<PAGE>

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-KSB

 (Mark One)
        |X|        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 1998

                                       OR

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

                 For the Transition period from ______ to ______

                         Commission File Number: 0-24554

                       CANTERBURY PARK HOLDING CORPORATION
-------------------------------------------------------------------------------
                 (Name of small business issuer in its charter)

              Minnesota                            41-1775532
     -----------------------------         -----------------------------
      (State or other jurisdiction               (I.R.S. Employer
      of incorporation or organization)          Identification No.)

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

       Registrant's telephone number, including area code: (612) 445-7223

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

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01 
par value


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
                          --------                   --------

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B in this form, and no disclosure will be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB.     |X|

The Company's operating revenues for its most recent fiscal year were
$19,195,577.

On March 12, 1999, the Company had 3,064,492 shares of common stock, $.01 par
value, outstanding.

The aggregate market value of the shares of voting stock held by non-affiliates
of the Company (persons other than directors and officers) computed at the
NASDAQ closing price of $6.625 per share on March 12, 1999 was approximately
$8,841,000.

                       DOCUMENTS INCORPORATED BY REFERENCE

The Company's Proxy Statement for its 1999 Annual Meeting of Shareholders, to be
held on June 3, 1999, is incorporated by reference into Part III of this Form
10-KSB.



                                       1
<PAGE>



                            CANTERBURY PARK HOLDING CORPORATION
                                 FORM 10-KSB ANNUAL REPORT
                           FOR THE YEAR ENDED DECEMBER 31, 1998

                                     TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                                  PAGE
                                          PART I


<S>        <C>                                                                                     <C>
ITEM 1.     Description of Business...............................................................   3
ITEM 2.     Description of Property...............................................................  10
ITEM 3.     Legal Proceedings.....................................................................  12
ITEM 4.     Submission of Matters to a Vote of Security Holders...................................  12

                                          PART II

ITEM 5.     Market for Common Equity and Related Stockholder Matters..............................  13
ITEM 6.     Management's Discussion and Analysis of Financial Condition
                and Results of Operations ........................................................  14
ITEM 7.     Financial Statements..................................................................  19
ITEM 8.     Changes In and Disagreements With Accountants on Accounting
                 and Financial Disclosure.........................................................  34

                                          PART III

ITEM 9.     Directors, Executive Officers, Promoters and Control Persons; Compliance
                 With Section 16(a) of the Exchange Act...........................................  34
ITEM 10.    Executive Compensation................................................................  34
ITEM 11.    Security Ownership of Certain Beneficial Owners and Management........................  34
ITEM 12.    Certain Relationships and Related Transactions........................................  34
ITEM 13.    Exhibits and Reports on Form 8-K......................................................  34

SIGNATURES .......................................................................................  35

EXHIBIT INDEX.....................................................................................  36

</TABLE>



                                       2
<PAGE>




Item 1.  DESCRIPTION OF BUSINESS

(a)      BUSINESS DEVELOPMENT

         Canterbury Park Holding Corporation (the "Company") is engaged in the 
business of conducting live Thoroughbred and Quarter Horse racing and related 
pari-mutuel wagering operations at its facilities in Shakopee, Minnesota (the 
"Racetrack"), as well as in conducting "simulcasting", which is pari-mutuel 
wagering on races held at out-of-state racetracks that are televised 
simultaneously at the Racetrack. The Company also derives revenues from 
related services and activities, such as concessions, parking, admissions and 
programs, and from other entertainment events held at the Racetrack.

         The Company was incorporated under the laws of Minnesota on March 24,
1994 and on March 29, 1994 acquired the Racetrack. On May 6, 1994 the Company
commenced simulcasting operations. In August 1994 the Company conducted a public
offering. With the proceeds from the public offering the Company retired debt
associated with its acquisition of the Racetrack. Since May 6, 1994 the Company
has been principally engaged in conducting its year-round simulcasting
operations, five to seven days per week and live horse racing ("live meets") on
a seasonal basis, generally from late May to mid-August.

(b)      BUSINESS OF ISSUER

(i)      RACING OPERATIONS

         The Company's racing operations consist of year-round pari-mutuel
wagering on simulcast horse races ("simulcasting") and live meets held on a
seasonal basis beginning in May and concluding in August. Thoroughbred and
Quarter Horse racing is conducted during the live meet. The Company also
conducted three-day live harness racing meets over the 1997 and 1998 Labor Day
weekends.

         SIMULCASTING.

         Simulcasting is the process by which live horse races held at one
facility (the "host track") are transmitted simultaneously to other locations
that allow patrons at each receiving location (the "guest track") to place
wagers on the race being broadcast. Monies are collected at the guest track and
the information with respect to the total amount wagered is electronically
transmitted to the host track. In effect, all of the amounts wagered at the
guest track are combined into the appropriate pools at the host track with the
final odds and payouts determined based upon all the monies in the pools.

         Throughout the year the Company offers simulcast wagering from
out-of-state racetracks, generally seven days a week. The Company offers "full
card" simulcast racing (broadcasting of another racetrack's entire daily live
racing program) from a number of racetracks, including Churchill Downs,
Hollywood Park, Santa Anita, Gulfstream Park, Belmont Park and Saratoga
Racecourse. In addition, races of national interest, such as the Kentucky Derby,
Preakness Stakes and Breeders' Cup, supplement the regular simulcast program.
The Company regularly evaluates its agreements with other racetracks in order to
offer the most popular simulcast signals of live horse racing which is feasible
to offer at the Racetrack.

         Under applicable provisions of federal and state law, the Racetrack
must obtain the consent of the organization which represents the owners and
trainers of the breed of horse which predominately races at the Racetrack with
respect to simulcast operations both as a host and guest track. In Minnesota
such consent must be obtained from the Minnesota Horsemen's Benevolent and
Protective Association (the "MHBPA").



                                       3
<PAGE>




         LIVE RACING.

         The Company conducted its first year of live racing in 1995 by
operating 55 days of live horse racing. The Company hosted a 51-day live meet in
1996 and a 56-day live meet, including three days of live harness racing, in
1997. The Company conducted 55 days of live racing in 1998, consisting of a
24-day mixed meet of Thoroughbred and Quarter Horse racing, a 28-day
Thoroughbred only meet, and three days of live harness racing over the Labor Day
weekend. In 1999, the Company plans to conduct 56 days of live racing,
consisting of a 26 days of mixed Thoroughbred and Quarter Horse racing, and a
30-day Thoroughbred only meet. Post times on Thursdays and Fridays will be 6:30
pm and 1:30 pm on Saturdays, Sundays and holidays.

         Currently, Minnesota law requires the Racetrack to schedule a minimum
of 125 days of live racing annually, unless the MHBPA agrees to a lesser number
of live racing days. The MHBPA has agreed to waive the 125-day requirement for
years 1995 through 1999 and allow the Company to run a minimum of 50 days of
live racing each year. After 1999, no assurance can be given that the MHBPA will
agree to a shorter live meet than the 125-day statutory minimum.

(ii)     SPECIAL EVENTS

         While pari-mutuel horse racing is the Company's principal business, the
Company's facilities are capable of being used for multiple purposes. In an
effort to more fully utilize the property and to generate additional revenues,
the Company has, in each year of its operations, expanded the use of the
grandstand, grounds and parking lot for special events and rentals.

         From 1996 through 1998, a number of non-horseracing events were held,
including snowmobile races, two major arts and crafts shows per year, trade
shows, concerts, motorcycle races, fund raisers, automobile shows and
competitions and private parties. Lilith Fair, an outdoor music event, came to
Canterbury Park in August of 1997 and 1998, each year drawing over 30,000 people
to the Racetrack. Two additional major concerts were conducted in September of
1998. In 1997 and 1998 Canterbury Park hosted Holiday in Lights during the
holiday season which consisted of a drive-through light display, located in and
around the barn area, and a Santa's Village on the track level of the
grandstand.

         To date in 1999, the facility has again hosted two snowmobile races.
Canterbury Park maintains a reputation as one of the premier snowmobile racing
venues in the world.

(iii)    SOURCES OF REVENUE

         GENERAL.

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

         The various forms of pari-mutuel wagering can be divided into two
categories: straight wagering pools and multiple wagering pools, which are also
referred to as "exotic" wagering pools. Examples of straight wagers include:
"win" (a wager on one specific horse to finish first); "place" (a wager on one
specific horse to finish first or second); and "show" (a wager on one specific
horse to finish first, second or third). Examples of exotic wagers include:
"daily double" (a wager in which the bettor selects the horses that will win two
consecutive races); "exacta" 


                                       4
<PAGE>

(a wager in which the bettor selects the horses that will finish first and
second, in order); "trifecta" (a wager in which the bettor selects the horses
that will finish first, second and third, in order); and "pick six" (a wager in
which the bettor selects the horses that will finish first in six consecutive
races).

         The amount of takeout earned by the Company depends on where the race
is run and the form of wager (straight or exotic). Net revenues from pari-mutuel
wagering on live races run at the Racetrack consist of the total amount wagered,
less the amounts paid (i) to winning patrons, (ii) for purses, (iii) to the
Breeders' Fund and (iv) for pari-mutuel taxes to the State of Minnesota. Net
revenues from pari-mutuel wagering on races being run at out-of-state racetracks
and simulcast to the Racetrack have similar expenses, but also include a host
fee payment to the host track. The host fee is calculated as a percentage of
monies wagered (generally 2.50% to 4.50%) and is negotiated with the host track
and must comply with state laws governing the host track.

         WAGERING ON LIVE RACES.

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

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

         The following table sets forth the percentage distribution of each
dollar wagered on live races at the Racetrack, as established by the Racing Act,
and the Racetrack's retainage:

<TABLE>
<CAPTION>

                                                                               LIVE RACING
                                                               ---------------------------------------
                                                                 STRAIGHT                    EXOTIC
                                                               ------------              -------------
<S>                                                               <C>                        <C>
Returned to Winning Patrons                                       83.00%                     77.00%
     Purse (1)                                                     8.40%                      8.40%
     Minnesota Breeders' Fund                                      1.00                       1.00
     Minnesota Pari-Mutuel Taxes (2)                                .10                        .14
     Racetrack Retainage (1)                                       7.50                      13.46

Total Takeout                                                     17.00                      23.00
                                                               ------------              -------------

Total Handle                                                     100.00%                    100.00%
                                                               ------------              -------------
                                                               ------------              -------------

-------------------
</TABLE>

(1)      Minnesota law provides that the 8.40% purse payment is a minimum. The
         actual percentage, if any, above the minimum is determined between the
         Racetrack and the MHBPA. Any additional amounts paid for purses
         decrease the Racetrack's retainage.
(2)      The current pari-mutuel tax structure exempts the first $12 million of
         takeout during a statutorily mandated twelve-month period. The total
         pari-mutuel tax liability for a twelve month period will depend upon
         the total takeout during that period.



                                       5
<PAGE>




WAGERING ON SIMULCAST RACES.

         The amount of takeout from simulcast wagering is determined by the laws
of the state in which the host track is located. In addition, the Racing Act
established a minimum that must be set aside from simulcasting for purse
payments on racing within Minnesota. Different amounts are deducted for purses
from the takeout depending on whether simulcasting occurs during the "Racing
Season," a statutorily defined 25 week period beginning in early May each year,
or outside of the Racing Season. If simulcasting occurs during the Racing
Season, the amount set aside for purses further depends on whether the
simulcasting is part of a full racing card that occurs during the part of the
day that live races are conducted at the Racetrack. For races that are part of a
full simulcast racing card that takes place within the time of live races at the
Racetrack, the amount reserved for purse payout is 8.4%. For simulcasting
conducted during the Racing Season that does not occur within the time period of
live races, the purse is equal to 50% of the takeout remaining after deductions
for pari-mutuel taxes, payments to the Breeders' Fund and payments to the host
racetrack for host track fees. For simulcasting conducted outside of the Racing
Season, the amount that must be contributed to the purses is 25% of the takeout
after deducting an 8% expense factor, pari-mutuel taxes, payments to the
Breeders' Fund and host fee payments to the host racetrack.

