              25,737,937     1,225,000
                                                                  -----------   -----------
Long-term debt, including capital lease obligations               $ 1,160,000   $ 1,750,000
                                                                  ===========   ===========
</TABLE>
<PAGE>

                             COLONIAL HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

4.     LONG-TERM  DEBT,  NOTES  PAYABLE-RELATED  PARTIES,  AND  CAPITAL LEASES -
(CONTINUED)

     In August 2000, the Company entered into an agreement with CD Entertainment
Ltd.  ("CD Entertainment"), an affiliate of the Chairman and CEO of the Company,
to  refinance  the  $15  million in loans from PNC Bank ("PNC") that came due on
June  30,  2000.  The refinanced former PNC debt and the Company's existing debt
to  related parties was consolidated into a $25.7 million credit facility with a
term  of  five  years and an interest rate of LIBOR on the date funds are drawn,
plus  3%.  The Company drew on the credit facility's available balance to payoff
the  $1.85  million  Norglass,  Inc.  debt.  The  credit  facility's  remaining
available balance of approximately $.7 million was drawn in October 2000 to meet
short-term working capital obligations.  Under the terms of the Credit facility,
principal  payments  of  $1 million each are due on June 30, 2002, 2003 and 2004
with  the  balance due on June 30, 2005.  In addition, the Company has agreed to
make  an  additional annual principal payment commencing in 2002 contingent upon
the Company's annual cash flow.  The Company's racetrack property and the Racing
Center  located  in Hampton serve as collateral for the loan.  Additionally, the
Company has pledged its limited partnership interest in Colonial Downs, L.P. and
its  shares  of  Stansley  Racing  Corp.,  both of which are subsidiaries of the
Company,  to  CD  Entertainment.  This  collateral  package is identical to that
provided  to  PNC for the PNC Credit Facility with the additional deeds of trust
on  the  Racing  Centers.  The maturities of long-term debt reflect the terms of
the  new  agreement  with  CD  Entertainment.

    Scheduled maturities of notes payable and capital lease obligations are as
follows:
<TABLE>
<CAPTION>
<S>                <C>
     2001         $   935,706
     2002           1,290,000
     2003           1,290,000
     2004           1,290,000
     2005          23,027,937
                  -----------
                   27,833,643
                  ===========
</TABLE>

5.     INCOME  TAXES

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

<TABLE>
<CAPTION>
                   (In  Thousands)
             Years  Ended  December  31,
                 2000    1999   1998
               -----------------------
<S>        <C>       <C>    <C>     <C>
Current:
  Federal         $-     $-     $  -
  State            -      -        -
               -----------------------
                   -      -        -
Deferred:
  Federal          -      -      (57)
  State            -      -      (27)
               -----------------------
                   -      -      (84)
               -----------------------
Total             $-     $-     $(84)
               =======================
</TABLE>
<PAGE>

                             COLONIAL HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

5.     INCOME  TAXES  -  (CONTINUED)

     Deferred  income  tax  assets  (liabilities)  consist  of  the  following:

<TABLE>
<CAPTION>
                                         (In  Thousands)
                                           December  31,
                                     2000      1999      1998
                                   ----------------------------
<S>               <C>              <C>       <C>       <C>
Assets
  Net operating loss               $ 5,131   $ 3,795   $ 2,828
Liabilities
  Depreciation and amortization     (1,374)     (848)     (276)
                                   --------  --------  --------
Net deferred tax asset               3,757     2,947     2,552
Valuation allowance                 (3,757)   (2,947)   (2,552)
                                   --------  --------  --------
Deferred tax asset                 $     -    $    -    $    -
                                   ========  ========  ========

</TABLE>
     Income  tax expense (benefit) as reported differs from the amounts computed
by  applying the statutory federal income tax rate to pre-tax income as follows:
<TABLE>
<CAPTION>

                                                    Year  Ended  December  31,
                                                    2000      1999      1998
                                                   ---------------------------
<S>           <C>                                  <C>       <C>        <C>
Income taxes at statutory rate                     $(975)    $(386)   $(1,798)
Increases (decreases) resulting from state taxes,
  net of federal income tax benefit                 (113)      (45)      (209)
Other                                                278        36          -
Valuation allowance                                  810       395      1,923
                                                   ------    ------   --------
                                                   $   -     $   -    $   (84)
                                                   ======    ======   ========
</TABLE>

     At  December  31, 2000, the Company has net operating loss carryforwards of
approximately  $13.5  million  for income tax purposes that expire in years 2012
through  2020.  A valuation allowance has been recognized to reduce the deferred
tax  assets  by  the  entire  amount.

6.     EMPLOYEE  BENEFIT  PLANS

     In  June 1998, the Company implemented a 401(k) Plan in which all full time
and  part  time  employees  are  eligible  to  participate  after  six months of
employment.  Employees  may  elect  to  make  pre-tax contributions up to 15% of
their  annual  salary  or  the applicable statutory maximum limits to the 401(k)
Plan.  The  Company  makes  discretionary  matching  contributions  (subject  to
statutory  limits)  in  an amount equal to 20% of the first 6% of the employee's
contribution.  Company  contributions  are  fully  vested  after  three years of
employment.

     The  Company's  contributions to the 401(k) Plan were approximately $9,100,
$10,400  and  $2,400  for  2000,  1999  and  1998,  respectively.

<PAGE>
                             COLONIAL HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

7.     RELATED  PARTY  TRANSACTIONS

     Upon  consummation  of  the  Initial Public Offering, ("IPO"), in 1997, the
Company  entered  into a five year consulting agreement at $75,000 per year with
the  Vice  Chairman of the Board of Directors. Total expense under the agreement
was  $75,000  for  each  of  the  years  ended December 31, 2000, 1999 and 1998.

     Virginia  Concessions,  L.L.C., ("VAC"), an affiliate of a shareholder, has
an agreement with the Company to manage the food and beverage concessions at the
Company's  Racing  Centers.  The  amended  agreement  states  that  the  Company
receives  100% of VAC's net income or loss.  VAC had net income of approximately
$70,000  (unaudited) and $141,000 (unaudited) in 2000 and 1999, respectively and
incurred  a  loss  of  approximately  $7,000  (unaudited)  in  1998.  Accounts
receivable  from  VAC  related  to  these  agreements  amounted to approximately
$243,000,  $245,000  and  $181,000  at  December  31,  2000,  1999  and  1998,
respectively.

