<PAGE>
                                       
                         SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, DC  20549
                                   -------------
                                     FORM 10-K
(Mark One)
/X/  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934.

For the fiscal year ended December 31, 1997

     OR

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

For the transition period from ___________ to ____________.

                           Commission file number 0-28068

                        COLORADO GAMING & ENTERTAINMENT CO.
               (Exact Name of Registrant as Specified in Its Charter)

<TABLE>
<S>                                                              <C>
DELAWARE                                                                   84-1242693
(State or Other Jurisdiction of Incorporation or Organization)   (I.R.S.Employer Identification No.)

12596 WEST BAYAUD AVE., SUITE 450, LAKEWOOD, COLORADO                           80228
(Address of Principal Executive Offices)                                   (Zip Code)
</TABLE>

                                   (303) 716-5600
               (Registrant's Telephone Number, Including Area Code) 

            SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: 
                                       (None)

            SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                      Common Stock (Par Value $0.01 Per Share)
                                   Title of Class

     Indicate by check P 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 Pif there are no delinquent filers to disclose herein 
pursuant to Item 405 of Regulation S-K, and there will not be any delinquent 
filers to disclose, to the best of the registrant's knowledge, in definitive 
proxy or information statements incorporated by reference in Part III of this 
Form 10-K or any amendment to this Form 10-K. [ ]

                 APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                    PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
     Indicate by check X mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. 
Yes X  No
   ---   ---

     Number of shares of common stock outstanding at March 25, 1998:  5,236,091
     
                        DOCUMENTS INCORPORATED BY REFERENCE:
     Portions of the Proxy Statement relating to the 1998 Annual Meeting of
Stockholders are incorporated by reference into Part III of this Report.

<PAGE>

                                       PART I

ITEM 1.  BUSINESS

GENERAL

     Colorado Gaming & Entertainment Co. ("CG&E" or the "Company"), formally 
known as Hemmeter Enterprises, Inc. (referred to as the "Predecessor Company" 
for the period prior to June 7, 1996), develops, owns and operates gaming and 
related entertainment facilities.  The Company owns and operates, through 
wholly-owned subsidiaries, BWBH, Inc. ("BWBH" or "Bullwhackers Black Hawk") 
and BWCC, Inc. ("BWCC" or "Bullwhackers Central City") two of the largest 
casinos in terms of number of slot machines in the historic mining towns of 
Black Hawk and Central City, Colorado, respectively.  In addition, the 
Company owns and operates, through a wholly-owned subsidiary, Silver Hawk 
Casino, Inc., a third gaming facility, in Black Hawk (the "Silver Hawk 
Casino") (Bullwhackers Black Hawk, Bullwhackers Central City and the Silver 
Hawk Casino are referred to collectively as the "Colorado Casinos").  In 
addition, through a wholly-owned subsidiary, Millsite 27 Inc. ("MS27"), the 
Company owns a parking lot with a capacity of approximately 500 cars, which 
is located directly between, and is used by, Bullwhackers Black Hawk and the 
Silver Hawk Casino.  References in this Annual Report on Form 10-K to CG&E or 
the Company include its subsidiaries unless the context otherwise requires. 

     Colorado law currently permits limited stakes gaming (with a maximum 
single bet of $5.00) in three historic mining towns:  Black Hawk and Central 
City, adjacent towns located approximately 35 miles from Denver, and Cripple 
Creek, located approximately 45 miles from Colorado Springs and 110 miles 
from Denver. Gaming operations also exist on two Native American reservations 
in Southwest Colorado.  Colorado law only permits casinos to offer slot 
machines and the table games of blackjack and poker.
     
     Effective August 22, 1997, the Company entered into an Agreement and 
Plan of Merger, as amended as of October 21, 1997 (the "Merger Agreement"), 
with Ladbroke Racing Corporation, a Delaware corporation ("LRC"), and CG&E 
Acquisition Corp., a Delaware corporation ("Acquisition Sub"), pursuant to 
which the Acquisition Sub will be merged with and into the Company (the 
"Merger"). Prior to the Merger and pursuant to the terms of the Merger 
Agreement, LRC will assign all of its rights and obligations under the Merger 
Agreement, including its interest in the Acquisition Sub, to Ladbroke Gaming 
Corporation, a Delaware corporation ("Ladbroke"), a wholly-owned subsidiary 
of Ladbroke Group plc, the ultimate parent of LRC.  As a result of the 
assignment and the Merger, the Company will become a wholly-owned subsidiary 
of Ladbroke.  Pursuant to the Merger Agreement, holders of the Company's 
common stock, $0.01 par value (the "Common Stock"), will be entitled to 
receive $6.25 in cash for each share of Common Stock held by them immediately 
prior to the Merger.  On December 12, 1997, stockholders of the Company 
approved and adopted the Merger Agreement. The Merger remains subject to 
approval by the Colorado Limited Gaming Control Commission (the "Gaming 
Commission").  Although there can be no assurances, closing of the Merger is 
anticipated to occur sometime in the third quarter of 1998.  However, 
pursuant to the terms of the Merger Agreement, if the Merger has not been 
consummated on or before September, 30 1998, which date may be extended by 
the mutual written consent of LRC and the Company, either party has the right 
to terminate the Merger Agreement and abandon the Merger.

REORGANIZATION

     As a result of the financial difficulties of a riverboat gaming project 
undertaken in 1995 by Grand Palais Riverboat, Inc. ("GPRI"), a wholly-owned 
subsidiary of the Predecessor Company, the Predecessor Company, BWBH, BWCC 
and MS27 sought protection under Chapter 11 of the United States Bankruptcy 
Code on November 7, 1995 (the " Reorganization").  The First Amended Joint 
Plan of Reorganization of the Predecessor Company, BWBH, BWCC and MS27 was 
confirmed on April 8, 1996 and became effective on June 7, 1996 (the 
"Effective Date").  As a result, among other things, the Company 
significantly reduced its consolidated debt, issued new shares of common 
stock and sold GPRI.

COLORADO CASINOS AND RELATED AMENITIES

     BULLWHACKERS BLACK HAWK.  Bullwhackers Black Hawk opened on July 17, 1992
and is currently one of the


                                      1
<PAGE>

largest gaming facilities, in terms of number of slot machines, in Black 
Hawk.  It is located on a prime site at the town's main intersection of 
Colorado State Highway 119 (the primary access road to Interstate 70, which 
leads to Denver) and Gregory Street (which connects Black Hawk to Central 
City).  Bullwhackers Black Hawk is a 36,000 square foot facility which 
contains approximately 12,000 square feet of gaming space on four levels. The 
casino currently has approximately 600 slot machines and fifteen table games. 
 The facility has one bar on each level, a 176-seat full service restaurant 
and office space.  Bullwhackers Black Hawk utilizes a Victorian theme in its 
interior design, featuring a winding grand staircase and a glass-enclosed 
elevator connecting the various levels of the facility.

     In June 1997, the Company completed construction of a day care facility 
adjacent to Bullwhackers Black Hawk, operated by New Horizons Kids Quest III, 
Inc.("Kids Quest"), at a cost of approximately $1.4 million.  Kids Quest is 
solely responsible for the day-to-day operations of the day care facility.

     BULLWHACKERS CENTRAL CITY.  Bullwhackers Central City opened on June 15, 
1992 and is currently one of the largest gaming facilities, in terms of 
number of slot machines, in Central City.  It is located at one of the town's 
two main intersections, and is across from a parking facility.  This 31,000 
square foot facility contains approximately 8,750 square feet of gaming space 
on two levels. Bullwhackers Central City currently has approximately 320 slot 
machines, following a reduction of approximately 80 slot machines in the 
fourth quarter of 1997, and four table games at the facility.  The facility 
has two bars, a 126-seat full service restaurant and office space.  
Bullwhackers Central City also utilizes a Victorian theme in its interior 
design.

     The Company believes that proximity to convenient parking is extremely 
important to the Central City casinos and the Colorado market in general. 
However, except for the largest casino in Central City which recently 
constructed an on-site parking garage, none of the casinos currently 
operating in Central City offer on-site parking for more than approximately 
50 cars immediately.  There are several public parking lots in Central City 
offering parking for a total of approximately 550 cars, including a 200-space 
lot across from Bullwhackers Central City.  As a result of the lack of 
adequate convenient parking, many of the operators in Central City, including 
the Company, increasingly rely on costly busing programs, which offer cash 
back promotions and other incentives designed to enhance incremental patron 
visitation and play, particularly during off-peak periods.

     SILVER HAWK CASINO.  The Silver Hawk Casino is an approximately 12,000 
square foot four-story building constructed in 1993, that was operated as a 
casino by an unaffiliated third party for less than 90 days in 1993 before it 
was closed.  The Company purchased the Silver Hawk Casino on April 12, 1996. 
The Company completed minor interior remodeling and reopened the facility on 
June 26, 1996.  Currently, the Silver hawk Casino has approximately 230 slot 
machines and 3 table games. The facility has two bars, a full service 
restaurant and office space.

     PARKING LOT.  The Company owns an approximately 3.25-acre parking lot 
located between Bullwhackers Black Hawk and the Silver Hawk Casino.  The 
Company believes that proximity to convenient parking is extremely important 
in Black Hawk.  The Company believes that the few gaming facilities that 
offer substantial parking at or close to the facility generate higher 
revenues per gaming device than gaming facilities that do not offer adequate 
parking.  The Company believes its parking lot gives Bullwhackers Black Hawk 
and the Silver Hawk Casino a competitive advantage over other casinos in 
Black Hawk that offer fewer parking spaces or less convenient parking. 

     On May 23, 1997 the Company completed the process of expanding its 
parking lot to accommodate a total of  approximately 500 cars.  The total 
cost of the project was approximately $1.6 million.  The Company also 
constructed a new valet facility, which cost approximately $250,000, to 
increase customer convenience and to enhance access to the Kids Quest child 
care facility.

GROWTH STRATEGY

     BRONCO BILLY'S ACQUISITION.  On February 13, 1998, the Company purchased 
the assets comprising the casino known as Bronco Billy's in Black Hawk from 
Pioneer Associates Limited Liability Company for approximately $5.5 million.  
In connection with the purchase, the Company entered into an amendment to the 
Company's senior bank credit facility (the "Credit Facility") converting the 
expired construction sub-facility into a new line to borrow up to $5 million 
(the "Bronco Billy's Acquisition Line") to purchase and perform tenant 
improvements on the former Bronco Billy's casino.  The Company anticipates it 
will incur an additional $2.0 million to equip and renovate the former Bronco 
Billy's casino for reopening, which will be funded out of cash flow from 


                                      2
<PAGE>

operations or borrowings under the Credit Facility.  Bronco Billy's is 
located next to Bullwhackers Black Hawk.  The Company intends to remove the 
common wall separating the casinos in order for the former Bronco Billy's 
casino to become a part of Bullwhackers Black Hawk.  Subject to the approval 
of the Gaming Commission and applicable state and local liquor agencies (the 
"Liquor Agencies"), the combined casino will be operated as a single casino, 
under one gaming license and one liquor license.  The Company plans to open 
the new facility in May 1998, which will add approximately 250 slot machines 
and an additional restaurant facility to Bullwhackers Black Hawk, increasing 
the existing slot capacity in Bullwhackers Black Hawk by over 40%.  The 
Company intends to identify the expanded area of Bullwhackers Black Hawk as 
"The Bullpen Sports Casino" with an enhanced sports bar theme.

     CANADA.  In April 1997, The Company responded to a Request for Proposal 
("RFP") issued by the government of Ontario, Canada, to develop and operate 
multiple charity gaming clubs in the Province of Ontario.  The clubs will 
offer 150 video lottery terminals ("VLT") and 40 table games with a maximum 
single bet of $100.  In responding to the RFP, the Company and its partners 
formed Diamond Gaming of Ontario Inc. ("Diamond Gaming").  Diamond Gaming's 
shareholders are a newly formed subsidiary of the Company, which owns 45% of 
Diamond Gaming, a subsidiary of Ogden Corporation (45% owner) and Diamond 
Gaming Services Inc. (10%  owner).  On September 30, 1997, the Ontario Gaming 
Control Commission announced that Diamond Gaming was the successful bidder to 
develop and operate charitable gaming clubs in the cities of Kingston and 
Belleville, Ontario.  The development and opening of the Kingston and 
Belleville facilities remain contingent upon a number of items, including 
entering into an operating agreement with the Ontario Gaming Control 
Commission, reaching an agreement with property owners and local 
municipalities on specific sites, and obtaining zoning and other local 
approvals, none of which can be assured.  The proposed terms of the operating 
agreement will be an eight-year term with one eight-year renewal option.  
Diamond Gaming will receive operator's compensation equivalent to 10% of the 
VLT revenue and 5% of the table revenue and all other revenue. Additionally, 
Diamond Gaming will receive 10% of operating profits, as defined, excluding 
profits from VLT operations.  The Company currently estimates that the two 
clubs in Kingston and Belleville will require an initial investment of 
approximately $5.0 million in the aggregate.  The Company's share of such 
investment is approximately 47% of that amount, which it intends to fund from 
cash flow from operations or borrowings under the revolving portion of the 
Credit Facility.  Pursuant to a Supplemental Indenture dated January 23, 
1998, the Company has received the necessary consent of the holders of its 
12% Senior Secured Pay-In-Kind Notes to allow it to make the required 
investment.  The Company will account for its 45% interest in Diamond Gaming  
under the equity method of accounting.  See "Management's Discussion and 
Analysis of Financial Condition and Results of Operations - Liquidity and 
Capital Resources."

     CONSULTING AGREEMENT. In 1996, the Company entered into a agreement with 
a company in business of providing gaming consulting and management services 
to Native American Indian tribes.  The consulting agreement provided that the 
companies will use their joint resources to pursue obtaining contractual 
arrangements with various Native American tribes to provide consulting 
services for new and existing Native American gaming projects.  For the 
twelve months ended December 31, 1997 and 1996, the Company expended $123,000 
and $120,000, respectively, of fees and contributions, which has been 
expensed in the accompanying consolidated statements of operations.  On 
November 25, 1997, the consulting agreement was terminated with respect to a 
particular Native American gaming project for which the Company made the 
above-referenced contributions, which termination relieves the Company from 
any rights or obligations with respect to such project.  The termination 
provides that the Company shall be reimbursed a total of $185,000 of such 
fees and contributions, contingent upon the opening of the tribal casino for 
such project.  The consulting agreement is still in effect with regard to 
pursuing other Native American gaming projects.

     OTHER.  Although the Company intends to focus on its existing 
operations, it continues to review and evaluate potential opportunities to 
apply existing management expertise to additional gaming operations in 
Colorado and in other jurisdictions such as those described above.  The 
Company's ability to acquire additional gaming facilities in Colorado without 
disposing of existing facilities is limited by the fact that no entity may 
hold more than three Colorado gaming licenses or more than three gaming 
tavern liquor licenses or more than one type of liquor license.  The Company 
currently holds, through its subsidiaries, the maximum number of gaming and 
liquor licenses allowed in Colorado.  Additionally, the Company's lending  
agreements significantly limit the amount of capital which may be expended 
for certain new projects.  See " -Colorado Gaming Regulations" and " - 
Non-Gaming Regulation."


                                      3
<PAGE>

COLORADO GAMING MARKET

     GENERAL.  Black Hawk and Central City are historic mining towns made 
famous during the gold rush of 1859.  Prior to the advent of casino gaming in 
October 1991, Black Hawk, and, to a greater extent, Central City, were 
popular tourist towns, especially in the summer.  Casino gaming is currently 
the main draw to the towns and gaming establishments have displaced many of 
the former tourist-related businesses.

     Customers for casinos in Black Hawk and Central City are primarily "day 
trippers" from the Denver metropolitan area.  Approximately 2.1 million 
people live in the Denver metropolitan area, approximately 2.4 million people 
live within a 50-mile radius, and approximately 2.8 million people live 
within a 100-mile radius, of Black Hawk and Central City.  Black Hawk and 
Central City are located approximately 35 miles west of Denver and 
approximately ten miles from Interstate 70, the main east-west artery 
connecting Denver with many of Colorado's premier ski resorts.

     According to the Colorado Division of Gaming, there were 52 gaming 
facilities operating in Colorado at the end of 1997, with a total of 12,977 
slot machines and 224 table games.  Of these, 19 facilities, 5,337 slot 
machines and 106 table games were located in Black Hawk; 12 facilities, 3,196 
slot machines and 58 table games were located in Central City; and 21 
facilities, 4,444 slot machines and 60 table games were located in Cripple 
Creek.  Generally, Central City facilities have not been able to compete 
effectively with facilities in Black Hawk, primarily because Black Hawk 
casinos offer substantially more on-site parking and more convenient location 
and access, which is a significant competitive advantage in the Colorado 
market.  For the year ended 1997, the average daily adjusted gross proceeds 
(determined by deducting the amount paid out to patrons from gross proceeds, 
and sometimes referred to as the casino's "win") per slot machine was $113.81 
in Black Hawk, $68.12 in Central City and $63.38 in Cripple Creek.  The 
cumulative gaming win in Black Hawk as a market was $220 million in 1997 and 
$204 million in 1996.  While the Black Hawk market continues to grow, the 
growth rate has slowed substantially from that of several years ago.  The 
cumulative gaming win in the Central City market was $82 million and $83 
million in 1997 and 1996, respectively.  Although these figures reveal only a 
slight decrease in the cumulative gaming win in Central City, the recent 
results of the Central City market reflect the strong growth of a the largest 
competitor located off Main Street in Central City, due, among  other 
matters, to the addition of a new parking garage, while the results of the 
Main Street operators, including Bullwhackers Central City, have seen 
revenues steadily decline over the past few  years.

     MARKETING STRATEGY.  The Company targets primarily customers in the 
Denver metropolitan area.  The Company seeks to attract customers to the 
Colorado Casinos by:  (i) offering first-class facilities with comfortable 
and efficient layouts; (ii) providing ample parking which is more convenient 
than that provided by many of its competitors; (iii) providing the newest 
models of slot machine games; (iv) promoting customer awareness through 
marketing of the Bullwhackers name and theme; (v) providing excellent 
customer service with a motivated staff; (vi) utilizing strategic busing 
programs; (vii) offering customer promotions; (viii) providing desirable food 
products and refreshments; and (ix) providing incentives to higher-value 
repeat customers.

