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                                   FORM 10-K
                      SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C.
(Mark One)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

For the fiscal year ended                 December 31, 2000
                           ----------------------------------------------------

                                      OR

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

For the transition period from  ____________________ to ____________________

Commission file number         333-88679
                       -----------------------------

                          HOLLYWOOD CASINO SHREVEPORT
                        SHREVEPORT CAPITAL CORPORATION
--------------------------------------------------------------------------------
         (Exact name of co-registrants as specified in their charters)

             LOUISIANA                                           72-1225563
             LOUISIANA                                           75-2830167
----------------------------------------                   ---------------------
    (States or other jurisdictions of                         (I.R.S. Employer
    incorporation or organization)                         Identification No.'s)

    Two Galleria Tower, Suite 2200
         13455 Noel Road, LB 48
             Dallas, Texas                                           75240
----------------------------------------                   ---------------------
(Address of principal executive offices)                           (Zip Code)

(Registrant's telephone number, including area code):           (972) 392-7777
                                                      --------------------------
          Securities registered pursuant to Section 12(b) of the Act:

           $150,000,000 Principal Amount of 13% First Mortgage Notes
                  with Contingent Interest due August 1, 2006
--------------------------------------------------------------------------------
                              Title of each class

          Securities registered pursuant to Section 12(g) of the Act:

                                     None
--------------------------------------------------------------------------------
                              Title of each class

     Indicate by check mark whether each of the Registrants (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.       Yes X        No
                                                   ---         ---

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrants' 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]

     As of March 29, 2001, HCS I, Inc. holds an effective 99% partnership
interest and HCS II, Inc. holds an effective 1% partnership interest in
Hollywood Casino Shreveport. As of March 29, 2001, 1,000 shares of common stock
of Shreveport Capital Corporation, $.01 par value, are outstanding, all of which
are owned by Hollywood Casino Shreveport.

                      DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the following documents are incorporated by reference into the
indicated part or parts of this report: None

     The Registrants meet the conditions set forth in General Instruction
(I)(1)(a) and (b) of Form 10-K and are therefore filing this Form with the
reduced disclosure format.

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                                    PART I


ITEM 1.   BUSINESS

General
-------

     Hollywood Casino Shreveport ("HCS") is a general partnership registered in
the state of Louisiana. The original partnership agreement was amended on
September 22, 1998 to include as partners in what is now referred to as HCS the
following companies: HWCC - Louisiana, Inc. ("HCL"), a Louisiana corporation
wholly owned by Hollywood Casino Corporation ("HCC"); Sodak Louisiana, L.L.C.
("Sodak"), a Louisiana limited liability company; and Shreveport Paddlewheels,
L.L.C. ("Paddlewheels"), a Louisiana limited liability company. The general
partnership was originally formed in May 1992 for the purpose of developing and
operating a riverboat casino in New Orleans, Louisiana. Originally named Queen
of New Orleans at the Hilton Joint Venture ("QNOV"), the partnership was 50%-
owned by Hilton New Orleans Corporation ("Hilton") and 50%-owned by New Orleans
Paddlewheels, Inc. ("NOP"). Hilton and NOP are collectively referred to herein
as the "former partners." QNOV's riverboat operations in New Orleans commenced
in February 1994 and were discontinued in October 1997.

     During October 1996, QNOV received approval from state gaming authorities
to relocate its license to operate to the City of Shreveport, Louisiana,
approximately 180 miles east of Dallas, Texas. Subsequent to receiving approval
to relocate, QNOV made the decision in 1997 not to conduct gaming operations in
Shreveport. The former partners sought to transfer the license to operate in
Shreveport to another interested party. Under Louisiana gaming regulations, the
license to operate a riverboat gaming operation is not transferable; however,
the ownership of an entity licensed to operate is transferable, subject to the
approval of the Louisiana Gaming Control Board (the "LGCB"). Accordingly, the
transfer of the license to operate in Shreveport was structured as the
acquisition of the interests of the former partners in QNOV.

     Upon admission of the new partners, HCS proceeded with entirely new plans
to develop, own and operate a riverboat gaming complex to be constructed in
Shreveport (the "Shreveport Casino"). The Shreveport Casino was completed and
opened on December 20, 2000. Prior to opening, HCS had no operating activities
other than development, financing and construction activities with respect to
the Shreveport Casino. The Shreveport Casino consists of a three-level riverboat
casino with approximately 1,434 slot machines and 68 table games and a 403-room,
all suite, art deco style hotel. The project also includes approximately 42,000
square feet of restaurant and entertainment facilities being developed by a
third party.

     It was originally anticipated that HCS would develop the Shreveport Casino
with each of HCL and Sodak having a 50% interest in the development and
subsequent operations. Once operations commenced, Paddlewheels was to have a
residual interest in the event that the project was ever sold amounting to 10%
plus any capital contributions made by Paddlewheels to HCS or otherwise credited
to their account. On March 31, 1999, HCL entered into a definitive agreement
with Sodak's parent to acquire Sodak for the $2,500,000 Sodak had contributed to
HCS, with $1,000 to be paid at closing and the remainder to be paid six months
after the opening of the Shreveport Casino. The revised structure of the
partnership was approved by the LGCB on April 20, 1999. As a result of the
acquisition, HCL obtained an effective 100% ownership interest in HCS with
Paddlewheels retaining their residual interest. During July 1999, Sodak was
merged into HCL.

     Also during July 1999, HCL formed two new, wholly owned subsidiaries, HCS
I, Inc. and HCS II, Inc., both Louisiana corporations. HCL contributed $1,000 of
capital to each entity, along with 99% of its interest in HCS to HCS I, Inc. and
the remaining 1% to HCS II, Inc. In addition, the HCS joint venture agreement
was amended and restated on July 21, 1999, to reflect, among other things, the
admission of HCS I, Inc. and HCS II, Inc. as partners of HCS and the withdrawal
of HCL as managing partner of HCS. As a result, HCS I, Inc. now has an effective
99% interest in HCS and has become its

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managing general partner. HCS II, Inc. now has an effective 1% interest in HCS.
Paddlewheels retained its 10% residual interest in HCS.

     Additionally, in July 1999, HCS formed a new, wholly owned subsidiary,
Shreveport Capital Corporation ("Shreveport Capital"), a Louisiana corporation.
HCS contributed $1,000 of capital to Shreveport Capital. Shreveport Capital was
formed for the sole purpose of being a co-issuer with respect to the First
Mortgage Notes, as defined below, and is not expected to have any operating
activities, acquire any assets or incur any other liabilities. Accordingly,
separate financial statements of Shreveport Capital are not included herein
because management has determined that such information is not material to
investors.

     Equity contributions from HCL and Paddlewheels provided the initial
$50,000,000 of funds necessary to construct the Shreveport Casino. During August
1999, HCS successfully completed the issuance of $150,000,000 of 13% First
Mortgage Notes with contingent interest (the "First Mortgage Notes") due 2006.
These sources of funds, together with $30,000,000 of furniture, fixture and
equipment financing, provided the total funding for the project.

     The principal executive offices of HCS are located at Two Galleria Tower,
Suite 2200, 13455 Noel Road, Dallas, Texas 75240, telephone (972) 392-7777.

Operations
----------

     The Shreveport Casino commenced operations on December 20, 2000. The
destination resort consists of a 403-room, all suite, art deco-style hotel, and
a three-level riverboat dockside casino. The casino contains approximately
59,000 square feet of space with approximately 1,434 slot machines and
approximately 68 table games. The riverboat casino floats in a concrete and
steel basin that raises the riverboat nearly 20 feet above the river. The basin
virtually eliminates variation in the water height and allows the boat to be
permanently moored to the land-based pavilion. The Shreveport Casino's
computerized pumping system is designed to regulate the water level of the basin
to a variance of no more than three inches.

     The centerpiece of the resort is an approximately 170,000 square foot land-
based pavilion housing numerous restaurants and entertainment amenities with an
85-foot wide seamless entrance to the casino from the land-based pavilion on all
three levels resulting in the feel of a land-based casino. The pavilion features
a dramatic 60-foot high atrium enabling patrons to see the casino floor from
almost anywhere in the pavilion. Other amenities include the award-winning
Fairbanks(R) gourmet steakhouse, the Hollywood Epic Buffet(R), a 1950's-style
casual diner (the Hollywood Diner(SM)), a premium players' club (the Hollywood
Director's Club(SM)) and an entertainment show room (the Hollywood Celebrity
Lounge(SM)). The pavilion also includes a deli and ice cream shop, VIP check-in,
a premium quality bar, meeting rooms and the Hollywood Casino Studio Store(SM),
a highly-themed shopping facility that offers movies on video, soundtrack
compact discs and logo merchandise.

     The Shreveport Casino offers three parking facilities, including two
parking lots and an eight-story parking garage located directly across the
street and connected to the pavilion by an enclosed, movie-themed walkway. The
three parking facilities provide space for approximately 2,000 cars, including
valet parking for approximately 340 cars.

     The Shreveport Casino features HCC's uniquely entertaining Hollywood theme,
which is utilized throughout the property. Management believes that the use of
the Hollywood theme throughout the Shreveport Casino's gaming, dining and
entertainment facilities has broad patron appeal and distinguishes the
Shreveport Casino from its competitors. Additionally, the nature of the theming
permits periodic and cost effective updating, which management believes
encourages both initial and repeat visits. The Hollywood theme has been used
successfully at other casino facilities owned and operated by HCC in Aurora,
Illinois and Tunica, Mississippi.

     The Shreveport Casino is located near the Shreveport Civic Theater. The
1,720-seat auditorium will be used by the Shreveport Casino to provide headliner
entertainment for customers. Entertainers

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booked or expected to be booked include Tony Bennett, Jay Leno, Natalie Cole,
Travis Tritt and Brooks and Dunn.

     The Shreveport Casino was built next to an existing riverboat gaming and
hotel facility operated by Harrah's. The two casinos form the first and only
"cluster" in the Shreveport/Bossier City market, allowing patrons to park once
and easily walk between the two facilities. The Harrah's property completed
construction and opened a new, 514-room hotel tower during the first quarter of
2001. With the opening of the Shreveport Casino, there are now a total of five
casinos operating in the Shreveport/Bossier City gaming market. In 2000, the
Shreveport market was the eighth largest gaming market in the United States and
the largest in Louisiana. Prior to April 1, 2001, the Shreveport market was the
only riverboat gaming market in Louisiana that permitted continuous dockside
gaming without cruising requirements or simulated cruising schedules, allowing
casinos to operate 24 hours a day with uninterrupted access. The four previously
established operators generated approximately $678.8 million in gaming revenues
in 2000, an increase of approximately 5.8% over 1999.

     The principal target markets for the Shreveport Casino are patrons from the
Dallas/Ft. Worth Metroplex and East Texas. There are approximately 7.2 million
adults who reside within 200 miles of Shreveport/Bossier City. The Shreveport
Casino is located approximately 180 miles east of Dallas and can be reached by
car in less than three hours. The Shreveport Regional Airport has 41 in-bound
flights per day, including 16 from Dallas and seven from Houston with flight
times of less than one hour.

     The Shreveport Casino employs a marketing strategy designed to take
advantage of its proximity to the large population base of the greater
Dallas/Ft. Worth metropolitan area and other major markets by targeting the
local day-trip market and by utilizing its hotel rooms to expand its patron mix
to include overnight visitors. Plans to develop a nearby golf course will
further promote such overnight stays. Management also utilizes casino
information technology used at other HCC-owned facilities to identify premium
patrons. Such information is then used to encourage participation in its casino
player's card program and tailor promotions and special events to cater to this
market segment. Management believes that the location of HCC's executive offices
in Dallas will result in a competitive advantage in attracting customers to the
Shreveport Casino from its target markets in Texas.

     The Shreveport Casino is owned by HCS which, through HCS I, Inc. and HCS
II, Inc., is in turn owned by HCL. HCS will operate the Shreveport Casino under
a management agreement with HWCC-Shreveport, Inc. ("Shreveport Management"), a
wholly owned subsidiary of HCC. The management agreement provides that HCS will
pay a management fee of 2% of net revenues plus an increasing percentage (5-10%)
of the Shreveport Casino's annual earnings before interest, taxes, depreciation
and amortization ("EBITDA") above $25 million.

     Casino Credit. Casino operations are conducted on both a credit and a cash
     -------------
basis. Gaming debts arising at the Shreveport Casino in accordance with
applicable regulations are enforceable under Louisiana law. For the period from
opening through December 31, 2000, gaming credit extended to customers accounted
for less than 1% of overall wagering. At December 31, 2000, gaming receivables
amounted to $617,000 before allowances for uncollectible gaming receivables
which amounted to $90,000. Management of the Shreveport Casino believes that the
allowances for uncollectible gaming receivables are adequate.

     Employees and Labor Relations. At December 31, 2000 there were
     -----------------------------
approximately 1,790 employees at the Shreveport Casino, none of whom are
represented under collective bargaining agreements. Management considers its
labor relations to be good.

Competition
-----------

     The gaming industry is highly fragmented and characterized by a high degree
of competition among a large number of participants, some of which have greater
financial and other resources than HCS. Competitive gaming activities include
land-based casinos, dockside casinos, riverboat casinos, video lottery terminals
and other forms of legalized gaming in the United States and other
jurisdictions. Legalized gambling is currently permitted in various forms
throughout the United States, in several

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Canadian provinces, as well as on Native American reservations in certain states
including Louisiana and Mississippi. Other jurisdictions may legalize gaming in
the near future through the introduction of proposals to legalize gaming in
their state legislatures. In addition, established gaming jurisdictions could
award additional gaming licenses or permit the expansion of existing gaming
operations. New or expanded operations by other persons can be expected to
increase competition for HCS's gaming operations and could have a material
adverse impact on HCS.

     The Shreveport Casino competes directly with Binion's Horseshoe, Harrah's,
the Isle of Capri and Casino Magic in the Shreveport/Bossier City market. Some
of these competitors have higher profile brand names and greater financial
resources than HCS. There can be no assurance that the Shreveport Casino will be
able to effectively compete against these four established casinos, three of
which have been in operation since 1994, or that the Shreveport/Bossier City
market is large enough to allow more than four casinos to operate profitably.
Furthermore, the fifteenth and final riverboat gaming license available in
Louisiana could ultimately be granted in, or one or more of the current
operators in other parts of Louisiana could relocate to, the Shreveport/Bossier
City market which would directly increase competition in the market.

     Also, there can be no assurance that the Shreveport Casino will be able to
effectively compete against any other future gaming operations that Louisiana or
other authorities may authorize in the gaming market in which it will operate.
For example, in 1997, the Louisiana legislature adopted legislation permitting
up to 15,000 square feet of slot machine gaming at pari-mutual wagering
facilities located in parishes in Louisiana that approve slot machine gaming in
a referendum election. Shortly thereafter, a referendum election was held that
approved slot machine gaming at Louisiana Downs, which is located in Bossier
City, approximately nine miles from the Shreveport Casino. In March 2001,
Louisiana Downs announced plans for an $86 million expanded entertainment
facility to include approximately 1,750 slot machines, a dining buffet, lounge
and sports bar to be completed in the first quarter of 2002. Additional plans
announced call for the construction of a 300- to 400-room hotel and recreational
vehicle park by the end of 2002. The completion of this facility will result in
another source of competition for the Shreveport Casino. The Shreveport Casino
will also face competition from other forms of gaming, such as state-sponsored
lotteries and video lottery terminals, pari-mutual betting on horse and dog
racing and bingo parlors, as well as other forms of entertainment in Louisiana
and other places from which it will draw customers.

Casino Regulation
-----------------

     The ownership and operation of a riverboat gaming vessel is subject to the
Louisiana Riverboat Economic Development and Gaming Control Act (the "Louisiana
Act"). As of May 1, 1996, gaming activities are regulated by the LGCB. The LGCB
is responsible for issuing gaming licenses and enforcing the laws, rules and
regulations relative to riverboat gaming activities. The LGCB is empowered to
issue up to 15 licenses to conduct gaming activities on a riverboat of new
construction in accordance with applicable law. However, no more than six
licenses may be granted to riverboats operating from any one parish.

     The laws and regulations of Louisiana seek to:

     .  prevent unsavory or unsuitable persons from having any direct or
        indirect involvement with gaming at any time or in any capacity;

     .  establish and maintain responsible accounting practices and procedures;

     .  maintain effective control over the financial practices of licensees,
        including establishing procedures for reliable record keeping and making
        periodic reports to the LGCB;

     .  prevent cheating and fraudulent practices;

     .  provide a source of state and local revenues through fees; and

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     .  ensure that gaming licensees, to the extent practicable, employ and
        contract with Louisiana residents, women and minorities.

     The Louisiana Act specifies certain restrictions and conditions relating to
the operation of riverboat gaming, including but not limited to the following:
(1) in parishes bordering the Red River, which includes the site for the
Shreveport Casino, gaming may be conducted dockside; however, in all other
authorized locations gaming is not permitted while a riverboat is docked, other
than for forty-five minutes between excursions, unless dangerous weather or
water conditions exist as certified by the riverboat's master; (2) each round
trip riverboat cruise may not be less than three nor more than eight hours in
duration, subject to specified exceptions; (3) agents of the LGCB are permitted
on board at any time during gaming operations; (4) gaming devices, equipment and
supplies may be purchased or leased only from permitted suppliers; (5) gaming
may only take place in the designated gaming area while the riverboat is upon a
designated river or waterway; (6) gaming equipment may not be possessed,
maintained, or exhibited by any person on a riverboat except in the specifically
designated gaming area, or a secure area used for inspection, repair, or storage
of such equipment; (7) wagers may be received only from a person present on a
licensed riverboat; (8) persons under 21 are not permitted on gaming vessels;
(9) except for slot machine play, wagers may be made only with tokens, chips, or
electronic cards purchased from the licensee aboard a riverboat; (10) licensees
may only use dockside facilities and routes for which they are licensed and may
only board and discharge passengers at the riverboat's licensed berth; (11)
licensees must have adequate protection and indemnity insurance; (12) licensees
must have all necessary federal and state licenses, certificates and other
regulatory approvals prior to operating a riverboat; and (13) gaming may only be
conducted in accordance with the terms of the license, the Louisiana Act and the
rules and regulations adopted by the LGCB.

     No person may receive any percentage of the profits from the Shreveport
Casino without first being found suitable. A gaming license is deemed to be a
privilege under Louisiana law and as such may be denied, revoked, suspended,
conditioned or limited at any time by the LGCB. In issuing a license, the LGCB
must find that the applicant is a person of good character, honesty and
integrity and that the applicant is a person whose prior activities, criminal
record, if any, reputation, habits and associations do not pose a threat to the
public interest of the State of Louisiana or to the effective regulation and
control of gaming, or create or enhance the dangers of unsuitable, unfair or
illegal practices, methods, and activities in the conduct of gaming or the
carrying on of business and financial arrangements in connection therewith. The
LGCB will not grant any licenses unless it finds that:

     .  the applicant is capable of conducting gaming operations, which means
        that the applicant can demonstrate the capability, either through
        training, education, business experience, or a combination of the above,
        to operate a gaming casino;

     .  the proposed financing of the riverboat and the gaming operations is
        adequate for the nature of the proposed operation and from a source
        suitable and acceptable to the LGCB;

     .  the applicant demonstrates a proven ability to operate a vessel of
        comparable size, capacity and complexity to a riverboat in its
        application for a license so as to ensure the safety of its passengers;

     .  the applicant designates the docking facilities to be used by the
        riverboat;

     .  the applicant shows adequate financial ability to construct and maintain
        a riverboat;

     .  the applicant submits a detailed plan of design of the riverboat in its
        application for a license;

     .  the applicant has a good faith plan to recruit, train and upgrade
        minorities in all employment classifications; and

     .  the applicant is of good moral character.

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     The LGCB may not award a license to any applicant who fails to provide
information and documentation to reveal any fact material to qualifications or
who supplies information which is untrue or misleading as to a material fact
pertaining to the qualification criteria; who has been convicted of or pled nolo
contendere to an offense punishable by imprisonment of more than one year; who
is currently being prosecuted for or regarding whom charges are pending in any
jurisdiction of an offense punishable by more than one year imprisonment; or if
any holder of 5% or more in the profits and losses of the applicant has been
convicted of or pled guilty or nolo contendere to an offense which at the time
of conviction is punishable as a felony.

     The transfer of a license is prohibited. The sale, assignment, transfer,
pledge, or disposition of securities which represent 5% or more of the total
outstanding shares issued by a holder of a license is subject to prior LGCB
approval. A security issued by a holder of a license must generally disclose
these restrictions.

     The failure of a licensee to comply with the requirements set forth above
may result in the suspension or revocation of that licensee's gaming license.
Additionally, if the LGCB finds that the individual owner or holder of a
security of a corporate licensee or intermediary company or any person with an
economic interest in a licensee is not qualified under the Louisiana Act, the
LGCB may require, under penalty of suspension or revocation of the license, that
the person not receive dividends or interest on securities of the corporation;
exercise directly or indirectly a right conferred by securities of the
corporation; receive remuneration or economic benefit from the licensee; or
continue in an ownership or economic interest in the licensee.

