##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.

FORM 10-Q

|    |  |                                                                                              
|--- |  | ---------------------------------------------------------------------------------------------
|[X] |  | QUARTERLY REPORT FILED PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2002

OR

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

For the transition period from _______________________ to ______________________

Commission file number 333-0214

HORSESHOE GAMING HOLDING CORP.

---

(Exact name of registrant as specified in its charter)


|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 88-0425131                          
|                                                               |  |                                     
|(State or other jurisdiction
of incorporation or organization) |  | (I.R.S. Employer Identification No.)

|                                              |  |  |            | 
|--------------------------------------------- |  |  | ---------- | 
|18454 South West Creek Drive, Tinley Park, IL |  |  | 60477      | 
|                                              |  | 
|(Address of principal executive office)       |  |  | (Zip Code)

(708) 429-8300

---

(Registrants telephone number, including area code)




---

(Former name, former address and former fiscal year, if changed since last report)


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 ___





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TABLE OF CONTENTS



|                             |                                                                                               |                                                      |  |  |  |  |  | 
|---------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|PART I FINANCIAL INFORMATION
|                             | Item 1. FINANCIAL STATEMENTS                                                                 
|                             |                                                                                               | CONSOLIDATED CONDENSED BALANCE SHEETS               
|                             |                                                                                               | CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS     
|                             |                                                                                               | CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS     
|                             |                                                                                               | NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
|                             | Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                             | Item 3. Quantitative and Qualitative Disclosure About Market Risk                            
|PART II OTHER INFORMATION   
|                             | Item 1. LEGAL PROCEEDINGS                                                                    
|                             | Item 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURES                  
|EXHIBIT 10.1                
|EXHIBIT 99.1                
|EXHIBIT 99.2                



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##### Table of Contents



HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

|           |                       |                                                                                                           |  |   
|---------- | --------------------- | --------------------------------------------------------------------------------------------------------- |  | --
|PART I     | FINANCIAL INFORMATION |                                                                                                           | 
|          
|Item 1.    |                       | Financial Statements                                                                                      |  |   
|          
|           |                       | Consolidated Condensed Balance Sheets as of
June 30, 2002 and December 31, 2001                           |  | 3 
|          
|           |                       | Consolidated Condensed Statements of Operations for the
three and six months ended June 30, 2002 and 2001 |  | 4 
|          
|           |                       | Consolidated Condensed Statements of Cash Flows for the
six months ended June 30, 2002 and 2001           |  | 5 
|          
|           |                       | Notes to Consolidated Condensed Financial Statements                                                      |  | 6 
|          
|Item 2.    |                       | Managements Discussion and Analysis of Financial Condition
and Results of Operations                     |  | 10
|          
|Item 3.    |                       | Quantitative and Qualitative Disclosures About Market Risk                                                |  | 18
|          
|PART II    | OTHER INFORMATION     |                                                                                                           | 
|          
|Item 1.    |                       | Legal Proceedings                                                                                         |  | 19
|          
|Item 6.    |                       | Exhibits and Reports on Form 8-K                                                                          |  | 20
|          
|SIGNATURES |                       | 21                                                                                                       

2



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##### Table of Contents






PART I FINANCIAL INFORMATION




Item 1. FINANCIAL STATEMENTS





HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS(unaudited)
(in thousands, except for share data)

|                              |                                                                                                         |                             |                                      |         |         |          |           |              |         |  |  | 
|----------------------------- | ------------------------------------------------------------------------------------------------------- | --------------------------- | ------------------------------------ | ------- | ------- | -------- | --------- | ------------ | ------- |  |  | 
|                              |                                                                                                         |                             |                                      |         |         | June 30, |           | December 31,
|                              |                                                                                                         |                             |                                      |         |         | 2002     |           | 2001        
|                              |                                                                                                         |                             |                                      |         |         |          |           |             
|                              |                                                                                                         |                             |                                      | ASSETS  |         |          |           |              |         |  |  | 
|Current assets                |                                                                                                         |                             |                                      |         |         |          |           |             
|                              | Cash and cash equivalents                                                                               |                             | $                                    | 90,508  |         |          | $         | 220,817      |        
|                              | Restricted cash                                                                                         |                             |                                      | 14,152  |         |          |           | 14,059       |        
|                              | Accounts receivable, net of allowance for doubtful
accounts of $8,357 and $13,160, respectively         |                             |                                      | 12,660  |         |          |           | 13,516       |        
|                              | Inventories                                                                                             |                             |                                      | 4,392   |         |          |           | 5,031        |        
|                              | Prepaid expenses and other                                                                              |                             |                                      | 9,622   |         |          |           | 12,152       |        
|                              |                                                                                                         |                             |                                      |         |         |          |           |             
|                              |                                                                                                         | Total current assets        |                                      |         | 131,334 |          |           |              | 265,575 | 
|                              |                                                                                                         |                             |                                      |         |         |          |           |             
|Property and equipment, net   |                                                                                                         |                             | 472,312                              |         |         |          | 482,379   |             
|Goodwill                      |                                                                                                         |                             | 254,413                              |         |         |          | 254,413   |             
|Other, net                    |                                                                                                         |                             | 56,054                               |         |         |          | 54,892    |             
|                              |                                                                                                         |                             |                                      |         |         |          |           |             
|                              |                                                                                                         | $                           | 914,113                              |         |         | $        | 1,057,259 |             
|                              |                                                                                                         |                             |                                      |         |         |          |           |             
|                              |                                                                                                         |                             | LIABILITIES AND STOCKHOLDERS EQUITY |         |         |          |           |              |         |  | 
|Current liabilities           |                                                                                                         |                             |                                      |         |         |          |           |             
|                              | Accounts payable                                                                                        |                             | $                                    | 6,212   |         |          | $         | 13,426       |        
|                              | Accrued expenses and other                                                                              |                             |                                      | 84,186  |         |          |           | 81,428       |        
|                              | Current maturities of long-term debt                                                                    |                             |                                      |        |         |          |           | 9,823        |        
|                              |                                                                                                         |                             |                                      |         |         |          |           |             
|                              |                                                                                                         | Total current liabilities   |                                      |         | 90,398  |          |           |              | 104,677 | 
|                              |                                                                                                         |                             |                                      |         |         |          |           |             
|Long-term liabilities         |                                                                                                         |                             |                                      |         |         |          |           |             
|                              | Long-term debt, less current maturities                                                                 |                             |                                      | 593,675 |         |          |           | 729,698      |        
|                              | Other long-term liabilities                                                                             |                             |                                      | 9,074   |         |          |           | 10,699       |        
|                              |                                                                                                         |                             |                                      |         |         |          |           |             
|                              |                                                                                                         | Total long-term liabilities |                                      |         | 602,749 |          |           |              | 740,397 | 
|                              |                                                                                                         |                             |                                      |         |         |          |           |             
|Commitments and contingencies |                                                                                                         |                             |                                      |         |         |          |           |             
|Stockholders equity          |                                                                                                         |                             |                                      |         |         |          |           |             
|                              | Common stock, $.01 par value, 50,000 shares authorized, 25,000
shares issued, 23,145 shares outstanding |                             |                                      |        |         |          |           |             |        
|                              | Additional paid-in capital                                                                              |                             |                                      | 59,808  |         |          |           | 59,808       |        
|                              | Retained earnings                                                                                       |                             |                                      | 213,943 |         |          |           | 205,162      |        
|                              |                                                                                                         |                             |                                      |         |         |          |           |             
|                              |                                                                                                         |                             | 273,751                              |         |         |          | 264,970   |             
|                              | Treasury stock, at cost, 1,855 shares                                                                   |                             |                                      | (52,785 | )       |          |           | (52,785      | )      
|                              |                                                                                                         |                             |                                      |         |         |          |           |             
|                              |                                                                                                         | Total stockholders equity  |                                      |         | 220,966 |          |           |              | 212,185 | 
|                              |                                                                                                         |                             |                                      |         |         |          |           |             
|                              |                                                                                                         | $                           | 914,113                              |         |         | $        | 1,057,259 |             
|                              |                                                                                                         |                             |                                      |         |         |          |           |             

