<PAGE>   1

                                                                    EXHIBIT 99.1

                          IN THE ILLINOIS GAMING BOARD

IN THE MATTER OF THE DENIAL OF THE  )
RENEWAL OF THE OWNER'S LICENSE      )             MATTER NO. ____________
OF EMPRESS CASINO JOLIET CORPORATION)

                          VERIFIED REQUEST FOR HEARING

     Empress Casino Joliet Corporation ("Empress"), by its counsel, hereby
submits, pursuant to 86 Ill. Adm. Code Section 3000.236(d)(1) and 86 Ill. Adm.
Code Section 3000.405(a) and (b), its Verified Request for Hearing on the
Illinois Gaming Board's (the "Gaming Board") July 19, 2000 Notice of Denial of
License Renewal for Empress Casino Joliet ("Notice of Denial").

     As set forth more fully below, Empress will present clear and convincing
documentary and testimonial evidence to establish that Empress is suitable for
license renewal and that Empress has fully complied with all Gaming Board
requests for information and documents and has cooperated fully with the Gaming
Board investigation into the suitability of Empress for renewal. Indeed, Empress
will present clear and convincing evidence that, in part because the Gaming
Board failed to follow its own rules and past practices, the Gaming Board's
decision to deny the renewal of the owner's license of Empress was against the
manifest weight of the evidence before it, arbitrary and capricious and
constitutes a denial of state and federal constitutional rights to due process
and equal protection.

     During the Gaming Board's review of Empress' license renewal application,
Empress met with the Gaming Board's staff numerous times and submitted a great
deal of supplemental information in response to their requests. Although Empress
provided factual information answering


                                       1
<PAGE>   2

every concern raised, the Gaming Board apparently failed to consider that
information in reaching the decision to deny renewal. Obviously, the Gaming
Board ignored its own lawful action on November 30, 1999 when it approved the
transaction involving Empress and HGHC.(1)

     The vast majority of the Gaming Board's nineteen alleged specific instances
of misconduct relate to matters that were before the Gaming Board on November
30, 1999. In addition to approving the transaction, the Gaming Board required
HGHC to move its corporate headquarters to Illinois (which it did) and relocate
many valued employees and their families (which it did). The extent to which
Empress accommodated the Gaming Board, lived up to all of its obligations and
significantly improved the operation, profitability, tax revenues and regulatory
compliance of Empress Casino Joliet, when taken against the flimsy and
pretextual nature of the allegations here, makes manifest the arbitrary and
capricious nature of the Gaming Board's decision.

     Also as more fully set forth below, Empress will specifically respond to
the "facts," allegations and conclusions enumerated in the Gaming Board's Notice
of Denial with clear and convincing documentary and testimonial evidence.
Empress estimates that it will offer testimony from not less than 100 witnesses
and hundreds of exhibits to establish the arbitrary, capricious and unfounded
nature of the Gaming Board's action and that Empress is suitable for license
renewal.

--------

     (1) HGHC will refer to both Horseshoe Gaming Holding Corp. or its
predecessor, Horseshoe Gaming LLC, unless specifically stated otherwise.


                                       2
<PAGE>   3

     As the following specific responses outline, Empress will present clear and
convincing documentary and testimonial evidence from public, law enforcement and
regulatory officials from Nevada, Louisiana, Mississippi and Indiana - all of
whose gaming commissions found both Mr. Binion and HGHC or its wholly owned
subsidiaries suitable for licensure - that Mr. Jack Binion's excellent
reputation for honesty, integrity and compliance with regulatory rules and
practices is well deserved and well founded in fact. They will attest to Mr.
Binion's vast experience and success in the gaming industry and the fact that he
has long been acknowledged by his peers as a model for and a leader of the
gaming business.

     Empress also will present evidence from Mr. Binion's present and former
employees, and independent contractors who have worked with him. They are in the
best position to give first hand testimony as to the institutional culture that
Jack Binion instills into his managers and employees with respect to regulatory
compliance, adherence to internal controls and fair dealing. This evidence will
address direct responses to the "facts" enumerated in the Notice of Denial,
including the conduct of business at the Empress Casino Joliet since December 1,
1999. Empress Casino Joliet is the entity that is the holder of the owner's
license in Illinois; yet, as will be established, most of the allegations in the
Notice of Denial do not involve operations or activities at Empress.

     Empress will present testimony from members of state and municipal
governments and charitable organizations and from citizens of the communities
which profit from the economic development, civic involvement, tax base
contributions and charitable contributions of Mr. Binion, his casinos and his
managers and employees.


                                       3
<PAGE>   4

     The Gaming Board, in its Notice of Denial at page 3, asserts that its
denial order is based on two "initial findings," "(1) Mr. Binion's unsuitability
as a Key Person of Empress; and (2) Empress's failure, since being acquired by
HGHC on December 1, 1999, to continue to meet all of the requirements of the Act
and the Rules." The Notice of Denial then lists nineteen alleged instances of
misconduct as support for its findings. At page four of the Notice of Denial,
footnote 1 states in part, in reference to the nineteen alleged instances of
misconduct, "Each category lists specific instances of conduct that, as noted
above, serve as the basis for the Board's initial determination under the
applicable provisions of the Act and the Rules." (Emphasis supplied.) As these
alleged instances form the entire basis for the "findings", Empress will address
only these allegations herein.

     As to the first "initial finding," Empress will present evidence with
respect to how this "determination" of unsuitability has been flawed by the lack
of due process afforded Mr. Binion and Empress, and on information and belief,
by the unusual processes and procedures engaged in by the Gaming Board in this
instance, including: the unprecedented reversal of the Gaming Board's November
30, 1999 approval of HGHC's acquisition of the Empress Casino Joliet in its July
19, 2000 Denial of Renewal; the retention of an independent contractor or
"outside" law firm to prepare a report on the investigation of Empress, HGHC and
Mr. Binion when Gaming Board staff had already conducted its investigation for
nearly a year and had informed the Administrator and the then Chief Counsel of
its findings; the failure of the Gaming Board to tender any or all of this
outside report (which was no longer confidential due to portions having been
provided to the press) to Empress; and the Gaming Board's actions in choosing to
ignore the recommendations of its own


                                       4
<PAGE>   5

investigative staff and to rely instead upon the report obtained by contract.
Upon information and belief, the outside contractor wrote a report, but never
conducted any investigation, never spoke to any individuals at HGHC or Empress
and never even interviewed the Gaming Board's lead investigator on the Empress
investigation.

