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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                    FORM 10-K

(MARK ONE)

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

                  For the fiscal year ended December 31, 2000
                                       OR
[ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number 333-0214

                         HORSESHOE GAMING HOLDING CORP.
             (Exact name of registrant as specified in its charter)

        Delaware                                                88-0425131
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                              Identification No.)

                               2300 Empress Drive
                                Joliet, IL 60436
                    (Address of principal executive offices)

       Registrant's telephone number, including area code: (815) 773-0700

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

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

        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 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. [X]

        The aggregate market value of the equity of Horseshoe Gaming Holding
Corp. held by non-affiliates of Horseshoe Gaming Holding Corp. is inapplicable
as the equity of Horseshoe Gaming Holding Corp. is privately held.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None.

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                         HORSESHOE GAMING HOLDING CORP.

                       INDEX TO ANNUAL REPORT ON FORM 10-K

                   For the fiscal year ended December 31, 2000

<TABLE>
<CAPTION>
                                                                                      Page
                                                                                      ----
<S>         <C>                                                                       <C>
                                              PART I
Item 1.     Business                                                                    3
Item 2.     Properties                                                                 25
Item 3.     Legal Proceedings                                                          26
Item 4.     Submission of Matters to a Vote of Security Holders                        27

                                              PART II

Item 5.     Market for Registrant's Common Equity and Related Stockholder Matters      27
Item 6.     Selected Financial Data                                                    28
Item 7.     Management's Discussion and Analysis of Financial Condition and Results
            of Operations                                                              29
Item 7A     Quantitative and Qualitative Disclosures About Market Risk                 37
Item 8.     Financial Statements and Supplementary Data                                37
Item 9.     Changes In and Disagreements With Accountants on Accounting and
            Financial Disclosure                                                       37

                                             PART III

Item 10.    Directors and Executive Officers of the Registrant                         38
Item 11.    Executive Compensation                                                     39
Item 12.    Security Ownership of Certain Beneficial Owners and Management             43
Item 13.    Certain Relationships and Related Transactions                             45

                                              PART IV

Item 14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K           46

            Signatures                                                                 47
</TABLE>


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                                     PART I

ITEM 1. BUSINESS.

GENERAL

        Horseshoe Gaming Holding Corp (the "Company") is a leading
multi-jurisdictional gaming company which owns and operates, through its
wholly-owned subsidiaries, riverboat casinos under the "Horseshoe" and "Empress"
brands. These include the Horseshoe Bossier City Casino ("Horseshoe Bossier
City" or "Bossier") in Bossier City, Louisiana, which commenced operations on
July 9, 1994, the Horseshoe Tunica Casino ("Horseshoe Tunica" or "Tunica") which
commenced operations on February 13, 1995, the Empress Casino Hammond ("Empress
Hammond" or "Hammond") in Hammond, Indiana and the Empress Casino Joliet
("Empress Joliet" or "Joliet") in Joliet, Illinois. Hammond and Joliet were
acquired (the "Empress Merger") from Empress Entertainment, Inc. ("Empress") on
December 1, 1999. Joliet commenced operations on June 17, 1992 and Hammond
commenced operations on June 28, 1996. The principal executive offices of the
Company are currently located at 2300 Empress Drive, Joliet, IL 60436, telephone
(815) 773-0700.

        On April 15, 1999, the Company acquired over 90% of the aggregate
ownership of Horseshoe Gaming, LLC ("Horseshoe Gaming") from Horseshoe Gaming's
members in exchange for interests in the Company. The remaining ownership
interests of Horseshoe Gaming either were contributed to the Company in exchange
for interests in the Company or acquired by the Company or Horseshoe Gaming and
Horseshoe Gaming was subsequently dissolved.

        The Joliet casino gaming license was due to be renewed by the Illinois
Gaming Board ("IGB") in June 2000. On June 30, 2000, the IGB preliminarily
denied Joliet's application to renew its riverboat owner's license and
preliminarily found Jack Binion ("Binion"), the Company's Chairman of the Board
and CEO, unsuitable to be licensed as a key person. Joliet timely filed a
Verified Request for Hearing of the IGB's decision.

        Effective January 31, 2001, the IGB approved a settlement agreement
between the IGB, the Company, Joliet and Binion. Pursuant to the pertinent parts
of the settlement agreement: (a) the Company agreed to sell Joliet to a suitable
purchaser within the time frames established in the settlement agreement; (b)
Binion will withdraw his key person application; and (c) upon the closing of the
sale of Joliet, Joliet will withdraw its Verified Request for Hearing and, upon
acceptance by the IGB of the withdrawal, the previous denial of Joliet's renewal
application will be moot.

BOSSIER CITY OPERATIONS

MARKET

        The Bossier City/Shreveport market is the largest gaming market in the
State of Louisiana. While approximately 350,000 people are full-time residents
of Bossier City/Shreveport, approximately 16.5 million people reside within 250
miles of the Company's Bossier City casino (approximately four hours driving
distance). The Bossier City/Shreveport market attracts a significant amount of
its gaming clientele from the Dallas/Fort Worth area of Texas.


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<PAGE>   4

HORSESHOE BOSSIER CITY

        The Horseshoe Bossier City is located on approximately 30 acres along
the east side of the Red River, directly facing downtown Shreveport, Louisiana.
The casino is located on a riverboat, which has approximately 86,000 square feet
spread out over four-decks with approximately 30,000 square feet of gaming
space, including 1,550 gaming devices and 57 table games. The casino operation
is complemented by an approximately 62,000 square foot dockside pavilion, a 25
story hotel with 606 deluxe rooms, meeting facilities, a health club and other
luxury hotel amenities and a 1,750 car parking garage. The riverboat and
pavilion are joined via an enclosed, climate-controlled boarding ramp with
handicap access and escalators serving each of the gaming decks. In addition,
Horseshoe Bossier City features an entertainment facility that provides seating
for 1,300 guests.

COMPETITION

        The Horseshoe Bossier City competes directly with four other riverboat
casinos in Shreveport and Bossier City. These five riverboats together currently
comprise the Bossier City/Shreveport market. The State of Louisiana has granted
approval to applicants for 14 of the 15 legislatively authorized licenses, five
of which have been approved for the northern region of the State in Bossier
City/Shreveport. While the Louisiana Gaming Control Board accepted applications
for the fifteenth license in 1999, the Louisiana Gaming Control Board has not
granted the remaining fifteenth license. If this license is granted, it may be
located in the Bossier City/Shreveport market. The impact on operating margins
from the overall increase in supply to this market is uncertain. As only 15
Louisiana riverboats and one land-based casino in New Orleans have been
authorized by law, potential competition in Louisiana is presently limited. The
Bossier City/Shreveport casinos capture the Dallas/Ft. Worth market and share
the Houston area market with four existing riverboats in Lake Charles Louisiana,
a land-based casino owned by the Coushatta Indian Tribe located near Lake
Charles and two riverboats in Baton Rouge, Louisiana. If Texas or Arkansas were
to approve gaming, competition would increase, which could have a material
adverse effect on our operations.

TUNICA OPERATIONS

MARKET

        The Tunica County, Mississippi market is the largest gaming market in
the State of Mississippi and the closest legalized gaming jurisdiction to the
Memphis, Tennessee metropolitan area, which is only 30 miles away. Tunica County
benefits from its proximity to several major population centers and to the
popularity of the Memphis region as a vacation destination. Over 2.5 million
people live within 90 miles and over 10.7 million people live within 200 miles
of the Horseshoe Tunica. Within 500 miles of the Company's Tunica County casino
(approximately eight hours driving distance or approximately one-hour flight
time) the total population base increases to approximately 54.9 million.


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<PAGE>   5

HORSESHOE TUNICA

        The Horseshoe Tunica is located in Tunica County, Mississippi, at Casino
Center, an 80-acre three-casino complex. The casino operation consists of
approximately 360,000 square feet. The gaming area comprises approximately
65,000 square feet and contains 2,073 slot machines, 71 table games and 12 poker
tables. The casino facility includes three specialty restaurants, a 650 seat
buffet, a deli, bars, retail outlets, a 14-story hotel tower with 312 deluxe
rooms, a total of 507 rooms, a health club, meeting room facilities, an 1,100
space, four-level parking garage, and an entertainment facility that provides
seating for 1,175 guests.

COMPETITION

        The Horseshoe Tunica competes with nine other casinos in the competitive
Tunica County, Mississippi, market. Some of our competitors are presently
undergoing expansion and others may do so in the future, which may have a
material adverse effect on the operations of Horseshoe Tunica.

        Tennessee's legislature has recently approved a resolution allowing a
lottery referendum on the November 2002 ballot. The referendum if passed would
provide an exception to the Tennessee constitution thus allowing the legislature
to establish a state lottery during the 2003 legislative session. Such a lottery
could possibly affect local market conditions causing a material adverse effect
on the operations of Horseshoe Tunica.

        In November 1996, the Mississippi county closest to Memphis (DeSoto
County) voted against permitting legal gaming to be conducted aboard vessels
located in DeSoto County. Legislation passed in 1997 precludes DeSoto County
from holding a subsequent election on the issue until at least October 2004. If
gaming were approved in DeSoto County or in Arkansas or Tennessee, numerous
additional sites closer to Memphis would be available for gaming. Thus, while
Tunica County is currently the closest legalized gaming jurisdiction to the
Memphis metropolitan area, there is no assurance that this situation will not
change in the future. If DeSoto County, Arkansas or Tennessee were to approve
gaming, competition would increase, which could have a material adverse effect
on the operations of Horseshoe Tunica.

CHICAGO OPERATIONS

MARKET

        The Chicago market, which encompasses portions of both Illinois and
Indiana, consists of approximately 8.0 million people within a radius of 50
miles from downtown Chicago. The Illinois Riverboat Act authorizes ten owner's
licenses for riverboat gaming operations, all of which have been issued, and
four of which, including Empress Joliet, serve the Chicago metropolitan area.
Current Indiana gaming legislation authorizes a total of five licenses to
operate riverboat casinos in northern Indiana on Lake Michigan, all of which
have been issued to casinos that are currently operating, including Empress
Hammond.


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<PAGE>   6

EMPRESS HAMMOND AND EMPRESS JOLIET

        Empress Hammond, the closest casino to downtown Chicago, includes an
approximately 125,000 square foot pavilion. The real estate used by Empress
Hammond is leased from the City of Hammond and is subject to a 75-year lease.
The casino operation is located on a catamaran vessel and consists of
approximately 42,500 square feet of gaming space and contains 1,534 slot
machines and 57 table games. The pavilion features a steakhouse, buffet, deli, a
150-seat banquet room and two lounges. The facility also includes a 1,051 car
parking garage.

        Empress Joliet and the surrounding land based facilities are located on
approximately 330 acres along the Des Plaines River in Joliet, Illinois. The
casino is situated on two catamaran vessels and collectively consists of 36,000
square feet of gaming space containing 1,111 slot machines and 36 table games.
Empress Joliet includes an approximately 150,000 square foot pavilion, featuring
a lounge, steakhouse, cafe, buffet and a 400-seat banquet room. A three-story
hotel with 102 rooms and an 80-space recreational vehicle park support Empress
Joliet. Empress Joliet provides surface parking for 2,350 cars.

COMPETITION

        Empress Hammond and Empress Joliet primarily compete with seven casinos,
four of which are located on Lake Michigan in Indiana and three of which are
located in Illinois. In addition, in May 1999, the Illinois legislature enacted
amendments to the Illinois Riverboat Gambling Act, which allowed all riverboats
to become permanently moored on June 26, 1999, and could result in one of the
ten state-authorized licenses for Illinois being relocated to the Chicago area.
A nearby competitor in Joliet is currently constructing a Las Vegas style casino
on barges to be moored on the Des Plaines River and an additional 1,000 car
parking garage. It is expected that this construction will be completed in the
fourth quarter of 2001. Both the possibility of an additional license in the
Chicago market and competitors having barges could have a material adverse
effect on the operations of Empress Hammond and Empress Joliet.

        Outside of Illinois and Indiana, several other states have authorized
gaming activities and other states in the future may authorize such gaming
activities. To date, riverboat and/or dockside gaming has also been approved in
nearby states such as Iowa and Missouri. Moreover, three land-based casinos have
been authorized in Detroit, Michigan, two of which have commenced gaming
operations.

        Empress Hammond and Empress Joliet also compete, and expect to compete,
with various gaming operations on Native American land, including those located,
or to be located, in Michigan, Wisconsin and possibly northern Indiana. The
Pokagon Band of the Potawatomi Indians is planning to build a land-based casino
in New Buffalo, Michigan located in southwest Michigan, approximately ten
minutes from Michigan City, Indiana. In addition, the Saginaw Chippewa Tribe is
currently operating one of the largest Native American gaming complexes in the
United States in Mt. Pleasant, Michigan, approximately 250 miles northeast of
Hammond, Indiana. The opening of land based casinos, which generally have a
competitive advantage over riverboat casinos, in close proximity to Empress
Hammond and Empress Joliet, could have a material adverse effect on the
operations of both casinos. In addition, lower age limits at Native American
casinos may put Empress Hammond and Empress Joliet, each with a minimum age
requirement for admittance of 21, at a competitive disadvantage.


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GAMING REGULATORY MATTERS

        The Company is subject to state and Federal laws, which regulate
businesses generally and the gaming business specifically. Below is a brief
description of some of the more significant regulations, which govern the
Company and its operations. All laws and regulations which govern the Company
are subject to change and different interpretations. Changes in laws or their
interpretation may result in the imposition of more stringent, burdensome or
expensive requirements, or the outright prohibition of an activity.

LOUISIANA

        In July 1991, the Louisiana legislature adopted legislation permitting
certain types of gaming activity on certain rivers and waterways in Louisiana.
The legislation granted authority to supervise riverboat gaming activities to
the Louisiana Riverboat Gaming Commission and the Riverboat Gaming Enforcement
Division of the Louisiana State Police, or the Louisiana Enforcement Division.
The Louisiana Riverboat Gaming Commission was authorized to hear and determine
all appeals relative to the granting, suspension, revocation, condition or
renewal of all licenses, permits and applications. In addition, the Louisiana
Riverboat Gaming Commission was authorized to establish regulations concerning
authorized routes, duration of excursions, minimum levels of insurance,
construction of riverboats and periodic inspections. The Louisiana Enforcement
Division was authorized to investigate applicants and issue licenses,
investigate violations of the statute and conduct continuing reviews of gaming
activities. The Louisiana gaming law authorizes the issuance of up to 15
licenses to conduct gaming activities on a riverboat of new construction in
accordance with applicable law. However, no more than six licenses may be
granted to riverboats operating from any one parish.

        The state has granted approval to applicants for 14 of the 15
legislatively authorized licenses, five of which have been approved for the
northern region of the state in Bossier City/Shreveport. While the Louisiana
Gaming Control Board accepted applications for the fifteenth license on November
15, 1999, the Louisiana Gaming Control Board has not granted the remaining
fifteenth license. Prior to the passage of legislation legalizing dockside
gaming, effective April 1, 2001, in the 2001 Special Session of the Louisiana
Legislature, the Louisiana gaming law stated that riverboat casinos must cruise,
but the Bossier City/Shreveport casinos were granted a legislative exemption in
June 1993 that allows them to operate as dockside facilities. Louisiana permits
most types of casino games, other than bingo and sports betting, and has neither
betting nor loss limits. Moreover, house credit may be extended to qualified
patrons. The only significant limitation imposed by Louisiana gaming regulations
restricts gaming space on riverboats to no more than 30,000 square feet. Prior
to the passage of legislation legalizing dockside gaming, effective April 1,
2001, in the 2001 Special Session of the Louisiana Legislature, fees to the
State of Louisiana for conducting gaming activities on a riverboat include (1)
$50,000 per riverboat for the first year of operation and $100,000 per year per
riverboat thereafter plus (2) 18.5% of net gaming proceeds. In the 2001 Special
Session of the Louisiana Legislature, a law was passed legalizing dockside
gaming and increasing the fees paid to the state of Louisiana to 21.5% of net
gaming proceeds effective April 1, 2001 for the nine riverboats outside of the
northern region of the state in Bossier City/Shreveport, while the fee increase
to 21.5% of net gaming proceeds will be phased in over an approximately two year
period for the riverboats in the northern region of the state in Bossier City/
Shreveport. The city of Bossier City also imposes a 3.2% tax on gaming revenue
plus an annual fee of $700,000.

        In the 1996 Special Session of the Louisiana Legislature, Louisiana
lawmakers passed a measure which established the Louisiana Gaming Control Board
and provided that it is the successor to all such prior authorities with regard
to the regulation and supervision of gaming in Louisiana except for the
regulation of horse racing and off-track betting and the conducting of
charitable gaming operations. Effective May 1, 1996, the powers, duties,
functions, and responsibilities with respect to riverboat gaming of the
Louisiana Riverboat Gaming Commission and the Louisiana


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Enforcement Division were transferred to the Louisiana Gaming Control Board. The
Louisiana Enforcement Division continues to provide investigative and
enforcement support to the Louisiana Gaming Control Board.

        In addition, legislation was passed in 1996 authorizing the Bossier
Police Jury, the governing body of Bossier Parish, to impose a boarding fee of
$0.50 per patron entering riverboat gaming facilities in Bossier Parish. In
response to this legislation, Horseshoe Bossier City and the Isle of Capri
Casino in Bossier City commenced litigation against the Bossier Police Jury,
asserting that the Bossier Police Jury had previously contracted away their
right to impose an additional $0.50 boarding fee. In January 1997, Horseshoe
Bossier City separately settled with the Bossier Police Jury, and the lawsuit
was dismissed as it relates to Horseshoe Bossier City, but not Isle of Capri
Casino, and the Bossier Police Jury. As part of the settlement, Horseshoe
Bossier City agreed to pay a 1% tax on its gross casino revenues to Bossier
Parish with a minimum annual payment of $1,500,000, regardless of actual
revenue. Under the terms of the settlement, Horseshoe Bossier City has the right
to receive a credit against gross gaming tax for the amount of increased
property taxes assessed against our property in Bossier Parish resulting from
increased assessments attributable to our major expansion project. Such credit
may be taken up to a maximum of 80% of the tax on casino revenues, and applies
during the entire ten-year term of the agreement.

        In the 1997 Regular Session of the Louisiana Legislature, a law was
passed authorizing the operation of slot machines at certain horse racing tracks
in Louisiana, including a racetrack situated in Bossier Parish. The legislation
limits slot machine space at each racetrack to 15,000 square feet. Within the
gaming space, however, there is no numerical limit on the number of slot
machines that can be permissibly installed.

        In issuing a license, the Louisiana Gaming Control Board must find that
the applicant is a person of good character, honesty and integrity and a person
whose prior activities, criminal record, if any, reputation, habits, and
associations do not pose a threat to the public interest of the State of
Louisiana or to the effective regulation and control of gaming, or create or
enhance the dangers of unsuitable, unfair or illegal practices, methods and
activities in the conduct of gaming or the carrying on of business and financial
arrangements in connection therewith. The Louisiana Gaming Control Board will
not grant a license unless it finds that: (1) the applicant is capable of
conducting gaming operations, which means that the applicant can demonstrate the
capability, either through training, education, business experience, or a
combination of the above, to operate a gaming casino; (2) the proposed financing
of the riverboat and the gaming operations is adequate for the nature of the
proposed operation and from a source suitable and acceptable to the Louisiana
Gaming Control Board; (3) the applicant demonstrates a proven ability to operate
a vessel of comparable size, capacity and complexity to a riverboat so as to
ensure the safety of its passengers; (4) the applicant submits a detailed plan
of design of the riverboat in its application for a license; (5) the applicant
designates the docking facilities to be used by the riverboat; (6) the applicant
shows adequate financial ability to construct and maintain a riverboat; and (7)
the applicant has a good faith plan to recruit, train and upgrade minorities in
all employment classifications.

        Certain persons affiliated with a riverboat gaming licensee, including
directors and officers of the licensee, directors and officers of any holding
company of the licensee involved in gaming operations, persons holding 5% or
greater interests in the licensee, and persons exercising influence over a
licensee ("Affiliated Gaming Persons"), are subject to the application and
suitability requirements of the Louisiana gaming law.

        The Louisiana gaming law specifies certain restrictions and conditions
relating to the operation of riverboat gaming, including the following: (1)
prior to the passage of legislation legalizing dockside gaming, effective April
1, 2001, in the 2001 Special Session of the Louisiana Legislature, gaming is not
permitted while a riverboat is docked, other than the forty-five minutes between
excursions, and during times when dangerous weather or water conditions exist,
except that the casinos operating in the Bossier City/Shreveport area are
permitted to operate exclusively at


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<PAGE>   9

dockside pursuant to a special exemption; (2) prior to the passage of
legislation legalizing dockside gaming, effective April 1, 2001, in the 2001
Special Session of the Louisiana Legislature, each roundtrip riverboat cruise
may not be less than three nor more than eight hours in duration, subject to
specified exceptions; (3) agents of the Louisiana Enforcement Division and the
Louisiana Gaming Control Board are permitted on board at any time during gaming
operations; (4) gaming machines, equipment and supplies may only be purchased or
leased from permitted suppliers; (5) gaming may only take place in the
designated gaming area while the riverboat is upon a designated river or
waterway; (6) gaming equipment may not be possessed, maintained or exhibited by
any person on a riverboat except in the specifically designated gaming area, or
a secure area used for inspection, repair or storage of such equipment; (7)
wagers may be received only from a person present on a licensed riverboat; (8)
persons under 21 are not permitted in designated gaming areas; (9) except for
slot machine play, wagers may be made only with tokens, chips or electronic
cards purchased from the licensee aboard a riverboat; (10) licensees may only
use docking facilities and routes for which they are licensed and may only board
and discharge passengers at the riverboat's licensed berth; (11) licensees must
have adequate protection and indemnity insurance; (12) licensees must have all
necessary Federal and state licenses, certificates and other regulatory
approvals prior to operating a riverboat; and (13) gaming may only be conducted
in accordance with the terms of the license and the rules and regulations
adopted by the Louisiana Enforcement Division and the Louisiana Gaming Control
Board.

        An initial license to conduct riverboat gaming operations is valid for a
term of five years. The Louisiana gaming law provides that a renewal application
for each five-year period succeeding the initial five-year term of the
operator's license must be made to the Louisiana Enforcement Division. The
application for renewal consists of a statement under oath of any and all
changes to the information, including financial information, provided in the
previous application. Horseshoe Entertainment ("HE"), the Company's subsidiary
that owns and operates Horseshoe Bossier City, was issued an initial operator's
license by the Louisiana Enforcement Division on November 22, 1993, and HE
timely submitted its renewal application to the Louisiana Enforcement Division.
On October 20, 1998, the Louisiana Gaming Control Board granted HE's license
renewal subject to suitability review, and on October 19, 1999 the Louisiana
Gaming Control Board extended the license renewal subject to suitability review.
HE is currently in the process of completing the suitability review with the
Louisiana Enforcement Division.

        The federal indictment and trial of certain public officials who have
been accused of accepting bribes or of being a party to other illegal activities
in connection with the awarding of several riverboat licenses has associated
such public officials with various gaming interests, which do not include the
Company, within the State of Louisiana. HE has been advised by the U.S.
Attorney's office that it is neither a subject nor a target of such
investigation. The federal indictment and trial delayed the Louisiana Gaming
Control Board efforts to proceed with the investigations and proceedings to
renew riverboat gaming licenses in the state of Louisiana, including the renewal
of HE's riverboat gaming license which is currently proceeding through the
renewal process.

        The transfer of a license or permit or an interest in a license or
permit is prohibited except as permitted by the Louisiana gaming law. The sale,
purchase, assignment, transfer, pledge or other hypothecation, lease,
disposition or acquisition (a "Transfer") by any person of securities which
represent 5% or more of the total outstanding shares issued by a corporation
that holds a license is subject to Louisiana Gaming Control Board disapproval. A
security issued by a corporation that holds a license must disclose these
restrictions. Prior Louisiana Gaming Control Board approval is required for the
Transfer of any ownership interest of 5% or more in any non-corporate licensee
or for the Transfer of any "economic interest" of 5% or more in any licensee or
Affiliated Gaming Person. An "economic interest" is defined for purposes of a
Transfer as any interest whereby a person receives or is entitled to receive, by
agreement or otherwise, a profit, gain, thing of value, loan, credit, security
interest, ownership interest or other economic benefit.


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<PAGE>   10

        Riverboat gaming licensees and their Affiliated Gaming Persons are
required to notify the Louisiana Enforcement Division prior to the receipt by
any such persons of any loans or extensions of credit. The Louisiana Gaming
Control Board is required to investigate the reported loan or extension of
credit and, subject to certain exemptions, to either approve or disapprove the
transaction. If disapproved, the loan or extension of credit cannot be
consummated by the licensee or Affiliated Gaming Person. The Company is an
Affiliated Gaming Person of HE. The Company and HE have submitted all required
disclosures to the Louisiana Gaming Control Board and the Louisiana Enforcement
Division. Any other advances by the Company to HE in the form of loans or other
intercompany indebtedness are subject to the disapproval power of the Louisiana
Gaming Control Board and the Louisiana Enforcement Division.

MISSISSIPPI

        The Company conducts its Mississippi Gaming operations through a
subsidiary, Robinson Property Group, Limited Partnership ("RGP"), which owns and
operates the Horseshoe Casino in the City of Robinsonville, Tunica County, and
Mississippi. The ownership and operation of casino facilities in Mississippi are
subject to extensive state and local regulation, but primarily the licensing and
regulatory control of the Mississippi Gaming Commission and the Mississippi
State Tax Commission.

        The Mississippi Gaming Control Act (the "Mississippi Act"), which
legalized dockside casino gaming in Mississippi, was enacted on June 29, 1990.
Although not identical, the Mississippi Act is similar to the Nevada Gaming
Control Act. Effective October 29, 1991, the Mississippi Gaming Commission
adopted regulations in furtherance of the Mississippi Act (the "regulations"),
which are also similar in many respects to the Nevada gaming regulations.

        The laws, regulations and supervisory procedures of Mississippi and the
Mississippi Gaming Commission seek to:

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

        -      establish and maintain responsible accounting practices and
               procedures;

        -      maintain effective control over the financial practices of
               licensees, including establishing minimum procedures for internal
               fiscal affairs and safeguarding of assets and revenues, providing
               reliable record keeping and making periodic reports to the
               Mississippi Gaming Commission;

        -      prevent cheating and fraudulent practices;

        -      provide a source of state and local revenues through taxation and
               licensing fees; and

        -      ensure that gaming licensees, to the extent practicable, employ
               Mississippi residents.

        The regulations are subject to amendment and interpretation by the
Mississippi Gaming Commission. Changes in Mississippi law or the regulations or
the Mississippi Gaming Commission's interpretations thereof may limit or
otherwise materially affect the types of gaming that may be conducted, and could
have a material adverse effect on the Company and RPG's Mississippi gaming
operations.

