<PAGE>   1
                                UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C 20549

                                   FORM 10-K

[Mark One]
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15d OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 [FEE REQUIRED] OR [ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED] FOR THE TRANSITION PERIOD FROM____TO_________.

COMMISSION FILE NUMBER: 333-06489

                        THE MAJESTIC STAR CASINO, LLC.
            (Exact name of registrant as specified in its charter)


            Indiana                                   43-1664986
 (State or other jurisdiction or                  (I.R.S. Employer
 incorporation or organization)                    Identification No.)

                         One Buffington Harbor Drive
                           Gary, Indiana 46406-3000
                                (219) 977-7777

       (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 such filing
requirements for the past 90 days.

Yes  x   No
   -----

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

The aggregate market value of the 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>   2
                         THE MAJESTIC STAR CASINO, LLC
                        1996 ANNUAL REPORT ON FORM 10-K

                               TABLE OF CONTENTS

                                     PART I
                                                             Page Number


Item 1.   Business.........................................     1


Item 2.   Properties ......................................     6

Item 3.   Legal Proceedings................................     7

Item 4.   Submission of Matters to a Vote of
          Security Holders.................................     8

                                    PART II

Item 5.   Market for Registrant's Common Equity and
          Related Stockholder Matters......................     9

Item 6.   Selected Financial Data..........................    10

Item 7.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations..............    11

Item 8.   Financial Statements and Supplementary Data......    16


Item 9.   Changes in and Disagreements with Accountants
          on Accounting and Financial Disclosure...........    16


                                    PART III

Item 10.  Directors and Executive Officers of Registrant...    17

Item 11.  Executive Compensation...........................    19

Item 12.  Security Ownership of Certain Beneficial
          Owners and Management............................    21

Item 13.  Certain Relationships and Related Transactions...    21

                                    PART IV

Item 14.  Exhibits, Financial Statement Schedules,
          and Reports on Form 8-K..........................    24


                                       i

<PAGE>   3


                                     PART I

ITEM 1. BUSINESS

GENERAL

     The Majestic Star Casino, LLC (the "Company") operates the Majestic Star
Casino, a riverboat gaming facility located at Buffington Harbor in Gary,
Indiana, pursuant to a license granted to it by the Indiana Gaming Commission
(the "IGC").

     The Majestic Star Casino commenced operations in June 1996, and operates on
a chartered vessel which is leased (the "Chartered Vessel") until a new vessel
to be owned by the Company (the "Permanent Vessel") is delivered.  The Company
anticipates that the Permanent Vessel which is presently under construction will
be delivered in late 1997.  The Chartered Vessel currently has 932 slot machines
and 50 table games and can accommodate 1,700 passengers and a crew of 200
employees. 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. (the "BHR Joint Venture"), a joint venture
which is owned equally by the Company and its joint venture partner.  The
Company and its joint venture partner each operates 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 executive offices of the Company are located at One Buffington
Harbor Drive, Gary, Indiana 46406-3000, and the Company's telephone number is
(219) 977-7777.

OPERATING STRATEGY

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

Middle Income Customer Focus

     The Company focuses primarily on middle-income customers which it believes
constitute the largest segment of potential gaming customers. The Company
utilizes high-volume marketing techniques to attract 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 M-Star Slot Club.  Club M-Star 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 repeat visits by
these customers.


                                       1



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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.  In order to maximize revenue, the Company intends to continue to
invest in state-of-the-art gaming machines and related equipment, by the
continuous replacement of older models with the most current product offerings.
The Company monitors its mix of slot machines to satisfy the demands of its
customer base and tracks payout percentages to remain competitive.

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),
direct highway access and abundant surface parking.

GROWTH STRATEGY

     The Company anticipates placing into service, at Buffington Harbor, the
Permanent Vessel in late 1997.  The Permanent Vessel will replace the Chartered
Vessel and is expected to contain approximately 43,000 square feet of casino
gaming on three decks.  The floor configuration is anticipated to contain
approximately 1,600 slot machines and 71 table games.  The Permanent Vessel
will substantially expand the Company's current number of slot machines and
table games and will significantly increase passenger capacity from 1,700
passengers to an estimated 3,000 passengers per cruise.

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.  Currently, five riverboat casinos, excluding the
Company and its joint venture partner, operate in northern Illinois and
northwest Indiana, within 50 miles of the Buffington Harbor Gaming Complex.
The Company expects additional competition in northern Indiana from two
riverboat casinos which have been authorized and are expected to commence
operations during 1997 in East Chicago and Michigan City, Indiana.  The Company
also expects to compete in Indiana, to a lesser extent, with the six additional
riverboats authorized to operate in southern Indiana.

     The Company believes that competition in the gaming industry is based on
the quality and location of the gaming facilities, the effectiveness of
marketing efforts and overall levels of customer service and satisfaction.
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 to develop in
its market area.


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     There can be no assurance that Indiana or Illinois will not authorize
additional gaming licenses in the future.  Legislation has been introduced on
numerous occasions in recent years in Illinois to provide for land-based
casinos in Chicago and most recently in East St. Louis and to expand riverboat
gaming in Illinois, including authorization of  additional operators or the
authorization of existing operators to move to new sites or otherwise to modify
existing regulations to decrease or eliminate certain restrictions, such as
limitations on the number of gaming positions or to remain dockside.  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 also expects future competition from a federally recognized
Indian tribe which is negotiating with various cities in southwestern Michigan
and/or Indiana to develop land-based casinos as well as three land-based
casinos to be developed in Detroit, Michigan, pursuant to a November 1996 voter
initiative.

     Many of the Company's competitors, including its joint venture partner and
Showboat Marina, the owner of the casino anticipated to be opened during the
second quarter of 1997 in East Chicago, Indiana, will have larger and, prior to
the delivery of the Permanent Vessel, more modern casino vessels.  In addition,
many of such competitors will have greater gaming industry management
experience and financial resources.  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.
These factors will become more important as competition in the casino gaming
industry becomes more intense with the opening of additional casino operations.

EMPLOYEES

     At December 31, 1996, the Company employed approximately 929 persons and
the BHR Joint Venture employed approximately 512 persons.  The Company and the
BHR Joint Venture have collective bargaining agreements with Local 1 of the
Hotel Employees and Restaurant Employees International Union, which cover
approximately 98 individuals employed by the Company and 231 individuals
employed by the BHR Joint Venture in food and beverage service positions.  The
agreements are each for a term of five years.  The Company is also currently
engaged in discussions with The Seafarers International Union with respect to
approximately 30 employees in the marine operations department.

     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 fifty-two percent women, seventy percent from
racially ethnic minority groups, sixty-seven percent residents of the City of
Gary and ninety percent residents of Lake County, Indiana.

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SEASONALITY

     The Company's financial results were adversely affected during the winter
months.  Because of the climate in the Chicago metropolitan and northern
Indiana areas, the Company's operations are expected to be seasonal with
stronger results 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 has been 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 continguous to Lake Michigan have been
conducted and gaming has been authorized for the cities of Hammond and East
Chicago (in addition to Gary) in Lake County, Indiana, and for Michigan City in
LaPorte County, 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 licenses 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.

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     In determining whether to grant 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 holding an owner's gaming license issued by the IGC
may not own more than a ten percent interest in another such license.  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.

     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.

     Effective November 1996, riverboat casinos operating on Lake Michigan were
granted an exemption to the Johnson Act, a federal statute, which prohibited
casino gambling on federal waterways.  Prior to this time the riverboat casinos
operating on Lake Michigan, including 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 the
gaming excursion is imposed upon each license owner.  Recently, legislation has
been introduced that would increase the admission tax from $3.00 for each
person admitted to $4.00 per person.  The Company at this time is unable to
predict whether this or any other legislation introduced in Indiana will be
enacted.  If the legislation is enacted to increase the admission tax, the
effect of such an increase could have a material impact on the results of

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<PAGE>   8

operations or financial condition of the Company.  An  additional twenty percent
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 (including checks received by the licensee whether or not collected)
received, less the total of all cash paid out as winnings to patrons and
uncollected gaming receivables (not to exceed two percent).  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 a gaming owner's license must establish goals of expending at least ten
percent of the total dollar value of the licensee's contracts for goods and
services with minority business enterprises and five percent of the total
dollar value of the licensee's contracts for goods and services with women's
business enterprises.  The IGC may suspend, limit or revoke a gaming owner's
license or impose a fine for failure to comply with these statutory
requirements.

ITEM 2. PROPERTIES

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

     The Majestic Star Casino operates at and from the Gaming Complex, which was
developed, and is owned and operated, by the BHR Joint Venture. The Gaming
Complex is situated on an approximately one-hundred acre site containing
approximately 3,000 surface parking spaces and includes a 90,000 square foot
land based Pavilion which contains, in its common areas, a 352 seat buffet, a
110 seat steakhouse, two cocktail lounges, a gift shop, a ticketing area for
each casino and administrative offices.

     The Chartered Vessel currently contains approximately 26,000 square feet
of gaming space on four levels, with approximately 932 slot machines and 50
table games.  The Majestic Star Casino is certified to accommodate 1,700
passengers and 200 employees and crew members and also contains food, beverage
and bar facilities.  The casino area of the Chartered Vessel contains a large
two-story atrium which, with the casino's conveniently placed elevators and
stairwells, encourages traffic flow to other levels of the casino.


                                       6
<PAGE>   9


     In October 1996, the Company entered into various agreements for the
design, engineering and construction of the Permanent Vessel.  The Permanent
Vessel is anticipated to contain approximately 43,000 square feet of casino
space on three decks, 1,600 slot machines and 71 table games.  The Permanent
Vessel will feature an atrium, and will have escalators in addition to
elevators and stair towers to move passengers more freely between the various
levels.  After the Permanent Vessel is placed in service, the Company believes
that its facility will meet its operating needs for the foreseeable future.

     The Permanent Vessel construction project entails significant construction
risks, including possible shortages of materials or skilled labor, unforeseen
engineering problems, work stoppages, fire or other natural disasters,
construction scheduling problems, and weather interference, any of which, if
they occurred, could delay construction and/or delivery of the Permanent
Vessel.  Such delay, if extensive, would have an adverse effect on the
Company's results of operations.

