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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, 1999

                                       OR

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

For the transition period from               to
                        [Commission file number 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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<PAGE>   2

                         HORSESHOE GAMING HOLDING CORP.

                       INDEX TO ANNUAL REPORT ON FORM 10-K

                   For the fiscal year ended December 31, 1999

<TABLE>
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                                                                                       Page
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<S>         <C>                                                                        <C>
                                     PART I
Item 1.     Business                                                                       3

Item 2.     Properties                                                                    24

Item 3.     Legal Proceedings                                                             25

Item 4.     Submission of Matters to a Vote of Security Holders                           25


                                     PART II


Item 5.     Market for Registrant's Common Equity and Related Stockholder Matters         25

Item 6.     Selected Financial Data                                                       26

Item 7.     Management's Discussion and Analysis of Financial Condition and Results
            of Operations                                                                 27

Item 7A     Qualitative and Quantitative Disclosures About Market Risk                    35

Item 8.     Financial Statements and Supplementary Data                                   35

Item 9.     Changes In and Disagreements With Accountants on Accounting and
            Financial Disclosure                                                          35



                                    PART III


Item 10.    Directors and Executive Officers of the Registrant                            36

Item 11.    Executive Compensation                                                        38

Item 12.    Security Ownership of Certain Beneficial Owners and Management                41

Item 13.    Certain Relationships and Related Transactions                                42



                                     PART IV


Item 14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K              43
</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 "Empress", "Horseshoe" and
"Binion" names in Joliet, Illinois, Hammond, Indiana, Bossier City, Louisiana
and Tunica County Mississippi. The principal executive offices of the Company
are located at 2300 Empress Drive, Joliet, IL 60436, telephone (815) 773-0700.

        Horseshoe Entertainment LP, ("HE"), the entity that owns and operates
Horseshoe Bossier City commenced operation on July 9, 1994 and Robinson Property
Group LP, ("RPG"), the entity that owns and operates Horseshoe Tunica commenced
operation on February 13, 1995. Both of these casinos previously were owned
indirectly by Horseshoe Gaming, LLC ("Horseshoe Gaming"). On April 15, 1999, the
members of Horseshoe Gaming holding over 90% of the aggregate ownership
interests in Horseshoe Gaming contributed to the Company their membership
interests in Horseshoe Gaming in exchange for interests in the Company. The
remaining ownership interests in Horseshoe Gaming either were contributed to the
Company in exchange for interests in the Company or acquired by the Company or
Horseshoe Gaming so that on December 1, 1999, the Company owned 100% of
Horseshoe Gaming.

        On December 1, 1999, the Company, acquired from Empress Entertainment,
Inc. ("Empress"), one of the largest operators of riverboat casinos serving the
Chicago metropolitan area, all of the outstanding stock of two of Empress'
operating subsidiaries, Empress Casino Hammond Corporation ("Empress Hammond"),
which operates Empress Hammond, and Empress Casino Joliet Corporation ("Empress
Joliet"), which operates Empress Joliet, for $494.9 million in cash (the
"Empress Merger"). Empress Joliet commenced operation on June 17, 1992 and
Empress Hammond commenced operation on June 28, 1996. Upon consummation of the
Empress Merger, Horseshoe Gaming was merged into the Company (the "Internal
Consolidation").

        The Empress Merger was accomplished through two simultaneous merger
transactions of the Company's wholly owned subsidiaries with and into the
Empress subsidiaries that own Empress Hammond and Empress Joliet, with the
Empress subsidiaries surviving. In connection with the Empress Merger, the
Company assumed $150 million of Empress' 8 1/8% 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 relevant Empress Indenture, the Company retired all of the Empress Notes
in January 2000.

        Upon the closing of the Empress Mergers, the Company announced its plans
to relocate its corporate headquarters and move its senior executives and their
support staff to Joliet, Illinois. The Company anticipates the closing of
corporate offices in Las Vegas, Nevada and Memphis Tennessee by April 30, 2000.
The cost of the relocation is not expected to be material to the financial
position or results of operations of the Company.




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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.

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 1,677 slot
machines, 55 table games and 8 poker tables. The pavilion is
mythologically-themed and features a lounge, steakhouse, buffet, deli and a
150-seat banquet room.

        Empress Joliet and the surrounding land-based facilities are located on
approximately 350 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 1,072 slot machines, 46 table games and 7
poker tables. Empress Joliet includes an approximately 150,000 square foot
Egyptian-themed 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 could result in one of
the ten state-authorized licenses for Illinois being relocated to Rosemont,
Illinois, which 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 has recently proposed building a
land-based casino in northern Indiana, specifically in St. Joseph or Elkhart
Counties. In addition, the Saginaw Chippewa Tribe has substantially completed
the construction of, and is currently operating, one of the largest Native
American gaming complexes in the U.S. in Mt. Pleasant, Michigan, approximately
250 miles northeast of Hammond, Indiana. The Governor of Michigan has recently
signed a number of Indian Compacts that would allow land-based casinos in
Michigan, including southwest Michigan. 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



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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.

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.

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 62,400 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 55,000 square foot dockside pavilion, a new
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 a new entertainment facility that provides
seating for 1,300 guests.

COMPETITION

        The Horseshoe Bossier City competes directly with three other riverboat
casinos in Shreveport and Bossier City. These four riverboats together currently
comprise the Bossier City/Shreveport market. The Louisiana Gaming Control Board
has recently granted approval to Hollywood Casinos and New Orleans Paddlewheels
Company to relocate the license for the New Orleans Flamingo Hilton Casino,
which is now closed, to a new facility to be located in Shreveport. 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 on November 15, 1999, the
Louisiana Gaming Control Board has not granted the remaining fifteenth license,
and the Governor of the State of Louisiana has included the elimination of the
fifteenth license in the March 13, 2000 call of the special session of the
Louisiana legislature. 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 would have an adverse effect on our
operations.

        Management believes that the Bossier City/Shreveport casinos have an
operational advantage over the other Louisiana riverboats because the Bossier
City/Shreveport riverboats do not have to



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cruise in three-hour increments. The cruising exemption for the Bossier
City/Shreveport market was included in the Louisiana Gaming Statutes to account
for the difficult navigational aspects of the Red River. The Horseshoe Bossier
City casino remains dockside, allowing passengers to enter and exit as they
please and enabling management to conduct 24-hour a day continuous gaming
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.

HORSESHOE TUNICA

        The Horseshoe Tunica is located in Tunica County, Mississippi, at Casino
Center, a 70-acre three-casino complex. The casino operation consists of
approximately 327,000 square feet. The gaming area comprises approximately
62,000 square feet and contains 1,596 slot machines, 61 table games and 14 poker
tables. The casino facility includes two specialty restaurants, a buffet, 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 a 1,000-seat themed entertainment facility, "Bluesville,"
that has hosted some of the world's renowned musical talent such as Julio
Iglesias, Vince Gill, Roger Daltrey and Ringo Starr.

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.

        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 would have a material adverse effect
on the operations of Horseshoe Tunica.

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 which



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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.

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 to which the company is
subject to. All laws 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. Gaming authority approvals are now required in each of Indiana,
Illinois, Mississippi, and Louisiana.

INDIANA

        The Indiana Riverboat 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 or Patoka Lake. The Indiana Gaming Commission has
not considered applicants for the eleventh license since the Patoka Lake site
has been determined by the U.S. Army Corps of Engineers to be unsuitable for a
casino vessel project. The Indiana Riverboat 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 Riverboat 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 Riverboat 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 Riverboat
Act.

        The Indiana Riverboat Act restricts the granting of the owner's licenses
by location. The licenses (excluding the license for Patoka Lake) must be
awarded as follows: (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, Porter or Lake counties, not including the
above-named cities; 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 issued the five authorized
riverboat owner's licenses on Lake Michigan and four riverboat owner's licenses
on the Ohio River, and a certificate of suitability has been issued to another
applicant, subject to final licensure, on the Ohio River.



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        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 Riverboat Act and the rules and
regulations adopted thereunder. The Indiana Riverboat 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
must be secured and cannot be disposed of without the approval of the Indiana
Gaming Commission. A licensed owner may apply for and may hold other licenses
that are necessary for the operation of a riverboat, including licenses to sell
alcoholic beverages, a license to prepare and serve food and any other necessary
licenses. Furthermore, the Indiana Riverboat Act requires that officers,
directors and employees of a gaming operation and suppliers of gaming equipment,
devices, and supplies and certain other suppliers be licensed. All Indiana state
excise taxes, use taxes, and gross retail taxes apply to sales on a riverboat.

        Applicants for licensure must submit 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 shareholder or participant of the applicant and provide
specific information with respect to certain shareholders holding significant
interests (5% or greater) in the applicant. The Indiana Gaming Commission has
the authority to request specific information on any shareholder.

        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 Riverboat Act.

        The Indiana Riverboat 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 U.S. Army Corps of Engineers, the Indiana
Gaming Commission may determine the available navigable waterways that are
suitable for the operation of riverboats under the Indiana Riverboat Act. If the
U.S. Army Corps of Engineers rescinds an approval for the operation of
riverboats on a waterway, a license issued under the Indiana Riverboat Act is
void and the holder may not conduct or continue gaming operations under the
Indiana Riverboat Act. The Indiana Gaming Commission requires employees working
on a riverboat to have a valid merchant marine document from the U. S. Coast
Guard.

        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 (i) 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); and (ii) when weather or water conditions prevent the boat
from cruising. The Indiana Gaming Commission may grant extended cruise hours in
its discretion. If the master of the riverboat reasonably determines and
certifies in writing that specific weather conditions or



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water conditions present a danger to the riverboat and the riverboat's
passengers and crew, the riverboat may remain docked and gaming may take place
until (i) the master determines that the conditions have sufficiently diminished
for the riverboat to safely proceed; or (ii) the duration of the authorized
excursion has expired.

        The Indiana Riverboat 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 State Revenue before the close of the business day
following the day when the wagers are made. The Indiana Riverboat 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 pursuant to the Indiana Riverboat 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 Riverboat 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 licensee has not begun regular riverboat excursions
prior to the end of the twelve month period following receipt of a license from
the Indiana Gaming Commission or 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 Riverboat 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.
The Indiana Gaming Commission may suspend, limit or revoke the owner's license
or impose a fine for failure to comply with the statutory requirements.

        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 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 Riverboat 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



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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.

        The Indiana Gaming Commission adopted a rule which 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 has adopted a rule which requires riverboat licensees
to maintain, on a quarterly basis, a cash reserve in the amount of the actual
payout for three days, and the cash reserve would include cash in the casino
cage, cash in a bank account in Indiana, or cash equivalents not committed or
obligated.

        A lawsuit was filed on October 25, 1996 in Harrison County, Indiana by
three individuals residing in counties abutting the Ohio River against the State
of Indiana, the 108th Indiana General assembly, the Indiana Gaming Commission
and individual members of the Indiana Gaming Commission. The lawsuit challenges
the constitutionality of the Indiana Riverboat Act on the grounds that (i) it
allegedly creates an unequal privilege because under the Indiana Riverboat Act
"citizens opposed to riverboat gaming must win several elections to ensure
riverboat gaming is not allowed in their county" but "citizens who support
riverboat gaming need only win once to entrench riverboat gaming indefinitely
into a county"; and (ii) it was enacted as a provision attached to a state
budget bill allegedly in violation of an Indiana constitutional provision
requiring legislative acts to be confined to one subject and to matters properly
connected with the subject. The defendants have filed an answer to the complaint
generally denying the allegations and, on June 10, 1999, the State of Indiana's
motion to dismiss the complaint was granted. The matter is now pending before
the Indiana Court of Appeals. If the Indiana Riverboat Act ultimately were held
unconstitutional and if, as a result thereof, Empress Hammond were not permitted
to operate, it would, absent timely corrective legislation, have a material
adverse effect on the Company.




ILLINOIS

        The Illinois Riverboat Act, as amended, 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. The Illinois
Riverboat 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 a part of a single riverboat gaming operation. The
Illinois Riverboat Act regulates the facilities, persons, associations and
practices related to riverboat gaming operations. The Illinois Riverboat Act
grants the Illinois Gaming Board specific powers and duties, and all other
powers necessary and proper to fully and effectively execute the Illinois
Riverboat Act for the purpose of administering, regulating and enforcing the
system of riverboat gaming. The Illinois Gaming Board's jurisdiction extends to
every person, association, corporation, partnership and trust involved in
riverboat gaming operations in Illinois.

        The Illinois Riverboat 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



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

        Applicants for and holders of an owner's license are required to obtain
formal approval from the Illinois Gaming Board for changes in: (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 viability of the gaming
operation. Factors to be considered by the licensee include, but are not limited
to, the following: (i) working capital requirements, (ii) debt service
requirements, (iii) requirements for repairs and maintenance and (iv) capital
expenditure requirements.

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

        On November 30, 1999, the Illinois Gaming Board approved the transfer of
the ownership of Empress Joliet from Empress to the Company. Empress Joliet's
gaming license will be up for renewal in June 2000. Currently, Jack B. Binion,
the principal owner of Empress Joliet, is seeking a key person license approval
from the Illinois Gaming Board.



                                       11
<PAGE>   12

        The investigation of Mr. Binion's key person application by the Illinois
Gaming Board is ongoing. The Illinois Gaming Board has not informed Mr. Binion
or Horseshoe as to the date the investigation will be completed. It is unknown
the effect, if any, a denial of Mr. Binion's key person application will have on
the ability of Horseshoe to continue to do business in Illinois or elsewhere.

        The Illinois Riverboat 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.

        Under the Illinois Riverboat Act, vessels must have the capacity to hold
a minimum of 500 persons if operating on the Mississippi River or the Illinois
River south of Marshall County, and a minimum of 400 persons on any other
waterway.

