<PAGE>

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

                                   FORM 10-K
(Mark One)
     [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the fiscal year ended December 31, 2000

                                      or

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

                       Commission file number: 333-06489


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<S>                                 <C>                                                         <C>
           Indiana                         THE MAJESTIC STAR CASINO, LLC                          43-1664986

           Indiana                         THE MAJESTIC STAR CASINO CAPITAL CORP.                 35-2100872

(State or other jurisdiction of     (Exact name of registrant as specified in its charter)      (I.R.S. Employer
incorporation or organization)                                                                  Identification No.)
</TABLE>


                          One Buffington Harbor Drive
                                 Gary, Indiana
                                  46406-3000
                                (219) 977-7823

       (Registrant's address and telephone number, including area code)
       Securities registered pursuant to section 12(b) of the act: None
       Securities registered pursuant to section 12(g) of the act: 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 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 voting stock held by non-affiliates of the
registrant: Not Applicable. The Company has no publicly traded equity
securities.

The number of shares of Common Stock issued and outstanding:   Not Applicable.

                   DOCUMENTS INCORPORATED BY REFERENCE: NONE
<PAGE>

                         THE MAJESTIC STAR CASINO, LLC
                        2000 ANNUAL REPORT ON FORM 10-K

                               TABLE OF CONTENTS

                                    PART I

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<CAPTION>
<S>                                                                                       <C>
Item 1.     Business.....................................................................  1

Item 2.     Properties................................................................... 10

Item 3.     Legal Proceedings............................................................ 11

Item 4.     Submission of Matters to a Vote of Security Holders.......................... 12

                                       PART II

Item 5.     Market for Registrant's Common Equity and Related Stockholder Matters........ 12

Item 6.     Selected Financial Data...................................................... 13

Item 7.     Management's Discussion and Analysis of Financial Condition and
            Results of Operations........................................................ 14

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk................... 25

Item 8.     Consolidated Financial Statements and Supplementary Data..................... 25

Item 9.     Changes in and Disagreements with Accountants on Accounting and
            Financial Disclosure......................................................... 25

                                      PART III

Item 10     Directors and Executive Officers of Registrant............................... 26

Item 11.    Executive Compensation....................................................... 28

Item 12.    Security Ownership of Certain Beneficial Owners and Management............... 30

Item 13.    Certain Relationships and Related Transactions............................... 30

                                        PART IV

Item 14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K............. 31
</TABLE>
<PAGE>

                                     PART I
ITEM 1.  BUSINESS

GENERAL

   The Majestic Star Casino, LLC (the "Company" or the "Registrant") operates
the Majestic Star Casino, a riverboat gaming facility located at Buffington
Harbor in Gary, Indiana, pursuant to a five year riverboat owner's license
granted to it by the Indiana Gaming Commission (the "IGC") on June 3, 1996.  The
Company anticipates applying for renewal of this license during April, 2001.

   The Majestic Star Casino commenced operations on June 7, 1996.  On October
27, 1997,  the Company replaced a leased vessel (the "Chartered Vessel")  with
the current Majestic Star Casino vessel owned by the Company (the "Permanent
Vessel").  The Permanent Vessel was initially placed in service at a cost of
approximately $50.1 million and contains approximately 43,000 square feet of
casino space, 1,429 slot machines and 51 table games on three decks.  The
Majestic Star Casino is part of a gaming complex (the "Gaming Complex") which
has been developed at Buffington Harbor, and is owned by Buffington Harbor
Riverboats, L.L.C. ("BHR" or the "BHR Joint Venture"), a joint venture which is
owned equally (50%) by the Company and Trump Indiana, Inc. (the "Joint Venture
Partner").  The Company and the Joint Venture Partner, the holder of a second
gaming license to operate from the City,  formed the BHR Joint Venture  to own
and operate certain common facilities of  the Gaming Complex  such as the guest
pavilion, vessel berths, parking lots and other infrastructure. The Company and
the Joint Venture Partner each operate its own riverboat casino at the Gaming
Complex on a staggered cruise schedule which reduces waiting times to board a
riverboat casino.

   The Company was formed in December 1993 as an Indiana limited liability
company. The Majestic Star Casino Capital Corp. ("Capital"), a wholly-owned
subsidiary of the Company was incorporated on May 11, 1999 in the State of
Indiana solely for the purpose of serving as a co-issuer to facilitate the
offering of the 10-7/8% Senior Secured Notes and has no assets, liabilities, or
operations.  Majestic Investor, LLC was formed in September 2000 as an
"unrestricted subsidiary" of the Company under the Indenture relating to the
Company's 10-7/8% Senior Secured Notes. Majestic Investor, LLC was initially
formed to satisfy the Company's off-site development obligations under the
Development Agreement with the City of Gary and currently is a party to a
Purchase Agreement to acquire certain assets of Fitzgerald's Gaming Corporation.
The executive offices of the Company are located at One Buffington Harbor Drive,
Gary, Indiana 46406-3000, and the Company's telephone number is (219) 977-7823.

OPERATING STRATEGY

   The Company's operating strategy is characterized by several principal
elements including those described below.

                                       1
<PAGE>

Targeted Customer Base
----------------------

   The Company focuses primarily on middle income customers which it believes
constitutes the largest segment of potential gaming customers.  The Company, in
February, 2000 began a comprehensive integrated marketing campaign to brand
Majestic Star Casino as "the place to play" for slot customers from this middle
income segment.  The Company's registered tagline, "We've Got Your Slots"(R)
has appeared in all advertising venues including television, radio, print and
outdoor media and will allow the Company to enhance its slot leadership
positioning among Chicago-area gaming facilities.  The Company intends to
utilize this broad marketing technique to attract these middle income customers,
whom it is then able to qualify and target for direct marketing activities.  To
assist the Company with its direct marketing activities, the Company has
established the Club Majestic and Club Majestic Premier Slot Clubs ("Club
Majestic").  Coin-in, a measurement utilized to gauge the amount wagered by
customers playing slots, increased $49.0 million or 3.8 % and slot win increased
approximately $3.6 million or  4.0 % during the year ended December 31, 2000,
compared to the year ended December 31, 1999.

   Club Majestic enables the Company to maintain a comprehensive database of
information about its customers, including their gaming levels, duration of play
and preferences, and to utilize such information to tailor marketing programs to
encourage frequent visits by these customers. The Company also has an
established strategy for recruiting and retaining higher activity casino
customers through the reward of certain promotional allowances, such as direct
mail cash back offers for slot customers, and complimentary food, beverage and
entertainment when gaming play warrants.  Promotional allowances are a
relatively small percentage of the potential casino revenue obtainable from
these tracked high limit customers. During the summer of 1999, the Company
expanded an existing VIP Lounge and added another VIP Lounge for Club Majestic
guests which the Company aggressively utilized in 2000 for entertaining Club
Majestic guests and for special events and promotions. Management believes that
its continued marketing efforts combined with the amenities offered by the
Permanent Vessel,  and the extension of credit to customers, will allow the
Company to continue to increase its share of the middle and higher income market
in the greater Chicago metropolitan area.

Emphasis on Slot Play
---------------------

   The Company emphasizes slot machine wagering, which it believes is the
fastest growing and most profitable segment of the casino entertainment
business.  The Company continues to enhance and modify its mix of slot machines.
During 2000 the Company replaced and/or converted approximately 249 slot
machines.  The Company plans to continue to update its inventory of product this
year with the anticipated purchase of approximately $2.5 million of new slot
machines.  The Company believes that it is advantageous to maintain a variety of
slot machines to meet the demand of its customers.  Minimum payout percentages
for slot machines in Indiana are set by the IGC.  The Company attempts to
maintain payout percentages that are competitive to attract and retain
customers.

                                       2
<PAGE>

Customer Service
----------------

   As part of its commitment to providing a quality casino entertainment
experience for its patrons, the Company is dedicated to ensuring a high level of
customer satisfaction and loyalty by providing attentive customer service in a
friendly atmosphere.  The Company has a full time player development department
and concierge service to further assist in providing onboard customer service.
Management recognizes that consistent quality and a comfortable atmosphere stem
from the collective care and friendliness of each team member.  Toward this end,
management takes a hands-on approach through active and direct involvement with
team members at all levels.  In particular, Management conducts ongoing
orientation and training sessions with all team members at which it stresses the
importance of customer contact and encourages team members to look at, smile at,
and wish each customer good luck with whom they interact.  The Company offers
attractive team member benefit programs to recruit and retain friendly,
professional team members.

Emphasis on Attributes of Buffington Harbor
-------------------------------------------

   The Company emphasizes the attributes of the Buffington Harbor Gaming
Complex, including the ability to park once and play twice (at two casinos) and
direct highway access. In June 2000, the Company began to conduct a marketing
campaign with its Joint Venture Partner  whereby both entities jointly advertise
the attributes of the Buffington Harbor Gaming Complex principally through
billboards and print. The Gaming Complex also has enhanced and expanded its food
outlets.  In calendar year 2000, three new food kiosks were introduced including
Harbor Treats and Shou Ki Sushi which are owned and operated by third parties
and Jackpot Java which is owned and operated by BHR. Entertainment is also being
provided in the Lakeshore lounge on weekends.

GROWTH STRATEGY

   The Company's expansion strategy originally focused on increasing the overall
size of its riverboat gaming facility located at Buffington Harbor in Gary,
Indiana.  On October 27, 1997, the Company placed into service the Permanent
Vessel which replaced the Chartered Vessel.  The Permanent Vessel contains
approximately 43,000 square feet of casino space,  which represents an increase
of approximately 65.4% compared to the Chartered Vessel. The floor configuration
as of March 15, 2001 contains approximately 1,429 slot machines and 51 table
games. The Permanent Vessel also substantially increased the Company's capacity
from 1,700 to 3,000 passengers per cruise.

   Don H. Barden, Chairman and CEO of the Company, through an affiliated
company, purchased for $25.0 million approximately 190 acres adjacent to
Buffington Harbor in September 2000. A portion of this acreage was subsequently
sold by Mr. Barden to a joint venture, Buffington Harbor Parking Associates, LLC
("BHPA") formed by the Joint Venture Partner and AMB Parking, LLC ("AMB") (a
company wholly- owned by Mr.Barden) in order to jointly construct and operate a
multi-level covered parking structure.  The parking structure is expected to
provide customers with approximately 2,000 covered parking spaces and indoor
access to the Buffington Harbor Gaming Complex. Customers currently either park
their automobiles in a remote self parking lot or use valet parking services.
The parking project is estimated to cost approximately $37.7 million including
approximately $14.2 million for the land. Approximately $28.3 million of the
project costs for the parking structure is anticipated to be financed with the
remainder being funded by lease payments

                                       3
<PAGE>

from the Company and the Joint Venture Partner. It is currently anticipated that
the Company will enter into a lease with BHPA with lease payments sufficient to
service the debt on the BHPA financing. The Joint Venture Partner will enter
into an identical lease, and each party will receive a credit of up to 50% of
the lease obligations if the other (the Company or the Joint Venture Partner, as
the case may be) makes its lease payments. The Company believes that the
convenience of the new parking structure will attract a significant number of
new customers to Buffington Harbor, thereby providing opportunities to increase
its net revenues and cash flow. There can be no assurance that BHPA will be able
to obtain financing to construct the parking garage on acceptable terms.

   In addition to growth opportunities at the Gaming Complex, the Company
continues to explore the acquisition and or development of new properties in
existing gaming jurisdictions to pursue gaming opportunities.  The Company's
wholly-owned subsidiary, Majestic Investor, LLC, entered into a definitive
purchase agreement dated as of November 22, 2000, as amended December 4, 2000,
with Fitzgeralds Gaming Corporation to purchase three Fitzgeralds brand casinos.
Majestic Investor, LLC plans to purchase Fitzgeralds casinos in Las Vegas,
Nevada, Tunica, Mississippi, and Black Hawk, Colorado for approximately $149.0
million in cash, subject to adjustment in certain circumstances, plus the
assumption of certain liabilities.   The sale is consistent with the
reorganization that Fitzgeralds Gaming Corporation has negotiated with a
committee representing its noteholders.  To facilitate this transaction,
Fitzgeralds Gaming Corporation and its subsidiaries voluntarily filed for
Chapter 11 Bankruptcy in U. S. District Court in Nevada on December 5, 2000. The
sale was approved by the Bankruptcy Court on March 19, 2001 but remains
contingent on, among other things, licensing and financing. Licensing clearances
are expected to be finalized in the second half of calendar year 2001.

   As reported by Fitzgeralds Gaming Corporation in its Quarterly Report on Form
10-Q for the period ended October 1, 2000, Fitzgeralds Las Vegas, Fitzgeralds
Tunica, and Fitzgeralds Black Hawk had net operating revenues of $40,082,000,
$61,319,000 and $29,149,000, respectively, and a total of $130,550,000 net
operating revenues for all three casinos, for the nine months ended October 1,
2000, as compared to net operating revenues of $39,765,000, $57,305,000 and
$27,807,000, respectively, and a total of $124,877,000 net operating revenues
for all three casinos, for the three quarters ended October 3, 1999, reflecting
increases in operating revenue of 0.8%, 7.0% and 4.8%, respectively, and a total
increase in operating revenue for all three casinos of 4.5%.

   The Company believes that expanded casino operations will provide the
opportunity for some cost savings as the Company leverages its increased buying
power, and will be beneficial in attracting and retaining high quality
executives.

   The Company's ability to expand will depend upon a number of factors
including, but not limited to: ( I )  the identification and availability of
suitable locations, and the negotiation of acceptable purchase, lease, joint
venture or other terms; (ii) the securing of required state and local licenses,
permits and approvals, which in some jurisdictions may be limited in number,
(iii) political factors; (iv) the risks typically associated with any new
construction; and (v) the availability of adequate financing or acceptable
terms, particularly in light of restrictive covenants contained in the
instruments relating to the 10-7/8% Senior Secured Notes and the Company's
credit facility, which limit the Company's ability to obtain such financing.  As
a result, there can be no assurance that the Company will be able to expand to
any other additional locations or, if such expansion occurs, that it will be
successful.

                                       4
<PAGE>

COMPETITION

   The Majestic Star Casino is dependent primarily on adults residing within 150
miles of the Buffington Harbor Gaming Complex, which includes the Chicago
metropolitan area.  The Chicago metropolitan area contains in excess of 6
million adults.  In addition,  according to the 1990 Census Bureau estimates,
the per capita income for the Chicago metropolitan area is high by comparison to
other Midwestern gaming jurisdictions.  Illinois and Indiana state laws limit
the total number of licenses issuable in the Chicago metropolitan area to ten.
Nine of the licenses are currently in operation and the number of licenses
cannot be increased without legislative action.  The Company also expects to
compete to a lesser extent with six additional riverboats authorized to operate
in southern Indiana, of which five are currently operational.  The sixth
riverboat in Southern Indiana is designated for  Patoka Lake which has not
received any of the required permits to be issued by the Army Corp of Engineers
and no applicant has applied for licensing.

There can be no assurance that Indiana or Illinois will not authorize additional
gaming licenses in the future.

   Dockside gaming was approved in Illinois in June, 1999. The Illinois gaming
market grew by approximately 21.9% in 2000 compared to 1999 and the Northwest
Indiana gaming market grew by approximately 5.0% in 2000 compared to 1999.
Notwithstanding the market growth, Management is unable to predict whether
increased competition in the market from dockside gaming will have a negative
impact on the Company's revenues. Several of the Chicago area operators located
in Illinois including Harrahs, Hollywood and Empress have publicly expressed an
interest in building barge based casinos as a result of the June, 1999
legislation allowing dockside gaming in Illinois. A lawsuit that had been filed
in Illinois challenging the validity of relocating a licensed operator to Cook
County has been dismissed. The operators license for the planned gaming barge in
Cook County was also revoked and to date, the Illinois Gaming Board has not
reissued the license for the Cook County location.

   Legislation has also been introduced in Illinois to provide for land-based
casinos in Chicago and to expand riverboat gaming in Illinois, including
authorization of additional or existing operators to move to new sites or
otherwise to modify existing regulations to decrease or eliminate certain
restrictions including limitations on the number of gaming positions, or the
elimination of credit play.  During the first quarter of 1999, legislation was
introduced in Indiana to allow certain organizations (primarily VFW posts) to
possess a limited number of electronic gaming devices.  Also during the first
quarter of 2000, legislation was introduced in Indiana to allow dockside gaming
and to modify restrictions with respect to ownership of multiple gaming
facilities.  In January 2001, a bill providing for dockside gaming as well as
increased gross wagering taxes was passed by the Indiana House, one of the two
legislative branches of the Indiana General Assembly. A similar bill providing
for dockside gaming was defeated by the Senate Rules Committee on March 28,
2001. Also in 2001 legislation was introduced in Indiana to allow riverboat
gambling companies to own up to two of the state's ten licenses. To date, no
such legislation has been enacted. The Company is unable to predict whether any
such legislation, in Illinois, Indiana or elsewhere, will be enacted or whether,
if passed, it would have a material adverse impact on the results of operations
or financial condition of the Company.

   The Company competes, and expects to compete, with various gaming operations
on Native American lands, including those located, or to be located, in
Michigan, Wisconsin and possibly northern Indiana.  The Saginaw Chippewa Indian
Tribe is currently operating one of the largest Native American gaming complexes
in the U. S. in Mt. Pleasant, Michigan, approximately 250 miles northeast of
Gary, Indiana.  The Pokagon Band of Potawatomi Indians recently reached revenue-
sharing and infrastructure financing agreements with local officials in New
Buffalo Township,

                                       5
<PAGE>

Michigan. These agreements advance the Band's goal of opening a land-based
gaming facility, by late 2001, including a 100,000+ square foot casino on
approximately 675 acres located 10 miles from the Indiana state line, off Exit 1
of Interstate 94. The Pokagons plan to have the second largest casino in the
Midwest, which would be substantially larger in size than any of the riverboats
currently operating in the Chicago metropolitan area.

   In December 1998, the Michigan Senate and House of Representatives approved
four additional Indian compacts which have been signed by the Governor of
Michigan that would allow land-based casinos in Michigan, including southwest
Michigan. The opening of land-based casinos, which generally have a competitive
advantage over cruising casinos in close proximity to the Company, could have an
adverse effect on the Company.  With respect to the State of Michigan, the
Company also expects competition from three land-based casinos in Detroit,
Michigan,  pursuant to a November 1996 voter initiative. On July 28, 1999, a
casino license was issued to MGM Grand Detroit, LLC, on December 14, 1999, a
casino license was issued to Detroit Entertainment, LLC, and on November 8,
2000, a casino license was issued to Greektown Casino, LLC, all of which are now
operational.

   The Company anticipates that competition will continue to increase as a
result of the sale of four area casinos to larger and stronger competitors.
Harrah's Entertainment, Inc., in 1998 purchased Showboat, Inc., including the
Showboat Mardi Gras Casino, located in East Chicago, Indiana.  Harrah's in March
1999, renamed the East Chicago property to take advantage of the Harrah's brand
name.  Harrah's also in late 1999 completed a $30.0 million expansion of its
East Chicago facility adding three new restaurants, meeting space and other
land-based amenities including new entrance ramps from Cline Avenue.  In late
2000, Harrah's began construction of a $47.0 million expansion project that will
include a hotel with approximately 300 rooms.  It is anticipated that this $47.0
million expansion project will be completed late 2001.  Also, Horseshoe Gaming,
LLC, in 1999 acquired Empress Entertainment.  Empress Entertainment owned two
area riverboat gaming operations: one in Hammond, Indiana, and one in Joliet,
Illinois.  Empress Entertainment plans to lease city-owned space in Hammond,
Indiana to develop the lakefront into an entertainment, shopping and
recreational mecca. In 2001, Horseshoe  announced that it intends to sell its
Joliet operated facility. It is also anticipated that Horseshoe, during 2001,
will rename the Hammond facility to a Horseshoe brand casino. The Blue Chip
Casino, LLC in Michigan City, Indiana was acquired by Boyd Gaming Corporation in
1999.  In February, 2000, a 189 room hotel was opened at its Michigan City,
Indiana location.