ITEM 3. LEGAL PROCEEDINGS

     On May 1, 1996, a class action complaint was filed in the Lake Superior
Court in Gary, Indiana, against the joint venture partner and certain of its
affiliates, the Company and certain of its affiliates, the IGC, the City of
Gary and the Mayor of the City of Gary and certain other parties affiliated
with the City of Gary.  The plaintiffs were comprised of two local contractors,
a former city employee, and five persons who claim that they were to be
investors in the riverboat casinos to be operated in Gary, Indiana.  The
complaint alleged, among other things, that the joint venture partner and the
Company each have failed to meet certain obligations with respect to minority
hiring goals, utilization of minority and/or women contractors, investment in
city projects and providing certain residents of the City of Gary with the
right to acquire a 15% equity interest in their respective projects.
Plaintiffs sought various remedies including damages and injunctive relief in
the form of an order to enjoin the IGC from issuing gaming licenses to the
Company and the joint venture partner until they have complied with these
conditions.  On July 11, 1996, the court granted a motion filed by the
defendants and the lawsuit was dismissed with prejudice. In December 1996,  an
order was entered by the trial judge limiting his original dismissal to only
matters regarding the injunctive relief.  The Company is taking steps to set
aside and/or appeal such decision.  The Company believes that this lawsuit is
without merits; however, at the present time, the Company cannot predict the
outcome of this matter and the effect, if any, of a judicial decision adverse
to the Company.

     On March 5, 1997, three individuals filed a lawsuit in Lake Circuit
Court, Crown Point, Lake County, Indiana, naming Don H. Barden and the Company
as defendants.  The suit alleges that the defendants failed to enter into an
agreement to sell five percent of the Company to the plaintiffs.  The
plaintiffs are requesting unspecified damages and attorneys' fees.  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.

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     The Company is not a party to any additional lawsuits.

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

     Not applicable.


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<PAGE>   11


                                    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.

     The Company has not paid any cash dividends to its members.  The ability
of the Company to pay dividends is restricted by the Indenture (the
"Indenture") dated May 22, 1996 by and between the Company and IBJ Schroder, as
Trustee, which governs the Company's 12.75% Senior Secured Notes due 2003, with
contingent interest (the "Senior Secured Notes").


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<PAGE>   12


ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA
                                   (IN THOUSANDS)
                                   ----------------------------------------
<TABLE>
<CAPTION>

                                                          DECEMBER 8, 1993
                                                        (DATE OF INCEPTION) TO
                                         DECEMBER 31,        DECEMBER 31,
                                                1996                1995

    <S>                                  <C>                 <C>
    STATEMENT OF OPERATIONS DATA:
       Net Operating Revenues (1)          $ 54,221             $    --
       Pre-opening costs                      4,587                  --
       Loss from Operations                     (48)                 --
       Interest Expense, Net                  6,399             $   249
       Net Income (Loss)                     (8,887)                249
       Ratio of Earnings to Fixed
         Charges                               --(3)                 --

    OTHER DATA
     Adjusted EBITDA: (2)                    10,738                  --

   BALANCE  SHEET DATA:
        Cash and Cash Equivalents          $  8,936             $ 8,446
        Restricted Cash                      51,689                  --
        Investment in BHR, Net               44,947              21,823
        Total Assets                        142,384              35,128
        Current Liabilities                   8,141                 120
        Long-Term Debt                      118,880                  --
        Total Liabilities                   127,021                 120
        Members' Equity                      15,363              35,009
</TABLE>

-------------------
     1. The Majestic Star Casino commenced operations in June 1996.
     2. Adjusted EBITDA, or "earnings before interest, income taxes,
        depreciation, amortization and chartered vessel
        lease payments," 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.  Adjusted EBITDA for 1996 excludes preopening expenses
        of Majestic Star Casino of $4,586,879.
     3. The ratio is less than one-to-one coverage.  The Company's earnings
        are inadequate to cover fixed charges and the amount of coverage
        deficiency is $9,099,604.




                                       10



<PAGE>   13


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

     The discussions regarding proposed developments and operations of the
Company included in Management's Discussion and Analysis of Financial Condition
and Results of Operations contain forward looking statements that involve a
number of risks and uncertainties.  These proposed developments and operations
include the construction and placing in service of the Permanent Vessel during
the fourth quarter of 1997, resolution of the need for a new harbor and the
Company's ability to fund planned developments and service its debt with
currently available cash, marketable securities and cash flow from operations.
These risks and uncertainties could significantly and adversely affect
anticipated results in the future and, accordingly, results may differ from
those expressed in any forward-looking statement made herein.

     The following discussions should be read in conjunction with, and is
qualified in its entirety by, the Company's financial statements, including the
notes thereto, appearing elsewhere herein.

RESULTS OF OPERATIONS

     The Company commenced operations in June 1996, and accordingly has a
limited operating history and no comparable fiscal year of operations.
Therefore, the discussion of operations herein will focus on events and the
Company's revenues and expenses during the fiscal year ended December 31, 1996.
Management believes that it is too early to determine whether the results of
operations for fiscal year 1996 provide any discernible trends; however, the
Company expects intense competition in the Northern Illinois/Indiana market to
continue with the anticipated opening of two additional riverboat casinos
during 1997.

     Future operating results will be subject to significant business,
economic, regulatory and competitive uncertainties and contingencies, including
new 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.

Fiscal 1996

     Operations for the year ended December 31, 1996 reflect the operation of
the riverboat casino for 205 days during 1996.  Prior to commencing operations
in June 1996, the Company was in the development stage and capitalized costs
associated with obtaining the license to operate a riverboat casino at the
Gaming Complex.  The capitalized costs consist primarily of development
obligation payments, vessel design costs, financing and commitment fees, gaming
application fees and other pre-opening costs.  Pre-opening costs of $4,587,000
were charged to operations during 1996.

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<PAGE>   14



     The Company in 1996 generated net operating revenues of approximately
$54,221,000.  Casino revenues in 1996 totaled approximately $52,788,000, of
which slot machines accounted for approximately $37,456,000 (71.0%) and table
games accounted for approximately $15,332,000 (29.0%).  The average number of
slot machines operated in 1996 was approximately 924, with an average win per
slot machine per day of $198.  The average number of table games operated in
1996 was approximately 50, with an average win per table game per day of
$1,496.  The average win per state passenger count was approximately $32 and
the average win per patron was approximately $53.

     Promotional allowances (complimentaries) included in the Company's 1996
gross food revenues were approximately $12,000.  Promotional allowances
provided to the Company's gaming patrons at facilities located in, and owned by
the BHR Joint Venture, totaled approximately $288,000 and are characterized in
the financial statements as an expense to the casino.  The BHR Joint Venture
invoices the Company monthly for these promotional allowances at cost, which
approximates the retail value of these promotional allowances.

     Food and beverage revenue for 1996 totaled approximately $809,000 and
other revenue, consisting primarily of commission income, totaled approximately
$636,000.

     Casino expenses in 1996 totaled approximately $9,257,000 or 17.1% of net
revenues.

     Gaming and admission taxes totaled approximately $15,538,000 in 1996.
These taxes are based upon 20% of adjusted gross receipts, as defined by
Indiana Gaming laws, and a head tax of $3 per passenger count based on
1,657,308 passengers, as determined by the Commission's regulations.  An
economic incentive of $1,586,000 was paid during 1996 to the City under an
economic development agreement pursuant to which the Company pays 3% of
adjusted gross receipts directly to the City.

     General and administrative expenses totaled approximately $12,289,000 of
which approximately $4,026,000 represents berthing fees, $3,379,000 for marine
operations and $994,000 for security and surveillance operations.

     Depreciation and amortization, net interest expense and other non-gaming
expenses, for 1996 were approximately $5,320,000, $6,399,000 and $5,692,000.
The non-gaming expenses of $5,692,000, include $4,563,000 and $1,129,000, for
marketing (advertising and promotion) and food and beverage operations,
respectively.  Net interest expense includes accrued but unpaid contingent
interest of approximately $603,000.

     The Company's loss in 1996 on its investment in the BHR Joint Venture was
approximately $2,440,000.


                                       12



<PAGE>   15


     As a result of the foregoing, the loss from operations in 1996 was
approximately $48,000, including the charge to operations of $4,587,000 of
pre-opening costs.  The net loss was approximately $8,887,000.

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

     EBITDA is presented solely as a supplemental disclosure.  EBITDA is used
by the Company to assist in the evaluation of the cash generating ability of
its gaming business.

     EBITDA (excluding pre-opening costs and the Chartered Vessel lease
payments) for 1996 was approximately $10,738,000 and represented 19.8% of net
revenues.  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.

     Consolidated cash flow as defined in the Indenture governing the Company's
Senior Secured Notes was approximately $12,057,000 during 1996 with $6,732,000
in the first semi-annual period and $5,325,000 in the second semi-annual
period.

LIQUIDITY AND CAPITAL RESOURCES

     From December 8, 1993 (date of inception) through December 31, 1996, the
principal expenditures were approximately as follows:  $47 million invested in
the BHR Joint Venture, $20 million expended on property (including construction
in progress relating to the Permanent Vessel), equipment and leasehold
interests, $5 million paid to the City of Gary, $4 million debt issuance costs,
and $7 million incurred on pre-opening, licensing and organizational costs.
The BHR Joint Venture owns (or leases) and operates the berthing facility for
the Company's casino vessel, the guest pavilion and associated infrastructure.
Property, equipment and leasehold interests primarily consist of slot machines
and associated equipment and leasehold improvements to the Chartered Vessel.
The Company has entered into a contract for the construction of the Permanent
Vessel and for the delivery of the vessel on September 27, 1997 at a fixed cost
of $33,000,000. The Company estimates that design, engineering, and owner
furnished materials will cost approximately $7,000,000, excluding additional
gaming related equipment. The cost of additional gaming equipment expenditures
is currently estimated to range between $9 million and $10 million and is
subject to the final configuration of the casino.  It is anticipated that these
additional gaming related equipment expenditures will be funded through
available cash flow from the casino's future operations and certain equipment
(vendor provided) financing. As of December 31, 1996, approximately $9 million
has been expended on the design and construction of the Permanent Vessel.

     As discussed below, the Company, to date, has met its capital requirements
through net cash from operations, capital contributions and loans.

                                       13



<PAGE>   16



     For the year ended December 31, 1996, net cash provided by operations
totaled approximately $2.9 million.

     Net capital contributions through December 31, 1996 were approximately $24
million, compared to approximately $35 million through December 31, 1995.  This
reduction was due to the Company's reassessment of its capital structure, which
resulted in the conversion of approximately of $11 of members' capital
contributions into a note payable to Barden Development, Inc. ("BDI"), a member
and the manager of the Company.