        The number of gaming positions is limited to a maximum of 1,200 per
license. 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. A $2 per person admission tax is imposed on the owner
of a riverboat operation. Prior to January 1, 1998, the Illinois Riverboat Act
imposed a 20% tax on all adjusted gross receipts on each Illinois gaming vessel.
Effective on January 1, 1998, the Illinois Riverboat Act was amended to impose
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; and (v) 35% of the calendar year
adjusted gross receipts in excess of $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 Riverboat Act
and to take such disciplinary and enforcement action as it may deem necessary
and proper. Employees and agents of the Illinois Gaming Board have access to and
may inspect any facilities relating to 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 Riverboat Act may
constitute an illegal gaming place and consequently may be subject to criminal
penalties, which penalties include possible seizure, confiscation and
destruction of illegal gaming devices and seizure and sale of riverboats and
dock facilities to pay any unsatisfied judgment that may be recovered and any
unsatisfied fine that may be levied. The Illinois Riverboat 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.



                                       12
<PAGE>   13

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

MISSISSIPPI

        The ownership and operation of casino 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, the regulations
and/or interpretations of the Mississippi Act and the regulations by the
Mississippi Gaming Commission 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 17, 2000, 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 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. On May 29,
1993, the Mississippi Gaming Commission granted preliminary site approval for
the site of the Horseshoe Tunica. 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



                                       13
<PAGE>   14

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 must maintain a gaming license from the
Mississippi Gaming Commission to operate a casino in Mississippi. The
Mississippi Gaming Commission issues the licenses. 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.

        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 and October 15, 1998. No person may become a stockholder of or
receive any percentage of profits from a licensed subsidiary of a holding
company 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 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 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.



                                       14
<PAGE>   15

        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. However, the Mississippi Gaming Commission has
adopted a policy that may permit institutional investors to own beneficially up
to 15% of a registered public or private company's common stock without a
finding of suitability. 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.

        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 RPG, the Company:

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

        -       recognizes the exercise, directly or indirectly, or any voting
                rights conferred by 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.

        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.



                                       15
<PAGE>   16

        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.

        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 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.

        Neither the Company nor RPG may engage in gaming activities in
Mississippi while the Company, RPG and/or persons found suitable to be
associated with the gaming license of RPG conduct gaming operations outside of
Mississippi without approval of the Mississippi Gaming Commission. The
Mississippi Gaming Commission may require determinations that there are means
for the Mississippi Gaming Commission to have access to information concerning
the Company's and its affiliates' out-of-state gaming operations. RPG received
waivers of foreign gaming approval from the Mississippi Gaming Commission for
the conduct of gaming operations in Nevada, Louisiana, Wisconsin, Alaska,
Indiana and Illinois, but may be required to obtain the approval or



                                       16
<PAGE>   17

a waiver of such approval from the Mississippi Gaming Commission before engaging
in any additional future gaming operations outside of Mississippi.

        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 a licensee's or any other of its registered holding
company's operating subsidiaries' gaming licenses may be deemed a violation of
the gaming license of any other of the registered holding company's operating
subsidiaries or of the licensee. 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 licensees
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 Company believes 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.



                                       17
<PAGE>   18

        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 all equity owners and
managers file personal record forms and fingerprint cards for their licensing
process. In addition, owners of more than 5% of RPG's equity and RPG's officers
and managers must submit detailed financial information to the Alcoholic
Beverage Control Division. 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, two requests were filed with the Secretary of State in
1998 to place on the November 1999 statewide ballot a voter initiative to ban
gaming in the state. The local circuit court found the wording of both
initiatives invalid. The sponsor appealed the local circuit court's decision on
one of the initiatives to the Mississippi Supreme Court, which affirmed the
ruling that the initiative's wording was invalid. Therefore, neither initiative
was included on the November 1999 ballot. Since Mississippi is a voter
initiative state, it is possible that the gaming ban initiative could be
re-worded and meet the requirements to be included in the ballot of a later
statewide election. A third request for a nearly identical initiative was filed
with the Secretary of State in 1999. The local circuit court again found the
wording of the initiate invalid. The sponsor has appealed that decision to the
Mississippi Supreme Court, where the matter is pending. If the sponsor prevails
in court and is able to collect the requisite number of signatures, the third
request could place on the November 2002 or a subsequent state-wide ballot a
voter initiative to ban gaming in the state. 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. If any initiative is submitted to the voters of
Mississippi for their consideration, no assurance can be given regarding the
outcome of the vote or the impact of the vote on the Company's gaming operations
in Mississippi.

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



                                       18
<PAGE>   19

November 15, 1999, the Louisiana Gaming Control Board has not granted the
remaining fifteenth license, and the Governor of the State of Louisiana included
the elimination of the fifteenth license in the March 13, 2000 call of the
special session of the Louisiana Legislature. While the Louisiana gaming
regulations state that riverboat casinos must cruise, 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. 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. 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 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



                                       19
<PAGE>   20

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)
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 dockside pursuant
to a special exemption; (2) 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. 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, ongoing investigation 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. While 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, ongoing investigation and
trial have caused delays and heightened scrutiny



                                       20
<PAGE>   21

by the Louisiana Gaming Control Board in connection with the renewal of all
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.

        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.

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 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.



                                       21
<PAGE>   22

IRS REGULATIONS

        The Internal Revenue Service ("IRS") requires operators of casinos
located in the United States to file information returns for U.S. citizens
(including names and addresses of winners) for keno and slot machine winnings in
excess of stipulated amounts. The IRS also requires operators to withhold taxes
on certain keno, bingo and slot machine winnings of nonresident aliens.
Management is unable to predict the extent, if any, to which such requirements,
if extended, might impede or otherwise adversely affect operations of, and/or
income from, such other games.

        Regulations adopted by the Financial Crimes Enforcement Network of the
Treasury Department and the gaming regulatory authorities in certain domestic
jurisdictions in which we operate casinos, or in which we have applied for
licensing to operate a casino, require the reporting of currency transactions in
excess of $10,000 occurring within a gaming day, including identification of the
patron by name and social security number. This reporting obligation commenced
in May 1985 and may have resulted in the loss of gaming revenues to
jurisdictions outside the United States that are exempt from the ambit of such
regulations.

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 as far
back as commencement of the Company's respective operations. 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.

        As a condition to its license in Indiana, Empress 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, 1999, approximately $14.5 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, Empress 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 Empress Hammond's adjusted gross
receipts.



                                       22
<PAGE>   23

        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 1, 2000, the Company employed 8,920 persons of whom 2,055
are employed at Empress Hammond, 1,664 are employed at Empress Joliet, 2,538 are
employed at Horseshoe Tunica, 2,663 are employed at Horseshoe Bossier City and
58 are employed in our corporate office. Approximately 21.4% of the Empress
Joliet employees are unionized. Empress Joliet's contract with the International
Union of Operating Engineers, Local 150 expires in November 2002.

        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.

ITEM 2. PROPERTIES

        The Company owns and operates casinos in Tunica County, Mississippi,
Bossier City, Louisiana, Joliet, Illinois and Hammond, Indiana. All of the real
property and casinos are subject to first priority liens securing the Company's
credit facility. We also lease space in Las Vegas, Nevada and Memphis, Tennessee
where the Company maintains executive offices. Both of these offices will be
closed during the second quarter of 2000 as a result of the relocation of the
Company's headquarters to Joliet, Illinois.

HORSESHOE TUNICA

        Horseshoe Tunica is located in Tunica County, Mississippi at Casino
Center, a 70-acre three-property complex. The entire casino complex is
approximately 327,000 square feet, with an approximately 62,000 square foot
gaming area, two specialty restaurants, a buffet, bars, retail outlets, a
14-story hotel tower, an entertainment venue and an 1,100 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.

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 62,400 square foot, four deck
riverboat with approximately 30,000 square feet of gaming space and an
approximately 55,000 square foot dockside pavilion, including a 25-story hotel
tower, an entertainment venue and a 1,750 parking garage.

EMPRESS JOLIET

        Empress Joliet and the surrounding land based facilities are located on
approximately 350 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.



                                       23
<PAGE>   24

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
lounge, steakhouse, buffet, deli and a 150-seat banquet room.


ITEM 3. LEGAL PROCEEDINGS.

        The City of Hammond is 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. This case was transferred on a change in venue in
the summer of 1998 to Newton County, Indiana. 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. As a result, it is not yet clear how much, or when, the condemnation
award will be paid.

        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 Joliet and Empress Hammond, and seeks
injunctive relief and money damages. Empress denies the allegations in the
complaint and intends to vigorously contest this matter. Although Empress has
agreed to indemnify the Company with respect to this claim and others, there can
be no assurances 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.

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

        Not applicable.



                                       24
<PAGE>   25

                                     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 1, 2000, the number of record holders of equity
interests in the Company was 40.

        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 1999, 1998 and 1997 were
$12,811,000, $13,312,000 and $11,056,000, respectively. In addition to these
permitted tax distributions, the Company paid non-tax distributions amounting to
$18,700,000 during 1998. 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.

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, 1999, 1998, 1997, 1996 and 1995 have been derived from the
Company's audited consolidated financial statements included elsewhere herein.

<TABLE>
<CAPTION>
                                                                   YEAR ENDED DECEMBER 31
                                            ---------------------------------------------------------------------
                                             1999(a)         1998           1997           1996          1995(b)
                                            ---------      ---------      ---------      ---------      ---------
STATEMENT OF OPERATIONS DATA:                                            (Thousands)
<S>                                         <C>            <C>            <C>            <C>            <C>
   Net revenues:
      Casino                                $ 487,536      $ 429,825      $ 321,236      $ 317,479      $ 283,402
      Non-casino                               38,017         31,351         13,857         14,258         14,983
                                            ---------      ---------      ---------      ---------      ---------
                                              525,553        461,176        335,093        331,737        298,385
OPERATING EXPENSES:
      Casino                                  266,482        245,234        175,394        162,408        133,299
      Non-casino                               35,899         34,654         20,283         20,474         20,131
      Other                                    66,954         58,370         48,217         51,980         54,331
      Asset write-down                         10,346         12,911             --             --             --
      Corporate expenses (c)                    8,087         12,947         22,490         10,254          3,375
      Depreciation and amortization            41,806         33,888         19,411         15,989         12,545
                                            ---------      ---------      ---------      ---------      ---------
   Operating income                            95,979         63,172         49,298         70,632         74,704
   Interest (expense) income, net             (53,332)       (37,672)       (15,796)       (21,964)       (18,735)
   Other, net                                    (620)          (228)          (429)           154             --
                                            ---------      ---------      ---------      ---------      ---------
   Net income before extraordinary
   loss on early retirement of debt and
   minority interest                           42,027         25,272         33,073         48,822         55,969
   Extraordinary loss on early
   retirement of debt                          (9,653)          (787)        (5,243)                       (7,179)
   Minority interest in (income) loss
   of subsidiaries (d)                             --            640           (420)        (1,861)        (8,850)
                                            ---------      ---------      ---------      ---------      ---------
   Net income                               $  32,374      $  25,125      $  27,410      $  46,961      $  39,940
                                            ---------      ---------      ---------      ---------      ---------
</TABLE>


<TABLE>
<CAPTION>
                                                               AS OF DECEMBER 31
                                     ----------------------------------------------------------------------
                                        1999          1998           1997            1996           1995
                                     ----------     ----------     ----------     ----------     ----------
BALANCE SHEET DATA:                                                (Thousands)
<S>                                  <C>            <C>            <C>            <C>            <C>
   Cash and cash equivalents (e)     $  118,276     $   84,151     $   48,710     $   79,159     $   65,541
   Total Assets                       1,409,244        560,448        511,556        377,597        300,088
   Long-term debt, including          1,258,948        388,718        313,275        232,708        197,603
   current maturities
   Shareholders'/Members' equity         34,594         71,151         64,595         79,782         52,747
</TABLE>

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

(b)     The Horseshoe Tunica opened on February 13, 1995.

(c)     Includes deferred compensation charges related to redeemable ownership
        interests of $469,000, $4,245,000, $15,066,000, $4,340,000 and
        $2,557,000 for the years ended December 31, 1999, 1998, 1997, 1996 and
        1995, respectively.

(d)     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.

(e)     Excludes escrow funds, restricted for expansion of existing facilities,
        development of new projects or repayment of debt, amounting to
        approximately $42,235,000 (1996) and $31,316,000 (1995).

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
Company's consolidated financial condition and



                                       25
<PAGE>   26

results of operations. The discussion should be read in conjunction with
"Selected Consolidated Financial Data" and the Consolidated Financial Statements
and notes thereto included elsewhere herein.

INTRODUCTION

        Horseshoe Bossier City, which is owned by HE, commenced operations on
July 9, 1994, and Horseshoe Tunica, which is owned by RPG, commenced operations
on February 13, 1995. Effective October 1, 1995, Mr. Binion and certain related
and unrelated parties transferred their ownership interests in HE and RPG to
Horseshoe Gaming in exchange for ownership interests in Horseshoe Gaming (the
"Roll-Up Transaction.") As a result of the Roll-Up Transaction, Horseshoe Gaming
owned 89% of HE, 100% of RPG, and 80% of Horseshoe Ventures, L.L.C., a Delaware
limited liability company that was formed to pursue casino development
opportunities in new jurisdictions. As of December 31, 1995, Horseshoe Gaming
acquired an additional 2.92% ownership interest in HE and, in April 1999,
exercised its option to repurchase the remainder of the ownership interest in HE
not owned by NGCP, a wholly-owned subsidiary of Horseshoe Gaming and the general
partner of HE. The consolidated financial statements include the assets,
liabilities, revenue and expenses for all entities included in the Roll-Up
Transaction, as if such entities were subsidiaries for all periods presented.

        On December 1, 1999, the Company acquired from Empress all of the
outstanding stock of two of Empress' operating subsidiaries, Empress Hammond and
Empress Joliet, for $494.9 million in cash (the "Empress Merger"). Empress
Joliet commenced operation on June 17, 1992 and Empress Hammond commenced
operation on June 28, 1996.