     In particular, the Company has used extensive marketing programs to 
build customer awareness, including radio, print and direct mail.  The 
Company believes that Bullwhackers enjoys among the highest name recognition 
of all casinos located in Colorado, a fact which the Company attributes in 
part to the success of its marketing campaigns. The Company has also 
developed promotional offerings centered around the Bullwhackers theme of 
offering a fun, exciting gaming atmosphere, including providing gift items 
and a cash-back reward system based upon level of play through slot club 
membership in the "Bullwhackers Five Star Players Club."  The Company also 
has instituted a popular busing program known as the "Bullride."  The 
Bullride operates at least fourteen times per day from Golden, a western 
Denver suburb, to and from Black Hawk and Central City.

COMPETITION

     Competition in the Black Hawk and Central City gaming market, which 
forms the primary gaming market in Colorado, is intense.  Bullwhackers 
Central City is located approximately one and one-half miles from 
Bullwhackers Black Hawk and the Silver Hawk Casino is located across the 
Company's parking lot from Bullwhackers Black Hawk.  However, the Company 
believes that its primary competition for the Colorado Casinos are other 
casinos operating in Black Hawk and Central City.  More experienced, 
nationally recognized casino operators from other 


                                      4
<PAGE>

areas of the country have entered, or have recently announced plans to enter, 
the Colorado gaming market, including Harvey's, Casino America, Riviera 
Holdings, Inc., Hyatt, Anchor Gaming and Fitzgerald's, many of which have 
substantially greater financial and marketing resources than the Company. 
Because Colorado does not limit the total number of gaming licenses available 
for issuance in Colorado and there are no minimum facility size requirements, 
the Company expects the number of gaming facilities and gaming devices to 
continue to increase in Black Hawk.

     Various published reports detailing additional gaming projects have been 
announced for the town of Black Hawk.  The majority of these projects are 
along the southern end of Black Hawk at the first major intersection off 
State Highway 119, providing these projects with the initial opportunity to 
capture visitors to Black Hawk from the Denver metropolitan area.  In 
contrast, Bullwhackers Black Hawk and the Silver Hawk Casino are located at 
the northern end of Black Hawk at the second major intersection off State 
Highway 119.  In addition, the Colorado Department of Transportation has 
begun construction on a third major intersection off State Highway 119 
between the two current intersections.  This additional intersection will, 
when completed, provide the casinos south of Bullwhackers Black Hawk and the 
Silver Hawk Casino with another opportunity to capture visitors to Black Hawk 
from the Denver metropolitan area, thereby potentially reducing traffic flow 
and customer visits to Bullwhackers Black Hawk and the Silver Hawk Casino 
and, to a greater extent, the overall Central City market.  

     Currently, there are two major projects under construction in Black 
Hawk. The first is a joint venture between Black Hawk Gaming & Development 
Co., the 50% owner and operator of the Gilpin Hotel Casino, and Jacobs 
Entertainment, for a new 35,000 square foot casino, with 55 hotel rooms, 250 
parking spaces and approximately 800 slot machines.  It is currently 
anticipated that this project will open sometime in the second quarter of 
1998.  The second project is the Isle of Capri Black Hawk, which is owned by 
subsidiaries of Casino America, Inc. and Nevada Gold & Casinos, Inc.  The 
Isle of Capri project is expected to include a 55,000 square foot casino with 
1,100 slot machines, 25 table games and 1,000 on-site parking spaces.  It is 
expected to open in late 1998 or early 1999.  The new gaming capacity being 
developed may dilute existing operators' win per unit and revenue, including 
the Company's.  Accordingly, such increase in capacity may have a material 
adverse effect on the Company's results of operations.  The new projects have 
all been announced/commenced in Black Hawk, due to its more convenient 
location as compared to Central City.  As the town of Black Hawk continues to 
expand, the Central City market contracts.  The Company believes that these 
new projects under construction will have severe negative impact on the town 
of Central City as compared to Black Hawk.

     In addition, a number of other casino projects have been announced and 
are in various planning stages,  including a venture by Riviera Holdings, 
Inc. to construct what would be the largest facility in Black Hawk.  
Additionally, Bullseye Gaming has announced plans for the Black Hawk Brewery, 
which will offer 500 slot machines and 10 table games when open.  Various 
other projects have been announced, proposed, discussed or rumored for the 
Black Hawk market, including large projects known as "Country World" and the 
"St. Moritz - Hyatt". While it is difficult to assess the likelihood and the 
timing of these proposed projects being completed, it is reasonably likely 
that at least some of the proposed competitive projects may be completed and 
open to the public by sometime during 1999 or 2000.  In addition, as the town 
of Black Hawk has expanded, both in terms of gaming device capacity and 
market size, the Central City market has contracted.  Therefore, should 
several of the announced competitive projects open, the increased competition 
may adversely affect the Company's operations in both Black Hawk and, to a 
greater extent, in Central City, which may be forced to close with the new 
competition, and, accordingly, may have a material adverse effect on the 
Company's consolidated results of operations and financial position.

     The Company believes that the primary competitive factors in the Black 
Hawk-Central City market are location, availability and convenience of 
parking, number of slot machines and gaming tables, types and pricing of 
amenities, name recognition and overall atmosphere.  The Company believes it 
generally competes favorably on these factors, although Bullwhackers Central 
City and the Central City market overall offers less convenient parking and 
access than most of its competitors.  The Silver Hawk Casino is smaller, has 
a less advantageous location and currently has less name recognition than 
some of its direct competitors.

     The Company believes that since October 1991, approximately 12 casinos 
in Black Hawk and 23 casinos in Central City have ceased operations.  In 
addition, several operators, including the Company, have reduced staffing and 
have closed temporarily or reduced their square footage and/or hours of 
operations.  The Company believes that the casinos that failed in Central 
City did so primarily due to Central City's Main Street disadvantages 
location as 


                                      5
<PAGE>

compared to Black Hawk.  In Black Hawk, the Company believes the properties 
that have failed have done so for a variety of reasons, including inferior 
design, inconvenient parking, inadequate size, inexperienced management and 
undercapitalization.   

     Several lobbying groups placed initiatives for additional Colorado 
limited stakes gaming venues, including Denver, on the November 1996 
statewide ballots. Although each of these initiatives were defeated by a wide 
margin, similar initiatives, legislation or regulations could be introduced 
in the future.  The enactment of any initiatives, legislation, or regulations 
legalizing gaming elsewhere in Colorado could, and if gaming closer to Denver 
was legalized, would, have a material adverse effect on the Company's 
consolidated results of operations and financial position.

     During the 1996-1997 legislative session, the Colorado Legislature 
passed a bill that would have authorized the installation of a minimum of 500 
video lottery terminals ("VLT's") at six horse and dog tracks located 
throughout Colorado.  VLT's are games of chance, similar to slot machines.  
The Governor of Colorado vetoed such bill.  A similar bill is pending in the 
current Legislative Session.  If the bill passes and the Governor of Colorado 
does not veto such bill, or if any such veto is overridden, the bill would 
become law and would add a significant amount of gaming device capacity in 
the Denver metropolitan area. Any such additional capacity may have a 
material adverse impact on the Company's results of operations.

     In addition to competing with other gaming facilities in Colorado, the 
Company competes to a lesser degree, both for customers and in potential 
future gaming sites, with gaming facilities nationwide, including casinos in 
Nevada and Atlantic City, many of which have substantially greater financial 
resources and experience in the gaming business.  The Company also competes 
with other forms of gaming on both a local and national level, including 
state-sponsored lotteries, bingo parlor operations, charitable gaming and 
pari-mutuel wagering, among others, and competes for entertainment dollars 
generally with other forms of entertainment.

     A decline in the Denver economy, a decline in the Black Hawk-Central 
City gaming market, or increased competition for Denver metropolitan area 
residents from other gaming jurisdictions both inside and outside Colorado, 
could have a material adverse effect on the Company's consolidated results of 
operations, financial position and cash flows.

COLORADO GAMING REGULATIONS

     The State of Colorado created the Colorado Division of Gaming ( the 
"Division") within the Department of Revenue to license, implement, regulate 
and supervise the conduct of limited stakes gaming.  The Director of the 
Division, under the supervision of the Gaming Commission, has been granted 
broad power to ensure compliance with Colorado law and regulations adopted 
thereunder (collectively, the "Colorado Regulations").  

     The Merger must be approved by the Gaming Commission.  In connection 
with such approval, the Division is currently investigating the operations, 
officers and directors of Ladbroke and its affiliates, including an extensive 
investigation of Ladbroke Group plc and its directors.  Although there can be 
no assurances, the Company anticipates that approval of the Merger will occur 
sometime in the third quarter of 1998.  However, pursuant to the terms of the 
Merger Agreement, if the Merger has not been consummated on or before 
September, 30 1998, which date may be extended by the mutual written consent 
of LRC and the Company, either party has the right to terminate the Merger 
Agreement and abandon the Merger.  Any failure or refusal of Ladbroke or such 
related persons or entities to provide any information requested by the 
Division, or any delays in providing such information, may detrimentally 
impact the ability of Ladbroke to obtain, or materially delay the obtaining 
of, the necessary approval of the Gaming Commission.  There can be no 
assurance that the Gaming Commission will approve the Merger.

     The Director of the Division (i) may inspect, without notice, premises 
where gaming is being conducted; (ii) may seize, impound or remove any gaming 
device; (iii) may examine and copy all of a licensee's records; (iv) may 
investigate the background and conduct of licensees and their employees; and 
(v) may bring disciplinary actions against licensees and their employees.  He 
may also conduct detailed background checks of persons who loan money to or 
invest money in a licensee.

     It is illegal to operate a gaming facility without a license issued by the
Gaming Commission.  The Gaming 


                                      6
<PAGE>

Commission is empowered to issue five types of gaming and 
gaming-related-licenses.  The licenses are revocable and non-transferable.  
Bullwhackers Black Hawk, Bullwhackers Central City and the Silver Hawk Casino 
were granted retailer/operator licenses concurrently with their respective 
openings.  These licenses are subject to continued satisfaction of 
suitability requirements.  The current licenses for Bullwhackers Black Hawk 
and Central City expire on December 2, 1998 and the license for the Silver 
Hawk Casino expires on June 24, 1998 and currently is in the process of being 
renewed.  In addition, prior to conducting gaming activities upon the former 
Bronco Billy's as part of Bullwhackers Black Hawk's gaming license, as 
discussed above, Bullwhackers Black Hawk must obtain approval for such 
transaction by the Gaming Commission.  There can be no assurance that the 
Company will successfully renew its licenses in a timely manner or at all.  
The failure or inability of the Company, BWBH, BWCC, Silver Hawk Casino, or 
associated persons to maintain necessary gaming licenses will have a material 
adverse effect on the operations of the Company.

     The Gaming Commission closely regulates the suitability of persons 
owning or seeking to renew an interest in a gaming license, and the 
suitability of a licensee can be adversely affected by persons associated 
with the licensee. Additionally, any person or entity having any direct 
interest in the Company or any casino directly or indirectly owned by the 
Company may be subject to administrative action, including personal history 
and background investigations. The actions of persons associated with the 
Company and its management employees, over whom the Company may have no 
control, could jeopardize any licenses held by the Company in Colorado.

     All persons employed by the Company who are involved, directly or 
indirectly, in gaming operations in Colorado also are required to obtain a 
support gaming license prior to commencing employment.  In addition, "Key" 
licenses are issued to "key employees," which include any executive, employee 
or agent of a licensee having the power to exercise a significant influence 
over decisions concerning any part of the operations of a licensee.  At least 
one key license holder must be on the premises of each Colorado Casino at all 
times. All licenses are revocable, non-transferable and valid only for the 
particular location initially authorized, except that support and key 
employee licenses move with the approved individual and are not location 
specific.  Messrs. Szapor, Mayer, Rabin, Stephens, all officers of the 
Company, and the Company's four independent directors, among others, all hold 
key licenses in Colorado.

     As a general rule under the Colorado Regulations, it is a criminal 
violation for any person to have a legal, beneficial, voting or equitable 
interest, or right to receive profits, in more than three gaming licenses in 
Colorado.  The Company currently has three such licenses, one each for 
Bullwhackers Black Hawk, Bullwhackers Central City and the Silver Hawk 
Casino. Accordingly, any expansion opportunities that the Company may have in 
Colorado are limited absent the disposition of one of the Colorado Casinos.  
In addition, this limitation may affect the ability of certain persons to own 
the Company's stock.  Under the Colorado Regulations, the definition of an 
"interest" in a licensee excludes ownership of less than 5% of a publicly 
traded company. Pursuant to the Colorado Regulations, a licensee that elects 
to register its common stock under Section 12(g) of the Exchange Act is 
considered to be publicly traded.  The Company registered its common stock 
effective on the Effective Date and, accordingly, is considered  a publicly 
traded company within the meaning of the Colorado Regulations.  Any owner of 
any interest in a Colorado licensee where such licensee is not publicly 
traded, or of a 5% or more interest in a publicly traded licensee, is 
precluded from owning more than 5% of the Company's stock.

     Under the Colorado Regulations, any person or entity having any direct 
or indirect interest in a gaming licensee or an applicant for a gaming 
license, including but not limited to the Company and stockholders of the 
Company, may be required to supply the Gaming Commission with substantial 
information, including but not limited to, personal background and financial 
information, source of funding information, a sworn statement that such 
person or entity is not holding his interest for any other party, and 
fingerprints.  Such information, investigation and licensing as an 
"associated person" is automatically required of all persons who directly or 
indirectly own 10% or more of a direct or indirect legal, beneficial or 
voting interest in the Colorado Casinos, through their ownership of the 
Company, as a publicly traded licensee.  Such persons (other than certain 
institutional investors discussed below) must report their interest and apply 
to the Gaming Commission for a finding of suitability within 45 days after 
acquiring such interest.  Persons directly or indirectly having an interest 
between 5% and 9.99% in a publicly held licensee must report their interest 
to the Gaming Commission within ten days after acquiring their interest and 
may be required to provide additional information and may be required to be 
found suitable by the Gaming Commission.  Institutional investors may be 
permitted to own up to 14.99% of the Colorado Casinos, through their 
ownership of the Company, before a finding of suitability will be required; 
provided, however, that such institutional investors must 


                                      7
<PAGE>

provide a certification within 45 days of acquiring such ownership of various 
matters relative to their ownership, including that such ownership  was 
acquired for investment purposes only.  The Gaming Commission maintains the 
right to request information from any person, directly or indirectly 
interested, regardless of their level of ownership, in or employed by a 
licensee.  An application for license or a finding of suitability may be 
denied for any reason deemed reasonable by the Gaming Commission or the 
Director of the Division (the "Director").  All licensing and investigation 
fees must be paid by the person in question.  The associated person 
investigation fee currently is $48 per hour.

     If the Gaming Commission determines that a person or entity is not 
suitable to own a direct or indirect voting interest in the Company, the 
Company may be sanctioned unless the person or entity disposes of its voting 
interest. Sanctions may include the loss by any of the Colorado Casinos of 
their licenses. In addition, the Colorado Regulations prohibit a licensee or 
any affiliate of a licensee from paying dividends, interest or other 
remuneration to any person found to be unsuitable, or recognizing the 
exercise of any voting rights by any person found to be unsuitable.  The 
Colorado Regulations require an operating casino licensee to include in its 
corporate charter provisions which permit the repurchase of the voting 
interests of any person found to be unsuitable.  The Company's Certificate of 
Incorporation includes the required provisions.

     A person or entity may not sell, lease, purchase, convey, acquire or 
pledge any interest in an entity licensed to conduct limited stakes gaming in 
Colorado without the prior approval of the Gaming Commission, except for a 
less than 5% interest in a publicly traded corporation.

     The Gaming Commission also has the right to request information from any 
person directly or indirectly interested in, or employed by, a licensee, and 
to investigate the moral character, honesty, integrity, prior activities, 
criminal record, reputation, habits and associations of (i) all persons 
licensed pursuant to the Colorado Limited Gaming Act, (ii) all officers, 
directors and stockholders of a licensed privately held corporation, (iii) 
all officers, directors and stockholders holding either a 5% or greater 
interest or a controlling interests in a licensed publicly traded 
corporation, (iv) all general partners and all limited partners of a licensed 
partnership, (v) all persons which have a relationship similar to that of an 
officer, director or stockholder of a corporation (such as members and 
managers of a limited liability company), (vi) all persons supplying, 
financing, or loaning money to any licensee connected with the establishment 
or operation of limited gaming, and (vii) all persons having a contract, 
lease or ongoing financial or business arrangement with any licensee, where 
such contract, lease or arrangement relates to limited gaming operations, 
equipment, devices or premises.

     In addition, under the Colorado Regulations, every person who is a party 
to a "gaming contract" with an applicant for a license, or with a licensee, 
upon the request of the Gaming Commission or the Director, promptly must 
provide to the Gaming Commission or Director all information which may be 
requested concerning financial history, financial holdings, real and personal 
property ownership, interests in other companies, criminal history, personal 
history and associations, character, reputation in the community, and all 
other information which might be relevant to a determination whether a person 
would be suitable to be licensed by the Gaming Commission. Failure to provide 
all information requested constitutes sufficient grounds for the Director or 
the Gaming Commission to require a licensee or applicant to terminate its 
"gaming contract" with any person who failed to provide the information 
requested.  In addition, the Director or the Gaming Commission may require 
changes in "gaming contracts" before an application is approved or 
participation in the contract is allowed. A "gaming contract" is defined as 
an agreement in which a person does business with or on the premises of a 
licensed entity.

     The Colorado Casinos may operate only between 8:00 a.m. and 2:00 a.m., 
and may permit only individuals 21 years or older to gamble in the casino.  
Slot machines, blackjack and poker are the only permitted games, with a 
maximum single bet of $5.00.  The Colorado Casinos may not provide credit to 
gaming patrons.  The Colorado Regulations restrict the percentage of space a 
casino may use for gaming to 50% of any floor and 35% of the overall square 
footage of the building in which the casino is located.  Effective October 1 
of each year, the Gaming Commission establishes the gross gaming revenue tax 
rate for the ensuing twelve months.  Under the Colorado Constitution, the 
rate can be increased to as much as 40%.  Colorado has both raised and 
lowered gaming tax rates since they were initially set in 1991.  Currently, 
the maximum gaming tax rate is 20%. These regulations and taxes adversely 
affect the Colorado Casinos' ability to generate revenues and operating 
profits.  See "- Non-Gaming Regulation -Taxation."