   Many of the Company's competitors have greater gaming industry management
experience, financial resources and, in the case of Harrah's and Empress
Hammond, enclosed parking garages. The Company's Joint Venture Partner also
operates a 300-room hotel for its own use located at the Gaming Complex. The
Company believes that its ability to compete successfully in the riverboat
gaming industry will be primarily based on the quality and location of its
gaming facilities, the effectiveness of its marketing efforts, and overall
levels of customer service and satisfaction. The Company believes that the
construction of the parking facility will provide added competitive benefits to
the Gaming complex. Although management believes that the location and amenities
of the Majestic Star Casino will enable the Company to compete effectively with
other casinos in the immediate area, the Company expects intense competition for
the reasons previously discussed to continue in its market area.

                                       6
<PAGE>

EMPLOYEES

   At December 31, 2000, the Company employed approximately 1,000 persons and
the BHR Joint Venture employed approximately 360 persons.  The Company and the
BHR Joint Venture have collective bargaining agreements with Local 1 of the
Hotel Employees and Restaurant Employees International Union ("H.E.R.E."),
covering  approximately 70 employees of  the Company and approximately 140
employees of  the BHR Joint Venture.  The Company's H.E.R.E. members are
exclusively in food and beverage positions.  The agreements expire on June 30,
2001. The Company and the BHR Joint Venture also have collective bargaining
agreements with the Operating Engineers Union, covering  approximately 6
employees of the Company's marine operations department and 15 employees of the
BHR Joint Venture Facilities Department.  The agreement with the Company expires
on September 30, 2003 and the agreement with the BHR Joint Venture expires on
July 1, 2001. The Company also has a collective bargaining agreement with the
Seafarers International Union which covers approximately 30 employees in the
marine operations department. The agreement expires on July 10, 2003.  The
Company believes that its overall relations with its employees are good.

   In recruiting personnel, the Company is obligated, under the terms of an
agreement with the City of Gary, to use its best efforts to have an employee
base which is comprised of 70% from racially minority groups, 52% females, 67%
residents of the City of Gary and 90% residents of Lake County, Indiana.

SEASONALITY

   Because of the climate in the Chicago metropolitan area,  the Company's
operations are expected to be seasonal with stronger results generally expected
during the period from May through September.  Accordingly, the Company's
results of operations are expected to fluctuate from quarter to quarter and the
results for any fiscal quarter may not be indicative of results for future
fiscal quarters.

GOVERNMENTAL REGULATION

   The ownership and operation of the Majestic Star Casino is subject to
regulation by the State of Indiana.  The following is a summary of the
applicable provisions of the Riverboat Gambling Act of the State of Indiana and
certain other laws and regulations.  It does not purport to be a full
description thereof and is qualified in its entirety by reference to the
Riverboat Gambling Act and such other laws and regulations.

   In 1993, the State of Indiana passed the Riverboat Gambling Act which created
the Indiana Gaming Commission (the "IGC").  The IGC is given extensive powers
and duties for the purposes of administering, regulating and enforcing riverboat
gaming in Indiana and was authorized to award up to eleven gaming licenses to
operate riverboat casinos in the State of Indiana, including five to counties
contiguous to Lake Michigan in northern Indiana, five to counties contiguous to
the Ohio River in southern Indiana and one to a county contiguous to Patoka Lake
in southern Indiana.

   Referenda required by the Riverboat Gambling Act to authorize the five
licenses to be issued for counties contiguous to Lake Michigan have been
conducted and gaming has been authorized for the cities of  Hammond, East
Chicago, and Gary in Lake County, Indiana, and for Michigan City in

                                       7
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LaPorte County, Indiana to the east of Lake County.

   The IGC has jurisdiction and supervision over all riverboat gaming operations
in Indiana and all persons on riverboats where gaming operations are conducted.
These powers and duties include authority to (i) investigate all applicants
for riverboat gaming licenses, (ii) select licensees from competing applicants,
(iii) establish fees for licensees and (iv) prescribe all forms used by
applicants. The IGC is authorized to adopt rules for administering the gaming
statute and the conditions under which riverboat gaming in Indiana may be
conducted. The IGC may suspend or revoke the license of a licensee or impose
civil penalties, in some cases without notice or hearing, for any act in
violation of the Riverboat Gambling Act or for any other fraudulent act.

   The Riverboat Gambling Act requires an extensive disclosure of  records and
other information concerning an applicant, including disclosure of all
directors, officers and persons holding a five percent or more direct or
indirect beneficial interest in an applicant.

   In determining whether to grant or renew an owner's license to an applicant,
the IGC considers a number of factors, including (i) the character,
reputation, experience and financial integrity of the applicant, (ii) the
facilities or proposed facilities for the conduct of riverboat gaming, (iii) the
prospective revenue to be collected by the state from the conduct of riverboat
gaming, (iv) the good faith affirmative action plan to recruit, train and
upgrade minorities in all employment classifications, (v) the financial ability
of the applicant to purchase and maintain adequate liability and casualty
insurance, (vi) whether the applicant has adequate capitalization to provide and
maintain the riverboat for the duration of the license and (vii) the extent to
which the applicant meets or exceeds other standards adopted by the IGC. The IGC
may also give favorable consideration to applicants for economically depressed
areas and applicants who provide for significant development of a large
geographic area.  A person or entity  holding an owner's gaming license issued
by the IGC may not own more than a ten percent interest in another such license.
Legislation has been introduced during the 2001 legislative session that would
allow a person or entity to own not more than two casinos, to date no such
legislation has been enacted. An owner's license expires five years after the
effective date of the license (unless earlier terminated or revoked) and may be
renewed for one year periods by the IGC upon satisfaction of certain statutory
and regulatory requirements.  A gaming license is a revocable privilege and is
not a property right pursuant to the Riverboat Gambling Act.  On June 3, 1996,
the Majestic Star Casino obtained a gaming license from the IGC.  During 2001
the Company will be required to renew its initial license granted on June 3,
1996.  There can be no assurance that the Company's license will be renewed.

   Under IGC regulations, minimum and maximum wagers on games are left to the
discretion of the licensee.  Wagering is required to be conducted with tokens,
chips or electronic cards instead of cash or coins.  Each riverboat gaming
excursion is limited to a maximum duration of four hours unless a longer
excursion is expressly approved by the IGC. In January 2001, a bill providing
for dockside gaming as well as increased gross wagering taxes was passed by the
Indiana House, one of the two legislative branches of the Indiana General
Assembly. A similar bill providing for dockside gaming was defeated by the
Senate Rules Committee on March 28, 2001. To date no such legislation has been
enacted.

   Effective November 1996, riverboat casinos operating on Lake Michigan were
granted an exemption to the Johnson Act, a federal statute which prohibits
casino gambling on federal waterways.  Prior to November 1996 the riverboat
casinos operating on Lake Michigan, including

                                       8
<PAGE>

the Majestic Star Casino, remained dockside and simulated cruising. No gaming
may be conducted while the boat is docked except (i) for 30-minute time periods
at the beginning and end of a cruise while the passengers are embarking and
disembarking, (ii) if the master of the riverboat reasonably determines that
specific weather or water conditions present a danger to the riverboat, its
passengers or crew, or other vessels on the water, (iii) if either the vessel or
the docking facility is undergoing mechanical or structural repair, (iv) if
water traffic conditions present a danger to the riverboat, its passengers or
crew, or other vessels on the water, or (v) if the master has been notified that
a condition exists that would cause a violation of federal law if the riverboat
were to cruise.

   An Indiana admission tax of $3.00 for each person admitted to each gaming
excursion is imposed upon the license owner.  Legislation has been introduced in
the past that would increase the admission tax to $4.00 per person, but to date,
no such legislation has been enacted.  The Company  is unable to predict if this
legislation will be reintroduced or if any other legislation introduced in
Indiana relative to riverboat casinos will be enacted.  If  legislation is
enacted to increase the admission tax, the effect of such an increase could have
a material impact on the results of operations of the Company.  A 20% tax is
imposed on the "adjusted gross receipts" received from gaming operations, which
is defined under the Riverboat Gambling Act as the total of all cash and
property received (including checks received by the licensee whether or not
collected), less the total of all cash paid out as winnings to patrons and
uncollected gaming receivables (not to exceed 2%). Legislation has been
introduced as recently as January 2001 that would increase the tax and allow the
riverboats to operate dockside and/or barge facilities, but to date, no such
legislation has been enacted. The gaming license owner must remit the admission
and wagering taxes before the close of business on the day following the day on
which the taxes were incurred.  Indiana laws also permit the imposition of real
property taxes on Indiana riverboats at rates to be determined by local taxing
authorities of the jurisdiction in which a riverboat operates.

   The IGC is authorized to license suppliers and certain occupations related to
riverboat gaming.  Gaming equipment and supplies customarily used in conducting
riverboat gaming may be purchased or leased only from licensed suppliers.

   The Riverboat Gambling Act places special emphasis upon minority and women
business enterprise participation in the riverboat industry.  Any person issued
an owner's gaming  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-owned business enterprises.  The IGC
may suspend, limit or revoke an owner's  gaming  license or impose a fine for
failure to comply with these statutory requirements.  The Company for the
calendar year ended December 31, 2000, has submitted unaudited reports to the
IGC that it believes meets these statutory requirements.

ITEM 2.  PROPERTIES

   The Company operates the Majestic Star Casino, a riverboat casino located at
Buffington Harbor in Gary, Indiana, approximately 23 miles southeast of downtown
Chicago.  Buffington Harbor is located at the interchange of  U.S. 12 and
Indiana State Highway 912, a divided freeway which connects Interstate Highways
90 and 80/94.

   The Majestic Star Casino operates from the Gaming Complex, which was
developed, and is owned and operated by the BHR Joint Venture.  The Gaming
Complex is situated on approximately

                                       9
<PAGE>

100 acres and contains approximately 3,000 surface parking spaces and a 90,000
square foot land based pavilion which has a 352 seat buffet, a 110 seat
steakhouse, a cocktail lounge, a gift shop, ticketing area for each casino and
administrative offices. The Gaming Complex also has three food kiosks, Harbor
Treats and Shou Ki Sushi which are owned and operated by third parties and
Jackpot Java which is owned and operated by BHR. The Company's Joint Venture
Partner also owns and operates a 300-room hotel facility at the Gaming Complex
for the use of its customers.

   BHR entered into a lease agreement with Lehigh Portland Cement Company to
lease certain property that is integral to the gaming operations of the Company
and its Joint Venture Partner.  In September 2000, Don H. Barden, Chairman and
CEO of the Company, through an affiliated company, Gary New Century ("GNC")
purchased for $25.0 million, approximately 190 acres of land adjacent to the
Buffington Harbor Complex, including the land that had formerly been leased by
BHR from Lehigh Portland Cement. Accordingly, the lease agreement with Lehigh
Portland Cement has been terminated, which relieves BHR of the remaining 62
monthly payments of $125,000 each and the need to  construct a new harbor. A
portion of this land was subsequently sold by GNC for $14.2 million to
Buffington Harbor Parking Associates, LLC ("BHPA") formed by the Joint Venture
Partner and AMB Parking, LLC (a company wholly-owned by Mr. Barden). BHPA
intends to construct and operate a parking garage on the purchased land. The
parking structure is expected to provide customers with approximately 2,000
covered parking spaces and indoor access to the Buffington Harbor Gaming
Complex. Customers currently either park their automobiles in a remote self
parking lot or use valet parking services.  The parking project is estimated to
cost approximately $37.7 million including approximately $14.2 million for the
land. The Company believes that the convenience of the new parking structure
will attract a significant number of new customers to Buffington Harbor, thereby
providing opportunities to increase its net revenues and cash flow. If the
parking garage is constructed, the Company anticipates entering into a lease
with BHPA with lease payments in an amount sufficient to service BHPA's debt.
All of the Company's assets including the Permanent Vessel are subject to a lien
in favor of the holders of the 10-7/8% Senior Secured Notes and the lender under
the Company's credit facility.

ITEM 3.  LEGAL PROCEEDINGS

   Various legal proceedings are pending against the Company.   Management
considers all such pending proceedings, primarily personal injury and equal
employment opportunity (EEO) claims, to be routine litigation incidental to the
Company's business.  Management believes that the resolution of these
proceedings will not, individually or in the aggregate, have a material effect
on the Company's financial condition or results of operations.

   On March 27, 1998, a complaint was filed in the Lake County Superior Court in
East Chicago, Indiana, against BHR, the Joint Venture Partner, and the Company.
The plaintiff,  a former employee of the Company, claims to have been assaulted
in the BHR parking lot on June 25, 1997 and is requesting compensatory and
punitive damages totaling approximately $11.0 million.  The suit alleges that
the Joint Venture Partner and the Company failed to provide adequate security to
prevent assaults.  The Company intends to vigorously defend against such suit.
However, it is too early to determine the outcome of such suit and the effect,
if any, on the Company's financial position and results of operations.

   On July 16, 1999, a complaint was filed in a Michigan state court in Detroit,
Michigan, against BHR, the Joint Venture Partner, and the Company.  The
plaintiff, a patron, claims to have been over served alcohol by the Company and
then was injured as a result of a slip and fall on an escalator at

                                       10
<PAGE>

BHR and is requesting compensatory and punitive damages of $55.0 million. This
claim was dismissed by the Michigan court on February 28, 2000. On May 12, 2000,
the plaintiff refiled a similar claim in the U. S. District Court in Hammond,
Indiana and is now requesting compensatory and punitive damages of $51.0
million. The Company intends to vigorously defend against such suit. However, it
is too early to determine the outcome of such suit and the effect, if any, on
the Company's financial position and results of operations.

   On March 2, 2000, the Company was issued notices of an audit finding by the
Indiana Department of Revenue that wagering taxes are not an allowable
deductible expense for calculating state income taxes. The Indiana Department of
Revenue requires that wagering taxes must be added back to net income to
determine the tax liability. The estimated tax deficiency for 1996 is
approximately $239,000 excluding interest and the estimated tax deficiency for
1998 is approximately $315,000 excluding interest. This same finding has been
protested by other Indiana casinos. The Company also intends to protest and
demand a hearing with the Indiana Department of Revenue. However, it is too
early to determine the outcome of such a protest and the effect, if any, on the
Company's financial position.

   From time to time, the Company may be involved in routine administrative
proceedings involving alleged violations of certain provisions of the Riverboat
Gambling Act.  Management believes that the outcome of any such proceedings will
not, either individually or in the aggregate, have a material adverse effect on
the Company or its ability to retain and/or renew any license required under the
Riverboat Gambling Act for the Company's operations.  No such proceedings are
pending at this time.


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

   Not applicable

                                     PART II

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

   The Company is a privately owned Indiana limited liability company and, as
such, there is no public market for the registrant's equity securities.

                                       11
<PAGE>

ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                       (DOLLARS IN THOUSANDS)
                                                      Years Ended December 31,
                                         ------------------------------------------------
                                           2000         1999          1998       1997 (1)
                                           ----         ----          ----       --------
<S>                                      <C>          <C>           <C>          <C>
STATEMENT OF OPERATIONS DATA: (2)
    Net Operating Revenues               $118,451     $119,847      $114,263     $ 94,543
    Pre-opening Costs                          --           --            --        1,254
    Operating Income (Loss) (2)            10,920       18,931        13,685          607
    Interest Expense, Net                  14,105       14,605        14,991       11,046
    Net Income (Loss) (2)
     Before Extraordinary Item             (5,367)       1,478        (4,473)     (13,887)
    Extraordinary Item                       (383)     (15,238)           --           --
    Net Income (Loss) (2)                  (5,750)     (13,760)       (4,473)     (13,887)
OTHER DATA
    Adjusted EBITDA:  (3)                  21,223       27,307        23,219       12,701
<CAPTION>
                                                            At December 31,
                                         -------------------------------------------------
BALANCE SHEET DATA: (2)                    2000         1999          1998         1997
                                           ----         ----          ----         ----
<S>                                      <C>          <C>           <C>          <C>
    Cash and Cash Equivalents            $ 16,120     $ 20,145      $ 17,295     $  8,084
    Restricted Cash                         2,000        7,358            --       11,905
    Investment in BHR, Net                 43,924       38,146        40,749       43,542
    Total Assets                          126,597      133,150       125,261      134,762
    Current Liabilities                    21,795       21,311        11,109       11,699
    Long-Term Debt                        128,233      128,922       108,390      110,829
    Total Liabilities                     150,028      150,233       128,259      133,286
    Members' Equity                       (23,431)     (17,083)       (2,998)       1,476
</TABLE>

NOTES:
------

1.  The Majestic Star Casino completed its first full year of operations on
    December 31,1997.

2.  The aforementioned financial data is consolidated and includes The Majestic
    Star Casino, LLC and Majestic Investor, LLC.

3.  Adjusted EBITDA represents "earnings before interest, income taxes,
    depreciation amortization and special items." Special items include
    chartered vessel lease payments for 1997 and 1998, $100,000 in costs
    associated with an abandoned acquisition in 1999 and loss on bond redemption
    for 1999. Special items for 2000 includes loss on bond redemption, line of
    credit fees and loss on disposal of assets and $772,000 of non-operating
    expenses associated with dockside lobbying initiatives, economic development
    and extraordinary items. Adjusted EBITDA is a supplemental financial
    measurement used by the Company in the evaluation of its gaming business and
    by many gaming industry analysts.

    Adjusted EBITDA should only be read in conjunction with all of the Company's
financial data summarized above and its financial statements prepared in
accordance with generally accepted accounting principles (GAAP) appearing
elsewhere herein, and should not be construed as an alternative either to income
from operations (as determined in accordance with GAAP) as an indication of the
Company's operating performance or to cash flows from operating activities (as
determined in accordance with GAAP) as a measure of liquidity.

                                       12
<PAGE>

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

    Statement on Forward-Looking Information
    ----------------------------------------

       The discussions regarding results of operations include the operations of
    The Majestic Star Casino, LLC and its wholly-owned subsidiary, Majestic
    Investor, LLC but they do not include The Majestic Star Casino Capital
    Corp., a wholly-owned subsidiary of the Company that was incorporated on May
    11, 1999 in the State of Indiana solely for the purpose of serving as a co-
    issuer to facilitate the offering of 10-7/8% Senior Secured Notes, since it
    has no assets, liabilities, or operations. Majestic Investor, LLC is an
    unrestricted subsidiary under the Indenture relating to the Company's 10-
    7/8% Senior Secured Notes due 2006 and is not a guarantor of the 10-7/8%
    Senior Secured Notes.

       The discussions regarding proposed developments and operations of the
    Company included in this item contain "forward looking statements"  within
    the meaning of  Section 27A of the Securities Act of 1933, as amended, and
    Section 21E of the Securities Exchange Act of 1934, as amended, which
    represent the Company's expectations or beliefs concerning future events.
    Statements containing expressions such as "believes", "anticipates" or
    "expects" used in the Company's press releases and reports filed with the
    Securities and Exchange Commission (including periodic reports on Form 10-K
    and Form 10-Q) are intended to identify forward-looking statements.  All
    forward-looking statements involve risks and uncertainties.  Although the
    Company believes its expectations are based upon reasonable assumptions
    within the bounds of its knowledge of its business and operations, there can
    be no assurances that actual results will not materially differ from
    expected results.  The Company cautions that these and similar statements
    included in this report and in previously filed periodic reports are further
    qualified by important factors that could cause actual results to differ
    materially from those in the forward-looking statements.  Such factors
    include, without limitation, the following:  the construction of a covered
    parking facility located at the Company's gaming complex; the ability to
    fund planned development needs and to service debt from existing operations
    and from new financing; increased competition in existing markets or the
    opening of new gaming jurisdictions; a decline in the public acceptance of
    gaming; the limitation, conditioning or suspension of the Company's gaming
    license; increases in or new taxes imposed on gaming revenues, admissions or
    gaming devices; a finding of unsuitability by regulatory authorities with
    respect to the Company, its officers or key employees; loss and/or
    retirement of key executives; significant increase in fuel or transportation
    prices; adverse economic conditions in the Company's markets;  severe and
    unusual weather in the Company's markets and non-renewal of the Company's
    license from the IGC.