        The Empress Merger was accomplished through two simultaneous merger
transactions of the Company's wholly owned subsidiaries with and into the
Empress subsidiaries that own Empress Hammond and Empress Joliet, with the
Empress subsidiaries surviving. In connection with the Empress Merger, the
Company assumed $150 million of Empress' 8 1/8% Senior Subordinated Notes due
2006 . 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.

RESULTS OF OPERATIONS OVERVIEW

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

        Horseshoe Tunica competes with nine other casinos in the competitive
Tunica County, Mississippi market.


        Horseshoe Bossier City is one of four riverboat casinos currently
operating in the Bossier City/Shreveport, Louisiana market. The Louisiana Gaming
Control Board recently granted approval to transfer the license for a New
Orleans casino, which is now closed, to a new facility to be located adjacent to
an existing competitor's facility in Shreveport, which is expected to open for
business in 2000. The Louisiana Legislature has also passed a law authorizing
slot machines at the horseracing track in Shreveport, although when and if slot
operations will actually begin at the track is uncertain. The impact on
operating margins from the overall increase in supply to this market is
uncertain.



                                       26
<PAGE>   27

        The Chicago market encompasses portions of both Illinois and Indiana.
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.

OPERATIONS

YEARS ENDED DECEMBER 31, 1999 AND 1998

        Net revenues for the year ended December 31, 1999 were $525.6 million
compared to $461.2 million for the year ended December 31, 1998. Operating
income increased to $96.0 million for the year ended December 31, 1999 from
$63.2 million for the year ended December 31, 1998. The operating income margin
increased in 1999 to 18.3% of net revenues from 13.7% for the 1998 period. Net
revenues, operating income and the operating income margin for the Chicago
properties included in the consolidated operating results for the 1999 period
was $37.2 million, $7.6 million and 20.4%, respectively. The remaining increase
in net revenues and operating income was mainly a result of an increase in
gaming volume at both the Horseshoe Tunica and Horseshoe Bossier City.

Horseshoe Tunica

        Horseshoe Tunica contributed net revenues of $236.5 million for the year
ended December 31, 1999 and $221.8 million for the year ended December 31, 1998.
Horseshoe Tunica's net revenues included casino revenues and non-casino revenues
of $226.3 million and $10.2 million, respectively, for the year ended December
31, 1999 and $212.0 million and $9.8 million, respectively, for the year ended
December 31, 1998. The increase in casino revenues for the year ended December
31, 1999 compared to the prior year was primarily due to volume increases in
slot revenue. Casino revenue per day increased approximately 7% in the year
ended December 31, 1999 to $620,000 from $581,000 in the prior year.

        Operating income was $60.1 million for the year ended December 31, 1999
compared to $44.7 million for the year ended December 31, 1998. The operating
income margin was 25.4% of net revenues for 1999 compared to 20.2% for 1998.

        Operating income increased by $15.4 million in 1999 as compared to 1998.
This increase was caused primarily by the increase in net revenues during 1999.
In addition, the 1998 period includes $6.8 million in additional bad debt
expenses and $2.9 million in additional corporate expenses not present in 1999.

Horseshoe Bossier City

        Horseshoe Bossier City contributed net revenues of $248.3 million for
the year ended December 31, 1999 and $239.4 million for the year ended December
31, 1998. Horseshoe Bossier City's net revenues include casino revenues and
non-casino revenues of $226.4 million and $21.9 million, respectively, for the
year ended December 31, 1999 and $217.8 million and $21.6 million, respectively,
for the year ended December 31, 1998. The increase in casino revenues for the
year ended December 31, 1999 compared to the prior year was primarily due to
volume increases in slot revenue. The increase in slot volume in 1999 over 1998
of $12.5 million was offset by lower than normal win percentages $4.5 million.
Casino revenue per day increased approximately 4% in the



                                       27
<PAGE>   28

year ended December 31, 1999 to $620,000 from $597,000 in the prior year.

        Operating income was $26.0 million for the year ended December 31, 1999
compared to $19.3 million for the year ended December 31, 1998. The operating
income margin was 10.5% of net revenues for 1999 compared to 8.1% for 1998.

        Operating income increased by $6.7 million in 1999 as compared to 1998
mainly as a result of the increase in net revenues. Operating income for 1999
and 1998 includes an asset write-down charge of $10.3 million and $12.9 million,
respectively, as more fully discussed below. The 1999 period reflects an
increase of $3.8 million in depreciation and amortization due to the
amortization of a non-compete agreement entered into with the former limited
partners (see Liquidity and Capital Resources discussion below). The 1998 period
also includes $2.9 million additional corporate expenses.

        Horseshoe Bossier City's new riverboat casino facility replaced the
existing riverboat casino facility, the "Queen of the Red." The Queen of the
Red, along with related gaming equipment, is included in assets held for sale in
the Consolidated Condensed Balance Sheets at December 31, 1999 and 1998. During
the year ended December 31, 1998, we recorded an initial charge of $12.9 million
to adjust the carrying value of the Queen of the Red to our 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 the bill by the
Illinois Legislature which allowed dockside gaming thereby eliminating the need
for cruising vessels. The additional charge was made to reflect the market
conditions for idle riverboats.

Other Factors Affecting Earnings

        Corporate expenses decreased approximately $4.9 million during 1999
primarily due to a reduction in non-cash compensation expense. The non-cash
compensation expense is recorded to reflect the value of redeemable ownership
interests based on an independent appraisal. For more details, see the heading
"Liquidity and Capital Resources - Ownership Repurchase Matters."

        The increase of $15.6 million in net interest expense for the year ended
December 31, 1999 compared with the year ended December 31, 1998 was due to the
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 acquisition of the
operating subsidiaries of Empress and to extinguish approximately $128.6 million
in higher interest debt. The Company recognized an extraordinary loss of $9.7
million from the early retirement of debt. For more details, see the heading
"Liquidity and Capital Resources." In January 2000, the Company retired $150.0
million in principal amount of senior subordinated notes assumed by the Company
from the acquisition of Empress, at a cost of $151.5 million (plus 1% redemption
premium), thereby reducing its total debt outstanding by $151.5 million.

        Net income increased in 1999 to $32.4 million from $25.1 million in
1998, or 29.1%. The increase in net income was due to the factors discussed
above.

YEARS ENDED DECEMBER 31, 1998 AND 1997

        Net revenues for the year ended December 31, 1998 were $461.2 million
compared to $335.1 million for the year ended December 31, 1997. Operating
income increased to $63.2 million for the year ended December 31, 1998 from
$49.3 million for the year ended December 31, 1997. The operating income margin
decreased in 1998 to 13.7% of net revenues from 14.7% for the 1997



                                       28
<PAGE>   29

period. The increase in net revenues and operating income occurred as a result
of an increase in gaming capacity from the expansions that occurred at both
Horseshoe Tunica and Horseshoe Bossier City.

Horseshoe Tunica

        Horseshoe Tunica contributed net revenues of $221.8 million for the year
ended December 31, 1998 and $167.2 million for the year ended December 31, 1997.
Horseshoe Tunica's net revenues included casino revenues and non-casino revenues
of $212.0 million and $9.8 million, respectively, for the year ended December
31, 1998 and $161.3 million and $5.9 million, respectively, for the year ended
December 31, 1997. The increase in net revenues for the year ended December 31,
1998 compared to the prior year was primarily due to increases in slot revenue
of approximately $43.3 million and table games revenue of approximately $7.4
million as a result of the recently completed expansion. Net revenues in 1998
were also affected by lower than anticipated win percentages in table games and
slots which slightly offset the growth in revenues by approximately $7.0 million
and $3.8 million, respectively. Casino revenue per day increased approximately
31% in the year ended December 31, 1998 to $581,000 from $442,000 in the prior
year.

        The increase to $29.7 million in promotional allowances for the year
ended December 31, 1998 compared to $14.3 million for the prior year was
partially due to an increase in the pricing structure of non-casino services of
approximately $5.0 million. The recently completed expansion of the property,
including the addition and/or upgrading of restaurants and hotel accommodations,
provided us with an opportunity to increase the retail cost of hotel and food
prices. The $10.4 million remaining increase was caused by an increase in
overall volume, primarily in hotel rooms and entertainment.

        Operating income was $44.7 million for the year ended December 31, 1998
compared to $34.3 million for the year ended December 31, 1997. The operating
income margin was 20.2% of net revenues for 1998 compared to 20.5% for 1997.

        Operating income increased by $10.4 million in 1998 as compared to 1997.
This increase was caused primarily by the expansion of the facility during 1997.
In addition, the 1997 period includes pre-opening expenses of $1.1 million not
present in 1998 and $4.7 million in additional corporate expenses. The 1998
period reflects an increase in bad debt expenses of $4.6 million and an increase
of $6.5 million in depreciation and amortization due to the expansion of the
facility. Operating income for 1998 was reduced due to the operation of our new
entertainment facility by approximately $4.2 million.

Horseshoe Bossier City

        Horseshoe Bossier City contributed net revenues of $239.4 million for
the year ended December 31, 1998 and $167.9 million for the year ended December
31, 1997. The increase in net revenues for the year ended December 31, 1998
compared to the prior year was primarily due to the recently completed expansion
at such property. Horseshoe Bossier City's net revenues include casino revenues
and non-casino revenues of $217.8 million and $21.6 million, respectively, for
the year ended December 31, 1998 and $160.0 million and $7.9 million,
respectively, for the year ended December 31, 1997. Casino revenue per day
increased approximately 36% in the year ended December 31, 1998 to $597,000 from
$438,000 in the prior year.

        The increase to $32.7 million in promotional allowances for the year
ended December 31,



                                       29
<PAGE>   30

1998 compared to $14.9 million for the prior year was partially due to an
increase in the pricing structure of non-casino services of approximately $6.0
million. The recently completed expansion of the property, including the
addition and/or upgrading of restaurants and hotel accommodations, provided us
with an opportunity to increase the retail cost of hotel and food prices. The
$11.8 million remaining increase was caused by an increase in overall volume of
promotional allowances, primarily in hotel rooms.

        Operating income was $19.3 million for the year ended December 31, 1998
compared to $16.7 million for the year ended December 31, 1997. The operating
income margin was 8.1% of net revenues for 1998 compared to 9.9% for 1997.

        Operating income increased by $2.6 million in 1998 as compared to 1997.
Operating income for 1998 includes an asset write-down charge of $12.9 million
as more fully discussed below. The 1998 period reflects an increase of $8.0
million in depreciation and amortization due to the expansion of the facility.
In addition, the 1997 period includes $1.8 million in pre-opening expenses,
whereas the 1998 period only includes $0.7 million. The 1997 period also
includes $4.7 million of additional corporate expenses

        Horseshoe Bossier City's new riverboat casino facility replaced the
existing riverboat casino facility, the "Queen of the Red." The Queen of the
Red, along with related gaming equipment, is included in assets held for sale in
the Consolidated Condensed Balance Sheets at December 31, 1998. During the year
ended December 31, 1998, we recorded a charge of $12.9 million to adjust the
carrying value of the Queen of the Red to our estimate of its then net
realizable value.

Other Factors Affecting Earnings

        Corporate expenses decreased approximately $9.5 million during 1998
primarily due to a reduction in non-cash compensation expense. The non-cash
compensation expense was recorded to reflect the increased value of redeemable
ownership interests in us based on an independent appraisal. For more details,
see the heading "Liquidity and Capital Resources Ownership Repurchase Matters."

        The increase of $21.9 million in net interest expense for the year ended
December 31, 1998 compared with the year ended December 31, 1997 is primarily
due to the increase in debt outstanding in 1998 and the capitalization of
interest in 1997. Approximately $11.2 million of construction period interest
related to the expansion programs at Horseshoe Tunica and Horseshoe Bossier City
was capitalized in the year ended December 31, 1997. Total debt outstanding
increased to $388.7 million as of December 31, 1998 from $313.3 million as of
December 31, 1997. The increased borrowings were necessary to fund a major
portion of the construction, as well as our subsequent purchase of outstanding
warrants, which closed in January 1999. For more details, see the heading
"Liquidity and Capital Resources."

        During 1998, we purchased $8.4 million in 12.75% senior notes in the
open market. An extraordinary loss of $0.8 million was recognized for prepayment
penalties, premium and write-off of unamortized discounts and deferred finance
charges. The 1997 period includes an extraordinary loss of $5.2 million from the
refinancing of certain indebtedness as more fully described below.

        Net income declined in 1998 to $25.1 million from $27.4 million in 1997,
or 8.4%. The decline in net income is due to the factors discussed above.

LIQUIDITY AND CAPITAL RESOURCES



                                       30
<PAGE>   31

        On May 11, 1999, the Company issued $600 million of 8 5/8% Senior
Subordinated Notes due May 2009. The proceeds from this issuance were used to
refinance Horseshoe Gaming's 12 _% senior notes and refinance Horseshoe Gaming's
$130 million credit facility, of which $75 million was outstanding as of May 11,
1999. $342.3 million of such proceeds were placed in a secured proceeds account
to partially fund the Empress acquisition and consummate the change of control
offer on $150.0 million of Empress' 8 1/8% senior subordinated notes due 2006.
In January 2000, the change of control offer was consummated and all $150
million of Empress' 8 1/8% senior subordinated notes were retired, and any
remaining balance in the secured proceeds account was distributed to the
Company.

        On June 30, 1999, the Company completed a $375 million Senior Secured
Credit Facility with a group of banks. The credit facility is comprised of a
$250 million revolver and a $125 million term loan. On December 1, 1999, the
Company used $175 million of the revolver and $125 million of the term loan to
partially fund the Empress acquisition, all of which was outstanding on December
31, 1999. As of March 4, 2000, the Company has repaid $65 million on the
outstanding revolver balance.

