Table of Contents

---

---

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

(Mark One)


|  |                                                                                      
|- | -------------------------------------------------------------------------------------
|ý | ANNUAL REPORT PURSUANT TO SECTION
 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2010

OR

|  |                                                                                          
|- | -----------------------------------------------------------------------------------------
|o | 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: 001-31569

|                                                      
|------------------------------------------------------
|CANTERBURY PARK HOLDING CORPORATION                   
|(Exact Name of Registrant as Specified in Its Charter)

|                                                                |  |                                      
|--------------------------------------------------------------- |  | -------------------------------------
|Minnesota                                                       |  | 41-1775532                           
|(State or Other Jurisdiction
 of Incorporation or Organization) |  | (I.R.S. Employer
 Identification No.)

1100 Canterbury Road
Shakopee, MN 55379
(Address of principal executive offices and zip code)

Registrants telephone number, including area
code: (952) 445-7223

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

|                             |  |                                     
|---------------------------- |  | ------------------------------------
|Common Stock, $.01 par value |  | The NASDAQ Stock Market LLC         
|Title of Each Class          |  | Name of Exchange on which Registered

Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. YES o NO x

Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. YES o NO x

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

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

Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of large accelerated filer, accelerated filer, and smaller
reporting company in Rule 12b-2 of the Exchange Act.

|                          |  |                            
|------------------------- |  | ---------------------------
|Large accelerated filer o |  | Non-accelerated filer o    
|                         
|Accelerated filer o       |  | Smaller reporting company x

Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). YES o NO x

The
aggregate market value of the shares of voting and non-voting common equity
held by non-affiliates based on the price at which the Companys common stock
was last sold on the NASDAQ Global Market, on June 30, 2010, the last business
day of the registrants most recently completed second fiscal quarter was
approximately $18,069,000.

On
March 18, 2011, the Company had 4,055,866 shares of common stock, $.01 par
value, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions
of the Companys definitive Proxy Statement for its 2011 Annual Meeting of
Shareholders, to be held on June 2, 2011 and which will be filed on or before
April 19, 2011, are incorporated by reference into Part III of this Form 10-K.

---

---

---



CANTERBURY PARK HOLDING CORPORATION
FORM 10-K ANNUAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 2010

TABLE OF CONTENTS

|               |  |                                                                                                                |  |     
|-------------- |  | -------------------------------------------------------------------------------------------------------------- |  | ----
|               |  |                                                                                                                |  | Page
|               |  | PART I                                                                                                         |  |     
|               |  |                                                                                                                |  |     
|ITEM 1.        |  | Business                                                                                                       |  | 3   
|ITEM 1A.       |  | Risk Factors                                                                                                   |  | 11  
|ITEM 1B.       |  | Unresolved
 Staff Comments                                                                                     |  | 13  
|ITEM 2.        |  | Properties                                                                                                     |  | 13  
|ITEM 3.        |  | Legal
 Proceedings                                                                                             |  | 14  
|ITEM 4.        |  | Reserved                                                                                                       |  | 14  
|               |  |                                                                                                                |  |     
|               |  | PART II                                                                                                        |  |     
|               |  |                                                                                                                |  |     
|ITEM 5.        |  | Market for
 Registrants Common Equity, Related Stockholder Matters and Issuer Purchases
 of Equity Securities |  | 15  
|ITEM 6.        |  | Selected
 Financial Data                                                                                       |  | 17  
|ITEM 7.        |  | Managements
 Discussion and Analysis of Financial Condition and Results of Operation                          |  | 18  
|ITEM 7A.       |  | Quantitative
 and Qualitative Disclosures about Market Risk                                                    |  | 27  
|ITEM 8.        |  | Financial
 Statements and Supplementary Data                                                                   |  | 28  
|ITEM 9.        |  | Changes In and
 Disagreements With Accountants on Accounting and Financial Disclosure                          |  | 47  
|ITEM 9A.       |  | Controls and
 Procedures                                                                                       |  | 47  
|ITEM 9B.       |  | Other
 Information                                                                                             |  | 48  
|               |  |                                                                                                                |  |     
|               |  | PART III                                                                                                       |  |     
|               |  |                                                                                                                |  |     
|ITEM 10.       |  | Directors,
 Executive Officers and Corporate Governance                                                        |  | 48  
|ITEM 11.       |  | Executive
 Compensation                                                                                        |  | 48  
|ITEM 12.       |  | Security
 Ownership of Certain Beneficial Owners and Management and Related Stockholder
 Matters               |  | 48  
|ITEM 13.       |  | Certain
 Relationships, Related Transactions and Director Independence                                         |  | 48  
|ITEM 14.       |  | Principal
 Accounting Fees and Services                                                                        |  | 49  
|               |  |                                                                                                                |  |     
|               |  | PART IV                                                                                                        |  |     
|               |  |                                                                                                                |  |     
|ITEM 15.       |  | Exhibits and
 Financial Statement Schedules                                                                    |  | 49  
|               |  |                                                                                                                |  |     
|SIGNATURES     |  |                                                                                                                |  | 50  
|               |  |                                                                                                                |  |     
|EXHIBIT INDEX  |  |                                                                                                                |  | 51  
|               |  |                                                                                                                |  |     
|CERTIFICATIONS |  |                                                                                                                |  | 54  

2

---



Table of Contents

Item 1. BUSINESS

(a) General
Development of the Business

Canterbury
Park Holding Corporation (the Company) conducts pari-mutuel wagering
operations and hosts unbanked card games at its Canterbury Park Racetrack and
Card Casino facility (the Racetrack) in Shakopee, Minnesota. The Companys
pari-mutuel wagering operations include both wagering on thoroughbred and
quarter horse races during live meets at the Racetrack and year-round wagering
on races held at out-of-state racetracks that are televised simultaneously at
the Racetrack (simulcasting). Unbanked card games, in which patrons compete
against each other, are hosted in the Card Casino at the Racetrack. The Company
also derives revenues from related services and activities, such as concessions,
parking, advertising, publication sales and from other entertainment events
held at the Racetrack.

The
Company was incorporated under the laws of Minnesota on March 24, 1994,
acquired the Racetrack on March 29, 1994, commenced seven day a week simulcast
operations on May 6, 1994, and, beginning in May 1995, launched live horse
racing and related pari-mutuel wagering on a seasonal basis, generally from
early May to early September. The Company opened the card room on April 19,
2000 with 43 tables and expanded to 50 tables (the maximum permitted by law) in
2001. The ownership and operation of the Racetrack and the Card Casino are
significantly regulated by the Minnesota Racing Commission (the MRC).

The
Company maintains a website at www.canterburypark.com. Our annual
reports on Form 10-K, our quarterly reports on Form 10-Q and our periodic
reports on Form 8-K (and any amendments to these reports) are available free of
charge on our website.

(b) Financial
Information About Segments

The
Company divides its business into three segments: horse racing, Card Casino and
concessions. The horse racing segment represents operations related to
pari-mutuel wagering on simulcast and live horse races; the Card Casino segment
represents our unbanked card operations; and, the concessions segment
represents food and beverage services for simulcast and live racing, the Card
Casino and during special events.

(c) Narrative
Description of Business

|    |                        
|--- | -----------------------
|(i) | Horse Racing Operations

The
Companys horse racing operations consist of year-round pari-mutuel wagering on
simulcast horse races (simulcasting) and on live thoroughbred and quarter
horse races (live meets) held on a seasonal basis beginning in May and
generally concluding in August or September.

Live
Racing

In
2010, the Racetrack hosted 62 days of live racing beginning May 14th and
concluding August 29th. The meet included 48 days of mixed thoroughbred and
quarter horse racing and 14 days of thoroughbred only racing. The 2009 live
meet was also 62 days long, beginning May 15th and ending August 30th, and
consisted of 42 days of mixed thoroughbred and quarter horse racing and 20 days
of thoroughbred only racing.

Currently,
Minnesota law requires the Company to schedule a minimum of 125 days of live
racing annually, unless the Minnesota Horsemens Benevolent and Protective
Association (the MHBPA) agrees to a lesser number of live racing days. Since
1995, the MHBPA has agreed to waive the 125-day requirement and has allowed the
Company to run a live meet of at least 50 days each year. As this agreement is
negotiated annually, no assurance can be given that the MHBPA will agree to a
shorter live meet than the 125-day statutory minimum after 2011. If the MHBPA
does not agree to a live meet shorter than 125 days, the Companys operations
could be adversely impacted by a decrease in the daily purses, potential
reduction in quality of horses, lower attendance, lower overall handle and
proportionally greater operating expenses.

3

---



Table of Contents

Simulcasting

Simulcasting
is the process by which live horse races held at one facility (the host
track) are transmitted simultaneously to other locations to allow patrons at
each receiving location (the guest track) to place wagers on races
transmitted from the host track. Monies are collected at the guest track and
the information with respect to the total amount wagered is electronically
transmitted to the host track. All of the amounts wagered at guest tracks are
combined into the appropriate pools at the host track with the final odds and
payouts based upon all the monies in the respective pools.

The
Company offers full card simulcast racing (broadcasting of another
racetracks entire daily live racing program) from up to 20 racetracks per day,
seven days a week, 363 days per year, including Churchill Downs, Hollywood
Park, Santa Anita, Gulfstream Park, Belmont Park and Saratoga Racecourse. In
addition, races of national interest, such as the Kentucky Derby, the Preakness
Stakes, the Belmont Stakes, and the Breeders Cup, supplement the regular
simulcast program. The Company regularly evaluates its agreements with other
racetracks in order to offer the most popular simulcast signals of live horse
racing that are feasible.

Under
applicable provisions of federal and state law, in order to conduct simulcast
operations either as a host or guest track, the Company must obtain the consent
of the states regulatory authority and the organization which represents a
majority of the owners and trainers of the horses who race at the Racetrack. In
Minnesota, such consent must be obtained from the MRC and the MHBPA.

|     |                       
|---- | ----------------------
|(ii) | Card Casino Operations

The
Card Casino is open 24 hours per day, seven days per week, offering two
variations of unbanked card games: poker and table games.

Poker
games, including Texas Hold Em, 7-Card Stud and Omaha, with betting limits per
hand ranging between $2 and $60, are currently offered in the poker room. A
dealer, employed by the Company, regulates the play of the game at each table
and deals the cards but does not participate in play. In poker games, the
Company is allowed to deduct a percentage from the accumulated wagers and
impose other charges for hosting the activity but does not have an interest in
the outcome of a game. The Company may add additional prizes, awards or money
to any game for promotional purposes. The Company collects a rake of 5-10%,
depending on the limit of the game, of each addition to the pot up to a
maximum of $5.00 per hand as its collection revenue. In addition, poker games
offer progressive jackpots for most games. In order to fund the jackpot pool,
the dealer withholds $1.00 from each final pot in excess of the $15 minimum.

Table
games, including Blackjack, Fortune Pai Gow, Let-It-Ride, Three and Four Card
Poker, Ultimate Texas Hold Em, EZ Baccarat, and Blackjack Switch are currently
offered in the card room. The Companys table games are required by law to be
unbanked. Unbanked refers to a wagering system or game where wagers lost or
won in card games are accumulated into a player pool liability for purposes of
enhancing the total amount paid back to winning players. The Company may only
serve as custodian of the player pool, may not have an active interest in any
card game and does not recognize amounts that dealers win or lose during
the course of play as revenue. The primary source of card room revenue is a
percentage of the wagers received from the players as compensation for
providing the card room facility and services, referred to as collection
revenue. In addition, several table games offer a progressive jackpot. The
player has the option of playing the jackpot and has the opportunity to win
some or the entire jackpot amount, depending upon their hand.

|      |               
|----- | --------------
|(iii) | Special Events

While
pari-mutuel horse racing and card room operations are the Companys principal
businesses, the Companys facilities are capable of being used for multiple
purposes. In an effort to more fully utilize the property and to generate
additional revenues, the Company has increasingly used its grandstand, grounds
and parking lot for special events and rentals. While the use of the Companys
facilities for particular special events and purposes varies from year to year,
the following are among the types of events and purposes for which the
Companys facilities have been used: snowmobile races, major arts and crafts
shows, trade shows, concerts, fundraisers, automobile shows and competitions,
vehicle and boat storage and private parties.

4

---



Table of Contents

|     |                   
|---- | ------------------
|(iv) | Sources of Revenue

General

The
Companys revenues are principally derived from Card Casino operations,
wagering on live and simulcast horse races and concession sales. For the fiscal
year ended December 31, 2010, revenues from Card Casino operations represented
55.3% of total revenues, wagering on horse races generated 25.5% of total
revenues and concessions revenue represented 13.0% of total revenues.

Card
Casino Operations

The
Company receives revenue from its Card Casino, which operates 24 hours per day,
seven days per week. The Company currently receives collection revenue from
poker and table games tables. Under Minnesota law, the Company is required to
pay 10% of the first $6 million of gross card room revenues towards purses for
live horse racing at the Racetrack. After meeting the $6 million threshold, the
Company must pay 14% of gross card room revenues as purse monies. Of funds
allocated for purses, the Company pays 10% of the purse monies to the State of
Minnesota Breeders Fund. The remaining 90% of purse monies are divided between
thoroughbred (90%), quarter horse (9%) and standardbred (1%) purse funds.

Pari-mutuel
wagering  General

In
pari-mutuel wagering, bettors wager against each other in a pool, rather than
against the operator of the facility or with preset odds. From the total amount
wagered (handle), the Minnesota Pari-Mutuel Horse Racing Act (the Racing
Act) specifies the maximum percentage, referred to as the takeout, which may
be withheld by the Racetrack, with the balance returned to the winning bettors.
The takeout constitutes one of the Racetracks primary sources of operating
revenue. From the takeout, funds are set aside for purses and paid to the State
of Minnesota for pari-mutuel taxes and the Minnesota Breeders Fund (the
MBF), which is a fund apportioned by the MRC among various purposes related
to Minnesotas horse breeding and horse racing industries. The balance of the
takeout remaining after these deductions is commonly referred to as the
retainage.

The
various forms of pari-mutuel wagering can be divided into two categories:
straight wagering pools and multiple wagering pools, which are also referred to
as exotic wagering pools. Examples of straight wagers include: win,
place, and show. Examples of exotic wagers include: daily double,
exacta, trifecta, and pick four.

The
amount of takeout earned by the Company depends on where the race is run and
the form of wager (straight or exotic). Net revenues from pari-mutuel wagering
on live races run at the Racetrack consist of the total amount wagered, less
the amounts paid (i) to winning patrons, (ii) for purses, (iii) to the MBF and
(iv) for pari-mutuel taxes to the State of Minnesota. Net revenues from
pari-mutuel wagering on races being run at out-of-state racetracks and
simulcast to the Racetrack have similar expenses but also include a host fee
payment to the host track. The host fee, which is calculated as a percentage of
monies wagered (generally 3.0% to 4.5%), is negotiated with the host track and
must comply with state laws governing the host track. Pari-mutuel revenues also includes commission
and breakage revenues on live on-track and simulcast racing, fees received from
out-of-state racetracks for wagering on our live races and proceeds from
uncashed winning tickets.

Wagering
on Live Races

The
Racing Act establishes the maximum takeout that may be deducted from the
handle. The takeout percentage on live races depends on the type of wager. The
total maximum takeouts are 17% from straight wagering pools and 23% from exotic
wagering pools. From this takeout, Minnesota law requires deductions for
purses, pari-mutuel taxes and the MBF.

5

---



Table of Contents

While
the Racing Act provides that a minimum of 8.4% of the live racing handle is to
be paid as purses to the owners of the horses, the size of the purse is subject
to further agreement with the horsepersons associations. The MBF receives 1%
of the handle. The pari-mutuel tax applicable to wagering on all simulcast and
live races is 6% of takeout in excess of $12 million during the twelve-month
period beginning July 1 and ending the following June 30.

The
following table sets forth the percentage distribution of each dollar wagered
on live races at the Racetrack, as established by the Racing Act, and the
Racetracks retainage for the years ended December 31, 2010 and 2009:

|                                |  |             |  |        |   |       |  |        |  
|------------------------------- |  | ----------- |  | ------ | - | ----- |  | ------ | -
|                                |  | Live Racing | 
|                                |  | Straight    |  | Exotic |  
|                                |  |             |  |        |   |       |  |        |  
|Returned to
 Winning Patrons    |  |             |  | 83.00  | % |       |  | 77.00  | %
|Purse (1)                       |  | 8.40        |  |        |   | 8.40  |  |        |  
|Minnesota Breeders Fund        |  | 1.00        |  |        |   | 1.00  |  |        |  
|Minnesota Pari-Mutuel Taxes (2) |  | .00         |  |        |   | .00   |  |        |  
|Racetrack Retainage (1)         |  | 7.60        |  |        |   | 13.60 |  |        |  
|Total Takeout                   |  |             |  | 17.00  |   |       |  | 23.00  |  
|                                |  |             |  |        |   |       |  |        |  
|Total Handle                    |  |             |  | 100.00 | % |       |  | 100.00 | %

|    |                                                                                                                                                                                                                                                                                                                                                                             | 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|    |                                                                                                                                                                                                                                                                                                                                                                            
|(1) | Minnesota
 law provides that the 8.40% purse payment is a minimum. The actual
 percentage, if any, above the minimum is determined between the Racetrack and
 the MHBPA. Any additional amounts paid for purses decrease the Racetracks
 retainage.                                                                                                                       
|(2) | The current
 pari-mutuel tax structure exempts the first $12 million of takeout during a
 statutorily mandated twelve-month period. The total pari-mutuel tax liability
 for a twelve-month period will depend upon the total takeout during that
 period. There was no pari-mutuel tax liability in 2009 and 2010 and
 therefore, it is not factored into the above table.

Wagering
on Simulcast Races

The
amount of takeout from simulcast wagering is determined by the laws of the
state in which the host track is located. In addition, the Racing Act
establishes a minimum that must be set aside from simulcasting for purse
payments on racing within Minnesota. Different amounts are deducted for purses
from the takeout depending on whether simulcasting occurs during the Racing
Season, a statutorily defined 25-week period beginning in early May each year,
or outside of the Racing Season. If simulcasting occurs during the Racing
Season, the amount set aside for purses further depends on whether the
simulcasting is part of a full racing card that occurs during the part of the
day that live races are conducted at the Racetrack. For races that are part of
a full simulcast racing card that takes place within the time of live races at
the Racetrack, the amount reserved for purse payout is 8.4%. For simulcasting
conducted during the Racing Season that does not occur within the time period
of live races, the purse is equal to 50% of the takeout remaining after
deductions for pari-mutuel taxes, payments to the MBF and payments to the host
racetrack for host track fees. For simulcasting conducted outside of the Racing
Season, the amount that must be contributed to the purses is 25% of the takeout
after deducting pari-mutuel taxes, payments to the MBF and host fee payments to
the host racetrack.