       Readers are cautioned not to place undue reliance on forward-looking
    statements, which speak only as of the date thereof.  The Company undertakes
    no obligation to publicly release any revisions to such forward-looking
    statements to reflect events or circumstances after the date hereof.

       The following discussions should be read in conjunction with, and are
    qualified in their

                                       13
<PAGE>

    entirety by, the Company's financial statements, including the notes
    thereto, appearing elsewhere herein.

                                       14
<PAGE>

    Results of Operations
    ---------------------

       The discussion of results of operations contained herein provides a
    comparison of the year ended December 31, 2000 with the year ended December
    31, 1999 and the year ended December 31, 1999 with the year ended December
    31, 1998.

       The following table contains information derived from the Company's
    statements of income expressed as a percentage of gross revenues.

       Consolidated Statements of Income -- Percentage of Gross Revenues
       -----------------------------------------------------------------

<TABLE>
<CAPTION>
                                            For The Years Ended December 31,
                                            --------------------------------
                                                 2000     1999     1998
                                                 ----     ----     ----
<S>                                             <C>      <C>      <C>
Revenues:
---------
   Casino                                         97.5%    97.6%    97.3%
   Food and beverage                               1.6      1.6      1.4
   Other                                           0.9      0.8      1.3
                                                ------   ------   ------
      Gross Revenues                             100.0    100.0    100.0
      less promotional allowances                 (0.3)    (0.3)    (0.3)
                                                ------   ------   ------
      Net Revenues                                99.7     99.7     99.7
Costs and Expenses:
-------------------
   Casino                                         21.4     17.3     16.5
   Gaming and admission taxes                     27.3     27.4     28.6
   Food and beverage                               2.1      2.0      2.1
   Advertising and promotion                       7.1      6.7      8.9
   General and administrative                     21.8     20.6     21.1
   Economic incentive-City of Gary                 2.7      3.0      3.0
   Depreciation and amortization                   7.7      7.0      6.8
   Loss on disposition of assets                   0.4       --      0.8
   Pre-opening costs                                --       --       --
                                                ------   ------   ------
      Total                                       90.5     84.0     87.8
                                                ------   ------   ------
Operating Income:                                  9.2     15.7     11.9
-----------------
Other Income (Expense):
-----------------------
   Loss on investment in BHR                      (1.7)    (2.4)    (2.8)
   Interest income                                 0.7      0.9      0.8
   Interest expense                              (12.7)   (12.9)   (13.4)
   Interest expense to affiliate                  (0.1)    (0.1)    (0.5)
                                                ------   ------   ------
   Total other income (expense)                  (13.8)   (14.5)   (15.9)
                                                ------   ------   ------
Net income (loss) before extraordinary item:      (4.6)     1.2     (4.0)
----------------------------------              ------   ------   ------
   Loss on bond redemption                        (0.3)   (12.7)      --
                                                ------   ------   ------
Net income (loss)                                 (4.9)%  (11.5)%   (4.0)%
Adjusted EBITDA: (in millions) (1)              $ 21.2   $ 27.3   $ 23.2
----------------------------------              ------   ------   ------
</TABLE>

NOTES:
------
1. Adjusted EBITDA represents "earnings before interest, income taxes,
   depreciation and amortization,

                                       15
<PAGE>

   excluding special items." Special items include chartered vessel lease
   payments for 1997 and 1998, $100,000 in costs associated with an abandoned
   acquisition in 1999 and loss on bond redemption for 1999. Special items for
   2000 includes loss on bond redemption, line of credit fees and loss on
   disposal of assets and $772,000 of non-operating expenses associated with
   dockside lobbying initiatives, economic development and extraordinary items.
   Adjusted EBITDA is a supplemental financial measurement used by the Company
   in the evaluation of its gaming business and by many gaming industry
   analysts. Adjusted EBITDA should only be read in conjunction with all of the
   Company's financial data summarized above and its financial statements
   prepared in accordance with GAAP appearing elsewhere herein, and should not
   be construed as an alternative either to income from operations (as
   determined in accordance with GAAP) as an indication of the Company's
   operating performance or to cash flows from operating activities (as
   determined in accordance with GAAP) as a measure of liquidity. In particular,
   the Company believes that an analysis of EBITDA enhances the understanding of
   the financial performance of companies with substantial depreciation and
   amortization.

       Future operating results are subject to significant business, economic,
   legislative, regulatory and competitive uncertainties and contingencies,
   including future and existing casino operations, many  of which are beyond
   the control of the Company.  While the Company believes that the Majestic
   Star Casino will be able to attract a sufficient number of customers and
   generate a sufficient amount of revenue to meet its debt obligations as they
   become due, there can be no assurance with respect thereto.

   2000 Compared to 1999
   ---------------------

       Gross revenues for the year ended December 31, 2000, amounted to
   approximately $118,451,000, a decrease of $1,726,000 over gross revenues
   recorded in the year ended December 31, 1999. The 1.4% decrease in gross
   revenues was primarily attributable to a $5,400,000 decline in table game
   revenues primarily as a result of a 5.4% decrease in table drop and lower
   than anticipated table hold partially offset by a $3,600,000 or 4.0% increase
   in slot revenues.

       Casino revenues during the year ended December 31, 2000, totaled
   approximately $115,455,000, of which slot machines accounted for
   approximately $93,086,000  (80.6%) and table games accounted for
   approximately $22,369,000 (19.4%).  The average number of slot machines in
   operation was 1,435 during the year ended December 31, 2000, compared to
   1,436 during the year ended December 31, 1999. The average win per slot
   machine per day increased to approximately $177 for the year ended December
   31, 2000, from approximately $171 during the year ended December 31, 1999.
   During the year ended December 31, 2000, slot machine coin-in and win
   increased by approximately 3.8% and 4.0%, respectively, compared to the year
   ended December 31, 1999, resulting in a higher win per slot machine per day.
   The percentage increases in slot coin-in and win is partially attributed to
   an aggressive multi-media marketing campaign emphasizing the registered tag
   line "We've Got Your Slots"(R) combined with a reconfiguration of the casino
   gaming floor which optimized the available space to accommodate the casino
   patrons. The average number of table games in operation during the year ended
   December 31, 2000, decreased to 55 from 58 during the year ended December 31,
   1999. The average win per table game per day during the year ended December
   31, 2000, decreased to approximately $1,108, compared to approximately $1,314
   during the year ended December 31, 1999. During the year ended December 31,
   2000, the decline in table games revenues were attributable to a decline of
   approximately $7,904,000 or 5.4% in table drop and a decrease in the table
   hold from 18.8% to 16.0% in comparison to the prior year. The average daily
   win per

                                       16
<PAGE>

   state passenger count was approximately $38 and the average daily win per
   patron was approximately $67 during the year ended December 31, 2000,
   compared to an average daily win per state passenger count of approximately
   $37 and an average daily win per patron of approximately $67 for the year
   ended December 31, 1999.

       Food and beverage revenues for the twelve months ended December 31, 2000,
   totaled approximately $1,925,000 or 1.6% of gross revenues, compared to
   approximately $1,949,000 or 1.6% of gross revenues for the year ended
   December 31, 1999. Other revenues totaled approximately $1,071,000, or 0.9%
   of gross revenues for the year ended December 31, 2000, consisted primarily
   of commission income compared to approximately $960,000 during the year
   ended December 31, 1999.

       Promotional allowances (complementaries) included in the Company's gross
   food revenues for the year ended December 31, 2000, and 1999, were
   approximately $411,000 and $330,000, respectively. Promotional allowances
   provided to the Company's gaming patrons at facilities located in, and/or
   owned by BHR for the year ended December 31, 2000, and 1999, totaled
   approximately $435,000 and $758,000, respectively, and are characterized in
   the financial statements as an expense. BHR and other third party operators
   of food kiosks invoice the Company monthly for these promotional allowances
   at cost, which approximates retail value.

       Casino operating expenses for the year ended December 31, 2000, totaled
   approximately $25,344,000, or 21.4% of gross revenues and 22.0% of casino
   revenues, respectively, compared to approximately $20,850,000, or 17.3% of
   gross revenues and 17.8% of casino revenues, respectively, for the year ended
   December 31, 1999. These expenses were primarily comprised of salaries, wages
   and benefits, and operating and promotional expenses of the casino. The
   dollar increase of $4,494,000 in casino operating expenses is primarily
   attributed to an increase of approximately $2,772,000 associated with Club
   Majestic as a result of a 14.0% increase in rated coin-in combined with a
   9.0% increase in the number of patrons in Club Majestic, $669,000 for gaming
   equipment rental primarily for participation games including Wheel of
   Fortune(R), Jeopardy(R) and Monopoly(R), and approximately $248,000 for
   repair and maintenance of gaming equipment, primarily to upgrade bill
   validators and monitors on video games.

       Gaming and admissions taxes totaled approximately $32,350,000 for the
   year ended December 31, 2000, compared to approximately $32,900,000 for the
   year ended December 31, 1999. These taxes are levied on adjusted gross
   receipts, as defined by Indiana gaming laws, at the rate of 20%, plus $3 per
   passenger per the state passenger count. An additional $3,231,000 was paid
   during the year ended December 31, 2000, compared to approximately $3,626,000
   in the year ended December 31, 1999, to the City of Gary under an economic
   incentive agreement whereby the Company pays 3% of the adjusted gross
   receipts directly to the City.

       Advertising and promotion expenses for the year ended December 31, 2000,
   totaled approximately $8,418,000, or 7.1% of gross revenues, compared to
   approximately $8,035,000, or 6.7% of gross revenues during the year ended
   December 31, 1999. Advertising and promotion expenses included salaries,
   wages and benefits of the marketing and casino service departments, as well
   as promotions, advertising and special events. The $383,000 or 4.8% increase
   in advertising

                                       17
<PAGE>

   and promotion expenses during the year ended December 31, 2000, was primarily
   the result of a $207,000 increase in costs associated with junket
   transportation including charter bus passengers and an increase of $456,000
   in television advertising as part of undertaking an aggressive and integrated
   brand image campaign that was conducted during the first and second quarters
   of 2000.  These increases were partially offset by a decrease of
   approximately $280,000 in other marketing costs during the year ended
   December 31, 2000 compared to the prior year.

       General and administrative expenses for the year ended December 31, 2000,
   were approximately $25,800,000, or 21.8% of gross revenues, compared to
   $24,738,000, or 20.6% of gross revenues, during the year ended December 31,
   1999. These expenses included approximately $6,968,000 for berthing fees paid
   to BHR, $6,402,000 for marine operations including housekeeping, and
   $2,608,000 for security and surveillance operations during the year ended
   December 31, 2000. The dollar increase of $1,062,000 in these expenses is
   primarily attributed to approximately $380,000 in payroll and related
   expenses, an increase of approximately $326,000 in insurance related expenses
   and approximately $250,000 for acquisition related expenses incurred by
   Majestic Investor, LLC, an unrestricted subsidiary.

       Depreciation and amortization for the year ended December 31, 2000, was
   approximately $9,114,000, or 7.7% of gross revenues, compared to
   approximately $8,375,000, or 7.0% of gross revenues, during the year ended
   December 31, 1999. The dollar increase totaled approximately $739,000, of
   which approximately $514,000 is depreciation expense and approximately
   $225,000 is incremental amortization expense. The dollar increase for the
   year ended December 31, 2000, is primarily attributable to new
   machinery and equipment placed into service during the past year and
   amortization of the debt issue costs associated with the June 1999 issuance
   of the 10 7-8% Senior Secured Notes.

       Operating income for the year ended December 31, 2000, was approximately
   $10,920,000, or 9.2% of gross revenues, compared to an operating income for
   the year ended December 31, 1999 of $18,931,000, or 15.7% of gross revenues.
   During the year ended December 31, 2000, the Company had a net loss
   on the disposition of assets totaling approximately $417,000. The $8,011,000
   or 42.3% decrease in operating income is principally attributable to
   increased expenditures of approximately $4,494,000 associated with casino
   operations, a decrease in gross revenues of approximately $1,726,000 and
   approximately $1,062,000 in increased general and administrative expenses
   including $125,000 in non-operating expenses, and approximately $250,000 for
   acquisition related expenses incurred by Majestic Investor, LLC, an
   unrestricted subsidiary, and an increase of approximately $739,000 for
   depreciation and amortization as previously discussed.

       Net interest expense for the year ended December 31, 2000, was
   $14,105,000, or approximately 11.9% of gross revenues, compared to
   $14,605,000, or approximately 12.2% for the same period last year. The
   $500,000 decrease in net interest expense is primarily attributable to the
   refinancing of the 12-3/4% Senior Secured Notes with Contingent Interest and
   the repayment of the $8.8 million demand note to BDI both of which occurred
   during the second quarter of 1999.

                                       18
<PAGE>

       The Company's expense on the redemption of its 12-3/4% Senior Secured
   Notes for the years ended December 31, 2000 and 1999, respectively was
   approximately $382,500 and $15,238,000 and is classified as an extraordinary
   item. The loss relating to its investment in BHR for the years ended December
   31, 2000 and 1999, respectively was approximately $2,059,000 and $2,848,000.
   Costs of approximately $6,968,000 associated with operating BHR are included
   in the operating expense line "General and Administrative" and are fully
   reflected in operating income. Other non-operating expenses of $125,000 for
   the year ended December 31, 2000 represent fees associated with the line of
   credit.

       As a result of the foregoing, the Company realized a loss (before the
   extraordinary item) of $5,368,000 during the year ended December 31, 2000
   compared to income (before the extraordinary item) of $1,478,000 in the year
   ended December 31, 1999. Net losses were approximately $5,750,000 and
   $13,760,000 during the years ended December 31, 2000, and 1999, respectively.

   1999 Compared to 1998
   ---------------------

       Gross revenues for the year ended December 31, 1999, amounted to
   approximately $120,177,000, an increase of $5,576,000 over gross revenues
   recorded in the year ended December 31, 1998.  The 4.9% increase in gross
   revenues was attributable to an increase in the daily win per patron.

       Casino revenues during the year ended December 31, 1999, totaled
   approximately $117,268,000, of which slot machines accounted for
   approximately $89,537,000  (76.4%) and table games accounted for
   approximately $27,731,000 (23.6%).  The average number of slot machines in
   operation decreased to 1,436 during the year ended December 31, 1999, from
   1,521 during the year ended December 31, 1998 due to changes in the casino
   floor layout including the creation of a new spacious high limit slot room
   and widening of aisle space for guest comfort.  The average win per slot
   machine per day increased to approximately $171 for the year ended December
   31, 1999, from approximately $155 during the year ended December 31, 1998.
   The average number of table games in operation during the year ended December
   31, 1999, decreased to 58 from 61 during the year ended December 31, 1998
   principally due to the removal of eight poker tables in mid-March, 1999.  The
   average win per table game per day during the year ended December 31,1999,
   increased to approximately $1,314, compared to approximately $1,113 during
   the year ended December 31, 1998. The average daily win per state passenger
   count was approximately $37 and the average daily win per patron was
   approximately $67 during the year ended December 31, 1999, compared to an
   average daily win per state passenger count of approximately $32 and an
   average daily win per patron of approximately $57 for the year ended December
   31, 1998.

       Food and beverage revenues for the year ended December 31, 1999, totaled
   approximately $1,949,000 or 1.6% of gross revenues, compared to approximately
   $1,643,000 or 1.4% of gross revenues for the twelve months ended December 31,
   1998. The $306,000 increase in food and beverage revenues is attributed to an
   overall increase in the number of customers served. Other revenues totaled
   approximately $960,000, or 0.8% of gross revenues for the twelve months ended
   December 31, 1999, consisting primarily of commission income compared to
   approximately $1,477,000 during the twelve months ended December 31, 1998.
   Other revenues during the year ended December 31, 1998 included a non-
   recurring lump sum payment

                                       19
<PAGE>

   of $504,000 from the Company's Joint Venture Partner to compensate the
   Company for the loss of certain parking spaces utilized by the Joint Venture
   Partner for the construction of a hotel facility.

       Promotional allowances (complementaries) included in the Company's gross
   food revenues for the year ended December 31, 1999 and 1998, were
   approximately $330,000 and $337,000, respectively. Promotional allowances
   provided to the Company's gaming patrons at facilities located in, and/or
   owned by BHR for the year ended December 31, 1999, and 1998, totaled
   approximately $758,000 and $567,000, respectively, and are characterized in
   the financial statements as an expense. BHR invoices the Company monthly for
   these promotional allowances at cost, which approximates retail value.

       Casino operating expenses for the year ended December 31, 1999, totaled
   approximately $20,850,000, or 17.3% of gross revenues and 17.8% of casino
   revenues, respectively, compared to approximately $18,853,000, or 16.5% of
   gross revenues and 16.9% of casino revenues, respectively, for the year ended
   December 31, 1998. These expenses were primarily comprised of salaries, wages
   and benefits, and operating and promotional expenses of the casino. The
   dollar increase of $1,997,000 in casino operating expenses is primarily
   attributable to an increase of approximately $1,124,000 for gaming equipment
   rental and approximately $774,000 for expenses associated with the Club
   Majestic.

       Gaming and admissions taxes totaled approximately $32,900,000 for the
   year ended December 31, 1999, compared to approximately $32,722,000 for the
   year ended December 31, 1998. These taxes are levied on adjusted gross
   receipts, as defined by Indiana gaming laws, at the rate of 20%, plus $3 per
   passenger per the state passenger count. An additional $3,626,000 was paid
   during the year ended December 31, 1999, compared to approximately $3,456,000
   in the year ended December 31, 1998, to the City of Gary under an economic
   incentive agreement whereby the Company pays 3% of the adjusted gross
   receipts directly to the City of Gary.

       Advertising and promotion expenses for the year ended December 31, 1999,
   totaled approximately $8,035,000, or 6.7% of gross revenues, compared to
   approximately $10,156,000, or 8.9% of gross revenues during the year ended
   December 31, 1998. Advertising and promotion expenses included salaries,
   wages and benefits of the marketing and casino service departments, as well
   as promotions, advertising and special events. The $2,121,000 or 20.9%
   decrease in advertising and promotion expenses during the year ended December
   31, 1999, was primarily the result of redirecting the Company's marketing
   dollars to target or direct marketing from mass marketing and special events
   combined with a significant reduction in the amount of chartered bus
   passengers.

       General and administrative expenses for the year ended December 31, 1999,
   were approximately $24,738,000, or 20.6% of gross revenues, compared to
   $24,222,000, or 21.1% of gross revenues, during the year ended December 31,
   1998. These expenses included approximately $7,120,000 for berthing fees paid
   to BHR, $6,109,000 for marine operations including housekeeping, and
   $2,348,000 for security and surveillance operations during the year ended
   December 31, 1999. The dollar increase of $516,000 in these expenses is
   primarily

                                       20
<PAGE>

   attributed to an increase for property taxes and utilities during the year
   ended December 31, 1999.

       Depreciation and amortization for the year ended December 31, 1999, was
   approximately $8,375,000, or 7.0% of gross revenues, compared to
   approximately $7,820,000, or 6.8% of gross revenues, during the year ended
   December 31, 1998. The dollar increase of $555,000 in depreciation and
   amortization expense for the year ended December 31, 1999, is primarily
   attributable to the increased expense associated with machinery and equipment
   placed into service during the past year and the increase in amortization of
   deferred financing costs associated with the issuance of the $130.0 million
   of 10-7/8% Senior Secured Notes. Also amortization includes approximately
   $100,000 in costs associated with an abandoned acquisition in 1999.