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

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HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS(unaudited)
(in thousands)

|                                                             |                                  |                              |         |                             |         |                           |         |         |         |      |         |         |         |   |         |         |         |  
|------------------------------------------------------------ | -------------------------------- | ---------------------------- | ------- | --------------------------- | ------- | ------------------------- | ------- | ------- | ------- | ---- | ------- | ------- | ------- | - | ------- | ------- | ------- | -
|                                                             |                                  |                              |         | Three months ended June 30, |         | Six months ended June 30,
|                                                             |                                  |                              |         |                             |         |                           |         |         |        
|                                                             |                                  |                              |         | 2002                        |         | 2001                      |         | 2002    |         | 2001
|                                                             |                                  |                              |         |                             |         |                           |         |         |         |      |         |         |         |   |         |         |        
|Revenues                                                     |                                  |                              |         |                             |         |                           |         |         |         |      |         |         |         |   |         |        
|                                                             | Casino                           |                              | $       | 209,531                     |         |                           | $       | 255,942 |         |      | $       | 417,464 |         |   | $       | 515,085 |        
|                                                             | Food and beverage                |                              |         | 19,717                      |         |                           |         | 23,451  |         |      |         | 40,247  |         |   |         | 47,577  |        
|                                                             | Hotel                            |                              |         | 7,321                       |         |                           |         | 7,549   |         |      |         | 14,457  |         |   |         | 15,061  |        
|                                                             | Retail and other                 |                              |         | 5,016                       |         |                           |         | 5,722   |         |      |         | 9,780   |         |   |         | 11,096  |        
|                                                             |                                  |                              |         |                             |         |                           |         |         |         |      |         |         |         |   |         |        
|                                                             |                                  |                              | 241,585 |                             |         |                           | 292,664 |         |         |      | 481,948 |         |         |   | 588,819 |        
|                                                             | Promotional allowances and other |                              |         | (28,141                     | )       |                           |         | (30,643 | )       |      |         | (56,686 | )       |   |         | (63,326 | )      
|                                                             |                                  |                              |         |                             |         |                           |         |         |         |      |         |         |         |   |         |        
|                                                             |                                  | Net revenues                 |         |                             | 213,444 |                           |         |         | 262,021 |      |         |         | 425,262 |   |         |         | 525,493 |  
|                                                             |                                  |                              |         |                             |         |                           |         |         |         |      |         |         |         |   |         |        
|Expenses                                                     |                                  |                              |         |                             |         |                           |         |         |         |      |         |         |         |   |         |        
|                                                             | Casino                           |                              |         | 115,257                     |         |                           |         | 148,749 |         |      |         | 225,698 |         |   |         | 293,648 |        
|                                                             | Food and beverage                |                              |         | 6,242                       |         |                           |         | 7,338   |         |      |         | 12,144  |         |   |         | 15,063  |        
|                                                             | Hotel                            |                              |         | 601                         |         |                           |         | 749     |         |      |         | 1,222   |         |   |         | 1,545   |        
|                                                             | Retail and other                 |                              |         | 2,375                       |         |                           |         | 2,046   |         |      |         | 4,237   |         |   |         | 3,662   |        
|                                                             | General and administrative       |                              |         | 30,468                      |         |                           |         | 32,887  |         |      |         | 56,787  |         |   |         | 66,463  |        
|                                                             | Corporate expenses               |                              |         | 8,545                       |         |                           |         | 6,353   |         |      |         | 13,400  |         |   |         | 12,887  |        
|                                                             | Deferred compensation            |                              |         | 4,645                       |         |                           |         | (1,092  | )       |      |         | 7,761   |         |   |         | (674    | )      
|                                                             | Preopening expense               |                              |         |                            |         |                           |         | 3,173   |         |      |         |        |         |   |         | 4,064   |        
|                                                             | Net loss on disposal of assets   |                              |         | 2,566                       |         |                           |         | 529     |         |      |         | 3,860   |         |   |         | 470     |        
|                                                             | Depreciation and amortization    |                              |         | 13,893                      |         |                           |         | 16,330  |         |      |         | 27,786  |         |   |         | 34,847  |        
|                                                             |                                  |                              |         |                             |         |                           |         |         |         |      |         |         |         |   |         |        
|                                                             |                                  | Total expenses               |         |                             | 184,592 |                           |         |         | 217,062 |      |         |         | 352,895 |   |         |         | 431,975 |  
|                                                             |                                  |                              |         |                             |         |                           |         |         |         |      |         |         |         |   |         |        
|Operating income                                             |                                  |                              | 28,852  |                             |         |                           | 44,959  |         |         |      | 72,367  |         |         |   | 93,518  |        
|Other income (expense)                                       |                                  |                              |         |                             |         |                           |         |         |         |      |         |         |         |   |         |        
|                                                             | Interest expense                 |                              |         | (17,584                     | )       |                           |         | (22,833 | )       |      |         | (35,263 | )       |   |         | (46,988 | )      
|                                                             | Interest income                  |                              |         | 872                         |         |                           |         | 372     |         |      |         | 1,799   |         |   |         | 855     |        
|                                                             | Other, net                       |                              |         |                            |         |                           |         | 14      |         |      |         | (615    | )       |   |         | 464     |        
|                                                             |                                  |                              |         |                             |         |                           |         |         |         |      |         |         |         |   |         |        
|                                                             |                                  | Total other income (expense) |         |                             | (16,712 | )                         |         |         | (22,447 | )    |         |         | (34,079 | ) |         |         | (45,669 | )
|                                                             |                                  |                              |         |                             |         |                           |         |         |         |      |         |         |         |   |         |        
|Income before extraordinary loss on early
retirement of debt |                                  |                              | 12,140  |                             |         |                           | 22,512  |         |         |      | 38,288  |         |         |   | 47,849  |        
|Extraordinary loss on early retirement
of debt               |                                  |                              | (9,683  | )                           |         |                           |        |         |         |      | (9,683  | )       |         |   |        |        
|                                                             |                                  |                              |         |                             |         |                           |         |         |         |      |         |         |         |   |         |        
|Net income                                                   |                                  | $                            | 2,457   |                             |         | $                         | 22,512  |         |         | $    | 28,605  |         |         | $ | 47,849  |        
|                                                             |                                  |                              |         |                             |         |                           |         |         |         |      |         |         |         |   |         |        

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

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HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,(unaudited)
(in thousands)