6

---



Table of Contents

The
following table sets forth the approximate percentage distribution of each
dollar wagered for races simulcast at the Racetrack and the Racetracks
retainage for the years ended December 31, 2010 and 2009:

|                                 |  |                            |  |                                |   |                           |  |        |   |       |  |        |  
|-------------------------------- |  | -------------------------- |  | ------------------------------ | - | ------------------------- |  | ------ | - | ----- |  | ------ | -
|                                 |  | During Racing Season       |  |                                |  
|                                 |  | Concurrent with
 Live Card |  | Not Concurrent with
 Live Card |   | Outside of Racing
 Season | 
|                                 |  |                            |  |                                |   |                           |  |        |   |       |  |        |  
|Returned to
 Winning Patrons (1) |  |                            |  | 80.50                          | % |                           |  | 80.50  | % |       |  | 80.50  | %
|Minnesota Breeders Fund         |  | 1.00                       |  |                                |   | 1.00                      |  |        |   | 1.10  |  |        |  
|Minnesota Pari-Mutuel Taxes (2)  |  | .00                        |  |                                |   | .00                       |  |        |   | .00   |  |        |  
|Purse (3)                        |  | 8.40                       |  |                                |   | 7.35                      |  |        |   | 4.15  |  |        |  
|Host Track Fees (4)              |  | 3.80                       |  |                                |   | 3.80                      |  |        |   | 3.80  |  |        |  
|Racetrack Retainage (3)          |  | 6.30                       |  |                                |   | 7.35                      |  |        |   | 10.45 |  |        |  
|Total Takeout                    |  |                            |  | 19.50                          |   |                           |  | 19.50  |   |       |  | 19.50  |  
|                                 |  |                            |  |                                |   |                           |  |        |   |       |  |        |  
|Total Handle                     |  |                            |  | 100.00                         | % |                           |  | 100.00 | % |       |  | 100.00 | %

|    |                                                                                                                                                                                                                                                                                                                                                                             | 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|(1) | This amount
 will depend upon the takeout at the host racetrack. This percentage is
 determined by local and state law applicable to the host track and ranges
 from 75.0% to 85.0%.                                                                                                                                                                                       
|(2) | The current
 pari-mutuel tax structure exempts the first $12 million of takeout during a
 statutorily mandated twelve-month period. The total pari-mutuel tax liability
 for a twelve-month period will depend upon the total takeout during that
 period. There was no pari-mutuel tax liability in 2009 and 2010 and
 therefore, it is not factored into the above graph.
|(3) | Although
 Minnesota law specifies purse percentages, the actual percentage is
 determined by agreement between the Racetrack and the MHBPA. For the year
 ended December 31, 2009, the MHBPA allowed a 1.6% expense deduction. No
 expense deduction was allowed in 2010 and none is expected for 2011 as well.                                                            
|(4) | Payments to
 the host track generally range from 3.0% to 4.5% of total handle, subject to
 negotiation with each host track. For purposes of this table, the host track
 fee is assumed to be 3.8%.                                                                                                                                                                        

Concessions
Revenue

The
Company earns revenue from food and beverage sales in its restaurant, group
catering areas and numerous concession stands located throughout the facility.
Food and beverage sales are offered during live and simulcast racing in the card
room and during special events.

Other
Revenue

The Company
generates cash revenues from the receipt reserved seating charges, preferred
and valet parking and the sales of various daily pari-mutuel publications.
Additional revenues are derived from the use of the Racetrack facilities
year-round for special events such as concerts, trade and craft shows, business
meetings, private parties, horse expositions and sales, boat and automobile
storage and community events. The Company also generates revenue from providing
advertising signage space, similar to that appearing at many sports stadiums,
and leasing excess parking lot space for various automotive activities and
vehicle storage.

|    |            
|--- | -----------
|(v) | Competition

From
1994 through 2004, the Company was the only racetrack licensed to operate in
the State of Minnesota. In January 2005, the MRC granted a license to the North
Metro Harness Initiative, LLC (NMHI) to construct and operate a harness
racetrack in Columbus Township, Anoka County, MN. Columbus Township is
approximately 50 miles from Canterbury Park. This license authorized NMHI to
engage in pari-mutuel wagering on live and simulcast racing for standardbred
(harness) horses. NMHI commenced operations as Running Aces Harness Park
(Running Aces) in April 2008. In addition, on completing a 50-day live meet
as required by Minnesota law, the MRC granted Running Aces a license to operate
a card room, and Running Aces began card room operations in competition with
the Company in June 2008.

7

---



Table of Contents

The
Company also competes with other forms of gaming, principally with numerous
tribal casinos located throughout the State of Minnesota that offer video slot
machines as well as poker. In particular, the largest casino in Minnesota is
located approximately four miles from the Racetrack. More recently, unbanked
card games have also become available at some tribal casinos. The Company also
faces increasing competition from offshore and out-of-state simulcast
operations offering Internet and telephone account home wagering systems to
Minnesota residents, although Minnesota regulatory authorities consider such
wagering to be illegal.

The
Company further competes with other forms of entertainment in the
Minneapolis-Saint Paul metropolitan area, including a wide range of live and
televised professional and collegiate sporting events. In addition, live horse
racing competes with a wide variety of summer attractions, including amusements
parks, sporting events and other local activities.

The
Company competes with racetracks located throughout the United States in
securing horses to run at the Racetrack. Attracting owners and trainers is
largely dependent on the ability to offer large purses. The Company experiences
significant competition for horses from racetracks located near Des Moines,
Iowa and Chicago, Illinois, both of which offer substantially larger purses
than the Company. This competition is expected to continue for the foreseeable
future.

|     |           
|---- | ----------
|(vi) | Regulation

General

The
ownership and operation of the Racetrack in Minnesota is subject to significant
regulation by the MRC under the Racing Act and the rules adopted by the MRC.
The Racing Act governs the allocation of each wagering pool to winning bettors,
the Racetrack, purses, pari-mutuel taxes and the MBF and empowers the MRC to
license and regulate substantially all aspects of horse racing in the State.
The MRC, among other things, grants operating licenses to racetracks after an
application process and public hearings, licenses all employees of a racetrack,
jockeys, trainers, veterinarians and other participants, regulates the transfer
of ownership interests in licenses, allocates live race days and simulcast-only
race days, approves race programs, regulates the conduct of races, sets
specifications for the racing ovals, animal facilities, employee quarters and
public areas of racetracks, regulates the types of wagers on horse races, and
approves significant contractual arrangements with racetracks, including
management agreements, simulcast arrangements, totalizator contracts and
concessionaire agreements.

A
federal statute, the Interstate Horse Racing Act of 1978, also requires that a
racetrack must obtain the consent of the group representing the horsepersons
(owners and trainers) racing the breed of horses that race a majority of the
time at the racetrack, and the consent of the state agency regulating the
racetrack, in order to transmit simulcast signals of its live races or to
receive and use simulcast signals from other racetracks. The Company has
obtained the consent of the MHBPA and MRC for receiving and sending simulcast
signals.

Issuance
of Class A and Class B Licenses to the Company

The
Company holds a Class A License, issued by the MRC, which allows the Company to
own and operate the Racetrack. The Class A License is effective until revoked,
suspended by the MRC or relinquished by the licensee. Currently, the fee for a
Class A License is $253,000 per fiscal year.

The
Company also holds a Class B License, issued by the MRC, that allows the
Company to sponsor and manage horse racing on which pari-mutuel wagering is
conducted at its Class A licensed racetrack and on other horse races run at
out-of-state locations as authorized by the MRC. The Class B License is
renewable each year by the MRC after a public hearing (if required by the MRC).
Currently, the fee for the Class B License is $500 for each assigned race day
on which live racing is actually conducted and $100 for each day on which
simulcasting is authorized and actually takes place.

8

---



Table of Contents

Limitation
on the Number of Class A and Class B Licenses

Pursuant
to the Racing Act, so long as the Racetrack maintains its Class A License, no
other Class A License may be issued to operate a racetrack in the seven-county
metropolitan area (the counties of Hennepin, Ramsey, Washington, Scott, Dakota,
Anoka and Carver), except the MRC may issue an additional Class A License
within the seven-county metropolitan area, provided that the additional license
may only be issued for a facility which, among other conditions, is located
more than 20 miles from the Racetrack, contains a track no larger than
five-eighths of a mile in circumference, and is used exclusively for standardbred
(harness) racing. An additional Class A license was issued to Running Aces on
January 20, 2005 (see Competition above). However, as long as the Company
holds its Class A License, only the Company may own and operate a racetrack in
the seven county metropolitan area where thoroughbred and quarter horses may be
raced.

Limitation
on Ownership and Management of an Entity which holds a Class A and/or Class B
License

The
Racing Act requires prior MRC approval of all officers, directors, 5%
shareholders or other persons having a present or future direct or indirect
financial or management interest in any person applying for a Class A and Class
B license, and if a change of ownership of more than 5% of the licensees
shares is made after an application is filed or the license issued, the
applicant or licensee must notify the MRC of the changes within five days of
this occurrence and provide the information required by the Racing Act.

Card
Casino Regulation

The
MRC is also authorized by law to regulate card room operations, and the law
requires that the Company reimburse the MRC for its actual costs, including
personnel costs, of regulating the card room. For fiscal years ended December
31, 2010, and 2009, the Company paid $148,000 and $150,000, respectively, to
the MRC as reimbursement for costs of regulating card room operations.

The
MRC issued an additional Class B License to the Company on January 19, 2000
that authorizes the Company to host unbanked card games. The Class B License is
renewable each year by the MRC after a public hearing (if required by the MRC).
Currently, the Class B License Fee of $10,000 per calendar year is included in
the Class A License Fee of $253,000 per calendar year.

Local
Regulation

The
Companys operations are subject to state and local laws, regulations,
ordinances and other provisions affecting zoning, public health and other
matters which may have the effect of restricting the uses to which the
Companys land and other assets may be used. Also, any development of the
Racetrack site is, among other things, subject to applicable zoning ordinances
and requires approval by the City of Shakopee and other authorities, and there
can be no assurance such approvals would be obtained if any development was
undertaken.

|      |            
|----- | -----------
|(vii) | Legislation

As
discussed in our previous filings with the SEC, the Company supported
legislation that would authorize electronic gaming devices at the Racetrack
(referred to as a Racino) during the 2010 session of the Minnesota
Legislature. However, the Minnesota Legislature adjourned without taking action
on the proposed Racino legislation. Based on the success of Racinos in several
other states, we continue to believe that if a Racino was authorized at the
Racetrack on similar terms to legislation approved in other states, it would
stimulate economic growth in the horse racing and related agriculture
businesses in Minnesota, provide growth and development opportunities that
would add jobs at the Racetrack, and provide new tax revenues for state and
local governments facing significant deficit issues.

The Company
believes the results of the November 2010 elections have improved the political
environment for gaining approval of the Companys Racino proposal. While polls
have shown a large majority of Minnesota residents support the Companys
proposal to add video gaming at Canterbury Park, legislative efforts have been
unsuccessful in the past. However, the major shift in the make-up of the
Minnesota Legislature resulting from the November 2010 elections is a positive
development. As a result, the Company is vigorously advocating for Racino
legislation in the 2011 session of the Minnesota Legislature.

9

---



Table of Contents

The effort to
obtain legislative approval for a Racino has required, and will continue to
require, substantial expenditures. Due to the inherent uncertainty of the
outcome of legislative activities, there can be no assurance that any bills
favorable to the Companys interests will be enacted into law, and it is
possible bills adverse to the Company could be enacted.

|       |          
|------ | ---------
|(viii) | Marketing

The
Companys primary market is the seven-county Minneapolis-Saint Paul
metropolitan area plus the two counties to the south of the Racetrack. Current
demographic information indicates that approximately 2.2 million adults age 18
and older reside within the primary market. The City of Shakopee, located in
the southwestern portion of the metropolitan area, is one of the fastest
growing communities in the region, and Scott County is one of the fastest
growing counties in the country.

To
support its pari-mutuel horse racing and card room businesses, the Company
conducts year-round marketing efforts to maintain the loyalty of live racing
and simulcast patrons and attract new racing and card room customers. The
Company utilizes newspapers and television advertising, the Internet, other
print media, radio and direct mail. Often, the Company combines its marketing
efforts to communicate the excitement of both wagering on horse racing and card
playing. In addition to its regular advertising program, the Company conducts
numerous special promotions and handicapping contests to increase simulcast
patronage and maintains successful pari-mutuel player and card room player
rewards programs. In addition, the development and maintenance of a customer
database over the past several years has enabled the Company to effectively
utilize direct mail advertising.

Because
wagering on horse racing and playing poker and table games are more complex
than many other forms of gaming, such as slot machines or various lottery
products, the Company continues to develop and conduct various educational
programs, such as complimentary poker and table games lessons, tours of the
Racetrack, wagering and handicapping classes and contests that it believes will
make pari-mutuel wagering on horse racing and card playing more understandable
to the general public.

|     |          
|---- | ---------
|(ix) | Employees

At
March 31, 2011, the Company had 256 full-time employees and 267 part-time
employees. On a seasonal basis, the Company adds approximately 120 full-time
and 250 part-time employees for live racing operations from early May until
early September. The Companys management believes its employee relations are
good.

|    |                   
|--- | ------------------
|(x) | Executive Officers

The
executive officers of the Company, their ages and their positions with the
Company are as follows:

|                    |  |     |  |                                                             
|------------------- |  | --- |  | ------------------------------------------------------------
|Name                |  | Age |  | Position with Company                                       
|                    |  |     |  |                                                             
|Randall D.
 Sampson |  | 52  |  | President,
 CEO and General Manager                         
|                    |  |     |  |                                                             
|David C.
 Hansen    |  | 54  |  | Vice
 President of Finance, CFO and Secretary               
|                    |  |     |  |                                                             
|Mark A.
 Erickson   |  | 54  |  | Vice
 President of Facilities                               
|                    |  |     |  |                                                             
|Michael J.
 Garin   |  | 55  |  | Vice
 President of Non-Gaming Operations and Asst. Secretary

10

---



Table of Contents

Randall
D. Sampson has been President and Chief Executive Officer since the formation
of the Company in March 1994 and General Manager since September 1995. He has
been active in horse industry associations, currently serving as Vice President
and Director of the Thoroughbred Racetracks of America and is a past President
of the Minnesota Thoroughbred Association. Mr. Sampson also currently serves as
a director of Communications Systems, Inc. (NASDAQ:JCS), a manufacturer of
telecommunications and data communications products based in Hector, Minnesota.
Mr. Sampson is the son of Curtis A. Sampson, the Companys Chairman of the
Board and the beneficial owner of approximately 22% of the Companys common
stock.

David
C. Hansen joined the Company in July 2001 as Vice President of Finance and
Chief Financial Officer. From 2000 to 2001, Mr. Hansen served as Director of
Accounting for Prairie Meadows Racetrack and Casino in Altoona, IA, one of the
nations first Racino operations. He served as Controller and later Director of
Finance at Treasure Island Resort & Casino, in Red Wing, MN, from 1993
until 2000. Mr. Hansen earned his CPA certification in 1983. Mr. Hansen is a
member of the Minnesota Society of Certified Public Accountants, the
Hospitality Financial and Technology Professionals Association, and Financial
Executives International.

Mark
A. Erickson has been Vice President of Facilities since May 1997, serving as
the Racetracks Director of Facilities since April 1994. From 1992 to 1994, Mr.
Erickson served as Maintenance Supervisor for the Mall of America, supervising
the interior maintenance for one of the largest shopping malls in North
America. Mr. Erickson was Master Electrician for Canterbury Downs from 1986 to
1992, supervising the installation and maintenance of all electrical equipment.

Michael
J. Garin was named Vice President of Non-Gaming Operations in October 2009.
Prior thereto, Mr. Garin served as the Vice President of Hospitality since May
of 1997. He also previously served as President of Canterbury Park Concessions,
Inc. from September 1995 to May of 1997. From 1993 to 1994, Mr. Garin served as
Food & Beverage Supervisor for Little Six, Inc., one of the largest tribal
casino operations in the country. Mr. Garin was President of MMR Vending, Inc.,
a regional vending company, from 1988 to 1992. Prior to 1988, he was a Regional
Director at General Mills Restaurant Group overseeing seven restaurants in
three states. Since 2007, Mr. Garin has served on the Board of Directors for
the Minnesota Restaurant Association.

Item 1A. RISK FACTORS

The
Company is subject to risk factors that may affect our operating results. Such
risk factors include, but are not limited to, the matters discussed below as
well as the additional risks discussed under Forward Looking Statements on page
27 of this Form 10-K.

We face significant competition from other
gaming operations that could have a material adverse effect on our operations.

We
face intense competition in our market, particularly competition from tribal
casinos. Such facilities have the advantage of being exempt from certain state
and federal taxes and state regulation of indoor smoking. We also compete with
illegal Internet wagering on horse races, other forms of gambling, other forms
of entertainment and other racetracks throughout the country as previously
discussed under Competition
above.

In
early 2005, the MRC granted a license to NMHI to construct and operate a
harness racetrack in Columbus Township, Anoka County, MN, which is
approximately 50 miles from the Racetrack. This license authorized NMHI to
engage in pari-mutuel wagering on live races of standardbred (harness) horses
and on simulcast races of all horse breeds. This racetrack opened in April of
2008 as Running Aces Harness Park (Running Aces). In addition, Running Aces
began card room operations in June of 2008.

We
expect competition for our existing and future operations to increase from
Running Aces, existing tribal casinos, and racetracks that are able to
subsidize their purses with alternative gaming revenues. In addition, several
of our tribal gaming competitors have substantially larger marketing and
financial resources than we do. We are unable to predict with any certainty the
effects of existing and future competition on our operating results.

11

---



Table of Contents

A downturn in general economic conditions can
adversely affect our results of operations.

Consumer
demand for entertainment is particularly sensitive to downturns in the economy
and the corresponding impact on discretionary spending on leisure activities.
Changes in discretionary consumer spending or consumer preferences could be
driven by factors such as perceived or actual general economic conditions
including housing prices and the availability of credit; high energy, fuel and
food costs; the increased cost of travel; the potential for bank failures; the
weakening job market; perceived or actual disposable consumer income and
wealth; fears of recession and changes in consumer confidence in the economy;
or fears of war and future acts of terrorism. These factors could reduce
consumer demand for the leisure activities we offer, thus imposing practical
limits on pricing and harming our operations. Our revenues and profitability
have been adversely affected by these factors during the last three years and
are likely to be adversely affected in 2011.

We are subject to extensive regulation from
gaming authorities that could adversely affect us.

The
ownership and operation of our Racetrack and Card Casino are subject to
significant regulation by the MRC under the Racing Act and the rules adopted by
the MRC. The MRC has the authority to impose increases in the Class A and Class
B license fees. In addition, State law requires that we reimburse the MRC for its
actual costs of regulating the card room, including personnel costs. Increases
in these licensing and regulatory costs could adversely affect our results of
operations.

Decisions
by the MRC in regard to any one or more of the following matters could also
adversely affect the Companys operations: the granting of operating licenses
to Canterbury Park and other racetracks after an application process and public
hearings; the licensing of all employees of a racetrack, jockeys, trainers,
veterinarians and other participants; regulating the transfer of ownership
interests in licenses; allocating live race days and simulcast-only race days;
approving race programs; regulating the conduct of races; setting
specifications for the racing ovals, animal facilities, employee quarters and
public areas of racetracks; changes to the types of wagers on horse races; and
approval of significant contractual agreements.

We
are subject to changes in the laws that govern our business, including the
possibility of an increase in gaming taxes, which would increase our costs, and
changes in other laws may adversely affect our ability to compete.

Our
operations and oversight by the MRC are ultimately subject to the laws of
Minnesota and there exists the risk that these laws may be amended in ways
adverse to our operations. In particular, we are required to pay taxes and fees
in addition to normal federal, state and local income taxes, and such taxes and
fees are subject to increase at any time. From time to time, state and local
legislators and officials have proposed changes in tax laws, or in the
administration of laws affecting our industry, such as the allocation of each
wagering pool to winning bettors, the Racetrack, purses and the MBF. In
addition, poor economic conditions could intensify the efforts of state and
local governments to raise revenues through increases in gaming taxes. It is
not possible to determine with certainty the likelihood of changes in tax laws
or in the administration of such laws. Such changes, if adopted, could have a
material adverse effect on our operations.

We
are also subject to laws in Minnesota that affect businesses generally. It is possible, as a result of the legislative
process, that legislation directly or indirectly adverse to the Company may be
enacted into law.

We Depend on Key
Personnel.

Our future
success will depend largely on the skills, efforts and motivation of Randall D.
Sampson, our President and Chief Executive Officer, as well as other executive
officers and key personnel, on whom we are highly dependent. Our inability to
retain key personnel could have a material, adverse impact on our business,
financial condition and results of operations.

12

---



Table of Contents

Energy and fuel
price increases may adversely affect our costs of operations and our revenues.

Our
facility uses significant amounts of electricity, natural gas and other forms
of energy. Increases in the cost of electricity or natural gas negatively
affect our results of operations. In addition, energy and fuel price increases
could negatively impact our operations by reducing disposable income of
potential customers and decreasing visitation to our facility.

Item 1B. UNRESOLVED
STAFF COMMENTS

Not
Applicable.

Item 2. PROPERTIES

General

The
Companys facilities, which are owned and operated under the name Canterbury
Park, are a modern complex of buildings and grounds, generally comparable to
other major racetracks located throughout the country. The Racetracks
grandstand has a patron capacity of approximately 10,000 within enclosed areas
and a maximum patron capacity of over 30,000 including outside areas around the
grandstand. The grandstand and most public outdoor areas contain numerous
pari-mutuel windows, odds information boards, video monitors, concessions
stands and other amenities. The audio/visual system includes over 600
television monitors with most areas providing multi-screen viewing of the
races.