       Operating income for the year ended December 31, 1999, was approximately
   $18,931,000, or 15.7% of gross revenues, compared to an operating income for
   the year ended December 31, 1998 of $13,685,000, or 11.9% of gross revenues.
   During the year ended December 31, 1998, the Company had a net loss on the
   disposition of assets totaling approximately $958,000. The $5,246,000 or
   38.3% increase in operating income is principally attributable to the
   increase in the average daily win per patron to $67 during the year ended
   December 31, 1999 from $57 during the year ended December 31, 1998, combined
   with a 20.9% decrease in overall marketing expenses.

       Net interest expense for the year ended December 31, 1999, was
   $14,605,000, or approximately 12.2% of gross revenues, compared to
   $14,991,000, or approximately 13.1% for the same period last year. The
   $386,000 decrease in net interest expense is primarily attributed to the
   elimination of the contingent interest on the refinanced 12-3/4% Senior
   Secured Notes and the repayment of the $8.8 million demand note to BDI. For
   the year ended December 31, 1999, the Company paid accrued contingent
   interest on its 12-3/4% Senior Secured Notes of approximately $3,018,000 as
   part of its refinancing of the 12-3/4% Senior Secured Notes.

       The Company's expense on the redemption of its 12-3/4% Senior Secured
   Notes was approximately $15,238,000 and is classified as an extraordinary
   item and the loss relating to its investment in BHR for the year ended
   December 31, 1999, was approximately  $2,848,000.

       As a result of the foregoing, the Company realized income before the
   extraordinary item of $1,478,000 during the year ended December 31, 1999
   compared to a loss of $4,473,000 in the year ended December 31, 1998. Net
   losses were approximately $13,760,000 and $4,473,000 during the years ended
   December 31, 1999, and 1998, respectively.

   Earnings Before Interest, Income Taxes, Depreciation and Amortization
   ("EBITDA")

       EBITDA is presented solely as a supplemental disclosure and is used by
   the Company to assist in the evaluation of the cash generating ability of its
   gaming business. Adjusted EBITDA during the twelve months ended December 31,
   2000 was approximately $21,223,000 or 17.9% of gross revenues, compared to
   approximately $27,307,000 or 22.7% of gross revenues during the

                                       21
<PAGE>

   twelve months ended December 31, 1999. The $6,084,000 decrease in Adjusted
   EBITDA is primarily the result of an increase in casino and marketing
   expenditures combined with a decrease in the table hold and table drop.
   Adjusted EBITDA for 2000 excludes loss on bond redemption, line of credit
   fees and loss on disposal of assets and $772,000 of non-operating expenses
   associated with dockside lobbying initiatives, economic development and
   extraordinary items.

       EBITDA should be viewed only in conjunction with all of the Company's
   financial data and statements, and should not be construed as an alternative
   either to income from operations (as an indicator of the Company's operating
   performance) or to cash flows from operating activities as a measure of
   liquidity.

   Liquidity and Capital Resources

       At December 31, 2000, the Company had cash and cash equivalents of
   approximately $16.1 million, including $3.6 million at Majestic Investor,
   LLC. During the year ended December 31, 2000, the Company's capital
   expenditures were approximately $3.0 million, which included approximately
   $1.9 million for slot machines and other gaming equipment, $738,000 for
   furniture, equipment, and vessel improvements, and $447,000 for computer
   equipment and software. During the third quarter of 2000, Barden Development,
   Inc. ("BDI"), a related party, repaid loans that the Company had made to BDI
   during the second and third quarters of 2000, together with interest at the
   annual rate of 10.5%. An additional loan of $2.0 million from Majestic
   Investor, LLC to BDI remains outstanding. The Company also made a capital
   contribution of approximately $7.8 million to BHR during the year ended
   December 31, 2000, and of this amount approximately $7.1 million was utilized
   by BHR to make certain advances to Buffington Harbor Parking Associates
   ("BHPA") to purchase land previously leased by BHR.

       During the quarter ended June 30, 1999, the Company issued $130.0 million
   of 10-7/8% Senior Secured Notes due 2006, in an exchange offer that was
   registered with the Securities and Exchange Commission under the Securities
   Act of 1933, as amended. The net proceeds from this offering were used in
   part to redeem $99.0 million principal amount of the Company's 12-3/4% Senior
   Secured Notes with Contingent Interest due 2003. During June 1999,
   approximately $7.4 million of net proceeds was classified as restricted cash
   to effect a covenant defeasance of the remaining $6.0 million of 12-3/4%
   Senior Secured Notes. During May 2000, the Company redeemed this remaining
   $6.0 million of 12-3/4% Senior Secured Notes. Holders of the outstanding 10-
   7/8% Senior Secured Notes due 2006 have the right to require that the Company
   repurchase the notes at a premium under certain conditions, including a
   change in control of the Company.

       Under the terms of its development agreement with the City of Gary, the
   Company committed to make development expenditures of not less than $116.0
   million for its casino and associated infrastructure during a five year
   period. The Company has met this commitment by purchasing and equipping the
   Permanent Vessel, constructing substantial harbor improvements at the BHR
   facilities, and by investing in an affiliated entity that purchased land for
   future

                                       22
<PAGE>

   development adjacent to the Gaming Complex. The purchase of land for $25.0
   million was completed in September 2000, by Gary New Century, LLC ("GNC"), a
   limited liability company indirectly owned and controlled by Don H. Barden,
   the Company's sole owner. In order to fulfill the Company's remaining
   development commitment to the City, a portion of the purchase price for the
   land was provided to GNC by Majestic Investor, LLC ("Majestic Investor"), a
   newly formed limited liability company that is wholly-owned by the Company.
   Majestic Investor was capitalized during the third quarter of 2000 with a
   $9.0 million investment by the Company, and Majestic Investor used these
   monies to acquire a 49% equity interest in GNC which was subsequently
   repurchased for its original cost. Majestic Investor is considered an
   "unrestricted subsidiary" of the Company under the Indenture relating to the
   Company's 10-7/8% Senior Secured Notes due 2006 and is not a guarantor of
   such notes.

       BHR entered into a lease agreement with Lehigh Portland Cement Company,
   to lease certain property that is integral to the gaming operations of the
   Company and its Joint Venture Partner. In September 2000, Don H. Barden,
   Chairman and CEO of the Company, through an affiliated company, GNC,
   purchased for $25.0 million, approximately 190 acres of land adjacent to the
   Gaming Complex, including the land that had formerly been leased by BHR from
   Lehigh Portland Cement. The lease agreement with Lehigh Portland Cement has
   been terminated, which relieves BHR of the remaining 62 monthly payments of
   $125,000 each and the need to construct a new harbor. A portion of this land
   was subsequently sold by GNC for $14.2 million to Buffington Harbor Parking
   Associates, LLC ("BHPA") formed by the Joint Venture Partner and AMB Parking,
   LLC (a company indirectly wholly-owned by Mr. Barden). BHPA intends to
   construct and operate a parking garage on the purchased land. The parking
   project is estimated to cost approximately $37.7 million including
   approximately $14.2 million for the land. It is currently anticipated that
   the Company will enter into a lease with BHPA with lease payments sufficient
   to service the debt on the BHPA financing. The Company believes that the
   convenience of the new parking structure will attract a significant number of
   new customers to Buffington Harbor, thereby providing opportunities to
   increase its net revenues and cash flow. Construction should be completed
   approximately 9 to 10 months from the closing of the loan facility. There can
   be no assurance that BHPA will be able to obtain financing to construct the
   parking garage on acceptable terms.

       Majestic Investor entered into a definitive purchase agreement dated
   as of November 22, 2000, as amended December 4, 2000, with Fitzgerald's
   Gaming Corporation to purchase three of Fitzgerald's brand casinos. Majestic
   Investor, LLC plans to purchase Fitzgerald's casinos in Las Vegas, Nevada,
   Tunica, Mississippi, and Black Hawk, Colorado for $149.0 million in cash,
   subject to adjustment in certain circumstances, plus assumption of certain
   liabilities. The sale is consistent with the reorganization that Fitzgerald's
   Gaming Corporation has negotiated with a committee representing its
   noteholders. To facilitate this transaction, Fitzgerald's Gaming Corporation
   and its subsidiaries voluntarily filed for Chapter 11 Bankruptcy in U. S.
   District Court in Nevada on December 5, 2000. The sale was approved by the
   Bankruptcy Court on March 19, 2001 but remains contingent on, among other
   things, licensing and financing. Licensing clearances are expected to be
   finalized in the second half of calendar year 2001.

       The Company had originally been required by the City of Gary to arrange
   for the issuance of a surety bond in the amount of $12.5 million to guarantee
   the remaining $10.0 million portion of its development commitment for off-
   site improvements. The Surety Bond in turn was backed

                                       23
<PAGE>

   by a letter of credit issued by an unaffiliated bank, and the Company was
   required to deposit cash collateral in the amount of $3.6 million with the
   bank to guarantee its reimbursement obligation to the bank if the letter of
   credit had to be drawn on by the bonding company that provided the Surety
   Bond. In September 2000, the bank released $1.0 million of the deposit. The
   Company received the remaining $2.6 million of cash collateral during March
   2001. Mr. Barden has provided a personal guarantee to the bonding company
   which allowed the remaining $2.6 million of cash collateral to be returned to
   the Company.

       The Company has met its capital requirements to date through its cash
   flow from operations, capital contributions from its sole member and
   borrowings from third parties. For the year ended December 31, 2000, net cash
   provided from operations totaled approximately $4.7 million. For the year
   ended December 31, 2000, approximately $12.8 million in cash was used by
   investing activities, compared to $4.3 million used by investing activities
   for the year ended December 31, 1999. Net cash provided by financing
   activities was $4.0 million for the year ended December 31, 2000 which
   included $7.8 million in net borrowing under the line of credit facility
   and net loans to BDI of $2.0 million, compared to $5.0 million used by
   financing activities for the year ended December 31, 1999.

       As of December 31, 2000, borrowings included $130.0 million principal
   amount of 10-7/8% Senior Secured Notes due 2006, and approximately $1.0
   million of equipment financing, including related use taxes. The 10-7/8%
   Senior Secured Notes are secured by substantially all current and future
   assets of the Company other than certain excluded assets. In addition, in
   August 1999, the Company established a $20.0 million credit facility, which
   is also secured by substantially all current and future assets of the Company
   other than certain excluded assets. The lien of the lender under the credit
   facility is structurally senior to the lien securing the 10-7/8% Senior
   Secured Notes. During September 2000, $12.0 million was borrowed on this
   credit facility, and at December 31, 2000, $4.2 million of these borrowings
   had been repaid. These borrowings were made to partially fund the $9.0
   million capital contribution to Majestic Investor as well as the $7.5 million
   contribution to BHR to make certain advances to BHPA. As of March 15, 2001,
   the outstanding balance on the credit facility has been reduced to
   approximately $3.7 million.

       Management believes that the Company's cash flow from operations, certain
   planned equipment financing, and its current line of credit, will be adequate
   to meet the Company's anticipated future requirements for working capital,
   its capital expenditures and scheduled payments of interest and principal on
   the Senior Secured Notes, lease payments to BHPA and other permitted
   indebtedness for the year 2001. No assurance can be given, however, that such
   proceeds and, operating cash flow from the Permanent Vessel, in light of
   increased competition principally dockside gambling in Illinois and the
   purchase of certain Indiana gaming facilities by larger more recognized brand
   names, will be sufficient for such purposes. If necessary and to the extent
   permitted under the Indenture, the Company will seek additional financing
   through borrowings and debt or equity financing. There can be no assurance
   that additional financing, if needed, will be available to the Company, or
   that, if available, the financing will be on terms favorable to the Company.
   In addition, there is no assurance that the Company's estimate of its
   reasonably anticipated liquidity needs is accurate or that unforeseen events
   will not occur,

                                       24
<PAGE>

   resulting in the need to raise additional funds.

   ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

   Interest Rate Risk
   ------------------

       The Company does not have any financial instruments held for traditional
   purposes and does not hedge any of its market risks with derivative
   instruments.

       The Company's primary market risk exposure relates to interest risk
   exposure through its borrowings.  The fair value of the Company's debt
   obligations approximates their carrying value.


   ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Item 14 of this Report on Form 10-K.

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

      Not Applicable.

                                       25
<PAGE>

                                   PART III

   ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

       The following table sets forth certain information with respect to the
   executive officers of the Company as of December 31, 2000. The Company does
   not have directors since it is a limited liability company.

                              Executive Officers


          Name and Age                Position(s) Held
          ------------                ----------------

         Don H. Barden, 57         Chairman, President, and Chief
                                   Executive Officer

         Michael E. Kelly, 39      Vice President, Chief Operating and
                                   Financial Officer

         David M. Wolf, 44         Vice President of Administration



       DON H. BARDEN is the Chairman, President, and Chief Executive Officer of
   the Company as well as Chairman and President of BDI, with responsibility for
   key policy making functions. Mr Barden is also the President and CEO of a
   group of companies which he owns and operates. Over the past 30 years, Mr.
   Barden has successfully developed, owned and operated many business
   enterprises in various industries including real estate development, casino
   gaming, broadcasting, cable television and international trade.

       MICHAEL E. KELLY is the Vice President, Chief Operating and Financial
   Officer of the Company since January 1, 1999, with overall responsibility for
   the daily operations. Mr. Kelly also serves as the Company's General Manager.
   From April 1996 through December 31, 1998, Mr. Kelly was the Vice President
   and Chief Financial Officer of the Company with overall responsibility for
   the Company's financial reporting and investor relations functions. Mr. Kelly
   assumed the responsibility for management of daily operations and related
   activities of the Company effective October 17, 1998. Mr. Kelly is a Vice
   President of BDI. From June 1994 to April 1996, Mr. Kelly held various
   positions with Fitzgerald's Gaming Corporation, including Corporate Vice
   President of Finance. Mr. Kelly also was the Senior Director of Operations
   and Chief Financial Officer of Fitzgerald's Tunica where he was responsible
   for operations, finance, regulatory affairs, legal and strategic planning and
   involved in the design and development of a new dockside gaming facility in
   Robinsonville, Mississippi. From September 1991 to June 1994, Mr. Kelly was
   Vice President and Chief Financial Officer of Empress River Casino
   Corporation and its affiliates, with responsibility for finance, legal,
   regulatory affairs, investor relations and administration. Mr. Kelly also
   participated in the design and development of riverboat casino operations at
   both Joliet, Illinois, and Hammond, Indiana, while employed by the Empress
   River Casino Corporation. From 1982 to 1991, Mr. Kelly was employed in
   various finance and administrative functions by Harrah's Hotel & Casino in
   New Jersey and Nevada, and the Fitzgerald's Group in Reno and Las Vegas,
   Nevada.

                                       26
<PAGE>

       DAVID M. WOLF has served as Vice President of Administration of the
   Company since March 1, 1999. Mr. Wolf has responsibility for finance,
   management information systems, risk management and administration. From
   February 1997 through February 1999, Mr. Wolf was Director of Finance of the
   Company. From 1981 to 1997, Mr. Wolf was employed in various senior finance
   and administrative positions by Harrah's Hotel and Casino, Trump Plaza Hotel
   and Casino and Tropicana Hotel and Casino in Atlantic City, New Jersey.

                                       27
<PAGE>

   ITEM 11.  EXECUTIVE COMPENSATION

       The following table sets forth all compensation earned for services
   performed for the Company during the three fiscal years ended December 31,
   2000 by the Company's Chief Executive Officer and each of its other executive
   officers  (collectively, the "Named Executive Officers").

                          Summary Compensation Table
                            Annual Compensation (1)
                        ----------------------------------

<TABLE>
<CAPTION>
                                                                               All Other
                                         Fiscal                              Compensation
Name & Position                           Year   Salary ($)      Bonus ($)      ($) (2)
<S>                                      <C>     <C>            <C>          <C>
Don H. Barden                             2000    331,250            --            920
President & Chief Executive Officer       1999    289,000            --          1,139
                                          1998    275,000            --          1,120

Michael E. Kelly (3)                      2000    280,000       100,000         18,589
Vice President, Chief Operating and       1999    275,000        70,000         14,919
Financial Officer                         1998    180,000        45,000         14,378

David M. Wolf (4)                         2000    153,000        50,000          8,684
Vice President of Administration          1999    126,000        10,000          7,580
                                          1998     94,144         3,462          2,607
</TABLE>

___________________
1.   The incremental cost to the Company of providing perquisites and other
     personal benefits during the past three fiscal years did not exceed, as to
     any "Named Executive Officer", the lesser of $50,000 or 10% of the total
     salary and bonus paid to such executive officer for any such year and,
     accordingly, is omitted from the table.

2.   Amounts represent contractual payments under individual employment
     agreements. In fiscal 2000, the Company contributed a 401(k) match of
     $11,520 and $4,500 to Messrs. Kelly and Wolf, respectively. Messrs. Kelly
     and Wolf were also reimbursed $5,045 and $3,264, respectively for non-
     deductible medical plan expenditures. In 2000, life insurance premiums of
     $920, $2,024, and $920 were paid on behalf of Messrs. Barden, Kelly and
     Wolf, respectively. In fiscal 1999, the Company contributed a 401(k) match
     of $7,601 and $4,079 to Messrs. Kelly and Wolf, respectively. Messrs. Kelly
     and Wolf were also reimbursed $4,904 and $2,509 for non-deductible medical
     plan expenditures. In 1999, life insurance premiums of $1,139, $2,414, and
     $992 were paid on behalf of Messrs. Barden, Kelly and Wolf, respectively.
     In fiscal 1998, the Company contributed 401(k) match of $7,313 and $1,975
     to Messrs. Kelly and Wolf. Mr. Kelly was also reimbursed $5,031 for non-
     deductible medical plan expenditures. In 1998, life insurance premiums of
     $1,120, $2,034, and $632 were paid on behalf of Messrs. Barden, Kelly and
     Wolf, respectively.

                                       28
<PAGE>

3.   Mr. Kelly joined the Company as Vice President and CFO in April 1996. Mr.
     Kelly assumed on an interim basis the duties of Chief Operating Officer and
     General Manager effective October 17, 1998. Effective January 1, 1999, Mr.
     Kelly was named Vice President, Chief Operating and Financial Officer.

4.   Mr. Wolf joined the Company as Director of Finance in February 1997. Mr.
     Wolf was promoted to Vice President of Administration effective March 1,
     1999.

     Employment Agreements
     ---------------------

          Mr. Barden serves as Chairman and President of the Company, pursuant
     to a letter agreement dated as of April 25, 1996.

          Mr. Kelly serves as Vice President, Chief Operating and Financial
     Officer pursuant to a two-year employment agreement with the Company,
     effective as of January 1, 1999. Effective January 1, 1999, Mr. Kelly
     received base compensation of $275,000 per year and can also earn annual
     incentive compensation based upon his performance and the performance of
     the Company. In addition to such compensation, Mr. Kelly is entitled to
     term life insurance in an amount equal to four times his base salary and
     other customary employee benefits, including participation in the 401(k)
     plan. Mr. Kelly is also entitled to additional compensation (as defined in
     the agreement) upon a change in control, equal to his base salary and
     incentive compensation for the remainder of the term of the agreement, plus
     12 months thereafter. Mr. Kelly's employment agreement contains certain
     non-competition provisions with a duration of 12 months following
     termination of his employment.