     At December 31, 1996, loans included $105 million of Senior Secured Notes,
approximately $11 million borrowed from BDI and approximately $5 million of
equipment financing. At December 31, 1996, approximately $52 million of the
proceeds and interest earned thereon from the Senior Secured Notes were held in
escrow for future cash requirements of the Company and were allocated as
follows:  $34 million for the Permanent Vessel, $7 million as an interest
reserve, and $11 million designated to repay the loan due to BDI.  The portion
designated for the repayment of the loan due to BDI cannot be paid to BDI until
certain conditions, primarily the completion of the Permanent Vessel, are met.
Until repaid, these funds are available, subject to certain limitations and
qualifications, to the Company for completion of the Permanent Vessel.

     The Senior Secured Notes mature on May 15, 2003.  The Senior Secured Notes
are redeemable at the option of the Company, in whole or part, at any time on
or after May 15, 2000, at various premiums.  Holders of the 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 carry a coupon interest rate of 12.75%, plus
contingent interest equal to 5% of the Company's Consolidated Cash Flow, as
defined, (not to exceed $3 million annually), both payable semi-annually.  The
payment of contingent interest can be deferred under certain conditions.  The
contingent interest ordinarily payable on November 15, 1996 was deferred, as
allowed under the terms of the Indenture. As of December 31, 1996, the Company
had accrued contingent interest of approximately $603,000.  The Senior Secured
Notes are collateralized by essentially all the assets of the Company.

     The Indenture contains financial and other covenants, which, among other
things, limits the Company's ability to (1) the issue indebtedness, (2) make
investments, (3) make distributions and equity repurchases, (4) enter into
merger, consolidation and asset sale transactions, (5) create liens and (6)
enter into transactions with affiliates.  These restrictions are subject to a
number of qualifications and exceptions as described in the Indenture.

     If the Company is determined to be in default under the Indenture, any
portion of the proceeds from the Senior Secured Notes held in escrow may no
longer be available to

                                       14



<PAGE>   17

the Company and the Senior Secured Notes may be accelerated.  Either event
could materially adversely affect the Company.

     The Company, pursuant to the Indenture, completed in November 1996, an
offer to exchange a new issue of Senior Secured Notes for all outstanding
12.75% Senior Secured Notes due 2003, with Contingent Interest.  These new
notes have the same terms and conditions as the Senior Secured Notes.

     Under the terms of the lease relating to the harbor on which the Chartered
Vessel is docked, the BHR Joint Venture may be required within one year to
construct a new harbor, berthing and guest facilities for the Company's casino
vessel.  The level of expenditures required for such new facilities cannot be
accurately estimated at this time.

     Under the terms of its development agreement with the City, the Company is
committed to make development expenditures of $116 million for its casino and
associated infrastructure in the City over the next five years.  Through
December 31, 1996, the Company has met or accrued a significant portion of
these commitments including: $47 million investment in BHR, $20 million as the
agreed to value of the Chartered Vessel, $5 million of economic development
obligation payments to the City, $20 million of gaming equipment and other
property, and other expenditures of $7 million prior to opening.  The two
principal components of the remaining commitment are a follows:  (1) $10
million for off-site development in the City and (2) $12 million (a substantial
portion of which was expended as of December 31, 1996, with the exact amount to
be agreed upon by the City and the Company) to be expended over the five years
following the June 1996 opening of the casino for enhancements to the Company's
operations and/or to the Gaming Complex.

     The Company anticipates that additional capital contributions to the BHR
Joint Venture, currently estimated not to exceed $1 million, may be required
for the BHR Joint Venture facilities. The Company and its joint venture partner
are also reviewing the feasibility of purchasing additional property and of
constructing a covered parking facility at the Gaming Complex.  The cost of the
property and designing and constructing a covered parking facility at the
Gaming Complex is undetermined at this time. The Company expects to fund such
further investments from working capital, from operations and/or from the funds
designated for the repayment of the note due to BDI.

     The Company currently operates on a Chartered Vessel until the Permanent
Vessel, to be owned by the Company, is delivered and placed into service in
late 1997.  Upon the expiration of the Charter, the Chartered Vessel is to be
redelivered afloat at the Company's sole cost and expense to the owner of the
Chartered Vessel.  The Company must pay the cost of any repairs which are
necessary in order to bring the Chartered Vessel into the condition required on
redelivery under the Charter.  The cost of these additional expenditures is
undetermined at this time.

     Management anticipates that income from operations for the Company for the
first and second quarters of 1997 may be lower than those for the third and
fourth quarters of


                                       15



<PAGE>   18


1996.  The principal factors for the anticipated decline may be attributable to
adverse weather conditions in early 1997 as well as the anticipated opening of
an additional riverboat casino during the second quarter of 1997.  The Company
expects to complete the outfitting of, and to place, the Permanent Vessel in
service during the fourth quarter of 1997.  The Company has committed under the
terms of its Senior Secured Notes to replace the Chartered Vessel with the
Permanent Vessel no later than June 30, 1998. Failure to place the Permanent
Vessel into service on time and on budget would adversely affect anticipated
1997 results of operations.

     Based upon the Company's anticipated future operations, management
believes that available cash flow from the casino's future operations and
certain equipment financing, together with the proceeds from the Senior Secured
Notes, will be adequate to meet the Company's anticipated future requirements
for working capital, funding the Company's portion of expenses associated with
the BHR Joint Venture, the remaining development obligations to the City,
capital expenditures, including the additional gaming equipment required for
the Permanent Vessel, and scheduled payments of interest and principal on the
Senior Secured Notes and other permitted indebtedness for fiscal 1997.  No
assurance can be given, however, that operating cash flow will be sufficient
for such purposes.  The Company intends to establish working capital reserves
to provide for anticipated short-term liquidity needs.  The Company will seek,
if necessary and to the extent permitted under the Indenture, 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.  There is no assurance that the Company's estimate of its reasonably
anticipated liquidity needs is accurate or that unforeseen events will not
occur, resulting in the need to raise additional funds.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The information required by this item is listed under Item 14 of Part IV
of this Report on Form 10-K.

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

     Not Applicable.


                                       16



<PAGE>   19


                                    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, 1996:


                               EXECUTIVE OFFICERS


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

           Don H. Barden      53   Chairman, President, and CEO
           Thomas C. Bonner   44   Executive Vice President
           Paul W. Sykes      45   Vice President and Chief Operating
                                   Officer
           Michael E. Kelly   35   Vice President and Chief Financial
                                   Officer


     DON H. BARDEN is the Chairman, President, CEO of the Company and is
employed by the Company, with responsibility for key policy making functions.
Since 1981, Mr. Barden has also been the President and Chief Executive Officer
of a group of companies which are wholly-owned by Mr. Barden and which operate
in the real estate development, broadcast, and entertainment industries.  Over
the past 25 years, Mr. Barden has successfully established and developed a
number of enterprises in the real estate, cable television and media
industries.

     THOMAS C. BONNER is the Executive Vice President of the Manager and the
Company and has been employed by the Company since December 1995, with primary
responsibility for the overall operations of the Company.  From March 1995 to
December 1995, Mr. Bonner was President and Chief Executive Officer of Showboat
Indiana, Inc..  From November 1993 to March 1995, Mr. Bonner was Vice President
of Project Development for Showboat Development Company and from October 1984
to November 1993, Mr. Bonner was Vice President and General Counsel to Atlantic
City Showboat, Inc.

     PAUL W. SYKES is the Vice President of the Manager, General Manager and
Chief Operating Officer of the Company since December 1995 and is employed by
the Company.  Mr. Sykes has responsibility for management of gaming operations
and related activities of the Company.  From February 1995 to December 1995,
Mr. Sykes was Vice President-Operations of Showboat Indiana, Inc. with primary
responsibility for pre-opening activities relating to casino gambling, credit,
food and beverage, property and security operations.  From December 1993 to
January 1995, Mr. Sykes was Vice President - Project Development where he was
responsible for identification and evaluation of new markets and related
legislative matters.  From November 1991 to

                                       17



<PAGE>   20

November 1993, Mr. Sykes was Vice President of Casino Marketing of Showboat
Atlantic City, where he was responsible for the direct mail, player
development, special events and complimentary services.  Prior to 1991, Mr.
Sykes served as Vice President of Customer Development for Trump's Taj Mahal.

     MICHAEL E. KELLY joined the management team in April 1996 as Vice
President and Chief Financial Officer of the Manager, with overall
responsibility for the Company's financial reporting and investor relations
functions.  Mr. Kelly is also employed by the Company.  From June 1994 to April
1996, Mr. Kelly held various positions with Fitzgeralds Gaming Corporation
including Vice President of Finance.  Mr. Kelly also was the Senior Director of
Operations and Chief Financial Officer of Fitzgeralds 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 and administration.  Mr. Kelly also participated in the
design and development of riverboat casino operations at Joliet, Illinois, and
Hammond, Indiana, while employed by the Empress River Casino Corporation.  From
1982 to 1991, Mr. Kelly was  employed in various senior finance and
administrative functions by Harrah's Hotel & Casino in New Jersey and Nevada,
and the Fitzgeralds Group in Reno and Las Vegas, Nevada.


                                       18



<PAGE>   21


ITEM 11.  EXECUTIVE COMPENSATION

     The following table sets forth all compensation earned for services
performed for the Company during the two fiscal years in the period ended
December 31, 1996 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(3)          1996      180,865       -                     -
President & Chief         1995        -           -                     -
Executive Officer

Thomas C. Bonner(4)       1996      198,086    169,500              12,919
Executive Vice President  1995        7,635       -                     -

Paul W. Sykes(5)          1996      174,580     99,500               6,859
Vice President & COO      1995        6,731       -                     -

Michael E. Kelly(6)       1996      117,586       -                 42,341
Vice President & CFO      1995        -           -                     -
</TABLE>

    ----------------------
     1.  The incremental cost to the Company of providing perquisites and other
         personal benefits during the past two 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 1996, the Company paid $8,050 and $5,403,
         respectively, to Messers Bonner, and Sykes in lieu of not having
         established a 401(K) Plan. Messers Bonner and Sykes also were
         reimbursed $4,869 and $1,456 respectively, for  non-deductible  medical
         plan expenditures.  Mr. Kelly received  $18,341 for reimbursable
         relocation expenses and $24,000 for non-vested stock options from a
         previous employer.
     3.  Mr. Barden became a paid employee of the Company in April 1996.
     4.  Mr. Bonner joined the Company as Executive Vice President in December
         1995.  Mr. Bonner's 1996 contractual bonus and other payments
         aggregating $169,500 were voluntarily deferred until calendar year
         1997.
     5.  Mr. Sykes joined the Company as Vice President and COO in December
         1995.
     6.  Mr. Kelly joined the Company as Vice President and CFO in April 1996.