The
Racetrack is located approximately 25 miles southwest of downtown Minneapolis.
The area immediately surrounding the Racetrack consists of commercial and
industrial buildings, farmland and residential areas. The Racetrack is in
reasonable proximity to a number of major entertainment destinations including:
Valleyfair, an amusement park about two miles from the Racetrack which annually
attracts approximately more than one million visitors during the spring and
summer; the Renaissance Festival, a seven-weekend late summer annual event
attracting approximately 300,000 visitors, located about five miles from the
Racetrack; and Mystic Lake Casino, located about four miles from the Racetrack,
which draws approximately 5.2 million patrons annually. The Mall of America,
the largest enclosed shopping mall in the United States, which attracts more
than 40 million visitors per year, is approximately 17 miles from the
Racetrack.

Racing
Surfaces

The
racing surfaces consist of a one-mile oval dirt/limestone track and a 7/8 mile
oval turf course. The dirt track includes a mile and one-quarter front stretch
chute, a 6-1/2 furlong backstretch chute and a 3-1⁄2 furlong chute and is lighted
for night racing.

Grandstand

The
grandstand is a modern, air-conditioned enclosed structure of approximately
275,000 square feet with a variety of facilities on six levels. The lower level
contains space for support functions such as jockey quarters, administrative
offices, Racing Commission offices, first aid, mechanical and electrical rooms.
The track level includes pari-mutuel windows, restrooms, a variety of
concession stands and other services as well as the card room, which occupies
22,000 square feet on the track level. The mezzanine level contains 1,320 fixed
seats in a glass-enclosed, air-conditioned area and an additional 3,000 seats
located outside. In addition to the seats, the mezzanine level contains
pari-mutuel windows, restrooms, concession stands and other guest facilities. A
portion of the mezzanine level is currently being used as a simulcast center
during live racing, and for banquets and other events during the off-season.
The kitchen level is an intermediate level located between the mezzanine and
clubhouse floors. It contains a full-service kitchen which supports a full
dining menu for the track-side dining terraces on the clubhouse level and food
preparation for the other concession areas. The clubhouse level is a
multi-purpose area serving as a simulcast center during wagering sessions on
televised races, as well as a full-service dining area during the live racing
season. The clubhouse level includes 325 trackside tables, each equipped with a
television set, with a total seating capacity of 1,200 patrons and an
additional 1,000 seats are located in lounges located throughout the area. The
press box and officials level is located in the roof trusses over the
clubhouse and contains work areas for the press, racing officials,
closed-circuit television, photo finish and the track announcer. In addition,
the grandstand was structurally built to accommodate skyboxes under the press
box/officials level, although none have yet been constructed. Escalators and
elevators are available to move patrons among the various levels within the
grandstand.

13

---



Table of Contents

Barn
and Backside Facilities

The
stable area consists of 33 barns with a total of approximately 1,650 stalls. In
the stable area, there are 216 dormitory rooms for the grooms and others
working at the Racetrack. The stable area also contains a combination racing
office and cafeteria/recreation building for stable personnel, two blacksmith
buildings and a one half-mile training track.

Parking

Approximately
7,500 paved parking spaces are available for patron and employee automobiles at
the Racetrack, including parking spaces that are reserved for handicapped
patrons. The Racetrack also has unpaved areas available for overflow parking
for approximately 5,000 additional automobiles. Areas are also reserved for bus
parking.

RV
Park

The
Company owns a recreational vehicle (RV) park, located two miles from the
Racetrack in Shakopee, Minnesota on approximately 29 acres adjacent to the
Minnesota River. The RV Park has 68 independent sites and 40 dependent sites,
an indoor swimming pool, laundry facilities, game room and mini store. In 2010,
this property was leased to an unaffiliated party, and it is expected the
lessee will continue to operate the RV Park similar to how it has been operated
in the past, with sites being rented to horsemen participating in Canterburys racing
operations, seasonal employees and the general public.

Undeveloped
Land

Approximately
100 acres of the 380 acres owned by the Company are not necessary for current
operations. This property could be developed or sold, in whole or in part,
depending upon future opportunities. The Company regularly evaluates other
business activities and development opportunities that would maximize the use
of the real estate surrounding the Racetrack and which would complement the Companys primary businesses of
horse racing and Card Casino operations.

Use of Properites

All three
Companys operating segments are housed in the Grandstand and use the parking
facilities. The racing surfaces, barns, and backside facilities are used exclusively
by the Horse Racing segment.

Item 3.  LEGAL PROCEEDINGS

There
are no material legal proceedings pending against the Company. From time to
time, the Company is party to ordinary and routine litigation incidental to our
business. We do not expect the outcome of any such litigation pending at this
time to have a material adverse effect on our consolidated financial position
or results of operations.

Item 4.  (REMOVED AND RESERVED)

14

---



Table of Contents

PART II

|        |                                                                                                              
|------- | -------------------------------------------------------------------------------------------------------------
|Item 5. | MARKET FOR REGISTRANTS COMMON EQUITY,
 RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|        |                                                                                                              
|(a)     | MARKET INFORMATION                                                                                           

The
Companys common stock trades on the NASDAQ Global Market under the symbol
CPHC. The table set forth below indicates the high and low sale prices for the
Common Stock in the quarterly periods ending December 31, 2010 and 2009.

|                |  |      |       |      |   |      |  |     |      |  |   |      | 
|--------------- |  | ---- | ----- | ---- | - | ---- |  | --- | ---- |  | - | ---- | 
|                |  | 2010 |       | 2009 |  
|                |  | High |       | Low  |   | High |  | Low |     
|Common Stock    |  |      |       |      |   |      |  |     |      |  |   |      | 
|                |  |      |       |      |   |      |  |     |      |  |   |      | 
|First
 Quarter  |  | $    | 9.00  |      | $ | 6.90 |  | $   | 7.43 |  | $ | 5.35 | 
|Second Quarter  |  |      | 9.20  |      |   | 7.26 |  |     | 7.32 |  |   | 5.83 | 
|Third
 Quarter  |  |      | 8.87  |      |   | 7.20 |  |     | 7.49 |  |   | 6.02 | 
|Fourth
 Quarter |  |      | 12.73 |      |   | 7.60 |  |     | 7.59 |  |   | 6.03 | 

|    |        
|--- | -------
|(b) | HOLDERS

At
March 10, 2011, the Company had 788 holders of record of its common stock. In
addition, on that date, a depository company held approximately 2,640,000
shares as nominee for an estimated 1,511 beneficial holders.

|    |          
|--- | ---------
|(c) | DIVIDENDS

No
special dividends were declared in 2009 or 2010.

15

---



Table of Contents

|    |                                                                   
|--- | ------------------------------------------------------------------
|(d) | SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The
following table sets forth information as of December 31, 2010 regarding our
equity compensation plans:

Securities
Authorized for Issuance Under Equity Compensation Plans

|                                                                 |  |                                                                                                                  |  |                                                                                     |      |                                                                                                                                                       |         | 
|---------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------- | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------- | ------- | 
|Plan Category (1)                                                |  | (a)
 Number of shares of
 common stock to be
 issued upon exercise of
 outstanding options,
 warrants and rights |  | (b)
 Weighted-average
 exercise price of
 outstanding options,
 warrants and rights |      | (c)
 Number of shares of
 common stock
 remaining available
 for future issuance
 under equity
 compensation plans
 (excluding shares in
 column (a)) |        
|                                                                 |  |                                                                                                                  |  |                                                                                     |      |                                                                                                                                                       |         | 
|Equity
 compensation plans approved by security holders:         |  |                                                                                                                  |  |                                                                                     |      |                                                                                                                                                       |         | 
|1994
 Stock Plan                                                 |  | 368,437                                                                                                          |  | $                                                                                   | 9.21 |                                                                                                                                                       | 232,750 | 
|1995
 Employee Stock Purchase Plan                               |  |                                                                                                                 |  |                                                                                     |     |                                                                                                                                                       | 107,815 | 
|                                                                 |  |                                                                                                                  |  |                                                                                     |      |                                                                                                                                                       |         | 
|Equity
 compensation plans not approved by security holders:     |  |                                                                                                                  |  |                                                                                     |      |                                                                                                                                                       |         | 
|Stock
 Option Plan for Non-Employee Consultants and Advisors (2) |  |                                                                                                                 |  |                                                                                     |     |                                                                                                                                                       | 167,500 | 
|                                                                 |  |                                                                                                                  |  |                                                                                     |      |                                                                                                                                                       |         | 
|Total                                                            |  | 368,437                                                                                                          |  |                                                                                     |      |                                                                                                                                                       | 508,065 | 

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
| | (1) The Company does not have individual
 compensation arrangements involving the granting of options, warrants, rights
 or restricted stock.                                                                                                                                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (2) Adopted by the Companys Board of
 Directors in 1997, the purpose of the Stock Option Plan for Non-Employee
 Consultants and Advisors is to attract and retain the services of experienced
 and knowledgeable non-employee consultants and advisors to assist in projects
 having strategic significance for the Company, to provide an alternative form
 of cash compensation to such persons and to provide such persons with the
 opportunity to participate in the Companys long term progress and success.

|    |                                              
|--- | ---------------------------------------------
|(h) | PURCHASES OF
 EQUITY SECURITIES BY THE ISSUER

On January
16, 2008, the Company announced that its Board of Directors had authorized a
program to repurchase up to an additional 250,000 shares of the Companys
common stock pursuant to Exchange Act Rule 12b-18 in open market transactions,
block purchases of privately negotiated transactions. During the fiscal year
2010, the Company did not repurchase any shares of common stock. As of December
31, 2010, there are 33,457 shares that the Company may buy back as a result of
this repurchase program.

16

---



Table of Contents

Item 6. SELECTED FINANCIAL DATA

The
following table sets forth selected consolidated financial data for each of the
five fiscal years ended December 31, 2010. The operating and balance sheet data
for the years ended and as of December 31, 2010, 2009, 2008, 2007, and 2006 are
derived from our audited consolidated financial statements. The following
information should be read in conjunction with Managements Discussion and
Analysis of Financial Condition and Results of Operations and with our
consolidated financial statements and the related notes thereto included
elsewhere in this report.

(In thousands
except for per share amounts)

|                                                   |  |                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|-------------------------------------------------- |  | ----------------------- | ------ | ---- | - | ------ | - | ---- | ------ | ---- | - | ------ | - | - | ------ | -
|                                                   |  | Year Ended
 December 31 |       
|OPERATING DATA                                     |  | 20101                   |        | 2009 |   | 2008   |   | 2007 |        | 2006 |  
|                                                   |  |                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Net Revenues                                       |  | $                       | 39,920 |      | $ | 39,589 |   | $    | 46,025 |      | $ | 52,880 |   | $ | 55,840 |  
|                                                   |  |                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Operating Expenses                                 |  |                         | 41,197 |      |   | 39,363 |   |      | 45,310 |      |   | 48,723 |   |   | 50,660 |  
|                                                   |  |                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|(Loss) Income Before Income Tax Benefit
 (Expense) |  |                         | (1,264 | )    |   | 261    |   |      | 823    |      |   | 4,486  |   |   | 5,459  |  
|                                                   |  |                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Income Tax Benefit (Expense)                       |  |                         | 272    |      |   | (200   | ) |      | (385   | )    |   | (1,865 | ) |   | (2,334 | )
|                                                   |  |                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Net (Loss) Income                                  |  | $                       | (992   | )    | $ | 61     |   | $    | 438    |      | $ | 2,621  |   | $ | 3,125  |  
|                                                   |  |                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Basic Net (Loss) Income per Share                  |  | $                       | (.25   | )    | $ | .02    |   | $    | .11    |      | $ | .65    |   | $ | .78    |  
|Diluted Net (Loss) Income per Share                |  |                         | (.25   | )    |   | .02    |   |      | .11    |      |   | .62    |   |   | .74    |  
|Dividends per Share                                |  |                         | .00    |      |   | .00    |   |      | .25    |      |   | .25    |   |   | .25    |  
|                                                   |  |                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Cash Flows from Operating Activities               |  | $                       | 2,985  |      | $ | 1,931  |   | $    | 1,649  |      | $ | 4,608  |   | $ | 5,973  |  
|                                                   |  |                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|                                                   |  | At December 31          |       
|BALANCE SHEET DATA                                 |  | 2010                    |        | 2009 |   | 2008   |   | 2007 |        | 2006 |  
|                                                   |  |                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Land, Buildings & Equipment, Net                   |  | $                       | 23,948 |      | $ | 23,850 |   | $    | 24,932 |      | $ | 25,038 |   | $ | 24,904 |  
|                                                   |  |                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Total Assets                                       |  |                         | 32,648 |      |   | 31,752 |   |      | 32,244 |      |   | 36,106 |   |   | 34,351 |  
|                                                   |  |                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Total Stockholders Equity                         |  |                         | 26,546 |      |   | 27,302 |   |      | 26,681 |      |   | 28,578 |   |   | 26,860 |  
|                                                   |  |                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Number of Common Shares Outstanding at Year
 End   |  |                         | 4,054  |      |   | 4,022  |   |      | 3,938  |      |   | 4,084  |   |   | 4,051  |  

1 During fiscal year 2010, the Company incurred a
one-time loss on disposal of assets in the amount of $909,540 relating to the
remodeling of our existing card room.

17

---



Table of Contents

|       |                                                                                       
|------ | --------------------------------------------------------------------------------------
|Item7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The
following Managements Discussion and Analysis of Financial Condition and
Results of Operations (MD&A) is intended to help the reader understand
Canterbury Park Holding Corporation, our operations and our present business
environment. This MD&A is provided as a supplement to  and should be read
in conjunction with  our consolidated financial statements and the accompanying
notes to the financial statements (the Notes). Our actual results could
differ materially from those anticipated in the forward-looking statements
included in this discussion as a result of certain factors, including, but not
limited to, those discussed in Risk Factors and Forward-Looking Statements
included elsewhere in this Annual Report.

STRATEGIC OVERVIEW

Canterbury
Park Holding Corporation was incorporated under the laws of Minnesota and
acquired land and buildings to conduct pari-mutuel horse racing operations in
March 1994. The Racetrack is located in Shakopee, Minnesota, approximately 25
miles southwest of downtown Minneapolis. In May 1994, we commenced year-round
pari-mutuel simulcast wagering operations and during the summer of 1995, we
hosted the first annual live race meet. Our live racing operations are a
seasonal business as we host live race meets each year from May until late
summer. We earn additional pari-mutuel revenue by televising our live racing to
out-of-state racetracks around the country. We also derive revenues from
related services and activities, such as advertising, admissions, parking and
publication sales and from other entertainment events and activities held at
the Racetrack.

In
April 2000, we opened Canterbury Parks card room. After nearly ten years in
operation, and beginning in January of 2010, the Company began an extensive
remodeling project in our card room. The remodeling project was completed
during the second quarter of 2010 and on April 14, 2010, Canterbury Park opened
its new Card Casino. The Card Casino operates 24 hours a day, seven days a week and
is limited by Minnesota State law to a maximum of 50 tables. The Card Casino
currently offers a mix of both poker and table games up to the State maximum
table limit.

Our
three largest sources of revenues, Card Casino operations, pari-mutuel
operations and concessions sales, generate cash revenues. Consequently, the
Company is highly liquid and has not utilized its line of credit in over eight
years.

|                                   |  |      |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|---------------------------------- |  | ---- | ------ | ---- | - | ------ | - | ---- | ------ | ---- | - | ------ | - | - | ------ | -
|Financial
Performance Summary      |  | 2010 |        | 2009 |   | 2008   |   | 2007 |        | 2006 |  
|                                   |  |      |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Net Revenues                       |  | $    | 39,920 |      | $ | 39,589 |   | $    | 46,025 |      | $ | 52,880 |   | $ | 55,840 |  
|                                   |  |      |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Operating
 Expenses                |  |      | 41,197 |      |   | 39,363 |   |      | 45,310 |      |   | 48,723 |   |   | 50,660 |  
|                                   |  |      |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|(Loss)
 Income Before Income Taxes |  |      | (1,264 | )    |   | 261    |   |      | 823    |      |   | 4,486  |   |   | 5,459  |  
|                                   |  |      |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Income Tax
 Benefit (Expense)      |  |      | 272    |      |   | (200   | ) |      | (385   | )    |   | (1,865 | ) |   | (2,334 | )
|                                   |  |      |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Net (Loss)
 Income                 |  | $    | (992   | )    | $ | 61     |   | $    | 438    |      | $ | 2,621  |   | $ | 3,125  |  

The primary
strengths of Canterbury Park are our dedicated and capable staff, our
first-class facilities and 380-acre property and the legal authority to offer
our unique gaming products in our market area.

Our
management team has extensive knowledge of the horse racing, Card Casino, and
concession operations  and our staff has demonstrated a commitment to our
customers. We continue to implement improvements to our comprehensive customer satisfaction
measurement and enhancement program. Our management team has a good relationship with our workforce and is
able to retain qualified personnel as demonstrated by our low turnover rate.

18

---



Table of Contents

Our
facilities are modern by racetrack industry standards, and we have invested
heavily in the past few years to update and upgrade them to meet the needs of
our customers and horsemen. Our 380-acre property with a prime location on the
edge of the Minneapolis  St. Paul metropolitan area in one of the
fastest-growing counties in Minnesota provides us with great long-term growth
and development opportunities. Our Board of Directors is engaged in an
evaluation of the highest and best potential uses of our underutilized land.
Our long-term strategic direction is to enhance the character of our property
as a unique gaming and entertainment destination.

We have a
strong commitment to live racing and have been particularly successful in
attracting new customers and providing a quality live racing experience for our
horse racing fans as well as the horsemen who enter their horses in live races
at Canterbury Park. However, we still face a number of longer-term challenges
as we work to improve the results of our pari-mutuel operations, including
declines in handle and intense competition for racehorses with tracks that are
able to subsidize their purses with alternative gaming revenues.

We
continue to believe that our best option for long-term growth is to gain
authority under Minnesota law to offer additional
gaming options, which would enhance horse racing with increased purses, provide
growth and development opportunities and produce significant new tax revenues
for state and local governments. In addition, we believe that additional gaming
options would provide significant job opportunities for the area. The effort to
obtain legislative authority for these initiatives has required, and will
continue to require, substantial expenditures. Due to the inherent uncertainty
of the outcome of legislative activities, there can be no assurance that any
bills favorable to the Companys interests will be enacted into law, and it is
possible, as a result of the legislative process, that legislation directly or
indirectly adverse to the Company may be enacted into law.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The
preparation of consolidated financial statements in conformity with generally
accepted accounting principles in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the consolidated financial statements and the reported amounts
of revenues and expenses during the reporting period. We base our assumptions,
estimates and judgments on historical experience, current trends and other
factors that management believes to be relevant at the time the consolidated
financial statements are prepared. On a regular basis, management reviews the
accounting policies, assumptions, estimates and judgments to ensure that our
financial statements are presented fairly and in accordance with generally
accepted accounting principles. However, because future events and their
effects cannot be determined with certainty, actual results could differ from
our assumptions and estimates, and such differences could be material.

Our
significant accounting policies are included in Note 1 to our consolidated
financial statements. We believe the following critical accounting policies
affect our more significant judgments and estimates used in the preparation of
our consolidated financial statements:

Property
and Equipment
- We have significant capital invested in our property and equipment, which
represents approximately 73.4% of our total assets at December 31, 2010. We
utilize our judgment in various ways including: determining whether an
expenditure is considered a maintenance expense or a capital asset; determining
the estimated useful lives of assets; and determining if or when an asset has
been impaired. Management periodically reviews the carrying value of property
and equipment for potential impairment by comparing the carrying value of these
assets with their related expected future net cash flows. Should the sum of the
related expected future net cash flows be less than the carrying value, we will
determine whether an impairment loss should be recognized. An impairment loss
would be measured by the amount by which the carrying value of the asset
exceeds the fair value of the asset. To date, we have determined that no
impairment of these assets exists.

Stock Based Employee Compensation
 ASC 718, Compensation  Stock Compensation (ASC 718), requires recognition
of employee services provided in exchange for a share-based payment based on
the grant date fair market value. We utilize our judgment in determining the
assumptions used to determine the fair value of options granted using a
Black-Scholes model.