     Empress also will present evidence, as will be set forth more fully below,
with respect to the failure of the Gaming Board to follow its own Rules and
procedures with respect to a finding of unsuitability as to an individual Key
Person, including the Gaming Board's failure to employ or offer or order the
possible economic disassociation option provided for by 86 Ill. Adm. Code
Section 3000.224(b). Indeed, that very section (Section 3000.224(b)) provides
that, ". . .a violation of an order of the Board for the economic disassociation
of a Key Person MAY RESULT IN A COMPLAINT UNDER SUBPART K. . . ." [emphasis
supplied]. The significance of this evidence and these Rules is that Mr. Binion,
as an individual Key Person, is being denied due process, as required by the
Act, because he is left without any right to appeal the "initial finding" of
unsuitability as a Key Person.

     If the Gaming Board had ordered an economic disassociation and Empress had
refused to comply, a hearing would proceed under Subpart K of the Rules,
"Seizure and Disciplinary Hearings." There are significant differences between a
proceeding under 86 Ill. Adm. Code Section 3000.1125(a) and a proceeding under
86 Ill. Adm. Code Section 3000. 236 and 3000.405. For example, the answer to the
complaint is due in twenty-one days, not five, and, in the conduct of the
hearing, Mr. Binion would be afforded a greater standard of due process. More
importantly, there would be a broad range of potential penalties less onerous
than being declared "Unsuitable." Even in the equivocal netherworld of an
"initial finding" of unsuitability jury-rigged to a Denial of Renewal of


                                       5
<PAGE>   6

another entity, the branding of Mr. Binion as "Unsuitable" is of great potential
negative significance to gaming regulators and others in the four other states
in which Mr. Binion and HGHC or its affiliates are licensed. It also is of
potential harm to thousands of employees, investors and private citizens who
benefit in one way or another from the continued operation of a respected gaming
company.

     As to the second "initial finding," Empress will offer clear and convincing
documentary and testimonial evidence that the specific "facts" or allegations as
to the conduct of Empress in regard to meeting the requirements of the "Act" and
the "Rules" since December 1, 1999, are either unfounded, not the result of
conduct by Empress after December 1, 1999 or of such a minor nature that, even
collectively, they are at most a basis for a potential disciplinary complaint
under the above referenced Subsection K and do not rise to the level of a basis,
or partial basis for a failure to grant renewal of this owner's license.

     Empress also will present clear and convincing evidence, both documentary
and testimonial, as to the unfounded nature of the "facts" or allegations
characterized by the Notice of Denial as "specific instances of misconduct" by
Mr. Binion and his affiliates. The specific responses to these allegations are
found below.

     Empress notes that the Gaming Board failed to specify in the Notice of
Denial which Illinois Gaming Board Rules or which portions of the Illinois
Riverboat Gambling Act the Empress allegedly violated. Empress has been required
to make assumptions as to the actual matters complained of in preparing this
response and request. Empress does not hereby waive its right to


                                       6
<PAGE>   7

a full hearing on every alleged violation the Gaming Board had in mind or may
later raise at hearing and now requests a hearing on any and all such
allegations.

     The Gaming Board also failed to allege the facts it will rely upon in
support of its nineteen specific allegations. Again, Empress does not hereby
waive its right to dispute each and every fact upon which the Gaming Board
relied, or will rely upon at hearing.

     I. NAME, CURRENT ADDRESS AND CURRENT TELEPHONE NUMBER
        Empress Casino Joliet Corporation
        2300 Empress Drive
        Joliet, Illinois 60436
        (815) 744-9400

     II. BACKGROUND

     HGHC entered the original Agreement and Plan of Merger ("Merger Agreement")
with Empress Entertainment, Inc. ("Empress Entertainment") on September 2, 1998.
Under the Merger Agreement, HGHC was obligated to pay over $600,000,000 to
Empress Entertainment for its assets and property. In order to gain the
necessary approval of the transaction from the Gaming Board, HGHC made its first
submission to the Gaming Board on September 30, 1998, representatives of HGHC
met with the Gaming Board staff on November 10, 1998, and Personal Disclosure
Forms (Form1s) for Jack Binion and several other key personnel were submitted on
November 20, 1998. During the intervening year between entering the Merger
Agreement and receiving the Gaming Board's approval, HGHC and Mr. Binion
submitted thousands of additional pages of personal, corporate and financial
information to the Gaming Board, met with the Board's staff on numerous
occasions (including an extensive interview of Mr. Binion) and submitted written
answers to specific questions raised by the Gaming Board and its staff.


                                       7
<PAGE>   8

     The length of this investigation necessitated that the Merger Agreement be
extended twice - on March 25, 1999 and July 23, 1999. As consideration for
Empress Entertainment's agreement on July 23 to extend the date to finalize the
merger, HGHC entered into a consulting agreement with Empress Entertainment. On
November 30, 1999, the Gaming Board approved the acquisition, which included the
consulting agreement. Ironically, the Gaming Board now cites that consulting
agreement as a basis for its denial notice.(2)

     The transaction closed on December 1, 1999, and HGHC promptly undertook a
program to honor its commitments to the Gaming Board regarding minority and
female businesses and the relocation of its corporate headquarters to Illinois.
On June 30, 2000, the Gaming Board stated that it would not renew the Empress
Joliet license. On July 19, 2000, the Gaming Board issued its formal Notice of
Denial.

     III. SPECIFIC RESPONSES - INITIAL FINDINGS

          A. MR. BINION IS SUITABLE AS A KEY PERSON OF EMPRESS

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

     (2) The Gaming Board was required to find HGHC and Jack Binion suitable for
licensure as a prerequisite to approving the merger. 86 Ill. Adm. Code Section
3000.235. As part of the suitability determination, Section 3000.235 mandated
that the Board evaluates HGHC by the same criteria used to determine the
suitability of an applicant for an owner's license. 86 Ill. Adm. Code Section
3000.235(a)(2). The Gaming Board was to consider, among other things, "the
character, reputation, experience and financial integrity of [HGHC] and of any
other or separate person that . . . controls directly, or indirectly, [HGHC]."
230 ILCS 10/7(c)(1)(A). Mr. Binion was a person in control of HGHC; his personal
disclosure form stated that he would own approximately 38% of the outstanding
shares, serve as its Chairman and Chief Executive Officer and possessed the
ability to vote the majority of its shares. Mr. Binion's PDF was previously
submitted to the Gaming Board and is not attached to this Request for Hearing
due to the confidential nature of some of the material contained therein.
Empress does not waive the right to exchange this document during discovery and
may rely on this document at the hearing. Thus, under the applicable
regulations, the Gaming Board must have considered the character, reputation,
experience and financial integrity of HGHC and Mr. Binion before it approved the
merger. And, in order to approve the merger, the Board must have found that HGHC
had demonstrated by clear and convincing evidence that HGHC and Mr. Binion were
suitable to be licensed. 86 Ill. Adm. Code Section 3000.230(c)(2)(A)-(E).

                                       8


<PAGE>   9

     Empress will present clear and convincing evidence that establishes Mr.
Binion's well deserved reputation for good business judgment and integrity. The
evidence also will demonstrate that Mr. Binion has assembled a management team
comprised of experienced, diverse, hard-working, and honest people whose skill
has made Horseshoe a tremendously successful enterprise.