     A licensee must periodically report the following information to the LGCB,
which is not confidential and is to be available for public inspection: the
licensee's net gaming proceeds from all authorized games; the amount of net
gaming proceeds tax paid; and all quarterly and annual financial statements
presenting historical data that are submitted to the LGCB, including annual
financial statements that have been audited by an independent certified public
accountant.

     The LGCB has adopted rules governing the method for approval of the area of
operations and the rules and odds of authorized games and devices permitted, and
prescribing grounds and procedures for the revocation, limitation or suspension
of licenses and permits.

     The Louisiana Act imposes franchise and license fees amounting to 18.5% of
net gaming proceeds and $50,000 per riverboat for the first year and $100,000
for subsequent years. Several local governments have been authorized to impose
additional fees on adjusted gross gaming revenues and/or other fees. The
Shreveport Casino is required to make certain payments to the City of Shreveport
under its ground lease agreement in lieu of boarding fees. Franchise and license
fees and payments in lieu of boarding fees for the Shreveport Casino amounted to
$1.9 million during 2000.

     In March 2001, the Louisiana legislature approved an increase in the gaming
tax on riverboat casinos to 21.5% of net gaming proceeds from the current 18.5%
and eliminated the cruising requirement for those boats previously required to
cruise. The tax increase will be phased in over a 25-month period for all
riverboats in the Shreveport/Bossier City area, which were not subject to the
cruising requirements. Accordingly, the gaming tax imposed on the Shreveport
Casino will increase to 19.5% effective April 1, 2001 with additional 1%
increases on April 1, 2002 and April 1, 2003. Had the entire 3% gaming tax been
in effect during the period that the Shreveport Casino was open in 2000, its
operating expenses would have increased by $243,000.

     On April 19, 1996, the Louisiana legislature adopted legislation requiring
statewide local elections on a parish-by-parish basis to determine whether to
prohibit or continue to permit licensed riverboat gaming, licensed video poker
gaming, and licensed land-based gaming in Louisiana parishes. The applicable
local election took place on November 5, 1996, and the voters in the parishes in
which riverboats are currently located voted to continue licensed riverboat
gaming. However, it is noteworthy that the current legislation does not provide
for any moratorium on future elections on gaming.

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Non-Gaming Regulation
---------------------

     HCS is subject to certain federal, state and local safety and health laws,
regulations and ordinances that apply to non-gaming businesses generally, such
as the Clean Air Act, Clean Water Act, Occupational Safety and Health Act,
Resource Conservation Recovery Act and the Comprehensive Environmental Response,
Compensation and Liability Act. HCS has not made, and does not anticipate
making, material expenditures with respect to such environmental laws and
regulations. However, the coverage and attendant compliance costs associated
with such laws, regulations and ordinances may result in future additional costs
to its operations. For example, in 1990 the U.S. Congress enacted the Oil
Pollution Act to consolidate and rationalize mechanisms under various oil spill
response laws. The Department of Transportation has proposed regulations
requiring owners and operators of certain vessels to establish through the U.S.
Coast Guard evidence of financial responsibility in the amount of $5.5 million
for clean-up of oil pollution. This requirement would be satisfied by either
proof of adequate insurance, including self-insurance, or the posting of a
surety bond or guaranty.

     The riverboat operated by HCS must comply with U.S. Coast Guard
requirements as to boat design, on-board facilities, equipment, personnel and
safety. The riverboat must hold a Certificate of Seaworthiness or must be
approved by the American Bureau of Shipping ("ABS") for stabilization and
flotation, and may also be subject to local zoning and building codes. The U.S.
Coast Guard requirements establish design standards, set limits on the operation
of the vessels and require individual licensing of all personnel involved with
the operation of the vessels. Loss of a vessel's Certificate of Seaworthiness or
ABS approval would preclude its use as a floating casino.

     Shipboard employees of HCS, even those who have nothing to do with the
marine operations of the vessel (such as dealers, waiters, and security
personnel) may be subject to the Jones Act which, among other things, exempts
those employees from state limits on workers' compensation awards.

Trademarks
----------

     HCS uses the service mark "Hollywood Casino" under a trademark license
agreement with HCC. The service mark is registered by HCC with the United States
Patent and Trademark Office. HCS also licenses other "Hollywood-formative" marks
to promote its casino and related services. These marks have either been
registered by HCC or are the subject of pending registration applications with
the United States Patent and Trademark Office. HCC considers its rights to the
"Hollywood Casino" service mark to be well established and to have significant
competitive value. The loss of its right to use the "Hollywood Casino" service
mark or of HCC to prevent others from using the same or a deceptively similar
mark could have a material adverse effect on HCS and HCC.


ITEM 2.   PROPERTIES

     The Shreveport Casino's facilities are described more fully under the
caption "Business- Operations."

     The ground lease for the Shreveport Casino has an initial term ending on
the tenth anniversary of the opening of the Shreveport Casino with options to
renew on the same terms for up to an additional 40 years and with further
renewals available at prevailing rates and terms. Beginning with the opening of
the Shreveport Casino, base rental payments under the lease are $450,000 per
year during the initial ten-year lease term. In addition to base rent, the
Shreveport Casino will pay monthly percentage rent of not less than $500,000 per
year equal to 1% of monthly adjusted gross revenues and the amount, if any, by
which monthly parking facilities net income exceeds the parking income credit,
as all such terms are defined in the ground lease.

     Substantially all of the assets of the Shreveport Casino other than assets
secured by up to $35 million in furniture, fixtures and equipment financing are
pledged as collateral for $150 million of 13% First Mortgage Notes with
contingent interest (the "First Mortgage Notes") issued by HCS during August
1999 and guaranteed by HCL. The First Mortgage Notes are nonrecourse to HCC.
Contingent

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interest on the First Mortgage Notes is equal to 5% of the Shreveport Casino's
cash flow, as defined, for the applicable period subject to a maximum contingent
interest of $5 million for any four consecutive fiscal quarters.


ITEM 3.   LEGAL PROCEEDINGS

     HCS is or may become a party in various legal proceedings with respect to
the conduct of casino and hotel operations. Although a possible range of loss
cannot be estimated, in the opinion of management, based upon the advice of
counsel, settlement or resolution of these proceedings should not have a
material adverse impact on the consolidated financial position or results of
operations of HCS and its subsidiaries.

                                    PART II

ITEM 5.   MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
          MATTERS

     As of March 29, 2001, HCS I, Inc. holds an effective 99% partnership
interest and HCS II, Inc. holds an effective 1% partnership interest in HCS.

     As of March 29, 2001, 1,000 shares of common stock of Shreveport Capital
Corporation, $.01 par value, are outstanding, all of which are owned by HCS.

     HCS paid cash distributions pursuant to its tax sharing agreements to its
partners totaling $278,000 during 2000. Distributions to its partners are
restricted under the terms of the indenture to the First Mortgage Notes as more
fully described in Note 3 of "Notes to Consolidated Financial Statements."


ITEM 6.   SELECTED FINANCIAL DATA

Hollywood Casino Shreveport and HWCC-Louisiana, Inc.
----------------------------------------------------

     The following tables set forth selected financial information for HCS and
HCL and are qualified in their entirety by, and should be read in conjunction
with, HCS and HCL's Financial Statements and accompanying footnotes appearing
elsewhere in this Form 10-K. The data as of December 31, 2000 and 1999 and for
the years ended December 31, 2000, 1999 and 1998 have been derived from the
audited financial statements of HCS and HCL presented in Item 8. The following
selected financial data for HCS and for HCL for the year 1996 are derived from
their unaudited financial statements and, in management's opinion, include the
normal recurring entries necessary for a fair presentation of the information.
Selected financial data for Shreveport Capital Corporation is not included
because management has determined that such information is not material to
investors since Shreveport Capital Corporation does not and is not expected to
have any operating activities, acquire any assets or incur any liabilities.

     The ownership of HCS was transferred on September 22, 1998. From that time
until December 20, 2000, HCS had no operating activities other than development,
financing and construction activities with respect to the Shreveport Casino. The
Shreveport Casino commenced operations on December 20, 2000. Under its previous
owners, HCS (then known as QNOV) operated a riverboat casino in New Orleans
until October 1997. From October 1997 until September 21, 1998, QNOV had no
operations and was seeking new owners.

     HCL was formed in April 1993 and its operations have related solely to
acquiring a gaming license to develop and own a riverboat casino in Louisiana.
HCL incurred costs associated with its unsuccessful efforts to obtain licenses
in Lake Charles and Bossier City, Louisiana. The majority of costs incurred by
HCL during 1998 and prior years related to its efforts in Bossier City. HCL's
current principal activity is to act as a holding company.

                                       9
<PAGE>

                 HOLLYWOOD CASINO SHREVEPORT AND SUBSIDIARIES

Consolidated Statement of Operations Data:

<TABLE>
<CAPTION>

                                                                        Year Ended December 31,
                                                   ---------------------------------------------------------------
                                                       2000         1999        1998(1)      1997(1)      1996(1)
                                                    ----------   ----------   ----------   ----------   ----------
                                                                            (in thousands)
<S>                                                 <C>          <C>          <C>          <C>          <C>

Net revenues......................................  $    7,779   $        -   $       89   $   47,455   $   68,853
                                                    ----------   ----------   ----------   ----------   ----------

Expenses:
   Departmental...................................       5,862            -          210       39,136       58,228
   General and administrative.....................         321            -          986        4,987        7,321
   Preopening and development.....................      14,794          991           90            -            -
   Depreciation and amortization..................         506            2            -        1,547        2,866
   Write down of assets...........................           -            -            -            -       12,200
   License transfer costs.........................           -            -            -            -       10,500
                                                    ----------   ----------   ----------   ----------   ----------

     Total expenses...............................      21,483          993        1,286       45,670       91,115
                                                    ----------   ----------   ----------   ----------   ----------

(Loss) income from operations.....................     (13,704)        (993)      (1,197)       1,785      (22,262)
                                                    ----------   ----------   ----------   ----------   ----------
Non-operating income (expense):
   Interest income................................       5,795        3,644          296          583            -
   Interest expense (net of capitalized interest
      of $11,814 in 2000 and $1,052 in 1999.......      (9,991)      (6,946)         (50)         (88)        (687)
   Gain on sale of vessel.........................           -            -            -            -        8,524
                                                    ----------   ----------   ----------   ----------   ----------
     Total non-operating (expense)
        income,  net..............................      (4,196)      (3,302)         246          495        7,837
                                                    ----------   ----------   ----------   ----------   ----------

(Loss) income before extraordinary item...........     (17,900)      (4,295)        (951)       2,280      (14,425)
Extraordinary item-loss from early
   extinguishment of debt.........................           -            -            -            -       (1,005)
                                                    ----------   ----------   ----------   ----------   ----------

Net (loss) income.................................  $  (17,900)  $   (4,295)  $     (951)  $    2,280   $  (15,430)
                                                    ==========   ==========   ==========   ==========   ==========

<CAPTION>
Consolidated Balance Sheet Data:
                                                                              December 31,
                                                    --------------------------------------------------------------
                                                       2000         1999         1998         1997(1)      1996(1)
                                                    ----------   ----------   ----------   ----------   ----------
                                                                            (in thousands)
<S>                                                 <C>          <C>          <C>          <C>          <C>

Total assets......................................  $  242,384   $  209,480   $    5,691   $    6,438   $   22,572
Total debt, including capital lease
  obligations.....................................     181,946      151,759            -            -            -
Partners' capital (deficiency)....................      29,174       38,171          (35)      (6,218)      (4,534)
</TABLE>
---------------

(1)  The ownership of HCS was transferred on September 22, 1998. From that time
     until December 20, 2000, HCS had no operating activities other than
     development, financing and construction activities with respect to the
     Shreveport Casino. The Shreveport Casino commenced operations on December
     20, 2000. Under its previous owners, HCS (then known as QNOV) operated a
     riverboat casino in New Orleans until October 1997. From October 1997 until
     September 21, 1998, QNOV had no operations and was seeking new owners.

                                       10
<PAGE>

                     HWCC-LOUISIANA, INC. AND SUBSIDIARIES

Consolidated Statement of Operations Data:

<TABLE>
<CAPTION>

                                                                        Year Ended December 31,
                                                   ---------------------------------------------------------------
                                                       2000         1999(1)      1998         1997         1996
                                                    ----------   ----------   ----------   ----------   ----------
                                                                            (in thousands)
<S>                                                 <C>          <C>          <C>          <C>          <C>
Net revenues...........................             $    7,779   $        -   $        -   $       -    $        -

Expenses:
 Departmental..........................                  5,862            -            -           -             -
 General and administrative............                    587           10            -           -             -
 Preopening and development............                 14,794        1,024           39         644            47
 Depreciation and amortization.........                    506            2            -           -             -
                                                    ----------   ----------   ----------   ----------   ----------

   Total expenses......................                 21,749        1,036           39         644            47
                                                    ----------   ----------   ----------   ----------   ----------

Loss from operations...................                (13,970)      (1,036)         (39)       (644)          (47)
                                                    ----------   ----------   ----------   ----------   ----------

Non-operating income (expenses):.......
 Interest income.......................                  6,007        3,701            -           -             -
 Interest expense, net of capitalized
    interest of $11,814 in 2000 and
    $1,052 in 1999.....................                 (9,991)      (6,946)           -           -             -
                                                    ----------   ----------   ----------   ----------   ----------

   Total non-operating expense, net....                 (3,984)      (3,245)           -           -             -
                                                    ----------   ----------   ----------   ----------   ----------

Loss before income taxes and
 other items...........................                (17,954)      (4,281)         (39)       (644)          (47)
Income tax benefit.....................                      -            -            -           -             -
                                                    ----------   ----------   ----------   ----------   ----------

Loss before other items................                (17,954)      (4,281)         (39)       (644)          (47)
Minority interest in
 Hollywood Casino Shreveport...........                    (78)           -            -           -             -
Pre-acquisition losses.................                      -           12            -           -             -
Equity in losses of Hollywood Casino
 Shreveport............................                      -            -          (17)          -             -
                                                    ----------   ----------   ----------   ----------   ----------

Net loss...............................             $  (18,032)  $   (4,269)  $      (56)  $     (644)  $      (47)
                                                    ==========   ==========   ==========   ==========   ==========

<CAPTION>
Consolidated Balance Sheet Data:
                                                                              December 31,
                                                    --------------------------------------------------------------
                                                       2000         1999(1)      1998         1997         1996
                                                    ----------   ----------   ----------   ----------   ----------
                                                                            (in thousands)
<S>                                                 <C>          <C>          <C>          <C>          <C>

Total assets...........................             $  252,017   $  219,428   $    2,705   $       42   $       47
Total debt, including capital lease
  obligations..........................                184,445      151,759            -            -            -
Shareholder's equity (deficit)                          34,293       46,000        1,369       (1,075)        (431)
</TABLE>
---------------
(1)  Consolidated to include the results of operations and balance sheet of
     Hollywood Casino Shreveport. Losses of Sodak Louisiana, L.L.C. from its
     equity interest in Hollywood Casino Shreveport for the period prior to its
     acquisition by HWCC-Louisiana, Inc. on April 23, 1999 are presented as pre-
     acquisition losses and reduce the consolidated net loss of HWCC-Louisiana,
     Inc.

                                       11
<PAGE>

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

     This Annual Report on Form 10-K contains forward-looking statements about
the business, results of operations, cash flows, financial condition and
prospects of HCS and HCL. The actual results could differ materially from those
indicated by the forward-looking statements because of various competition,
economic conditions, tax regulations, state regulations applicable to the gaming
industry in general or HCS in particular, and other risks indicated in HCS and
HCL's filings with the Securities and Exchange Commission. Such risks and
uncertainties are beyond management's ability to control and, in many cases, can
not be predicted by management. When used in this Annual Report on Form 10-K,
the words "believes", "estimates", "anticipates" and similar expressions as they
relate to HCS or HCL or their management are intended to identify forward-
looking statements. Similarly, statements herein that describe HCS and HCL's
business strategy, outlook, objectives, plans, intentions or goals are forward-
looking statements.

     HCL has had no operating activities other than certain costs incurred in
developing the Shreveport Casino. Accordingly, management's discussion that
follows primarily addresses the results of operations and liquidity and capital
resources of HCS. Activities of HCL exclusive of HCS and its subsidiaries will
be separately noted where significant.

     RESULTS OF OPERATIONS

     The ownership of HCS was transferred on September 22, 1998 when the current
partners acquired their partnership interests from the former partners. HCS was
a development stage entity from September 22, 1998 until the Shreveport Casino
opened for business on December 20, 2000.

     Prior to October 1997, the former partners were engaged in the operation of
a riverboat casino in New Orleans. From that time until September 21, 1998, the
former partners were winding down operations and in negotiations to transfer
their ownership interests to the current partners of HCC. Because the
liquidation of the New Orleans operations are not relevant to an understanding
of either the current or anticipated operations of the Shreveport Casino, the
majority of the discussion which follows relates to the period subsequent to
September 22, 1998. The results of operations for the period from January 1,
1998 through September 21, 1998 are only discussed in the section entitled "New
Orleans Operations."

     General

     The Shreveport Casino recognized a loss from operations of $13.7 million in
2000 compared to $993,000 in 1999 and $90,000 for the period from September 22,
1998 through December 31, 1998. Excluding preopening and development costs in
2000, the Shreveport Casino earned income from operations of $1.1 million. As
previously noted, the Shreveport Casino opened on December 20, 2000 and all
activities prior to that date relate to its development and construction.

     The Shreveport Casino experienced the typical operating inefficiencies
associated with the opening of a new, major resort. The large volume of business
generated by the property during its first 12 days of operations in 2000,
coupled with a difficult labor market in Shreveport, exacerbated these
inefficiencies. As a result, management concentrated its efforts in January and
early February 2001 on fully implementing operating and training programs to
ensure that customers were provided with a superior level of service. With these
programs completed, the Shreveport Casino launched major marketing programs in
late February and March. Delays in commencing its marketing efforts, together
with inclement weather and increased competitive pressures in the Shreveport
market, resulted in lower gaming activity at the Shreveport Casino in January
and February 2001 than management originally anticipated. Since implementing its
marketing programs, the Shreveport Casino has experienced a favorable trend in
its gaming revenues with significant increases in both February and March
compared to the prior month periods.


                                       12
<PAGE>

     In March 2001, the Louisiana legislature approved an increase in the gaming
tax on riverboat casinos to 21.5% of net gaming proceeds from the current 18.5%.
The tax increase will be phased in over a 25-month period for all riverboats in
the Shreveport/Bossier City area; accordingly, the gaming tax imposed on the
Shreveport Casino will increase to 19.5% effective April 1, 2001 with additional
1% increases on April 1, 2002 and April 1, 2003. Had the entire 3% gaming tax
been in effect during the period that the Shreveport Casino was open in 2000,
its operating expenses would have increased by $243,000.

     Gaming Operations

     Total gross wagering at the Shreveport Casino as measured by table game
drop and slot machine handle amounted to $83.3 million subsequent to opening in
2000.

     Revenues

     Casino revenues totaled $7.2 million during 2000 of which slot machine and
table game revenues accounted for 81.3% and 18.7%, respectively.

     Rooms revenues amounted to $302,000 during 2000 with a hotel occupancy rate
of 71.4% and an average daily rate of $108.

     Food and beverage and other revenues amounted to $1.3 million and $74,000,
respectively in the 2000 period since opening.

     Promotional allowances represent the estimated value of goods and services
provided free of charge to casino customers under various marketing programs.
These allowances, as a percentage of rooms, food and beverage and other
revenues, amounted to 65.7% since opening in 2000. This percentage, which
reflects opening period promotional activities, is consistent with the
historical experience of other HCC-owned gaming operations.

     Departmental Expenses

     Departmental expenses as a percentage of the associated revenues are set
forth below:


                                    Expense     Percent
                                  -----------   -------

     Casino expense               $5,218,000       72.5%
     Rooms expense                    88,000       29.1%
     Food and beverage expense       413,000       31.1%
     Other expense                   143,000      193.2%

     With the exception of other departmental expenses, these expense ratios are
consistent with or only slightly higher than the historical experience during
initial operating periods of other new gaming facilities operated by HCC. A
significant portion of other departmental expenses are related to opening day
activities; accordingly, management anticipates that such costs, as a percentage
of the associated revenues, should decline in future periods.

     General and Administrative

     General and administrative expenses at the Shreveport Casino amounted to
$321,000 during the 2000 period subsequent to opening. Prior to opening,
administrative personnel and their associated expenses were included in
preopening and development costs. Additional general and administrative costs at
HCL, consisting primarily of franchise taxes, amounted to $266,000.

                                       13
<PAGE>

     Depreciation and Amortization

     Depreciation and amortization expense increased to $506,000 in 2000
compared to $2,000 in 1999. The increase results primarily from the placement in
service of substantially all buildings, barges, and operating equipment at the
Shreveport Casino on December 20, 2000. Only minimal operating equipment was in
use during the construction period.

     Preopening and Development Costs

     Preopening and development costs are the start up costs associated with the
development of the Shreveport Casino which, in accordance with existing
accounting pronouncements, are required to be expensed as incurred. Such costs
include, among other things, organizational costs, marketing and promotional
costs, hiring and training of new employees and other operating costs incurred
prior to the opening of the project.