19

---



Table of Contents

NEW ACCOUNTING PRONOUNCEMENTS

In January
2010, the FASB issued Accounting Standards Update No. 2010-06 (ASU 2010-06) 
Fair Value Measurements and Disclosures. ASU 2010-06 amends Accounting
Standards Codification (ASC) 820-10, Fair Value Measurements and
Disclosures, and requires new disclosures surrounding certain fair value
measurements. ASU 2010-06 was effective for the first interim or annual
reporting period beginning on or after December 15, 2009, except for
certain disclosures about purchases, sales, issuances and settlements in the
rollforward of activity in Level 3 fair value measurements, which are effective
for the first interim and annual reporting periods beginning on or after
December 15, 2010. The adoption of ASU 2010-06 did not have a material
effect on the Companys consolidated financial statements.

In April
2010, the FASB issued Accounting Standards Update No. 2010-16 (ASU
2010-16) EntertainmentCasinos (Topic 924): Accruals for Casino Jackpot
Liabilities. ASU 2010-16 codifies the consensus reached in Emerging Issues
Task Force Issue No. 09-F, Casino Base Jackpot Liabilities. ASU 2010-16
amends the ASC to clarify that an entity should not accrue jackpot liabilities,
or portions thereof, before a jackpot is won if the entity can avoid paying the
jackpot. Jackpots should be accrued and charged to revenue when an entity has
the obligation to pay the jackpot. The guidance in this ASU applies to both
base and progressive jackpots. The amendments in this ASU are effective for
fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2010. The amendments should be applied by recording a
cumulative-effect adjustment to opening retained earnings in the period of
adoption. The adoption of ASU 2010-16 is not expected to have a material effect
on the Companys consolidated financial statements.

CONTINGENCIES

In
connection with the purchase of the Racetrack, the Company entered into an Earn
Out Promissory Note dated March 29, 1994. In accordance with the Earn Out Note,
if (i) off-track betting becomes legally permissible in the State of Minnesota
and (ii) we begin to conduct off-track betting with respect to or in connection
with its operations, we will be required to pay to the IMR Fund, L.P. the
greater of $700,000 per operating year as defined, or 20% of the net pretax
profit as defined, for each of five operating years. At this time, we believe
that the likelihood that these two conditions will be met and that we will be
required to pay these amounts is remote. At the date (if any) that these two
conditions are met, the five minimum payments will be discounted back to their
present value and the sum of those discounted payments will be capitalized as
part of the purchase price in accordance with generally accepted accounting
principles. The purchase price will be further increased if payments become due
under the 20% of Net Pretax Profit calculation. The first payment is to be
made 90 days after the end of the third operating year in which off-track
betting is conducted by us. Remaining payments would be made within 90 days of
the end of each of the next four operating years.

The
Company is periodically involved in various claims and legal actions arising in
the normal course of business. Management believes that the resolution of any
pending claims and legal actions at December 31, 2010 and as of the date of
this report will not have a material impact on the consolidated financial
statements.

20

---



Table of Contents

OPERATIONS REVIEW

YEAR ENDED DECEMBER
31, 2010 COMPARED TO YEAR ENDED DECEMBER 31, 2009

The following
table sets forth a reconciliation of net income, a GAAP financial measure, to
EBITDA and Adjusted EBITDA (each defined below), which are non-GAAP measures,
for the years ended December 31, 2010 and 2009. EBITDA represents earnings
before interest income, income tax expense, and depreciation and amortization.
EBITDA is not a measure of performance or liquidity calculated in accordance
with generally accepted accounting principles (GAAP), and should not be
considered an alternative to, or more meaningful than, net income as an
indicator of our operating performance, or cash flows from operating activities
as a measure of liquidity. EBITDA has been presented as a supplemental
disclosure because it is a widely used measure of performance and basis for
valuation of companies in our industry. Moreover, other companies that provide
EBITDA information may calculate EBITDA differently than we do. Adjusted EBITDA
represents EBITDA plus material, one-time non-cash expenses. During the year
ended December 31, 2010, Adjusted EBITDA included the loss on disposal of
assets during the remodel of our card room.

|                                          |  |                |           |                |   |           |  
|----------------------------------------- |  | -------------- | --------- | -------------- | - | --------- | -
|                                          |  | Dec. 31,
 2010 |           | Dec. 31,
 2009 |  
|Net (loss)
 income                        |  | $              | (992,206  | )              | $ | 60,970    |  
|Interest
 income, net of interest expense |  |                | (12,913   | )              |   | (35,583   | )
|Income tax
 (benefit) expense             |  |                | (272,000  | )              |   | 199,800   |  
|Depreciation                              |  |                | 2,043,758 |                |   | 2,094,174 |  
|EBITDA                                    |  | $              | 766,639   |                | $ | 2,319,361 |  
|Loss on disposal of assets (net)          |  |                | 906,940   |                |   |          |  
|Adjusted
 EBITDA                          |  | $              | 1,673,579 |                | $ | 2,319,361 |  

Adjusted
EBITDA decreased as a percentage of net revenues to 4.2% for the year ended
December 31, 2010 compared to 5.9% for the year ended December 31, 2009.

Total
net operating revenues for the year ended December 31, 2010 were $39.9 million,
an increase of $331,601, or 0.8%, compared to total operating revenues of $39.6
million for the year ended December 31, 2009. Total Card Casino revenues
increased 9.9%, pari-mutuel revenues decreased 10.2% and concession revenues
decreased 1.3% in fiscal 2010 compared to fiscal 2009. Discussions of
pari-mutuel and Card Casino revenues follow.

21

---



Table of Contents

SUMMARY OF PARI-MUTUEL OPERATING DATA

|                                       |  |                           |            |                           |   |            | 
|-------------------------------------- |  | ------------------------- | ---------- | ------------------------- | - | ---------- | 
|                                       |  | Year Ended
 Dec. 31, 2010 |            | Year Ended
 Dec. 31, 2009 |  
|Racing Days                            |  |                           |            |                           |   |            | 
|Simulcast only days                    |  |                           | 301        |                           |   | 301        | 
|Live and simulcast days                |  |                           | 62         |                           |   | 62         | 
|Total Racing Days                      |  |                           | 363        |                           |   | 363        | 
|On-Track Handle                        |  |                           |            |                           |   |            | 
|Simulcast handle on non-live race days |  | $                         | 25,250,000 |                           | $ | 27,934,000 | 
|Simulcast handle on live race days     |  |                           | 9,204,000  |                           |   | 10,482,000 | 
|Total simulcast handle                 |  |                           | 34,454,000 |                           |   | 38,416,000 | 
|                                       |  |                           |            |                           |   |            | 
|Live racing handle                     |  |                           | 10,581,000 |                           |   | 12,181,000 | 
|Total On-Track Handle                  |  |                           | 45,035,000 |                           |   | 50,597,000 | 
|                                       |  |                           |            |                           |   |            | 
|Out-of-state Live Handle               |  |                           | 13,365,000 |                           |   | 13,712,000 | 
|Total Handle                           |  | $                         | 58,400,000 |                           | $ | 64,309,000 | 
|On-Track Average Daily Handle          |  |                           |            |                           |   |            | 
|Simulcast only days                    |  | $                         | 84,000     |                           | $ | 93,000     | 
|Live and simulcast days                |  |                           | 319,000    |                           |   | 366,000    | 

Pari-mutuel
revenues include commission and breakage revenues on live on-track and
simulcast racing, fees received from out-of-state racetracks for wagering on
our live races and proceeds from uncashed winning tickets. Pari-mutuel revenues
decreased to $10.2 million in 2010 from $11.4 million in 2009, primarily
reflecting a decrease in simulcast and on-track live racing handle in 2010
compared to 2009.

Total
handle wagered on simulcast races in 2010 decreased $3,962,000, or 10.3%,
compared to 2009. The decrease is attributable to the lingering effects of the
economic recession that has adversely impacted discretionary spending on
entertainment. In addition, inclement weather during the first half of 2010
resulted in the cancellation of a significant number of races at racetracks
simulcasting their signal to our racetrack. Finally, the Company believes that
an increasing number of Minnesota residents are unlawfully wagering on horse
races over the Internet.

On-track
live handle decreased by $1,600,000, or 13.1%, for the 2010 live meet compared
to the live meet in 2009. In addition, wagering at out-of-state tracks on races
conducted at the Racetrack during the 2010 live meet decreased $347,000, or
2.5%, compared to the 2009 meet. These decreases are primarily due to the
lingering effects of the economic recession that has adversely impacted
discretionary spending on entertainment.

Revenues
recognized on proceeds from winning pari-mutuel tickets which were not
presented for payment within one year of the end of the respective race meets
decreased approximately $23,000 in 2010 compared to 2009, primarily due to
reduced amounts wagered on simulcast horse races.

22

---



Table of Contents

SUMMARY OF CARD CASINO REVENUES

|                          |  |                           |            |                           |   |            | 
|------------------------- |  | ------------------------- | ---------- | ------------------------- | - | ---------- | 
|                          |  | Year Ended
 Dec. 31, 2010 |            | Year Ended
 Dec. 31, 2009 |  
|                          | 
|Poker Games               |  | $                         | 11,126,000 |                           | $ | 11,520,000 | 
|Table Games               |  |                           | 9,080,000  |                           |   | 6,930,000  | 
|Total Collection Revenue  |  |                           | 20,206,000 |                           |   | 18,450,000 | 
|                          |  |                           |            |                           |   |            | 
|Other
 Revenue            |  |                           | 1,954,000  |                           |   | 1,708,000  | 
|                          |  |                           |            |                           |   |            | 
|Total Card Casino Revenue |  | $                         | 22,160,000 |                           | $ | 20,158,000 | 
|                          |  |                           |            |                           |   |            | 
|Number of Days Offered    |  |                           | 364        |                           |   | 364        | 
|Average Revenue per Day   |  | $                         | 60,900     |                           | $ | 55,400     | 

The
primary source of Card Casino revenue is a percentage of the wagers received
from the players as compensation for providing the card room facility and
services, referred to as collection revenue. Other Revenue presented above
includes fees collected for the administration of tournaments and amounts
earned as reimbursement for the administrative costs of maintaining the jackpot
funds. Card Casino revenues represent 55.5% and 50.9% of net revenues for 2010
and 2009, respectively.

The Card Casino is divided into two areas, the poker area and the table games
area. The average daily collection amount per game is dependent upon the number
of tables utilized to offer the game. Patron demand determines the number of
tables to be used for a specific game.

Total
Card Casino revenue increased $2,002,000, or 9.9%, compared to 2009. The
increase in Card Casino revenue is due primarily to the increase in table games
revenue of $2,150,000, or 31.0%, in 2010 over 2009. The increase is largely due
to the opening of the Companys new Card Casino on April 14, 2010. While the
continued lingering effects of the economic recession and unlawful wagering on
poker over the Internet continues to adversely affect Card Casino revenues, the
Company believes these factors were more than offset by the new Card Casino that
has provided both an exciting and inviting atmosphere which has sparked an
increase in card play by patrons.

We
expect that competition from Running Aces, illegal Internet wagering, wagering
at tribal casinos will continue to put pressure on Card Casino operating
revenues in future periods. As a result, we continue to search for
opportunities to make Canterbury Park the most attractive alternative when our
customers want to wager on card games.

SUMMARY OF CONCESSION REVENUES

Concession
revenues remained relatively stable at $5,218,523, a slight decrease of
$67,000, or 1.3%, compared to 2009.

SUMMARY OF OTHER REVENUES

Other
revenue decreased $450,000, or 15.3%, to $2,502,000 in fiscal year 2010
compared to 2009. The decrease in 2010 was due primarily to the Company
offering free admission for each live race day in 2010 in honor of the 25th
anniversary of the founding of Canterbury Park (then Canterbury Downs).

23

---



Table of Contents

OPERATING EXPENSES

Total
operating expenses increased approximately $1,834,000, or 4.7%, to $41,197,000
in 2010, from $39,363,000 in 2009 primarily due to factors described below.
Total operating expenses as a percentage of net revenues increased slightly to
103.2% from 99.4% in 2009. This was due to multiple factors. First, we
experienced a considerable decrease in pari-mutuel revenues in 2010. In
addition, we incurred a one-time loss on disposal of assets in the amount of
$909,940 relating to the remodeling of our existing card room. As a result,
despite decreases in variable expenses, such as marketing and purse expenses,
operating expenses became a larger percentage of total revenues.

Total
purse expense decreased $71,000, or 1.2%, in 2010 compared to 2009 as presented
in the table below. As discussed in greater detail in Item 1(c) (iv) above,
Minnesota law requires us to allocate a portion of funds received from betting
in the card room and wagering on simulcast and live horse races for future
payment as purses for live horse races or other authorized uses. While most of
these funds are paid into the purse funds for thoroughbred, quarter horse and
standardbred races, Minnesota law requires that a portion of funds allocated
for purses be paid into the MBF. A description of how the purse expense was
derived from these three sources and allocated for purse expense and to the MBF
is presented below. The increase in Card Casino revenues in 2010 compared to
2009 resulted in the increases in Card Casino purse and MBF expense shown in
the table below. Total purse expense associated with simulcast and live racing
decreased in 2010 compared to 2009 primarily due to lower wagering levels.

|                 |  |               |           |                                   |   |           |  |      |         |  |   |         | 
|---------------- |  | ------------- | --------- | --------------------------------- | - | --------- |  | ---- | ------- |  | - | ------- | 
|                 |  | Purse Expense |           | Minnesota Breeders Fund
 Expense |  
|                 |  | 2010          |           | 2009                              |   | 2010      |  | 2009 |        
|                 |  |               |           |                                   |   |           |  |      |         |  |   |         | 
|Card Casino      |  | $             | 2,576,000 |                                   | $ | 2,324,000 |  | $    | 286,000 |  | $ | 258,000 | 
|                 |  |               |           |                                   |   |           |  |      |         |  |   |         | 
|Simulcast Racing |  |               | 2,016,000 |                                   |   | 2,183,000 |  |      | 387,000 |  |   | 429,000 | 
|                 |  |               |           |                                   |   |           |  |      |         |  |   |         | 
|Live Racing      |  |               | 1,191,000 |                                   |   | 1,347,000 |  |      | 106,000 |  |   | 122,000 | 
|                 |  |               |           |                                   |   |           |  |      |         |  |   |         | 
|Total            |  | $             | 5,783,000 |                                   | $ | 5,854,000 |  | $    | 779,000 |  | $ | 809,000 | 

Under
Minnesota law, the Company is required to pay 10% of the first $6 million of
gross Card Casino revenues towards purses for live horse racing at the
Racetrack. After meeting the $6 million threshold, the Company must pay 14% of
gross Card Casino revenues as purse monies. Of funds allocated for purses, the
amounts paid are allocated 90% to the purse funds and 10% to the MBF.

The
amounts paid to the purse fund for simulcast racing differ depending upon
whether the simulcast wagering occurs during the Racing Season, a statutorily
defined 25-week period beginning in early May each year, or outside of the
Racing Season. We paid an average of 5.85% of handle to the purse fund in 2010,
compared to 5.68% in 2009. We pay 5.50% of pari-mutuel simulcast commission
revenues to the MBF; consequently, lower revenues result in lower MBF expense.

We
also experienced a reduction in host fees of $119,000, or 7.6%, in 2010
compared to 2009 due to lower wagering experienced in 2010 compared to 2009.

Salary
and benefit expenses increased by $564,000, or 3.3%, for the twelve months
ended December 31, 2010 compared to the twelve months ended December 31, 2009.
The increase is primarily due to an increase in the Federal minimum wage which
became effective after the 2009 second quarter, an increase in hours worked to
support the growth in Card Casino revenues, and an increase in the state
unemployment tax rate.

Other
operating expenses increased $514,000, or 7.8%, in 2010 compared to 2009. This
increase is primarily due to increased expenditures in support of legislation
that would authorize electronic gaming devices at the Racetrack.

Net
other income decreased $23,000, or 63.7%, in 2010 compared to 2009. This
decrease is primarily attributable to a decrease in interest income on our
primary bank account balance during 2010.

24

---



Table of Contents

Income
taxes as a percentage of pre-tax loss and income increased to 78.5% for the
year ended December 31, 2010 from 76.6% for the year ended December 31, 2009.
The increase is primarily attributable to an increase in non-deductible
lobbying expenses in 2010 compared to 2009 as part of the Companys effort to
obtain Racino legislation.

Net
income decreased $1,053,000, which resulted in a net loss for 2010 in the
amount of $992,000 compared to net income of $61,000 for the year ended
December 31, 2009. As mentioned above, the primary reasons for this change was
the loss on disposal of assets during the first quarter of 2010 and the
significant decline in pari-mutuel revenues during 2010.

LIQUIDITY AND CAPITAL RESOURCES

At
December 31, 2010, we had unrestricted cash and cash equivalents of $5,451,000
compared to $4,741,000 at December 31, 2009. This $710,265 increase consists of
$3.0 million net cash provided by operating activities and $0.1 million net
cash provided by financing activities, offset by $2.4 million net cash used in investing
activities. In addition, as of December 31, 2010, we had $3.0 million of
capacity under a commercial revolving credit line as part of a general credit
and security agreement with Bremer Bank that will expire on May 8, 2011. The
Company plans to renew this credit line before it expires. We had no borrowings
under the credit line in 2010 or 2009.

Our
three largest sources of revenue: pari-mutuel wagering, Card Casino operations
and concessions, are all based on cash transactions. Consequently, we have
significant inflows of cash on a daily basis. We designate cash balances which
will be required to satisfy certain short-term liabilities such as progressive
jackpots, the player pool and amounts due horsemen for purses and awards as
restricted as a separate balance sheet item.

The
Companys table games are required by law to be unbanked. Unbanked refers
to a wagering system or game where wagers lost or won by the host are
accumulated into a player pool liability for purposes of enhancing the total
amount paid back to players in any other card game. The Company may only serve
as custodian of the player pool. It may not have an active interest in any card
game and does not recognize net wins or losses as revenue. The Company is
required to return accumulated player pool funds to the players through
giveaways, promotional items, prizes or by other means. The player pool
liability was approximately $206,000 at December 31, 2010 compared to $156,000
at December 31, 2009.

The
card room offers progressive jackpots for poker games. Amounts collected for
these jackpot funds are accrued as liabilities until paid to winners. At
December 31, 2010, accrued jackpot funds totaled approximately $516,000
compared to $486,000 at December 31, 2009. The MRC regulates the operation of
the player pool and progressive jackpot pools. These liabilities have the
potential for significant fluctuation on a daily basis.

All
games in the Card Casino are played using chips. The value of chips issued and
outstanding, referred to as the outstanding chip liability, was approximately
$187,000 at December 31, 2010, compared to $191,000 at December 31, 2009. This
liability has the potential for significant fluctuation on a daily basis depending
upon the demand for chip redemptions and sales.

Our
second largest individual operating expense item is purse expense. Pursuant to
an agreement with the MHBPA, we transferred into a trust account or paid
directly to the MHBPA approximately $5,207,000 and $5,525,000 in purse funds
for the years ended December 31, 2010 and 2009, respectively. Minnesota
Statutes specify that amounts transferred into trust are the property of the
trust and not the Company. Unpaid purse fund obligations due the MHBPA were
$193,592 and $35,422 at December 31, 2010 and 2009, respectively.

The
Company believes that unrestricted funds available in its cash accounts,
amounts available under its revolving line of credit, along with funds
generated from operations, will be sufficient to satisfy its liquidity and
capital resource requirements for regular operations for the foreseeable
future.

25

---



Table of Contents

CASH FLOWS FROM OPERATING ACTIVITIES

Net
cash provided by operations during the year ended December 31, 2010 was
$2,984,065 and was the result of several factors. During the first quarter of
2010, the Company incurred a one-time loss on disposal of assets in the amount
of $909,540 relating to the remodel of our card room. In addition, depreciation
during 2010 was $2,043,758. Finally, during the third quarter of 2010, the
Company had a cost segregation study performed on our assets in use. Primarily
as a result of the study, our deferred tax liability increased $839,450. These
items were somewhat offset by an increase in restricted cash in the amount of
$391,662 due primarily to the increase in the amount to the Minnesota
Horsemens Benevolence & Protective Association (MHBPA).

Net
cash provided by operations during the year ended December 31, 2009 was
$1,930,905, which resulted primarily from net income of $60,970 and
depreciation of $2,094,174, offset by a decrease in card room accruals of
$513,830. The decrease in card room accruals was primarily as a result of there
being more days accrued in 2008 for the dealer tips.