                                      8
<PAGE>

     The Company believes that it is presently in material compliance with 
all applicable gaming rules and regulations.

     NATIONAL GAMBLING IMPACT AND POLICY COMMISSION.  Federal legislation was 
recently enacted that established a National Gambling Impact and Policy 
Commission to study the economic impact of gambling on the United States, the 
individual states and Native American tribes.  Additional federal regulation 
may occur due to the initiation hearings by the Commission.  Any new federal 
legislation could have a material adverse effect on the Company.

NON-GAMING REGULATION

     LIQUOR REGULATION.  The sale of alcoholic beverages is subject to 
licensing, control and regulation by the Liquor Agencies.  The current liquor 
licenses for Bullwhackers Black Hawk and Bullwhackers Central City, which 
were recently renewed, expire in January and February of 1999, respectively.  
The Silver Hawk liquor license expires in June 1998 and is in the process of 
being renewed.  Currently, the Company is seeking approval from the Liquor 
Agencies to expand the premises for Bullwhackers Black Hawk liquor license to 
include the former Bronco Billy's casino recently acquired by the Company.  
In addition, the Company's liquor licenses will be deemed to have been 
transferred as a result of the Merger.  This deemed transfer must be approved 
by the Liquor Agencies. There can be no assurance that such approvals of the 
Liquor Agencies will be obtained.

     All liquor licenses are renewable, are revocable and are not 
transferable. The Liquor Agencies have full powers to limit, condition, 
suspend or revoke any liquor license.  Any such disciplinary action could, 
and any failure to renew or other revocation of any of its liquor licenses 
would, have a material adverse effect upon the operations of the Company.

     Under  Colorado law, it is a criminal violation for any person or entity 
to own a direct or indirect interest in more than one type of alcoholic 
beverage license or more than three gaming tavern liquor licenses.  Each 
Colorado Casino has a gaming tavern liquor license.  Accordingly, the 
Company's expansion opportunities in Colorado are limited by such licensing 
restriction. Furthermore, no person that holds an interest in the Company may 
hold any direct or indirect legal, equitable or voting interest in any other 
Colorado alcoholic beverage licensee, and vice versa.

     TAXATION.  Gaming operators in Colorado are subject to state and local 
taxes and fees in addition to ordinary federal and state income taxes.  Black 
Hawk and Central City have imposed annual license fees, currently $750 and 
$1,265, respectively, for each gaming device installed in a casino.  Colorado 
currently imposes an annual device fee of $75 for each gaming device 
installed in a casino. The Colorado Casinos operate as licensed gaming 
establishments pursuant to the Colorado Limited Gaming Act and, accordingly, 
are required to make monthly gaming tax payments to the State of Colorado.  
These rates are subject to annual revision with a maximum rate of 40%.  The 
latest annual revision, which became effective October 1, 1996, is calculated 
as a percentage of adjusted gross proceeds (casino net win).  The gaming tax 
rates for the previous three gaming years are set forth in the following 
table:

<TABLE>
<CAPTION>
                                         Annual Tax Rate          Annual Tax Rate 
          Annual Gross Proceeds         from 10/94 to 9/96       from 10/96 to 6/98
          ---------------------         ------------------       ------------------
     <S>                                <C>                      <C>
     First $2 million . . . . . . .             2%                       2%
     Next $2 million. . . . . . . .             8%                       4%
     Next $1 million. . . . . . . .            15%                      14%
     Next $5 million. . . . . . . .            18%                      18%
     Proceeds over $10 million. . .            18%                      20%
</TABLE>

     In 1997, the Gaming Commission changed the gaming tax year from October 
1 through September 30 to July 1 through June 30.  Accordingly, the new tax 
rate for the gaming tax year 1998-99 will be set by the Gaming Commission in 
June, effective as of July 1.  While it is difficult to speculate on how the 
Gaming Commission may adjust the tax rates, if at all, any material increase 
in the tax rates could have a material adverse effect on the Company's 
consolidated results of operations and financial position.


                                      9
<PAGE>

EMPLOYEES

     The Company employs approximately 575 persons, including cashiers, 
dealers, food and beverage servers, facilities maintenance, accounting, 
marketing and human resources personnel.  No labor unions currently represent 
any employees of the Company.  A package of employee benefits is provided to 
full-time employees. The Company believes that its employee relations are 
satisfactory.

SEASONALITY AND INCLEMENT WEATHER

     Because the Colorado Casinos are located in the Rocky Mountains, they 
are subject to sudden and severe winter storms.  Access to Central City and 
Black Hawk, which are both located ten miles from Interstate 70, is made via 
a two-lane secondary road.  In bad weather, and in the winter months, this 
access road may be difficult to traverse, which reduces the number of patrons 
traveling to Black Hawk and Central City, and, accordingly, negatively 
affects the Company's operating results during these periods.  As a result, 
the Colorado Casinos' business tends to be seasonal, with the highest level 
of activity occurring during the summer months.

     The site of Bullwhackers Black Hawk is located in a 100-year flood 
plain. To date, the Company has not experienced any flooding resulting in 
damage to the casino.  The Company believes it carries adequate flood 
insurance on Bullwhackers Black Hawk.  There can be no assurance that 
Bullwhackers Black Hawk will not suffer flood damage in the future or that 
any damage will be adequately covered by insurance.

PRIVATE SECURITIES LITIGATION REFORM ACT

     Certain statements set forth above and elsewhere in this Annual Report 
on Form 10-K which are not historical facts are forward-looking statements 
within the meaning of the Private Securities Litigation Reform Act of 1995, 
such as statements relating to future competition, financing and refinancing 
sources and availability, plans for future development or expansion 
activities and capital expenditures.  Such statements can be identified by 
the use of forward-looking terminology such as "might," "may," "will," 
"would," "could," "except," "anticipate," "estimate," "likely," "believe, "or 
"continue" or the negative thereof or other variations thereon or comparable 
terminology.  Such forward looking statements involve a number of risks and 
uncertainties that may significantly affect the Company's liquidity and 
results of operations in the future and, accordingly, actual results may 
differ materially from those expressed in any forward-looking statements.  
Such risks and uncertainties include, but are not limited to, those related 
to leverage and debt service and financing and refinancing efforts, 
competition, inclement weather, general economic conditions in the Denver 
metropolitan area, changes in gaming laws, regulations or tax rates and risks 
related to development and construction activities.  See "Management 's 
Discussion and Analysis of Financial Conditions and Results of 
Operations-Statement on Forward-Looking Information."

ITEM 2.  PROPERTIES

     The Company owns, through wholly-owned subsidiaries, the Colorado 
Casinos and the parking lot including, with the exception of Bullwhackers 
Black Hawk, free title to the real property underlying the buildings.  The 
Company leases the real property underlying Bullwhackers Black Hawk pursuant 
to a 23-year land lease expiring in 2014.  The terms of the ground lease 
require base minimum payments for the calendar year 1996 through 1999 of 
$150,000 per quarter.  The base minimum quarterly payments increase 
thereafter for each five-year period for the balance of the lease term, up to 
a maximum of $195,000 per quarter. Additional rent in the amount of 1.9% of 
Bullwhackers Black Hawk's adjusted gross revenue is payable monthly in 
arrears throughout the term of the lease. In February 1998, the Company 
entered into an amendment to this lease, commencing upon the opening of the 
Company's Black Hawk expansion, requiring the Company to pay 80% of the above 
additional rent (1.9% of adjusted gross revenues) on the joint premises of 
Bullwhackers Black Hawk and the former Bronco Billy's Casino  The lease 
contains a buy-out provision which allows the Company to buy the land subject 
to the lease on or after November 1, 2001 at a price equal to nine times the 
annual base minimum rent payments in effect when the buy-out is exercised.

     On February 11, 1998, the  Company entered into three ground lease 
agreements for the real property underlying the facility of the former Bronco 
Billy's casino.  The terms of the first lease requires a monthly $35,000 


                                      10
<PAGE>

base rent and additional rent equal to 40% of Net Win (as defined therein) of 
the gaming operations conducted on the premises through September 2022, with 
an option to extend the lease term to July 2024.  The terms of the second 
lease requires a $22,500 monthly lease payment through July 2024.  This lease 
contains a purchase option for $1.2 million expiring in March 2001.  The 
terms of the third lease requires a monthly rent between $12,500 to $16,500 
per month, based on a range of Average Daily Proceeds from all gaming devices 
on the premises, which monthly rent escalates throughout the term of the 
lease, through July 2024.

     In March 1997, the Company relocated its corporate offices from Denver 
to Lakewood, Colorado pursuant to a new $10,000 a month lease, which expires 
April 2002.

ITEM 3.  LEGAL PROCEEDINGS

     GENERAL.  The Company is or may become a defendant in pending or 
threatened legal proceedings in the ordinary course of business.  The 
Company's management believes that the ultimate resolution of all such 
currently pending legal proceedings will not have a material adverse impact 
on the Company's financial position or results of operations. 

     LADY LUCK.  In October 1996, BWCC, Inc. signed a non-binding memorandum 
of understanding ("MOU") with Gold Coin, Inc., a wholly-owned subsidiary of 
Lady Luck Gaming Corporation, to explore the possibility of physically 
combining Bullwhackers Central City with the adjacent casino operated as Lady 
Luck Gold Coin Gambling Hall & Saloon and owned by Gold Coin, Inc.  The 
prospective transaction was subject to a number of contingencies, including 
the execution and delivery of definitive agreements setting forth the final 
agreed upon terms and conditions of the transaction.  While the parties 
continued to negotiate over unresolved issues contained in the drafts of the 
definitive agreements, market conditions and other events affecting the 
Central City market continued to change and decline significantly.  Despite 
continued efforts to satisfactorily resolve the open issues in light of the 
foregoing, no final, definitive agreements were executed and delivered, and 
the prospective transaction was never consummated.
     
     In March 1998, Lady Luck Central City, Inc., formerly known as Gold 
Coin, Inc., filed a complaint in the District Court for the County of 
Jefferson, State of Colorado, Case No. 98 CV 672, captioned as LADY LUCK 
CENTRAL CITY, INC. V. BWCC, INC., D/B/A BULLWHACKERS CENTRAL CITY, COLORADO 
GAMING & ENTERTAINMENT, CO., AND LADBROKE GROUP PLC.  The complaint alleges 
causes of action against BWCC, Inc. based upon the foregoing events for 
breach of contract, breach of fiduciary duty, and breach of duty of good 
faith.  The complaint also alleges causes of action against the Company and 
Ladbroke Group PLC for tortious interference with contract and tortious 
interference with prospective business opportunity.  The Company and BWCC, 
Inc. believe the complaint is without merit and intend to vigorously defend 
themselves.  As required by the Colorado Regulations, the Company has 
notified the Division of this matter.

     ENVIRONMENTAL MATTERS.  The Black Hawk and Central City gaming 
districts, including the Colorado Casino sites, are located generally within 
the Central City/Clear Creek Superfund site (the "Site") as designated by the 
Environmental Protection Agency (the "EPA"), pursuant to the Comprehensive 
Environmental Response, Compensation and Liability Act of 1980, as amended 
("CERCLA").  The Site includes numerous specifically identified areas of mine 
tailings and other waste piles from former gold mine operations that are the 
subject of ongoing investigation and clean-up by the EPA and the Colorado 
Department of Public Health and Environment (the "CDPHE").  CERCLA requires 
remediation of sites from which there has been a release or threatened 
release of hazardous substances and authorizes the EPA to take any necessary 
response actions at Superfund sites, including authorizing potentially 
responsible parties ("PRPs") to clean up or contribute to the clean-up of a 
Superfund site.  PRPs are broadly defined under CERCLA, and include past and 
present owners and operators of a site.  CERCLA imposes strict liability on 
PRPs, and courts have commonly held PRPs to be jointly and severally liable 
for all response costs.

     Although the Colorado Casinos are not within any of the specific areas 
of the Site currently identified by the EPA for investigation or remediation, 
the site on which the parking lot was constructed was identified as requiring 
remediation in connection with the construction of the parking lot.  That 
remediation was completed in June 1994.  When the Company expanded the 
parking lot in June 1996, additional environmental remediation of hazardous 
soil was required.  Such additional remediation was completed, at the 
direction and approval of the EPA and CDPHE, prior to December 


                                      11
<PAGE>

31, 1996.

     The Company, through independent environmental consultants, conducted 
both Phase I and Phase II environmental examinations of the real property 
underlying the Bullwhackers Casinos and obtained subsequent follow-up 
reports, including a Phase I on the former Bronco Billy's site.  Based on 
these examinations, the Company is not aware of any environmental problems 
affecting the Colorado Casinos which would likely result in material costs to 
the Company.  Although the Company has not conducted environmental 
evaluations of the real property underlying the Silver Hawk Casino facility, 
it does not believe that there are any environmental problems affecting the 
Silver Hawk Casino site which are likely to result in material costs to the 
Company.  No assurance can be given, however, that the Company will not 
subsequently discover significant environmental problems at any of its 
Colorado properties.  Furthermore, the EPA or other governmental authorities 
could broaden their investigations and identify additional areas within the 
Site, including the Colorado Casino sites, for remediation.  If any of the 
Colorado Casinos were included in additional areas of concern within the 
Site, the Company could be identified as a PRP and any liability related 
thereto could have a material adverse effect on the Company.  Furthermore, 
environmental conditions at any of the Company's Colorado properties could 
have, or could in the future have, a detrimental impact on adjacent or nearby 
properties or persons.  No assurance can be given that no such impact on a 
third party will arise in the future, nor that such an impact, if it arises, 
will not have a material adverse impact on the Company.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS

     The following matters were approved by the Company's stockholders at the 
Company's Special Meeting of Stockholders held December 12, 1997:

     1.  Approval and adoption of the Merger Agreement by and among LRC, the 
Acquisition Sub and the Company: 

<TABLE>
          <S>                           <C>                           <C>
          3,301,738 Shares Voted For    2,174 Shares Voted Against    0 Shares Abstained
</TABLE>

ITEM 4A. EXECUTIVE  OFFICERS OF THE REGISTRANT

     Set forth below is certain information with respect to each individual who
is an executive officer of the Company:

<TABLE>
<CAPTION>
Name                        Age       Position(s)
----                        ---       -----------
<S>                         <C>       <C>
Stephen J. Szapor, Jr.      38        Chief Executive Officer,
                                      President and Director

Alan L. Mayer               36        Senior Vice President,
                                      Chief Legal Officer and Secretary

Richard S. Rabin            51        Senior Vice President of Operations

Robert J. Stephens          30        Vice President of Finance and Treasurer

Jack Breslin                43        Vice President of Marketing
</TABLE>

     STEPHEN J. SZAPOR, JR. has served as President and Chief Executive 
Officer of the Company since August 1995 and as a director since June 7, 
1996, the Effective Date.  Mr. Szapor served as Executive Vice President and 
Chief Financial Officer from March 1995 until August 1995.  From July 1994 
until joining the Company, he served as the Chief Operating Officer and a 
member of the board of directors of Sahara Gaming Corporation, and from June 
1993 until July 1994, he was the Executive Vice President/Chief Financial 
Officer of Sahara Gaming Corporation.  From October 1986 until June 1993, Mr. 
Szapor held several executive positions with Hollywood Casino Corporation 


                                      12
<PAGE>

including Assistant to the President and Vice President--Strategic Planning.  
Mr. Szapor has also held financial and accounting positions with Merrill 
Lynch & Co. and Arthur Andersen LLP. He holds a key license from the Gaming 
Commission and is a Certified Public Accountant.  Mr. Szapor's employment 
agreement with the Company provides that he shall serve as President and 
Chief Executive Officer and as a director during the term of his employment.  
On April 29, 1997, the Compensation Committee of the Board of Directors 
extended Mr. Szapor's employment contract to June 7, 2000.  

     ALAN L. MAYER has served as Senior Vice President, Secretary and Chief 
Legal Officer of the Company and its predecessors since September 1992 and 
served as an interim director from the Effective Date through January 1997. 
From 1987 to 1992, Mr. Mayer was associated with Isaacson, Rosenbaum, Woods & 
Levy in Denver, where he specialized in real estate, land use planning, 
finance, corporate and gaming law.  Mr. Mayer is a member of the American Bar 
Association, the Colorado Bar Association, the California Bar Association and 
the International Association of Gaming Attorneys.  He is licensed to 
practice law in California and Colorado.  He holds a key license from the 
Gaming Commission and is President of the Board of Directors of the Casino 
Owners Association of Colorado. 

     RICHARD S. RABIN has served as Senior Vice President of Operations of 
the Company since March 1996 and served as an interim director from the 
Effective Date through October 1996.  Mr. Rabin served as Vice President, 
Finance & Administration of the Company from August 1995 until March 1996.  
From 1994 until joining the Company, he served as Chief Financial Officer of 
a riverboat gaming facility operated by Sahara Gaming Corporation in Missouri 
and then as General Manager of a gaming facility operated by Sahara Gaming 
Corporation in Nevada.  From 1991 to 1994, Mr. Rabin was Chief Financial 
Officer and Vice President and, beginning in 1993, also General Manager, of 
the Glory Hole Saloon and Gambling Hall in Central City, Colorado.  From 1985 
until 1991, Mr. Rabin served in various positions in the gaming industry in 
Reno, Nevada. Mr. Rabin holds a key license from the Gaming Commission and is 
a Certified Public Accountant.

     ROBERT J. STEPHENS has served as Vice President of Finance since 
September 1996.  He served as Controller, Chief Accounting Officer and 
Treasurer of the Company from August 1995 until September 1996.  Previously, 
Mr. Stephens served in various finance and accounting positions since joining 
the Company in May 1994.  From 1990 to 1994 Mr. Stephens was associated with 
Arthur Andersen LLP. Mr. Stephens holds a key license from the Gaming 
Commission and is a Certified Public Accountant.