     The  Company  filed  an  arbitration  claim  against  Norglass, the general
contractor engaged to manage the construction of the Track and an affiliate of a
shareholder,  in  which  Norglass  counterclaimed.  In August 1999, the American
Arbitration  Association  rendered  a  decision favorable to Norglass.  Colonial
Downs,  L.P.  was  ordered  to  pay  Norglass $1,965,000 in the arbitration.  In
addition,  Colonial  Downs,  L.P.  was  ordered to pay interest of approximately
$285,000  and  arbitration  costs  of  approximately  $98,000.

     The  Company  settled  with  Norglass,  in  September  1999  for a total of
$2,325,000, of which $475,000 was paid in October 1999 and the remaining balance
of  $1,850,000 plus interest at 6% was paid in September 2000 in satisfaction of
a  note  accepted  by  Norglass.

     On October 1, 1997, the Company  entered  into  an  agreement  with Premier
Development  Co.  ("Premier"),  an  affiliate  of  a  shareholder, to pay annual
consulting  fees  in  the  amount  of  $226,000 through September 30, 1999.  The
Company  paid  $225,000  and  $226,000  under  the agreement for the years ended
December  31,  1999  and 1998, respectively.  The provisions under the agreement
continued  until  December  31,  1999  on  a month-to-month basis.  No fees were
incurred  during  the  year  ended  December  31,  2000.

     Pursuant  to  an  agreement  to  provide  credit  support  to  the Company,
Diversified  Opportunities  Group  Ltd.  ("Diversified"),  an  affiliate  of  a
shareholder,  will receive  an  annual  fee  equal  to  3%  of the amount of any
letters of credit or guarantees provided to the Company (subject, in the case of
a  letter  of  credit,  to  a  minimum  annual fee of $50,000).  The 1998 fee of
$450,000 is not payable until such time that the Company has successfully opened
two satellite wagering  facilities  in  Northern  Virginia.  If  such  events do
not occur by January 1,  2007,  the  fee  will  be  waived  in  its  entirety.
Costs incurred under this agreement were $450,000 in 1999 and $300,000  in 2000.
This  agreement  was  terminated  in  connection  with  the  refinancing  of the
Company's long term debt in August 2000.

     In August 2000 the Company entered into an agreement with CD Entertainment,
Ltd.  ("CD  Entertainment"),  an  affiliate  of  the  Chairman  and  CEO  of the
Corporation,  to  refinance the $15 million in loans from PNC Bank that came due
on  June  30,  2000.  The  refinanced former PNC debt and the Company's existing
debt  to  related  parties was consolidated into a $25.7 million credit facility
with  a

<PAGE>

                             COLONIAL HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

7.     RELATED  PARTY  TRANSACTIONS  -  (CONTINUED)

term  of  five  (5)  years  and  an interest rate of LIBOR on the date funds are
drawn,  plus  3%.  Under the terms of the Credit facility, principal payments of
$1 million each are due on June 30, 2002, 2003 and 2004, with the balance due on
June 30, 2005.  In addition, the Company has agreed to make an additional annual
principal  payment  commencing in 2002 contingent upon the Company's annual cash
flow.  The Company's racetrack property and the Racing Center located in Hampton
serve  as  collateral  for  the loan.  Additionally, the Company has pledged its
limited  partnership interest in Colonial Downs, L.P. and its shares of Stansley
Racing  Corp.,  both  of  which  are  subsidiaries  of  the  Company,  to  CD
Entertainment.  This collateral package is identical to that provided to PNC for
the  PNC  Credit  Facility  with  the  additional  deeds  of trust on the Racing
Centers.

8.     COMMITMENTS  AND  CONTINGENCIES

     The  Company has entered into an agreement with a totalisator company which
provides  wagering  services and designs, programs, and manufactures totalisator
systems for use in wagering applications. The basic terms of the agreement state
that  the  totalisator company shall provide totalisator services to the Company
for  all  wagering  held at the Company's facilities through 2001.  In addition,
the Company agreed to use certain equipment provided by the totalisator company.

     The  Company  has  entered  into  agreements  with a company which provides
broadcasting  and  simulcasting equipment and services.  These agreements expire
at  various  times  through  2002.  Total  expense incurred for totalisator, and
broadcasting and simulcasting equipment was approximately $1,755,000, $1,604,000
and  $1,821,000  for  the  years  ended  December  31,  2000,  1999  and  1998,
respectively.

     The Company leases automobiles, building space, and certain equipment under
operating  leases  expiring  at various dates.  Total rental expense under these
non-cancelable  leases was approximately $243,200, $230,000 and $207,000 for the
years  ended  December  31,  2000,  1999  and  1998,  respectively.

     The  following  are  the  future  estimated  minimum commitment relating to
non-cancelable  operating  agreements  and  leases:

<TABLE>
<CAPTION>
                          Broadcasting
                          Simulcasting
                               and
Year ended December 31,    Totalisator     Other         Total
-----------------------   ------------   ---------    ----------
<S>            <C>           <C>         <C>         <C>
     2001                   $1,240,000    $185,000    $1,425,000
     2002                      689,000     179,000       868,000
     2003                            -     155,000       155,000
     2004                            -     112,000       112,000
     2005                            -      57,000        57,000
                          ------------  ----------    ----------
                          $  1,929,000  $  688,000    $2,617,000
                          ============  ==========    ==========
</TABLE>
<PAGE>

                             COLONIAL HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

8.     COMMITMENTS  AND  CONTINGENCIES  -  (CONTINUED)

     In  2000,  the  Company  entered  into an agreement to manage truckstops in
Louisiana  owned  by  an  affiliate of the Company's principal shareholder.  The
agreement  may be terminated on 60 days written notice from the affiliate of the
principal  shareholder.

     Under the terms of a $700,000 Community Development Block Grant received in
1996  from  New Kent County, the Company must take affirmative steps to employ a
minimum  number of low and moderate income persons based on HUD Section 8 Income
Limits.  If  a  good  faith  effort has not been made to honor its commitment to
take such affirmative steps, the Company may repay all or a portion of any local
or  grant  funds  already  expended  to  the locality.  In 2001, the Company was
deemed  to  have  complied  with  the  terms  of  this  agreement.