         The following table sets forth the approximate percentage distribution
of each dollar wagered for races simulcast at the Racetrack and the Racetrack's
retainage:
<TABLE>
<CAPTION>

                                                              DURING RACING SEASON
                                                              --------------------

                                                                                 Not Concurrent
                                                     Concurrent with                  with                  Outside of
                                                        Live Card                   Live Card              Racing Season
                                                    ------------------         -----------------         -----------------

<S>                                                       <C>                         <C>                      <C>
Returned to Winning Patrons (1)                           80.50%                      80.50%                   80.50%
     Minnesota Breeders' Fund                              1.00%                       1.10%                    1.10%
     Minnesota Pari-Mutuel Taxes (2)                        .12                         .12                      .12
     Purse (3)                                             8.40                        7.39                     1.70
     Host Track Fees (4)                                   3.50                        3.50                     3.50
     Racetrack Retainage (3)                               6.48                        7.39                    13.08
Total Takeout                                             19.50                       19.50                    19.50
                                                    ------------------          -----------------         ---------------
Total Handle                                             100.00%                     100.00%                  100.00%
                                                    ------------------          -----------------         ---------------
                                                    ------------------          -----------------         ---------------
------------------
</TABLE>

(1)      This amount will depend upon the takeout at the host racetrack. This
         percentage will be determined by local and state law applicable to the
         host track and ranges from 75.0% to 85.0%.

(2)      The current pari-mutuel tax structure exempts the first $12 million of
         takeout during a statutorily mandated twelve-month period. The total
         pari-mutuel tax liability for a twelve month period will depend upon
         the total takeout during that period.

(3)      Although Minnesota law specifies a minimum, the actual percentage is
         determined by agreement between the Racetrack and the MHBPA. Any
         additional amounts paid for purses reduce the Racetrack's retainage.

(4)      Payments to the host track generally range from 2.5% to 4.5% of total
         handle, subject to negotiation with each host track. For purposes of
         this table, the host track fee is assumed to be 3.5%.


                                       6
<PAGE>



         OTHER REVENUE

         The Company also derives revenue from other activities such as
admissions and parking fees, as well as from the sale of food and beverage,
programs, and other racing publications. The Company offers advertising signage
space similar to that appearing at many sports stadiums. Finally, additional
revenues are derived from use of the facilities for events such as concerts,
holiday displays, trade and craft shows, snowmobile racing, business meetings,
private parties, horse expositions and sales, boat and automobile storage,
community events, and rental of the parking lot for various automobile
activities and vehicle storage.

(iv)     COMPETITION

         The Company competes with other forms of gaming in the State of
Minnesota, particularly casino-style gambling located on Native American
reservations throughout the State of Minnesota, including a large casino located
approximately three miles from the Racetrack. In addition, the Company competes
against charitable gambling (bingo and pulltabs) and various state lottery
products. Finally, the Company competes with a greyhound racetrack located
approximately 40 miles from the Racetrack at the eastern end of the
Minneapolis-Saint Paul metropolitan area. This greyhound track offers wagering
on live and simulcast dog racing, as well as wagering on simulcasting of
Thoroughbred horse racing.

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

         The Company also competes with racetracks located throughout the United
States in securing the better quality horses to run at the Racetrack. Attracting
the owners and trainers of better quality horses is largely influenced by the
ability to offer large purses. The Company experiences significant competition
for better quality horses from a racetrack located near Des Moines, Iowa which
offered substantially larger purses than the Company in 1997and 1998. This
competition from the Des Moines racetrack is expected to continue in the
foreseeable future.

(v)      MARKETING

         The Company's primary market is the seven county Minneapolis-Saint Paul
metropolitan area. Current demographic information indicates that approximately
2 million adults, age 21 and older, reside within a 50 mile radius of Shakopee
Minnesota. This information does not include adults ages 18 to 20 years of age
which are also patrons of the Racetrack.

         To support its primary business of pari-mutuel horse racing, the
Company maintains year-round marketing efforts which are focused on maintaining
the loyalty of live and simulcast patrons and attracting new customers. Using
newspapers, television, the internet, other print media, radio and direct mail,
the Company concentrates its marketing efforts on communicating the excitement
of wagering on high caliber horse racing from around the country. In addition to
its regular advertising program, the Company conducts numerous special
promotions to increase simulcast patronage.

         The 1998 and 1997 advertising campaigns utilized primarily print and
radio advertising to promote live racing by highlighting the attractive,
park-like atmosphere of Canterbury Park, promoting activities for the entire
family, as well as the fun and excitement of live horse racing. In addition, the
development of a customer data base enabled the Company to effectively utilize
direct mail advertising since 1997.

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



                                       7
<PAGE>

(vi)     REGULATION

         GENERAL.

         The ownership and operation of a horse racetrack in Minnesota is
subject to significant regulation by the Racing Commission under the Racing Act
and the rules adopted by the Racing Commission. The Racing Act provides for the
allocation of each wagering pool to winning bettors, the racetrack, purses, the
State of Minnesota and the Breeders' Fund and empowers the Racing Commission to
license and regulate substantially all aspects of horse racing in the State. The
Racing Commission, among other things, grants operating licenses to racetracks
after an application process and public hearings, licenses all employees of a
racetrack, jockeys, trainers, veterinarians and other participants, regulates
the transfer of ownership interests in licenses, allocates live race days and
simulcast-only race days, approves race programs, regulates the conduct of
races, sets specifications for the racing ovals, animal facilities, employee
quarters and public areas of racetracks, regulates the types of wagers on horse
races and approves significant contractual arrangements with racetracks,
including management agreements, simulcast arrangements, totalizator contracts
and concessionaire agreements. Decisions by the Racing Commission in regard to
any one or more of the foregoing matters could adversely affect the Company's
operations.

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

         ISSUANCE OF CLASS A AND CLASS B LICENSES TO THE COMPANY.

         The Racing Commission issued a Class A License to the Company on April
27, 1994. The Class A License allows the Company to own and operate the
Racetrack. The Class A License is effective until revoked or suspended by the
Racing Commission, or relinquished by the licensee. The fee for a Class A
License is $10,000 per calendar year.

         The Racing Commission issued a Class B License to the Company on April
27, 1994. The Class B License allows the Company to sponsor and manage horse
racing on which pari-mutuel wagering is conducted at its Class A licensed
racetrack and on other horse races run at out-of-state locations as authorized
by the Racing Commission. The Class B License is renewable each year by the
Racing Commission after a public hearing (if required by the Racing Commission).
The Company's Class B License was renewed for the 1999 season in December 1998.
The fee for a Class B License is $100 for each assigned race day on which live
racing is actually conducted and $50 for each day on which simulcasting is
authorized and actually takes place.

         LIMITATION ON THE NUMBER OF CLASS A AND CLASS B LICENSES.

         Pursuant to the Racing Act, so long as the Racetrack maintains its
Class A License, no other Class A License may be issued in the seven county
metropolitan area (the counties of Hennepin, Ramsey, Washington, Scott, Dakota,
Anoka and Carver), except the Racing Commission may issue an additional Class A
License within the seven county metropolitan area, provided that the additional
license may only be issued for a facility which, among other conditions, is
located more than 20 miles from the Racetrack, contains a track no larger than
five-eighths of a mile in circumference, and is used exclusively for
Standardbred (harness) racing. Therefore, as long as the Company holds the Class
A License, only the Company may own and operate a racetrack in the seven county
metropolitan area where Thoroughbred Horses and Quarter Horses may be raced.



                                       8
<PAGE>




         LIMITATION ON OWNERSHIP AND MANAGEMENT OF AN ENTITY WHICH HOLDS A CLASS
A LICENSE AND/OR CLASS B LICENSE.

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

         LOCAL REGULATION.

         The Racetrack is subject to state and local laws, regulations,
ordinances and other provisions affecting zoning and other matters which may
have the effect of restricting the uses to which the Company's land and other
assets may be used. Also, any development of the Racetrack site will, among
other things, be subject to applicable zoning ordinances and require approval by
the City of Shakopee and other authorities and there can be no assurance such
approvals will be obtained.

(vii)    EMPLOYEES

         At March 12, 1999, the Company had approximately 65 full-time employees
and 150 part-time employees. When the Company commences live racing in May 1999,
the Company expects to employ approximately 120 additional full-time seasonal
employees and approximately 450 additional part-time seasonal employees. The
Company's management believes its employee relations are good.

(viii)   EXECUTIVE OFFICERS

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

NAME                                AGE              POSITION WITH COMPANY
----                                ---              ---------------------
<S>                                 <C>              <C>
Randall D. Sampson                  40               President, Chief Financial Officer, and
                                                     General Manager

Michael J. Garin                    43               Vice President of Hospitality

Troy J. Mertens                     31               Vice President of Mutuels and Simulcasting

Mark A. Erickson                    42               Vice President of Facilities

-------------------
</TABLE>

         Randall D. Sampson has been President and Chief Financial Officer since
the formation of the Company in March 1994 and General Manager since September
1995. Mr. Sampson has been active in horse racing industry associations, serving
on the Board of Directors of the Minnesota Thoroughbred Association from 1989 to
1993. Mr. Sampson has also been a member of the Minnesota Horsemen's Benevolent
and Protective Association, serving as Vice President of the organization from
1993 to 1994, and was a member of the Minnesota Racing Commission Breeders' Fund
Advisory Board from 1991 to 1997. He also serves as a director of the
Thoroughbred Racing Association of North America. Mr. Sampson is the son of
Curtis A. Sampson, the Company's Chairman of the Board who is a holder of
approximately 35% of the Company's common stock.



                                       9
<PAGE>




         Michael J. Garin has been Vice President of Hospitality since May of
1997. He had served as President of Canterbury Park Concessions, Inc. since
April of 1994. From September 1993 to April 1994, Mr. Garin was employed as Food
and Beverage Supervisor of Little Six, Inc.

         Troy J. Mertens has been Vice President of Mutuels and Simulcasting
since May 1997, was Director of Mutuel and Simulcast Operations from April 1994
through April 1997, and Assistant General Manager from September 1995 until
April 1997.

         Mark A. Erickson has served as Vice President of Facilities since May
1997. He was the Director of Facilities from April 1994 until April 1997. From
May 1992 until employment with the Racetrack, Mr. Erickson served as Maintenance
Supervisor for the Mall of America in Bloomington, Minnesota.


ITEM 2.  DESCRIPTION OF PROPERTY

         GENERAL.

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

         The Racetrack is located approximately 25 miles southwest of downtown
Minneapolis. The area immediately surrounding the Racetrack consists primarily
of a partially developed industrial park and farm land. However, the Racetrack
is in reasonable proximity to a number of major entertainment destinations
including: Valleyfair, an amusement park about two miles from the Racetrack
which annually attracts approximately 1.3 million visitors during the spring and
summer; the Renaissance Festival, a seven-weekend late summer attraction
attracting approximately 340,000 visitors, located about five miles from the
Racetrack; and Mystic Lake Casino, located about three miles from the Racetrack,
which draws approximately 5.2 million patrons annually. Approximately 20 miles
from the Racetrack is the Mall of America, the largest enclosed shopping mall in
the United States, which attracts approximately 42.5 million visitors per year.

         RACING SURFACES.

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

         GRANDSTAND.