|                                               |                                                                                   |   |                                                                    |                                           |   |         |          |         |   |        |         |  
|---------------------------------------------- | --------------------------------------------------------------------------------- | - | ------------------------------------------------------------------ | ----------------------------------------- | - | ------- | -------- | ------- | - | ------ | ------- | -
|                                               |                                                                                   |   |                                                                    |                                           |   | 2002    |          | 2001   
|                                               |                                                                                   |   |                                                                    |                                           |   |         |          |        
|Cash flows from operating activities           |                                                                                   |   |                                                                    |                                           |   |         |          |        
|                                               | Net income                                                                        |   | $                                                                  | 28,605                                    |   |         | $        | 47,849  |  
|                                               | Adjustments to reconcile net income to
net cash provided by operating activities: |   |                                                                    |                                           |   |         |          |         |  
|                                               |                                                                                   |   | Depreciation and amortization                                      |                                           |   | 27,786  |          |         |   | 34,847 |        
|                                               |                                                                                   |   | Net loss on disposal of assets                                     |                                           |   | 3,860   |          |         |   | 470    |        
|                                               |                                                                                   |   | Extraordinary loss on early retirement of debt                     |                                           |   | 9,683   |          |         |   |       |        
|                                               |                                                                                   |   | Amortization of debt discounts,
deferred finance charges and other |                                           |   | 1,561   |          |         |   | 2,240  |        
|                                               |                                                                                   |   | Provision for doubtful accounts                                    |                                           |   | 1,609   |          |         |   | 3,641  |        
|                                               |                                                                                   |   | Deferred compensation                                              |                                           |   | 7,761   |          |         |   | (674   | )      
|                                               |                                                                                   |   | Net change in current assets and current liabilities               |                                           |   | (16,667 | )        |         |   | (6,490 | )      
|                                               |                                                                                   |   |                                                                    |                                           |   |         |          |        
|                                               |                                                                                   |   |                                                                    | Net cash provided by operating activities |   |         | 64,198   |         |   |        | 81,883  |  
|                                               |                                                                                   |   |                                                                    |                                           |   |         |          |        
|Cash flows from investing activities           |                                                                                   |   |                                                                    |                                           |   |         |          |        
|                                               | Purchases of property and equipment                                               |   |                                                                    | (18,488                                   | ) |         |          | (23,017 | )
|                                               | Proceeds from sale of property and equipment                                      |   |                                                                    | 205                                       |   |         |          | 90      |  
|                                               | Net increase in other assets                                                      |   |                                                                    | (3,715                                    | ) |         |          | (4,504  | )
|                                               |                                                                                   |   |                                                                    |                                           |   |         |          |        
|                                               |                                                                                   |   |                                                                    | Net cash used in investing activities     |   |         | (21,998  | )       |   |        | (27,431 | )
|                                               |                                                                                   |   |                                                                    |                                           |   |         |          |        
|Cash flows from financing activities           |                                                                                   |   |                                                                    |                                           |   |         |          |        
|                                               | Proceeds from long-term debt                                                      |   |                                                                    | 60,000                                    |   |         |          | 30,000  |  
|                                               | Repayments on long-term debt                                                      |   |                                                                    | (206,031                                  | ) |         |          | (59,711 | )
|                                               | Payment of call premium to retire debt                                            |   |                                                                    | (7,457                                    | ) |         |          |        |  
|                                               | Capital dividends                                                                 |   |                                                                    | (19,021                                   | ) |         |          | (22,913 | )
|                                               |                                                                                   |   |                                                                    |                                           |   |         |          |        
|                                               |                                                                                   |   |                                                                    | Net cash used in financing activities     |   |         | (172,509 | )       |   |        | (52,624 | )
|                                               |                                                                                   |   |                                                                    |                                           |   |         |          |        
|Net change in cash and cash equivalents        |                                                                                   |   | (130,309                                                           | )                                         |   |         | 1,828    |        
|Cash and cash equivalents, beginning of period |                                                                                   |   | 220,817                                                            |                                           |   |         | 78,133   |        
|                                               |                                                                                   |   |                                                                    |                                           |   |         |          |        
|Cash and cash equivalents, end of period       |                                                                                   | $ | 90,508                                                             |                                           |   | $       | 79,961   |        
|                                               |                                                                                   |   |                                                                    |                                           |   |         |          |        
|Supplemental cash flow disclosure              |                                                                                   |   |                                                                    |                                           |   |         |          |        
|                                               | Interest paid                                                                     |   | $                                                                  | 35,721                                    |   |         | $        | 45,034  |  

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

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HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

Note 1  Basis of Presentation

The accompanying unaudited consolidated condensed financial statements of
Horseshoe Gaming Holding Corp., a Delaware corporation, and its subsidiaries
(the Company) have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and note disclosures
normally included in annual financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to those rules and regulations. It is suggested that these
consolidated condensed financial statements be read in conjunction with the
financial statements and the notes thereto included in the Companys Form 10-K
for the year ended December 31, 2001. In the opinion of management, all
adjustments (which include normal recurring adjustments) necessary to present
fairly the financial position, results of operations and cash flows of all
periods presented have been made. The results of operations for the six months
ended June 30, 2002, are not necessarily indicative of the operating results
for the full year. Certain reclassifications have been made to the financial
statements as previously presented to conform to current classifications.

Note 2  Goodwill and Other Intangible Assets

On January 1, 2002 the Company adopted Statements of Financial Accounting
Standards No. 142 Goodwill and Other Intangible Assets (SFAS 142). SFAS 142
changed the accounting for goodwill and intangible assets. SFAS 142 states
that goodwill and indefinite-lived intangible assets are no longer amortized
but are reviewed for impairment annually (or more frequently if impairment
indicators arise). Separable intangible assets that are not deemed to have an
indefinite life continue to be amortized over their useful lives. The Company
has concluded its initial impairment tests required pursuant to SFAS 142 and
has determined that no impairment charge is required.

A reconciliation of the Companys reported net income to pro forma net
income to give effect to SFAS 142 for the three and six months ended June 30,
2001, is as follows (in thousands):

|                     |                                           |   |                    |       |                  |   |        |       | 
|-------------------- | ----------------------------------------- | - | ------------------ | ----- | ---------------- | - | ------ | ----- | 
|                     |                                           |   | Three months ended |       | Six months ended
|                     |                                           |   | June 30, 2001      |       | June 30, 2001   
|                     |                                           |   |                    |       |                 
|Reported net income  |                                           | $ | 22,512             |       |                  | $ | 47,849 |      
|Add back:            |                                           |   |                    |       |                  |   |        |      
|                     | Goodwill amortization                     |   |                    | 2,902 |                  |   |        | 6,535 | 
|                     | Indefinite-lived intangibles amortization |   |                    |      |                  |   |        | 167   | 
|                     |                                           |   |                    |       |                  |   |        |      
|Pro forma net income |                                           | $ | 25,414             |       |                  | $ | 54,551 |      
|                     |                                           |   |                    |       |                  |   |        |      

Note 3  Long-Term Debt

In June 2002, the Company redeemed all of its outstanding 9.375% Senior
Subordinated Notes for $166.5 million, including call premium. As a result of
this redemption, the Company recorded an extraordinary loss on early retirement
of debt of $9.7 million in the second quarter of 2002 (see Note 5). In
addition, the Company repaid approximately $38.0 million in other debt, bearing
interest rates ranging from 9% to 12%. The Company used cash on hand plus
$60.0 million of its Senior Secured Revolving Credit Facility (Credit
Facility) to repay these obligations. As of August 12, 2002, the Company had
$50.0 million outstanding under its Credit Facility and $100.0 million of
availability.

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Note 4  Deferred Compensation

The Company recorded deferred compensation of $4.6 million and $(1.1)
million for the three months ended June 30, 2002 and 2001, respectively, and
$7.8 million and $(0.7) million for the six months ended June 30, 2002 and
2001, respectively, related to the appreciation/(depreciation) of vested stock
appreciation rights in the Horseshoe Gaming Holding Corp. Equity Incentive
Plan.

Note 5  Recently Issued Accounting Pronouncements

In June 2002, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 146, Accounting for
Costs Associated with Exit or Disposal Activities (SFAS 146). SFAS 146
requires companies to recognize costs associated with exit or disposal
activities when they are incurred rather than at the date of a commitment to an
exit or disposal plan, as previously required under EITF Issue 94-3. Examples
of costs covered by the standard include lease termination costs and certain
employee severance costs that are associated with a restructuring, discontinued
operation, plant closing, or other exit or disposal activity. SFAS 146 is to
be applied prospectively to exit or disposal activities initiated after
December 31, 2002. The Company will adopt SFAS 146 beginning January 1, 2003.
The Company does not believe the adoption will have a significant impact on its
results of operations or financial position.

In April 2002, the FASB issued SFAS No. 145 Rescission of FASB Statements
No. 4, 44, and 64, Amendments of FASB Statement No. 13, and Technical
Corrections (SFAS 145). SFAS 145 rescinds SFAS No. 4, Reporting Gains and
Losses from Extinguishment of Debt, and an amendment of that statement, SFAS
No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements.
SFAS 145 also rescinds SFAS No. 44, Accounting for Intangible Assets of Motor
Carriers. SFAS 145 amends SFAS No. 13, Accounting for Leases, to eliminate
an inconsistency between the required accounting for sale-leaseback
transactions and the required accounting for certain lease modifications that
have economic effects that are similar to sale-leaseback transactions. SFAS
145 also amends other existing authoritative pronouncements to make various
technical corrections, clarify meanings, or describe their applicability under
changed conditions. The Company is in the process of evaluating the impact of
SFAS 145 on its financial statements and will adopt the provisions of SFAS 145
in the first quarter of 2003.

