UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-K

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

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)OF THE SECURITIES EXCHANGE
    ACT OF 1934 For the transition period from ____________ to ____________


                        Commission File Number 333-88829

             Peninsula Gaming Company, LLC / Peninsula Gaming Corp.
             (Exact name of registrant as specified in its charter)

                               Delaware 42-1483875
          (State of incorporation) (I.R.S. Employer Identification No.)

          3rd Street Ice Harbor, PO Box 1750, Dubuque, Iowa 52004-1683
               (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (319) 583-7005

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

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

                                (Title of Class)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934 during the  preceding  twelve  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 [_] No [X]

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

     All of the common equity  interests of Peninsula  Gaming Company,  LLC (the
"Company")  are held by Peninsula  Gaming  Partners,  LLC, and all of the common
stock of Peninsula Gaming Corp. is held by Peninsula Gaming Company, LLC.




<PAGE>


                                TABLE OF CONTENTS

PART I     ...................................................................2
  ITEM 1.  BUSINESS...........................................................2
  ITEM 2.  PROPERTIES.........................................................8
  ITEM 3.  LEGAL PROCEEDINGS..................................................9
  ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS.................9

PART II    ...................................................................10
  ITEM 5.  MARKET FOR THE REGISTRANTS COMMON EQUITY AND
             RELATED STOCKHOLDER MATTERS......................................10
  ITEM 6.  SELECTED FINANCIAL DATA............................................11
  ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
             CONDITION AND RESULTS OF OPERATIONS..............................13
  ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
             ABOUT MARKET RISK................................................18
  ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA........................18
  ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
             ACCOUNTING AND FINANCIAL DISCLOSURE..............................18

PART III   ...................................................................19
  ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT.....................19
  ITEM 11. EXECUTIVE COMPENSATION.............................................20
  ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
             AND MANAGEMENT...................................................22
  ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.....................23

PART IV    ...................................................................26
  ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
             REPORTS ON FORM 8-K........................................ .....26



                                       -i-

<PAGE>


                                     PART I

ITEM 1. BUSINESS

DESCRIPTION OF THE BUSINESS

The Diamond Jo

     We own and  operate  the  Diamond  Jo  riverboat  casino,  one of only  two
licensed gaming  operations in Dubuque,  Iowa. We are organized in Delaware as a
limited liability  company and commenced  operations upon our acquisition of the
Diamond Jo riverboat casino on July 15, 1999.

     The Diamond Jo is a three-story, approximately 51,900 square foot riverboat
casino,  replicating a classic 19th century  paddlewheel.  The riverboat has the
capacity for 1,390 patrons, features a spacious two-story atrium, and offers 650
slot machines and 29 table games in  approximately  17,800 square feet of gaming
space.  Adjacent to the Diamond Jo is a two-story,  approximately  33,000 square
foot dockside pavilion,  featuring our 142-seat Lighthouse Grill restaurant, our
recently  renovated 180-seat High Steaks  restaurant,  our recently  constructed
25-seat Club Wild players  lounge,  our gift shop, and our 205-seat  Harbor View
Room, a full service banquet facility.  Approximately  1,000 convenient  parking
spaces are available to our patrons,  including valet parking. The Diamond Jo is
open seven days a week and  functions  primarily  as a dockside  riverboat  with
continuous  boarding.  The Diamond Jo is required by Iowa law to cruise at least
100 times per year,  for a minimum of two hours per cruise,  which we satisfy by
conducting  a two-hour  cruise at 7:30 a.m.  on  weekdays  during the spring and
summer months.

     The  Diamond Jo operates  from,  and the  dockside  pavilion is located in,
Dubuque's  Ice Harbor,  a waterfront  development  on the  Mississippi  River in
downtown  Dubuque.  The  Diamond  Jo is  centrally  located in the Ice Harbor in
downtown  Dubuque and is accessible from each of the major highways in the area.
On  average,  more  than  30,000  vehicles  pass our site per day.  We share our
dockside  pavilion with the Spirit of Dubuque  dinner-boat  and the Iowa Welcome
Center, featuring a museum, historical exhibits, shops, and an observation deck.
The Mississippi River Museum is located within a five-minute walk from our site.
Several cruise ships that operate on the  Mississippi  River,  such as the Delta
Queen and the Mississippi  Queen,  stop at the Ice Harbor  regularly  during the
summer  months.   We  believe  that  the  Diamond  Jo  is  among  the  principal
entertainment venues for residents in and around Dubuque.

Casino Operations

     We regularly  adjust our overall  game mix to appeal to our target  market,
based on, among other factors, the coin-in, hold percentage, location and age of
our  various  slot  machines.  Approximately  75% of  the  Diamond  Jo's  gaming
positions  are slot  machines.  The 650 slot  machines,  all of which  have bill
validators,  include denominations of $0.05 to $25.00, with more than 97% of the
machines $1.00 or lower in denomination.  At any one time,  approximately 20% to
25% of our slot machines are video poker, video keno, and other electronic games
of skill.  Since January 1996,  the casino has replaced or installed  conversion
packages  on   approximately   540  slot  machines.   Conversion   packages  are
installations of new glass, reels and, on occasion, other coinhandling equipment
to slot  machines  to  update or  replace  the game and its  appearance  without
replacing  the  entire  machine.   The   authorization  in  Iowa  of  wide  area
progressives,  networks of slot machines throughout several casinos resulting in
higher  jackpots,  has  allowed us to further  improve  our product mix with the
introduction  of 8 linked  slot  machines.  The 29 table  games  offered  by the
Diamond Jo include three craps, two roulette, 19 blackjack,  two Caribbean Stud,
two  Let-It-Ride,  and one three card  poker,  all  primarily  with low  betting
limits.

Business Strategy

     The  Diamond  Jo is the  leading  gaming  facility  in our  market,  having
captured over half of Dubuque's  casino gaming revenues since 1995, the casino's
first full year of  operations.  We  attribute  our  success to our  competitive
position  and our unique  local  gaming  operations,  offering  the most  gaming
positions  and the only table games,  video poker and video keno within 60 miles
of Dubuque.

                                      -2-
<PAGE>

     We have developed marketing and promotional  strategies designed to attract
new customers and reward frequent gaming customers.  The Company,  in July 2000,
began a marketing  campaign  to define the Diamond Jo as a fun and  entertaining
casino venue.  Our new tag line,  "Where the River Runs Wild" appears in all our
advertising,  including billboard,  print, radio, and television  throughout the
Dubuque area, as well as in our  promotional  offerings.  In addition to our tag
line,  we have  established  core-marketing  programs  utilizing the "River Runs
Wild" theme and have  included  this theme in naming our  players'  club and VIP
lounge. We intend to use our new theme in creating core marketing programs which
will allow us to continue to attract new  customers as well as maintain  loyalty
within our existing customer base.

     We also  believe in  aggressively  using the  information  in our  customer
database  obtained  through our electronic  player  tracking system to focus our
marketing  efforts on our most valued  customers to help increase  revenues from
our  existing  customer  base.  With the help of this  system,  we can  identify
customers'  habits,  such as the  day of the  week,  time of the day and  dollar
denominations  our  players'  club  members  prefer to play.  We can also  store
pertinent information for each member, including birthdays,  favorite sports and
music  preferences.  These  customer  preferences  allow us to better define our
members and give us the ability to improve our  marketing  efforts by  tailoring
our promotions and direct mail offers.

Growth Strategy

     We anticipate  continued growth through a combination of targeted marketing
initiatives,  enhanced by our electronic  player tracking system,  and continued
physical enhancements to our property.  During 2000, we completely remodeled all
three decks of the casino.  This remodeling project creates a more open feel for
the  customer,  which we have found to enhance  the  overall  experience  of our
guests. In February 2001, we remodeled our Diamond Jo Saloon into High Steaks, a
restaurant/sports  bar and created a "VIP" area located in the portside facility
named Club Wild for our players'  club  members.  Additionally,  we expanded the
square footage and seating capacity of our Lighthouse  Grill restaurant  located
within the portside  building.  These enhancements to our portside facility will
provide us with additional amenities to offer to our high-end customers.

     In  addition,   we  anticipate  continued  growth  through  locally  funded
development  programs,  including  the  redevelopment  project in Dubuque's  Ice
Harbor,  where the Diamond Jo is located,  known as the America's River project.
The America's River project is a 90-acre site planned for the Dubuque riverfront
that features a Mississippi  River  Discovery  Center,  education and conference
center,  a river walk and  accompanying  amenities,  and a riverfront  hotel and
indoor  water  park.  This  redevelopment  project is  designed  to enhance  the
attractiveness of the Ice Harbor as a community center and tourist destination.

Competition

     General.  Riverboat  gaming  licenses  in the State of Iowa are  granted to
not-for-profit  "qualified  sponsoring  organizations"  which  may  operate  the
riverboats themselves or may enter into agreements with other parties to operate
the riverboats. The granting of new licenses requires regulatory approval, which
includes,  among other things,  satisfactory  feasibility  studies.  The Dubuque
Racing  Association is the  not-for-profit  organization  that holds the Diamond
Jo's qualified sponsoring organization gaming license and has contracted with us
to operate the Diamond Jo.

     In 1998, the Iowa Racing and Gaming  Commission  adopted a rule that limits
the  number of  riverboat  gaming  licenses  in Iowa to ten,  subject to limited
exceptions,  including  licenses  issued  to  purchasers  of  existing  licensed
facilities and licenses issued to replace an existing facility if its license is
surrendered,  not renewed,  or revoked and  prohibits  the transfer of a license
outside the county in which the  riverboat  operated  on May 1, 1998.  There are
currently ten licensed  riverboat gaming facilities  operating in Iowa. The rule
also prohibits  existing  licensees from increasing the number of table games or
slot  machines  at their  gaming  facilities  without  prior  gaming  commission
approval.

                                      -3-
<PAGE>


     The Dubuque gaming market borders other neighboring  gaming markets.  These
neighboring markets include:

         (1)  Elgin and Aurora, Illinois to the east;
         (2)  Marquette, Iowa and Native American gaming in Wisconsin and
              Minnesota to the north;
         (3)  Des Moines, Iowa and Native American gaming in Tama, Iowa to
              the west; and
         (4)  Clinton, Iowa and the Quad Cities (Bettendorf and Davenport,
              Iowa and Moline and Rock Island,
              Illinois) to the south.

     We believe  that the  Diamond  Jo  competes  only  indirectly  with  gaming
facilities in these neighboring markets.

     Dubuque. The Diamond Jo's principal  competition is the only other licensed
gaming facility in Dubuque:  the Dubuque  Greyhound Park. The Dubuque  Greyhound
Park,  which  opened its casino in 1995,  is located  three  miles  north of the
Diamond Jo and offers  600 slot  machines  and live  greyhound  racing  from May
through October of each year with simulcasts  from other greyhound  tracks.  The
Dubuque  Greyhound  Park also offers,  on a limited  basis,  simulcasts of horse
races.  The Dubuque  Greyhound  Park is owned and operated by the Dubuque Racing
Association.  As a not-for-profit  organization,  the Dubuque Racing Association
distributes  a  percentage  of its cash  flow to the City of  Dubuque  and local
charities.  The Dubuque  Racing  Association  operating  agreement  allows us to
restrict the number of slot machines at the Dubuque  Greyhound Park to 600 if we
do not increase the number of slot  machines at the Diamond Jo to more than 650.
In  addition,  subject to limited  conditions,  the Dubuque  Racing  Association
operating  agreement allows us to require that the weighted average  theoretical
slot payback  percentage at the Dubuque  Greyhound  Park not exceed ours by more
than 0.5%.  We have elected to apply both of these  restrictions  to the Dubuque
Greyhound Park. Under Iowa law, table games,  video poker,  video keno and other
electronic games of skill are not permitted at the Dubuque Greyhound Park.

     Legislation  was enacted in 1999 in Illinois to provide for dockside gaming
in Illinois, which dockside gaming is limited to ten licenses, nine of which are
currently  active.  We  believe  that  additional  competitors  are  effectively
precluded from entering our market due to  constraints  imposed by existing laws
on the availability of gaming licenses.

Employees

     We  maintain  a staff  of  approximately  475 to 500  full-time  equivalent
employees,  depending  upon  the time of the  year.  None of our  employees  are
covered by a collective bargaining agreement.  We have not experienced any labor
problems  resulting in a work  stoppage,  and believe we maintain good relations
with our employees.

Regulatory Matters

     General. We are subject to regulation by the State of Iowa and, to a lesser
extent, by federal law. We are subject to regulations that apply specifically to
the gaming  industry  and  casinos,  in addition to  regulations  applicable  to
businesses generally.  Legislative or administrative changes in applicable legal
requirements,  including  legislation  to  prohibit  casino  gaming,  have  been
proposed in the past. It is possible that the applicable requirements to operate
an Iowa gaming  facility  will become more  stringent and  burdensome,  and that
taxes,  fees and expenses may  increase.  It is also possible that the number of
authorized  gaming  licenses in Iowa may  increase,  which would  intensify  the
competition  that we face.  Our  failure  to  comply  with  detailed  regulatory
requirements  may be grounds for the  suspension or revocation of one or more of
our licenses which would have a material adverse effect on us.

     Iowa Riverboat Gaming Regulation. Our operations are subject to Chapter 99F
of the Iowa Code and the  regulations  promulgated  under that  Chapter  and the
licensing and regulatory control of the gaming commission.

     Under Iowa law, the legal age for gaming is 21, and wagering on a "gambling
game" is legal when conducted by a licensee on an "excursion  gambling boat." An
"excursion  gambling boat" is a  self-propelled  excursion boat, and a "gambling
game" is any game of chance authorized by the gaming commission.  While dockside
casino  gaming is  currently  authorized  by the gaming  commission,  a licensed
excursion  gambling  boat is required to conduct at least one two-hour excursion

                                      -4-

<PAGE>

cruise  each day for at least 100 days  during the  excursion  season to operate
during the  off-season.  The excursion  season is from April 1st through October
31st of each calendar year.  The  excursions  conducted by the Diamond Jo during
the 2000 cruising season  satisfied the requirements of Iowa law for the conduct
of off-season operations.

     The legislation permitting riverboat gaming in Iowa authorizes the granting
of licenses to "qualified  sponsoring  organizations."  A "qualified  sponsoring
organization"  is defined as a nonprofit  corporation  organized under Iowa law,
whether or not exempt from federal taxation, or a person or association that can
show to the satisfaction of the gaming commission that the person or association
is eligible for exemption from federal income  taxation under ss.ss.  501(c)(3),
(4),  (5),  (6),  (7),  (8),  (10) or (19) of the Internal  Revenue  Code.  Such
nonprofit  corporation may operate the riverboat itself, or it may enter into an
agreement  with another boat operator to operate the riverboat on its behalf.  A
boat  operator  must be  approved  and  licensed by the gaming  commission.  The
Dubuque  Racing  Association,  a  not-for-profit  corporation  organized for the
purpose of operating a pari-mutuel  greyhound racing facility in Dubuque,  Iowa,
first  received  a  riverboat  gaming  license  in 1990  and has  served  as the
"qualified sponsoring  organization" of the Diamond Jo since March 18, 1993. The
Dubuque  Racing  Association   subsequently  entered  into  the  Dubuque  Racing
Association  operating  agreement with Greater Dubuque  Riverboat  Entertainment
Company,  the previous owner and operator of the Diamond Jo, authorizing Greater
Dubuque Riverboat  Entertainment  Company to operate riverboat gaming operations
in Dubuque.  The Dubuque Racing Association  operating agreement was approved by
the  gaming  commission  on  March  18,  1993.  The term of the  Dubuque  Racing
Association  operating  agreement  expires on December 31, 2008.  We assumed the
rights and obligations of Greater Dubuque Riverboat  Entertainment Company under
the Dubuque Racing Association operating agreement.

     Under Iowa law, a license to conduct  gaming may be issued in a county only
if the county  electorate  has approved the gaming.  The  electorate  of Dubuque
County,  Iowa,  which includes the City of Dubuque,  approved  gaming on May 17,
1994 by referendum,  including gaming conducted by the Diamond Jo. Approximately
80% of the votes cast approved gaming at that time. However, the 2002 referendum
must be held at the general election in 2002, and a  reauthorization  referendum
must be held each eight years afterward.  Each referendum requires the vote of a
majority of the votes cast. If any reauthorization  referendum is defeated, Iowa
law provides that any  previously  issued  gaming  license will remain valid and
subject to renewal for a total of nine years from the date of original  issuance
of the license,  subject to earlier  nonrenewal or revocation under Iowa law and
regulations applicable to all licenses.

     Proposals to amend or  supplement  Iowa's  gaming  statutes are  frequently
introduced in the Iowa state  legislature.  In addition,  the state  legislature
sometimes considers proposals to amend or repeal Iowa law and regulations, which
could  effectively  prohibit  riverboat  gaming in the State of Iowa,  limit the
expansion of existing operations or otherwise affect our operations. Although we
do not believe that a prohibition of riverboat gaming in Iowa is likely,  we can
give no  assurance  that  changes in Iowa gaming laws will not occur or that the
changes will not have a material adverse effect on our business.

     The  gaming  commission  adopted in 1998 a rule that  prohibits  licensees,
including the Diamond Jo, from increasing the number of gaming tables and gaming
machines without gaming commission  approval.  This approval is based on several
factors, including whether the increase will:

       (1) positively impact the community in which the licensee operates,
       (2) result in permanent improvements and land-based developments, and
       (3) have a detrimental impact on the financial viability of other
           licensees operating in the same market.

As a result of this  rule,  we may be unable to  increase  the  number of gaming
positions on the Diamond Jo.

     Substantially all of the Diamond Jo's material  transactions are subject to
review  and  approval  by the  gaming  commission.  All  contracts  or  business
arrangements,  verbal or written,  with any  related  party or in which the term
exceeds three years or the total value of the contract  exceeds  $50,000 must be
submitted  in advance  to the  gaming  commission  for  approval.  Additionally,
contracts  negotiated  between  the  Diamond  Jo and a  related  party  must  be
accompanied by economic and qualitative justification.

                                      -5-

<PAGE>

     We must  submit  detailed  financial,  operating  and other  reports to the
gaming commission. We must file monthly gaming reports indicating adjusted gross
receipts  received from gambling  games and the total number and amount of money
received from admissions. Additionally, we must file annual financial statements
covering all  financial  activities  related to our  operations  for each fiscal
year. We must also keep  detailed  records  regarding  our equity  structure and
owners.

     Iowa has a  graduated  wagering  tax on  riverboat  gambling  equal to five
percent of the first one million dollars of adjusted gross receipts, ten percent
on the next two million dollars of adjusted gross receipts and twenty percent on
adjusted gross receipts of more than three million  dollars.  In addition,  Iowa
riverboats share equally in costs of the gaming  commission and related entities
to administer  gaming in Iowa.  For the fiscal year ended December 31, 2000, our
share of such expenses was approximately $378,000.  Further, the Diamond Jo pays
to the City of Dubuque a fee equal to $.50 per passenger.

     If the gaming  commission  decides that a gaming law or regulation has been
violated, the gaming commission has the power to assess fines, revoke or suspend
licenses or to take any other  action as may be  reasonable  or  appropriate  to
enforce the gaming rules and  regulations.  In addition,  renewal is subject to,
among other things, continued satisfaction of suitability requirements.