         The grandstand is a modern, air-conditioned, enclosed structure of
approximately 275,000 square feet with a variety of facilities on six levels.
The Lower Level contains space for support functions such as jockey quarters,
administrative offices, Racing Commission offices, the mutuels department,
concession and maintenance offices, first aid, mechanical and electrical rooms.
The Track Level includes mutuels windows, restrooms, a variety of concession
stands and other services. A large area of the track level is used as a
simulcast center during live racing and is utilized for banquets and other
events during the off-season. The Mezzanine Level contains 1,320 fixed seats in
a glass-enclosed, air-conditioned area and an additional 3,000 seats located
outside. In addition to the seats, the Mezzanine Level contains mutuel windows,
restrooms, concession stands and other guest facilities. The Kitchen Level is an
intermediate level located between the Mezzanine and Clubhouse floors; it
contains a full-service kitchen which can support a full dining menu for the
track-side dining terraces on the Clubhouse Level and 


                                       10
<PAGE>

to prepare food for the other concession areas. The Clubhouse Level is a
multi-purpose area serving as a simulcast center during wagering sessions on
televised races, as well as a full-service dining area during the live racing
season. The Clubhouse Level includes 325 trackside tables, each equipped with a
television set, with a total seating capacity of 1,200 patrons and an additional
1,000 seats are located in lounges located throughout the area. An additional
feature of the Clubhouse Level is a special club area which includes 225 dining
seats, a party room and a large bar and lounge. The Press Box/Officials' Level
is located in the roof trusses over the Clubhouse and contains work areas for
the press, racing officials, closed-circuit television, photo-finish and the
track announcer. In addition, the grandstand was structurally built to
accommodate skyboxes under the Press Box/Officials' Level, although none have
yet been constructed. Escalators and elevators are available to move patrons
among the various levels within the grandstand.

         OTHER VIEWING AREAS.

         In addition to the grandstand, patrons can watch races from the
following outdoor areas: the apron, or standee ramp, between the grandstand and
the racetrack and a large picnic area immediately north of the grandstand. These
areas have concession stands and mutuel windows nearby.

         GROUNDS; SADDLING PADDOCK AREA.

         The grounds surrounding the grandstand are extensively landscaped.
Located near the main entrance behind the grandstand is a European-style paddock
area where patrons can observe the jockey mounting and the post parade.

         BARN AND BACKSIDE FACILITIES.

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

         PARKING.

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

         INSURANCE.

         The Company maintains insurance on its facilities in amounts it
believes are sufficient.

         OTHER PROPERTIES.

         Approximately 80 acres of the 355 acres owned by the Company are not
necessary for racing operations. This property, adjacent to the Racetrack, is
undeveloped and could be sold in whole or in part, depending upon future
opportunities. The 355 acres includes 30 acres of undeveloped land adjacent to
Canterbury Park which was purchased on August 18, 1997, for investment or future
development. The Company regularly evaluates other business activities and
development opportunities that would maximize the use of the real estate
surrounding the Racetrack and which would complement the Company's primary
business of horse racing.




                                       11
<PAGE>




ITEM 3.  LEGAL PROCEEDINGS

         Not Applicable.

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

         Not Applicable.



                                       12
<PAGE>


                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

(A)      MARKET INFORMATION

         The Company's Common Stock is traded on the NASDAQ Stock Market under
the symbol TRAK. In addition, prior to September 1, 1998, Warrants to purchase
Company common stock and Units (each Unit consisting of one share of common
stock and one warrant to purchase one share of common stock) traded on the
NASDAQ Stock Market under the respective symbols TRAKW and TRAKU. Trading of
Warrants and Units ceased upon the expiration of the Warrants in August 1998.
The table set forth below indicates the high and low trade prices for the Units,
Common Stock and Warrants for the years ended December 31, 1998 and 1997. These
prices indicate interdealer prices without retail markup, markdowns or
commissions.

<TABLE>
<CAPTION>

                                                     1998                                     1997
                                         ------------------------------           ------------------------------
                                           High                 Low                 High                 Low
                                         ----------           ---------           ---------            ---------
UNITS

<S>                                 <C>                     <C>                <C>                  <C>
First Quarter                         $   3 3/64            $  2 5/8           $   4 1/2            $   2 3/16
Second Quarter                            3 5/8                2 1/2               5 7/8                2 1/2
Third Quarter                             3                    2 5/8               4 3/4                3 3/8
Fourth Quarter                                                                     7                    2 3/4

COMMON STOCK

First Quarter                             3 3/8                2 1/2               4 5/8                2
Second Quarter                            3 1/2                2 3/8               6                    2 3/8
Third Quarter                             3 3/32               2 5/8               4 5/8                2 3/4
Fourth Quarter                            5                    2 13/16             6 1/2                2 3/4

WARRANTS

First Quarter                             3/8                  7/32                13/16                1/16
Second Quarter                            7/32                 1/16                1                    1/4
Third Quarter                             -                    -                   5/8                  1/4
Fourth Quarter                                                                     1 1/2                17/64
</TABLE>

(B)      HOLDERS

         At March 12, 1999, the Company had approximately 349 holders of record
of its common stock. In addition, on that date a depository company held
approximately 1,400,000 shares as nominees for an estimated 1,368 beneficial
holders.

(C)      DIVIDENDS

         The Company has not paid any dividends on its common stock and does not
anticipate paying any in the foreseeable future. The Company's current loan
arrangements with a commercial bank prohibit the payment of dividends without
the bank's consent.



                                       13
<PAGE>



ITEM 6   MANAGEMENT'S DISCUSSION AND ANALYSIS

GENERAL

         Canterbury Park Holding Corporation (the "Company") owns and operates
Canterbury Park (the "Racetrack"), the only pari-mutuel horse racing facility in
the State of Minnesota. The Company's revenues for the years ended December 31,
1998 and 1997 were derived primarily from pari-mutuel take-out on races
simulcast year-round to Canterbury Park from racetracks throughout the country.
In addition the Company earned pari-mutuel take-out during live race meets
featuring thoroughbred, quarter horse and harness racing. During 1998 the
Company conducted 364 days of simulcast racing, including 55 days of live
racing. In 1997 the Company conducted 358 days of simulcast racing including 56
days of live racing. Live race meets in 1998 and 1997 commenced in the month of
May and concluded in September with three days of harness racing over the Labor
Day weekend. During live race meets, the Company televises its races to
out-of-state racetracks around the country. The Company earns additional
pari-mutuel revenue on wagers placed at out-of-state racetracks. In addition to
pari-mutuel revenues, the Company generates revenues from admissions, parking,
publication sales, concession sales, special events, facility rental,
advertising and other sources.

         Legislation enacted on April 11, 1996, which became effective July 1,
1996, repealed the State of Minnesota 6% pari-mutuel tax on the first $12
million of pari-mutuel take-out in a twelve-month period and allowed the Company
to retain the proceeds of winning pari-mutuel tickets which were not presented
for payment. This legislation was scheduled to expire on July 1, 1999. The 1998
Omnibus tax bill, signed into law on April 21, 1998, made the 1996 legislation
permanent.

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1998 AND DECEMBER 31,
1997


         Total operating revenues for the year ended December 31, 1998 were
$19,195,577, an increase of 5.5% compared to total operating revenues of
$18,202,216 for the year ended December 31, 1997. Pari-mutuel revenues increased
3.0% in fiscal year 1998 compared to fiscal year 1997. Discussion of the change
in pari-mutuel revenues follows the Summary of Operating Data below.

         Concession revenues increased 6.5% during the year ended December 31,
1998 compared to the year ended December 31, 1997. The increase is due primarily
to increased concession sales during special events hosted by the Racetrack. The
remaining increase is attributable to higher racing attendance in 1998 compared
to 1997.

         Other operating revenue increased $478,000 to $873,000 in fiscal year
1998, representing a 121% increase over $395,000 of other operating revenues in
fiscal year 1997. The Company generated approximately $400,000 in 1998 by
leasing underutilized areas of the Racetrack grounds for vehicle storage.
Vehicle storage revenues in fiscal year 1997 were approximately $24,000.



                                       14
<PAGE>




The following table summarizes operating data for the years ended December 31,
1998 and December 31, 1997:
<TABLE>
<CAPTION>

SUMMARY OF OPERATING DATA:
                                                                        YEAR                            YEAR
                                                                        ENDED                           ENDED
                                                                    DECEMBER 31,                    DECEMBER 31,
                                                                        1998                            1997
      <S>                                                      <C>                             <C>
       RACING DAYS
            Simulcast only days                                              309                            302
            Live and simulcast days                                           55                             56
                                                                ----------------------         -----------------------
                                      TOTAL RACING DAYS                      364                            358

       ATTENDANCE
            Simulcast only days                                          132,000                        130,000
            Live and simulcast days                                      193,000                        191,000
                                                                ----------------------         -----------------------
                                      TOTAL ATTENDANCE                   325,000                        321,000

       ON-TRACK HANDLE
            Simulcast only days                                    $  43,819,000                  $  42,182,000
            Live and simulcast days
                Live racing                                           12,013,000                     11,321,000
                Simulcast racing                                      12,876,000                     12,494,000
       OUT-OF-STATE LIVE HANDLE                                        7,985,000                     12,635,000
                                                                ----------------------         -----------------------
                                      TOTAL HANDLE                 $  76,693,000                  $  78,632,000

       AVERAGE DAILY ATTENDANCE
            Simulcast only days                                              427                            430
            Live and simulcast days                                        3,509                          3,403

       ON-TRACK PER CAPITA WAGERING
            Simulcast only days                                    $         332                  $         324
            Live and simulcast days                                          129                            125

       ON-TRACK AVERAGE DAILY HANDLE
            Simulcast only days                                    $     141,809                  $     139,675
            Live and simulcast days                                      452,527                        425,268
</TABLE>

         Total pari-mutuel revenues increased 3.0% to approximately $14,448,000
in 1998 from $14,024,000 in 1997. Total attendance for live and simulcast racing
increased by 1.2% to 325,000 during the twelve months ended December 31, 1998,
from 321,000 during the twelve months ended December 31, 1997. The total
on-track per capita wager for fiscal year 1998 increased 2.8% compared to fiscal
year 1997. Total on-track handle increased approximately 4.1% to $68,708,000 in
1998 from $65,997,000 in 1997. Handle wagered at out-of-state locations,
however, decreased 36.8% or $4,650,000 compared to 1997, due to a switch in 1998
to Saturday afternoon live racing from Saturday evenings in 1997. Although the
change reduced out-of-state live handle (because, given the greater number of 
available simulcast signals on Saturday afternoon, there was reduced interest 
among out-of-state tracks in carrying the Company's signal) this reduction 
was more than offset by an increase in on-track handle because of increased 
attendance at the Racetrack for the Saturday afternoon live races.

         Pari-mutuel revenues related to simulcast racing increased 4.1% to
$11,394,000 in 1998 from $10,940,000 in 1997. This change was consistent with
the change in total simulcast handle, which increased to $56,695,000 in 1998, up
from $54,676,000 in 1997.



                                       15
<PAGE>

         On-track wagering on live races at the Racetrack increased by $
692,000, or 6.1%, to $12,013,000 in 1998 from $11,321,000 in 1997, causing
pari-mutuel revenue to increase by 6.1% to $2,535,000 in 1998 from $2,390,000 in
1997. Higher average daily attendance in 1998 on days when both simulcast and
live racing were conducted, along with a higher per-capita wager on those days
resulted in an increase in average daily handle of $27,259 or 6.4%.