     Interest Income

     Unexpended proceeds from HCS's debt offering and from a total of $50
million in capital contributions generated interest income of $5.8 million and
$3.6 million, respectively, during the years ended December 31, 2000 and 1999
compared with $55,000 during the period from September 22, 1998 through December
31, 1998.

     Interest Expense

     In August 1999, HCS successfully completed the issuance of $150 million of
First Mortgage Notes (see "Liquidity and Capital Resources"). Interest on the
First Mortgage Notes, together with lease financing and other borrowings,
resulted in interest expense amounting to $10 million and $6.9 million,
respectively, during the years ended December 31, 2000 and 1999. Such amounts
are net of capitalized interest of $11.8 million and $1.1 million, respectively,
during the 2000 and 1999 annual periods. Interest expense also includes the
amortization of deferred financing costs incurred in connection with the debt
offering and lease financings. Such amortization amounted to $998,000 and
$293,000, respectively, during 2000 and 1999. Contingent interest with respect
to the First Mortgage Notes amounted to $77,000 during 2000.

     Income Taxes

     HCS is a partnership and, accordingly, is not subject to federal income
taxes. Such taxes are the responsibility of its partners. HCL is included in the
consolidated federal income tax return of HCC. Pursuant to agreements between
HCL and HCC, HCL's provision for federal income taxes is based on the amount of
tax which would be provided if a separate federal income tax return were filed.
The consolidated financial statements of HCL include the federal tax provisions
of its subsidiaries which are partners in HCS. Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes", requires that the tax benefit
of NOL's, together with the tax benefit of deferred tax assets resulting from
temporary differences, be recorded as an asset and, to the extent that
management can not assess that the utilization of all or a portion of such
deferred tax assets is more likely than not, a valuation allowance should be
recorded. Based on the losses incurred to date and the lack of historical
operating activity upon which to estimate future taxable income, management has
provided valuation allowances to fully reserve the net deferred tax assets for
all periods presented.

     Market Risk

     HCS's only financing arrangement that is subject to fluctuating market
interest rates is the $30 million lease commitment to acquire furniture,
fixtures and equipment. Interest under this agreement is variable and will be
reset quarterly. The rate of interest on borrowings is LIBOR plus 4% (currently
10.57%). If the interest rate increases by 100 basis points, or 1%, then
interest expense will increase by $300,000. Management believes that all other
market risks are immaterial. The furniture, fixture and

                                       14
<PAGE>

equipment financing was entered into for non-trading purposes as a source of
funding for the Shreveport Casino and management believes that this financing
has no other material market risks other than interest rate risk. Such interest
rate risk is beyond management's control; however, the resulting obligation
could be prepaid should increases in the underlying interest rate result in an
excessive financing cost to HCS.

     The First Mortgage Notes issued by HCS to finance construction of the
Shreveport Casino include interest at the rate of 13% payable semiannually as
well as contingent interest once the Shreveport Casino opens. The contingent
interest will be equal to 5% of HCS's consolidated cash flow for the applicable
period subject to a maximum contingent interest of $5 million for any four
consecutive fiscal quarters. Accordingly, the maximum potential interest with
respect to the First Mortgage Notes for a fiscal year could be $24.5 million,
resulting in an effective annual interest rate of 16.33%. This maximum would
assume that consolidated cash flow was at least $100 million. The contingent
component of interest under the First Mortgage Notes was negotiated with the
lenders as part of determining the fixed rate component of interest. Management
believes that because the contingent interest component is determined by the
cash flows of HCS and can only be paid if it meets certain coverage ratios,
HCS's liquidity and capital resources will not be compromised by the payment, if
any, of contingent interest.

     Changes in the market interest rate would also impact the fair market value
of HCS's outstanding fixed rate debt instruments. Management estimates that an
increase of 1% in the market interest rate would result in a decrease in the
fair market value of HCS's debt securities in the amount of approximately $5.8
million.

     Seasonality

     The Shreveport Casino has an extremely limited operating history.
Management anticipates that activity at the Shreveport Casino may be modestly
seasonal, with stronger results expected during the third fiscal quarter. In
addition, its operations may be impacted by adverse weather conditions.
Accordingly, the results of operations may fluctuate from quarter to quarter and
the results for any fiscal quarter may not be indicative of results for future
fiscal quarters.

     New Orleans Operations

     During the period from January 1, 1998 through September 21, 1998, the
former partners were in the process of negotiating the sale of their interests
to the current partners of HCS. Operating costs during this period consisted
primarily of general and administrative expenses of $986,000 including salaries
and legal fees associated with the efforts to transfer ownership. Property
operations during the 1998 partial year period included miscellaneous revenues
of $89,000 and operating and other costs amounted to $210,000. These expenses
included costs for leased office space, utilities and maintenance of the leased
vessel. Interest income of $241,000 earned on cash balances was partially offset
by $50,000 of interest expense owing to one of the partners in connection with
termination costs of the partner's docking site lease.

LIQUIDITY AND CAPITAL RESOURCES

     Operating Activities

     Cash flow during 2000 since the commencement of operations of $815,000 was
sufficient to meet the Shreveport Casino's operating cash needs and to pay
distributions amounting to $278,000 to its partners with respect to their tax
obligations. Under the indenture for the First Mortgage Notes, contingent
interest is payable based on the definition of consolidated cash flow contained
in the indenture. Such consolidated cash flow for contingent interest
calculation purposes for the period from opening through December 31, 2000
amounted to $1.5 million.

     The operations of the Shreveport Casino are managed by Shreveport
Management under the terms of a management agreement. Under the terms of the
management agreement, HCS pays Shreveport

                                       15
<PAGE>

Management basic and incentive management fees for its services. The basic fee
equals approximately 2% of the Shreveport Casino's net revenues and the
incentive fee equals the sum of (1) 5% of the Shreveport Casino's earnings
before interest, taxes, depreciation and amortization as defined in the
agreement ("EBITDA") between $25 million and $35 million, (2) 7% of the
Shreveport Casino's EBITDA between $35 million and $40 million, and (3) 10% of
the Shreveport Casino's EBITDA over $40 million. In addition, HCS reimburses
Shreveport Management for expenses incurred in connection with services provided
under the management agreement. Such fees amounted to $156,000 during the 2000
period after opening.

     HCS I, Inc. and HCS II, Inc. have assumed an obligation of HCL to cause HCS
to pay Paddlewheels an amount equal to approximately 1% of the Shreveport
Casino's net revenues in exchange for the assignment by Paddlewheels of its
joint venture interest in HCS to HCL and Sodak in September 1998. For financial
accounting purposes, such allocations are treated as distributions to HCS I,
Inc. and HCS II, Inc. HCS is also obligated to pay Paddlewheels a $30,000
monthly fee for marine services and to reimburse Paddlewheels for its direct
expenses, if any, incurred with respect to those services. The payments to
Paddlewheels are to be made for so long as they remain a joint venture partner
in HCS. HCS incurred marine services fees of $12,000 under these agreements in
the 2000 period after opening.

     Third parties could assert obligations against HCS for liabilities that
have arisen or that might arise against QNOV or the former partners with respect
to any period prior to September 22, 1998. Management believes that if such a
claim arises, it would be adequately covered under either existing
indemnification agreements with the former partners or insurance policies
maintained by QNOV or the former partners.

     Financing Activities

     HCS used proceeds from its August 1999 issue of $150 million in First
Mortgage Notes, together with $50 million of capital contributions and $30
million in furniture, fixture and equipment financing (see below) to provide
$230 million of the costs needed to develop, construct, equip and open the
Shreveport Casino. Project costs include financing costs ($7.3 million) and the
$5 million payment made in August 1999 to the City of New Orleans with respect
to moving the license to Shreveport. The funds provided by these sources also
provided a reserve for the first three scheduled payments of fixed interest on
the First Mortgage Notes, including the interest payment made on February 1,
2001. In addition, HCC made a cash capital contribution of $5.9 million in
December 2000 to meet liquidity requirements.

     HCS entered into a financing lease agreement with third party lessors for
$30 million used to acquire furniture, fixtures and equipment for the Shreveport
Casino. Borrowings under the lease agreement accrue interest at the rate of
LIBOR plus 4%. During the construction period, HCS paid only interest on
outstanding borrowings as well as a fee of .5% per annum on the undrawn portion
of the $30 million. Effective with the opening of the Shreveport Casino, the
outstanding borrowings became payable in equal quarterly installments plus
interest over a three year period to fully amortize the obligation. The lease is
treated as a capital lease for financial reporting purposes. Borrowings under
the lease are collateralized by the furniture, fixtures and equipment purchased.
The lease agreement contains certain covenants substantially similar to those
included in the indenture for the First Mortgage Notes.

     HCS entered into a ground lease with the city of Shreveport for the land on
which the Shreveport Casino was built. The lease has an initial term of ten
years from the date the Shreveport Casino opened with subsequent renewals for up
to an additional 40 years. Base rental payments under the lease began when
construction commenced and were $10,000 per month during the construction
period. The base rental amount increased to $450,000 per year upon opening and
continue at that amount for the remainder of the initial ten-year lease term.
During the first five-year renewal term, the base annual rental will be
$402,500. The annual base rental payment will be $462,875 for the second five-
year renewal term, $532,306 for the third five-year renewal term, $612,152 for
the fourth five-year renewal term and $703,975 for the fifth five year renewal
term with no further increases. In addition to the base rent, HCS pays monthly
percentage rent equal to the greater of (1) $500,000 per year or (2) the sum of
1% of adjusted gross revenues of the Shreveport Casino and the amount by which
50% of the net income

                                       16
<PAGE>

from the parking facilities exceeds a specified parking income credit. Ground
lease rentals amounted to $213,000 during 2000. In addition, the ground lease
agreement also calls for payments in lieu of admission fees to the City of
Shreveport and payments to the local school board amounting to 3.225% and .5375%
of Net Gaming Proceeds (as defined in the agreement), respectively. The payments
in lieu of admission fees are subject to an initial credit of $600,000. These
additional charges amounted to $304,000 during the 2000 period subsequent to
opening.

     It was originally anticipated that HCS would develop the Shreveport Casino
with each of HCL and Sodak having a 50% interest in the development and
subsequent operations. On March 31, 1999, HCL entered into a definitive
agreement with Sodak's parent to acquire Sodak for the $2.5 million Sodak had
contributed to HCS, with $1,000 to be paid at closing and the remainder to be
paid six months after the opening of the Shreveport Casino.

     In connection with the Compromise Agreement, HCS agreed to contingently
reimburse Hilton $2 million of the amount it paid to the City of New Orleans.
The reimbursement is to be paid in monthly installments of $200,000, without
interest, commencing with the opening of the Shreveport Casino. The $2 million
liability, net of a discount in the original amount of $308,000, and the
associated project costs were recorded upon the issuance of the First Mortgage
Notes.

     As of December 31, 2000, HCS's scheduled maturities of long-term debt and
payments under capital leases during 2001 are approximately $2 million and $10
million, respectively. In addition to such obligations, HCL has a note payable
in the amount of $2.5 million due in June 2001 with respect to its acquisition
of a former joint partner's interest in the Shreveport Casino.

     During November 2000, HCS entered into bank revolving credit facilities of
$2 million for working capital needs and $4 million to meet liquidity
requirements under Louisiana gaming regulations. The facilities are available
for a period of one year and advances under both facilities accrue interest at
the Wall Street Journal Prime Rate plus 2%. The agreements contain certain
reporting requirements and advances are subject to specified collateral
agreements. No amounts were outstanding under the credit facilities at December
31, 2000.

     Capital Expenditures and Other Investing Activities

     Capital expenditures at the Shreveport Casino during 2000 to complete
construction, equip and open the resort amounted to $116.1 million. Management
anticipates spending $3 million during 2001 toward its ongoing program of
capital improvements.

     On April 23, 2000, the construction site for the Shreveport Casino suffered
tornado damage which delayed the opening of the facility. Management filed
damage claims and received reimbursements from its insurance carrier during 2000
in the amount of approximately $1.7 million to cover the damage incurred. In
addition, management is seeking to recover lost profits and related claims under
its business interruption insurance coverage. The recovery of these amounts is
currently subject to litigation and management is unable to determine the
amount, if any, that will ultimately be received.

     HCS entered into an agreement with a third party during 2000 providing for
the joint construction and ownership of a golf course. An initial contribution
of $48,000 was recorded in 2000. Contributions by HCS during 2001 to the limited
liability corporation formed to develop and operate the golf course are expected
to be approximately $2.6 million.

     Conclusion

     Management believes that cash flow from operations will be sufficient to
meet HCS's liquidity and capital resource needs for the next 24 months.

                                       17
<PAGE>

ITEM 8.   INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                      Page
                                                                      ----
<S>                                                                   <C>
Hollywood Casino Shreveport and Subsidiaries:

 Independent Auditors' Report.........................................  19

 Consolidated Balance Sheets as of December 31, 2000 and 1999.........  20

 Consolidated Statements of Operations for the Years
   Ended December 31, 2000, 1999 and 1998.............................  22

 Consolidated Statement of Changes in Partners' Capital (Deficiency)
   for the Three Years Ended December 31, 2000........................  23

 Consolidated Statements of Cash Flows for the Years
   Ended December 31, 2000, 1999 and 1998.............................  24

 Notes to Consolidated Financial Statements...........................  25

HWCC-Louisiana, Inc. and Subsidiaries

 Independent Auditors' Report.........................................  37

 Consolidated Balance Sheets as of December 31, 2000 and 1999.........  38

 Consolidated Statements of Operations for the Years
  Ended December 31, 2000, 1999 and 1998..............................  40

 Consolidated Statement of Changes in Shareholder's Equity (Deficit)
  for the Three Years Ended December 31, 2000.........................  41

 Consolidated Statements of Cash Flows for the Years Ended
  December 31, 2000, 1999 and 1998....................................  42

 Notes to Consolidated Financial Statements...........................  43
</TABLE>

                                       18
<PAGE>

INDEPENDENT AUDITORS' REPORT


To Hollywood Casino Shreveport:

We have audited the accompanying consolidated balance sheets of Hollywood Casino
Shreveport (a Louisiana general partnership and formerly known as QNOV) and
subsidiaries as of December 31, 2000 and 1999, and the related consolidated
statements of operations, changes in partners' capital (deficiency) and cash
flows for each of the three years in the period ended December 31, 2000. These
financial statements are the responsibility of the Partnership'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, the consolidated financial statements present fairly, in all
material respects, the financial position of Hollywood Casino Shreveport and
subsidiaries as of December 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States of America.



Deloitte & Touche LLP
Dallas, Texas
March 15, 2001

                                       19
<PAGE>

                 HOLLYWOOD CASINO SHREVEPORT AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEETS (NOTE 1)

<TABLE>
<CAPTION>


                                              December 31,   December 31,
                                                  2000           1999
                                              ------------   ------------
<S>                                           <C>            <C>
Assets
Current Assets:
  Cash and cash equivalents                   $ 37,352,000   $ 19,014,000
  Accounts receivable, net of allowance
   of $90,000 in 2000                              851,000              -
 Inventories                                     1,826,000              -
 Interest receivable                               231,000      1,432,000
 Prepaid expenses and other current assets       1,394,000        620,000
                                              ------------   ------------

    Total current assets                        41,654,000     21,066,000
                                              ------------   ------------

Property and Equipment:
 Land improvements                               1,619,000              -
 Buildings and improvements                     93,825,000              -
 Riverboat                                      44,520,000              -
 Furniture and equipment                        42,561,000         23,000
 Construction in progress                        2,621,000     36,155,000
                                              ------------   ------------

                                               185,146,000     36,178,000
 Less - accumulated depreciation                  (508,000)        (2,000)
                                              ------------   ------------

                                               184,638,000     36,176,000
                                              ------------   ------------

Cash restricted for construction project         9,530,000    147,310,000
                                              ------------   ------------

Other Assets:
 Deferred financing costs, net                   5,978,000      4,928,000
 Other                                             584,000              -
                                              ------------   ------------

    Total other assets                           6,562,000      4,928,000
                                              ------------   ------------

                                              $242,384,000   $209,480,000
                                              ============   ============
</TABLE>



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

                                       20
<PAGE>

                 HOLLYWOOD CASINO SHREVEPORT AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEETS (NOTE 1)

<TABLE>
<CAPTION>
                                          December 31,  December 31,
                                              2000          1999
                                          ------------  ------------

<S>                                       <C>           <C>
Liabilities and Partners' Capital
Current Liabilities:
 Current maturities of long-term debt
    and capital lease obligations         $ 11,919,000  $    400,000
  Accounts payable                          17,720,000    11,648,000
 Accrued liabilities -
  Salaries and wages                         2,745,000        35,000
  Interest                                   8,229,000     7,637,000
  Gaming and other taxes                       128,000             -
  Insurance                                     86,000             -
  Other                                        662,000             -
 Due to affiliates                             950,000       230,000
 Other current liabilities                     731,000             -
                                          ------------  ------------

   Total current liabilities                43,170,000    19,950,000
                                          ------------  ------------

Long-Term Debt                             150,027,000   151,359,000
                                          ------------  ------------

Capital Lease Obligations                   20,000,000             -
                                          ------------  ------------

Other Noncurrent Liabilities                    13,000             -
                                          ------------  ------------

Commitments and Contingencies (Note 6)

Partners' Capital                           29,174,000    38,171,000
                                          ------------  ------------

                                          $242,384,000  $209,480,000
                                          ============  ============

</TABLE>





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

                                       21
<PAGE>

                 HOLLYWOOD CASINO SHREVEPORT AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF OPERATIONS (NOTE 1)

<TABLE>
<CAPTION>
                                                          Year Ended December 31,
                                                  ----------------------------------------
                                                      2000          1999          1998
                                                  ------------   -----------   -----------

<S>                                               <C>            <C>           <C>
Revenues:
 Casino                                           $  7,194,000   $         -   $         -
 Rooms                                                 302,000             -             -
 Food and beverage                                   1,330,000             -             -
 Other                                                  74,000             -        89,000
                                                  ------------   -----------   -----------

                                                     8,900,000             -        89,000
 Less - promotional allowances                      (1,121,000)            -             -
                                                  ------------   -----------   -----------

 Net revenues                                        7,779,000             -        89,000
                                                  ------------   -----------   -----------

Expenses:
 Casino                                              5,218,000             -             -
 Rooms                                                  88,000             -             -
 Food and beverage                                     413,000             -             -
 Other                                                 143,000             -       210,000
 General and administrative                            321,000             -       986,000
 Preopening and development                         14,794,000       991,000        90,000
 Depreciation and amortization                         506,000         2,000             -
                                                  ------------   -----------   -----------

  Total expenses                                    21,483,000       993,000     1,286,000
                                                  ------------   -----------   -----------

Loss from operations                               (13,704,000)     (993,000)   (1,197,000)
                                                  ------------   -----------   -----------

Non-operating (expense) income:
 Interest income                                     5,795,000     3,644,000       296,000
 Interest expense, net of capitalized interest
   of $11,814,000 and $1,052,000 in 2000
  and 1999, respectively                            (9,991,000)   (6,946,000)      (50,000)
                                                  ------------   -----------   -----------

  Total non-operating (expense) income              (4,196,000)   (3,302,000)      246,000
                                                  ------------   -----------   -----------

Net loss                                          $(17,900,000)  $(4,295,000)  $  (951,000)
                                                  ============   ===========   ===========
</TABLE>



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

                                       22
<PAGE>

                 HOLLYWOOD CASINO SHREVEPORT AND SUBSIDIARIES
                CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS'
                         CAPITAL (DEFICIENCY) (NOTE 1)

                  For the Three Years Ended December 31, 2000

<TABLE>
<CAPTION>
                                                                                               Shreveport
                                                  HWCC-         Sodak                           Paddle-
                                   Former      Louisiana,    Louisiana,     HCS I,    HCS II,   wheels,
                                 Partners(1)      Inc.        L.L.C.(2)      Inc.       Inc.    L.L.C.    Totals
                                -------------  -----------  -------------  ---------  --------  -------  ---------
                                                              (amounts in thousands)
<S>                             <C>            <C>          <C>            <C>        <C>       <C>      <C>

Balances, January 1, 1998          $(6,218)       $     -      $     -     $      -     $   -    $    -  $ (6,218)
Cash distributions                  (6,000)             -            -            -         -         -    (6,000)
Assumption of partnership
 obligations                         5,000              -            -            -         -         -     5,000
Non-cash distribution of net
 liabilities                         3,134              -            -            -         -         -     3,134
Capital contributions                    -          2,500        2,500            -         -         -     5,000
Net loss                              (916)           (17)         (18)           -         -         -      (951)
                                   -------        -------   ----------     --------     -----   -------  --------

Balances, December 31, 1998         (5,000)         2,483        2,482            -         -         -       (35)
Adjust recorded value of
 Sodak Louisiana, L.L.C.'s
 investment (2)                          -              -       (2,499)           -         -         -    (2,499)
Merger of Sodak Louisiana,
 L.L.C. (2)                              -            (29)          29            -         -         -         -
Contribution of interest (3)             -         (2,441)           -        2,417        24         -         -
Capital contributions                    -              -            -       43,560       440     1,000    45,000
Assignment of interest                   -              -            -         (990)      (10)    1,000         -
Net loss                                 -            (13)         (12)      (4,227)      (43)        -    (4,295)
                                   -------        -------   ----------     --------     -----   -------  --------

Balances, December 31, 1999         (5,000)             -            -       40,760       411     2,000    38,171
Capital contributions                    -              -            -        9,176        93         -     9,269
Partnership distributions                                                      (364)       (2)        -      (366)
Net loss                                 -              -            -      (17,721)     (179)        -   (17,900)
                                   -------        -------   ----------     --------     -----   -------  --------

Balances, December 31, 2000        $(5,000)       $     -      $     -     $ 31,851     $ 323    $2,000  $ 29,174
                                   =======        =======   ==========     ========     =====   =======  ========
</TABLE>
---------------
(1)  Hilton New Orleans Corporation and New Orleans Paddlewheels, Inc. withdrew
     as partners and transferred their interests to HWCC-Louisiana, Inc., Sodak
     Louisiana, L.L.C. and Shreveport Paddlewheels, L.L.C. during September
     1998. At the time of such transfer, all assets and liabilities of the joint
     venture had been distributed to the withdrawing partners with the exception
     of a $5,000,000 obligation to the City of New Orleans (see Note 1).
(2)  Sodak Louisiana L.L.C. became a wholly owned subsidiary of HWCC-Louisiana,
     Inc. on April 23, 1999 and was merged into HWCC-Louisiana, Inc. on July 9,
     1999. The adjustment to the recorded value is a purchase adjustment (see
     Note 1).
(3)  On July 21, 1999, HWCC-Louisiana, Inc. contributed its ownership interest
     in Hollywood Casino Shreveport to its wholly owned subsidiaries, HCS I,
     Inc. and HCS II, Inc.