                                       19



<PAGE>   22


Employment Agreements

     Mr. Barden serves as Chairman and President of the Manager and will
receive annual compensation of $275,000 as an employee of the Company, pursuant
to a letter agreement dated as of April 25, 1996.

     Mr. Bonner serves as Executive Vice President of Gaming Operations
pursuant to an employment agreement with the Company, effective as of December
4, 1995.  Under the terms of his employment agreement, Mr. Bonner will receive
base compensation of $348,700 per year and housing, car and meal allowances
aggregating $19,300 per year.  Mr. Bonner can also earn incentive compensation
based on his performance and the performance of the Company.  The employment
agreement is for a term of three years unless earlier terminated because of Mr.
Bonner's death, permanent disability, inability to obtain or maintain the
licenses required for the performance of his duties, or "for cause" (as defined
therein).  The employment agreement also includes a non-competition provision
which generally provides that during the term of the employment agreement and
for 18 months thereafter, Mr. Bonner cannot directly or indirectly recruit or
solicit the Company's employees to work for another company or to compete with
the Company in specified portions of Illinois and Indiana (the "Non-Competition
Provision").

     Mr. Sykes has entered into an employment agreement with the Company,
effective as of December 4, 1995, pursuant to which he has agreed to serve as
Vice President and General Manager of Operations for a three year term.  Mr.
Sykes will receive base compensation of $247,000 per year and can also earn
incentive compensation based upon his performance and the performance of the
Company.  Mr. Sykes' employment agreement contains terms substantially similar
to that of Mr. Bonner's, including the Non-Competition Provision.

     Mr. Kelly services as Vice President and Chief Financial Officer pursuant
to a two-year employment agreement with the Company, effective as of April 22,
1996.  Mr. Kelly will receive base compensation of $225,000 per year and can
also earn annual incentive compensation based on his performance and the
performance of the Company.  Mr. Kelly's employment agreement contains other
terms substantially similar to that of Mr. Bonner's, including a
Non-Competition Provision with a duration of 12 months.


                                       20



<PAGE>   23


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain information, as of March 15, 1997,
with regard to the beneficial ownership of the membership interests in the
Company.


<TABLE>
Name and Address of
Beneficial Owner                    % Ownership
----------------------------------  -----------
<S>                                 <C>
Don H. Barden (1)                   100.0%
400 Renaissance Center, Suite 2400
Detroit, Michigan  48243
</TABLE>

(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

Note to and Advances from Principal Member

     By December 31, 1995, the Company had been capitalized by its members with
$35.0 million, including interest earned thereon, of capital contributions.
Effective March 31, 1996, $10.8 million of the contributions of BDI was
reclassified as indebtedness payable to BDI, evidenced by the Note to Principal
Member.  The Note to Principal Member is a non-transferable and subordinated
note which bears interest at a rate equal to the applicable short-term federal
rate, as set forth in Section 1274(d) of the Internal Revenue Code, adjusted on
the first day of each month that the Note to Principal Member is outstanding.

     The net proceeds from the Senior Note Offering that have been designated
to repay the Note to Principal Member have been deposited in a  completion
reserve account and $5.0 million may be released upon satisfaction of certain
conditions.  Any funds remaining in the completion  reserve account will be
disbursed to repay the Note to Principal member upon delivery of the Permanent
Vessel to the Company.

     BDI loaned the Company additional amounts required to fund the ongoing
costs of completing the Majestic Star Casino and the Gaming Complex pursuant to
an additional promissory note.  Such note aggregating $18,097,299 in principal
amount, was repaid with interest at 5% per annum at the Closing from the
proceeds of the offering of the Senior Secured Notes on May 22, 1996.


                                       21



<PAGE>   24



IGC Bond

     On May 20, 1996, the IGC agreed to accept a $12.5 million surety bond (the
"Bond") issued by United States Fidelity and Guaranty Company ("USF&G") in
place of a previously issued letter of credit, which was canceled on May 21,
1996 by NBD Bank, N.A. (Indiana) (the "Bank"), thereby releasing Don H.
Barden's pledge of $12.9 million of cash equivalents.  However, to support the
Company's obligations to USF&G should there be a draft against the Bond, the
Company obtained on May 15, 1996 a $3.5 million letter of credit from the Bank
to benefit USF&G.  Don H. Barden guaranteed the Company's obligations to USF&G
under the Bond and to the Bank under the $3.5 million letter of credit.  To
secure the guaranty to the Bank, Mr. Barden pledged $3.6 million of cash
equivalents.

Reimbursement of Expenses to Manager

     Pursuant to the terms of the Operating Agreement, the Manager receives no
compensation for its management of the Company, but is reimbursed for all
reasonable out-of-pocket expenses related therewith.

CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

     This document includes various "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Sections
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 release and periodic reports on Forms 10-K and 10-Q filed
with the Securities and Exchange Commission 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,
including reports filed on 10-Q, 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:  risks associated with the development and construction of the
Permanent Vessel; 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 or gaming devices; a
finding of unsuitability by regulatory authorities with respect to the Company's
officers, directors or key employees; loss 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; adverse
                                       22



<PAGE>   25

results of significant litigation matters.  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.


                                       23



<PAGE>   26


                                    PART IV

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

(a) 1.  Financial Statements of the Company.  The following financial
statements are attached:


      Report of Independent Accountants,                      F-1
      Balance Sheets as of December 31, 1996 and 1995         F-2
      Statements of Income for the year ended                 F-3
      December 31, 1996 and for the period December 8, 1995
      (date of inception) to December 31, 1995
      Statements of Members' Equity for the year ended        F-4
      December 31, 1996 and for the period December 8, 1995
      (date of inception) to December 31, 1995
      Statements of Cash Flows for the year ended             F-5
      December 31, 1996 and for the period December 8, 1995
      (date of inception) to December 8, 1995
      Notes to the Financial Statements.                      F-6

   2. Financial Statement Schedule for the year ended
      December 31, 1996
      Report of Independent Accountants                       F-17
      Schedule II - Valuation and Qualifying Accounts         F-18

   3. Financial Statements of the BHR Joint Venture.  The following
financial statements are attached:


      Report of Independent Accountants,                      F-19
      Balance Sheets at December 31, 1996 and 1995            F-20
      Statements of Operations for the year ended             F-21
      December 31, 1996 and for the period September 27,
      1995 to December 31, 1995
      Statements of Members' Capital for the year ended       F-22
      December 31, 1996 and for the period September 27,
      1995 to December 31, 1995
      Statements of Cash Flows for the year ended             F-23
      December 31, 1996 and for the period September 27,
      1995 to December 8, 1995
      Notes to the Financial Statements.                      F-24


   4. Exhibits  Refer to (c) below

(b)   Report on Form 8-K. None


                                       24



<PAGE>   27


(c) Exhibits.  Reference is made to the Index to Exhibits immediately preceding
               the exhibits hereto.


                                       25



<PAGE>   28

                       REPORT OF INDEPENDENT ACCOUNTANTS



To the Members of
The Majestic Star Casino, LLC:

We have audited the accompanying balance sheets of The Majestic Star Casino,
LLC (the "Company") as of December 31, 1996 and 1995 and the related statements
of income, changes in members' equity, and cash flows for the year ended
December 31, 1996 and for the period December 8, 1993 (date of inception) to
December 31, 1995.  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 generally accepted auditing
standards.  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 the Company as of December 31,
1996 and 1995 and the results of its operations, members' equity and cash flows
for the year ended December 31, 1996 and for the period December 8, 1993 (date
of inception) to December 31, 1995 in conformity with generally accepted
accounting principles.

Coopers & Lybrand, L.L.P.

Chicago, Illinois
March 28, 1997






                                     F-1
<PAGE>   29


                        THE MAJESTIC STAR CASINO, LLC
                               BALANCE SHEETS
                      AS OF DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>

                                                                                                     1996               1995
---------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S>                                                                                            <C>                   <C>
  Current Assets:
    Cash and cash equivalents                                                                  $  8,935,999          $ 8,446,389
    Accounts receivable, less allowance for doubtful accounts of $190,000                           557,816                    -
    Inventories                                                                                      24,651                    -
    Prepaid expenses                                                                              1,169,868                    -
                                                                                               ------------          -----------

    Total current assets                                                                         10,688,334            8,446,389

  Property, equipment, and vessel improvements, net                                              24,124,802               74,846
  Organizational costs, less accumulated amortization of $ 15,772 and $ -0-,
    respectively                                                                                    125,469              141,241
  Deferred financing costs, less accumulated amortization of $ 357,640                            3,757,667                    -
  Deferred costs, less accumulated amortization of $ 2,131,166 and $ -0-, respectively            5,023,767            4,392,729
  Investment in Buffington Harbor Riverboats, L.L.C.                                             44,946,852           21,823,018
  Other assets and deposits                                                                       2,028,260              250,000
  Restricted cash                                                                                51,688,854                    -
                                                                                               ------------          -----------

    Total Assets                                                                               $142,384,005          $35,128,223
                                                                                               ============          ===========

LIABILITIES AND MEMBERS' EQUITY

  Current Liabilities:
    Current maturities of long-term debt                                                         $2,211,599          $         -
    Accounts payable                                                                                544,154              119,573
    Accrued liabilities:
      Payroll and related                                                                           593,492                    -
      Interest                                                                                    2,468,698                    -
      Other accrued liabilities                                                                   1,496,758                    -
      Due to joint venture                                                                          826,512
                                                                                               ------------          -----------

      Total current liabilities                                                                   8,141,213              119,573

  Long-term debt, net of current maturities                                                     108,120,746                    -
  Note to member                                                                                 10,759,355
  Commitments                                                                                             -                    -

                                                                                               ------------          -----------
      Total Liabilities                                                                         127,021,314              119,573
                                                                                               ------------          -----------

  Members' Equity:
    Members' contributions                                                                       24,000,000           34,759,355
    Retained earnings (Accumulated deficit)                                                      (8,637,309)             249,295
                                                                                               ------------          -----------
      Total members' equity                                                                      15,362,691           35,008,650
                                                                                               ------------          -----------
      Total Liabilities and Members' Equity                                                    $142,384,005          $35,128,223
                                                                                               ============          ===========
</TABLE>

   The accompanying notes are an integral part of the financial statements.