     In  connection  with  the  Norglass dispute, two subcontractors of Norglass
have  filed  mechanics  liens  against  the  Track  seeking payments aggregating
approximately  $178,000.  The  Company  is contesting these claims.  At December
31,  2000,  approximately  $60,000 has been accrued related to these claims.  An
agreement  was  reached  to settle these claims in March 2001 for not materially
more  than  previously  accrued.

9.     HORSEMEN'S  AGREEMENT

     Purse  agreements are negotiated with the respective horsemen's groups, the
Virginia  Horsemen's  Benevolent  and  Protective  Association  ("VaHBPA")  for
thoroughbred  and  the  Virginia  Harness  Horse  Association  ("VHHA")  for
standardbred.

     The  Corporation entered into a new agreement with the VHHA as of August 1,
2000 relating to standardbred racing at the Racetrack and simulcast standardbred
racing  at  the  Corporation's  satellite  racing  facilities.  Pursuant  to the
agreement,  and  in  compliance with a law passed during the 2000 session of the
Virginia  General Assembly, the Corporation contributes five percent (5%) of the
first  $75 million of simulcast Handle, six percent (6%) of the next $75 million
of  simulcast  Handle,  and  seven  percent (7%) of all Handle in excess of $150
million to the purse account of the VHHA.  Simulcast standardbred Handle has not
exceeded  $75  million  in  the  four-year  operation  of the satellite wagering
facilities.  The  agreement  with  the  VHHA  automatically  renews year to year
unless  notice  is  given prior to November 1 of a party's election not to renew
the agreement.  In accordance with the Virginia Racing Act, the Company deposits
approximately  8.5%  of  the Handle generated by live standardbred racing at the
Track.  Standardbred  purse  expense  for  2000, 1999 and 1998 was approximately
$1.6  million,  $.9  million  and  $1.6  million,  respectively.

     The  Company entered into a three year agreement with the VaHBPA, effective
January  1,  1999, that set a minimum payment of $3.125 million for 1999 purses,
with  25 days of live racing with average daily purses of no less than $125,000.
Of  the total $3.125 million guaranteed payments, $1.5 million was considered to
be  an  advance of purse money due in years 2000 and 2001.  In 2000, the Company
paid  5  1/4%  of  the  Handle generated on simulcast thoroughbred racing to the
thoroughbred  purse  account  and  will continue to do so in 2001.  In 2000, the
VaHBPA repaid $750,000 of the advance plus interest thereon back to the Company,
effectively  reducing  the  Company's  2000  purse  expense.

<PAGE>
                             COLONIAL HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

9.     HORSEMEN'S  AGREEMENT  -  (CONTINUED)

     In  addition,  in accordance with the Virginia Racing Act, the Company must
continue  to  deposit  approximately  8.5%  of  the  Handle  generated  by  live
thoroughbred  racing  conducted  at  the  Track.  Thoroughbred purse expense for
2000,  1999  and  1998  was  approximately  $4.2  million, $2.6 million and $4.6
million,  respectively.  Prior  to  1999,  the  Company  contributed  to  the
thoroughbred  purse  accounts a certain percentage of all thoroughbred wagers at
its  Racing  Centers.

10.     STOCK  OPTIONS

     The  Company  implemented  a  stock option plan on March 31, 1997.  Options
granted  under  the  plan may be either Incentive Stock Options or Non-qualified
Stock  Options,  based on the discretion of the Board of Directors.  The maximum
aggregate  number  of  shares  which  may be optioned and sold under the plan is
395,000  shares  of  Class  A  Common  Stock.  The  exercise price per share for
Incentive  Options will be no less than the fair value of the stock at the grant
date.  The  exercise  of  Non-qualified  Options  is  determined by the Board of
Directors  on  the  grant date.  The term of the plan is ten years.  On June 14,
1999,  20,000  granted  and  outstanding  options  were  repriced from $10.45 to
$1.7875  per  share.  On  December  15,  1998,  195,000  granted and outstanding
options  were  repriced  from $9.50 per share to $1.00 per share.  The following
tables  summarize  activity  of  the  Stock  Option  Plan  and the stock options
outstanding  at  December  31,  2000:
<PAGE>

<TABLE>
<CAPTION>
                             Weighted
                              Average
                             Exercise  Available      Options
                               Price   for Grant    Outstanding
                             --------  ---------    -----------
<S>                           <C>      <C>           <C>
Balance at December 31, 1997  $ 9.86    108,000       192,000
Granted                         1.00    (79,000)       79,000
Forfeited                       1.00     26,000       (26,000)
                             --------  ---------    -----------
Balance at December 31, 1998  $ 2.93     55,000       245,000
Granted                         1.50    (15,000)       15,000
Forfeited                       1.00     21,200       (21,200)
Shares added to plan               -     95,000             -
                             --------   --------    -----------
Balance at December 31, 1999  $ 2.28    156,200       238,800
Granted                         1.06     (2,500)        2,500
Forfeited                       1.00      3,200        (3,200)
                             --------   --------     ----------
Balance at December 31, 2000  $ 2.29    156,900       238,100
                             ========   ========     ==========
</TABLE>

<TABLE>
<CAPTION>
                                  Options  Outstanding    Options  Exercisable
                            --------------------------------------------------
                                       Weighted   Weighted          Weighted
                                        Average    Average           Average
                                       Remaining   Exercise          Exercise
                             Number   Contractual Price Per  Number  Price Per
Range of Exercise Prices   of Shares  Life (years)  Share   of Shares  Share
                            --------  -----------  --------  -------- ------
<S>                        <C>        <C>           <C>     <C>        <C>
1.00 - 1.79                 208,100       6.99     $ 1.11    122,300  $ 1.10
10.45                        30,000       6.26      10.45     30,000   10.45
                            --------  -----------  --------  -------- ------
                            238,100       6.97     $ 2.29    152,300  $ 2.94
</TABLE>
<PAGE>

                             COLONIAL HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

10.     STOCK  OPTIONS  -  (CONTINUED)

     In  October  1995, the Financial Accounting Standards Board ("FASB") issued
Statement  of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation  ("SFAS  123").  SFAS  123  establishes  alternative  methods  of
accounting  and  disclosure  for employee stock-based compensation arrangements.
The  Company  has  elected  to  use  the intrinsic value method of accounting as
prescribed  by  Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued  to  Employees, and related Interpretations, for stock options granted to
the  Company's  employees.  This  method  does  not result in the recognition of
compensation  expense  when  employee  stock options are granted if the exercise
price  of the option equals or exceeds the fair market value of the stock at the
date  of  grant.