         Pari-mutuel revenue from simulcasting the Racetrack's live races to
out-of-state locations totalled approximately $233,000 in 1998 compared to
$360,000 in 1997. The Racetrack receives amounts ranging from 2.50% to 3.00% of
amounts wagered at out-of-state racetracks as a "guest fee". The decrease in
revenues reflects the corresponding decrease in out-of-state handle in 1998
compared to 1997.

         Revenues recognized for proceeds from winning pari-mutuel tickets which
were not presented for payment within one year of the end of the respective race
meets were approximately $286,000 in 1998 compared to $333,000 in 1997.

         Total operating expenses increased 4.5% to $18,698,000 in 1998 from
$17,898,000 in 1997. An increase of 4.3% in pari-mutuel expenses in fiscal year
1998, compared to fiscal year 1997, is directly related to the increase in
handle. Salary and benefit expenses increased 8.8% in 1998 compared to 1997, 
due to additional full-time positions added in 1997 and 1998, additional 
employee benefit expenses in 1998 and to an increase in management bonuses in 
1998.

         Repair and maintenance costs in 1998 increased by $282,000, or 63.5%,
compared to 1997, primarily due to repairs and maintenance of the Racetrack
parking lots during the third quarter of 1998. The Company also upgraded the
facility's valet entrance and made other repairs of facility systems and video
equipment during 1998.

         Other operating expenses decreased by approximately $275,000 in fiscal
year 1998, compared to fiscal year 1999. Expense levels in 1997 for legislative
activity were much higher than a normal year due to the Company's efforts to
obtain legislative approval for a casino at the Racetrack. During fiscal year
1997 the Company incurred lobbying and communication expenses of $257,000 and
charged an additional $150,000 to operations, including $86,000 of noncash
expense resulting from the issuance of stock options to consultants, to develop
financial, design and market feasibility studies related to the casino concept.
While this proposal did not succeed in 1997, the Company continued to pursue
legislative changes in 1998, incurring $76,000 of lobbying expenses. The 
Company's 1998 legislative efforts resulted in inclusion in the 1998 Omnibus 
tax bill of a provision which made permanent a tax reduction on
pari-mutuel revenue which was scheduled to expire in 1999.

         Minnesota law requires the Company to allocate a portion of funds
received from wagering on simulcast and live horse races for future payment as
purses for live horse races or other uses of Minnesota's horsepersons'
associations. This purse expense is one of the Company's largest single expense
items. The minimum percentage required by law to be set aside for purses from
simulcasting varies substantially depending on the time of year the simulcasting
is conducted. For the 25-week period beginning in early May, which is the
statutorily established "Racing Season," 50% of net pari-mutuel revenue, before
deducting for purses, is allocated to a fund for the payment of purses during
the live meet. For the remaining 27 weeks of the racing year, November through
April, funds accumulate at the rate of 25% of net pari-mutuel revenue, before
deducting for purses, but after deducting an 8% expense factor. Purse expense as
a percentage of the Company's pari-mutuel commission and breakage revenues was
consistent for 1998 and 1997 at 27.0% each year.

         Amounts paid to the Minnesota Breeders' Fund are a function of on-track
handle and the increase from $696,000 in 1997 to $728,000 in 1998 is consistent
with the increase in total on-track handle. Host track fees remained steady at
to 3.45% of simulcast handle in 1998 compared to 3.44% in 1997. The host fee is
calculated as a percentage of monies wagered on out-of-state racetracks
(generally 2.50% to 4.50%) and is negotiated with each host track. The Racetrack
received simulcast signals from over 50 race meets in 1998 and 1997.



                                       16
<PAGE>


         Interest expense decreased 28.9% to $118,151 in 1998 compared to
$166,252 in 1997. Interest expense relates primarily to amounts due under line
of credit agreements and to amounts due on advances from the MHBPA. The Company
operated under a line of credit agreement with the Company's Chairman of the
Board until June 11, 1998 when it was replaced with a commercial revolving
credit line with Bremer Bank N.A. The combined average daily balance of the
lines of credit utilized in 1998 was approximately $823,000. The average daily
balance of the line of credit with the Chairman of the Board in 1997 was
approximately $1,190,000. The weighted average rate of interest on the lines of
credit was 8.53% and 9.42% for 1998 and 1997, respectively. Interest charged to
operations under the line of credit with the Chairman of the Board was $43,349
in fiscal year 1998, and $112,137 in fiscal year 1997. Interest charged to
operations in 1998 for the line of credit with Bremer Bank was $26,843. The
average daily balance of amounts due under advances with the MHBPA was
approximately $558,000 in 1998 compared to $662,000 in 1997. The weighted
average rate of interest on the amounts due to the MHBPA was 8.49% for fiscal
year 1998, compared to 8.17% for fiscal year 1997. The interest rate on the line
of credit and the MHBPA advances was 7.75% at December 31, 1998 compared to
8.50% at December 31, 1997. Interest charged to operations on advances with the
MHBPA was $47,416 in fiscal year 1998, compared to $54,108 in fiscal year 1997.

         Net income for the year ended December 31, 1998 was $433,747, compared
to net income of $135,788 for the year ended December 31, 1997. Income before
income taxes was $386,619 in 1998 compared to $144,188 in 1997. The Company
recognized an income tax benefit in 1998 of $47,128 and incurred income tax
expense of $8,400 in 1997. The income tax benefit is the net result of a
$208,000 reduction of it's valuation allowance, offset by current income tax
expense of $161,000 for fiscal year 1998. Since acquisition of the Company in
1994, the Company had fully offset any deferred tax assets with a valuation
allowance due to the uncertainty of realization of the benefits in future
periods. At December 31, 1998, management determined that based upon recent and
projected profitability, it was more likely than not that $208,000 of the
deferred tax asset would be utilized in the future and thus reduced it's
valuation allowance.

LIQUIDITY AND CAPITAL RESOURCES:

         During the year ended December 31, 1998, cash provided by operating
activities was $1,383,697, which resulted principally from net income of
$433,747, depreciation and amortization of $901,443, an increase in income taxes
payable of $160,75, partially offset by the increase in the deferred tax asset
of $208,000. During the year ended December 31, 1997, cash provided by operating
activities was $1,077,527, which resulted principally from net income of
$135,788, depreciation and amortization of $856,982, and an increase in accounts
payable and accrued expenses of $130,802

         For fiscal 1998, net cash used in investing activities was $221,439 for
capital expenditures, partially offset by proceeds from the sale of property and
equipment of $33,091. The Company estimates that it will spend approximately
$300,000 for capital expenditures during fiscal year 1999. For fiscal 1997, net
cash used in investing activities was $1,283,152 which consisted of $935,141 for
the acquisition of a 30 acre tract of undeveloped land adjacent to the
Racetrack, and $395,355 for capital expenditures, primarily consisting of
equipment and building improvements. These cash uses were partially offset by
proceeds from the sale of equipment of $47,344.

         During 1998, cash used in financing activities was $1,154,301, which
included the pay off of the Company's line of credit with its Chairman of the
Board of $1,651,942 on June 11, 1998. This net payment was offset by the
proceeds from borrowings under the new commercial revolving credit line of
$608,449. Net payments on the advance from the MHBPA used net cash of $163,159
in 1998. The Company was provided cash of $52,351 in 1998 upon the issuance of
common stock, due primarily to the exercise of options and to the issuance of
common stock pursuant to the Company's employee stock purchase plan. Cash
provided by financing activities was $273,168 for the year ended December 31,
1997, which represents the net proceeds on the Company's line of credit with its
majority shareholder of $42,188, proceeds of $74,597 from the issuance of common
stock and $156,383 net proceeds on the advance with the MHBPA.


                                       17
<PAGE>



         Pursuant to an agreement with the MHBPA, the Company transferred into a
trust account or paid directly to the MHBPA, approximately $3,650,000 and
$3,287,000 in purse funds for the years ended December 31, 1998 and 1997,
respectively. Minnesota Statutes specify that amounts transferred into trust are
the property of the trust and not of the Company. Unpaid purse fund obligations
due the MHBPA were $546,414 and $709,573 at December 31, 1998 and 1997,
respectively. The interest rates on any statutory purses accrued but not
transferred into the trust (which are guaranteed by the Company's Chairman of
the Board) were 7.75% and 8.50% at December 31, 1998 and 1997, respectively.

         At December 31, 1997 the Company had a $3,000,000 line of credit
arrangement with the Chairman of the Board, of which $1,651,942 was outstanding.
The interest rate for borrowings under the line of credit was the prime rate at
December 31, 1997. This line of credit was paid off on June 11, 1998 and was
replaced by a commercial revolving credit line with Bremer Bank, N.A..

         The Company entered into a general credit and security agreement with
Bremer Bank, N.A., a financial institution located in South Saint Paul,
Minnesota, on June 3, 1998. Borrowings under the credit agreement include a
commercial revolving credit line which provides for maximum advances of
$2,250,000 with interest at the prime rate (7.75% at December 31, 1998). The new
lending arrangement also includes a term loan commitment of $750,000.

         During 1998 and 1997, the Company hosted a number of special events in
addition to horse racing in an effort to increase its cash flows and attain
profitability in 1998 and 1997. Management believes that funds available under
its bank credit agreement along with funds generated from operations, will be
sufficient to satisfy its liquidity and capital resource requirements during
1999.

         In August 1998, 1,437,000 warrants to purchase one share of common
stock at an exercise price of $4.875 per share issued as part of the Company's
1994 initial public offering and 400,000 warrants issued to the Company's
founders in connection with the public offering at an exercise price of $4.00
per share expired unexercised.

         Cash flows provided from operations in 1999 are anticipated to be
comparable to cash flows provided by operations in 1998.

OPERATING PLAN:

         In 1998 the Company successfully conducted its fourth live race meet in
four years. The Company plans a 56-day live race meet in 1999 consisting of a 26
days of mixed Thoroughbred and Quarter Horse racing and a 30-day Thoroughbred
only meet. The Company competes with racetracks located throughout the United
States in securing the better quality horses to run at the Racetrack. Attracting
the owners and trainers of better quality horses is largely influenced by the
ability to offer large purses. By limiting the number of live racing days and
utilizing purse monies from simulcasting and live race wagering, the Company
continues to offer purses during its live racing season which are comparable to
previous Canterbury Park live race meets. However, the Company experiences stiff
competition for better quality horses from a racetrack located near Des Moines,
Iowa, as well as racetracks in Chicago, Illinois which offer substantially
larger purses.

         The Company's ability to operate profitably in 1999 will depend
primarily upon the Racetrack's ability to maintain levels of attendance and
handle for live and simulcast racing at levels similar to previous years. The
Company's revenues in 1998 are also significantly impacted by special event and
facility rental revenues. While the Company plans to continue its emphasis on
special events and maximizing the potential of the entire facility year-round,
there can be no guarantee that 1998 levels will continue into the future. The
Company also needs to maintain operating expenses at levels similar to 1998.

         Management intends to continue pursuing legislation for additional
potential sources of revenue. These efforts could result in increased
legislative related expenses in the future.




                                       18
<PAGE>




FACTORS AFFECTING FUTURE PERFORMANCE:

         The Company has identified and evaluated its in-house personal computer
systems for year 2000 compliance. These PC based applications are compliant and
are not considered to be critical to the Company's daily operations. The Company
utilizes a racing office administrative network system which is considered to be
obsolete and is in the process of being replaced. The new system will be
functional for the 1999 live race meet beginning May 1999. The estimated cost of
software and hardware replacement for the racing office system is $25,000.