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

                                       23
<PAGE>

                 HOLLYWOOD CASINO SHREVEPORT AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (NOTE 1)

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                    Year Ended December 31,
                                                           -------------------------------------------
                                                               2000            1999          1998
                                                           -------------   -------------   -----------
<S>                                                        <C>             <C>             <C>
OPERATING ACTIVITIES:
 Net loss                                                  $ (17,900,000)  $  (4,295,000)  $  (951,000)
 Adjustments to reconcile net loss to net
  cash (used in) provided by operating activities:
  Depreciation and amortization, including
   accretion of discount                                       1,658,000         362,000             -
  Provision for doubtful accounts                                 90,000               -             -
  Increase in accounts receivable                               (941,000)              -             -
  Increase in accounts payable and accrued liabilities        10,250,000      13,594,000       726,000
  Net change in intercompany balances                          1,067,000         230,000             -
  Net change in other current assets and liabilities            (668,000)     (2,052,000)   (2,009,000)
  Net change in other noncurrent assets and liabilities         (523,000)              -     2,847,000
                                                           -------------   -------------   -----------

 Net cash (used in) provided by operating activities          (6,967,000)      7,839,000       613,000
                                                           -------------   -------------   -----------

INVESTING ACTIVITIES:
 Purchases of property and equipment                        (116,117,000)    (35,028,000)   (1,957,000)
 Investment in unconsolidated affiliate                          (48,000)              -             -
 Net change in cash restricted for construction project      137,780,000    (147,310,000)            -
                                                           -------------   -------------   -----------

 Net cash provided by (used in) investing activities          21,615,000    (182,338,000)   (1,957,000)
                                                           -------------   -------------   -----------

FINANCING ACTIVITIES:
 Proceeds from issuance of long-term debt                         35,000     150,000,000             -
 Capital contributions                                         5,900,000      45,000,000     5,000,000
 Repayments of long-term debt                                     (2,000)              -             -
 Deferred financing costs                                     (1,955,000)     (5,221,000)            -
 Partner distributions                                          (288,000)              -    (6,000,000)
                                                           -------------   -------------   -----------

 Net cash provided by (used in) financing activities           3,690,000     189,779,000    (1,000,000)
                                                           -------------   -------------   -----------

 Net increase (decrease) in cash and cash equivalents         18,338,000      15,280,000    (2,344,000)

 Cash and cash equivalents at beginning of year               19,014,000       3,734,000     6,078,000
                                                           -------------   -------------   -----------

 Cash and cash equivalents at end of year                  $  37,352,000   $  19,014,000   $ 3,734,000
                                                           =============   =============   ===========
</TABLE>


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

                                       24
<PAGE>

                 HOLLYWOOD CASINO SHREVEPORT AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


(1)  Organization, History, Business and Basis of Presentation

     Hollywood Casino Shreveport ("HCS") is a general partnership registered in
the state of Louisiana. The original partnership agreement was amended on
September 22, 1998 to include as partners in what is now referred to as HCS the
following companies: HWCC - Louisiana, Inc. ("HCL"), a Louisiana corporation
wholly owned by Hollywood Casino Corporation ("HCC"); Sodak Louisiana, L.L.C.
("Sodak"), a Louisiana limited liability company; and Shreveport Paddlewheels,
L.L.C. ("Paddlewheels"), a Louisiana limited liability company. The general
partnership was originally formed in May 1992 for the purpose of developing and
operating a riverboat casino in New Orleans, Louisiana. Originally named Queen
of New Orleans at the Hilton Joint Venture ("QNOV"), the partnership was 50%-
owned by Hilton New Orleans Corporation ("Hilton") and 50%-owned by New Orleans
Paddlewheels, Inc. ("NOP"). Hilton and NOP are collectively referred to herein
as the "former partners." QNOV's riverboat operations in New Orleans commenced
in February 1994 and were discontinued in October 1997.

     During October 1996, QNOV received approval from state gaming authorities
to relocate its license to operate to the City of Shreveport, Louisiana,
approximately 180 miles east of Dallas, Texas. Subsequent to receiving approval
to relocate, QNOV made the decision in 1997 not to conduct gaming operations in
Shreveport. The former partners sought to transfer the license to operate in
Shreveport to another interested party. Under Louisiana gaming regulations, the
license to operate a riverboat gaming operation is not transferable; however,
the ownership of an entity licensed to operate is transferable, subject to the
approval of the Louisiana Gaming Control Board (the "LGCB"). Accordingly, the
transfer of the license to operate in Shreveport was structured as the
acquisition of the interests of the former partners in QNOV. The former partners
disposed of QNOV's assets other than its license to operate and satisfied all
but one of its obligations so that when the former partners withdrew on
September 22, 1998, QNOV's only asset was its license to operate in Shreveport
(which had no recorded value) and its only liability was a $5,000,000 obligation
to the City of New Orleans. The $5,000,000 obligation was paid by HCS in August
1999 upon the issuance of $150,000,000 of 13% First Mortgage Notes with
contingent interest due 2006 (the "First Mortgage Notes") (see Note 3).

     Upon admission of the new partners, HCS proceeded with entirely new plans
to develop, own and operate a riverboat gaming complex to be constructed in
Shreveport (the "Shreveport Casino"). The Shreveport Casino was completed and
opened on December 20, 2000. Prior to opening, HCS had no operating activities
other than development, financing and construction activities with respect to
the Shreveport Casino. The Shreveport Casino consists of a three-level riverboat
dockside casino with approximately 1,434 slot machines and 68 table games and a
403-room, all suite, art deco style hotel. The project also includes
approximately 42,000 square feet of restaurant and entertainment facilities
being developed by a third party.

     Riverboat gaming operations in Louisiana are subject to regulatory control
by the LGCB. HCS's current license to operate the Shreveport Casino expires on
October 15, 2004.

     It was originally anticipated that HCS would develop the Shreveport Casino
with each of HCL and Sodak having a 50% interest in the development and
subsequent operations. Once operations commenced, Paddlewheels was to have a
residual interest in the event that the project was ever sold amounting to 10%
plus any capital contributions made by Paddlewheels to HCS or otherwise credited
to their account. On March 31, 1999, HCL entered into a definitive agreement
with Sodak's parent to acquire Sodak for the $2,500,000 Sodak had contributed to
HCS, with $1,000 to be paid at closing and

                                       25
<PAGE>

                 HOLLYWOOD CASINO SHREVEPORT AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


the remainder to be paid six months after the opening of the Shreveport Casino.
Because the remaining obligation to Sodak was contingent at December 31, 1999,
the accompanying consolidated balance sheet of HCS at that date includes an
adjustment in the amount of $2,499,000 to reduce the recorded value of
construction in progress and partners' capital to reflect the difference between
the amount paid by HCL to acquire Sodak's partnership interest and the
previously recorded investment by Sodak in HCS. When the additional $2,499,000
obligation with respect to the acquisition price to Sodak was recorded by HCL in
June 2000, the adjustment to the recorded value of construction in progress was
reversed and an additional capital contribution was recorded (see Note 9). The
revised structure of the partnership was approved by the LGCB on April 20, 1999.
As a result of the acquisition, HCL obtained an effective 100% ownership
interest in HCS with Paddlewheels retaining their residual interest. During July
1999, Sodak was merged into HCL.

     Also during July 1999, HCL formed two new, wholly owned subsidiaries, HCS
I, Inc. and HCS II, Inc., both Louisiana corporations. HCL contributed $1,000 of
capital to each entity, along with 99% of its interest in HCS to HCS I, Inc. and
the remaining 1% to HCS II, Inc. In addition, the HCS joint venture agreement
was amended and restated on July 21, 1999, to reflect, among other things, the
admission of HCS I, Inc. and HCS II, Inc. as partners of HCS and the withdrawal
of HCL as managing partner of HCS. As a result, HCS I, Inc. now has an effective
99% interest in HCS and has become its managing general partner. HCS II, Inc.
now has an effective 1% interest in HCS. Paddlewheels retained its 10% residual
interest in HCS. The revised partnership structure was approved by the LGCB on
July 20, 1999. HCL contributed an additional $300,000 to HCS through HCS I, Inc.
and HCS II, Inc. in July 1999. Once HCS secured financing for the Shreveport
Casino (see Note 3), HCL contributed an additional $43,700,000 to HCS through
HCS I, Inc. and HCS II, Inc. HCL also loaned $1,000,000 to Paddlewheels which
Paddlewheels contributed to HCS. HCL contributed an additional $5,900,000 to HCS
through HCS I, Inc. and HCS II, Inc. in December 2000 to meet liquidity
requirements. Capital contributions from HCC, HCL's parent, were used by HCL to
make the capital contributions to its subsidiaries and the loan to Paddlewheels.

     Additionally, in July 1999, HCS formed a new, wholly owned subsidiary,
Shreveport Capital Corporation ("Shreveport Capital"), a Louisiana corporation.
HCS contributed $1,000 of capital to Shreveport Capital. Shreveport Capital was
formed for the sole purpose of being a co-issuer with respect to the First
Mortgage Notes and is not expected to have any operating activities, acquire any
assets or incur any other liabilities. Accordingly, separate financial
statements of Shreveport Capital are not included herein because management has
determined that such information is not material to investors.

     The accompanying consolidated financial statements include the accounts of
HCS and its wholly owned subsidiaries, Shreveport Capital and HCS-Golf Course,
LLC ("Golf"). All significant intercompany balances have been eliminated in
consolidation. Golf, a Delaware corporation, was formed in 2000 to own an
initial 49% interest in Shreveport Golf Company, a joint venture formed to
develop and operate a golf course to be used by patrons of the Shreveport
Casino. Golf's investment in Shreveport Golf Company is accounted for under the
equity method. As of December 31, 2000, capital contributions amounting to
$48,000 have been made to Shreveport Golf Company and are included in other
noncurrent assets on the accompanying consolidated balance sheet.

     HCS estimates that a significant amount of the Shreveport Casino's revenues
are derived from patrons living in the Dallas/Ft. Worth and east Texas areas.
The Shreveport Casino faces intense competition from other riverboat gaming
operations in Shreveport and Bossier City, Louisiana and management believes
that this competition will continue in the future.

                                       26
<PAGE>

                 HOLLYWOOD CASINO SHREVEPORT AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


(2)  Summary of Significant Accounting Policies

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

Casino revenues, promotional allowances and departmental expenses -

     HCS recognizes the net win from gaming activities (the difference between
gaming wins and losses) as casino revenues. Casino revenues are net of accruals
for anticipated payouts of progressive jackpots. Such anticipated jackpot
payouts are included in other accrued liabilities on the accompanying
consolidated balance sheet at December 31, 2000.

     The estimated value of rooms, food and beverage and other items which were
provided to customers without charge has been included in revenues and a
corresponding amount has been deducted as promotional allowances. The cost of
such complimentaries has been included in casino expenses on the accompanying
consolidated statement of operations for the year ended December 31, 2000. Costs
of complimentaries allocated from the rooms, food and beverage and other
operating departments to the casino department amounted to $42,000, $1,276,000
and $49,000, respectively, during the 2000 period subsequent to opening.

Cash and cash equivalents -

     Cash and cash equivalents are generally comprised of cash and investments
with original maturities of three months or less, such as treasury bills and
fixed repurchase agreements.

Cash Restricted for Construction Project -

     Cash restricted for construction project consists of investments in
government securities which are to be used for specified purposes and which were
purchased with net proceeds from the First Mortgage Notes (see Note 3) as
required by the indenture for the First Mortgage Notes. Prior to opening on
December 20, 2000, such restricted cash included (1) funds to be used for
construction which were subject to meeting certain conditions prior to their
disbursement and (2) funds to be used to complete and open the Shreveport Casino
in the event the construction funds in (1) above were not sufficient. Restricted
cash also includes an account with funds to be used to make the first three
semiannual interest payments with respect to the First Mortgage Notes; the
restrictions on such account were removed when the third interest payment was
made on February 1, 2001. Interest earned, but not yet received, on restricted
cash investments is included in interest receivable on the accompanying
consolidated balance sheets. Upon receipt, interest is included in cash
restricted for construction project.

                                       27
<PAGE>

                 HOLLYWOOD CASINO SHREVEPORT AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


     Cash restricted for construction project is comprised of the following:

<TABLE>
<CAPTION>

                        December 31,  December 31,
                           2000          1999
                        ------------  ------------

<S>                     <C>           <C>
Construction reserve      $        -  $114,964,000
Interest reserve           9,530,000    27,275,000
Completion reserve                 -     5,071,000
                          ----------  ------------

                          $9,530,000  $147,310,000
                          ==========  ============
</TABLE>

Allowance for doubtful accounts -

     The allowance for doubtful accounts is maintained at a level considered
adequate to provide for possible future losses. Provisions for doubtful accounts
amounting to $90,000 were made during the year ended December 31, 2000. No
provisions were required prior to opening.

Inventories -

     Inventories are stated at the lower of cost (on a first-in, first-out
basis) or market.

Property and equipment -

     Property and equipment have been recorded at cost and are being depreciated
utilizing the straight-line method over the estimated useful lives of the assets
as follows:

     Land improvements                            20 years
     Buildings, riverboats and improvements       25-40 years
     Operating equipment                          3-7 years

     A portion of the interest incurred on construction financing was
capitalized during the construction period. Such capitalized costs have been
allocated to the individual components of property and equipment and other
assets and, since opening, are being amortized over the useful lives of the
related assets.

Deferred financing costs -

     The costs of issuing long-term debt, including all underwriting, licensing,
legal and accounting fees, have been deferred and are being amortized over the
term of the related debt issues using either the effective interest method or,
where appropriate, the straight-line method approximating the effective interest
method. Amortization of such costs amounted to $998,000 and $293,000,
respectively, during the years ended December 31, 2000 and 1999 and is included
in interest expense on the accompanying consolidated statements of operations.

                                       28
<PAGE>

                 HOLLYWOOD CASINO SHREVEPORT AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


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. HCS does not believe that any such events or changes have occurred.

Accrued insurance -

     HCS is self insured for a portion of its general liability, certain health
care and other liability exposures. Accrued insurance includes estimates of such
accrued liabilities based on an evaluation of the merits of individual claims
and historical claims experience; accordingly, HCS's ultimate liability may
differ from the amounts accrued.

Preopening and development costs -

     Preopening and development costs include, among other things,
organizational costs, marketing and promotional costs, hiring and training of
new employees and other operating costs incurred prior to opening the project.
Preopening costs are accounted for under the provisions of Statement of Position
98-5 issued by the American Institute of Certified Public Accountants which
requires that such costs be expensed as incurred.

Employee stock options -

     HCS has adopted the disclosure provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS
123"). SFAS 123 allows an entity to continue to measure compensation cost for
employee stock options using the intrinsic value based method of accounting
prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees" ("Opinion 25"). Entities electing to remain with the
accounting under Opinion 25 are required to make pro forma disclosures of net
income as if the fair value based method of accounting under SFAS 123 had been
applied. HCL, as managing general partner of HCS, has elected to account for
employee-based compensation under Opinion 25. During September 1999, HCC issued
stock options to an employee of HCS for 50,000 shares of HCC common stock at an
exercise price of $2.50 per share, the market price on the date of grant. Pro
forma compensation expense for the year ended December 31, 2000 would be $26,000
and for the period from the grant date (September 16, 1999) through December 31,
1999 would be $8,000.

Income taxes -

     HCS is a partnership and its tax attributes, including income and expense
items, are passed through to its partners. Accordingly, the accompanying
consolidated financial statements do not reflect state or federal income taxes.

Recent accounting pronouncement -

     In June 1998, the Financial Accounting Standards Board issued a new
statement, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133"), which has been amended to be effective

                                       29
<PAGE>

                 HOLLYWOOD CASINO SHREVEPORT AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


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 partners' capital until a hedged
transaction occurs. The adoption of SFAS 133 as of January 1, 2001 had no impact
on the consolidated financial position or results of operations of HCS.

(3)  Long-term Debt

     Long-term debt at December 31, 2000 and 1999 consists of the following:

<TABLE>
<CAPTION>
                                                   December 31,   December 31,
                                                       2000           1999
                                                   ------------   ------------

<S>                                                <C>            <C>
     13% First Mortgage Notes, with contingent
       interest, due 2006(a)                       $150,000,000   $150,000,000
     Note payable, net of discount of $87,000 and
        $241,000, respectively (b)                    1,913,000      1,759,000
     Other                                               33,000              -
                                                   ------------   ------------

     Total indebtedness                             151,946,000    151,759,000

     Less-current maturities                         (1,919,000)      (400,000)
                                                   ------------   ------------

       Total long-term debt                        $150,027,000   $151,359,000
                                                   ============   ============
</TABLE>

---------------
(a)  In August 1999, HCS and Shreveport Capital issued the First Mortgage Notes.
     Fixed interest on the First Mortgage Notes at the annual rate of 13% is
     payable on each February 1 and August 1. In addition, contingent interest
     accrues and is payable on each interest date after the Shreveport Casino
     begins operations. The amount of contingent interest is equal to 5% of the
     consolidated cash flow of HCS for the applicable period subject to a
     maximum contingent interest of $5,000,000 for any four consecutive fiscal
     quarters.

     The First Mortgage Notes are secured by, among other things, (1) a first
     priority security interest in the net proceeds from the issue of the First
     Mortgage Notes; (2) a first priority security interest in substantially all
     of the assets that will comprise the Shreveport Casino other than up to
     $35,000,000 in assets secured by equipment financing; (3) a collateral
     assignment of the Shreveport Casino's interest in the principal agreements
     under which it will be constructed, operated and managed; and (4) a
     collateral assignment of certain licenses and permits with respect to the
     construction, operation and management of the Shreveport Casino. In
     addition, the First Mortgage Notes are guaranteed on a senior secured basis
     by HCL, HCS I, Inc. and HCS II, Inc. (collectively, the "Guarantors"). Such
     guarantees are secured by a first priority secured interest in
     substantially all of the Guarantors' assets, including a pledge of the
     capital stock of HCS I, Inc. and HCS II, Inc. and their partnership
     interests in HCS. The security interest does not include $2,499,000 held by
     HCL to fund its acquisition of Sodak (see Note 1).

                                       30
<PAGE>

                 HOLLYWOOD CASINO SHREVEPORT AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


     The First Mortgage Notes may be redeemed at any time on or after August 1,
     2003 at 106.5% of the then outstanding principal amount, decreasing to
     103.25% and 100% on August 1, 2004 and 2005, respectively. HCS may also
     redeem up to 35% of the First Mortgage Notes at a redemption price of 113%
     plus accrued interest at any time prior to August 1, 2002 with the net cash
     proceeds of an equity offering by HCC resulting in at least $20,000,000,
     but only to the extent that such proceeds are contributed by HCC as equity
     to HCS.

     The indenture to the First Mortgage Notes contains various provisions
     limiting the ability of HCS to borrow money, pay distributions on its
     equity interests or prepay debt, make investments, create liens, sell its
     assets or enter into mergers or consolidations. In addition, the indenture
     restricts the ability of the Guarantors and Shreveport Capital Corporation
     to acquire additional assets, become liable for additional obligations or
     engage in any significant business activities.