Liquidity, Capital Spending and Financing

        Net cash provided by operating activities was $115.6 million, $83.8
million and $71.3 million for the years ended December 31, 1999, 1998 and 1997,
respectively. Net cash used in investing activities was $488.2 million, $90.4
million and $161.2 million, for the years ended December 31, 1999, 1998 and
1997, respectively. Cash flows from investing activities for 1999 include the
effects of the acquisition of Empress Joliet and Empress Hammond which include
additional goodwill of approximately $257.9 million and net property and
equipment of include $189.7 million. The fluctuations in investing cash flows
for 1998 and 1997 are mainly due to the expansion projects completed in
Horseshoe Tunica in December 1997 and Horseshoe Bossier City in January 1998.
Net cash provided by financing activities was $406.7 million, $42.1 million and
$59.4 million for the years ended December 31, 1999, 1998 and 1997,
respectively. The additional borrowings completed in 1999 to complete the
acquisition of Empress Joliet and Empress Hammond accounted for the fluctuations
in financing cash flows in 1999 as compared to 1998. The primary reason for the
fluctuations in cash flows from financing activities in 1998 and 1997 are due to
the amount of borrowings necessary to complete the Company's expansion and
acquisition projects.

        Cash and cash equivalents totaled $118.3 million as of December 31,
1999. We believe that our 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.

Ownership Repurchase Matters

        On January 13, 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 shareholder, 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.



                                       31
<PAGE>   32

        In May 1999, Horseshoe Gaming purchased redeemable ownership interests
comprising an aggregate 7.2% of Horseshoe Gaming from five former employees for
an aggregate purchase price of $39.0 million. In June 1999, the first
installment of approximately $11.5 million was paid with the remaining amount to
be paid over a period not to exceed four years. During the third quarter of
1999, Horseshoe Gaming agreed to purchase redeemable ownership interests of 1.3%
of the Company from four current employees for $5.3 million. The first
installment of approximately $1.7 million was paid with the remaining amount to
be paid over a period not to exceed three years. The notes receivable from these
former and current employees was fully paid in connection with the first
installment payment made. Operating results for the year ended December 31, 1999
include a $2.9 million reduction in deferred compensation expense resulting from
the final valuation of these ownership interests.

        During the third quarter of 1999, the Company also agreed to purchase
ownership interests of 3.2% of the Company from four owners totaling $18.3
million. During the third quarter of 1999, the first installment of
approximately $1.8 million was paid with the remaining amount to be paid over a
period not to exceed four years.

        During the fourth quarter of 1999, the Company also agreed to purchase
ownership interests of 0.7% of the Company from five owners totaling $5.3
million to be paid in January 2004.

        The Company has employment agreements and unit option agreements with
certain employees which contain put/calls whereby, upon termination of
employment, the Company must, at the election of any such employee, and may, at
the Company's election, purchase such 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, 1999, the
aggregate fair market value of all interests subject to such put/calls,
representing approximately 1.4% ownership of the Company, was $6.8 million. Such
agreements provide that the purchase price for the employee's ownership interest
shall be paid in cash, either upon transfer of the interest to us or in
installments over a period not to exceed five years depending on the aggregate
purchase price.


Louisiana Repurchase

        In April 1999, Horseshoe Gaming exercised its option to acquire the
remaining 8.08% limited partnership interest in HE not held by NGCP for total
consideration of up to $30.4 million, which included payments for a non-compete
covenant, consents and a release of claims. The consideration for the repurchase
consisted of cash, payables to the former limited partners and offsets against
the negative capital account balances of the former limited partners.

Empress Acquisition

        On December 1, 1999, the Company completed the acquisition of the
operating subsidiaries of Empress for a total purchase price of $651.4 million.
The acquisition was accomplished by merging two of our wholly owned subsidiaries
into the Empress subsidiaries that own Empress Hammond and Empress Joliet.
Consolidated operating results include the results of operations of Empress
Hammond and Empress Joliet since the date of their acquisition on December 1,
1999.



                                       32
<PAGE>   33

        The preliminary allocation of the purchase price is as follows (in
millions):

<TABLE>
<S>                                                   <C>
PURCHASE PRICE:
        Cash                                          $494.9
        Assumed liabilities                            155.0
        Tender premium on debt                           1.5
                                                      ------
               Total purchase price                   $651.4
                                                      ======

PRELIMINARY ALLOCATION OF PURCHASE PRICE:
        Current assets                                $ 46.0
        Property and equipment, net                    189.7
        Other assets, net                               14.5
        Intangible assets                               15.0
        Goodwill                                       415.0
        Current liabilities                            (28.8)
                                                      ------
               Total allocation of purchase price     $651.4
                                                      ======
</TABLE>

Other Items

        During 1999, HE recorded an additional $10.3 million charge to adjust
the carrying value to its revised estimate of the net realizable value of the
Queen of the Red and the equipment on board that vessel. This additional charge
was made to reflect the current market conditions for idle riverboats. On March
6, 2000, HE received $.6 million from the sale of the equipment thereby reducing
the Company's expected net realizable value to $1.0 million.

Year 2000

        Throughout 1999, the Company continued its efforts to address the
potential impact of the Year 2000 ("Y2K") on the technology systems and
equipment essential to its operations. All of the Company's business systems and
equipment were tested and evaluated and then replaced or renovated as necessary
to become compliant. The Company's systems and equipment were deemed Y2K
compliant before the end of 1999, and the Company has not experienced any
significant problems related to the turn of the century.



                                       33
<PAGE>   34

ITEM 7A. QUALITATIVE AND QUANTITATIVE 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 presents principal cash flows and
related weighted average interest rates by expected maturity dates.

                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                      Maturity Date
                                    -----------------------------------------------------------------------------------      Fair
                                      2000         2001      2002       2003        2004        Thereafter      Total      Value (1)
                                    ---------     -------   -------   --------    ----------     ---------     --------    --------
<S>                                 <C>           <C>       <C>       <C>         <C>            <C>           <C>         <C>
Liabilities
   Long-term debt
    Fixed rate                      $ 154,748     $   850   $   850   $ 14,684    $    5,321     $ 757,829     $934,282    $916,482
       Average interest rate            8.122%      8.000%    8.000%     8.000%       10.000%        8.783%
    Variable rate                   $   9,497     $ 9,308   $ 9,924   $ 54,375    $  123,125     $ 118,437     $324,666    $324,666
       Average interest rate (2)        8.076%      8.078%    8.073%     8.662%        8.552%        8.580%
</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, 1999, 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.



                                       34
<PAGE>   35

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

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

<TABLE>
<CAPTION>
                         Age    Position
                         ---    --------
<S>                      <C>    <C>
Jack B. Binion           63     Chairman of the Board of Directors, Chief Executive Officer and Secretary.

Peri Howard              39     Vice Chairperson of the Board of Directors.

Leslie Kenny             44     Director

Joseph J. Canfora        40     President

Kirk C. Saylor           43     Senior Vice President, Treasurer and Chief Financial Officer.

Roger Wagner             52     Senior Vice President and Chief Operating Officer.

Gary Border              48     Senior Vice President - Marketing.

David Carroll            45     Senior Vice President - Human Resources.

Floyd Hannon             58     Senior Vice President - Government Affairs

J. Lawrence Lepinski     53     Senior Vice President - General Manager of Horseshoe Bossier City.

Bob McQueen              46     Senior Vice President - General Manager of Horseshoe Tunica.

David Fendrick           51     General Manager of Empress Joliet

Rick Mazer               45     General Manager of Empress Hammond

Jon Wolfe                32     Vice President - Chief Information Officer.

John Moran               36     Vice President - Database Marketing and Analysis.
</TABLE>


        Mr. Binion has served as Chairman of the Board, Chief Executive Officer
and Secretary of the Company since formation in April 1999. Prior thereto, Mr.
Binion served as the Chief Executive Officer of Horseshoe Gaming, Inc. ("HGI",
the former manager of Horseshoe Gaming, L.L.C.) since inception in December 1992
and as Chief Executive Officer of the general partner of NGCP since immediately
prior to the Roll-Up Transaction. Mr. Binion also served as the Chief Executive
Officer of the general partner of RPG and NGCP, the entity that operates
Horseshoe Tunica and Horseshoe Bossier City, from its inception in May 1993
until it merged into HGI in the Roll-Up Transaction. From 1964 to July 1998, Mr.
Binion was the President and Chief Executive Officer of the Horseshoe Club,
which owns and operates Binion's Horseshoe Casino in Las Vegas, Nevada.

        Ms. Howard has been our 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. Canfora has been the Company's President since December 1, 1999.
Prior thereto, he served as the President of Empress Entertainment, Inc.,
Empress Hammond and Empress Joliet from June 1997 through November 1999. Mr.
Canfora was the President of Midwest Operations for Stations Casinos, Inc. from
1992 through June 1997.



                                       35
<PAGE>   36

        Mr. Saylor has been our 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 the Company's Chief Financial Officer since August 1, 1998. From
November 1995 to November 1998, Mr. Saylor served as HGI's Corporate Controller.
From October 1994 to November 1995, Mr. Saylor served as Vice President and
Chief Financial Officer of Lone Star Casino Corp. in Las Vegas.

        Mr. Wagner has been our Senior Vice President and Chief Operating
Officer since the Company's formation in April 1999. Prior thereto, he served in
the same capacity 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. Border has been the Company's Senior Vice President - Marketing
since the Company's formation in April 1999. Prior thereto, he served in the
same capacity with HGI since July 1996. Since 1987, Mr. Border served as
President and founder of Marketing Results, Inc. Mr. Border resigned from his
position as Senior Vice President - Marketing effective March 31, 2000.

        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. Lepinski has been Senior Vice President and General Manager of the
Horseshoe Bossier City since September 1995. Prior thereto, Mr. Lepinski served
as General Manager of Bally's Saloon and Gambling Hall in Tunica, Mississippi
since August 1993.

        Mr. McQueen has been Senior Vice President and 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. Fendrick has been General Manager of the Empress Joliet since August
1997. Prior thereto, Mr. Fendrick served as Vice President and General Manager
of Station Casino in Kansas City, Missouri from December 1994 the March 1997.

        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. Prior to joining the
Empress, Mr. Mazer was Vice President of Marketing for Par-A-Dice Riverboat
Casino in Peoria, Illinois from 1993 through 1995.

        Mr. Wolfe has been the Company's Vice President and 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



                                       36
<PAGE>   37

Systems for HGI. From July 1994 to October 1995 Mr. Wolfe was Director of
Information Systems for Horseshoe Tunica.

        Mr. Moran has been the Company's Vice President - Database Marketing and
Analysis since the Company's formation in April 1999. Prior thereto, he served
in the same capacity with HGI since November 1998. From December 1996 to
November 1998 Mr. Moran was Director of Club Operations and Analysis for HGI.
From September 1995 to December 1996 Mr. Moran was Director of Club Operations
and Analysis for the Horseshoe Club and from February 1987 to September 1995 was
Director of Marketing Operations for the Claridge Casino and Hotel.

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") for their services to the
Company for the years ended December 31, 1999, 1998 and 1997.

                     SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                             Long-Term
                                                                                            Compensation
                                                                             Other Annual      Awards        All Other
Name                                 Year        Salary           Bonus      Compensation      Options     Compensation (1)
----                                 ----        ------           -----      ------------      -------     ----------------
<S>                                  <C>       <C>             <C>           <C>            <C>            <C>
Jack B. Binion,                      1999      $1,000,000      $       --      $      --             --      $       --
   Chairman of the Board             1998      $1,000,000      $       --      $      --             --      $       --
   CEO and Secretary                 1997      $       --      $       --      $      --             --      $       --
Gary A. Border, Senior               1999      $  350,000      $  100,000      $      --      25.622256      $    4,156
   Vice President-                   1998      $  350,000      $       --      $      --             --      $    3,550
   Marketing (2)                     1997      $  350,000      $       --      $      --             --      $    3,550
Roger P. Wagner, Senior              1999      $  250,000      $   62,500      $      --      18.301612      $    4,452
   Vice President -                  1998      $   32,692      $       --      $      --             --      $       --
   Chief Operating Officer           1997      $       --      $       --      $      --             --      $       --
Bob McQueen, Senior VP               1999      $  201,981      $   95,000      $      --      14.641288      $    7,542
   General Manager -                 1998      $  168,476      $   95,000      $      --             --      $   12,594
   Horseshoe Tunica                  1997      $  161,510      $   95,000      $      --             --      $    4,636
Kirk C. Saylor, Senior               1999      $  222,404      $   56,250      $      --      16.471448      $    7,684
   Vice President-                   1998      $  132,488      $   75,000      $      --             --      $    4,107
   Chief Financial Officer           1997      $  126,966      $   15,000      $      --             --      $    4,006
</TABLE>


(1)     Premium on insurance policies.

(2)     Resigned effective March 31, 2000.

        The following table sets forth certain information regarding grants of
stock options made to the executive officers named in the Summary Compensation
Table during 1999, 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 1999.



                                       37
<PAGE>   38

                     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 1999     Price ($/sh.)         Date            5%             10%
----                --------------   -------------  -------------      ----------     ----------      ----------
<S>                 <C>              <C>            <C>                <C>            <C>             <C>
Jack B. Binion               --
Gary A. Border        25.622256            8.30%      $   13,660        12/31/08      $  220,113      $  557,810
Roger P. Wagner       18.301612            5.93%      $   13,660        12/31/08      $  157,224      $  398,436
Bob McQueen           14.641288            4.74%      $   13,660        12/31/08      $  125,779      $  318,748
Kirk C. Saylor        16.471448            5.33%      $   13,660        12/31/08      $  141,501      $  358,592
All Option/SARs      308.854441          100.00%      $   13,660        12/31/08      $2,653,276      $6,723,922
</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.

        The following table sets forth certain information concerning stock
option exercises during 1999 by the executive officers named in the Summary
Compensation Table and information concerning option values.