     JACK BRESLIN has served as Vice President of Marketing since February 
1997.  Mr. Breslin served as President and Partner of CCI Advertising, Inc. 
in New Jersey, which produced campaigns for Horseshoe Casinos and Sands Hotel 
and Casino in  Atlantic City, the Santa Fe Casino in Las Vegas, and Gold 
River in Laughlin, Nevada and several other casinos and riverboats throughout 
the country from 1991 to February 1997.  Prior to that, Mr. Breslin served as 
in-house Creative Director for Trump's Castle Casino Resort in New Jersey.

                                      PART II.

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDERS
MATTER

 (a) MARKET INFORMATION.  The Company's Common Stock has traded on the OTC 
Bulletin Board system, under the symbol "CGME" since October 1996.  From June 
1996 to October 1996, the Common Stock traded in the "pink sheets" in the 
over-the-counter market.  No established public trading market for the 
Company's Common Stock exists.  There are only, limited sporadic and 
infrequent trades of the Common Stock; consequently there are no reliable 
quotations of trading prices.  Based upon information supplied to Nasdaq 
Trading and Market Services by the reporting brokers and information supplied 
to the Company by certain market makers, Nasdaq Trading and Market Services 
and such brokers reported the following range of high and low sales price for 
each quarter since the Common Stock became registered under the Securities 
Exchange Act of 1934 on the Effective Date:

<TABLE>
<CAPTION>
     Quarter Ended                      High           Low
     -------------                      ----           ---
<S>                                     <C>            <C>
June 30, 1996                           3.50           2.50
September 30, 1996                      4.25           3.50
</TABLE>


                                      13
<PAGE>

<TABLE>
<S>                                     <C>           <C>
December 31, 1996                       5.00           4.00

<CAPTION>
     Quarter Ended                      High           Low
     -------------                      ----           ---
March 31, 1997                         $5.25          $4.50
June 30, 1997                           4.25           4.25
September 30, 1997                      5.30           2.50
December 31, 1997                       5.75           5.125
</TABLE>

     The most recent trade of the Company's Common Stock was $5.75 per share 
on March 10, 1998.

(b) HOLDERS.  The approximate number of record holders of the Company's 
Common Stock as of March 25, 1998 was approximately 13.

(c) DIVIDENDS.  Since the Effective Date, the Company has neither declared 
nor paid dividends on the Common Stock and does not anticipate paying 
dividends in the foreseeable future.  The Company intends to follow a policy 
of retaining any earnings either to repay borrowings under the Company's 
Credit Facility, finance the Company's growth, or for general corporate 
purposes.  In addition, the Company's Credit Facility and the Indenture 
governing its 12% Senior Secured Pay-In-Kind Notes due 2003 restrict the 
Company from paying cash dividends. Payment of dividends in the future will 
be determined by the Company's Board of Directors and will depend upon, among 
other things, the Company's future earnings, operations, capital 
requirements, contractual restrictions in the Company's debt or other 
instruments, and such other factors the Board of Directors may deem relevant. 


                                      14
<PAGE>

ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA

     The selected consolidated financial data set forth below is derived from 
the Company's Consolidated Financial Statements.  Due to the Reorganization, 
comparisons of periods prior to and after June 6, 1997 may be of limited use 
in determining operating or other financial trends in the Company's business. 
 This data should be read in conjunction with the Consolidated Financial 
Statements of the Company and the Notes thereto and "Management's Discussion 
and Analysis of Financial Condition and Results of Operations" contained in 
this Form 10-K.

                        IN THOUSANDS, EXCEPT SHARE DATA

<TABLE>
<CAPTION>
                                                    Years Ended December 31,
                                              -------------------------------------
                                                1993         1994(b)        1995(b)
                                              -------       --------      ---------
<S>                                           <C>           <C>           <C>
STATEMENT OF OPERATIONS DATA:
Net revenues . . . . . . . . . . . . . .      $38,468       $ 45,474      $  47,428
Operating Expenses:
  Impairment of assets and
  predevelopment expense . . . . . . . .            -         10,804         11,347
  Reorganization items . . . . . . . . .            -              -         17,910
  Other operating expenses . . . . . . .       35,310         47,631         44,807
Income (loss) from operations. . . . . .        3,158        (12,961)       (26,636)
Interest expense . . . . . . . . . . . .        6,987         18,822         18,664
Equity loss in unconsolidated
  subsidiary . . . . . . . . . . . . . .            -         (2,324)       (70,277)
                                              -------       --------      ---------
Net loss . . . . . . . . . . . . . . . .      $(3,829)      $(32,331)     $(115,216)
                                              -------       --------      ---------
                                              -------       --------      ---------
Net loss per common share(a) . . . . . .          N/A            N/A            N/A
                                              -------       --------      ---------
                                              -------       --------      ---------
Weighted average common
  shares(a)  . . . . . . . . . . . . . .          N/A            N/A            N/A
</TABLE>

<TABLE>
<CAPTION>
                                            Jan. 1,1996        June 7, 1996
                                              through             through                 Year Ended
                                            June 6, 1996      December 31,1996         December 31, 1997
                                            ------------      ----------------         -----------------
<S>                                         <C>               <C>                      <C>
STATEMENT OF OPERATIONS DATA:
Net revenues . . . . . . . . . . . . . .        $19,982             $30,680                $  52,132
Operating Expenses:
  Reorganization items . . . . . . . . .          2,290                 308                       75
  Other operating expenses . . . . . . .         17,130              26,402                   44,421
Income from operations . . . . . . . . .            562               3,970                    7,636
Interest expense . . . . . . . . . . . .            579               3,867                    6,780
Extraordinary gain from
  reorganization . . . . . . . . . . . .        164,358                  --                       --
                                            ------------      ----------------         -----------------
Net income . . . . . . . . . . . . . . .       $164,407              $  192                   $  212
                                            ------------      ----------------         -----------------
                                            ------------      ----------------         -----------------
Basic net income per common share(a) . .            N/A             $  0.04                  $  0.04
                                            ------------      ----------------         -----------------
                                            ------------      ----------------         -----------------
Weighted average common
  shares(a)  . . . . . . . . . . . . . .            N/A           5,138,888                5,194,280
                                            ------------      ----------------         -----------------
                                            ------------      ----------------         -----------------
</TABLE>


                                      15
<PAGE>

<TABLE>
<CAPTION>
                                                                 As of December 31,
                                            -----------------------------------------------------------
                                               1993       1994(b)      1995(b)        1996        1997
                                            --------     --------     ---------     -------     -------
<S>                                         <C>          <C>          <C>           <C>         <C>
BALANCE SHEET DATA:
Cash and cash equivalents . . . . . . . .   $ 12,944     $  7,977     $   3,623     $ 5,758     $ 4,228
Total assets  . . . . . . . . . . . . . .    143,622      141,093        37,680      67,048      64,679
Long-term debt (excluding current
portion)  . . . . . . . . . . . . . . . .    139,595      155,675             -      55,391      53,553
Liabilities subject to compromise . . . .          -            -       186,460          --          --
Total stockholders' equity (deficit). . .     (4,693)     (36,824)     (153,137)       4,869      5,248
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
</TABLE>

(a)  The weighted average number of common shares outstanding and net income per
     common share for the Predecessor Company (periods prior to June 6, 1996)
     have not been presented because, due to the Reorganization and
     implementation of fresh-start reporting, they are irrelevant.

(b)  GPRI was consolidated with the Company and its other wholly-owned
     subsidiaries for the Company's fiscal year ended December 31, 1994, but was
     not consolidated with the Company and its other wholly owned subsidiaries
     for the Company's fiscal year ended December 31, 1995, because the Company
     no longer "controlled" GPRI (as determined by generally accepted accounting
     principles) following the commencement of the GPRI Bankruptcy Case.  On May
     3, 1996, GPRI was sold to Casino America, Inc. as part of the
     Reorganization.  See Consolidated Financial Statements and Notes thereto. 


                                      16
<PAGE>

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

STATEMENT ON FORWARD-LOOKING INFORMATION

     Certain information included in this Annual Report on Form 10-K contain 
forward-looking statements within the meaning of Section 21E of the 
Securities Exchange Act of 1934, as amended, enacted pursuant to the Private 
Securities Litigation Reform Act of 1995.  Such Section 21E provides certain 
"safe harbor" protections for forward-looking statements in order to 
encourage companies to provide prospective information about their 
businesses.  Forward-looking statements include statements concerning plans, 
objectives, goals, strategies, future events or performance, competition, 
growth opportunities, source and uses of capital, future development or 
expansion activities, underlying assumptions and other statements which are 
other than statements of historical facts.  Such statements may be identified 
by the use of forward-looking terminology such as "might," "may," "would," 
"could," "expect," "anticipate," "estimate," "likely," "believe," or 
"continue" or the negative thereof or other variations thereon or comparable 
terminology.   Such forward-looking statements involve a number of risks, 
uncertainties and other factors that may significantly affect the Company's 
liquidity and results of operations in the future and, accordingly, actual 
results may differ materially from those expressed in any forward-looking 
statements.

     The forward-looking statements set forth in this Report on Form 10-K are 
based  upon various assumptions, many of which are based, in turn, upon 
further assumptions, including, without limitation, management's examination 
of historical operating trends, data contained in the  Company's records and 
other data available from third parties.  Although the Company believes that 
such assumptions were reasonable when made, because such assumptions are 
inherently subject to significant uncertainties and contingencies which are 
difficult or impossible to predict and are beyond the Company's control, 
there can be no assurance, and no representation or warranty is made, that 
management's expectations, beliefs or projections will result, be achieved or 
accomplished. In addition to the other factors and matters discussed 
elsewhere herein, factors that, in the view of the Company, could cause 
actual results to differ materially from those discussed in the 
forward-looking statements include:  (i) leverage and debt service, (ii) 
financing and refinancing efforts, (iii) significant changes in competitive 
factors affecting the Company, (iv) inclement weather, (v) changes in general 
economic conditions in the Denver metropolitan area, (vi) changes in state 
and local gaming laws, regulations or tax rates, (vii) risks related to 
development and construction activities, (viii) changes in management or 
control of the Company, (ix) significant changes from expectations in actual 
capital expenditures and operating expenses and (x) occurrences affecting the 
Company's ability to obtain funds from operations, to finance needed capital 
expenditures and other investments.

OVERVIEW

     Colorado Gaming & Entertainment Co. ("CG&E") and its subsidiaries 
(collectively referred to as the "Company"), formerly known as Hemmeter 
Enterprises, Inc. (referred to as the "Predecessor Company" or "HEI" for 
periods prior to June 7, 1996), was incorporated in August 1993 to develop, 
own and operate gaming and related entertainment facilities.  Three 
wholly-owned subsidiaries, BWBH, Inc., BWCC, Inc., and the Silver Hawk 
Casino, Inc., own and operate limited stakes gaming facilities in Colorado 
(collectively, the "Colorado Casinos"). The Company purchased the Silver Hawk 
Casino in April 1996 for $2.7 million and commenced operations on June 26, 
1996.  Millsite 27, Inc., also a wholly-owned subsidiary, owns a parking lot, 
for use by BWBH, Inc. and Silver Hawk Casino, Inc.  A wholly-owned subsidiary 
of the Predecessor Company, Grand Palais Riverboat, Inc. ("GPRI"), developed 
and operated a riverboat gaming project in New Orleans, Louisiana (the 
"Riverboat Project").  GPRI's riverboat gaming operations commenced on March 
29, 1995 and ceased on June 6, 1995.  Due to the failure of the Riverboat 
Project, GPRI filed a voluntary petition under Chapter 11 of the Federal 
Bankruptcy Code in the United States Bankruptcy Court for the Eastern 
District of Louisiana ( the "Court").  Subsequently, HEI and its subsidiaries 
(BWBH, BWCC and Millsite 27), which collateralized the Predecessor Company's 
senior secured debt filed for protection under Chapter 11 of the Federal 
Bankruptcy Code in the Court (the "Reorganization").  Through the 
reorganization process, the Predecessor Company sold GPRI to Casino America, 
Inc.,  the proceeds of which went to partially satisfy GPRI creditors and HEI 
senior secured creditors.  Additionally, in the Reorganization, the Company 
recapitalized by reducing its senior secured debt to $50 million and issuing 
all new shares of common stock.  All of these events and transactions were 
completed on June 7, 1996 (the "Effective Date") and the Company 


                                      17
<PAGE>

and its three subsidiaries emerged from bankruptcy.

     On the Effective Date, the Company adopted fresh-start accounting in 
accordance with AICPA Statement of Position SOP 90-7 resulting in adjustment 
of the Company's stockholders' equity and the carrying values of assets and 
liabilities.  Accordingly, the Company's post-Reorganization balance sheets 
and statements of operations are not prepared on a consistent basis of 
accounting with its pre-Reorganization balance sheets and statements of 
operations, a substantial amount of pre-bankruptcy liabilities of the Company 
was converted to equity or otherwise discharged and significant adjustments 
were made to reflect the resolution of certain liabilities.

RESULTS OF OPERATIONS
     FOR THE YEAR ENDED DECEMBER 31, 1997 AS COMPARED TO THE YEAR ENDED DECEMBER
     31, 1996.

     The Company's net revenue increased 3%, to $52.1 million in 1997, from 
$50.7 million in 1996.  The increase in revenue is primarily attributable to 
a full year of operations of the Silver Hawk Casino in 1997, which did not 
commence operations until June 26, 1996, and generated an incremental $2.4 
million in net revenue in 1997.  Bullwhackers Black Hawk produced a 1% 
increase in revenues in 1997.  However, Bullwhackers Black Hawk's operating 
results were negatively affected in 1997 by severe weather in the fourth 
quarter and an abnormally low hold percentage on the Company's slot 
machinesduring November and December 1997.  In addition, construction 
activities related to the Company's parking expansion and Kids Quest during 
the first five months of 1997 negatively effected revenues during that 
period.  Additionally, the revenue growth at the Silver Hawk Casino and 
Bullwhackers Black Hawk was partially offset by a 13% revenue decrease at 
Bullwhackers Central City due to the overall decline of the Main Street 
casinos in the Central City market.  The Central City market, which was down 
approximately 2% for the year, continues to struggle to compete with Black 
Hawk, which offers better access, parking convenience and superior 
properties.  Additionally Bullwhackers Central City has not been able to 
compete effectively with Central City's largest casino, which offers 
substantially more amenities such as on-site parking and hotel rooms, 
including the opening of a major parking expansion in June 1997.  
Bullwhackers Central City revenue declines accelerated in the second half of 
1997, subsequent to the opening of a competitor's expanded parking facilities.

     Expenses directly related to casino operations, including casino labor 
expense, gaming taxes and food and beverage expense, increased 5% to $26.6 
million in 1997, as compared to $25.3 million in 1996.  The increase is due 
to a full year of operations of the Silver Hawk Casino in 1997 and an 
increase in the gaming taxes on revenues over $10 million from 18% to 20%.

     Marketing expense increased 8% to $6.9 million in 1997, as compared to 
$6.4 million in 1996.  This increase is primarily due to certain cash-back 
promotions and busing programs in an effort to sustain business levels at 
Bullwhackers Central City.  Additionally, a full year of marketing and 
promotions expenses for the Silver Hawk Casino accounted for an incremental 
$200,000 of marketing expense in 1997.

     Casino general and administrative expenses increased 2% to $2.9 million 
in 1997, as compared to $2.8 million in 1996.  The slight increase primarily 
relates to a full year of additional administrative expenses for the Silver 
Hawk Casino.

     Corporate expense increased 7% to $3.0 million in 1997, as compared to 
$2.8 million in 1996.  The increase primarily relates to $750,000 of legal, 
financial advisory and other fees incurred relating to the Merger.  Absent 
these one-time transaction costs, corporate expense would have decreased 218% 
from the prior period.

     Depreciation and amortization decreased 15% to $5.0 million in 1997 as 
compared to $5.9 million in 1996.  The decreased depreciation and 
amortization charges are a direct result of a substantial amount of equipment 
at Bullwhackers Black Hawk and Bullwhackers Central City becoming fully 
depreciated in 1997, which accounted for $1.4 million of lower depreciation 
charges in 1997.  This decrease is somewhat offset by increased depreciation 
and amortization charges of $500,000 due to the increased basis of the 
Company's assets, from the adoption of "fresh-start" accounting on June 7, 
1996 and depreciation and amortization charges related to a full year of 
operations of the Silver Hawk Casino.

     The Company incurred no pre-opening expense in 1997 as compared to 
$362,000 in pre-opening expense in 1996 related to the opening of the Silver 
Hawk Casino.


                                   18
<PAGE>

     Reorganization and other impairment charges totaled $75,000 in 1997, as 
compared to $2.6 million in 1996.  Reorganization expenses are costs directly 
related to the Reorganization and consisted primarily of professional fees in 
the 1997 and 1996 periods.

     Interest expense increased 55% to $6.8 million in 1997, as compared to 
$4.4 million in 1996.  The increase in interest expense is primarily due to 
the Company not recording any interest expense during the Reorganization 
period (January 1 through June 6, 1996) on its debt obligations in default.

     FOR THE YEAR ENDED DECEMBER 31, 1996 AS COMPARED TO THE YEAR ENDED DECEMBER
     31, 1995.

     The Company's net revenue increased 7%, to $50.7 million in 1996 from 
$47.4 million in 1995.  The increase in revenue is primarily attributable to 
the addition of the Silver Hawk Casino.  The Silver Hawk Casino, located in 
Black Hawk adjacent to the Company's expanded parking lot, opened for 
business on June 26, 1996 and contributed approximately $3.9 million in net 
revenue from that date through year end.  In addition, continued overall 
growth in the Black Hawk market and completion of the Company's expanded 
parking lot, which opened on June 7, 1996, contributed to the increase in the 
Company's net revenue. Bullwhackers Black Hawk produced a 6% increase in 
revenues in 1996, despite the fact that Bullwhackers Black Hawk's operations 
were negatively affected by the construction activities relating to expansion 
of the parking lot which began April 1 and ended June 7.  The revenue gains 
in Black Hawk were offset by significant revenue declines at Bullwhackers 
Central City due to competition in an overall declining Central City market.  
The Central City market, which was down approximately 6% for the year, 
continues to struggle to compete with Black Hawk, which offers better access 
and parking convenience. Bullwhackers Central City has not been able to 
compete effectively with the largest operator in Central City, which offers 
substantially more amenities such as on-site parking and hotel rooms.