        The Mississippi Act provides for legalized dockside gaming at the
discretion of the 14 counties that either border the Gulf Coast or the
Mississippi River, but only if the voters in such counties have not voted to
prohibit gaming in that county. As of March 22, 2001, dockside gaming was
permissible in nine of the 14 eligible counties in the state and gaming
operations had commenced in Adams, Coahoma, Hancock, Harrison, Tunica, Warren
and Washington counties. Under Mississippi law, gaming vessels must be located
on the Mississippi River or on navigable


                                       10
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waters in eligible counties along the Mississippi River, or in the waters of the
State of Mississippi lying south of the state in eligible counties along the
Mississippi Gulf Coast. Although there are no legislative limitations on the
number of gaming licenses which may be issued in Mississippi, competition is
limited by the availability of legal, suitable and accessible sites.

        Mississippi law permits unlimited stakes gaming on permanently moored
vessels on a continuous 24-hour basis and does not restrict the size of the
gaming area or the percentage of vessel space which may be utilized for gaming.
All types of casino games (other than bingo and race and/or sports betting) may
be offered. House credit may be extended to qualified patrons. The legal age for
gaming in Mississippi is 21.

        The Company and RPG are subject to the licensing and regulatory control
of the Mississippi Gaming Commission. The Company is registered under the
Mississippi Act as a holding company of RPG and will be required periodically to
submit detailed financial, operating and other reports to the Mississippi Gaming
Commission and furnish any other information which the Mississippi Gaming
Commission may require. If the Company is unable to satisfy the registration
requirements of the Mississippi Act, the Company and RPG cannot own or operate
gaming facilities in Mississippi. RPG will also be required periodically to
submit detailed financial, operating and other reports to the Mississippi Gaming
Commission and the Mississippi State Tax Commission and to furnish any other
information required thereby.

        RPG must maintain a gaming license from the Mississippi Gaming
Commission to operate a casino in Mississippi. Gaming licenses are not
transferable, are issued for a maximum term of three years and must be renewed
periodically thereafter. RPG received its Mississippi gaming operator's license
on October 13, 1994 and renewals on October 14, 1996, October 15, 1998 and
October 16, 2000. No person may become a stockholder of or receive any
percentage of profits from a licensed gaming entity, including both the Company
and RPG, without first obtaining licenses and approvals from the Mississippi
Gaming Commission.

        Certain of the Company's officers, directors and employees and the
officers, directors and key employees of RPG who are actively and directly
engaged in the administration or supervision of gaming in Mississippi must be
found suitable or be licensed by the Mississippi Gaming Commission. On October
13, 1994, the Mississippi Gaming Commission found certain key principals of the
Company and RPG suitable, and all required findings of suitability have been
maintained and are current. The Company believes that it and RPG have applied
for all necessary findings of suitability with respect to these persons,
although the Mississippi Gaming Commission, in its discretion, may require
additional persons to file applications for findings of suitability. In
addition, any person having a material relationship or involvement with the
Company or RPG may be required to be found suitable, in which case those persons
must pay the costs and fees associated with the investigation. A finding of
suitability requires submission of detailed personal and financial information
followed by a thorough investigation. There can be no assurance that a person
who is subject to a finding of suitability will be found suitable by the
Mississippi Gaming Commission. The Mississippi Gaming Commission may deny an
application for a finding of suitability for any cause that it deems reasonable.
Findings of suitability must be periodically renewed.

        Changes in certain licensed positions must be reported to the
Mississippi Gaming Commission. In addition to its authority to deny an
application for a finding of suitability, the Mississippi Gaming Commission has
jurisdiction to disapprove a change in a licensed position. The Mississippi
Gaming Commission has the power to require the Company and RPG to suspend or
dismiss officers, directors and other key employees or sever relationships with
other persons who


                                       11
<PAGE>   12

refuse to file appropriate applications or whom the authorities find unsuitable
to act in their capacities.

        Employees associated with gaming must obtain work permits that are
subject to immediate suspension. The Mississippi Gaming Commission will refuse
to issue a work permit to a person convicted of a felony and it may refuse to
issue a work permit to a gaming employee if the employee has committed various
misdemeanors or knowingly violated the Mississippi Act or for any other
reasonable cause.

        At any time, the Mississippi Gaming Commission has the power to
investigate and require a finding of suitability of the Company's record or
beneficial stockholders, regardless of the percentage of ownership. Mississippi
law requires any person who acquires more than 5% of the common stock of a
publicly-traded corporation registered with the Mississippi Gaming Commission to
report the acquisition to the Mississippi Gaming Commission, and that person may
be required to be found suitable. Also, any person who becomes a beneficial
owner of more than 10% of the common stock of such a company, as reported to the
Commission, must apply for a finding of suitability by the Mississippi Gaming
Commission and must pay the costs and fees that the Mississippi Gaming
Commission incurs in conducting the investigation. The Mississippi Gaming
Commission has generally exercised its discretion to require a finding of
suitability of any beneficial owner of more than 5% of a registered public or
private company's common stock. If a stockholder who must be found suitable is a
corporation, partnership or trust, it must submit detailed business and
financial information including a list of beneficial owners. The Mississippi
Gaming Commission may at any time dissolve, suspend, condition, limit or
restrict a finding of suitability to own the Company's equity interests for any
cause it deems reasonable.

        The Company may be required to disclose to the Mississippi Gaming
Commission, upon request, the identities of the holders of any debt or other
securities. In addition, under the Mississippi Act, the Mississippi Gaming
Commission may, in its discretion:

        -      require holders of debt securities of registered corporations to
               file applications;

        -      investigate the holders; and

        -      require the holders to be found suitable to own the debt
               securities.

        Although the Mississippi Gaming Commission generally does not require
the individual holders of obligations such as notes to be investigated and found
suitable, the Mississippi Gaming Commission retains the discretion to do so for
any reason, including but not limited to a default, or where the holder of the
debt instrument exercises a material influence over the gaming operations of the
entity in question. Any holder of debt or equity securities required to apply
for a finding of suitability must pay all investigative fees and costs of the
Mississippi Gaming Commission in connection with the investigation.

        Any person who fails or refuses to apply for a finding of suitability or
a license within 30 days after being ordered to do so by the Mississippi Gaming
Commission may be found unsuitable. Any person found unsuitable and who holds,
directly or indirectly, any beneficial ownership of the Company's securities
beyond the time that the Mississippi Gaming Commission prescribes may be guilty
of a misdemeanor. The Company is subject to disciplinary action if, after
receiving notice that a person is unsuitable to be a stockholder or to have any
other relationship with the Company or Tunica, the Company:

        -      pays the unsuitable person any dividend, interest or other
               distribution upon its voting securities;


                                       12
<PAGE>   13

        -      recognizes the exercise, directly or indirectly, any voting
               rights conferred through such securities held by the unsuitable
               person;

        -      pays the unsuitable person any remuneration in any form for
               services rendered or otherwise, except in limited and specific
               circumstances; or

        -      fails to pursue all lawful efforts to require the unsuitable
               person to divest himself of the securities, including, if
               necessary, the immediate purchase of the securities for cash at a
               fair market value within ten days.

        RPG must maintain in Mississippi a current ledger with respect to the
ownership of its equity securities and the Company must maintain in Mississippi
a current list of its stockholders which must reflect the record ownership of
each outstanding share of any equity security issued by the Company. The ledger
and stockholder lists must be available for inspection by the Mississippi Gaming
Commission at any time. If any securities are held in trust by an agent or by a
nominee, the record holder may be required to disclose the identity of the
beneficial owner to the Mississippi Gaming Commission. A failure to make that
disclosure may be grounds for finding the record holder unsuitable. The Company
must also render maximum assistance in determining the identity of the
beneficial owner.

        The Mississippi Act requires that the certificates representing
securities of the Company bear a legend to the general effect that the
securities are subject to the Mississippi Act and the regulations of the
Mississippi Gaming Commission. The Mississippi Gaming Commission has the power
to impose additional restrictions on the Company and the holders of its
securities at any time.

        Substantially all loans, leases, sales of securities and similar
financing transactions by a licensed gaming subsidiary must be reported to or
approved by the Mississippi Gaming Commission. A licensed gaming subsidiary may
not make a public offering of its securities, but may pledge or mortgage casino
facilities if it obtains the prior approval of the Mississippi Gaming
Commission. The Company may not make a public offering or private placement of
its securities without the prior approval of the Mississippi Gaming Commission
if any part of the proceeds of the offering is to be used to finance the
construction, acquisition or operation of gaming facilities in Mississippi or to
retire or extend obligations incurred for those purposes. The approval, if
given, does not constitute a recommendation or approval of the accuracy or
adequacy of the prospectus or the investment amounts of the securities subject
to the offering.

        Under the regulations of the Mississippi Gaming Commission, RPG may not
guarantee a security issued by the Company pursuant to a public offering or
private placement, or pledge its assets to secure payment or performance of the
obligations evidenced by the security issued by the Company, without the prior
approval of the Mississippi Gaming Commission. Similarly, the Company may not
pledge the ownership interests of RPG, nor may the pledgee of such ownership
interests foreclose on such a pledge, without the prior approval of the
Mississippi Gaming Commission. Moreover, restrictions on the transfer of an
equity security issued by RPG and agreements not to encumber such securities
granted by the Company are ineffective without the prior approval of the
Mississippi Gaming Commission.

        Neither the Company nor RPG may change its control through merger,
consolidation, acquisition of assets, management or consulting agreements or any
form of takeover without the prior approval of the Mississippi Gaming
Commission. The Mississippi Gaming Commission may also require controlling
stockholders, officers, directors, and other persons having a material
relationship or involvement with the entity proposing to acquire control, to be
investigated and licensed as part of the approval process relating to the
transaction.


                                       13
<PAGE>   14

        Neither the Company, RPG and/or persons found suitable to be associated
with the gaming license of RPG may conduct gaming operations outside of
Mississippi without approval of the Mississippi Gaming Commission. The
Mississippi Gaming Commission may require access to information concerning the
Company's and its affiliates' out-of-state gaming operations.

        If the Mississippi Gaming Commission decides that a licensed gaming
subsidiary violated a gaming law or regulation, the Mississippi Gaming
Commission could limit, condition, suspend or revoke the license of the
subsidiary. In addition, the licensee, its registered holding company, and the
persons involved could be subject to substantial fines for each separate
violation. A violation under any of the Company's other operating subsidiaries'
gaming licenses may be deemed a violation of RPG's gaming license. Because of a
violation, the Mississippi Gaming Commission could attempt to appoint a
supervisor to operate the casino facilities. Limitation, conditioning or
suspension of a licensee's gaming license or its registered holding company's
registration as a holding company, or the appointment of a supervisor could, and
revocation of any gaming license or registration would, materially adversely
affect the business of the licensee, its registered holding company, and its
registered holding company's other operating subsidiaries.

         A licensed gaming subsidiary must pay license fees and taxes, computed
in various ways depending on the type of gaming involved, to the State of
Mississippi and to the county or city in which the licensed gaming subsidiary
conducts operations. Depending upon the particular fee or tax involved, these
fees and taxes are payable either monthly, quarterly or annually and are based
upon:

        -      a percentage of the gross gaming revenues received by the casino
               operation;

        -      the number of slot machines operated by the casino; and

        -      the number of table games operated by the casino.

        The license fee payable to the State of Mississippi is based upon
"gaming receipts," generally defined as gross receipts less payouts to customers
as winnings, and equals:

        -      4% of gaming receipts of $50,000 or less per month;

        -      6% of gaming receipts over $50,000 and less than $134,000 per
               month; and

        -      8% of gaming receipts over $134,000 per month.

        These license fees are allowed as a credit against a licensee's
Mississippi income tax liability for the year paid. The gross revenue fee
imposed by the Mississippi cities and counties in which casino operations are
located is in addition to the fees payable to the State of Mississippi and
equals approximately 4% of the gaming receipts.

        The Mississippi Gaming Commission adopted a regulation in 1994 requiring
as a condition of licensure or license renewal that a gaming establishment's
plan include a 500-car parking facility in close proximity to the casino complex
and infrastructure facilities which will amount to at least 25% of the casino
cost. Infrastructure facilities are defined in the regulation to include a hotel
with at least 250 rooms, theme park, golf course and other similar facilities.
With the opening of its hotel and other amenities, the Horseshoe Tunica is in
compliance with this requirement. On January 21, 1999, the Mississippi Gaming
Commission adopted an amendment to this regulation which increased the
infrastructure requirement to 100% from the existing 25%; however, the
regulation grandfathers existing licensees and applies only to new casino
projects and casinos that are not operating at the time of acquisition or
purchase, and would therefore not apply to the Horseshoe Tunica. In any event,
the Horseshoe Tunica would comply with the increased requirement.


                                       14
<PAGE>   15

        Both the local jurisdiction and the Alcoholic Beverage Control Division
of the Mississippi State Commission license, control and regulate the sale of
alcoholic beverages, including beer and wine, by RPG at the Horseshoe Tunica.
The Horseshoe Tunica is in an area designated as a special resort area, which
allows casinos located therein to serve alcoholic beverages on a 24-hour basis.
The Alcoholic Beverage Control Division requires that the key officers and
managers of the Company and RPG and all owners of more than 5% of RPG's equity
submit detailed personal, and in some instances, financial information to the
Alcoholic Beverage Control Division and be investigated and licensed. All such
licenses are non-transferable. The Alcoholic Beverage Control Division must
approve changes in key positions. The Alcoholic Beverage Control Division has
the full power to limit, condition, suspend or revoke any license for the
service of alcoholic beverages or to place a licensee on probation with or
without conditions. Any disciplinary action could, and revocation would, have a
material adverse effect upon the operations of the Horseshoe Tunica.

        In Mississippi, in three separate instances, referenda were proposed
which, if approved, would have amended the Mississippi constitution to ban
gaming in Mississippi and would have required all currently legal gaming
entities to cease operations within two years of the ban. All three of the
proposed referenda have been ruled illegal by Mississippi State trial court
judges. The proponents of the most recent referendum filed a notice of appeal of
the trial court ruling with the Mississippi Supreme Court. The Mississippi
Supreme Court affirmed the trial court ruling. Any such referendum must be
approved by the Mississippi Secretary of State and signatures of approximately
91,700 registered voters must be gathered and certified in order for such a
proposal to be included on a statewide ballot for consideration by the voters.
An affirmative vote representing both a majority of the votes cast with respect
to the initiative and at least 40% of the voters casting votes on any matter in
the election is required to pass any Mississippi initiative. The next election
for which the proponents could attempt to place such a proposal on the ballot
would be in November 2002. While it is too early in the process for us to make
any predictions with respect to whether such a referendum will appear on a
ballot or the likelihood of such a referendum being approved by the voters, if
such a referendum were passed and gaming were prohibited in Mississippi, it
would have a material adverse effect on our Mississippi gaming operations.

INDIANA

        The Indiana Riverboat Gaming Act ("Indiana Act") authorizes the issuance
of up to 11 riverboat gaming licenses on waterways located in Indiana counties
that are contiguous to Lake Michigan, the Ohio River and Patoka Lake. The
Indiana Act strictly regulates the facilities, persons, associations and
practices related to gaming operations pursuant to the police powers of the
State of Indiana, including comprehensive law enforcement provisions. The
Indiana Act vests the Indiana Gaming Commission with the power and duties of
administering, regulating and enforcing the system of riverboat gaming in the
State of Indiana. The Indiana Gaming Commission's jurisdiction extends to every
person, association, corporation, partnership and trust involved in riverboat
gaming operations in the State of Indiana.

        The Indiana Act requires the owner of a riverboat gaming operation to
hold an owner's license issued by the Indiana Gaming Commission. Each license
granted entitles the licensee to own and operate one riverboat and gaming
equipment as part of the gaming operation. A licensee may own no more than a 10%
interest in any other owner's license under the Indiana Act.

        The Indiana Gaming Commission has issued: (i) two licenses for
riverboats operating from Gary; (ii) one license for a riverboat operating in
Hammond; (iii) one license for a riverboat operating in East Chicago; (iv) one
license for a riverboat operating in any city located in LaPorte


                                       15
<PAGE>   16

County and (v) five licenses for riverboats that operate upon the Ohio River
from counties contiguous thereto and with no more than one operating in any
county. The Indiana Gaming Commission has not considered applications for a
license to be sited in a county contiguous to Patoka Lake since Patoka Lake is a
project of the U.S. Army Corps of Engineers ("Corps") and the Corps has
determined Patoka Lake is unsuitable for a riverboat project.

        Each owner's license runs for a period of five years. Thereafter, the
license is subject to renewal on an annual basis upon a determination by the
Indiana Gaming Commission that the licensee continues to be eligible for an
owner's license pursuant to the Indiana Act and the rules and regulations
adopted thereunder. The Indiana Act requires that a licensed owner undergo a
complete investigation every three years. If for any reason the license is
terminated, the assets of the riverboat gaming operation cannot be disposed of
without the approval of the Indiana Gaming Commission. Furthermore, the Indiana
Act requires that officers, directors and employees of a gaming operation be
licensed. The Company's Hammond license is due for renewal in June of 2001. The
Company anticipates a renewal through June of 2002.

        Applicants for licensure must submit a comprehensive application and
personal disclosure forms and undergo an exhaustive background investigation
prior to the issuance of a license. The applicant must also disclose the
identity of every person holding an ownership interest in the applicant. Any
person holding significant interests (5%) in the applicant must undergo a
background investigation and be licensed. The Indiana Gaming Commission has the
authority to request specific information on or license any one holding an
ownership interest.

        An institutional investor which acquires 5% or more of any class of
voting securities of a holding company of a licensee is required to notify the
Indiana Gaming Commission and to provide additional information, and may be
subject to a finding of suitability. A person who acquires 5% or more of any
class of voting securities of a holding company of a licensee is required to
apply to the Indiana Gaming Commission for a finding of suitability.

        A riverboat owner licensee or any other person may not lease,
hypothecate, borrow money against or loan money against an owner's riverboat
gaming license. An ownership interest in an owner's riverboat gaming license may
only be transferred in accordance with the regulations promulgated under the
Indiana Act.

        The Indiana Act does not limit the maximum bet or per patron loss. The
licensee sets minimum and maximum wagers on games. Wagering may not be conducted
with money or other negotiable currency. No person under the age of 21 is
permitted to wager, and wagers may only be taken from a person present on a
licensed riverboat.

        Riverboats operating in Indiana must (i) have a valid certificate of
inspection from the U.S. Coast Guard to carry at least 500 passengers; and (ii)
be at least 150 feet long. Any riverboat that operates on the Ohio River must
replicate, as nearly as possible, historic Indiana steamboat passenger vessels
of the nineteenth century. Riverboats operating on Lake Michigan need not meet
this requirement.

         After consultation with the Corps, the Indiana Gaming Commission may
determine the available navigable waterways that are suitable for the operation
of riverboats under the Indiana Act. If the Corps rescinds an approval for the
operation of riverboats on a waterway, a license issued under the Indiana Act is
void and the holder may not conduct or continue gaming operations under the
Indiana Act.


                                       16
<PAGE>   17

        Gaming sessions are generally required to be at least two hours and are
limited to a maximum duration of four hours. No gaming may be conducted while
the boat is docked, except for 30-minute time periods at the beginning and end
of each cruise while the passengers are embarking and disembarking (total gaming
time is limited to four hours, however, including the pre- and post- docking
periods). Except for patron embarkation and disembarkation periods, dockside
gambling may not be conducted unless the master of the riverboat certifies, in
writing, that one of the following conditions exist: (1) weather or water
conditions present a danger to the riverboat, its passengers and crew; (2) the
vessel or docking facility is being repaired; (3) traffic conditions present a
danger to the riverboat, its passengers and crew or other vessels; or (4)
cruising would result in a violation of Federal law. The Indiana Gaming
Commission may grant extended cruise hours in its discretion.

        The Indiana Act imposes a 20% wagering tax on adjusted gross receipts
from gaming. The tax imposed is to be paid by the licensed owner to the Indiana
Department of Revenue before the close of the business day following the day
when the wagers are made. The Indiana Act also requires that licensees pay a
$3.00 admission tax for each person admitted to a gaming excursion. A riverboat
license may be suspended for failure to pay such tax as required by the Indiana
Act. Riverboats are assessed, for property tax purposes, as real property and
are taxed at rates determined by local taxing authorities. Indiana corporations
are also subject to the Indiana gross income tax, the Indiana adjusted gross
income tax and the Indiana Supplemental corporate net income tax.

        The Indiana Gaming Commission may subject a licensee to fines,
suspension or revocation of its license for any act that is in violation of the
Indiana Act, the regulations of the Indiana Gaming Commission, or for any other
fraudulent act. In addition, the Indiana Gaming Commission may revoke an owner's
license if the Indiana Gaming Commission determines that the revocation of the
license is in the best interests of the State of Indiana. A holder of a gaming
license is required to post a bond with the Indiana Gaming Commission in an
amount that the Indiana Gaming Commission determines will adequately reflect the
amount that a local community will expend for infrastructure and other
facilities associated with a riverboat operation.

        The Indiana Act places special emphasis upon minority and women's
business enterprise participation in the riverboat industry. Any person issued a
riverboat owner's license must establish goals of expending at least 10% of the
total dollar value of the licensee's contracts for goods and services with
minority business enterprises and 5% of the total dollar value of the licensee's
contracts for goods and services with women's business enterprises.

        A riverboat owner licensee may not enter into or perform any contract or
transaction in which it transfers or receives consideration which is not
commercially reasonable or which does not reflect the fair market value of the
goods and services rendered or received. All contracts are subject to
disapproval by the Indiana Gaming Commission. A riverboat owner licensee or an
affiliate may not enter into a debt transaction of $1.0 million or more without
the prior approval of the Indiana Gaming Commission. The Indiana Gaming
Commission has a rule requiring the reporting of certain currency transactions,
which is similar to that required by Federal authorities.

        The Indiana Act prohibits contributions to a candidate for a state,
legislative, or local office, or to a candidate's committee or to a regular
party committee by the holder of a riverboat owner's license or a supplier's
license, by an officer of a licensee or by an officer of a person that holds at
least a 1% interest in the licensee. The Indiana Gaming Commission has
promulgated a rule requiring quarterly reporting by the holder of a riverboat
owner's license or a supplier's license or officers of the licensee, officers of
persons that hold at least a 1% interest in the licensee, and of persons who
directly or indirectly own a 1% interest in the licensee.


                                       17
<PAGE>   18

        The Indiana Gaming Commission prohibits a distribution (except to allow
payment of taxes) by a riverboat licensee to its partners, shareholders, itself,
or any affiliated entity, if the distribution would impair the financial
viability of the riverboat gaming operation. The Indiana Gaming Commission also
requires riverboat licensees to maintain, on a quarterly basis, a cash reserve
equal to the average amount of payouts over a three day period. The cash reserve
includes cash in the casino cage, cash in a bank account in Indiana, or cash
equivalents not committed or obligated.

ILLINOIS

        The Illinois Riverboat Gambling Act (the "Illinois Act"), as amended in
June 1999, authorizes the issuance of up to ten riverboat gaming licenses by the
five-member Illinois Gaming Board on water within or forming a boundary of
Illinois, except for Lake Michigan. In addition, the Illinois Act provides that
gaming operations need not cruise, and as a result, the Illinois Gaming Board
has approved plans by some operators to move their gaming operations to barges.
The Illinois Act requires the owner of a riverboat gaming operation to hold an
owner's license issued by the Illinois Gaming Board. Each owner's license
permits up to two boats as part of a single riverboat gaming operation. The
Illinois Act regulates the facilities, persons, associations and practices
related to riverboat gaming operations. The Illinois Act grants the Illinois
Gaming Board specific powers and duties, and all other powers necessary and
proper to fully and effectively execute the Illinois Act for the purpose of
administering, regulating and enforcing the system of riverboat gaming. The
Illinois Gaming Board's jurisdiction extends to every person, association,
corporation, partnership, and trust involved in riverboat gaming operations in
Illinois.

        The Illinois Act restricts the granting of certain of the ten owner's
licenses by location. Three licenses are reserved for operators docking at sites
on the Mississippi River, one for an operator docking at a site on the Illinois
River south of Marshall County and one for an operator docking at a site on the
Des Plaines River in Will County. The remaining five owner's licenses are not
restricted as to location. In addition to the ten owner's license which are
authorized under the Illinois Act, the Illinois Gaming Board may issue special
event licenses allowing persons who are not otherwise licensed to conduct
riverboat gaming and to conduct such gaming on a specified date or series of
dates. Riverboat gaming under such a license may take place on a riverboat not
normally used for riverboat gaming.

        An owner's license is issued for an initial period of three years and
must be renewed annually thereafter. For licenses renewed on or after May 1,
1998, renewal may be for a period of up to four years. An ownership interest in
a holder of an owner's license may be transferred or pledged as collateral only
with the consent of the Illinois Gaming Board. Licenses issued by the Illinois
Gaming Board may not be transferred to another person or entity. All licensees
must maintain their suitability for licensure and have a continuing duty to
disclose any material changes in information provided to the Illinois Gaming
Board.

        Applicants for and holders of an owner's license are required to obtain
formal approval from the Illinois Gaming Board for changes in: (i) key
personnel, including officers, directors, managing agents, or holders of a 5% or
greater ownership interest in the business entity; (ii) its organizational form;
(iii) the equity and debt capitalization of the entity; (iv) investors and/or
debt holders; (v) sources of funds; (vi) the applicant's economic development
plan; (vii) riverboat capacity or significant design changes; (viii) the number
of gaming positions; (ix) anticipated economic impact; or (x) oral or written
agreements relating to the acquisition or disposition of property of a value
greater than $1,000,000. A holder of an owner's license is allowed to make
distributions to its partners, stockholders or itself only to the extent that
such distribution would not impair the financial


                                       18
<PAGE>   19

viability of the gaming operation. Factors to be considered by the licensee
include, but are not limited to, the following (i) working capital requirements,
(ii) debt service requirements, (iii) requirements for repairs and maintenance
and (iv) capital expenditure requirements.

        The number of gaming positions is limited to a maximum of 1,200 per
license. All riverboats must be accessible to disabled persons and must comply
with applicable Federal and state laws, including, but not limited to, U.S.
Coast Guard regulations. The Illinois Act permits the licensee to set the
maximum or minimum limits on wagering. No person under the age of 21 is
permitted to wager in Illinois. A $2 per person admission tax is imposed on the
owner of a riverboat operation. The Illinois Act, imposes the following
graduated wagering tax rates on adjusted gross receipts from gaming: (i) 15% of
the calendar year adjusted gross receipts up to and including $25.0 million;
(ii) 20% of the calendar year adjusted gross receipts in excess of $25.0 million
but not exceeding $50.0 million; (iii) 25% of the calendar year adjusted gross
receipts in excess of $50.0 million but not exceeding $75.0 million. (iv) 30% of
the calendar year adjusted gross receipts in excess of $75.0 million but not
exceeding $100.0 million. The licensee is required to wire transfer all such
gaming tax payments to the Illinois Gaming Board on a daily basis.