AGGREGATED OPTION/SAR EXERCISES IN 1999 AND DECEMBER 31, 1999 OPTION/SAR VALUES

<TABLE>
<CAPTION>
                                                           Number of Securities
                                                           Underlying Unexercised        Value of Unexercised,
                                                           Options/SARs Held at         In-the-Money Options/SARs
                         Shares                            December 31, 1999 (#)       at December 31, 1999 ($)(1)
                       Acquired on       Value           --------------------------   ---------------------------
Name                   Exercise (#)   Realized ($)       Exercisable   Unexercisable   Exercisable  Unexercisable
----                   ------------   ------------       -----------   -------------   -----------  --------------
<S>                    <C>            <C>                <C>           <C>             <C>          <C>
Jack B. Binion              --             --                    --             --            --            --
Gary A. Border              --             --              6.405564      19.216692      $ 63,928      $191,590
Roger P. Wagner             --             --              4.575403      13.726208      $ 45,663      $136,850
Bob McQueen                 --             --              3.660322      10.980966      $ 36,530      $109,480
Kirk C. Saylor              --             --              4.117862      12.353586      $ 41,096      $123,165
</TABLE>


(1)     Amount represents the difference between the aggregate price of
        unexercised options/SARs and a $23,640 per share price as determined by
        the Company pursuant to the Equity Incentive Plan document. The $23,640
        per share price represents the latest available fair market price as
        determined pursuant to the plan document.



                                       38
<PAGE>   39

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 Howard receives $230,000 and Leslie
Kenny receives no compensation for services on the board. Officers serve at the
discretion of the Board. The Board has no Compensation Committee.

        The Company's Board of Directors also utilizes various individuals as
business advisors. One individual, whom is also an owner, received $ for his
advisory services to the Board in 1999.

EMPLOYMENT AGREEMENTS

        Mr. Binion has provided services pursuing, developing and managing
gaming operations for the Company and its subsidiaries. A salary of $1,000,000
was accrued for Mr. Binion for his services during 1999 and 1998. There is no
existing employment agreement providing for Mr. Binion to receive compensation
for his services in the future.

        Gary Border is employed as the Senior Vice President - Marketing for the
Company pursuant to an employment agreement with the Company dated November 23,
1998. Mr. Border's term of employment under the employment agreement expires
December 1, 2002. Mr. Border is responsible for supervising the marketing
departments of the Company, developing and creating marketing strategies,
creative strategies, planning and support for all national local markets,
assisting the general managers of various properties owned by subsidiaries or
affiliates of the Company and coordinating and overseeing the various department
heads charged with casino and hotel marketing. Mr. Border presently earns
compensation of three hundred fifty thousand dollars ($350,000) per year base
salary and a discretionary bonus not to exceed twenty-five thousand dollars
($25,000) annually. In addition, Mr. Border was granted a one hundred thousand
dollar ($100,000) signing bonus upon execution of the employment agreement. Mr.
Border resigned from the Company as Senior Vice President-Marketing effective
March 31, 2000.

        Roger Wagner is employed as Senior Vice President and Chief Operating
Officer of the Company pursuant to an employment agreement executed on December
1, 1998. Mr. Wagner's term of employment under this agreement expires on
December 31, 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 three hundred thousand dollars
($300,000) and a discretionary bonus not to exceed 50% of base salary.

        Robert McQueen is employed as a Senior Vice President - General Manager
of Horseshoe Tunica pursuant to an employment agreement with the Company dated
October 15, 1998. Mr. McQueen's term of employment under the employment
agreement expires October 15, 2001. Mr. McQueen is responsible for supervising
the day to day activities of Horseshoe Tunica. Mr. McQueen presently earns
compensation of two hundred seven thousand five hundred dollars ($207,500) per
year base salary and a bonus of ninety-five thousand dollars ($95,000) for
calendar years 1998 and 1999, and a discretionary bonus not to exceed 50% of his
base salary for each year thereafter.



                                       39
<PAGE>   40

        Kirk Saylor is employed as a 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 December 1, 2002. 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 fifty thousand dollars ($250,000) per year base
salary and a discretionary bonus not to exceed 50% of the base salary.

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 1, 2000, 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>   <C>
Jack B. Binion                           21,329       (2)    89.48%
Phyllis M. Cope                           1,907       (3)     8.00%
Leslie Kenny                              1,194               5.01%
Peri Howard                               3,629       (4)    15.22%
Scott Hamilton                            1,272       (5)     5.33%
Wanda Parsons                             1,907       (6)     8.00%
Directors and executive
officers as a group (10 persons)         21,361       (7)    89.61%
</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 Road, 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 3,629 shares owned by Peri
Howard; (d) the 1,194 shares owned by Leslie 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 11,550 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.



                                       40
<PAGE>   41

(4) Includes 275 shares held by Peri Howard, as Trustee of the Ted J. Fechser
Trust, 275 shares held by Peri Howard, as Trustee of the Fancy Ann Fechser
Trust, 275 shares held by Peri Howard, as Trustee of the James Christopher
Fechser Trust, 275 shares held by Peri Howard, as Trustee of the Robert Daniel
Fechser Trust, 275 shares held by Peri Howard, as Trustee of the Katie O'Neill
Trust, 275 shares held by Peri Howard, as Trustee of the Kellie O'Neill Trust,
275 shares held by Peri Howard, as Trustee of the Rachel Fechser Trust 275
shares held by Peri Howard, as Trustee of the Ben E. Johnson Trust, 55 shares
held by Peri Howard, as Trustee of the Bonnie Binion Trust, and 55 shares held
by Peri Howard, as Trustee of the Benny Behnen Trust; 55 shares held by Peri
Howard, as Trustee of the Jack Behnen Trust, 1,261 shares held by Peri Howard as
an individual and 4 shares subject to options that are currently exercisable or
will become exercisable within 60 days. Peri 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 27 shares subject to options that are currently exercisable or will
become exercisable within 60 days.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

        The Company conducts a portion of its marketing through an entity that
is owned by the wife of an officer. Amounts paid to this company for fees and
reimbursable expenses totaled $3,157,000, $3,625,000 and $2,648,000 for the
years ended December 31, 1999, 1998 and 1997, respectively.

        The Company has made loans to various employees (including some who are
now former employees) with ownership interests in the Company. The notes were
repaid during 1999 out of the proceeds of the put/call provisions relating to
such ownership interests. The amount outstanding under these loans was
$2,677,000 as of December 31, 1998.

        The Company and Walter Haybert, the former Chief Financial Officer of
the Company, are parties to an agreement whereby the Company has agreed to pay
Mr. Haybert $150,000 per year for each of 1999 and 2000 as advances against the
purchase price for his interest in the Company. Mr. Haybert's interest in the
Company is subject to purchase by the Company pursuant to the put/call
provisions that were contained in his employment agreement with the Company.

                                     PART IV

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

         Page



                                       41
<PAGE>   42

        Number

(a)(1)  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS:

         HORSESHOE GAMING HOLDING CORP.      F-2

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

               SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS S-2

        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:

        In the fourth quarter of 1999 a Form 8-K was filed, dated December 16,
1999 reporting under Item 2 the Company's acquisition of Empress Entertainment,
Inc.'s two operating subsidiaries.

        On February 11, 2000 Form 8-K/A was filed to amend the previously filed
Form 8-K to include the financial statements of Empress Entertainment, Inc.



                                       42
<PAGE>   43

SIGNATURES

                Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Joliet, State of Illinois, on March 30, 2000.

                                            Horseshoe Gaming Holding Corp.
                                            a Delaware corporation

                                            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 30, 2000
----------------------------   Chairman of the Board of Directors
Jack B. Binion                 (Principal Executive Officer)

/s/ Peri Howard                Director                                 March 30, 2000
----------------------------
Peri Howard

/s/ Leslie Kenny               Director                                 March 30, 2000
----------------------------
Leslie Kenny

/s/ Kirk C. Saylor             Chief Financial Officer and Treasurer    March 30, 2000
----------------------------   (Principal Financial and Accounting
Kirk C. Saylor                 Officer)
</TABLE>



                                       43
<PAGE>   44

                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, 1999 and 1998                                             F-3
      Statements of operations for the years ended December 31, 1999, 1998 and 1997               F-4
      Statements of stockholders' equity for the years ended December 31, 1999, 1998 and 1997     F-5
      Statements of cash flows for the years ended December 31, 1999, 1998 and 1997               F-6
      Notes to consolidated financial statements                                                  F-7
</TABLE>



                                      F-1
<PAGE>   45

                    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 as of December 31, 1999 and 1998, and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended December 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with 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, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States.



                                            ARTHUR ANDERSEN LLP

Memphis, Tennessee,
      March 3, 2000.



                                      F-2
<PAGE>   46

                 HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                            December 31,
                                                                   ----------------------------
                                                                      1999              1998
                                                                   -----------      -----------
<S>                                                                <C>              <C>
                                     ASSETS
Current Assets:
      Cash and cash equivalents                                    $   118,276      $    84,151
      Restricted cash                                                  159,002               --
      Accounts receivable, net of allowance for doubtful
           accounts of $11,089 and $10,346                              14,876            9,653
      Inventories                                                        4,219            3,548
      Prepaid expenses and other                                         6,212            4,484
                                                                   -----------      -----------
                            Total current assets                       302,585          101,836
                                                                   -----------      -----------

Property and Equipment, net                                            546,464          375,307

Other Assets:
      Assets held for resale                                             1,630           12,000
      Goodwill, net                                                    463,847           36,124
      Other, net                                                        94,718           35,181
                                                                   -----------      -----------
                                                                   $ 1,409,244      $   560,448
                                                                   ===========      ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
      Current maturities of long-term debt                         $   164,245      $     1,174
      Accounts payable                                                   8,514            8,252
      Accrued expenses and other                                        87,588           40,599
                                                                   -----------      -----------
                            Total current liabilities                  260,347           50,025
                                                                   -----------      -----------

Long-term Liabilities:
      Long-term debt, less current maturities                        1,094,703          387,544
      Other long-term liabilities                                       12,840               --
                                                                   -----------      -----------
                 Total long-term liabilities                         1,107,543          387,544
                                                                   -----------      -----------

Commitments and Contingencies (Notes 9, 10, 12 and 13)

Minority Interest                                                           --           (1,965)

Redeemable Ownership Interests, net of deferred
      compensation of $0 and $272                                        6,760           53,693

Members' Equity                                                             --           71,151

Stockholders' Equity
      Common Stock, $1.00 par value, 50,000 shares authorized,
           25,000 shares issued, 23,772 shares outstanding                  25               --
      Additional paid-in capital                                        41,360               --
      Retained earnings                                                 16,789               --
                                                                   -----------      -----------
                                                                        58,174               --
      Less 1,228 shares of treasury stock at cost                      (23,580)              --
                                                                   -----------      -----------
                            Total Stockholders' Equity                  34,594               --
                                                                   -----------      -----------
                                                                   $ 1,409,244      $   560,448
                                                                   ===========      ===========
</TABLE>



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



                                      F-3
<PAGE>   47

                 HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                          Years Ended December 31,
                                                   ---------------------------------------
                                                     1999           1998           1997
                                                   ---------      ---------      ---------
<S>                                                <C>            <C>            <C>
Revenues:
      Casino                                       $ 487,536      $ 429,825      $ 321,236
      Food and beverage                               52,969         48,263         29,990
      Hotel                                           33,566         35,448          8,773
      Retail and other                                16,413          9,980          4,305
                                                   ---------      ---------      ---------
                                                     590,484        523,516        364,304
      Less promotional allowances                    (64,931)       (62,340)       (29,211)
                                                   ---------      ---------      ---------
           Net revenues                              525,553        461,176        335,093
                                                   ---------      ---------      ---------

Expenses:
      Casino                                         266,482        245,234        175,394
      Food and beverage                               16,911         15,959         10,981
      Hotel                                           12,054         11,785          7,877
      Retail and other                                 6,934          6,910          1,425
      General and administrative                      66,627         57,202         43,600
      Corporate expenses                               8,088         12,947         22,490
      Development                                        327            515          1,653
      Preopening                                          --            653          2,964
      Asset write-down                                10,346         12,911             --
      Depreciation and amortization                   41,806         33,888         19,411
                                                   ---------      ---------      ---------
           Total expenses                            429,575        398,004        285,795
                                                   ---------      ---------      ---------

Operating Income                                      95,978         63,172         49,298

Other Income (Expense):
      Interest expense                               (65,219)       (39,861)       (20,792)
      Interest income                                 11,887          2,189          4,996
      Other, net                                        (620)           412           (849)
                                                   ---------      ---------      ---------

Income before Extraordinary Loss
      on Early Retirement of Debt                     42,026         25,912         32,653

Extraordinary Loss on Early Retirement of Debt        (9,653)          (787)        (5,243)
                                                   ---------      ---------      ---------

Net Income                                         $  32,373      $  25,125      $  27,410
                                                   =========      =========      =========
</TABLE>


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



                                      F-4
<PAGE>   48

                 HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
                                 (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, 1996        $ 79,782

Distributions:
     Cash                          (11,056)
     Payable                       (15,000)
Increase in redeemable
    ownership interests            (16,541)
Net income                          27,410
                                  --------

Balance, December 31, 1997          64,595

Cash distributions                 (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
                                  --------

Balance, June 30, 1999              41,679

Exchange of members'
     ownership interests
     for 25,000 shares of
     common stock
     at $1.00 par value            (41,679)        $     25        $     --         $ 41,654         $     --         $ 41,679

Dividends:
     Cash                               --               --              --               --             (566)            (566)
     Payable                            --               --              --               --           (1,629)          (1,629)
Increase in redeemable
    ownership interests                 --               --              --             (294)              --             (294)
Purchase of stock for
    treasury                            --               --         (23,580)              --               --          (23,580)
Net income                              --               --              --               --           18,984           18,984
                                  --------         --------        --------         --------         --------         --------

Balance, December 31, 1999        $     --         $     25        $(23,580)        $ 41,360         $ 16,789         $ 34,594
                                  ========         ========        ========         ========         ========         ========
</TABLE>