     Regulatory  Requirements Applicable to Owners of the Securities and Others.
We are required to notify the gaming  commission  as to the identity of, and may
be required to submit background information regarding, each director, corporate
officer and owner, partner, joint venture, trustee or any other person who has a
beneficial  interest of five percent or more,  direct or indirect,  in Peninsula
Gaming Company. The gaming commission may also request that we provide them with
a list of persons holding  beneficial  ownership  interests in Peninsula  Gaming
Company of less than five  percent.  For  purposes of these  rules,  "beneficial
interest" includes all direct and indirect forms of ownership or control, voting
power or investment power held through any contract,  lien, lease,  partnership,
stockholding,  syndication, joint venture, understanding,  relationship, present
or reversionary  right, title or interest,  or otherwise.  The gaming commission
may  determine  that holders of the notes,  Peninsula  Gaming  Company's  common
membership  interests and preferred membership  interests,  and Peninsula Gaming
Partners'  common  membership  interests and  convertible  preferred  membership
interests have a "beneficial  interest" in us. The gaming  commission may limit,
make  conditional,  suspend  or revoke  the  license  of a  licensee  in which a
director,  corporate  officer or holder of a  beneficial  interest in the person
includes or involves any person or entity which is found to be  ineligible  as a
result  of  want of  character,  moral  fitness,  financial  responsibility,  or
professional qualifications or due to failure to meet other criteria employed by
the gaming commission.

     If any gaming  authority,  including  the gaming  commission,  requires any
person,  including  a  record  or  beneficial  owner  of the  securities,  to be
licensed,  qualified  or found  suitable,  the person  must apply for a license,
qualification or finding of suitability  within the time period specified by the
gaming authority. The person would be required to pay all costs of obtaining the
license,  qualification  or finding of  suitability.  If a record or  beneficial
owner  of any of the  notes  or any  membership  interest  of  Peninsula  Gaming
Partners or Peninsula  Gaming  Company is required to be licensed,  qualified or
found  suitable and is not licensed,  qualified or found  suitable by the gaming
authority within the applicable time period, these notes or membership interests
will be subject to regulatory redemption procedures.  Notes to be redeemed under
a required  regulatory  redemption are redeemable by us, in whole or in part, at
any time upon not less than 20 business  days nor more than 60 days  notice,  or
such earlier date as may be ordered by any governmental authority.

     As of the date of this report,  the gaming  commission has not required the
security  holders to apply for a finding of suitability  to own the  securities.
However,  the gaming  commission  could  require a holder of the  securities  to
submit an application in the future.

     Federal Regulation of Slot Machines. We are required to make annual filings
with the U.S.  Attorney  General in connection  with the sale,  distribution  or
operation of slot  machines.  We are  currently in  compliance  with such filing
requirements.

                                      -6-
<PAGE>

     Potential Changes in Tax and Regulatory Requirements.  In the past, federal
and state  legislators and officials have proposed changes in tax law, or in the
administration of the laws, affecting the gaming industry. The gaming commission
and the Iowa  legislature  sometimes  consider  limitations  on the expansion of
gaming in Iowa and other  changes in gaming laws and  regulations.  Proposals at
the national  level have included a federal  gaming tax and  limitations  on the
federal  income  tax  deductibility  of the  cost  of  furnishing  complimentary
promotional items to customers,  as well as various measures which would require
withholding on amounts won by customers or on negotiated  discounts  provided to
customers on amounts owed to gaming  companies.  It is not possible to determine
with certainty the likelihood of possible changes in tax or other laws or in the
administration  of the laws.  The  changes,  if  adopted,  could have a material
adverse effect on our financial results.

     The United  States  Congress  created a national  commission,  the National
Gaming  Impact  Study  Commission,  which  generally  has the duty to  conduct a
comprehensive  legal and  factual  study of  gambling  in the United  States and
existing  federal,  state and local  policies and practices  with respect to the
legalization  or  prohibition of gambling  activities,  to formulate and propose
changes  in  the  policies  and  practices  and  to  recommend  legislation  and
administrative  actions for such  changes.  The national  commission  issued its
report to President  Clinton,  Congress,  state  governors  and Native  American
tribal leaders on June 18, 1999. Any of the recommendations made by the national
commission  could result in the enactment of new laws and/or the adoption of new
regulations which could have an adverse impact on the gaming industry.  While we
are unable at this time to  determine  the  ultimate  disposition  of any of the
recommendations  that the national commission made,  management does not believe
that any of the  recommendations,  if enacted,  would be reasonably  expected to
have a material adverse effect on our gaming operations.

     Liquor  Regulations.  The sale of  alcoholic  beverages by us is or will be
subject to the licensing,  control and regulation by the liquor agencies,  which
include  the City of Dubuque  and the  Alcoholic  Beverage  Division of the Iowa
Department  of  Commerce.  The  applicable  liquor laws allow the sale of liquor
during legal hours which are Monday  through  Saturday from 6 a.m. to 2 a.m. the
next day and Sunday from 8 a.m. to 2 a.m. on Monday.  Subject to few exceptions,
all  persons  who  have a  financial  interest  in us,  by  ownership,  loan  or
otherwise,  must be disclosed in an  application  filed with, and are subject to
investigation  by, the liquor  agencies.  Persons  who have a direct or indirect
interest  in any Iowa  liquor  license,  other than hotel or  restaurant  liquor
licenses,  may be prohibited from purchasing or holding the notes.  All licenses
are subject to annual  renewal,  are  revocable  and are not  transferable.  The
liquor agencies have the full power to limit,  condition,  suspend or revoke any
license or to place a liquor  licensee on probation with or without  conditions.
Any  disciplinary  action could, and revocation  would,  have a material adverse
effect upon the  operations  of our business.  Many of our owners,  officers and
managers must be  investigated  by the liquor  agencies in  connection  with our
liquor  permits.  Changes in licensed  positions  must be approved by the liquor
agencies.

     United States Coast Guard.  The Diamond Jo is also  regulated by the United
States Coast Guard,  whose regulations affect boat design and stipulate on-board
facilities,  equipment and personnel, including requirements that each vessel be
operated  by  a  minimum  complement  of  licensed  personnel,  in  addition  to
restricting  the number of  persons  who can be aboard the boat at any one time.
Our riverboat  must hold, and currently  possesses,  a Certificate of Inspection
and a Certificate of Documentation  from the United States Coast Guard.  Loss of
the  Certificate  of Inspection  would  preclude our use of the Diamond Jo as an
operating  riverboat.  In addition,  the  riverboat is subject to United  States
Coast Guard regulations  requiring periodic hull inspections.  The United States
Coast  Guard,  upon our  request,  allowed  us to  conduct  an  underwater  hull
inspection  instead  of the  traditional  out of water dry dock  inspection.  We
completed  the  underwater  inspection in November  2000.  The  underwater  hull
inspection did not result in any loss of services of the  riverboat.  We will be
required to perform  another hull  inspection  within 30 months from the date of
the completion of the  underwater  hull  inspection.  At that time, we may again
seek approval from the Coast Guard for an underwater hull inspection in order to
avoid any loss of services of the riverboat.

     All of our marine employees employed on United States Coast Guard regulated
vessels,  even those who have  nothing to do with the  actual  operation  of the
vessel,  such as dealers,  cocktail  hostesses  and security  personnel,  may be
subject to maritime law at certain times of the year, which, among other things,
exempts those employees from state limits on workers'  compensation  awards.  We
maintain workers' compensation insurance in compliance with applicable Iowa law.

                                      -7-
<PAGE>

     The Shipping Act of 1916; The Merchant Marine Act of 1936. The Shipping Act
of 1916, and the Merchant Marine Act of 1936, and applicable regulations contain
provisions which would prevent persons who are not citizens of the United States
from  holding  in the  aggregate  more  than 25% of our  outstanding  membership
interests,  directly or  indirectly.  Peninsula  Gaming  Company's and Peninsula
Gaming Partners'  respective  operating  agreements contain prohibitions against
any purchase or transfer of  Peninsula  Gaming  Company's  or  Peninsula  Gaming
Partners' respective  membership interests to any person or entity if, following
the purchase or transfer, more than 25% of Peninsula Gaming Company's membership
interests are owned, directly or indirectly,  by persons who are not citizens of
the United  States.  Any such  purchase or transfer in  violation  of  Peninsula
Gaming Company's or Peninsula Gaming Partners'  respective  operating agreements
is null and void,  and Peninsula  Gaming Company and Peninsula  Gaming  Partners
will not recognize the purchaser,  transferee or purported beneficial owner as a
direct  or  indirect  holder of an  interest  in  Peninsula  Gaming  Company  or
Peninsula Gaming Partners, respectively, for any purpose. To the extent required
by maritime  laws, the managing  member,  managers and the officers of Peninsula
Gaming  Partners  and  Peninsula  Gaming  Company must be citizens of the United
States.

     Other Regulations. We are subject to federal, state and local environmental
and safety and health laws,  regulations and ordinances that apply to non-gaming
businesses generally, such as the Clean Air Act, Federal Water Pollution Control
Act, Occupational Safety and Health Act, Resource Conservation Recovery Act, Oil
Pollution  Act  and  Comprehensive  Environmental  Response,   Compensation  and
Liability  Act,  each as  amended.  We have not  incurred,  and do not expect to
incur,  material  expenditures  with  respect  to these  laws.  There  can be no
assurances,  however, that we will not incur material liability under these laws
in the future.

General

     We are wholly-owned by Peninsula  Gaming Partners,  LLC, a Delaware limited
liability  company and our sole managing  member.  Peninsula Gaming Corp. is our
only subsidiary, has no assets or operations and was formed solely to facilitate
the  offering  of  our  12  1/4%  Senior  Secured  Notes  due  2006  in  certain
jurisdictions.  Unless otherwise  specified  herein,  references to "us," "our,"
"we" or the "Company" shall mean Peninsula Gaming Company, LLC.

     Our  address  is  3rd  Street  Ice  Harbor,  PO  Box  1750,  Dubuque,  Iowa
52004-1683, and our telephone number is (319) 583-7005.

Recent Developments

     On March 12, 2001, we entered into a secured working capital  facility with
Foothill Capital  Corporation  providing for commitments of up to $10.0 million.
See "Management's  Discussion and Analysis of Financial Condition and Results of
Operations" for further information about this facility.



ITEM 2.  PROPERTIES

     The  properties we acquired upon  consummation  of the  acquisition  of the
Diamond Jo are located within the historic Ice Harbor  district on the west bank
of the Mississippi River in Dubuque,  Iowa. These properties  consist of several
parcels of real property previously owned by Harbor Community Investment. We own
a fee interest in the dockside  pavilion,  consisting  of  approximately  33,000
square  feet,  surface  parking  lots within  close  proximity  to the  dockside
pavilion,  and the walkway  connecting the dockside  pavilion to the ramp, which
leads to where the Diamond Jo is moored.

     The  Diamond  Jo  and  its  dockside  facility  are  currently  pledged  as
collateral with respect to the 12 1/4% Senior Secured Notes due 2006,  issued on
July 15, 1999 by the Company and  Peninsula  Gaming Corp.  in the original  face
amount of $71 million.

     In addition to the  properties we purchased,  we currently  lease  property
used as a patio located between the dockside pavilion and the Diamond Jo, a ramp
connecting the dockside pavilion to the Diamond Jo, and property used as surface
parking  consisting  of  approximately  445  parking  spaces  that  are in close
proximity to the Diamond Jo.

                                      -8-

<PAGE>


     These  leased  properties  are  currently  owned by the City of Dubuque and
leased  to the  Dubuque  Racing  Association,  which  in  turn  subleases  these
properties  to us. The sublease  requires us to pay one dollar per year as rent.
In  connection  with the  acquisition  of the Diamond  Jo, we  acquired  Greater
Dubuque Riverboat  Entertainment Company's interests in this sublease. The terms
of the  Dubuque  Racing  Association  lease  with  the City of  Dubuque  and our
sublease with the Dubuque  Racing  Association  have each been extended  through
December 31, 2008.

     The Dubuque Racing  Association is also party to a parking agreement by and
among the City of Dubuque,  Greater Dubuque Riverboat  Entertainment Company and
other parties, which governs the use of the parking spaces we currently sublease
from the Dubuque Racing  Association.  This parking  agreement gives our patrons
the  non-exclusive  right to use the  approximately 445 parking spaces currently
subleased  from the Dubuque  Racing  Association.  The agreement  also gives our
patrons  and  employees  the  non-exclusive   right  to  use  approximately  335
additional  parking spaces that are owned by the City of Dubuque and are located
in close  proximity to the Diamond Jo. In exchange for these parking  rights and
the  extension  of the  sublease  with the Dubuque  Racing  Association,  we are
required, under some circumstances,  to share costs of maintaining the subleased
parking lots.

     The gaming  commission  approved our application for a license to operate a
gaming riverboat on May 20, 1999,  effective upon the transfer of the Diamond Jo
to us. As a condition to the grant of our gaming  license,  we were  required by
the gaming  commission  to spend up to a maximum of $11.5 million to develop and
construct a hotel  contiguous to the Diamond Jo and to commence  construction of
the hotel by December  2000.  At the April 20, 2000 gaming  commission  meeting,
this condition was removed and our license was renewed with no future obligation
to construct a hotel.


ITEM 3. LEGAL PROCEEDINGS

     We are not a party to,  and none of our  property  is the  subject  of, any
pending legal proceedings other than litigation  arising in the normal course of
business.  We do not  believe  that  adverse  determinations in any or all  such
litigation  would have a material  adverse effect on our financial  condition or
results of operations.  We did not assume liability for any litigation involving
the Diamond Jo or any of the related  real  property in our  acquisition  of the
Diamond Jo from Greater Dubuque Riverboat  Entertainment Company and of the real
property from Harbor Community Investment.

     The  footnotes  to the  historical  financial  statements  included  herein
contain  references  to  expenses  associated  with  Greater  Dubuque  Riverboat
Entertainment  Company  ownership  litigation.  We  are  not  a  party  to  this
litigation,  and,  under the terms of our  acquisition  agreements,  we have not
assumed any liabilities in connection with this litigation.


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

     None.



                                      -9-
<PAGE>


                                     PART II

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

     There is no  established  public  trading  market for any of the  Company's
common equity securities.

     As of March 21, 2001,  there was one holder of record of the common  equity
of the Company,  and the Company was the sole  shareholder  of Peninsula  Gaming
Corp.  The Company paid  approximately  $286,170 for the year ended December 31,
1999 and  approximately  $1,917,551  for the year  ended  December  31,  2000 to
Peninsula  Gaming Partners,  the Company's parent and sole member,  primarily in
respect of (i) certain  consulting and financial  advisory  services relating to
the business operations of the Company, (ii) board fees and expenses paid to the
members of the board of managers of Peninsula  Gaming  Partners,  and (iii) tax,
accounting,  legal and  administrative  costs and expenses of  Peninsula  Gaming
Partners relating to the business operations of the Company.



                                      -10-
<PAGE>


ITEM 6.   SELECTED FINANCIAL DATA

     The following table  represents  selected  financial data of the Company or
its predecessor companies,  Greater Dubuque Riverboat  Entertainment Company and
Harbor Community Investment, L.C., for the five years ended December 31, 2000.

     The selected  historical  financial  data for the five years ended December
31, 2000 are derived from  audited  financial  statements  of the Company or its
predecessor  combined  companies.  The three years ended  December 31, 2000 have
been audited by Deloitte & Touche LLP, independent auditors, and are included in
this form 10-K. The Company acquired the operations of the predecessor companies
on July 15, 1999. The selected  financial data set forth below should be read in
conjunction   with,   and  is  qualified  in  its  entirety  by  reference   to,
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations,"  and  the  Company's  and  the  predecessor   companies'  financial
statements and the related notes included elsewhere in this document.

     As set forth in the table  below,  the  amount  of  non-recurring  expenses
consists of  non-recurring  charges  related to sale of business and  litigation
involving  the prior  owners of the  Diamond Jo and  Greater  Dubuque  Riverboat
Entertainment  Company as well as  organizational  costs and severance  expenses
incurred by the Company.  For purposes of  determining  the ratio of earnings to
fixed  charges,  earnings are defined as income  before  income taxes plus fixed
charges.  Fixed  charges  include  interest  expense  on  all  indebtedness  and
amortization  of bond issuance costs and bond discount.  The Company's  ratio of
earnings  to fixed  charges  for the  period  from  July 15,  1999,  the date of
inception,  to  December  31,  1999  would  have been 1.1x if the  start-up  and
organizational costs expensed during this period were excluded.


<TABLE>
<CAPTION>


                                                                             Peninsula Gaming                 Peninsula Gaming
                                         Predecessor Companies                    Company        Pro Forma         Company
                            -----------------------------------------------  ---------------------------------------------------
                                                               Period from     Period from
                                                                January 1,      July 15,
                                                                1999 to          1999 to
                                                                July 14,       December 31,
                               1996        1997        1998       1999            1999              1999            2000
                            ----------------------------------------------   ---------------------------------------------------
                                                                      (Dollars in thousands)
<S>                         <C>         <C>          <C>        <C>           <C>                 <C>          <C>

Statement of
Operations Data
Revenues:
Casino                      $ 40,267    $ 40,572    $ 44,167    $ 23,764        $ 21,153         $ 44,917         $ 45,519
Food and Beverage              2,619       2,449       2,469       1,408           1,235            2,643            2,664
Other                            329         406         290         121             122              243              169
Less:  Promotional
allowances                      (963)       (806)     (1,076)       (565)           (551)          (1,116)          (1,116)
                            -----------------------------------------------  ---------------------------------------------------
Net Revenues                  42,252      42,621      45,850      24,728          21,959           46,687           47,236

Expenses:
Casino                        16,430      16,706      17,819       9,797           8,730           18,527           20,109
Food and Beverage              2,586       2,196       2,299       1,408           1,248            2,656            2,659
Boat operations                1,997       2,005       2,056       1,055             936            1,991            2,099
Other                             64          65          54          21              16               37               37
Selling, general and
administrative                 9,573       6,947       7,515       4,122           4,206            8,328            7,691
Depreciation and
amortization                   2,026       1,826       1,895       1,157           1,541            2,698            3,571
Non-recurring expenses            58         170         928       1,871           3,134            5,005                0
                            -----------------------------------------------  ---------------------------------------------------
Total expenses                32,734      29,915      32,566      19,431          19,811           39,242           36,166

Income From Operations         9,518      12,706      13,284       5,297           2,148            7,445           11,070
Other income (expense)
Interest income                   81         222         142          76             155              231              434
Interest expense              (1,813)     (1,772)     (1,142)       (331)         (4,383)          (4,714)          (9,507)
Loss on sale of assets        (6,878)        (88)        (74)        (98)            (68)            (166)            (122)
                            -----------------------------------------------  ---------------------------------------------------
Total other expense           (8,610)     (1,638)     (1,074)       (353)         (4,296)          (4,649)          (9,195)

Preferred member
distributions                      0           0           0           0            (289)            (289)            (630)
                            -----------------------------------------------  ---------------------------------------------------
Net income (loss) to
common interests            $    908    $ 11,068    $ 12,210    $  4,944        $ (2,437)        $  2,507         $  1,245
                            ===============================================  ===================================================