(b)  The partners of HCS agreed that HCS would contingently reimburse Hilton for
     $2,000,000 it paid in connection with the relocation of the license to
     Shreveport (see Note 1); such repayment is to be made in monthly
     installments of $200,000, without interest, commencing with the opening of
     the Shreveport Casino. The $2,000,000 liability, net of a discount in the
     original amount of $308,000, and the related adjustment to the recorded
     value of project costs were recorded upon the issuance of the First
     Mortgage Notes in August 1999.

     Scheduled payments of long-term debt as of December 31, 2000 are set forth
     below:
<TABLE>
<S>                                <C>
     2001                           $  2,006,000
     2002                                  6,000
     2003                                  7,000
     2004                                  8,000
     2005                                  6,000
     Thereafterr                     150,000,000
                                    ------------

                                    $152,033,000
                                    ============
</TABLE>

(4)  Leases

     Capital Lease -

     HCS entered into a financing lease agreement with third party lessors for
$30,000,000 to acquire furniture, fixtures and equipment for the Shreveport
Casino. During the construction period, HCS paid only interest on outstanding
borrowings together with a fee of .5% per annum on the undrawn portion of the
$30,000,000. Effective with the opening of the Shreveport Casino, the
outstanding borrowings became payable in equal quarterly installments plus
interest at LIBOR plus 4% (currently 10.57%) over a three year period to fully
amortize the obligation. The lease is treated as a capital lease for financial
reporting purposes. Borrowings under the lease are collateralized by the
furniture, fixture and equipment purchased. The lease agreement contains certain
covenants substantially similar to those included in the indenture for the First
Mortgage Notes (see Note 3).

     The original cost of the assets acquired under the capital lease agreements
is included in furniture and equipment on the accompanying consolidated balance
sheet at December 31, 2000 in the amount of $30,000,000. Amortization expense
with respect to these assets amounted to $172,000 during the year

                                       31
<PAGE>

                 HOLLYWOOD CASINO SHREVEPORT AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


ended December 31, 2000 with the same amount included in accumulated
amortization at December 31, 2000.

     Future minimum lease payments under the capital lease obligation are as
follows:

<TABLE>
<S>                                                    <C>
     2001                                              $ 12,740,000
     2002                                                11,696,000
     2003                                                10,652,000
                                                       ------------

     Total minimum lease payments                        35,088,000
     Less - amount representing interest                 (5,088,000)
                                                       ------------

     Present value of future minimum lease payments      30,000,000
     Current capital lease obligation                   (10,000,000)
                                                       ------------

     Long-term capital lease obligation                $ 20,000,000
                                                       ============
</TABLE>

     Operating Leases -

     In May 1999, HCS entered into a ground lease with the City of Shreveport
for the land on which the Shreveport Casino was built. The term of the lease
began when construction commenced and will end on the tenth anniversary of the
date the Shreveport Casino opened. HCS has options to renew the lease on the
same terms for up to an additional forty years. The lease may be further renewed
after that time at prevailing rates and terms for similar leases. The City of
Shreveport may terminate the lease as a result of, among other things, a default
by HCS under the lease. HCS may terminate the lease at any time if the operation
of the Shreveport Casino becomes uneconomic. Base rental payments under the
lease were $10,000 per month during the construction period. The base rental
amount increased to $450,000 per year upon opening and continue at that amount
for the remainder of the initial ten-year lease term. During the first five-year
renewal term, the base annual rental will be $402,500. Subsequent renewal period
base rental payments will increase by 15% during each of the next four five-year
renewal terms with no further increases. In addition to the base rent, HCS pays
monthly percentage rent of not less than $500,000 per year equal to 1% of
monthly adjusted gross revenues and the amount, if any, by which monthly parking
facilities net income exceeds the parking income credit, as all such terms are
defined in the lease agreement. Ground lease rentals amounted to $213,000 and
$56,000, respectively, for the years ended December 31, 2000 and 1999, including
percentage rentals amounting to $78,000 during 2000. Costs incurred under the
ground lease during the construction period were capitalized. In addition, the
ground lease agreement also calls for payments in lieu of admission fees to the
City of Shreveport and payments to the local school board amounting to 3.225%
and .5375% of Net Gaming Proceeds (as defined in the agreement), respectively.
The payments in lieu of admission fees are subject to an initial credit of
$600,000. These additional charges amounted to $304,000 during the 2000 period
subsequent to opening.

     HCS also leases office space, warehouse space and certain equipment under
lease agreements accounted for as operating leases. The lease agreements expire
at various dates through 2005. Total rental expense for such leases amounted to
$324,000 and $9,000, respectively, during the years ended December 31, 2000 and
1999.

                                       32
<PAGE>

                 HOLLYWOOD CASINO SHREVEPORT AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


     Future minimum lease payments as of December 31, 2000 under operating lease
obligations (other than the ground lease) having an initial or remaining
noncancellable term in excess of one year are as follows:

<TABLE>
<S>         <C>
     2001                               $  392,000
     2002                                  396,000
     2003                                  338,000
     2004                                  204,000
     2005                                  125,000
                                        ----------

                                        $1,455,000
                                        ==========
</TABLE>

(5)  Transactions with Affiliates

     The operations of the Shreveport Casino are managed by HWCC - Shreveport,
Inc. ("Shreveport Management"), a wholly owned subsidiary of HCC, under the
terms of a management agreement. The management agreement became effective when
the LGCB approved the development of the Shreveport Casino and will remain in
effect as long as HCS holds its license, unless sooner terminated in accordance
with its terms. Under the terms of the management agreement, HCS pays Shreveport
Management basic and incentive management fees for its services. The basic fee
is equal to 2% of gross revenues, as defined in the agreement, from the
operations of the Shreveport Casino. The incentive fee is equal to the sum of
(1) 5% of earnings before interest, taxes, depreciation and amortization
("EBITDA"), as defined in the agreement, in excess of $25,000,000 and up to
$35,000,000; (2) 7% of EBITDA in excess of $35,000,000 and up to $40,000,000;
and (3) 10% of EBITDA over $40,000,000. In addition, HCS reimburses Shreveport
Management for expenses incurred in connection with services provided under the
management agreement. Total management fees incurred amounted to $156,000 for
the year ended December 31, 2000 and are included in general and administrative
expenses on the accompanying consolidated statement of operations. Management
fees payable at December 31, 2000 amounting to $156,000 are included in due to
affiliates on the accompanying consolidated balance sheet.

     HCS also entered into a Technical Services Agreement with Shreveport
Management to provide certain construction and project supervision services
prior to the opening of the Shreveport Casino. HCS reimbursed Shreveport
Management for expenses incurred in connection with services provided under the
Technical Services Agreement. Such costs amounted to $888,000 and $291,000,
respectively, for the years ended December 31, 2000 and 1999. Amounts payable
under the agreement amounting to $105,000 and $56,000 are included in due to
affiliates on the accompanying consolidated balance sheets at December 31, 2000
and 1999, respectively.

     The Shreveport Casino's casino system software was provided and installed
by Advanced Casino Systems Corporation ("ACSC"). ACSC is a wholly owned
subsidiary of Greate Bay Casino Corporation ("GBCC") which has certain officers,
directors and principal shareholders in common with HCC. Total costs incurred in
connection with the installation of the software system amounting to $2,626,000
are included in operating equipment on the accompanying consolidated balance
sheet at December 31, 2000. Unpaid charges of $156,000 are included in due to
affiliates on the accompanying consolidated balance sheet at December 31, 2000.
No such costs were incurred prior to 2000.

     The Shreveport Casino has also entered into a maintenance and support
agreement with ACSC effective as of October 12, 2000 which provides for a
monthly fee of $11,000 (subject to change upon 60

                                       33
<PAGE>

                 HOLLYWOOD CASINO SHREVEPORT AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


days written notice) commencing 90 days after installation of ACSC's casino
system plus additional services at rates charged by ACSC to third parties. The
agreement has an initial term of one year with automatic annual renewals unless
notice of termination is given.

     HCS has also entered into a Marine Services Agreement with Paddlewheels to
provide certain marine services for so long as Paddlewheels remains a joint
venture partner in HCS. The Marine Services Agreement became effective on
September 22, 1998 and, in addition to the reimbursement of Paddlewheels for its
direct expenses incurred, if any, HCS pays a monthly fee of $30,000 effective
with the opening of the Shreveport Casino. HCS expensed $12,000 under the
agreement during 2000 and has included a liability of the same amount in due to
affiliates on the accompanying consolidated balance sheet at December 31, 2000.

(6)  Commitments and Contingencies

     During November 2000, HCS entered into bank revolving credit facilities of
$2,000,000 for working capital needs and $4,000,000 to meet liquidity
requirements under Louisiana gaming regulations. The facilities are available
for a period of one year and advances under both facilities accrue interest at
the Wall Street Journal Prime Rate plus 2%. The agreements contain certain
reporting requirements and advances are subject to specified collateral
agreements. No amounts were outstanding under the credit facilities at December
31, 2000.

     For so long as it remains a joint venture partner in HCS, Paddlewheels will
receive, among other things, an amount equal to 1% of "complex net revenues", as
defined, of the Shreveport Casino, which approximates net revenues, in exchange
for the assignment by Paddlewheels and its affiliates of their joint venture
interest in HCS to HCL and Sodak. Allocations to Paddlewheels of such amounts
are reflected as partnership distributions to HCS I, Inc. and HCS II, Inc. Such
interest amounted to $78,000 during 2000 and is included in due to affiliates on
the accompanying consolidated balance sheet at December 31, 2000.

     On April 23, 2000, the construction site for the Shreveport Casino suffered
tornado damage which delayed the opening of the facility. Management filed
damage claims and received reimbursements from its insurance carrier during 2000
in the amount of approximately $1,700,000 to cover the damage incurred. In
addition, management is seeking to recover lost profits and related claims under
its business interruption insurance coverage. The recovery of these amounts is
currently subject to litigation and management is unable to determine the
amount, if any, that will ultimately be received.

     Third parties could assert obligations against HCS for liabilities that
have arisen or that might arise against QNOV or the former partners with respect
to any period prior to September 22, 1998. Management believes in the event such
a claim arises, it would be adequately covered under either existing
indemnification agreements with the former partners or insurance policies
maintained by QNOV or the former partners.

     HCS is or may become a party in various legal proceedings with respect to
the conduct of casino and hotel operations. Although a possible range of loss
cannot be estimated, in the opinion of management, based upon the advice of
counsel, settlement or resolution of these proceedings should not have a
material adverse impact on the consolidated financial position or results of
operations of HCS and its subsidiaries.

                                       34
<PAGE>

                 HOLLYWOOD CASINO SHREVEPORT AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


(7)  Louisiana Regulatory Matters

     Riverboat gaming operations in Louisiana are subject to regulatory control
by the LGCB. Louisiana law requires that HCS maintain its Owners' License in
order to operate. HCS's Owner's License was renewed by the LGCB through October
15, 2004. If it were determined that gaming laws were violated by a licensee,
the gaming license held by the licensee could be limited, conditioned,
suspended, or revoked. In addition, the licensee and other persons involved
could be subject to substantial fines. Limitation or conditioning or suspension
of any gaming license could, and revocation would, have a materially adverse
affect on the consolidated operations of HCS.

(8)  Employee Retirement Savings Plan

     HCS participates in a retirement savings plan under Section 401(k) of the
Internal Revenue Code sponsored by HCC which covers all of its employees who
meet certain eligibility requirements as to age and period of employment. The
plan allows employees to contribute up to 15% of their salary on a pre-tax basis
(subject to statutory limitations) and invest such monies in a choice of mutual
funds on a tax-deferred basis. HCS matches a portion of the participating
employees' contributions to the plan and may, from time to time, make additional
discretionary contributions. For the year ended December 31, 2000, HCS expensed
$6,000 as company contributions to the plan.

(9)  Supplemental Cash Flow Information

     HCS paid interest, net of amounts capitalized, totaling $8,170,000 during
the year ended December 31, 2000; no interest was paid during the years ended
December 31, 1999 or 1998. HCS paid no income taxes during any of the years
ended December 31, 2000, 1999 or 1998.

     During 2000, HCS I, Inc. and HCS II, Inc. made non-cash capital
contributions to HCS consisting of (1) certain project related costs incurred by
HCL in prior years ($445,000) and (2) the assumption of certain liabilities
($425,000).

     During 2000, HCS obtained proceeds under capital lease obligations
amounting to $30,000,000 used to purchase fixed assets during the construction
period (Note 4).

     During June 2000, HCS I, Inc. and HCS II, Inc. made a non-cash capital
contribution in the amount of $2,499,000 to HCS consisting of project costs
incurred by Sodak which were acquired by HCL and contributed to HCS I, Inc. and
HCS II, Inc.

     The issuance of a note to Hilton by HCS at a discounted face amount of
$1,692,000 (see Note 3(b)) and the associated project costs have been excluded
from the accompanying consolidated statement of cash flows for the year ended
December 31, 1998 as a non-cash transaction.

(10) Disclosures About Fair Value of Financial Instruments

     The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:

     Cash and cash equivalents - The carrying amounts approximate fair value
     -------------------------
because of the short maturity of these instruments.


                                       35
<PAGE>

                 HOLLYWOOD CASINO SHREVEPORT AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


     Interest receivable and interest payable - The carrying amount of interest
     ----------------------------------------
receivable and payable approximates fair value because of the short maturity of
the obligation.

     Cash restricted for construction project - The carrying amounts approximate
     ----------------------------------------
fair value because of the short maturity of these instruments.

     Note payable - The carrying amounts approximate fair value because of the
     ------------
short maturity of these instruments.

     Long-term debt - The fair value of HCS's long-term debt is estimated based
     --------------
on either the quoted market price of the underlying debt issue or on the
discounted cash flow of future payments utilizing current rates available to HCS
for debt of similar remaining maturities. Debt obligations with a short
remaining maturity are valued at the carrying amount.

     The estimated carrying amounts and fair values of HCS's financial
instruments are as follows:

<TABLE>
<CAPTION>
                                      December 31, 2000           December 31, 1999
                                  --------------------------  --------------------------
                                   Carrying                    Carrying
                                    Amount       Fair Value     Amount       Fair Value
                                  ------------  ------------  ------------  ------------
<S>                               <C>           <C>           <C>           <C>

     Financial Assets:
       Cash and cash
         equivalents              $ 37,352,000  $ 37,352,000  $ 19,014,000  $ 19,014,000
       Interest receivable             231,000       231,000     1,432,000     1,432,000
       Cash restricted for
         construction project        9,530,000     9,530,000   147,310,000   147,310,000

     Financial Liabilities:
       Interest payable           $  8,229,000  $  8,229,000  $  7,637,000  $  7,637,000
       13% First Mortgage Note     150,000,000   159,375,000   150,000,000   160,500,000
       Note payable                  1,913,000     1,913,000     1,759,000     1,759,000
       Other notes                      33,000        33,000             -             -
</TABLE>

(11) Selected Quarterly Financial Data (Unaudited)

<TABLE>
<CAPTION>
                                                        Quarter
                                -------------------------------------------------------
                                   First         Second        Third         Fourth
                                ------------  ------------  ------------  -------------
<S>                             <C>           <C>           <C>           <C>

Year Ended December 31, 2000
 Net revenues                   $         -   $         -   $         -   $  7,779,000
                                ===========   ===========   ===========   ============

 Net loss                       $(2,115,000)  $(2,118,000)  $(3,608,000)  $(10,059,000)
                                ===========   ===========   ===========   ============

Year Ended December 31, 1999
 Net revenues                   $         -   $         -   $         -   $          -
                                ===========   ===========   ===========   ============

 Net loss                       $   (24,000)  $    (7,000)  $(1,632,000)  $ (2,632,000)
                                ===========   ===========   ===========   ============
</TABLE>

                                       36
<PAGE>

INDEPENDENT AUDITORS' REPORT


To HWCC-Louisiana, Inc.:

We have audited the accompanying consolidated balance sheets of HWCC-Louisiana,
Inc. (the "Company") and subsidiaries as of December 31, 2000 and 1999, and the
related consolidated statements of operations, changes in shareholder's equity
(deficit) and cash flows for each of the three years in the period ended
December 31, 2000. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States 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 consolidated financial statements present fairly, in all
material respects, the financial position of HWCC-Louisiana, Inc. and
subsidiaries as of December 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States of America.



Deloitte & Touche LLP
Dallas, Texas
March 15, 2001

                                       37
<PAGE>

                     HWCC-LOUISIANA, INC. AND SUBSIDIARIES
                 (wholly owned by Hollywood Casino Corporation)

                      CONSOLIDATED BALANCE SHEETS (NOTE 1)

<TABLE>
<CAPTION>
                                                        December 31,   December 31,
                                                            2000           1999
                                                        ------------   ------------
<S>                                                     <C>            <C>
Assets
Current Assets:
  Cash and cash equivalents                             $ 39,956,000   $ 21,580,000
 Accounts receivable, net of allowance
   of $90,000 in 2000                                        876,000              -
 Inventories                                               1,826,000              -
 Interest receivable                                         234,000      1,432,000
 Prepaid expenses and other current assets                 1,394,000        649,000
                                                        ------------   ------------

    Total current assets                                  44,286,000     23,661,000
                                                        ------------   ------------

Property and Equipment:
 Land improvements                                         1,619,000              -
 Buildings and improvements                               99,825,000              -
 Riverboat                                                44,520,000              -
 Furniture and equipment                                  42,562,000         24,000
 Construction in progress                                  2,621,000     42,571,000
                                                        ------------   ------------

                                                         191,147,000     42,595,000
 Less - accumulated depreciation                            (508,000)        (2,000)
                                                        ------------   ------------

                                                         190,639,000     42,593,000
                                                        ------------   ------------

Cash restricted for construction project                   9,530,000    147,310,000
                                                        ------------   ------------

Other Assets:
 Deferred financing costs, net                             5,978,000      4,928,000
 Note receivable, net of discount of $64,000 in 1999       1,000,000        936,000
 Other                                                       584,000              -
                                                        ------------   ------------

    Total other assets                                     7,562,000      5,864,000
                                                        ------------   ------------

                                                        $252,017,000   $219,428,000
                                                        ============   ============
</TABLE>



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

                                       38
<PAGE>

                     HWCC-LOUISIANA, INC. AND SUBSIDIARIES
                 (wholly owned by Hollywood Casino Corporation)

                      CONSOLIDATED BALANCE SHEETS (NOTE 1)

<TABLE>
<CAPTION>
                                                     December 31,   December 31,
                                                         2000           1999
                                                     ------------   ------------

<S>                                                  <C>            <C>
Liabilities and Shareholder's Equity
Current Liabilities:
 Current maturities of long-term debt
    and capital lease obligations                    $ 11,919,000   $    400,000
 Payable to Sodak Gaming, Inc.                          2,499,000              -
  Accounts payable                                     17,735,000     11,663,000
 Accrued liabilities -
  Salaries and wages                                    2,745,000         35,000
  Interest                                              8,229,000      7,637,000
  Gaming and other taxes                                  128,000              -
  Insurance                                                86,000              -
  Other                                                   662,000              -
 Due to affiliates                                        872,000        334,000
 Other current liabilities                                731,000              -
                                                     ------------   ------------

   Total current liabilities                           45,606,000     20,069,000
                                                     ------------   ------------

Long-Term Debt                                        150,027,000    151,359,000
                                                     ------------   ------------

Capital Lease Obligations                              20,000,000              -
                                                     ------------   ------------

Other Noncurrent Liabilities                               13,000              -
                                                     ------------   ------------

Commitments and Contingencies (Note 8)

Minority Interest (Note 8)                              2,078,000      2,000,000
                                                     ------------   ------------

Shareholder's Equity:
  Common stock, $1 par value per share, 1,000,000
  shares authorized, 1,000 shares issued and
  outstanding                                               1,000          1,000
  Additional paid-in capital                           57,725,000     51,400,000
  Accumulated deficit                                 (23,433,000)    (5,401,000)
                                                     ------------   ------------

 Total shareholder's equity                            34,293,000     46,000,000
                                                     ------------   ------------

                                                     $252,017,000   $219,428,000
                                                     ============   ============
</TABLE>



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

                                       39
<PAGE>

                    HWCC-LOUISIANA, INC.  AND SUBSIDIARIES
                (wholly owned by Hollywood Casino Corporation)

                CONSOLIDATED STATEMENTS OF OPERATIONS (NOTE 1)

<TABLE>
<CAPTION>
                                                         Year Ended December 31,
                                                  -------------------------------------
                                                       2000          1999       1998
                                                  ------------   -----------   --------
<S>                                               <C>            <C>           <C>
Revenues:
 Casino                                           $  7,194,000   $         -   $      -
 Rooms                                                 302,000             -          -
 Food and beverage                                   1,330,000             -          -
 Other                                                  74,000             -          -
                                                  ------------   -----------   --------

                                                     8,900,000             -          -
 Less - promotional allowances                      (1,121,000)            -          -
                                                  ------------   -----------   --------

 Net revenues                                        7,779,000             -          -
                                                  ------------   -----------   --------