CASH FLOWS FROM INVESTING ACTIVITIES

Cash
used in investing activities for the year ended December 31, 2010 of $2,417,119
resulted primarily from costs to remodel our Card Casino totaling $2,296,000.
The Company used cash on hand to fund the project and avoided drawing on its
line of credit.

Cash
used in investing activities for the year ended December 31, 2009 of $1,340,178
resulted primarily from upgrades to our grandstand and the purchase of
equipment for our backside operations. In addition, in 2009, the Company
purchased investments of $500,000 that were set to mature at various dates in
2010 and 2011. A portion of these investments were redeemed early in 2010, and
the Company has no investments as of December 31, 2010.

CASH FLOWS FROM FINANCING ACTIVITIES

Cash
provided by financing activities was $143,319 for the year ended December 31,
2010 compared to cash provided by financing activities of $404,739 for the year
ended December 31, 2009. The 2010 cash inflow resulted solely from proceeds
received upon the exercise of stock options and shares of common stock
purchased by employees pursuant to our Employee Stock Purchase Plan.

Cash
provided by financing activities was $404,739 for the year ended December 31,
2009 compared to cash used in financing activities of $2,621,148 for the year
ended December 31, 2008. The 2009 cash inflow resulted solely from proceeds of
$404,739 received upon the issuance of common stock due to the exercise of stock
options and shares of common stock purchased by employees pursuant to our
Employee Stock Purchase Plan.

OFF-BALANCE SHEET ARRANGEMENTS

The
Company currently has no off-balance sheet arrangements and has no intent to
enter into any such agreements in the near future.

COMMITMENTS AND CONTRACTUAL OBLIGATIONS

In
March 2008, the Company entered into a six-year service agreement with its
totalizator provider. Pursuant to the agreement, the vendor provides
totalizator equipment and computer programs which record and process all wagers
and calculate odds and payoffs. In October 2008, the Company entered into a
four-year service agreement to outsource its information technology (IT)
function. Amounts charged to operations under these agreements for the years
ended December 31, 2010 and 2009 were approximately $637,000 and $644,000,
respectively.

26

---



Table of Contents

The
Company has entered into operating leases for rental of office equipment,
equipment to print certain publications, and track equipment to maintain the
Racetrack. Amounts charged to operations under these agreements for the years
ended December 31, 2010 and 2009 were approximately $140,000 and $142,000,
respectively. All such leases expire on or before September 30, 2013.

Since
December 31, 2010, there have been no material changes outside the ordinary
course of business to our contractual obligations as set forth above. As of
December 31, 2010, we had no borrowings pursuant to our line of credit and were
not party to capital lease obligations, significant purchase obligations or
other long-term obligations.

FORWARD-LOOKING STATEMENTS

From
time to time, in reports filed with the Securities and Exchange Commission, in
press releases, and in other communications to shareholders or the investing
public, we may make forward-looking statements concerning possible or
anticipated future financial performance, prospective business activities or
plans which are typically preceded by words such as believes, expects, anticipates,
intends or similar expressions. For such forward-looking statements, we claim
the protection of the safe harbor for forward-looking statements contained in
federal securities laws. Shareholders and the investing public should
understand that such forward-looking statements are subject to risks and
uncertainties which could affect our actual results and cause actual results to
differ materially from those indicated in the forward-looking statements. Such
risks and uncertainties include, but are not limited to: material fluctuations
in attendance at the Racetrack, decline in interest in wagering on horse races
at the Racetrack, at other tracks, or on unbanked card games offered at the
Card Casino, competition from other venues offering unbanked card games or
other forms of wagering, competition from other sports and entertainment
options, costs associated with our efforts to obtain legislative authority for
additional gaming options, increases in compensation and employee benefit
costs, increases in the percentage of revenues allocated for purse fund
payments, higher than expected expense related to new marketing initiatives,
the impact of wagering products and technologies introduced by competitors,
legislative and regulatory decisions and changes, the general health of the
gaming sector, and other factors that are beyond our ability to control or
predict.

Item 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Canterbury
Park is not required to provide the information requested by this Item as it
qualifies as a smaller reporting company.

27

---



Table of Contents

Item 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

(a)          Financial
Statements

The following
financial statements of the Company are set forth on pages 29 through 46 of the
Form 10-K:

|                                                                                                           |  |     
|---------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                           |  | Page
|                                                                                                           |  |     
|Report of Independent
 Registered Public Accounting Firm                                                   |  | 29  
|                                                                                                           |  |     
|Consolidated
 Balance Sheets as of December 31, 2010 and 2009                                              |  | 30  
|                                                                                                           |  |     
|Consolidated
 Statements of Operations for the years ended December 31, 2010 and 2009                      |  | 31  
|                                                                                                           |  |     
|Consolidated
 Statements of Changes in Stockholders Equity for the years ended December 31, 2010 and 2009 |  | 32  
|                                                                                                           |  |     
|Consolidated
 Statements of Cash Flows for the years ended December 31, 2010 and 2009                      |  | 33  
|                                                                                                           |  |     
|Notes to
 Consolidated Financial Statements for the years ended December 31, 2010 and
 2009                |  | 34  

28

---



Table of Contents

REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of
Directors and Stockholders
Canterbury Park Holding Corporation

We
have audited the accompanying consolidated balance sheets of Canterbury Park
Holding Corporation (a Minnesota corporation) as of December 31, 2010 and
2009, and the related consolidated statements of operations, stockholders
equity and cash flows for the years then ended. 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 the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Companys internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, 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 referred to above present
fairly, in all material respects, the financial position of Canterbury Park
Holding Corporation as of December 31, 2010 and 2009, and the results of
their operations and their cash flows for the years then ended in conformity
with accounting principles generally accepted in the United States of America.

|                        | 
|----------------------- | 
|                        | 
|/s/ Grant
 Thornton LLP | 
|Minneapolis,
 Minnesota | 
|March 31,
 2011         | 

29

---



Table of Contents

CANTERBURY PARK HOLDING CORPORATION AND
SUBSIDIARIES

CONSOLIDATED
BALANCE SHEETS
DECEMBER 31, 2010 AND 2009




|                                                                                                                                   |  |      |            |      |   |            | 
|---------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | ---- | - | ---------- | 
|                                                                                                                                   |  | 2010 |            | 2009 |  
|                                                                                                                                   |  |      |            |      |   |            | 
|ASSETS                                                                                                                             |  |      |            |      |   |            | 
|                                                                                                                                   |  |      |            |      |   |            | 
|CURRENT ASSETS                                                                                                                     |  |      |            |      |   |            | 
|Cash                                                                                                                               |  | $    | 5,451,462  |      | $ | 4,741,197  | 
|Restricted cash                                                                                                                    |  |      | 1,341,656  |      |   | 949,994    | 
|Short-term investments (Note
 3)                                                                                                   |  |      |           |      |   | 365,894    | 
|Accounts receivable, net of
 allowance of $34,805 and $6,500, respectively                                                         |  |      | 394,314    |      |   | 405,192    | 
|Inventory                                                                                                                          |  |      | 176,211    |      |   | 178,512    | 
|Prepaid expenses                                                                                                                   |  |      | 564,984    |      |   | 465,084    | 
|Income taxes receivable                                                                                                            |  |      | 381,898    |      |   | 168,979    | 
|Deferred income taxes (Note 4)                                                                                                     |  |      | 320,400    |      |   | 296,500    | 
|Due from Minnesota horsemen
 associations                                                                                          |  |      | 49,241     |      |   | 32,353     | 
|Total current assets                                                                                                               |  |      | 8,680,166  |      |   | 7,603,705  | 
|                                                                                                                                   |  |      |            |      |   |            | 
|LONG-TERM ASSETS                                                                                                                   |  |      |            |      |   |            | 
|Deposits                                                                                                                           |  |      | 20,000     |      |   | 20,000     | 
|Deferred income taxes (Note 4)                                                                                                     |  |      |           |      |   | 28,850     | 
|Long-term investments (Note 3)                                                                                                     |  |      |           |      |   | 250,000    | 
|Land, buildings and equipment,
 net (Note 2)                                                                                       |  |      | 23,948,330 |      |   | 23,849,672 | 
|                                                                                                                                   |  |      |            |      |   |            | 
|                                                                                                                                   |  | $    | 32,648,496 |      | $ | 31,752,227 | 
|                                                                                                                                   |  |      |            |      |   |            | 
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                               |  |      |            |      |   |            | 
|                                                                                                                                   |  |      |            |      |   |            | 
|CURRENT LIABILITIES                                                                                                                |  |      |            |      |   |            | 
|Accounts payable                                                                                                                   |  | $    | 2,252,527  |      | $ | 2,061,658  | 
|Card Casino accruals                                                                                                               |  |      | 1,433,798  |      |   | 1,175,383  | 
|Accrued wages and payroll taxes                                                                                                    |  |      | 686,964    |      |   | 635,182    | 
|Due to MHBPA (Note 1)                                                                                                              |  |      | 193,592    |      |   | 35,422     | 
|Accrued property taxes                                                                                                             |  |      | 562,349    |      |   | 511,136    | 
|Payable to horsepersons                                                                                                            |  |      | 21,551     |      |   | 31,444     | 
|Total current liabilities                                                                                                          |  |      | 5,150,781  |      |   | 4,450,225  | 
|                                                                                                                                   |  |      |            |      |   |            | 
|                                                                                                                                   |  |      |            |      |   |            | 
|LONG-TERM LIABILITIES                                                                                                              |  |      |            |      |   |            | 
|Deferred income taxes (Note 4)                                                                                                     |  |      | 951,900    |      |   |           | 
|                                                                                                                                   |  |      |            |      |   |            | 
|COMMITMENTS AND CONTINGENCIES
 (Notes 9 and 10)                                                                                    |  |      |           |      |   |           | 
|                                                                                                                                   |  |      |            |      |   |            | 
|STOCKHOLDERS EQUITY (Notes 5 and 6)                                                                                               |  |      |            |      |   |            | 
|Common stock, $.01 par value, 10,000,000
 shares authorized, 4,053,660 and 4,021,702, respectively, shares issued and
 outstanding |  |      | 40,537     |      |   | 40,217     | 
|Additional paid-in capital                                                                                                         |  |      | 15,883,899 |      |   | 15,648,200 | 
|Retained earnings                                                                                                                  |  |      | 10,621,379 |      |   | 11,613,585 | 
|Total stockholders equity                                                                                                         |  |      | 26,545,815 |      |   | 27,302,002 | 
|                                                                                                                                   |  |      |            |      |   |            | 
|                                                                                                                                   |  | $    | 32,648,496 |      | $ | 31,752,227 | 

See notes to
consolidated financial statements.

30

---



Table of Contents

CANTERBURY PARK HOLDING CORPORATION AND
SUBSIDIARIES

CONSOLIDATED
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2010 AND 2009




|                                                        |  |      |            |      |   |            |  
|------------------------------------------------------- |  | ---- | ---------- | ---- | - | ---------- | -
|                                                        |  | 2010 |            | 2009 |  
|                                                        |  |      |            |      |   |            |  
|OPERATING REVENUES:                                     |  |      |            |      |   |            |  
|Pari-mutuel                                             |  | $    | 10,222,981 |      | $ | 11,384,656 |  
|Card Casino                                             |  |      | 22,160,076 |      |   | 20,158,313 |  
|Concessions                                             |  |      | 5,218,523  |      |   | 5,285,922  |  
|Other                                                   |  |      | 2,501,697  |      |   | 2,952,128  |  
|Total Revenues                                          |  |      | 40,103,277 |      |   | 39,781,019 |  
|Less: Promotional allowances                            |  |      | (183,093   | )    |   | (192,436   | )
|Net Revenues                                            |  |      | 39,920,184 |      |   | 39,588,583 |  
|                                                        |  |      |            |      |   |            |  
|OPERATING EXPENSES:                                     |  |      |            |      |   |            |  
|Purses                                                  |  |      | 5,782,877  |      |   | 5,853,656  |  
|Minnesota Breeders Fund                                |  |      | 778,715    |      |   | 809,405    |  
|Other pari-mutuel expenses                              |  |      | 1,451,192  |      |   | 1,570,032  |  
|Salaries and benefits                                   |  |      | 17,699,849 |      |   | 17,135,676 |  
|Cost of concession and other sales                      |  |      | 3,044,434  |      |   | 2,937,619  |  
|Depreciation                                            |  |      | 2,043,758  |      |   | 2,094,174  |  
|Loss on disposal of assets                              |  |      | 906,940    |      |   |           |  
|Utilities                                               |  |      | 1,112,776  |      |   | 1,083,850  |  
|Advertising and marketing                               |  |      | 1,314,649  |      |   | 1,330,485  |  
|Other                                                   |  |      | 7,062,113  |      |   | 6,548,499  |  
|Total Operating Expenses                                |  |      | 41,197,303 |      |   | 39,363,396 |  
|                                                        |  |      |            |      |   |            |  
|(LOSS) INCOME FROM OPERATIONS                           |  |      | (1,277,119 | )    |   | 225,187    |  
|                                                        |  |      |            |      |   |            |  
|OTHER (EXPENSE) INCOME:                                 |  |      |            |      |   |            |  
|Interest expense                                        |  |      | (225       | )    |   | (4,589     | )
|Interest income                                         |  |      | 13,138     |      |   | 40,172     |  
|Net Other Income                                        |  |      | 12,913     |      |   | 35,583     |  
|                                                        |  |      |            |      |   |            |  
|(LOSS) INCOME BEFORE INCOME TAXES                       |  |      | (1,264,206 | )    |   | 260,770    |  
|                                                        |  |      |            |      |   |            |  
|Income tax benefit (expense) (Note 4)                   |  |      | 272,000    |      |   | (199,800   | )
|                                                        |  |      |            |      |   |            |  
|NET (LOSS) INCOME                                       |  | $    | (992,206   | )    | $ | 60,970     |  
|                                                        |  |      |            |      |   |            |  
|WEIGHTED AVERAGE NUMBER OF COMMON SHARES
 OUTSTANDING   |  |      | 4,038,103  |      |   | 3,958,294  |  
|                                                        |  |      |            |      |   |            |  
|WEIGHTED AVERAGE NUMBER OF DILUTIVE SHARES
 OUTSTANDING |  |      | 4,038,103  |      |   | 3,983,657  |  
|                                                        |  |      |            |      |   |            |  
|BASIC NET (LOSS) INCOME PER COMMON SHARE
 (Note 7)      |  | $    | (.25       | )    | $ | .02        |  
|                                                        |  |      |            |      |   |            |  
|DILUTED NET (LOSS) INCOME PER COMMON SHARE
 (Note 7)    |  | $    | (.25       | )    | $ | .02        |  

See notes to
consolidated financial statements.

31

---



Table of Contents

CANTERBURY PARK HOLDING CORPORATION AND
SUBSIDIARIES

CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
YEARS ENDED DECEMBER 31, 2010 AND 2009




|                                                  |  |                    |           |               |   |                              |  |                    |            |       |   |            |   |   |            |  
|------------------------------------------------- |  | ------------------ | --------- | ------------- | - | ---------------------------- |  | ------------------ | ---------- | ----- | - | ---------- | - | - | ---------- | -
|                                                  |  | Number 
 of Shares |           | Common
 Stock |   | Additional
 Paid-in
 Capital |  | Retained
 Earnings |            | Total |  
|                                                  |  |                    |           |               |   |                              |  |                    |            |       |  
|Balance at December 31, 2008                      |  |                    | 3,938,021 |               | $ | 39,380                       |  | $                  | 15,089,438 |       | $ | 11,552,615 |   | $ | 26,681,433 |  
|                                                  |  |                    |           |               |   |                              |  |                    |            |       |   |            |   |   |            |  
|Exercise of stock options                         |  |                    | 79,837    |               |   | 798                          |  |                    | 376,918    |       |   |           |   |   | 377,716    |  
|Stock-based compensation                          |  |                    |          |               |   |                             |  |                    | 138,966    |       |   |           |   |   | 138,966    |  
|Tax benefit from exercise of stock options        |  |                    |          |               |   |                             |  |                    | 15,893     |       |   |           |   |   | 15,893     |  
|Shares issued under Employee Stock Purchase
 Plan |  |                    | 3,844     |               |   | 39                           |  |                    | 26,985     |       |   |           |   |   | 27,024     |  
|Net income                                        |  |                    |          |               |   |                             |  |                    |           |       |   | 60,970     |   |   | 60,970     |  
|                                                  |  |                    |           |               |   |                              |  |                    |            |       |   |            |   |   |            |  
|Balance at December 31, 2009                      |  |                    | 4,021,702 |               | $ | 40,217                       |  | $                  | 15,648,200 |       | $ | 11,613,585 |   | $ | 27,302,002 |  
|                                                  |  |                    |           |               |   |                              |  |                    |            |       |   |            |   |   |            |  
|Exercise of stock options                         |  |                    | 28,101    |               |   | 281                          |  |                    | 114,651    |       |   |           |   |   | 114,932    |  
|Stock-based compensation                          |  |                    |          |               |   |                             |  |                    | 187,959    |       |   |           |   |   | 187,959    |  
|Tax shortfall from exercise of stock
 options     |  |                    |          |               |   |                             |  |                    | (95,502    | )     |   |           |   |   | (95,502    | )
|Shares issued under Employee Stock Purchase
 Plan |  |                    | 3,857     |               |   | 39                           |  |                    | 28,591     |       |   |           |   |   | 28,630     |  
|Net loss                                          |  |                    |          |               |   |                             |  |                    |           |       |   | (992,206   | ) |   | (992,206   | )
|                                                  |  |                    |           |               |   |                              |  |                    |            |       |   |            |   |   |            |  
|Balance at December 31, 2010                      |  |                    | 4,053,660 |               | $ | 40,537                       |  | $                  | 15,883,899 |       | $ | 10,621,379 |   | $ | 26,545,815 |  

See notes to consolidated
financial statements.

32

---



Table of Contents

CANTERBURY PARK HOLDING CORPORATION AND
SUBSIDIARIES

CONSOLIDATED
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2010 AND 2009




|                                                                                         |  |      |            |      |   |            |  
|---------------------------------------------------------------------------------------- |  | ---- | ---------- | ---- | - | ---------- | -
|                                                                                         |  | 2010 |            | 2009 |  
|Operating Activities:                                                                    |  |      |            |      |   |            |  
|Net (loss) income                                                                        |  | $    | (992,206   | )    | $ | 60,970     |  
|Adjustments to reconcile net
(loss) income to net cash provided by
operating activities: |  |      |            |      |   |            |  
|Depreciation                                                                             |  |      | 2,043,758  |      |   | 2,094,174  |  
|Stockbased compensation
expense                                                         |  |      | 187,959    |      |   | 138,966    |  
|Loss on disposal of assets                                                               |  |      | 906,940    |      |   | 5,092      |  
|Tax (shortfall) benefit from
exercise of stock options                                   |  |      | (95,502    | )    |   | 15,893     |  
|Increase (decrease) in
deferred income taxes                                             |  |      | 956,850    |      |   | (213,550   | )
|Changes in operating assets
and liabilities:                                             |  |      |            |      |   |            |  
|Decrease in accounts
receivable                                                          |  |      | 10,878     |      |   | 70,384     |  
|(Increase) decrease in
restricted cash                                                   |  |      | (391,662   | )    |   | 311,298    |  
|Increase in other current
assets                                                         |  |      | (97,599    | )    |   | (55        | )
|(Increase) decrease in income
taxes receivable                                           |  |      | (212,919   | )    |   | 397,457    |  
|Increase (decrease) in
accounts payable and accrued wages & payroll taxes                |  |      | 226,551    |      |   | (324,259   | )
|Increase (decrease) in Card
Casino accruals                                              |  |      | 258,415    |      |   | (513,830   | )
|Increase (decrease) in accrued
property taxes                                            |  |      | 51,213     |      |   | (2,680     | )
|Decrease in payable to
horsepersons                                                      |  |      | (9,893     | )    |   | (63,773    | )
|Increase (decrease) in due to
MHBPA                                                      |  |      | 141,282    |      |   | (45,182    | )
|Net cash provided by operating
activities                                                |  |      | 2,984,065  |      |   | 1,930,905  |  
|                                                                                         |  |      |            |      |   |            |  
|Investing Activities:                                                                    |  |      |            |      |   |            |  
|Additions to land, buildings
and equipment                                               |  |      | (3,035,613 | )    |   | (1,037,279 | )
|Proceeds from sale of
equipment                                                          |  |      | 2,600      |      |   |           |  
|Proceeds from redemption of
investments                                                  |  |      | 644,387    |      |   | 342,116    |  
|Purchase of investments                                                                  |  |      | (28,493    | )    |   | (645,015   | )
|Net cash used in investing
activities                                                    |  |      | (2,417,119 | )    |   | (1,340,178 | )
|                                                                                         |  |      |            |      |   |            |  
|Financing Activities:                                                                    |  |      |            |      |   |            |  
|Proceeds from issuance of
common stock                                                   |  |      | 143,319    |      |   | 404,739    |  
|Net cash provided by financing
activities                                                |  |      | 143,319    |      |   | 404,739    |  
|                                                                                         |  |      |            |      |   |            |  
|Net increase in cash                                                                     |  |      | 710,265    |      |   | 995,466    |  
|                                                                                         |  |      |            |      |   |            |  
|Cash at beginning of year                                                                |  |      | 4,741,197  |      |   | 3,745,731  |  
|                                                                                         |  |      |            |      |   |            |  
|Cash at end of year                                                                      |  | $    | 5,451,462  |      | $ | 4,741,197  |  
|                                                                                         |  |      |            |      |   |            |  
|Non-cash investing and financing
activities:                                             |  |      |            |      |   |            |  
|Additions to buildings and
equipment funded through accounts payable                     |  | $    | 27,587     |      | $ | 11,487     |  
|Proceeds from issuance of
common stock funded through shares swapped                     |  | $    | 251,530    |      | $ | 15,880     |  
|Supplemental disclosure of cash flow
information:                                        |  |      |            |      |   |            |  
|Income taxes refunded, net of
amount paid                                                |  | $    | 914,971    |      | $ |           |  

See notes to
consolidated financial statements.