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

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

        If the Illinois Gaming Board has suspended, revoked or refused to renew
the license of an owner or if a riverboat gaming operation is closing and the
owner is voluntarily surrendering its owner's license, the Illinois Gaming Board
may petition the local circuit court in which the riverboat is situated for
appointment of a receiver. The circuit court shall have sole jurisdiction over
any and all issues pertaining to the appointment of a receiver. The Illinois
Gaming Board shall specify the specific powers, duties and limitations for the
receiver, including but not limited to the authority to:

(i)     hire, fire, promote and discipline personnel and retain outside
        employees or consultants;

(ii)    take possession of any and all property, including but not limited to
        its books, records, papers;


                                       19
<PAGE>   20

(iii)   preserve and/or dispose of any and all property;

(iv)    continue and direct the gaming operations under the monitoring of the
        Board;

(v)     discontinue and dissolve the gaming operation;

(vi)    enter into and cancel contracts;

(vii)   borrow money and pledge, mortgage or otherwise encumber the property;

(viii)  pay all secured and unsecured obligations;

(ix)    institute or define actions by or on behalf of the holder of an Owner's
        license; and

(x)     distribute earnings derived from gaming operations in the same manner as
        admission and wagering taxes are distributed under Sections 12, 13 of
        the Riverboat Gambling Act.

        The Illinois Gaming Board shall submit at least three nominees to the
court. The nominees may be individuals or entities selected from an Illinois
Gaming Board approved list of pre-qualified receivers who meet the same criteria
for a finding of preliminary suitability for licensure under Illinois Gaming
Board Rules, Sections 3000.230(c)(2)(B) and (C). In the event that the Illinois
Gaming Board seeks the appointment of a receiver on an emergency basis, the
Illinois Gaming Board shall issue a Temporary Operating Permit to the receiver
appointed by the Court. A receiver, upon appointment by the court, shall before
assuming his or her duties, execute and post the same bond as an owner's
licensee pursuant to Section 10 of the Illinois Act.

        The receiver shall function as an independent contractor, subject to the
direction of the Court. However, the receiver shall also provide to the Illinois
Gaming Board regular reports and provide any information deemed necessary for
the Illinois Gaming Board to ascertain the receiver's compliance with all
applicable rules and laws. From time to time, the Illinois Gaming Board may, at
its sole discretion, report to the Court on the receiver's level of compliance
and any other information deemed appropriate for disclosure to the Court. The
term and compensation of the receiver shall be set by the court. The receiver
shall provide to the Court and the Illinois Gaming Board at least 30 days
written notice of any intent to withdraw from the appointment or to seek
modification of the appointment. Except as otherwise provided by action to the
Illinois Gaming Board the gaming operation shall be deemed a licensed operation
subject to all rules of the Illinois Gaming Board during the tenure of any
receivership.

        The Illinois Gaming Board requires that a "Key Person" of an owner
licensee submit a Personal Disclosure or Business Entity Form and be
investigated and approved by the Illinois Gaming Board. The Illinois Gaming
Board shall certify for each applicant for or holder of an owner's license each
position, individual or Business Entity that is to be approved by the Board and
maintain suitability as a Key Person. With respect to an applicant for or the
holder of an owner's license, Key Person shall include: any Business Entity and
any individual with an ownership interest or voting rights of more than 5% in
the licensee or applicant, and the trustee of any trust holding such ownership
interest or voting rights; the directors of the licensee or applicant and its
chief executive officer, president and chief operating officer, or their
functional equivalents; and all other individuals or Business Entities that,
upon review of the applicant's or licensees Table of Organization, Ownership and
Control the Board determines hold a position or a level of ownership, control or
influence this is material to the regulatory concerns and obligations of the
Illinois Gaming Board for the specified licensee or applicant.

        In order to assist the Illinois Gaming Board in its determination of Key
Persons, applicants for or holders of an owner's license shall provide to the
Illinois Gaming Board a Table of Organization, Ownership and Control (the
"Table"). The Table shall identify in sufficient detail the hierarchy of
individuals and Business Entities that, through direct or indirect means, manage
own or control the interest and assets of the applicant or licensee holder. If a
Business Entity identified in the Table is a publicly traded company, the
following information must be provided in the Table;


                                       20
<PAGE>   21

the name and percentage of ownership interest of each individual or Business
Entity with ownership of more than 5% of the voting shares of the entity, to the
extent such information is known or contained in Schedule 13D or 13G of
Securities and exchange Commission filings; to the extent known, the names and
percentage of interest of ownership of persons who are relatives of one another
and who together (as individuals or through trusts) exercise control over or own
more than 10% of the voting shares of the entity; and any trust holding more
than 5% ownership or voting interest in the Company, to the extent such
information is known or contained in Schedule 13D or 13G of Securities and
exchange Commission filings. The Table may be disclosed under the Freedom of
Information Act.

        Each owner licensee must provide a means for the economic disassociation
of a Key Person in the event such economic disassociation is required by an
order of the Illinois Gaming Board. Based upon findings from an investigation
into the character, reputation, experience, associations, business probity and
financial integrity of a Key Person, the Illinois Gaming Board may enter an
order upon the licensee or require the economic disassociation of such Key
Person.

        Furthermore, each applicant or owner licensee must disclose the identity
of every person, association, trust or corporation having a greater than 1%
direct or indirect pecuniary interest in an owner licensee or in the riverboat
gaming operation with respect to which the license is sought. The Illinois
Gaming Board may also require an applicant or owner licensee to disclose any
other principal or investor and require the investigation and approval of such
individuals.

        The Illinois Gaming Board, (unless the investor qualifies as an
Institutional Investor), requires a Personal Disclosure Form from any person or
entity who or which, individually or in association with others, acquires
directly or indirectly, beneficial ownership of more than 5% of any class of
voting securities or non-voting securities convertible into voting securities of
a publicly-traded corporation which holds an ownership interest in the holder of
an owner's license. If the Illinois Gaming Board denies an application for such
a transfer and if no hearing is requested, the applicant for the transfer of
ownership interest must promptly divest those shares in the publicly-traded
parent corporation. The holder of an owner's license would not be able to
distribute profits to a publicly-traded parent corporation until such shares
have been divested. If a hearing is requested, the shares need not be divested
and profits may be distributed to a publicly-held parent corporation pending the
issuance of a final order from the Illinois Gaming Board.

        An Institutional Investor that individually or jointly with others,
cumulatively acquires, directly or indirectly, 5% or more an any class of voting
securities of a publicly-traded licensee or a licensee's publicly-traded parent
corporation shall, within no less than ten days after acquiring such securities,
notify the Administrator of the Board of such ownership and shall provide any
additional information as may be required. If an Institutional Investor (as
specified above) acquires 10% or more of any class of voting securities of a
publicly-traded licensee or a licensee's publicly-traded parent corporation it
shall file an Institutional Investor Disclosure Form within 45 days after
acquiring such level of ownership interest. The owner licensee shall notify the
Administrator as soon as possible after it becomes aware that it or its parent
is involved in an ownership acquisition by an Institutional Investor. The
Institutional Investor also has an obligation to notify the Administrator of its
ownership interest.

        In addition to Institutional Investor Disclosure Forms, certain other
forms may be required to be submitted to the Illinois Gaming Board. An
owner-licensee must submit a Marketing Agent Form to the Illinois Gaming Board
for each Marketing Agent with whom it intends to do business. A Marketing Agent
is a person or entity, other than a junketeer or an employee of a riverboat
gaming operation, who is compensated by the riverboat gaming operation in excess
of $100 per patron per


                                       21
<PAGE>   22

trip for identifying and recruiting patrons. Key Persons of owner-licensees must
submit Trust Identification Forms for trusts, excluding land trusts, for which
they are a grantor, trustee or beneficiary each time such a trust relationship
is established, amended or terminated.

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

        The constitutionality of the Illinois Act, as amended, was challenged.
That lawsuit was dismissed, because the court determined that the Plaintiff
lacked standing to challenge the Amended Act. It is still unknown whether
Plaintiff can or will timely appeal the circuit court decision. There is no
assurance that the circuit court decision will be affirmed on appeal. If there
is on-going litigation, there is no assurance that the Illinois Act will be
upheld as constitutional. If the Illinois Act is deemed unconstitutional, all of
the new provisions would no longer be in effect. Specifically, in that
situation, riverboats would have to return to cruising in order to conduct
gaming.

        From time to time, various proposals have been introduced in the
Illinois legislature that, if enacted, would affect the taxation, regulation,
operation or other aspects of the gaming industry or the Company. Some of this
legislation, if enacted, could adversely affect the gaming industry or the
Company. No assurance can be given whether such or similar legislation will be
enacted.

        The Company's Joliet license was due to be renewed in June 2000. On June
30, 2000, the Illinois Gaming Board preliminarily denied Joliet's application to
renew its riverboat owner's license and preliminarily found Jack Binion
unsuitable to be licensed as a Key Person. Joliet timely filed a Verified
Request for Hearing of the Illinois Gaming Board's decision.

        Effective January 31, 2001, the Illinois Gaming Board approved a
Settlement Agreement between the Board, the Company, Joliet and Jack Binion.
Pursuant to the pertinent parts of the Settlement Agreement; (a) the Company
agrees to sell Empress Joliet to a suitable purchaser within the time frames
established in the Settlement Agreement; (b) Jack Binion will withdraw his Key
Person application; and (c) upon the closing of the sale of Joliet, Joliet will
withdraw its Verified Request for Hearing and, upon acceptance by the Illinois
Gaming Board of the withdrawal, the previous denial of Joliet's renewal
application will be moot.

ENVIRONMENTAL REGULATIONS

        The Company is subject to Federal, state and local laws, regulations and
ordinances, or environmental laws, that: (1) govern activities or operations
that may have adverse environmental effects, such as discharges to air and water
as well as handling and disposal practices for solid and hazardous wastes; and
(2) impose liability for the costs of cleaning up, and certain damages resulting
from, past spills, disposals or other releases of hazardous substances.

        Based on our review of certain environmental assessments, the Company is
aware that there may be soil and groundwater contamination present on some of
the real property used by our existing casinos due to past industrial
activities. In connection with the construction of a highway overpass to service
Empress Hammond, Empress agreed to clean up contamination discovered on property
owned by the City of Hammond during the course of construction. Empress also
agreed, subject to certain limitations, to indemnify the City of Hammond for the
costs related to any other future cleanup required at the property as a result
of historical conditions. Empress completed the construction of the overpass and
associated cleanup efforts in 1996. We do not believe that the contamination
discovered during the investigations requires further investigation or cleanup
under current environmental laws. It is possible, however, that such laws will
become more stringent in


                                       22
<PAGE>   23

the future or that additional contamination on the property will be discovered
and will need to be cleaned up. Pursuant to Empress' agreement with the City of
Hammond, which the Company assumed pursuant to the Empress Merger, the Company
could be obligated to undertake any such cleanup and may be required to make
material expenditures with respect to such matters.

STATUS AS AN S CORPORATION

        As an S corporation, the Company will not be subject to Federal income
tax as an entity. Instead, each stockholder generally will be subject to income
tax on his proportionate share of the Company's income (or take into account his
proportionate share of any loss). Pursuant to a stockholder' agreement, the
Company intends to make distributions to its stockholders to enable them to pay
any taxes on their share of the Company's income. While the Company believes it
was properly formed and has been properly operating as an S corporation and that
its subsidiaries were properly formed and have been properly operating as
Qualified Subchapter S Subsidiaries for Federal and state income tax purposes,
if the Company's S corporation tax status or the Qualified Subchapter S
Subsidiary status of any of its subsidiaries were successfully challenged, the
Company or such subsidiary could be required to pay Federal and certain state
income taxes, plus interest and possibly penalties, on our taxable income for
all open tax years. Such payments could have a material adverse effect on the
Company.

OTHER LAWS AND REGULATIONS

        The riverboats operated by the Company's subsidiaries must comply with
U.S. Coast Guard requirements as to boat design, on-board facilities, equipment,
personnel and safety. Each riverboat must hold a Certificate of Seaworthiness or
must be approved by the American Bureau of Shipping, or ABS, for stabilization
and floatation, and may also be subject to local zoning and building codes. Loss
of a riverboat's Certificate of Seaworthiness or ABS approval would preclude its
use as a floating casino.

        Each of the riverboat casinos is subject to extensive state and local
regulations and, on a periodic basis, must obtain various licenses and permits,
including those required to sell alcoholic beverages.

EMPLOYEES

        As of March 15, 2001, the Company employed 9,699 persons of whom 2,629
are employed at Horseshoe Bossier City, 2,731 are employed at Horseshoe Tunica,
2,453 are employed at Empress Hammond, 1,818 are employed at Empress Joliet, and
68 are employed in our corporate office. Approximately 28.6% of the Empress
Joliet employees are unionized.

        Management believes the Company and its subsidiaries maintain an
excellent relationship with their respective employees and we are not aware of
any threatened labor activity affecting its employees. Neither the Company nor
any of its subsidiaries have ever experienced a work stoppage due to a labor
dispute.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

        This Annual Report on Form 10-K contains certain "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, which generally can be identified by the use of such terms as "may,"
"expect," "anticipate," "believe," "continue," or similar variations or the
negative thereof. These forward-looking statements involve risks and
uncertainties, many of


                                       23
<PAGE>   24

which are outside the Company's control and, accordingly, actual results may
differ materially. Factors that might cause a difference include, but are not
limited to, the competitive nature of the casino gaming industry, risk of
increases in the number of competitors in the markets in which the Company
operates, risk of changes in gaming laws and regulations, licensing and other
governmental approvals, construction factors, environmental restrictions, soil
and water conditions, weather and other hazards, access to available and
feasible financing, relations with partners, owners, employees and other third
parties, conditions of credit markets and other business and economic
conditions, litigation, judicial actions and political uncertainties and other
factors discussed from time to time in the Company's filings with the SEC. Any
forward looking statements are made pursuant to the Private Securities
Litigation Reform Act of 1995 and, as such, speak only as of the date made.




                                       24
<PAGE>   25

ITEM 2. PROPERTIES.

        The Company owns and operates casinos in Bossier City, Louisiana; Tunica
County, Mississippi; Hammond, Indiana; and Joliet, Illinois. All of the real
property and casinos are subject to first priority liens securing the Company's
credit facility.

HORSESHOE BOSSIER CITY

        Horseshoe Bossier City is located on approximately 30 acres along the
east side of the Red River, directly facing downtown Shreveport, Louisiana. The
casino complex consists of an approximately 86,000 square foot, four deck
riverboat with approximately 30,000 square feet of gaming space and an
approximately 62,000 square foot dockside pavilion, including a 25-story hotel
tower, an entertainment venue and a 1,750 car parking garage.

HORSESHOE TUNICA

        Horseshoe Tunica is located in Tunica County, Mississippi at Casino
Center, an 80-acre three-property complex. Horseshoe Tunica is approximately
360,000 square feet, with an approximately 65,000 square foot gaming area, three
specialty restaurants, a 650 seat buffet, bars, retail outlets, a 14-story hotel
tower, an entertainment venue and an 1,100 car parking garage. In addition to
the parking garage, there are approximately 4,000 lighted surface parking spaces
in the Casino Center complex. The facility also includes over 46,000 square feet
of administrative space.

EMPRESS HAMMOND

        Empress Hammond, the closest casino to downtown Chicago, includes an
approximately 125,000 square foot pavilion. The real estate used by Empress
Hammond is leased from the City of Hammond, Indiana and is subject to a 75-year
lease. The casino operation is located on a catamaran vessel and consists of
approximately 42,500 square feet of gaming space. The pavilion features a
steakhouse, buffet, deli, a 150-seat banquet room and two lounges. The facility
also includes a 1,051 car parking garage.

EMPRESS JOLIET

        Empress Joliet and the surrounding land based facilities are located on
approximately 330 acres along the Des Plaines River in Joliet, Illinois. The
casino is situated on two catamaran vessels and collectively consists of 36,000
square feet of gaming space. Empress Joliet includes an approximately 150,000
square foot pavilion, featuring a lounge, steakhouse, cafe, buffet and a
400-seat banquet room. A three-story hotel with 102 rooms and an 80-space
recreational vehicle park support Empress Joliet. Empress Joliet provides
surface parking for 2,350 cars.


                                       25
<PAGE>   26

ITEM 3. LEGAL PROCEEDINGS.

        The City of Hammond was a plaintiff in a condemnation proceeding filed
in September 1995 in Lake Superior Court in Lake County, Indiana in which the
City of Hammond condemned a small parcel of land for the construction of the
overpass located near Empress Hammond. On September 28, 1998, the jury returned
a $5.2 million verdict against the City of Hammond. Under terms of the
Development Agreement between Empress Hammond and the City, Empress Hammond is
responsible for reimbursing the City of Hammond for its costs, fees and any
judgments. The City of Hammond appealed this decision to the Indiana appellate
court and subsequently agreed to settle the matter by paying the amount of the
judgment. The judgment was paid by Empress Entertainment, Inc. pursuant to the
agreement for indemnification between the Company and Empress Entertainment,
Inc.

        On July 21, 1998, a lawsuit was filed against Empress Hammond and
Empress Joliet and four of their employees by two former female employees of
Empress Joliet, alleging that Empress Hammond and Empress Joliet committed
gender discrimination and sexual harassment in violation of Title VII of the
Civil Rights Act of 1964 and permitted a hostile work environment to exist at
its facilities. The lawsuit also alleges certain tort claims and seeks
certification as a class action on behalf of similarly situated current and
former female employees of Empress Hammond and Empress Joliet, and seeks
injunctive relief and money damages. The court denied the plaintiffs' request
for class certification. Empress denies the allegations in the complaint and
intends to vigorously contest the remaining claims of the individual plaintiffs.
Because the Court denied the plaintiffs' request for class certification, any
judgment in this matter is not expected to have a material adverse effect on the
Company.

        On June 2, 2000, a lawsuit was filed against Empress Hammond and the
Company on behalf of current and former employees of Empress Hammond alleging
that Empress Hammond and the Company are responsible for damages to current and
former employees as a result of poor air quality on the Empress III, which is
the gaming vessel operating in Hammond, Indiana. The lawsuit alleges certain
tort claims based on poor air quality and seeks certification as a class on
behalf of similarly situated current and former employees of Empress Hammond.
Empress Hammond and the Company deny the allegations in the complaint and intend
to vigorously contest this matter.

        Empress Hammond, Empress Joliet and the Company have demanded
indemnification from Empress Entertainment, Inc., the former owner of Empress
Hammond and Empress Joliet, with respect to each of the above claims, but there
can be no assurance that such indemnity will be adequate or available to the
Company or that any judgment in this matter would not have a material adverse
effect on the Company.

        On February 13, 2001, a lawsuit was filed by Edward T. McGowan, a former
shareholder of Empress Entertainment, Inc. against the Company and seven other
former shareholders of Empress Entertainment, Inc., challenging the validity of
the Empress Merger. The lawsuit seeks injunctive relief, monetary damages and
rescission of the Empress Merger. The Company has demanded indemnification for
any and all claims, losses, costs and expenses incurred as a result of, or in
connection with the defense of, such lawsuit pursuant to a Stockholder
Indemnification Agreement dated December 1, 1999 by and among the Company and
each of the former shareholders of Empress Entertainment, Inc. other than Edward
T. McGowan. Although the Company demanded indemnification, there can be no
assurance that such indemnity will be available to the Company or that any
judgment in this matter would not have a material adverse effect on the Company.

        On November 30, 1999, the Illinois Gaming Board ("IGB") approved the
acquisition of Empress Joliet by the Company, placing certain conditions on its
decision. One of the conditions


                                       26
<PAGE>   27

was the completion of the investigation and approval of all key persons of the
Company. On March 13, 2000, Empress Joliet filed its renewal application with
the IGB and on June 30, 2000, the IGB issued its initial decision and directed
the Administrator to issue a Notice of Denial to Empress Joliet, denying its
application for renewal of its Owner's License. On July 19, 2000, Empress Joliet
received the Notice of Denial of License Renewal from the IGB. In response to
the denial, the Company filed an appeal and submitted a request for an
administrative hearing.

        Effective January 31, 2000, the IGB approved a settlement agreement
between the IGB, the Company, Joliet and Binion. Pursuant to the pertinent parts
of the settlement agreement: (a) the Company agreed to sell Joliet to a suitable
purchaser within the time frames established in the settlement agreement; (b)
Binion will withdraw his key person application; and (c) upon the closing of the
sale of Joliet, Joliet will withdraw its Verified Request for Hearing and, upon
acceptance by the IGB of the withdrawal, the previous denial of Joliet's renewal
application will be moot.

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

        Not applicable.

                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

        There is no established public trading market for the equity interests
in the Company. As of March 15, 2001, the number of record holders of equity
interests in the Company was 37.

        The Company pays tax distributions in accordance with its debt
agreements to enable the holders of equity interests in the Company to pay state
and Federal income taxes on their proportionate share of the Company's income.
The amount of tax distributions paid during 2000, 1999 and 1998 were $38.0
million, $12.8 million and $17.0 million, respectively. The Company's debt
agreements contain provisions which restrict the ability of the Company to make
distributions to the holders of equity interests, based on the Company's
earnings, the ability of the Company to meet certain restrictions on borrowing,
and certain other criteria.




                                       27
<PAGE>   28

ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA.

         The following table summarizes certain selected consolidated financial
data, which should be read in conjunction with the Company's Consolidated
Financial Statements and notes thereto, included elsewhere herein and with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." The selected consolidated financial data as of and for the years
ended December 31, 2000, 1999, 1998, 1997 and 1996 have been derived from the
Company's audited consolidated financial statements included elsewhere herein.

<TABLE>
<CAPTION>
                                                                              Year Ended December 31,
                                                      ---------------------------------------------------------------------
                                                         2000            1999(a)         1998         1997           1996
                                                      -----------     -----------     ---------     ---------     ---------
                                                                                    (in thousands)
<S>                                                   <C>             <C>             <C>           <C>           <C>
STATEMENT OF OPERATIONS DATA:

    Net revenues:
       Casino                                         $   960,927     $   487,536     $ 429,825     $ 321,236     $ 317,479
       Non-casino                                          51,909          34,619        31,351        13,857        14,258
                                                      -----------     -----------     ---------     ---------     ---------
                                                        1,012,836         522,155       461,176       335,093       331,737

    Operating expenses:
       Casino                                             555,429         269,188       247,773       175,394       162,408
       Non-casino                                          45,442          26,859        26,281        20,283        20,474
       Other                                              128,153          69,636        64,283        48,217        51,980
       (Gain) loss on asset held for sale                  (2,096)         10,346        12,911            --            --
       Corporate expenses (b)                              46,283           8,414        12,947        22,490        10,254
       Depreciation and amortization                       81,468          41,806        33,888        19,411        15,989
                                                      -----------     -----------     ---------     ---------     ---------
    Operating income                                      158,157          95,906        63,093        49,298        70,632
    Interest expense, net                                 (96,211)        (53,332)      (37,672)      (15,796)      (21,964)
    Other, net                                             (1,232)           (548)         (149)         (429)          154
                                                      -----------     -----------     ---------     ---------     ---------

    Net income before extraordinary loss on
      early retirement of debt and minority
      interest                                             60,714          42,026        25,272        33,073        48,822
    Extraordinary loss on early retirement of debt             --          (9,653)         (787)       (5,243)           --
    Minority interest in income (loss) of
      subsidiaries(c)                                          --              --           640          (420)       (1,861)
                                                      -----------     -----------     ---------     ---------     ---------
    Net income                                        $    60,714     $    32,373     $  25,125     $  27,410     $  46,961
                                                      ===========     ===========     =========     =========     =========
</TABLE>

<TABLE>
<CAPTION>
                                                                                  As of December 31,
                                                      ---------------------------------------------------------------------
                                                         2000            1999(a)         1998         1997           1996
                                                      -----------     -----------     ---------     ---------     ---------
                                                                                   (in thousands)
<S>                                                   <C>             <C>             <C>           <C>           <C>
BALANCE SHEET DATA:

    Cash and cash equivalents(d)                      $    78,133     $   118,276     $  84,151     $  48,710     $  79,159
    Total assets                                        1,204,538       1,409,244       560,448       511,556       377,597
    Long-term debt, including current maturities        1,028,221       1,258,948       388,718       313,275       232,708
    Shareholders'/members' equity                          52,608          34,594        71,151        64,595        79,782
</TABLE>

----------------
(a)  Includes the results of operations of Empress Hammond and Empress Joliet
     since their acquisition on December 1, 1999.

(b)  Includes deferred compensation charges related to redeemable ownership
     interests of $8.3 million, $0.5 million, $4.2 million, $15.1 million, and
     $4.3 million for the years ended December 31, 2000, 1999, 1998, 1997, and
     1996, respectively.

(c)  Prior to April 1999, the Company owned less than 100% of certain
     subsidiaries. Minority interest represents the share of each subsidiary's
     income attributable to those interests not owned by the Company.

(d)  Excludes escrow funds, restricted for expansion of existing facilities,
     development of new projects or repayment of debt, amounting to
     approximately $42.2 million (1996).


                                       28
<PAGE>   29

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

        The following discussion and analysis provides information which
management believes is relevant to an assessment and understanding of the
consolidated financial condition and results of operations of Horseshoe Gaming
Holding Corp. ("the Company") and its subsidiaries. The discussion should be
read in conjunction with "Selected Consolidated Financial Data" and the
Consolidated Financial Statements and notes thereto included elsewhere herein.
References to 2000, 1999 and 1998 refer to the years ended December 31, 2000,
1999 and 1998, respectively.

        This Annual Report on Form 10-K contains certain "forward looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, which generally can be identified by the use of such terms as "may,"
"expect," "anticipate," "believe," "continue," or similar variations or the
negative thereof. These forward looking statements are subject to certain risks
and uncertainties, such as risks associated with substantial indebtedness, debt
service and liquidity; risks of competition in the Company's existing and future
markets; failure to obtain or retain licenses or regulatory approvals; changes
in gaming laws and regulations; and other factors which could cause actual
results to differ materially.

INTRODUCTION

        The Company is a leading multi-jurisdictional gaming company which owns
and operates, through its wholly-owned subsidiaries, riverboat casinos under the
"Horseshoe" and "Empress" brands. These include the Horseshoe Bossier City
Casino ("Bossier City") in Bossier City, Louisiana, which commenced operations
on July 9, 1994, the Horseshoe Tunica Casino ("Tunica") in Robinsonville,
Mississippi, which commenced operations on February 13, 1995, the Empress Casino
Hammond ("Hammond") in Hammond, Indiana and the Empress Casino Joliet ("Joliet")
in Joliet, Illinois. Hammond and Joliet were acquired (the "Empress Merger")
from Empress Entertainment, Inc. ("Empress") on December 1, 1999, for a total
purchase price, including assumed debt and transaction costs, of $658.4 million.
Joliet commenced operations on June 17, 1992 and Hammond commenced operations on
June 28, 1996.

        The Joliet casino gaming license was due to be renewed by the Illinois
Gaming Board ("IGB") in June 2000. On June 30, 2000, the IGB preliminarily
denied Joliet's application to renew its riverboat owner's license and
preliminarily found Jack Binion ("Binion"), Chairman of the Board and CEO of the
Company, unsuitable to be licensed as a key person. Joliet timely filed a
Verified Request for Hearing of the IGB's decision.