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


                                      F-5
<PAGE>   49

                 HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                        Years Ended December 31,
                                                                             ---------------------------------------------
                                                                               1999              1998              1997
                                                                             ---------         ---------         ---------
<S>                                                                          <C>               <C>               <C>
Cash flows from operating activities:
      Net income                                                             $  32,373         $  25,125         $  27,410
      Adjustments to reconcile net income to
           net cash provided by operating activities:
                 Minority interest in income (loss) of subsidiary                  311              (640)              420
                 Depreciation and amortization                                  41,806            33,888            19,411
                 Asset write-down                                               10,346            12,911                --
                 Amortization of debt discounts,
                      deferred finance charges and other                         3,631             2,741             2,313
                 Loss on disposal of property                                       --                --               389
                 Provision for doubtful accounts                                 4,643            11,937             7,556
                 Increase in redeemable ownership interests                        470             4,245            15,066
                 Extraordinary loss on early retirement of debt                  9,653               787             5,243
                 Change in assets and liabilities                               14,773           (22,238)           (6,482)
                                                                             ---------         ---------         ---------
                            Net cash provided by operating activities          118,006            68,756            71,326
                                                                             ---------         ---------         ---------

Cash flows from investing activities:
      Purchases of property and equipment                                     (205,090)          (46,576)         (215,576)
      Increase (decrease) in construction payables                                  --           (26,290)           13,879
      Proceeds from sale of property                                                --               383                --
      Goodwill                                                                (257,928)               --                --
      Net decrease (increase) in escrow funds                                       --                --            42,235
      Net increase in other assets                                             (25,603)          (17,902)           (1,717)
                                                                             ---------         ---------         ---------
                            Net cash used in investing activities             (488,621)          (90,385)         (161,179)
                                                                             ---------         ---------         ---------

Cash flows from financing activities:
      Proceeds from long-term debt                                             867,146            85,000           175,438
      Payments on debt                                                        (236,895)          (10,185)          (97,877)
      Capital distributions                                                    (12,811)          (17,012)          (11,056)
      Warrant repurchases                                                      (34,426)               --                --
      Redeemable ownership payments                                            (16,642)               --                --
      Increase in restricted cash                                             (159,002)               --                --
      Purchase of treasury stock                                                (1,788)               --                --
      Distributions to minority holders                                           (842)               (8)             (910)
      Debt issue costs and commitment fees                                          --              (725)           (6,191)
                                                                             ---------         ---------         ---------
                            Net cash provided by financing activities          404,740            57,070            59,404
                                                                             ---------         ---------         ---------

Net change in cash and cash equivalents                                         34,125            35,441           (30,449)

Cash and cash equivalents, beginning of period                                  84,151            48,710            79,159
                                                                             ---------         ---------         ---------

Cash and cash equivalents, end of period                                     $ 118,276         $  84,151         $  48,710
                                                                             =========         =========         =========
</TABLE>


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



                                      F-6
<PAGE>   50

                 HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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
"Empress", "Horseshoe" and "Binion" names in Joliet, Illinois; Hammond, Indiana;
Bossier City, Louisiana and Tunica County, Mississippi.

 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 such
that on December 31, 1999, the Company owned 100% of Horseshoe Gaming.

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. In April 1999, the Company
        purchased the remaining 8.08% limited partner interests in Horseshoe
        Entertainment, L.P. ("HE"), a Louisiana limited partnership which owns
        and operates the Horseshoe Bossier City (see Note 10), not held by NGCP.
        As of December 31, 1999 and 1998, NGCP owned 100% and 91.92%,
        respectively, of HE.

-       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 located in Tunica County, Mississippi, and
        is 100% owned by the Company and its subsidiary, Horseshoe GP, Inc.

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

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

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), since the Company holds more than a 50%
ownership interest in all of its subsidiaries. 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.



                                      F-7
<PAGE>   51

2.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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 30 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, 1999, 1998 and 1997, was $8,000, $163,000
and $11,191,000, respectively.

Goodwill

Goodwill is amortized on a straight-line basis over 25 years, which management
estimates is the related minimum benefit period. Management regularly evaluates
whether or not the future undiscounted cash flows of HE, RPG, ECJC and ECHC are
sufficient to recover the carrying amount of the goodwill associated with each
entity. Additionally, management continually monitors such factors as the status
of new or proposed legislation, the competitive environment and the general
economic conditions of the markets in which it operates. If the estimated future
undiscounted cash flows are not sufficient to recover the carrying amount of
goodwill and, accordingly, an impairment has occurred, management intends to
write down the carrying amount of goodwill to its estimated fair value based on
discounted cash flows. The amount of amortization expense recorded for the years
ended December 31, 1999, 1998 and 1997, was $3,597,000, $1,668,000 and
$1,662,000, respectively.

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 1.4% 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).



                                      F-8
<PAGE>   52

2.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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 taxable income and the highest marginal
federal and state corporate 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

In accordance with industry practice, casino revenues represent the net win from
gaming activities, which is the difference between 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 substantially included in casino department expenses, are as
follows (in thousands):

<TABLE>
<CAPTION>
                                       Years Ended December 31,
                                -------------------------------------
                                 1999           1998            1997
                                -------        -------        -------
<S>                             <C>            <C>            <C>
Food and beverage               $37,534        $36,705        $24,967
Hotel                             8,384          8,325          3,360
Other operating expenses          7,599          5,067            664
                                -------        -------        -------
                                $53,517        $50,097        $28,991
                                =======        =======        =======
</TABLE>

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 related to new
construction as incurred in accordance with Statements of Position 98-5
"Reporting on the Cost of Start-up Activities." Total preopening costs of $0,
$653,000 and $2,964,000 were expensed during 1999, 1998 and 1997, respectively,
in conjunction with expansions at Horseshoe Bossier City and Horseshoe 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. Included in corporate
expenses for the years ended December 31, 1999, 1998 and 1997 are normal
operating expenses and compensation expenses related to ownership interests in
the Company issued to employees pursuant to employment agreements (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



                                      F-9
<PAGE>   53

2.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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 at December 31, 1998.

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.

The tax bases in the Company's assets and liabilities were in excess of the
amounts reported in the accompanying consolidated financial statements by
$18,278,000 and $3,847,000 at December 31, 1999 and 1998, respectively. Taxable
income was in excess of net income reported in the accompanying consolidated
statements of operations for all periods presented.

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. Based on management's evaluations, there were no significant
impairments of long-lived assets during the year ended December 31, 1997. For
the years ended December 31, 1999 and 1998, the Company recorded a write-down in
the carrying value of an idle riverboat (see Note 6).

Use of Estimates

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

Reclassifications

Certain amounts from prior years have been reclassified to conform to the
current year presentation.

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 1999, the Company acquired ECHC and ECJC for cash plus the assumption of
debt. As a result, the Company increased debt by $151,500,000, which included
the tender premium of $1,500,000, increased accrued liabilities by $5,078,000
and increased goodwill by $156,578,000. The Company also recorded additional
liabilities and goodwill related to the acquisition of ECHC and ECJC totaling
$3,814,000.

During 1999, the Company purchased common stock held in treasury for $21,800,000
in notes payable.

Also, during 1999, the Company purchased certain ownership interests for
$28,100,000 in notes payable. The Company had previously recorded a redeemable
ownership liability for the repurchase of these ownership interests.

3.      CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

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



                                      F-10
<PAGE>   54

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 RPG and the contributing partner. As a result, RPG
reduced the value of the land by $941,000 and reduced goodwill by $168,000 with
a corresponding reduction in partners' capital of $1,109,000.

Distributions totaling $15,000,000, accrued at December 31, 1997, were paid in
February 1998.

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

<TABLE>
<CAPTION>
                                                                  Years Ended December 31,
                                                         --------         --------         --------
                                                           1999             1998             1997
                                                         --------         --------         --------
<S>                                                      <C>              <C>              <C>
           (Increase) decrease in assets:
                 Accounts receivable                     $ (9,866)        $ (8,072)        $(13,091)
                 Inventories                                 (671)            (590)          (1,523)
                 Prepaid expenses and other                (1,730)          (2,382)            (493)
           Increase (decrease) in liabilities:
                 Accounts payable                             262           (2,226)           5,600
                 Accrued expenses and other                26,778           (8,968)           3,025
                                                         --------         --------         --------
                                                         $ 14,773         $(22,238)        $ (6,482)
                                                         ========         ========         ========

Supplemental Disclosure of Cash Flow Information:
           Cash paid for interest (in thousands)         $ 54,681         $ 36,530         $ 29,524
</TABLE>

4.      ACQUISITION

On December 1, 1999, the Company acquired from Empress Entertainment, Inc.
("Empress"), all of the outstanding stock of two of Empress's operating
subsidiaries, Empress Hammond and Empress Joliet for $494.9 million in cash. The
acquisition was accomplished through two simultaneous merger transactions
(collectively the "Empress Mergers") of the Company's wholly owned subsidiaries,
Horseshoe Acquisition Indiana, Inc. ("Horseshoe Indiana") with and into Empress
Hammond, and Horseshoe Acquisition Illinois, Inc. ("Horseshoe Illinois") with
and into Empress Joliet. As additional consideration for the Empress Mergers,
the Company assumed the indebtedness and obligations of Empress, Empress River
Casino Finance Corporation, Empress Joliet, Empress Hammond and Hammond
Residential LLC, a wholly owned subsidiary of Empress Hammond ("Residential"),
under an Indenture, dated as of June 18, 1998, for $150 million 8.125% Senior
Subordinated Notes due 2006 and the payment of certain transaction costs. The
Empress Mergers were consummated pursuant to an Agreement and Plan of Merger,
dated as of September 2, 1998, by and among the Company, Horseshoe Gaming,
certain of the Company's affiliates named therein, Empress, Empress Joliet and
Empress Hammond (as amended by the First Amendment dated as of March 25, 1999
and by the Second Amendment dated as of July 23,1999, and as modified by the
Assumption Agreement dated as of November 18, 1999, collectively, the "Merger
Agreement").

The consideration was agreed upon as the result of arm's-length, good faith
negotiations between the parties to the Merger Agreement and their respective
representatives. Empress Joliet, Empress Hammond and Residential, will continue
to operate as wholly owned subsidiaries of the Company. The sources of the funds
used by the Company to pay the cash merger consideration consisted of funds
obtained under: (i) an Indenture conveying $600 million in 8.625% Senior
Subordinated Notes due 2009, dated as of May 11, 1999, between the Company and
U.S. Trust Company, National Association, as trustee; and (ii) a Credit
Agreement, dated as of June 30, 1999, by and among the Company, DLJ Capital
Funding, Inc., as Syndication Agent, Canadian Imperial Bank of Commerce, as
Administrative Agent, Wells Fargo Bank, National Association, as Documentation
Agent, and the Lenders listed therein.

4.      ACQUISITION (CONTINUED)

The transactions have been recorded using the purchase method of accounting. The
purchase price of the acquisitions and related preliminary allocation consist of
the following (in thousands):

<TABLE>
<S>                                                           <C>
PURCHASE PRICE:
           Cash                                               $ 493,900
           Transactions costs                                       955
                                                              ---------
               Total cash consideration                         494,855
               Plus: Debt and accrued interest assumed          155,078
</TABLE>



                                      F-11
<PAGE>   55

<TABLE>
<S>                                                           <C>
                     Tender premium on debt                       1,500
                                                              ---------
                     Total purchase price                     $ 651,433
                                                              =========
PRELIMINARY ALLOCATION OF PURCHASE PRICE:
           Current assets                                     $  46,018
           Property and equipment                               189,695
           Other assets, net                                     14,518
           Intangible assets                                     15,000
           Goodwill                                             414,986
           Current liabilities                                  (28,784)
                                                              ---------
               Total allocation of purchase price             $ 651,433
                                                              =========
</TABLE>

The Company is currently in the process of allocating the purchase price among
the tangible and intangible assets acquired and the liabilities assumed in the
Empress acquisition. The Company estimates the value of other acquired
intangibles included in other assets, net in the accompanying Consolidated
Balance Sheets are $10.0 million for trademarks and $5.0 million for customer
lists, to be amortized over five years. Upon completion of the final purchase
price allocation, to the extent the purchase price exceeds the fair value of the
net identifiable tangible and intangible assets acquired, such excess will be
allocated to goodwill and amortized over approximately 25 years.

The following unaudited pro-forma financial information 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>
                              December 31,
                        ------------------------
                          1999            1998
                        --------        --------
                      (unaudited)      (unaudited)
<S>                   <C>              <C>
Net revenues            $940,507        $857,842
Operating income         165,167         112,834
Net income                56,811          14,790
</TABLE>

5.      PROPERTY AND EQUIPMENT

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

<TABLE>
<CAPTION>
                                                      December 31,
                                               ---------------------------
                                                  1999              1998
                                               ---------         ---------
<S>                                            <C>               <C>
Land                                           $  28,349         $  16,093
Buildings, boat, barge and improvements          528,610           333,071
Furniture, fixtures and equipment                158,306            83,360
Less:  accumulated depreciation                 (170,868)          (61,330)
                                               ---------         ---------
                                                 544,397           371,194
Construction in progress                           2,067             4,113
                                               ---------         ---------
     Property and Equipment, net               $ 546,464         $ 375,307
                                               =========         =========
</TABLE>



                                      F-12
<PAGE>   56

6.      ASSETS HELD FOR RESALE

In January 1998, HE 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 is reported as assets held for resale in the
accompanying consolidated balance sheets. During 1999, HE recorded an asset
write-down of $10,346,000 reducing the carrying value of the Queen of the Red to
its current estimated net realizable value of $1,630,000. The estimated net
realizable value was based on recent market information concerning riverboats
being held for sale. In 1998, based on an appraisal of the Queen of the Red,
management reduced the carrying value of the Queen of the Red by $12,911,000.
Management is continuing to evaluate various options for use of the Queen of the
Red, including sale. Subsequent to December 31, 1999, HE sold the gaming
equipment from the Queen of the Red for $630,000 thereby reducing the carrying
value to $1,000,000.