     Empress will present abundant evidence, which the Gaming Board chose to
ignore, that the consensus of the gaming and investment communities is that Mr.
Binion has had a distinguished career in gaming. For example, in the September
1999 issue of Casino Executive magazine Horseshoe was named runner-up for the
Gaming Company of the Century award. (Exhibit 1) Further, numerous witnesses
will attest that Mr. Binion and HGHC's management has drawn the overwhelming
endorsement of investment bankers, analysts and investors. As illustrations of
this testimony, consider the following excerpts from analysts' reports on HGHC:

     o    On November 3, 1999, Banc of America Securities rated Horseshoe a
          "Buy," stating that it is the "only diversified gaming company with
          high-quality assets and a deleveraging story."

     o    On October 4, 1999, SG Cowen Securities Corporation stated that
          Horseshoe "will emerge as one of the strongest [gaming companies] in
          the industry," adding that "Horseshoe is the premier emerging market
          gaming company" and "possesses strong credit measures." Under "Outlook
          and Initial Credit Considerations," SG opined that "Horseshoe . . . .
          continues the Horseshoe tradition of operating leading facilities."

     o    On January 27, 1999, Salomon Smith Barney stated that "Horseshoe
          offer[s] the best relative value in today's market;" "the combined
          Horseshoe Gaming and Empress Entertainment is a solid credit;" and,
          perhaps most importantly, "We point out that Jack Binion and his
          general managers have remained with the company, and that Empress also
          has some seasoned executives to help guide the company."

(Exhibit 2)

                                       9


<PAGE>   10

     Further evidence will be presented at the hearing to demonstrate that the
judgment of the gaming and investment communities has been mirrored by the
judgment of the Indiana, Louisiana, and Mississippi gaming commissions, all of
whom have investigated Mr. Binion, reviewed largely the same information
presented to the Gaming Board, and found Mr. Binion to be suitable under
standards comparable to those established by the Illinois Riverboat Gambling
Act.

     Additional testimony will show that these sentiments are echoed by
regulatory, law enforcement, business and community leaders in Nevada, Louisiana
and Mississippi - the states in which Jack Binion was licensed prior to
acquiring the Empress riverboats in Indiana and Illinois. Submitted to the
Gaming Board previously (and with this request as Exhibit 3) were numerous
letters of support that reflect the expected testimony of these witnesses,
including letters from the former Executive Director of the Mississippi Gaming
Commission; the Clark County, Nevada District Attorney; the Sheriff of Clark
County, Nevada; the Mayor of Bossier City, Louisiana; the Sheriff of Bossier
Parish, Louisiana; the Mayor of Shreveport, Louisiana; and the Tunica County,
Mississippi, Administrator. These letters are from people who have years of
experience with Mr. Binion and Horseshoe, and they portray Mr. Binion as an
outstanding businessman, with impeccable integrity and a long history of
regulatory compliance, a committed citizen, and a generous human being:


                                       10
<PAGE>   11

     o    "I have known Jack Binion for 25 years. I have always known Jack
          Binion to be a person of honesty and integrity, both personally and
          professionally . . . . In addition, Mr. Binion has always been a good
          corporate citizen . . . . I know of no reason whatsoever to deny
          gaming privileges to Jack Binion. To the contrary, I highly recommend
          his licensure." (District Attorney, Clark County, Nevada.)

     o    "I am honored to provide this letter of recommendation on behalf of
          Mr. Jack Binion . . . . Jack Binion's personal character and integrity
          have carried over into his corporate commitments . . . . His integrity
          is unquestioned, his candidness admired, and he has displayed the
          highest level of professionalism." (Sheriff, Clark County, Nevada.)

     o    "From the perspective of the Mississippi Gaming Commission, RPG
          [Horseshoe Casino & Hotel] is fiscally sound and is a good corporate
          citizen of the State of Mississippi . . . . We are pleased to include
          RPG among our gaming licensees, and value its contribution to the
          Mississippi Gaming Industry." (Mississippi Gaming Commission.)

     o    "I was the Executive Director of the Mississippi Gaming Commission
          from October 1993 to June 1998. Since 1994 I had the distinct pleasure
          to work with Mr. Binion and his superb company on a frequent basis. I
          consider him to be the premier gaming operator in our state and a
          gentleman of impeccable character and honesty . . . . Without
          reservation, I recommend Mr. Binion for a gaming license in the state
          of Illinois." (Paul A. Harvey, Major General USAF (Ret.)

     o    "Horseshoe Casino-Hotel has made a very positive impact on the
          communities of Shreveport and Bossier City, Louisiana . . . . The
          Horseshoe has actively supported civic endeavors . . . . The Horseshoe
          organization and its employees have given generously of their time and
          resources . . . . Shreveport and Bossier City are fortunate to have
          the Horseshoe Casino-Hotel and its staff in our midst." (Mayor,
          Shreveport, Louisiana.)

     o    Horseshoe has been a great corporate citizen . . . . The Horseshoe has
          actively supported civic endeavors . . . ." (Mayor, Bossier City,
          Louisiana.)

     o    "Horseshoe Hotel & Casino in Bossier City LA has been a good neighbor
          to Bossier Parish. The management has done much to help with crime
          prevention in our area. Thank you for the opportunity to share with
          you are appreciation of Horseshoe Hotel & Casino for the contributions
          to help reduce crime in our area." (Sheriff, Bossier Parish,
          Louisiana.)


                                       11
<PAGE>   12

     o    "It is my pleasure to recommend and commend Jack Binion and his
          Management Team here at Tunica for operating a First Class Facility."
          (Administrator, Tunica County, Mississippi.)

     HGHC and Mr. Binion set an enviable standard for the gaming industry. In
Louisiana, HGHC has the highest revenues in the state. Their revenues are nearly
50% greater than its nearest competitors. In Mississippi, with only 10% of the
state's gaming positions they have captured a 23% product share. HGHC and Mr.
Binion have consistently outperformed the competition in every venue they enter.
They have and can continue to produce the best results for Illinois. During the
first five months of this year, average monthly casino revenues at Empress
Joliet have increased by $2,138,000 or 12% over the last five months of
operation by the prior ownership.

     In short, the evidence will show, clearly and convincingly, that HGHC and
Mr. Binion have an excellent reputation for regulatory compliance, management
expertise and civic responsibility that fully supports licensure renewal in
Illinois.

     As to the "facts" set forth as "specific instances of improper conduct" and
as the bases for denial of renewal, we set forth below Empress' specific
responses and the evidence Empress will present to demonstrate that none of
these "facts" merit Denial of the Empress Casino Joliet license.