          Mr. Wolf serves as Vice President of Administration pursuant to a two-
     year employment agreement, effective as of March 1, 1999. Effective October
     4, 1999, Mr. Wolf received base compensation of $150,000 per year and can
     also earn annual incentive compensation based upon his performance and the
     performance of the Company. Mr. Wolf is also entitled to additional
     compensation, upon a change in control, equal to his base salary and
     incentive compensation for the remainder of the term of the agreement, plus
     six months thereafter. Mr. Wolf's employment agreement contains other terms
     substantially similar to that of Mr. Kelly's including certain non-
     competition provisions with a duration of 12 months following termination
     of his employment.

                                       29
<PAGE>

   ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

       The following table sets forth certain information, as of March 15, 2001,
   with regard to the beneficial ownership of the membership interests in the
   Company.

             Name and Address of Beneficial Owner           % Ownership
             ------------------------------------           -----------

                 Don H. Barden                                 100.0% (1)
                 400 Renaissance Center, Suite 2400
                 Detroit, Michigan 48243
   NOTE:
   -----
   (1) Includes the membership interests in the Company beneficially owned
   directly by BDI and indirectly by BDI and Barden Management, Inc. ("BMI")
   through Gary Riverboat Gaming, LLC ("GRG").  Mr. Barden is the beneficial
   owner of 100% of BDI, BMI and GRG.

   ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

       The Company made two $2.0 million loans to BDI that were repaid with
   interest during the year ended December 31, 2000. An additional $2.0 million
   loan was made to BDI by Majestic Investor, LLC on October 3, 2000 which
   carries an interest rate of 10.5%. This loan is currently outstanding.

       In September 2000, Don H. Barden, Chairman and CEO of the Company,
   through an affiliated company, (GNC) purchased for $25.0 million,
   approximately 190 acres of land adjacent to the Buffington Harbor Complex,
   including the land that had formerly been leased by BHR from Lehigh Portland
   Cement. In order to fulfill the Company's remaining development commitment
   to the City, a portion of the purchase price for the land was provided to GNC
   by Majestic Investor, a newly formed limited liability company that is wholly
   owned by the Company. Majestic Investor was capitalized during the third
   quarter of 2000 with a $9.0 million investment by the Company, and Majestic
   Investor used these monies to acquire a 49% equity interest in GNC which was
   subsequently repurchased for its original cost.

       A Management Agreement was entered into on June 18, 1999 with BDI to
   provide for, among other things, a management fee payable by the Company to
   BDI for acting as the manager.  The fees for each fiscal quarter will be
   equal to 5% of the Company's Consolidated Cash Flow (as defined in the
   Indenture

                                       30
<PAGE>

   for the 10-7/8% Senior Secured Notes) for the immediately preceding fiscal
   quarter and may not be paid if the Company is in default under the Indenture
   governing the Notes or if the Company does not meet certain financial ratios
   as provided in the Indenture. For the three month periods ended September 30,
   1999, December 31, 1999 and March 31, 2000, approximately $325,000, $282,000,
   and $315,000, respectively was paid to BDI in accordance with the Management
   Agreement. In February, 2000 approximately $282,000 was paid to BDI in
   accordance with the Management Agreement for the three month period ended
   December 31, 1999. In April, 2000 approximately $315,000 was paid to BDI in
   accordance with the Management Agreement for the three month period ended
   March 31, 2000. No management fees have been paid since April 2000 since the
   Company has not met certain financial ratios as provided in the Indenture.

                                       31
<PAGE>

                                    PART IV

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

<TABLE>
<S>                                                                         <C>
(a) 1.  Financial Statements of the Company:

        Report of Independent Accountants                                   F-1

        Consolidated Balance Sheets as of December 31, 2000 and 1999        F-2

        Consolidated Statements of Income for the years ended
        December 31, 2000, 1999 and 1998                                    F-3

        Consolidated Statements of Changes in Members' Equity for the       F-4
        years ended December 31, 2000, 1999, and 1998

        Consolidated Statements of Cash Flows for the                       F-5
        years ended December 31, 2000, 1999, and 1998

        Notes to the Consolidated Financial Statements                      F-6

2.      Financial Statement Schedules:
        Schedule II - Valuation and Qualifying Accounts                     F-24
</TABLE>

3.  Exhibits

Exhibit No.    Description
----------     -----------
2.1            Purchase and Sale Agreement, dated as of November 22, 2000, by
               and among Majestic Investor, LLC, Fitzgerald's Las Vegas, Inc.,
               101 Main Street Limited Liability Company, Fitzgerald's
               Mississippi, Inc., Fitzgerald's Gaming Corporation and certain
               affiliates of the foregoing parties, as amended by the First
               Amendment thereto, dated as of December 4, 2000. The Registrant
               agrees to furnish a supplementary copy of any omitted schedule to
               the Commission upon request.

3.1            Amended and Restated Articles of Organization of The Majestic
               Star Casino, LLC, filed as Exhibit 3.1 to the Company's
               Registration Statement, No. 333- 06489, and incorporated herein
               by reference.

3.2            Third Amended and Restated Operating Agreement of The Majestic
               Star Casino, LLC dated as of March 29, 1996, filed as Exhibit 3.2
               to the Company's Registration Statement, No.333-06489, and
               incorporated herein by reference.

3.3            First Amendment of Third Amended and Restated Operating Agreement
               of The Majestic Star Casino, LLC, dated as of June 18, 1999,
               filed as Exhibit 3.3 to the Company's Registration Statement, No.
               333-85089, and incorporated herein by reference.

                                       32
<PAGE>

3.4            Articles of Incorporation of The Majestic Star Casino Capital
               Corp., filed as Exhibit 3.4 to the Company's Registration
               Statement, No. 333-85089, and incorporated herein by reference.

3.5            Bylaws of The Majestic Star Casino Capital Corp., filed as
               Exhibit 3.5 to the Company's Registration Statement, No. 333-
               85089, and incorporated herein by reference.

4.11           Indenture, dated as of June 18, 1999, by and among The Majestic
               Star Casino, LLC, The Majestic Star Casino Capital Corp., and IBJ
               Whitehall Bank & Trust Company, as Trustee, with respect to the
               10-7/8% Senior Secured Notes due 2006 (the "2006 Senior Notes")
               and the 10-7/8% Senior Exchange Secured Notes (the "2006 Senior
               Exchange Notes"), filed as Exhibit 4.3 to the Company's
               Registration Statement, No. 333-85089, and incorporated herein by
               reference.

4.12           Form of 2006 Senior Note and 2006 Senior Exchange Note (included
               in Exhibit 4.11), filed as Exhibit 4.3 to the Company's
               Registration Statement, No. 333-85089, and incorporated herein by
               reference.

4.13           Security Agreement, dated as of June 18, 1999, by and between The
               Majestic Star Casino, LLC and IBJ Whitehall Bank & Trust Company,
               filed as Exhibit 4.4 to the Company's Registration Statement, No.
               333-85089, and incorporated herein by reference.

4.14           Trademark Security Agreement, dated as of June 18, 1999, by and
               between The Majestic Star Casino, LLC and IBJ Whitehall Bank &
               Trust Company, filed as Exhibit 4.5 to the Company's Registration
               Statement, No. 333-85089, and incorporated herein by reference.

4.15           Preferred Ship Mortgage, dated as of June 18, 1999, made by The
               Majestic Star Casino, LLC in favor of IBJ Whitehall Bank & Trust
               Company, filed as Exhibit 4.6 to the Company's Registration
               Statement, No. 333-85089, and incorporated herein by reference.

4.16           Pledge Agreement, dated as of June 18, 1999, by and between The
               Majestic Star Casino, LLC and IBJ Whitehall Bank & Trust Company,
               filed as Exhibit 4.7 to the Company's Registration Statement, No.
               333-85089, and incorporated herein by reference.

4.17           Pledge Agreement, dated as of June 18, 1999, by and among Barden
               Development, Inc., Gary Riverboat Gaming, LLC, and IBJ Whitehall
               Bank & Trust Company, filed as Exhibit 4.8 to the Company's
               Registration Statement, No. 333-85089, and incorporated herein by
               reference.

10.1 *         Employment Letter Agreement dated as of April 25, 1996 by and
               between the Company and Don H. Barden, filed as Exhibit 10.1 to
               the Company's Registration Statement, No. 333-06489, and
               incorporated herein by reference.

                                      E-1
<PAGE>

10.2           Berthing Agreement, dated as of April 23, 1996, between the
               Company and Buffington Harbor Riverboats, LLC, filed as Exhibit
               10.5 to the Company's Registration Statement, No. 333-06489, and
               incorporated herein by reference.

10.3           First Amended and Restated Operating Agreement of Buffington
               Harbor Riverboats, LLC, made as of October 31, 1995, by and
               between Trump Indiana, Inc. and the Company, as amended to date,
               filed as Exhibit 10.6 to the Company's Registration Statement,
               No. 333-06489, and incorporated herein by reference.

10.6           Equipment Financing Agreement dated April 5, 1996 by and between
               the Company and International Gaming Technology, filed as Exhibit
               10.10 to the Company's Registration Statement, No. 333-06489, and
               incorporated herein by reference.

10.7           Equipment Financing Agreement dated May 5, 1996 by and between
               the Company and International Gaming Technology, filed as Exhibit
               10.10 to the Company's Registration Statement, No. 333-06489, and
               incorporated herein by reference.

10.11          Equipment Financing Agreement dated September 15, 1997 by and
               between the Company and PDS Financial Corporation, filed as
               Exhibit 10.15 to the Company's Report on Form 10-K for the period
               ended December 31, 1997.

10.12          Equipment Financing Agreement dated October 27, 1997 by and
               between the Company and PDS Financial Corporation, filed as
               Exhibit 10.16 to the Company's Report on Form 10-K for the period
               ended December 31, 1997.

10.13*         Employment Letter Agreement effective as of January 1, 1999 by
               and between the Company and Michael E. Kelly, filed as Exhibit
               10.17 to the Company's Registration Statement, No. 333-06489, and
               incorporated herein by reference.

10.14*         Employment Letter Agreement effective as of March 1, 1999 by and
               between the Company and David M. Wolf, filed as Exhibit 10.18 to
               the Company's Registration Statement, No. 333-06489, and
               incorporated herein by reference.

10.15          Loan and Security Agreement, dated as of August 2, 1999, by and
               between The Majestic Star Casino, LLC and Foothill Capital
               Corporation, filed as Exhibit 10.1 to the Company's Quarterly
               Report on Form 10-Q for the quarter ended September 30, 1999, and
               incorporated herein by reference.

10.16          Management Agreement, dated as of June 19, 1999, between Barden
               Development, Inc. and the Company, filed as Exhibit 10.16 to the
               Company's Annual Report on Form 10-K for the period ended
               December 31, 1999, and incorporated herein by reference.

21             Subsidiaries of the Registrant.

                                      F-2
<PAGE>

*  Denotes a management compensation arrangement.

(b)  Reports on Form 8-K

     The Company filed a Form 8-K on December 6, 2000.

(d)  Financial Statements of Buffington Harbor Riverboats, L.L.C.:

     F-26    Balance Sheets at December 31, 2000 and 1999
     F-27    Statements of Operations for the years ended December 31, 2000,
             1999 and 1998
     F-28    Statements of Members' Capital for the years ended December 31,
             2000, 1999 and 1998
     F-29    Statements of Cash Flows for the years ended December 31, 2000,
             1999 and 1998
     F-30    Notes to the Financial Statements

                                      F-3
<PAGE>

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Members of
The Majestic Star Casino, LLC:


In our opinion, the accompanying consolidated financial statements listed in the
index appearing under Item 14(a)1 and Item 14(a)2 on page 31 present fairly, in
all material respects, the financial position of The Majestic Star Casino, LLC
(the "Company") at December 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States of America. 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 of these statements in accordance with auditing standards generally
accepted in the United States which 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, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

Chicago, Illinois
March 21, 2001

                                      F-4
<PAGE>

                         THE MAJESTIC STAR CASINO, LLC
                          CONSOLIDATED BALANCE SHEETS
                       AS OF DECEMBER 31, 2000 and 1999

<TABLE>
<CAPTION>
                                                                        2000                  1999
-------------------------------------------------------------------------------------------------------
<S>                                                                 <C>                   <C>
ASSETS
Current Assets:
  Cash and cash equivalents.....................................    $ 16,119,512         $  20,145,044
  Accounts receivable, less allowance for doubtful accounts
     of  $120,000 and $36,548, respectively.....................       2,059,577             1,995,904
  Inventories...................................................          53,479                67,049
  Prepaid expenses..............................................         636,337             1,041,748
  Note due from affiliate.......................................       2,000,000                    --
  Restricted Cash...............................................       2,000,000             7,357,874
                                                                   -------------         -------------
     Total current assets.......................................      22,868,905            30,607,619
                                                                   -------------         -------------

Property, equipment, and vessel improvements, net...............      49,158,571            53,550,817

Other Assets:
  Deferred financing costs, less accumulated amortization
     of $1,269,380 and  $419,823, respectively..................       5,840,448             5,205,917
  Deferred costs, less accumulated amortization
     of $5,099,462 and $3,994,262, respectively.................         552,553             1,657,767
     Investment in Buffington Harbor Riverboats, L.L.C..........      43,924,033            38,146,213
  Other assets and deposits.....................................       4,252,799             3,981,710
                                                                   -------------         -------------
        Total other assets......................................      54,569,833            48,991,607
                                                                   -------------         -------------

        Total Assets............................................   $ 126,597,309         $ 133,150,043
                                                                   =============         =============

LIABILITIES AND MEMBERS'  EQUITY
Current Liabilities:
  Current maturities of long-term debt..........................   $   8,811,719         $   8,208,002
  Accounts payable..............................................         789,293               859,087
  Other accrued liabilities:
  Payroll and related...........................................       1,108,066               936,608
  Interest......................................................       7,107,058             7,903,260
  Other accrued liabilities.....................................       3,597,924             3,227,147
  Due to Buffington Harbor Riverboats, L.L.C....................         380,736               176,861
                                                                   -------------         -------------
Total current liabilities.......................................      21,794,796            21,310,965

Long-term debt, net of current maturities.......................     128,233,486           128,922,062
Commitments and contingencies...................................              --                    --

        Total Liabilities.......................................     150,028,282           150,233,027
                                                                   -------------         -------------

Members' Equity:
  Members'  contributions.......................................      24,000,000            24,000,000
  Accumulated deficit...........................................     (47,430,973)          (41,082,984)
                                                                   -------------         -------------
        Total members' equity...................................     (23,430,973)          (17,082,984)
                                                                   --------------        -------------

        Total Liabilities and Members' Equity...................   $ 126,597,309         $ 133,150,043
                                                                   =============         =============
</TABLE>

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

                                      F-5
<PAGE>

                         THE MAJESTIC STAR CASINO, LLC
                       CONSOLIDATED STATEMENTS OF INCOME


FOR THE YEARS ENDED DECEMBER 31, 2000, DECEMBER 31, 1999, AND DECEMBER 31, 1998


<TABLE>
<CAPTION>
                                                 For the Year Ended     For the Year Ended      For the Year Ended
                                                 December 31, 2000      December 31, 1999       December 31, 1998
------------------------------------------------------------------------------------------------------------------
<S>                                              <C>                    <C>                     <C>
Revenues:
 Casino..........................................    $115,455,271          $ 117,267,702           $ 111,480,624
 Food and beverage...............................       1,925,023              1,948,927               1,643,470
 Other...........................................       1,070,965                960,431               1,476,549
                                                     ------------          -------------           -------------

   Gross Revenues................................     118,451,259            120,177,060             114,600,643
                                                     ------------          -------------           -------------

   less promotional allowances...................        (410,687)              (330,486)               (337,410)

   Net Revenues..................................     118,040,572            119,846,574             114,263,233
                                                     ------------          -------------           -------------

Costs and Expenses:
 Casino..........................................      25,344,109             20,849,684              18,853,387
 Gaming and admission taxes......................      32,350,368             32,899,551              32,722,100
 Food and beverage...............................       2,447,125              2,391,531               2,390,282
 Advertising and promotion.......................       8,417,641              8,035,228              10,155,661
 General and administrative......................      25,799,848             24,737,833              24,222,202
 Economic incentive - City of Gary...............       3,230,679              3,626,056               3,455,705
 Depreciation and amortization...................       9,113,681              8,375,223               7,820,276
 Loss on disposition of assets...................         416,904                     --                 958,425
                                                     ------------          -------------           -------------

   Total costs and expenses......................     107,120,355            100,915,106             100,578,038
                                                     ------------          -------------           -------------

   Operating income..............................      10,920,217             18,931,468              13,685,195
                                                     ------------          -------------           -------------

Other Income (Expense):
 Loss on investment in
 Buffington Harbor Riverboats, L.L.C.............      (2,058,669)            (2,848,004)             (3,167,459)

 Interest income.................................         893,453              1,058,213                 860,240
 Interest expense................................     (14,998,377)           (15,496,091)            (15,325,869)
 Interest expense to affiliate...................              --               (167,455)               (525,430)
 Other non-operating expense.....................        (124,503)                    --                      --
                                                     ------------          -------------           -------------
   Total other income (expense)..................     (16,288,096)           (17,453,337)            (18,158,518)
                                                     -------------         -------------           -------------

   Income (loss) before extraordinary item.......    $ (5,367,879)         $   1,478,131           $  (4,473,323)

Extraordinary Item:
 Loss on bond redemption.........................        (382,500)           (15,238,156)                     --
                                                     ------------          -------------           -------------

   Net income (loss).............................    $ (5,750,379)         $ (13,760,025)          $  (4,473,323)
                                                     ============          =============           =============
</TABLE>

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

                                      F-6
<PAGE>

                         The Majestic Star Casino, LLC
             Consolidated Statements of Changes in Members' Equity

For the Years Ended December 31, 2000, December 31, 1999, and December 31, 1998
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                           Retained
                                                           Earnings            Total
                                       Capital           (Accumulated         Members'
                                    Contributions          Deficit)           Equity
                                    -------------        ------------      ------------
<S>                                 <C>                  <C>               <C>
Balance, December 31, 1997           $ 24,000,000        $ (22,524,501)    $   1,475,499
Net loss                                       --           (4,473,323)       (4,473,323)
                                     ------------        --------------    -------------

Balance, December 31, 1998             24,000,000          (26,997,824)       (2,997,824)
Net loss                                       --          (13,760,025)      (13,760,025)
Cash distribution to members                   --             (325,135)         (325,135)
                                     ------------        -------------     -------------

Balance, December 31, 1999             24,000,000          (41,082,984)      (17,082,984)
Net loss                                                    (5,750,379)       (5,750,379)
Cash distribution to members                                  (597,610)         (597,610)
                                     ------------        -------------     -------------

Balance, December 31, 2000           $ 24,000,000        $ (47,430,973)    $ (23,430,973)
                                     ============        =============     =============
</TABLE>

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

                                      F-7
<PAGE>

                         The Majestic Star Casino, LLC
                     Consolidated Statements of Cash Flows

FOR THE YEARS ENDED DECEMBER 31, 2000, DECEMBER 31, 1999, AND DECEMBER 31, 1998

<TABLE>
<CAPTION>
                                                                     For the Year Ended    For the Year Ended    For the Year Ended
                                                                     December 31, 2000     December 31, 1999     December 31, 2000
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>                   <C>                  <C>
Cash Flows From Operating Activities
Net loss...........................................................    $  (5,750,37)         $ (13,760,025)        $  (4,473,323)
Adjustment to reconcile net loss to net cash provided by operating
  activities
  Depreciation.....................................................       6,835,778              6,322,363             5,949,639
  Amortization.....................................................       2,277,903              2,052,860             1,870,637
  Loss on investment in Buffington Harbor Riverboats, L.L.C........       2,058,669              2,848,004             3,167,459
  Loss on bond redemption..........................................         382,500             15,238,156                    --
  Loss on disposal of assets.......................................         416,904                     --               958,425
  (Increase) decrease in accounts receivable, net..................         (65,416)            (1,145,818)               29,801
  Increase in inventories..........................................          13,570                (25,101)               (8,231)
  (Increase) decrease in prepaid expenses..........................         405,411                (57,236)               11,375
  (Increase) decrease in other assets..............................      (1,738,980)            (3,224,105)               36,683
  Increase (decrease) in accounts payable..........................         (69,794)               431,017            (1,091,165)
  Increase (decrease) in accrued payroll and other expenses........         171,458               (137,193)             (379,988)
  Increase (decrease) in accrued interest..........................        (796,202)             3,686,838             1,139,910
  Increase (decrease) in other accrued liabilities.................         605,290                (77,899)             (249,589)
                                                                       ------------          -------------         -------------
    Net cash provided by operating activities......................       4,746,712             12,151,861             6,961,633
                                                                       ------------          -------------         -------------