         The Company has evaluated the impact that the failure of significant
suppliers to achieve year 2000 readiness would have on its operations. The
Company has a contract with Autotote Systems, Inc. ("Autotote") for totalizator
services, including equipment and computer programs which record and process all
wagers and calculate odds and payoffs which was recently extended through 
April 2004. Autotote has assured the Company, in writing, of their commitment 
to achieve year 2000 compliance. However, should Autotote fail to remediate 
its own year 2000 issue, pari-mutuel wagering would cease at the Racetrack 
beginning January 1, 2000. The Company's contingency plan is to enter into a 
comparable agreement with another of the industry's tote service providers. 
There can be no guarantee that the systems of other companies on which the 
Company's systems rely would be timely converted and would not have an 
adverse effect on the Company's systems.

         From time to time, in reports filed with the Securities and Exchange
Commission, in press releases, and in other communications to shareholders or
the investing public, the Company may comment on anticipated future financial
performance. Such forward looking statements, including statements contained in
this Report on Form 10-KSB, are subject to risks and uncertainties which may
adversely affect future financial performance, including, but not limited to,
fluctuations in attendance at the Racetrack, changes in the level of wagering by
patrons, legislative and regulatory changes, the impact of wagering products
introduced by competitors, higher than expected expenses, and other risks
applicable to the horse racing industry generally.

ITEM 7.  FINANCIAL STATEMENTS

         The following financial statements of the Company are set forth on
pages 20 through 33 of the Form 10-KSB:

<TABLE>
<CAPTION>

                                                                                                                      Page
                                                                                                                  -------------

<S>                                                                                                                    <C>
Independent Auditors' Report................................................................................           20

Consolidated Balance Sheets as of December 31, 1998 and 1997 ...............................................           21

Consolidated Statements of Operations for the years ended December 31, 1998 and
December 31, 1997 ..........................................................................................           22

Consolidated Statements of Changes in Stockholders' Equity for the years ended
December 31, 1998 and December 31, 1997 ....................................................................           23

Consolidated Statements of Cash Flows for the years ended December 31, 1998 and
December 31, 1997 ..........................................................................................           24

Notes to Consolidated Financial Statements for the years ended December 31, 1998 and
December 31, 1997 ..........................................................................................           25

</TABLE>


                                       19
<PAGE>



INDEPENDENT AUDITORS' REPORT

Board of Directors
Canterbury Park Holding Corporation
Shakopee, Minnesota

We have audited the accompanying consolidated balance sheets of Canterbury Park
Holding Corporation and subsidiary (the Company) as of December 31, 1998 and
1997 and the related consolidated statements of operations, stockholders'
equity, and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Canterbury Park
Holding Corporation and subsidiary as of December 31, 1998 and 1997 and the
results of their operations and their cash flows for the years then ended, in
conformity with generally accepted accounting principles.

Deloitte & Touche LLP



March 15, 1999
Minneapolis, Minnesota




                                       20
<PAGE>


<TABLE>
<CAPTION>

CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
---------------------------------------------------------------------------------------------------------------------

                                                                                     1998                  1997

ASSETS

<S>                                                                             <C>                   <C>
CURRENT ASSETS:
     Cash                                                                       $    372,171          $    364,214
     Accounts receivable                                                             215,296               185,468
     Inventory                                                                        89,640                76,657
     Deposits                                                                         20,000                20,000
     Prepaid expenses                                                                121,859               106,381
                                                                                ----------------      ----------------
         Total current assets                                                        818,966               752,720

PROPERTY AND EQUIPMENT, net  (Note 2)                                              8,386,439             9,061,205

DEFERRED TAX ASSET  (Note 3)                                                         208,000

INTANGIBLE ASSETS, net of accumulated amortization of 
      $20,113 and $14,875, respectively                                                4,256                 9,494
                                                                                ----------------      ----------------
                                                                                $  9,417,661          $  9,823,419
                                                                                ----------------      ----------------
                                                                                ----------------      ----------------

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
     Accounts payable                                                           $    760,132          $    715,062
     Accrued wages and payroll taxes                                                 166,898               200,942
     Accrued interest                                                                100,367               103,184
     Advance from MHBPA (Note 1)                                                     546,414               709,573
     Advance from shareholder (Note 6)                                                                   1,651,942
     Borrowings under credit agreement (Note 6)                                      608,449
     Accrued property taxes                                                          354,022               305,032
     Income taxes payable                                                            160,875
     Payable to horsepersons                                                          70,805                14,923
                                                                                ----------------      ----------------
         Total current liabilities                                                 2,767,962             3,700,658

COMMITMENTS AND CONTINGENCIES (Notes 7 and 8)

STOCKHOLDERS' EQUITY (Note 4):
     Common stock, $.01 par value, 10,000,000 shares authorized, 3,020,167
         and 2,998,848, respectively, shares issued and outstanding                   30,202                29,989
     Additional paid-in capital                                                    8,132,809             8,061,875
     Unearned compensation                                                                                 (22,044)
     Accumulated deficit                                                          (1,513,312)           (1,947,059)
                                                                                ----------------      ----------------
         Total stockholders' equity                                                6,649,699             6,122,761
                                                                                ----------------      ----------------
                                                                                $  9,417,661          $  9,823,419
                                                                                ----------------      ----------------
                                                                                ----------------      ----------------

See notes to consolidated financial statements.
</TABLE>

                                       21
<PAGE>


<TABLE>
<CAPTION>

CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1998 AND  1997
--------------------------------------------------------------------------------------------------------------------------

                                                                                      1998                    1997

<S>                                                                             <C>                    <C>
OPERATING REVENUES:
     Pari-mutuel                                                                $   14,448,354         $    14,023,668
     Concessions                                                                     2,578,262               2,421,538
     Admissions and parking                                                            563,091                 602,215
     Publications                                                                      733,075                 759,657
     Other operating revenue                                                           872,795                 395,138
                                                                                ------------------      ------------------
                                                                                    19,195,577              18,202,216

OPERATING EXPENSES:
     Pari-mutuel expenses:
         Statutory purses                                                            3,828,864               3,689,747
         Host track fees                                                             1,953,901               1,880,779
         Pari-mutuel taxes                                                              78,020                  51,177
         Minnesota Breeders' Fund                                                      728,387                 696,459
     Salaries and benefits                                                           4,703,506               4,321,476
     Cost of sales related to concessions                                              772,290                 721,146
     Cost of sales related to publications                                             783,256                 856,472
     Depreciation and amortization                                                     901,443                 856,982
     Repairs, maintenance and supplies                                                 725,497                 443,851
     Property taxes                                                                    417,003                 309,764
     Advertising and marketing                                                         863,213                 873,855
     Utilities                                                                         692,992                 671,228
     Other operating expenses                                                        2,250,022               2,525,083
                                                                                ------------------      ------------------
                                                                                    18,698,394              17,898,019

NONOPERATING (EXPENSES) REVENUES:
     Interest expense (Note 6)                                                        (118,151)               (166,252)
     Other, net                                                                          7,587                   6,243
                                                                                ------------------      ------------------
                                                                                      (110,564)               (160,009)
                                                                                ------------------      ------------------

INCOME BEFORE INCOME TAX EXPENSE                                                       386,619                 144,188

     Income tax benefit (expense) (Note 3)                                              47,128                  (8,400)

                                                                                ------------------      ------------------
NET INCOME                                                                      $      433,747         $       135,788
                                                                                ------------------      ------------------
                                                                                ------------------      ------------------ 


WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING                                 3,005,164               2,976,961
                                                                                ------------------      ------------------
                                                                                ------------------      ------------------

BASIC NET INCOME PER COMMON SHARE (Note 5)                                      $          .14          $          .05
                                                                                ------------------      ------------------
                                                                                ------------------      ------------------

DILUTED NET INCOME PER COMMON SHARE (Note 5)                                    $          .14          $          .04
                                                                                ------------------      ------------------
                                                                                ------------------      ------------------


See notes to consolidated financial statements.
</TABLE>



                                       22
<PAGE>

<TABLE>
<CAPTION>

CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
----------------------------------------------------------------------------------------------------------------

                                                                      Additional      Unearned       
                                       Number          Common          Paid-in         Compen-       Accumulated
                                     of Shares          Stock          Capital         sation          Deficit            Total
                                    -------------    ------------    -------------   ------------   ---------------   --------------

<S>                                 <C>             <C>             <C>             <C>             <C>               <C>
BALANCE,  DECEMBER  31, 1996          2,961,382     $   29,614      $7,879,551                      $(2,082,847)       $5,826,318

Exercise of stock options                22,500            225          42,494                                             42,719

Issuance and amortization of
     compensatory stock options                                        108,102      $  (22,044)                            86,058

Shares issued under Employee Stock
     Purchase Plan                       14,966            150          31,728                                             31,878

Net income                                                                                              135,788           135,788
                                    -------------   ------------    -------------   ------------   ---------------   --------------

BALANCE,  DECEMBER  31, 1997          2,998,848     $   29,989      $8,061,875      $  (22,044)    $ (1,947,059)     $  6,122,761

Exercise of stock options                 8,775             88          20,276                                             20,364

Issuance and amortization of
     compensatory stock options                                         18,796          22,044                             40,840

Shares issued under Employee Stock
     Purchase Plan                       12,544            125          31,862                                             31,987

Net income                                                                                              433,747           433,747
                                    -------------   ------------    -------------   ------------   ---------------   --------------

BALANCE,  DECEMBER 31, 1998           3,020,167     $   30,202      $8,132,809      $        0     $ (1,513,312)     $  6,649,699
                                    -------------   ------------    -------------   ------------   ---------------   ---------------
                                    -------------   ------------    -------------   ------------   ---------------   ---------------

</TABLE>



See notes to consolidated financial statements.



                                       23
<PAGE>


<TABLE>
<CAPTION>

CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998 AND  1997
-----------------------------------------------------------------------------------------------------------------------------------

                                                                                               1998                    1997

<S>                                                                                      <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income                                                                          $       433,747        $       135,788
     Adjustments to reconcile net income to net cash provided by operations:
         Depreciation and amortization                                                           901,443                856,982
         Deferred income taxes                                                                  (208,000)
         Stock options issued for consulting services                                             40,840                 86,058
         (Increase) decrease in accounts receivable                                              (29,828)                 1,366
         Increase in other current assets                                                        (28,461)               (28,940)
         Increase in income taxes payable                                                        160,875
         Increase in accounts payable and accrued expenses                                        11,026                130,802
         Decrease in accrued interest                                                             (2,817)               (46,203)
         Increase (decrease) in accrued property taxes                                            48,990                (65,884)
         Increase in payable to horsepersons                                                      55,882                  7,558
                                                                                         ------------------     -------------------
              Net cash provided by operations                                                  1,383,697              1,077,527

CASH FLOWS FROM INVESTING ACTIVITIES:
     Additions to property and equipment and other assets                                       (254,530)              (395,355)
     Additions to land                                                                                                 (935,141)
     Proceeds from sale of property and equipment                                                 33,091                 47,344
                                                                                         ------------------     -------------------
         Net cash used in investing activities                                                  (221,439)            (1,283,152)

CASH FLOWS FROM FINANCING ACTIVITIES:
     Net proceeds from borrowings under credit agreement                                         608,449
     Net (payments on) proceeds from advance by MHBPA                                           (163,159)               156,383
     Proceeds from issuance of common stock                                                       52,351                 74,597
     Net (payments on) proceeds from advance from shareholder                                 (1,651,942)                42,188
                                                                                         ------------------     -------------------
         Net cash (used in) provided by financing activities                                  (1,154,301)               273,168
                                                                                         ------------------     -------------------

NET INCREASE IN CASH                                                                               7,957                 67,543

CASH AT BEGINNING OF YEAR                                                                        364,214                296,671
                                                                                         ------------------     -------------------

CASH AT END OF YEAR                                                                      $       372,171        $       364,214
                                                                                         ------------------     -------------------
                                                                                         ------------------     -------------------


INTEREST PAID                                                                            $       120,968        $       212,450
                                                                                         ------------------     -------------------
                                                                                         ------------------     -------------------
</TABLE>

See notes to consolidated financial statements.