Expenses:
 Casino                                              5,218,000             -          -
 Rooms                                                  88,000             -          -
 Food and beverage                                     413,000             -          -
 Other                                                 143,000             -          -
 General and administrative                            587,000        10,000          -
 Preopening and development                         14,794,000     1,024,000     39,000
 Depreciation and amortization                         506,000         2,000          -
                                                  ------------   -----------   --------

  Total expenses                                    21,749,000     1,036,000     39,000
                                                  ------------   -----------   --------

Loss from operations                               (13,970,000)   (1,036,000)   (39,000)
                                                  ------------   -----------   --------

Non-operating (expense) income:
 Interest income                                     6,007,000     3,701,000          -
 Interest expense, net of capitalized interest
   of $11,814,000 and $1,052,000 in 2000
  and 1999, respectively                            (9,991,000)   (6,946,000)         -
                                                  ------------   -----------   --------

  Total non-operating (expense) income              (3,984,000)   (3,245,000)         -
                                                  ------------   -----------   --------

Loss before taxes and other items                  (17,954,000)   (4,281,000)   (39,000)
Income tax benefit                                           -             -          -
                                                  ------------   -----------   --------

Loss before other items                            (17,954,000)   (4,281,000)   (39,000)
Minority interest in Hollywood
 Casino Shreveport (Note 8)                            (78,000)            -          -
Pre-acquisition losses (Note 1)                              -        12,000          -
Equity in losses of Hollywood Casino
 Shreveport (Note 1)                                         -             -    (17,000)
                                                  ------------   -----------   --------

Net loss                                          $(18,032,000)  $(4,269,000)  $(56,000)
                                                  ============   ===========   ========
</TABLE>

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

                                       40
<PAGE>

                     HWCC-LOUISIANA, INC. AND SUBSIDIARIES
                (wholly owned by Hollywood Casino Corporation)

                     CONSOLIDATED STATEMENT OF CHANGES IN
                    SHAREHOLDER'S EQUITY (DEFICIT) (NOTE 1)
                  For the Three Years Ended December 31, 2000

<TABLE>
<CAPTION>

                                           Common Stock        Additional
                                        ------------------      Paid-in        Accumulated
                                        Shares      Amount      Capital          Deficit
                                        ------      ------     -----------     ------------

<S>                                   <C>          <C>        <C>          <C>
BALANCES, January 1, 1998                1,000      $1,000     $         -     $ (1,076,000)
  Capital contributions                      -           -       2,500,000                -
  Net loss                                   -           -               -          (56,000)
                                        ------      ------     -----------     ------------

BALANCES, December 31, 1998              1,000       1,000       2,500,000       (1,132,000)
  Capital contributions                      -           -      48,900,000                -
  Net loss                                   -           -               -       (4,269,000)
                                        ------      ------     -----------     ------------

BALANCES, December 31, 1999              1,000       1,000      51,400,000       (5,401,000)
  Capital contributions                      -           -       6,325,000                -
  Net loss                                   -           -               -      (18,032,000)
                                        ------      ------     -----------     ------------

BALANCES, December 31, 2000              1,000      $1,000     $57,725,000     $(23,433,000)
                                        ======      ======     ===========     ============
</TABLE>



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

                                       41
<PAGE>

                    HWCC - LOUISIANA, INC. AND SUBSIDIARIES
                (wholly owned by Hollywood Casino Corporation)

                CONSOLIDATED STATEMENTS OF CASH FLOWS (NOTE 1)

<TABLE>
<CAPTION>
                                                                    Year Ended December 31,
                                                           -------------------------------------------
                                                                2000            1999          1998
                                                           -------------   -------------   -----------
<S>                                                        <C>             <C>             <C>
OPERATING ACTIVITIES:
 Net loss                                                  $ (18,032,000)  $  (4,269,000)  $   (56,000)
 Adjustments to reconcile net loss to net
  cash (used in) provided by operating activities:
  Depreciation and amortization, including accretion
   of discount                                                 1,594,000         333,000             -
  Minority interest in Hollywood Casino Shreveport                78,000               -             -
  Pre-acquisition losses                                               -          12,000             -
  Write off deferred project costs                                     -               -        10,000
  Equity in losses of Hollywood Casino Shreveport                      -               -        17,000
  Provision for doubtful accounts                                 90,000               -             -
  Increase in accounts receivable                               (966,000)              -             -
  Increase in accounts payable and accrued liabilities        10,250,000      18,818,000        15,000
  Net change in intercompany balances                            963,000        (987,000)      204,000
  Net change in other current assets and liabilities            (671,000)     (2,081,000)       40,000
  Net change in other noncurrent assets and liabilities         (523,000)              -             -
                                                           -------------   -------------   -----------

 Net cash (used in) provided by operating activities          (7,217,000)     11,826,000       230,000
                                                           -------------   -------------   -----------

INVESTING ACTIVITIES:
 Purchases of property and equipment                        (116,117,000)    (38,157,000)     (163,000)
 Net change in cash restricted for construction project      137,780,000    (147,310,000)            -
 Investment in unconsolidated affiliate                          (48,000)              -             -
 Increase in cash from acquisition (Note 1)                            -       1,474,000             -
 Loan to joint venture partner                                         -      (1,000,000)            -
 Investment in Hollywood Casino Shreveport                             -               -    (2,500,000)
                                                           -------------   -------------   -----------

 Net cash provided by (used in) investing activities          21,615,000    (184,993,000)   (2,663,000)
                                                           -------------   -------------   -----------

FINANCING ACTIVITIES:
 Proceeds from issuance of long-term debt                         35,000     150,000,000             -
 Capital contributions                                         5,900,000      48,900,000     2,500,000
 Repayments of long-term debt                                     (2,000)              -             -
 Deferred financing costs                                     (1,955,000)     (5,221,000)            -
 Investment by joint venture partner                                   -       1,000,000             -
                                                           -------------   -------------   -----------

 Net cash provided by financing activities                     3,978,000     194,679,000     2,500,000
                                                           -------------   -------------   -----------

 Net  increase in cash and cash equivalents                   18,376,000      21,512,000        67,000
 Cash and cash equivalents at beginning of year               21,580,000          68,000         1,000
                                                           -------------   -------------   -----------

 Cash and cash equivalents at end of year                  $  39,956,000   $  21,580,000   $    68,000
                                                           =============   =============   ===========
</TABLE>

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

                                       42
<PAGE>

                     HWCC-LOUISIANA, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements


(1)  Organization, History, Business and Basis of Presentation

     HWCC - Louisiana, Inc. ("HCL") is a Louisiana corporation and wholly owned
subsidiary of Hollywood Casino Corporation ("HCC"). HCL was formed in April 1993
for the purpose of obtaining a license to develop and own a riverboat casino in
Louisiana. HCL's initial efforts to obtain sites in Lake Charles and Bossier
City, Louisiana proved unsuccessful. In September 1998, HCL, Sodak Louisiana,
L.L.C. ("Sodak") and Shreveport Paddlewheels, L.L.C. ("Paddlewheels") acquired
the interests of Queen of New Orleans at the Hilton Joint Venture ("QNOV"). QNOV
was a general partnership which owned and operated a riverboat gaming facility
in New Orleans, Louisiana. QNOV ceased operating the riverboat casino in October
1997 having requested and obtained approval from the Louisiana Gaming Control
Board (the "LGCB") to move their licensed site to the city of Shreveport,
approximately 180 miles east of Dallas, Texas. Subsequent to receiving approval
to relocate the license, QNOV made the decision not to conduct gaming operations
in Shreveport. The partners of QNOV sought to transfer the license to operate in
Shreveport to another interested party. Under Louisiana gaming regulations, the
license to operate a riverboat gaming operation is not transferable; however,
the ownership of an entity licensed to operate is transferable, subject to the
approval of the LGCB. Accordingly, the acquisition by HCL, Sodak and
Paddlewheels of the license to operate in Shreveport was structured as an
acquisition of the interests of QNOV's partners. The former partners disposed of
QNOV's assets other than its license to operate and satisfied all but one of its
obligations so that when the former partners withdrew on September 22, 1998
transferring their interests to HCL, Sodak and Paddlewheels, QNOV's only asset
was its license to operate in Shreveport (which had no recorded value) and its
only liability was a $5,000,000 obligation to the City of New Orleans (see
below). HCL, Sodak and Paddlewheels obtained the necessary approvals from the
LGCB to proceed with the project in Shreveport. In June 1999, HCL obtained
approval to change the name of the partnership to Hollywood Casino Shreveport
("HCS").

     Upon admission of the new partners, HCS proceeded with entirely new plans
to develop, own and operate a riverboat gaming complex to be constructed in
Shreveport (the "Shreveport Casino"). The Shreveport Casino was completed and
opened on December 20, 2000. Prior to opening, HCS had no operating activities
other than development, financing and construction activities with respect to
the Shreveport Casino. The Shreveport Casino consists of a three-level riverboat
dockside casino with approximately 1,434 slot machines and 68 table games and a
403-room, all suite, art deco style hotel. The project also includes
approximately 42,000 square feet of restaurant and entertainment facilities
being developed by a third party.

     Riverboat gaming operations in Louisiana are subject to regulatory control
by the LGCB. HCS's current license to operate the Shreveport Casino expires on
October 15, 2004.

     When the former partners of QNOV proposed moving to Shreveport, they
negotiated a settlement with the City of New Orleans to pay $10,000,000 with
respect to claims asserted by the City in connection with the relocation. During
September 1998, HCS, the former partners of QNOV and the City of New Orleans
entered into a Compromise Agreement under which one of QNOV's former partners
agreed to pay $5,000,000 to the City and QNOV was released from any further
relocation claims. The remaining $5,000,000 obligation continued to be reflected
as a liability by HCS until it was paid in August 1999 upon the issuance of
$150,000,000 of 13% First Mortgage Notes with contingent interest due 2006 (the
"First Mortgage Notes") (see Note 4). HCL has treated this $5,000,000 as part of
the cost of acquiring their interest in HCS and has included the cost as an
adjustment to property and equipment on the accompanying consolidated balance
sheets at December 31, 2000 and 1999.

                                       43
<PAGE>

                     HWCC-LOUISIANA, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements


     For the period from September 22, 1998 until April 23, 1999, HCL's
investment in HCS was accounted for under the equity method of accounting. It
was originally anticipated that HCS would develop the Shreveport Casino with
each of HCL and Sodak having a 50% interest in the development and subsequent
operations. Once operations commenced, Paddlewheels was to have a residual
interest in the event that the project was ever sold amounting to 10% plus any
capital contributions made by Paddlewheels to HCS or otherwise credited to their
account (see Note 8). On March 31, 1999, HCL entered into a definitive agreement
with Sodak's parent to acquire Sodak for the $2,500,000 Sodak had contributed to
HCS, with $1,000 to be paid at closing and the remainder to be paid six months
after the opening of the Shreveport Casino (see Note 3). The revised structure
of the partnership was approved by the LGCB on April 20, 1999. As a result, HCL
obtained an effective 100% ownership interest in HCS with Paddlewheels retaining
their 10% residual interest. The acquisition was accounted for under the
purchase method of accounting. Accordingly, effective as of the April 23, 1999
closing of HCL's acquisition of Sodak, Sodak became a consolidated subsidiary of
HCL.

     In July 1999, HCL formed two new, wholly owned subsidiaries, HCS I, Inc.
and HCS II, Inc., both Louisiana corporations. HCL contributed $1,000 of capital
to each entity along with 99% of its interest in HCS to HCS I, Inc. and the
remaining 1% of its interest to HCS II, Inc. In addition, the HCS joint venture
agreement was amended and restated on July 21, 1999, to reflect, among other
things, the admission of HCS I, Inc. and HCS II, Inc. as partners of HCS and the
withdrawal of HCL as managing partner of HCS. As a result, HCS I, Inc. now has
an effective 99% interest in HCS, and has become its managing general partner.
HCS II, Inc. now has an effective 1% interest in HCS. HCS I, Inc. and HCS II,
Inc. currently have no other operating activities or assets other than their
ownership interests in HCS. Paddlewheels retained its 10% residual interest in
HCS. The revised partnership structure was approved by the LGCB on July 20,
1999.

     Additionally, in July 1999, HCS formed a new, wholly owned subsidiary,
Shreveport Capital Corporation ("Shreveport Capital"), a Louisiana corporation.
HCS contributed $1,000 of capital to Shreveport Capital. Shreveport Capital was
formed for the sole purpose of being a co-issuer with respect to the First
Mortgage Notes and is not expected to have any operating activities, acquire any
assets or incur any other liabilities. Accordingly, separate financial
statements of Shreveport Capital are not included herein because management has
determined that such information is not material to investors.

     The accompanying consolidated financial statements reflect (1) the April
23, 1999 acquisition of Sodak and the resulting consolidation of Sodak and HCS
with HCL; (2) the July 1999 formation of HCS I, Inc., HCS II, Inc. and
Shreveport Capital; and (3) the formation during 2000 of HCS-Golf Course, LLC
("Golf") as a wholly owned subsidiary of HCS to own an initial 49% interest in
Shreveport Golf Company, a joint venture formed to develop and operate a golf
course to be used by patrons of the Shreveport Casino. Golf's investment in
Shreveport Golf Company is accounted for under the equity method. As of December
31, 2000, capital contributions amounting to $48,000 have been made to
Shreveport Golf Company and are included in other noncurrent assets on the
accompanying consolidated balance sheet. The accompanying consolidated
statements of operations for the year ended December 31, 1999 reflect the
operations of HCL on a consolidated basis, including Sodak and HCS, for the
period from January 1, 1999 with the pre-acquisition losses of Sodak from its
investment in HCS reflected as a nonoperating item. Sodak had no other
operations during the period presented. All intercompany balances and
transactions have been eliminated in consolidation.

                                       44
<PAGE>

                     HWCC-LOUISIANA, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements


     HCL estimates that a significant amount of the Shreveport Casino's revenues
are derived from patrons living in the Dallas/Ft. Worth and east Texas areas.
The Shreveport Casino faces intense competition from other riverboat gaming
operations in Shreveport and Bossier City, Louisiana and management believes
that this competition will continue in the future.

(2)  Summary of Significant Accounting Policies

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

Casino revenues, promotional allowances and departmental expenses -

     HCS recognizes the net win from gaming activities (the difference between
gaming wins and losses) as casino revenues. Casino revenues are net of accruals
for anticipated payouts of progressive jackpots. Such anticipated jackpot
payouts are included in other accrued liabilities on the accompanying
consolidated balance sheet at December 31, 2000.

     The estimated value of rooms, food and beverage and other items which were
provided to customers without charge has been included in revenues and a
corresponding amount has been deducted as promotional allowances. The cost of
such complimentaries has been included in casino expenses on the accompanying
consolidated statement of operations for the year ended December 31, 2000. Costs
of complimentaries allocated from the rooms, food and beverage and other
operating departments to the casino department amounted to $42,000, $1,276,000
and $49,000, respectively, during the 2000 period subsequent to opening.

Cash and cash equivalents -

     Cash and cash equivalents are generally comprised of cash and investments
with original maturities of three months or less, such as treasury bills and
fixed repurchase agreements.

Cash Restricted for Construction Project -

     Cash restricted for construction project consists of investments in
government securities which are to be used for specified purposes and which were
purchased with net proceeds from the First Mortgage Notes (see Note 3) as
required by the indenture for the First Mortgage Notes. Prior to opening on
December 20, 2000, such restricted cash included (1) funds to be used for
construction which were subject to meeting certain conditions prior to their
disbursement and (2) funds to be used to complete and open the Shreveport Casino
in the event the construction funds in (1) above were not sufficient. Restricted
cash also includes an account with funds to be used to make the first three
semiannual interest payments with respect to the First Mortgage Notes; the
restrictions on such account were removed when the third interest payment was
made on February 1, 2001. Interest earned, but not yet received, on

                                       45
<PAGE>

                     HWCC-LOUISIANA, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements


restricted cash investments is included in interest receivable on the
accompanying consolidated balance sheets. Upon receipt, interest is included in
cash restricted for construction project.

     Cash restricted for construction project is comprised of the following:

<TABLE>
<CAPTION>

                                        December 31,  December 31,
                                            2000           1999
                                        ------------  ------------

<S>                                     <C>           <C>
     Construction reserve                 $        -  $114,964,000
     Interest reserve                      9,530,000    27,275,000
     Completion reserve                            -     5,071,000
                                          ----------  ------------

                                          $9,530,000  $147,310,000
                                          ==========  ============
</TABLE>

Allowance for doubtful accounts -

     The allowance for doubtful accounts is maintained at a level considered
adequate to provide for possible future losses. Provisions for doubtful accounts
amounting to $90,000 were made during the year ended December 31, 2000. No
provisions were required prior to opening.

Inventories -

     Inventories are stated at the lower of cost (on a first-in, first-out
basis) or market.

Property and equipment -

     Property and equipment have been recorded at cost and are being depreciated
utilizing the straight-line method over the estimated useful lives of the assets
as follows:

     Land improvements                            20 years
     Buildings, riverboats and improvements       25-40 years
     Operating equipment                          3-7 years

     A portion of the interest incurred on construction financing was
capitalized during the construction period. Such capitalized costs have been
allocated to the individual components of property and equipment and other
assets and, since opening, are being amortized over the useful lives of the
related assets.

Deferred financing costs -

     The costs of issuing long-term debt, including all underwriting, licensing,
legal and accounting fees, have been deferred and are being amortized over the
term of the related debt issues using either the effective interest method or,
where appropriate, the straight-line method approximating the effective interest
method. Amortization of such costs amounted to $998,000 and $293,000,
respectively, during the years ended December 31, 2000 and 1999 and is included
in interest expense on the accompanying consolidated statements of operations.

                                       46
<PAGE>

                     HWCC-LOUISIANA, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements

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. HCS does not believe that any such events or changes have occurred.

Accrued insurance -

     HCS is self insured for a portion of its general liability, certain health
care and other liability exposures. Accrued insurance includes estimates of such
accrued liabilities based on an evaluation of the merits of individual claims
and historical claims experience; accordingly, HCS's ultimate liability may
differ from the amounts accrued.

Preopening and development costs -

     Preopening and development costs include, among other things,
organizational costs, marketing and promotional costs, hiring and training of
new employees and other operating costs incurred prior to opening the project.
Preopening costs are accounted for under the provisions of Statement of Position
98-5 issued by the American Institute of Certified Public Accountants which
requires that such costs be expensed as incurred.

Employee stock options -

     HCL has adopted the disclosure provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS
123"). SFAS 123 allows an entity to continue to measure compensation cost for
employee stock options using the intrinsic value based method of accounting
prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees" ("Opinion 25"). Entities electing to remain with the
accounting under Opinion 25 are required to make pro forma disclosures of net
income as if the fair value based method of accounting under SFAS 123 had been
applied. HCL, as managing general partner of HCS, has elected to account for
employee-based compensation under Opinion 25. During September 1999, HCC issued
stock options to an employee of HCS for 50,000 shares of HCC common stock at an
exercise price of $2.50 per share, the market price on the date of grant. Pro
forma compensation expense for the year ended December 31, 2000 would be $26,000
and for the period from the grant date (September 16, 1999) through December 31,
1999 would be $8,000.

Income taxes -

     HCL is included in the consolidated federal income tax return of HCC.
Pursuant to agreements between HCL and HCC, HCL's provision for taxes is based
on the amount of tax that would be provided if a separate federal income tax
return were to be filed.

                                       47
<PAGE>

                     HWCC-LOUISIANA, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements

Recent accounting pronouncement -

     In June 1998, the Financial Accounting Standards Board issued a new
statement, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133"), which has been amended to be 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 partners' capital until a hedged transaction occurs.
The adoption of SFAS 133 as of January 1, 2001 had no impact on the consolidated
financial position or results of operations of HCL.

(3)  Acquisition of Sodak Louisiana, L.L.C.

     As discussed in Note 1, HCL acquired Sodak on April 23, 1999 for a cash
payment of $1,000 and contingent consideration of $2,499,000 to be paid six
months after the opening of the Shreveport Casino. At December 31, 1999, the
$2,499,000 difference between Sodak's basis in the assets acquired and the
$1,000 paid by HCL was treated as an adjustment to reduce the recorded amount of
project costs to the amount paid with respect to such costs in accordance with
Accounting Principles Board Statement Number 16, "Business Combinations." Sodak
had no operating activities prior to the acquisition date other than equity from
its investment in HCS and its only asset was its investment in HCS. During the
second quarter of 2000, the contingent consideration was recorded by HCL and
project costs were increased to reflect this additional cost incurred by HCL
(see Note 11). The obligation is reflected on the accompanying consolidated
balance sheet at December 31, 2000 as payable to Sodak Gaming, Inc.