Cash Flows From Investing Activities
  Acquisition of property, equipment and vessel improvements.......      (3,039,635)            (3,919,960)           (2,099,921)
  Sale of slot equipment...........................................         179,200                     --               427,050
  Sale of telephone equipment......................................              --                     --                16,000
  Decrease in Chartered Vessel deposit.............................              --                     --               609,274
  Increase in deposits.............................................         (98,404)               (15,000)           (3,600,000)
  Investment in Buffington Harbor Riverboats, L.L.C................      (7,836,489)              (245,330)             (374,363)
  Cash paid for other investing activities.........................                               (100,000)                   --
  (Increase) decrease in restricted cash...........................      (2,000,000)                    --            11,904,716
  Purchase of 49% interest in Gary New Century, LLC................      (9,000,000)                    --                    --
  Sale of 49% interest in Gary New Century, LLC....................       9,000,000
                                                                       ------------          -------------         -------------

    Net cash (used) provided by investing activities...............     (12,795,328)            (4,280,290)            6,882,756
                                                                       ------------          -------------         -------------
Cash Flows From Financing Activities
  Redemption of 12-3/4% Senior Secured Notes.......................      (6,382,500)          (116,005,298)                   --
  Proceeds from issuance of 10-7/8% Senior Secured Notes...........              --            127,738,000                    --
  (Increase) decrease in restricted cash...........................       7,357,874             (7,357,874)                   --
  Payment of Senior Secured Notes issuance costs...................              --             (4,241,526)                   --
  Distribution to Barden Development, Inc..........................        (597,610)              (325,135)                   --
  Increase in short-term debt......................................              --              6,000,000                    --
  Increase in long-term debt.......................................              --                 75,226                    --
  Line of credit, net..............................................       7,800,000                     --                    --
  Cash paid to reduce short-term debt..............................              --                     --              (100,696)
  Cash paid to reduce long-term debt...............................      (2,154,680)            (2,145,966)           (1,954,836)
  Reduction of notes payable.......................................              --                     --              (427,050)
  Payment of loan to member........................................                             (8,759,355)           (2,000,000)
  Cash paid for financing charges..................................              --                     --              (150,000)
  Issuance of loans to Barden Development, Inc.....................      (6,000,000)                    --                    --
  Cash received for loans to Barden Development, Inc...............       4,000,000                     --                    --
                                                                       ------------          -------------         -------------
    Net cash (used) provided by financing activities...............       4,023,084             (5,021,928)           (4,632,582)
                                                                       ------------          -------------         -------------
Net increase (decrease) in cash and cash equivalents...............      (4,025,532)             2,849,643             9,211,807
Cash and cash equivalents, beginning of period.....................      20,145,044             17,295,401             8,083,594
                                                                       ------------          -------------         -------------
Cash and cash equivalents, end of period...........................    $ 16,119,512          $  20,145,044         $  17,295,401
                                                                       ============          =============         =============

Interest paid:
  Principal Member.................................................    $         --          $     266,508         $     525,429
  Equipment Debt...................................................    $    237,513          $     487,926         $     747,060
  Senior Secured Notes - Fixed Interest, 12.75%....................    $    382,500          $   8,233,313         $  13,387,500
  Senior Secured Notes - Contingent Interest, 12.75%...............    $    250,545          $   3,018,090         $          --
  Senior Secured Notes - Fixed Interest, 10.875%...................    $ 14,648,021          $          --         $          --
  Line of credit...................................................    $    276,000          $          --         $          --
</TABLE>

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

                                      F-8
<PAGE>

                         THE MAJESTIC STAR CASINO, LLC
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     FOR THE YEARS ENDED DECEMBER 31, 2000, DECEMBER 31, 1999, AND DECEMBER 31,
     1998

     1.   Basis of Presentation:

          The Majestic Star Casino, LLC (the "Company") was formed on December
     8, 1993, as an Indiana limited liability company ("LLC"), to provide gaming
     and related entertainment to the public. The Company commenced gaming
     operations in the City of Gary (the "City") at Buffington Harbor, located
     in Lake County, in the State of Indiana on June 7, 1996. Majestic Investor,
     LLC was formed in September 2000 as an "unrestricted subsidiary" of the
     Company under the Indenture relating to the Company's 10-7/8% Senior
     Secured Notes. Majestic Investor, LLC was initially formed to satisfy the
     Company's off-site development obligations under the Development Agreement
     with the City of Gary and currently is a party to a Purchase Agreement to
     acquire certain assets of Fitzgerald's Gaming Corporation. The accompanying
     consolidated financial statements include the accounts of The Majestic Star
     Casino, LLC and its wholly-owned subsidiary, Majestic Investor, LLC.
     Intercompany transactions are eliminated. Investments in affiliates in
     which the Company has the ability to exercise significant influence, but
     not control, are accounted for by the equity method.

     2.   Summary of Significant Accounting Policies:

     Cash and Cash Equivalents

          The Company considers cash equivalents to include short-term
     investments with original maturities of ninety days or less. At December
     31, 2000 and 1999, the Company had bank deposits in excess of federally
     insured limits by approximately $11,618,000 and $12,750,000, respectively.

     Inventories

          Inventories, which consist of food, beverage, and promotional items
     are recorded at the lower of cost or market, cost being determined
     principally on a first in, first out basis. The estimated cost of normal
     operating quantities (base stock) of uniforms has been recorded as an asset
     and is not being depreciated. Costs of base stock replacements are expensed
     as incurred. Other assets in the accompanying balance sheets include
     $539,392 and $366,710, respectively of base stock inventories at December
     31, 2000 and 1999.

     Property and Equipment

          Property and equipment are stated at cost. Depreciation and
     amortization are computed utilizing the straight line method over the
     estimated useful lives of the assets. Costs of major improvements are
     capitalized; costs of normal repairs and maintenance are charged to expense
     as incurred. Gains or losses on disposal are recognized when incurred.

          On October 27, 1997 the Chartered Vessel was replaced with the
     Permanent Vessel. The Company wrote-off approximately $755,000 of assets
     previously utilized on the Chartered Vessel in 1998. The Company also wrote
     off approximately $596,000 and $204,000, respectively for slot machines
     disposed of in 2000 and 1998.

                                      F-9
<PAGE>

                         THE MAJESTIC STAR CASINO, LLC

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

      2.  Summary of Significant Accounting Policies  (Continued)

      Capitalized Interest

          The Company capitalizes interest costs associated with debt incurred
      in connection with major construction projects. When no debt is
      specifically identified as being incurred in connection with such
      construction projects, the Company capitalizes interest on amounts
      expended on the project at the Company's average cost of borrowed money.

      Organizational Costs

          Costs incurred in connection with the formation of the limited
      liability company have been capitalized and were initially being amortized
      over a period of five years. The Company, in accordance with the Statement
      of Position 98-5, Reporting on the Costs of Start-Up Activities, wrote off
      the remaining balance of organization costs during the fourth quarter of
      1998.

      Deferred Financing Costs

          Deferred financing costs represent agent's commission, closing costs
      and professional fees incurred in connection with the issuance of the
      10-7/8% Senior Secured Notes and the $20.0 million line of credit. Such
      costs are being amortized over the seven year term of the notes and over
      the four year term of the line of credit, respectively.

      Deferred Costs and Preopening Costs

          Development obligation payments to the City and licensing costs
      represent direct costs associated with the development of the riverboat
      casino, and were deferred until operations commenced on June 7, 1996.
      These costs are currently being amortized over five years, the life of the
      gaming license.

      Investment in Buffington Harbor Riverboats, L.L.C.

          The Company accounts for its 50 percent interest in Buffington Harbor
      Riverboats, L.L.C. ("BHR") under the equity method, whereby the initial
      investments are recorded at cost and then adjusted for the Company's share
      of BHR's net income or loss.

                                     F-10
<PAGE>

                         THE MAJESTIC STAR CASINO, LLC

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

      2.  Summary of Significant Accounting Policies   (Continued)

      Restricted Cash

          Cash from Majestic Investor, LLC of approximately $2,000,000 at
      December 31, 2000 represents the amount required under the Escrow
      Agreement in connection with the Purchase and Sale Agreement of
      Fitzgeralds Gaming Corporation. Cash and investments of approximately
      $7,358,000 at December 31, 1999 represent the amount required to effect a
      covenant defeasance of the $6.0 million principal amount of 12-3/4% Senior
      Secured Notes. The funds were invested primarily in securities of the U.
      S. Government and its agencies, with original maturities less than 180
      days and were held in collateral accounts pursuant to disbursement
      agreements of the 12-3/4% Senior Secured Notes. These amounts were
      released from restriction during 2000 as the remaining 12-3/4% Senior
      Secured Notes were redeemed.

      Casino Revenue

          Casino revenue is the net win from gaming activities, which is the
      difference between gaming wins and losses.

      Promotional Allowances

          Operating revenues include the retail value of food and other
      services, which were provided to customers without charge. The
      corresponding charges have been deducted from revenue in the accompanying
      consolidated statements of income as promotional allowances in the
      determination of net operating revenues. The estimated costs of providing
      the complimentary services are charged to the casino department and are as
      follows:

                               2000                 1999             1998

              Food          $  243,108          $  223,410       $ 292,904
              Retail        $  167,579          $  107,076       $  44,506

      Federal Income Taxes

          The Company has elected status as a partnership under the Internal
      Revenue Code. Under this election, income of the Company is taxed directly
      to the member and, accordingly, there is no provision for federal income
      taxes.

                                     F-11
<PAGE>

                         THE MAJESTIC STAR CASINO, LLC

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


      2.  Summary of Significant Accounting Policies  (Continued)

      Long-Lived Assets

          The Company, in 1995, adopted the provisions of Statement of Financial
      Accounting Standard No. 121, "Accounting for the Impairment of Long-Lived
      Assets" ("SFAS No. 121"). SFAS No. 121 requires, among other things, that
      an entity review its long-lived assets and certain related intangibles for
      impairment whenever changes in circumstances indicate that the carrying
      amount of an asset may not be fully recoverable. Impairment of long-lived
      assets exists, if, at a minimum the future expected cash flows
      (undiscounted and without interest charges) from an entity's operation are
      less than the carrying value of these assets. As a result of its review,
      the Company does not believe that any impairment exists in the
      recoverability of its long-lived assets.

      Fair Value of Financial Instruments

          The Company believes, based upon current information, that the
      carrying value of the Company's cash and cash equivalents, restricted
      cash, accounts receivable and accounts payable approximates fair value
      because of the short term maturity of those instruments. The Company
      estimates the fair value of its long-term debt and notes payable
      approximates their carrying value based on quotations received from
      investment bankers or because interest rates on the debt approximate
      market rates.

      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 at
      the date of the financial statements and the reported amounts of revenues
      and expenses during the period. Actual results could differ from those
      estimates.

      Prospective Accounting Pronouncements

          In June 1998 the Financial Accounting Standard Board ("FASB") issued
      Statement of Financial Accounting Standards No. 133, "Accounting for
      Derivative Instruments and Hedging Activities" ("FAS 133"). FAS 133, as
      amended, is effective for fiscal years beginning after June 15, 2000
      (Fiscal 2001 for the Company). FAS 133 requires that all derivative
      instruments be recorded on the balance sheet at their fair value. Changes
      in the fair value of derivatives are recorded in current period earnings
      or other comprehensive income, depending on whether a derivative is
      designated as part of a hedge transaction and, if it is, the type of hedge
      transaction. The ineffective portion of all hedges will be recognized in
      current period earnings. The Company does not believe that FAS 133 will
      have a significant effect on the Company's results of operations or
      financial position.

          In October 2000, the Financial Accounting Standards Board issued SFAS
      No. 140. "Accounting for Transfers and Servicing of Financial Assets and
      Extinguishment of Liabilities, a

                                     F-12
<PAGE>

                         THE MAJESTIC STAR CASINO, LLC

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

      2.  Summary of Significant Accounting Policies  (Continued)

      replacement of FAS 125." This pronouncement is effective for all transfers
      and servicing of financial assets or extinguishment of liabilities
      occurring after March 31, 2001. However, increased disclosure requirements
      for collateral, securitized financial assets, servicing assets and
      liabilities and retained interests in securitized financial assets are
      effective for periods ending after December 15, 2000. The Company expects
      to adopt SFAS No. 140 during fiscal 2001. The Company does not expect
      adoption to have a material effect on the Company's financial statements.

      3.  Certificate of Suitability

          On December 9, 1994, the Indiana Gaming Commission (the "Commission")
      awarded the Company one of two certificates (the "Certificate") for a
      riverboat owner's license for a riverboat casino to be docked in the City.
      Having complied with certain statutory and regulatory requirements and
      other conditions of the Commission, the Company received a five year
      riverboat owner's license on June 3, 1996. During 2001 the Company will be
      required to renew its license granted on June 3, 1996. There can be no
      assurance that the Company's license will be renewed.

          The second certificate was issued to Trump Indiana, Inc. ("Trump").
      The Company and Trump jointly developed and operate a docking location
      from which the entities are conducting their respective riverboat gaming
      operations in the City.

      4.  City of Gary, Indiana Development Obligation

          On September 7, 1995, the Company and the City entered into an
      agreement for the purpose of summarizing procedures regarding the
      acquisition of a certain parcel of land in accordance with the
      Certificate. The Company paid the City $250,000 under the terms of this
      agreement.

          On September 29, 1995, the Company and Trump entered into an agreement
      with the City for which the Company paid the City $5,000,000. As of
      December 31, 1996, $5,250,000 of deferred costs represents the Company's
      development obligation to the City, which is being amortized over 5 years,
      the life of the gaming license.

          As of March 26, 1996, the City and the Company entered into a
      development agreement which supersedes the previous agreement between the
      City and the Company. The development agreement ("Development Agreement")
      requires the Company, among other things, (1) to invest $116 million in
      various on-site improvements over the succeeding five years, (2) pay the
      City an economic incentive equal to 3% of the Company's adjusted gross
      receipts, as defined by the Riverboat Gambling Act and (3) pay a default
      payment in the amount of damages for failure to complete certain on-site
      developments, which amount is capped at $12 million.

          The Company fulfilled all commitments with respect to the development
      agreement as of September 2000, by purchasing and equipping the Permanent
      Vessel, constructing substantial harbor improvements and the BHR
      facilities, and by investing in an affiliated entity that purchased land
      for future development adjacent to the BHR facility. Also the Company is
      current

                                     F-13
<PAGE>

                         THE MAJESTIC STAR CASINO, LLC

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


      Summary of Significant Accounting Policies  (Continued)

      on its ongoing economic incentive payments.


      5.  Property and Equipment

          Property and equipment at December 31, 2000 and 1999 consist of the
          following:

          Estimated

                                                                         Service
                                                                           Life
                                                  2000           1999   ( Years)

      Vessel                                 $ 44,444,718  $  44,290,699   30
      Buildings and improvements                  195,253        165,082    5
      Furniture, fixtures and equipment        26,443,891     25,523,653    5
                                             ------------  -------------
         Total Property and equipment          71,083,862     69,979,434

      Less accumulated depreciation
      and amortization                        (21,925,291)   (16,428,617)
                                             ------------  -------------
         Total Property and equipment, net   $ 49,158,571  $  53,550,817
                                             ============  =============



          Substantially all property and equipment are pledged as collateral on
          long-term debt. See Note 8.

                                     F-14
<PAGE>

                         THE MAJESTIC STAR CASINO, LLC

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


      6.  Investment in Buffington Harbor Riverboats, L.L.C.

          On October 31, 1995, the Company and Trump entered into the First
      Amended and Restated Operating Agreement of BHR for the purpose of
      acquiring and developing certain facilities for the gaming operations in
      the City ("BHR Property"). BHR is responsible for the management,
      development and operation of the BHR Property. The Company and Trump have
      each entered into an agreement with BHR (the "Berthing Agreement") to use
      BHR Property for their respective gaming operations and have committed to
      pay cash operating losses of BHR as additional berthing fees. The Company
      and BHR share equally in the operating expenses relating to the BHR
      Property, except for costs associated with food and beverage, and valet
      operations, which are allocated on a percentage of use by the casino
      customers of the Company and the Joint Venture Partner.

      The following represents selected financial information of BHR:

                                           December 31, 2000   December 31,1999
                                           -----------------   ----------------
         BALANCE SHEET

      Cash and cash equivalents              $      286,921       $     92,804
      Current assets                             15,843,359            915,211
      Property, plant and equipment, net         75,100,370         79,672,916
      Other assets                                  116,955            272,732

      Total assets                               91,060,684         80,860,859

      Current liabilities                        10,311,785          2,425,588

      Total liabilities                          10,311,785          4,568,433

      Member's equity
      The Majestic Star Casino, LLC              43,924,033         38,146,213

      Total members' equity                      80,748,899         76,292,426

         STATEMENTS OF INCOME

      Gross revenue                              17,814,012         18,293,939

      Operating income (loss)                    (4,350,334)        (5,701,264)

      Net income (loss)                          (4,117,338)        (5,696,010)

                                     F-15
<PAGE>

                         THE MAJESTIC STAR CASINO, LLC

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


      6.  Investment in Buffington Harbor Riverboats, L.L.C. (Continued)

          Promotional allowances provided to the Company's gaming patrons at BHR
      facilities totaled approximately $435,000 in 2000 and $758,000 in 1999,
      and are characterized in the Company's financial statements as an expense
      of the casino. BHR invoices the Company monthly for these promotional
      allowances at cost which approximates the retail value of the promotional
      allowances.

          At December 31, 2000, 1999, and 1998, the Company's consolidated
      income statements reflect approximately $8,973,000, $9,300,000, and
      $8,616,000, respectively, in vessel berthing fees and promotional
      allowances of which $8,519,000, $9,123,000, and $8,211,000 was paid in
      2000, 1999, and 1998, respectively.

      7.  Charter Agreement

      During the year ended December 31, 1998, the Company wrote-off assets
      previously utilized on the vessel leased by the Company prior to the
      Permanent Vessel that had a net book value of approximately $755,000. As
      of March 1, 1998, all obligations of the Company and New Yorker
      Acquisition Corporation, the owner of the Company's previously leased
      gaming vessel have been fully satisfied and the parties have no further
      obligations under the original charter agreement. The total amount of
      expenses associated with the lease and subsequent termination of the
      charter vessel lease agreement included in the Company's Statements of
      Income was approximately $755,000 for 1998.