                                       24
<PAGE>


CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND  1997
-------------------------------------------------------------------------------

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         BUSINESS - Canterbury Park Holding Corporation (the Company) was
         incorporated on March 24, 1994. On March 29, 1994 the Company acquired
         all the outstanding securities of Jacobs Realty, Inc. (JRI) from Irwin
         Jacobs and IMR Fund, L.P. (an investment fund for various pension plans
         and trusts). JRI was merged into the Company and the acquisition was
         accounted for under the purchase method of accounting whereby the
         acquired assets and liabilities have been recorded at the Company's
         cost. The primary asset of JRI was Canterbury Downs Racetrack and the
         325 acres of surrounding land.

         On May 20, 1994, the Company adopted a plan of Reorganization pursuant
         to which the sole shareholder of Canterbury Park Concessions, Inc.
         (CPC), and majority shareholder of the Company, agreed to exchange his
         shares of CPC stock for 198,888 shares of the Company's common stock
         concurrent with the closing of a public offering. Pursuant to the Plan
         of Reorganization, CPC became a wholly owned subsidiary of the Company
         in August 1994 when the Company completed the initial public offering
         of its common stock. This reorganization was treated in a manner
         similar to a pooling of interests. Net proceeds received by the Company
         from the public offering were approximately $4,847,000 which, along
         with additional borrowings under the Company's line of credit with the
         majority shareholder, were used to pay off the remaining notes payable
         from the acquisition of JRI.

         The consolidated financial statements include the accounts of the
         Company and CPC after elimination of intercompany accounts and
         transactions.

         OPERATIONS - The Company's revenues are derived primarily from
         pari-mutuel wagering on simulcast and live horse races.

         BASIS OF ACCOUNTING - The consolidated financial statements have been
         prepared assuming that the Company will continue in existence. This
         contemplates the realization of assets and settlement of obligations in
         the ordinary course of business. The Company has incurred cumulative
         operating losses of approximately $1,513,000, and has a working capital
         deficit of approximately $1,949,000 at December 31, 1998. During 1998
         and 1997, the Company hosted a number of special events in addition to
         horse racing in an effort to increase its cash flows and attain
         profitability. These additional events, combined with the benefit to
         the Company of legislative changes referred to below, have allowed the
         Company to achieve profitability in 1996 through 1998. Management
         continues to pursue legislation for additional potential sources of
         revenue and has secured traditional bank financing. Management believes
         that funds available under its bank line of credit along with funds
         generated from operations, will be sufficient to satisfy its liquidity
         and capital resource requirements during 1999.

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

         DEPRECIATION - Property and equipment are depreciated on a
         straight-line basis over the estimated useful lives of the assets,
         generally 5 to 39 years.

         INTANGIBLE ASSETS - Intangible assets consist of organization and
         trademark costs and are amortized on a straight-line basis over 60
         months.


                                       25
<PAGE>


         UNCASHED WINNING TICKETS - Pari-mutuel tickets which are not cashed
         within one year of the end of the respective race meet become the
         property of the Company. The Company records revenue associated with
         the uncashed winning tickets at the time that, based on historical
         experience, management can reasonably estimate the amount of additional
         winning tickets from a race meet that will be presented for payment.

         PARI-MUTUEL TAXES - The first $12 million of pari-mutuel revenue is
         exempt from the 6% pari-mutuel tax. Pari-mutuel taxes are estimated for
         each 12 month period from July 1 through June 30, and an estimated
         annual effective tax rate is applied to all pari-mutuel commission
         revenues.

         ADVANCE FROM THE MINNESOTA HORSEMEN'S BENEVOLENT AND PROTECTIVE
         ASSOCIATION, INC. (THE "MHBPA") - The Minnesota Pari-Mutuel Horse
         Racing Act specifies that the Company is required to segregate a
         portion of funds (recorded as statutory purses in the statements of
         operations), received from wagering on simulcast and live horse races,
         for future payment as purses for live horse races or other uses of the
         horsepersons' associations. Pursuant to an agreement with the Minnesota
         Horsemens Benevolent and Protective Association (the "MHBPA"), the
         Company has transferred into a trust account or paid directly to the
         MHBPA, approximately $3,650,000 and $3,287,000 for the years ended
         December 31, 1998 and 1997, respectively, related to thoroughbred
         races. Amounts due to the MHBPA are guaranteed by the Chairman of the
         Board. Minnesota Statutes specify that amounts transferred into the
         trust account are the property of the trust and not of the Company. The
         interest rates on any statutory purses accrued but not transferred into
         the trust were 7.75% and 8.50% at December 31, 1998 and 1997,
         respectively.

         SHORT-TERM BORROWINGS - The weighted average interest rates on
         short-term borrowings at December 31, 1998 and 1997 are 7.75% and
         8.50%, respectively. The weighted average rates for 1998 and 1997 were
         8.51% and 8.97%, respectively.

         INCOME TAXES - Prior to the completion of the Company's initial public
         offering of its common stock, the Company was taxed as a "small
         business corporation" under Subchapter S of the Internal Revenue Code.
         As a result, any income tax liability or benefit was being passed
         through to the individual shareholders and no income taxes payable or
         income tax expenses were recorded in the consolidated financial
         statements. Simultaneous with the Company's completion of the public
         offering of its common stock, the Company's Subchapter S election was
         terminated. A portion of the losses accumulated prior to the public
         offering is not available to offset future earnings. The Company
         currently accounts for income taxes in accordance with Statement of
         Financial Accounting Standards (SFAS) No. 109, ACCOUNTING FOR INCOME
         TAXES.

         NET INCOME PER SHARE - Effective December 15, 1997, the Company adopted
         the provisions of Statement of Financial Accounting Standards No. 128
         "Earnings per Share". The Statement requires the Company to present its
         net income per share in basic and diluted forms and to restate net
         income per share from prior periods to conform with the new statement.
         Basic net income per common share is based on the weighted average
         number of common shares outstanding during each year. Diluted net
         income per common share takes into effect the dilutive effect of
         potential common shares outstanding. The Company's only potential
         common shares outstanding are stock options and warrants.

         IMPAIRMENT OF LONG-LIVED ASSETS - Management of the Company
         periodically reviews the carrying value of property and equipment for
         potential impairment by comparing the carrying value of these assets
         with their related expected future net cash flows. Should the sum of
         the related expected future net cash flows be less than the carrying
         value, management will determine whether an impairment loss should be
         recognized. An impairment loss would be measured by the amount by which
         the carrying value of the asset exceeds the fair value of the asset. To
         date, management has determined that no impairment of these assets
         exists.


                                       26
<PAGE>

         RECLASSIFICATION - Certain reclassifications have been made to the 1997
         consolidated financial statements to conform to the presentation
         adopted in the 1998 consolidated financial statements. The
         reclassifications had no effect on stockholders' equity and net income
         as previously reported.

         RECENTLY ISSUED ACCOUNTING STANDARDS - In June 1997, the Financial
         Accounting Standards Board (FASB) issued Statement of Financial
         Accounting Standards (SFAS) No. 130, REPORTING COMPREHENSIVE INCOME,
         which establishes standards for reporting and display of comprehensive
         income and its components in a full set of financial statements.
         Comprehensive income includes all changes in stockholders' equity
         except those resulting from investments by and distributions to owners.
         SFAS No. 130 is not currently applicable for the Company because the
         Company did not have any items of other comprehensive income in any of
         the periods presented.

         SFAS No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
         ACTIVITIES, was issued in June 1998. SFAS No. 133 provides a
         comprehensive standard for the recognition and measurement of
         derivatives and hedging activities. The standard requires all
         derivatives to be recorded on the balance sheet at fair value and
         establishes special accounting for three types of hedges. SFAS No. 133
         is effective for the Company year beginning January 1, 2000. The
         Company is currently assessing the impact on the Company's financial
         position and results of operations.

2.       PROPERTY AND EQUIPMENT

         Property and equipment consists of the following at December 31:
<TABLE>
<CAPTION>

                                                                                      1998                     1997

           <S>                                                                <C>                       <C>               
           Land                                                               $        3,617,865        $        3,648,851
           Buildings and building improvements                                         2,883,817                 2,829,762
           Furniture and equipment                                                     5,588,999                 5,392,330
                                                                              ---------------------     --------------------
                                                                                      12,090,681                11,870,943
           Accumulated depreciation                                                   (3,704,242)               (2,809,738)
                                                                              ---------------------     --------------------
                                                                              $        8,386,439        $        9,061,205
                                                                              ---------------------     --------------------
</TABLE>


3.       INCOME TAXES

         A reconciliation between income taxes computed at the statutory federal
         income tax rate and the effective tax rate is as follows:
<TABLE>
<CAPTION>

                                                                                         1998                     1997

           <S>                                                                    <C>                      <C>
           Federal tax expense computed at statutory rate                         $          135,000       $           50,000
           Decrease in valuation allowance                                                  (217,000)                (155,000)
           Nondeductible lobbying expense                                                     27,000                   90,000
           State expense, net of federal impact                                               30,000                   24,000
           Other                                                                             (22,000)                    (600)
                                                                                  --------------------     --------------------
                                                                                  $          (47,000)      $            8,400
                                                                                  --------------------     --------------------
</TABLE>



                                       27
<PAGE>



         Temporary differences, tax carryforwards and the valuation allowance at
December 31 are as follows:
<TABLE>
<CAPTION>

                                                                                         1998                     1997

           <S>                                                                    <C>                      <C>
           Operating loss carryforward                                            $          262,000       $          491,000
           Federal / State AMT Benefit                                                       165,000
           Tax depreciation greater than book depreciation                                  (174,000)                (247,000)
           Organizational and start-up costs                                                   8,000                   31,000
           Repairs capitalized                                                                10,000                   13,000
           Other                                                                              67,000                   59,000
           Valuation allowance                                                              (130,000)                (347,000)
                                                                                  --------------------     --------------------
                                                                                  $          208,000       $                -
                                                                                  --------------------     --------------------
</TABLE>

         The benefit of deferred tax assets was entirely offset by a valuation
         allowance at December 31, 1997 because future realization was
         uncertain. At December 31, 1998, management determined that based on
         recent and projected profitability, it was more likely than not that
         $208,000 of the deferred tax asset would be utilized in the future and
         thus reduced it's valuation allowance. The Company has federal income
         tax net operating loss carryforwards of approximately $633,000 at
         December 31, 1998 which expire in 2009 through 2011.

4.       STOCKHOLDERS' EQUITY

         EMPLOYEE STOCK PURCHASE PLAN:

         On April 3, 1995, the Board of Directors adopted the 1995 Employee
         Stock Purchase Plan. The plan, which is open to all employees of the
         Company working more than 15 hours per week, commenced on April 15,
         1995 and will continue for ten years. The plan consists of one-year
         phases. The phases commence on October 1 of each year. Under the terms
         of the plan, employees may set aside a portion of their payroll
         earnings to purchase shares of the Company's common stock at the lower
         of 85% of the fair market value of the shares on the commencement date
         of each phase or 85% of the fair market value on the termination date
         of each phase. The plan provides for the sale of up to 100,000 shares.
         The plan issued 12,544 and 14,966 shares in 1998 and 1997,
         respectively.

         401(k) PLAN:

         On June 1, 1998 the Company established a defined contribution savings
         plan for employees who had completed one year of service, as defined in
         the Plan document. The defined contribution savings plan allows for
         employee compensation deferral contributions under Section 401(k) of
         the Internal Revenue Code and discretionary contributions by the
         Company. Employer contributions charged to operations in 1998 were
         approximately $15,000.