     If  the  accounting  provisions of SFAS 123 had been adopted, the effect on
2000,  1999  and  1998 loss would have been as follows (In Thousands, Except Per
Share  Data):

<TABLE>
<CAPTION>
                                     2000      1999      1998
                                   --------  --------  --------
<S>                                <C>       <C>       <C>       <C>
Net loss:
  Reported                         $(2,869)  $(1,139)  $(5,288)
  Proforma                          (2,871)   (1,148)   (5,299)
Basic and diluted loss per share:
  Reported                         $ (0.39)  $ (0.16)  $ (0.73)
  Proforma                           (0.39)    (0.16)    (0.73)
</TABLE>

     For  purposes  of  computing the proforma amounts indicated above, the fair
value  of  each option on the date of grant is estimated using the Black-Scholes
option pricing model with the following assumptions for the years ended December
31, 2000, 1999 and 1998, respectively: no dividend yield, expected volatility of
70%,  50%  and  50%,  risk-free  interest  rate  of  6.62%, 6.08% and 5.04%, and
expected  lives of seven, two to ten, and three to ten years.  Substantially all
options  become  vested  and  exercisable  evenly  over a five-year period.  The
weighted  average  fair value of options granted during the years ended December
31,  2000,  1999  and  1998  are  $.76, $1.38 and $1.47 per share, respectively.

11.     QUARTERLY  FINANCIAL  DATA  (UNAUDITED)

     Condensed  quarterly  consolidated financial data, in thousands (except per
share  data),  is  shown  as  follows:

2000  quarterly  information:
<TABLE>
<CAPTION>
                         1st Quarter    2nd Quarter   3rd Quarter  4th Quarter
<S>                       <C>             <C>            <C>          <C>
     Net revenue           $6,900         $6,975         $7,656      $ 7,671
     Gross profit           1,727          1,560          1,425          787
     Net loss                (186)          (328)          (832)      (1,523)
     Loss per share         (0.03)         (0.05)         (0.11)       (0.20)
</TABLE>

1999  quarterly  information:
<TABLE>
<CAPTION>
                        1st Quarter     2nd Quarter   3rd Quarter  4th Quarter
<S>                     <C>            <C>              <C>            <C>
     Net revenue           $7,024        $7,233         $7,781       $7,313
     Gross profit           2,680         1,712          1,852        2,125
     Net loss                 515        (1,031)          (647)          24
     Loss per share          0.07         (0.14)         (0.09)           -
</TABLE>
<PAGE>

12.     SUBSEQUENT  EVENTS

     On  March  1,  2001,  the  Company  announced  that  its Board of Directors
received an offer from Jeffrey P. Jacobs, Chairman of the Board, Chief Executive
Officer,  and  the  Company's largest shareholder, to acquire the Company.  Upon
receipt  of  the  offer,  the Company formed a Special Committee to evaluate the
proposal.

     Mr. Jacobs indirectly owns approximately 43.5% of the stock of the Company.
He  proposed  a  transaction  to purchase all of the remaining shares for a cash
price  of  $1.00  per  share.  U.S.  Bancorp  Libra,  a division of U.S. Bancorp
Investments,  Inc.,  is  acting as advisor to Mr. Jacobs.  The Special Committee
intends to employ independent legal counsel and a financial advisor to assist it
in  analyzing  the  offer  and  negotiating  with  Mr.  Jacobs.

     Consummation of the transaction is subject to various conditions, including
the  negotiation  and  execution  of  definitive  agreements,  approval  by  the
Company's  Board  of  Directors  and  shareholders,  the  obtaining  of  various
regulatory  approvals, and Mr. Jacobs' ability to obtain financing necessary for
the  transaction.  If  a  transaction  with Mr. Jacobs occurs, it is anticipated
that  it  would  close  in  mid  to  late  summer  of  2001.

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

     None.

<PAGE>

                                    PART III

ITEM  10.     DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  THE  REGISTRANT

<TABLE>
<CAPTION>

Name of Director             Age     Position with the Company
----------------            ----     --------------------------
<S>                          <C>     <C>
Arnold W. Stansley           68      Mr. Stansley is an owner and has been an executive
                                     officer of Raceway Park, a standardbred racetrack
                                     Toledo, Ohio, for the last ten years.  From  1993
                                     to  1997,  he  served  as  President  of Stansley
                                     Management Corp., Colonial Downs, L.P.'s managing
                                     general partner prior to the reorganization of the
                                     Company in  connection  with  its  initial  public
                                     offering of stock.  He also served as President of
                                     Stansley Racing prior to the reorganization,  from
                                     1994 to 1997.  Mr. Stansley has been a director of
                                     the Company since March 1997. Mr. Stansley's  term
                                     as a director of the Company expires in 2002.

Stephen Peskoff              58      Mr. Peskoff has acted as a consultant to Friedman,
                                     Billings, Ramsey & Co. for the last five years and
                                     served as President of Underhill Investment  Corp.
                                     since  1976.  Mr.  Peskoff  was  active  in  the
                                     thoroughbred  horse  industry  from  1978 to 1992
                                     during which time he won two Eclipse Awards (1983
                                     and 1991) and was the breeder of the 1991 horse of
                                     the  year  (Black Tie Affair).  Mr.  Peskoff was a
                                     director of the Company from March 1997 until his
                                     resignation  on  September  18,  2000.  He  was
                                     reappointed to the Board in March 2001.  His  term
                                     as director expires in 2002.
Patrick J. McKinley          46      Mr. McKinley has served as Executive Vice President
                                     of Jacobs  Investment,  Inc. for  more than twenty
                                     years and is responsible  for  that  company's day-
                                     to-day operations.  Mr.  McKinley  has over twenty
                                     years' experience in restaurant operations and real
                                     estate development and management.  Mr. McKinley has
                                     been a director of the Company since March 1997.  Mr.
                                     McKinley's term as a director expires in 2001.
<PAGE>