33

---



Table of Contents

CANTERBURY PARK HOLDING CORPORATION AND
SUBSIDIARIES

NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2010 AND 2009




|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. | SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Business 
Canterbury Park Holding Corporation was incorporated on March 24, 1994. On
March 29, 1994, the Company acquired all the outstanding securities of Jacobs
Realty, Inc. (JRI) from Irwin Jacobs and IMR Fund, L.P. (an investment fund
for various pension plans and trusts). JRI was merged into the Company, and
the acquisition was accounted for under the purchase method of accounting
whereby the acquired assets and liabilities have been recorded at the
Companys cost. The primary asset of JRI was Canterbury Downs Racetrack and
the 325 acres of surrounding land.                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | On May 20,
1994, the Company adopted a plan of Reorganization pursuant to which the sole
shareholder of Canterbury Park Concessions, Inc. (CPC), and majority
shareholder of the Company, agreed to exchange his shares of CPC stock for
198,888 shares of the Companys common stock concurrent with the closing of a
public offering. Pursuant to the Plan of Reorganization, CPC became a wholly
owned subsidiary of the Company in August 1994 when the Company completed the
initial public offering of its common stock. This reorganization was treated
in a manner similar to a pooling of interests. Net proceeds received by the
Company from the public offering were approximately $4,847,000, which along
with additional borrowings under the Companys line of credit with the
majority shareholder, were used to pay off the remaining notes payable from
the acquisition of JRI.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The
consolidated financial statements include the accounts of the Company, CPC
and Shakopee Valley
RV Park Acquisition Company, LLC after elimination of intercompany accounts
and transactions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Revenue
Recognition Our revenues are derived primarily from the operations of a Card Casino,
pari-mutuel wagering on simulcast and live horse races, concession sales, and
related activities. Collection revenue from Card Casino operations, a set percentage
of wagers, is recognized at the time that the wagering process is complete.
Pari-mutuel revenues are recognized upon occurrence of the live race that is
presented for wagering and after that live race is made official by the
respective states racing regulatory body. Revenues related to concession and
publication sales and parking and admission fees are recognized as revenue
when the service has been performed or the product has been delivered. All
sales taxes are presented on a net basis and are excluded from revenue.                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Estimates  The preparation of the consolidated
financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the consolidated financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
these estimates.                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Unrestricted Cash  Cash includes all investments with original maturities of three months
or less or which are readily convertible into known amounts of cash and are
not legally restricted. Accounts at each institution are insured by the
Federal Deposit Insurance Corporation up to $250,000. The Company has not
experienced any losses in such accounts and believes it is not exposed to any
significant credit risk on cash.                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Restricted Cash  Restricted cash represents refundable
deposits and amounts due to horsemen for purses, stakes and awards, and
amounts accumulated in card game progressive jackpot pools, the player pool
and poker promotional fund to be used to repay card players in the form of
promotions, giveaways, prizes, or by other means.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

34

---



Table of Contents

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Uncashed Winning Tickets The
Company records a liability for winning tickets upon the completion of a
race. As winning tickets are redeemed, this liability is reduced for the
respective cash payment. We recognize revenue associated with the uncashed
winning tickets when the likelihood of the redemption of the winning ticket
is remote.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Promotional Allowances The Company offers certain promotional
allowances at no charge to patrons who participate in our player rewards
program. The retail value of these promotional items is shown as a deduction
from total revenues on the Companys consolidated statements of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Due to Minnesota Horsemens Benevolent and
Protective Association, Inc. (MHBPA)  The
Minnesota Pari-Mutuel Horse Racing Act specifies that the Company is required
to segregate a portion of funds (recorded as purse expense in the statements
of operations), received from card room operations and wagering on simulcast
and live horse races, for future payment as purses for live horse races or
other uses of the horsepersons associations. Pursuant to an agreement with
the MHBPA, the Company has transferred into a trust account or paid directly
to the MHBPA, approximately $5,207,000 and $5,525,000 for the years ended
December 31, 2010 and 2009, respectively, related to thoroughbred races.
Minnesota Statutes specify that amounts transferred into the trust account
are the property of the trust and not of the Company.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Impairment of Long-Lived Assets Management
of the Company periodically reviews the carrying value of property and
equipment for potential impairment by comparing the carrying value of these
assets with their related expected future net cash flows. Should the sum of
the related expected future net cash flows be less than the carrying value,
management will determine whether an impairment loss should be recognized. An
impairment loss would be measured by the amount by which the carrying value
of the asset exceeds the fair value of the asset. To date, management has
determined that no impairment of these assets exists.                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Land, Buildings, and Equipment
 Land, buildings, equipment, and building improvements are capitalized at a
level of $1,000 or greater and are recorded at cost. Repair and maintenance
costs are charged to operations when incurred. Furniture, fixtures, and
equipment are depreciated using the straight-line method over estimated
useful lives ranging from 5  7 years, while buildings are depreciated over
15  39 years. Building improvements are amortized using the straight-line
method over the useful life of the assets.                                                                                                                                                                                                                                                                                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Card Casino
Accruals  Minnesota law allows the
Company to collect amounts from patrons to fund progressive jackpot pools in
the card room. These amounts, along with amounts earned by the player pool,
promotional pools and the outstanding chip liability, are accrued as
short-term liabilities at each balance sheet date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Income Taxes 
Income taxes are accounted for under the asset and liability method. Deferred
tax assets and liabilities are recognized for the estimated future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax
rates in effect for the year in which those temporary differences are
expected to reverse.                                                                                                                                                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Interest and penalties associated with uncertain income tax positions
are presented in income tax expense. During the twelve months ended
December 31, 2010 and 2009, we recognized expenses of $19,003 and $0,
respectively, for interest and penalties. We do not have any amounts accrued
at December 31, 2010 for the payment of interest and penalties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Net Income Per Share
 Basic net income per common share is based on the weighted average number
of common shares outstanding during each year. Diluted net income per common
share takes into effect the dilutive effect of potential common shares
outstanding. The Companys only potential common shares outstanding are stock
options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

35

---



Table of Contents

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Fair Values
of Financial Instruments Due to the current classification of
all financial instruments of the Company and given the short-term nature of
the related account balances, carrying amounts reported in the consolidated
balance sheets approximate fair value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Recent Accounting PronouncementsIn January 2010, the FASB issued
Accounting Standards Update No. 2010-06 (ASU 2010-06)  Fair Value
Measurements and Disclosures. ASU 2010-06 amends Accounting Standards
Codification (ASC) 820-10, Fair Value Measurements and Disclosures, and
requires new disclosures surrounding certain fair value measurements. ASU
2010-06 was effective for the first interim or annual reporting period
beginning on or after December 15, 2009, except for certain disclosures
about purchases, sales, issuances and settlements in the rollforward of
activity in Level 3 fair value measurements, which are effective for the
first interim and annual reporting periods beginning on or after
December 15, 2010. The adoption of ASU 2010-06 did not have a material
effect on the Companys consolidated financial statements.                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | In April 2010, the FASB issued Accounting Standards Update
No. 2010-16 (ASU 2010-16) EntertainmentCasinos
(Topic 924): Accruals for Casino Jackpot Liabilities. ASU 2010-16
codifies the consensus reached in Emerging Issues Task Force Issue
No. 09-F, Casino Base Jackpot Liabilities. ASU 2010-16 amends the ASC
to clarify that an entity should not accrue jackpot liabilities, or portions
thereof, before a jackpot is won if the entity can avoid paying the jackpot.
Jackpots should be accrued and charged to revenue when an entity has the
obligation to pay the jackpot. The guidance in this ASU applies to both base
and progressive jackpots. The amendments in this ASU are effective for fiscal
years, and interim periods within those fiscal years, beginning on or after
December 15, 2010. The amendments should be applied by recording a
cumulative-effect adjustment to opening retained earnings in the period of
adoption. The adoption of ASU 2010-16 is not expected to have a material
effect on the Companys consolidated financial statements.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Stock Based Employee Compensation  ASC 718,
Compensation  Stock Compensation (ASC 718), requires recognition of
employee services provided in exchange for a share-based payment based on the
grant date fair market value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | ASC
718 requires the use of a fair value based measurement method when granting
stock options. The
Company selected the Black-Scholes method to measure the compensation cost
for stock options. The Black-Scholes method requires the use of significant
assumptions to estimate the fair value of the stock option awards. The
expected term of both the board of director and key employee options was
calculated using the simplified method. The expected volatility was
calculated primarily with reliance on historical volatility rates. During 2010, the Company adjusted its dividend yield rate to reflect the
current expectation that no dividends will be declared. The risk-free rate
utilized in the Black-Scholes calculations was the U.S. Constant Maturity
Treasury Security for the period equivalent to the term of the option.                                                                                                                                                                                                                                  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | The fair
value of options granted under the 1994 Stock Plan during 2010 and 2009 was
estimated on the date of grant using the Black-Scholes option-pricing model
with the following weighted average assumptions and results:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

|                                    |  |      |         |      |   |         |  
|----------------------------------- |  | ---- | ------- | ---- | - | ------- | -
|                                    |  | 2010 |         | 2009 |  
|Dividend
yield                      |  |      | 0.00    | %    |   | 4.12    | %
|Expected
volatility                 |  |      | 44      | %    |   | 26      | %
|Risk-free
interest rate             |  |      | 2.54    | %    |   | 2.93    | %
|Expected
term of options in years   |  |      | 5.9     |      |   | 6.3     |  
|Fair value
of options on grant date |  | $    | 345,855 |      | $ | 111,455 |  

| |                                                                        
| | -----------------------------------------------------------------------
| | For more
information on our stock-based compensation plans, see Note 6.

36

---



Table of Contents

|   |                                                                                  
|-- | ---------------------------------------------------------------------------------
|2. | LAND, BUILDINGS AND EQUIPMENT                                                    
|   |                                                                                  
|   | Land, buildings and equipment, at cost, consists of the
following at December 31:

|                                    |  |      |             |      |   |             |  
|----------------------------------- |  | ---- | ----------- | ---- | - | ----------- | -
|                                    |  | 2010 |             | 2009 |  
|                                    |  |      |             |      |   |             |  
|Land                                |  | $    | 6,673,076   |      | $ | 6,673,076   |  
|Buildings
and building improvements |  |      | 19,937,187  |      |   | 20,006,176  |  
|Furniture
and equipment             |  |      | 16,344,381  |      |   | 15,794,200  |  
|                                    |  |      | 42,954,644  |      |   | 42,473,452  |  
|Accumulated
depreciation            |  |      | (19,006,314 | )    |   | (18,623,780 | )
|                                    |  | $    | 23,948,330  |      | $ | 23,849,672  |  

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3. | FAIR VALUE                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | ASC 820
defines fair value as the exchange price that would be received for an asset
or paid to transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction
between market participants on the measurement date. ASC 820 also establishes
a fair value hierarchy which requires an entity to maximize the use of
observable inputs and minimize the use of unobservable inputs when measuring
fair value.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The standard
describes three levels of inputs that may be used to measure fair value:                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Level 1  Quoted prices in active markets
for identical assets or liabilities.                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Level 2  Observable inputs other than Level 1 prices such as quoted prices for
similar assets or liabilities; quoted prices in markets that are not active;
or other inputs that are observable or can be corroborated by observable
market data for substantially the full term of the assets or liabilities.                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Level 3  Unobservable inputs that are supported
by little or no market activity and that are significant to the fair value of
the assets or liabilities.                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The Company utilizes the market approach to measure fair value for
its financial assets and liabilities. The market approach uses prices and
other relevant information generated by market transactions involving
identical or comparable assets or liabilities.                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The Company had no assets and liabilities measured at fair value on a
recurring basis for December 31, 2010. Assets and liabilities measured at
fair value on a recurring basis for December 31, 2009 are summarized below:                                                                                                                                                                                                                                                         

|                                                 |  |                                                  |         |         |   |         |  |         |         |  |   |   | 
|------------------------------------------------ |  | ------------------------------------------------ | ------- | ------- | - | ------- |  | ------- | ------- |  | - | - | 
|                                                 |  | Fair Value Measurements as of 
December 31, 2009 |        
|Description                                      |  | Total                                            |         | Level 1 |   | Level 2 |  | Level 3 |        
|                                                 |  |                                                  |         |         |   |         |  |         |         |  |   |   | 
|Short-term investments (Certificates of Deposit) |  | $                                                | 365,894 |         | $ |        |  | $       | 365,894 |  | $ |  | 
|Long-term investments (Certificates of Deposit)  |  | $                                                | 250,000 |         | $ |        |  | $       | 250,000 |  | $ |  | 
|Total                                            |  | $                                                | 615,894 |         | $ |        |  | $       | 615,894 |  | $ |  | 

37

---



Table of Contents

|   |                                                                                                                                  
|-- | ---------------------------------------------------------------------------------------------------------------------------------
|4. | INCOME TAXES                                                                                                                     
|   |                                                                                                                                  
|   | A
reconciliation between income taxes computed at the statutory federal income
tax rate and the effective tax rate is as follows:

|                                               |  |      |          |      |   |         | 
|---------------------------------------------- |  | ---- | -------- | ---- | - | ------- | 
|                                               |  | 2010 |          | 2009 |  
|                                               |  |      |          |      |   |         | 
|Federal tax
(benefit) expense                  |  | $    | (429,400 | )    | $ | 88,700  | 
|Nondeductible
lobbying expense                 |  |      | 144,900  |      |   | 54,300  | 
|State
(benefit) expense, net of federal impact |  |      | (45,100  | )    |   | 28,800  | 
|Stock option
expense                           |  |      | 41,100   |      |   | 7,700   | 
|Other                                          |  |      | 16,500   |      |   | 20,300  | 
|                                               |  | $    | (272,000 | )    | $ | 199,800 | 

| |                                                                                                       
| | ------------------------------------------------------------------------------------------------------
| | Income tax
(benefit) expense for the years ended December 31, 2010 and 2009 consists of
the following:

|                            |  |      |            |      |   |          |  
|--------------------------- |  | ---- | ---------- | ---- | - | -------- | -
|                            |  | 2010 |            | 2009 |  
|Current                     |  |      |            |      |   |          |  
|Federal                     |  | $    | (1,064,650 | )    | $ | 304,000  |  
|State                       |  |      | (46,800    | )    |   | 109,350  |  
|                            |  |      | (1,111,450 | )    |   | 413,350  |  
|Deferred,
primarily Federal |  |      | 839,450    |      |   | (213,550 | )
|                            |  | $    | (272,000   | )    | $ | 199,800  |  

| |                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company
recognized certain tax deficiencies related to stock option plans in the
amount of $117,400 for the year ended December 31, 2010. The deficiency was
recorded as a decrease in additional paid-in capital.
| |                                                                                                                                                                                                                       
| | Current and
long term temporary differences and tax carryforwards at December 31 are as
follows:                                                                                                                      

|                                                |  |      |            |      |   |          |  
|----------------------------------------------- |  | ---- | ---------- | ---- | - | -------- | -
|                                                |  | 2010 |            | 2009 |  
|Current                                         |  |      |            |      |   |          |  
|Vacation
accrual                                |  | $    | 104,400    |      | $ | 99,400   |  
|Player
rewards program accrual                  |  |      | 199,900    |      |   | 173,400  |  
|Other                                           |  |      | 16,100     |      |   | 23,700   |  
|Net current deferred tax asset                  |  | $    | 320,400    |      | $ | 296,500  |  
|                                                |  |      |            |      |   |          |  
|                                                |  | 2010 |            | 2009 |  
|Long-Term                                       |  |      |            |      |   |          |  
|Tax
depreciation greater than book depreciation |  | $    | (1,364,800 | )    | $ | (166,700 | )
|Deferred
gain on sale of land                   |  |      | (104,000   | )    |   | (104,000 | )
|Stock
options                                   |  |      | 93,700     |      |   | 263,900  |  
|Net
operating loss carryforwards                |  |      | 406,000    |      |   |         |  
|Other                                           |  |      | 17,200     |      |   | 35,650   |  
|Net long-term deferred tax (liability)
asset    |  | $    | (951,900   | )    | $ | 28,850   |  

| |                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company
is subject to U.S. and Minnesota taxation. With few exceptions, the Company
is no longer subject to US federal, state or local examinations by tax
authorities for years before 2007.

38

---



Table of Contents

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|5. | STOCKHOLDERS
 EQUITY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Employee Stock Purchase Plan:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | On April 3,
 1995, the Board of Directors adopted an Employee Stock Purchase Plan (the
 ESPP). The ESPP is open to all employees of the Company working more than
 15 hours per week. The ESPP consists of one-year phases. The phases commence
 on October 1 of each year and under the terms of the plan, employees are
 allowed to set aside a portion of their payroll earnings to purchase shares
 of the Companys common stock. The purchase price is 95% of the fair market
 value of the shares on the termination date of the phase. The plan provides
 for the sale of up to 350,000 shares. The plan issued 3,857 and 3,844 shares
 in 2010 and 2009, respectively. The ESPP has issued a total of 242,185 shares
 since its inception.                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | 401(k) Plan:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | On June 1,
 1998 the Company established a defined contribution savings plan for
 employees who had completed one year of service, as defined in the Plan
 document. The defined contribution savings plan allows for employee
 compensation deferral contributions under Section 401(k) of the Internal
 Revenue Code and discretionary contributions by the Company. In January 2009,
 the Company suspended its employer contributions for fiscal 2009. Employer
 contributions charged to operations in 2010 and 2009 were approximately $0
 and $28,000, respectively. In February 2011, the Company announced it would
 reinstate its discretionary contribution match beginning in March 2011.                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Employee Stock Ownership Plan:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | In December
 2004, the Companys Board of Directors approved an Employee Stock Ownership
 Plan (the ESOP) effective for calendar years beginning January 1, 2004. All
 eligible employees of the Company participate in the ESOP after completing
 one full calendar year of service. Contributions to the ESOP are determined
 by the Board of Directors and can be made in cash or shares of the Companys
 common stock. Annual contributions are allocated to each participant based on
 compensation and vest in accordance with a six year graded vesting schedule.
 Compensation expense for the ESOP is determined based on the average fair
 value of shares on the date the Company commits to the contribution to the
 ESOP. For the purposes of earnings per share, ESOP shares are included in
 weighted-average common shares outstanding at year-end as the shares are
 committed to be contributed on that date. On October 24, 2008, the Company suspended
 its ESOP contribution for fiscal 2008. As of the date of this filing, the
 Company had taken no action to resume making contributions.                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Stock Repurchase Plan:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | On January 16, 2008, the Company announced that its Board of
 Directors had authorized the repurchase of up to an additional 250,000 shares
 of the Companys common stock pursuant to Exchange Act Rule
 12b-18. During 2008, the
 Company repurchased 216,543 shares of common stock at an average price of
 $8.71 for an aggregate purchase price of $1,886,034. The Company did not
 repurchase any shares in 2009 or 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|6. | STOCK BASED
 COMPENSATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Stock Options:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The
 Companys 1994 Stock Plan (the Plan) provides for the granting of awards in
 the form of stock options, restricted stock, stock appreciation rights, and
 deferred stock to key employees and non-employees, including directors of and
 consultants to the Company and any subsidiary, to purchase up to a maximum of
 1,450,000 shares of common stock. The Company currently has 232,750 shares
 available for grant under the Plan. Options that are granted under the Plan
 may be either options that qualify as incentive stock options within the
 meaning of Section 422 of the Internal Revenue Code of 1986, as amended
 (Incentive Stock Options), or those that do not qualify as Incentive Stock
 Options (Non-Qualified Stock Options). The Plan is administered by the Board
 of Directors which determines the persons who are to receive awards under the
 Plan, the type of award to be granted, the number of shares subject to each
 award and, if an option, the exercise price of each option. The Plan also
 provides for formula grants of Non-Qualified Stock Options to non-employee
 directors and consultants of the Company.