          B.   THE GAMING BOARD STATES THAT ITS JUNE 30, 2000 DETERMINATION OF
               "... EMPRESS' FAILURE, SINCE BEING ACQUIRED BY HGHC ON DECEMBER
               1, 1999, TO CONTINUE TO MEET ALL OF THE REQUIREMENTS OF THE ACT
               AND THE RULES," IS A BASIS FOR THE DENIAL.

     Again, the Gaming Board has failed to cite which requirements of the Act
and which Rules have been disobeyed by Empress. Indeed, none of the eleven
specific instances of misconduct characterized as "Financial Integrity and
Business Practices" involve any conduct by Empress


                                       12
<PAGE>   13

Casino Joliet or any conduct by Mr. Binion or HGHC involving, implicating or in
any way related to Empress Casino Joliet.

     As to the eight specific instances of misconduct characterized as
"Regulatory Compliance Issues," five (numbers 4, 5, 6, 7 and 8), again have no
relationship whatsoever to the Empress Casino Joliet, and additionally, did not
occur or result in any regulatory action during the period between December 1,
1999 and June 30, 2000. Therefore, the three "Regulatory Compliance Issues"
numbered one through three must contain the exclusive bases for the Board's
initial determination as to Empress Casino Joliet's failure to continue to meet
all of the requirements of the Act and the Rules after December 1, 1999.

     Our specific responses to these three allegations are set forth below.
However, it is of no small importance that none of these three allegations
resulted in the issuance of a disciplinary complaint by the Illinois Gaming
Board. Also, one of these alleged acts took place before November 30, 1999 and
the Gaming Board approved the transaction with full knowledge of the alleged
misconduct.

     The "basis" for the initial finding that Empress failed to comply with the
Act and the Rules after December 1, 1999 is, in truth, confined to allegations
A-2 and A-3, the merits of which are discussed below. But regardless of the
ultimate findings of fact as to these charges, such "violations" have never,
alone or collectively with other violations, risen to the level of a basis for
denial of licensure or re-licensure.

     IV. SPECIFIC RESPONSES - SPECIFIC INSTANCES OF IMPROPER CONDUCT

         A. REGULATORY COMPLIANCE ISSUES


                                       13
<PAGE>   14

               1.   HGHC'S EXECUTION OF A CONSULTING AGREEMENT DID NOT VIOLATE
                    GAMING BOARD RULES.

     HGHC's (which is not the Illinois owner licensee) execution of a $20
million consulting agreement did not violate Gaming Board Rule 3000.170, which
states that, "No holder of an Owner's License shall enter into a contract
relating to its licensed activities for consideration in excess of fair market
value."

     Pursuant to the Consulting Agreement (Exhibit 4), the former Empress
shareholders were obligated to advise and provide HGHC with expertise on a
variety of issues involving and associated with dockside gaming. The former
Empress shareholders are uniquely well qualified to provide this advice and
counsel. They possess a unique knowledge of the gaming industry in Illinois and
have specific knowledge of the gaming market in the Chicagoland area. Empress
was the first riverboat to begin operations in the Chicago market and the
experiences of the former shareholders is invaluable. Moreover, because of their
intimate knowledge of the construction of the current Empress facility, as well
as their background in the construction industry, the former shareholders'
expertise on these types of issues is unique. As will be established, by
testimonial and documentary evidence, because the overall purpose of the
consulting agreement was for assistance with dockside gaming, its continued
success and the building of additional business as a result of this benefit, the
payments made pursuant to this consulting agreement are contingent and will be
suspended during any period that dockside gaming is suspended or repealed.

     Empress will establish that the former shareholders have met with Empress
management since December 1, 1999 to discuss possible construction projects in
light of dockside gaming.


                                       14
<PAGE>   15

     When asked by the Gaming Board why the former Empress Joliet shareholders
do not offer these services to other riverboats, Pete Ferro, former CEO of
Empress Casino Joliet, responded:

          "Our construction expertise is limited to this facility because we
          built it. We do not know what Hollywood facility is about. Our
          expertise lies locally at this site."

     When asked if the former shareholders' expertise could be utilized
elsewhere, Mr. Ferro stated:

     "Not as specifically as here. We know where pipes are, why we built a ramp,
what problems are encountered. I can tell you where sold [sic] rock is. I can
tell you where along Route 6 the ground water is. I can tell you where we put
extra pipes under road and where there are too many boulders to dig. That is
from me personally. They go to construction two or three bits of information
like that can be worth millions on construction costs. That is why we can only
offer it there. I do not know the soil conditions in Aurora."

(Exhibit 5)

     Similarly, when Mr. Binion was asked about the purpose of the Consulting
Agreement during his interview with the Gaming Board, he responded, in pertinent
part:

          "About keeping . . . dock side in . . . and to help us in every way
          that they can to . . . make sure that this stays in place."

          ". . . they know that not only on the State basis, but on the local
          basis."

(Exhibit 6)

     Consulting agreements of this nature are not new to the Gaming Board.
Empress will present evidence that in a very similar case the Gaming Board,
after having a panel of experts review the matter, approved the panel's decision
finding that the consulting agreement (where, on information and belief, there
was no documentation of work product) was at fair market value. The consulting

                                       15


<PAGE>   16

agreement at issue here is no different. The Gaming Board's own precedent
dictates not only that this type of agreement be approved (to the extent
approval is even necessary), but that it is certainly not grounds for the
non-renewal of the Empress owner's license.

     In short, the consulting agreement was the product of an arms-length
negotiation, which reflected fair market value. It did not affect the purchase
price of the transaction.

     At the request of the Indiana Gaming Commission, Dr. Charlene Sullivan from
the Krannert School of Business at Purdue University completed a financial
analysis of the merger, financing transaction and the consulting agreement.
Although Dr. Sullivan's report is confidential, it is assumed she did not view
the consulting agreement unfavorably since the acquisition transaction was
approved by the Indiana Gaming Commission on August 20, 1999. (Exhibit 7)

     Additionally, the transfer of ownership and the attendant financing was
approved by the Gaming Board on November 30, 1999, and thus was deemed
acceptable. The issue of the financing and the existence of this consulting
agreement were properly before the Gaming Board at that time. The Gaming Board
took action on them at that time by its approval of the acquisition transaction.
These issues are not matters that should be considered by the Gaming Board when
now making its determination on an application for renewal of an owner's
license.

               2.   EMPRESS' POST-ACQUISITION STRUCTURE WAS KNOWN TO THE GAMING
                    BOARD AND THE REQUISITE INTERNAL CONTROLS HAD BEEN SUBMITTED
                    TO THE GAMING BOARD FOR APPROVAL.

     Following the Gaming Board's approval of HGHC's acquisition of Empress,
Empress implemented the organizational chart and management reporting structure
that had been orally submitted to the Gaming Board and which was cited at the
Gaming Board's Regular Public Meeting


                                       16
<PAGE>   17

on October 26, 1999. After approval of the transaction, Empress continued to
make oral and written submissions of its preferred management structure to the
Gaming Board. (Exhibit) In general, these changes involved stronger oversight of
Empress gaming operations.