                                     F-2
<PAGE>   30

                        THE MAJESTIC STAR CASINO, LLC
                             STATEMENTS OF INCOME

           FOR THE YEAR ENDED DECEMBER 31, 1996 AND FOR THE PERIOD
          DECEMBER 8, 1993 (DATE OF INCEPTION) TO DECEMBER 31, 1995


<TABLE>
<CAPTION>
                                                                                                   FOR THE PERIOD
                                                                            FOR THE               DECEMBER 8, 1993
                                                                          YEAR ENDED             (DATE OF INCEPTION)
                                                                        DECEMBER 31, 1996         TO DECEMBER 31, 1995
------------------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>                      <C>
REVENUES
    Casino                                                                  $52,788,009
    Food and beverage                                                           808,567
    Other                                                                       636,071

                                                                          -------------
Gross Revenues                                                               54,232,647
                                                                          -------------
    less promotional allowances                                                 (12,088)
Net Revenues                                                                 54,220,559
                                                                          -------------

COSTS AND EXPENSES
    Casino                                                                    9,256,597
    Gaming and admission taxes                                               15,537,905
    Food and beverage                                                         1,128,868
    Advertising and promotion                                                 4,563,096
    General and administrative                                               12,289,291
    Economic incentive - City of Gary                                         1,586,351
    Depreciation & amortization                                               5,319,682
    Pre-opening costs                                                         4,586,879
                                                                          -------------
        Total costs and expenses                                             54,268,669
                                                                          -------------

    Operating income (loss)                                                     (48,110)
                                                                          -------------

    Other income (expense)
      Loss on investment in Buffington Harbor Riverboats, L.L.C.             (2,439,581)
      Interest income                                                         2,198,929                $249,295
      Interest expense                                                       (8,246,565)
      Interest expense to affiliate                                            (351,277)
                                                                          -------------             -----------
      Total other income (expense)                                           (8,838,494)                249,295
                                                                          -------------             -----------

NET INCOME (LOSS)                                                         $  (8,886,604)            $   249,295
                                                                          =============             ===========

</TABLE>

   The accompanying notes are an integral part of the financial statements.


                                     F-3

<PAGE>   31


                         THE MAJESTIC STAR CASINO, LLC
                    STATEMENTS OF CHANGES IN MEMBERS' EQUITY

            FOR THE YEAR ENDED DECEMBER 31, 1996 AND FOR THE PERIOD
           DECEMBER 8, 1993 (DATE OF INCEPTION) TO DECEMBER 31, 1995


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

<TABLE>
<CAPTION>
                                                                                  RETAINED
                                                                                  EARNINGS          TOTAL
                                                                   CAPITAL      (ACCUMULATED       MEMBERS'
                                                                CONTRIBUTIONS     DEFICIT)          EQUITY
                                                                -------------   -------------    -----------
<S>                                                             <C>             <C>              <C>
Balance, December 8, 1993
     Members' contributions                                      $ 32,547,090            -       $32,547,090
     Non-cash contributions                                         2,212,265            -         2,212,265
     Net income                                                           -      $   249,295         249,295
                                                                -------------   -------------    -----------

Balance, December 31, 1995                                         34,759,355        249,295      35,008,650

     Conversion of capital contribution to debt                   (10,759,355)           -       (10,759,355)
     Net  loss                                                            -       (8,886,604)     (8,886,604)
                                                                -------------   -------------    -----------

Balance, December 31, 1996                                       $ 24,000,000    $(8,637,309)    $15,362,691
                                                                =============   =============    ===========


</TABLE>




   The accompanying notes are an integral part of the financial statements.



                                     F-4
<PAGE>   32
                         THE MAJESTIC STAR CASINO, LLC
                            STATEMENTS OF CASH FLOWS
            FOR THE YEAR ENDED DECEMBER 31, 1996 AND FOR THE PERIOD
           DECEMBER 8, 1993 (DATE OF INCEPTION) TO DECEMBER 31, 1995



<TABLE>
<CAPTION>
                                                                                                               FOR THE PERIOD
                                                                                          FOR THE              DECEMBER 8, 1993
                                                                                        YEAR ENDED            (DATE OF INCEPTION)
                                                                                     DECEMBER 31, 1996      TO DECEMBER 31, 1995
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                   <C>                       <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (Loss)                                                                      ($8,886,604)               $249,295
Adjustment to reconcile net income to net cash provided by operating activities
    Depreciation                                                                         2,815,104
    Amortization                                                                         2,504,578
    Deferred expenses                                                                      234,796              (2,585,863)
    Organizational costs                                                                                          (141,241)
    Loss on investment in Buffington Harbor Riverboats, L.L.C.                           2,439,581
    Increase in accounts receivable, net                                                  (557,816)
    Increase in inventories                                                                (24,651)
    Increase in prepaid expenses                                                        (1,169,868)
    Increase in other assets                                                              (310,722)               (250,000)
    Increase in accounts payable                                                           424,581                 119,573
    Increase in accrued payroll and other expenses                                         593,492
    Increase in accrued interest                                                         2,468,698
    Increase in other accrued liabilities                                                2,323,270
                                                                                     -------------------------------------

Net cash provided by (used in) operating activities                                     $2,854,439             ($2,608,236)

CASH FLOWS FROM INVESTING ACTIVITIES
    Acquisition of property, equipment and leasehold interest                          (20,241,855)                (74,846)
    Licensing and local initiative expenditures                                         (2,747,000)
    Increase in Chartered Vessel deposit                                                (1,717,538)
    Investment in Buffington Harbor Riverboats, L.L.C.                                 (25,563,415)            (21,417,619)
    Increase in restricted cash                                                        (51,688,854)
                                                                                     -------------------------------------
Net cash used in investing activities                                                  (101,958,662)            (21,492,465)

CASH FLOWS FROM FINANCING ACTIVITIES
    Proceeds of loan from Member                                                        18,097,299              32,547,090
    Proceeds from issuance of 12.75%  Senior Secured Notes -                           105,000,000
    Repayment of short term loan debt                                                  (18,097,299)
    Cash paid to reduce long-term debt                                                  (1,290,860)
    Payment of Senior Secured Notes issuance costs                                      (4,115,307)
                                                                                     -------------------------------------
Net cash provided by financing activities                                               99,593,833              32,547,090

Net increase in cash and cash equivalents                                                  489,610               8,446,389

Cash and cash equivalents, beginning of year                                             8,446,389                     -
                                                                                     -------------------------------------

Cash and cash equivalents, end of year                                                  $8,935,999             $ 8,446,389
                                                                                     =====================================

</TABLE>

SUPPLEMENTAL NONCASH FINANCING ACTIVITIES INCLUDE THE FOLLOWING:
    On March 31, 1996, contributions totaling $10,759,355 were converted from
      Members' Equity to Long-term debt.
    During 1996, the Company obtained financing of $6,623,205 for gaming
      equipment and paid interest of $382,231.
    During 1995, deferred expenses of $918,286 were paid by a former member on
      behalf of the Company and $888,580 were contributed to the Company by a
      current member.
    In 1995, the Investment in Buffington Harbor Riverboats, L.L.C. of $87,167
      was paid by a former member on behalf of the Company and $318,232 was
      contributed to the Company by a current member.


   The accompanying notes are an integral part of the financial statements.

                                     F-5
<PAGE>   33


                         THE MAJESTIC STAR CASINO, LLC
                         NOTES TO FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION:

      The Majestic Star Casino, LLC (the "Company") was formed on December 8,
      1993, as an Indiana limited liability company, 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 in June 1996.

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, 1996 and 1995, the Company had bank deposits in
      excess of federally insured limits by approximately $4,907,000 and
      $8,346,000, respectively.

      INVENTORIES - are stated 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 $310,722 of base stock inventories at December 31,
      1996.

      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 disposals are recognized when
      incurred.

      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.

                                     F-6


<PAGE>   34



                         THE MAJESTIC STAR CASINO, LLC
                         NOTES TO FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED:

   For the period ended December 31, 1996,  interest expense capitalized for
   the construction of a new riverboat casino (the "Permanent Vessel") to
   replace a leased vessel amounted to approximately $213,000.

   DEFERRED FINANCING COSTS - represent agent's commission, closing costs
   and professional fees incurred in connection with the Senior Secured
   Notes.  Such costs are being amortized over the seven year term of the
   notes.

   ORGANIZATIONAL COSTS - are costs incurred in connection with the
   formation of the limited liability company.  These costs have been
   capitalized and are being amortized over a period of five years.

   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 or distributions.  The Company's investment will not be
   reduced below zero as a result of such adjustments.

   DEFERRED COSTS - include development obligation payments to the City and
   licensing costs.  Such payments and costs, which represent direct costs
   associated with the development of the riverboat casino, were deferred
   until operations commenced in June 1996, and are currently being
   amortized over five years, the life of the gaming license.  At December
   31, 1995, deferred costs also included pre-opening costs which were
   charged to operations during 1996.

   RESTRICTED CASH - at December 31, 1996 represents cash and investments of
   approximately $51,689,000 to fund future cash requirements of the Company
   as required by the Indenture discussed in Note 10.  The funds are
   invested primarily in securities of the U.S. government and its agencies,
   with original maturities less than 180 days and are held in collateral
   accounts pursuant to disbursement agreements of the Senior Secured Notes.

   CASINO REVENUE - is the net win from gaming activities, which is the
   difference between gaming wins and losses.

                                     F-7




<PAGE>   35




                         THE MAJESTIC STAR CASINO, LLC
                         NOTES TO FINANCIAL STATEMENTS

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED:

     PROMOTIONAL ALLOWANCES - operating revenues include the retail value of
     food provided to customers without charge; corresponding charges have
     been deducted from revenue in the accompanying 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:


                                     1996           1995

                        Food        $13,026        - 0 -

     FEDERAL INCOME TAXES - the Company has elected status as an LLC under the
     Internal Revenue Code.  Under this election, income of the Company is
     taxed directly to the members and, accordingly, there is no provision for
     federal income taxes.

     LONG-LIVED ASSETS - during 1995, the Company 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 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.

                                     F-8

<PAGE>   36



                         THE MAJESTIC STAR CASINO, LLC
                         NOTES TO 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.