In 2001, the FASB issued SFAS No. 143 Accounting for Asset Retirement
Obligations (SFAS 143). SFAS 143 requires the recognition of legal
obligations associated with the retirement of long-lived assets that result
from the acquisition, construction, development and/or the normal operation of
the long-lived asset, as well as the disclosure of certain information related
to asset retirement obligations. Companies are required to adopt the provisions
of SFAS 143 as of the beginning of the entitys fiscal year beginning after
June 15, 2002. The Company is currently evaluating the provisions of SFAS 143
and the impact that adoption will have on the Companys financial position and
results of operations.

Also in 2001, the FASB issued SFAS No. 144 Accounting for the Impairment
or Disposal of Long-Lived Assets (SFAS 144). This statement establishes a
single accounting model, based on the framework established by SFAS No. 121
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of, for long-lived assets to be disposed of by sale. SFAS 144,
which was adopted by the Company on January 1, 2002, had no impact on the
Companys financial position or results of operations.

7



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##### Table of Contents



Note 6  Contingencies

The Company and its subsidiaries are from time to time, party to legal
proceedings arising in the ordinary course of business. Except as discussed
below, the Company is unaware of any legal proceedings which, even if the
outcome were unfavorable to the Company, would have a material adverse impact
on either its financial condition or results of operations.

On June 2, 2000, a lawsuit was filed in the United States District Court
for the Northern District of Indiana, against the Company and the Companys
subsidiary in Hammond, Indiana (Horseshoe Hammond or Hammond) on behalf of
current and former employees of Horseshoe Hammond alleging that Horseshoe
Hammond and the Company are responsible for damages to current and former
employees as a result of poor air quality on the gaming vessel operating in
Hammond, Indiana. The lawsuit alleged certain tort claims based on poor air
quality and seeks certification as a class on behalf of similarly situated
current and former employees of Horseshoe Hammond. On May 8,
2002, The United States District
Court denied Plaintiffs request for class certification.  Horseshoe Hammond and the Company deny the allegations in the complaint
asserted by the named employees and intend to vigorously contest this matter.

On July 8, 2002, the Common Council of the City of Hammond filed its
Verified Complaint for Preliminary Injunction And Declaratory Judgement And
Petition for Determination Of The Nature Of The City Executive And Legislative
Power By The Court, sitting en Banc in the Lake County Superior Court in Crown
Point, Indiana and captioned as Robert A. Markovich, as President of The
Common Council of the City of Hammond vs. Duane W. Dedelow, Jr., as Mayor of
the City of Hammond, Horseshoe Hammond, Inc., f/k/a Empress Casino Hammond,
Corporation, and Hammond Development Corporation. In the Verified Complaint,
the Common Council asked the Court to (i) enjoin the Mayor from entering into
any further agreements providing for payments from Horseshoe Hammond or
spending any of the funds already paid by Horseshoe Hammond, (ii) determine
that the Mayor does not have unilateral authority to enter into agreements with
Horseshoe Hammond and (iii) enter a declaratory judgement finding that the
First, Second, Third and Fourth Amendments to the Development Agreements are
not valid. The Company believes that the suit is without merit and will
vigorously defend the validity of the Amendments to the Development Agreement.
An adverse ruling could delay Horseshoe Hammonds ability to expand its
facility in Hammond, Indiana.

Horseshoe Entertainment (HE), the Companys subsidiary that owns and
operates Horseshoe Bossier City, was issued an initial operators license by
the Louisiana Enforcement Division (the Enforcement Division) on November 22,
1993 for a five year period. HE timely submitted its renewal application to
the Enforcement Division and on October 20, 1998, the Louisiana Gaming Control
Board (the Gaming Control Board) granted HEs license renewal subject to
suitability review. HEs license renewal was extended on October 19, 1999,
subject to completion of suitability review. The Enforcement Division filed a
Report with the Louisiana Gaming Control Board on May 13, 2002, documenting the
results of its suitability review. The Report noted a number of issues in
Horseshoes history and dealings with the State of Louisiana that, in the view
of the Enforcement Division, should be considered by the Gaming Control Board
prior to making the final determination on HEs license renewal application.
The Report does not make a recommendation to the Gaming Control Board and, in
fact, the Enforcement Division noted that the Gaming Control Board has the
authority to renew HEs license without conditions, to renew HEs license with
such conditions as the Gaming Control Board deems appropriate or to deny HEs
application for a license renewal.

The Gaming Control Board is expected to convene a hearing to act on HEs
license renewal during January 2003. HE believes the Report inaccurately
describes certain matters. At that hearing, HE will have an opportunity to
present its case for license renewal to the Gaming Control Board and in the
process to contest and refute the items in the Report that are critical of HEs
past actions.

8



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##### Table of Contents



Note 7  Subsequent Events

Indiana Legislative Activities

Recently passed legislation in the State of Indiana increased the gaming
tax by 2.5%, effective July 1, 2002. This legislation also allows casinos the
option to convert to dockside gaming in exchange for a graduated tax rate
ranging from 15% to 35%. All of the casinos in Indiana, including Horseshoe
Hammond, have been approved by the Indiana Gaming Commission to convert to
dockside gaming. Hammond began dockside operations on August 1, 2002.

Ownership Transactions

In July 2002, the Company purchased 0.29% of its outstanding common stock
from a current owner for approximately $2.5 million in cash.

9



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##### Table of Contents






Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis provides information which
management believes is relevant to an assessment and understanding of the
consolidated financial condition and results of operations of Horseshoe Gaming
Holding Corp. (the Company) and its subsidiaries. References to Bossier
City, Tunica, and Hammond (or Horseshoe Hammond) refer to the Companys wholly
owned subsidiaries in Bossier City, Louisiana; Tunica, Mississippi; and
Hammond, Indiana, respectively. In addition, the Company owned and operated a
casino in Joliet, Illinois (Joliet) until July 31, 2001. This discussion
should be read in conjunction with the Companys consolidated condensed
financial statements and notes thereto.

This Quarterly Report on Form 10-Q contains certain forward looking
statements, express or implied, which are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995 and, as
such, speak only as of the date made. The Company undertakes no obligation to
publicly update any forward-looking statements, whether as a result of new
information, future events or otherwise. These forward-looking statements
generally can be identified by phrases such as the Company or its management
believes, anticipates, expects, forecasts, estimates, foresees, or
the negative or other variations thereof or comparable terminology. In
particular, they include statements relating to, among other things, future
actions, new projects, strategies, future performance, the outcome of
contingencies such as legal proceedings and future financial results. These
forward-looking statements are based on the beliefs of management, as well as
assumptions made based on information currently available to management. The
reader is cautioned that forward-looking statements involve risks and
uncertainties, which could cause actual results or events to differ materially
from those expressed or implied therein, including, but not limited to risks
associated with substantial indebtedness, debt service and liquidity; risks of
competition in the Companys existing and future markets; expected increases in
revenues as a result of dockside gaming in Indiana and whether the revenues
will actually offset the increase in taxes; failure to obtain or retain
licenses or regulatory approvals; and changes in gaming laws and regulations.
Further information on these and other applicable risks are included in the
Companys filings with the Securities and Exchange Commission.