     In accordance with Gaming Board Rules, Empress made a written submission to
the Board regarding proposed changes to its Internal Control Systems ("ICS") to
reflect the post-acquisition reporting structure which it had already put in
place.

     This alleged highly technical violation of Empress' ICS does not rise to a
level dictating non-renewal of Empress' owner's license. In making such a
finding the Gaming Board acted arbitrarily and capriciously, particularly in
light of the Gaming Board's own precedents regarding similar, minor violations
of an owner licensee's ICS. Empress will present evidence showing that for
similar conduct other licensees received disciplinary complaints with minimal
fines.


                                       17
<PAGE>   18

               3.   HGHC'S AGREEMENT FOR CONSULTING SERVICES DID NOT VIOLATE
                    GAMING BOARD RULES AND SERVICES WERE PROVIDED AT FAIR MARKET
                    VALUE.

     HGHC entered into an agreement with a certain individual regarding
consulting on construction and financial matters. Pursuant to Gaming Board Rule
3000.141, a licensee is required to promptly identify to the Gaming Board any
individual or entity acting on behalf of the licensee, for compensation, with
regard to Gaming Board action.

     In this instant situation, the consultant was not appearing before the
Gaming Board. Thus, pursuant to the Gaming Board's own rules, disclosure was not
mandated.

     Furthermore, and as previously discussed in A-1 above, Empress will provide
evidence establishing that this consulting agreement was commercially reasonable
as required by Gaming Board Rule 3000.170.

               4.   WHILE GAMING BOARD LICENSEES HAVE A DUTY TO PROMPTLY
                    DISCLOSE MATERIAL CHANGES IN INFORMATION, HGHC'S INADVERTENT
                    OMISSION OF NON-MATERIAL INFORMATION AND SUBSEQUENT
                    DISCLOSURE THEREOF, DID NOT VIOLATE GAMING BOARD RULES.

     The Gaming Board has alleged that HGHC failed to timely disclose certain of
its subsidiaries to the Board. Pursuant to Gaming Board rule 3000.140, Board
licensees shall have a continuing duty to disclose promptly any material changes
in information provided to the Board. HGHC is not a Board licensee, rather it is
a Key Person of Empress. On June 6, 2000, HGHC did advise the Gaming Board that
it (HGHC) unintentionally and inadvertently omitted Horseshoe License Company
("License Company") and the South China Development Partnership ("South China")
from ownership charts HGHC had previously submitted to the Gaming Board.


                                       18
<PAGE>   19

     HGHC owns 49% of License Company and has an indirect interest of 31% in
South China (HGHC owns this interest through Horseshoe Ventures, LLC). The
omission of License Company and South China was inadvertent. Once HGHC realized
that it had submitted an organizational chart that did not reflect these two
corporations, itself reported the existence of these corporations to the Gaming
Board. (Exhibit 9) It was HGHC that revealed its omission to the Gaming Board.
These corporations do not hold any gaming licenses, and do not currently conduct
any gaming operations.

     There is no reasonable basis on which either company could be viewed as
material to HGHC. The licensing company is a completely passive entity, which
holds the rights to the Horseshoe name and makes its use available on a royalty
free basis. South China is an entity in which HGHC has a passive ownership
interest and in which HGHC has made a minimal investment.

     This inadvertent non-material omission, which was promptly corrected by
HGHC is not a violation of Board Rule 3000.140. Assuming it is viewed as a
violation, it again does not rise to a level to provide a basis for non-renewal
of Empress' owner's license, based on prior Gaming Board actions.

               5.   REPURCHASE OF INSIGNIFICANT AMOUNTS OF STOCK BY HGHC AND
                    HGHC'S NOTIFICATION TO THE GAMING BOARD OF THIS TRANSACTION
                    DID VIOLATE GAMING BOARD RULES.

     Empress believes that this allegation refers to HGHC's (a Key Person of
Empress) repurchase of stock held by two small shareholders. While the violation
of the particular Board rule is not specified, Empress is aware of its duty to
promptly disclose any material changes in information provided to the Board in
accordance with Rule 3000.140. This stock repurchase by HGHC was not material in
regards to Empress ownership or in the ownership of HGHC (the total


                                       19
<PAGE>   20

repurchase from these two individuals was approximately 1.033182% of the
outstanding shares). (Exhibit 9)

     Nonetheless, HGHC complied with Rule 3000.140. HGHC repurchased the stock
at issue on April 1, 2000. Written notification of this change was provided to
the Board on June 6, 2000. (Exhibit 9) This reporting certainly meets the
reporting requirement of Rule 3000.140.

               6.   ROUTINE DISCIPLINARY COMPLAINTS AGAINST AFFILIATED COMPANIES
                    OF AN ILLINOIS OWNER LICENSEE DO NOT PROVIDE A BASIS FOR THE
                    NON-RENEWAL OF AN OWNER'S LICENSE BY THE GAMING BOARD.

     The Gaming Board, in denying the non-renewal of Empress' owner's license,
cites as a basis Louisiana Entertainment, LP's ("Louisiana Horseshoe")
violations of certain Louisiana gaming regulations. Louisiana Horseshoe is a
wholly owned subsidiary of HGHC, which is a Key Person of Empress.

     While Empress does not dispute that a wholly owned subsidiary of one of its
Key Persons was disciplined and fined for violations of Louisiana gaming
regulations, this information should not be used as a basis for denial of
Empress' Illinois renewal application. Even if a review of Louisiana Horseshoe
is deemed relevant, by the Gaming Board's own precedents, such discipline and
fines would not result in the non-renewal of an owner's license. Documentary and
testimonial evidence will establish that since the commencement of gaming in
Louisiana through January 1, 2000, Louisiana has preliminarily assessed a total
of approximately 412 fines against all of its riverboats. Often, these initial
fines have been reduced for purposes of settlement or other proceedings. If all
such fines were paid, the total dollar value would be $6,537,676.82. Through


                                       20
<PAGE>   21

January 1, 2000, the Louisiana riverboats have paid a total of 254 fines
resulting in a total dollar value of $3,734,234.88.

     Through January 1, 2000, Louisiana Horseshoe has paid a total of 15 fines.
Three complaints against Louisiana Horseshoe were dismissed or withdrawn, three
were warnings, and one complaint is currently pending. On information and
belief, the fewest fines paid by any riverboat in Louisiana is eight. Argosy
Casino of Baton Rouge (ACBR), having paid 33 fines for a total of $464,600, has
paid the most fines of any riverboat in Louisiana. ACBR is a subsidiary of
Argosy, the publicly traded parent company of the Alton Belle Casino, an
Illinois owner licensee, whose license has consistently been renewed by the
Gaming Board. On information and belief, Players, which through subsidiaries,
operates two casinos in Lake Charles, Louisiana, paid 31 fines with a total
dollar value of $429,500. Moreover, Players' casinos are a subsidiary of Players
International Inc., which was fined $10 million for its involvement in improper
payments to Governor Edwin Edwards to obtain a casino license. Players
International was a Key Person of Southern Illinois Riverboat Casino Cruises
("SIRCC"). SIRCC had its Illinois owner's license renewed even after these
events in Louisiana.