</TABLE>

                                      -11-

<PAGE>



<TABLE>
<CAPTION>


                                                                             Peninsula Gaming                 Peninsula Gaming
                                         Predecessor Companies                    Company        Pro Forma         Company
                            -----------------------------------------------  ---------------------------------------------------
                                                               Period from     Period from
                                                                January 1,      July 15,
                                                                1999 to          1999 to
                                                                July 14,       December 31,
                               1996        1997        1998       1999            1999              1999            2000
                            ----------------------------------------------   ---------------------------------------------------
                                                                      (Dollars in thousands)
<S>                         <C>         <C>          <C>        <C>           <C>                 <C>          <C>

Ratio of earnings to
fixed charges                  1.5x        6.5x       10.8x       13.5x             .5x                              1.1x

Other Data
Cash flows from
operating activities        $ 10,140    $ 12,522    $ 14,638    $  6,134        $  2,475                          $  4,951
Cash flows from
investing activities         (18,162)      4,196      (1,793)         80         (68,611)                           (2,409)
Cash flows from
financing activities          10,249     (15,114)    (12,806)     (8,277)         74,055                            (2,099)
Distributions to
common members                 1,380       6,583       7,027       5,258             286                             1,918


                                    At December 31,
                          -----------------------------------                   --------                           -------
Balance Sheet Data:            1996        1997        1998                       1999                              2000
                          -----------------------------------                   --------                           -------
Current assets              $  6,661     $ 6,255     $ 6,767                    $  8,765                          $  9,134
Total assets                   3,340      28,915      29,252                      88,175                            86,788
Current liabilities            8,325       6,829       8,133                       4,370                             3,533
Total debt                    23,132      15,100       9,822                      70,680                            70,764
Preferred member
interest,
redeemable                         0           0           0                       7,000                             7,000
Total members' equity          7,528      11,513      16,697                       6,277                             5,604

</TABLE>



                                      -12-
<PAGE>


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

     The following  discussion and analysis should be read in conjunction  with,
and is  qualified  in its entirety  by, our  "Selected  Financial  Data" and the
financial  statements and the related notes thereto appearing  elsewhere in this
report.  Some statements  contained in "Management's  Discussion and Analysis of
Financial  Condition  and  Results of  Operations"  constitute  "forward-looking
statements" within the meaning of the Private  Securities  Litigation Reform Act
of 1995. Forward-looking statements include the words "may," "will," "estimate,"
"intend,"  "continue,"  "believe,"  "expect," or "anticipate"  and other similar
words. These forward-looking statements generally relate to plans and objectives
for future  operations and are based upon management's  reasonable  estimates of
future  results or trends.  Although  we believe  that the plans and  objectives
reflected in or suggested by such  forward-looking  statements  are  reasonable,
such plans or  objectives  may not be achieved.  Actual  results may differ from
projected results due, but not limited,  to unforeseen  developments,  including
developments relating to the following:

      o   the  availability  and  adequacy  of our  cash  flow  to  satisfy  our
          obligations,  including  payment  of the  notes and  additional  funds
          required to support capital improvements and development,

      o   economic, competitive,  demographic,  business and other conditions in
          our local and regional markets,  including  competition in the Dubuque
          gaming market,

      o   changes  or  developments  in the  laws,  regulations  or taxes in the
          gaming  industry,  including  riverboat  gaming and liquor  regulation
          under Iowa law,

      o   actions  taken or  omitted  to be taken  by third  parties,  including
          customers, suppliers,  competitors,  members and shareholders, as well
          as   legislative,   regulatory,   judicial   and  other   governmental
          authorities,

      o   changes in business strategy, capital improvements, development plans,
          including those due to environmental  remediation concerns, or changes
          in personnel or their compensation, including federal, state and local
          minimum wage requirements,

      o   the loss of any license or permit,  including the failure to obtain an
          unconditional renewal of a required gaming license on a timely basis,

      o   the  termination  of  our operating  agreement with the Dubuque Racing
          Association,  Ltd. or the failure of the Dubuque  Racing  Association,
          Ltd. to continue as our "qualified sponsoring organization,"

      o   the loss of our  riverboat  casino  or  land-based  facilities  due to
          casualty, weather, mechanical failure or any extended or extraordinary
          maintenance or inspection that may be required, and

      o   other factors  discussed in our other filings with the  Securities and
          Exchange Commission.

     You should read this annual report  completely  and with the  understanding
that actual future results may be materially different from what we expect.

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

     The results of  operations  for the twelve  months ended  December 31, 2000
represent our results of operations for the entire twelve months. The results of
operations for the twelve months ended December 31, 1999 discussed below include
our results of operations for the five and a half months ended December 31, 1999
and the combined  results of operations for the six and a half months ended July
14,  1999  for the  predecessor  companies.  As a  result  of the  substantially
different  capital  structure  of our  company  in  comparison  to  that  of the
predecessor  companies,  and of  the  applications  of  purchase  accounting  in
connection with the  acquisition,  our results of operations may not be entirely

                                      -13-

<PAGE>


comparable to the results of operations of the predecessor  companies.  In order
to allow for the transfer of ownership of the Diamond Jo in accordance  with the
gaming commission guidelines, the Diamond Jo was closed for 30 business hours on
July 14 and 15, 1999.

     For the years ended  December  31, 2000 and 1999,  Dubuque was a two-casino
market consisting of the Diamond Jo and the Greyhound Park. Casino gaming win in
the Dubuque  market  increased 3.3% to $81.3 million for the year ended December
31, 2000 from $78.7  million for the year ended  December 31,  1999.  We believe
this  increase was primarily due to increased  player's  club  promotions  and a
change in our slot mix and the slot mix at the  Greyhound  Park.  Admissions  to
casinos in the Dubuque  market  decreased  2.2% to 1,960,915  for the year ended
December 31, 2000 from  2,005,452  for the year ended  December  31, 1999.  This
decrease was primarily due to a record  snowfall level of 35.8 inches during the
month of  December  2000.  As a result of this  snowfall,  total  admissions  in
December 2000  decreased by 32,745  patrons  compared to December  1999. For the
year ended  December 31, 2000, our share of the Dubuque market casino gaming win
decreased  to 56.0%  from 57.1% and casino  admissions  decreased  to 53.9% from
55.2%, in each case, for the year ended December 31, 1999. We believe our market
share  decrease in casino gaming win was  primarily due to the higher  Greyhound
Park slot win  percentage of 6.47% for the year ended December 31, 2000 compared
to our slot win  percentage  of 6.22% for the same year (in  contrast to our and
Greyhound Park's slot win percentages of 6.28% and 6.30%, respectively,  for the
year ended December 31, 1999).

     Net revenues  increased  1.1% to $47.2 million for the year ended  December
31, 2000 from $46.7  million for the year ended  December 31, 1999 due primarily
to increased  communication  with our player's club members  through direct mail
campaigns and a continued  review and change in our game mix. Our admissions for
the year ended  December 31, 2000 decreased 4.5% to 1,057,386 from 1,106,829 for
the year ended  December 31, 1999  partially  as a result of the  aforementioned
inclement  weather during  December  2000.  Admissions for the month of December
2000 decreased by 21,954 from December 1999. In addition, we incurred a decrease
in bus and banquet  passengers  of 23,879 for the year ended  December  31, 2000
compared  to the year ended  December  31,  1999 due to our change in  marketing
strategy.  For the year ended December 31, 2000, our win per admission increased
6.1% to $43.05 from $40.58 for the year ended December 31, 1999. Consistent with
an increase  in net  revenues,  our win per gaming  position  increased  5.9% to
$137.68 for the year ended  December  31,  2000 from  $130.03 for the year ended
December 31, 1999. Our casino  revenues also increased 1.3% to $45.5 million for
the year ended  December 31, 2000 from $44.9 million for the year ended December
31, 1999.  Casino  revenues were derived 81.9% from slot machines and 18.1% from
table games for the year ended  December  31,  2000  compared to 81.1% from slot
machines and 18.9% from table games,  respectively,  for the year ended December
31, 1999.  The increase in casino  revenues was due  primarily to an increase in
slot revenues of 2.3% to $37.3 million for the year ended December 31, 2000 from
$36.4  million  for the year ended  December  31,  1999.  The  increase  in slot
revenues was offset by a decrease in table game revenues of 3.5% to $8.2 million
for the year  ended  December  31,  2000 from $8.5  million  for the year  ended
December 31, 1999.  Food and beverage  revenues,  other revenues and promotional
allowances remained substantially  unchanged at $1.8 million for the years ended
December 31, 2000 and 1999. Promotional allowances represent the estimated value
of goods and  services  provided  free of charge  to  casino  patrons  under our
various marketing programs.

     Casino  operating  expenses  increased  8.5% to $20.1  million  or 42.6% of
casino revenues for the year ended December 31, 2000 from $18.5 million or 41.3%
of casino  revenues for the year ended December 31, 1999.  This increase of $1.6
million was due  primarily to an increase in casino and players club  promotions
of approximately $891,000, an increase in player points expense of approximately
$667,000  due to triple point  promotions  and an increase of $334,000 in gaming
taxes due to  increased  revenue.  This was  partially  offset by a reduction in
rental  expense  of  $196,000  related to vendor  participation  leases for slot
machines.  Food and beverage expenses remained  substantially  unchanged at $2.7
million for the years ended December 31, 2000 and 1999. Boat operations expenses
remained substantially unchanged at $2.1 million for the year ended December 31,
2000  compared to $2.0 million for the year ended  December  31, 1999.  Selling,
general and administrative  expenses decreased 7.7% to $7.7 million for the year
ended  December 31, 2000 from $8.3 million for the year ended December 31, 1999,
primarily  due to the 1999  expenses  relating to  nonrecurring  litigation  and
severance pay of approximately $0.5 million involving the separation and release
agreement  of the  former  Chief  Operating  Officer of  Peninsula  Gaming and a
decrease in marketing and group promotions of approximately  $0.4 million.  This
was  partially  offset by an  increase  in head tax paid to the  Dubuque  Racing
Association of approximately  $405,000.  This tax commenced on April 1, 2000 per
our agreement with the Dubuque Racing Association and continues  thereafter.  We
are required to pay the sum of $.50 for each patron admitted on the boat, which,

                                      -14-

<PAGE>


based on our estimate of annual  attendees for the year ended December 31, 2001,
would  approximate  $500,000  annually.  Included in the year ended December 31,
1999 operating expenses were  non-recurring  expenses of $5.5 million related to
the sale of the business,  litigation  involving the prior owners of the Diamond
Jo and severance payments described above.

     Depreciation and amortization  expense  increased 32.3% to $3.6 million for
the year ended  December 31, 2000 from $2.7 million for the year ended  December
31, 1999.  This increase was due primarily to the  amortization  of $1.4 million
for the $56.6  million of  goodwill  recorded in  connection  with the July 1999
acquisition for the year ended December 31, 2000 compared to $.6 million for the
year ended  December 31, 1999 arising out of goodwill of $56.6 million  recorded
in  connection  with the July 1999  acquisition.  Net interest  expense was $9.1
million for the year ended December 31, 2000 and $4.3 million for the year ended
December 31, 1999. The increase in interest  expense was due to the inclusion of
twelve  months of interest for the year ended  December 31, 2000 relating to the
issuance  of our 12 1/4%  Senior  Secured  Notes due 2006,  as  compared  to the
inclusion of five and a half months of interest for the year ended  December 31,
1999.  Loss on disposal of assets was $0.1  million for the year ended  December
31, 2000 and $0.2 million for the year ended  December  31,  1999.  These losses
were attributable  primarily to the replacement and upgrade of slot machines and
the remodeling of our portside facility.

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

     The results of  operations  for the twelve  months ended  December 31, 1999
discussed below include our results of operations for the five and a half months
ended December 31, 1999 and the combined results of operations for the six and a
half months ended July 14, 1999 for the  predecessor  companies.  The results of
operations for the twelve months ended December 31, 1998 discussed below are the
results  of  operations  for  the  predecessor  companies.  As a  result  of the
substantially  different  capital structure of our company in comparison to that
of the predecessor companies,  and of the applications of purchase accounting in
connection with the  acquisition,  our results of operations may not be entirely
comparable to the results of operations of the predecessor  companies.  In order
to allow for the transfer of ownership of the Diamond Jo in accordance  with the
gaming commission guidelines, the Diamond Jo was closed for 30 business hours on
July 14 and 15.

     For the years ended  December  31, 1999 and 1998,  Dubuque was a two-casino
market consisting of the Diamond Jo and the Greyhound Park. Casino gaming win in
the Dubuque  market  increased 7.0% to $78.7 million for the year ended December
31, 1999 from $73.5  million for the year ended  December 31,  1998.  We believe
this increase was primarily due to an increase in the number of slot machines at
the Greyhound Park, an increase in popular nickel machines at the Greyhound Park
from 78 to 119 and changes in our game mix. Admissions to casinos in the Dubuque
market  decreased  .5% to  2,005,452  for the year ended  December 31, 1999 from
2,015,017 for the year ended  December 31, 1998. For the year ended December 31,
1999,  our share of the Dubuque market casino gaming win decreased to 57.1% from
60.0% and casino admissions decreased to 55.2% from 56.7%, in each case, for the
year ended December 31, 1998. We believe our market share decrease was primarily
due to the Greyhound Park reconfiguring its floor plan and increasing the number
of its slot  machines from 545 to 600 in September  1998.  At 600 machines,  the
Dubuque  Greyhound  Park has met the limit  defined  within the  Dubuque  Racing
Association,  Ltd.  operating  agreement  between  us  and  the  Dubuque  Racing
Association.  The Dubuque Racing Association  operating agreement expires by its
terms on December 31, 2008.

     Net revenues  increased  1.8% to $46.7 million for the year ended  December
31, 1999 from $45.8  million for the year ended  December 31, 1998 due primarily
to improved  marketing  efforts,  better tracking of, and communication with our
VIP players through our electronic player tracking system and a continued review
and change in our game mix. Our  admissions for the year ended December 31, 1999
decreased  3.1% to 1,106,829  patrons from 1,142,008 for the year ended December
31, 1998,  primarily as a result of unusually  inclement  weather during January
1999,  closing of the casino for 30 hours during transfer of ownership,  and the
change of slot  machine mix at the Dubuque  Greyhound  Park.  For the year ended
December 31, 1999,  our win per admission  increased  4.9% to $40.58 from $38.67
for the year  ended  December  31,  1998.  Consistent  with an  increase  in net
revenues,  win per gaming position  increased 2.0% to $130.03 for the year ended
December 31, 1999 from $127.51 for the year ended  December 31, 1998. Our casino
revenues also  increased  1.7% to $44.9 million for the year ended  December 31,
1999 from $44.2 million for the year ended  December 31, 1998.  Casino  revenues
were  derived  81.1% from slot  machines and 18.9% from table games for the year
ended  December  31, 1999  compared to 80.9% from slot  machines  and 19.1% from
table  games for the year  ended  December  31,  1998.  The  increase  in casino
revenues  was due  primarily  to an increase  in slot  revenues of 2.0% to $36.4

                                      -15-

<PAGE>


million for the year ended  December  31,  1999 from $35.7  million for the year
ended December 31, 1998. We believe that the increases in slot revenues,  casino
revenues,  win per admission,  and win per gaming position were due primarily to
the same reasons net  revenues  increased  for the year ended  December 31, 1999
over the corresponding  period of the prior year. Food and beverage revenues and
other  revenues  increased  4.6% to $2.9 million for the year ended December 31,
1999  compared to $2.8 million for the year ended  December 31, 1998,  primarily
due to an  increase  in  complimentary  food  and  beverage  sales.  Promotional
allowances  increased  by 3.7% to $1.1  million for the year ended  December 31,
1999  compared to $1.08  million for the year ended  December 31, 1998 due to an
increase  in  complimentary  food and  beverage  provided  to our  Diamond  Club
members.  Promotional  allowances  represent  the  estimated  value of goods and
services  provided free of charge to casino patrons under our various  marketing
programs.

     Casino  operating  expenses  increased  4.0% to $18.5  million  or 41.3% of
casino revenues for the year ended December 31, 1999 from $17.8 million or 40.3%
of casino  revenues for the year ended December 31, 1998.  This increase of $0.7
million  was due  primarily  to  increased  rental  expense  related  to  vendor
participation  slot machines of  approximately  $0.6 million.  Food and beverage
expenses  increased  approximately  $.4 million or 15.6% to $2.7 million for the
year ended  December 31, 1999 from $2.3 million for the year ended  December 31,
1998.  We  believe  this  increase  was due to an  increase  in food cost due to
increased  patronage  at our bars and  restaurants,  an increase in food product
quality and an  increase in payroll  expenses  of  approximately  $0.1  million.
Selling, general and administrative expenses increased 10.8% to $8.3 million for
the year ended  December 31, 1999 from $7.5 million for the year ended  December
31, 1998, primarily due to an increase in nonrecurring  litigation and severance
pay of $.5 million  involving the separation and release agreement of the former
Chief Operating Officer of Peninsula Gaming, an increase in marketing promotions
of  approximately  $.2  million as well as an  increase  in  insurance  costs of
approximately $.1 million. Included in the year ended December 31, 1999 and 1998
operating expenses were non-recurring  expenses of $5.5 million and $.9 million,
respectively,  related to the sale of the  business,  litigation  involving  the
prior owners of the Diamond Jo and Greater  Dubuque  Riverboat and the severance
pay discussed above.

     Depreciation and amortization  expense  increased 42.4% to $2.7 million for
the year ended  December 31, 1999 from $1.9 million for the year ended  December
31, 1998. This increase was due primarily to the amortization of $.6 million for
the  $56.6  million  of  goodwill  recorded  in  connection  with the July  1999
acquisition.  Net interest  expense was $4.5 million for the year ended December
31, 1999 and $1.0 million for the year ended  December 31, 1998. The increase of
interest  expense was due to the issuance of $71 million senior secured notes at
12.25%  interest  rate  related  to the  acquisition  in July of  1999.  Loss on
disposal  of assets was $0.2  million for the year ended  December  31, 1999 and
$0.1  million  for  the  year  ended  December  31,  1998.   These  losses  were
attributable primarily to the replacement and upgrade of slot machines.


LIQUIDITY AND CAPITAL RESOURCES

     At December 31, 2000, we had  outstanding  long term debt of  approximately
$71 million and total member's equity of approximately $5.6 million.

Financing Activities

     On July 15, 1999, we completed a private placement of $71 million aggregate
principal  amount  of  Series  A 12 1/4%  Senior  Secured  Notes  due  2006 in a
transaction  exempt from the registration  requirements of the Securities Act of
1933, as amended,  pursuant to Rule 144A  promulgated  thereunder.  On March 15,
2000, we consummated a registered  exchange offer,  pursuant to which all of our
issued  and  outstanding  Series A 12 1/4%  Senior  Secured  Notes due 2006 were
exchanged for our Series B 12 1/4% Senior Secured Notes due 2006.

     The 12 1/4% Senior Secured  Notes are  secured  by  all of our  current and
future  tangible and intangible  assets (with the exception of certain  excluded
assets).  The notes, which mature on July 1, 2006, are redeemable at our option,
in  whole  or in  part at  any time or from  time to time,  on and after July 1,
2003 at certain specified redemption prices set forth in our indenture governing
these notes. The indenture  governing the notes contains a number of restrictive
covenants   and   agreements,  including  covenants  that  limit our ability to,
among  other  things: (1) incur more debt;  (2) pay dividends,  redeem stock  or
make other distributions; (3) issue stock of subsidiaries; (4) make investments;

                                      -16-
<PAGE>


(5) create liens;  (6) enter into  transactions  with  affiliates;  (7) merge or
consolidate;  and (8) transfer or sell assets.  The events of default  under the
indenture  include  provisions that are typical of senior debt financings.  Upon
the occurrence and continuance of certain events of default,  the trustee or the
holders of not less than 25% in aggregate  principal amount of outstanding notes
may declare all unpaid  principal and accrued interest on all of the notes to be
immediately  due and  payable.  Upon the  occurrence  of a change of control (as
defined in the  indenture),  each holder of notes will have the right to require
us to purchase  all or a portion of such  holder's  notes  pursuant to the offer
described in the  indenture at a purchase  price equal to 101% of the  principal
amount  thereof  plus  accrued  and  unpaid  interest,  if any,  to the  date of
repurchase.