     Expenses directly related to casino operations, including casino labor 
expense, gaming taxes and food and beverage expense increased 3% to $25.3 
million in 1996, as compared to $24.5 million in 1995.  The increase is due 
to the addition of the Silver Hawk Casino operations and the increased 
business levels at Bullwhackers Black Hawk.  However, as a percentage of net 
revenue, casino expenses decreased to 50% in 1996 from 52% in 1995.  The 
decrease is due to certain labor efficiencies and other cost saving programs 
implemented in late 1995 and early 1996, particularly at Bullwhackers Central 
City in an effort to sustain profitability in light of the revenue decreases. 
 The decrease is also due to the benefit of approximately $110,000 the 
Company received from the revised gaming tax structure in the fourth quarter 
of 1996.

     Marketing expense increased 10% to $6.4 million in 1996, as compared to 
$5.8 million in 1995.  This increase is due to marketing efforts related to 
the introduction of the Silver Hawk Casino to the market and the 
implementation of additional customer busing programs and certain other 
promotions in an effort to sustain business levels at Bullwhackers Central 
City.

     Casino general and administrative expenses decreased 13% to $2.8 million 
in 1996, as compared to $3.2 million in 1995.  The decrease primarily relates 
to reductions in staffing at Bullwhackers Central City and decreased 
insurance costs.

     Corporate expense decreased 59% to $2.8 million in 1996, as compared to 
$6.9 million in 1995.  These reductions included the elimination of most 
corporate positions and terminating the use and subsidy of a corporate 
aircraft, all beginning in the second quarter of 1995.  Offsetting a portion 
of these corporate reductions for 1996 includes a charge for approximately 
$720,000 relating to incentive compensation expense for senior management 
based upon implementation of the Company's new Cash Bonus Plan and the Stock 
Incentive Plan subsequent to the Reorganization.  Of the $720,000 incurred, 
approximately $270,000 was a result of a noncash charge related to stock 
compensation.

     Depreciation and amortization increased 23% to $5.9 million in 1996 as 
compared to $4.8 million in 1995.  The increased depreciation charges are  
due to the increased book basis of the Company's assets from the adoption of 
"fresh-start" reporting upon emerging from bankruptcy, primarily the excess 
reorganization value recorded at Bullwhackers Black Hawk.  The Company was 
required to adjust the carrying value of its assets to fair value when 
adopting fresh-start accounting.  Also to a lesser extent, depreciation 
charges increased due to the addition of the 


                                      19
<PAGE>

Silver Hawk Casino.

     The Company incurred $362,000 in pre-opening expense in 1996 related to 
the opening of the Silver Hawk Casino.  

     Reorganization and other impairment charges totaled $2.6 million in 
1996, as compared to $28.9 million in 1995.  Reorganization expenses are 
costs directly related to the Predecessor Company's Reorganization and 
consisted primarily of professional fees in the 1996 period.  Impairments are 
write-offs, primarily due to the write-off of affiliate receivables and 
capitalized financing costs in the 1995 period.

     Interest expense decreased 76% to $4.4 million in 1996, as compared to 
$18.7 million in 1995.  The decrease in interest expense is primarily due to 
the reduction of debt pursuant to the Reorganization.  Additionally, the 
Company did not record any interest expense during the Reorganization period 
November 1995 through June 6, 1996 on its debt obligations in default.  On a 
pro forma basis, based on the reorganized capital structure, interest for 
1996 would have been approximately $7 million.

     LIQUIDITY AND CAPITAL RESOURCES 

     On June 7, 1996, the Company entered into a $12.5 million revolving 
senior bank credit facility (the "Credit Facility") with Foothill Capital 
Corporation. The Credit Facility is segregated into several different 
facilities, including a $5 million construction line, a $5 million equipment 
financing line and up to a $3.5 million working capital line.  No more than 
$12.5 million of borrowings may be outstanding at any time.  Borrowings under 
the construction line of the Credit Facility were required to be made as of 
September 30, 1997.  Accordingly, the construction portion of the Credit 
Facility expired unutilized on September 30, 1997.  The Credit Facility was 
amended in February 1998 to convert the construction line into a $5 million 
acquisition line (the "Bronco Billy's Acquisition Line") to purchase and 
perform tenant improvements on the former Bronco Billy's casino.  Borrowings 
under the Credit Facility accrue interest at prime plus 2.375% (10.875% as of 
December 31, 1997).  The facilities have varying terms ranging from three to 
five years from when the funds are borrowed, but the entire facility matures 
on June 2001, with two one-year extension options.  As of December 31, 1997, 
the Company had an outstanding balance of approximately $108,000 under the 
equipment financing line.

     The Company's outstanding 12% Senior Secured Pay-In-Kind Notes (the 
"Notes") have an outstanding principal amount of $52.9 million as of December 
31, 1997.  Interest on the Notes accrues at a rate of 12% per annum and is 
payable semi-annually in June and December.  The Notes mature in June 2003.

     The Company completed two major capital projects in the 1997 period to 
enhance its Black Hawk properties.  First, the Company completed an expansion 
of its parking lot and valet facility to increase the parking capacity by 
approximately 120 cars, bringing the total capacity to approximately 500 
cars. Secondly, the Company completed construction of a day care facility 
adjacent to Bullwhackers Black Hawk for use by New Horizons Kids Quest III, 
Inc.("Kids Quest").  Kids Quest is solely responsible for the day-to-day 
operations of the day care facility.  These construction projects aggregated 
approximately $3.25 million of capital expenditures, all of which was funded 
with cash flow from operations.  In total, the Company spent $4.6 million on 
capital expenditures in 1997, with the remaining expenditures primarily 
related to the purchase of new gaming equipment.

     In April 1997, The Company responded to a Request for Proposal ("RFP") 
issued by the government of Ontario, Canada, to develop and operate multiple 
charity gaming clubs in the Province of Ontario.  The clubs will offer 150 
video lottery terminals ("VLT") and 40 table games with a maximum single bet 
of $100. In responding to the RFP, the Company and its partners formed 
Diamond Gaming of Ontario Inc. ("Diamond Gaming").  Diamond Gaming's 
shareholders are a newly formed subsidiary of the Company, which owns 45% of 
Diamond Gaming, a subsidiary of Ogden Corporation (45% owner) and Diamond 
Gaming Services Inc. (10%  owner). On September 30, 1997, the Ontario Gaming 
Control Commission announced that Diamond Gaming was the successful bidder to 
develop and operate charitable gaming clubs in the cities of Kingston and 
Belleville, Ontario.  The development and opening of the Kingston and 
Belleville facilities remain contingent upon a number of items, including 
entering into an operating agreement with the Ontario Gaming Control 
Commission, reaching an agreement with property owners and local 
municipalities on specific sites, and obtaining zoning and other local 
approvals, none of which can be assured.


                                      20
<PAGE>

The proposed terms of the operating agreement will be an eight-year term with 
one eight-year renewal option. Diamond Gaming will receive operator's 
compensation equivalent to 10% of the VLT revenue and 5% of the table revenue 
and all other revenue.  Additionally, Diamond Gaming will receive 10% of 
operating profits, as defined, excluding profits from VLT operations.  The 
Company currently estimates that the two clubs in Kingston and Belleville 
will require an initial investment of approximately $5.0 million in the 
aggregate.  The Company's share of such investment is approximately 47% of 
that amount, which it intends to fund from cash flow from operations or 
borrowings under the revolving portion of the Credit Facility. Pursuant to a 
Supplemental Indenture dated January 23, 1998, the Company has received the 
necessary consent of the holders of the Notes to allow it to make the 
required investment.  The Company will account for its 45% interest in 
Diamond Gaming  under the equity method of accounting.

     On February 13, 1998, the Company purchased the assets comprising the 
casino known as Bronco Billy's in Black Hawk from Pioneer Associates Limited 
Liability Company for approximately $5.5 million.  The Company financed the 
purchase by borrowing $5.5 million under the Credit Facility.  The Company 
borrowed $5.0 million under the Bronco Billy's Acquisition Line and borrowed 
the remaining $500,000 of the purchase price under the equipment line of the 
Credit Facility.  The Bronco Billy's Acquisition Line amortizes over 60 
months, commencing  on June 1, 1998 and is payable in full on June 6, 2001. 
Additionally, the Company anticipates to incurring an additional $2.0 million 
to equip and renovate the former Bronco Billy's casino for reopening, which 
will be funded out of cash flow  from operations or additional borrowings 
under the Credit Facility.

     Bronco Billy's is located next to Bullwhackers Black Hawk.  The Company 
intends to remove the common wall separating the casinos in order for the 
former Bronco Billy's casino to become a part of Bullwhackers Black Hawk.  
Subject to the approval of the Gaming Commission and the Liquor Agencies, the 
combined casino will be operated as a single casino, under one gaming license 
and one liquor license.  The Company plans to open the new  facility in May 
1998, which will add approximately 250 slot machines (over 40% in additional 
capacity) to Bullwhackers Black Hawk and an additional restaurant facility.  
While the Company intends to operate the newly acquired Bronco Billy's 
facility as part of Bullwhackers Black Hawk, the Company will theme the newly 
acquired facility with an enhanced sports bar theme.  Such theming will be 
distinctively different from Bullwhackers Black Hawk's victorian theme, and 
any theme currently offered in the Black Hawk and Central City markets.

     The Company is currently in the process of evaluating its information 
technology infrastructure for Year 2000 compliance.  The Company does not 
expect that the cost to modify its information technology infrastructure to 
Year 2000 compliance will be material to its financial condition or results 
of operations. The Company does not anticipate any material disruption in its 
operations as a result of any failure by the Company to be in compliance.  
The Company does not currently have any information concerning the Year 2000 
compliance status of its suppliers.  In the event that any of the Company's 
significant suppliers do not successfully and timely achieve Year 2000 
compliance, the Company's business or operations could be adversely affected.

NEGATIVE WORKING CAPITAL

     As of December 31, 1997, the Company's current liabilities exceeded its 
current assets, resulting in negative working capital.  Since the Company 
emerged from bankruptcy on June 7, 1996, the Company has used cash generated 
from operations to pay down debt under the Credit Facility ahead of schedule 
and to pay construction costs for its parking lot expansion and Kids Quest 
construction from cash flows.  Management believes this strategy maximizes 
the return on its excess cash.  Additionally, should the Company have 
additional working capital needs, it is able to borrow up to $3.5 million 
under the revolving portion of the Credit Facility.

     The Company believes that the Credit Facility and its operating cash 
flows will provide sufficient liquidity and capital resources to fund the 
Company's current operations.  However, there can be no assurance the 
Company's estimate of its need for liquidity and capital resources is 
accurate or that new business developments or other unforeseen events will 
not occur which will increase those needs.  Although no additional financing 
are contemplated at this time, the Company may seek additional debt or equity 
financing if necessary.   There can be no assurance that additional financing 
will be available, or if available, will be on terms favorable to the 
Company.  Additionally, debt or equity financing may require consent from the 
holders of the Notes, and the Company's senior bank lender under 


                                      21
<PAGE>

the Credit Facility and from Ladbroke and related entities pursuant to the 
Merger Agreement.  

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Not Applicable.

ITEM 8.  FINANCIAL STATEMENTS

     The Consolidated Financial Statements and Notes required by Item 8 are 
attached at the end of this Annual Report on Form 10-K and are included 
herein by this reference.  An index to these Consolidated Financial 
Statements and Notes is also included in Item 14(a) of this Report on Form 
10-K.

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

     Not Applicable.

                                      PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Information relating to the directors of the Company, including 
directors who are executive officers of the Company, is set forth under the 
caption "Election of Directors" in, and is incorporated herein by reference 
to the Company's proxy statement for its 1998 Annual Meeting of Stockholders. 
Information relating to the executive officers of the Company is set forth 
under the caption "Executive Officers of the Registrant" in Part I, Item 4A 
of this report and is incorporated herein by reference.

ITEM 11.  EXECUTIVE COMPENSATION

     The information required by this item is incorporated herein by 
reference to the Company's proxy statement for its 1998 Annual Meeting of 
Stockholders under the caption " Executive Compensation".

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information required by this item is incorporated herein by 
reference to the Company's proxy statement for its 1998 Annual Meeting of 
Stockholders under the caption "Security Ownership of Certain Beneficial 
Owners and Management".

ITEM 13.  CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS

     The information required by this item is incorporated herein by 
reference to the Company's proxy statement for its 1998 Annual Meeting of 
Stockholders under the caption "Executive Compensation".


                                      22
<PAGE>

                                   PART IV

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

     (a) (1) and (a)(2) Financial Statements and Financial Statement Schedules

                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                             Page
                                                                             ----
<S>                                                                          <C>
CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Public Accountants . . . . . . . . . . . . . . . . . .  24
Consolidated Balance Sheets. . . . . . . . . . . . . . . . . . . . . . . . .  25
Consolidated Statements of Operations. . . . . . . . . . . . . . . . . . . .  26
Consolidated Statements of Stockholders' Equity. . . . . . . . . . . . . . .  27
Consolidated Statements of Cash Flows. . . . . . . . . . . . . . . . . . . .  28
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . .  30
</TABLE>

   All other schedules are omitted because the required information is not 
present in amounts sufficient to require submission of the schedule or 
because the information required is included in the Consolidated Financial 
Statements and Notes thereto.  

     (a)(3)    Exhibits

               See Index to Exhibits on page 43 which is incorporated herein 
               by reference.

     (b)       Reports on Form 8-K

     1.        On December 17, 1997, the Company filed a Current Report on 
               Form 8-K. The date of report (date of the earliest event 
               reported) was December 11, 1997.  The Company reported under 
               Item 5 that it reached agreement to purchase the assets 
               comprising the casino known as Bronco Billy's in Black Hawk 
               from Pioneer Associates Limited Liability Company.


                                      23
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Colorado Gaming & Entertainment Co.

We have audited the accompanying consolidated balance sheets of Colorado 
Gaming & Entertainment Co. (formerly Hemmeter Enterprises, Inc.) and 
subsidiaries (the "Company") as of December 31, 1997 and 1996, and the 
related consolidated statements of operations, stockholders' equity and cash 
flows for the year ended December 31, 1997, the period from June 7, 1996 
through December 31, 1996, the period from January 1, 1996 through June 6, 
1996 and the year ended December 31, 1995.  These consolidated financial 
statements are the responsibility of the Company's management.  Our 
responsibility is to express an opinion on these consolidated 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 consolidated financial position of Colorado Gaming 
& Entertainment Co. and subsidiaries as of December 31, 1997 and 1996, and 
the results of their operations and their cash flows for the year ended 
December 31, 1997, the period from June 7, 1996 through December 31, 1996, 
the period from January 1, 1996 through June 6, 1996 and the year ended 
December 31, 1995, in conformity with generally accepted accounting 
principles.



Denver, Colorado
     March 13, 1998.                                  Arthur Andersen LLP


                                      24
<PAGE>

                      COLORADO GAMING & ENTERTAINMENT CO.
                         CONSOLIDATED BALANCE SHEETS
                      (in thousands, except share data)

<TABLE>
<CAPTION>
                                                                     December 31, 1997    December 31, 1996
                                                                     -----------------    -----------------
<S>                                                                  <C>                  <C>
                              ASSETS
CURRENT ASSETS:
  Cash and cash equivalents ........................................      $ 4,228              $ 5,758
  Accounts receivable, net .........................................          467                  217
  Inventories ......................................................          114                  106
  Prepaid expenses .................................................          619                  406
                                                                     -----------------    -----------------
      Total current assets .........................................        5,428                6,487
                                                                     -----------------    -----------------
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, net ................       41,798               41,322

EXCESS REORGANIZATION VALUE, net (Note 2) ..........................       16,491               18,256

OTHER ASSETS, net of accumulated amortization of $501 and $370,
  respectively .....................................................          962                  983
                                                                     -----------------    -----------------
                                                                          $64,679              $67,048
                                                                     -----------------    -----------------
                                                                     -----------------    -----------------
             LIABILITIES AND STOCKHOLDERS' EQUITY 
CURRENT LIABILITIES:
  Accounts payable .................................................      $ 1,118              $   804
  Accrued expenses (Note 2) ........................................        3,951                4,025
  Current portion of credit facility ...............................          108                1,308
  Current portion of other notes payable and capital leases ........          701                  651
                                                                     -----------------    -----------------
      Total current liabilities ....................................        5,878                6,788
                                                                     -----------------    -----------------
NOTES PAYABLE, net of current portion:
  Senior secured notes payable .....................................       52,883               52,883
  Credit facility ..................................................           --                1,136
  Other notes payable and capital leases ...........................          670                1,372
                                                                     -----------------    -----------------
                                                                           53,553               55,391
                                                                     -----------------    -----------------
      Total liabilities ............................................       59,431               62,179
                                                                     -----------------    -----------------
COMMITMENTS AND CONTINGENCIES (NOTE 10)

STOCKHOLDERS' EQUITY:
  Common stock, $.01 par value, 20,000,000 shares authorized,
    5,236,091 and 5,138,888 shares issued and outstanding at
    December 31, 1997 and 1996, respectively .......................           52                   51
  Additional paid-in capital .......................................        4,792                4,626
  Retained earnings ................................................          404                  192
                                                                     -----------------    -----------------
      Total stockholders' equity ...................................        5,248                4,869
                                                                     -----------------    -----------------
                                                                          $64,679              $67,048
                                                                     -----------------    -----------------
                                                                     -----------------    -----------------
</TABLE>

           The accompanying notes are an integral part of these 
                        consolidated balance sheets.