     Disciplinary actions both in Illinois and in other jurisdictions while
serious have not resulted in the non-renewal of owners' licenses. The Gaming
Board has acted arbitrarily and capriciously in not renewing Empress' owner's
license in Illinois based on preliminary fines.


                                       21
<PAGE>   22

               7.   DISCIPLINARY COMPLAINTS, OVER SEVEN YEARS AGO, RELATING TO
                    AN ENTITY IN NO WAY CURRENTLY AFFILIATED WITH EMPRESS, DOES
                    NOT PROVIDE A BASIS FOR NON-RENEWAL OF EMPRESS' OWNER'S
                    LICENSE.

     The Gaming Board alleges that between 1989 and 1993 Nevada Horseshoe had a
pattern of conduct, including recurring CTR (Nevada Regulation 6A and associated
regulations) violations, resulting in disciplinary investigations, complaints
and sanctions, including, but not limited to, a $1 million fine. (Exhibit 10)
Empress will provide documentary and testimonial evidence from witnesses with
first-hand knowledge of Nevada Horseshoe's Regulation 6A compliance efforts.
This evidence will also establish that when Nevada Horseshoe's serious
compliance problems were brought to Mr. Binion's attention, he took prompt and
substantial steps to remedy the situation. He hired Arthur Andersen to evaluate
the Nevada Horseshoe's practices and procedures and implemented Andersen's
recommendations, including hiring a recognized expert in Regulation 6A
compliance to serve as Nevada Horseshoe's controller and to oversee, among other
things, Nevada Horseshoe's Regulation 6A compliance efforts. Under the
supervision of the new controller, the Nevada Horseshoe was violation-free. For
a more detailed discussion of the Nevada Horseshoe's compliance efforts,
attached and incorporated by reference are copies of the following materials
previously submitted to the Board: Exhibit 11 at 5-8 (letter submitted to Sergio
Acosta on November 10, 1999); Exhibit 12 at 6-9; Exhibit 13 at 3-6 (letter
submitted to Sergio Acosta on June 20, 2000).

     Additionally, the CTR violations did not in any way involve Empress.
Empress' record of compliance with CTR regulations has been excellent and
Empress has not been criticized or disciplined by the Gaming Board for any CTR
violations. The Board should not utilize a disciplinary complaint issued over
seven years ago against a company for whom Mr. Binion was also


                                       22
<PAGE>   23

a key person does not provide a basis to deny a renewal application to a company
he is currently affiliated with as a key person or a finding that Mr. Binion is
unsuitable.

               8.   ACTIONS OVER FIVE YEARS AGO IN ANOTHER JURISDICTION BY AN
                    ENTITY NOT AFFILIATED WITH EMPRESS, DO NOT PROVIDE A BASIS
                    FOR THE NON-RENEWAL OF EMPRESS'S LICENSE.

     The Gaming Board alleges that a violation by Nevada Horseshoe and Mr.
Binion in 1995, of a duly authorized Nevada gaming agent's orders with respect
to the release of money belonging to a Nevada Horseshoe customer provides a
basis for non-renewal of Empress' license. (Exhibit 14 including Complaint,
Stipulation and Order)

     This incident, like several others cited in the Gaming Board's Notice, has
nothing whatsoever to do with the Empress. As for Mr. Binion's role in the
incident, Empress will demonstrate that Mr. Binion's personal conduct in
connection with the incident was reasonable under the circumstances, as
evidenced by the fact that he was not sanctioned by the Nevada Gaming Control
Board for his actions. For a more detailed discussion of this incident, we
enclose and incorporate by reference Exhibit 11 at 10; Exhibit 12 at 12-14.

          B. FINANCIAL INTEGRITY AND BUSINESS PRACTICES.

             1.   LOUISIANA HORSESHOE'S USE OF MINORITY BROKERS WAS AN APPROVED
                  PRACTICE IN THAT JURISDICTION AND DOES NOT PROVIDE THE GAMING
                  BOARD WITH A BASIS FOR THE NON-RENEWAL OF THE EMPRESS LICENSE.

     As another basis for the non-renewal of Empress' owner's license, the
Gaming Board alleges that Louisiana Horseshoe (again, a subsidiary company of
HGHC, a Key Person of Empress) improperly used minority brokers, some of whom
were either limited partners in Louisiana


                                       23
<PAGE>   24

Horseshoe or were relatives of limited partners of Louisiana Horseshoe, to meet
its minority participation goals in Louisiana.

     Louisiana Horseshoe did utilize minority vendor brokerage arrangements in
Louisiana to help meet its voluntary minority and women business enterprise
("MBE/WBE") goals in this state. Neither HGHC nor Louisiana Horseshoe has ever
denied its utilization of brokerage MBE/WBE nor made any attempt to conceal the
utilization of these brokerage firms. (Exhibits 6, 15.) Utilizing brokerage
MBE/WBE firms was a common and accepted practice in Louisiana. There is no
evidence that the State of Louisiana views the use of brokerage firms as
undermining a licensee's suitability. In fact, all of the brokerage MBE/WBEs
utilized by Louisiana Horseshoe were, if required, licensed by the State of
Louisiana. The nature of the brokerage MBE/WBE operations was known to state
regulators. (Exhibits 6, 15)

     It is true that many of the MBE/WBE brokerage firms utilized by Louisiana
Horseshoe were owned by Louisiana Horseshoe's limited partners or their
relatives. At the outset of Louisiana Horseshoe, Mr. Binion made a commitment to
his limited partners that they could participate in supplying goods and services
to Louisiana Horseshoe so long as they:

     1.   Could provide quality goods and services

     2.   The goods and services were competitively priced;

     3.   They obtained the appropriate non-gaming supplier permit from the
          State of Louisiana.

All of the brokerage firms owned by limited partners or their relatives met
these qualifications. There is nothing illegal about allowing limited partners
or their relatives to supply goods or services to riverboat licensees.


                                       24
<PAGE>   25

     The contracts with the limited partners or their relatives were properly
reported to the Louisiana State Police. The fact that the contracts were with
limited partners or their relatives did not violate any provision of Louisiana
Law and were not concealed in any way. The use of brokerage MBE/WBE firms and
the fact that the firms were limited partners or their relatives does not and
cannot rise to the level that it can be used to support the Gaming Board's
denial or order.