     On July 15, 1999, the Company  authorized and issued $9.0 million of common
membership units to Peninsula Gaming Partners.  The combined  proceeds from this
transaction  and the issuance of the senior  secured notes were used to complete
the purchase of certain assets comprising the Diamond Jo casino and related real
property.

     On March 12, 2001, we entered into a secured working capital  facility with
Foothill  Capital  Corporation  providing for commitments of up to $10.0 million
which mature in 2005. The  outstanding  loans will bear interest at a rate equal
to (a) the LIBOR rate plus  3.00%  with  respect to LIBOR rate loans and (b) the
base  rate  plus  0.75%  with  respect  to base rate  loans,  provided  that the
outstanding  obligations shall not at any time bear interest at a rate per annum
less than 8.50%.  Interest on our borrowings under the senior credit facility is
payable  (a) with  respect to base rate  loans,  monthly in arrears and (b) with
respect to LIBOR rate  loans,  on the  earliest  to occur of (i) the last day of
each  applicable  interest  period with respect to such LIBOR rate loan and (ii)
the  first  day of  each  month  that  such  LIBOR  rate  loan  is  outstanding.
Indebtedness  under the senior  credit  facility is secured by all of our assets
that also secure our  obligations  under the notes.  The senior credit  facility
contains a number of  restrictive  covenants and  agreements  similar to (and in
certain cases more restrictive than) those contained in the indenture  governing
the notes,  including a minimum  earnings  requirement,  and  certain  events of
default customary for senior secured facilities of this type. At March 21, 2001,
we had no outstanding borrowings under our senior credit facility.

Operating, Investing and Financing Activities

     Our level of indebtedness will have several important effects on our future
operations,  including,  but not limited to, the  following:  (1) a  significant
portion of our cash flow from operations will be required to pay interest on our
indebtedness; (2) the financial covenants contained in certain of the agreements
governing our indebtedness  will require us to meet certain  financial tests and
may limit our ability to borrow  additional  funds or to dispose of assets;  (3)
our ability to obtain  additional  financing in the future for working  capital,
capital expenditures, or general corporate purposes may be impaired; and (4) our
ability  to adapt to  changes  in the casino  gaming  industry  and to  economic
conditions in general could be limited.

     We generated $5.0 million in cash flows from  operations for the year ended
December  31,  2000.  Net cash flows  used for  investing  activities  were $2.4
million,  which related  primarily to the renovation of our casino floor and the
acquisition of slot machines.  Cash flows used from  financing  activities  were
$2.1 million,  including $1.9 million in member distributions and $.2 million in
bond issuance costs.

     As a condition to the granting of our gaming  license,  we were required by
the  gaming  commission  to spend up to a maximum  of $11.5  million  toward the
development and  construction  of a hotel  contiguous to the Diamond Jo portside
facility.  At the April 20, 2000 gaming commission  meeting,  this condition was
removed,  and our license was renewed with no future  obligation  to construct a
hotel.

     We believe that cash on hand and cash  generated  from  operations  will be
sufficient to satisfy our working capital requirements,  maintenance and capital
expenditures and other cash obligations. However, we cannot assure you that this
will be the  case.  If cash on hand  and  cash  generated  from  operations  are
insufficient  to meet these  obligations,  we may have to refinance  our debt or
sell some or all of our assets to meet our obligations.

                                      -17-
<PAGE>


SEASONALITY AND INFLATION

     Our  business  is  subject  to  seasonal  fluctuations  in the Iowa  gaming
business,  which is typically  weaker from November through February as a result
of adverse  weather  conditions,  and  typically  stronger  from  March  through
October.  In general,  our payroll and general and  administrative  expenses are
affected by inflation.  Although  inflation has not had a material effect on our
business  to date,  we could  experience  the  effects  of  inflation  in future
periods.

FORWARD-LOOKING STATEMENTS

     Throughout  this  report,  we  make   forward-looking   statements.   These
forward-looking  statements  generally relate to plans and objectives for future
operations  and are  based  upon  management's  reasonable  estimates  of future
results or trends.  Although we believe that the plans and objectives  reflected
in or suggested by these forward-looking statements are reasonable, the plans or
objectives may not be achieved.  You should read this report completely and with
the  understanding  that actual future results may be materially  different from
what  we  expect.   Unless  otherwise  required  by  law,  we  will  not  update
forward-looking statements even though our situation may change in the future.



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company is exposed to certain  market  risks which are  inherent in the
Company's  financial  instruments which arise from transactions  entered into in
the normal  course of  business.  Although  the  Company  currently  utilizes no
derivative  financial  instruments and during the fiscal year ended December 31,
2000 had no  variable  rate debt  which may expose  the  Company to  significant
market  risk,  the  Company  is  exposed  to fair  value  risk due to changes in
interest  rates  with  respect  to  its  long-term   fixed  interest  rate  debt
borrowings.  As our fixed rate debt matures,  future earnings and cash flows may
be  impacted  by changes in  interest  rates  related to debt  incurred  to fund
repayments under such fixed interest rate debt borrowings.

     The following information relates to the Company's debt instruments subject
to interest rate risk at December 31, 2000 (dollars in millions):

        Description        Contract Terms     Interest Rate    Cost   Fair Value
        -----------        --------------     -------------    ----   ----------

    Senior Secured Notes   Due July 1, 2006   12 1/4% fixed   $71.0     $66.0*

      *   Represents estimated fair value of such debt instrument as of
          March 28, 2001 based on information provided by Jefferies & Co., Inc.

     We have no  investments  in market  risk  sensitive  instruments  issued by
others.  The only securities owned by Peninsula Gaming Company are the shares of
common stock of its wholly-owned subsidiary, Peninsula Gaming Corp.


ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Audited  financial  statements  and the notes thereto are combined in pages
F-1 through F-23.


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

     None.

                                      -18-
<PAGE>


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

OFFICERS OF PENINSULA GAMING COMPANY, LLC, MANAGERS OF PENINSULA GAMING
PARTNERS, LLC AND OFFICERS AND DIRECTORS OF PENINSULA GAMING CORP.

     Peninsula Gaming Partners, LLC is our parent and sole member. The following
table  sets  forth the names and ages of the  executive  officers  of  Peninsula
Gaming  Company and of the managers and executive  officers of Peninsula  Gaming
Partners.

     Name                        Age                     Position
     ----                        ---                     --------

     M. Brent Stevens........    40      Manager of Peninsula  Gaming  Partners;
                                         Director  of  Peninsula  Gaming  Corp.;
                                         Chief  Executive  Officer of  Peninsula
                                         Gaming  Partners and  Peninsula  Gaming
                                         Company;  President  and  Treasurer  of
                                         Peninsula Gaming Corp.

     George T. Papanier......    43      Chief  Operating  Officer of  Peninsula
                                         Gaming Company

     Natalie A. Schramm......    30      Chief  Financial  Officer and Assistant
                                         General  Manager  of  Peninsula  Gaming
                                         Company

     Michael S. Luzich.......    46      Manager of Peninsula  Gaming  Partners;
                                         Director  of  Peninsula  Gaming  Corp.;
                                         Vice President of Corporate Development
                                         and   Secretary  of  Peninsula   Gaming
                                         Partners;  Vice President and Secretary
                                         of Peninsula Gaming Corp.; Secretary of
                                         Peninsula Gaming Company

     Terrance W. Oliver......    51      Manager of Peninsula Gaming Partners
     William L. Westerman....    68      Manager of Peninsula Gaming Partners
     Andrew R. Whittaker.....    38      Manager of Peninsula Gaming Partners



MANAGEMENT PROFILES

     Following is a brief description of the business  experience of each of the
executive officers of Peninsula Gaming Company and of the managers and executive
officers of Peninsula Gaming Partners listed in the preceding table.

M. Brent Stevens - Manager of Peninsula Gaming Partners; Chief Executive Officer
of Peninsula Gaming Partners and Peninsula Gaming Company; Director of Peninsula
Gaming  Corp.;  President and  Treasurer of Peninsula  Gaming Corp.  Since 1990,
Mr. Stevens has been employed by Jefferies & Company, Inc.,  and presently is an
Executive Vice President in the Corporate  Finance  department.  Mr. Stevens has
been a board member of American  Restaurant Group, Inc. since 1999.  Mr. Stevens
joined us in December 1998 and has held each of the positions listed above since
that date.

George T. Papanier - Chief Operating  Officer of Peninsula  Gaming Company.  Mr.
Papanier has served as our chief  operating  officer  since July 2000.  Prior to
joining our  company,  Mr.  Papanier  was  employed by Resorts  Casino  Hotel in
Atlantic  City,  New Jersey as  Executive  Vice  President  and Chief  Operating
Officer  from May 1997 to March  2000.  Prior to that,  Mr.  Papanier  served as
Senior Vice President and Chief Financial  Officer for Sun  International  since
March 1997 and Senior Vice President of Finance and Chief  Financial  Officer of
Mohegan Sun Casino  since  October  1995.  Mr.  Papanier  has been in the casino
industry  for 20 years  working for various  casinos  including  Sands Hotel and
Casino,  Golden Nugget Casino Hotel, Bally's Grand, Trump Plaza Hotel and Casino
and Hemmeter Enterprises.

                                      -19-

<PAGE>

Natalie A. Schramm - Chief  Financial  Officer and Assistant  General Manager of
Peninsula Gaming Company.  Ms. Schramm has served as our Chief Financial Officer
since July 15, 1999 and as our  Assistant  General  Manager since April 1, 2000.
Ms. Schramm joined our  predecessor,  Greater  Dubuque  Riverboat  Entertainment
Company,  L.C., in November  1996 and was formerly  employed by Aerie Hotels and
Resorts in Oak Brook,  Illinois as Corporate  Accounting Manager since 1992. She
was responsible for the corporate  accounting functions of the Silver Eagle, the
Eagle Ridge Inn and  Resorts,  located in Galena,  Illinois and the Essex Hotel,
located in  Chicago,  Illinois.  She served as  Internal  Audit  Manager for the
Silver Eagle and was a member of a development team that successfully  pursued a
riverboat gaming license in Indiana.

Michael  S.  Luzich - Manager,  Vice  President  of  Corporate  Development  and
Secretary of Peninsula Gaming Partners;  Director,  Vice President and Secretary
of Peninsula Gaming Corp.; Secretary of Peninsula Gaming Company.  Mr. Luzich is
the  founder  and  President  of the  Cambridge  Investment  Group,  L.L.C.,  an
investment  and  development  company  located  in Las Vegas,  Nevada.  Prior to
October 1995,  Mr. Luzich was a founding partner and director of Fitzgeralds New
York, Inc.  and  Fitzgeralds  Arizona  Management, Inc.,  which are  development
companies  responsible for the Turning Stone Casino near Syracuse,  New York for
the Oneida  Tribe and the Cliff  Castle  Casino  near  Sedona,  Arizona  for the
Yavapai-Apachi Tribe, respectively. Mr. Luzich joined us in December 1998.

Terrance  W.  Oliver  -  Manager  of  Peninsula  Gaming  Partners.  Since  1993,
Mr. Oliver  has  served  as a  director  of  and  consultant  to  Mikohn  Gaming
Corporation,  a gaming equipment  manufacturer  headquartered in Las Vegas. From
1988 until 1993,  Mr. Oliver  served as Chairman of the Board to the predecessor
company of Mikohn. From 1984 until 1996,  Mr. Oliver was a founding shareholder,
board member and executive officer of Fitzgeralds Gaming Corporation. Mr. Oliver
retired as the Chief  Operating  Officer of  Fitzgeralds  Gaming  Corporation in
1996.  Mr. Oliver  joined us in September 1999 as a manager of Peninsula  Gaming
Partners.

William L.  Westerman  - Manager  of  Peninsula  Gaming  Partners.  Since  1992,
Mr. Westerman  has  assumed  the  positions  of  Chairman  of the  Board,  Chief
Executive Officer and President of Riviera Holdings Corporation, Chairman of the
Board,  Chief Executive  Officer and President of Riviera, Inc.  and Chairman of
the Board and Chief Executive  Officer of Riviera  Operating  Corporation.  From
July 1,  1991 until his  appointment  as  Chairman  of the Board,  Mr. Westerman
served  as  a  consultant  to  Riviera, Inc.  From  1973  until  June 30,  1991,
Mr. Westerman  held  various  positions  with  Cellu-Craft Inc.   and  Alusuisse
Flexible Packaging,  manufacturers of flexible packaging used primarily for food
products,  including  serving  as  President  and  Chief  Executive  Officer  of
Cellu-Craft Inc.  and President of Alusuisse Flexible Packaging,  a wholly-owned
subsidiary of Alusuisse,  which  purchased  Cellu-Craft Inc.  on June 30,  1989.
Mr. Westerman joined us in July, 1999 as a manager of Peninsula Gaming Partners.
Mr.  Westerman  resigned from the board of managers of Peninsula Gaming Partners
on December 31, 2000.

Andrew R.  Whittaker  - Manager of  Peninsula  Gaming  Partners.  Since 1990 Mr.
Whittaker  has been  employed by Jefferies & Company,  Inc. and  presently is an
executive  vice president in the Corporate  Finance  department.  Mr.  Whittaker
joined us in July 1999 as a manager of Peninsula Gaming Partners.


ITEM 11. EXECUTIVE COMPENSATION

     Subject to the approval of the holders of at least 85% of the voting common
membership  interests of Peninsula Gaming  Partners,  Peninsula Gaming Partners'
board of managers  may issue  additional  incentive  based  equity  interests in
Peninsula Gaming Partners at no less than fair market value.

                                      -20-

<PAGE>

SUMMARY COMPENSATION TABLE

     The following  table sets forth all  compensation  awarded to, earned by or
paid to our Chief  Executive  Officer and to each of our executive  officers for
all services  rendered since the date of consummation of the acquisition on July
15, 1999 through December 31, 2000.

                                                       Other             All
                                                       Annual   Long-    Other
                                                       Compen-  term     Compen-
Name and                    Fiscal  Salary    Bonus    sation   Compen-  sation
Principal Position           Year     ($)      ($)      ($)     sation    ($)
------------------          ------  ------    -----    -------  ------   -------

                                       Annual Compensation
                                       -------------------

M. Brent Stevens..........   2000      --        --      --       --      --
Chief Executive Officer
                             1999      --        --      --       --      --

George T. Papanier........   2000   109,203      --    19,341(1)  --      --
Chief Operating Officer

Natalie A. Schramm........   2000   114,207   20,000     --       --    4,480(2)
Chief Financial Officer
                             1999    36,490   25,000     --       --      --

James P. Rix..............   2000      --        --      --       --  360,315(3)
Formerly, Chief Operating
Officer                      1999    91,346      --      --       --      --

-----------

(1) Includes $6,200 in club membership fees, $4,250 in automobile allowances and
$8,891  for  reimbursement  of  certain   out-of-pocket   relocation   expenses.
Additionally,  in  connection  with his  relocation,  the Company  acquired  Mr.
Papanier's  current  residence  for which he pays all  property  taxes,  utility
expenses and other  out-of-pocket  costs related to maintaining  such residence,
excluding the fair market value equivalent of rental expense.

(2)  Represents  matching  contributions  made by the  Company to the  Company's
401(k) plan.

(3) In connection with Mr. Rix's resignation in November 1999, we entered into a
separation  and release  agreement  pursuant to which,  among other  things,  we
agreed to pay Mr. Rix $360,315.95 in full satisfaction of all amounts due to him
upon termination, which amount was paid to Mr. Rix in January 2000.


EMPLOYMENT AND CONSULTING AGREEMENTS

Natalie A. Schramm. Ms. Schramm has entered into an employment agreement with us
which has a term of three years commencing April 1, 2000. Under the terms of her
employment  agreement,  Ms.  Schramm is  entitled  to an annual  base  salary of
$125,000 and an annual  performance based bonus. Ms. Schramm is further entitled
to at least a 5% annual salary increase, the actual amount of the increase to be
determined by the board of managers of Peninsula  Gaming  Partners.  Ms. Schramm
has agreed to restrictions which will limit her ability to compete with us for a
one-year period following her termination of employment.

                                      -21-

<PAGE>

Michael S.  Luzich.  Peninsula  Gaming  Partners  has entered  into a consulting
agreement  with Mr.  Luzich,  under  which  Mr.  Luzich,  in  consideration  for
corporate  development  and consulting  services to be rendered,  is entitled to
receive  compensation  consisting  of base salary and  incentive  payments in an
aggregate annual amount not to exceed $340,000.  The consulting  agreement has a
one year term and, subject to the occurrence of various  termination  events, is
renewable automatically for successive one year terms. Mr. Luzich is entitled to
reimbursement  of  reasonable  business  expenses  as  approved  by the board of
managers of  Peninsula  Gaming  Partners  and  incurred in  connection  with the
performance of his services.

COMPENSATION OF MANAGERS

     All  managers of Peninsula  Gaming  Partners  receive an annual  payment of
$25,000  (other than Mr.  Stevens who receives  $125,000) for their  services as
managers  on the  board  of  managers  of  Peninsula  Gaming  Partners  and  are
reimbursed for their travel and related out-of-pocket expenses for attendance at
board of managers meetings.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     We have no standing Compensation Committees. All compensation decisions are
made by Peninsula Gaming Partners,  our parent and sole manager. The managers of
Peninsula  Gaming Partners each  participate in the  determination  of executive
officer compensation.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     All of Peninsula Gaming Company's  outstanding common membership  interests
are owned by Peninsula  Gaming  Partners,  its parent and sole  manager.  All of
Peninsula Gaming Corp.'s  outstanding  common stock is owned by Peninsula Gaming
Company.

     Greater Dubuque  Riverboat  Entertainment  Company holds 100% of our issued
and  outstanding  preferred  membership  interests,  which,  subject  to limited
exceptions, will have no voting rights, except as required by applicable law. On
July 15, 1999,  Peninsula Gaming Partners issued 500,000  convertible  preferred
membership interests;  each of which is initially convertible into one Peninsula
Gaming Partners  non-voting common membership  interest,  representing 33.33% of
the fully diluted common  membership  interests of Peninsula  Gaming Partners on
such  date.  Peninsula  Gaming  Partners  does not have  outstanding  any of its
non-voting  common  membership  interests.  See "Description of Peninsula Gaming
Company  Membership  Interests" and  "Description  of Peninsula  Gaming Partners
Membership  Interests"  for more  information  about our  different  classes  of
membership interests. Unless otherwise indicated, the address of each manager or
executive  officer of Peninsula Gaming Partners is c/o Peninsula Gaming Company,
LLC, 3rd Street Ice Harbor, P.O. Box 1750, Dubuque, IA 52004-1683.