Jeffrey P. Jacobs            47      Mr. Jacobs serves as Chairman of the Board and
                                     Chief Executive Officer of the Company.  From 1995 to
                                     1995 to the present, he has  served as  Chairman and
                                     Chief Executive Officer of Jacobs Entertainment Ltd.,
                                     a  company  based  in  Cleveland,  Ohio  that  has
                                     investments in other gaming companies and ventures,
                                     including Black Hawk Gaming and Development Company,
                                     Inc.  based  in  Black  Hawk,  Colorado.  From 1975
                                     to present he also has served as President and CEO
                                     of Jacobs Investments, Inc., a company engaged in the
                                     development, construction and operation of residential
                                     and commercial real estate and entertainment projects
                                     in Ohio.  Mr. Jacobs also served in the Ohio House of
                                     Representatives  from  1982  until  1986.  Mr. Jacobs'
                                     term as a director of the Company expires in 2003.
Robert H. Hughes             60      Mr. Hughes served as Chief Financial Officer of
                                     Jacobs Investments, Inc. from 1993 until May 1999.  Mr.
                                     Hughes is a director of Black Hawk Gaming and Development
                                     Co., Inc.  Mr. Hughes was partner in charge of the audit
                                     department of the Cleveland office of the accounting firm
                                     of Deloitte & Touche LLP until his retirement in 1991.
                                     Mr. Hughes is a certified public accountant (retired).
                                     Mr. Hughes' term as a director of the Company expires
                                     in 2003.
David C. Grunenwald          47      Mr. Grunenwald has served as Vice President of
                                     Development and Leasing for Jacobs Investments, Inc.
                                     Inc. since 1988 and directs such company's development,
                                     construction, and leasing operations.  Prior to joining
                                     Jacobs Investments, Inc., Mr. Grunenwald worked for Weston,
                                     Inc. (1987-88) in syndication and property management and
                                     Touche Ross & Company from 1981 to 1987 as a tax consultant.
                                     Mr. Grunenwald's term as a director expires in 2003.
</TABLE>
<PAGE>

 The  executive  officers,  in  addition  to Mr. Jacobs, of the Corporation are:
<TABLE>
<CAPTION>
Name of Officer             Age      Position with the Company
---------------             ---      -------------------------
<S>                         <C>     <C>
Ian M. Stewart               46      Mr. Stewart has served as President since November
                                     1998 and Chief Financial Officer since June 1997.
                                     From January 1998 through November 1998, Mr. Stewart
                                     served as Chief Operating Officer of the Company.
                                     Prior to that time, Mr. Stewart was CFO for Barber
                                     Martin & Associates from March 1997 to June 1997.
                                     From October 1994 to March 1997, Mr. Stewart served
                                     as a consultant and a temporary CFO for several Virginia
                                     based businesses.  From December 1989 to September
                                     1994, Mr. Stewart was Vice President and CFO of Hat
                                     Brands,  Inc.  Mr.  Stewart  is  a  certified public
                                     accountant.

Jerry M. Monahan             61      Mr. Monahan has served as Vice President - Racing
                                     Operations since June 1997.  Prior to that time, Mr.
                                     Monahan was Vice President and General Manager of
                                     the Lexington Trots Breeder Association.  Prior to
                                     that, Mr.  Monahan  was Vice President and General
                                     Manager of Buffalo Raceway.
</TABLE>

There  are  no  family  relationships between any of the directors and executive
officers.  No  director  or  executive  officer has been subject to any material
legal  proceedings  in  the  past  five  years.

ITEM  10.     DIRECTORS  AND  EXECUTIVE OFFICERS OF THE REGISTRANT - (CONTINUED)

SECTION  16(A)     BENEFICIAL  OWNERSHIP  REPORTING  COMPLIANCE

     Section  16(a)  of  the  Securities  Exchange  Act  requires  the Company's
executive  officers  and  directors and persons who own more than ten percent of
the Company's Common Stock file reports of ownership and changes in ownership of
the  Company's  Common Stock and any other equity securities of the Company with
the  Securities  and  Exchange Commission (SEC) and The NASDAQ Small Cap Market.
Executive  officers,  directors  and  greater  than ten percent shareholders are
required  by  SEC  regulation  to furnish the Company with copies of all Section
16(a)  forms  they  file.

     Based  solely  on its review of the copies of Forms 3, 4 and 5 furnished to
the  Company,  or written representations from certain reporting persons that no
such  forms were required to be filed by such persons, the Company believes that
all its executive officers, directors and greater than 10% shareholders complied
with  all  filing  requirements  applicable  to  them  during  2000.

ITEM  11.     EXECUTIVE  COMPENSATION

     The  following  table  sets  forth  a  summary  of all compensation paid or
accrued  by the Company for services rendered for the last three fiscal years to
the Company's Chief Executive Officer and each executive officer whose aggregate
cash  compensation  in  2000  exceeded  $100,000:
<PAGE>

<TABLE>
<CAPTION>
                                   SUMMARY COMPENSATION TABLE

                             Annual  Compensation           Long  Term  Compensation
                                                               Awards      Payouts
                                                        Restricted Options/ LTIP       All
Name  and                                      Other       Stock     SARs  Payouts    Other
Principal Position  Year   Salary   Bonus   Compensation   Awards   (#)(3)   ($)  Compensation
------------------  ----  --------  ------  -------------  -------  -------  ---  -------------
<S>                 <C>   <C>       <C>     <C>            <C>      <C>      <C>  <C>
Jeffrey P. Jacobs   2000  $120,000    (1)       (2)          (1)      (1)    (1)        (1)
Chief Executive     1999   120,000    (1)       (2)          (1)      (1)    (1)        (1)
Officer             1998   120,000    (1)       (2)          (1)      (1)    (1)        (1)


Ian M. Stewart      2000  $150,000    (1)       (2)          (1)      (1)    (1)        (1)
President           1999   135,584    (1)       (2)          (1)    10,000   (1)        (1)
                    1998   120,000    (1)       (2)          (1)    10,000   (1)        (1)
</TABLE>

(1)     No  compensation  of  this  type  received.
(2)     Other  Annual  Compensation for executive officers is not reported as it
is  less  than  the  required reporting threshold of the Securities and Exchange
Commission.
(3)     Number  of  shares  of  Common  Stock  issuable upon exercise of options
granted  during  1998,  1999  and  2000.  The  Company  did  not grant any Stock
Appreciation  Rights  during  1998,  1999  and  2000.