        Effective January 31, 2001, the IGB approved a settlement agreement
between the IGB, the Company, Joliet and Binion. Pursuant to the pertinent parts
of the agreement: (a) the Company agreed to sell Joliet to a suitable purchaser
within the time frames established in the settlement agreement; (b) Binion will
withdraw his key person application; and (c) upon the closing of the sale of
Joliet, Joliet will withdraw its Verified Request for Hearing and, upon
acceptance by the IGB of the withdrawal, the previous denial of Joliet's renewal
application will be moot.

OVERVIEW

        Results of operations include the consolidated results of Bossier City
and Tunica, and Hammond and Joliet from the date of their acquisition on
December 1, 1999.

        Bossier City is one of five riverboat casinos currently operating in the
Bossier


                                       29
<PAGE>   30

City/Shreveport, Louisiana market. The fifth casino opened on December 20, 2000.
In addition, one of the existing casinos in that market is expanding their
facility by adding a hotel. This expansion is expected to be complete in the
first quarter of 2001. The impact on the operating results of the Bossier City
property from these additions is uncertain.

        Tunica competes with nine other casinos in the competitive Tunica
County, Mississippi market. Late in the fourth quarter of 2000, Tunica completed
a $40 million expansion of its facility, adding 475 additional slot machines and
10 table games. In addition, the expanded facility includes a new 625-seat
buffet and an Asian restaurant. The additional space should enable Tunica to
take full advantage of peak business periods when the property historically has
operated at maximum capacity.

        Hammond and Joliet compete with seven other casinos in the Chicago
market, which include four casinos on Lake Michigan in northern Indiana and
three casinos located in Illinois. In 1999, the Illinois legislature enacted
amendments to the Illinois Riverboat Gambling Act that could result in one of
the ten state-authorized licenses for Illinois being relocated to the Chicago
market. The impact on the operating results of Hammond and Joliet due to the
possible relocation of a gaming license to the Chicago market is uncertain.

          The Hammond property experienced construction disruption during 2000
as the Company renovated the steakhouse and buffet and reconfigured the gaming
floor. Ongoing renovations of the pavilion continue into the first quarter of
2001 as the Company prepares to convert the Empress Hammond facility to the
Horseshoe brand during the second quarter of 2001.



                                       30
<PAGE>   31


RESULTS OF OPERATIONS

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
                                                                 Years ended December 31,          % Increase/(Decrease)
                                                       -------------------------------------     -------------------------
                                                          2000          1999         1998        '00 vs. '99   '99 vs. '98
                                                       -----------    ---------    ---------     -----------   -----------
                                                               (dollars in thousands)
<S>                                                    <C>            <C>          <C>                <C>           <C>
Casino revenues
     Bossier City                                      $   247,934    $ 226,373    $ 217,788          9.52%         3.94%
     Tunica                                                240,643      226,313      212,037          6.33%         6.73%
     Hammond                                               236,915       18,085           --            (a)           (a)
     Joliet                                                235,435       16,765           --            (a)           (a)
                                                       -----------    ---------    ---------
                                                       $   960,927    $ 487,536    $ 429,825         97.10%        13.43%
                                                       ===========    =========    =========
Net revenues
     Bossier City                                      $   268,701    $ 248,304    $ 239,379          8.21%         3.73%
     Tunica                                                250,558      236,478      221,797          5.95%         6.62%
     Hammond                                               245,969       19,197           --            (a)           (a)
     Joliet                                                247,608       18,176           --            (a)           (a)
                                                       -----------    ---------    ---------
                                                       $ 1,012,836    $ 522,155    $ 461,176         93.97%        13.22%
                                                       ===========    =========    =========

Operating income (loss)
     Bossier City(b)                                   $    45,501    $  39,912    $  39,277         14.00%         1.62%
     Tunica(b)                                              68,841       63,682       51,157          8.10%        24.48%
     Hammond(b)                                             42,109        3,471           --            (a)           (a)
     Joliet(b)                                              64,126        3,295           --            (a)           (a)
     (Gain) writedown on assets held
       for sale                                              2,096      (10,346)     (12,911)           (c)           (c)
     Corporate expense                                     (37,945)      (7,945)      (8,702)       377.60%        -8.70%
     Deferred compensation
       expense                                              (8,338)        (469)      (4,245)      1677.83%       -88.95%
     Depreciation, amortization
       and other related to
       Empress acquisition                                 (19,008)         833           --            (c)           (c)
     Other                                                     775        3,473       (1,483)       -77.68%      -334.19%
                                                       -----------    ---------    ---------
                                                       $   158,157    $  95,906    $  63,093         64.91%        52.01%
                                                       ===========    =========    =========

Other information
     Interest expense, net                             $    96,211    $  53,332    $  37,672         80.40%        41.57%
     Extraordinary loss                                $        --    $   9,653    $     787            (c)           (c)
     Net income                                        $    60,714    $  32,373    $  25,125         87.55%        28.85%

Operating margin (operating income/net revenues)(d)
     Bossier City(b)                                         16.9%        16.1%        16.4%       0.8 pts.    (0.3) pts.
     Tunica(b)                                               27.5%        26.9%        23.1%       0.6 pts.      3.8 pts.
     Hammond(b)                                              17.1%        18.1%          --      (1.0) pts.            --
     Joliet(b)                                               25.9%        18.1%          --        7.8 pts.            --
     Consolidated                                            15.6%        18.4%        13.7%     (2.8) pts.      4.7 pts.
</TABLE>

--------------
(a)  Acquisition closed on December 1, 1999. Variance % is not meaningful.

(b)  Before corporate allocations and other non-recurring items.

(c)  Not meaningful.

(d)  The "% Increase/(Decrease)" for operating margin represents the absolute
     difference in percentage points (pts.) between the two periods.


                                       31
<PAGE>   32

YEARS ENDED DECEMBER 31, 2000 AND 1999

        A 97% increase in consolidated casino revenues for the year ended
December 31, 2000 over the prior year was primarily the result having only one
month of revenues from Hammond and Joliet in 1999. Casino revenues at Bossier
City and Tunica (the "Existing Properties") increased an average of 8% in the
year 2000 over 1999 with slot volume being the primary driver of those
increases. Contributing to the increase in slot volumes in Bossier City in 2000
was the addition of 200 additional slot machines that were added to the gaming
floor upon the closure of the poker room in the first quarter of 2000.
Offsetting the increased slot volumes was a slight decrease in the table game
hold percentage at both of the Existing Properties year over year. In addition,
construction disruption in 2000 affected revenues in Tunica.

        Food and beverage revenue at the Existing Properties increased 5% in
2000 over 1999. This increase in food and beverage revenue has a direct
correlation with the increase in slot volumes experienced in 2000.

        Consolidated hotel revenues decreased 4% in 2000 in spite of the
additional revenues from the Joliet hotel for a full year in 2000 as opposed to
one month in 1999. Hotel revenue in Bossier City decreased 15% in 2000 from 1999
primarily due to a reduction in the direct mail programs that were in effect in
the prior year. In addition, hotel revenues in Bossier City were adversely
impacted by the sale of an off-site hotel in the first half of the year.

        Operating income on a consolidated basis increased 65% in the year ended
December 31, 2000 as compared to the year ended December 31, 1999 primarily
related to the positive impact of the Empress Merger. The consolidated operating
margin decreased from 18% in 1999 to 16% in 2000, however, operating margins at
the Existing Properties, excluding corporate allocations and other non-recurring
items, increased 0.8 points in Bossier City and 0.6 points in Tunica in 2000 as
a result of the increase in net revenues. The Existing Properties experienced
increases in gaming taxes and payroll as a result of the increased revenues in
2000. Competitive pressures in all of the Company's markets have impacted
margins due to increases in payroll, marketing efforts and direct mail offers.
Consolidated operating margins were also impacted in 2000 by additional
expenditures necessary to increase the operating and service standards in
Hammond and Joliet to a level more consistent with the Company's expectations.

         During 2000, the Company sold a riverboat and related equipment not
currently used, which had been written down in both 1998 and 1999 by $23.2
million, resulting in a gain on sale of $2.1 million.

        Corporate expenses increased $30.0 million during the year 2000 as
compared to 1999. During 2000, the Company relocated its corporate headquarters
to Illinois and doubled the size of the corporate staff in order to build the
corporate infrastructure required to accommodate the Empress Merger. Legal and
professional fees increased approximately $5.4 million primarily related to
regulatory matters in Illinois, $4.0 million was paid related to a consulting
agreement with Empress and $6.0 million of contributions were made to the MBE
Incubator Fund, Inc. (the "Incubator Fund"). The main purpose of the Incubator
Fund is to assist and foster minority owned business enterprises in Illinois,
Indiana, Louisiana and Mississippi, which provide goods and services to the
casino industry. In addition, approximately $3.1 million was incurred for
benefits and severance related to certain current and former executives.

        Deferred compensation expense increased approximately $7.9 million in
2000 over 1999. Deferred compensation expense is recorded based on the change in
the fair market value of


                                       32
<PAGE>   33

redeemable ownership interests and stock appreciation rights issued and the
vesting schedule pursuant to these agreements.

        During 2000, the Company recorded an additional $19.8 million in
acquisition related expenses as compared to 1999, primarily related to
depreciation and amortization expenses associated with the Empress Merger. On a
consolidated basis, depreciation and amortization expense increased 95% in 2000
over 1999, primarily attributable to both depreciation of the two new properties
and the amortization of goodwill associated with the Empress Merger.

        Net interest expense, increased $42.9 million, or 80%, in 2000 over
1999. This is the direct result of additional borrowings made in late 1999 to
fund the Empress Merger and to extinguish approximately $128.6 million in higher
interest debt. During 1999, the Company recorded an extraordinary loss of
approximately $9.7 million related to this early retirement of debt. During
2000, the Company recorded $1.0 million in capitalized interest related to the
expansion of the Tunica casino. Only $8,000 of capitalized interest was recorded
in 1999.

YEARS ENDED DECEMBER 31, 1999 AND 1998

        A 13% increase in consolidated casino revenues for the year ended
December 31, 1999 over 1998 was the result of one month of gaming revenue from
Hammond and Joliet and a combined year over year increase of 5% in casino
revenues from the Existing Properties. Increases in slot volume in Bossier City
and Tunica were partially offset by lower than normal win percentages in Bossier
City in 1999.

        Increases in net revenues at Bossier City and Tunica in 1999 over 1998
were 4% and 7%, respectively. These percentage increases are directly in line
with the increase in casino revenues for the same two periods.

        Operating income on a consolidated basis increased 52% in the year ended
December 31, 1999 as compared to the year ended December 31, 1998. The
consolidated operating margin increased from 14% in 1998 to 18% in 1999.
Operating margins, excluding corporate allocations and other non-recurring
items, decreased 0.3 points in 1999 from 1998 in Bossier City while Tunica
experienced a 3.8 point increase in 1999 over 1998. The 1999 period reflects an
increase of $3.8 million in depreciation and amortization in Bossier City due to
the amortization of a non-compete agreement entered into with the former limited
partners (see Liquidity and Capital Resources discussion below), while the 1998
period in Tunica includes $6.8 million in additional bad debt expense which was
not present in 1999.

         During 1998, Bossier City recorded an initial charge of $12.9 million
to adjust the carrying value of an idle riverboat to the then estimate of its
net realizable value. During 1999, the carrying value was again adjusted
downward by $10.3 million primarily due to the passage of a bill by the Illinois
Legislature which allowed dockside gaming, thereby further reducing the
marketability of such a vessel. The riverboat was sold in 2000, and Bossier City
recognized a gain on sale of $2.1 million.

        Corporate expenses and deferred compensation expense decreased
approximately $4.5 million during 1999 primarily due to a reduction in non-cash
compensation expense. The non-cash compensation expense was recorded to reflect
the value of redeemable ownership interests based on an independent appraisal.

        Net interest expense increased $15.7 million or 42% in 1999 over 1998.
This was due to the


                                       33
<PAGE>   34

increase in debt outstanding in 1999. Total debt outstanding increased to
$1,258.9 million as of December 31, 1999 from $388.7 million as of December 31,
1998. The increased borrowings were necessary to fund the Empress Merger and to
extinguish approximately $128.6 million in higher interest debt. The Company
recognized an extraordinary loss of $9.7 million in 1999 and $787,000 in 1998 on
the early retirement of debt.

LIQUIDITY AND CAPITAL RESOURCES

        Net cash provided by operating activities was $151.1 million, $118.1
million and $68.8 million for the years ended December 31, 2000, 1999 and 1998,
respectively.

        Net cash used in investing activities was $68.3 million, $488.7 million
and $90.5 million, for the years ended December 31, 2000, 1999 and 1998,
respectively. Cash flows from investing activities for 1999 include the effects
of the acquisition of Hammond and Joliet, which include additional goodwill of
approximately $257.9 million and net property and equipment of $189.7 million.
The fluctuations in investing cash flows for 2000 and 1998 are primarily due to
the expansion projects completed in Tunica in December 2000 and Bossier City in
January 1998.

        Net cash (used in)/ provided by financing activities was $(122.9)
million, $404.7 million and $57.1 million for the years ended December 31, 2000,
1999 and 1998, respectively. The borrowings in 1999 were necessary to complete
the Empress Merger. During 2000 and 1999, $293.1 million and $236.9 million,
respectively, was repaid on long-term debt.

        In May 1999, the Company issued $600.0 million of 8 5/8% Senior
Subordinated Notes due May 2009. The proceeds from this issuance were used to
refinance the Company's 12 3/4% Senior Notes and the Company's $130.0 million
credit facility, of which $75.0 million was outstanding in May 1999. $342.3
million of such proceeds were placed in a secured proceeds account to partially
fund the Empress Merger and to retire the $150.0 million of Empress' 8 1/8%
Senior Subordinated Notes due 2006.

        On June 30, 1999, the Company completed a $375.0 million Senior Secured
Credit Facility (the "Credit Facility") with a group of banks. The Credit
Facility is comprised of a $250.0 million revolver and a $125.0 million term
loan. On December 1, 1999, the Company used $175.0 million of the revolver and
$125.0 million of the term loan to partially fund the Empress Merger. As of
March 15, 2001, the Company had $208.4 million outstanding under the Credit
Facility.

        The Company's debt agreements contain covenants that, among other
things, (i) limit the amount of dividends the Company can pay to its
stockholders; (ii) limit the amount of additional indebtedness which may be
incurred by the Company and its subsidiaries; (iii) prohibit any consolidation
or merger of the Company or its subsidiaries with an affiliate or third party,
any sale of substantially all of the Company or its subsidiaries' assets, or any
payment of subordinated indebtedness prior to its scheduled maturity; and (iv)
limit the amount of restricted payments, as defined, the Company may make. In
regards to the pending sale of Joliet, the Company is currently considering its
options as it relates to the Credit Facility.

        Cash and cash equivalents totaled $78.1 million as of December 31, 2000.
Management believes that cash and cash equivalents on hand, cash from operations
and available borrowing capacity will be adequate to meet our existing debt
service obligations and capital expenditure commitments for the next twelve
months.


                                       34
<PAGE>   35

Additional Factors Affecting Future Operating Income

        As previously mentioned, the Company is moving forward with plans to
sell the Joliet property. While there is no certainty of the exact date of
disposition or the final sales price, the timeline set forth in the settlement
agreement with the IGB encourages the Company to move rapidly with the
transaction.

        In March 2001, the Louisiana legislature passed a bill that will
increase the gaming taxes paid by riverboats in the Bossier City/Shreveport
market, including the Company's Bossier City property, by 3%. The increased tax
will be phased in through April 1, 2003, with the first 1% increase effective
April 1, 2001. Taxes will be increased an additional 1% on April 1, 2002 and the
final increase will occur on April 1, 2003.

Ownership Repurchase Matters

       During 2000, the Company purchased redeemable ownership interests of 1.5%
of the Company for $13.2 million of notes payable. Operating results for the
year ended December 31, 2000 include an approximate $443,000 reduction in
deferred compensation expense resulting from the final valuation of these
ownership interests. As of December 31, 2000, the Company's remaining obligation
under these purchases was $10.8 million.

       During 1999, the Company purchased ownership interests of 3.9% of the
Company for $23.6 million of notes payable. As of December 31, 2000, the
Company's remaining obligation under this purchase was $20.0 million.

       During 1999, Horseshoe Gaming purchased redeemable ownership interests
from current and former employees representing a total of 8.5% of Horseshoe
Gaming for $44.3 million. Operating results for the year ended December 31, 1999
includes a $2.9 million reduction in deferred compensation expense resulting
from the final valuation of these ownership interests. As of December 31, 2000,
the Company's remaining obligation under these purchases was $18.5 million.

       In January 1999, Horseshoe Gaming repurchased outstanding warrants held
by a third party which entitled such third party to purchase an approximate
6.99% ownership interest in Horseshoe Gaming from its largest stockholder,
Horseshoe Gaming, Inc. ("HGI"), for an exercise price of $510,000. Upon
acquisition, Horseshoe Gaming exercised the warrants and retired the membership
units acquired from HGI. The total cost of the warrants, including fees,
expenses and the exercise price paid to HGI, was approximately $34.4 million,
which was recorded as a reduction in members' equity in the first quarter of
1999.

       The Company has an agreement with a certain employee which contains a
put/call option whereby, upon termination of employment, the Company must, at
the election of the employee, and may, at the Company's election, purchase the
employee's ownership interest for an amount equal to the fair market value of
such interest as determined by an independent appraisal or an arbitration
process. As of December 31, 2000, the aggregate fair market value of this
interest subject to such put/call option, representing approximately 0.8%
ownership of the Company, was $5.7 million. The agreement provides that the
purchase price for the employee's ownership interest shall be paid in cash,
either upon transfer of the interest to the Company or in installments over a
period not to exceed five years depending on the aggregate purchase price.

       In April 1999, the Company exercised an option to acquire the remaining
8.08% limited partnership interest in Bossier not held by New Gaming Capital
Partnership for total consideration


                                       35
<PAGE>   36

of $30.6 million, which included payments for a non-compete covenant, consents
and a release of claims. The consideration for the repurchase consisted of $2.1
million cash, offsets against the negative capital account balances of the
former limited partners and payables amounting to $26.0 million. As of December
31, 2000, the remaining amount to be paid to these limited partners totaled
$12.8 million and is included in accrued expenses in the accompanying
consolidated balance sheets. Included in other assets in the accompanying
consolidated balance sheets at December 31, 2000 and 1999 are notes receivable
from the former limited partners totaling $5.7 million and $8.3 million,
respectively.

Recently Issued and Proposed Accounting Standards

        The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes accounting and reporting
standards for derivative financial instruments. The provisions of SFAS No. 133
require that a company recognizes all derivatives as either assets or
liabilities on its balance sheet and that the instruments be valued at their
fair value. The Statement also defines the criteria and conditions which govern
the recognition of subsequent changes in the fair value of the instrument as
being either balance sheet or income statement events. The provisions of SFAS
No. 133 are effective for years beginning after June 15, 2000. We do not expect
the adoption of SFAS No. 133 to materially impact our results of operations or
financial position.

        The FASB has issued a proposed SFAS that will impact the accounting for
business combinations and intangible assets, including goodwill. If adopted as
currently proposed, the new SFAS will require that all acquisitions be accounted
for under the purchase method and the amortization of goodwill will cease.
Goodwill will be subject to periodic reviews for impairment, and, if impaired, a
write-down would be recorded. The new SFAS is expected to be issued during 2001
and its provisions are expected to be effective for the first fiscal quarter
after issuance. Early adoption or retroactive application of the new Standard is
not expected to be permitted, although pro forma disclosures of the impact of
its provisions on periods prior to the date of adoption are expected to be
required.



                                       36
<PAGE>   37

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

        The Company's exposure to market risk is changes in its interest rate
risk associated with long term debt. To date, the Company has not held or issued
derivative financial instruments for trading purposes, and the Company does not
enter into derivative transactions that would be considered speculative
positions. For debt obligations, the table below presents principal cash flows
and related weighted average interest rates by expected maturity dates.

<TABLE>
<CAPTION>
                                                           Maturity Date
                                  -----------------------------------------------------------------
                                   2001       2002       2003       2004       2005      Thereafter    Total    Fair Value(1)
                                  -------   --------   --------   --------   --------    ----------   --------  -------------
<S>                               <C>       <C>        <C>        <C>        <C>         <C>          <C>       <C>
    Fixed rate debt               $ 1,850   $    850   $ 17,084   $  8,937   $  3,749    $ 758,064    $790,534    $773,170

      Average interest rate        10.379%    12.000%    11.579%    10.000%     9.000%       8.783%

    Variable rate debt            $ 9,145   $ 10,168   $  1,250   $ 98,750   $ 30,312    $  88,062    $237,687    $237,687

      Average interest rate(2)      9.424%     9.431%     8.940%     8.635%     8.940%       8.940%
</TABLE>

(1) The fair values are based on the borrowing rates currently available for
    debt instruments with similar terms and maturities and market quotes of the
    Company's publicly traded debt.

(2) The average interest rates were based on December 31, 2000, variable rates.
    Actual rates in future periods could vary.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

        See the Index to Consolidated Financial Statements and the Index to
Financial Statement Schedules included at "Item 14. Exhibits, Financial
Statement Schedules, and Reports on Form 8-K".

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

        None.



                                       37
<PAGE>   38

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

        The following table sets forth information concerning the Company
executive officers, directors and other key personnel.

<TABLE>
<CAPTION>
                           Age    Position
                           ---    --------
<S>                        <C>    <C>
Jack B. Binion             64     Chairman of the Board of Directors, Chief Executive Officer
                                  and Secretary
Peri N. Howard             40     Vice Chairperson of the Board of Directors
Leslie L. Kenny            45     Director
Roger P. Wagner            53     President and Chief Operating Officer
Kirk C. Saylor             44     Senior Vice President - Treasurer and Chief Financial Officer
Dominic F. Polizzotto      35     Senior Vice President - General Counsel
David S. Carroll           46     Senior Vice President - Human Resources
Floyd B. Hannon            59     Senior Vice President - Government Affairs
Jon C. Wolfe               33     Senior Vice President - Chief Information Officer
J. Lawrence Lepinski       54     General Manager of Horseshoe Bossier City
Robert McQueen             47     General Manager of Horseshoe Tunica
Ricky S. Mazer             46     General Manager of Empress Hammond
Douglas B. Ferrari         48     General Manager of Empress Joliet
</TABLE>

        Mr. Binion has served as Chairman of the Board, Chief Executive Officer
and Secretary of the Company since its formation in April 1999. From December
1992 to April 1999, Mr. Binion served as the Chief Executive Officer of various
related entities including Horseshoe Gaming, Inc. ("HGI") and Horseshoe GP, Inc.
From 1964 to July 1998, Mr. Binion was the President and Chief Executive Officer
of the Horseshoe Club Operating Company, which owns and operates Binion's
Horseshoe Casino in Las Vegas, Nevada.

        Ms. Howard has been the Company's Vice-Chairperson of the board of
directors since its inception in April 1999 and previously served as a director
of HGI since January 1997. Ms. Howard has served in various capacities with
Horseshoe Tunica since 1995. Ms. Howard is the daughter of Mr. Binion's wife.

        Ms. Kenny has been one of the Company's directors since its inception in
April 1999 and previously served as director of HGI since September 1998. Ms.
Kenny has been self-employed as a manicurist since 1983. Ms. Kenny is the
daughter of Mr. Binion's wife.

        Mr. Wagner has been the Company's President and Chief Operating Officer
since January 1, 2001. Prior thereto, he served as Senior Vice President and
Chief Operating Officer since the Company's formation in April 1999. Prior
thereto, he served as Senior Vice President and Chief Operating Officer with HGI
since November 1998. From October 1996 to March 1998, Mr. Wagner served as
President of the development company for Trump Hotel and Casino Resorts in
Atlantic City, New Jersey. Prior thereto, Mr. Wagner served as President and
Chief Operating Officer of Trump Castle Casino in Atlantic City, New Jersey
since January 1991.

        Mr. Saylor has been the Company's Senior Vice President and Chief
Financial Officer since the Company's formation in April 1999. Prior thereto, he
served as Vice President and Chief Accounting Officer of HGI since November
1998. He has also served as HGI's Chief Financial Officer since August 1, 1998.
From November 1995 to November 1998, Mr. Saylor served as HGI's


                                       38
<PAGE>   39

Corporate Controller.

        Mr. Polizzotto has been the Company's Senior Vice President - General
Counsel since January 2001. Prior thereto he was a partner in the law firm of
Ice Miller in Indianapolis, Indiana since August 1990.

        Mr. Carroll has been the Company's Senior Vice President - Human
Resources since the Company's formation in April 1999. Prior thereto, he served
in the same capacity with HGI since November 1998. From August 1997 to November
1998, Mr. Carroll was Vice President - Human Resources of HGI. From September
1993 to November 1998, Mr. Carroll was Director of Human Resources for Harrah's
Casino in Shreveport, Louisiana.

        Mr. Hannon has been the Company's Senior Vice President - Government
Affairs since the Company's formation in April 1999. Prior thereto, he served in
the same capacity with HGI since July 1999. From November 1993 to June 1999, Mr.
Hannon served as Deputy Director of the Indiana Gaming Commission.

        Mr. Wolfe has been the Company's Senior Vice President - Chief
Information Officer since October 2000. Prior thereto, Mr. Wolfe served as the
Company's Vice President - Chief Information Officer since the Company's
formation in April 1999. Prior thereto, he served in the same capacity with HGI
since October 1998. From October 1995 to October 1998, Mr. Wolfe was Director of
Information Systems for HGI.

        Mr. Lepinski has been General Manager of the Horseshoe Bossier City
since September 1995.

        Mr. McQueen has been General Manager of the Horseshoe Tunica since July
1996 and prior to that as Vice President of Casino Operations for Horseshoe
Tunica since June 1994.

        Mr. Mazer has been General Manager of the Empress Hammond since February
1996. Prior thereto, Mr. Mazer served as Director of Marketing and Advertising
for Empress Joliet from October 1995 to February 1996.

        Mr. Ferrari has been General Manager of Empress Joliet since January
2001. Prior thereto he was Assistant General Manager of Empress Joliet from June
2000 to December 2000. From September 1997 to May 2000, Mr. Ferrari was Director
of Casino Marketing for Peppermill Hotel Casino in Reno, Nevada. From June 1997
to August 1997, Mr. Ferrari was the Marketing Manager for Harrah's Hotel Casino
in Las Vegas, Nevada and prior thereto he served as Vice President of Player
Development for Tropicana Resort and Casino in Las Vegas, Nevada since September
1986.

ITEM 11. EXECUTIVE COMPENSATION.

        The following table sets forth all compensation awarded to, earned by or
paid to the Chief Executive Officer and the four most highly compensated
executive officers (the "Named Executive Officers") and two former executive
officers for their services to the Company for the years ended December 31,
2000, 1999 and 1998.