39

---



Table of Contents

| |                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Plan provides that payment of the exercise price may be made in
 the form of unrestricted shares of common stock already owned by the
 optionee. The Company calculates the fair market value of unrestricted shares
 as the average of the high and low sales prices on the date of exercise.
| |                                                                                                                                                                                                                                                                                                   
| | Stock option
 activity related to the Plan during the years ended December 31, 2010 and
 2009 is summarized below:                                                                                                                                                                                

|                                    |  |        |         |                                    |   |        |  |                                    |         |   |   |       | 
|----------------------------------- |  | ------ | ------- | ---------------------------------- | - | ------ |  | ---------------------------------- | ------- | - | - | ----- | 
|                                    |  | 2010   |         | 2009                               |  
|                                    |  | Shares |         | Weighted
 Average
 Exercise
 Price |   | Shares |  | Weighted
 Average
 Exercise
 Price |        
|                                   
|Outstanding at beginning of year    |  |        | 403,244 |                                    | $ | 10.15  |  |                                    | 470,000 |   | $ | 11.12 | 
|                                    |  |        |         |                                    |   |        |  |                                    |         |   |   |       | 
|Granted                             |  |        | 106,500 |                                    |   | 8.15   |  |                                    | 115,000 |   |   | 6.09  | 
|Exercised                           |  |        | (62,557 | )                                  |   | 5.86   |  |                                    | (82,506 | ) |   | 4.58  | 
|Expired/Forfeited                   |  |        | (78,750 | )                                  |   | 15.27  |  |                                    | (99,250 | ) |   | 14.52 | 
|                                    |  |        |         |                                    |   |        |  |                                    |         |   |   |       | 
|Outstanding
 at end of year         |  |        | 368,437 |                                    | $ | 9.21   |  |                                    | 403,244 |   | $ | 10.15 | 
|                                    |  |        |         |                                    |   |        |  |                                    |         |   |   |       | 
|Options
 exercisable at end of year |  |        | 264,812 |                                    | $ | 9.92   |  |                                    | 335,744 |   | $ | 10.89 | 

| |                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The
 grant-date fair value of options outstanding and exercisable at December 31,
 2010 and 2009 was $1,129,000 and $1,712,000, respectively. The weighted average
 remaining contractual term of these options is 5.2 and 3.2 years,
 respectively.                          
| |                                                                                                                                                                                                                                                                               
| | The
 weighted-average grant-date fair value of options granted during the years
 2010 and 2009 was $382,808 and $113,863, respectively. The total fair value of options exercised
 during the years ended December 31, 2010 and 2009 was $231,000 and $247,000,
 respectively.
| |                                                                                                                                                                                                                                                                               
| | As of December 31, 2010, total compensation cost related to
 non-vested stock options not yet recognized was $236,718, which is expected
 to be recognized over the next 2.50 years on a weighted-average basis.                                                              
| |                                                                                                                                                                                                                                                                               
| | The following table summarizes information concerning
 all options outstanding and options exercisable as of December 31, 2010:                                                                                                                                               

|                         |  |                      |         |                                                          |  |                                    |  |                      |       |                                   |  |         |  |   |       | 
|------------------------ |  | -------------------- | ------- | -------------------------------------------------------- |  | ---------------------------------- |  | -------------------- | ----- | --------------------------------- |  | ------- |  | - | ----- | 
|Range of
 Exercise Price |  | Options
 Outstanding |         | Weighted
 Average
 Remaining
 Contractual
 Life in Years |  | Weighted
 Average
 Exercise
 Price |  | Options
 Exercisable |       | Weighted
 Average
 Exercise Price | 
|$5.00  7.50             |  |                      | 172,187 |                                                          |  | 5.7                                |  | $                    | 6.44  |                                   |  | 131,187 |  | $ | 6.57  | 
|$7.51 
 11.25           |  |                      | 91,750  |                                                          |  | 8.8                                |  | $                    | 8.36  |                                   |  | 29,125  |  | $ | 8.52  | 
|$11.26 
 16.50          |  |                      | 75,000  |                                                          |  | 5.1                                |  | $                    | 13.56 |                                   |  | 75,000  |  | $ | 13.56 | 
|$16.51 
 17.25          |  |                      | 29,500  |                                                          |  | 3.6                                |  | $                    | 16.94 |                                   |  | 29,500  |  | $ | 16.94 | 
|Total                    |  |                      | 368,437 |                                                          |  | 6.2                                |  | $                    | 9.21  |                                   |  | 264,812 |  | $ | 9.92  | 

40

---



Table of Contents

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Board of Director Grants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | Each
 non-employee member of the Board of Directors receives an annual recurring
 grant of 3,000 non-qualified stock options. On February 1, 2010 and February
 1, 2009, 15,000 options were granted to the five board members with an
 exercise price equal to the market price on the date of grant of $7.05 and
 $6.66, respectively. The stock options vest over a six-month period and
 expire in ten years. The compensation
 cost associated with the Board of Director options of $45,450 and $18,900 was
 recognized as expense over the six-month vesting period in 2010 and 2009,
 respectively.                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | 2006 Employee Stock Option Grant                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | On February 9, 2006, 15,000 employee stock options
 were granted. The compensation cost associated with the employee stock option
 grant in 2006 was recognized ratably over the four-year vesting period. The
 compensation cost related to these employee option awards included in
 salaries and benefits expense for 2010 and 2009 was $386 and $5,146,
 respectively. As of December 31, 2010, there was no unrecognized compensation
 cost related to these stock options.                                                                                                                                                                                                                                                                                                                                    
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | 2006 Restricted Stock Grant                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | Also on
 February 9, 2006, 41,000 shares of restricted stock were granted to executive
 employees. The restricted stock cliff vested in four years from the date of
 grant. There were no forfeitures during 2009 and 2010. On February 9, 2010,
 the 35,000 shares were distributed to the applicable personnel.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | Upon
 granting, compensation cost associated with the restricted stock grant was
 calculated as the market price on the date of grant of $14.55 for the 41,000
 shares (reduced by estimated forfeitures) of $589,275. In 2008, as forfeited
 shares had exceeded original estimated forfeitures, a new forfeiture rate was
 calculated. As a result of this new calculation, the total estimated
 compensation cost for the restricted stock grant was $487,425. In accordance
 with the modified prospective method, the compensation cost related to these
 awards included in salaries and benefits expense for the years ended December
 31, 2010 and 2009 was $3,510 and $97,290, respectively. As of December 31,
 2010, there was no unrecognized compensation cost related to this restricted
 stock grant.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | 2009 Employee Stock Option Grant                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | On April 23,
 2009, 100,000 options were granted to employees with an exercise price equal
 to the market price on the date of grant of $6.00. The stock options vest
 over a 42-month period and expire in ten years. The compensation cost
 associated with this grant of employee options is $92,555 to be recognized as
 expense over the 42-month vesting period. The compensation cost related to
 these employee option awards included in salaries and benefits expense for
 the years ended December 31, 2010 and 2009 was $26,444 and $17,630,
 respectively. As of December 31, 2010, there was $48,481 of total
 unrecognized compensation cost related to these stock options which is
 expected to be recognized over 1.8 years.                                                                      
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | 2010 Employee Stock Option Grant                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | On February
 25, 2010, 86,500 options were granted to employees with an exercise price
 equal to the market price on the date of grant of $8.28. The stock options
 vest over a 42-month period and expire in ten years. The compensation cost
 associated with this grant of employee options is $282,355 to be recognized
 as expense over the 42-month vesting period. The compensation cost related to
 these employee option awards included in salaries and benefits expense for
 2010 was $94,118. As of December 31, 2010, there was $188,237 of total
 unrecognized compensation cost related to these stock options which is
 expected to be recognized over 2.7 years.                                                                                                                                   

41

---



Table of Contents

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   | 2010 Non-Employee Consultant and Advisor
 Grant                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | On November
 4, 2010, 5,000 options were granted to a non-employee consultant with an
 exercise price equal to the market price on the date of grant of $9.15. The
 stock options vest immediately and expire in ten years. The compensation cost
 associated with this grant was $18,050 and was recognized immediately. As of
 December 31, 2010, there was no unrecognized compensation cost related to
 these stock options. The total income tax benefit recognized in the income
 statement for stock-based compensation arrangements was $23,000 and $16,000
 for 2010 and 2009, respectively.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|7. | EARNINGS PER
 SHARE COMPUTATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The
 following is a reconciliation of the numerator and denominator of the
 earnings per common share computations:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

|                                                                                          |  |      |           |      |   |           | 
|----------------------------------------------------------------------------------------- |  | ---- | --------- | ---- | - | --------- | 
|                                                                                          |  | 2010 |           | 2009 |  
|                                                                                          |  |      |           |      |   |           | 
|Net (loss)
 income (numerator) amounts used for basic and diluted per share computations: |  | $    | (992,206  | )    | $ | 60,970    | 
|                                                                                          |  |      |           |      |   |           | 
|Weighted
 average shares (denominator) of common stock outstanding:                       |  |      |           |      |   |           | 
|Basic                                                                                     |  |      | 4,038,103 |      |   | 3,958,294 | 
|Plus dilutive effect of stock options                                                     |  |      |          |      |   | 25,363    | 
|Diluted                                                                                   |  |      | 4,038,103 |      |   | 3,983,657 | 
|                                                                                          |  |      |           |      |   |           | 
|Net (loss)
 income per common share:                                                      |  |      |           |      |   |           | 
|Basic                                                                                     |  | $    | (.25      | )    | $ | .02       | 
|Diluted                                                                                   |  |      | (.25      | )    |   | .02       | 

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   | Options to
 purchase 368,437 shares of common stock at an average of $9.21 per share were
 outstanding at December 31, 2010 but were not included in the computation of
 diluted EPS because the Company experienced a net loss for the year ended
 December 31, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Options to
 purchase 264,250 shares of common stock at an average of $11.86 per share
 were outstanding at December 31, 2009 but were not included in the
 computation of diluted EPS because the options exercise price was greater
 than the average market price of the common shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|8. | LINES OF
 CREDIT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The Company
 has a general credit agreement with Bremer Bank, which provides a revolving
 credit line of up to $3,000,000. On May 8, 2010, the Company signed an amendment with Bremer Bank
 extending the expiration date from June 30, 2010 to May 8, 2011, while
 keeping previous provisions intact. The Company had no borrowings under this
 credit line at December 31, 2010 and December 31, 2009. The credit
 agreement contains certain covenants requiring the Company to maintain
 certain financial ratios. The Company was in compliance with these
 requirements as of December 31, 2010. The Company believes that unrestricted
 funds available in its cash accounts, funds available under this line of
 credit, along with funds generated from operations, will be sufficient to
 satisfy its liquidity and capital resource requirements during 2011. The
 Company anticipates being able to renew the line of credit at similar terms.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|9. | OPERATING
 LEASES AND COMMITMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Purchase Obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | In March
 2008, the Company entered into a six-year service agreement with its
 totalizator provider. Pursuant to the agreement, the vendor provides
 totalizator equipment and computer programs which record and process all
 wagers and calculate odds and payoffs. In October 2008, the Company entered
 into a four-year service agreement to outsource its information technology
 (IT) function. Amounts charged to operations under these agreements for the
 years ended December 31, 2010 and
 2009 were approximately $637,000 and $644,000, respectively.                                                                                                                                                                                                                                                                                                                                                                                       

42

---



Table of Contents

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Operating Lease Obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | The Company has entered into operating leases for rental of office
 equipment, equipment to print certain publications, and track equipment to
 maintain the Racetrack. Amounts charged to operations under these agreements
 for the years ended December 31, 2010 and 2009 were approximately $140,000
 and $142,000, respectively. All such leases expire on or before September 30,
 2013. Future lease payment obligations under these leases are provided in the
 table below.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | FUTURE MINIMUM LEASE PAYMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | The
 following table reflects our future minimum lease payments as of December 31,
 2010:                                                                                                                                                                                                                                                                                                                                                                                           

|                                 |  |                        |         |      |   |        |  |      |        |      |   |        |  |   |   | 
|-------------------------------- |  | ---------------------- | ------- | ---- | - | ------ |  | ---- | ------ | ---- | - | ------ |  | - | - | 
|                                 |  | Payments Due by Period |        
|Lease
Obligation                 |  | TOTAL                  |         | 2011 |   | 2012   |  | 2013 |        | 2014 |  
|                                
|Operating
 Lease Obligations (1) |  | $                      | 123,000 |      | $ | 66,900 |  | $    | 34,800 |      | $ | 21,300 |  | $ |  | 

| |     |                                                                                        
| | --- | ---------------------------------------------------------------------------------------
| | (1) | Includes
 operating lease obligations for general office and printing equipment rental.

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10. | CONTINGENCIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | In
 connection with the purchase of the Racetrack (Note 1), the Company entered
 into an Earn Out Promissory Note dated March 29, 1994. In accordance with the
 Earn Out Note, if (i) off-track betting becomes legally permissible in the
 State of Minnesota and (ii) the Company begins to conduct off-track betting
 with respect to or in connection with its operations, the Company will be
 required to pay to the IMR Fund, L.P. the greater of $700,000 per operating
 year, as defined, or 20% of the net pretax profit, as defined for each of
 five operating years. At this time, management believes that the likelihood
 that these two conditions will be met, and that the Company will be required
 to pay these amounts is remote. At the date (if any) that these two
 conditions are met, the five minimum payments will be discounted back to
 their present value and the sum of those discounted payments will be
 capitalized as part of the purchase price in accordance with generally
 accepted accounting principles. The purchase price will be further increased
 if payments become due under the 20% of Net Pretax Profit calculation. The
 first payment is to be made 90 days after the end of the third operating year
 in which off-track betting is conducted by the Company. Remaining payments
 would be made within 90 days of the end of each of the next four operating
 years.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | The Company
 is periodically involved in various claims and legal actions arising in the
 normal course of business. Management believes that the resolution of any
 pending claims and legal actions at December 31, 2010 and as of the date of
 this report will not have a material impact on the consolidated financial
 statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | The Company
 has committed to payment of statutory distributions under a $500,000 bond
 issued to the Minnesota Racing Commission as required by Minnesota statute.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|11. | RELATED-PARTY
 TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | The Company
 paid a total of $50,100 in both 2010 and 2009 to the Chair and Vice Chair of
 the Company in consideration for the services they provided pursuant to
 consulting agreements. In addition, another non-employee Board member
 received $12,000 in both 2010 and 2009 for services regarding the Companys
 strategic planning matters. Finally, an additional non-employee Board member
 received $18,000 in 2010 for services regarding the Companys effort to pass
 Racino legislation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

43

---



Table of Contents

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|12. | OPERATING
 SEGMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The Company
 has three reportable operating segments: horse racing, Card Casino, and
 concessions. The horse racing segment includes simulcast and live horse
 racing operations, the Card Casino segment includes operations of Canterbury
 Parks Card Casino, and the concessions segment provides concessions during
 simulcast and live racing, in the Card Casino and during special events. The
 Companys reportable operating segments are strategic business units that
 offer different products and services. The horse racing and Card Casino
 segments are regulated by the Minnesota Racing Commission.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Depreciation,
 interest expense and income taxes are allocated to the segments but no
 allocation is made to concessions for shared facilities. However, the
 concessions segment paid approximately 25% of gross revenues on live racing
 and special event days to the horse racing segment for use of the facilities
 in 2010 and 2009.                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The
 following tables provide information about the Companys operating segments
 (in 000s):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

|                                           |  |                              |        |             |   |             |  |       |        |  |   |        |  
|------------------------------------------ |  | ---------------------------- | ------ | ----------- | - | ----------- |  | ----- | ------ |  | - | ------ | -
|                                           |  | Year Ended December 31, 2010 |       
|                                           |  | Horse Racing                 |        | Card Casino |   | Concessions |  | Total |       
|                                          
|Net revenues
 from external customers      |  | $                            | 12,517 |             | $ | 22,160      |  | $     | 5,243  |  | $ | 39,920 |  
|                                           |  |                              |        |             |   |             |  |       |        |  |   |        |  
|Intersegment
 revenues                     |  |                              | 590    |             |   |            |  |       | 1,545  |  |   | 2,135  |  
|                                           |  |                              |        |             |   |             |  |       |        |  |   |        |  
|Net interest
 income                       |  |                              | 13     |             |   |            |  |       |       |  |   | 13     |  
|                                           |  |                              |        |             |   |             |  |       |        |  |   |        |  
|Depreciation                               |  |                              | 1,123  |             |   | 768         |  |       | 153    |  |   | 2,044  |  
|                                           |  |                              |        |             |   |             |  |       |        |  |   |        |  
|Segment
 (loss) income before income taxes |  |                              | (2,336 | )           |   | 1,347       |  |       | 410    |  |   | (579   | )
|                                           |  |                              |        |             |   |             |  |       |        |  |   |        |  
|Segment
 Assets                            |  | $                            | 28,446 |             | $ | 3,566       |  | $     | 10,353 |  | $ | 42,365 |  

|                                           |  |                              |        |             |   |             |  |       |       |  |   |        | 
|------------------------------------------ |  | ---------------------------- | ------ | ----------- | - | ----------- |  | ----- | ----- |  | - | ------ | 
|                                           |  | Year Ended December 31, 2009 |       
|                                           |  | Horse Racing                 |        | Card Casino |   | Concessions |  | Total |      
|                                          
|Net revenues
 from external customers      |  | $                            | 14,136 |             | $ | 20,158      |  | $     | 5,295 |  | $ | 39,589 | 
|                                           |  |                              |        |             |   |             |  |       |       |  |   |        | 
|Intersegment
 revenues                     |  |                              | 569    |             |   |            |  |       | 1,412 |  |   | 1,981  | 
|                                           |  |                              |        |             |   |             |  |       |       |  |   |        | 
|Net interest
 income                       |  |                              | 36     |             |   |            |  |       |      |  |   | 36     | 
|                                           |  |                              |        |             |   |             |  |       |       |  |   |        | 
|Depreciation                               |  |                              | 1,289  |             |   | 644         |  |       | 161   |  |   | 2,094  | 
|                                           |  |                              |        |             |   |             |  |       |       |  |   |        | 
|Segment
 (loss) income before income taxes |  |                              | (1,684 | )           |   | 2,207       |  |       | 734   |  |   | 1,257  | 
|                                           |  |                              |        |             |   |             |  |       |       |  |   |        | 
|Segment
 Assets                            |  | $                            | 28,279 |             | $ | 2,841       |  | $     | 9,636 |  | $ | 40,756 | 