               2.   NO "PATTERN" EXISTED WITH RESPECT TO THE MISREPRESENTATION
                    AND OVER-REPORTING TO THE LOUISIANA GAMING COMMISSION OF
                    MINORITY PARTICIPATION IN THE LOUISIANA HORSESHOE.

     From 1994 through 1999, the MBE/WBE expenditures reported by Louisiana
Horseshoe to Louisiana were inaccurate in that Louisiana Horseshoe overstated
its purchases from MBE's and understated its purchases from WBE's. The
inaccuracies were not discovered until 1999. Once HGHC became aware of the
situation, HGHC directed outside counsel to determine why the MBE/WBE
expenditures had been misreported.

     In short, the investigation found no evidence that the misreporting was
intentional and found no evidence that Mr. Binion had any role in this matter.
The results of this investigation were summarized in a letter sent by Floyd
Hannon, Senior Vice President of HGHC to Lieutenant Dane Morgan, Louisiana State
Police. (Exhibit 16) Although the inaccurate reporting did continue for a period
of time, once it was discovered, the reporting method was corrected. The fact
that Louisiana Horseshoe continued to report MBE/WBE expenditures in the same
manner in the mistaken belief it was the proper reporting method cannot and
should not be deemed a pattern of misrepresentation that can serve as a basis
for denial of Empress' license renewal.


                                       25
<PAGE>   26

               3.   LOUISIANA HORSESHOE PROVIDED CERTAIN INDIVIDUALS WITH
                    OWNERSHIP IN THE ENTITY IN RETURN FOR PERSONAL CONSULTING
                    SERVICES THOSE INDIVIDUALS PROVIDED.

     Louisiana Horseshoe (a subsidiary company of a Key Person of Empress)
received services from its local owners, which were of substantial value.
Louisiana Horseshoe's local partners were capable and talented individuals, with
substantial experience in dealing with local and state regulatory agencies,
governmental bodies, and community organizations. One of Louisiana Horseshoe's
local owners had extensive familiarity with cruise ships and the cruise ship
industry. The contributions of Louisiana Horseshoe's local partners contributed
to the overall success of the project.

     Evidence will establish that Louisiana Horseshoe's agreements with its
local limited partners were not unusual or improper, were commercially
reasonable, do not reflect adversely on Mr. Binion's suitability, and the
extension of ownership interests to local business people in exchange for their
"sweat equity" was an accepted practice in Louisiana. Several boats that were
licensed in Louisiana had local owners, many of whom contributed little or no
capital. Louisiana Horseshoe's local owners collectively held less than twelve
percent of that entity. Other boats in Louisiana had local owners who held
substantial percentages, one as high as fifty percent. (Exhibit 17)

                                       26


<PAGE>   27

               4.   LOUISIANA HORSESHOE'S CONTRACT WITH ATM CONSULTANTS WAS
                    LEGAL AND PROPER.

     Louisiana Horseshoe (a subsidiary of a Key Person of Empress) denies that
it used the ATM services agreement as a means to circumvent loan covenants, and
the Gaming Board's Notice of Denial fails to identify the loan covenants that
were allegedly violated. Documentary and testimonial evidence will establish
that Louisiana Horseshoe's contract with ATM Consultants was legal and proper.
The ATM contract provided a limited amount of cash flow to certain limited
partners and provided Louisiana Horseshoe with the ATM services it required.
This was not an illegal or unreasonable arrangement, and it does not reflect
adversely on Mr. Binion. For a more detailed discussion of Louisiana Horseshoe's
relationship with ATM Consultants, we attach and incorporate by reference
Exhibit 12 at 41.

               5.   LOANS BY LOUISIANA HORSESHOE TO CERTAIN OF ITS LIMITED
                    PARTNERS DID NOT CIRCUMVENT LENDER COVENANTS.

     At various times between 1994 and 1999, Louisiana Horseshoe extended loans
to certain of its limited partners and their relatives ("Borrowers"), but the
Gaming Board's Notice of Denial fails to identify the loan covenants that it
believes Louisiana Horseshoe attempted to circumvent. Empress assumes that the
Gaming Board is referring to loans to Louisiana Horseshoe. During the vast bulk
of the period of time that Louisiana Horseshoe made these loans, it was a debtor
under two trust indentures and two credit facilities. All four debt arrangements
specifically allowed Louisiana Horseshoe to use cash for investments, loans and
various payments, which in the aggregate, would not exceed a sum certain. At no
time did the total of the allowed investments, loans and payments, including
loans to the Borrowers, exceed the amount allowed under the loan covenants. None
of the


                                       27
<PAGE>   28

loans violated any loan covenant in these debt arrangements of Louisiana
Horseshoe. In addition, Horseshoe Gaming, LLC, the ultimate parent of Louisiana
Horseshoe, informed the lenders under the various loans of these matters through
required periodic reports of the amounts of all outstanding investments,
payments and loans. Horseshoe acknowledges that in late 1994 through much of
1995 it made two loans to Borrowers in the aggregate amount of $150,000 that,
for a period of less than one year, may have constituted a technical violation
of a covenant in one of Horseshoe's earliest loan agreements. Horseshoe
refinanced and repaid, in full, the loan made under that agreement.

     Thus, the documentary and testimonial evidence at hearing will demonstrate
that the loans to the Borrowers were not designed to circumvent loan covenants
prohibiting distributions. Rather, the sole purpose of the loans was to make
advances against future anticipated distributions flowing from the ownership
interest of these individuals, which was not a violation of law or any
contractual obligation of Louisiana Horseshoe and is a normal and customary
business practice.

               6.   LOUISIANA HORSESHOE'S CHOICE OF LEGAL COUNSEL, PAYMENTS MADE
                    TO COUNSEL, INCLUDING PROVIDING AN OWNERSHIP OPPORTUNITY IN
                    LOUISIANA HORSESHOE WERE PROPER.

     Louisiana Horseshoe's awarding of an ownership interest and its subsequent
buyout agreement with the Louisiana lawyer are addressed at B.3 and B.7 herein,
respectively. Empress will need greater specificity in order to respond to the
Louisiana lawyer's alleged conflicts of interest or the alleged payments to the
lawyer's relatives. Louisiana Horseshoe's legal services agreements with the
lawyer were legal, appropriate, and fully documented. Louisiana Horseshoe
received substantial services from the lawyer, some of which services are
documented in the lawyers bills, copies of which are attached as Exhibit 18.
Other services were done on a retainer basis. For more


                                       28
<PAGE>   29

detail regarding Louisiana Horseshoe's relationship with this lawyer, attached
and incorporated by reference are Exhibit 19 at 6; Exhibit 12; and Exhibit 13 at
1-2.

               7.   LOUISIANA HORSESHOE REPURCHASED CERTAIN OWNERS' INTERESTS AT
                    COMMERCIALLY REASONABLE PRICES AND CONSISTENTLY EXPLAINED
                    THESE TRANSACTIONS TO VARIOUS STATE REGULATORS.