     The table below sets forth information  regarding the beneficial  ownership
of the voting common membership interests of Peninsula Gaming Partners by

     (a)  each person or entity known by us to own beneficially 5% or more
          of the common membership interests of Peninsula Gaming Partners,

     (b)  each manager and executive officer of Peninsula  Gaming Partners and

     (c)  all managers and executive officers of Peninsula Gaming Partners
          as a group.

     The following  information is helpful to an understanding of, and qualifies
the  beneficial  ownership  data  contained  in, the table set forth below.  Mr.
Stevens holds 248,333  Peninsula  Gaming  Partners common  membership  interests
directly and 413,333  Peninsula  Gaming  Partners  common  membership  interests
indirectly  through PGP Investors,  LLC. Mr. Stevens is the sole managing member
of PGP Investors and exercises  voting and  investment  power over the Peninsula
Gaming Partners common membership interests owned by PGP Investors.  Mr. Stevens
does  not  own  any  membership  interests in PGP  Investors.  Mr.  Stevens and
Mr. Whittaker,  managers of Peninsula Gaming Partners,  are a managing  director
and  executive  vice  president,  respectively,  of  Jefferies & Company,  Inc.,

                                      -22-

<PAGE>

the initial  purchaser  in the offering  of the old  notes on July 15, 1999.  In
addition,  Jefferies & Company,  Inc. and some of its  affiliates,  officers and
employees  are  members of PGP Investors, LLC.  Mr. Whittaker  holds an economic
interest  in  20,000  Peninsula  Gaming  Partners  common  membership  interests
indirectly through his membership in PGP Investors, but does not exercise voting
or  investment  power with  respect  to, and  disclaims a  beneficial  ownership
interest in, these Peninsula Gaming Partners common  membership  interests.  The
total  holding of all managers and  executive  officers as a group  includes the
413,333  Peninsula  Gaming  Partners  common  membership  interests  held by PGP
Investors, over which Mr. Stevens exercises voting and investment power.


                                             Voting Common
Name and Address                         Membership Interests     Percent of
of Beneficial Owner                       Beneficially Owned        Class
-------------------                      --------------------     -----------

M. Brent Stevens.......................       248,333               24.84%
11100 Santa Monica, 10th Floor
Los Angeles, CA 90071

PGP Investors, LLC.....................       413,333               41.33%
11100 Santa Monica, 10th Floor
Los Angeles, CA 90071

Michael S. Luzich......................       323,333               32.33%

Terrance Oliver........................        15,000                1.50%

Andrew R. Whittaker....................        20,000                2.00%
11100 Santa Monica, 10th Floor
Los Angeles, CA 90071

All managers and executive officers as
   a group (6 persons).................     1,000,000              100.00%



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

RELATIONSHIP WITH DUBUQUE RACING ASSOCIATION

     The Dubuque Racing  Association is a not-for-profit  corporation  organized
for the purpose of operating the Dubuque Greyhound Park, a pari-mutuel greyhound
racing  facility in Dubuque,  Iowa.  On February  22, 1993,  the Dubuque  Racing
Association  entered into the Dubuque  Racing  Association  operating  agreement
which  authorizes us to operate  riverboat  gaming  operations  in Dubuque.  The
Dubuque Racing  Association  operating  agreement has since been amended several
times and expires by its terms on December 31, 2008.

     Beginning  April 1, 2000,  we were  required to make a $0.50 per  admission
payment to the Dubuque  Racing  Association,  without  regard to our revenues or
profits.  Payments made and accrued to the Dubuque Racing  Association  based on
2000  admissions  were  approximately  $405,000.  Based on 2000  admissions,  we
anticipate this payment to be approximately $530,000 in 2001.

     Under the  Dubuque  Racing  Association  operating  agreement,  subject  to
limited conditions,  we are also required to pay the Dubuque Racing Association,
for the right to operate the Diamond Jo, an amount equal to the excess of 32% of
the first $30 million of the  combined  gaming  revenues  of the Dubuque  Racing
Association  and the  Diamond Jo, plus 8% of the next $12 million of these total
gaming  revenues,   plus,  if  there  are  no  competing  gaming  operations  in
neighboring  counties of Illinois  and  Wisconsin,  8% of the next $4 million of
total gaming  revenues,  over the Dubuque Racing  Association's  gaming revenues
from the Dubuque  Greyhound  Park.  Gaming  revenues  under this contract  means

                                      -23-

<PAGE>

adjusted gross receipts less gaming taxes.  This formula is subject to change if
the Dubuque Racing  Association  ceases to operate the Dubuque Greyhound Park or
if we operate a riverboat  smaller than the current Diamond Jo. We are currently
not required to make any such payments to the Dubuque Racing Association because
the Dubuque Racing  Association's  revenues from the Dubuque  Greyhound Park are
greater than the specified percentage of our total gaming revenues.

     The Dubuque Racing  Association  operating  agreement allows us to restrict
the number of slot machines at the Dubuque Greyhound Park to 600; provided, that
we do not  increase  the number of slot  machines at the Diamond Jo to more than
650. In  addition,  we may require that the weighted  average  theoretical  slot
payback  percentage at the Dubuque  Greyhound  Park not exceed ours by more than
0.5% so long as the rates we set are reasonable and in good faith. Additionally,
we cannot require the Dubuque Racing Association to change rates on its machines
more than four times per contract  year.  We have elected to apply both of these
restrictions to the Dubuque Greyhound Park. These restrictions  terminate on the
earlier of:

        (1)    our operation of a replacement  riverboat that is not of equal or
               greater  size than the  Diamond Jo or on which we  operate  fewer
               total gaming positions than on the Diamond Jo, and

        (2)    March 31, 2002.

        Without these restrictions,  either we or the Dubuque Racing Association
        may:

             (a)    increase the number of slot machines upon a determination by
                    the  gaming  commission,   among  other  things,   that  the
                    additional slot machines would not have a detrimental impact
                    on  the  Dubuque  Racing   Association's  or  our  financial
                    viability, as applicable, and

             (b)    increase  the  weighted  average  theoretical  slot  payback
                    percentage, either of which actions, if taken by the Dubuque
                    Racing  Association,  could result in increased  competition
                    from  the  Dubuque   Greyhound   Park.  Iowa  law  currently
                    prohibits pari-mutuels,  such as the Dubuque Greyhound Park,
                    from operating table games,  and we believe that table games
                    will not become permissible at racetracks in Iowa.

     The above  restrictions  are subject to the express approval and regulatory
supervision  of the gaming  commission.  Additionally,  all of the  restrictions
under the Dubuque Racing Association operating agreement will terminate if we or
any of our affiliates  operate  another gaming facility in Dubuque County or the
adjoining   counties  in  Illinois  or  Wisconsin.   Under  the  Dubuque  Racing
Association  operating  agreement,  we have the right to sell the Diamond Jo and
related facilities, subject to the approval of the gaming commission, as long as
the  acquiror  agrees to abide by the terms of the  Dubuque  Racing  Association
operating agreement.

MANAGING MEMBER INDEMNIFICATION

     Under our and  Peninsula  Gaming  Partners'  operating  agreements,  we and
Peninsula Gaming Partners have agreed,  subject to few exceptions,  to indemnify
and hold harmless our members,  Peninsula  Gaming Partners and Peninsula  Gaming
Partners members,  as the case may be, from liabilities  incurred as a result of
their  positions as our sole  manager and as members of us or  Peninsula  Gaming
Partners, as the case may be.

EQUITY CONTRIBUTION

     The  common  members  of  Peninsula  Gaming  Partners  have  made a capital
contribution of $6.0 million to Peninsula  Gaming Partners in exchange for their
common membership interests.  Peninsula Gaming Partners immediately  contributed
this $6.0 million and the $3.0  million  raised in the offering of the old notes
through the sale of Peninsula Gaming Partners'  convertible preferred membership
interests  to  Peninsula  Gaming  Company,  in  exchange  for common  membership
interests  in  Peninsula  Gaming  Company.  Peninsula  Gaming  Company used this
capital  contribution  from  Peninsula  Gaming  Partners  to finance in part the
acquisition of the Diamond Jo. Additionally,  we issued $7.0 million face amount
of preferred  membership  interests to Greater Dubuque  Riverboat  Entertainment
Company in connection  with the  acquisition of the Diamond Jo. We redeemed $3.0
million of the preferred membership interests on January 19, 2001.

                                      -24-

<PAGE>

OPERATING AGREEMENT OF PENINSULA GAMING PARTNERS

     Under Peninsula Gaming  Partners'  operating  agreement,  the management of
Peninsula  Gaming  Partners  is vested in a board of  managers  composed of five
individuals, two of whom must be independent managers. At any time that M. Brent
Stevens, together with any entity controlled by Mr. Stevens,  beneficially holds
at least 5% of the  voting  common  membership  interests  of  Peninsula  Gaming
Partners,  Mr.  Stevens is  entitled  to  designate  three of  Peninsula  Gaming
Partners'  managers,  including  one of the two  independent  managers.  The two
independent managers shall serve as members of the independent committee.  Under
Peninsula Gaming Partners' operating  agreement,  PGP Advisors,  LLC, a Delaware
limited liability company, of which Mr. Stevens is the sole managing member, may
render financial  advisory and consulting  services to Peninsula Gaming Partners
and will be entitled to receive  commercially  reasonable  fees for the services
consistent  with  industry  practices.  Subject  to the  terms of the  indenture
governing the notes, these fees will be paid by us as distributions to Peninsula
Gaming Partners.

     At any time that Michael Luzich, together with any entity controlled by Mr.
Luzich, beneficially holds at least 5% of the voting common membership interests
of  Peninsula  Gaming  Partners,  Mr.  Luzich is  entitled to  designate  two of
Peninsula Gaming Partners' managers, including the other independent manager.

     Presently, Peninsula Gaming Partners' board of managers is composed of four
managers.  If not  appointed  earlier,  a fifth  manager  will be  appointed  at
Peninsula Gaming Partners' next annual meeting of managers. A manager may resign
at any time,  and the member who designates a manager may remove or replace that
manager from the board of managers at any time.

OPERATING AGREEMENT OF PENINSULA GAMING COMPANY

     Under the terms of Peninsula Gaming Company's  operating  agreement,  if we
repay, redeem or refinance 90% or more of the notes on or prior to July 1, 2003,
particular members of management,  including Messrs. Luzich and Stevens, will be
entitled to receive, at Mr. Stevens'  discretion,  an aggregate of $1.5 million,
payable by Peninsula Gaming Company.

MANAGEMENT CONSULTING SERVICES

     During  the past  fiscal  year,  Riviera  Gaming  Management,  of which Mr.
Westerman  is  an  executive  officer,  assisted  us on an  interim  basis  with
transitional  matters  following the  resignation of our former chief  operating
officer.  Pursuant to the terms of a consulting  agreement with Peninsula Gaming
Partners and an employee  sharing  agreement with us, Riviera Gaming  Management
was  entitled  to  receive  aggregate  monthly  compensation  of  $30,000,  plus
reimbursement for out-of-pocket costs and expenses. During the past fiscal year,
Riviera Gaming  Management  earned fees and expenses of approximately  $242,000.
Our engagement of Riviera Gaming Management terminated in July of 2000.




                                      -25-

<PAGE>


                                     PART IV

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

(a)     The following documents are filed as a part of this report:

        (1)    Financial Statements -- see Index to Financial Statements
               appearing on page F-1.
        (2)    Exhibits:

       Exhibit
        Number                          Description
       -------                         ------------

        *3.1A     Certificate of Formation of Peninsula  Gaming  Company,  LLC
        *3.1B     Amendment to  Certificate  of Formation of Peninsula  Gaming
                  Company, LLC
        *3.2      Operating Agreement of Peninsula Gaming Company, LLC
        *3.3      Articles of Incorporation of Peninsula Gaming Corp.
        *3.4      By-laws of Peninsula Gaming Corp.
        *4.1      Specimen Certificate of Common Stock
        *4.2      Indenture,  dated  July 15,  1999,  by and  among  Peninsula
                  Gaming Company, LLC, Peninsula Gaming Corp. and Firstar Bank
                  of Minnesota, N.A., as trustee
        *4.5      Registration  Rights Agreement,  dated July 15, 1999, by and
                  among Peninsula Gaming Company,  LLC, Peninsula Gaming Corp.
                  and Jefferies & Company, Inc.
       *10.1A     Asset  Purchase  Agreement,  dated  January 15, 1999, by and
                  among Greater Dubuque Riverboat  Entertainment Company, L.C.
                  and AB Capital, L.L.C.
       *10.1B     Amendment to Asset  Purchase  Agreement,  dated  February 1,
                  1999, by and among Greater Dubuque  Riverboat  Entertainment
                  Company, L.C. and AB Capital, L.L.C.
       *10.2A     Real Property Purchase Agreement, dated January 15, 1999, by
                  and among Harbor Community Investment,  L.C. and AB Capital,
                  L.L.C.
       *10.2B     First Amendment to Real Property Purchase  Agreement,  dated
                  July 15,  1999,  by and among Harbor  Community  Investment,
                  L.C. and AB Capital, L.L.C.
       *10.3      Assignment  Agreement,  dated  July 1,  1999,  by and  among
                  Peninsula  Gaming Partners,  LLC (formerly AB Capital,  LLC)
                  and Peninsula Gaming Company, LLC
       *10.4      Employment  Agreement,  dated April 15,  1999,  by and among
                  James P.  Rix,  AB  Capital,  L.L.C.  and  Peninsula  Gaming
                  Company, LLC
       *10.5      Employment  Agreement,  dated  July 15,  1999,  by and among
                  Natalie Schramm and AB Capital, L.L.C.
       *10.6      Indemnification  Agreement, dated June 7, 1999, by and among
                  James P.  Rix,  AB  Capital,  L.L.C.  and  Peninsula  Gaming
                  Company, LLC
       *10.7      Indemnification  Agreement, dated June 7, 1999, by and among
                  Natalie Schramm and AB Capital,  L.L.C. and Peninsula Gaming
                  Company, LLC
       *10.8      Bill of Sale,  dated  July 15,  1999,  by and among  Greater
                  Dubuque Riverboat  Entertainment Company, L.C. and Peninsula
                  Gaming Company, LLC
       *10.9A     Operating  Agreement,  dated February 22, 1993, by and among
                  Dubuque  Racing   Association,   Ltd.  and  Greater  Dubuque
                  Riverboat Entertainment Company, L.C.
       *10.9B     Amendment to Operating  Agreement,  dated February 22, 1993,
                  by and among Dubuque  Racing  Association,  Ltd. and Greater
                  Dubuque Riverboat Entertainment Company, L.C.
       *10.9C     Amendment to Operating  Agreement,  dated March 4, 1993,  by
                  and among  Dubuque  Racing  Association,  Ltd.  and  Greater
                  Dubuque Riverboat Entertainment Company, L.C.
       *10.9D     Third  Amendment  to  Operating  Agreement,  dated March 11,
                  1993,  by and among  Dubuque  Racing  Association,  Ltd. and
                  Greater Dubuque Riverboat Entertainment Company, L.C.
       *10.9E     Fourth  Amendment  to Operating  Agreement,  dated March 11,
                  1993,  by and among  Dubuque  Racing  Association,  Ltd. and
                  Greater Dubuque Riverboat Entertainment Company, L.C.
       *10.9F     Fifth Amendment to Operating Agreement, dated April 9, 1993,
                  by and among Dubuque  Racing  Association,  Ltd. and Greater
                  Dubuque Riverboat Entertainment Company, L.C.
       *10.9G     Sixth Amendment to Operating  Agreement,  dated November 29,
                  1993,  by and among  Dubuque  Racing  Association,  Ltd. and
                  Greater Dubuque Riverboat Entertainment Company, L.C.

                                      -26-

<PAGE>

      *10.9H     Seventh  Amendment  to Operating  Agreement,  dated April 6,
                 1994,  by and among  Dubuque  Racing  Association,  Ltd. and
                 Greater Dubuque Riverboat Entertainment Company, L.C.
      *10.9I     Eighth  Amendment  to Operating  Agreement,  dated April 29,
                 1994,  by and among  Dubuque  Racing  Association,  Ltd. and
                 Greater Dubuque Riverboat Entertainment Company, L.C.
      *10.9J     Ninth Amendment to Operating Agreement, dated July 11, 1995,
                 by and among Dubuque  Racing  Association,  Ltd. and Greater
                 Dubuque Riverboat Entertainment Company, L.C.
      *10.9K     Tenth Amendment to Operating Agreement, dated July 15, 1999,
                 by and among Dubuque  Racing  Association,  Ltd. and Greater
                 Dubuque Riverboat Entertainment Company, L.C.
      *10.10     Operating Agreement Assignment,  dated July 15, 1999, by and
                 among Greater Dubuque Riverboat  Entertainment Company, L.C.
                 and Peninsula Gaming Company, LLC
      *10.11     First  Preferred  Ship  Mortgage,  dated July 15,  1999,  by
                 Peninsula  Gaming  Company,  LLC in favor of Firstar Bank of
                 Minnesota, N.A., as trustee
      *10.12     Mortgage, Leasehold Mortgage,  Assignment of Rents, Security
                 Agreement  and Fixture  Financing  Statement  dated July 15,
                 1999, by Peninsula  Gaming Company,  LLC in favor of Firstar
                 Bank of Minnesota, N.A., as trustee
      *10.13     Ice  Harbor  Parking  Agreement  Assignment,  dated July 15,
                 1999, by and among Greater Dubuque  Riverboat  Entertainment
                 Company, L.C. and Peninsula Gaming Company, LLC
      *10.14     First Amendment to Sublease Agreement,  dated July 15, 1999,
                 by and among Dubuque  Racing  Association,  Ltd. and Greater
                 Dubuque Riverboat Entertainment Company, L.C.
      *10.15     Sublease  Assignment,  dated  July 15,  1999,  by and  among
                 Greater Dubuque  Entertainment  Company,  L.C. and Peninsula
                 Gaming Company, LLC
      *10.16     Iowa Racing and Gaming Commission Gaming License, dated July
                 15, 1999
      *10.17     Assignment of Iowa IGT  Declaration  and Agreement of Trust,
                 dated July 15, 1999 by and among Greater  Dubuque  Riverboat
                 Entertainment  Company,  L.C. and Peninsula  Gaming Company,
                 LLC
    ***10.18     Employee  Sharing  Agreement,  dated as of March 1, 2000, by
                 and among Riviera Gaming Management, Inc., Jerome Grippe and
                 Peninsula Gaming Company, LLC.
       12.1      Computation of ratio of earnings to fixed charges
      *99.1      Form of Letter of Transmittal
      *99.2      Form of Notice of Guaranteed Delivery
     **99.3      Form of Letter to Brokers, Dealers and other Nominees
     **99.4      Form of Letter to clients


-----------
*        Previously  filed as an exhibit to the  registration  statement on Form
         S-4 (Registration  Number  333-88829) of Peninsula Gaming Company,  LLC
         and Peninsula Gaming Corp. on October 12, 1999.

**       Previously  filed as an  exhibit  to  Amendment  No. 2 to  registration
         statement  on Form S-4  (Registration  Number  333-88829)  of Peninsula
         Gaming Company, LLC and Peninsula Gaming Corp. on December 13, 1999.

***      Previously  filed as an exhibit to the Form 10-K  (Registration  Number
         333-88829) of Peninsula Gaming Company,  LLC and Peninsula Gaming Corp.
         on March 30, 2000.