10



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##### Table of Contents



Results of OperationsFinancial Highlights

|                                                   |                        |   |                             |        |                       |   |               |        |   |  |          |     |  
|-------------------------------------------------- | ---------------------- | - | --------------------------- | ------ | --------------------- | - | ------------- | ------ | - |  | -------- | --- | -
|                                                   |                        |   | Three months ended June 30, |        | % Increase/(Decrease)
|                                                   |                        |   |                             |        |                      
|                                                   |                        |   | 2002                        |        | 2001                  |   | 2002 vs. 2001
|                                                   |                        |   |                             |        |                       |   |              
|                                                   |                        |   | (dollars in thousands)      |        |                       |   |              
|Casino revenues                                    |                        |   |                             |        |                       |   |               |        |   |  |          |    
|                                                   | Bossier City           |   | $                           | 66,360 |                       |   | $             | 58,977 |   |  |          | 13  | %
|                                                   | Tunica                 |   |                             | 67,117 |                       |   |               | 61,410 |   |  |          | 9   | %
|                                                   | Hammond                |   |                             | 76,054 |                       |   |               | 66,912 |   |  |          | 14  | %
|                                                   | Joliet (a)             |   |                             |       |                       |   |               | 68,643 |   |  |          | (b  | )
|                                                   |                        |   |                             |        |                       |   |               |        |   |  |          |    
|                                                   |                        | $ | 209,531                     |        |                       | $ | 255,942       |        |   |  | -18      | %  
|                                                   |                        |   |                             |        |                       |   |               |        |   |  |          |    
|Net revenues                                       |                        |   |                             |        |                       |   |               |        |   |  |          |    
|                                                   | Bossier City           |   | $                           | 68,491 |                       |   | $             | 61,108 |   |  |          | 12  | %
|                                                   | Tunica                 |   |                             | 66,640 |                       |   |               | 62,690 |   |  |          | 6   | %
|                                                   | Hammond                |   |                             | 78,313 |                       |   |               | 68,289 |   |  |          | 15  | %
|                                                   | Joliet (a)             |   |                             |       |                       |   |               | 69,934 |   |  |          | (b  | )
|                                                   |                        |   |                             |        |                       |   |               |        |   |  |          |    
|                                                   |                        | $ | 213,444                     |        |                       | $ | 262,021       |        |   |  | -19      | %  
|                                                   |                        |   |                             |        |                       |   |               |        |   |  |          |    
|Operating income (loss)                            |                        |   |                             |        |                       |   |               |        |   |  |          |    
|                                                   | Bossier City (c)       |   | $                           | 11,333 |                       |   | $             | 7,723  |   |  |          | 47  | %
|                                                   | Tunica (c)             |   |                             | 18,094 |                       |   |               | 16,977 |   |  |          | 7   | %
|                                                   | Hammond (c)            |   |                             | 12,675 |                       |   |               | 7,703  |   |  |          | 65  | %
|                                                   | Joliet (a)(c)          |   |                             |       |                       |   |               | 21,165 |   |  |          | (b  | )
|                                                   | Corporate expenses     |   |                             | (8,545 | )                     |   |               | (6,353 | ) |  |          | 35  | %
|                                                   | Preopening expense (d) |   |                             |       |                       |   |               | (3,173 | ) |  |          | (b  | )
|                                                   | Deferred compensation  |   |                             | (4,645 | )                     |   |               | 1,092  |   |  |          | (b  | )
|                                                   | Other                  |   |                             | (60    | )                     |   |               | (175   | ) |  |          | -66 | %
|                                                   |                        |   |                             |        |                       |   |               |        |   |  |          |    
|                                                   |                        | $ | 28,852                      |        |                       | $ | 44,959        |        |   |  | -36      | %  
|                                                   |                        |   |                             |        |                       |   |               |        |   |  |          |    
|Other information                                  |                        |   |                             |        |                       |   |               |        |   |  |          |    
|                                                   | Interest expense, net  |   | $                           | 16,712 |                       |   | $             | 22,461 |   |  |          | -26 | %
|                                                   | Extraordinary loss     |   | $                           | 9,683  |                       |   | $             |       |   |  |          | (b  | )
|                                                   | Net income             |   | $                           | 2,457  |                       |   | $             | 22,512 |   |  |          | -89 | %
|Operating margin (operating
income/net revenue)(e) |                        |   |                             |        |                       |   |               |        |   | 
|                                                   | Bossier City (c)       |   |                             | 17     | %                     |   |               | 13     | % |  | 4 pts.  
|                                                   | Tunica (c)             |   |                             | 27     | %                     |   |               | 27     | % |  | 0 pts.  
|                                                   | Hammond (c)            |   |                             | 16     | %                     |   |               | 11     | % |  | 5 pts.  
|                                                   | Joliet (c)             |   |                             |       |                       |   |               | 30     | % |  |          | (b  | )
|                                                   | Consolidated           |   |                             | 14     | %                     |   |               | 17     | % |  | -3  pts.



---

|(a) |  | Joliet was sold on July 31, 2001.                                                                                                       
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(b) |  | Not meaningful.                                                                                                                         
|   
|   
|   
|   
|(c) |  | Before corporate allocations and other non-recurring items.                                                                             
|   
|   
|   
|   
|(d) |  | Includes advertising and production costs of $1.9 million.                                                                              
|   
|   
|   
|   
|(e) |  | The % Increase/(Decrease) for operating margin represents the absolute
difference in percentage points (pts.) between the two periods.

11



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##### Table of Contents



Three months ended June 30, 2002 and 2001

Due to the sale of Joliet in July 2001, the Company experienced a
consolidated 19% decline in net revenues in the second quarter of 2002 versus
2001. Net revenues at the three remaining properties increased a combined 11%
when compared to the June 30, 2001 quarter. Excluding the effects of the
January 1, 2002 adoption of Statements of Financial Accounting Standards No.
142 Goodwill and Other Intangible Assets (SFAS 142), as further discussed
below, the Company generated second quarter 2002 increases in operating income
at its Bossier City, Tunica and Hammond properties.

With the adoption of SFAS 142, the Company ceased amortization on most
intangibles, including goodwill, on January 1, 2002. Such amortization expense
totaled approximately $2.9 million in the second quarter of 2001. Excluding
amortization expense in the prior year period, operating income increased 39%,
5% and 27% in Bossier City, Tunica and Hammond, respectively, in the second
quarter of 2002 as compared to the prior year quarter. In addition, operating
margins in the second quarter of 2002 were 17%, 27% and 16% for Bossier City,
Tunica and Hammond, respectively, as compared to operating margins of 13%, 27%
and 15%, respectively, in the 2001 period when calculated on a comparable
basis.

Net revenue increases in the 2002 quarter were the result of a combination
of both volume and hold percentage improvements in Bossier City, Tunica and
Hammond, and were the primary source of increases in operating income for the
quarter.

Improved results in Bossier City in the second quarter of 2002 were
achieved despite an additional 1% increase in gaming taxes that went into
effect on April 1, 2002. Bossier City redirected its marketing efforts in the
second quarter of 2002 by putting less emphasis on direct mail and more on
advertising, primarily in the Dallas, Texas market. Advertising expense
exceeded prior year by approximately $0.6 million in the quarter ended June 30,
2002, while direct mail expense in the quarter ended June 30, 2002 was $0.5
million less than the prior year period. As a result, Bossier City experienced
a 22% increase in the number of new or reactivated slot patrons from the
Dallas, Texas market in the quarter ended June 30, 2002 as compared to the
prior year period.

Net revenues in Tunica increased approximately 6% in the quarter ended
June 30, 2002 as compared to the prior year quarter, yet margins remained flat.
Revenue increases associated with the Tyson/Lewis heavyweight championship
fight that was held in Memphis, Tennessee in June 2002, fell short of
expectations and did not offset the costs incurred. In addition, prior year
net revenues include approximately $2.0 million related to a reduction in the
amount of promotional costs incurred for player database marketing.

Hammond continued to show improvements in the quarter ended June 30, 2002
over the prior year quarter. Impacting Hammonds operating income in the
second quarter of 2002 was a $2.5 million charge for assets disposed of during
the quarter, primarily related to the write-off of design and option fees on a
site upon which the Company no longer plans to utilize.