                                       39
<PAGE>   40


                           SUMMARY COMPENSATION TABLE


<TABLE>
<CAPTION>
                                                                                 Long-Term
                                                  Annual Compensation           Compensation
                                              ----------------------------  Securities Underlying   All Other
           Name                   Year          Salary            Bonus        Options/SARs(#)     Compensation
           ----                   ----        ----------        ----------  ---------------------  ------------
<S>                               <C>         <C>               <C>         <C>                    <C>
Jack B. Binion(1)                 2000        $1,000,000                --               --          $179,787
   Chairman of the Board          1999        $1,000,000                --               --          $144,960
   CEO and Secretary              1998        $1,000,000                --               --                --

Roger P. Wagner(2)                2000        $  295,833        $  146,156        18.350000          $102,067
   President - Chief              1999        $  250,000        $  125,000        18.301611          $  4,452
   Operating Officer              1998        $   32,692                --               --                --

Kirk C. Saylor(3)                 2000        $  250,000        $  123,513        18.350000          $137,432
   Senior Vice President          1999        $  222,404        $  112,500        16.471449          $  7,684
   Chief Financial Officer        1998        $  132,488        $   75,000               --          $  4,107

Floyd B. Hannon(4)                2000        $  250,000        $  123,513        18.350000          $ 67,293
   Senior Vice President          1999        $  125,000        $  125,000        18.508921          $    750
   Government Affairs             1998                --                --               --                --

Ricky S. Mazer(5)(8)              2000        $  200,000        $  216,540        14.650000          $ 12,314
   General Manager                1999        $   17,186        $    5,945               --          $  1,228
   Empress Hammond                1998                --                --               --                --

David F. Fendrick(6)(8)           2000        $  238,020        $  184,696               --          $ 28,554
   Former General Manager         1999        $   15,846        $    7,042               --          $    860
   Empress Joliet                 1998                --                --               --                --

Joseph J. Canfora(7)(8)           2000        $  496,154        $  135,416               --          $ 84,380
   Former President               1999        $   38,462        $   36,818               --          $ 11,530
                                  1998                --                --               --                --
</TABLE>

(1)     All other compensation includes premiums on insurance policies of
        $179,767 and $144,960 for 2000 and 1999, respectively.

(2)     All other compensation includes premiums on insurance policies of $6,370
        and $4,452 for 2000 and 1999, respectively, and relocation payments made
        to, and on behalf of, Mr. Wagner amounting to $95,697 for 2000. In the
        event there is a change in control, Mr. Wagner is entitled to 2.99 times
        his most recent salary and bonus.

(3)     All other compensation includes premiums on insurance policies of
        $10,914 and $7,684 for 2000 and 1999, respectively, and relocation
        payments made to, and on behalf of, Mr. Saylor amounting to $126,518 for
        2000. In the event there is a change in control, Mr. Saylor is entitled
        to 2.99 times his most recent salary and bonus.

(4)     All other compensation includes premiums on insurance policies of
        $11,090 and $750 for 2000 and 1999, respectively, relocation payments
        made to, and on behalf of, Mr. Hannon amounting to $42,363 for 2000 and
        use of Company automobile amounting to $13,840 for 2000. In the event
        there is a change in control, Mr. Hannon is entitled to 2.99 times his
        most recent salary and bonus.

(5)     All other compensation includes premiums on insurance policies of $8,014
        and $870 for 2000 and 1999, respectively, and use of Company automobile
        amounting to $4,300 and $358 for 2000 and 1999, respectively. In the
        event there is a change in control, Mr. Mazer is entitled to 1.00 times
        his most recent salary and bonus.

(6)     Mr. Fendrick resigned as the General Manager of Empress Joliet on
        December 31, 2000. Included in all other compensation are premiums on
        insurance policies of $10,315 and $860 for 2000 and 1999, respectively,
        use of Company automobile amounting to $2,938 for 2000 and accrued
        vacation of $15,301 for 2000.

(7)     Mr. Canfora resigned as President effective July 1, 2000. Included in
        all other compensation are premiums on insurance policies of $17,740 and
        $11,530 for 2000 and 1999, respectively, use of company automobile
        amounting to $12,793 for 2000 and accrued vacation of $53,846 for 2000.
        Mr. Canfora is also covered under a severance agreement that requires
        bi-weekly payments of $19,231 through December 31, 2001.

(8)     Includes compensation since December 1, 1999, the date of the Empress
        Merger.

        No other annual compensation or long-term incentive plan payouts were
paid during the year


                                       40
<PAGE>   41

ended December 31, 2000.

        The following table sets forth certain information regarding grants of
stock options made to the Named Executive Officers during 2000, including
information as to the potential realizable value of such options at assumed
annual rates of stock price appreciation for the ten-year option terms.
Additional information is provided concerning this potential realizable value
for all optionees receiving grants in 2000.

                      OPTION/SAR GRANTS IN LAST FISCAL YEAR


<TABLE>
<CAPTION>

                                                   INDIVIDUAL GRANTS                             POTENTIAL REALIZABLE
                                             -----------------------------                      VALUE AT ASSUMED ANNUAL
                              NUMBER OF        PERCENT OF                                         RATES OF STOCK PRICE
                             SECURITIES      TOTAL OPTIONS/                                         APPRECIATION FOR
                             UNDERLYING       SARs GRANTED       EXERCISE                          OPTION/SAR TERM(1)
                            OPTIONS/SARs      TO EMPLOYEES       OR BASE       EXPIRATION    -----------------------------
NAME                         GRANTED(2)          IN 2000       PRICE($/SH.)       DATE            5%              10%
----                        ------------     --------------    ------------    ----------    ------------     ------------
<S>                         <C>              <C>               <C>             <C>           <C>              <C>
Jack B. Binion                     --                --                --             --              --               --
Roger P. Wagner                 18.35              3.02%         $ 44,488       12/31/09     $    513,401     $  1,301,059
Kirk C. Saylor                  18.35              3.02%         $ 44,488       12/31/09     $    513,401     $  1,301,059
Floyd B. Hannon                 18.35              3.02%         $ 44,488       12/31/09     $    513,401     $  1,301,059
Ricky S. Mazer                  14.65              2.41%         $ 44,488       12/31/09     $    409,881     $  1,038,720

All Option/SARs                607.80            100.00%         $ 44,488       12/31/09     $ 17,005,189     $ 43,094,488
</TABLE>


(1)     The dollar amount under these columns are the result of calculations at
        five percent and ten percent rates set by the Securities and Exchange
        Commission and therefore are not intended to forecast possible future
        appreciation. There is no assurance that the value realized by an
        officer will be at or near the value estimated above.

(2)     Employees vest in the right to exercise these options/SARs over a
        four-year period. Options/SARs are subject to certain conditions,
        including compliance with terms and conditions of the options/SARs as
        approved by the Company. The executive officers listed above received
        tandem SARs in conjunction with the listed options. The tandem SARs have
        substantially identical terms to the options.



                                       41
<PAGE>   42

        The following table sets forth certain information concerning stock
option exercises during 2000 by the Named Executive Officers named in the
Summary Compensation Table and information concerning option values.


AGGREGATED OPTION/SAR EXERCISES IN 2000 AND DECEMBER 31, 2000 OPTION/SAR VALUES

<TABLE>
<CAPTION>
                                                    Number of Securities
                                                   Underlying Unexercised          Value of Unexercised,
                                                     Options/SARs Held           In-the-Money Options/SARs
                        Shares                      at December 31, 2000          at December 31, 2000(1)
                      Acquired on     Value     ----------------------------   ----------------------------
Name                   Exercise     Realized    Exercisable    Unexercisable   Exercisable    Unexercisable
                      -----------   ---------   -----------    -------------   -----------    -------------
<S>                   <C>           <C>         <C>            <C>             <C>            <C>
Jack B. Binion               --            --           --              --             --              --
Roger P. Wagner        4.575403     $ 168,613     9.162903       22.913301      $ 114,019       $ 228,028
Kirk C. Saylor         4.117862     $ 151,751     8.705362       21.998224      $ 102,613       $ 205,226
Floyd B. Hannon        4.627230     $ 116,014     4.587500       27.644191             --       $ 348,042
Ricky S. Mazer               --            --     3.662500       10.987500             --              --
</TABLE>

(1)     Amount represents the difference between the aggregate exercise price of
        unexercised options/SARs and a $38,579 per share price as determined by
        the Company pursuant to the Equity Incentive Plan document. The $38,579
        per share price represents the latest available fair market price as
        determined pursuant to the plan document.

COMPENSATION OF DIRECTORS; COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION

        The Bylaws of the Company provide for a six-member Board of Directors.
There are currently three directors. Directors serve until the next annual
meeting of stockholders and until their successors have been elected and
qualified. Vacancies on the Board of Directors may be filled by a majority of
the remaining directors. The Chairman of the Board of Directors receives no
compensation for services on the Board, Peri N. Howard receives $250,000 and
Leslie L. Kenny receives no compensation for services on the board. Officers
serve at the discretion of the Board. The Board has no Compensation Committee.

EMPLOYMENT AGREEMENTS

        Jack B. Binion has provided services pursuing, developing and managing
gaming operations for the Company and its subsidiaries. There is no existing
employment agreement providing for Mr. Binion to receive compensation for his
services in the future.

        Roger P. Wagner is employed as the President and Chief Operating Officer
of the Company pursuant to an employment agreement executed on November 3, 1998.
Mr. Wagner's term of employment under this agreement expires on December 1,
2002. Mr. Wagner collaborates with Senior Management of the Company to develop
operating objectives that will achieve the Company's profitability and
development goals. He directs and oversees Company operations at each casino and
assures that each operating division is properly organized, staffed, and
directed to fulfill its responsibilities in accordance with Company standards.
Mr. Wagner presently earns a base salary of five hundred thousand dollars
($500,000) and a discretionary bonus.


                                       42
<PAGE>   43

        Kirk C. Saylor is employed as the Senior Vice President - Chief
Financial Officer for the Company pursuant to an employment agreement with the
Company dated November 15, 1998. Mr. Saylor's term of employment under the
employment agreement expires January 1, 2003. Mr. Saylor is responsible for
overseeing the senior accounting operations of the Company's facilities and
assisting in the opening of any casino and hotel facilities to be developed or
acquired by subsidiaries or affiliates of the Company. Mr. Saylor presently
earns compensation of two hundred seventy thousand dollars ($270,000) per year
base salary and a discretionary bonus.

        Floyd P. Hannon is employed as the Senior Vice President - Government
Affairs for the Company pursuant to an employment agreement with the Company
dated July 5, 1999. Mr. Hannon's term of employment under the employment
agreement expires March 31, 2001. Mr. Hannon is responsible for overseeing all
aspects of governmental relations, regulatory compliance and assisting in the
opening of any casino and hotel facilities to be developed or acquired by
subsidiaries or affiliates of the Company. Mr. Hannon presently earns
compensation of two hundred sixty-seven thousand five hundred dollars ($267,500)
per year base salary and a discretionary bonus.

        Ricky S. Mazer is employed as the General Manager of Empress Casino -
Hammond pursuant to an employment agreement with the Company dated March 23,
2000. Mr. Mazer's term of employment under the employment agreement expires
March 23, 2003. Mr. Mazer is responsible for overseeing all day to day
activities of Empress Casino - Hammond in order to maximize, to the best of his
ability, the profitability of the Hammond facility. Mr. Mazer presently earns
compensation of two hundred twenty thousand dollars ($220,000) per year base
salary and a discretionary bonus.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

        The following table sets forth certain information regarding beneficial
ownership of common stock in the Company, as of March 15, 2001, by each person
who is known by the Company to own beneficially more than 5% of the outstanding
shares, by each director of the Company, each of the executive officers and by
all directors and executive officers of the Company as a group.

<TABLE>
<CAPTION>
                                                                    PERCENTAGE
               NAME(1)                          NUMBER OF SHARES    OF SHARES
               -------                          ----------------    ---------
<S>                                             <C>                 <C>
               Jack B. Binion                       21,340(2)         91.10%
               Phyllis M. Cope                       1,907(3)          8.15
               Leslie L. Kenny                       1,194             5.10
               Peri N. Howard                        3,637(4)         15.53
               Scott Hamilton                        1,272(5)          5.43
               Wanda Parsons                         1,907(6)          8.15
               Directors and executive
               officers as a group(13)              21,393(7)         91.12
</TABLE>

(1)     The persons named in this table have sole voting power and investment
power with respect to all shares of capital stock shown as beneficially owned by
them, subject to community property laws where applicable and the information
contained in this table and these notes. Unless otherwise indicated, the address
for each of the persons or entities listed above is c/o the Company at 2300
Empress Drive, Joliet, IL 60436.

(2)     Includes (a) the 9,779 shares held by Mr. Binion as an individual; (b)
the 1,907 shares owned by Phyllis M. Cope; (c) the 3,637 shares owned by Peri N.
Howard; (d) the 1,194 shares owned by


                                       43
<PAGE>   44

Leslie L. Kenney; (e) the 1,272 shares owned by Scott Hamilton; (f) the 1,907
shares owned by Wanda Parsons; and (g) the 1,644 shares held by members of Mr.
Binion's family or trusts for the benefit of members of Mr. Binion's family. Mr.
Binion expressly disclaims beneficial ownership of the 11,561 shares which are
held of record members of Mr. Binion's family or by trusts established for the
benefit of certain members of the families of Mr. Binion or Phyllis M. Cope, for
purposes of Sections 13(d) and 13(g) of the Exchange Act.

(3)     Includes 954 shares held by Phyllis M. Cope, as Trustee of the Ted J.
Fechser Trust, and 953 shares held by Phyllis M. Cope, as Trustee of the Fancy
Ann Fechser Trust. Phyllis M. Cope expressly disclaims beneficial ownership of
any shares held by her as trustee of such trusts, which are trusts established
for the benefit of certain members of the families of Mr. Binion or Phyllis M.
Cope, for purposes of Sections 13(d) and 13(g) of the Exchange Act.

(4)     Includes 275 shares held by Peri N. Howard, as Trustee of the Ted J.
Fechser Trust, 275 shares held by Peri N. Howard, as Trustee of the Fancy Ann
Fechser Trust, 275 shares held by Peri N. Howard, as Trustee of the James
Christopher Fechser Trust, 275 shares held by Peri N. Howard, as Trustee of the
Robert Daniel Fechser Trust, 275 shares held by Peri N. Howard, as Trustee of
the Katie O'Neill Trust, 275 shares held by Peri N. Howard, as Trustee of the
Kellie O'Neill Trust, 275 shares held by Peri N. Howard, as Trustee of the
Rachel Fechser Trust 275 shares held by Peri N. Howard, as Trustee of the Ben E.
Johnson Trust, 55 shares held by Peri N. Howard, as Trustee of the Bonnie Binion
Trust, and 55 shares held by Peri N. Howard, as Trustee of the Benny Behnen
Trust; 55 shares held by Peri N. Howard, as Trustee of the Jack Behnen Trust,
1,261 shares held by Peri N. Howard as an individual and 11 shares subject to
options that are currently exercisable or will become exercisable within 60
days. Peri N. Howard expressly disclaims beneficial ownership of any shares held
by her as trustee of such trusts, which are trusts established for the benefit
of certain members of the families of Mr. Binion or Phyllis M. Cope, for
purposes of Sections 13(d) and 13(g) of the Exchange Act.

(5)     Includes 636 shares held by Scott Hamilton, as Trustee of the James C.
Fechser Trust, and 636 shares held by Scott Hamilton, as Trustee of the Rachel
Fechser Trust. Scott Hamilton expressly disclaims beneficial ownership of any
shares held by him as trustee of such trusts, which are trusts established for
the benefit of certain members of the families of Mr. Binion or Phyllis M. Cope,
for purposes of Sections 13(d) and 13(g) of the Exchange Act.

(6)     Includes 954 shares held by Wanda Parsons, as Trustee of the Katie
O'Neill Trust, and 953 shares held by Wanda Parsons, as Trustee of the Kellie
O'Neill Trust. Wanda Parsons expressly disclaims beneficial ownership of any
shares held by her as trustee of such trusts, which are trusts established for
the benefit of certain members of the families of Mr. Binion or Phyllis M. Cope,
for purposes of Sections 13(d) and 13(g) of the Exchange Act.

(7)     Includes 64 shares subject to options that are currently exercisable or
will become exercisable within 60 days.


                                       44
<PAGE>   45

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

        A current owner, through an entity he owns, provides certain financial
consulting services to the Company. Amounts paid to this company for fees
totaled $300,000, $125,000 and none for the years ended December 31, 2000, 1999
and 1998, respectively.

        The Company and Walter Haybert, the former Chief Financial Officer of
the Company, are parties to an agreement whereby the Company paid Mr. Haybert
$150,000 per year for each of 1999 and 2000 as advances against the purchase
price for his interest in the Company. The Company purchased Mr. Haybert's
interest in the Company in April 2000 for a total purchase price of $5.1
million. The purchase agreement required a down payment of $1.0 million with the
remainder being due in April 2002. The note requires quarterly interest payments
at 9% of the outstanding principal amount.

         The Company and G.A. Robinson III, a current owner of the Company, are
parties to an agreement whereby the Company agreed to purchase Mr. Robinson's
ownership interest at a price to be determined later, if and when Mr. Robinson
decides to sell. In April 2000, Mr. Robinson sold a portion of his ownership for
a total purchase price of $4.4 million. The purchase agreement required a down
payment of $700,000 with the remainder being due in April 2002. The note
requires semi-annual interest payments at 9% of the outstanding principal
amount.

        The Company and Patrick Savin, a former owner of the Company, are
parties to an agreement whereby the Company agreed to purchase Mr. Savin's
ownership interest for a total purchase price of $3.6 million. The note requires
semi-annual interest payments at 10% of the outstanding principal amount with
the principal being due in January 2004.

        In July 2000 the Company loaned Kirk C. Saylor, the Company's Senior
Vice President and Chief Financial Officer, $150,000 evidenced by a promissory
note. The note requires bi-weekly payments of $743 including interest at 10% and
is due July 2005. The note is secured by a second mortgage on Mr. Saylor's
personal residence. The amount outstanding on December 31, 2000 was $148,000.



                                       45
<PAGE>   46

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

<TABLE>
<CAPTION>
(a)(1)  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS:                        Page
                                                                          Number
                                                                          ------
<S>                                                                       <C>
        HORSESHOE GAMING HOLDING CORP.                                     F-1

(a)(2)  INDEX TO FINANCIAL STATEMENT SCHEDULES:

        SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS                    S-2
</TABLE>

        All other schedules are omitted as the required information is
        inapplicable or not present in amounts sufficient to require submission
        of the schedule, or because the information is presented in the
        consolidated financial statements or related notes thereto.

        The exhibits listed on the accompanying Exhibit Index are filed as part
        of this Form 10-K.

(b)     REPORTS ON FORM 8-K:

        On February 7, 2001, a Form 8-K was filed disclosing the January 31,
        2001 Settlement Agreement between the Illinois Gaming Board, Horseshoe
        Gaming Holding Corp., Empress Casino Joliet Corporation and Jack Binion.




                                       46
<PAGE>   47

                                   SIGNATURES

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

                                                Horseshoe Gaming Holding Corp.
                                                a Delaware corporation

Date: March 29, 2001                            By:  /s/ Jack B. Binion
                                                     -------------------------
                                                     Jack B. Binion

                                                Its: Chief Executive Officer,
                                                     Secretary and Chairman of
                                                     the Board of Directors

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

<TABLE>
<CAPTION>
        SIGNATURE                          TITLE                          DATE
        ---------                          -----                          ----
<S>                        <C>                                       <C>
/s/ Jack B. Binion         Chief Executive Officer, Secretary and    March 29, 2001
-------------------------  Chairman of the Board of Directors
Jack B. Binion             (Principal Executive Officer)


/s/ Peri N. Howard         Director                                  March 29, 2001
-------------------------
Peri N. Howard


/s/ Leslie L. Kenny        Director                                  March 29, 2001
-------------------------
Leslie L. Kenny


/s/ Kirk C. Saylor         Chief Financial Officer and Treasurer     March 29, 2001
-------------------------  (Principal Financial and Accounting
Kirk C. Saylor             Officer)
</TABLE>



                                       47
<PAGE>   48

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit
Number                             Description
------                             -----------
<S>        <C>
1.1(f.)    Purchase Agreement, dated May 6, 1999, by and among Horseshoe Gaming
           Holding Corp. and the initial purchasers.

2.1(d.)    First Amendment to Deposit Escrow Agreement, by and among Horseshoe
           Gaming, L.L.C. and Empress Entertainment, Inc., dated March 25, 1999.

2.2(d.)    First Amendment to Agreement and Plan of Merger, dated as of March
           25, 1999, to the Agreement and Plan of Merger, dated as of September
           22, 1998, by and among Horseshoe Gaming, L.L.C., Horseshoe Gaming
           (Midwest), Inc., Empress Acquisition Illinois, Inc., Empress
           Acquisition Indiana, Inc., Empress Casino Joliet Corporation, Empress
           Casino Hammond Corporation and Empress Entertainment, Inc.

2.3(c.)    Agreement and Plan of Merger, dated as of September 2, 1998, by and
           among Horseshoe Gaming, L.L.C., Horseshoe Gaming (Midwest), Inc.,
           Empress Acquisition Illinois, Inc., Empress Acquisition Indiana,
           Inc., Empress Casino Joliet Corporation, Empress Casino Hammond
           Corporation and Empress Entertainment, Inc.

2.4(f.)    Subscription and Reorganization Agreement, dated as of April 23,
           1999, by and among Horseshoe Gaming Holding Corp, Horseshoe Gaming,
           L.L.C., Robinson Property Group, Inc., and others listed therein.

2.5(g.)    Second Amendment to Agreement and Plan of Merger, dated as of July
           23, 1999, to the Agreement and Plan of Merger, dated as of September
           22, 1998, by and among Horseshoe Gaming, L.L.C., Horseshoe Gaming
           (Midwest), Inc., Empress Acquisition Illinois, Inc., Empress
           Acquisition Indiana, Inc., Empress Entertainment, Inc., Empress
           Casino Joliet Corporation and Empress Casino Hammond Corporation.

2.6(i.)    Assumption Agreement, dated as of November 18, 1999, by and among
           Horseshoe Gaming L.L.C., Horseshoe Gaming (Midwest), Inc., Empress
           Acquisition Illinois, Inc., Empress Acquisition Indiana, Inc.,
           Empress Entertainment, Inc., Empress Casino Joliet Corporation,
           Empress Casino Hammond Corporation, Horseshoe Acquisition Illinois,
           Inc., Horseshoe Acquisition Indiana, Inc., and Horseshoe Gaming
           Holding Corp.

3.1(f.)    Certificate of Incorporation of Horseshoe Gaming Holding Corp.

3.2(f.)    By-laws of Horseshoe Gaming Holding Corp.

4.1(f.)    Indenture, dated as of May 11, 1999, by and between Horseshoe Gaming
           Holding Corp. and U.S. Trust Company, National Association.

4.2(f.)    Second Supplemental Indenture, dated as of May 11, 1999, to
           Indenture, dated as of October 10, 1995, by and between Horseshoe
           Gaming, L.L.C., Robinson Property Group Limited Partnership and U.S.
           Trust Company, National Association.

4.3(f.)    Amendment No. 1 to Second Ship Mortgage on the Whole of the Horseshoe
           Casino & Hotel, Tunica executed by Robinson Property Group Limited
           Partnership, as Owner and Mortgagor, in favor of Horseshoe Gaming,
           L.L.C. and United Trust Company of New York.

4.4(b.)    Purchase Agreement for 93/8% Series A Senior Subordinated Notes by
           and among Horseshoe Gaming, L.L.C. and Robinson Property Group
           Limited Partnership, as guarantor, and Wasserstein Perella
           Securities, Inc. as Initial Purchaser.

4.5(b.)    Form of 93/8% Senior Subordinated Note due 2007 of Horseshoe Gaming,
           L.L.C.

4.6(b.)    Indenture, dated as of June 15, 1997, by and among Horseshoe Gaming,
           L.L.C., U.S. Trust Company of Texas, N.A., as Trustee, and Robinson
           Property Group Limited Partnership, as guarantor, with respect to the
           9 3/8% Senior Subordinated Notes due 2007.

4.7(b.)    Exchange and Registration Rights Agreement, dated as of June 25,
           1997, by and among Horseshoe Gaming, L.L.C., Robinson Property Group
           Limited Partnership and Wasserstein Perella Securities, Inc.

4.8(b.)    Intercompany Senior Secured Note due June 15, 2007 executed by
           Robinson Property Group Limited Partnership in favor of Horseshoe
           Gaming, L.L.C.

4.9(b.)    Intercompany Senior Secured Note due June 15, 2007 executed by
           Horseshoe Entertainment in favor of Horseshoe Gaming, L.L.C.

4.10(h.)   Horseshoe Gaming Holding Corp. Credit Agreement, dated as of June 30,
           1999, by and among Horseshoe Gaming Holding Corp., the Lenders listed
           therein, DLJ Capital Funding, Inc. and Canadian Imperial Bank of
           Commerce.(1)
</TABLE>

--------

        (1) In accordance with item 601 of Regulation S-K, the Registrant has
not filed the schedules to this Agreement with the Securities and Exchange
Commission. The Registrant undertakes to supplementally provide a copy of such
schedules to the Securities and Exchange Commission upon request.


                                       48
<PAGE>   49

<TABLE>
<S>        <C>
4.11(j.)   Indenture dated as of June 18, 1998 by and between Empress
           Entertainment, Inc., as issuer, the Guarantors named therein and U.S.
           Bank National Association as Trustee with respect to Empress' 8 1/8%,
           $150 million Senior Subordinated Notes due 2006.

4.12(j.)   Supplemental Indenture, dated as of December 1, 1999, among Empress
           Casino Hammond Corporation, Empress Residential, L.L.C. and Empress
           Casino Joliet Corporation (collectively, the "Subsidiary Guarantors")
           with respect to the unconditional guarantee of all of the Company's
           obligations under Indenture covering the 9 3/8% Senior Subordinated
           Notes due 2007 by the Subsidiary Guarantors.

4.13(j.)   Supplemental Indenture dated as of December 1, 1999, between
           Horseshoe Gaming Holding Corp., to the 9 3/8% Senior Subordinated
           Notes due 2007 and U.S. Trust Company of Texas, N.A.

4.14(j.)   Amendment No. 1 to Horseshoe Gaming Holding Corp. Credit Agreement,
           dated as of November 18, 1999, by and among Horseshoe Gaming Holding
           Corp., the Lenders listed therein, DLJ Capital Funding, Inc. and
           Canadian Imperial Bank of Commerce.

4.15(j.)   Amendment No. 2 to Horseshoe Gaming Holding Corp. Credit Agreement,
           dated as of November 30, 1999, by and among Horseshoe Gaming Holding
           Corp., the Lenders listed therein, DLJ Capital Funding, Inc. and
           Canadian Imperial Bank of Commerce.