                                      -27-
<PAGE>


                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange  Act of 1934,  the  Company has duly caused this report to be signed on
its  behalf  by the  undersigned,  thereunto  duly  authorized,  in the  City of
Dubuque, State of Iowa on March 29, 2001.

                                PENINSULA GAMING COMPANY, LLC

                                By:  /s/ M. Brent Stevens
                                   -----------------------------------
                                     M. Brent Stevens
                                     Chief Executive Officer

                                By:  /s/ George T. Papanier
                                   -----------------------------------
                                     George T. Papanier
                                     Chief Operating Officer

                                By:  /s/ Natalie A. Schramm
                                   -----------------------------------
                                     Natalie A. Schramm
                                     Chief Financial Officer


                                PENINSULA GAMING CORP.

                                By:   /s/ M. Brent Stevens
                                   -----------------------------------
                                     M. Brent Stevens
                                     President and Treasurer

                                By:   /s/ Michael S. Luzich
                                   -----------------------------------
                                     Michael S. Luzich
                                     Vice President

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

                                PENINSULA GAMING PARTNERS, LLC
                                Managing Member of Peninsula Gaming Company, LLC

Date: March 29, 2001            By:   /s/ M. Brent Stevens
                                   ----------------------------------
                                   M. Brent Stevens
                                   Chief Executive Officer and Manager

Date: March 29, 2001            By:   /s/ Michael S. Luzich
                                   ---------------------------------
                                   Michael S. Luzich
                                   Vice President, Secretary and Manager

Date: March 29, 2001            By:   /s/ Terrance W. Oliver
                                   ----------------------------------
                                   Terrance W. Oliver
                                   Manager of Peninsula Gaming Partners

Date: March 29, 2001            By:   /s/ Andrew R. Whittaker
                                   ---------------------------------
                                   Andrew R. Whittaker
                                   Manager of Peninsula Gaming Partners


                                      -28-
<PAGE>


                                                                    Exhibit 12.1


Computation of Ratio of Earnings to Fixed Charges  (amounts in thousands  except
ratio information)

                                                              1/1/00 - 12/31/00
                                                              -----------------
Earnings:

     Total Earnings                                                  $1,245

Fixed Charges:

     Interest Charges                                                 8,712
     Preferred Member Distributions                                     630
     Amortization of bond issuance costs and bond discount              795
                                                                    -------

Total Fixed Charges                                                  10,137
                                                                    -------

Earnings as adjusted                                                $11,382
                                                                    -------

Ratio of earnings to fixed charges                                      1.1
                                                                    =======



                                      -29-
<PAGE>


<TABLE>
<CAPTION>

INDEX TO FINANCIAL STATEMENTS
----------------------------------------------------------------------------------------------------------------------
<S>  <C>                                                                                                          <C>

FINANCIAL STATEMENTS OF PENINSULA GAMING COMPANY, LLC

     Independent Auditors' Report                                                                                 F-2

     Balance Sheets at December 31, 2000 and December 31, 1999                                                    F-3

     Statements of Operations for the Year Ended December 31, 2000 and the period July 15, 1999
     (Date of Inception) to December 31, 1999                                                                     F-4

     Statements of Changes in Members' Equity for the Year Ended December 31, 2000 and
      the period July 15, 1999 (Date of Inception) to December 31, 1999                                           F-5

     Statements of Cash Flows for the Year Ended December 31, 2000 and the period
     July 15, 1999 (Date of Inception) to December 31, 1999                                                       F-6

     Notes to Financial Statements                                                                                F-7


COMBINED FINANCIAL STATEMENTS OF GREATER DUBUQUE RIVERBOAT
ENTERTAINMENT COMPANY, L.C. AND HARBOR COMMUNITY INVESTMENT, L.C.

     Independent Auditors' Report                                                                                F-15

     Combined Statements of Operations for the Period from January 1, 1999 through
     July 14, 1999 and the Year Ended December 31, 1998                                                          F-16

     Combined Statements of Changes in Members' Equity for the Period from
     January 1, 1999 through July 14, 1999 and the Year Ended December 31, 1998                                  F-17

     Combined Statements of Cash Flows for the Period from January 1, 1999
     through July 14, 1999 and the Year Ended December 31, 1998                                                  F-18

     Notes to the Combined Financial Statements                                                                  F-19
</TABLE>








                                      F-1



<PAGE>




INDEPENDENT AUDITORS' REPORT


To the Members of
Peninsula Gaming Company, LLC
Dubuque, Iowa

We have audited the accompanying balance sheets of Peninsula Gaming Company, LLC
(the "Company") as of December 31, 2000 and 1999, and the related  statements of
operations,  changes  in  members'  equity,  and cash  flows for the year  ended
December 31, 2000 and the period July 15, 1999 (date of  inception)  to December
31, 1999.  These financial  statements are the  responsibility  of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  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,  such  financial  statements  present  fairly,  in all material
respects, the financial position of Peninsula Gaming Company, LLC as of December
31, 2000 and 1999,  and the results of its operations and its cash flows for the
year ended December 31, 2000 and the period July 15, 1999 (date of inception) to
December 31, 1999 in conformity with accounting principles generally accepted in
the United States of America.

DELOITTE & TOUCHE LLP

Cedar Rapids, Iowa
January 26, 2001



                                      F-2
<PAGE>



PENINSULA GAMING COMPANY, LLC
<TABLE>
<CAPTION>
BALANCE SHEETS
DECEMBER 31, 2000 and 1999
---------------------------------------------------------------------------------------------------------------------------
                                                                                                2000            1999
                                                                                          ---------------  ----------------
<S>                                                                                       <C>              <C>
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents (Note 4)                                                        $ 8,362,122     $ 7,918,742
  Accounts receivable, less allowance of $43,104 and $55,367, respectively                       74,159         115,616
  Inventory                                                                                     113,583          99,813
  Prepaid expenses                                                                              584,195         630,754
                                                                                            -----------     -----------
        Total current assets                                                                  9,134,059       8,764,925
                                                                                            -----------     -----------

PROPERTY AND EQUIPMENT, NET (Notes 3 and 4)                                                  19,079,869      18,950,194
                                                                                            -----------     -----------
OTHER ASSETS:
  Bond issuance costs, net of accumulated amortization of $1,029,474 and $318,945,
  respectively (Note 13)                                                                      3,991,373       4,520,894
  Goodwill and other intangible assets, net of accumulated amortization of $2,062,064
  and $648,077, respectively                                                                 54,497,416      55,911,404
  Deposits                                                                                       84,973          27,472
                                                                                            -----------     -----------
        Total other assets                                                                   58,573,762      60,459,770
                                                                                            -----------     -----------
TOTAL                                                                                       $86,787,690     $88,174,889
                                                                                            ===========     ===========

LIABILITIES AND MEMBERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable                                                                             $710,537        $476,868
  Accrued payroll and payroll taxes                                                             999,659       1,131,771
  Other accrued expenses                                                                      1,708,994       2,609,630
  Current maturities of capital lease obligations (Note 5)                                      113,552         151,331
                                                                                            -----------     -----------
        Total current liabilities                                                             3,532,742       4,369,600
                                                                                            -----------     -----------

LONG-TERM LIABILITIES:
  Senior secured notes, net of discount (Note 4)                                             70,288,519      70,203,780
  Capital lease obligations, net of current maturities (Note 5)                                 362,229         324,450
                                                                                            -----------     -----------
        Total long-term liabilities                                                          70,650,748      70,528,230
                                                                                            -----------     -----------
        Total liabilities                                                                    74,183,490      74,897,830
                                                                                            -----------     -----------

COMMITMENTS AND CONTINGENCIES (Notes 7 and 9)

PREFERRED MEMBERS' INTEREST, REDEEMABLE (Note 10)                                             7,000,000       7,000,000

MEMBERS' EQUITY (Note 11):
  Common members' interest                                                                    9,000,000       9,000,000
  Accumulated deficit                                                                        (3,395,800)     (2,722,941)
                                                                                            -----------     -----------
        Total members' equity                                                                 5,604,200       6,277,059
                                                                                            -----------     -----------

TOTAL                                                                                       $86,787,690     $88,174,889
                                                                                            ===========     ===========

See notes to financial statements.
</TABLE>

                                      F-3
<PAGE>


PENINSULA GAMING COMPANY, LLC
<TABLE>
<CAPTION>

STATEMENTS OF OPERATIONS
THE YEAR ENDED DECEMBER 31, 2000 AND THE PERIOD
FROM JULY 15, 1999 (DATE OF INCEPTION) TO DECEMBER 31, 1999
----------------------------------------------------------------------------------------------------------------
                                                                                                  Period from
                                                                                                 July 15 (Date
                                                                                                 of Inception)
                                                                                                    through
                                                                                                 December 31,
                                                                                 2000                1999
                                                                            ----------------    ----------------
<S>                                                                         <C>                 <C>
REVENUES:
  Casino                                                                    $   45,518,772      $   21,152,879
  Food and beverage                                                              2,663,380           1,235,297
  Other                                                                            169,446             122,012
  Less promotional allowances                                                   (1,116,055)           (550,816)
                                                                            ----------------    ----------------
        Total net revenues                                                      47,235,543          21,959,372
                                                                            ----------------    ----------------

EXPENSES:
  Casino                                                                        20,108,742           8,729,651
  Food and beverage                                                              2,659,037           1,247,552
  Boat operations                                                                2,099,467             936,076
  Other                                                                             36,826              16,365
  Selling, general and administrative                                            7,690,666           4,206,073
  Start-up and organization costs (Note 13)                                              0           3,134,095
  Depreciation and amortization                                                  3,571,220           1,541,516
                                                                            ----------------    ----------------
        Total expenses                                                          36,165,958          19,811,328
                                                                            ----------------    ----------------

INCOME FROM OPERATIONS                                                          11,069,585           2,148,044
                                                                            ----------------    ----------------

OTHER INCOME (EXPENSE):
  Interest income                                                                  434,283             154,737
  Interest expense                                                              (9,506,969)         (4,383,143)
  Loss on sale of assets                                                          (122,207)            (67,659)
                                                                            ----------------    ----------------
        Total other expense                                                     (9,194,893)         (4,296,065)
                                                                            ----------------    ----------------

NET INCOME (LOSS) BEFORE PREFERRED MEMBER DISTRIBUTIONS                          1,874,692          (2,148,021)

LESS PREFERRED MEMBER DISTRIBUTIONS                                               (630,000)           (288,750)
                                                                            ----------------    ----------------

NET INCOME (LOSS) TO COMMON MEMBERS' INTEREST                               $    1,244,692      $   (2,436,771)
                                                                            ================    ================


See notes to financial statements.
</TABLE>

                                      F-4

<PAGE>


PENINSULA GAMING COMPANY, LLC

<TABLE>
<CAPTION>

STATEMENTS OF CHANGES IN MEMBERS' EQUITY
THE YEAR ENDED DECEMBER 31, 2000 AND THE PERIOD FROM JULY 15, 1999
(DATE OF INCEPTION) TO DECEMBER 31, 1999
--------------------------------------------------------------------------------------------------------------------

                                                         COMMON                                      TOTAL
                                                        MEMBERS'             ACCUMULATED            MEMBERS'
                                                        INTEREST               DEFICIT               EQUITY
                                                       ----------            -----------            ---------
<S>                                                   <C>                   <C>                   <C>

BALANCE, JULY 15, 1999                               $     9,000,000                              $   9,000,000

Net loss to common members' interest                                       $    (2,436,771)          (2,436,771)

Member distributions                                                              (286,170)            (286,170)
                                                     ---------------       ----------------       --------------

BALANCE, DECEMBER 31, 1999                                 9,000,000            (2,722,941)           6,277,059

Net income to common members' interest                                           1,244,692            1,244,692

Member distributions                                                            (1,917,551)          (1,917,551)
                                                     ---------------        ---------------       --------------

BALANCE, DECEMBER 31, 2000                           $     9,000,000       $    (3,395,800)       $   5,604,200
                                                     ===============       ================       ==============

See notes to financial statements.
</TABLE>



                                      F-5
<PAGE>


PENINSULA GAMING COMPANY, LLC

<TABLE>
<CAPTION>

STATEMENTS OF CASH FLOWS
THE YEAR ENDED DECEMBER 31, 2000 AND THE PERIOD
FROM JULY 15, 1999 (DATE OF INCEPTION) TO DECEMBER 31, 1999
-------------------------------------------------------------------------------------------------------------------------------
                                                                                                      Period from
                                                                                                    July 15 (Date of
                                                                                                       Inception)
                                                                                                        through
                                                                                                      December 31,
                                                                                         2000             1999
                                                                                     ------------   -----------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income (loss)                                                                $  1,244,692   $  (2,436,771)
    Adjustments to reconcile net income (loss) to net cash flows
      provided by operating activities:
        Depreciation and amortization                                                   3,571,220       1,541,516
        Provision for doubtful accounts                                                   107,505          55,367
        Amortization of bond issuance costs and bond discount                             795,268         341,536
        Loss on sale of assets                                                            122,207          67,659
    Changes in operating assets and liabilities:
        Receivables                                                                       (66,046)       (147,305)
        Inventory                                                                         (13,770)        (26,869)
        Prepaid expenses and other assets                                                 (10,941)       (581,928)
        Accounts payable                                                                  233,668         466,889
        Accrued expenses                                                               (1,032,749)      3,194,760
                                                                                      ------------   -------------
          Net cash provided by operating activities                                     4,951,054       2,474,854
                                                                                      ------------   -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Proceeds from sale of property and equipment                                           23,331          54,900
    Purchase of property and equipment                                                 (2,432,446)       (666,192)
    Acquisition, net of cash acquired                                                           0     (68,000,000)
                                                                                      ------------   -------------
          Net cash used by investing activities                                        (2,409,115)    (68,611,292)
                                                                                      ------------   -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from senior secured notes                                                          0      70,181,189
    Bond issuance costs                                                                  (181,008)     (4,839,839)
    Proceeds from issuance of common members' interest                                          0       9,000,000
    Member distributions                                                               (1,917,551)       (286,170)
                                                                                      ------------   -------------
          Net cash provided (used) by financing activities                             (2,098,559)     74,055,180
                                                                                      ------------   -------------
NET INCREASE IN CASH                                                                      443,380       7,918,742

CASH AND CASH EQUIVALENTS AT
    BEGINNING OF PERIOD                                                                 7,918,742               0
                                                                                     -------------  -------------
CASH AND CASH EQUIVALENTS AT
    END OF PERIOD                                                                    $  8,362,122   $   7,918,742
                                                                                     ============   =============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
    Cash paid during the period for interest                                         $  8,697,500   $   4,034,673

SUPPLEMENTAL DISCLOSURES OF NONCASH FINANCING ACTIVITIES:
    Issuance of preferred members' interest, redeemable (Notes 1 and 10)             $          0   $   7,000,000

 See notes to financial statements.
</TABLE>

                                      F-6
<PAGE>


PENINSULA GAMING COMPANY, LLC


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


1.  ORGANIZATION, BUSINESS PURPOSE AND BASIS OF PRESENTATION

Peninsula  Gaming Company,  LLC (the "Company") is a wholly-owned  subsidiary of
Peninsula  Gaming  Partners,  LLC  ("PGP").  The  Company is a Delaware  limited
liability  company  formed on January  26,  1999 for the  purpose of  purchasing
assets comprising the Diamond Jo Casino and related real property.

The common  membership  interests  of the Company are  wholly-owned  by PGP. The
Company and PGP  completed  the sale of  $71,000,000  of 12 1/4% Senior  Secured
Notes due 2006 and $3,000,000 in  convertible  preferred  membership  interests,
respectively,  during July 1999.  Concurrently  with the sale of the securities,
the Company received a $9.0 million capital  contribution from PGP ($6.0 million
of which was contributed to the capital of PGP by common members of PGP and $3.0
million  of which was  contributed  to the  capital of PGP  through  the sale of
convertible preferred membership interests of PGP as previously described).  The
proceeds  for the above  transactions  were used to  complete  the  purchase  of
certain assets  comprising  the Diamond Jo casino and related real property.  On
July 15, 1999, the Company acquired  substantially  all of the assets of Greater
Dubuque Riverboat  Entertainment  Company,  L.C.  ("GDREC") and Harbor Community
Investment,  L.C. ("HCI") for $77,000,000.  The purchase price was $70.0 million
cash  ($68.0  million  net of casino cash  acquired  of $2.0  million)  and $7.0
million  in  redeemable  preferred  membership  interests  (see  Note  10).  For
financial  statement  purposes the  acquisition  was accounted for as a purchase
and,  accordingly,  included  in the  Company's  results  since  the date of the
acquisition.  The purchase price has been allocated to the assets  purchased and
the  liabilities  assumed  based  upon  the  fair  values  on  the  date  of the
acquisition, as follows (in thousands):

          Property and equipment                      $  19,300
          Current assets, other than cash                    78
          Goodwill and other intangibles                 56,559
                                                      ----------
          Total assets                                   75,937
          Liabilities                                      (937)
                                                      ----------
          Total Purchase Price                        $  75,000
                                                      ==========

The  excess of the total  acquisition  costs over the fair  market  value of net
assets  acquired has been recorded as goodwill and other  intangible  assets and
will be amortized on a straight-line basis over forty years.

The  following  unaudited  pro  forma  information  presents  a  summary  of the
consolidated  results  of  operations  of the  Company,  GDREC and HCI as if the
acquisition had occurred January 1, 1998.


         Pro Forma Information (Unaudited)
         (in thousands)                                   1999        1998
                                                         -------     -------

         Net revenues                                    $46,687     $45,849

         Income from operations                           11,335      12,503

         Net income to common interests                    1,238       2,506

The pro forma  results do not  include  charges of  $3,134,095  incurred  by the
Company in 1999 for start-up and  organization  costs.  The pro forma results do
not  purport to be  indicative  of results  that  would  have  occurred  had the
acquisition been in effect for the periods presented,  nor do they purport to be
indicative of the results that will be obtained in the future.


                                      F-7

<PAGE>


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Concentration  of  Risks  - The  Company's  management  estimates  that  regular
customers  are  concentrated  within  100  miles  of the  facility  representing
approximately  95% of the  Company's  customer  base at December 31,  2000.  The
remaining 5% includes  groups,  tourists and highway  travelers that live beyond
100 miles.

Cash and Cash Equivalents - The Company considers all cash on hand and in banks,
certificates of deposit and other highly liquid debt instruments  purchased with
original maturities of three months or less to be cash equivalents.

Allowance  for  Doubtful  Accounts - The  allowance  for  doubtful  accounts  is
maintained at a level considered adequate to provide for possible future losses.
The  provision  for doubtful  accounts of $107,505 and $55,367 were recorded for
the  year  ended  December  31,  2000 and the  period  July  15,  1999  (date of
inception) through December 31, 1999 respectively.

Inventories -  Inventories  consisting  principally  of food,  beverage,  retail
items,  and  operating  supplies are stated at the lower of first-in,  first-out
cost or market.

Property  and  Equipment  - Property  and  equipment  are  recorded  at cost and
capitalized  lease  assets  are  recorded  at  their  fair  market  value at the
inception of the lease.  Major renewals and improvements are capitalized,  while
maintenance and repairs are expensed as incurred.  Depreciation and amortization
are computed on a straight-line basis over the following estimated useful lives:

         Land improvements                         20-40 years
         Building and portside improvements         9-40 years
         Riverboat and improvements                 5-20 years
         Furniture, fixtures and equipment          3-10 years
         Computer equipment                          3-5 years
         Vehicles                                      5 years

Bond Issuance Costs - Costs associated with  the issuance of the bonds have been
deferred and are being  amortized over the life of the bonds using the effective
interest method.