(4)  Long-term Debt

     Long-term debt at December 31, 2000 and 1999 consists of the following:

<TABLE>
<CAPTION>

                                                    December 31,   December 31,
                                                        2000           1999
                                                    ------------   ------------

<S>                                                 <C>            <C>
     13% First Mortgage Notes, with contingent
       interest, due 2006(a)                        $150,000,000   $150,000,000
     Note payable, net of discount of $87,000 and
       $241,000, respectively (b)                      1,913,000      1,759,000
     Other                                                33,000              -
                                                    ------------   ------------

     Total indebtedness                              151,946,000    151,759,000

     Less-current maturities                          (1,919,000)      (400,000)
                                                    ------------   ------------

       Total long-term debt                         $150,027,000   $151,359,000
                                                    ============   ============
</TABLE>

---------------
(a)  In August 1999, HCS and Shreveport Capital issued the First Mortgage Notes.
     Fixed interest on the First Mortgage Notes at the annual rate of 13% is
     payable on each February 1 and August 1. In addition, contingent interest
     accrues and is payable on each interest date after the Shreveport

                                       48
<PAGE>

                     HWCC-LOUISIANA, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements


     Casino begins operations. The amount of contingent interest is equal to 5%
     of the consolidated cash flow of HCS for the applicable period subject to a
     maximum contingent interest of $5,000,000 for any four consecutive fiscal
     quarters.

     The First Mortgage Notes are secured by, among other things, (1) a first
     priority security interest in the net proceeds from the issue of the First
     Mortgage Notes; (2) a first priority security interest in substantially all
     of the assets that will comprise the Shreveport Casino other than up to
     $35,000,000 in assets secured by equipment financing; (3) a collateral
     assignment of the Shreveport Casino's interest in the principal agreements
     under which it will be constructed, operated and managed; and (4) a
     collateral assignment of certain licenses and permits with respect to the
     construction, operation and management of the Shreveport Casino. In
     addition, the First Mortgage Notes are guaranteed on a senior secured basis
     by HCL, HCS I, Inc. and HCS II, Inc. (collectively, the "Guarantors"). Such
     guarantees are secured by a first priority secured interest in
     substantially all of the Guarantors' assets, including a pledge of the
     capital stock of HCS I, Inc. and HCS II, Inc. and their partnership
     interests in HCS. The security interest does not include $2,499,000 held by
     HCL to fund its acquisition of Sodak (see Note 1).

     The First Mortgage Notes may be redeemed at any time on or after August 1,
     2003 at 106.5% of the then outstanding principal amount, decreasing to
     103.25% and 100% on August 1, 2004 and 2005, respectively. HCS may also
     redeem up to 35% of the First Mortgage Notes at a redemption price of 113%
     plus accrued interest at any time prior to August 1, 2002 with the net cash
     proceeds of an equity offering by HCC resulting in at least $20,000,000,
     but only to the extent that such proceeds are contributed by HCC as equity
     to HCS.

     The indenture to the First Mortgage Notes contains various provisions
     limiting the ability of HCS to borrow money, pay distributions on its
     equity interests or prepay debt, make investments, create liens, sell its
     assets or enter into mergers or consolidations. In addition, the indenture
     restricts the ability of the Guarantors and Shreveport Capital Corporation
     to acquire additional assets, become liable for additional obligations or
     engage in any significant business activities.

(b)  The partners of HCS agreed that HCS would contingently reimburse Hilton for
     $2,000,000 it paid in connection with the relocation of the license to
     Shreveport (see Note 1); such repayment is to be made in monthly
     installments of $200,000, without interest, commencing with the opening of
     the Shreveport Casino. The $2,000,000 liability, net of a discount in the
     original amount of $308,000, and the related adjustment to the recorded
     value of project costs were recorded upon the issuance of the First
     Mortgage Notes in August 1999.

                                       49
<PAGE>

                     HWCC-LOUISIANA, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements


     Scheduled payments of long-term debt as of December 31, 2000 are set forth
below:

<TABLE>
<S>                      <C>
     2001                $  2,006,000
     2002                       6,000
     2003                       7,000
     2004                       8,000
     2005                       6,000
     Thereafter           150,000,000
                         ------------

                         $152,033,000
                         ============
</TABLE>

(5)  Leases

     Capital Lease -

     HCS entered into a financing lease agreement with third party lessors for
$30,000,000 to acquire furniture, fixtures and equipment for the Shreveport
Casino. During the construction period, HCS paid only interest on outstanding
borrowings together with a fee of .5% per annum on the undrawn portion of the
$30,000,000. Effective with the opening of the Shreveport Casino, the
outstanding borrowings became payable in equal quarterly installments plus
interest at LIBOR plus 4% (currently 10.57%) over a three year period to fully
amortize the obligation. The lease is treated as a capital lease for financial
reporting purposes. Borrowings under the lease are collateralized by the
furniture, fixture and equipment purchased. The lease agreement contains certain
covenants substantially similar to those included in the indenture for the First
Mortgage Notes (see Note 4).

     The original cost of the assets acquired under the capital lease agreements
is included in furniture and equipment on the accompanying consolidated balance
sheet at December 31, 2000 in the amount of $30,000,000. Amortization expense
with respect to these assets amounted to $172,000 during the year ended December
31, 2000 with the same amount included in accumulated amortization at December
31, 2000.

     Future minimum lease payments under the capital lease obligation are as
follows:

<TABLE>
<S>                                                   <C>
     2001                                             $ 12,740,000
     2002                                               11,696,000
     2003                                               10,652,000
                                                      ------------

     Total minimum lease payments                       35,088,000
     Less - amount representing interest                (5,088,000)
                                                      ------------

     Present value of future minimum lease payments     30,000,000
     Current capital lease obligation                  (10,000,000)
                                                      ------------

     Long-term capital lease obligation               $ 20,000,000
                                                      ============
</TABLE>

                                       50
<PAGE>

                     HWCC-LOUISIANA, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements


     Operating Leases -

     In May 1999, HCS entered into a ground lease with the City of Shreveport
for the land on which the Shreveport Casino was built. The term of the lease
began when construction commenced and will end on the tenth anniversary of the
date the Shreveport Casino opened. HCS has options to renew the lease on the
same terms for up to an additional forty years. The lease may be further renewed
after that time at prevailing rates and terms for similar leases. The City of
Shreveport may terminate the lease as a result of, among other things, a default
by HCS under the lease. HCS may terminate the lease at any time if the operation
of the Shreveport Casino becomes uneconomic. Base rental payments under the
lease were $10,000 per month during the construction period. The base rental
amount increased to $450,000 per year upon opening and continue at that amount
for the remainder of the initial ten-year lease term. During the first five-year
renewal term, the base annual rental will be $402,500. Subsequent renewal period
base rental payments will increase by 15% during each of the next four five-year
renewal terms with no further increases. In addition to the base rent, HCS pays
monthly percentage rent of not less than $500,000 per year equal to 1% of
monthly adjusted gross revenues and the amount, if any, by which monthly parking
facilities net income exceeds the parking income credit, as all such terms are
defined in the lease agreement. Ground lease rentals amounted to $213,000 and
$56,000, respectively, for the years ended December 31, 2000 and 1999, including
percentage rentals amounting to $78,000 during 2000. Costs incurred under the
ground lease during the construction period were capitalized. In addition, the
ground lease agreement also calls for payments in lieu of admission fees to the
City of Shreveport and payments to the local school board amounting to 3.225%
and .5375% of Net Gaming Proceeds (as defined in the agreement), respectively.
The payments in lieu of admission fees are subject to an initial credit of
$600,000. These additional charges amounted to $304,000 during the 2000 period
subsequent to opening.

     HCS also leases office space, warehouse space and certain equipment under
lease agreements accounted for as operating leases. The lease agreements expire
at various dates through 2005. Total rental expense for such leases amounted to
$324,000 and $9,000, respectively, during the years ended December 31, 2000 and
1999.

     Future minimum lease payments as of December 31, 2000 under operating lease
obligations (other than the ground lease) having an initial or remaining
noncancellable term in excess of one year are as follows:

<TABLE>
<S>                                                            <C>
     2001                                                      $    392,000
     2002                                                           396,000
     2003                                                           338,000
     2004                                                           204,000
     2005                                                           125,000
                                                                -----------

                                                                $ 1,455,000
                                                                ===========
</TABLE>

                                       51
<PAGE>

                     HWCC-LOUISIANA, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements


(6)  Income Taxes

     HCT's benefit for income taxes consists of the following:

<TABLE>
<CAPTION>
                                                          Year Ended December 31,
                                                  ---------------------------------------
                                                     2000          1999          1998
                                                  -----------   -----------   -----------
<S>                                               <C>           <C>           <C>
Deferred benefit:
 Federal                                          $ 5,623,000   $ 1,362,000   $      8,000
 State                                              1,442,000       338,000          1,000
Change in valuation allowance                      (7,065,000)   (1,700,000)        (9,000)
                                                  -----------   -----------   ------------

                                                  $         -   $         -   $          -
                                                  ===========   ===========   ============
</TABLE>

     A reconciliation between the calculated tax benefit on losses based on the
statutory rates in effect and the effective tax rates for the years ended
December 31, 2000, 1999 and 1998 follows:

<TABLE>
<CAPTION>
                                                          Year Ended December 31,
                                                  ---------------------------------------
                                                     2000          1999          1998
                                                  -----------   -----------   -----------

<S>                                               <C>           <C>           <C>
Calculated income tax benefit                     $ 6,131,000   $ 1,451,000    $    9,000
Valuation allowance change                         (7,065,000)   (1,700,000)       (9,000)
State income taxes, net of federal provision          952,000       223,000         1,000
Other                                                 (18,000)       26,000        (1,000)
                                                  -----------   -----------    ----------

Tax benefit as shown on statement
  of operations                                   $         -   $         -    $        -
                                                  ===========   ===========    ==========
</TABLE>

     Deferred income taxes result primarily from the use of the allowance method
rather than the direct write-off method for doubtful accounts, the use of
accelerated methods of depreciation for federal income tax purposes and
differences in the timing of deductions taken between tax and financial
reporting purposes for the amortization of preopening costs, the capitalization
of interest and other accruals.

     At December 31, 2000, HCL has net operating loss carryforwards ("NOL's")
for federal income tax purposes totaling approximately $5,546,000 which do not
begin to expire until the year 2012. Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes", requires that the tax benefit of such
NOL's, together with the tax benefit of deferred tax assets resulting from
temporary differences, be recorded as an asset and, to the extent that
management can not assess that the utilization of all or a portion of such
deferred tax assets is more likely than not, a valuation allowance should be
recorded. Based on the losses incurred to date and the lack of historical
operating activity upon which to estimate future taxable income, management has
provided valuation allowances to fully reserve the net deferred tax assets for
all periods presented.

                                       52
<PAGE>

                     HWCC-LOUISIANA, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements


     The components of HCL's net deferred tax asset are as follows:

<TABLE>
<CAPTION>
                                                     December 31,
                                              --------------------------
                                                     2000          1999
                                              -----------   -----------
<S>                                           <C>           <C>
     Deferred tax assets:
       Net operating loss carryforwards       $ 6,407,000   $ 1,571,000
       Preopening expenses                      6,271,000       460,000
       Allowance for doubtful accounts             35,000             -
       Write off of deferred project costs              -        49,000
       Other liabilities and accruals             269,000        12,000
                                              -----------   -----------

         Total deferred tax assets             12,982,000     2,092,000

     Deferred tax liabilities:
       Depreciation and amortization           (3,825,000)            -
                                              -----------   -----------

     Net deferred tax asset                     9,157,000     2,092,000
     Valuation allowance                       (9,157,000)   (2,092,000)
                                              -----------   -----------

                                              $         -   $         -
                                              ===========   ===========
</TABLE>

(7)  Transactions with Affiliates

     The operations of the Shreveport Casino are managed by HWCC - Shreveport,
Inc. ("Shreveport Management"), a wholly owned subsidiary of HCC, under the
terms of a management agreement. The management agreement became effective when
the LGCB approved the development of the Shreveport Casino and will remain in
effect as long as HCS holds its license, unless sooner terminated in accordance
with its terms. Under the terms of the management agreement, HCS pays Shreveport
Management basic and incentive management fees for its services. The basic fee
is equal to 2% of gross revenues, as defined in the agreement, from the
operations of the Shreveport Casino. The incentive fee is equal to the sum of
(1) 5% of earnings before interest, taxes, depreciation and amortization
("EBITDA"), as defined in the agreement, in excess of $25,000,000 and up to
$35,000,000; (2) 7% of EBITDA in excess of $35,000,000 and up to $40,000,000;
and (3) 10% of EBITDA over $40,000,000. In addition, HCS reimburses Shreveport
Management for expenses incurred in connection with services provided under the
management agreement. Total management fees incurred amounted to $156,000 for
the year ended December 31, 2000 and are included in general and administrative
expenses on the accompanying consolidated statement of operations. Management
fees payable at December 31, 2000 amounting to $156,000 are included in due to
affiliates on the accompanying consolidated balance sheet.

     HCS also entered into a Technical Services Agreement with Shreveport
Management to provide certain construction and project supervision services
prior to the opening of the Shreveport Casino. HCS reimbursed Shreveport
Management for expenses incurred in connection with services provided under the
Technical Services Agreement. Such costs amounted to $888,000 and $291,000,
respectively, for the years ended December 31, 2000 and 1999. Amounts payable
under the agreement amounting to $105,000 and $56,000 are included in due to
affiliates on the accompanying consolidated balance sheets at December 31, 2000
and 1999, respectively.

                                       53
<PAGE>

                     HWCC-LOUISIANA, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements


     Prior to 2000, HCL was billed by subsidiaries of HCC for certain
administrative and other service performed by their employees on behalf of HCL.
Such charges amounted to $170,000 and $153,000, respectively, during the years
ended December 31, 1999 and 1998. Amounts payable amounting to $64,000 are
included in due to affiliates on the accompanying consolidated balance sheet at
December 31,1999; no such amounts were outstanding at December 31, 2000. During
April 1999, HCC made a capital contribution to HCL of $1,400,000. Proceeds from
the capital contribution were used to repay HCC and its subsidiaries with
respect to such charges and to reimburse HCC for its payment of other third
party billings.

     The Shreveport Casino's casino system software was provided and installed
by Advanced Casino Systems Corporation ("ACSC"). ACSC is a wholly owned
subsidiary of Greate Bay Casino Corporation ("GBCC") which has certain officers,
directors and principal shareholders in common with HCC. Total costs incurred in
connection with the installation of the software system amounting to $2,626,000
are included in operating equipment on the accompanying consolidated balance
sheet at December 31, 2000. Unpaid charges of $156,000 are included in due to
affiliates on the accompanying consolidated balance sheet at December 31, 2000.
No such costs were incurred prior to 2000.

     The Shreveport Casino has also entered into a maintenance and support
agreement with ACSC effective as of October 12, 2000 which provides for a
monthly fee of $11,000 (subject to change upon 60 days written notice)
commencing 90 days after installation of ACSC's casino system plus additional
services at rates charged by ACSC to third parties. The agreement has an initial
term of one year with automatic annual renewals unless notice of termination is
given.

     HCS has also entered into a Marine Services Agreement with Paddlewheels to
provide certain marine services for so long as Paddlewheels remains a joint
venture partner in HCS. The Marine Services Agreement became effective on
September 22, 1998 and, in addition to the reimbursement of Paddlewheels for its
direct expenses incurred, if any, HCS pays a monthly fee of $30,000 effective
with the opening of the Shreveport Casino. HCS expensed $12,000 under the
agreement during 2000 and has included a liability of the same amount in due to
affiliates on the accompanying consolidated balance sheet at December 31, 2000.

(8)  Commitments and Contingencies

     During November 2000, HCS entered into bank revolving credit facilities of
$2,000,000 for working capital needs and $4,000,000 to meet liquidity
requirements under Louisiana gaming regulations. The facilities are available
for a period of one year and advances under both facilities accrue interest at
the Wall Street Journal Prime Rate plus 2%. The agreements contain certain
reporting requirements and advances are subject to specified collateral
agreements. No amounts were outstanding under the credit facilities at December
31, 2000.

     HCL agreed that upon obtaining construction financing for the Shreveport
Casino, it would loan $1,000,000 to Paddlewheels which Paddlewheels would use to
make a $1,000,000 capital contribution to HCS. HCL loaned the $1,000,000 to
Paddlewheels and Paddlewheels made its capital contribution to HCS in August
1999; the $1,000,000 is included in minority interest on the accompanying
consolidated balance sheets of HCL at both December 31, 2000 and 1999. The loan
to Paddlewheels earns interest at the rate of prime commencing with the opening
of the Shreveport Casino and will be payable monthly.

                                       54
<PAGE>

                     HWCC-LOUISIANA, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements


Because the loan had no stated interest prior to completion of the Shreveport
Casino, HCL recorded a discount on the note which was accreted during the
construction period resulting in a note receivable balance of $1,000,000 at the
opening date. Principle on the loan is due to be repaid on December 20, 2010.

     Paddlewheels was also given credit for an additional $1,000,000 capital
contribution at the time construction financing was obtained and the $5,000,000
liability described in Note 1 was paid. Such credit was in recognition of
guarantees provided by an affiliate of Paddlewheels necessary to obtain LGCB
approval for the Shreveport Casino. The additional $1,000,000 credit to
Paddlewheels's capital account results in an additional $1,000,000 minority
interest on HCL's consolidated balance sheets and has been treated as an
additional project cost.

     For so long as it remains a joint venture partner in HCS, Paddlewheels will
receive, among other things, an amount equal to 1% of "complex net revenues", as
defined, of the Shreveport Casino, which approximates net revenues, in exchange
for the assignment by Paddlewheels and its affiliates of their joint venture
interest in HCS to HCL and Sodak. Allocations to Paddlewheels are reflected as
minority interest in Hollywood Casino Shreveport on the accompanying
consolidated statement of operations for the year ended December 31, 2000. Such
interest amounted to $78,000 during 2000 and is included in minority interest on
the accompanying consolidated balance sheet at December 31, 2000.

     On April 23, 2000, the construction site for the Shreveport Casino suffered
tornado damage which delayed the opening of the facility. Management filed
damage claims and received reimbursements from its insurance carrier during 2000
in the amount of approximately $1,700,000 to cover the damage incurred. In
addition, management is seeking to recover lost profits and related claims under
its business interruption insurance coverage. The recovery of these amounts is
currently subject to litigation and management is unable to determine the
amount, if any, that will ultimately be received.

     Third parties could assert obligations against HCS for liabilities that
have arisen or that might arise against QNOV or the former partners with respect
to any period prior to September 22, 1998. Management believes in the event such
a claim arises, it would be adequately covered under either existing
indemnification agreements with the former partners or insurance policies
maintained by QNOV or the former partners.

     HCS is or may become a party in various legal proceedings with respect to
the conduct of casino and hotel operations. Although a possible range of loss
cannot be estimated, in the opinion of management, based upon the advice of
counsel, settlement or resolution of these proceedings should not have a
material adverse impact on the consolidated financial position or results of
operations of HCS and its subsidiaries.

(9)  Louisiana Regulatory Matters

     Riverboat gaming operations in Louisiana are subject to regulatory control
by the LGCB. Louisiana law requires that HCS maintain its Owners' License in
order to operate. HCS's Owner's License was renewed by the LGCB through October
15, 2004. If it were determined that gaming laws were violated by a licensee,
the gaming license held by the licensee could be limited, conditioned,

                                       55
<PAGE>

                     HWCC-LOUISIANA, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements

suspended, or revoked. In addition, the licensee and other persons involved
could be subject to substantial fines. Limitation or conditioning or suspension
of any gaming license could, and revocation would, have a materially adverse
affect on the consolidated operations of HCS.

(10) Employee Retirement Savings Plan

     HCS participates in a retirement savings plan under Section 401(k) of the
Internal Revenue Code sponsored by HCC which covers all of its employees who
meet certain eligibility requirements as to age and period of employment. The
plan allows employees to contribute up to 15% of their salary on a pre-tax basis
(subject to statutory limitations) and invest such monies in a choice of mutual
funds on a tax-deferred basis. HCS matches a portion of the participating
employees' contributions to the plan and may, from time to time, make additional
discretionary contributions. For the year ended December 31, 2000, HCS expensed
$6,000 as company contributions to the plan.

(11) Supplemental Cash Flow Information

     HCL paid interest, net of amounts capitalized, totaling $8,170,000 during
the year ended December 31, 2000; no interest was paid during the years ended
December 31, 1999 or 1998. HCS paid no income taxes during any of the years
ended December 31, 2000, 1999 or 1998.

     During 2000, HCC made non-cash capital contributions to HCL in the amount
of $425,000 consisting of the assumption of certain liabilities.

     During 2000, HCS obtained proceeds under capital lease obligations
amounting to $30,000,000 used to purchase fixed assets during the construction
period (Note 5).

     The additional $1,000,000 credit given to HCL's joint venture partner as an
additional contribution to the Shreveport Partnership (see Note 8) and the
corresponding addition to construction in progress have been excluded from the
accompanying consolidated statement of cash flows for the year ended December
31, 1999 as a non-cash transaction.

     The issuance of a note to Hilton by HCS at a discounted face amount of
$1,692,000 (see Note 4(b)) and the associated project costs have been excluded
from the accompanying consolidated statement of cash flows for the year ended
December 31, 1998 as a non-cash transaction.