4.16(j.)   Amendment No. 3 to Horseshoe Gaming Holding Corp. Credit Agreement,
           dated as of January 20, 2000, by and among Horseshoe Gaming Holding
           Corp., the Lenders listed therein, DLJ Capital Funding, Inc. and
           Canadian Imperial Bank of Commerce.

10.1(f.)   Settlement Term Sheet, dated as of May 19, 1999, by and among Jack B.
           Binion, Horseshoe Gaming, Inc., Horseshoe Gaming, L.L.C., Paul R.
           Alanis, Loren Ostrow, John Schreiber and Cliff Kortman.

10.2(f.)   Horseshoe Note Pledge and Security Agreement, dated as of and on May
           11, 1999, by and among Horseshoe Gaming Holding Corp., Horseshoe
           Gaming, L.L.C. and U.S. Trust Company, National Association.

10.3(f.)   Registration Rights Agreement, dated May 11, 1999, by and among
           Horseshoe Gaming Holding Corp. and the initial purchasers.

10.4(f.)   Security and Control Agreement, dated as of and on May 11, 1999, by
           and among Horseshoe Gaming Holding Corp. and U.S. Trust Company,
           National Association.

10.5(f.)   Guarantee, dated as of May 11, 1999, by Robinson Property Group,
           Limited Partnership for the benefit of Horseshoe Gaming Holding Corp.

10.6(f.)   Guarantee, dated as of May 11, 1999, by Horseshoe Entertainment for
           the benefit of Horseshoe Gaming Holding Corp.

10.7(f.)   Stockholders' Agreement for Horseshoe Gaming Holding Corp., dated as
           of April 29, 1999, by and among Horseshoe Gaming Holding Corp. and
           parties listed therein.

10.8(d.)   Settlement Agreement, dated as of December 31, 1998, by and among
           Horseshoe Gaming, Inc., Horseshoe Gaming, L.L.C. and Hollywood Park,
           Inc.

10.9(d.)   Settlement Agreement, dated as of February 3, 1999, by and among
           Horseshoe Gaming, Inc., Horseshoe Gaming, L.L.C. and Mike Allen.

10.10(d.)  Mutual General Release, dated February 23, 1999, by and among
           Horseshoe Gaming, L.L.C., Horseshoe Gaming, Inc., Horseshoe GP, Inc.,
           Robinson Property Group Limited Partnership, New Gaming Capital
           Partnership, Horseshoe Entertainment, and Nobutaka Mutaguchi.

10.11(d.)  Exclusive License Agreement, dated July 2, 1998, by and between
           Horseshoe Gaming, L.L.C. and Horseshoe License Company.

10.12(d.)  Amended and Restated Employment Agreement, dated November 23, 1998,
           by and between Horseshoe Gaming, Inc. and Larry Lepinski.

10.13(d.)  Amended and Restated Employment Agreement, dated October 15, 1998, by
           and between Robinson Property Group and Robert McQueen.

10.14(d.)  Amended and Restated Employment Agreement, dated November 23, 1998,
           by and between Horseshoe Gaming, Inc. and Kirk Saylor.

10.15(f.)  Amended and Restated Employment Agreement, dated November 23, 1998,
           by and between Horseshoe Gaming, Inc. and David Carroll.

10.16(f.)  Employment Agreement, dated as of November 3, 1998, by and between
           Horseshoe Gaming, Inc. and Roger Wagner.

10.17(e.)  Agreement, dated as of April 21, 1999, by and among Horseshoe Gaming,
           L.L.C., Horseshoe Gaming, Inc., Horseshoe Entertainment, LP, and New
           Gaming Capital Partnership; Jack B. Binion; The Robin Group, Inc. and
           August Robin.

10.18(e.)  Agreement, dated as of April 21, 1999, by and among Horseshoe Gaming,
           L.L.C., Horseshoe Gaming, Inc., Horseshoe Entertainment, LP, and New
           Gaming Capital Partnership; Jack B. Binion; Wendell Piper; Cassandra
           Piper; and Robert E. Piper, Jr.

10.19(g.)  Consulting Agreement, dated as of July 23, 1999, by and between
           Horseshoe Gaming, L.L.C. and Empress Entertainment, Inc.

10.20(j.)  Amended & Restated Employment Agreement dated as of March 2000, by
           and between Empress
</TABLE>


                                       49
<PAGE>   50

<TABLE>
<S>        <C>
           Casino Hammond Corporation and Ricky S. Mazer.

10.21(j.)  Equity Incentive Plan dated as of January 1, 1999 by and between
           Horseshoe Gaming Holding Corp. and certain employees.

10.22(j.)  Promissory Note and Stock Purchase Agreement dated as of November 30,
           1999 by and between Horseshoe Gaming L.L.C. and Alpine Associates.

10.23(j.)  Promissory Note and Stock Purchase Agreement dated as of November 30,
           1999 by and between Horseshoe Gaming L.L.C. and Bear Stearns F/A/O #
           2000.

10.24(j.)  Promissory Note and Stock Purchase Agreement dated as of November 30,
           1999 by and between Horseshoe Gaming L.L.C. and Matthewson CRUT.

10.25(j.)  Promissory Note and Stock Purchase Agreement dated as of November 30,
           1999 by and between Horseshoe Gaming L.L.C. and Nobutaka Mutaguchi.

10.26(j.)  Promissory Note and Stock Purchase Agreement dated as of November 30,
           1999 by and between Horseshoe Gaming L.L.C. and Post Balanced Fund.

10.27(j.)  Stock Purchase Agreement dated as of August 1, 1999 by and between
           Horseshoe Gaming L.L.C. and Robert Fechser.

10.28(j.)  Stock Purchase Agreement dated as of August 1, 1999 by and between
           Horseshoe Gaming L.L.C. and Doyle Brunson.

10.29(j.)  Stock Purchase Agreement dated as of August 1, 1999 by and between
           Horseshoe Gaming L.L.C. and Key Fechser.

10.30(j.)  Stock Purchase Agreement dated as of August 1, 1999 by and between
           Horseshoe Gaming L.L.C. and David Reese.

10.31(k.)  Purchase Agreement dated April 1, 2000, between Horseshoe Gaming
           Holding Corp. and Walter J. Haybert.

10.32(k.)  Promissory Note dated April 1, 2000, between Horseshoe Gaming Holding
           Corp. and Water J. Haybert.

10.33(k.)  Purchase Agreement dated April 1, 2000 between Horseshoe Gaming
           Holding Corp. and G. A. Robinson, III.

10.34(k.)  Promissory Note dated April 1, 2000 between Horseshoe Gaming Holding
           Corp. and G.A. Robinson, III.

10.35(m.)  Purchase Agreement dated October 1, 2000 between Horseshoe Gaming
           Holding Corp. and Patrick Savin.

10.36(m.)  Promissory Note dated October 1, 2000 between Horseshoe Gaming
           Holding Corp. and Patrick Savin.

10.37(n.)  Empress Casino Joliet Settlement Agreement between the Illinois
           Gaming Board, Horseshoe Gaming Holding Corp., Empress Casino Joliet
           Corporation and Jack Binion, dated January 31, 2001.

10.38(o.)  Horseshoe Gaming Holding Corp. 401(k) Plan document.

10.39(o.)  First Amendment to Horseshoe Gaming Holding Corp. 401(k) Plan dated
           January 1, 2001.

10.40(o.)  Horseshoe Gaming Holding Corp. Deferred Compensation Plan document.

10.41(o.)  Employment Agreement, dated July 5, 1999, by and between Horseshoe
           Gaming, Inc. and Floyd B. Hannon.

10.42(o.)  Employment Agreement, dated June 19, 2000, by and between Empress
           Casino Joliet Corporation and Douglas Ferrari.

10.43(o.)  Executive Severance Agreement, dated August 21, 2000, by and between
           Horseshoe Gaming Holding Corp. and Roger P. Wagner.

10.44(o.)  Executive Severance Agreement, dated August 21, 2000, by and between
           Horseshoe Gaming Holding Corp. and Kirk C. Saylor.

10.45(o.)  Executive Severance Agreement, dated August 21, 2000, by and between
           Horseshoe Gaming Holding Corp. and David S. Carroll.

10.46(o.)  Executive Severance Agreement, dated August 21, 2000, by and between
           Horseshoe Gaming Holding Corp. and Floyd B. Hannon.
</TABLE>


                                       50
<PAGE>   51
<TABLE>
<S>        <C>
10.47(o.)  Executive Severance Agreement, dated August 21, 2000, by and between
           Horseshoe Gaming Holding Corp. and Peri N. Howard.

10.48(o.)  Horseshoe Gaming Holding Corp. Retention Bonus Plan, effective August
           1, 2000.

10.49(o.)  Amended And Restated Employment Agreement, dated October 15, 1998, by
           and between Horseshoe Gaming Inc. and Jon C. Wolfe.

10.50(o.)  Executive Severance Agreement, dated August 21, 2000, by and between
           Horseshoe Gaming Holding Corp. and Jon C. Wolfe.

20.1(c.)   Press Release issued on September 2, 1998 by Horseshoe Gaming, L.L.C.
           announcing that it had executed an agreement to acquire the riverboat
           gaming operations of Empress Entertainment, Inc.

21.1(o.)   Subsidiaries of Horseshoe Gaming Holding Corp.

99.1(f.)   Form of Letter of Transmittal for Tender of all Outstanding 8 5/8%
           Series A Senior Subordinated Notes Due 2009 in exchange for 8 5/8%
           Series B Senior Subordinated Notes Due 2009 of Horseshoe Gaming
           Holding Corp.

99.2(f.)   Form of Tender for all Outstanding 8 5/8% Series A Senior
           Subordinated Notes Due 2009 in exchange for 8 5/8% Series B Senior
           Subordinated Notes Due 2009 of Horseshoe Gaming Holding Corp.

99.3(f.)   Form of Instruction to Registered Holder from Beneficial Owner of 8
           5/8% Series A Senior Subordinated Notes Due 2009 of Horseshoe Gaming
           Holding Corp.

99.4(f.)   Form of Notice of Guaranteed Delivery for Outstanding 8 5/8% Series A
           Senior Subordinated Notes Due 2009 in exchange for 8 5/8% Series B
           Senior Subordinated Notes Due 2009 of Horseshoe Gaming Holding Corp.

99.5(l.)   Verified Request for Hearing on the Illinois Gaming Board's July 19,
           2000 Notice of Denial of License Renewal for Empress Casino Joliet.
</TABLE>


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

(a.)    Filed as an Exhibit to Horseshoe Gaming, L.L.C. Registration Statement
        on Form S-4 (No. 333-0214) (the "1996 Form S-4") filed on January 8,
        1996.

(b.)    Filed as an Exhibit to Horseshoe Gaming, L.L.C. Registration Statement
        on Form S-4 (No. 333-33145) filed on August 7, 1997.

(c.)    Filed as an Exhibit to Horseshoe Gaming, L.L.C. Form 8-K filed on
        September 18, 1998.

(d.)    Filed as an Exhibit to Horseshoe Gaming, L.L.C. Form 10-K for the fiscal
        year ended December 31, 1999.

(e.)    Filed as an Exhibit to Horseshoe Gaming, L.L.C. Form 10-Q filed on May
        3, 1999..

(f.)    Filed as an Exhibit to Horseshoe Gaming Holding Corp.'s Form S-4
        Registration Statement filed on June 15, 1999.

(g.)    Filed as an Exhibit to Amendment No. 1 to Horseshoe Gaming Holding
        Corp's Form S-4 Registration Statement filed on July 30, 1999.

(h.)    Filed as an Exhibit to Amendment No. 2 to Horseshoe Gaming Holding
        Corp's Form S-4 Registration Statement filed on August 2, 1999.

(i.)    Filed as an Exhibit to Horseshoe Gaming Holding Corp. Form 8-K on
        December 16, 1999.

(j.)    Filed as Exhibit to Horseshoe Gaming Holding Corp. Form 10-K on March
        30, 2000.

(k.)    Filed as Exhibit to Horseshoe Gaming Holding Corp. Form 10-Q on May 15,
        2000.

(l.)    Filed as Exhibit to Horseshoe Gaming Holding Corp. Form 10-Q on August
        11, 2000.

(m.)    Filed as Exhibit to Horseshoe Gaming Holding Corp. Form 10-Q on November
        14, 2000.

(n.)    Filed as Exhibit to Horseshoe Gaming Holding Corp. Form 8-K on February
        7, 2001.

(o.)    Filed herewith.



                                       51
<PAGE>   52

                 HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES

                          INDEX TO FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
Horseshoe Gaming Holding Corp. and Subsidiaries                                              Page
-----------------------------------------------                                              ----
<S>                                                                                          <C>
Report of Independent Public Accountants                                                      F-2

Consolidated Financial Statements:

   Balance sheets as of December 31, 2000 and 1999                                            F-3

   Statements of operations for the years ended December 31, 2000, 1999 and 1998              F-4

   Statements of stockholders' equity for the years ended December 31, 2000, 1999 and 1998    F-5

   Statements of cash flows for the years ended December 31, 2000, 1999 and 1998              F-6

   Notes to consolidated financial statements                                                 F-7
</TABLE>



                                      F-1
<PAGE>   53
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Horseshoe Gaming Holding Corp.:

We have audited the accompanying consolidated balance sheets of HORSESHOE GAMING
HOLDING CORP. AND SUBSIDIARIES (the "Company") (a Delaware corporation) 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
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. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Horseshoe Gaming Holding Corp.
and Subsidiaries as of December 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years ended December 31,
2000, in conformity with accounting principles generally accepted in the United
States.


/s/ Arthur Andersen LLP

Memphis, Tennessee
February 16, 2001

                                      F-2
<PAGE>   54


                 HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                AS OF DECEMBER 31
                    (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)


<TABLE>
<CAPTION>
                                                                       2000            1999
                                                                    -----------     -----------
<S>                                                                 <C>             <C>
                                     ASSETS
Current assets
   Cash and cash equivalents                                        $    78,133     $   118,276
   Restricted cash                                                           --         159,002
   Accounts receivable, net of allowance for doubtful
      accounts of $12,912 and $11,089                                    15,847          14,776
   Inventories                                                            5,678           5,516
   Prepaid expenses and other                                             7,419           6,212
                                                                    -----------     -----------
         Total current assets                                           107,077         303,782
                                                                    -----------     -----------
Property and equipment, net                                             540,802         546,464
Assets held for sale                                                         --           1,630
Goodwill, net                                                           479,503         470,720
Other, net                                                               77,156          86,648
                                                                    -----------     -----------
                                                                    $ 1,204,538     $ 1,409,244
                                                                    ===========     ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
   Current maturities of long-term debt                             $    10,995     $   164,245
   Accounts payable                                                      14,985           8,430
   Accrued expenses and other                                           100,806          86,548
                                                                    -----------     -----------
         Total current liabilities                                      126,786         259,223
                                                                    -----------     -----------

Long-term liabilities
   Long-term debt, less current maturities                            1,017,226       1,094,703
   Other long-term liabilities                                            2,193          13,964
                                                                    -----------     -----------
         Total long-term liabilities                                  1,019,419       1,108,667
                                                                    -----------     -----------
Commitments and contingencies
Redeemable ownership interests                                            5,725           6,760
Stockholders' equity
   Common stock, $.01 par value, 50,000 shares authorized,
      25,000 shares issued, 23,413 and 23,772 shares outstanding             --              --
   Additional paid-in capital                                            52,715          46,637
   Retained earnings                                                     43,267          16,789
                                                                    -----------     -----------
                                                                         95,982          63,426
   Treasury stock, at cost, 1,587 and 1,228 shares, respectively        (43,374)        (28,832)
                                                                    -----------     -----------
         Total stockholders' equity                                      52,608          34,594
                                                                    -----------     -----------
                                                                    $ 1,204,538     $ 1,409,244
                                                                    ===========     ===========
</TABLE>


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


                                      F-3
<PAGE>   55


                 HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                         FOR THE YEARS ENDED DECEMBER 31
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                     2000            1999            1998
                                                  -----------     -----------     -----------
<S>                                               <C>             <C>             <C>
Revenues
   Casino                                         $   960,927     $   487,536     $   429,825
   Food and beverage                                   85,212          52,953          48,263
   Hotel                                               32,169          33,494          35,448
   Retail and other                                    20,411          13,004           9,980
                                                  -----------     -----------     -----------
                                                    1,098,719         586,987         523,516
   Promotional allowances                             (85,883)        (64,832)        (62,340)
                                                  -----------     -----------     -----------
      Net revenues                                  1,012,836         522,155         461,176
                                                  -----------     -----------     -----------

Expenses
   Casino                                             555,429         269,188         247,773
   Food and beverage                                   34,378          16,818          15,853
   Hotel                                                4,146           3,220           3,518
   Retail and other                                     6,918           6,821           6,910
   General and administrative                         127,659          69,558          63,551
   Corporate expenses                                  37,945           7,945           8,702
   Deferred compensation expense                        8,338             469           4,245
   Preopening expenses                                     --              --             653
   Net loss on disposal of assets                         494              78              79
   (Gain) write-down on assets held for sale           (2,096)         10,346          12,911
   Depreciation and amortization                       81,468          41,806          33,888
                                                  -----------     -----------     -----------
      Total expenses                                  854,679         426,249         398,083
                                                  -----------     -----------     -----------

Operating income                                      158,157          95,906          63,093

Other income (expense)
   Interest expense                                   (98,894)        (65,219)        (39,861)
   Interest income                                      2,683          11,887           2,189
   Other, net                                          (1,232)           (548)            491
                                                  -----------     -----------     -----------
      Total other income (expense)                    (97,443)        (53,880)        (37,181)
                                                  -----------     -----------     -----------
Income before extraordinary loss
   on early retirement of debt                         60,714          42,026          25,912

Extraordinary loss on early retirement of debt             --          (9,653)           (787)
                                                  -----------     -----------     -----------
Net income                                        $    60,714     $    32,373     $    25,125
                                                  ===========     ===========     ===========
</TABLE>


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


                                      F-4
<PAGE>   56


                 HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                FOR YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                          Additional
                                       Members'     Common    Treasury     Paid-in      Retained
                                        Equity      Stock      Stock       Capital      Earnings     Total
                                       --------     ------    --------    ----------    --------    --------
<S>                                    <C>          <C>       <C>         <C>           <C>         <C>
Balance, December 31, 1997             $ 64,595
Cash distribution                       (17,012)
Revaluation of land contribution         (1,109)
Increase in redeemable
  ownership interests                      (448)
Net income                               25,125
                                       --------

Balance, December 31, 1998               71,151
Cash distributions                      (10,616)
Decrease in redeemable
  ownership interests                     2,181
Warrant repurchase                      (34,426)
Net income                               13,389
                                       --------

Balance, June 30, 1999                   41,679
Exchange of members' ownership
  interests for 25,000 shares of
  common stock at $.01 par value        (41,679)     $--      $     --     $ 41,679     $     --    $ 41,679
Dividends:
  Cash                                       --       --            --           --         (566)       (566)
  Payable                                    --       --            --           --       (1,629)     (1,629)
Increase in redeemable
  ownership interests                        --       --            --         (294)          --        (294)
Treasury stock purchases                     --       --       (28,832)       5,252           --     (23,580)
Net income                                   --       --            --           --       18,984      18,984
                                       --------      ---      --------     --------     --------    --------
Balance, December 31, 1999                   --       --       (28,832)      46,637       16,789      34,594
Dividends:
  Cash                                       --       --            --           --      (36,395)    (36,395)
  Receivable                                 --       --            --           --        2,159       2,159
Increase in redeemable
  ownership interests                        --       --            --         (400)          --        (400)
Treasury stock purchases                     --       --       (14,542)       6,478           --      (8,064)
Net income                                   --       --            --           --       60,714      60,714
                                       --------      ---      --------     --------     --------    --------
Balance, December 31, 2000             $     --      $--      $(43,374)    $ 52,715     $ 43,267    $ 52,608
                                       ========      ===      ========     ========     ========    ========
</TABLE>


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


                                      F-5
<PAGE>   57


                 HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                         FOR THE YEARS ENDED DECEMBER 31
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                      2000         1999         1998
                                                                    ---------    ---------    ---------
<S>                                                                 <C>          <C>          <C>
Cash flows from operating activities
   Net income                                                       $  60,714    $  32,373    $  25,125
   Adjustments to reconcile net income to
      net cash provided by operating activities:
         Depreciation and amortization                                 81,468       41,806       33,888
         (Gain) write-down on asset held for sale                      (2,096)      10,346       12,911
         Amortization of debt discounts,
           deferred finance charges and other                           4,468        3,631        2,741
         Provision for doubtful accounts                                7,651        4,643       11,937
         Deferred compensation expense                                  8,338          469        4,245
         Net loss on disposal of assets                                   494           78           79
         Extraordinary loss on early retirement of debt                    --        9,653          787
         Minority interest in income (loss) of subsidiary                  --          311         (640)
         Net change in assets and liabilities                          (9,949)      14,774      (22,238)
                                                                    ---------    ---------    ---------
              Net cash provided by operating activities               151,088      118,084       68,835
                                                                    ---------    ---------    ---------

Cash flows from investing activities
   Purchases of property and equipment                                (74,551)    (205,168)     (46,655)
   Proceeds from sale of property                                       6,292           --          383
   Goodwill                                                               (80)    (257,928)          --
   Net increase in other assets                                            --      (25,603)     (17,902)
   Decrease in construction payables                                       --           --      (26,290)
                                                                    ---------    ---------    ---------
              Net cash used in investing activities                   (68,339)    (488,699)     (90,464)
                                                                    ---------    ---------    ---------

Cash flows from financing activities
   Proceeds from long-term debt                                        49,500      897,810       85,000
   Repayments on long-term debt                                      (293,079)    (236,895)     (10,185)
   Decrease (increase) in restricted cash                             159,002     (159,002)          --
   Capital dividends                                                  (38,024)     (12,811)     (17,012)
   Debt issue costs and commitment fees                                  (291)     (30,664)        (725)
   Warrant repurchases                                                     --      (34,426)          --
   Redeemable ownership payments                                           --      (16,642)          --
   Purchase of treasury stock                                              --       (1,788)          --
   Distributions to minority shareholders                                  --         (842)          (8)
                                                                    ---------    ---------    ---------
              Net cash (used in) provided by financing activities    (122,892)     404,740       57,070
                                                                    ---------    ---------    ---------

Net change in cash and cash equivalents                               (40,143)      34,125       35,441
Cash and cash equivalents, beginning of period                        118,276       84,151       48,710
                                                                    ---------    ---------    ---------
Cash and cash equivalents, end of period                            $  78,133    $ 118,276    $  84,151
                                                                    =========    =========    =========
</TABLE>


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


                                      F-6
<PAGE>   58


                 HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2000


1.      ORGANIZATION AND BASIS OF PRESENTATION

        Horseshoe Gaming Holding Corp. (the "Company"), a Delaware corporation,
conducts casino gaming, hotel and other related operations at riverboat casinos
under the "Horseshoe" and "Empress" names in Bossier City, Louisiana; Tunica
County, Mississippi; Hammond, Indiana; and Joliet, Illinois.

        On April 15, 1999, the Company acquired over 90% of the aggregate
ownership of Horseshoe Gaming, LLC ("Horseshoe Gaming") from Horseshoe Gaming's
members in exchange for interests in the Company. The remaining ownership
interests of Horseshoe Gaming either were contributed to the Company in exchange
for interests in the Company or acquired by the Company or Horseshoe Gaming and
Horseshoe Gaming was subsequently dissolved.

        A description of each principal subsidiary is as follows:

            -   New Gaming Capital Partnership ("NGCP") is a Nevada limited
                partnership, which was formed on February 4, 1993. NGCP is 100%
                owned by the Company and its subsidiary, Horseshoe GP, Inc. and
                is a 91.92% owner of Horseshoe Entertainment, L.P., a Louisiana
                limited partnership which owns and operates the Horseshoe
                Bossier City, ("Bossier City"). In April 1999, the Company
                purchased the remaining 8.08% limited partner interests in
                Horseshoe Entertainment, L.P., (see Note 10), not held by NGCP.

            -   Robinson Property Group, Limited Partnership ("RPG") is a
                Mississippi limited partnership, which was formed on June 7,
                1993. RPG owns and operates the Horseshoe Tunica ("Tunica")
                located in Tunica County, Mississippi, and is 100% owned by the
                Company and its subsidiary, Horseshoe GP, Inc.

            -   Empress Casino Hammond Corporation ("Hammond" or "Empress
                Hammond") is an Indiana Corporation, which was formed on
                November 25, 1992. The Company acquired Hammond from Empress
                Entertainment, Inc. on December 1, 1999 (see Note 4). Hammond
                owns and operates the Empress Casino in Hammond, Indiana and is
                100% owned by the Company.

            -   Empress Casino Joliet Corporation ("Joliet" or "Empress Joliet")
                is an Illinois Corporation, which was formed on December 26,
                1990. The Company acquired Joliet from Empress Entertainment,
                Inc. on December 1, 1999 (see Note 4). Joliet owns and operates
                the Empress Casino and Hotel in Joliet, Illinois and is 100%
                owned by the Company.


                                      F-7
<PAGE>   59

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

        The consolidated financial statements include the accounts of the
Company and all of its subsidiaries (see Note 1). All significant intercompany
accounts and transactions have been eliminated.

Cash and Cash Equivalents

        Cash equivalents are highly liquid investments with an original maturity
of three months or less and are stated at the lower of cost or market.

Restricted Cash

        Restricted cash represents the remaining proceeds from the Company's
8.625% Senior Subordinated Notes which were placed in a secured proceeds account
and used in January 2000 to retire the assumed Empress debt (see Notes 4 and 8).
The proceeds were invested in U.S. Treasuries.

Inventories

        Inventories are stated at the lower of cost, as determined on a
first-in, first-out basis, or market value and consist primarily of food,
beverage, retail merchandise, kitchen smallwares and employee wardrobe.

Property and Equipment

        Property and equipment are stated at cost. The costs of normal repairs
and maintenance are expensed as incurred while major expenditures that extend
the useful lives of assets are capitalized.

        Depreciation is provided on the straight-line basis over the estimated
useful lives as follows:

<TABLE>
<S>                                                          <C>
               Buildings, boat, barge and improvements       15 to 31.5 years
               Furniture, fixtures and equipment              3 to 10   years
</TABLE>

Capitalized Interest

        The Company capitalizes interest for associated borrowing costs of major
construction projects. Capitalization of interest ceases when the asset is
substantially complete and ready for its intended use. Interest capitalized
during the years ended December 31, 2000, 1999 and 1998, was $1.0 million,
$8,000 and $163,000, respectively.

Goodwill

        Goodwill is amortized on a straight-line basis over 25 years, which
management estimates is the related minimum benefit period. The amount of
amortization expense recorded for the years ended December 31, 2000, 1999 and
1998, was $20.7 million, $3.6 million and $1.7 million, respectively.


                                      F-8
<PAGE>   60

2.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Deferred Finance Charges

        Deferred finance charges, which are included in other assets, consist of
fees and expenses incurred to obtain the Company's debt. The deferred finance
charges are being amortized over the term of the related debt using the
effective interest method (see Note 8).