Goodwill and Other  Intangible  Assets - The excess of total  acquisition  costs
over the fair  market  value of net  assets  acquired  is  amortized  using  the
straight-line  method over forty  years.  Management  periodically  assesses the
recoverability of goodwill and other intangible assets by comparing its carrying
value to the  undiscounted  cash flows  expected to be generated by the acquired
operation during the anticipated period of benefit.

Long-Lived  Assets -  Statement  of  Financial  Accounting  Standards  No.  121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be  Disposed  Of"  requires,  among  other  things,  that an entity  review  its
long-lived assets and certain related intangibles for impairment whenever events
or changes in  circumstances  indicate that the carrying  amount of an asset may
not be fully recoverable.  Under the standard, if the sum of the expected future
undiscounted  cash  flows is less  than the  carrying  amount of the  asset,  an
impairment  loss is  recognized.  The  impairment is measured  based on the fair
value of the asset.

Financial  Instruments - The carrying amount for financial  instruments included
among cash and cash  equivalents,  accounts  receivable,  accounts  payable  and
security deposits  approximates  their fair value based on the short maturity of
those instruments.

Income Taxes - The Company is a limited liability company.  In lieu of corporate
income  taxes,  the  members of a limited  liability  company are taxed on their
proportionate share of the Company's taxable income.  Therefore, no provision or
liability  for  federal   income  taxes  has  been  included  in  the  financial
statements.

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


                                      F-8

<PAGE>


Promotional  Allowances  - Food,  beverage,  and other items  furnished  without
charge to customers are included in gross revenues at a value which approximates
retail and then  deducted as  promotional  allowances to arrive at net revenues.
The cost of such complimentary services have been included as casino expenses on
the  accompanying  statements of operations.  Such estimated  costs of providing
complimentary  services allocated from the food and beverage and other operating
departments  to the casino  department for the year ended December 31, 2000 were
$529,133 and $12,632 for food and beverage and other, respectively,  and for the
period July 15, 1999 (date of inception) through December 31, 1999 were $294,553
and $13,481, respectively.

Advertising  - The  Company's  policy is to  expense  all  advertising  costs as
incurred.

Use of Estimates - The  preparation of financial  statements in conformity  with
accounting  principles  generally  accepted  in the  United  States  of  America
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 periods.  Actual results could differ
from those estimates.

Recent  Accounting  Pronouncements  - In  June  1998,  the  FASB  issued  a  new
statement, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133"),  effective  for fiscal  years  beginning  after June 15,  2000.  SFAS 133
requires,  among other things, that derivatives be recorded on the balance sheet
at fair  value.  Changes  in the fair value of  derivatives  may,  depending  on
circumstances,  be recognized in earnings or deferred as a component of members'
equity  until a  hedged  transaction  occurs.  In June  1999,  the  FASB  issued
Statement  No.  137,   "Accounting   for  Derivative   Instruments  and  Hedging
Activities--Deferral of the Effective Date of FASB Statement No. 133." Under the
new effective  date, the Company  currently  expects to adopt FASB Statement No.
133,  "Accounting for Derivative  Instruments  and Hedging  Activities," in year
2001.  The Company has evaluated  the effect of adopting this  Statement and has
determined  that the effects of adoption  will not be material to its results of
operation or its financial position.

In 1999, the Securities and Exchange  Commission ("SEC") issued Staff Accounting
Bulletin  (SAB) No. 101,  "Revenue  Recognition in Financial  Statements"  ("SAB
101"). SAB 101 summarizes the SEC staff's views on applying  generally  accepted
accounting  principles  to revenue  recognition  in  financial  statements.  The
Company has reviewed its revenue  recognition  policies and has determined  that
they  comply  with the  principles  as set  forth in SAB 101.  Accordingly,  the
adoption of SAB 101 will have no effect on the Company's  financial  position or
net income.

Reporting  on the Costs of Start-up  Activities  - In April 1998,  the  American
Institute of Certified Public Accountants issued the Statement of Position 98-5,
"Reporting on the Costs of Start-Up  Activities" ("SOP 98-5"). SOP 98-5 requires
that costs of start-up activities and organization costs be expensed as incurred
and was effective for the Company in 1999.  The Company  expensed  $3,134,095 of
organizational costs relating to the acquisition during the period July 15, 1999
(date of inception) through December 31, 1999.


                                      F-9
<PAGE>


3.  PROPERTY AND EQUIPMENT

Property and equipment at December 31 are summarized as follows:

                                                      2000           1999
                                                 -------------  --------------

     Land                                        $    800,000    $    800,000
     Building and portside improvement              6,222,895       5,781,495
     Riverboats and improvements                    8,176,780       7,778,823
     Furniture, fixtures and equipment              5,531,903       4,413,878
     Computer equipment                               387,532         198,111
     Vehicles                                          72,181          72,181
     Equipment held under capital lease
       obligations                                    704,527         704,527
                                                  ------------    ------------
     Subtotal                                      21,895,818      19,749,015
     Accumulated depreciation                      (2,815,949)       (798,821)
                                                  ------------    ------------
     Property and equipment, net                  $19,079,869     $18,950,194
                                                  ============    ============


4.  SENIOR SECURED NOTES

Senior Secured Notes at December 31 are as follows:

                                                      2000            1999
                                                  ------------    ------------
     Senior Secured Notes                         $71,000,000     $71,000,000
     Less:  unamortized discount                     (711,481)       (796,220)
                                                  ------------    ------------
     Senior Secured Notes, net                    $70,288,519     $70,203,780
                                                  ============    ============


On July 15,  1999,  the  Company  issued $71  million of Series A 12.25%  Senior
Secured  Notes due July 1, 2006.  On March 15, 2000,  the Company  consummated a
registered  exchange offer,  pursuant to which all of the issued and outstanding
Series A Notes were  exchanged  for Series B 12.25%  Senior  Secured  Notes (the
"Notes") due July 1, 2006. Interest on the Notes is payable semiannually on July
1 and  January 1 of each year,  commencing  on  January  1, 2000.  The Notes are
collateralized  by certain  cash  accounts  and  substantially  all property and
equipment. The Notes contain various restrictive covenants, which, among others,
restrict  the  Company  from  paying  certain  dividends  and making  restricted
investments.  The Company was in  compliance  with such  covenants for the years
ended December 31, 2000 and 1999.

The carrying amount of the Notes  approximates the estimated fair value based on
the credit, interest rate and the terms of the obligation.

The Notes are not  redeemable  at the  Company's  option  prior to July 1, 2003.
Thereafter,  the Notes may be redeemed at the option of the Company, in whole or
part,  upon not less than 30 nor more than 60 day's  notice,  at the  redemption
prices  (expressed as  percentages  of principal  amount) set forth below,  plus



                                      F-10
<PAGE>


accrued  and  unpaid  interest  thereon,  if  any,  to the  applicable  date  of
redemption,  if redeemed during the 12-month  period  beginning on July 1 of the
years indicated below:

                     Year              Percentage
                     ----              ----------
                     2003                108.00%
                     2004                105.33
                     2005                102.67

Notwithstanding the foregoing, at any time or from time to time prior to July 1,
2002,  the Company  may  redeem,  at their  option,  up to 35% of the  aggregate
principal  amount of the Notes then outstanding at a redemption price of 112.25%
of the principal amount thereof,  plus accrued and unpaid interest  thereon,  if
any,  through the applicable  date of redemption,  with the net cash proceeds of
one or more equity offerings;  provided, that such redemption shall occur within
60 days of the date of closing of such equity  offering  and at least 65% of the
aggregate  principal  amount of Notes  issued on or after the issue date remains
outstanding  immediately  after  giving  effect  to each  such  redemption.  The
restrictions on the optional redemption  contained in the Notes do not limit the
Company's  right to separately make open market,  privately  negotiated or other
purchases of the Notes from time to time.


5.  CAPITAL LEASE OBLIGATION
<TABLE>
<CAPTION>

Capital lease obligations at December 31 are as follows:
<S>                                                                                   <C>         <C>
                                                                                         2000       1999
         Liability under capital leases, due in monthly installments of $21,536       ---------  ---------
         for 24 months and $1,006 for one month, including interest at a fixed
         rate of 9%.  Final payment is due 25 months after the initial payment
         is made.  Payments are anticipated to begin in July 2001 after final
         acceptance of the system.  The leases are collateralized by equipment
         with a net book value of $499,040 and $639,869 at December 31, 2000
         and 1999, respectively.                                                      $475,781   $475,781
         Less current portion                                                         (113,552)  (151,331)
                                                                                      ---------  ---------
                                                                                      $362,229   $324,450
                                                                                      =========  =========

Future  minimum lease  payments under capital lease for the years ended December 31 are as follows:

         2001                                                           $129,216
         2002                                                            258,432
         2003                                                            130,222
                                                                        ---------
         Total minimum lease payments                                    517,870
         Less amounts representing interest                              (42,089)
                                                                        ---------
         Present value of future minimum lease payments                  475,781
         Less current portion                                           (113,552)
                                                                        ---------
         Long-term capital lease obligation                             $362,229
                                                                        =========
</TABLE>


6.  EMPLOYEE BENEFIT PLAN

The Company started a qualified  defined  contribution plan under section 401(k)
of the Internal  Revenue Code during  December  1999.  Under the plan,  eligible
employees  may elect to defer up to 15% of their  salary,  subject  to  Internal
Revenue  Service  limits.  The Company may make a matching  contribution to each
participant based upon a percentage set by the Company, prior to the end of each
plan year. Company matching  contributions to the plan were $212,766 and $15,632
for the year ended  December  31, 2000 and for the period July 15, 1999 (date of
inception) to December 31, 1999, respectively.

                                      F-11

<PAGE>

7. LEASING ARRANGEMENTS

The Company leases various equipment under  noncancelable  operating leases. The
leases require fixed monthly payments to be made ranging from $523 to $3,913 and
certain  other gaming  machines and tables  require  contingent  monthly  rental
payments based on usage of the equipment.  The leases expire on various dates in
2001,  2002 and 2004.  Rent expense for the year ended December 31, 2000 and the
period July 15, 1999 (date of  inception) to December 31, 1999 were $873,949 and
$448,041, respectively.

The future  minimum  rental  payments  required under these leases for the years
ended December 31 are summarized as follows:


              2001                           $103,011
              2002                             27,061
              2003                              6,276
              2004                                523
                                             --------
                                             $136,871
                                             ========

8.  UNINSURED CASH BALANCES

The Company maintains deposit accounts at a local bank. At December 31, 2000 and
1999 and various  times during the periods  then ended,  the balance at the bank
exceeded the maximum amount insured by the FDIC.  Management believes any credit
risk related to the uninsured balance is minimal.


9.  OMMITMENTS AND CONTINGENCIES

The Company is involved in various legal actions arising in the normal course of
business.  In the opinion of  management,  such matters will not have a material
effect upon the financial position of the Company.


10.  PREFERRED MEMBERS' INTEREST--REDEEMABLE

On July 15, 1999,  the Company  authorized  and issued $7.0 million of preferred
membership  units.  The  holders of all of the  Company's  preferred  membership
interests are entitled to receive,  subject to certain restrictions contained in
the indenture  governing the notes,  out of funds  legally  available  therefor,
cumulative preferred  distributions payable semiannually at an annual rate of 9%
of the original face amount thereof.  Distributions  for the year ended December
31, 2000 and the period July 15, 1999 (date of inception)  through  December 31,
1999 were  $630,000  and  $288,750,  respectively.  Other than  certain  limited
consent  rights  and as  required  by law,  holders of the  Company's  preferred
membership interests have no voting rights.

Subject to certain  limitations  contained in the indenture governing the notes,
to the extent not used for any indemnification  obligations of the holders under
the  acquisition  agreements,  the Company  must redeem $3.0 million in original
face  amount of its  preferred  membership  interests  on January  15, 2001 at a
redemption  price  of $3.0  million,  plus  any  accrued  and  unpaid  preferred
distributions  through the date of  redemption.  Certain  managers  of PGP,  who
collectively   have  the  ability  of  control  have  guaranteed  the  Company's
obligation to redeem up to $3.0 million of such preferred membership  interests,
plus  any  accrued  and  unpaid  preferred  distributions  through  the  date of
redemption.  The balance of preferred  membership  interests  not required to be
redeemed  by the  Company on January 15, 2001 must be redeemed by the Company 90
days after the seventh  anniversary of the closing date of the  acquisition at a
redemption  price  of $4.0  million,  plus  any  accrued  and  unpaid  preferred
distributions  through  the  date of  redemption.  The  $3.0  million  preferred
membership  interests  due January 15, 2001,  were redeemed on January 19, 2001,


                                      F-12

<PAGE>


plus a portion of accrued and unpaid  interest  thereon of $170,000 (the balance
of which,  in an amount equal to $145,000,  has agreed to be paid by the Company
at such time that such payment is permitted to be made pursuant to the Company's
existing financing arrangements, but in no event later than January 15, 2003).


11. MEMBERS' EQUITY

On July 15,  1999,  the Company  authorized  and issued  $9.0  million of common
membership  units.  PGP,  as the  holder  of all of  the  Company's  issued  and
outstanding common membership  interests,  is entitled to vote on all matters to
be voted on by  holders  of common  membership  interests  of the  Company  and,
subject to certain  limitations  contained in the Company's  operating agreement
and the  indenture  governing  the notes,  is  entitled to  dividends  and other
distributions  if, as and when declared by the  Company's  managers out of funds
legally available therefor.


12.  DUBUQUE RACING ASSOCIATION, LTD. CONTRACT

Dubuque Racing Association,  Ltd. (the  "Association"),  a qualified  sponsoring
organization,  presently holds a license to conduct gambling games under Chapter
99F and other Iowa statutes.

The Association owns Dubuque Greyhound park, a traditional  greyhound race track
with 600 slot  machines  and  amenities  including a gift shop,  restaurant  and
clubhouse.

The  Company  entered  into a  contract  (the  "Operating  Agreement")  with the
Association  relating to the  operation of an excursion  gambling  riverboat for
excursion  seasons  through  December 31, 2008,  under  gambling  licenses  held
jointly.

Under the terms of the Operating Agreement,  subject to certain conditions,  the
Association shall receive the greater of the Association's  gaming revenues from
the greyhound park for the period,  or a percentage of the total combined gaming
revenues  of the  Association's  from  the  greyhound  park and the  Company  as
follows:

     o  32% of the first $30,000,000 of total combined gaming revenues, plus

     o  8% of the total combined gaming revenues of $30,000,000, but less
        than $42,000,000, plus

     o  8% of total  combined  gaming  revenues  between  $42,000,000  and
        $46,000,000 during any period for which no excursion boat gambling
        or land based gambling operation is carried on from a Wisconsin or
        Illinois  gambling  operation in Grant County,  Wisconsin,  or Joe
        Davies County, Illinois.

Gaming revenues under this contract means adjusted gross  receipts,  less gaming
taxes.

Gaming revenues for the twelve month period ended December 31, 2000 and 1999 for
the Association were $25,912,357 and $25,074,718 respectively,  which are higher
than the previously described thresholds,  therefore, no payments have been made
to the  Association  for the periods ended  December 31, 2000 and 1999 under the
Operating Agreement.

Commencing  April 1, 2000, and continuing  thereafter,  the Company has paid the
Association the sum of $.50 for each patron admitted on the boat,  which,  based
upon recent annual attendance, would approximate $500,000 annually. For the year
ended December 31, 2000 this amount equaled $405,000.

In the event the Company  shall desire to sell or lease the  excursion  gambling
boat, its furnishings and gambling  equipment  and/or its interest in any ticket
sale  facility  or other  buildings  located in the  Dubuque  Ice Harbor used in
connection  with the operation of an excursion  gambling  boat, to a third party
that does not agree to operate said asset subject to the terms and conditions of
the Operating  Agreement,  and obtains an acceptable offer from said third party
for the purchase or lease of the excursion  gambling  boat and its  furnishings,
equipment,  and/or its interest in said building, the Association shall have the
option to purchase or lease the excursion gambling boat, its furnishings, and/or
the  Company's  interest in the building or its lease of the same for the amount
of the  acceptable  offer  made by a third  party  and upon the same  terms  and
conditions as set forth in a third party offer.

                                      F-13

<PAGE>


13.  TRANSACTIONS WITH RELATED PARTIES

During the year ended December 31, 2000,  expenses related to interim management
consulting  services of  approximately  $37,500  were paid to an  affiliate of a
board member of the Company  following the  resignation  in the previous year of
the Company's  former Chief  Operating  Officer.  In addition,  the Company paid
approximately  $1,917,551  during  such  period  to  Peninsula  Gaming  Partners
primarily in respect of (i) certain  consulting and financial  advisory services
relating to the business operations of the Company, (ii) board fees and expenses
paid to the members of the board of managers of  Peninsula  Gaming  Partners and
(iii) tax, accounting,  legal and administrative costs and expenses of Peninsula
Gaming Partners relating to the business operations of the Company.

During the period ended  December 31, 1999, in  connection  with the sale of the
Notes and the purchase of certain assets  comprising the Diamond Jo Casino (Note
1),  approximately  $750,000  of  expenses  related to  organizational  and bond
issuance costs were reimbursed to various related parties for expenses  incurred
on behalf of the  Company.  In  addition,  during such  period,  (i)  consulting
expenses of $90,000 were paid to a unit holder for services  related to the bond
issuance,  (ii)  underwriting  expenses of  $2,900,000  were paid to Jefferies &
Company,  Inc.,  in  which  the  Company's  CEO is a  managing  director  in the
Corporate Finance department, and were included in organizational costs and bond
issuance  costs and (iii) the Company paid  approximately  $286,170 to Peninsula
Gaming Partners,  LLC, the Company's parent and sole member,  in connection with
certain  consulting  services  provided to Peninsula  Gaming Partners by Riviera
Gaming Management and Mr. Michael Luzich relating to the business  operations of
the  Company  and with  related  organizational  and  administrative  costs  and
expenses of Peninsula Gaming Partners.

                                    * * * * *





                                      F-14
<PAGE>


INDEPENDENT AUDITORS' REPORT

To the Members of
Greater Dubuque Riverboat Entertainment Company, L.C.
  and Harbor Community Investment, L.C.
Dubuque, Iowa

We have  audited the  accompanying  combined  statements  of income,  changes in
members'  equity,  and cash flows of  Greater  Dubuque  Riverboat  Entertainment
Company,  L.C. and Harbor  Community  Investment,  L.C., both of which are under
common ownership and management, for the period from January 1, 1999 to July 14,
1999 and the year ended December 31, 1998.  These  financial  statements are the
responsibility of the companies' management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  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 combined  financial  statements  referred to above  present
fairly,  in all material  respects,  the results of operations and cash flows of
Greater  Dubuque  Riverboat  Entertainment  Company,  L.C. and Harbor  Community
Investment, L.C for the period from January 1, 1999 to July 14, 1999 and for the
year ended December 31, 1998 in conformity with accounting  principles generally
accepted in the United States of America.

DELOITTE & TOUCHE LLP

Cedar Rapids, Iowa
February 25, 2000





                                      F-15
<PAGE>




GREATER DUBUQUE RIVERBOAT ENTERTAINMENT COMPANY,  L.C.
AND HARBOR COMMUNITY INVESTMENT, L.C.