   The second certificate was issued to Trump Indiana, Inc. ("Trump").  The
   Company and Trump have committed to a joint development and operation of
   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, Trump and the City entered into an
   agreement.  In accordance with this agreement, 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 September 7, 1995 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 next five years, (2) pay
   the City an economic incentive equal to 3% of the Company's adjusted
   gross receipts, as defined by the Riverboat Gaming 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.

                                     F-9

<PAGE>   37



                         THE MAJESTIC STAR CASINO, LLC
                         NOTES TO FINANCIAL STATEMENTS

5. PROPERTY, EQUIPMENT AND VESSEL IMPROVEMENTS:

   Property and equipment at December 31, 1996 and 1995 consist of the
   following:


<TABLE>                                                       Estimated
<CAPTION>                                                     Service
                                                                Life
                                   1996              1995      (Years)


<S>                              <C>               <C>       <C>
Buildings and improvements     $    28,789           -             5
Vessel improvements              5,051,258           -             2
Furniture, fixtures and
 equipment                      13,211,824           -             5
                                -----------       --------
                                18,291,871           -

Less accumulated depreciation
and amortization                 (2,815,104)
                               -------------      --------
                                 15,476,767
Construction in progress          8,648,035       $74,846
                               -------------      --------

Total                           $24,124,802       $74,846
                               ------------       --------
</TABLE>


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

6. INVESTMENT IN BUFFINGTON HARBOR RIVERBOAT, L.L.C.:

   On October 31, 1995, the Company and Trump entered into the First
   Amended and Restated Operating Agreement of Buffington Harbor Riverboat,
   L.L.C. ("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 operations, which is allocated on a percentage of use
   by the casino customers of the Company and the joint venture partner.

                                    F-10

<PAGE>   38



                         THE MAJESTIC STAR CASINO, LLC
                         NOTES TO FINANCIAL STATEMENTS

6. INVESTMENT IN BUFFINGTON HARBOR RIVERBOAT, L.L.C." - CONTINUED:

   The following represents selected financial information of BHR:


<TABLE>
<CAPTION>
                                      December 31, 1996     December 31, 1995
                                      -----------------     -----------------
       <S>                             <C>                 <C>

       BALANCE SHEET
       Cash and cash equivalents       $    68,380            $14,056,869
       Current Assets                    2,663,868             14,056,869
       Property, equipment and
       construction in progress, net    90,854,327             32,603,593
       Deferred pre-opening costs                -                571,440
       Other assets                         49,075
       Total assets                     93,567,270             47,231,902
       Current Liabilities               1,941,459              2,940,645
       Total liabilities                 3,655,768              3,512,085
       Members' Equity-
       Majestic Star Casino, LLC        44,946,852             21,823,018
       Total members' equity            89,911,502             43,719,817
       INCOME STATEMENT
       Gross revenue                    12,764,460                      -
       Operating income (loss)          (5,138,192)                     -
       Net income (loss)               $(4,935,145)           $    73,781
</TABLE>


      Promotional allowances provided to the Company's gaming patrons at BHR
      facilities totaled approximately $288,000 in 1996, 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, 1996 the Company's income statement reflects
      approximately  $4,314,000 in vessel berthing fee's and promotional
      allowances payable to BHR of which $3,487,000 were paid in 1996.

7.    CHARTER AGREEMENT:

      On August 17, 1995, the Company entered into a Charter Agreement
      ("Agreement") with New Yorker Acquisition Corporation ("Owner") and
      President Casino, Inc. for the purpose of leasing the Owner's casino
      gaming vessel together, with all improvements, furniture, fixtures and
      equipment.



                                    F-11

<PAGE>   39



                         THE MAJESTIC STAR CASINO, LLC
                         NOTES TO FINANCIAL STATEMENTS

7.   CHARTER AGREEMENT: - CONTINUED

     The Agreement became effective on May 3, 1996, and expires on May 3,
     2001, subject to early termination options.  Under the terms of the
     Agreement, the Company will pay the Owner $125,000 plus 5% use tax
     monthly for the first 24 months.  The total amount of rent expense
     included in the Company's Statement of Income was approximately $879,000
     for 1996. The monthly rate for the final three years will be negotiated
     based on market rates.  The Company is responsible for certain
     refurbishing and expenses to operate the vessel during the charter and
     upon the return of the vessel to its owners.

     As required by the Agreement, the Company has placed a security deposit
     in escrow with a financial institution.  As of December 31, 1996 and
     December 31, 1995, the amount in escrow including accrued interest was
     approximately $1.7 million and $250,000 respectively.  The security
     deposit is refundable pursuant to the terms of the escrow agreement.

8.   LONG -TERM DEBT:

     There was no long-term debt at December 31, 1995. Long-term debt at
     December 31, 1996 is as follows:

<TABLE>
<CAPTION>
                                                         1996
     <S>                                             <C>
     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.
     (See Note 10).                                  $105,000,000

     Contracts payable collateralized by gaming
     equipment; due in aggregate monthly
     installments of approximately $184,300
     plus interest, with varying maturity
     dates through April 1999.                          5,332,345

                                                     -------------
     Total long-term debt                             110,332,345
     Less current portion                              (2,211,599)
                                                     -------------

     Long-term portion                               $108,120,746
                                                     -------------
</TABLE>


                                    F-12




<PAGE>   40




                         THE MAJESTIC STAR CASINO, LLC
                         NOTES TO FINANCIAL STATEMENTS

8. LONG - TERM DEBT: - CONTINUED

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

<TABLE>
<S>                       <C>
   Year Ending
   December 31,
   1997                   $   2,211,599
   1998                       2,211,599
   1999                         909,147
   2000
   2001
   Thereafter               105,000,000
                           -------------
   Total                   $110,332,345

   Equipment Financing

</TABLE>

    At December 31, 1996, approximately $5.3 million of equipment financing
    was outstanding of which $2.2 million represents current maturities of
    long-term debt. This debt, which carries a floating interest rate of 3%
    over prime (prime was 8.25% at December 31, 1996), is collateralized by
    certain gaming equipment and the remaining balance will be repaid in equal
    monthly principal payments of approximately $184,300.

9.  NOTE TO MEMBER

    At December 31, 1996, approximately $10.8 million was owed to a member
    of the Company.  This note carries a floating interest rate equal to
    the applicable federal short term note, as set forth in Section 1274(d) of
    the Internal Revenue Code of 1986 (5.6% at December 31, 1996) and cannot be
    repaid, under the Indenture, until the completion of the Permanent Vessel.
    This note resulted from the conversion of members' Contributions into debt
    on March 31, 1996.  There is no set term for the Note to member.

10. SENIOR SECURED NOTES:

    On May 22, 1996, the Company completed a private offering of $105,000,000
    of Senior Secured Notes due May 15, 2003.  These notes were exchanged in
    November, 1996 by the Senior Exchange Secured Notes, which are registered
    under the Securities Exchange Act of 1933., but which notes are otherwise
    substantially identical in all material respects to the privately placed
    notes.

    The Senior Secured Notes bear interest at a fixed rate of 12.75% per annum
    payable May 15 and November 15 of each year commencing November 15, 1996.
    Contingent

                                    F-13


<PAGE>   41




                        THE MAJESTIC STAR CASINO, LLC
                         NOTES TO FINANCIAL STATEMENTS

10. SENIOR SECURED NOTES: - CONTINUED

    interest is payable on the Senior Secured Notes, on each such interest
    payment date, in an aggregate amount equal to 5.0% of the Company's
    Consolidated Cash Flow, as defined in the Indenture between the Company and
    IBJ Schroder Bank & Trust  Company, as Trustee, dated May 22, 1996 (the
    "Indenture"), for the six month period ending on March 31 or September 30
    (each, a "Semiannual Period") most recently completed prior to such
    interest payment date, based on maximum of $60.0 million of the Company's
    Consolidated Cash Flow during any two consecutive Semiannual Periods;
    provided that no contingent interest shall be payable with respect to any
    period prior to the first day of the operation of the Majestic Star Casino,
    as defined in the Indenture.  Under certain circumstances, the Company, at
    its option, may defer payment of all or a portion of any installment of
    contingent interest.  Contingent interest accrued as of December 31, 1996
    was approximately $603,000. A portion of the proceeds from the Senior
    Secured Notes will be used to construct a new casino vessel to replace the
    Chartered Vessel.  These amounts are characterized as Restricted Cash on
    the accompanying balance sheet as further discussed in Note 2.

    The Senior Secured Notes are collateralized by, among other things
    (i) a pledge of the Company's 50% membership interest in BHR, (ii) a
    collateral assignment of the Company's interest in the Berthing
    Agreement, (iii) a pledge of all funds in the collateral accounts into
    which the proceeds from the Senior Secured Notes were deposited pending
    their use and (iv) upon delivery of the Permanent Vessel to the Company,
    a duly perfected first preferred ship mortgage on such Permanent Vessel.

    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.

11. LETTER OF CREDIT/SURETY BOND

    In May 1996, the Company arranged for a $12.5 million five year surety
    bond (the "Bond") to be issued to the Commission.  The Bond's primary
    purpose is to provide collateral for completion of the Company's off-site
    development obligations under the Development Agreement.  To support the
    Company's obligations to the bonding company, the Company obtained a $3.5
    million letter of credit from a bank to benefit the bonding company.  The
    beneficial owner of the Company (the "Owner") guaranteed the Company's
    obligations to the bonding company under the Bond and to the bank under
    the $3.5 million letter of credit.

                                    F-14


<PAGE>   42




                         THE MAJESTIC STAR CASINO, LLC
                         NOTES TO FINANCIAL STATEMENTS

11. LETTER OF CREDIT/SURETY BOND - CONTINUED:

    If the Owner is required to make payments to the bank or the bonding
    company as a result of the guaranty, the Company will be obligated to
    reimburse the Owner for any such payments.

12. COMMITMENTS AND CONTINGENT LIABILITIES:

    CONSTRUCTION CONTRACT

           The Company has executed a contract with Atlantic Marine, Inc. for
    the construction of the Permanent Vessel and for the delivery of the vessel
    on September 27, 1997 at a fixed cost of $33,000,000.