Redeemable Ownership Interests

        The Company is obligated to repurchase ownership interests totaling 0.8%
of the Company's outstanding equity interests issued to certain employees
pursuant to employment agreements in the event of their termination at a price
equal to the then fair market value, based on an independent appraisal. The
estimated fair value of such ownership interests is reported outside of equity
in the accompanying consolidated balance sheets for all periods presented and
expensed over the vesting period (see Note 12).

Dividends and Capital Distributions

        The Company's debt agreements contain covenants that limit dividends and
capital distributions to its stockholders. Dividends and capital distributions
to the stockholders are to be based upon the Company's taxable income and the
highest marginal Federal and state individual statutory tax rates in effect,
which are applicable to any stockholder. Such dividends and distributions are to
be paid quarterly based upon estimated taxable income. After filing of their
annual tax returns by the Company and its subsidiaries, each stockholder is to
reimburse the Company for overpayments of capital distributions or the Company
is to withhold such amounts from future dividends to the stockholders.

Casino Revenues

        Casino revenue is the aggregate of gaming wins and losses.

Casino Promotional Allowances

        Casino promotional allowances consist primarily of the retail value of
complimentary food and beverage, rooms and other services furnished to guests
without charge. Such amounts are included in gross revenues and deducted as
promotional allowances. The estimated costs of providing such complimentary
services, which are included in casino department expenses, are as follows (in
thousands):

<TABLE>
<CAPTION>
                                                 Years Ended December 31,
                                              -------------------------------
                                               2000        1999        1998
                                              -------     -------     -------
<S>                                           <C>         <C>         <C>
               Food and beverage              $60,373     $37,534     $36,705
               Hotel                            8,612       8,384       8,325
               Other operating expenses         7,981       7,599       5,067
                                              -------     -------     -------
                                              $76,966     $53,517     $50,097
                                              =======     =======     =======
</TABLE>



                                      F-9
<PAGE>   61

2.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Advertising Costs

        The Company expenses all costs associated with advertising as incurred,
and such amounts are included in general and administrative expenses in the
accompanying consolidated statements of operations.

Development and Preopening Expenses

        The Company expenses all development and preopening costs as incurred in
accordance with Statements of Position 98-5 "Reporting on the Cost of Start-up
Activities." Total preopening costs of $653,000 were expensed during 1998, in
conjunction with expansions in Bossier City and Tunica.

Corporate Expenses

        Expenses associated with the management of the Company are recorded as
corporate expenses and are reflected in the accompanying consolidated statements
of operations in the periods such expenses are incurred.

Deferred Compensation Expense

        Deferred compensation expense represents compensation expenses related
to ownership interests in the Company issued to employees pursuant to employment
agreements, the 1997 Unit Option Plan and the 1999 Equity Incentive Plan (see
Note 12).

Income Taxes

        The Company is organized as a corporation under Delaware laws and has
elected to be taxed as an S Corporation for Federal income tax purposes. During
1998, the Company was organized as a limited liability company under Delaware
laws. The Internal Revenue Service classifies a limited liability company as a
partnership for Federal income tax purposes if the limited liability company
lacks certain characteristics of corporations. Management believed that the
Company lacked such corporate characteristics and, accordingly classified the
Company as a partnership for Federal income tax purposes.

        Accordingly, no provision is made in the accounts of the Company for
Federal income taxes, as such taxes are liabilities of the stockholders or
members.

        The Company's income tax returns and the amount of allocable taxable
income are subject to examination by Federal taxing authorities. If an
examination results in a change to taxable income, the income tax reported by
the stockholders may also change.

Impairment of Long-Lived Assets

        In accordance with Statement of Financial Accounting Standards No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of," management continually evaluates whether events or changes in
circumstances indicate that the carrying amount of long-lived assets may not be
recoverable (see Note 6).


                                      F-10
<PAGE>   62

2.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Use of Estimates

        The preparation of financial statements in conformity with accounting
principles generally accepted in the United States 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.

Reclassifications

        Certain amounts from prior years have been reclassified to conform to
the current year presentations, which have no effect on previously reported net
income.

Recently Issued and Proposed Accounting Standards

        The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes accounting and reporting
standards for derivative financial instruments. The provisions of SFAS No. 133
require that a company recognizes all derivatives as either assets or
liabilities on its balance sheet and that the instruments be valued at their
fair value. The Statement also defines the criteria and conditions which govern
the recognition of subsequent changes in the fair value of the instrument as
being either balance sheet or income statement events. The provisions of SFAS
No. 133 are effective for years beginning after June 15, 2000. We do not expect
the adoption of SFAS No. 133 to materially impact our results of operations or
financial position.

        The FASB has issued a proposed SFAS that will impact the accounting for
business combinations and intangible assets, including goodwill. If adopted as
currently proposed, the new SFAS will require that all acquisitions be accounted
for under the purchase method and the amortization of goodwill will cease.
Goodwill will be subject to periodic reviews for impairment, and, if impaired, a
write-down would be recorded. The new SFAS is expected to be issued during 2001
and its provisions are expected to be effective for the first fiscal quarter
after issuance. Early adoption or retroactive application of the new Standard is
not expected to be permitted, although pro forma disclosures of the impact of
its provisions on periods prior to the date of adoption are expected to be
required.

3.      CONSOLIDATED STATEMENTS OF CASH FLOWS

        The following non-cash investing and financing activities are not
reflected in the Consolidated Statements of Cash Flows:

        During 2000, an individual exercised a put option which had previously
been recorded as redeemable ownership interests. As a result, the Company
increased accrued liabilities and decreased redeemable ownership interests by
$1.3 million.

        During 2000, the Company purchased 359 shares of the Company's common
stock valued at $14.5 million for debt. The Company had accrued for the
repurchase of 146 shares valued at $6.5 million.

        During 2000, Bossier sold an offsite hotel for $4.2 million. The Company
received a note receivable for $2.0 million of the sale price.


                                      F-11
<PAGE>   63

        During 1999, the Company acquired Hammond and Joliet for cash plus the
assumption of debt. As a result, the Company increased debt by $151.5 million,
which included the tender premium of $1.5 million, increased accrued liabilities
by $5.1 million and increased goodwill by $156.6 million. The Company also
recorded additional liabilities and goodwill related to the acquisition of
Hammond and Joliet totaling $3.8 million.

       During 1999, the Company purchased treasury stock for $21.8 million in
notes payable.

       Also, during 1999, the Company purchased certain ownership interests for
$28.1 million in notes payable. The Company had previously recorded redeemable
ownership interests for the repurchase of these ownership interests.

       During 1999, the Company purchased the remaining 8.08% limited
partnership interest not held by NGCP for $30.6 million. The non-cash asset of
$25.9 million increased goodwill by $13.0 million and other assets by $12.9
million. The non-cash liability increased accrued expenses by $10.6 million,
other long-term accrued expenses by $12.8 million and minority interest by $2.5
million.

       During 1998, the carrying value of the land was adjusted to its estimated
fair market value as agreed to by Tunica and the contributing partner. As a
result, Tunica reduced the value of the land by $941,000 and reduced goodwill by
$168,000 with a corresponding reduction in partners' capital of $1.1 million.

       The net change in assets and liabilities consists of the following (in
thousands):

<TABLE>
<CAPTION>
                                                                Years Ended December 31,
                                                              ----------------------------
                                                                2000       1999       1998
                                                              --------   -------   --------
<S>                                                           <C>        <C>       <C>
      (Increase) decrease in assets:
         Accounts receivable                                   $(7,117)  $(9,866)  $ (8,072)
         Inventories                                              (162)     (671)      (590)
         Prepaid expenses and other                             (5,223)   (1,730)    (2,382)
      Increase (decrease) in liabilities:
         Accounts payable                                        6,555       262     (2,226)
         Accrued expenses and other                             (4,002)   26,779     (8,968)
                                                              --------   -------   --------
                                                               $(9,949)  $14,774   $(22,238)
                                                              ========   =======   ========

Supplemental Cash Flow Disclosure (in thousands)
      Cash paid for interest, net of amounts capitalized      $100,044   $54,681   $ 36,530
</TABLE>



                                      F-12
<PAGE>   64

4.      EMPRESS ACQUISITION

        On December 1, 1999, the Company acquired Hammond and Joliet from
Empress Entertainment, Inc. (the "Empress Merger") for $493.9 million in cash
plus transaction costs of $7.9 million. As additional consideration, the Company
assumed $150.0 million of Empress' 8.125% Senior Subordinated Notes due 2006
(the "Empress Notes"). Pursuant to a change in control offer to purchase the
Empress Notes at 101% of their principal amount in accordance with the terms of
the Indenture, the Company retired all of the Empress Notes in January 2000.
Hammond and Joliet continue to operate as wholly owned subsidiaries of the
Company.

       The acquisition has been recorded using the purchase method of
accounting. During 2000, the Company recorded an additional $29.5 million of
goodwill relating to further allocations of the purchase price of the Empress
properties to the tangible and intangible assets acquired and liabilities
assumed, bringing the total goodwill to $451.3 million. The goodwill is being
amortized over 25 years from the date of acquisition. The Company valued the
acquired intangibles (included in other assets, net in the accompanying
consolidated balance sheets) to be $10.0 million for trademarks and $5.0 million
for customer lists. These amounts are being amortized over five years. The
purchase price of the acquisitions and related allocation consist of the
following (in thousands):

<TABLE>
<S>                                                                   <C>
         PURCHASE PRICE:
               Cash                                                   $493,900
               Transactions costs                                        7,908
                                                                      --------
                      Total cash consideration                         501,808
                      Plus: Debt and accrued interest assumed          155,078
                            Tender premium on debt                       1,500
                                                                      --------
                      Total purchase price                            $658,386
                                                                      ========

       ALLOCATION OF PURCHASE PRICE:
               Current assets                                         $ 46,018
               Property and equipment                                  163,004
               Other assets, net                                        14,518
               Intangible assets                                        15,000
               Goodwill                                                451,301
               Current liabilities                                     (31,455)
                                                                      --------
                      Total allocation of purchase price              $658,386
                                                                      ========
</TABLE>

       The following unaudited pro-forma financial information (in thousands)
assumes the acquisitions occurred at the beginning of each period presented.
These results have been prepared for comparative purposes only and do not
purport to be indicative of what would have occurred had the acquisitions been
made at the beginning of these periods, or as a prediction of results which may
occur in the future.

<TABLE>
<CAPTION>
                                                 Years Ended December 31,
                                                 --------------------------
                                                    2000           1999
                                                 -----------    -----------
                                                 (unaudited)    (unaudited)
<S>                                               <C>            <C>
        Net revenues                              $940,507       $857,842
        Operating income                          $164,024       $111,691
        Net income                                $ 55,668       $ 13,647
</TABLE>


                                      F-13
<PAGE>   65

5.      PROPERTY AND EQUIPMENT

       Property and equipment consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                          As of December 31,
                                                        -----------------------
                                                          2000           1999
                                                        ---------      --------
<S>                                                     <C>           <C>
         Land and land improvements                     $  33,357     $  26,355
         Buildings, boat, barge and improvements          502,105       493,325
         Furniture, fixtures and equipment                135,242       116,531
         Construction in progress                           5,842         2,067
                                                        ---------      --------
                                                          676,546       638,278
         Accumulated depreciation                        (135,744)      (91,814)
                                                        ---------      --------
             Property and equipment, net                $ 540,802      $546,464
                                                        =========      ========
</TABLE>

6.     ASSETS HELD FOR SALE

       In 1998, Bossier City replaced its riverboat casino facility ("Queen of
the Red") with a new riverboat casino facility. The Queen of the Red, along with
its related gaming equipment, were reported as assets held for sale in the
accompanying 1999 consolidated balance sheet. During 1999 and 1998, Bossier City
recorded an asset write-down of $10.3 million and $12.9 million, respectively,
reducing the carrying value of the Queen of the Red to its then estimated net
realizable value. The estimated net realizable value was based on market
information concerning riverboats being held for sale. In 2000, the Queen of the
Red and its remaining gaming equipment were sold. After recording all
liabilities associated with the Queen of the Red, Bossier City recorded a gain
on sale of $2.1 million.

7.     ACCRUED EXPENSES AND OTHER

       Accrued expenses and other consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                        Years Ended December 31,
                                                        ------------------------
                                                         2000             1999
                                                        --------        --------
<S>                                                     <C>             <C>
         Payroll and related liabilities                $ 23,755        $ 19,609
         Buyout of former limited partners                12,840          10,987
         Gaming, sales, use and property taxes            12,399           7,726
         Accrued interest                                 11,973          17,476
         Progressive slot and slot club liabilities       10,044          12,531
         Insurance and guest claims payable                7,342           4,296
         Other accrued expenses                           22,453          13,923
                                                        --------        --------
                                                        $100,806        $ 86,548
                                                        ========        ========
</TABLE>



                                      F-14
<PAGE>   66
8.     LONG-TERM DEBT

       Long-term debt consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                                         As of December 31,
                                                                       -----------------------
                                                                           2000         1999
                                                                       ----------   ----------
<S>                                                                    <C>          <C>
         8.625% Senior Subordinated Notes (effective interest rate
            of 8.657%), due May 15, 2009, net of unamortized
            discount of $1,831 and $2,050                              $  598,169   $  597,950

         9.375% Senior Subordinated Notes (effective interest of
            9.384%), due June 15, 2007, net of unamortized
            discount of $105 and $121                                     159,895      159,879

         8.125% Empress Senior Subordinated Notes (effective interest
            rate of 8.125%), due July 1, 2006, including call premium
            of $1,500                                                          --      151,500

         Senior Secured Revolving Credit Facility, secured by
            substantially all of the assets of the Company, $250
            million borrowing capacity, due September 30, 2004,
            with varying interest rates ranging from 8.53% to
            10.50 % at December 31, 2000                                   97,500      175,000

         Senior Secured Credit Facility Tranche B Term Loan,
            $125 million borrowing capacity, secured by substantially
            all of the assets of the Company, principal of $313 plus
            interest due quarterly with remaining principal and interest
            due September 30, 2006, with a variable interest rate
            which was 8.94% at December 31, 2000                          123,375      124,687

         Notes Payable, interest ranging from 9% to 12%, due in
            various installments through January 2004                      49,282       49,932
                                                                       ----------   ----------
                                                                        1,028,221    1,258,948
         Current maturities                                               (10,995)    (164,245)
                                                                       ----------   ----------
                                                                       $1,017,226   $1,094,703
                                                                       ==========   ==========
</TABLE>

       On June 15, 1997, the Company issued $160.0 million of 9.375% Senior
Subordinated Notes ("Subordinated Notes") due June 15, 2007. The Subordinated
Notes were issued at 99.899% of par value. The Subordinated Notes are unsecured
and require semi-annual interest payments on June 15 and December 15.

       During 1998, the Company repurchased some of its senior notes from
individual note holders in the open market totaling $8.4 million. An
extraordinary loss on early retirement of debt of $787,000 was recognized in
1998 for prepayment penalties, premium and the write-off of unamortized
discounts and deferred finance charges.

        In May 1999, the Company completed a private placement offering of
$600.0 million of 8.625% Senior Subordinated Notes due 2009. $128.6 million of
the proceeds from the notes were used to retire the 12.75% senior notes and
$75.0 million was applied to the Company's Amended



                                      F-15
<PAGE>   67

8.  LONG-TERM DEBT (CONTINUED)

and Restated Senior Secured Revolving Credit Facility. An extraordinary loss on
the early retirement of debt of $9.6 million was recognized in 1999 for
prepayment penalties, premium and the write-off of unamortized discounts and
deferred finance charges. The remaining proceeds of $342.3 million were placed
in a secured proceeds account of which $151.5 million was used to fund the
redemption of the Empress 8.125% Senior Subordinated Notes in January 2000 and
$190.8 million was used to partially fund the acquisition of Hammond and Joliet.

       On June 30, 1999, the Company completed its $375.0 million Senior Secured
Credit Facility (the "Credit Facility"). The Credit Facility consists of a
$250.0 million, five-year revolver and a $125.0 million, seven-year term loan.
On December 1, 1999, the Company borrowed $175.0 million of the revolver and the
entire $125.0 million term loan to complete the funding requirement for the
purchase of Hammond and Joliet. All of the operating subsidiaries guarantee the
obligations under the Credit Facility. The term loan requires quarterly
principal payments of $312,500 through September 2005 and $29.4 million
quarterly thereafter. The revolver is permanently reduced by $9.4 million per
quarter beginning December 31, 2001, $12.5 million per quarter beginning
December 31, 2002 and $40.6 million per quarter beginning December 31, 2003.

       The Company's debt agreements contain covenants that, among other things,
(i) limit the amount of dividends the Company can pay to its stockholders; (ii)
limit the amount of additional indebtedness which may be incurred by the Company
and its subsidiaries; (iii) prohibit any consolidation or merger of the Company
or its subsidiaries with an affiliate or third party, any sale of substantially
all of the Company or its subsidiaries' assets, or any payment of subordinated
indebtedness prior to its scheduled maturity; and (iv) limit the amount of
restricted payments, as defined, the Company may make.

       Five year maturities of the Company's long-term debt are as follows (in
thousands):

<TABLE>
         Year ended December 31
         ----------------------
<S>                                                          <C>
            2001                                             $ 10,995
            2002                                             $ 11,018
            2003                                             $ 18,334
            2004                                             $107,686
            2005                                             $ 34,061
</TABLE>

       At both December 31, 2000 and 1999 the fair market value of the 8.625%
Senior Subordinated Notes, based on quoted market prices was $580.5 million. As
of December 31, 2000 and 1999, the fair market value of the 9.375% Senior
Subordinated Notes, based on quoted market prices was $160.2 million and $159.6
million, respectively. The fair market value of the Company's other long-term
debt approximated its carrying value as of December 31, 2000 and 1999, based on
the borrowing rates currently available for debt with similar terms.


                                      F-16
<PAGE>   68

9.     LEASE COMMITMENTS

        The Company and its subsidiaries lease both real estate and equipment
used in the operations and classifies those leases as operating leases following
the provisions of SFAS No. 13 "Accounting for Leases." As of December 31, 2000,
the Company did not have any capital leases.

        Hammond entered into a lease providing for the right to use the site of
the development and the parking structure, which was conveyed to the City of
Hammond upon completion. The lease expires on the fifth anniversary of Hammond's
procurement of its operating license from the Indiana Gaming Commission (June
21, 1996). The term of the lease automatically extends for a period equal to
each renewal period of the operating license provided that the total term will
not exceed 75 years. Hammond has paid in full the rent for the amount of $1.00
per year for the term of the lease.

       Rent expense for the years ended December 31, 2000, 1999 and 1998 was
approximately $8.2 million, $2.5 million, and $2.1 million, respectively.

       As of December 31, 2000, the company was obligated under non-cancelable
operating leases to make future minimum lease payments as follows (in
thousands):

<TABLE>
<CAPTION>
         Year ended December 31
         ----------------------
<S>                                                          <C>
            2001                                             $2,290
            2002                                              1,882
            2003                                                903
            2004                                                290
            2005                                                159
            Thereafter                                          675
                                                             ------
            Total                                            $6,199
                                                             ======
</TABLE>

       In addition to these minimum rental commitments, certain of the Company's
operating leases provide for contingent rentals based on a percentage of
revenues in excess of specified amounts.

10.     OWNERSHIP REPURCHASE MATTERS

       During 2000, the Company purchased redeemable ownership interests of 1.5%
of the Company for $13.2 million of notes payable. Operating results for the
year ended December 31, 2000 includes an approximate $443,000 reduction in
deferred compensation expense resulting from the final valuation of these
ownership interests. As of December 31, 2000, the Company's remaining obligation
under these purchases was $10.8 million.

       During 1999, the Company purchased ownership interests of 3.9% of the
Company for $23.6 million of notes payable. As of December 31, 2000, the
Company's remaining obligation under this purchase was $20.0 million.

       During 1999, Horseshoe Gaming purchased redeemable ownership interests
from four current employees and five former employees representing a total of
8.5% of Horseshoe Gaming for $44.3 million. Operating results for the year ended
December 31, 1999 includes a $2.9 million reduction in deferred compensation
expense resulting from the final valuation of these ownership interests. As of
December 31, 2000, the Company's remaining obligation under these purchases was
$18.5 million.



                                      F-17
<PAGE>   69

10.    OWNERSHIP REPURCHASE MATTERS (CONTINUED)

       In January 1999, Horseshoe Gaming repurchased outstanding warrants held
by a third party which entitled such third party to purchase an approximate
6.99% ownership interest in Horseshoe Gaming from its largest stockholder,
Horseshoe Gaming, Inc. ("HGI"), for an exercise price of $510,000. Upon
acquisition, Horseshoe Gaming exercised the warrants and retired the membership
units acquired from HGI. The total cost of the warrants, including fees,
expenses and the exercise price paid to HGI, was approximately $34.4 million,
which was recorded as a reduction in members' equity in the first quarter of
1999.

       The Company has an agreement with a certain employee which contains a
put/call option whereby, upon termination of employment, the Company must, at
the election of the employee, and may, at the Company's election, purchase the
employee's ownership interest for an amount equal to the fair market value of
such interest as determined by an independent appraisal or an arbitration
process. As of December 31, 2000, the aggregate fair market value of this
interest subject to such put/call option, representing approximately 0.8%
ownership of the Company, was $5.7 million. The agreement provides that the
purchase price for the employee's ownership interest shall be paid in cash,
either upon transfer of the interest to the Company or in installments over a
period not to exceed five years depending on the aggregate purchase price.

       In April 1999, the Company exercised an option to acquire the remaining
8.08% limited partnership interest in Bossier not held by NGCP for total
consideration of $30.6 million, which included payments for a non-compete
covenant, consents and a release of claims. The consideration for the repurchase
consisted of $2.1 million cash, offsets against the negative capital account
balances of the former limited partners and payables amounting to $26.0 million.
As of December 31, 2000, the remaining amount to be paid to these limited
partners totaled $12.8 million and is included in accrued expenses in the
accompanying consolidated balance sheets. Included in other assets in the
accompanying consolidated balance sheets at December 31, 2000 and 1999 are notes
receivable from the former limited partners totaling $5.7 million and $8.3
million, respectively.

11.    TRANSACTIONS WITH RELATED PARTIES

       A current owner, through an entity he owns, provides certain financial
consulting services to the Company. For the years ended December 31, 2000 and
1999, the Company paid fees of approximately $300,000 and $125,000,
respectively, to this owner.

       Notes receivable from current and former employees totaling $310,000 and
$490,000 are included in other assets in the accompanying consolidated balance
sheets as of December 31, 2000 and 1999, respectively. The notes are secured by
their ownership interests in the Company or by personal real estate and have
various due dates and interest rates ranging from 7% to 10%. One of the current
notes, amounting to $148,000, is from an officer of the Company.


                                      F-18
<PAGE>   70
12.    EMPLOYEE COMPENSATION AND BENEFITS

        Deferred compensation expense represents compensation expenses related
to ownership interests in the Company issued to employees pursuant to employment
agreements, the 1997 Unit Option Plan, and the 1999 Equity Incentive Plan as
follows (in thousands):

<TABLE>
<CAPTION>
                                                  Years Ended December 31,
                                             ---------------------------------
                                              2000         1999         1998
                                             -------      -------      -------
<S>                                          <C>          <C>          <C>
         Employee ownership interests        $ 4,024      $   125      $ 2,701
         1997 Unit Option Plan                   913         (391)       1,544
         1999 Equity Incentive Plan            3,401          735           --
                                             -------      -------      -------
                                             $ 8,338      $   469      $ 4,245
                                             =======      =======      =======
</TABLE>

Employee Ownership Interests

        Certain former employees were issued ownership interests in the Company
pursuant to employment agreements. The employment agreements included a put/call
provision which required the Company to repurchase such employees' respective
ownership interests in the Company in the event of termination at the then fair
market value based on an independent appraisal. Accordingly, those compensation
agreements were accounted for as variable stock purchase plans. Deferred
compensation expense was recorded each period equal to the change in the fair
market value of the ownership interest.

1997 Unit Option Plan

        In 1997, the Company approved the 1997 Unit Option Plan, which provided
for certain employees to be granted options to purchase membership units in
Horseshoe Gaming at a fixed exercise price of $3.47 per unit. The Unit Option
Plan contained a put/call provision under the same terms as described above for
employee ownership interest. Accordingly, the Unit Option Plan was accounted for
as a variable stock purchase plan. Deferred compensation expense was recorded
each period based on vesting an amount equal to the change in the fair market
value of the stock in the Company, provided such value exceeds the exercise
price of the options. As of December 31, 2000, all unit options had been
exercised.


                                      F-19
<PAGE>   71

12.     EMPLOYEE COMPENSATION AND BENEFITS (CONTINUED)

1999 Equity Incentive Plan

        During 1999, the Company approved the 1999 Equity Incentive Plan which
provides for certain employees to be granted options (with tandem SARs) to
purchase stock in the Company and SARs to certain other employees to share in
the increase in the market value of the options and SARs as determined in
accordance with the Equity Incentive Plan. The exercise price for the
options/SARs is determined in accordance with the plan document and represents
management's best estimate of the fair market value at the date of grant. The
options/SARs vest over a period of four years and expire in ten years. The
following table represents option (with tandem SARs) activity for 1999 and 2000:

<TABLE>
<CAPTION>
                                                   Number of     Average Price
                                                    Shares         per Share
                                                    ------         ---------
<S>                                                 <C>             <C>
         Balance, December 31, 1998                     --               --
            Issued                                  145.74          $13,641
            Cancelled                                   --               --
            Exercised                                   --               --
                                                    ------
         Balance, December 31, 1999                 145.74          $13,641
            Issued                                  157.25          $44,488
            Cancelled                               (34.76)         $27,448
            Exercised                               (32.87)         $13,638
                                                    ------
         Balance, December 31, 2000                 235.36          $32,211
                                                    ======

         Exercisable at December 31, 2000            64.40          $30,619
                                                    ======

       The following table represents SAR activity for 1999 and 2000:

         Balance, December 31, 1998                     --               --

            Issued                                  183.92          $13,660
            Cancelled                               (12.41)         $13,660
            Exercised                                   --               --
                                                    ------
         Balance, December 31, 1999                 171.51          $13,660
            Issued                                  466.10          $45,203
            Cancelled                               (32.70)         $23,369
            Exercised                               (40.69)         $13,660
                                                    ------

         Balance, December 31, 2000                 564.22          $39,045
                                                    ======

         Exercisable at December 31, 2000           151.55          $37,287
                                                    ======
</TABLE>


                                      F-20
<PAGE>   72

12.     EMPLOYEE COMPENSATION AND BENEFITS (CONTINUED)

401(k) Savings Plan

        The Company maintains a 401(k) savings plan whereby eligible employees
may contribute up to 20% of their earnings to the plan, on a pre-tax basis.
Employees are eligible to participate in the plan on the first day of the next
calendar quarter following six months of service. In addition, the Company
matches 100% of the first 2% and 50% of the next 4% of the employees'
contributions. Employees vest in the Company's matching contributions over four
years. The Company's matching contributions were $3.5 million, $1.2 million and
$923,000 for the years ended December 31, 2000, 1999 and 1998, respectively.