COMBINED STATEMENTS OF  OPERATIONS
PERIOD FROM JANUARY 1, 1999 THROUGH JULY 14, 1999
AND THE YEAR ENDED DECEMBER 31, 1998

                                                  PERIOD
                                                   FROM
                                                JANUARY 1,
                                                  THROUGH
                                                 JULY 14,
                                                   1999              1998
                                             --------------      ------------

REVENUES:
  Casino                                     $ 23,763,442     $  44,166,688
  Food and beverage                             1,408,046         2,468,526
  Other                                           121,360           290,388
  Less - promotional allowances                  (565,208)       (1,076,116)
                                             --------------   --------------
        Net revenues                           24,727,640        45,849,486
                                             --------------   --------------


EXPENSES:
  Casino                                        9,797,175        17,819,022
  Food and beverage                             1,408,009         2,298,631
  Boat operations                               1,054,539         2,056,377
  Other                                            20,713            53,643
  Selling, general and administrative           4,121,942         7,515,115
  Depreciation and amortization                 1,156,822         1,894,763
  Sale of business expenses (Note 7)            1,566,761           716,655
  Ownership litigation (Note 5)                   304,742           211,388
                                             --------------   --------------
        Total expenses                         19,430,703        32,565,594
                                             --------------   --------------

INCOME FROM OPERATIONS                          5,296,937        13,283,892
                                             --------------   --------------

OTHER INCOME (EXPENSE):
  Interest income                                  76,119           141,967
  Interest expense                               (331,101)       (1,142,122)
  Loss on sale of assets                          (97,750)          (73,726)
                                             --------------   --------------
        Total other expense                      (352,732)       (1,073,881)
                                             --------------   --------------

NET INCOME                                   $  4,944,205     $  12,210,011
                                             ==============   ==============



                                      F-16
<PAGE>



GREATER DUBUQUE RIVERBOAT ENTERTAINMENT COMPANY, L.C.
AND HARBOR COMMUNITY INVESTMENT, L.C.


<TABLE>
<CAPTION>

COMBINED STATEMENTS OF CHANGES IN MEMBERS' EQUITY
PERIOD FROM JANUARY 1, 1999 THROUGH JULY 14, 1999
AND THE YEAR ENDED DECEMBER 31, 1998
----------------------------------------------------------------------------------------------------------------------------
                                                                           Unrealized Gain
                                                                             on Investments
                                                                               Available        Retained      Total Members'
                                          Member Units     Member Interest      for Sale        Earnings          Equity
                                          ------------     ---------------  ---------------    ----------     --------------
<S>                                       <C>              <C>              <C>                <C>            <C>

BALANCE, JANUARY 1, 1998                         112          $4,100,000                       $ 7,412,962      $11,512,962
  Net income                                                                                    12,210,011       12,210,011
  Member distributions                                                                          (7,027,473)      (7,027,473)
  Unrealized gain on securities
     available for sale                                                         $  1,508                              1,508
                                           ----------         ----------        ---------       -----------     ------------
BALANCE, DECEMBER 31, 1998                       112           4,100,000           1,508        12,595,500       16,697,008
  Net income                                                                                     4,944,205        4,944,205
  Member distributions                                                                          (5,258,468)      (5,258,468)
  Change in unrealized gain on
     securities available for sale                                                (1,508)                            (1,508)
                                           ----------         ----------        ---------      ------------     ------------
BALANCE, JULY 14, 1999                           112          $4,100,000        $    --        $12,281,237      $16,381,237
                                           ==========         ==========        =========      ============     ============

See notes to combined financial statements.
</TABLE>




                                      F-17
<PAGE>



GREATER DUBUQUE RIVERBOAT ENTERTAINMENT COMPANY, L.C.
AND HARBOR COMMUNITY INVESTMENT, L.C.

<TABLE>
<CAPTION>

COMBINED STATEMENTS OF CASH FLOWS
PERIOD FROM JANUARY 1, 1999 THROUGH JULY 14, 1999 AND THE YEAR ENDED DECEMBER 31, 1998
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>               <C>
                                                                                PERIOD FROM
                                                                                 JANUARY 1,
                                                                                  THROUGH
                                                                                  JULY 14,
                                                                                    1999                1998
                                                                                -------------     ---------------

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                                    $   4,944,205      $ 12,210,011
  Adjustments to reconcile net income to net cash provided by operating
    activities:
      Depreciation and amortization                                                 1,156,822         1,894,763
      Loss on sale of assets                                                           97,750            73,726
    Changes in assets and liabilities:
      Accounts receivable                                                             (72,927)           74,548
      Inventory                                                                         7,298            (2,638)
      Prepaid expenses                                                                 89,926           (36,193)
      Other assets                                                                                       (7,483)
      Accounts payable                                                               (408,484)          171,463
      Accrued expenses                                                                319,126           259,595
                                                                                --------------     ---------------
           Net cash provided by operating activities                                6,133,716        14,637,792
                                                                                --------------     ---------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from sale of property and equipment                                         35,455           107,510
  Purchase of property and equipment                                                 (467,955)       (1,392,968)
  Proceeds from sale of available for sale securities                                 512,000
  Purchase of securities available for sale                                                            (507,855)
                                                                                --------------     ---------------
           Net cash provided (used) by investing activities                            79,500        (1,793,313)
                                                                                --------------     ---------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Payments on long-term liabilities                                                (3,018,921)       (5,753,666)
  Payments for debt refinancing costs                                                                   (25,000)
  Member distributions                                                             (5,258,468)       (7,027,473)
                                                                                --------------     ---------------
           Net cash used by financing activities                                   (8,277,389)      (12,806,139)
                                                                                --------------     ---------------

NET INCREASE (DECREASE) IN CASH                                                    (2,064,173)           38,340

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                      5,820,717         5,782,377
                                                                                --------------     ---------------

CASH AND CASH EQUIVALENTS AT END OF YEAR                                        $   3,756,544      $  5,820,717
                                                                                ==============     ===============

SUPPLEMENTAL DISCLOSURES OF
  CASH FLOW INFORMATION - Cash paid during the                                       $365,587        $1,148,868
     year for interest

SUPPLEMENTAL DISCLOSURES OF NONCASH
  INVESTING AND FINANCING ACTIVITIES:
    Unrealized gain on sale of securities available for sale                                              1,508
    Change in unrealized gain on securities available for sale                          1,508
    Capital lease obligation incurred to acquire equipment                                              475,780

See notes to combined financial statements.
</TABLE>


                                      F-18

<PAGE>


GREATER DUBUQUE RIVERBOAT ENTERTAINMENT COMPANY, L.C.
AND HARBOR COMMUNITY INVESTMENT, L.C.

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


1.  ORGANIZATION AND BUSINESS

Greater  Dubuque  Riverboat   Entertainment   Company,  L.C.  ("Greater  Dubuque
Riverboat"), which is licensed by the Iowa Riverboat Gaming Commission ("IRGC"),
is an Iowa limited  liability  company with 52 members (who collectively own 112
units). Greater Dubuque Riverboat was organized and incorporated during May 1994
for the purpose of developing and holding the ownership  interest in a riverboat
gaming operation  located in Dubuque,  Iowa (the "Diamond Jo Casino").  The same
members own Harbor Community  Investment,  L.C.  ("Harbor  Community") which was
formed April 8, 1996 to own and lease land and  buildings in an area of Dubuque,
Iowa known as the Ice Harbor.  The  combined  financial  statements,  therefore,
include the accounts and  operations  of Greater  Dubuque  Riverboat  and Harbor
Community.  These two entities are collectively  referred to as the Company. All
material   intercompany  balances  and  transactions  have  been  eliminated  in
combination.

In January 1999, the membership of the Company approved an agreement to sell all
of the Company's  operating  assets used in connection with the gaming excursion
riverboat   business  to  Peninsula  Gaming  Company,   LLC  for   approximately
$77,000,000. The sale was completed in July 1999.


2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Concentration  of  Risks  - The  Company's  management  estimates  that  regular
customers  are  concentrated  within  100  miles  of the  facility  representing
approximately  95% of the  Company's  customer  base.  The remaining 5% includes
groups, tourists and highway travelers that live beyond 100 miles.

Cash and Cash Equivalents - The Company considers all cash on hand and in banks,
certificates of deposit and other highly liquid debt instruments  purchased with
original maturities of three months or less to be cash equivalents.

Investments  Available for Sale - The Company accounts for its investments using
Statement of Financial  Accounting  Standards No. 115,  "Accounting  for Certain
Investments  in Debt and Equity  Securities"  ("SFAS No.  115").  This  standard
requires that certain debt and equity  securities be adjusted to market value at
the end of each accounting period.  Unrealized market value gains and losses are
charged  to  earnings  if the  securities  are  traded  for  short-term  profit.
Otherwise,  such  unrealized  gains and losses  are  charged  or  credited  to a
separate component of members' equity.

Gains and losses on the sale of available  for sale  securities  are  determined
using the specific  identification  method. The amortization of premiums and the
accretion  of discounts  are  recognized  in interest  income using the interest
method over the period to maturity.

Accounts  Receivable - Bad debts are charged to  operations in the year in which
the account is determined uncollectible.


                                      F-19
<PAGE>



Property  and  Equipment  -  Property  and  equipment  is  carried  at cost  and
capitalized  lease assets are stated at their fair value at the inception of the
lease.  Major  renewals  are  capitalized,  while  maintenance  and  repairs are
expensed  when  incurred.  Depreciation  and  amortization  are  computed by the
straight-line method over the following estimated useful lives:

          Land improvements                               20-40 years
          Building                                        40 years
          Riverboat and improvements                      18-20 years
          Leasehold improvements                          20-40 years
          Furniture, fixtures and equipment               3-10 years
          Computer equipment                              5 years
          Vehicles                                        5 years


Intangible  Assets -  Intangible  assets  subject to  amortization  include loan
commitment fees and organization costs. Loan commitment fees are being amortized
straight-line  over the life of the related loan.  Organization  costs are being
amortized straight-line over a period of 60 months.

Long-Lived  Assets -  Statement  of  Financial  Accounting  Standards  No.  121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be  Disposed  Of"  requires,  among  other  things,  that an entity  review  its
long-lived assets and certain related intangibles for impairment whenever events
or changes in  circumstances  indicate that the carrying  amount of an asset may
not be fully recoverable.  Under the standard, if the sum of the expected future
undiscounted  cash  flows is less  than the  carrying  amount of the  asset,  an
impairment loss is recognized. The impairment is measured based on the estimated
fair value of the asset.  The Company  does not believe  that any such events or
changes have occurred.

Financial  Instruments - The carrying amount for financial  instruments included
among cash and cash  equivalents,  accounts  receivable,  accounts  payable  and
security deposits  approximates  their fair value based on the short maturity of
those  instruments.  The carrying  amount of notes  payable  approximates  their
estimated  fair  value  based on the  credit,  interest  rate  and  terms of the
obligations.

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

Promotional  Allowances  - Food,  beverage,  and other items  furnished  without
charge to customers are included in gross revenues at a value which approximates
retail and then  deducted as  promotional  allowances to arrive at net revenues.
The cost of such complimentary services have been included as casino expenses on
the  accompanying  statement of operations.  Such  estimated  costs of providing
complimentary  services allocated from the food and beverage and other operating
departments to the casino department are as follows:

                                           Period from
                                            January 1,
                                             through
                                          July 14, 1999       1998
                                         --------------     --------

          Food and beverage                  $286,835       $531,944
          Other                                 8,411         14,264


Advertising  - The  Company's  policy is to  expense  all  advertising  costs as
incurred.

                                      F-20

<PAGE>


Income Taxes - The Company is a limited liability company.  In lieu of corporate
income  taxes,  the  members of a limited  liability  company are taxed on their
proportionate share of the Company's taxable income.  Therefore, no provision or
liability  for  federal   income  taxes  has  been  included  in  the  financial
statements.

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 periods. Actual results could differ from those estimates.

Reclassifications  - Certain  information has been  reclassified to conform with
the current year's presentation.


3. EMPLOYEE BENEFIT PLAN

The Company started a qualified  defined  contribution plan under section 401(k)
of the Internal Revenue Code during 1996. Under the plan, eligible employees may
elect to defer up to 15% of their salary,  subject to Internal  Revenue  Service
limits.  The Company may make a matching  contribution to each participant based
upon a  percentage  set by the  Company,  prior  to the end of each  plan  year.
Company  matching  contributions to the plan for the period from January 1, 1999
through July 14, 1999 were $127,535.  Company matching contributions to the plan
were $240,459 for the year ended December 31, 1998.


4.  LEASING ARRANGEMENTS

The Company leases various equipment under  noncancelable  operating leases. The
equipment  leases require fixed monthly payments to be made ranging from $351 to
$4,155 and certain other gaming machines and tables require  contingent  monthly
rental  payments based on usage of the  equipment.  The leases expire on various
dates in 1999 and 2000. Rent expense for the period from January 1, 1999 through
July 14, 1999 was  $747,493,  including  contingent  rentals of  $613,673.  Rent
expense was $403,148 for the year ended December 31, 1998,  including contingent
rentals of $226,374.

The future minimum rental payments  required under these leases during the years
ended December 31 are summarized as follows:


                 1999                                  $21,590
                 2000                                    5,478
                 2001                                      415
                 2002                                      415
                 2003                                      415
                 Thereafter                              3,735
                                                       -------
                                                       $32,048
                                                       =======


5.  COMMITMENTS AND CONTINGENCIES

A lawsuit has also been filed by one of the three original "active" unit-holders
(see Note 6) regarding a number of claims,  some of which have been  narrowed by
the court. The primary claim is in regards to quantum merit for the value of the
services  rendered to the Company.  The court has  narrowed  that claim to those
services rendered up to and including the licensure of the Company in the Spring
of 1993. An estimate of potential liability,  if any, as a result of the lawsuit
was not possible as of the date of this report.

The Company has  incurred  various  legal  expenses  relating to this lawsuit of
$304,742  for the period  from  January 1, 1999  through  July 14,  1999.  Legal
expenses  related to this  lawsuit  for the year ended  December  31,  1998 were
$211,388.


                                      F-21

<PAGE>


The  Company is involved in various  other legal  actions  arising in the normal
course of business.  In the opinion of management,  such matters will not have a
material effect upon the financial position of the Company.


6.  MEMBERS EQUITY

Transfers of member  interests are limited in that,  in accordance  with Greater
Dubuque  Riverboat  Entertainment  Co., L.C.'s  operating  agreement,  any sale,
exchange  or  transfer  of a  member's  interest  in the  Company  shall  not be
effective unless the transaction is approved by:

     1.  The Manager, in writing, and

     2.  By a vote of the members holding a majority of the remaining units
         and by a majority vote of the remaining members at a meeting of
         the members.

This  limitation does not include the granting of a security  interest,  pledge,
lien, or encumbrance against any membership interest.

The profits,  losses,  and  distributions of the Company are allocated among the
members  in  proportion  to each  member's  respective  percentage  of  Units of
Ownership  when compared with total Units of Ownership  issued.  An exception to
this is that there is an initial unequal  division of  distributions in that 95%
of  distributions  are  paid  to  non-developer  "passive"  members,  and  5% to
developer  "active" members until such time as said  non-developer  members have
received an amount equal to their original purchase price for Units of Ownership
purchased,   plus  10%.  Thereafter,   any  and  all  distributions  are  to  be
proportionate to Units owned.


7.  SALE OF BUSINESS

During  1997,  the  Company's  ownership  made a decision  to pursue the sale of
Greater Dubuque Riverboat and Harbor  Community.  The sales process has resulted
in  the  Company  incurring  various  expenses  related  to a  valuation  of the
business,  retaining the services of an  investment  banker,  environmental  and
market studies, legal and travel.

Sale of business  expenses  for the period from January 1, 1999 through July 14,
1999 were $1,566,761. Sale of business expenses were $716,655 for the year ended
December 31, 1998. See Note 1 regarding the sale of the business.


8.  DUBUQUE RACING ASSOCIATION, LTD. CONTRACT

Dubuque Racing Association,  Ltd. (the  "Association"),  a qualified  sponsoring
organization,  presently holds a license to conduct gambling games under Chapter
99F and other Iowa statutes.

The Association owns Dubuque Greyhound Park, a traditional  greyhound race track
with 600 slot  machines  and  amenities  including a gift shop,  restaurant  and
clubhouse.

In  February  of 1993,  the  Company  entered  into a contract  (the  "Operating
Agreement")  with the  Association  relating to the  operation  of an  excursion
gambling  riverboat for three excursion seasons  commencing April 1, 1993, under
gambling licenses held jointly.

In July of 1995, the Operating  Agreement with the Association was amended.  The
provisions of the amendment are as follows:

     1.   The  Company  shall  have the  option  to  renew  and  extend  the
          Operating  Agreement for three  consecutive  three year terms. The
          option has been  exercised  and the  Operating  Agreement has been
          extended to March 31, 2002.

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<PAGE>


     2.  Under the  terms of the  Operating  Agreement,  the  Association  shall
         receive  the  greater of the  Association's  gaming  revenues  from the
         greyhound  park for the period,  or a percentage of the total  combined
         gaming  revenues of the  Association's  from the greyhound park and the
         Greater Dubuque Riverboat Entertainment Company, L.C., as follows:

          a.  32% of the first $30,000,000 of total combined gaming revenues,
              plus

          b.  8% of the total combined gaming revenues over $30,000,000, but
              less than $42,000,000, plus

          c.  8% of the total combined gaming revenues over $42,000,000, but
              less than $46,000,000 during any period for which no excursion
              boat gambling or land based  gambling  operation is carried on
              from a  Wisconsin  or  Illinois  gambling  operation  in Grant
              County, Wisconsin or Jo Daviess County, Illinois.

         Gaming  revenues under this contract means adjusted gross receipts less
         gaming taxes.

         Gaming  revenues for the  Association  were  $13,320,489 for the period
         from January 1, 1999 through July 14, 1999 and $22,362,156 for the year
         ended December 31, 1998, therefore payments made to the Association for
         the period  from  January 1, 1999  through  July 14,  1999 and the year
         ended December 31, 1998 under the Operating Agreement were $0.

     3.  Commencing April 1, 2000, and continuing thereafter,  the Company shall
         additionally  pay  the  Association  the sum of $.50  for  each  patron
         admitted on the boat, which, based upon recent annual attendance, would
         approximate $500,000 annually.

     4.  In  the  event the Company  shall desire to sell or lease the excursion
         gambling  boat,  its  furnishings  and  gambling  equipment  and/or its
         interest in any ticket sale facility or other buildings  located in the
         Dubuque  Ice  Harbor  used  in  connection  with  the  operation  of an
         excursion  gambling  boat,  to a third  party  that  does not  agree to
         operation  said  asset  subject  to the  terms  and  conditions  of the
         Operating  Agreement,  and obtains an acceptable  offer from said third
         party for the purchase or lease of the excursion  gambling boat and its
         furnishings,  equipment,  and/or its  interest  in said  building,  the
         Association  shall have the option to purchase  or lease the  excursion
         gambling  boat,  its  furnishings,   equipment,  and/or  the  Company's
         interest in the building or its lease of the same for the amount of the
         acceptable  offer  made by a third  party  and upon the same  terms and
         conditions as set forth in a third party offer.

                                    * * * * *


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