                                      25
<PAGE>

                       COLORADO GAMING & ENTERTAINMENT CO.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     (in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                                              January 1,
                                                        Year Ended        June 7, 1996           1996          Year Ended
                                                       December 31,     through December     through June     December 31,
                                                         1997 (a)         31, 1996(a)          6, 1996            1995
                                                       ------------     ----------------     ------------     ------------
<S>                                                    <C>              <C>                  <C>              <C>
REVENUES:
  Casino .........................................        $50,049            $29,398           $  19,126       $  44,854
  Food and beverage ..............................          3,270              1,998               1,288           3,737
  Other ..........................................            274                117                  32             286
                                                       ------------     ----------------     ------------     ------------
  Gross revenues .................................         53,593             31,513              20,446          48,877
    Less: promotional allowances .................         (1,461)              (833)               (464)         (1,449)
                                                       ------------     ----------------     ------------     ------------
  Net revenues ...................................         52,132             30,680              19,982          47,428
                                                       ------------     ----------------     ------------     ------------
OPERATING EXPENSES
  Casino .........................................         14,060              7,884               5,788          13,087
  Gaming taxes and device fees ...................          9,146              4,564               3,614           8,277
  Food and beverage ..............................          3,409              2,111               1,299           3,173
  General and administrative:
    Casino .......................................          2,869              1,557               1,249           3,223
    Corporate ....................................          3,021              1,926                 902           6,872
  Marketing ......................................          6,891              4,001               2,349           5,806
  Depreciation and amortization ..................          5,025              4,044               1,882           4,771
  Pre-opening ....................................             --                315                  47              --
  Reorganization items (Note 1) ..................             75                308               2,290          17,910
  Impairment of  assets ..........................             --                 --                  --          10,945
                                                       ------------     ----------------     ------------     ------------
  Total operating expenses .......................         44,496              26,710              19,420          74,064
                                                       ------------     ----------------     ------------     ------------
INCOME (LOSS) FROM 
OPERATIONS .......................................          7,636              3,970                562          (26,636)
  Interest expense ...............................         (6,780)            (3,867)              (579)         (18,664)
  Interest income ................................             98                 89                 66              361
  Equity loss of unconsolidated subsidiary .......             --                 --                 --          (70,277)
                                                       ------------     ----------------     ------------     ------------
INCOME (LOSS) BEFORE INCOME
  TAX PROVISION ..................................            954                192                 49         (115,216)
  Provision for income taxes .....................           (742)                --                 --               --
                                                       ------------     ----------------     ------------     ------------
  Net income (loss) before extraordinary 
    gain .........................................            212                192                 49         (115,216)
  Extraordinary gain from reorganization
    items ........................................             --                 --            164,358               --
                                                       ------------     ----------------     ------------     ------------
NET INCOME (LOSS) ................................        $   212            $   192           $164,407        $(115,216)
                                                       ------------     ----------------     ------------     ------------
                                                       ------------     ----------------     ------------     ------------
BASIC NET INCOME PER SHARE(b) ....................        $  0.04            $  0.04                N/A              N/A
                                                       ------------     ----------------     ------------     ------------
                                                       ------------     ----------------     ------------     ------------
WEIGHTED AVERAGE COMMON
  SHARES OUTSTANDING .............................      5,194,280          5,138,888                N/A              N/A
                                                       ------------     ----------------     ------------     ------------
                                                       ------------     ----------------     ------------     ------------
</TABLE>

(a) Due to the Reorganization and implementation of fresh-start reporting, 
financial statements for the Reorganized Company (period starting June 7, 
1996) are not comparable to those of the Predecessor Company.  See Notes to 
the Financial Statements for additional information.  

(b)  The weighted average number of common shares outstanding and net income 
per common share for the Predecessor Company have not been presented because, 
due to the Reorganization and implementation of fresh-start reporting, they 
are not comparable to subsequent periods.  

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


                                      26
<PAGE>

                        COLORADO GAMING & ENTERTAINMENT CO.
                   CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                      (in thousands, except number of shares)

<TABLE>
<CAPTION>
                                                               Common Stock
                                                            ------------------
                                                                                            Additional  Retained
                                                                                  Warrants    Paid-in   Earnings
                                                              Shares    Amount     Issued     Capital   (Deficit)      Totals
                                                            ----------  ------    --------  ----------  ---------    ---------
<S>                                                         <C>         <C>       <C>       <C>         <C>          <C>
BALANCES, December 31, 1994 .............................    9,847,787   $ 99      $ 8,266     $2,012   $ (47,201)   $ (36,824)

Vesting of common stock grants to officers
  and directors .........................................       88,667      1           --        168          --          169
Warrants of deconsolidated subsidiary excluded in
  1995 period ...........................................           --     --       (1,266)        --          --       (1,266)
Conversion of warrants to common stock ..................     1,849,781     18          --        (18)         --           --
Net Loss ................................................            --     --          --         --    (115,216)    (115,216)
                                                            ----------  ------    --------  ----------  ---------    ---------
BALANCES, December 31, 1995 .............................    11,786,235    118       7,000      2,162    (162,417)    (153,137)
Cancellation of Predecessor Company common stock  and
  warrants and elimination of deficit ...................   (11,786,235)  (118)     (7,000)     1,951     162,417      157,250
                                                            ----------  ------    --------  ----------  ---------    ---------
BALANCES, June 6, 1996 ..................................            --     --          --      4,113          --        4,113

Issuance of new common stock ............................     5,000,000     50          --         --          --           50
Restricted stock grants to  officers and directors ......       138,888      1          --        513          --          514
Net income June 7 through December 31, 1996 .............            --     --          --         --         192          192
                                                            ----------  ------    --------  ----------  ---------    ---------
BALANCES, December 31, 1996 .............................     5,138,888     51          --      4,626         192        4,869
                                                            ----------  ------    --------  ----------  ---------    ---------
Restricted stock grants to  officers and directors ......        97,203      1          --        166          --          167
Net Income ..............................................            --     --          --         --         212          212
                                                            ----------  ------    --------  ----------  ---------    ---------
BALANCES, December 31, 1997 .............................     5,236,091  $  52     $    --     $4,792   $     404    $   5,248
                                                            ----------  ------    --------  ----------  ---------    ---------
                                                            ----------  ------    --------  ----------  ---------    ---------
</TABLE>

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


                                      27
<PAGE>

                     COLORADO GAMING & ENTERTAINMENT CO.
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (in thousands)

<TABLE>
<CAPTION>
                                                                                               January 1,
                                                              Year Ended      June 7, 1996        1996        Year Ended
                                                              December 31,   through December  through June   December 31,
                                                                 1997          31, 1996(a)       6, 1996          1995
                                                              ------------   ----------------  ------------   ------------
<S>                                                           <C>            <C>                <C>           <C>
  CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ........................................      $   212          $   192         $ 164,407      $(115,216)

Adjustments to reconcile net income (loss) to net cash
  provided by operating activities:
Depreciation and amortization ............................        5,025            4,044             1,882          4,771
Loss on retirements of property and equipment ............           82              150               244            127
Equity in loss of unconsolidated subsidiaries ............           --               --                --         70,277
Noncash compensation .....................................          167              514                --            169
Deferred income taxes ....................................          742               --                --             --
Impairment of assets .....................................           --               --                --         11,347
Noncash interest expense .................................          101            3,443               495         17,895
Extraordinary gain from reorganization ...................           --               --          (164,358)            --
Change in working capital and other ......................         (334)          (3,111)              822          1,374
Noncash reorganization items .............................           --               --             1,825         15,317
                                                              ------------   ----------------  ------------   ------------
Net cash provided by operating activities ................        5,995            5,232             5,317          6,061
                                                              ------------   ----------------  ------------   ------------
  CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property, equipment and
  leasehold improvements .................................       (4,608)          (3,224)           (3,885)        (1,508)
Net restricted funds (placed in) disbursed from escrow ...          162              244              (507)         4,209
Investment in unconsolidated subsidiaries ................          (92)              --                --         (9,270)
Advances to PRIGSA .......................................           --               --                --           (289)
Advances to affiliates, net ..............................           --               --                --         (1,257)
                                                              ------------   ----------------  ------------   ------------
Net cash used in investing activities ....................       (4,538)          (2,980)           (4,392)        (8,115)
                                                              ------------   ----------------  ------------   ------------

  CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable to affiliate .................           --               --                --          2,000
Proceeds from debt financing .............................        1,000            2,392             5,824             --
Payment of debt placement costs, net of
  accrued liabilities ....................................           --             (445)                --           (315)
Repayments of debt financing .............................       (3,987)          (5,509)            (3,304)        (1,651)
                                                              ------------   ----------------  ------------   ------------
Net cash provided by (used in) financing activities ......       (2,987)          (3,562)             2,520             34
                                                              ------------   ----------------  ------------   ------------
  NET INCREASE (DECREASE) IN CASH AND
    CASH EQUIVALENTS .....................................       (1,530)          (1,310)             3,445         (2,020)
  CASH AND CASH EQUIVALENTS, at beginning of period ......        5,758            7,068              3,623          5,643
                                                              ------------   ----------------  ------------   ------------
  CASH AND CASH EQUIVALENTS, at end of period ............      $ 4,228          $ 5,758         $    7,068     $    3,623
                                                              ------------   ----------------  ------------   ------------
                                                              ------------   ----------------  ------------   ------------
</TABLE>

(a)  Due to the Reorganization and implementation of fresh-start reporting, 
financial statements for the new Reorganized Company (period starting June 7, 
1996) are not comparable to those of the Predecessor Company.  See Notes to 
the Financial Statements for additional information.  

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


                                      28
<PAGE>

                     COLORADO GAMING & ENTERTAINMENT CO.
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (in thousands)

<TABLE>
<CAPTION>
                                                                                                       January 1,
                                                                    Years Ended      June 7, 1996         1996       Years Ended
                                                                    December 31,   through December   through June   December 31,
                                                                        1997         31, 1996(a)        6, 1996          1995
                                                                    ------------   ----------------   ------------   ------------
<S>                                                                 <C>            <C>                <C>            <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
  INFORMATION:
Cash paid for interest, net of amounts capitalized .............       $6,721           $ 1,020            $19          $  579
                                                                    ------------   ----------------   ------------   ------------
                                                                    ------------   ----------------   ------------   ------------
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
Issuance of senior secured notes payable and other
  notes payable pursuant to the Reorganization .................       $   --           $52,300            $--          $   --
                                                                    ------------   ----------------   ------------   ------------
                                                                    ------------   ----------------   ------------   ------------
Issuance of notes payable and capital lease obligations for
 purchases of property and equipment ...........................       $   --           $    --            $--          $  227
                                                                    ------------   ----------------   ------------   ------------
                                                                    ------------   ----------------   ------------   ------------
Issuance of notes payable for accrued interest
  obligations ..................................................       $   --           $ 2,883            $--          $9,416
                                                                    ------------   ----------------   ------------   ------------
                                                                    ------------   ----------------   ------------   ------------
</TABLE>

(a)  Due to the Reorganization and implementation of fresh-start reporting, 
financial statements for the new Reorganized Company (period starting June 7, 
1996) are not comparable to those of the Predecessor Company.  See Notes to 
the Financial Statements for additional information.  

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


                                      29
<PAGE>

                       COLORADO GAMING & ENTERTAINMENT CO.
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1997

(1)  ORGANIZATION

ORGANIZATION

     Colorado Gaming & Entertainment Co. ("CG&E") and its subsidiaries 
(collectively referred to as the "Company"), formerly known as Hemmeter 
Enterprises, Inc. (referred to as the "Predecessor Company" or "HEI" for 
periods prior to June 7, 1996), was incorporated in August 1993 to develop, 
own and operate gaming and related entertainment facilities.  Three 
wholly-owned subsidiaries, BWBH, Inc., BWCC, Inc., and Silver Hawk Casino, 
Inc., own and operate limited stakes gaming facilities in Colorado 
(collectively, the "Colorado Casinos"). The Company purchased the Silver Hawk 
Casino in April 1996 for $2.7 million and commenced operations on June 26, 
1996.  Millsite 27, Inc., also a wholly-owned subsidiary, owns a parking lot, 
with a capacity of approximately 500 cars, which is directly between , and is 
used by BWBH, Inc. and Silver Hawk Casino, Inc.  A wholly-owned subsidiary of 
the Predecessor Company, Grand Palais Riverboat, Inc. ("GPRI"), developed and 
operated a riverboat gaming project in New Orleans, Louisiana (the "Riverboat 
Project"). GPRI's riverboat gaming operations commenced on March 29, 1995 and 
ceased on June 6, 1995.  Due to the failure of the Riverboat Project, GPRI 
filed a voluntary petition under Chapter 11 of the Federal Bankruptcy Code in 
the United States Bankruptcy Court for the Eastern District of Louisiana ( 
the " Court"). Subsequently, HEI and its subsidiaries which collateralized 
the Predecessor Company's senior secured debt ( BWBH, BWCC and Millsite 27) 
filed for protection under Chapter 11 of the Federal Bankruptcy Code in the 
Court (the "Reorganization").  Through the reorganization process, the 
Predecessor Company sold GPRI to Casino America, Inc., the proceeds of which 
went to satisfy GPRI creditors and HEI senior secured creditors.  
Additionally, in the reorganization, the Company recapitalized by reducing 
its senior secured debt to $50 million and issuing its new shares to the 
Predecessor Company's senior secured creditors.  All of these events and 
transactions were completed on June 7, 1996 (the "Effective Date") and the 
Company and its three subsidiaries emerged from bankruptcy.

FRESH START REPORTING

     In accordance with AICPA Statement of Position 90-7, "Financial 
Reporting by Entities in Reorganization Under the Bankruptcy Code" ("SOP 
90-7"), the Company was required to adopt "fresh-start" accounting on the 
Effective Date. The adjustments to reflect the consummation of the 
Reorganization (including the gain on extinguishment of debt and other 
pre-petition liabilities) and the adjustment to record assets and liabilities 
at their fair values have been reflected in the December 31, 1997 
consolidated financial statements. Accordingly, a vertical black line is 
shown in the consolidated financial statements to separate 
post-Reorganization operations from those prior to June 7, 1996.  As a result 
of adopting fresh-start reporting, the Reorganized Company's consolidated 
financial statements are not comparable with those prepared before the 
Effective Date, including the historical consolidated financial statements 
included herein.

(2)  SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION

     The accompanying consolidated financial statements of the Reorganized 
Company (period beginning June 7, 1996) and the Predecessor Company (periods 
prior to June 7, 1996) include the accounts of CG&E and its wholly owned 
subsidiaries.  Intercompany balances and transactions have been eliminated. 
Investments in 50% or less owned entities are accounted for using the equity 
method.


                                      30
<PAGE>

USE OF ESTIMATES

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

CASH AND CASH EQUIVALENTS

     Cash and cash equivalents includes cash in banks, currency located in 
the casinos' vaults, coins located in the gaming device hoppers and other 
cash used in daily operations.  Included in cash and cash equivalents at 
December 31, 1997 and 1996 is restricted cash totaling $525,000 and $511,000, 
respectively, which represents the portion of cash that is required to be 
maintained by the Colorado Casinos based on regulations promulgated by the 
Colorado Limited Gaming Control Commission (the "Gaming Commission").

     The Company considers all highly-liquid investments purchased with an 
original maturity of three months or less to be cash equivalents.  The 
carrying amount of cash equivalents approximates fair value due to the 
short-term maturity of those investments.

CAPITALIZED INTEREST

     Interest cost associated with major construction projects is 
capitalized. When no debt is incurred specifically for a project, interest is 
capitalized on amounts expended on the project using the weighted-average 
cost of the Company's outstanding borrowings.  Interest capitalized during 
the year ended December 31, 1997 was $62,000.

INVENTORIES

     Inventories consist of food and beverage, retail and casino supplies. 
Inventories are stated at the lower of cost (first-in, first-out basis) or 
market.  

PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS

     Property, equipment and leasehold improvements are stated at cost. 
Depreciation and amortization are computed using the straight-line method 
over the estimated useful lives of the assets.  Costs of major improvements 
are capitalized, while costs of normal repairs and maintenance are charged to 
expense as incurred.

EXCESS REORGANIZATION VALUE

     Excess reorganization value is amortized on a straight-line basis over 
18.5 years.  Accumulated amortization of excess reorganization value was $1.6 
million and $577,000 at December 31, 1997 and 1996, respectively.  The 
Company continually evaluates current events and circumstances in order to 
determine whether the recorded value has been impaired.


                                      31
<PAGE>

ACCRUED EXPENSES

     Accrued expenses consisted of the following (in thousands):

<TABLE>
<CAPTION>
                                               December 31,
                                              1997      1996
                                             ------   -------
     <S>                                     <C>      <C>
     Gaming taxes payable ................   $  456   $   521
     Accrued payroll and 
        related expenses .................    1,065       991
     Accrued interest ....................      601       542
     Accrued incentive compensation ......       --       454
     Accrued gaming liabilities ..........      672       624
     Other accruals ......................    1,192       893
                                             ------   -------
                                             $3,986    $4,025
                                             ------   -------
                                             ------   -------
</TABLE>

CASINO REVENUES AND PROMOTIONAL ALLOWANCES

     In accordance with industry practice, the Company recognizes as casino 
revenues the net win from gaming activities, which is the difference between 
amounts wagered by customers, less awards or winnings paid out to customers. 
The retail value of food and beverage furnished to customers on a 
complimentary basis is included in gross revenues and then deducted as 
promotional allowances. The estimated cost of providing such promotional 
allowances is included in casino operating expenses in the accompanying 
consolidated statements of operations and totaled approximately $501,000, 
$508,000 and $605,000 for the years ended December 31, 1997, 1996 and 1995, 
respectively.

PRE-OPENING EXPENSES

     The Company expenses pre-opening costs as incurred.  Pre-opening costs 
consist of expenditures incurred prior to the opening of the casinos to 
prepare the casinos for business and include labor costs, certain consulting, 
marketing and other direct costs.  The $362,000 reflected in the 1996 periods 
relate to pre-opening costs for the Silver Hawk Casino which opened on June 
26, 1996.