                                     F-16
<PAGE>

                         THE MAJESTIC STAR CASINO, LLC

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


8.  Long - Term Debt

Long-term debt at December 31,
  2000 and 1999, is as follows:                       2000            1999

$130,000,000 million senior
secured notes payable with a
discount of $1,766,514 in 2000
and $2,089,657 in 1999;
collateralized by a first
priority lien on substantially
all of the assets of the Company,
due in semi-annual installments
of interest at 10 7/8% on July 1
and January 1; with a final
payment of principal and
interest due on July 1, 2006.                       $128,233,486   $127,910,343

$20.0 million 4 year credit facility
established on August 2, 1999,
expiring on August 2, 2003;
collateralized by substantially
all current and future assets, other
than excluded assets; interest rate
at the borrowers choice of LIBOR
plus 3.75% or 1.5% points above the
base rate which approximates the
prime rate, with a minimum
interest rate of 8.5%.                                 7,800,000             --

Senior secured notes payable;
collateralized by a first priority
lien on substantially all of the
assets of the Company, due in
semi-annual installments of
interest at 12.75% together with
contingent interest payable on
May 15 and November 15; with a
final payment of principal and
interest due on May 15, 2003.                                 --      6,000,000

Equipment financing payable
including related use taxes;
collateralized by gaming equipment;
due in aggregate monthly
installments (principal and
interest) of approximately
$197,000 and $220,000, in 2000
and 1999, respectively with
varying maturity dates through
September 2001. (1)                                    1,011,719      3,219,721
                                                    ------------   ------------

Total long-term debt                                 137,045,205    137,130,064

Less current portion (1)                              (8,811,719)    (8,208,002)
                                                    ------------   ------------

Long-term portion                                   $128,233,486   $128,922,062
                                                    ============   ============

                                     F-17
<PAGE>

                         THE MAJESTIC STAR CASINO, LLC

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8.  Long - Term Debt (Continued)


    The scheduled maturities of long-term debt are as follows:

                       Year Ending December 31,                Maturities
                             2001                           $   8,811,719
                             2002                                      --
                             2003                                      --
                             2004                                      --
                             2005                                      --
                       Thereafter                             128,233,486
                                                           --------------
                                            Total          $  137,045,205
                                                           ==============


(1) At December 31, 2000, the current portion of equipment debt includes accrued
    use taxes payable of approximately $34,005. At December 31, 1999 deferred
    long term and current portion of equipment debt includes accrued use taxes
    of $34,005 and approximately $53,323, respectively.

Senior Secured Notes

     On June 18, 1999, the Company issued $130.0 million of 10-7/8% Senior
Secured Notes due 2006. In October 1999, the Company successfully completed an
exchange of its privately placed $130.0 million 10-7/8% Senior Secured Notes
Series A for $130.0 million 10-7/8% Senior Secured Notes Series B that are
registered with the Securities and Exchange Commission. The net proceeds from
the offering were utilized to redeem $99.0 million principal amount of the
Company's 12-3/4% Senior Secured Notes due 2003 with Contingent Interest. During
June 1999, approximately $4.2 million of the net proceeds were utilized for fees
to fund the repurchase and approximately $7.5 million of the net proceeds were
classified as restricted cash to effect a covenant defeasance of the $6.0
million of remaining 12-3/4% Senior Secured Notes due 2003 with Contingent
Interest. During May 2000, the Company redeemed this remaining $6.0 million of
12-3/4% Senior Secured Notes. Holders of the outstanding 10-7/8% Senior Secured
Notes have the right to require that the Company repurchase the notes at a
premium under certain conditions, including a change in control of the Company.

     The Senior Secured Notes bear interest at a fixed rate of 10-7/8% per annum
payable January 1 and July 1 each year, commencing January 1, 2000.
Substantially all of the Company's current and future assets other than certain
excluded assets are pledged as collateral. The notes rank senior in right of
payment to any of the Company's subordinated indebtedness and equally with any
of the Company's senior indebtedness.

                                     F-18
<PAGE>

                         THE MAJESTIC STAR CASINO, LLC

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8.  Long - Term Debt (Continued)

     After July 1, 2003, the Company may, at its option, redeem all or some of
the notes at a premium that will decrease over time from 105.438% to 100% of
their face amount, plus interest. Prior to July 1, 2002, if the Company publicly
offers certain equity securities, it may, at its option, apply part of the net
proceeds from those transactions to redeem up to 35% of the principal amount of
the notes at 110.875% of their face amount, plus interest. If the Company goes
through a change of control, it must give holders of the notes the opportunity
to sell the Company their notes at 101% of their face amount, plus interest.

     The Indenture contains covenants, which among other things, restrict the
Company's ability to (i) make certain distributions and payments, (ii) incur
additional indebtedness, (iii) enter into transactions with affiliates, (iv)
sell assets or stock, and (v) merge, consolidate or transfer substantially all
of its assets.

Credit Facility

     On August 2, 1999, the Company established a $20.0 million credit facility,
which is also secured by substantially all current and future assets, other than
certain excluded assets. The lien on the collateral securing this credit
facility is structurally senior to the lien securing the 10-7/8% Senior Secured
Notes. During September 2000, $12.0 million was borrowed on this credit
facility, and at December 31, 2000, $4.2 million of these borrowings had been
repaid. These borrowings were made to partially fund the $9.0 million capital
contribution to Majestic Investor as well as a $7.5 million contribution to BHR.
As of December 31, 2000, $7.8 million of the credit facility is outstanding. As
of March 15, 2001, the outstanding balance on the credit facility has been
reduced to approximately $3.7 million.

     The terms of the $20.0 million line of credit is four years with an
interest rate at the Company's choice of LIBOR plus 3.75% or 1.5 percentage
points above the base rate. The base rate approximates the prime rate. The
minimum interest rate is 8.5%. The credit agreement includes covenants, which
among other things, (i) require operating income as defined in the credit
facility of at least $10.0 million for twelve consecutive months during the
credit period, and (ii) restrict the Company's ability to incur, assume, or
guarantee any indebtedness.

Equipment Financing

     At December 31, 2000 and 1999, approximately $978,000 and $3.1 million,
respectively, of equipment financing, excluding accrued use taxes of
approximately $34,000 and $87,000 was outstanding. At December 31, 2000,
$325,000 of this debt carries an

                                     F-19
<PAGE>

                         THE MAJESTIC STAR CASINO, LLC

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8.  Long - Term Debt (Continued)

interest rate of 11.5%, $469,000 carries an interest rate of 10.75%, and
$184,000 carries an interest rate of 10.93%. The debt is collateralized by
certain gaming equipment and the remaining balance will be repaid in varying
monthly principal and interest payments of approximately $197,000.

9.  Note to Member

     At December 31, 1998, approximately $8.8 million was owed to a member of
the Company. During the year ended December 31, 1999, the Company repaid the
remaining balance of the demand note.

10. Profit Sharing Plan

     The Company contributes to a defined contribution plan which provides for
contributions in accordance with the plan document. The plan is available to all
employees with at least one year of service. The Company contributes a matching
contribution up to a maximum of 3% of an employee's salary limited to a
specified dollar amount as stated in the plan document. The Company's
contributions to the plan amounted to $340,000, $303,000 and $272,000 during
2000, 1999 and 1998, respectively.

11. Commitments and Contingencies

Letter of Credit/Surety Bond

     In May 1996, the Company was required by the City of Gary, to maintain a
Surety Bond in the amount of $12.5 million to guarantee the remaining $10.0
million of its off-site development obligation and $2.5 million to satisfy state
and local regulatory obligations. The Surety Bond was secured by a $3.5 million
letter of credit issued by a bank, which was collateralized by $3.6 million in
cash. In September 2000, the Company met its development obligation,
concurrently the Surety Bond was reduced from $12.5 million to $2.5 million and
the bank released $1.0 million of the cash collateral. In March 2001, the
Company replaced its existing bond with a new $2.5 million unsecured Surety
Bond. In conjunction with the release of the original bond, the letter of credit
was canceled and the remaining $2.6 million of cash collateral was released to
the Company. The new bond is secured only by a personal guarantee of Don H.
Barden. If the Owner is required to make payments to the bonding company as a
result of the guaranty, the Company will be obligated to reimburse the Owner for
any such payments.

                                     F-20
<PAGE>

                         THE MAJESTIC STAR CASINO, LLC

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. Commitments and Contingencies (Continued)

Legal Proceedings

     On March 27, 1998, a complaint was filed in the Lake County Superior Court
in East Chicago, Indiana, against BHR, Trump (the "Joint Venture Partner"), and
the Company. The plaintiff, a former employee of the Company, claims to have
been assaulted in the BHR parking lot on June 25, 1997 and is requesting
compensatory and punitive damages totaling approximately $11.0 million. The suit
alleges that the Joint Venture Partner and the Company failed to provide
adequate security to prevent assaults. The Company intends to vigorously defend
against such suit. However, it is too early to determine the outcome of such
suit and the effect, if any, on the Company's financial position and results of
operations.

     On January 15, 1998, the Company filed a petition for "Correction of an
Error" and on January 20, 1998, filed an appeal to the March 1, 1997, county
property tax assessment of the Chartered Vessel. The Company believes it was not
given proper notice of the 1997 property tax assessment in accordance with the
general assessment provisions of the property tax law and the Company further
believes the assessment of approximately $1.2 million was excessive. The tax is
payable in semiannual installments due in May and November 1998. Payments
totaling approximately $560,000 in the aggregate have been paid based upon an
estimate provided to the Company by legal counsel. On March 15, 2001, the Lake
County Property Tax Assessment Board of Appeals granted the Company partial
relief, reducing the 1998 tax liability to approximately $690,000. The Company
believes the assessment is still excessive, and intends to file a further appeal
to the Indiana State Board of Tax Commissioners. It is too early to determine
the outcome of this matter and the effect, if any, on the Company's financial
position.

     On July 16, 1999, a complaint was filed in a Michigan state court in
Detroit, Michigan, against BHR, the Joint Venture Partner, and the Company. The
plaintiff, a patron, claims to have been over served alcohol by the Company and
then was injured as a result of a slip and

                                     F-21
<PAGE>

                         THE MAJESTIC STAR CASINO, LLC

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. Commitments and Contingencies (Continued)

fall on an escalator at BHR and is requesting compensatory and punitive damages
of $55.0 million. This claim was dismissed by the Michigan court on February 28,
2000. On May 12, 2000, the plaintiff refiled a similar claim in the U. S.
District Court in Hammond, Indiana and is now requesting compensatory and
punitive damages of $51.0 million. The Company intends to vigorously defend
against such suit. However, it is too early to determine the outcome of such
suit and the effect, if any, on the Company's financial position and results of
operations.

     On October 6, 1999, the Company was issued notices of proposed assessment
by the Indiana Department of Revenue for sales and use tax deficiencies, plus
interest, for the years ended December 31, 1996 and 1997. The alleged
deficiencies relate primarily to the riverboat vessel constructed in 1997. The
tax deficiency assessed for 1996 is approximately $300,000 including interest.
The tax deficiency assessed for 1997 is approximately $2.1 million including
interest. The Company believes that the sales and use tax assessment incorrectly
classifies the vessel as personal property when the property tax statute
authorizing gaming in Indiana classifies the vessel as real property. Legal
counsel, on behalf of the Company has filed a written protest and demand for a
hearing with the Indiana Department of Revenue. A hearing on this matter was
conducted before a hearing officer for the Indiana Department of Revenue on
September 19, 2000, and the Company is currently awaiting the letter of
findings. It is too early to determine the outcome of such a protest and the
effect, if any, on the Company's financial position.

     On March 2, 2000, the Company was issued notices of an audit finding by the
Indiana Department of Revenue that wagering taxes are not an allowable
deductible expense for calculating state income taxes. The Indiana Department of
Revenue requires that wagering taxes must be added back to net income to
determine the tax liability. The estimated tax deficiency for 1996 is
approximately $239,000 excluding interest and the estimated tax deficiency for
1998 is approximately $315,000 excluding interest. This same finding has been
protested by other Indiana casinos. The Company also intends to protest and
demand a hearing with the Indiana Department of Revenue. However, it is too
early to determine the outcome of such a protest and the effect, if any, on the
Company's financial position.

     From time to time, the Company may be involved in routine administrative
proceedings involving alleged violations of certain provisions of the Riverboat
Gambling Act. Management believes that the outcome of any such proceedings will
not, either individually or in the aggregate, have a material adverse effect on
the Company or its ability to retain and/or renew any license required under the
Riverboat Gambling Act for the Company's operations. No such proceedings are
pending at this time.

                                     F-22
<PAGE>

                         THE MAJESTIC STAR CASINO, LLC

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. Commitments and Contingencies (Continued)

Indiana Gaming Regulations

The ownership and operation of riverboat gaming operations in Indiana are
subject to strict state regulation under the Riverboat Gambling Act ("Act") and
the administrative rules promulgated thereunder. The Indiana Gaming Commission
("IGC") is empowered to administer, regulate and enforce the system of riverboat
gaming established under the Act and has jurisdiction and supervision over all
riverboat gaming operations in Indiana, as well as all persons on riverboats
where gaming operations are conducted. The IGC is empowered to regulate a wide
variety of gaming and nongaming related activities, including the licensing of
supplies to, and employees at, riverboat gaming operations and to approve the
form of entity qualifiers and intermediary and holding companies. Indiana is a
new jurisdiction and the emerging regulatory framework is not yet complete. The
IGC has adopted certain final rules and has published others in proposed or
draft form which are proceeding through the review and final adoption process.
The IGC has broad rulemaking power, and it is impossible to predict what effect,
if any, the amendment of existing rules or the finalization of currently new
rules might have on the operations.

12. Supplemental Consolidating Information

     The following consolidating financial schedules are presented as
supplemental information. The "Unrestricted Subsidiary" balances relate to
Majestic Investor, LLC, a wholly-owned subsidiary of The Majestic Star Casino,
LLC.

                                     F-23
<PAGE>

THE MAJESTIC STAR CASINO, LLC
CONSOLIDATING BALANCE SHEETS
AS OF DECEMBER 31, 2000

<TABLE>
<CAPTION>
                                                                          UNRESTRICTED    ELIMINATIONS/
                                                             PARENT        SUBSIDIARY      ADJUSTMENTS      CONSOLIDATED
<S>                                                       <C>            <C>              <C>               <C>
ASSETS
Current Assets:
  Cash and cash equivalents                               $ 12,550,681   $   3,568,831     $           -    $  16,119,512
  Accounts receivable (net)                                  2,041,077          18,500                          2,059,577
  Intercompany accounts                                        250,000        (250,000)                                 -
  Inventories                                                   53,479               -                             53,479
  Prepaid expenses                                             636,337               -                            636,337
  Note due from affiliate                                            -       2,000,000                          2,000,000
  Restricted Cash                                                    -       2,000,000                          2,000,000
                                                          ----------------------------------------------------------------
         Total current assets                               15,531,574       7,337,331                 -       22,868,905
                                                          ----------------------------------------------------------------

Property, equipment, and vessel improvements, net           49,158,571               -                 -       49,158,571

Other Assets:
  Deferred financing costs (net)                             4,374,588       1,465,860                          5,840,448
  Deferred costs (net)                                         552,553               -                            552,553
  Investment in Buffington Harbor Riverboats, L.L.C.        43,924,033               -                         43,924,033
  Investment in Majestor Investor                            8,803,191               -        (8,803,191)               -
  Other assets and deposits                                  4,252,799               -                          4,252,799
                                                          ----------------------------------------------------------------
         Total other assets                                 61,907,164       1,465,860        (8,803,191)      54,569,833

         Total Assets                                     $ 126,597,30   $   8,803,191     $  (8,803,191)   $ 126,597,309
                                                          ================================================================

LIABILITIES AND MEMBERS' EQUITY
Current Liabilities:
  Current maturities of long-term debt                    $  8,811,719   $           -     $           -    $   8,811,719
  Accounts payable                                             789,293               -                            789,293
  Other accrued liabilities:
  Payroll and related                                        1,108,066               -                          1,108,066
  Interest                                                   7,107,058               -                          7,107,058
  Other accrued liabilities                                  3,597,924               -                          3,597,924
  Due to Buffington Harbor Riverboats, L.L.C.                  380,736                                            380,736
                                                          ----------------------------------------------------------------
         Total current liabilities                          21,794,796               -                 -       21,794,796

Long-term debt, net of current maturities                  128,233,486               -                 -      128,233,486
                                                          ----------------------------------------------------------------
         Total long-term liabilities                       128,233,486               -                 -      128,233,486
                                                          ----------------------------------------------------------------
         Total Liabilities                                 150,028,282               -                 -      150,028,282
                                                          ----------------------------------------------------------------

Members' Equity:
  Members' contributions                                    24,000,000       9,000,500        (9,000,500)      24,000,000
  Accumulated income (deficit)                             (46,508,228)       (197,309)          197,309      (46,508,228)
  Members' distributions                                      (922,745)                                          (922,745)
                                                          ----------------------------------------------------------------
         Total members' equity                             (23,430,973)      8,803,191        (8,803,191)     (23,430,973)
                                                          ----------------------------------------------------------------
         Total Liabilities and Members' Equity            $ 126,597,30   $   8,803,191     $  (8,803,191)   $ 126,597,309
                                                          ================================================================
</TABLE>

                                     F-24
<PAGE>

THE MAJESTIC STAR CASINO, LLC
CONSOLIDATING STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 2000
<TABLE>
<CAPTION>
                                                                   UNRESTRICTED
                                                        PARENT      SUBSIDIARY        CONSOLIDATED
<S>                                            <C>                   <C>             <C>
Revenues:
     Casino                                    $      115,455,271    $        -      $  115,455,271
     Food and beverage                                  1,925,023                         1,925,023
     Other                                              1,070,965                         1,070,965
                                             ---------------------------------------------------------

           Gross Revenues                             118,451,259             -         118,451,259
                                             ---------------------------------------------------------
           less promotional allowances                   (410,687)            -            (410,687)

         Net Revenues                                 118,040,572             -         118,040,572
                                             ---------------------------------------------------------
Costs and Expenses:
     Casino                                           25,344,109                         25,344,109
     Gaming and admission taxes                       32,350,368                         32,350,368
   Food and beverage                                   2,447,125                          2,447,125
   Advertising and promotion                           8,417,641                          8,417,641
   General and administrative                         25,549,622         250,226         25,799,848
   Economic incentive - City of Gary                   3,230,679                          3,230,679
   Depreciation and amortization                       9,113,681                          9,113,681
   Loss on disposition of assets                         416,904                            416,904
                                             ---------------------------------------------------------
           Total costs and expenses                  106,870,129         250,226        107,120,355
                                             ---------------------------------------------------------
           Operating income (loss)                    11,170,443        (250,226)        10,920,217
                                             ---------------------------------------------------------
Other Income (Expenses):
   Loss on investment in                                                                          -
      Buffington Harbor Riverboats, L.L.C.            (2,058,669)                        (2,058,669)
   Interest income                                       840,536          52,917            893,453
   Interest expense                                  (14,998,377)                       (14,998,377)
   Other non-operating expense                          (124,503)                          (124,503)
                                             ---------------------------------------------------------
      Total other income (expense)                   (16,341,013)          52,97        (16,288,096)

      Income (loss) before extraordinary         $    (5,170,570)     $ (197,309)      $  (5,367,879)
           item (expense)

Extraordinary Item:
   Loss on bond redemption                            (382,500)                            (382,500)
                                             ---------------------------------------------------------
           Net income (loss)                     $  (5,553,070)       $ (197,309)      $ (5,750,379)
                                             =========================================================
</TABLE>

                                     F-25
<PAGE>

THE MAJESTIC STAR CASINO, LLC
CONSOLIDATING STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2000


<TABLE>
<CAPTION>
                                                                                     UNRESTRICTED
                                                                    PARENT            SUBSIDIARY         CONSOLIDATED
<S>                                                              <C>                 <C>                <C>
Cash Flows From Operating Activities
Net loss                                                         $  (5,553,070)      $   (197,309)      $   (5,750,379)
Adjustment to reconcile net loss to net cash provided
by operating activities
   Depreciation                                                      6,835,778                               6,835,778
   Amortization                                                      2,277,903                               2,277,903
   Loss on investment in Buffington Harbor Riverboats,               2,058,669                               2,058,669
   L.L.C.
   Loss on bond redemption                                             382,500                                 382,500
   Loss on disposal of assets                                          416,904                                 416,904
   (Increase) decrease in accounts receivable, net                     (46,916)           (18,500)             (65,416)
   Increase in inventories                                              13,570                                  13,570
   (Increase) decrease in prepaid expenses                             405,411                                 405,411
   (Increase) decrease in other assets                                (273,120)        (1,465,860)          (1,738,980)
   (Increase) decrease in accounts payable                             (69,794)                                (69,794)
   Increase (decrease) in accrued payroll and other expenses           171,458                                 171,458
   Increase (decrease) in accrued interest                            (796,202)                               (796,202)
   Increase (decrease) in other accrued liabilities                    355,290            250,000              605,290
                                                                 -----------------------------------------------------