Corporate expenses increased 35% in the second quarter of 2002, due
primarily to the resolution of a 1999  2001 Louisiana franchise tax audit.
The Company accrued $2.3 million in franchise tax expense plus interest in the
quarter ended June 30, 2002, related to this audit. Positively impacting
corporate expenses in the June 2002 quarter was a reduction in life insurance
expense on a key executive and a reduction in legal expenses due to the
completion of the sale of the Joliet property. In addition, the monthly
consulting payments to the former owners of Joliet, amounting to $1.0 million
per quarter, were included in corporate expense in the 2001 quarter. Upon the
sale of Joliet, the present value of the remaining liability was accrued and
charged against the gain on the sale of Joliet, thereby excluding those
payments from corporate expense in the 2002 quarter.

12



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##### Table of Contents



Deferred compensation increased $5.7 million in the second quarter of 2002
due to appreciation on vested stock appreciation rights.

Interest expense, net decreased 26% in the second quarter of 2002 as
compared to the prior year period, primarily due to lower outstanding debt
balances during the 2002 quarter.

13



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##### Table of Contents



Results of Operations

Financial Highlights

|                                                   |                        |   |                           |         |                       |   |               |         |   |  |         |      |  
|-------------------------------------------------- | ---------------------- | - | ------------------------- | ------- | --------------------- | - | ------------- | ------- | - |  | ------- | ---- | -
|                                                   |                        |   | Six months ended June 30, |         | % Increase/(Decrease)
|                                                   |                        |   |                           |         |                      
|                                                   |                        |   | 2002                      |         | 2001                  |   | 2002 vs. 2001
|                                                   |                        |   |                           |         |                       |   |              
|                                                   |                        |   | (dollars in thousands)    |         |                       |   |              
|Casino revenues                                    |                        |   |                           |         |                       |   |               |         |   |  |         |     
|                                                   | Bossier City           |   | $                         | 130,467 |                       |   | $             | 119,890 |   |  |         | 9    | %
|                                                   | Tunica                 |   |                           | 136,620 |                       |   |               | 127,292 |   |  |         | 7    | %
|                                                   | Hammond                |   |                           | 150,377 |                       |   |               | 133,304 |   |  |         | 13   | %
|                                                   | Joliet (a)             |   |                           |        |                       |   |               | 134,599 |   |  |         | (b   | )
|                                                   |                        |   |                           |         |                       |   |               |         |   |  |         |     
|                                                   |                        | $ | 417,464                   |         |                       | $ | 515,085       |         |   |  | -19     | %   
|                                                   |                        |   |                           |         |                       |   |               |         |   |  |         |     
|Net revenues                                       |                        |   |                           |         |                       |   |               |         |   |  |         |     
|                                                   | Bossier City           |   | $                         | 135,026 |                       |   | $             | 124,137 |   |  |         | 9    | %
|                                                   | Tunica                 |   |                           | 135,317 |                       |   |               | 128,034 |   |  |         | 6    | %
|                                                   | Hammond                |   |                           | 154,919 |                       |   |               | 135,772 |   |  |         | 14   | %
|                                                   | Joliet (a)             |   |                           |        |                       |   |               | 137,550 |   |  |         | (b   | )
|                                                   |                        |   |                           |         |                       |   |               |         |   |  |         |     
|                                                   |                        | $ | 425,262                   |         |                       | $ | 525,493       |         |   |  | -19     | %   
|                                                   |                        |   |                           |         |                       |   |               |         |   |  |         |     
|Operating income (loss)                            |                        |   |                           |         |                       |   |               |         |   |  |         |     
|                                                   | Bossier City (c)       |   | $                         | 22,303  |                       |   | $             | 15,693  |   |  |         | 42   | %
|                                                   | Tunica (c)             |   |                           | 41,587  |                       |   |               | 37,272  |   |  |         | 12   | %
|                                                   | Hammond (c)            |   |                           | 29,459  |                       |   |               | 16,500  |   |  |         | 79   | %
|                                                   | Joliet (a)(c)          |   |                           |        |                       |   |               | 40,576  |   |  |         | (b   | )
|                                                   | Corporate expenses     |   |                           | (13,400 | )                     |   |               | (12,887 | ) |  |         | 4    | %
|                                                   | Preopening expense (d) |   |                           |        |                       |   |               | (4,064  | ) |  |         | (b   | )
|                                                   | Deferred compensation  |   |                           | (7,761  | )                     |   |               | 674     |   |  |         | (b   | )
|                                                   | Other                  |   |                           | 179     |                       |   |               | (246    | ) |  |         | -173 | %
|                                                   |                        |   |                           |         |                       |   |               |         |   |  |         |     
|                                                   |                        | $ | 72,367                    |         |                       | $ | 93,518        |         |   |  | -23     | %   
|                                                   |                        |   |                           |         |                       |   |               |         |   |  |         |     
|Other information                                  |                        |   |                           |         |                       |   |               |         |   |  |         |     
|                                                   | Interest expense, net  |   | $                         | 33,464  |                       |   | $             | 46,133  |   |  |         | -27  | %
|                                                   | Extraordinary loss     |   | $                         | 9,683   |                       |   | $             |        |   |  |         | (b   | )
|                                                   | Net income             |   | $                         | 28,605  |                       |   | $             | 47,849  |   |  |         | -40  | %
|Operating margin (operating
income/net revenue)(e) |                        |   |                           |         |                       |   |               |         |   |  |         |     
|                                                   | Bossier City (c)       |   |                           | 17      | %                     |   |               | 13      | % |  | 4 pts. 
|                                                   | Tunica (c)             |   |                           | 31      | %                     |   |               | 29      | % |  | 2 pts. 
|                                                   | Hammond (c)            |   |                           | 19      | %                     |   |               | 12      | % |  | 7 pts. 
|                                                   | Joliet (c)             |   |                           |        |                       |   |               | 29      | % |  |         | (b   | )
|                                                   | Consolidated           |   |                           | 17      | %                     |   |               | 18      | % |  | -1 pts.



---

|(a) |  | Joliet was sold on July 31, 2001.                                                                                                       
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(b) |  | Not meaningful.                                                                                                                         
|   
|   
|   
|   
|(c) |  | Before corporate allocations and other non-recurring items.                                                                             
|   
|   
|   
|   
|(d) |  | Includes advertising and production costs of $2.0 million.                                                                              
|   
|   
|   
|   
|(e) |  | The % Increase/(Decrease) for operating margin represents the absolute
difference in percentage points (pts.) between the two periods.

14



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##### Table of Contents



Six months ended June 30, 2002 and 2001

The Company experienced a consolidated 19% decline in net revenues in the
first six months of 2002 versus 2001 due to the sale of Joliet in July 2001.
Net revenues at the three remaining properties increased a combined 10% when
compared to the six months ended June 30, 2001. Excluding the effects of the
January 1, 2002 adoption of SFAS 142, the Company generated increases in
operating income and operating margins at its Bossier City, Tunica and Hammond
properties in the first six months of 2002 as compared to the prior year
period.

Excluding the $6.7 million in amortization expense that was recorded in
the 2001 period, operating income increased 35%, 10% and 40% in Bossier City,
Tunica and Hammond, respectively, in the six months ended June 30, 2002 as
compared to the prior year period. In addition, operating margins in the first
six months of 2002 were 17%, 31% and 19% for Bossier City, Tunica and Hammond,
respectively, as compared to operating margins of 13%, 29% and 16%,
respectively, in the 2001 period when calculated on a comparable basis.

Net revenue increases at the Companys three remaining properties in the
first six months of 2002 were the result of volume increases in both slots and
table games, coupled with a higher slot hold percentage. These revenue
increases were the primary source of improvements in operating income at the
three properties during the first six months of 2002.

Improved results in Bossier City in the first six months of 2002 were
achieved despite an additional 1% increase in gaming taxes that went into
effect on April 1, 2002. Due to the redirection of marketing efforts in
Bossier City in the first half of 2002, direct mail expense in the six months
ended June 30, 2002 was $1.4 million less than the prior year period, while
advertising and complimentary expenses exceeded prior year by $1.0 million.