ITEM  11.     EXECUTIVE  COMPENSATION  -  (CONTINUED)

     EMPLOYEE  GRANTS  OF  STOCK  OPTIONS  IN  2000

     None

                  NON-EMPLOYEE GRANTS OF STOCK OPTIONS IN 2000

EXERCISE  OF  STOCK  OPTIONS  IN  2000
<TABLE>
<CAPTION>
                                                                        Potential Realizable
              Number of    Percentage of Total                                  Value
             Securities         Options                                     at Assumed Annual
             Underlying      Granted to Non-     Exercise                 Rates of Stock Price
               Option          Employees          Prices     Expiration       Appreciation
Recipient      Granted        in Fiscal Year     Per Share      Date        Per Option Term1
-----------    -------        --------------     ---------   ----------     -----------------
<S>       <C>    <C>             <C>               <C>            <C>           <C>
                                                                                5%      10%
John Mooney     2,500              100%            $1.06       3/10/05          -     $1,550
</TABLE>

1  In accordance  with Securities and Exchange Commission rules, these columns
showed  gains  that  might  exist  for the respective options, assuming that the
market  price  of  Colonial  Holdings' common stock appreciates from the date of
grant  over  a  period  of  ten  years  at  the  annualized rates of 5% and 10%,
respectively.  If  the stock price does not increase above the exercise price at
the  time  of  exercise,  realized  value  to the individual employee from these
options  will  be  zero.
<PAGE>

OTHER  MATTERS

     The  Company  entered  into a two-year employment agreement with Mr. Ian M.
Stewart in June 1999. This agreement contains customary terms and conditions and
provides  minimum  base  salary  of  $150,000  each  year.
<PAGE>

ITEM  12.     SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL OWNERS AND MANAGEMENT

                          SECURITY OWNERSHIP OF CERTAIN
                        BENEFICIAL OWNERS AND MANAGEMENT

     The  following  table  sets  forth  certain  information  with  respect  to
beneficial  ownership of the Company's Common Stock as of March 10, 2001, by (i)
each  person  known to the Company to own beneficially more than five percent of
the  Company's  outstanding  Common  Stock,  (ii) each director, (iii) the chief
executive  officer  and each of the four other most highly compensated executive
officers  of  the Company whose salaries and bonuses were in excess of $100,000,
and  (iv) all of the executive officers and directors of the Company as a group.

<TABLE>
<CAPTION>
           AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP OF COMMON STOCK

                                                                                        Voting  Power
                                                    Percent  of  Common  Outstanding   as  Percent  of
                                                                                        Common  Stock
Name of Beneficial Owner    Class A       Class B      Class A    Class B    All        Outstanding(1)
-------------------------  ----------  -------------  ----------  --------  -----       --------------
<S>                 <C>         <C>            <C>         <C>       <C>    <C>             <C>
CD Entertainment Ltd. (2)
1231 Main Avenue
Cleveland, OH  44113       26,106,456(3)  2,010,000      86.4%      89.6%   86.6%            87.3%

Jeffrey P. Jacobs (4)      26,126,456     2,010,000      86.5%      89.6%   86.7%            87.3%

Arnold W. Stansley            478,879         ---         1.6%      ---      1.5%             1.2%

James M. Leadbetter
110 Arco Drive
Toledo, Ohio 43607            216,581       225,000        *        10.0%    1.4%             3.2%

Stephen Peskoff (5)            67,518         ---          *         ---      *                *

Ian M. Stewart (6)             30,000         ---          *         ---      *                *

David C. Grunenwald (6)        13,088         ---          *         ---      *                *

Robert H. Hughes (6)           13,088         ---          *         ---      *                *

Patrick J. McKinley (6)        13,150         ---          *         ---      *                *


All executive officers
and directors as a group
(8 persons) (7)            26,757,179     2,010,000      88.6%      89.6%    88.6%           88.8%
* Represents less than 1%
</TABLE>

(1)     Except  for  votes  on (i) a merger, (ii) a sale of substantially all of
the  assets  of the Company, (iii) an amendment to the Articles of Incorporation
or  Bylaws  of  the  Company,  in  which  case the voting power of the Company's
officers  and  directors  will  be  equal  to  their total respective percentage
ownership  of  Common  Stock  outstanding,  as  set  forth  herein.

(2)     CD  Entertainment  Ltd.  is beneficially owned by Jeffrey P. Jacobs, and
Richard  E.  Jacobs  Revocable  Trust.

<PAGE>

(3)     Includes  24,951,456  shares  of  Class A Common Stock issuable upon the
conversion  of  an  Amended  and  Restated Convertible Term Note and Credit Line
Convertible  Note  held by CD Entertainment.  The percentage calculation assumes
that  the  issued  and  outstanding  Class  A  Common  Stock  of  the Company is
29,976,695.  However,  the  aggregate  number  of shares of Class A Common Stock
which  the  Company currently has authority to issue is 12,000,000.  The Company
will  make  efforts  to  authorize additional shares for such conversion rights.

(4)     Represents  the  shares  owned  by CD Entertainment Ltd. and options for
20,000  shares  held  pursuant  to  the  Stock  Option  Plan.

(5)     Represents  2,518  shares  owned,  15,000  shares  owned  by  Underhill
Investment Corp., an affiliate of Mr. Peskoff, options for 50,000 shares granted
under  the  Stock  Option  Plan.

(6)     Includes  stock  options  granted.

(7)     Includes  (i)  all shares owned directly or indirectly, (ii) all options
held,  except  those  to  purchase shares issued to another officer or director.
The address of all directors and employees is c/o Colonial Downs, 10515 Colonial
Downs  Parkway,  New  Kent,  Virginia  23124.

ITEM  13.     CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

     Colonial  Gifts  &  Sportswear.  The  Corporation entered into an agreement
with  Colonial  Gifts & Sportswear, Inc., a Virginia corporation ("Sportswear"),
in  1997  for  the  sale  of  gifts and apparel.  Pursuant to the Agreement, the
Corporation  provides space at the Racetrack and Racing Centers to Sportswear in
exchange  for  a  royalty  based  on  Sportswear's  gross  sales.  Although  the
Corporation received less than $10,000 in 2000 under the agreement, the expected
value  of  the contract may be in excess of $60,000.  Sportswear is wholly owned
by  the  wife  and  daughter  of  Mr.  Arnold  Stansley,  a  director.

Virginia Concessions, L.L.C.  Virginia Concessions, L.L.C. has an agreement with
the  Corporation  to  provide food and beverage concessions at the Corporation's
Racing  Centers.  Under  the  agreement,  the Corporation is responsible for the
management  and  administration  of  Virginia  Concessions  in  exchange for all
earnings (or losses) from food and beverage sales.  Virginia Concessions, L.L.C.
is  beneficially  owned  by  Mr.  Jeffrey  P.  Jacobs,  Chairman and a director.