         STOCK OPTIONS:

         The Company has a stock option plan (the Stock Option Plan) which
         provides for the granting of awards in the form of stock options,
         restricted stock, stock appreciation rights, and deferred stock to key
         employees and nonemployees, including directors of and consultants to
         the Company and any subsidiary, to purchase up to a maximum of 500,000
         shares of common stock. Options that are granted under the plan may be
         either options that qualify as "incentive stock options" within the
         meaning of Section 422 of the Internal Revenue Code of 1986, as amended
         (Incentive Stock Options), or those that do not qualify as Incentive
         Stock Options (Non-Qualified Stock Options). The plan is administered
         by the Board of Directors, or a committee designated by the Board,
         which determines the persons who are to receive awards under the plan,
         the type of award to be granted, the number of shares subject to each
         award and, if an option, the 


                                       28
<PAGE>


exercise price of each option. The plan also provides for formula grants of
Non-Qualified Stock Options to nonemployee directors of the Company.

Stock option activity related to the Plan during the years ended December 31,
1998 and 1997 is summarized below:
<TABLE>
<CAPTION>

                                                          1998                                          1997
                                        ------------------------------------------    ------------------------------------------
                                                              Weighted Average                               Weighted Average 
                                            Shares             Exercise Price               Shares            Exercise Price 
                                        ----------------     ---------------------    -----------------    ---------------------

           <S>                          <C>                  <C>                      <C>                 <C>
           Outstanding at
             beginning of year                 263,500       $            2.47               184,000       $            2.58

           Granted                             112,000                    2.55               102,000                    2.12
           Exercised                            (6,275)                   2.05               (21,500)                   1.85
           Canceled                             (1,500)                   2.50                (1,000)                   2.06
                                        ----------------     ---------------------    -----------------    ---------------------

           Outstanding at end of
             year                              367,725       $            2.50               263,500       $            2.47
                                        ----------------     ---------------------    -----------------    ---------------------
                                        ----------------     ---------------------    -----------------    ---------------------

           Options exercisable at
             end of year                       313,225       $            2.49               221,750       $            2.54
                                        ----------------     ---------------------    -----------------    ---------------------
                                        ----------------     ---------------------    -----------------    ---------------------
</TABLE>


         In addition to options granted under the plan, in June 1994 the Company
         issued options to purchase 73,000 shares of common stock to certain
         individuals who were instrumental in assisting the Company commence
         operations. During 1998, 2,500 of these options were exercised. The
         69,500 options remaining at December 31, 1998 are exercisable at $3.00
         per share and expire in August 1999.

         In 1997, the Company issued an option to purchase 50,000 shares of
         common stock at an exercise price of $3.75 per share, for consulting
         services. The option was valued at $88,176, of which $22,044 was
         recognized in the 1998 statement of operations and $66,132 was
         recognized in 1997. The option expires March 31, 2000.

         The Company also issued options in 1998 and 1997 to purchase 15,000 and
         12,500 shares of common stock, respectively, to a Board member for
         consulting services. The exercise prices of the options are $2.625 and
         $3.25 per share, respectively. The options were valued at $18,796 and
         $19,926 and were recognized in the 1998 and 1997 statements of
         operations, respectively. The option issued in 1998 expires in
         September 2001 and the option issued in 1997 expires in November 1999.

         In 1994, the Chairman of the Board was granted an option to purchase
         51,825 shares at $2.625 per share. This option expires on May 20, 1999.

         At December 31, 1998, the weighted average remaining contractual life
         of all options was 62 months, and the range of exercise prices was
         $1.75 to $4.00.



                                       29
<PAGE>




         In 1996, the Company adopted Statement of Financial Accounting
         Standards No. 123 (SFAS 123), "Accounting for Stock-Based
         Compensation." As permitted by SFAS 123, the Company has elected to
         continue following the guidance of APB 25 for measurement and
         recognition of stock-based transactions with employees. No compensation
         cost has been recognized for stock options issued under the Stock
         Option Plan because the exercise price of all options granted was at
         least equal to the fair value of the common stock at the date of grant.
         If compensation cost for the Company's stock option and employee stock
         purchase plans had been determined based on the fair value at the grant
         dates, consistent with the method provided in SFAS 123, the Company's
         net income (loss) and earnings (loss) per share would have been as
         follows:
<TABLE>
<CAPTION>

                                                                        1998                      1997
                                                                ---------------------     ---------------------
          <S>                                                   <C>                       <C>
           Net Income (Loss):
                As reported                                     $        433,747          $        135,788
                Pro forma                                                212,052                   (71,022)

           Basic Earnings (Loss) Per Share:
                As reported                                     $            .14          $            .05
                Pro forma                                                    .07                      (.02)

           Diluted Earnings (Loss) Per Share"
                As reported                                     $            .14          $            .04
                Pro forma                                                    .07                      (.02)
</TABLE>

         The fair value of options granted under the Stock Option Plan during
         1998 and 1997 were estimated on the date of grant using the
         Black-Scholes option-pricing model with the following weighted average
         assumptions and results:
<TABLE>
<CAPTION>

                                                                        1998                      1997
                                                                ---------------------     ---------------------
           <S>                                                      <C>                       <C>
           Dividend yield                                                  None                      None
           Expected volatility                                              78%                       85%
           Risk-free interest rate                                        5.86%                     6.56%
           Expected life of option                                      120 mo.                   120 mo.
           Fair value of options on grant date                      $   245,173               $   214,931
</TABLE>

         WARRANTS:

         In 1994, the Company issued warrants to purchase 400,000 shares of
         common stock at an exercise price of $4.00 to the Company's founders in
         consideration for services performed. The warrants expired in August
         1998 unexercised. Also, warrants to purchase 1,437,300 shares of common
         stock related to the initial public offering which were exercisable at
         $4.88 per share expired in August 1998 unexercised.

         In addition to the above, the Company's selling agents have a warrant
         to purchase 125,000 units (each unit consisting of one share of common
         stock and one warrant to purchase one share of common stock) at an
         exercise price of $4.80 per unit which expires in August 1999.

         The Company's Articles of Incorporation provide that the Company may
         redeem, at fair market value, securities held by any person or entity
         whose status as a security holder, in the opinion of the Board of
         Directors of the Company, may result in the disapproval, modification,
         or nonrenewal of any contract or the loss or nonreinstatement from any
         governmental agency of any license or franchise held by the Company or
         any of its subsidiaries, which license or franchise is conditioned upon
         some or all of the holders of capital stock meeting certain criteria.



                                       30
<PAGE>

<TABLE>
<CAPTION>


5.       EARNINGS PER SHARE
                                             Year Ended December 31, 1998                     Year Ended December 31,1997
                                     ----------------------------------------------  ----------------------------------------------
                                        Income           Shares         Per Share       Income           Shares         Per Share
                                     (Numerator)     (Denominator)       Amount       (Numerator)     (Denominator)      Amount
                                     -------------   ---------------   ------------  --------------  ----------------  ------------

          <S>                        <C>             <C>               <C>           <C>             <C>               <C>
          Net Income                 $   433,747                                     $   135,788
                                     -------------                                   --------------
                                     -------------                                   --------------


          BASIC EPS
          Income available
            to common
            stockholders                 433,747         3,005,164     $      .14        135,788         2,976,961     $     .05
                                     -------------                     ------------  --------------                    -------------
                                     -------------                     ------------  --------------                    -------------

          EFFECT OF DILUTIVE
          SECURITIES
          Stock options                                     83,889                                         114,932
                                                     ---------------                                 ----------------

          DILUTED EPS
          Income available
            to common stock-
            holders                  $   433,747         3,089,053     $      .14    $   135,788         3,091,893     $     .04
                                     -------------   ---------------   ------------  --------------  ----------------  ------------
                                     -------------   ---------------   ------------  --------------  ----------------  ------------
</TABLE>


         Options to purchase 211,000 shares of common stock at a weighted
         average exercise price of $3.42 per share were outstanding during 1998
         but were not included in the computation of diluted EPS because the
         options' exercise prices were greater than the average market price of
         the common shares. The options which expire in an average of 33 months
         were still outstanding at the end of year 1998. In addition, the
         1,837,400 warrants which expired in August 1998, and 125,000 warrants
         which expire in August 1999, were excluded in both years because the
         weighted average exercise price of $4.70 was greater than the average
         market price of the common shares.

6.       LINES OF CREDIT

         At December 31, 1997 the Company had a $3,000,000 line of credit
         arrangement with the Chairman of the Board, of which $1,651,942 was
         outstanding. The interest rate for borrowings under the line of credit
         was the prime rate at December 31, 1997. This line of credit was paid
         off on June 11, 1998 and was replaced by a commercial revolving credit
         line with Bremer Bank, N.A.. Interest charged to operations under the
         line of credit with the Chairman of the Board was approximately $43,000
         and $112,000 for the periods ended December 31, 1998 and 1997,
         respectively.

         The Company entered into a general credit and security agreement with
         Bremer Bank, N.A., a financial institution located in South Saint Paul,
         Minnesota, on June 3, 1998. Borrowings under the credit agreement
         include a commercial revolving credit line which provides for maximum
         advances of $2,250,000 with interest at the prime rate (7.75% at
         December 31, 1998). The new lending arrangement also includes a term
         loan commitment of $750,000. Interest charged to operations under this
         line of credit was approximately $27,000 for the period ended December
         31, 1998. The credit agreement contains certain covenants requiring the
         Company to maintain certain financial ratios. The Company was in
         compliance with these requirements as of December 31, 1998. The 
         Company's current loan arrangements with a commercial bank prohibit 
         the payment of dividends without the bank's consent.



                                       31
<PAGE>




7.       OPERATING LEASES AND COMMITMENTS

         In May 1994 the Company entered into a five-year totalizator services
         agreement with Autotote Systems, Inc. (Autotote). Pursuant to the
         agreement, Autotote provides totalizator equipment and computer
         programs which record and process all wagers and calculate the odds and
         payoffs. For such services, Autotote receives a fee of approximately
         .35% of the gross monies wagered. Amounts charged to operations under
         this agreement for the years ended December 31, 1998 and 1997 were
         approximately $306,000 and $311,000, respectively. During the 1998
         and1997 live race meets, Autotote provided uplink services which
         enabled the Company to simulcast horse races held at Canterbury Park to
         out-of-state racetracks. These services resulted in an amount charged
         to operations in 1998 and 1997 of approximately $102,000 and $95,000,
         respectively. Effective January 1, 1999, the Company extended the
         totalizator services agreement with Autotote through April, 2004. A
         director of the Company is the regional sales manager of Autotote.

8.       CONTINGENCIES

         In connection with the purchase of JRI (note 1), the company entered
         into an Earn Out Promissory Note dated March 29, 1994. In accordance
         with the Earn Out Note if (i) off-track betting becomes legally
         permissible in the State of Minnesota and (ii) the Company begins to
         conduct off-track betting with respect to or in connection with its
         operations, the Company will be required to pay to the IMR Fund, L.P.
         the greater of $700,000 per operating year, as defined, or 20% of the
         net pretax profit, as defined for each of five operating years. At the
         date (if any) that these two conditions are met, the five minimum
         payments will be discounted back to their present value and the sum of
         those discounted payments will be recorded as an increase to the
         purchase price. The purchase price will be further increased if
         payments become due under the "20% of Net Pretax Profit" calculation.
         The first payment is to be made 90 days after the end of the third
         operating year in which off-track betting is conducted by the Company.
         Remaining payments would be made within 90 days of the end of each of
         the next four operating years.

9.       RELATED-PARTY TRANSACTIONS

         The president/director and two other directors have guaranteed
         performance by the Company under a $500,000 bond issued to the
         Minnesota Racing Commission.