7.      ACCRUED EXPENSES AND OTHER

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

<TABLE>
<CAPTION>
                                                                     December 31,
                                                               ----------------------
                                                                1999            1998
                                                               -------        -------
<S>                                                            <C>            <C>
             Payroll and related tax liabilities               $13,006        $ 8,674
             Vacation and other employee benefits                7,417          3,157
             Accrued interest                                   17,476          5,491
             Gaming, sales, use and property taxes               7,720          3,815
             Progressive slot and slot club liabilities         12,531          6,691
             Other accrued expenses                             29,438         12,771
                                                               -------        -------
                                                               $87,588        $40,599
                                                               =======        =======
</TABLE>

8.      LONG-TERM DEBT

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

<TABLE>
<CAPTION>
                                                                                December 31,
                                                                           ------------------------
                                                                             1999           1998
                                                                           --------        --------
<S>                                                                        <C>             <C>
8.625% Senior Subordinated Notes (effective interest rate of
     8.657%), due May 15, 2009, net of unamortized
     discount of $2,050                                                    $597,950        $     --

9.375% Senior Subordinated Notes (effective interest of 9.384%),
     due June 15, 2007, net of unamortized
     discount of $121 and $137                                              159,879         159,863

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 8.33% to 8.73%                             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 varying interest rates ranging
     from 8.58% to 8.63%                                                    124,687              --
</TABLE>



                                      F-13
<PAGE>   57

8.      LONG-TERM DEBT (CONTINUED)

<TABLE>
<CAPTION>
                                                                                December 31,
                                                                     -------------------------------
                                                                         1999                1998
                                                                     -----------         -----------
                                                                              (in thousands)
<S>                                                                  <C>                 <C>
12.75% Senior Notes (effective interest rate of 13.01%),
     substantially paid in full in May 1999, paid in full and
     retired in September 1999, net of unamortized
     discount of $909                                                $        --         $   127,681

Senior Secured Revolving Credit Facility, secured by
     substantially all of the assets of the Company, paid in
     full and retired in May 1999                                             --             100,000

Notes Payable, interest ranging from 6% to 12%, due in
     various installments through January 2004                            49,932               1,174
                                                                     -----------         -----------
                                                                       1,258,948             388,718
Less:  current maturities                                               (164,245)             (1,174)
                                                                     -----------         -----------
                                                                     $ 1,094,703         $   387,544
                                                                     ===========         ===========
</TABLE>

On June 15, 1997, the Company issued $160,000,000 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. A portion of the
proceeds were used to retire a previously outstanding credit facility (see
below), as well as retire $13 million in senior notes. An extraordinary loss on
early retirement of debt of $5,243,000 was recognized in 1997 for prepayment
penalties and premium, and the write-off of unamortized discounts and deferred
finance charges. The remaining proceeds were used to fund a portion of the
expansion of the Company's existing facilities.

During 1998, the Company repurchased some of its senior notes from individual
note holders in the open market totaling $8,410,000. 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 million
of 8.625% Senior Subordinated Notes due 2009. The proceeds from the notes were
used to retire the 12.75% senior notes of $128.6 million and the Company's
Amended and Restated Senior Secured Revolving Credit Facility of $75 million. 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
amounting to $342.3 million were placed in a secured proceeds account of which
$151.5 million was used to fund the redemption of Empress 8.125% Senior
Subordinated Notes in January 2000 and $190.8 million was used to partially fund
the acquisition of ECJC and ECHC.

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 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
ECJC and ECHC. 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 $29,375,000 quarterly thereafter. The
revolving loan commitment is permanently reduced by $9,375,000 per quarter
beginning December 31, 2001, $12,500,000 per quarter beginning December 31, 2002
and $40,625,000 per quarter beginning December 31, 2003. As of March 4, 2000, a
combined $234.7 million was 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



                                      F-14
<PAGE>   58

8.      LONG-TERM DEBT (CONTINUED)

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.

As of December 31, 1999, the five year maturities for long-term debt were
$164,245,000 (2000), $10,158,000 (2001), $10,774,000 (2002), $69,059,000 (2003)
and $128,446,000 (2004).

As of December 31, 1999 the fair market value of the 8.625% Senior Subordinated
Notes, based on quoted market prices was $580,500,000. As of December 31, 1999
and 1998, the fair market value of the 9.375% Senior Subordinated Notes, based
on quoted market prices was $159,600,000 and $164,800,000, respectively. As of
December 31, 1998, the fair market value of the 12.75% Senior Notes, based on
market quoted market prices was $138,170,000. The fair market value of the
Company's other long-term debt approximated its carrying value as of December
31, 1999 and 1998, based on the borrowing rates currently available for debt
with similar terms.

9.      LEASE COMMITMENTS

The Company and its subsidiaries lease both real estate and equipment used in
the operations and classifies those leases as either operating or capital leases
following the provisions of SFAS No. 13 "Accounting for Leases."

Empress 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 Empress
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. Empress 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, 1999, 1998 and 1997 was
approximately $2,486,000 $2,105,000 and $1,741,000, respectively.

In January 2000, the Company signed a three year lease for computer equipment.
The leases require monthly payments of $51,079 and expire on December 31, 2002.

As of December 31, 1999, our future minimum rental commitments are $2,098,000
(2000), $1,495,000 (2001), $1,230,000 (2002), $216,000 (2003) and $205,000
(2004).

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

On January 13, 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.

In May 1999, Horseshoe Gaming purchased redeemable ownership interests
comprising an aggregate 7.2% of Horseshoe Gaming from five former employees for
an aggregate purchase price of $39.0 million. In June 1999, the first
installment of approximately $11.5 million was paid with the remaining amount to
be paid



                                      F-15
<PAGE>   59

10.     OWNERSHIP REPURCHASE MATTERS (CONTINUED)

over a period not to exceed four years. During the third quarter of 1999,
Horseshoe Gaming agreed to purchase redeemable ownership interests of 1.3% of
the Company from four current employees for $5.3 million. The first installment
of approximately $1.7 million was paid with the remaining amount to be paid over
a period not to exceed three years. The notes receivable from these former and
current employees was fully paid in connection with the first installment
payment made. 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.

During the third quarter of 1999, the Company also agreed to purchase ownership
interests of 3.2% of the Company from four owners totaling $18.3 million. During
the third quarter of 1999, the first installment of approximately $1.8 million
was paid with the remaining amount to be paid over a period not to exceed four
years.

During the fourth quarter of 1999, the Company also agreed to purchase ownership
interests of 0.7% of Horseshoe Gaming from five owners totaling $5.3 million to
be paid in January 2004.

The Company has employment agreements and unit option agreements with certain
employees which contain put/call options whereby, upon termination of
employment, the Company must, at the election of any such employee, and may, at
the Company's election, purchase such 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, 1999, the
aggregate fair market value of all interests subject to such put/call options,
representing approximately 1.4% ownership of the Company, was $6.8 million. Such
agreements provide 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 HE 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, 1999, the remaining amount to be paid to these limited partners totaled
$23.8 million, of which $11.0 million is included in accrued expenses and $12.8
million is included in other long-term liabilities.

11.     TRANSACTIONS WITH RELATED PARTIES

Mr. Binion has provided services pursuing, developing and managing gaming
operations for the Company and its subsidiaries. Mr. Binion has never received
compensation for his services, although the Company accrued compensation for Mr.
Binion equal to the fair value of his services for each of the years ended
December 31, 1999 and 1998. Mr. Binion does not have an employment agreement to
receive compensation for his services; however, the Company and Mr. Binion may
enter into such an employment agreement during 2000.

The principals of a placement agent used by the Company to secure financing own
approximately 3.9% of the Company. Fees were paid to the placement agent during
1997 for various financial advisory services totaling $600,000.

Notes receivable (including accrued interest) from employees and former
employees with ownership interests in the Company totaling $583,000 and
$3,037,000 are included in other assets in the accompanying consolidated balance
sheets as of December 31, 1999 and 1998, respectively.

The notes to employees are secured by their ownership interests in the Company
and have various due dates and interest rates ranging from 7% to 10%.



                                      F-16
<PAGE>   60

11.     TRANSACTIONS WITH RELATED PARTIES (CONTINUED)

Included in other assets in the accompanying consolidated balance sheets at
December 31, 1999 and 1998 are notes receivable from the former limited partners
of HE totaling $8,252,000 and $8,163,000, respectively. The notes receivable
will be offset from the payments to be made to these limited partners pursuant
to the acquisition of their ownership interest in HE by the Company.

The Company conducts a portion of its marketing through an entity that is owned
by the wife of an officer. Fees and expenses paid to this company were
$3,157,000, $3,625,000 and $2,648,000 for the years ended December 31, 1999,
1998 and 1997, respectively.

12.     EMPLOYEE COMPENSATION AND BENEFITS

Employment Agreements

Certain current and former key employees are covered under employment agreements
that provide certain benefits in the event of such employees' termination. These
employment agreements include a put/call provision, which if exercised by the
employee, would require 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, these compensation
agreements are accounted for as variable stock purchase plans. Compensation
expense is recorded each period equal to the change in the fair market value of
ownership interests issued and the vesting schedule pursuant to these
agreements.

The total ownership interest in the Company issued to employees pursuant to such
employment agreements was 1.4%, 4.1% and 4.1% as of December 31, 1999, 1998 and
1997, respectively. As of December 31, 1998, all employees/former employees were
fully vested. The amount of compensation expense recorded in the accompanying
consolidated statements of operations related to these ownership interests was
$470,000, $4,245,000 and $15,066,000 for the years ended December 31, 1999, 1998
and 1997, respectively. Some of the employment agreements also included a
guaranteed severance payment in the event of termination. The amount of such
liability was $ 0 and $1,810,000 at December 31, 1999 and 1998, respectively
(see Note 10.)

Unit Option Plan

During 1997, the Company approved the 1997 Unit Option Plan, which provides 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 options vest
in three equal annual installments beginning one year subsequent to the date of
the option holder's employment and expire after 10 years. As of December 31,
1999, 631,225 units had been granted all of which had vested. As of December 31,
1999, 126,245 units, which were exchanged for 33.6 options to purchase stock in
the Company at an exercise price of $13,009.75 per share, remained unexercised.

The Unit Option Plan contains a put/call provision under the same terms as
described above for the employment agreements. Accordingly, the Unit Option Plan
is accounted for as a variable stock purchase plan. Compensation expense is
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. The net value is included in redeemable ownership
interests in the accompanying consolidated balance sheets. The Company
recognized compensation expense of $1,544,000 and $1,107,000 related to this
option plan during 1998 and 1997, respectively, and during 1999, a reduction of
$391,000 resulting from the final valuation of the options.

In 1998, one former employee that had a Unit Option Agreement (126,245 units)
elected not to renew his employment agreement and exercised his option to
purchase the units pursuant to the Unit Option Agreement and his option to put
the units back to the Company at fair market value. The exercise price was
deducted from the proceeds received by the employee for the redemption of his
units (see Note 10).



                                      F-17
<PAGE>   61

12.     EMPLOYEE COMPENSATION AND BENEFITS (CONTINUED)

In 1999, two employees that had unit options under the Unit Option Agreement
(378,735 units), exercised their options pursuant to the Unit Option Agreement
and put them back to the Company at fair market value. The exercise price was
deducted from the proceeds received by the employees for the redemption of their
units.

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 Company. The exercise price for the options/SARs is
determined in accordance with the plan document and represents the fair market
value at the date of grant. The options/SARs vest over a period of four years
and expire in ten years. Total compensation expense recognized during 1999 was
$735,000.

The following table represents option (with tandem SAR) activity for 1999:

<TABLE>
<CAPTION>
                                 Number of   Average Price
                                  Shares       per Share
                                  ------        -------
<S>                              <C>         <C>
Balance, December 31, 1998            --        $    --
     Issued                       127.23         13,660
     Cancelled                        --             --
     Exercised                        --             --
                                  ------        -------
Balance, December 31, 1999        127.23        $13,660
                                  ======        =======
</TABLE>

The following table represents SAR activity for 1999:

<TABLE>
<S>                               <C>           <C>
Balance, December 31, 1998            --        $    --
     Issued                       181.62         13,702
     Cancelled                     16.71         13,660
     Exercised                      2.10         13,660
                                  ------        -------
Balance, December 31, 1999        162.81        $13,706
                                  ======        =======
</TABLE>

401(k) Savings Plan

Effective January 1, 1995, a 401(k) savings plan was established for RPG whereby
eligible employees may contribute up to 15% of their salary. Beginning January
1, 1996, employees of the Company and its subsidiaries other than RPG were
allowed to participate in the RPG 401(k) savings plan. The Company matches 50%
of the employees' contributions up to a maximum of 6% of their salary, and the
employees vest in the matching contribution over six years. Employees are
eligible to participate in the plan on the first day of the next calendar
quarter following six months of service. The Company's matching contributions
were $1,205,000, $923,000 and $716,000 for the years ended December 31, 1999,
1998 and 1997, respectively.

Upon the acquisition of ECJC and ECHC, on December 1, 1999, the Company took
over the 401(k) plan of ECJC and ECHC. The Company's contributions to the plan
are based on a discretionary percentage of employee contributions and may
include an additional discretionary amount. The Company's contributions for the
period from acquisition through December 31, 1999 totaled $67,000.



                                      F-18
<PAGE>   62

13.     COMMITMENTS AND CONTINGENCIES

Litigation

The City of Hammond is 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. This case was transferred on a change in venue in
the summer of 1998 to Newton County, Indiana. On September 28, 1998, the jury
returned a $5.2 million verdict against the City of Hammond. Under the terms of
the Development Agreement between Empress Hammond and the City of Hammond,
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. As a result, it is not yet clear how much, if any, or
when, the condemnation award will be paid.

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
Joliet and Empress Hammond, and seeks injunctive relief and money damages.
Empress denies the allegations in the complaint and intends to vigorously
contest this matter. Although Empress has agreed to indemnify the Company with
respect to this claim and others, there can be no assurances 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.

The Company and its subsidiaries are from time to time, party to legal
proceedings arising in the ordinary course of business. 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.