     CD  Entertainment  Ltd.  In  August  2000  the  Corporation entered into an
agreement  with  CD Entertainment Ltd. ("CD Entertainment"), an affiliate of the
Chairman  and CEO of the Corporation, to refinance the $15 million in loans from
PNC Bank that came due on June 30, 2000.  The refinanced former PNC debt and the
Corporation's  existing  debt  to  related parties was consolidated into a $25.7
million  credit  facility  with a term of five (5) years and an interest rate of
LIBOR  on  the  date  funds  are  drawn, plus 3%.  Under the terms of the Credit
facility,  principal payments of $1 million each are due on June 30, 2002, 2003,
and  2004,  with the balance due on June 30, 2005.  In addition, the Corporation
has  agreed  to  make  an additional annual principal payment commencing in 2002
contingent upon the Corporation's annual cash flow.  The Corporation's Racetrack
property  and  the  Racing Center located in Hampton serve as collateral for the
loan.  Additionally,  the  Corporation  has  pledged  its  limited  partnership
interest  in  Colonial Downs, L.P. and its shares of Stansley Racing Corp., both
of  which  are  subsidiaries  of  the  Corporation,  to  CD Entertainment.  This
collateral package is  identical  to  that  provided  to  PNC for the PNC Credit
Facility with the additional  deeds  of  trust  on  the  Racing  Centers.

<PAGE>

                                     PART IV

ITEM  14.     EXHIBITS  AND  REPORTS  ON  FORM  8-K

(a)     1.     Financial  Statements
               Included  in  Part  II  of  this  report:

    Report  of  Independent  Auditors

    Consolidated  Balance  Sheets  at  year  end  2000  and  1999

    Consolidated Statements of Operations for years 2000, 1999 and 1998

    Consolidated  Statements of Changes in Stockholder's Equity for years 2000,
     1999  and  1998

    Consolidated  Statements  of  Cash  Flows  for  years  2000,  1999 and 1998

    Notes  to  Consolidated  Financial  Statements

     2.     All  required  schedules  are  omitted  because  of  the  absence of
conditions  under which they are required or because the required information is
given  in  the  financial  statements  or  notes  thereto.

     3.     Exhibits
     2.1     Agreement  and  Plan  of  Reorganization  (1)
     3.1     Amended and Restated Articles of Incorporation of Colonial
             Downs  Holdings,  Inc.  (1)
     3.2     Amended and Restated By-laws of Colonial Downs Holdings, Inc.(1)
     4.1     Stock  Certificate  representing  Colonial  Downs  Holdings,  Inc.
             Common  Stock  (1)
    10.1     Management  and  Consulting  Agreement  (1)
    10.2     Amended  and  Restated  Performance  Guarantee  Agreement  (1)
    10.3     Form  of  Deed  for  Track  site  (1)
    10.4     Construction  Agreement  (1)
    10.5     Development  Agreement  (1)
    10.6     Hubbing  Agreement  (1)
    10.7     VHHA  Simulcast  Wagering  Agreement  (1)
    10.8     VaHBPA  Simulcast  Wagering  Agreement  (1)
    10.9     Form  of  Convertible  Subordinated  Note  (1)
    10.10    Forms  of  Employment  Agreements  (1)
    10.11    Form  of  Stansley  Racing  Agreement  (1)
    10.12    Amended and Restated Promissory Note to CD Entertainment Ltd. (1)
    10.13    Agreement  for  Interim  Financing  (1)
    10.14    Registration  Rights  Agreement  (1)
    10.15    Not  used  (1)

<PAGE>
ITEM  14.     EXHIBITS  AND  REPORTS  ON  FORM  8-K  -  (CONTINUED)

    10.16    Form  of  1997  Stock  Option  Plan  (1)
    10.17    Agreement  for  Provision  of  Credit  (1)
    10.18    Management  Agreement  between  Colonial  Downs,  L.P.  and
             Virginia  Concessions,     L.L.C.  (2)
    10.19    Construction  Loan Agreement between Colonial Downs, L.P. and PNC
             Bank,  N.A.  (2)
    10.20    Revolving  Line  of  Credit  Agreement  (2)
    10.21    Deed  of  Trust  Note  (2)
    10.22    Revolving  Line  of  Credit  Note  (2)
    10.23    Deed  of  Trust  and  Security  Agreement  (2)
    10.24    Assignment  of  Leases  and  Rents  (2)
    10.25    Agreement  of  Guaranty  and  Suretyship  (Completion)  between
             Stansley  Racing  Corp.  and  PNC  Bank,  N.A.  (2)
    10.26    Agreement  of  Guaranty  and  Suretyship  (Completion)  between
             Colonial  Downs, Holdings,  Inc.  and  PNC  Bank,  N.A.
    10.27    Agreement  of Guaranty and Suretyship (Payment), between Stansley
             Racing  Corp.  and  PNC  Bank,  N.A.  (2)
    10.28    Agreement  of Guaranty and Suretyship (Payment), between Colonial
             Downs  Holdings,  Inc.  and  PNC  Bank,  N.A.  (2)
    10.29    Promissory  Note  payable  to  Citizens  and  Farmers  Bank  (3)
    10.30    Business Loan Agreement between the Company, the Partnership, and
             Citizens  and  Farmers  Bank  (3)
    10.31    Commercial Security Agreement among the Company, the Partnership,
             and  Citizens  and  Farmers  Bank  (3)
    10.32    Subordinated  Agreement  (Lighting)  among  the  Company,  CD
             Entertainment,  the Partnership,  and  David  F.  Belkowitz
             and  James  W.  Theobold  (3)
    10.33    Employment  Agreement dated June 23, 1997 between the Company and
             Ian  M.  Stewart  (3)
    10.34    Souvenir  and Gift Concessions Agreement dated August 1, 1997, by
             and  between  the Partnership, and Stansley Racing Corp., and
             Colonial Gifts and Sportswear,  Inc.  (4)
    10.35    First  Amendment  to  Deed  of  Trust  Note and Construction Loan
             Agreement  dated  as of February 27, 1998, between Colonial Downs,
             L.P., and PNC Bank,  N.A.  (5)
    10.36    Convertible  Subordinated  Note,  dated  August  26,  1998 in the
             principal  amount  of  $1.0  million  issued  to  CD  Entertainment
             Ltd.  (6)
    10.37    Deed  of  Trust,  Assignment  of  Rents  and Leases, and Security
             Agreement  and Assignment  thereto  to  CD  Entertainment  Ltd. (6)
    10.38    Amended  and  Restated  Management  and  Consulting Agreement and
             Addendum  between  the Company and Maryland-Virginia Racing
             Circuit, Inc., dated January  15,  1999
    10.39    Agreement between Delmarva Properties, Inc. and the Company dated
             January  15,  1999
    10.40    Forbearance Agreement dated January 11, 1999 between the Company
             and  PNC  Bank,  N.A.
    10.41    Second  Amendment  to  Standardbred  Horsemen's  Agreement  (1)
    10.42    Thoroughbred  Horsemen's  Agreement  (8)
    10.43    Promissory  note  payable  to  Norglass, Inc. dated September 24,
             1999  (9)
<PAGE>