         In 1998 and 1997, the Company paid $40,000 and $50,000, respectively,
         to a Board member for advertising and marketing services provided to
         the Company. This Board member was also granted 15,000 stock options in
         1998 and 12,500 stock options in 1997 (refer to Note 4).

10.      OPERATING SEGMENTS

         The Company has two reportable operating segments: horse racing and
         concessions. The horse racing segment includes simulcast and live
         racing operations. The concessions segment provides concessions during
         simulcast racing, live racing and special events. The Company's
         reportable operating segments are strategic business units that offer
         different products and services. They are managed separately because
         the segments differ in the nature of the products and services provided
         as well as processes to produce those products and services. The horse
         racing segment is regulated by the State of Minnesota Racing
         Commission.

         The accounting policies of the operating segments are the same as those
         described in the summary of significant accounting policies.

         All depreciation, interest expense and income taxes are recorded in the
         horse racing segment and no allocation is made to concessions for
         shared facilities. However, the concessions segment pays approximately
         25% of gross revenues to the horse racing segment for use of the
         facilities.



                                       32
<PAGE>


         The following table provides information about the Company's operating
segments (in 000's):

<TABLE>
<CAPTION>

                                             Year Ended December 31, 1998                   Year Ended December 31,1997
                                     ---------------------------------------------  --------------------------------------------
                                     Horse Racing     Concessions       Total       Horse Racing     Concessions        Total
                                     --------------  --------------  -------------  -------------  ---------------  -------------
          <S>                       <C>              <C>             <C>            <C>            <C>              <C>
          Revenues from external
               customers                 $16,494         $2,701          $19,195        $15,679        $2,523           $18,202
          Intersegment revenues              725                             725            592                             592
          Net interest expense              (111)                           (111)          (160)                           (160)
          Depreciation and
               amortization                  901                             901            857                             857
          Segment income before
               income taxes                  377             62              439            137            131              268

          Segment Assets                  $9,347           $240           $9,587         $9,705           $249           $9,954
                                     --------------  --------------  -------------  -------------  ---------------  -------------
                                     --------------  --------------  -------------  -------------  ---------------  -------------
</TABLE>

         Included in horse racing segment revenues for the years ended December
         31, 1998 and 1997 is approximately $680,000 and $195,000, respectively,
         for rental of the racing facility for special events.

         The following are reconciliations of reportable segment revenue, income
         before income taxes, and assets, to the Company's consolidated totals
         (in 000's):
<TABLE>
<CAPTION>
                                                                                    1998                    1997
                                                                             -------------------     -------------------
         <S>                                                                 <C>                     <C>
         REVENUES
           Total revenue for reportable segments                                        $19,920                 $18,794
           Elimination of intersegment revenues                                            (725)                   (592)
                                                                             -------------------     -------------------
                    Total consolidated revenues                                          19,195                  18,202
                                                                             -------------------     -------------------
                                                                             -------------------     -------------------

         INCOME BEFORE INCOME TAXES
           Total segment income before income taxes                                        $439                    $268
           Elimination of intersegment income before income taxes                           (53)                   (124)
                                                                             -------------------     -------------------
                    Total consolidated income before income taxes                           386                     144
                                                                             -------------------     -------------------
                                                                             -------------------     -------------------
</TABLE>

<TABLE>
<CAPTION>
                                                                             December 31, 1998       December 31, 1997
                                                                             -------------------     -------------------
         <S>                                                                 <C>                      <C>
         ASSETS
           Total assets for reportable segments                                          $9,587                  $9,954
           Elimination of intercompany receivables                                         (169)                   (131)
                                                                             -------------------     -------------------
                    Total consolidated assets                                             9,418                   9,823
                                                                             -------------------     -------------------
                                                                             -------------------     -------------------
</TABLE>


                                       33
<PAGE>




ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
          FINANCIAL DISCLOSURE

          Not Applicable.




                                    PART III
                                    --------

ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
          COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

          Information required under this item with respect to the directors
          will be set forth in a section captioned "Election of Directors" 
          in the Company's Proxy Statement for the Annual Meeting of 
          Shareholders to be held on June 3, 1999 (the "1999 Proxy Statement"),
          a definitive copy of which will be filed with the Commission within 
          120 days of the close of the 1998 fiscal year, which information is 
          incorporated herein by reference. Information regarding executive 
          officers is presented under Item 1 herein.

ITEM 10.  EXECUTIVE COMPENSATION

          Information required under this item will be set forth in a section
          entitled "Executive CompensatioCompany's 1999 Proxy Statement which
          information is incorporated herein by reference.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

          Information required under this item will be set forth in a section
          entitled "Shareholdings of Principal Shareholders and Management" in
          the Company's 1999 Proxy Statement which information is incorporated
          herein by reference.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

          Information required under this item will be set forth in a section
          entitled "Certain Transactions" in the Company's 1999 Proxy Statement
          which information is incorporated herein by reference.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a)       EXHIBITS. See Exhibit Index at page 36 which is incorporated herein
          by reference. Exhibits that cover management contracts or
          compensatory plans or arrangements are marked with an asterisk (*) on
          the Exhibit Index.

(b)       REPORTS ON FORM 8-K. No reports on Form 8-K were filed during the
          fourth quarter of 1998.



                                       34
<PAGE>


                                   SIGNATURES

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

Dated:  March 31, 1999            CANTERBURY PARK HOLDING CORPORATION

                            By    /s/ Randall D. Sampson
                                  ---------------------------------------------
                                  Randall D. Sampson
                                  President and Chief Executive Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on the date set forth above.

                                POWER OF ATTORNEY

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

             SIGNATURE                                       TITLE                                       DATE
             ---------                                       ----                                        ----
<S>                                            <C>                                                 <C> 
/s/Curtis A. Sampson                           Chairman of the Board                               March 31, 1999
-------------------------------------
Curtis A. Sampson


/s/ Dale H. Schenian                           Director; Vice Chairman                             March 31, 1999
-------------------------------------
Dale H. Schenian


/s/ Randall D. Sampson                         Chief Executive Officer, President,                 March 31, 1999
-------------------------------------          Chief Financial Officer, General
Randall D. Sampson                             Manager, Treasurer and Director


/s/ Brian C. Barenscheer                       Director                                            March 31, 1999
-------------------------------------
Brian C. Barenscheer


/s/ Gibson Carothers                           Director                                            March 31, 1999
-------------------------------------
Gibson Carothers


/s/ Terence McWilliams                         Director                                            March 31, 1999
-------------------------------------
Terance McWilliams


/s/ Carin Offerman                             Director                                            March 31, 1999
-------------------------------------
Carin Offerman


/s/ Judith M. Dahlke
-------------------------------------          Chief Accounting Officer                            March 31, 1999
Judith M. Dahlke
</TABLE>

                                       35
<PAGE>



<TABLE>
<CAPTION>


                               CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARY

                                                Exhibit Index To
                                Form 10-KSB for the Year Ended December 31, 1998

   Regulation S-B                                                                   Location in Consecutive Numbering
   Exhibit Table                                                                    System as Filed with the Securities
     Reference             Title of Document                                        and Exchange Commission
---------------------      --------------------------------------------------       --------------------------------------
        <S>                <C>                                                      <C>
        3.1                Articles of Incorporation, as amended.                   Filed as Exhibit 3.1 to the Forms SB-2
                                                                                    Registration Statement of the Company,
                                                                                    File No. 33-81262C, (the "SB-2
                                                                                    Registration Statement") and
                                                                                    incorporated herein by reference.


        3.2                Bylaws, as amended                                       Filed as Exhibit 3.2 to the SB-2
                                                                                    Registration Statement and incorporated
                                                                                    herein by reference.


        4.1                Warrant Agreement between the Company and the            Filed as Exhibit 4.1 to the SB-2
                           Warrant Agent                                            Registration Statement and incorporated 
                                                                                    herein by reference.


        10.1               Plan of Reorganization dated as of May 20, 1994          Filed as Exhibit 10.1 to the SB-2
                           between Canterbury Park Holding Corporation and          Registration Statement and incorporated
                           Canterbury Park Concessions, Inc.                        herein by reference.


        10.2               Restated Stock Purchase Agreement                        Filed as Exhibit 10.2 to the SB-2
                                                                                    Registration Statement and incorporated
                                                                                    herein by reference.


        10.3               Letter dated April 4, 1994 from the Minnesota            Filed as Exhibit 10.3 to the SB-2
                           Horsemen's Benevolent and Protective Association,        Registration Statement and incorporated
                           Inc. to Minnesota Racing Commission waiving 125          herein by reference.
                           day racing minimum


        10.4               Totalizator Services Agreement dated May 2, 1994         Filed as Exhibit 10.4 to the SB-2
                           between Autotote Systems, Inc. and Canterbury            Registration Statement and incorporated
                           Park Holding Corporation.                                herein by reference.


        10.5               Stock Option Plan, as amended*                           Filed as Exhibit 4.1 to the
                                                                                    Registration Statement on Form S-8 of
                                                                                    the Company filed on August 28, 1997
                                                                                    (File No. 333-34509) and incorporated
                                                                                    herein by reference.


        10.6               Form of Non-qualified Stock Option Agreement             Filed as Exhibit 10.6 to the SB-2
                                                                                    Registration Statement and incorporated
                                                                                    herein by reference.
</TABLE>

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



                                       36
<PAGE>

<TABLE>
<CAPTION>

   Regulation S-B                                                                   Location in Consecutive Numbering
   Exhibit Table                                                                    System as Filed with the Securities
     Reference             Title of Document                                        and Exchange Commission
---------------------      --------------------------------------------------       -----------------------------------
        <S>                <C>                                                      <C>
        10.7               Curtis A. Sampson Guaranty to HRA                        Filed as Exhibit 10.7 to the SB-2
                                                                                    Registration Statement and incorporated 
                                                                                    herein by reference.



        10.8               Form of Founders' Warrants                               Filed as Exhibit 10.8 to the SB-2
                                                                                    Registration Statement and incorporated
                                                                                    herein by reference.



        10.9               Curtis A. Sampson Warrant                                Filed as Exhibit 10.9 to the SB-2
                                                                                    Registration Statement and incorporated
                                                                                    herein by reference.



        10.10              General Credit and Security Agreement dated as of        Filed as Exhibit 10.10 herewith at page
                           June 3, 1998 between Canterbury Park Holding             40.
                           Corporation and Bremer Bank N.A. (previously
                           First American Bank, N.A.)  This exhibit 10.10
                           replaces exhibit 10.10 filed previously as an
                           exhibit to the SB-2 Registration Statement.


        10.11              Stock Purchase Savings Plan                              Filed as Exhibit 10.11 to Form
                                                                                    10-KSB for the fiscal year ended
                                                                                    December 31, 1997 and incorporated
                                                                                    herein by reference.


         10.12             Compensatory Employee and Advisor                        Filed as Exhibit 4.2 to the
                           Stock Plan                                               Registration Statement on Form S-8 of
                                                                                    the Company filed on August 28, 1997
                                                                                    (File No. 333-34509) and incorporated
                                                                                    herein by reference.


          10.13            Stock Option Plan for Non-Employee Consultants           Filed as Exhibit 4.3 to the
                           and Advisors                                             Registration Statement on Form S-8 of
                                                                                    the Company filed on August 28, 1997
                                                                                    (File No. 333-34509) and incorporated
                                                                                    herein by reference.


            21             Subsidiary of the Registrant                             Filed herewith at page 38.


            23             Independent Auditors' Consent                            Filed herewith at page 39.


            24             Power of Attorney                                        Included in signature page at     
                                                                                    page 35.
</TABLE>


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



                                       37