    LEGAL PROCEEDINGS

           On May 1, 1996, a class action complaint was filed in the Lake
    Superior Court in Gary, Indiana, against the joint venture partner and
    certain of its affiliates, the Company and certain of its affiliates, the
    IGC, the City of Gary and the Mayor of the City of Gary and certain other
    parties affiliated with the City of Gary.  The plaintiffs were comprised
    of two local contractors, a former city employee, and five persons who
    claim that they were to be investors in the riverboat casinos to be
    operated in Gary, Indiana.  The complaint alleged, among other things,
    that the joint venture partner and the Company each have failed to meet
    certain obligations with respect to minority hiring goals, utilization of
    minority and/or women contractors, investment in city projects and
    providing certain residents of the City of Gary with the right to acquire
    a 15% equity interest in their respective projects.  Plaintiffs sought
    various remedies including damages and injunctive relief in the form of
    an order to enjoin the IGC from issuing gaming licenses to the Company
    and the Joint Venture Partner until they have complied with these
    conditions.  On July 11, 1996, the court granted a motion filed by the
    defendants and the lawsuit was dismissed with prejudice.  In December
    1996,  an order was entered by the trial judge limiting his original
    dismissal to only matters regarding the injunctive relief.  The Company
    is taking steps to set aside and/or appeal such decision.  The Company
    believes that this lawsuit is without merits; however, at the present
    time, the Company cannot to predict the outcome of this matter and the
    effect, if any, of a judicial decision adverse to the Company.

                                    F-15


<PAGE>   43



                        THE MAJESTIC STAR CASINO, LLC
                         NOTES TO FINANCIAL STATEMENTS

12.  COMMITMENTS AND CONTINGENT LIABILITIES - CONTINUED:

           On March 5, 1997, three individuals filed a lawsuit in Lake Circuit
     Court, Crown Point, Lake County, Indiana, naming Don H. Barden and the
     Company as defendants.  The suit alleges that the defendants failed to
     enter into an agreement to sell five percent of the Company to the
     plaintiffs.  The plaintiffs are requesting unspecified damages and
     attorneys' fees.  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.

     HARBOR LEASE

           Under a lease agreement assumed by the BHR Joint Venture from Trump
     Indiana with Lehigh Portland Cement Company ("Lehigh Cement"), The BHR
     Joint Venture has leased certain property which is integral to the gaming
     operations of Trump Indiana and the Company.  The lease places certain
     restrictions on the use of the harbor by the joint venture partners and
     requires the reimbursement of certain costs which may be incurred by
     Lehigh Cement.  The lease is rent free through December 29, 1997 and
     subject to obtaining the necessary regulatory permits, the lease will be
     extended beyond December 23, 1997 until December 31, 2005.  The BHR Joint
     Venture will be required to pay $125,000 per month beginning January,
     1998.  If the regulatory permits are not obtained, the BHR Joint Venture
     may be required to construct a new harbor, berthing and guest facilities.
     The level of expenditures required for such new facilities cannot be
     accurately estimated at this time.

                                    F-16



<PAGE>   44

                       REPORT OF INDEPENDENT ACCOUNTANTS



To the Members of
The Majestic Star Casino, LLC:

Our report on the financial statements of The Majestic Star Casino, LLC (the
"Company") is included in Part IV, Item 14 to this Form 10-K.  In connection
with our audits of such financial statements, we have also audited the related
financial statement schedule listed in Part IV of Form 10-K, Item 14(a) 2 as of
and for the year ended December 31, 1996.

In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.


Coopers & Lybrand, L.L.P.

Chicago, Illinois
March 28, 1997





                                    F-17
<PAGE>   45

                                                                SCHEDULE II

                         THE MAJESTIC STAR CASINO, LLC
                       VALUATION AND QUALIFYING ACCOUNTS
                      FOR THE YEAR ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>

                                                                     ADDITIONS
                                                            ---------------------------
                                        Balance at          Charged to                                       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, 1996            $ -               $190,000           $ -              $ -            $190,000

</TABLE>


                                      F-18

<PAGE>   46
                    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,
1996 and 1995, and the related statements of operations, members' capital and
cash flows for the year ended December 31, 1996 and for period from September
27, 1995 through December 31, 1995. 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 audit.

We conducted our audits in accordance with generally accepted auditing
standards. 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, 1996 and 1995, and the results of its operations and
its cash flows for year ended December 31, 1996 and for the period from
September 27, 1995 through December 31, 1995 in conformity with generally
accepted accounting principles.

                        Arthur Andersen LLP

Roseland, New Jersey
March 27, 1997


                                      F-19

<PAGE>   47

                      BUFFINGTON HARBOR RIVERBOATS, L.L.C.
                                 BALANCE SHEETS

                        AS OF DECEMBER 31, 1996 AND 1995


<TABLE>
<CAPTION>

            ASSETS                                                  1996             1995
<S>                                                          <C>               <C>
CURRENT ASSETS:
  Cash and cash equivalents (Note 2)                         $     68,380       $ 14,056,869
  Trade receivable                                                 15,264                  -
  Due from members' (Note 5)                                    1,928,390                  -
  Inventory                                                       560,272                  -
  Prepaid expense and other current assets                         91,562                  -
                                                             ------------       ------------
    Total Current Assets                                        2,663,868         14,056,869
                                                             ------------       ------------
PROPERTY, PLANT AND EQUIPMENT, NET (Note 2 and 3)              90,854,327         32,603,593

DEFERRED PREOPENING COSTS (Notes 5)                                     -            571,440

OTHER ASSETS                                                       49,075                  -
                                                             ------------       ------------
    Total assets                                             $ 93,567,270       $ 47,231,902

            LIABILITIES AND MEMBERS' CAPITAL

CURRENT LIABILITIES:
  Accounts payable                                           $  1,081,317       $  2,940,645
  Accrued expense                                                 460,142                  -
  Deferred Income (Note 4)                                        400,000                  -
                                                             ------------       ------------
    Total current liabilities                                   1,941,459          2,940,645

DEFERRED RENT EXPENSE (Notes 5)                                 1,714,309            571,440

COMMITMENTS AND CONTINGENCIES (Notes 5)

MEMBERS' CAPITAL                                               89,911,502         43,719,817
                                                             ------------       ------------
    Total liabilities and members' capital                   $ 93,567,270       $ 47,231,902
                                                             ============       ============
</TABLE>


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


                                      F-20


<PAGE>   48
                    BUFFINGTON HARBOR RIVERBOATS, L.L.C.
                           STATEMENT OF OPERATIONS

        FOR THE YEAR ENDED DECEMBER 31, 1996 AND FOR THE PERIOD FROM
                SEPTEMBER 27, 1995 THROUGH DECEMBER 31, 1995

<TABLE>
<CAPTION>

                                                                                           1996               1995
                                                                                       -------------   --------------
<S>                                                                                    <C>             <C>
REVENUES
   Food and Beverage                                                                    $ 3,576,492    $          -
   Other (Note 4)                                                                         9,187,968               -
                                                                                       -------------   --------------
      Gross Revenue                                                                      12,764,460               -
                                                                                       -------------   --------------

COSTS AND EXPENSES
   Food and Beverage                                                                      2,894,437               -
   General and administrative                                                             9,768,871               -
   Depreciation                                                                           3,039,708               -
   Other                                                                                    328,046               -
   Preopening expenses                                                                    1,871,590               -
                                                                                       -------------   --------------
                                                                                         17,902,652               -
                                                                                       -------------   --------------

      Loss from Operations                                                               (5,138,192)

INCOME - Interest income, net                                                               203,047            73,781
                                                                                       -------------   --------------

      Net (Loss) Income                                                                 ($4,935,145)   $       73,781
                                                                                       =============   ==============


</TABLE>

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

                                     F-21
<PAGE>   49
                      BUFFINGTON HARBOR RIVERBOATS, L.L.C.
                         Statement of Members' Capital

                  FOR THE YEAR ENDED DECEMBER 31, 1996 AND FOR
          THE PERIOD FROM SEPTEMBER 27, 1995 THROUGH DECEMBER 31, 1995


<TABLE>
<CAPTION>

                                                                                            RETAINED
                                                                       MEMBER               EARNINGS
                                                                    CONTRIBUTIONS           (DEFICIT)                  TOTAL
                                                                    -------------          --------------        -------------------
<S>                                                                 <C>                    <C>                     <C>
Balance, September 27, 1995

                                                                                 $0                      $0                  $0

        Capital contribution made by Trump Indiana, Inc.                 21,823,018                       0          21,823,018
        Capital contribution made by
         The Majestic Star Casino, LLC                                   21,823,018                       0          21,823,018
        Net income                                                                0                  73,781              73,781
                                                                        -----------             -----------         -----------

Balance, December 31, 1995                                               43,646,036                  73,781          43,719,817

        Capital contribution made by Trump Indiana, Inc.                 25,563,415                       0          25,563,415
        Capital contribution made by
         The Majestic Star Casino, LLC                                   25,563,415                       0          25,563,415
        Net loss                                                                  0              (4,935,145)        ($4,935,145)
                                                                        -----------             -----------         -----------

Balance, December 31, 1996                                              $94,772,866             ($4,861,364)        $89,911,502
                                                                        ===========             ===========         ===========

</TABLE>

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


                                      F-22
<PAGE>   50

                      BUFFINGTON HARBOR RIVERBOATS, L.L.C.
                            STATEMENT OF CASH FLOWS

          FOR THE YEAR ENDED DECEMBER 31, 1996 AND FOR THE PERIOD FROM
                  SEPTEMBER 27, 1996 THROUGH DECEMBER 31, 1995


<TABLE>
<CAPTION>

                                                        1996          1995
                                                    -----------    -----------
<S>                                                 <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income                                   ($4,935,145)   $    73,781
Adjustments to reconcile net (loss) income to
  net cash flows (used in) provided by
  operating activities-
  Depreciation                                        3,039,708           -
  Deferred rent expense                               1,714,309           -
  Deferred income                                       400,000           -

Changes in operating assets and liabilities-
  Increase in accounts receivable                       (15,264)          -
  Increase in inventory                                (560,272)          -
  Increase in due from members'                      (1,928,390)          -
  Increase in prepaid expenses and other
    current assets                                      (91,562)          -
  Increase in other assets                              (49,075)          -
  Increase in accounts payable                       (1,859,328)     2,940,645
  Increase in accrued expenses                          460,142           -
                                                    -----------    -----------
    Net cash flows (used in) provided by
      operating activities                           (3,824,877)     3,014,426
                                                    -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES - Purchases
  of property, plant and equipment                  (61,290,442)   (32,603,593)
                                                    -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Contributed capital-                               51,126,830     43,646,036
                                                    -----------    -----------
    Net (decrease) increase in cash and
      cash equivalents                              (13,988,489)    14,056,869

CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD        14,056,869           -
                                                    -----------    -----------
CASH AND CASH EQUIVALENTS END OF PERIOD             $    68,380    $14,056,869
                                                    ===========    ===========

</TABLE>


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


                                      F-23
<PAGE>   51
                      BUFFINGTON HARBOR RIVERBOATS, L.L.C.