ITEM  14.     EXHIBITS  AND  REPORTS  ON  FORM  8-K  -  (CONTINUED)

    10.44    Promissory  note  payable  to  CD  Entertainment,  Ltd.,  dated
             September  30,  1999  (9)
    10.45    Promissory  note  payable to CD Entertainment, Ltd., dated August
             31,  1999  (9)
    10.46    Promissory  note  payable to CD Entertainment, Ltd., dated August
             15,  1999  (9)
    10.47    Employment  Agreement,  dated as of June 23, 1999, between Ian M.
             Stewart  and  the  Company
    10.48    Assignment,  dated  as  of  August  30,  2000,  between PNC Bank,
             National  Association,  and  CD  Entertainment,  Ltd.
    10.49    Amended  and  Restated Loan Agreement dated as of August 30, 2000
             between  Colonial  Downs,  L.P.,  the  Company,  and  CD
             Entertainment,  Ltd.
    10.50    Amended and Restated Convertible Term Note dated as of August 30,
             2000  between  PNC  Bank,  National  Association  and  Colonial
             Downs,  L.P.
    10.51    Credit  Line Convertible Note dated as of August 30, 2000 between
             the  Company  and  CD  Entertainment,  Ltd.
    10.52    Amendment  to  Second Deed of Trust dated August 30, 2000 between
             the  Company  and  CD  Entertainment,  Ltd.
    21.1     Subsidiaries  of  the  Registrant  (1)
    24.1     Power  of  Attorney  (1)

(1)     Incorporated by reference to  the  Exhibits filed with Colonial Downs
        Holdings,  Inc.'s Registration Statement on  Form  S-1  (Registration
        No. 333-18295).
(2)     Incorporated  by reference to the Exhibits filed with Colonial Downs
        Holdings,  Inc.'s10-Q,  dated  August  14,  1997.
(3)     Incorporated  by  reference  to  the  Exhibits filed with Colonial Downs
        Holdings,  Inc.'s  10-Q,  dated  September  14,  1997.
(4)     Incorporated  by  reference  to  the  Exhibits filed with Colonial Downs
        Holdings,  Inc.'s  10-K,  dated  March  30,  1998.
(5)     Incorporated  by  reference  to  the  Exhibits filed with Colonial Downs
        Holdings,  Inc.'s  10-Q,  dated  May  15,  1998.
(6)     Incorporated  by  reference  to  the  Exhibits filed with Colonial Downs
        Holdings,  Inc.'s  10-Q,  dated  November  16,  1997.
(7)     Incorporated  by  reference  to  the  Exhibits filed with Colonial Downs
        Holdings,  Inc.'s  10-Q,  dated  May  4,  1999.
(8)     Incorporated  by  reference  to  the  Exhibits filed with Colonial Downs
        Holdings,  Inc.'s  10-Q,  dated  August  16,  1999.
(9)     Incorporated  by  reference  to  the  Exhibits filed with Colonial Downs
        Holdings,  Inc.'s  10-Q,  dated  November  15,  1999.
(10)     Incorporated  by  reference  to  the Exhibits filed with Colonial Downs
        Holdings,  Inc.'s  10-Q,  dated  May  3,  2000.
(11)     Incorporated by reference to the Exhibits filed with Colonial Holdings,
        Inc.'s  10-Q,,  dated  August  14,  2000.
(12)     Incorporated by reference to the Exhibits filed with Colonial Holdings,
        Inc.'s  10-Q,  dated  November  14,  2000.

<PAGE>
ITEM  14.     EXHIBITS  AND  REPORTS  ON  FORM  8-K  -  (CONTINUED)

(b)     Reports  on  Form  8-K  - The Company filed a Current Report on Form 8-K
during  the three months ended December 31, 2000 relating to the transfer of the
listing  of  its  securities  from the NASDAQ Small Cap Market to the NASDAQ OTC
Bulletin Board.  The Company filed a Current Report on Form 8-K during the three
months ended June 30, 2000 relating to long-term refinancing of its current debt
maturities.  The  Company  filed  Current  Reports  on Form 8-K during the three
months ended September 30, 2000 relating to the resignation of a member from the
Board  of  Directors  and  announcing  a  proposed  management  contract with an
affiliate  of  the  Chairman  and  CEO.

<PAGE>
                                   SIGNATURES

Pursuant  to the requirements of Section 13 and 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.

                                          COLONIAL  HOLDINGS,  INC.

                                        By:  /s/     Ian  M.  Stewart
                                          ---------------------------
                                          Ian  M.  Stewart,  President
                                          and  Chief  Financial  Officer
                                          March  30,  2001


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


/s/     Jeffrey  P.  Jacobs                           /s/     Robert  H.  Hughes
---------------------------                           --------------------------
Jeffrey  P.  Jacobs,  Chief  Executive  Officer,      Robert  H.  Hughes,
Chairman  of  the  Board,  Director                   Director
March  30,  2001                                      March  30,  2001

/s/     Arnold  W.  Stansley                         /s/     David C. Grunenwald
----------------------------                         ---------------------------
Arnold  W.  Stansley,                                 David  C.  Grunenwald,
Director                                              Director
March  30,  2001                                      March  30,  2001

/s/     Stephen  D.  Peskoff                         /s/    Patrick J. McKinley
----------------------------                         ---------------------------
Stephen  D.  Peskoff,                                 Patrick  J.  McKinley,
Director                                              Director
March  30,  2001                                      March  30,  2001