Operating income in Tunica in the six months ended June 30, 2002 includes
approximately $1.9 million in positive adjustments related to favorable
resolutions on various tax matters. In addition, prior year net revenues in
Tunica include approximately $2.0 million related to a reduction in the amount
of promotional costs incurred for player database marketing.

Hammond has shown significant improvements in the six months ended June
30, 2002 as compared to the same period in 2001, benefiting from the Horseshoe
branding efforts that have evolved since the property was acquired in late
1999.

Corporate expenses increased 4% in the first six months of 2002, due
primarily to the resolution of a 1999  2001 Louisiana franchise tax audit.
The Company accrued $2.3 million in tax franchise expense plus interest in the
first six months of 2002, related to this audit. Positively impacting
corporate expenses in the 2002 period was a reduction in life insurance expense
on a key executive and a reduction in legal expenses due to the completion of
the sale of the Joliet property. In addition, the monthly consulting payments
to the former owners of Joliet, amounting to $2.0 million for six months, were
included in corporate expense in the 2001 period. Upon the sale of Joliet, the
present value of the remaining liability was accrued and charged against the
gain on the sale of Joliet, thereby excluding those payments from corporate
expense in the 2002 period.

Deferred compensation increased $8.4 million in the first six months of
2002 due to additional appreciation on vested stock appreciation rights.

Interest expense, net decreased 27% in the six months ended June 30, 2002
as compared to the prior year period, primarily due to lower outstanding debt
balances during 2002.

15



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Liquidity and Capital Resources

As of June 30, 2002, the Company had cash and cash equivalents of $90.5
million. During the six months ended June 30, 2002, cash provided by operating
activities was $64.2 million, net cash used in investing activities was $22.0
million and net cash used in financing activities was $172.5 million.

In June 2002, the Company redeemed all of its outstanding 9.375% Senior
Subordinated Notes for $166.5 million, including call premium. As a result of
this redemption, the Company recorded an extraordinary loss on early retirement
of debt of $9.7 million in the second quarter of 2002. In addition, the
Company repaid approximately $38.0 million in other debt, bearing interest
rates ranging from 9% to 12%. The Company used cash on hand plus $60.0 million
of its Senior Secured Revolving Credit Facility (Credit Facility) to repay
these obligations. As of August 12, 2002, the Company had $50.0 million
outstanding under its Credit Facility.

Management believes that the Companys cash and cash equivalents, cash
from operations and $100.0 million in available borrowing capacity on its
Credit Facility will be adequate to meet the Companys debt service obligations
and capital expenditure commitments for the next twelve months.

Indiana Legislative Activities

Recently passed legislation in the State of Indiana increased the gaming
tax by 2.5%, effective July 1, 2002. This legislation also allows casinos the
option to convert to dockside gaming in exchange for a graduated tax rate
ranging from 15% to 35%. All of the casinos in Indiana, including Horseshoe
Hammond, have been approved by the Indiana Gaming Commission to convert to
dockside gaming. Hammond began dockside operations on August 1, 2002.

Ownership Transactions

In July 2002, the Company purchased 0.29% of its outstanding common stock
from a current owner for approximately $2.5 million in cash.

Contingencies

The Company and its subsidiaries are from time to time, party to legal
proceedings arising in the ordinary course of business. Except as discussed
below, the Company is unaware of any legal proceedings which, even if the
outcome were unfavorable to the Company, would have a material adverse impact
on either its financial condition or results of operations.

On June 2, 2000, a lawsuit was filed in the United States District Court
for the Northern District of Indiana, against Horseshoe Hammond and the Company
on behalf of current and former employees of Horseshoe Hammond alleging that
Horseshoe Hammond and the Company are responsible for damages to current and
former employees as a result of poor air quality on the gaming vessel operating
in Hammond, Indiana. The lawsuit alleged certain tort claims based on poor air
quality and seeks certification as a class on behalf of similarly situated
current and former employees of Horseshoe Hammond. On May 8,
2002, The United States District
Court denied Plaintiffs request for class certification.  Horseshoe Hammond and the Company deny the allegations in the complaint
asserted by the named employees and intend to vigorously contest this matter.

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On July 8, 2002, the Common Council of the City of Hammond filed its
Verified Complaint for Preliminary Injunction And Declaratory Judgement And
Petition for Determination Of The Nature Of The City Executive And Legislative
Power By The Court, sitting en Banc in the Lake County Superior Court in Crown
Point, Indiana and captioned as Robert A. Markovich, as President of The
Common Council of the City of Hammond vs. Duane W. Dedelow, Jr., as Mayor of
the City of Hammond, Horseshoe Hammond, Inc., f/k/a Empress Casino Hammond,
Corporation, and Hammond Development Corporation. In the Verified Complaint,
the Common Council asked the Court to (i) enjoin the Mayor from entering into
any further agreements providing for payments from Horseshoe Hammond or
spending any of the funds already paid by Horseshoe Hammond, (ii) determine
that the Mayor does not have unilateral authority to enter into agreements with
Horseshoe Hammond and (iii) enter a declaratory judgement finding that the
First, Second, Third and Fourth Amendments to the Development Agreements are
not valid. The Company believes that the suit is without merit and will
vigorously defend the validity of the Amendments to the Development Agreement.
An adverse ruling could delay Horseshoe Hammonds ability to expand its
facility in Hammond, Indiana.

Horseshoe Entertainment (HE), the Companys subsidiary that owns and
operates Bossier City, was issued an initial operators license by the
Louisiana Enforcement Division (the Enforcement Division) on November 22,
1993 for a five year period. HE timely submitted its renewal application to
the Enforcement Division and on October 20, 1998, the Louisiana Gaming Control
Board (the Gaming Control Board) granted HEs license renewal subject to
suitability review. HEs license renewal was extended on October 19, 1999,
subject to completion of suitability review. The Enforcement Division filed a
Report with the Louisiana Gaming Control Board on May 13, 2002, documenting the
results of its suitability review. The Report noted a number of issues in
Horseshoes history and dealings with the State of Louisiana that, in the view
of the Enforcement Division, should be considered by the Gaming Control Board
prior to making the final determination on HEs license renewal application.
The Report does not make a recommendation to the Gaming Control Board and, in
fact, the Enforcement Division noted that the Gaming Control Board has the
authority to renew HEs license without conditions, to renew HEs license with
such conditions as the Gaming Control Board deems appropriate or to deny HEs
application for a license renewal.

The Gaming Control Board is expected to convene a hearing to act on HEs
license renewal during January 2003. HE believes the Report inaccurately
describes certain matters. At that hearing, HE will have an opportunity to
present its case for license renewal to the Gaming Control Board and in the
process to contest and refute the items in the Report that are critical of HEs
past actions.

Recently Issued Accounting Pronouncements

In June 2002, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 146, Accounting for
Costs Associated with Exit or Disposal Activities (SFAS 146). SFAS 146
requires companies to recognize costs associated with exit or disposal
activities when they are incurred rather than at the date of a commitment to an
exit or disposal plan, as previously required under EITF Issue 94-3. Examples
of costs covered by the standard include lease termination costs and certain
employee severance costs that are associated with a restructuring, discontinued
operation, plant closing, or other exit or disposal activity. SFAS 146 is to
be applied prospectively to exit or disposal activities initiated after
December 31, 2002. The Company will adopt SFAS 146 beginning January 1, 2003.
The Company does not believe the adoption will have a significant impact on its
results of operations or financial position.