                         NOTES TO FINANCIAL STATEMENTS



(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 riverboats casinos, formed Buffington Harbor Riverboats, L.L.C.
     ("BHR") on September 27, 1995 and have entered into an agreement (the
     "BHR Agreement") relative 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.

     PROPERTY, PLANT AND EQUIPMENT-

     Property, plant and equipment is carried at cost.  At December 31 1995,
     substantially all of the property and equipment represented construction
     in progress; accordingly no depreciation was recorded for the period from
     September 27, 1995 through December 31, 1995.  Property and equipment is
     depreciated on the straight-line method using rates based on the
     following useful lives:


<TABLE>
             <S>                                <C>
             Land improvements                         15 years
             Buildings                                 40 years
             Building improvements                 5 - 10 years
             Harbor improvements                  10 - 15 years
             Furniture, fixtures and equipment          5 years
</TABLE>


     INCOME TAXES -

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


                                    F-24
<PAGE>   52




                      BUFFINGTON HARBOR RIVERBOATS, L.L.C.

                         NOTES TO FINANCIAL STATEMENTS



     LONG-LIVED ASSETS-

      During 1995, BHR 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 operations
      are less than the carrying value of these assets.  As a result of its
      review, BHR does not believe that any impairment exists in the
      recoverability of its long-lived assets.

     STATEMENT OF CASH FLOWS-

      For purposes of the statement of cash flows, the Company considers all
      highly liquid debt instruments purchased with a maturity of three months
      or less at the time of acquisition to be cash equivalents.

(3)  PROPERTY, PLANT AND EQUIPMENT:

     Property, plant and equipment is comprised of the following-


<TABLE>
                                               1996           1995
                                              -----------  -----------

          <S>                                 <C>          <C>
          Land and land improvements          $34,167,743  $22,988,872
          Building and building improvements   37,184,893    1,435,684
          Harbor improvements                  16,582,189    8,179,037
          Furniture, fixtures and equipment     5,959.210            0
                                              -----------  -----------
                                               93,894,035   32,603,593
          Less:  Accumulated depreciation       3,039,708            0
                                              -----------  -----------
          Total property, plant and
          equipment, net                      $90,854,327  $32,603,593
                                              ===========  ===========
</TABLE>

(4)  OTHER INCOME:

      Under the terms of BHR Agreement, Trump Indiana and Barden pay berthing
      and other fees to BHR for the services provided by and the utilization of
      BHR's common area facilities.  Services provided by and BHR to customers
      of its members are charged to the members at cost.

      At December 31, 1996, deferred income represents prepaid berthing fees.

                                    F-25


<PAGE>   53


                      BUFFINGTON HARBOR RIVERBOATS, L.L.C.

                         NOTES TO FINANCIAL STATEMENTS



(5)   COMMENTS AND CONTINGENCIES:

      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
      ownership and financial structure of not only riverboats owner and
      supplier licensees, but also their 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 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 and requires the reimbursement of
      certain costs which may be incurred by Lehigh Cement.  The lease is rent
      free through December 29, 1997 and subject to obtaining the necessary
      regulatory permits, the lease will be extended beyond December 29, 1997
      until December 31, 2005.  BHR will be required to pay $125,000 per month
      beginning January, 1998.  As of December 31, 1996 and 1995, BHR has
      recorded deferred rent expense of $1,714,309 and $571,440, respectively.

      Minimum rental commitments under noncancelable operating leases are as
      follows-


<TABLE>
                     <S>                         <C>
                      Years ended December 31-
                        1997                      $         0
                        1998                        1,500,000
                        1999                        1,500,000
                        2000                        1,500,000
                        2001                        1,500,000
                        Thereafter                  6,000,000
                                                  -----------
                                                  $12,000,000
                                                  ===========
</TABLE>


                                    F-26


<PAGE>   54



                                   SIGNATURES



     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on March 28, 1997.



                                      The Majestic Star Casino, L.L.C.


                                      By:  Barden Development Inc., Manager

                                      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
registrant and in the capacities and on the date indicated.



Signature                          Title                      Date

/s/ Don H. Barden                 President and              March 28, 1997
---------------------             Chief Executive Officer
Don H. Barden                     of the Manager and the
                                  Company (Principal
                                  Executive Officer)



/s/ Michael E. Kelly              Vice President and         March 28, 1997
--------------------              Chief Financial Officer
Michael E. Kelly                  (Principal Financial and
                                  Accounting Officer of the
                                  Company)








<PAGE>   55


                               INDEX TO EXHIBITS





Exhibit
Number           Document
----------------------------------------------------------------------------

3.1  Amended and Restated Articles of Organization of The Majestic Star
     Casino, L.L.C., 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, L.L.C. 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.

4.1  Purchase Agreement, dated as of May 22, 1996, by and between The
     Majestic Star Casino, L.L.C. and Wasserstein Perella Securities, Inc.,
     filed as Exhibit 4.1 to the Company's Registration Statement, No.
     333-06489, and incorporated herein by reference.

4.2  Indenture, dated as of May 22, 1996, by and between The Majestic
     Star Casino, L.L.C., IBJ Schroder Bank & Trust Company, as Trustee,
     with respect to the Senior Secured Notes due 2003 with Contingent
     Interest (the "Senior Notes") and the holder of Senior Exchange
     Secured Notes due May 15, 2003 with Contingent Interest (the "Senior
     Exchange Notes"), filed as Exhibit 4.2 to the Company's Registration
     Statement, No. 333-06489, and incorporated herein by reference.

4.3  Form of Senior Note and Senior Exchange Note (included in Exhibit
     4.2), filed as Exhibit 4.3 to the Company's Registration Statement, No.
     333-06489, and incorporated herein by reference.

4.4  Security Agreement, dated as of May 22, 1996, from The Majestic Star
     Casino, L.L.C., in favor of the holders of Senior Notes and the Senior
     Exchange Notes, filed as Exhibit 4.4 to the Company's Registration
     Statement, No. 333-06489, and incorporated herein by reference.

4.5  Pledge Agreement, dated as of May 22, 1996, from Barden Development,
     Inc. in favor of the holders of Senior Notes and the Senior Exchange Notes,
     filed as Exhibit 4.5 to the Company's Registration Statement, No. 333-
     06489, and incorporated herein by reference.

4.6  Pledge Agreement, dated as of May 22, 1996, from the Company in favor
     of the holders of Senior Notes and the Senior Exchange Notes, filed as
     Exhibit 4.6 to the Company's Registration Statement, No. 333-06489, and
     incorporated herein by reference.

4.7  Trademark Security Agreement, dated as of May 22, 1996, from the Company
     in favor of the holders of the Senior Notes and the Senior Exchange Notes,
     filed as Exhibit 4.7 to the Company's Registration State, No. 333-06489,
     and incorporated herein by reference.


                                     E-1



<PAGE>   56

4.8      Cash Collateral Agreement, dated as of May 22, 1996, by and among the
         Company, the Trustee and NBD Bank.

10.1(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.

10.2(1)  Employment Letter Agreement effective as of December 4, 1995 by and
         between the Company, and Thomas C. Bonner, filed as Exhibit 10.2 to
         the Company's Registration Statement, No. 333-06489, and incorporated
         herein by reference.

10.3(1)  Employment Letter Agreement effective as of December 4, 1995 by and
         between the Company, and Paul W. Sykes, filed as Exhibit 10.3 to the
         Company's Registration Statement, No. 333-06489, and incorporated
         herein by reference.

10.4(1)  Employment Letter Agreement effective as of April 22, 1996 by and
         between the Company and Michael E. Kelly, filed as Exhibit 10.4 to
         the Company's Registration Statement, No. 333-06489, and
         incorporated herein by reference.

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

10.6     First Amended and Restated Operating Agreement of Buffington Harbor
         Riverboats, L.L.C., 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.

10.7     Charter Agreement, dated August 17, 1995, by and among New Yorker
         Acquisition Corporation, the Company and President Casinos, Inc., as
         amended to date, filed as Exhibit 10.7 to the Company's Registration
         Statement, No. 333-06489, and incorporated herein by reference.

10.8     Development Agreement, dated March 26, 1996, by and between the
         Company and the City of Gary, Indiana, filed as Exhibit 10.8 to the
         Company's Registration Statement, No. 333-06489, and incorporated
         herein by reference.

10.9     Harbor Lease Agreement, dated June 29, 1995, by and between Trump
         Indiana, Inc. and Lehigh Portland Cement Company, as assigned by
         Trump Indiana, Inc. to Buffington Harbor Riverboats, L.L.C. pursuant
         to the Assignment Agreement dated as of October 31, 1995, by and
         between Trump Indiana, Inc. and Buffington Harbor Riverboats, L.L.C.,
         filed as Exhibit 10.9 to the Company's Registration Statement, No.
         333-06489, and incorporated herein by reference.

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

10.11    Master Surety Agreement by and between Company and United States
         Fidelity and Guaranty Company, filed as Exhibit 10.11 to the Company's
         Registration Statement, No. 333-06489, and incorporated herein by
         reference.



                                       E-2



<PAGE>   57

10.12    Standby Letter of Credit Application and Reimbursement and Security
         Agreement, filed as Exhibit 10.12 to the Company's  Registration
         Statement, No. 333-06489, and incorporated herein by reference.

10.10    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.

10.13    Promissory Note dated March 31, 1996 from the Company to Barden
         Development, Inc., filed as Exhibit 10.13 to the Company's
         Registration Statement, No. 333-06489, and incorporated herein
         by reference.

10.14    Vessel Construction Contract between Majestic Star and Atlantic Marine,
         Inc. dated as of September 27, 1996 filed as Exhibit 10.14 to the
         Company's Report on Form 10-Q for the period ended September 30, 1996
         is incorporated herein by reference.

11*      Computation of Ratio of Earnings to Fixed Charges for the year ended
         December 31, 1996

27*      Financial data Schedule (EDGAR Version Only)

---------------
*Filed herewith
     (1) Denotes a management compensation arrangement.


                                     E-3