Commitments - Empress Hammond License Requirements

As a condition to its license in Indiana, Empress 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,
1999, approximately $14.5 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, Empress 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 Empress Hammond's adjusted gross
receipts.



                                      F-19
<PAGE>   63

                    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 March 3, 2000. 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.



          ARTHUR ANDERSEN LLP

Memphis, Tennessee,
   March 3, 2000.


                                       S-1

<PAGE>   64

                                   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, 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
                                           =======        =======        ========            ==========        =======


Year Ended December 31, 1997

    Allowance for Doubtful Accounts        $ 3,452        $ 7,556        $ (2,043)(a)        $       --        $ 8,965
                                           =======        =======        ========            ==========        =======
</TABLE>


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

(b)      Includes balances assumed in the Empress Acquisition.


                                       S-2

<PAGE>   65

                                  EXHIBIT INDEX

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

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

2.2++++     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+++      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##       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###      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++++     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##       Certificate of Incorporation of Horseshoe Gaming Holding Corp.

3.2##       By-laws of Horseshoe Gaming Holding Corp.

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

4.2##       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.

4.9*        Intercompany Senior Secured Note due September 30, 2000, executed by
            Horseshoe Entertainment in favor of Horseshoe Gaming, L.L.C.

4.15##      Amendment No. 1 to Second Pledge Agreement, from Jack Binion, B&O
            Development Limited Partnership, JBB Gaming Investments, L.L.C. in
            favor of United States Trust Company of New York for the benefit of
            the Holders of 12.75% Senior Notes due September 30, 2000.

4.17##      Amendment No. 1 to Second Pledge Agreement, from Horseshoe Gaming,
            L.L.C. in favor of United States Trust Company of New York for the
            ratable benefit of the Holders of 12.75% Senior Notes due September
            30, 2000.

4.19##      Amendment No. 1 to Second Ship Mortgage on the Whole of the Queen of
            the Red by Horseshoe Entertainment in favor of Horseshoe Gaming,
            L.L.C.

4.22##      Amendment No. 1 to Second Deed of Trust, Security Agreement and
            Assignment of Leases and Rents from Robinson Property Group,
            Limited Partnership to Rowan H. Taylor, Jr. for the benefit of
            Horseshoe Gaming, L.L.C. and United States Trust Company of New York
            for the ratable benefit of the Holders of 12.75% Senior Notes due
            September 30, 2000.

4.24##      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.

4.26****    Intercompany Senior Secured Note due September 30, 2000 executed by
            Robinson Property Group Limited Partnership in favor of Horseshoe
            Gaming, L.L.C.

4.27****    Intercompany Senior Secured Note due September 30, 2000 executed by
            Horseshoe Entertainment in favor of Horseshoe Gaming, L.L.C.

4.28+       Purchase Agreement for 9 3/8% Series A Senior Subordinated Notes by
            and among Horseshoe Gaming, L.L.C. and Robinson Property Group
            Limited Partnership, as
</TABLE>
<PAGE>   66

<TABLE>
<S>         <C>                                                                        <C>
            guarantor, and Wasserstein Perella Securities, Inc. as Initial
            Purchaser.

4.29+       Form of 9 3/8% Senior Subordinated Note due 2007 of Horseshoe
            Gaming, L.L.C.

4.30+       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.

4.31+       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.

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

4.33+       Intercompany Senior Secured Note due June 15, 2007 executed by
            Horseshoe Entertainment in favor of Horseshoe Gaming, L.L.C.

4.34++      Intercompany Senior Secured Note due June 15, 2000 executed by
            Robinson Property Group Limited Partnership in favor of Horseshoe
            Gaming, L.L.C.

4.35++      Intercompany Senior Secured Note due June 15, 2000 executed by
            Horseshoe Entertainment in favor of Horseshoe Gaming, L.L.C.

4.37##      Amendment No. 1 to the Amended and Restated Note Assignment, dated
            as of May 11, 1999, from Horseshoe Gaming, L.L.C. in favor of the
            Holders of Senior Secured Credit Facility Notes due September 30,
            2000.

4.51####    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)

4.52++++++  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.

4.53++++++  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.

4.54++++++  Supplemental Indenture, dated as of December 1, 1999, among New
            Gaming Capital Partnership, Horseshoe Entertainment, Horseshoe
            Gaming, L.L.C., Horseshoe GP, Inc., Empress Casino Hammond
            Corporation, Empress Residential, L.L.C., Empress Casino Joliet
            Corporation, Robinson Property Group, Limited Partnership and
            Bossier City Land Corporation (collectively, the "Guaranteeing
            Subsidiaries") with respect to the unconditional guarantee of all of
            the Company's obligations under Indenture covering the 8 1/8%%
            Senior Subordinated Notes due 2009 by the Guaranteeing Subsidiaries.

4.55++++++  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.

4.56++++++  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.

4.57++++++  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.

4.58++++++  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##      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##      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##      Promissory Note, dated May 11, 1999, from Horseshoe Gaming, L.L.C.
            to Horseshoe Gaming Holding Corp. for $240,349,125.00.

10.4##      Registration Rights Agreement, dated May 11, 1999, by and among
            Horseshoe Gaming Holding
</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>   67

<TABLE>
<S>         <C>                                                                        <C>
            Corp. and the initial purchasers.

10.5##      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.

10.6##      Guarantee, dated as of May 11, 1999, by Robinson Property Group,
            Limited Partnership for the benefit of Horseshoe Gaming Holding
            Corp.

10.7##      Guarantee, dated as of May 11, 1999, by Horseshoe Entertainment for
            the benefit of Horseshoe Gaming Holding Corp.

10.8##      Stockholders' Agreement for Horseshoe Gaming Holding Corp., dated as
            of April 29, 1999, by and among Horseshoe Gaming Holding Corp. and
            parties listed therein.

10.9*       401(k) Plan of Robinson Property Group Limited Partnership.

10.11+      Second Amended and Restated Employment Agreement, dated as of
            October, 1, 1995, by and between Horseshoe Gaming, Inc. and Walter
            J. Haybert.

10.12*      Employment Agreement, dated January 1, 1996, by and between
            Horseshoe Gaming, Inc. and Paul Alanis.

10.13*      Employment Agreement, dated January 1, 1996, by and between
            Horseshoe Gaming, L.L.C. and Loren S. Ostrow.

10.14+      Second Amended and Restated Employment Agreement, dated as of
            October 1, 1995, by and between Horseshoe Gaming, Inc. and John
            Michael Allen.

10.15+      Second Amended and Restated Employment Agreement, dated as of
            October 1, 1995, by and between Horseshoe Gaming, Inc. and John J.
            Schreiber.

10.16+      1997 Unit Option Plan of Horseshoe Gaming, L.L.C.

10.17++++   Unit Option Agreement, dated as of February 1, 1997, by and between
            Horseshoe Gaming, L.L.C. and Larry Lepinski.

10.18++++   Unit Option Agreement, dated as of February 1, 1997 by and between
            Horseshoe Gaming, L.L.C. and Cliff Kortman.

10.19++++   Warrant Purchase Agreement, dated as of December 21, 1998, by and
            between Hanwa Co., Ltd. and Horseshoe Gaming, L.L.C.

10.20++++   Settlement Agreement, dated as of December 31, 1998, by and among
            Horseshoe Gaming, Inc., Horseshoe Gaming, L.L.C. and Hollywood Park,
            Inc.

10.21++++   Settlement Agreement, dated as of February 3, 1999, by and among
            Horseshoe Gaming, Inc., Horseshoe Gaming, L.L.C. and Mike Allen.

10.22++++   Letter Agreement, dated October 19, 1998, by Horseshoe Gaming, Inc.
            and Horseshoe Gaming, L.L.C. and accepted by Walter Haybert.

10.23++++   Letter Agreement, dated January 4, 1999, by Horseshoe Gaming, Inc.
            and Horseshoe Gaming, L.L.C. and accepted by Walter Haybert.

10.24++++   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.

10.25++++   Exclusive License Agreement, dated July 2, 1998, by and between
            Horseshoe Gaming, L.L.C. and Horseshoe License Company.

10.26++++   Amended and Restated Employment Agreement, dated November 23, 1998,
            by and between Horseshoe Gaming, Inc. and Gary Border.

10.27++++   Amended and Restated Employment Agreement, dated November 23, 1998,
            by and between Horseshoe Gaming, Inc. and Larry Lepinski.

10.28++++   Amended and Restated Employment Agreement, dated October 15, 1998,
            by and between Horseshoe Gaming, Inc. and Robert McQueen.

10.29++++   Amended and Restated Employment Agreement, dated November 23, 1998,
            by and between Horseshoe Gaming, Inc. and Kirk Saylor.

10.30##     Amended and Restated Employment Agreement, dated November 23, 1998,
            by and between Horseshoe Gaming, Inc. and David Carroll.

10.31##     Amended and Restated Employment Agreement, dated November 23, 1998,
            by and between Horseshoe Gaming, Inc. and John Moran.

10.32##     Employment Agreement, dated as of November 3, 1998, by and between
            Horseshoe Gaming, Inc. and Roger Wagner.

10.33++++   Unit Option Agreement, dated as of February 1, 1997, by and between
            Horseshoe Gaming, L.L.C. and Urs Vogel.

10.34++++   Unit Option Agreement, dated as of February 1, 1997, by and between
            Horseshoe Gaming, L.L.C. and Glen Buxton.

10.35#      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.
</TABLE>

<PAGE>   68

<TABLE>
<S>         <C>                                                                        <C>
10.36#      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.

10.37##     Employment Agreement, dated as of January 11, 1999, by and between
            Horseshoe Gaming, Inc. and Joseph J. Canfora.

10.38##     Consulting Agreement, dated as of July 23, 1999, by and between
            Horseshoe Gaming, L.L.C. and Empress Entertainment, Inc.

10.39++++++ Employment Agreement dated as of March 2000, by and between Empress
            Casino Hammond Corporation and Rick Mazer.

10.40++++++ Employment Agreement dated as January 6, 2000, by and between
            Empress Casino Joliet Corporation and David Fendrick.

10.41++++++ Release Agreement dated as July 1, 1999 by and between Horseshoe
            Gaming, L.L.C. and Larry Lepinski.

10.42++++++ Release Agreement dated as July 1, 1999 by and between Horseshoe
            Gaming, L.L.C. and Glenn Buxton.

10.43++++++ Stock Purchase Agreement dated as of July 1, 1999 by and between
            Horseshoe Gaming L.L.C. and Rick Cook.

10.44++++++ Stock Purchase Agreement dated as of August 1, 1999 by and between
            Horseshoe Gaming L.L.C. and Robert McQueen.

10.45++++++ Stock Purchase Agreement dated as of August 1, 1999 by and between
            Horseshoe Gaming L.L.C. and Gary Border.

10.46++++++ Stock Purchase Agreement dated as of August 1, 1999 by and between
            Horseshoe Gaming L.L.C. and Gary Anderson.

10.47++++++ Equity Incentive Plan dated as of January 1, 1999 by and between
            Horseshoe Gaming Holding Corp. and certain employees.

10.48++++++ Promissory Note and Stock Purchase Agreement dated as of November
            30, 1999 by and between Horseshoe Gaming L.L.C. and Alpine
            Associates.

10.49++++++ 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.

10.50++++++ Promissory Note and Stock Purchase Agreement dated as of November
            30, 1999 by and between Horseshoe Gaming L.L.C. and Matthewson CRUT.

10.51++++++ Promissory Note and Stock Purchase Agreement dated as of November
            30, 1999 by and between Horseshoe Gaming L.L.C. and Nobutaka
            Mutaguchi.

10.52++++++ Promissory Note and Stock Purchase Agreement dated as of November
            30, 1999 by and between Horseshoe Gaming L.L.C. and Post Balanced
            Fund.

10.53++++++ Stock Purchase Agreement dated as of August 1, 1999 by and between
            Horseshoe Gaming L.L.C. and Robert Fechser.

10.54++++++ Stock Purchase Agreement dated as of August 1, 1999 by and between
            Horseshoe Gaming L.L.C. and Doyle Brunson.

10.55++++++ Stock Purchase Agreement dated as of August 1, 1999 by and between
            Horseshoe Gaming L.L.C. and Key Fechser.

10.56++++++ Stock Purchase Agreement dated as of August 1, 1999 by and between
            Horseshoe Gaming L.L.C. and David Reese.

20.1+++     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++++++  Subsidiaries of Horseshoe Gaming Holding Corp.

24.1##      Power of Attorney (included on signature page hereto).

27.1++++++  Financial Data Schedule

99.1##      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##      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##      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##      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.
</TABLE>


----------
*           Filed as an Exhibit to Horseshoe Gaming, L.L.C. Registration
            Statement on Form

<PAGE>   69

**          S-4 (No. 333-0214) (the "1996 Form S-4") filed on January 8, 1996.
            Filed as an Exhibit to Horseshoe Gaming, L.L.C. Amendment No. 1 to
            the 1996 Form S-4 filed on April 26, 1996.

***         Filed as an Exhibit to Horseshoe Gaming, L.L.C. Form 10-Q for the
            Quarter Ended June 30, 1996.

****        Filed as an Exhibit to Horseshoe Gaming, L.L.C. Form 10-Q for the
            Quarter Ended March 31, 1997.

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

++          Filed as an Exhibit to Horseshoe Gaming, L.L.C. Form 10-K for the
            Year Ended December 31, 1997.

+++         Filed as an Exhibit to Horseshoe Gaming, L.L.C. Form 8-K filed on
            September 12, 1998.

++++        Filed as an Exhibit to Horseshoe Gaming, L.L.C. Form 10-K for the
            fiscal year ended December 31, 1998.

#           Filed as an Exhibit to Horseshoe Gaming, L.L.C. Form 10-Q for the
            Quarter Ended March 31, 1999.

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

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

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

++          Filed as an Exhibit to Amendment No. 3 to Horseshoe Gaming Holding
            Corp's Form S-4 Registration Statement filed on August 10, 1999.

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

++++++      Filed herewith.