     Net cash (used in) provided by operating activities             6,178,381         (1,431,669)           4,746,712
                                                                 -----------------------------------------------------

Cash Flows From Investing Activities
   Acquisition of property, equipment and vessel improvements       (3,039,635)                             (3,039,635)
   Sale of slot equipment                                              179,200                                 179,200
   Increase in deposits                                                (98,404)                                (98,404)
   Investment in Buffington Harbor Riverboats, L.L.C.               (7,836,489)                             (7,836,489)
   (Increase) decrease in restricted cash                                    -         (2,000,000)          (2,000,000)
   Contribution to Majestic Investor, LLC                           (9,000,500)         9,000,500
   Purchase of 49% interest in Gary New Century, LLC                         -         (9,000,000)          (9,000,000)
   Sale of 49% interest in Gary New Century, LLC                             -          9,000,000            9,000,000
                                                                 -----------------------------------------------------

     Net cash (used in) provided by investing activities            (19,795,828)        7,000,500          (12,795,328)
                                                                 -----------------------------------------------------

Cash Flows From Financing Activities
   Redemption of 12-3/4% Senior Secured Notes                       (6,382,500)                             (6,382,500)
   (Increase) decrease in restricted cash                            7,357,874                               7,357,874
   Distribution to Barden Development, Inc.                           (597,610)                               (597,610)
   Line of credit, net                                               7,800,000                               7,800,000
   Cash paid to reduce long-term debt                               (2,154,680)                             (2,154,680)
   Issuance of loans to Barden Development, Inc.                    (4,000,000)        (2,000,000)          (6,000,000)
   Cash received for loans to Barden Development, Inc.               4,000,000                               4,000,000
                                                                 -----------------------------------------------------

     Net cash (used in) provided by financing activities             6,023,084         (2,000,000)           4,023,084
                                                                 -----------------------------------------------------

Net increase (decrease) in cash and cash equivalents                (7,594,363)         3,568,831           (4,025,532)
Cash and cash equivalents, beginning of period                      20,145,044                  -           20,145,044
                                                                 -----------------------------------------------------
Cash and cash equivalents, end of period                         $  12,550,681       $  3,568,831       $   16,119,512
                                                                 =====================================================
</TABLE>

                                     F-26
<PAGE>

                                                                     SCHEDULE II

                         THE MAJESTIC STAR CASINO, LLC
                       VALUATION AND QUALIFYING ACCOUNTS
                FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999


<TABLE>
<CAPTION>
                                        Balance at       Charged                                  Balance at
                                         beginning      costs and                        Cash         end
Description                               of year        expenses      Recoveries     Deductions    of year
--------------------------------------------------------------------------------------------------------------
<S>                                     <C>             <C>            <C>            <C>         <C>
Allowance for doubtful accounts

Year ended December 31, 1998              $370,000       $374,310       $  28,487      $ 624,189     $148,608

Year ended December 31, 1999              $148,608       $ 75,504       $  64,591      $ 252,155     $ 36,548

Year ended December 31, 2000              $ 36,548       $140,182       $  35,270      $  92,000     $120,000
</TABLE>

                                     F-27
<PAGE>

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


To the Members of
Buffington Harbor Riverboats, L.L.C.:



We have audited the accompanying balance sheets of Buffington Harbor Riverboats,
L.L.C. (a Delaware limited liability company) as of December 31, 2000 and 1999,
and the related statements of operations, members' capital and cash flows for
the three years in the period ended December 31, 2000. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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 Buffington Harbor Riverboats,
L.L.C. as of December 31, 2000 and 1999, and the results of its operations and
its cash flows for the three years in the period ended December 31, 2000, in
conformity with accounting principles generally accepted in the United States.


                                                             ARTHUR ANDERSEN LLP



Roseland, New Jersey
January 25, 2001

                                     F-28
<PAGE>

                     BUFFINGTON HARBOR RIVERBOATS, L.L.C.
                     ------------------------------------

                                BALANCE SHEETS
                                --------------

                          DECEMBER 31, 2000 AND 1999
                          --------------------------

<TABLE>
<CAPTION>
                                                                                   2000             1999
--------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>               <C>
ASSETS
------

CURRENT ASSETS:
  Cash                                                                         $    286,921      $     92,804
  Trade receivables                                                                 206,757            60,183
  Due from members' (Note 2)                                                        549,947           376,765
  Inventory                                                                         228,519           255,481
  Prepaid expenses and other current assets                                         169,205           129,978
  Note and accrued interest receivable from affiliate (Note 4)                   14,402,010                --
                                                                               ------------      ------------
     Total current assets                                                        15,843,359           915,211

PROPERTY, PLANT AND EQUIPMENT, NET (Notes 2 and 3)                               75,100,370        79,672,916

OTHER ASSETS                                                                        116,955           272,732
                                                                               ------------      ------------
        Total  assets                                                          $ 91,060,684      $ 80,860,859
                                                                               ============      ============

LIABILITIES AND MEMBERS' CAPITAL
--------------------------------

CURRENT LIABILITIES:
  Accounts payable                                                             $  1,425,399      $    819,892
  Accrued expense (Note 5)                                                        1,787,219         1,605,696
  Member advance (Note 4)                                                         7,099,167                --
                                                                               ------------      ------------
        Total current liabilities                                                10,311,785         2,425,588

DEFERRED RENT (Note 4)                                                                   --         2,142,845

COMMITMENTS AND CONTINGENCIES (Note 4)

MEMBERS' CAPITAL                                                                 80,748,899        76,292,426
                                                                               ------------      ------------
        Total liabilities and member's capital                                 $ 91,060,684      $ 80,860,859
                                                                               ============      ============
</TABLE>

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

                                     F-29
<PAGE>

                     BUFFINGTON HARBOR RIVERBOATS, L.L.C.
                     ------------------------------------

                            STATEMENT OF OPERATIONS
                            -----------------------

             FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
             -----------------------------------------------------


                                       2000           1999            1998
------------------------------------------------------------------------------
REVENUES:

   Food and beverage              $  4,017,032    $  4,454,387    $  4,076,256
   Other (Note 2)                   13,796,980      13,839,552      14,571,430
                                  ------------    ------------    ------------
         Net revenues               17,814,012      18,293,939      18,647,686
                                  ------------    ------------    ------------

COST AND EXPENSES:
   Food and beverage                 2,483,154       2,843,285       3,532,120
   General and administrative       13,151,389      14,957,381      15,331,318
   Depreciation                      6,260,583       6,022,374       5,945,672
   Other                               269,220         172,163         190,722
                                  ------------    ------------    ------------
                                    22,164,346      23,995,203      24,999,832
                                  ------------    ------------    ------------
           Loss from operations     (4,350,334)     (5,701,264)     (6,352,146)

INTEREST INCOME                        232,996           5,254          17,220
                                  ------------    ------------    ------------
      Net loss                    $ (4,117,338)   $ (5,696,010)   $ (6,334,926)
                                  ============    ============    ============


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

                                     F-30
<PAGE>

                     BUFFINGTON HARBOR RIVERBOATS, L.L.C.
                     ------------------------------------

                        STATEMENTS OF MEMBERS' CAPITAL
                        ------------------------------

             FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
             -----------------------------------------------------


<TABLE>
<CAPTION>
                                                                         Retained
                                                         Member          Earnings
                                                      Contributions      (Deficit)           Total
                                                      -------------      ---------           ------
<S>                                                   <C>             <C>                 <C>
Balance, December 31, 1997                             $ 98,859,016   $  (11,775,046)     $87,083,970
Capital contribution made by Trump Indiana, Inc.            374,365               --          374,365
Capital contribution made by
  The Majestic Star Casino, LLC                             374,365               --          374,365
Net loss                                                         --       (6,334,926)      (6,334,926)
                                                       ------------   --------------      -----------
Balance, December 31, 1998                             $ 99,607,746   $  (18,109,972)     $81,497,774
                                                       ------------   --------------      -----------
Capital contribution made by Trump Indiana, Inc.            245,331               --          245,331
Capital contribution made by
  The Majestic Star Casino, LLC                             245,331               --          245,331
Net loss                                                         --       (5,696,010)      (5,696,010)
                                                       ------------   --------------      -----------

Balance, December 31, 1999                             $100,098,408   $  (23,805,982)     $76,292,426
                                                       ============   ==============      ===========

Capital contribution made by Trump Indiana, Inc.            737,322               --          737,322
Capital contribution made by
  The Majestic Star Casino, LLC                           7,836,489               --        7,836,489
Net loss                                                         --       (4,117,338)      (4,117,338)
                                                       ------------   --------------      -----------
Balance, December 31, 2000                             $108,672,219   $  (27,923,320)     $80,748,899
                                                       ============   ==============      ===========
</TABLE>

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

                                     F-31
<PAGE>

                     BUFFINGTON HARBOR RIVERBOATS, L.L.C.
                     ------------------------------------

                           STATEMENTS OF CASH FLOWS
                           ------------------------

             FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
             -----------------------------------------------------


<TABLE>
<CAPTION>
                                                                                    2000               1999             1998
                                                                              ---------------------------------------------------
<S>                                                                           <C>                  <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                                       $   (4,117,338)     $ (5,696,010)     $ (6,334,926)
  Adjustment to reconcile net loss to net cash flows
   provided by (used in) operating activities
        Depreciation                                                                6,260,583         6,022,374         5,945,672
        Deferred rent                                                              (2,142,845)         (357,144)         (357,176)
        Changes in operating assets and liabilities
        (Increase) decrease in trade receivable                                      (146,574)            7,547           (56,611)
        (Increase) decrease in due from members'                                     (173,182)          984,610           305,134
        Decrease in inventory                                                          26,962             6,269            77,316
        (Increase) in prepaid expenses and other current assets                       (39,227)          (51,062)           21,245
        Increase in due from affiliate                                            (14,402,010)               --                --
        Decrease (increase) in other assets                                           155,777            (5,015)          241,562
        Increase (decrease)  in accounts payable                                      605,507          (443,519)         (832,401)
        Increase in accrued expenses                                                  181,523           143,937           796,878
                                                                               --------------      ------------      ------------
           Net cash  flows  provided  by  (used in) operating activities          (13,790,824)          611,987          (193,307)
                                                                               --------------      ------------      ------------

CASH FLOWS FROM INVESTING ACTIVITIES--
        Purchases of property, plant and equipment, net                            (1,688,037)       (1,187,530)         (507,247)
                                                                               --------------      ------------      ------------

CASH FLOWS FROM FINANCING ACTIVITIES--
        Contributed capital                                                         8,573,811           490,662           748,730
        Member advance                                                              7,099,167                --                --
                                                                               --------------      ------------      ------------
           Net cash flows provided by financing activities                         15,672,978           490,622           748,730
                                                                               --------------      ------------      ------------
           Net increase (decrease) in cash                                            194,117           (84,881)           48,176

CASH BEGINNING OF PERIOD                                                               92,804           177,685           129,509
                                                                               --------------      ------------      ------------

CASH END OF PERIOD                                                             $      286,921      $     92,804      $    177,685
                                                                               ==============      ============      ============
</TABLE>

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

                                     F-32
<PAGE>

                     BUFFINGTON HARBOR RIVERBOATS, L.L.C.
                     ------------------------------------

                         NOTES TO FINANCIAL STATEMENTS
                         -----------------------------

                       DECEMBER 31, 2000, 1999, AND 1998


1.   ORGANIZATION AND OPERATIONS:
     ----------------------------

     Trump Indiana, Inc. ("Trump Indiana") and The Majestic Star Casino, LLC
     ("Barden"), the two holders of certificates of suitability for the Gary,
     Indiana riverboat casinos, formed Buffington Harbor Riverboats, L.L.C.
     ("BHR") on September 27, 1995 and have entered into an agreement (the "BHR
     Agreement") relating to the joint ownership, development and operation of
     all common land based and waterside operations in support of the Trump
     Indiana and Barden riverboat casinos. Under the BHR Agreement, BHR acquired
     property and constructed common roadways, utilities and other
     infrastructure improvements on BHR's property.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
     ------------------------------------------

     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.

     Revenue Recognition
     -------------------

     Under the terms of the BHR Agreement, all expenditures requiring a cash
     outlay by BHR are billed to Trump Indiana and Barden at cost. Accordingly,
     BHR records as expenses the cost of providing such services and records as
     other revenues the amounts billed to Trump Indiana and Barden.

     Property, Plant and Equipment
     -----------------------------

     Property, plant and equipment is carried at cost. Property, plant and
     equipment is depreciated on the straight-line method using rates based on
     the following useful lives:

                   Land improvements                        15 years
                   Buildings                                40 years
                   Building improvements                5 - 10 years
                   Harbor improvements                 10 - 15 years
                   Furniture, fixtures and equipment         5 years

                                     F-33
<PAGE>

                     BUFFINGTON HARBOR RIVERBOATS, L.L.C.
                     ------------------------------------

                         NOTES TO FINANCIAL STATEMENTS
                         -----------------------------

                       DECEMBER 31, 2000, 1999 AND 1998


     Income Taxes
     ------------

     BHR makes no provision (benefit) for income taxes since taxable income
     (loss) is allocated to the members for inclusion in their respective income
     tax returns.

     Long-Lived Assets
     -----------------

     BHR accounts for long-lived assets under the provisions of Statement of
     Financial Accounting Standard No. 121, "Accounting for the Impairment of
     Long-Lived Assets" ("SAS No. 121"). SAS No. 121 requires, among other
     things, that an entity review its long-lived assets and certain related
     intangibles for impairment whenever changes in circumstances indicate that
     the carrying amount of an asset may not be fully recoverable. BHR does not
     believe that any such changes have occurred.

     Reclassifications
     -----------------

     Certain reclassifications have been made to the prior year numbers to
     conform them to the current year presentation.

3.   PROPERTY, PLANT AND EQUIPMENT
     -----------------------------

     Property, plant and equipment is comprised of the following--

                                                        2000           1999
                                                        ----           ----
       Land and land improvements                 $   36,883,043  $ 36,020,821
       Building and building improvements             40,392,638    40,232,632
       Harbor improvements                            17,089,620    17,267,281
       Furniture, fixtures and equipment               7,818,771     6,975,301
                                                  --------------  ------------
                                                     102,184,072   100,496,035
       Less: Accumulated depreciation                 27,083,702    20,823,119
                                                   -------------  ------------
       Total property, plant and equipment, net    $  75,100,370  $ 79,672,916
                                                   =============  ============

                                     F-34
<PAGE>

                     BUFFINGTON HARBOR RIVERBOATS, L.L.C.
                     ------------------------------------

                         NOTES TO FINANCIAL STATEMENTS
                         -----------------------------

                       DECEMBER 31, 2000, 1999 AND 1998


4.   COMMITMENTS AND CONTINGENCIES:
     -----------------------------

     Indiana Gaming Regulations
     --------------------------

     The ownership and operation of riverboat gaming operations in Indiana are
     subject to state regulation under the Riverboat Gambling Act ("Act") and
     the administrative rules promulgated thereunder. The Indiana Gaming
     Commission ("IGC") is empowered to administer, regulate and enforce the
     system of riverboat gaming established under the Act and has jurisdiction
     and supervision over all riverboat gaming operations in Indiana, as well as
     all persons on riverboats where gaming operations are conducted. The IGC is
     empowered to regulate a wide variety of gaming and nongaming related
     activities, including the licensing of suppliers to, and employees at,
     riverboat gaming operations and to approve the form of ownership and
     financial structure of not only riverboat owner and supplier licensees, but
     also their entity qualifiers and intermediary and holding companies.
     Indiana regulations continue to be revised and adopted by the IGC. The IGC
     has broad rulemaking power, and it is impossible to predict what effect, if
     any, the amendment of existing rules or the finalization of currently new
     rules might have on the operations of BHR, Trump Indiana and Barden.

     Leases
     ------

     Under a lease agreement assumed by BHR from Trump Indiana with Lehigh
     Portland Cement Co. ("Lehigh Cement"), BHR has leased certain property,
     which is integral to the gaming operations of Trump Indiana and Barden. The
     lease places certain restrictions on the use of the harbor by the
     riverboats of Barden and Trump Indiana, requires the reimbursement of
     certain costs which may be incurred by Lehigh Cement, and requires BHR to
     pursue the permitting and construction of a new harbor. The lease was rent
     free through December 29, 1997 and subject to certain conditions, primarily
     continuing progress toward permitting and construction of a new harbor, the
     lease will extend until the earlier of December 31, 2005 or the completion
     of a new harbor. Subsequent to the original 30-month term and beginning
     January, 1998 BHR was required to make payments of $125,000 per month for
     the remainder of the lease term. As of December 31, 1999, BHR had recorded
     deferred rent expense of $2,142,845.

     In September 2000, Buffington Harbor Parking Associates ("BHPA"), a joint
     venture owned by Trump Indiana and an affiliate of Barden purchased for
     $15,000,000 (Purchase) the Lehigh Cement property, which was subject to the
     BHR lease. The purchase price was financed by an advance from BHR of
     $14,182,856, with interest at 6%, and through the sale of one acre of land
     to BHR for approximately $817,144. In connection with the purchase, the
     members

                                     F-35
<PAGE>

                     BUFFINGTON HARBOR RIVERBOATS, L.L.C.
                     ------------------------------------

                         NOTES TO FINANCIAL STATEMENTS
                         -----------------------------

                       DECEMBER 31, 2000, 1999 AND 1998

Leases (Continued)
------------------

advanced $7,099,167 and contributed $7,900,833 to BHR. As a result of the above,
BHR reversed $1,874,986 of deferred rent expense into income. This amount is
reflected as a reduction of general and administrative expenses in the
accompanying statement of operations. BHR also has office equipment and vehicle
leases. Rental expense for noncancellable operating leases was $1,367,607,
$1,431,837 and $1,481,197 for 2000, 1999, and 1998 respectively.

Minimum rental payments under noncancellable operating leases are as follows--


                       Years ended December 31-
                       2001                         $  157,194
                       2002                            122,763
                       2003                             56,837
                       2004                             18,989
                       2005                              2,884
                                                    ----------

                                                    $  358,667
                                                    ==========

                                     F-36
<PAGE>

                                  SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrants have duly caused this report to be signed
on their behalf by the undersigned, thereunto duly authorized, on March 30,
2001.

THE MAJESTIC STAR CASINO, LLC
By: Barden Development Inc., Manager

By:  /s/ Don H. Barden
    -------------------------------------------------------
    Don H. Barden, President and Chief Executive Officer

THE MAJESTIC STAR CASINO CAPITAL CORP.


By:  /s/ Don H. Barden
    -------------------------------------------------------
    Don H. Barden, President and Chief Executive Officer


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

Signature             Title                                      Date
---------             -----                                      ----

/s/ Don H. Barden     President and Chief Executive Officer      March 30, 2001
--------------------  of the Manager and the Company
                      Sole Director of The Majestic Star
                      Casino Capital Corp. (Principal
                      Executive Officer)


/s/ Michael E. Kelly  Vice President, Chief Operating and        March 30, 2001
--------------------  Financial Officer of the Company and
Michael E. Kelly      The Majestic Star Casino Capital
                      Corp. (Principal Financial and
                      Accounting Officer)