REORGANIZATION ITEMS

     Reorganization items consist of expenses and other costs directly 
related to the reorganization of the Company.  Reorganization items included 
in the consolidated statements of operations consisted of the following (in 
thousands):

<TABLE>
<CAPTION>
                                                     Year Ended      June 7,1996       January 1, 1996       Year Ended
                                                    December 31,        through            through          December 31,
                                                        1997       December 31, 1996     June 6,1996            1995
                                                    ------------   -----------------   ---------------      ------------
 <S>                                                <C>            <C>                 <C>                  <C>
 Charge-off of debt discount and 
   placement costs ...............................       $--              $ --             $   --             $10,717
 Loss charged for guarantee of subsidiary debt ...        --                --                 --               4,600
 Professional fees ...............................        75               308              2,290               2,593
                                                    ------------   -----------------   ---------------      ------------
                                                         $75              $308             $2,290             $17,910
                                                    ------------   -----------------   ---------------      ------------
                                                    ------------   -----------------   ---------------      ------------
</TABLE>


                                      32
<PAGE>

INCOME TAXES

     The Company accounts for taxes pursuant to Statement of Financial 
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes".  SFAS No. 
109 requires the measurement of deferred tax assets for deductible temporary 
differences and operating loss carryforwards and of deferred tax liabilities 
for taxable differences.  Measurement of current and deferred tax liabilities 
and assets is based on provisions of enacted tax law; the effects of future 
changes in tax laws or rates are not anticipated.  Deferred tax assets 
primarily result from net operating loss carryforwards and impairment of 
assets recognized in different periods for financial reporting and tax 
purposes.

EARNINGS PER COMMON SHARE

     The Company adopted Statement of Financial Accounting Standards No. 128, 
"Earnings Per Share" ("SFAS 128") effective  December 15, 1997.  This 
pronouncement requires the presentation of the earnings per share ("EPS") 
based on the weighted average number of common shares outstanding (referred 
to as basic earnings per share) and earnings per share giving effect to all 
dilutive potential common shares that were outstanding during the reporting 
period (referred to as diluted earnings per share or earnings per share 
assuming dilution).  In addition, this pronouncement requires restatement of 
earnings per share for all prior periods presented.  As a result of the 
Reorganization and the implementation of fresh-start accounting, the periods 
prior to June 6, 1996 are not comparable to subsequent periods and 
accordingly are not presented.

     The following data show the amounts used in computing earnings per share 
and the effect on income and the weighted average number of shares of 
dilutive potential common stock (in thousands).

<TABLE>
<CAPTION>
                                                  Year Ended        June 7,1996       January 1,1996    Year Ended
                                                 December 31,         through            through       December 31,
                                                     1997         December 31, 1996    June 7, 1996        1995
                                                 ------------     -----------------   ---------------  ------------
 <S>                                             <C>              <C>                 <C>              <C>
 Income available to common shareholders          $      212         $      192              --              --
                                                 ------------     -----------------
                                                 ------------     -----------------
 Weighted average number of common 
 shares used in basic EPS                          5,194,280          5,138,888             N/A             N/A
 Effect of dilutive securities ( see Note 6):
   Management stock incentive plan                   118,350             97,203             N/A             N/A
                                                 ------------     -----------------   ---------------  ------------
                                                   5,312,630          5,236,091             N/A             N/A
                                                 ------------     -----------------   ---------------  ------------
                                                 ------------     -----------------   ---------------  ------------
</TABLE>

RECENTLY ISSUED ACCOUNTING STANDARDS

     In June 1997, the FASB issued Statement of Financial Accounting 
Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130").  This 
statement requires companies to classify items of other comprehensive income 
by their nature in a financial statement and display the accumulated balance 
of other comprehensive income separately from retained earnings and 
additional paid-in capital in the equity section of a statement of financial 
position.  SFAS 130 is effective for financial statements issued for fiscal 
years beginning after December 15, 1997. Adoption of this standard will not 
have a material impact on the Company's financial statements.

YEAR 2000

     The Company is currently in the process of evaluating its information 
technology infrastructure for Year 2000 compliance.  The Company does not 
expect that the cost to modify its information technology infrastructure to 
Year 2000 compliant will be material to its financial condition or results of 
operations. The Company does not anticipate any material disruption in its 
operations as a result of any failure by the Company to be in compliance.  


                                     33
<PAGE>

The Company does not currently have any information concerning the Year 2000 
compliance status of its suppliers.  In the event that any of the Company's 
significant suppliers do not successfully and timely achieve Year 2000 
compliance, the Company's business or operations could be adversely affected.

RECLASSIFICATIONS

     Certain prior period amounts have been reclassified to conform to the 
current year presentation.  These reclassifications had no effect on the 
Company's net income.

(3)  PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS

     Property, equipment and leasehold improvements consisted of the 
following (in thousands):

<TABLE>
<CAPTION>
                                        December 31,
                                     1997         1996
                                  ---------    ---------
<S>                               <C>          <C>
Land and improvements ........    $  13,997    $  12,288
Building and improvements ....        7,010        5,359
Leasehold improvements .......       20,778       20,935
Gaming equipment, furniture
  and fixtures ...............       20,509       19,975
Construction-in-progress .....          102          335
                                  ---------    ---------
                                     62,396       58,892
Less: accumulated 
 depreciation ................      (20,598)     (17,570)
                                  ---------    ---------
                                  $  41,798    $  41,322
                                  ---------    ---------
                                  ---------    ---------
</TABLE>

Depreciation and amortization are computed using the straight-line method 
over the following useful lives:

<TABLE>
<CAPTION>
                                       Useful Lives
                                     --------------
<S>                                  <C>
Land improvements ............             15 years
Building and improvements ....       5 - 31.5 years
Leasehold improvements .......         5 - 23 years
Gaming equipment,
  furniture and fixtures .....       5 - 31.5 years
</TABLE>

(4)  NEW VENUE PROJECTS

     For the years ended December 31, 1997, 1996 and 1995, the Company 
expensed $140,000, $120,000 and $402,000, respectively, for predevelopment 
costs related to various potential development opportunities in new gaming 
venues throughout North America.  The costs incurred represent design, 
presentation, research, consulting, regulatory and other costs associated 
with pursuing development opportunities in new gaming venues.  Of the 
$140,000 incurred in 1997, only $50,000 was a "restricted investment" as 
defined by the Indenture for the Notes.

     In April 1997, The Company responded to a Request for Proposal ("RFP") 
issued by the government of Ontario, Canada, to develop and operate multiple 
charity gaming clubs in the Province of Ontario.  The clubs will offer 150 
video lottery terminals ("VLT") and 40 table games with a maximum single bet 
of $100. In responding to the RFP, the Company and its partners formed 
Diamond Gaming of Ontario Inc. ("Diamond Gaming").  Diamond Gaming's 
shareholders are a newly formed subsidiary of the Company, which owns 45% of 
Diamond Gaming, a subsidiary of Ogden Corporation (45% owner) and Diamond 
Gaming Services Inc. (10%


                                      34
<PAGE>

owner). On September 30, 1997, the Ontario Gaming Control Commission 
announced that Diamond Gaming was the successful bidder to develop and 
operate charitable gaming clubs in the cities of Kingston and Belleville, 
Ontario.  The development and opening of the Kingston and Belleville 
facilities remain contingent upon a number of items, including entering into 
an operating agreement with the Ontario Gaming Control Commission, reaching 
an agreement with property owners and local municipalities on specific sites, 
and obtaining zoning and other local approvals, none of which can be assured. 
 The proposed terms of the operating agreement will be an eight-year term 
with one eight-year renewal option. Diamond Gaming will receive operator's 
compensation equivalent to 10% of the VLT revenue and 5% of the table revenue 
and all other revenue.  Additionally, Diamond Gaming will receive 10% of 
operating profits, as defined, excluding profits from VLT operations.  The 
Company currently estimates that the two clubs in Kingston and Belleville 
will require an initial investment of approximately $5.0 million in the 
aggregate.  The Company's share of such investment is approximately 47% of 
that amount, which it intends to fund from cash flow from operations or 
borrowings under the revolving portion of the Credit Facility. Pursuant to a 
Supplemental Indenture dated January 23, 1998, the Company has received the 
necessary consent of the holders of its Notes to allow it to make the 
required investment.  The Company will account for its 45% interest in 
Diamond Gaming  under the equity method of accounting. (5)  

NOTES PAYABLE

     Notes payable consisted of the following (in thousands):

<TABLE>
<CAPTION>
                                              December 31,
                                             1997      1996
                                          -------   -------
<S>                                       <C>       <C>
Senior Secured Pay-In-Kind Notes .....    $52,883   $52,883
Credit facility ......................        108     2,444
Other ................................      1,371     2,023
                                          -------   -------
                                           54,362    57,350
Less:  current portion                        809     1,959
                                          -------   -------
                                          $53,553   $55,391
                                          -------   -------
                                          -------   -------
</TABLE>

     CREDIT FACILITY

     On June 7, 1996, the Company entered into a $12.5 million revolving 
credit facility (the "Credit Facility") with Foothill Capital Corporation.  
The Credit Facility is segregated into several different facilities, 
including a $5 million construction line, a $5 million equipment financing 
line and up to a $3.5 million working capital line.  No more than $12.5 
million of borrowings may be outstanding at any time.  Borrowings under the 
construction portion of the Credit Facility were required to be made as of 
September 30, 1997.  Accordingly, the construction portion of the Credit 
Facility expired unutilized on September 30, 1997.  Borrowings under the 
Credit Facility accrue interest at prime plus 2.375% (10.875% as of December 
31, 1997).  The facilities have varying terms ranging from three to five 
years from when the funds are borrowed, but the entire facility matures on 
June 7, 2001, with two one-year extension options. As of December 31, 1997, 
the Company had an outstanding balance of approximately $108,000.  Borrowings 
are secured by a first priority lien and security interest in substantially 
all of the real and personal property owned or leased by the Company.  The 
carrying amount of the Credit Facility is a reasonable estimate of fair 
value, as terms of the line reflect current rates

     SENIOR SECURED PAY-IN-KIND NOTES

     Pursuant to the Reorganization on June 6, 1996, senior creditors 
received a new issue of Senior Secured Pay-In-Kind Notes ( the "Notes") 
having an aggregate principal amount of $50 million, due 2003.  Interest on 
the Notes accrues at a rate of 12% per annum, and is payable semi-annually.  
Through the first year the Notes were outstanding, at the option of the 
Company, interest on the Notes was payable either in cash or through the 
issuance of additional Notes.  Thereafter, the Company is required to pay 
interest on the Notes in cash.  On December 1, 1996, the Company made an 
interest payment on the Notes by issuing $2.9 million of additional Notes.  
All future interest


                                      35
<PAGE>

payments are due in cash.  The Notes are secured by substantially all the 
assets of the Company.  In addition, the Notes Indenture includes certain 
restrictive covenants.  As of December 31, 1997, the fair values of the Notes 
is approximately $57.1 million, which are based on quoted market prices 
(108%).  The Notes are redeemable prior to maturity, in whole or part, at the 
election of the Company on or after June 1, 2000, at the redemption prices 
(expressed as percentages of principal amount) set forth below plus accrued 
and unpaid interest to the redemption date, if redeemed during the 12-month 
period beginning on the June 1st in the years indicated below:

<TABLE>
<CAPTION>
          YEAR                                    REDEMPTION PRICE
          ----                                    ----------------
          <S>                                     <C>
          2000                                        104%
          2001                                        103%
          2002                                        102%
          2003                                        100%
</TABLE>

OTHER NOTES

     Pursuant to the Reorganization, the Company issued two unsecured 
promissory notes to Capital Associates International, Inc. ("CAI") in the 
respective principal amounts of $1.6 million and $3 million, both accruing 
interest at the rate of 9% per annum.  The $1.6 million note is due in 10 
equal quarterly installments which commenced September 7, 1996.  The second 
note in the amount of $3 million is payable in 20 quarterly installments of 
principal and interest (at 9% per annum).  The $3 million note was reduced by 
$2.3 million  in funds received by CAI in respect of its claims filed in the 
GPRI Bankruptcy. Accordingly, the outstanding balance on the $3 million note 
is approximately $670,000 as of December 31, 1997.  The outstanding balance 
on the $1.6 million note is approximately $700,000 as of December 31, 1997.  
The Company considers the estimated fair value of such notes to be the same 
as its carrying value since the obligations were entered into as of the 
Effective Date, and no significant interest rate fluctuations have occurred 
since that date.

     Aggregate annual maturities of long-term debt, are as follows:

<TABLE>
     <S>                              <C>
     1998                             $   809
     1999                                  --
     2000                                 306
     2001                                 364
     2002                                  --
     Thereafter                        52,883
                                      -------
     Total                            $54,362
                                      -------
                                      -------
</TABLE>

     Subsequent to year end, the  Company borrowed $5.5 million under the 
Credit Facility to finance the acquisition of Bronco Billy's.  Additional 
repayments with respect to these borrowings are $1.0 million, $1,1 million, 
$1.1 million and $2.3 million, payable in 1998, 1999, 2000 and 2001, 
respectively.

(6)  STOCKHOLDER'S EQUITY

     Pursuant to the Reorganization, the Predecessor Company's preferred 
stock, common stock and warrants were canceled on the Effective Date.  The 
Reorganization  provided for the amendment and restatement of the Company's 
certificate of incorporation and bylaws.  The new charter authorized 20 
million shares of $.01 par value common stock. Upon the Effective Date, 5 
million shares of common stock of CG&E were issued on a pro rata basis to the 
Predecessor Company's senior secured creditors.  In addition, the Company's 
President and Chief Executive Officer was issued 138,888 shares of common 
stock on the Effective Date.  Also on the Effective Date, 416,667 shares were 
reserved to be 


                                      36
<PAGE>

issued to executive management pursuant to the Management Stock Incentive 
Plan (the "Stock Plan").  The Stock Plan provides for shares to be issued to 
certain management individuals annually, for the three years following the 
Effective Date based on the Company meeting certain performance criteria.  
Once granted, the shares are fully vested.  On June 7, 1997, the Company 
granted 97,203 shares to management due to the performance criteria being 
achieved.  As of December 31, 1997, there are 319,464 shares available for 
grant under the Stock Plan.

(7)  INCOME TAXES

     The Company recorded no income tax expense in the 1995 and 1996 periods 
due to the Company's significant loss position, and the effect of the 
Reorganization on the Company's tax position.  For the year ended December 
31, 1997 the Company recorded a $342,000 deferred tax provision.  A 
reconciliation of income tax expense to the statutory federal tax rate of 34% 
is as follows:

<TABLE>
<S>                       <C>
Statutory Rate ........   34.0%

Effects of:
State Taxes ...........    3.3%
Goodwill ..............   40.5%
                          -----
Effective Tax Rate ....   77.8%
                          -----
</TABLE>

     The components of the deferred tax asset as of December 31, 1997 and 
1996 are as follows.

<TABLE>
<CAPTION>
                                              1997        1996
                                            -------     -------
<S>                                         <C>         <C>
CURRENT:
Accrued vacation, gaming liabilities
and incentive compensation                  $   261     $   458
NON-CURRENT:
Difference in asset basis                       456         458
Recognition of legal settlement                 503         740
Impairment of assets                          1,208       3,860
Net operating loss carryforwards              4,689       2,343
                                            -------     -------
Gross deferred tax asset                      7,117       7,859
Valuation allowance                          (7,117)     (7,859)
                                            -------     -------
                                            $    --     $    --
                                            -------     -------
                                            -------     -------
</TABLE>

     The net deferred tax asset valuation allowance is equal to the full 
amount of the gross deferred tax asset because the realization of such asset 
is dependent upon future taxable income, which is uncertain.  The Company 
currently has NOL's totaling approximately $12.5 million, which expire 
beginning in 2008. Pursuant to the Reorganization, the old shares of common 
stock were canceled and newly authorized common stock was issued to the 
Company's senior secured creditors, effecting an ownership change as defined 
in section 382 of the Internal Revenue Code.  The effect of this ownership 
change limits the utilization of NOL's generated prior to the Effective Date 
to approximately $520,000 annually.  Utilization of NOL's generated 
subsequently to the Effective Date, totaling approximately $6.3 million, is 
unlimited.

(8) LEASES

OPERATING LEASES


                                      37
<PAGE>

     The Company leases real property, on which Bullwhackers Black Hawk was 
constructed.  The lease is for a period through 2014 and requires an annual 
base rent as specified below, payable quarterly.  The land lease also 
requires monthly payments of additional rent equal to 1.9% of gross revenues, 
as defined. Total base rent plus additional rent pursuant to the lease 
agreement for the three years ended December 31, 1997 was $1.1 million each 
year.  In addition to the specified rental payments, the Company is also 
responsible for any and all costs associated with the leased property, 
including but not limited to taxes and assessments, utilities, insurance, 
maintenance and repairs.  The Company has an option to purchase the leased 
land, beginning November 1, 2001, for an amount equal to nine times the 
annual base minimum rent payment then in effect, or $5.9 million on that date.

     Future annual base rental payments for the land lease as of December 31, 
1997 are as follows:

<TABLE>
<CAPTION>
                    Year ending December 31 (in thousands):
              <S>                                           <C>
              1998 ...........................              $  600
              1999 ...........................                 600
              2000 ...........................                 660
              2001 ...........................                 660
              2002 ...........................                 660
              Thereafter .....................               8,690
                                                         ---------
              Total ..........................           $  11,870
                                                         ---------
                                                         ---------
</TABLE>

     In March 1997, the Company relocated its corporate offices to Lakewood, 
Colorado pursuant to a new $10,000 a month lease, which expires April 2002.

     On February 11, 1998, the  Company entered into three ground lease 
agreements for the real property underlying the facility of the former Bronco 
Billy's casino.  The terms of the first lease requires a monthly $35,000 base 
rent payment and additional rent equal to 40% of Net Win (as defined) of the 
gaming operations conducted on the premises through September 2022, with an 
option to extend the lease term to July 2024.  The terms of the second lease 
requires a $22,500 monthly lease payment through July 2024.  This lease 
contains a purchase option for $1.2 million expiring in March 2001.  The 
terms of the third lease requires a monthly rent between $12,500 to $16,500 
per month, based on a range of Average Daily Proceeds (as defined) from all 
gaming devices conducted on the premises, which monthly rent escalates 
throughout the term of the lease, through July 2024.

(9) RELATED PARTY TRANSACTIONS

DUE FROM AFFILIATES

     In 1997, the Company paid $250,000 to Unirock Management Company, a 
merchant banking firm controlled by the Chairman of the Board of Directors 
for the Company.  Unirock Management Company provided financial advisory 
services to the Company related to the Merger.  The Company believes that 
this transaction is on terms at least as favorable as would have been 
obtained from non-related parties.