44

---



Table of Contents

The following
are reconciliations of reportable segment revenue, income before income taxes,
and assets, to the Companys consolidated totals (in 000s):

|                                     |  |      |        |      |   |        |  
|------------------------------------ |  | ---- | ------ | ---- | - | ------ | -
|Revenues                             |  | 2010 |        | 2009 |  
|Net revenues for reportable segments |  | $    | 42,055 |      | $ | 41,570 |  
|Elimination of intersegment revenues |  |      | (2,135 | )    |   | (1,981 | )
|Total consolidated net revenues      |  | $    | 39,920 |      | $ | 39,589 |  

|                                                        |  |   |        |   |   |       |  
|------------------------------------------------------- |  | - | ------ | - | - | ----- | -
|(Loss)
 income before income taxes                      |  |   |        |   |   |       |  
|Total segment (loss) income before income
 taxes        |  | $ | (579   | ) | $ | 1,257 |  
|Elimination of intersegment income before
 income taxes |  |   | (685   | ) |   | (996  | )
|Total consolidated (loss) income before
 income taxes   |  | $ | (1,264 | ) | $ | 261   |  

|                                        |  |                  |        |                  |   |        |  
|--------------------------------------- |  | ---------------- | ------ | ---------------- | - | ------ | -
|                                        |  | December 31,2010 |        | December 31,2009 |  
|Assets                                  |  |                  |        |                  |   |        |  
|Total asset for reportable segments     |  | $                | 42,365 |                  | $ | 40,756 |  
|Elimination of intercompany receivables |  |                  | (9,717 | )                |   | (9,004 | )
|Total consolidated assets               |  | $                | 32,648 |                  | $ | 31,752 |  

|    |                                                 
|--- | ------------------------------------------------
|13. | SUPPLEMENTARY
 FINANCIAL INFORMATION (UNAUDITED)

|                                   |  |                     |           |         |   |              |   |             |            |   |   |           | 
|---------------------------------- |  | ------------------- | --------- | ------- | - | ------------ | - | ----------- | ---------- | - | - | --------- | 
|                                   |  | 2010 Quarter Ended: |          
|                                   |  | March 31            |           | June 30 |   | September 30 |   | December 31 |           
|                                  
|Net revenues                       |  | $                   | 7,788,613 |         | $ | 11,453,879   |   | $           | 12,011,366 |   | $ | 8,666,326 | 
|                                   |  |                     |           |         |   |              |   |             |            |   |   |           | 
|Operating
 expenses                |  |                     | 8,578,307 |         |   | 11,989,419   |   |             | 12,159,378 |   |   | 8,470,199 | 
|                                   |  |                     |           |         |   |              |   |             |            |   |   |           | 
|Net (loss)
 income                 |  |                     | (639,641  | )       |   | (380,969     | ) |             | (132,875   | ) |   | 161,279   | 
|                                   |  |                     |           |         |   |              |   |             |            |   |   |           | 
|Basic (loss)
 earnings per share   |  |                     | (.16      | )       |   | (.09         | ) |             | (.03       | ) |   | .04       | 
|                                  
|Diluted
 (loss) earnings per share |  |                     | (.16      | )       |   | (.09         | ) |             | (.03       | ) |   | .04       | 

|                                   |  |                     |           |         |   |              |   |             |            |  |   |           |  
|---------------------------------- |  | ------------------- | --------- | ------- | - | ------------ | - | ----------- | ---------- |  | - | --------- | -
|                                   |  | 2009 Quarter Ended: |          
|                                   |  | March 31            |           | June 30 |   | September 30 |   | December 31 |           
|                                  
|Net revenues                       |  | $                   | 8,195,176 |         | $ | 11,160,254   |   | $           | 12,150,722 |  | $ | 8,082,431 |  
|                                   |  |                     |           |         |   |              |   |             |            |  |   |           |  
|Operating
 expenses                |  |                     | 7,616,689 |         |   | 11,454,971   |   |             | 12,111,495 |  |   | 8,180,241 |  
|                                   |  |                     |           |         |   |              |   |             |            |  |   |           |  
|Net income
 (loss)                 |  |                     | 316,774   |         |   | (173,099     | ) |             | 16,395     |  |   | (99,100   | )
|                                   |  |                     |           |         |   |              |   |             |            |  |   |           |  
|Basic
 earnings (loss) per share   |  |                     | .08       |         |   | (.04         | ) |             | .00        |  |   | (.02      | )
|                                  
|Diluted
 earnings (loss) per share |  |                     | .08       |         |   | (.04         | ) |             | .00        |  |   | (.02      | )

45

---



Table of Contents

|    |                            
|--- | ---------------------------
|14. | LOSS ON
 DISPOSAL OF ASSETS

In January 2010, and in accordance
with Minnesota Statute 240, the Company obtained approval from the MRC to
remodel its existing card room. Construction and architectural contracts with
various firms were signed shortly thereafter, and the card room was moved to a
temporary location on the mezzanine level on January 25, 2010. The Company used
cash on hand to fund the project and avoided drawing on its line of credit. As
part of the remodeling project, the Company disposed of assets during the first
quarter of 2010 with an original cost of $2,354,619 and associated accumulated
depreciation of $1,445,079, resulting in a loss on disposal of $909,540. The
remodeling project was completed during the second quarter of 2010 and on April
14, 2010, Canterbury Park opened its new Card Casino.

46

---



Table of Contents

|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Item 9.  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
 FINANCIAL DISCLOSURE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|         | Not
 Applicable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Item 9A. | CONTROLS AND PROCEDURES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(a)      | Evaluation of Disclosure Controls and Procedures:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|         | The Companys Chief Executive Officer, Randall D. Sampson, and Chief
 Financial Officer, David C. Hansen, have reviewed the Companys disclosure
 controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of the end
 of the period covered by this report. Based upon this review, these officers
 have concluded that the Companys disclosure controls and procedures are
 effective to ensure that information required to be disclosed in the reports
 that the Company files under the Exchange Act is recorded, processed,
 summarized and reported within the time periods specified in the rules and
 forms of the SEC and that the disclosure controls are also effective to
 ensure that information required to be disclosed in the Companys Exchange
 Act reports is accumulated and communicated to management, including the
 chief executive officer and chief financial officer, to allow timely
 decisions regarding required disclosure.
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(b)      | Managements annual report on internal control over financial
 reporting:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|         | Management is responsible for establishing and maintaining an
 adequate system of internal control over financial reporting of the Company.
 This system is designed to provide reasonable assurance regarding the
 reliability of financial reporting and the preparation of financial
 statements for external purposes in accordance with accounting principles
 generally accepted in the United States of America.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|         | The Companys internal control over financial reporting (as such term
 is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934)
 includes those policies and procedures that (i) pertain to the maintenance of
 records that, in reasonable detail, accurately and fairly reflect the
 transactions and dispositions of the assets of the Company; (ii) provide
 reasonable assurance that transactions are recorded as necessary to permit
 preparation of financial statements in accordance with generally accepted
 accounting principles, and that receipts and expenditures of the Company are
 being made only in accordance with authorizations of management and directors
 of the Company; (iii) provide reasonable assurance regarding prevention or
 timely detection of unauthorized acquisition, use, or disposition of the
 Companys assets that could have a material effect on the financial
 statements.                             
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|         | Because of its inherent limitations, internal control over financial
 reporting can only provide reasonable assurance and may not prevent or detect
 misstatements. Also, projections of any evaluation of effectiveness to future
 periods are subject to the risk that controls may become inadequate because
 of changes in conditions, or that the degree of compliance with the policies
 or procedures may deteriorate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|         | Management conducted an evaluation of the effectiveness of the system
 of internal control over financial reporting as of December 31, 2010. In
 making this evaluation, management used the criteria set forth by the
 Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control  Integrated Framework.Based
 on managements evaluation and those criteria, management concluded that the
 Companys system of internal control over financial reporting was effective
 as of December 31, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                  
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(c)      | Changes in Internal Control Over Financial Reporting:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|         | There has been no change in our internal control over financial
 reporting (as defined in Rules 13a-15(f) under the Securities Exchange Act of
 1934) that occurred during our fiscal quarter ended December 31, 2010, that
 have materially affected, or is reasonably likely to materially affect, our
 internal control over financial reporting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

47

---



Table of Contents

|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Item 9B. | OTHER
 INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|         | Not
 Applicable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|PART III
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Item 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|         | Information
 Incorporated by Reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|         | Information
 required under Item 401 (except as noted below), 405, 406, and 407 (c) (3),
 (d) (4), and (d) (5) of Regulation S-K to the extent applicable to the
 Company will be set forth in the Companys Proxy Statement for the Annual
 Meeting of Shareholders to be held on June 2, 2011 (the 2011 Proxy
 Statement), a definitive copy of which will be filed with the Commission
 within 120 days of the close of the 2010 fiscal year, which information is
 incorporated herein by reference. Information required under Item 402 of
 Regulation S-K regarding executive officers is presented under Item 1(c)(x)
 herein.
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|         | Code of
 Ethics                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|         | The Company
 has adopted a code of ethics applicable to all employees of and consultants
 to the Company. A copy of the Code of Conduct can be obtained free of charge
 upon written request directed to the Companys Secretary at the executive
 offices of the Company.                                                                                                                                                                                                                                                                                                                                                             
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Item 11. | EXECUTIVE COMPENSATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|         | Information required under Item 402 of Regulation S-K to the extent
 applicable to the Company will be set forth in the Companys 2011 Proxy
 Statement which information is incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                         
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Item 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
 RELATED STOCKHOLDER MATTERS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|         | Information
 required under Item 201(d) and 403 of Regulation S-K to the extent applicable
 to the Company will be set forth in the Companys 2011 Proxy Statement which
 information is incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                             
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Item 13. | CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|         | Information,
 if any, required by Item 404 of Regulation S-K to the extent applicable to
 the Company will be set forth in the Companys 2011 Proxy Statement which
 information is incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                  

48

---



Table of Contents

|         |                                                                                                                                                                                                                                                 
|-------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Item 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES                                                                                                                                                                                                          
|         |                                                                                                                                                                                                                                                 
|         | Information
 required by Item 14 of this Form 10-K and Item 9(e) of Schedule 14A will be
 set forth in a section entitled The Companys Auditors in the Companys
 2011 Proxy statement which information is incorporated herein by reference.

|         |                                            |                                                                                                                                                       
|-------- | ------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------
|PART IV 
|         |                                            |                                                                                                                                                       
|Item 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|         |                                            |                                                                                                                                                       
|         | (a).                                       | The
 following Consolidated Financial Statements of Canterbury Park Holding
 Corporation and subsidiaries are included in Part II, Item 8 pages 29-46:
|         |                                            |                                                                                                                                                       
|         |                                            | Report of
 Independent Registered Public Accounting Firm                                                                                              
|         |                                            |                                                                                                                                                       
|         |                                            | Consolidated
 Balance Sheets as of December 31, 2010 and 2009                                                                                         
|         |                                            |                                                                                                                                                       
|         |                                            | Consolidated
 Statements of Operations for the years ended December 31, 2010 and 2009                                                                 
|         |                                            |                                                                                                                                                       
|         |                                            | Consolidated
 Statements of Changes in Stockholders Equity for the years ended December
 31, 2010 and 2009                                           
|         |                                            |                                                                                                                                                       
|         |                                            | Consolidated
 Statements of Cash Flows for the years ended December 31, 2010 and 2009                                                                 
|         |                                            |                                                                                                                                                       
|         |                                            | Notes to
 Consolidated Financial statements                                                                                                           
|         |                                            |                                                                                                                                                       
|         | (b).                                       | The exhibits
 listed on the Exhibits Index on pages 51 & 52 are filed with this Form
 10-K or incorporated by reference in this report.             
|         |                                            |                                                                                                                                                       
|         | (c).                                       | No financial
 statement schedules are required by Item 8 and Item 15(c) of Form 10-K.                                                                 

49

---



Table of Contents

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.

|                       |                                      |                                      
|---------------------- | ------------------------------------ | -------------------------------------
|Dated: March
 31, 2011 | CANTERBURY
 PARK HOLDING CORPORATION
|                       |                                      |                                      
|                       | By                                   | /s/ Randall D. Sampson               
|                       |                                      | Randall D. Sampson                   
|                       |                                      | President and Chief Executive Officer

Pursuant
to the requirements of the Securities Exchange Act of 1934, the following
persons on behalf of the Registrant and in the capacities and the dates
indicated have signed this report below.

Power of Attorney

Each
person whose signature appears below constitutes and appoints CURTIS A.
SAMPSON, DALE H. SCHENIAN and RANDALL D. SAMPSON as his true and lawful
attorneys-in-fact and agents, each acting alone, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any of all amendments to this Annual Report on Form 10-K
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, each acting alone, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.

|                                |  |                                          |  |                 | 
|------------------------------- |  | ---------------------------------------- |  | --------------- | 
|Signature                       |  | Title                                    |  | Date           
|                                |  |                                          |  |                
|/s/ Curtis A. Sampson           |  | Chairman of
 the Board                   |  | March 31,
 2011
|Curtis A. Sampson               |  |                                          |  |                
|                                |  |                                          |  |                
|/s/ Dale H. Schenian            |  | Vice
 Chairman; Director                 |  | March 31,
 2011
|Dale H. Schenian                |  |                                          |  |                
|                                |  |                                          |  |                
|/s/ Randall D. Sampson          |  | Chief
 Executive Officer, President,     |  | March 31,
 2011
|Randall D. Sampson              |  | General
 Manager, Treasurer and Director |  |                
|                                |  |                                          |  |                
|/s/ Patrick R. Cruzen           |  | Director                                 |  | March 31,
 2011
|Patrick R. Cruzen               |  |                                          |  |                
|                                |  |                                          |  |                
|/s/ Burton F. Dahlberg          |  | Director                                 |  | March 31,
 2011
|Burton F. Dahlberg              |  |                                          |  |                
|                                |  |                                          |  |                
|/s/ Carin J. Offerman           |  | Director                                 |  | March 31,
 2011
|Carin J. Offerman               |  |                                          |  |                
|                                |  |                                          |  |                
|/s/ David C. Hansen             |  | Chief
 Financial Officer* and Secretary  |  | March 31,
 2011
|David C. Hansen                 |  |                                          |  |                
|                                |  |                                          |  |                
|* Principal
 Accounting Officer |  |                                          |  |                

50

---



Table of Contents

CANTERBURY PARK HOLDING CORPORATION AND
SUBSIDIARY

Exhibit Index To
Form 10-K for the Year Ended December 31, 2010

|                          |  |                                                                                                                                                                       |  |                                                                                                                                                                               
|------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit
 Table
 Reference |  | Title of Document                                                                                                                                                     |  | Location in Consecutive Numbering
 System as Filed with the Securities
 and Exchange Commission                                                                               
|                          |  |                                                                                                                                                                       |  |                                                                                                                                                                               
|3.1                       |  | Articles of
 Incorporation, as amended.                                                                                                                               |  | Filed as
 Exhibit 3.1 to the Forms SB-2 Registration Statement of the Company, File No.
 33-81262C, (the SB-2 Registration Statement) and incorporated herein by
 reference.
|                          |  |                                                                                                                                                                       |  |                                                                                                                                                                               
|3.2                       |  | Bylaws, as
 amended                                                                                                                                                   |  | Filed as
 Exhibit 3.2 to the SB-2 Registration Statement and incorporated herein by
 reference.                                                                               
|                          |  |                                                                                                                                                                       |  |                                                                                                                                                                               
|10.1                      |  | Plan of
 Reorganization dated as of May 20, 1994 between Canterbury Park Holding
 Corporation and Canterbury Park Concessions, Inc.                                   |  | Filed as
 Exhibit 10.1 to the SB-2 Registration Statement and incorporated herein by
 reference.                                                                              
|                          |  |                                                                                                                                                                       |  |                                                                                                                                                                               
|10.2                      |  | Restated
 Stock Purchase Agreement                                                                                                                                    |  | Filed as
 Exhibit 10.2 to the SB-2 Registration Statement and incorporated herein by
 reference.                                                                              
|                          |  |                                                                                                                                                                       |  |                                                                                                                                                                               
|10.3                      |  | Letter dated
 April 4, 1994 from the Minnesota Horsemens Benevolent and Protective
 Association, Inc. to Minnesota Racing Commission waiving 125 day racing
 minimum |  | Filed as
 Exhibit 10.3 to the SB-2 Registration Statement and incorporated herein by
 reference.                                                                              
|                          |  |                                                                                                                                                                       |  |                                                                                                                                                                               
|10.5                      |  | Stock Option
 Plan, as amended*                                                                                                                                       |  | Filed as
 Exhibit 4.1 to the Registration Statement on Form S-8 of the Company filed on
 August 28, 1997 (File No. 333-34509) and incorporated herein by reference.           
|                          |  |                                                                                                                                                                       |  |                                                                                                                                                                               
|10.6                      |  | Form of
 Non-qualified Stock Option Agreement                                                                                                                         |  | Filed as
 Exhibit 10.6 to the SB-2 Registration Statement and incorporated herein by
 reference.                                                                              

|                                                                                               |  |  |  |  | 
|---------------------------------------------------------------------------------------------- |  |  |  |  | 
|* Denotes an
 exhibit that covers management contracts or compensatory plans or
 arrangements.

51

---



Table of Contents

|                          |  |                                                                                                                                                                                                                                                                                         |  |                                                                                                                                                                    
|------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit
 Table
 Reference |  | Title of Document                                                                                                                                                                                                                                                                       |  | Location in Consecutive Numbering
 System as Filed with the Securities
 and Exchange Commission                                                                    
|                          |  |                                                                                                                                                                                                                                                                                         |  |                                                                                                                                                                    
|10.7                      |  | Curtis A.
 Sampson Guaranty to HRA                                                                                                                                                                                                                                                      |  | Filed as
 Exhibit 10.7 to the SB-2 Registration Statement and incorporated herein by
 reference.                                                                   
|                          |  |                                                                                                                                                                                                                                                                                         |  |                                                                                                                                                                    
|10.10                     |  | General
 Credit and Security Agreement dated as of June 3, 1998 between Canterbury
 Park Holding Corporation and Bremer Bank N.A. (previously First American
 Bank, N.A.) This exhibit 10.10 replaces exhibit 10.10 filed previously as an
 exhibit to the SB-2 Registration Statement. |  | Filed as
 Exhibit 10.10 to the Form 10-KSB for the fiscal year ended December 31, 1998.                                                                            
|                          |  |                                                                                                                                                                                                                                                                                         |  |                                                                                                                                                                    
|10.11                     |  | Stock
 Purchase Savings Plan                                                                                                                                                                                                                                                            |  | Filed as
 Exhibit 10.11 to Form 10-KSB for the fiscal year ended December 31, 1997 and
 incorporated herein by reference.                                          
|                          |  |                                                                                                                                                                                                                                                                                         |  |                                                                                                                                                                    
|10.13                     |  | Stock Option
 Plan for Non-Employee Consultants and Advisors                                                                                                                                                                                                                            |  | Filed as
 Exhibit 4.3 to the Registration Statement on Form S-8 of the Company filed on
 August 28, 1997 (File No. 333-34509) and incorporated herein by reference.
|                          |  |                                                                                                                                                                                                                                                                                         |  |                                                                                                                                                                    
|21                        |  | Subsidiaries
 of the Registrant                                                                                                                                                                                                                                                         |  | Filed
 herewith.                                                                                                                                                   
|                          |  |                                                                                                                                                                                                                                                                                         |  |                                                                                                                                                                    
|23.1                      |  | Consent of
 Independent Registered Public Accounting Firm                                                                                                                                                                                                                               |  | Filed
 herewith.                                                                                                                                                   
|                          |  |                                                                                                                                                                                                                                                                                         |  |                                                                                                                                                                    
|24                        |  | Power of
 Attorney                                                                                                                                                                                                                                                                      |  | Included in
 signature page at page 50.                                                                                                                            
|                          |  |                                                                                                                                                                                                                                                                                         |  |                                                                                                                                                                    
|31.1                      |  | Certification
 of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
 Act 0f 2002                                                                                                                                                                                |  | Filed
 herewith.                                                                                                                                                   
|                          |  |                                                                                                                                                                                                                                                                                         |  |                                                                                                                                                                    
|31.2                      |  | Certification
 of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
 Act of 2002                                                                                                                                                                                |  | Filed
 herewith.                                                                                                                                                   
|                          |  |                                                                                                                                                                                                                                                                                         |  |                                                                                                                                                                    
|32                        |  | Certification
 pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                |  | Filed
 herewith.                                                                                                                                                   
|                          |  |                                                                                                                                                                                                                                                                                         |  |                                                                                                                                                                    

The exhibits referred to in
this Exhibit will be supplied to a shareholder at a charge of $.25 per page
upon written request directed to the Companys Secretary at the executive
offices of the Company.

52

---