     In connection with the acquisition of Sodak, HCL assumed the following
liabilities:

<TABLE>
<S>                                                  <C>
     Fair value of non-cash assets acquired          $ 1,465,000
     Cash acquired                                     1,525,000
     Contingent liability for purchase                (2,499,000)
     Pre-acquisition losses attributable to joint
       venture partner                                    12,000
     Cash paid for capital stock                          (1,000)
                                                     -----------

     Liabilities assumed                             $   502,000
                                                     ===========
</TABLE>

                                       56
<PAGE>

                     HWCC-LOUISIANA, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements


     The contingent liability of $2,499,000 shown above and described in Note 3
was recorded as a non-cash transaction during 2000.

(12) Disclosures About Fair Value of Financial Instruments

     The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:

     Cash and cash equivalents - The carrying amounts approximate fair value
     -------------------------
because of the short maturity of these instruments.

     Interest receivable and interest payable - The carrying amount of interest
     ----------------------------------------
receivable and payable approximates fair value because of the short maturity of
the obligation.

     Cash restricted for construction project - The carrying amounts approximate
     ----------------------------------------
fair value because of the short maturity of these instruments.

     Payable to Sodak Gaming, Inc. and note payable - The carrying amounts
     ----------------------------------------------
approximate fair value because of the short maturity of these instruments.

     Long-term debt - The fair value of HCS's long-term debt is estimated based
     --------------
on either the quoted market price of the underlying debt issue or on the
discounted cash flow of future payments utilizing current rates available to HCS
for debt of similar remaining maturities. Debt obligations with a short
remaining maturity are valued at the carrying amount.

     The estimated carrying amounts and fair values of HCL's financial
instruments are as follows:

<TABLE>
<CAPTION>
                                      December 31, 2000           December 31, 1999
                                  --------------------------  --------------------------
                                   Carrying                     Carrying
                                    Amount       Fair Value      Amount      Fair Value
                                  ------------  ------------  ------------  ------------
<S>                               <C>           <C>           <C>           <C>

     Financial Assets:
       Cash and cash
         equivalents              $ 39,956,000  $ 39,956,000  $ 21,580,000  $ 21,580,000
       Interest receivable             234,000       234,000     1,432,000     1,432,000
       Cash restricted for
         construction project        9,530,000     9,530,000   147,310,000   147,310,000

     Financial Liabilities:
       Payable to Sodak
          Gaming, Inc.            $  2,499,000  $  2,499,000  $          -  $          -
       Interest payable              8,229,000     8,229,000     7,637,000     7,637,000
       13% First Mortgage Note     150,000,000   159,375,000   150,000,000   160,500,000
       Note payable                  1,913,000     1,913,000     1,759,000     1,759,000
       Other notes                      33,000        33,000             -             -
</TABLE>

                                       57
<PAGE>

                     HWCC-LOUISIANA, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements

(13) Selected Quarterly Financial Data (Unaudited)

<TABLE>
<CAPTION>
                                                        Quarter
                                -------------------------------------------------------
                                   First         Second        Third         Fourth
                                ------------  ------------  ------------  -------------
<S>                             <C>           <C>           <C>           <C>

Year Ended December 31, 2000
 Net revenues                   $         -   $         -   $         -   $  7,779,000
                                ===========   ===========   ===========   ============

 Net loss                       $(2,136,000)  $(2,139,000)  $(3,626,000)  $(10,131,000)
                                ===========   ===========   ===========   ============

Year Ended December 31, 1999
 Net revenues                   $         -   $         -   $         -   $          -
                                ===========   ===========   ===========   ============

 Net loss                       $   (18,000)  $   (23,000)  $(1,638,000)  $ (2,590,000)
                                ===========   ===========   ===========   ============
</TABLE>

(14) Reclassifications

     Certain reclassifications have been made to the prior years' consolidated
financial statements to conform to the 2000 consolidated financial statement
presentation.

                                       58
<PAGE>

                                    PART IV

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

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

     1.   Financial Statements

          The financial statements filed as part of this report are listed on
     the Index to Financial Statements on page 18.

     2.   Financial Statement Schedules

     Hollywood Casino Shreveport
     ---------------------------

     --  Independent Auditors' Report
     --  Schedule II; Valuation and Qualifying Accounts

     HWCC-Louisiana, Inc.
     --------------------

     --  Independent Auditors' Report
     --  Schedule II; Valuation and Qualifying Accounts

     All other schedules for which provision is made in the applicable
     accounting regulations of the Securities and Exchange Commission are not
     required under the related instructions or are inapplicable and therefore
     have been omitted.

     3.   Exhibits

   +++3.1  --  Third Amended and Restated Joint Venture Agreement of Hollywood
               Casino Shreveport by and among Shreveport Paddlewheels, L.L.C.,
               HCS I, Inc. and HCS II, Inc., dated as of July 21, 1999. (Exhibit
               3.1)
   +++3.2  --  August 1999 Amendment to Third Amended and Restated Joint Venture
               Agreement between Shreveport Paddlewheels, L.L.C., HCS I, Inc.
               and HCS II, Inc. (Exhibit 3.2)
   +++3.3  --  Articles of incorporation of Shreveport Capital Corporation.
               (Exhibit 3.3)
   +++3.4  --  Bylaws of Shreveport Capital Corporation. (Exhibit 3.4)
   +++3.5  --  Articles of incorporation of HWCC-Louisiana, Inc. (Exhibit 3.5)
   +++3.6  --  Bylaws of Hollywood Casino - Lake Charles, Inc. (now known as
               HWCC-Louisiana, Inc. (Exhibit 3.6)
   +++3.7  --  Articles of incorporation of HCS I, Inc. (Exhibit 3.7)
   +++3.8  --  Bylaws of HCS I, Inc. (Exhibit 3.8)
   +++3.9  --  Articles of incorporation of HCS II, Inc. (Exhibit 3.9)
  +++3.10  --  Bylaws of HCS II, Inc. (Exhibit 3.10)
     +4.1  --  Indenture among Hollywood Casino Shreveport and Shreveport
               Capital Corporation ("SCC") as Co-Issuers, and HWCC-Louisiana,
               Inc. ("HCL"), HCS I, Inc. and HCS II, Inc., as Guarantors, and
               State Street Bank and Trust Company, as Trustee, dated as of
               August 10, 1999. (Exhibit 4.1)
     +4.2  --  Registration Rights Agreement, dated as of August 10, 1999, by
               and among Hollywood Casino Shreveport, SCC, the Guarantors named
               therein and the Initial Purchasers. (Exhibit 4.2)
     +4.3  --  Collateral Assignment of Contracts and Documents dated August 10,
               1999 between Hollywood Casino Shreveport and State Street Bank
               and Trust Company, as Trustee. (Exhibit 4.3)
     +4.4  --  Security Agreement dated August 10, 1999 between Hollywood Casino
               Shreveport and State

                                       59
<PAGE>

               Street Bank and Trust Company, as Trustee. (Exhibit 4.4)
     +4.5  --  Partnership Interest Pledge Agreement dated August 10, 1999 made
               by HCS I, Inc. in favor of State Street Bank and Trust Company,
               as Trustee and Secured Party. (Exhibit 4.5)
     +4.6  --  Cash Collateral and Disbursement Agreement dated August 10, 1999
               between Hollywood Casino Shreveport, SCC, First American Title
               Insurance Company, as Disbursement Agent and State Street Bank
               and Trust Company, as Trustee. (Exhibit 4.6)
     #4.7  --  First Amendment to Cash Collateral and Disbursement Agreement
               dated January 1, 2000 between Hollywood Casino Shreveport, SCC,
               First American Title Insurance Company and State Street Bank and
               Trust Company. (Exhibit 4.24)
     +4.8  --  Stock Pledge Agreement dated August 10, 1999 made by HCL in favor
               of State Street Bank and Trust Company, as Trustee. (Exhibit 4.7)
     +4.9  --  Security Agreement dated August 10, 1999 made by SCC, HCL, HCS I,
               Inc. and HCS II, Inc. to State Street Bank and Trust Company, as
               Trustee and Secured Party. (Exhibit 4.8)
    +4.10  --  Security Agreement - Vessel Construction dated August 10, 1999
               between Hollywood Casino Shreveport and State Street Bank and
               Trust Company, as Trustee. (Exhibit 4.9)
    +4.11  --  Mortgage, Leasehold Mortgage and Assignment of Leases and Rents
               made by Hollywood Casino Shreveport in favor of State Street Bank
               and Trust Company, as Mortgagee, dated August 10, 1999. (Exhibit
               4.10)
    +4.12  --  Partnership Interest Pledge Agreement dated August 10, 1999 made
               by HCS II, Inc. in favor of State Street Bank and Trust Company,
               as Trustee and Secured Party. (Exhibit 4.11)
    +4.13  --  First Amendment to Security Agreement dated August 10, 1999
               between HWCC-Shreveport, Inc. and State Street Bank and Trust
               Company, as Trustee. (Exhibit 4.12)
  ###10.1  --  Amended and Restated Joint Venture Agreement by and among
               Shreveport Paddlewheels, L.L.C., Sodak Louisiana, L.L.C. and
               HWCC-Louisiana, Inc. dated July 31, 1998. (Exhibit 10.1)
  ###10.2  --  September 1998 Amendment to the July Amended and Restated Joint
               Venture Agreement. (Exhibit 10.2)
   ##10.3  --  Membership Interest Purchase Agreement dated as of March 31, 1999
               by and among HWCC-Louisiana, Inc., Sodak Gaming, Inc. and Sodak
               Louisiana, L.L.C. (Exhibit 10.32)
    +10.4  --  Amended and Restated Federal Income Tax Sharing Agreement dated
               August 10, 1999 by and among HCC, HWCC Development Corporation,
               Hollywood Management, Inc., HCT, Golf, HCA, HWCC-Shreveport,
               Inc., HWCC-Argentina, Inc., HCL, HWCC Holdings, Inc., HWCC-Aurora
               Management, Inc., HWCC-Transportation, Inc., HCS I, Inc. and HCS
               II, Inc. (Exhibit 10.16)
   ++10.5  --  Completion Capital Agreement, dated as of August 10, 1999, by and
               among Hollywood Casino Shreveport, HCL, HCS I, Inc., HCS II, Inc.
               and HCC. (Exhibit 10.2)
   ++10.6  --  Manager Subordination Agreement, dated as of August 10, 1999, by
               and among State Street Bank and Trust Company, as Trustee, HWCC-
               Shreveport, Inc. and Hollywood Casino Shreveport. (Exhibit 10.3)
    +10.7  --  Technical Services Agreement, dated as of September 22, 1998, by
               and between QNOV and HWCC-Shreveport, Inc. (Exhibit 10.4)
    +10.8  --  Vessel Construction Contract, dated July 16, 1999, by and between
               Leevac Shipyards, Inc. and Hollywood Casino Shreveport. (Exhibit
               10.5)
    +10.9  --  Employment Agreement, dated August 4, 1999, by and between HWCC
               Development Corporation and Juris Basens. (Exhibit 10.6)
   +10.10  --  Compromise Agreement, dated September 15, 1998, by and among
               Hilton New Orleans Corporation, New Orleans Paddlewheels, Inc.,
               Queen of New Orleans at the Hilton Joint Venture and the City of
               New Orleans. (Exhibit 10.7)
   +10.11  --  Loan and Settlement Agreement, dated January 16, 1998, by and
               among New Orleans Paddlewheels, Inc., Shreveport Paddlewheels,
               L.L.C., HCL, Sodak Louisiana L.L.C. and Hilton New Orleans
               Corporation. (Exhibit 10.11)
   +10.12  --  Retail Space Lease, executed as of June 3, 1999 by and between
               QNOV and Red River Entertainment Company, L.L.C. (Exhibit 10.12)
   +10.13  --  Ground Lease, dated May 19, 1999, by and between the City of
               Shreveport, Louisiana and QNOV. (Exhibit 10.13)
   +10.14  --  Marine Services Agreement dated September 22, 1998 between QNOV
               and Shreveport Paddlewheels, L.L.C. (Exhibit 10.17)


                                       60
<PAGE>

   +10.15  --  Side Agreement dated January 16, 1998 between Queen of New
               Orleans at the Hilton Joint Venture, HCL, and Sodak, L.L.C.
               (Exhibit 10.18)
   +10.16  --  Loan Agreement dated August 10, 1999 between Shreveport
               Paddlewheels, L.L.C. and HCL. (Exhibit 10.19)
   +10.17  --  Promissory note dated August 10, 1999 in the original principal
               amount of $1,000,000 made by Shreveport Paddlewheels, L.L.C., as
               Borrower to HCL, as Lender. (Exhibit 10.20 )
   +10.18  --  Security Agreement dated August 10, 1999 made by Shreveport
               Paddlehwheels, L.L.C., as Debtor, in favor of HCL, as Secured
               Party. (Exhibit 10.21)
   +10.19  --  Guaranty Agreement dated August 10, 1999 made by New Orleans
               Paddlewheels, L.L.C. in favor of HCL. (Exhibit 10.22)
   +10.20  --  Contribution and Assumption Agreement dated July 21, 1999 among
               HCL, HCS I, Inc., HCS II, Inc. and Shreveport Paddlewheels,
               L.L.C. (Exhibit 10.24)
++++10.21  --  Form of Participation Agreement and related agreements among
               Hollywood Casino Shreveport, First Security Bank, National
               Association, the several lenders party thereto, First Security
               Trust Company of Nevada, as Administrative Agent, and Bank of
               America, National Association, as Arranger and Documentation
               Agent. (Exhibit 10.27)
   @10.22  --  Management Services Agreement dated September 22, 1998 by and
               between QNOV and HWCC-Shreveport, Inc. (Exhibit 10.1)
   @10.23  --  Amendment to Management Services Agreement dated August 2, 1999
               by and between Hollywood Casino Shreveport (formerly QNOV) and
               HWCC-Shreveport, Inc. (Exhibit 10.2)
_______________________

  #   Incorporated by reference from the exhibit shown in parenthesis filed in
      HCC's Annual Report on Form 10-K for the fiscal year ended December 31,
      1999.

 ##   Incorporated by reference from the exhibit shown in parenthesis filed in
      HCC's Annual Report on Form 10-K for the fiscal year ended December 31,
      1998.

###   Incorporated by reference to the exhibit shown in parenthesis filed in
      HCC's Quarterly Report on Form 10-Q for the quarter ended September 30,
      1998 as filed with the SEC on November 13, 1998.

  +   Incorporated by reference to the exhibit shown in parenthesis included in
      Form S-4 Registration Statement of Hollywood Casino Shreveport and
      Shreveport Capital Corporation as filed with the SEC on October 8, 1999.

 ++   Incorporated by reference to the exhibit shown in parenthesis included in
      Form S-4 Registration Statement of Hollywood Casino Corporation as filed
      with the SEC on August 13, 1999.

 +++  Incorporated by reference to the exhibit shown in parenthesis included in
      Form S-4 Registration Statement of Hollywood Casino Corporation as filed
      with the SEC on July 16, 1999.

++++  Incorporated by reference to the exhibit shown in parenthesis included in
      Form S-4 Registration Statement, Amendment No. 4, of Hollywood Casino
      Shreveport and Shreveport Capital Corporation as filed with the SEC on
      April 18, 2000.

@     Incorporated by reference to the exhibit shown in parenthesis filed in
      HCC's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999 as
      filed with the SEC on August 16, 1999.

  (b) Reports on Form 8-K.

      The Registrants did not file any Reports on Form 8-K during the fourth
quarter of 2000.

                                       61
<PAGE>

                                  SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Co-Registrants have duly caused this report to be
signed on their behalf by the undersigned, thereunto duly authorized, in the
City of Dallas, State of Texas on March 29, 2001.

                                  HOLLYWOOD CASINO SHREVEPORT
                                 SHREVEPORT CAPITAL CORPORATION

                                  By: HCS I, Inc.

                                  By:      /s/ Jack E. Pratt
                                      ------------------------------
                                              Jack E. Pratt
                                        Chief Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Co-Registrants
in the capacities and on the dates indicated:

<TABLE>
<CAPTION>

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

         /s/ Jack E. Pratt             Chief Executive            March 29, 2001
-------------------------------------  Officer and Director       --------------
         Jack E. Pratt


         /s/ Edward T. Pratt, Jr.      Director                   March 29, 2001
-------------------------------------                             --------------
         Edward T. Pratt, Jr.


         /s/ William D. Pratt          Executive Vice President,  March 29, 2001
-------------------------------------  Secretary, General Counsel --------------
         William D. Pratt              and Director


         /s/ Edward T. Pratt III       President                  March 29, 2001
-------------------------------------                             --------------
         Edward T. Pratt III


         /s/ Paul C. Yates             Executive Vice President,  March 29, 2001
-------------------------------------  Chief Financial Officer,   --------------
         Paul C. Yates                 Treasurer and Assistant
                                       Secretary


         /s/ Charles F. LaFrano III    Vice President and         March 29, 2001
-------------------------------------  Assistant Secretary        --------------
         Charles F. LaFrano III


         /s/ Juris Basens              Vice President             March 29, 2001
-------------------------------------                             --------------
         Juris Basens
</TABLE>

                                       62
<PAGE>

                                  SIGNATURES

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

                                      HWCC - LOUISIANA, INC.

                                 By:        /s/ Jack E. Pratt
                                     ------------------------------
                                               Jack E. Pratt
                                          Chief Executive Officer

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

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

         /s/ Jack E. Pratt             Chief Executive            March 29, 2001
-------------------------------------  Officer and Director       --------------
         Jack E. Pratt


         /s/ Edward T. Pratt, Jr.      Director                   March 29, 2001
-------------------------------------                             --------------
         Edward T. Pratt, Jr.


         /s/ William D. Pratt          Executive Vice President,  March 29, 2001
-------------------------------------  Secretary, General Counsel --------------
         William D. Pratt              and Director


         /s/ Edward T. Pratt III       President                  March 29, 2001
-------------------------------------                             --------------
         Edward T. Pratt III


         /s/ Paul C. Yates             Executive Vice President,  March 29, 2001
-------------------------------------  Chief Financial Officer,   --------------
         Paul C. Yates                 Treasurer and Assistant
                                       Secretary


         /s/ Charles F. LaFrano III    Vice President and         March 29, 2001
-------------------------------------  Assistant Secretary        --------------
         Charles F. LaFrano III
</TABLE>


                                       63
<PAGE>

                    INDEX TO FINANCIAL STATEMENT SCHEDULES


Hollywood Casino Shreveport and Subsidiaries

     --   Independent Auditors' Report

     --   Schedule II; Valuation and Qualifying Accounts

HWCC-Louisiana, Inc. and Subsidiaries

     --   Independent Auditors' Report

     --   Schedule II; Valuation and Qualifying Accounts

                                       64
<PAGE>

INDEPENDENT AUDITORS' REPORT


To Hollywood Casino Shreveport:

We have audited the consolidated financial statements of Hollywood Casino
Shreveport and Subsidiaries as of, and for each of the three years in the period
ended December 31, 2000, and have issued our report thereon dated March 15,
2001; such report is included elsewhere in this Form 10-K. Our audits also
include the financial statement schedule of Hollywood Casino Shreveport listed
in Item 14. This financial statement schedule is the responsibility of the
Partnership's management. Our responsibility is to express an opinion based on
our audits. In our opinion, such financial statement schedule, when considered
in relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.



Deloitte & Touche LLP
Dallas, Texas
March 15, 2001

                                       65
<PAGE>

                                                                     SCHEDULE II

                          HOLLYWOOD CASINO SHREVEPORT

                       Valuation and Qualifying Accounts

<TABLE>
<CAPTION>
                                              Amounts
                                 Balance at  Charged to              Balance
                                 Beginning   Costs and                at End
                                 of Period   Expenses    Deductions  of Period
                                 ----------  ----------  ----------  ---------

<S>                               <C>        <C>         <C>         <C>
Year Ended December 31, 2000:
 Allowance for doubtful
  accounts receivable            $       -   $   90,000  $        -  $   90,000
                                 ==========  ==========  =========== ==========
</TABLE>



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

                                       66
<PAGE>

INDEPENDENT AUDITORS' REPORT


To HWCC - Louisiana, Inc.:

We have audited the consolidated financial statements of HWCC-Louisiana, Inc.
and subsidiaries as of, and for each of the three years in the period ended
December 31, 2000, and have issued our report thereon dated March 15, 2001; such
report is included elsewhere in this Form 10-K. Our audits also include the
financial statement schedule of HWCC-Louisiana, Inc. listed in Item 14. This
financial statement schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion based on our audits. In our opinion,
such financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.



Deloitte & Touche LLP
Dallas, Texas
March 15, 2001

                                       67
<PAGE>

                                                                     SCHEDULE II

                     HWCC-LOUISIANA, INC. AND SUBSIDIARIES
                (wholly owned by Hollywood Casino Corporation)

                       Valuation and Qualifying Accounts

<TABLE>
<CAPTION>
                                             Amounts
                                 Balance at  Charged to              Balance
                                 Beginning   Costs and               at End
                                 of Period   Expenses    Deductions  of Period
                                 ----------  ----------  ----------  ---------

<S>                              <C>         <C>         <C>         <C>
Year Ended December 31, 2000:
 Allowance for doubtful
  accounts receivable            $       -    $  90,000  $       -   $  90,000
                                 ==========   =========  ==========  =========
</TABLE>



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

                                       68