Deferred Compensation Plan

        The Company maintains a nonqualified deferred compensation plan for
certain key employees. The plan allows participants to defer, on a pre-tax
basis, a portion of their salary and accumulate tax deferred earnings, plus
interest, as a retirement fund. These deferrals are in addition to those allowed
under the Company's 401(k) Savings Plan. All deferred amounts vest immediately.
There are no employer matching contributions made under this plan. The full
amount vested in a participants account will be distributed to a participant
following termination of employment, normal retirement or in the event of
disability or death.

13.     COMMITMENTS AND CONTINGENCIES

Litigation

        The Company and its subsidiaries are from time to time, party to legal
proceedings arising in the ordinary course of business. Except as discussed
below, the Company is unaware of any legal proceedings which, even if the
outcome were unfavorable to the Company, would have a material adverse impact on
either its financial condition or results of operations.

        The City of Hammond was a plaintiff in a condemnation proceeding filed
in September 1995 in Lake Superior Court in Lake County, Indiana in which the
City of Hammond condemned a small parcel of land for the construction of the
overpass located near Empress Hammond. On September 28, 1998, the jury returned
a $5.2 million verdict against the City of Hammond. Under terms of the
Development Agreement between Empress Hammond and the City, Empress Hammond is
responsible for reimbursing the City of Hammond for its costs, fees and any
judgments. The City of Hammond appealed this decision to the Indiana appellate
court and subsequently agreed to settle the matter by paying the amount of the
judgment. The judgment was paid by Empress Entertainment, Inc. pursuant to the
agreement for indemnification between the Company and Empress Entertainment,
Inc.

        On July 21, 1998, a lawsuit was filed against Empress Hammond and
Empress Joliet and four of their employees by two former female employees of
Empress Joliet, alleging that Empress Hammond and Empress Joliet committed
gender discrimination and sexual harassment in violation of Title VII of the
Civil Rights Act of 1964 and permitted a hostile work environment to exist at
its facilities. The lawsuit also alleges certain tort claims and seeks
certification as a class action on behalf of similarly situated current and
former female employees of Empress Hammond and Empress Joliet, and seeks
injunctive relief and money damages. The court denied the plaintiffs'


                                      F-21
<PAGE>   73

13.     COMMITMENTS AND CONTINGENCIES (CONTINUED)

request for class certification. Empress denies the allegations in the complaint
and intends to vigorously contest the remaining claims of the individual
plaintiffs. Because the Court denied the plaintiffs' request for class
certification, any judgment in this matter is not expected to have a material
adverse effect on the Company.

        On June 2, 2000, a lawsuit was filed against Empress Hammond and the
Company on behalf of current and former employees of Empress Hammond alleging
that Empress Hammond and the Company are responsible for damages to current and
former employees as a result of poor air quality on the Empress III, which is
the gaming vessel operating in Hammond, Indiana. The lawsuit alleges certain
tort claims based on poor air quality and seeks certification as a class on
behalf of similarly situated current and former employees of Empress Hammond.
Empress Hammond and the Company deny the allegations in the complaint and intend
to vigorously contest this matter.

        Empress Hammond, Empress Joliet and the Company have demanded
indemnification from Empress Entertainment, Inc., the former owner of Empress
Hammond and Empress Joliet, with respect to each of the above claims, but there
can be no assurance that such indemnity will be adequate or available to the
Company or that any judgment in this matter would not have a material adverse
effect on the Company.

        On February 13, 2001, a lawsuit was filed by Edward T. McGowan, a former
shareholder of Empress Entertainment, Inc. against the Company and seven other
former shareholders of Empress Entertainment, Inc., challenging the validity of
the Empress Merger. The lawsuit seeks injunctive relief, monetary damages and
rescission of the Empress Merger. The Company has demanded indemnification for
any and all claims, losses, costs and expenses incurred as a result of, or in
connection with the defense of, such lawsuit pursuant to a Stockholder
Indemnification Agreement dated December 1, 1999 by and among the Company and
each of the former shareholders of Empress Entertainment, Inc. other than Edward
T. McGowan. Although the Company demanded indemnification, there can be no
assurance that such indemnity will be available to the Company or that any
judgment in this matter would not have a material adverse effect on the Company.

Commitments - Hammond License Requirements

        As a condition to its license in Indiana, Hammond made various financial
and other commitments to the City of Hammond, Indiana and other Indiana
governmental bodies pursuant to a Development Agreement. As of December 31,
2000, approximately $13.4 million of such commitments remained outstanding
primarily for commercial development, residential development and the
construction of a hotel. In addition, under the terms of the Development
Agreement, Hammond is required to make annual payments of approximately $1.3
million for public safety services and other uses as well as an annual payment
based on a varying percentage of Hammond's adjusted gross receipts.


                                      F-22
<PAGE>   74

14.     SUBSEQUENT EVENT

        Empress Joliet's license was due to be renewed in June 2000. On June 30,
2000, the Illinois Gaming Board preliminarily denied Joliet's application to
renew its riverboat owner's license and preliminarily found Jack Binion,
Chairman of the Board and CEO of the Company, unsuitable to be licensed as a key
person. Joliet timely filed a Verified Request for Hearing of the Illinois
Gaming Board's decision.

      Effective January 31, 2001, the Illinois Gaming Board approved a
Settlement Agreement between the Board, the Company, Joliet and Jack Binion.
Pursuant to the pertinent parts of the Settlement Agreement: (a) the Company
agreed to sell Empress Joliet to a suitable purchaser within the time frames
established in the Settlement Agreement; (b) Jack Binion will withdraw his key
person application; and (c) upon the closing of the sale of Joliet, Joliet will
withdraw its Verified Request for Hearing and, upon acceptance by the Illinois
Gaming Board of the withdrawal, the previous denial of Joliet's renewal
application will be moot.





                                      F-23
<PAGE>   75


REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Horseshoe Gaming Holding Corp.:

We have audited in accordance with auditing standards generally accepted in the
United States, the consolidated financial statements of Horseshoe Gaming Holding
Corp. and subsidiaries included in this Form 10-K, and have issued our report
thereon dated February 16, 2001. Our audits were made for the purpose of forming
an opinion on those statements taken as a whole. The schedule listed under Item
14(a)2 is the responsibility of the Company's management and is presented for
purposes of complying with the Securities and Exchange Commission's rules and is
not part of the basic financial statements. This schedule has been subjected to
the auditing procedures applied in the audits of the basic financial statements,
and in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.



/s/ Arthur Andersen LLP

Memphis, Tennessee,
February 16, 2001.


<PAGE>   76


                                   SCHEDULE II

                 HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES
                 CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
                                 (in thousands)


<TABLE>
<CAPTION>
              Column A               Column B    Column C      Column D      Column E     Column F
              --------               --------    --------      --------      --------     --------
                                                 Additions
                                     Balance at  Charged to   Deductions                   Balance at
                                     Beginning   Costs and      from           Other         Close
             Description             of Period   Expenses      Reserves       Changes      of Period
             -----------             ---------   --------      --------       -------      ---------
<S>                                   <C>         <C>         <C>            <C>           <C>
Year Ended December 31, 2000

   Allowance for Doubtful Accounts    $11,089     $ 7,651      $ (5,828)(a)   $    --       $12,912
                                      =======     =======      ========       =======       =======

Year Ended December 31, 1999

   Allowance for Doubtful Accounts    $10,346     $ 4,643      $ (7,815)(a)   $ 3,915(b)    $11,089
                                      =======     =======      ========       =======       =======

Year Ended December 31, 1998

   Allowance for Doubtful Accounts    $ 8,965     $11,937      $(10,556)(a)   $    --       $10,346
                                      =======     =======      ========       =======       =======
</TABLE>

(a)     Uncollectable accounts written off, net of amounts recovered.

(b)     Includes balances assumed in the Empress Acquisition.





                                      S-2


<PAGE>   77

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit
Number                             Description
------                             -----------
<S>        <C>
1.1(f.)    Purchase Agreement, dated May 6, 1999, by and among Horseshoe Gaming
           Holding Corp. and the initial purchasers.

2.1(d.)    First Amendment to Deposit Escrow Agreement, by and among Horseshoe
           Gaming, L.L.C. and Empress Entertainment, Inc., dated March 25, 1999.

2.2(d.)    First Amendment to Agreement and Plan of Merger, dated as of March
           25, 1999, to the Agreement and Plan of Merger, dated as of September
           22, 1998, by and among Horseshoe Gaming, L.L.C., Horseshoe Gaming
           (Midwest), Inc., Empress Acquisition Illinois, Inc., Empress
           Acquisition Indiana, Inc., Empress Casino Joliet Corporation, Empress
           Casino Hammond Corporation and Empress Entertainment, Inc.

2.3(c.)    Agreement and Plan of Merger, dated as of September 2, 1998, by and
           among Horseshoe Gaming, L.L.C., Horseshoe Gaming (Midwest), Inc.,
           Empress Acquisition Illinois, Inc., Empress Acquisition Indiana,
           Inc., Empress Casino Joliet Corporation, Empress Casino Hammond
           Corporation and Empress Entertainment, Inc.

2.4(f.)    Subscription and Reorganization Agreement, dated as of April 23,
           1999, by and among Horseshoe Gaming Holding Corp, Horseshoe Gaming,
           L.L.C., Robinson Property Group, Inc., and others listed therein.

2.5(g.)    Second Amendment to Agreement and Plan of Merger, dated as of July
           23, 1999, to the Agreement and Plan of Merger, dated as of September
           22, 1998, by and among Horseshoe Gaming, L.L.C., Horseshoe Gaming
           (Midwest), Inc., Empress Acquisition Illinois, Inc., Empress
           Acquisition Indiana, Inc., Empress Entertainment, Inc., Empress
           Casino Joliet Corporation and Empress Casino Hammond Corporation.

2.6(i.)    Assumption Agreement, dated as of November 18, 1999, by and among
           Horseshoe Gaming L.L.C., Horseshoe Gaming (Midwest), Inc., Empress
           Acquisition Illinois, Inc., Empress Acquisition Indiana, Inc.,
           Empress Entertainment, Inc., Empress Casino Joliet Corporation,
           Empress Casino Hammond Corporation, Horseshoe Acquisition Illinois,
           Inc., Horseshoe Acquisition Indiana, Inc., and Horseshoe Gaming
           Holding Corp.

3.1(f.)    Certificate of Incorporation of Horseshoe Gaming Holding Corp.

3.2(f.)    By-laws of Horseshoe Gaming Holding Corp.

4.1(f.)    Indenture, dated as of May 11, 1999, by and between Horseshoe Gaming
           Holding Corp. and U.S. Trust Company, National Association.

4.2(f.)    Second Supplemental Indenture, dated as of May 11, 1999, to
           Indenture, dated as of October 10, 1995, by and between Horseshoe
           Gaming, L.L.C., Robinson Property Group Limited Partnership and U.S.
           Trust Company, National Association.

4.3(f.)    Amendment No. 1 to Second Ship Mortgage on the Whole of the Horseshoe
           Casino & Hotel, Tunica executed by Robinson Property Group Limited
           Partnership, as Owner and Mortgagor, in favor of Horseshoe Gaming,
           L.L.C. and United Trust Company of New York.

4.4(b.)    Purchase Agreement for 93/8% Series A Senior Subordinated Notes by
           and among Horseshoe Gaming, L.L.C. and Robinson Property Group
           Limited Partnership, as guarantor, and Wasserstein Perella
           Securities, Inc. as Initial Purchaser.

4.5(b.)    Form of 93/8% Senior Subordinated Note due 2007 of Horseshoe Gaming,
           L.L.C.

4.6(b.)    Indenture, dated as of June 15, 1997, by and among Horseshoe Gaming,
           L.L.C., U.S. Trust Company of Texas, N.A., as Trustee, and Robinson
           Property Group Limited Partnership, as guarantor, with respect to the
           9 3/8% Senior Subordinated Notes due 2007.

4.7(b.)    Exchange and Registration Rights Agreement, dated as of June 25,
           1997, by and among Horseshoe Gaming, L.L.C., Robinson Property Group
           Limited Partnership and Wasserstein Perella Securities, Inc.

4.8(b.)    Intercompany Senior Secured Note due June 15, 2007 executed by
           Robinson Property Group Limited Partnership in favor of Horseshoe
           Gaming, L.L.C.

4.9(b.)    Intercompany Senior Secured Note due June 15, 2007 executed by
           Horseshoe Entertainment in favor of Horseshoe Gaming, L.L.C.

4.10(h.)   Horseshoe Gaming Holding Corp. Credit Agreement, dated as of June 30,
           1999, by and among Horseshoe Gaming Holding Corp., the Lenders listed
           therein, DLJ Capital Funding, Inc. and Canadian Imperial Bank of
           Commerce.(1)
</TABLE>

--------

        (1) In accordance with item 601 of Regulation S-K, the Registrant has
not filed the schedules to this Agreement with the Securities and Exchange
Commission. The Registrant undertakes to supplementally provide a copy of such
schedules to the Securities and Exchange Commission upon request.


<PAGE>   78

<TABLE>
<S>        <C>
4.11(j.)   Indenture dated as of June 18, 1998 by and between Empress
           Entertainment, Inc., as issuer, the Guarantors named therein and U.S.
           Bank National Association as Trustee with respect to Empress' 8 1/8%,
           $150 million Senior Subordinated Notes due 2006.

4.12(j.)   Supplemental Indenture, dated as of December 1, 1999, among Empress
           Casino Hammond Corporation, Empress Residential, L.L.C. and Empress
           Casino Joliet Corporation (collectively, the "Subsidiary Guarantors")
           with respect to the unconditional guarantee of all of the Company's
           obligations under Indenture covering the 9 3/8% Senior Subordinated
           Notes due 2007 by the Subsidiary Guarantors.

4.13(j.)   Supplemental Indenture dated as of December 1, 1999, between
           Horseshoe Gaming Holding Corp., to the 9 3/8% Senior Subordinated
           Notes due 2007 and U.S. Trust Company of Texas, N.A.

4.14(j.)   Amendment No. 1 to Horseshoe Gaming Holding Corp. Credit Agreement,
           dated as of November 18, 1999, by and among Horseshoe Gaming Holding
           Corp., the Lenders listed therein, DLJ Capital Funding, Inc. and
           Canadian Imperial Bank of Commerce.

4.15(j.)   Amendment No. 2 to Horseshoe Gaming Holding Corp. Credit Agreement,
           dated as of November 30, 1999, by and among Horseshoe Gaming Holding
           Corp., the Lenders listed therein, DLJ Capital Funding, Inc. and
           Canadian Imperial Bank of Commerce.

4.16(j.)   Amendment No. 3 to Horseshoe Gaming Holding Corp. Credit Agreement,
           dated as of January 20, 2000, by and among Horseshoe Gaming Holding
           Corp., the Lenders listed therein, DLJ Capital Funding, Inc. and
           Canadian Imperial Bank of Commerce.

10.1(f.)   Settlement Term Sheet, dated as of May 19, 1999, by and among Jack B.
           Binion, Horseshoe Gaming, Inc., Horseshoe Gaming, L.L.C., Paul R.
           Alanis, Loren Ostrow, John Schreiber and Cliff Kortman.

10.2(f.)   Horseshoe Note Pledge and Security Agreement, dated as of and on May
           11, 1999, by and among Horseshoe Gaming Holding Corp., Horseshoe
           Gaming, L.L.C. and U.S. Trust Company, National Association.

10.3(f.)   Registration Rights Agreement, dated May 11, 1999, by and among
           Horseshoe Gaming Holding Corp. and the initial purchasers.

10.4(f.)   Security and Control Agreement, dated as of and on May 11, 1999, by
           and among Horseshoe Gaming Holding Corp. and U.S. Trust Company,
           National Association.

10.5(f.)   Guarantee, dated as of May 11, 1999, by Robinson Property Group,
           Limited Partnership for the benefit of Horseshoe Gaming Holding Corp.

10.6(f.)   Guarantee, dated as of May 11, 1999, by Horseshoe Entertainment for
           the benefit of Horseshoe Gaming Holding Corp.

10.7(f.)   Stockholders' Agreement for Horseshoe Gaming Holding Corp., dated as
           of April 29, 1999, by and among Horseshoe Gaming Holding Corp. and
           parties listed therein.

10.8(d.)   Settlement Agreement, dated as of December 31, 1998, by and among
           Horseshoe Gaming, Inc., Horseshoe Gaming, L.L.C. and Hollywood Park,
           Inc.

10.9(d.)   Settlement Agreement, dated as of February 3, 1999, by and among
           Horseshoe Gaming, Inc., Horseshoe Gaming, L.L.C. and Mike Allen.

10.10(d.)  Mutual General Release, dated February 23, 1999, by and among
           Horseshoe Gaming, L.L.C., Horseshoe Gaming, Inc., Horseshoe GP, Inc.,
           Robinson Property Group Limited Partnership, New Gaming Capital
           Partnership, Horseshoe Entertainment, and Nobutaka Mutaguchi.

10.11(d.)  Exclusive License Agreement, dated July 2, 1998, by and between
           Horseshoe Gaming, L.L.C. and Horseshoe License Company.

10.12(d.)  Amended and Restated Employment Agreement, dated November 23, 1998,
           by and between Horseshoe Gaming, Inc. and Larry Lepinski.

10.13(d.)  Amended and Restated Employment Agreement, dated October 15, 1998, by
           and between Robinson Property Group and Robert McQueen.

10.14(d.)  Amended and Restated Employment Agreement, dated November 23, 1998,
           by and between Horseshoe Gaming, Inc. and Kirk Saylor.

10.15(f.)  Amended and Restated Employment Agreement, dated November 23, 1998,
           by and between Horseshoe Gaming, Inc. and David Carroll.

10.16(f.)  Employment Agreement, dated as of November 3, 1998, by and between
           Horseshoe Gaming, Inc. and Roger Wagner.

10.17(e.)  Agreement, dated as of April 21, 1999, by and among Horseshoe Gaming,
           L.L.C., Horseshoe Gaming, Inc., Horseshoe Entertainment, LP, and New
           Gaming Capital Partnership; Jack B. Binion; The Robin Group, Inc. and
           August Robin.

10.18(e.)  Agreement, dated as of April 21, 1999, by and among Horseshoe Gaming,
           L.L.C., Horseshoe Gaming, Inc., Horseshoe Entertainment, LP, and New
           Gaming Capital Partnership; Jack B. Binion; Wendell Piper; Cassandra
           Piper; and Robert E. Piper, Jr.

10.19(g.)  Consulting Agreement, dated as of July 23, 1999, by and between
           Horseshoe Gaming, L.L.C. and Empress Entertainment, Inc.

10.20(j.)  Amended & Restated Employment Agreement dated as of March 2000, by
           and between Empress
</TABLE>


<PAGE>   79

<TABLE>
<S>        <C>
           Casino Hammond Corporation and Ricky S. Mazer.

10.21(j.)  Equity Incentive Plan dated as of January 1, 1999 by and between
           Horseshoe Gaming Holding Corp. and certain employees.

10.22(j.)  Promissory Note and Stock Purchase Agreement dated as of November 30,
           1999 by and between Horseshoe Gaming L.L.C. and Alpine Associates.

10.23(j.)  Promissory Note and Stock Purchase Agreement dated as of November 30,
           1999 by and between Horseshoe Gaming L.L.C. and Bear Stearns F/A/O #
           2000.

10.24(j.)  Promissory Note and Stock Purchase Agreement dated as of November 30,
           1999 by and between Horseshoe Gaming L.L.C. and Matthewson CRUT.

10.25(j.)  Promissory Note and Stock Purchase Agreement dated as of November 30,
           1999 by and between Horseshoe Gaming L.L.C. and Nobutaka Mutaguchi.

10.26(j.)  Promissory Note and Stock Purchase Agreement dated as of November 30,
           1999 by and between Horseshoe Gaming L.L.C. and Post Balanced Fund.

10.27(j.)  Stock Purchase Agreement dated as of August 1, 1999 by and between
           Horseshoe Gaming L.L.C. and Robert Fechser.

10.28(j.)  Stock Purchase Agreement dated as of August 1, 1999 by and between
           Horseshoe Gaming L.L.C. and Doyle Brunson.

10.29(j.)  Stock Purchase Agreement dated as of August 1, 1999 by and between
           Horseshoe Gaming L.L.C. and Key Fechser.

10.30(j.)  Stock Purchase Agreement dated as of August 1, 1999 by and between
           Horseshoe Gaming L.L.C. and David Reese.

10.31(k.)  Purchase Agreement dated April 1, 2000, between Horseshoe Gaming
           Holding Corp. and Walter J. Haybert.

10.32(k.)  Promissory Note dated April 1, 2000, between Horseshoe Gaming Holding
           Corp. and Water J. Haybert.

10.33(k.)  Purchase Agreement dated April 1, 2000 between Horseshoe Gaming
           Holding Corp. and G. A. Robinson, III.

10.34(k.)  Promissory Note dated April 1, 2000 between Horseshoe Gaming Holding
           Corp. and G.A. Robinson, III.

10.35(m.)  Purchase Agreement dated October 1, 2000 between Horseshoe Gaming
           Holding Corp. and Patrick Savin.

10.36(m.)  Promissory Note dated October 1, 2000 between Horseshoe Gaming
           Holding Corp. and Patrick Savin.

10.37(n.)  Empress Casino Joliet Settlement Agreement between the Illinois
           Gaming Board, Horseshoe Gaming Holding Corp., Empress Casino Joliet
           Corporation and Jack Binion, dated January 31, 2001.

10.38(o.)  Horseshoe Gaming Holding Corp. 401(k) Plan document.

10.39(o.)  First Amendment to Horseshoe Gaming Holding Corp. 401(k) Plan dated
           January 1, 2001.

10.40(o.)  Horseshoe Gaming Holding Corp. Deferred Compensation Plan document.

10.41(o.)  Employment Agreement, dated July 5, 1999, by and between Horseshoe
           Gaming, Inc. and Floyd B. Hannon.

10.42(o.)  Employment Agreement, dated June 19, 2000, by and between Empress
           Casino Joliet Corporation and Douglas Ferrari.

10.43(o.)  Executive Severance Agreement, dated August 21, 2000, by and between
           Horseshoe Gaming Holding Corp. and Roger P. Wagner.

10.44(o.)  Executive Severance Agreement, dated August 21, 2000, by and between
           Horseshoe Gaming Holding Corp. and Kirk C. Saylor.

10.45(o.)  Executive Severance Agreement, dated August 21, 2000, by and between
           Horseshoe Gaming Holding Corp. and David S. Carroll.

10.46(o.)  Executive Severance Agreement, dated August 21, 2000, by and between
           Horseshoe Gaming Holding Corp. and Floyd B. Hannon.
</TABLE>


<PAGE>   80
<TABLE>
<S>        <C>
10.47(o.)  Executive Severance Agreement, dated August 21, 2000, by and between
           Horseshoe Gaming Holding Corp. and Peri N. Howard.

10.48(o.)  Horseshoe Gaming Holding Corp. Retention Bonus Plan, effective August
           1, 2000.

10.49(o.)  Amended And Restated Employment Agreement, dated October 15, 1998, by
           and between Horseshoe Gaming Inc. and Jon C. Wolfe.

10.50(o.)  Executive Severance Agreement, dated August 21, 2000, by and between
           Horseshoe Gaming Holding Corp. and Jon C. Wolfe.

20.1(c.)   Press Release issued on September 2, 1998 by Horseshoe Gaming, L.L.C.
           announcing that it had executed an agreement to acquire the riverboat
           gaming operations of Empress Entertainment, Inc.

21.1(o.)   Subsidiaries of Horseshoe Gaming Holding Corp.

99.1(f.)   Form of Letter of Transmittal for Tender of all Outstanding 8 5/8%
           Series A Senior Subordinated Notes Due 2009 in exchange for 8 5/8%
           Series B Senior Subordinated Notes Due 2009 of Horseshoe Gaming
           Holding Corp.

99.2(f.)   Form of Tender for all Outstanding 8 5/8% Series A Senior
           Subordinated Notes Due 2009 in exchange for 8 5/8% Series B Senior
           Subordinated Notes Due 2009 of Horseshoe Gaming Holding Corp.

99.3(f.)   Form of Instruction to Registered Holder from Beneficial Owner of 8
           5/8% Series A Senior Subordinated Notes Due 2009 of Horseshoe Gaming
           Holding Corp.

99.4(f.)   Form of Notice of Guaranteed Delivery for Outstanding 8 5/8% Series A
           Senior Subordinated Notes Due 2009 in exchange for 8 5/8% Series B
           Senior Subordinated Notes Due 2009 of Horseshoe Gaming Holding Corp.

99.5(l.)   Verified Request for Hearing on the Illinois Gaming Board's July 19,
           2000 Notice of Denial of License Renewal for Empress Casino Joliet.
</TABLE>


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

(a.)    Filed as an Exhibit to Horseshoe Gaming, L.L.C. Registration Statement
        on Form S-4 (No. 333-0214) (the "1996 Form S-4") filed on January 8,
        1996.

(b.)    Filed as an Exhibit to Horseshoe Gaming, L.L.C. Registration Statement
        on Form S-4 (No. 333-33145) filed on August 7, 1997.

(c.)    Filed as an Exhibit to Horseshoe Gaming, L.L.C. Form 8-K filed on
        September 18, 1998.

(d.)    Filed as an Exhibit to Horseshoe Gaming, L.L.C. Form 10-K for the fiscal
        year ended December 31, 1999.

(e.)    Filed as an Exhibit to Horseshoe Gaming, L.L.C. Form 10-Q filed on May
        3, 1999..

(f.)    Filed as an Exhibit to Horseshoe Gaming Holding Corp.'s Form S-4
        Registration Statement filed on June 15, 1999.

(g.)    Filed as an Exhibit to Amendment No. 1 to Horseshoe Gaming Holding
        Corp's Form S-4 Registration Statement filed on July 30, 1999.

(h.)    Filed as an Exhibit to Amendment No. 2 to Horseshoe Gaming Holding
        Corp's Form S-4 Registration Statement filed on August 2, 1999.

(i.)    Filed as an Exhibit to Horseshoe Gaming Holding Corp. Form 8-K on
        December 16, 1999.

(j.)    Filed as Exhibit to Horseshoe Gaming Holding Corp. Form 10-K on March
        30, 2000.

(k.)    Filed as Exhibit to Horseshoe Gaming Holding Corp. Form 10-Q on May 15,
        2000.

(l.)    Filed as Exhibit to Horseshoe Gaming Holding Corp. Form 10-Q on August
        11, 2000.

(m.)    Filed as Exhibit to Horseshoe Gaming Holding Corp. Form 10-Q on November
        14, 2000.

(n.)    Filed as Exhibit to Horseshoe Gaming Holding Corp. Form 8-K on February
        7, 2001.

(o.)    Filed herewith.