     In 1994 and 1995, the Predecessor Company made approximately $4.8 
million of advances to former officers and various affiliates which were 
majority owned by the controlling stockholders and certain officers of the 
Predecessor Company. No amounts were ever repaid under these advances.  Due 
to the  deterioration of the financial condition of the affiliates and 
certain officers to which the Predecessor Company had advanced funds, the 
Predecessor Company determined it was unlikely that it would collect any of 
the advances to affiliates and, accordingly, provided a reserve for the 
entire $4.8 million amounts owed the Company as of December 31, 1995.  These 
write-offs are reflected as impairment of assets in the accompanying 
consolidated statements of operations.


                                      38
<PAGE>

(10) COMMITMENTS AND CONTINGENCIES

GAMING LICENSES

     The Colorado Casinos are required to comply with laws and regulations 
promulgated by the Colorado Gaming Commission in order to maintain continued 
operations.  Bullwhackers Black Hawk and Bullwhackers Central City operate 
under separate current annual gaming licenses which expire in December 1998, 
whereas the Silver Hawk Casino license expires in June 1998.  Management 
anticipates that such gaming licenses will be renewed. 

GAMING TAXES AND FEES

     The Colorado Casinos operate as licensed gaming establishments pursuant 
to the Colorado Limited Gaming Act and, accordingly, are required to make 
monthly gaming tax payments to the State of Colorado which are subject to 
annual revisions with a maximum rate of 40%.  The latest annual revision, 
which became effective October 1, 1996, is calculated as a percentage of 
adjusted gross proceeds (casino net win).  The gaming tax rates for the 
previous three gaming years are set forth in the following table:

<TABLE>
<CAPTION>
                                        Annual Tax Rate from      Annual Tax Rate
        Annual Gross Proceeds              10/94 to 9/96         from 10/96 to 6/98
        ---------------------           --------------------     ------------------
      <S>                               <C>                      <C>
      First $2 million ...............            2%                      2%
      Next $2 million ................            8%                      4%
      Next $1 million ................           15%                      14%
      Next $5 million ................           18%                      18%
      Proceeds over $10 million ......           18%                      20%
</TABLE>

     Additionally, the city and state levy device fees ranging from $75 to 
$1,265 per device per annum.  For the years ended December 31, 1997, 1996 and 
1995 the Company recorded $9.1 million, $8.2 million and $8.3 million, 
respectively, in total gaming taxes and device fees.  In 1997, the Gaming 
Commission changed the gaming tax year from October 1 through September 30 to 
July 1 through June 30.  Accordingly, the new tax rate for the gaming tax 
year 1998-99 will be set by the Gaming Commission in June, effective as of 
July 1, 1998.  While it is difficult to speculate on how the Gaming 
Commission may adjust the tax rates, if at all, any material increase in the 
tax rates could have a material adverse effect on the Company's consolidated 
results of operations and financial position.

EMPLOYMENT AGREEMENTS

     In 1996, the Company entered into employment agreements with certain 
executives of the Company.  These employment agreements are each for initial 
term of three years, and renew thereafter for successive one year terms 
unless terminated by each of the respective parties.  On April 29, 1997, the 
Compensation Committee of the Board of Directors extended Mr. Szapor's 
employment contract to June 7, 2000.

OTHER COMMITMENTS

     Effective August 22, 1997, the Company entered into an Agreement and 
Plan of Merger, as amended as of October 21, 1997 (the "Merger Agreement"), 
with Ladbroke Racing Corporation, a Delaware corporation ("LRC"), and CG&E 
Acquisition Corp., a Delaware corporation ("Acquisition Sub"), pursuant to 
which the Acquisition Sub will be merged with and into the Company (the 
"Merger"). Prior to the Merger and pursuant to the terms of the Merger 
Agreement, LRC will assign all of its rights and obligations under the Merger 
Agreement, including its interest in the Acquisition Sub, to Ladbroke Gaming 
Corporation, a Delaware corporation ("Ladbroke"), a wholly-owned subsidiary 
of Ladbroke Group PLC, the ultimate parent of LRC.  As a result of the 
assignment and the 


                                      39
<PAGE>

Merger, the Company will become a wholly-owned subsidiary of Ladbroke.  
Pursuant to the Merger Agreement, holders of the Company's common stock, 
$0.01 par value (the "Common Stock"), will be entitled to receive $6.25 in 
cash for each share of Common Stock held by them immediately prior to the 
Merger.  On December 12, 1997, stockholders of the Company approved and 
adopted the Merger Agreement. The Merger remains subject to approval by the 
Colorado Limited Gaming Control Commission (the "Gaming Commission").  
Although there can be no assurances, closing of the Merger is anticipated to 
occur sometime in the third quarter of 1998.  However, pursuant to the terms 
of the Merger Agreement, if the Merger has not been consummated on or before 
September, 30 1998, which date may be extended by the mutual written consent 
of LRC and the Company, either party has the right to terminate the Merger 
Agreement and abandon the Merger.

LEGAL PROCEEDINGS

     In October 1996, BWCC, Inc. signed a non-binding memorandum of 
understanding ("MOU") with Gold Coin, Inc., a wholly-owned subsidiary of Lady 
Luck Gaming Corporation, to explore the possibility of physically combining 
Bullwhackers Central City with the adjacent casino operated as Lady Luck Gold 
Coin Gambling Hall & Saloon and owned by Gold Coin, Inc.  The prospective 
transaction was subject to a number of contingencies, including the execution 
and delivery of definitive agreements setting forth the final agreed upon 
terms and conditions of the transaction.  While the parties continued to 
negotiate over unresolved issues contained in the drafts of the definitive 
agreements, market conditions and other events affecting the Central City 
market continued to change and decline significantly.  Despite continued 
efforts to satisfactorily resolve the open issues in light of the foregoing, 
no final, definitive agreements were executed and delivered, and  the 
prospective transaction was never consummated.

     In March 1998, Lady Luck Central City, Inc., formerly known as Gold 
Coin, Inc., filed a complaint in the District Court for the County of 
Jefferson, State of Colorado, Case No. 98 CV 672, captioned as LADY LUCK 
CENTRAL CITY, INC. V. BWCC, INC., D/B/A BULLWHACKERS CENTRAL CITY, COLORADO 
GAMING & ENTERTAINMENT, CO., AND LADBROKE GROUP PLC.  The complaint alleges 
causes of action against BWCC, Inc. based upon the foregoing events for 
breach of contract, breach of fiduciary duty, and breach of duty of good 
faith.  The complaint also alleges causes of action against the Company and 
Ladbroke Group PLC for tortious interference with contract and tortious 
interference with prospective business opportunity.  The Company and BWCC, 
Inc. believe the complaint is without merit and intend to vigorously defend 
themselves.  As required by the Colorado Regulations, the Company has 
notified the Division of this matter.

     The Company is or may become a defendant in a number of pending or 
threatened legal proceedings in the ordinary course of business.  The 
Company's management believes that the ultimate resolution of currently 
pending legal proceedings will not have a material adverse impact on the 
Company's financial position or results of operations. 

(11) SUBSEQUENT EVENTS (UNAUDITED)

     On February 13, 1998, the Company purchased the assets comprising the 
casino known as Bronco Billy's in Black Hawk from Pioneer Associates Limited 
Liability Company for approximately $5.5 million.  In connection with the 
purchase, the Company entered into an amendment to the Credit Facility 
converting the expired $5 million construction line into a new line up to $5 
million (the "Bronco Billy's Acquisition Line") to purchase and perform 
tenant improvements on the  former Bronco Billy's casino.  The Company 
borrowed $5.0 million of the purchase price under the Bronco Billy's 
Acquisition Line and borrowed the remaining $500,000 of the purchase price 
under the equipment portion of the Credit Facility.  The Bronco Billy's 
Acquisition Line amortizes over 60 months, commencing  on June 1, 1998 and is 
payable in full on June 6, 2001.  Additionally, the Company anticipates to 
incur an additional $2.0 million to equip and renovate the former Bronco 
Billy's casino for reopening, which will be funded out of cash flow from 
operations or additional borrowing from the Credit Facility.

     Bronco Billy's is located next to Bullwhackers Black Hawk.  The Company
intends to remove the common wall separating the casinos in order for the former
Bronco Billy's to become a part of Bullwhackers Black Hawk.  


                                      40
<PAGE>

Subject to the approval of the Gaming Commission and the Liquor Agencies, the 
combined casino will be operated as a single casino, under one gaming license 
and one liquor license.  The Company plans to reopen the new  facility in May 
1998, which will add approximately 250 slot machines and an additional 
restaurant facility to Bullwhackers Black Hawk.  The Company intends the 
expansion of Bullwhackers Black Hawk to be known as The Bullpen Sports Casino 
with an enhanced sports-bar theme.

(12) QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

     The following is a summary of unaudited quarterly information excluding 
any reorganization or other impairment changes related to the Reorganization 
and disposition of assets.

<TABLE>
<CAPTION>
        1997               1st Quarter  2nd Quarter  3rd Quarter  4th Quarter
        ----               -----------  -----------  -----------  -----------
 <S>                       <C>          <C>          <C>          <C>
 Net Revenues                $  12,973    $  13,392    $  14,090    $  11,677
 Operating Income                1,368        1,849        2,424        1,995
 Net Income (Loss)               (346)           74          366          118

<CAPTION>
        1996               1st Quarter  2nd Quarter  3rd Quarter  4th Quarter
        ----               -----------  -----------  -----------  -----------
 <S>                       <C>          <C>          <C>          <C>
 Net Revenues                $  11,023    $  12,204    $  14,625    $  12,810
 Operating Income                  424          319        1,926        1,863
 Net Income                        328      163,868          232          171
</TABLE>


                                      41
<PAGE>

                                  SIGNATURES

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

                                       COLORADO GAMING & ENTERTAINMENT CO.



                                       By: /s/  Stephen J. Szapor, Jr.
                                           ----------------------------------
                                           Stephen J. Szapor, Jr.
                                           President and Chief Executive Officer


     Pursuant to the requirements of the Securities 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.

<TABLE>
<CAPTION>
     Signature                  Title                                 Date
     ---------                  -----                                 ----
<S>                             <C>                                   <C>

/s/  Stephen J. Szapor, Jr.     President and Chief                   March 25, 1998
---------------------------     Executive Officer, Director
Stephen J. Szapor, Jr.          (Principal Executive
                                Officer)

/s/  Robert J. Stephens         Vice President of Finance             March 25, 1998
---------------------------     (Principal Financial and
Robert J. Stephens              Accounting Officer)

/s/  Franklin S. Wimer          Director, Chairman of                 March 25, 1998
---------------------------     the Board
Franklin S. Wimer

/s/ Philip J. DiBerardino       Director                              March 25, 1998
---------------------------
Philip J. DiBerardino

/s/  Steve Leonard              Director                              March 25, 1998
---------------------------
Steve Leonard

/s/ Mark van Hartesvelt         Director                              March 25, 1998
---------------------------
Mark van Hartesvelt
</TABLE>


                                      42
<PAGE>

                                  INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Exhibit No.    Description
-----------    -----------
<S>            <C>
   2.1         Disclosure Statement for First Amended Joint Plan of
               Reorganization of the Company, BWBH, Inc., BWCC, Inc. and
               Millsite 27, Inc.*

   2.2         First Amended Joint Plan of Reorganization of the Company, BWBH,
               Inc., BWCC, Inc. and Millsite 27, Inc. (included in
               exhibit 2.1.).*

   2.3         Agreement and Plan of Merger dated as of August 22, 1997 by and
               among the Company, Ladbroke Racing Corporation ("Ladbroke") and
               CG&E Acquisition Corp. (incorporated by reference to Exhibit 2.1
               to the Company's Current Report on Form 8-K filed August 27,
               1997).

   2.4         Stock Option Agreement dated as of August 22, 1997 by and between
               the Company and Ladbroke (incorporated by reference to Exhibit
               2.2 to the Company's Current Report on Form 8-K filed August 27,
               1997).

   2.5         First Amendment to Agreement and Plan of Merger dated as of
               October 21, 1997, among the Company, Ladbroke and CG&E
               Acquisition Corp.

   2.6         Asset Purchase Agreement, dated December 10, 1997, by and between
               CG&E and Pioneer Associates Limited Liability Company
               ("Pioneer").

   3.1         Amended and Restated Articles of Incorporation of the Company.*

   3.2         Amended and Restated By laws of the Company.*

   4.1         Indenture between the Company and Fleet National Bank, as
               Trustee.*

   4.2         Specimen Certificate of Common Stock.*

   4.3         Form of Note.*

   4.4         Registration Rights Agreement.*

   4.5         First Supplemental Indenture date as of January 23, 1998 by and
               between the Company and State Street Bank and Trust Company, as
               successor in interest to Fleet National Bank, as Trustee.

  10.1         Loan and Security Agreement, dated as of November 1, 1995 by and
               between BWBH, Inc., BWCC, Inc. and Millsite 27, Inc. and Foothill
               Capital Corporation.*

  10.2         Amendment Number One to Loan and Security Agreement, dated as of
               December 4, 1995.*

  10.3         Amendment Number Two to Loan and Security Agreement, dated as of
               January 24, 1996.*

  10.4         Letter Agreement, dated as of December 18, 1995, from BWBH, Inc.,
               BWCC, Inc. and Millsite 27, Inc. to Foothill Credit Corporation.*

  10.5         Security Agreement, dated as of November 1, 1995, between the
               Company and Foothill Credit Corporation.*
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<PAGE>

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<S>            <C>
  10.6         Trademark Security Agreement, dated as of November 1, 1995,
               between the Company and Foothill Credit Corporation.*

  10.7         Continuing Guaranty, dated as of November 1, 1995 by the Company
               and Foothill Credit Corporation.*

  10.8         Amended and Restated Loan and Security Agreement, dated as of
               June 4, 1996 between Foothill Capital Corporation, BWBH, Inc.,
               BWCC, Inc., Millsite 27, Inc. and Silver Hawk Casino, Inc.*

  10.9         Lease Agreement, dated October 25, 1991 by and among Jerry L.
               Brown and Harold Gene Reagin and HP Black Hawk, L.P.*

  10.10        Option to Purchase dated October 28, 1991 by and among Jerry L.
               Brown and Harold Gene Reagin and HP Black Hawk, L.P.*

  10.11        Sublease Agreement by and between Marsh & McLennan, Incorporated
               and the Company.*

  10.12        Amendment to Sublease Agreement, dated as of January 18, 1996 by
               and between Marsh & McLennan, Incorporated and the Company.*

  10.13        Guaranty, dated as of January 18, 1996, by BWBH, Inc., BWCC, Inc.
               and Millsite 27, Inc.*

  10.14        Agreement for Sale of Real Estate, dated October 20, 1995, by and
               between Millsite 20 Limited Liability Company, Iron City Limited
               Liability Company and the Company.*

  10.15        First Amendment to Agreement for Sale of Real Estate, dated
               December 21, 1995 by and between Millsite 20 Limited Liability
               Company, Iron City Limited Liability Company and the Company.*

  10.16        Letter dated February 28, 1996 from the United States
               Environmental Protection Agency.*

  10.17        Subdivision Agreement dated February 28, 1996 by and among the
               City of Black Hawk, the Black Hawk/Central City Sanitation
               District, Millsite 27, Inc. and Millsite 20 Limited Liability
               Company.*

  10.18        State of Colorado, Department of Revenue, Limited Gaming License
               issued to Bullwhackers Black Hawk Casino.*

  10.19        State of Colorado, Department of Revenue, Alcoholic Beverage
               License issued to BWBH, Inc.*

  10.20        City of Black Hawk, Retail Liquor License with Extended Hours
               issued to BWBH, Inc.*

  10.21        State of Colorado, Department of Revenue, Limited Gaming License
               issued to Bullwhackers Central City Casino.*

  10.22        State of Colorado, Department of Revenue, Alcoholic Beverage
               License issued to BWCC, Inc.*

  10.23        City of Central City, Retail Liquor License issued to BWCC, Inc.*

  10.24        City of Central City, Extended Hours License issued to BWCC,
               Inc.*

  10.25        Colorado Gaming & Entertainment Co. Management Stock Incentive
               Plan.*+
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                                      44
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<S>            <C>
  10.26        Colorado Gaming & Entertainment Co. Management Cash Bonus Plan.*+

  10.27        Form of Consulting Agreement between the Company and Christopher
               B. Hemmeter.*

  10.28        Form of Consulting Agreement between the Company and Mark M.
               Hemmeter.*

  10.29        Employment Agreement between the Company and Stephen J. Szapor,
               Jr.*+

  10.30        Employment Agreement between the Company and Alan L. Mayer.*+

  10.31        Employment Agreement between the Company and Richard Rabin.*+

  10.32        Employment Agreement between the Company and Robert Stephens .+

  10.33        Employment Agreement between the Company and Jack Breslin.+

  10.34        Second Amendment to Loan and Security Agreement by and among the
               BWBH, Inc., BWCC, Inc. and Silver Hawk Casino, Inc., and Foothill
               Capital Corporation dated February 9, 1998.

  10.35        Amendment to Lease Agreement, dated February 27, 1998 by and
               among Jerry L. Brown and Harold Gene Reagin and HP Black Hawk,
               L.P.

    10.36      Lease Acknowledgment, Assumption and Modification Agreement,
               dated February 11, 1998 by and among Pioneer, BWBH, Inc. and
               Edward E. Smith and Shirley J. Smith.
  
  10.37        Lease Acknowledgment, Assumption and Modification Agreement,
               dated February 11, 1998 by and among Pioneer, BWBH, Inc. and KDL,
               Inc. ("KDL").

  10.38        Lease Acknowledgment, Assumption and Modification Agreement,
               dated February 11, 1998 by and among Pioneer, BWBH, Inc., KDL and
               Elizabeth Branecki.

  10.39        First Amendment to Employment Agreement between the Company and
               Stephen J. Szapor, Jr.+


  21.1         List of Subsidiaries.*

  25.1         Statement of Eligibility under the Trust Indenture Act of 1939,
               as amended of Fleet National Bank, as Trustee under the
               Indenture.*

  27.1         Financial Data Schedule.
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*    Incorporated by reference to the same exhibit number in the Company's 
Registration Statement on Form 10, with the exception of exhibit 25.1 was 
previously referenced as 99.1 (File No. 0 - 28068).

+    Indicates management contract or compensatory plan, contract or 
arrangement.


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