17



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##### Table of Contents



In April 2002, the FASB issued SFAS No. 145 Rescission of FASB Statements
No. 4, 44, and 64, Amendments of FASB Statement No. 13, and Technical
Corrections (SFAS 145). SFAS 145 rescinds SFAS No. 4, Reporting Gains and
Losses from Extinguishment of Debt, and an amendment of that statement, SFAS
No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements.
SFAS 145 also rescinds SFAS No. 44, Accounting for Intangible Assets of Motor
Carriers. SFAS 145 amends SFAS No. 13, Accounting for Leases, to eliminate
an inconsistency between the required accounting for sale-leaseback
transactions and the required accounting for certain lease modifications that
have economic effects that are similar to sale-leaseback transactions. SFAS
145 also amends other existing authoritative pronouncements to make various
technical corrections, clarify meanings, or describe their applicability under
changed conditions. The Company is in the process of evaluating the impact of
SFAS 145 on its financial statements and will adopt the provisions of SFAS 145
in the first quarter of 2003.

In 2001, the FASB issued SFAS No. 143 Accounting for Asset Retirement
Obligations (SFAS 143). SFAS 143 requires the recognition of legal
obligations associated with the retirement of long-lived assets that result
from the acquisition, construction, development and/or the normal operation of
the long-lived asset, as well as the disclosure of certain information related
to asset retirement obligations. Companies are required to adopt the provisions
of SFAS 143 as of the beginning of the entitys fiscal year beginning after
June 15, 2002. The Company is currently evaluating the provisions of SFAS 143
and the impact that adoption will have on the Companys financial position and
results of operations.

Also in 2001, the FASB issued SFAS No. 144 Accounting for the Impairment
or Disposal of Long-Lived Assets (SFAS 144). This statement establishes a
single accounting model, based on the framework established by SFAS No. 121
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of, for long-lived assets to be disposed of by sale. SFAS 144,
which was adopted by the Company on January 1, 2002, had no impact on the
Companys financial position or results of operations.




Item 3. Quantitative and Qualitative Disclosure About Market Risk

As of June 30, 2002 there were no material changes to the information
incorporated by reference in Item 7A of the Companys Annual Report on Form
10-K for the fiscal year ended December 31, 2001.

18



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##### Table of Contents






PART II OTHER INFORMATION




Item 1. LEGAL PROCEEDINGS

On June 2, 2000, a lawsuit was filed in the United States District Court
for the Northern District of Indiana, against Horseshoe Hammond and the Company
on behalf of current and former employees of Horseshoe Hammond alleging that
Horseshoe Hammond and the Company are responsible for damages to current and
former employees as a result of poor air quality on the gaming vessel operating
in Hammond, Indiana. The lawsuit alleged certain tort claims based on poor air
quality and seeks certification as a class on behalf of similarly situated
current and former employees of Horseshoe Hammond. On May 8,
2002, The United States District
Court denied Plaintiffs request for class certification.  Horseshoe Hammond and the Company deny the allegations in the complaint
asserted by the named employees and intend to vigorously contest this matter.

On July 8, 2002, the Common Council of the City of Hammond filed its
Verified Complaint for Preliminary Injunction And Declaratory Judgement And
Petition for Determination Of The Nature Of The City Executive And Legislative
Power By The Court, sitting en Banc in the Lake County Superior Court in Crown
Point, Indiana and captioned as Robert A. Markovich, as President of The
Common Council of the City of Hammond vs. Duane W. Dedelow, Jr., as Mayor of
the City of Hammond, Horseshoe Hammond, Inc., f/k/a Empress Casino Hammond,
Corporation, and Hammond Development Corporation. In the Verified Complaint,
the Common Council asked the Court to (i) enjoin the Mayor from entering into
any further agreements providing for payments from Horseshoe Hammond or
spending any of the funds already paid by Horseshoe Hammond, (ii) determine
that the Mayor does not have unilateral authority to enter into agreements with
Horseshoe Hammond and (iii) enter a declaratory judgement finding that the
First, Second, Third and Fourth Amendments to the Development Agreements are
not valid. The Company believes that the suit is without merit and will
vigorously defend the validity of the Amendments to the Development Agreement.
An adverse ruling could delay Horseshoe Hammonds ability to expand its
facility in Hammond, Indiana.

Horseshoe Entertainment (HE), the Companys subsidiary that owns and
operates Horseshoe Bossier City, was issued an initial operators license by
the Louisiana Enforcement Division (the Enforcement Division) on November 22,
1993 for a five year period. HE timely submitted its renewal application to
the Enforcement Division and on October 20, 1998, the Louisiana Gaming Control
Board (the Gaming Control Board) granted HEs license renewal subject to
suitability review. HEs license renewal was extended on October 19, 1999,
subject to completion of suitability review. The Enforcement Division filed a
Report with the Louisiana Gaming Control Board on May 13, 2002, documenting the
results of its suitability review. The Report noted a number of issues in
Horseshoes history and dealings with the State of Louisiana that, in the view
of the Enforcement Division, should be considered by the Gaming Control Board
prior to making the final determination on HEs license renewal application.
The Report does not make a recommendation to the Gaming Control Board and, in
fact, the Enforcement Division noted that the Gaming Control Board has the
authority to renew HEs license without conditions, to renew HEs license with
such conditions as the Gaming Control Board deems appropriate or to deny HEs
application for a license renewal.

The Gaming Control Board is expected to convene a hearing to act on HEs
license renewal during January 2003. HE believes the Report inaccurately
describes certain matters. At that hearing, HE will have an opportunity to
present its case for license renewal to the Gaming Control Board and in the
process to contest and refute the items in the Report that are critical of HEs
past actions.

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##### Table of Contents






Item 6. EXHIBITS AND REPORTS ON FORM 8-K

|         |  |                                                                                                                        
|-------- |  | -----------------------------------------------------------------------------------------------------------------------
|Exhibit  |  |                                                                                                                        
|Number   |  | Description                                                                                                            
|         |  |                                                                                                                        
|3.1 (a)  |  | Certificate of Incorporation of Horseshoe Gaming Holding Corp.                                                         
|        
|3.2 (a)  |  | By-laws of Horseshoe Gaming Holding Corp.                                                                              
|        
|10.1 (b) |  | Purchase Agreement dated July 1, 2002 between Horseshoe
Gaming Holding Corp. and G.A. Robinson, III.                   
|        
|99.1 (b) |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
|        
|99.2 (b) |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.



---

|(a) |  | Filed as an Exhibit to Horseshoe Gaming Holding Corp.s Form S-4 Registration Statement filed on June 15, 1999.
|--- |  | ---------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Included herein.                                                                                               

Reports on Form 8-K filed during the quarter:

On May 31, 2002, a Form 8-K was filed to announce the Companys
dismissal of Arthur Andersen, LLP as its independent public accountants and
the engagement of Deloitte & Touche, LLP as its new independent public
accountants.

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##### Table of Contents






SIGNATURES

Pursuant to the requirements 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.

|                      |                                                                                                   |                   
|--------------------- | ------------------------------------------------------------------------------------------------- | ------------------
|                      | HORSESHOE GAMING HOLDING CORP.a Delaware corporation                                             
|                     
|Date: August 13, 2002 | By:                                                                                               | /s/ Kirk C. Saylor
|                      |                                                                                                  
|                      | Kirk C. Saylor
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)

21



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EXHIBIT INDEX

|         |  |                                                                                                                        
|-------- |  | -----------------------------------------------------------------------------------------------------------------------
|Exhibit  |  |                                                                                                                        
|Number   |  | Description                                                                                                            
|         |  |                                                                                                                        
|3.1 (a)  |  | Certificate of Incorporation of Horseshoe Gaming
    Holding Corp.                                                     
|3.2 (a)  |  | By-laws of Horseshoe Gaming Holding Corp.                                                                              
|10.1 (b) |  | Purchase Agreement dated July 1, 2002
    between Horseshoe Gaming Holding Corp. and G.A. Robinson,
    III.           
|99.1 (b) |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
|99.2 (b) |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.






|    |                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(a) | Filed as an Exhibit to Horseshoe Gaming Holding Corp.s
    Form S-4 Registration Statement filed on June 15, 1999.
|   
|   
|   
|   
|(b) | Included herein.