     The Gaming Board alleges that certain limited partners in Louisiana
Horseshoe had their interests purchased for "disproportionate amounts" and that
inconsistent explanations for the purchase of these interests were provided to
regulators in Louisiana, Indiana and Illinois. Certain individuals sold their
interests in Louisiana Horseshoe to HGHC's predecessor, Horseshoe Gaming, LLC
pursuant to agreements entered into on April 21, 1999. (Exhibits 20 and 21 for
Purchase Agreements) Evidence will establish that the agreements with these
individuals were negotiated with each parties' counsel vigorously representing
their interests. Although no standard has been identified by the Gaming Board
regarding why any purchase price was "disproportionate," it will be established
that the purchase prices were commercially reasonable.

     In addition, Empress will present documentary and testimonial evidence
refuting the Gaming Board's allegation that inconsistent explanations were
provided to various state regulators regarding the aforementioned purchases of
certain limited partnership interests. (Exhibits 6, 15 and 22)


                                       29
<PAGE>   30

               8.   POSTING OF A BOND BY MR. BINION IN 1993 FOR A PERSON WHO WAS
                    A HIGH STAKES PLAYER AT HORSESHOE NEVADA, AND WHO WAS
                    SUBSEQUENTLY FOUND NOT GUILTY ON THE CHARGES LODGED AGAINST
                    HIM, IS NOT ILLEGAL AND DOES NOT PROVIDE THE GAMING BOARD
                    WITH A BASIS TO FIND JACK BINION UNSUITABLE.

     Posting bond for an individual is not illegal. The individual in question
was a Mexican citizen arrested on a Mexican warrant arising from alleged
violations of the Mexican tax code. The arrested individual was a well-regarded
businessman who had made his fortune in the textile industry. He was also, as
the Notice of Denial asserts, a well-known, high-stakes gambler in Las Vegas.
Though the arrested individual had ample funds in Mexico to use for bond, he was
unable to access those funds. Mr. Binion was asked by friends of the arrested
individual to assist him, and Mr. Binion did. The documentary and testimonial
evidence at hearing will establish that Mr. Binion used his own funds to post
the arrested individual's bond and never jeopardized the Nevada Horseshoe. Mr.
Binion made a business decision that he hoped would cause this individual to
play more at the Nevada Horseshoe than he had in the past. As a result of Mr.
Binion's actions, the individual and his friends did, in fact, increase their
play at the Nevada Horseshoe, and eventually he lost in excess of $13 million
there. Mr. Binion was repaid the amount he posted for the individual's bond. For
a more detailed discussion of this incident and documentation relating to it, we
attach and incorporate by reference Exhibit 11 at 12-13; Exhibit 12 at 35-36.


                                       30
<PAGE>   31

               9.   THE ACCEPTANCE BY MR. BINION OF A PERSONAL LOAN FROM A
                    NEVADA HORSESHOE CUSTOMER, WAS LEGAL AND FULLY DOCUMENTED
                    AND IS NOT A BASIS FOR FINDING JACK BINION UNSUITABLE.

     Mr. Binion acknowledges that in 1995, he obtained a substantial personal
loan from a Nevada Horseshoe customer. This loan was legal, proper, fully
documented, and did not harm the Nevada Horseshoe or present a conflict of
interest. Indeed, but for the lending relationship, neither the lender nor her
brother would have played at the Nevada Horseshoe and would not have lost
approximately $1.8 million at the Nevada Horseshoe. At hearing, Empress will
present documentary and testimonial evidence that Mr. Binion repaid the loan in
full. (Exhibit 23) For a more detailed discussion of this loan and documentation
relating to it, we attach and incorporate by reference Exhibit 11 at 11-12;
Exhibit 12 at 32-35.

               10.  NEVADA HORSESHOE DID NOT DEVIATE FROM ACCEPTED CREDIT
                    PRACTICES.

     The credit practices utilized by the Nevada Horseshoe while Mr. Binion was
President were not deviations from accepted competitive Las Vegas Asian credit
practices. Empress will present evidence at hearing that many high stakes Asian
players prefer the game of baccarat. Baccarat offers casinos the ability to win
millions of dollars over a short period of time. Casinos wanting to compete for
Asian play commonly offer high stakes Asian players higher credit lines, higher
betting limits and a discount on gambling losses. Nevada Horseshoe was pursuing
high-end Asian baccarat play in the early 1990s.

     As previously reported to the Gaming Board, Nevada Horseshoe's Asian
baccarat credit practices were similar to practices followed by other Las Vegas
casinos. (Exhibit 24) Essentially, Nevada Horseshoe's Asian baccarat credit
practices matched the industry norm.


                                       31
<PAGE>   32

     The Notice of Denial also states that Nevada Horseshoe's baccarat credit
polities resulted in millions of dollars of uncorrectable debt. As part of his
Settlement Agreement that resulted from a lawsuit initiated by Mr. Binion's
sister, Becky Binion Behnen, Mr. Binion acquired $15.9 million of uncollected
accounts. At the time the Settlement Agreement was executed, Nevada Horseshoe
had written its uncollected accounts down to $5 million. Mr. Binion purchased
Nevada Horseshoe's active uncollected accounts for $5 million. Nevada Horseshoe
has collected and remitted $1.352 million to Mr. Binion. In March 1999, Mr.
Binion retained a Nevada law firm to assist him in his collection efforts. Since
that time, the law firm has collected an additional $315,000 on these accounts
and the collection efforts are continuing. Empress will present competent and
credible evidence as to these issues at hearing.

     A comparison of Nevada Horseshoe's Asian baccarat credit policies to credit
policies applicable to other gamblers is a comparison of apples to oranges.
Nevada Horseshoe's baccarat credit policies should only be compared to other
casinos' Asian baccarat credit policies.

               11.  WILLIAM THURMAN WALTERS, A BUSINESS ACQUAINTANCE OF JACK
                    BINION'S DOES NOT PROVIDE THE GAMING BOARD WITH A BASIS TO
                    FIND JACK BINION UNSUITABLE AS A KEY PERSON OF EMPRESS.


                                       32
<PAGE>   33

     The Board did not specifically designate what led it to its conclusion that
Mr. Binion's interaction with Mr. Walters led to this finding. The extent of any
"association" that Mr. Binion may have had with Mr. Walters is not a sufficient
basis upon which to conclude that Mr. Binion is not suitable to be a Key Person
at Empress. Through documentary and testimonial evidence, Empress will establish
that Mr. Walters is a player in good standing at many casinos in Las Vegas,
Nevada and that Mr. Walters has never been blacklisted in Nevada.

     Mr. Binion knows Mr. Walters as a high limit customer at the Horseshoe Club
in Las Vegas. As president of the Horseshoe Club, it was incumbent upon Mr.
Binion to maintain a friendly relationship with all high limit customers who
were players in good standing, such as Mr. Walters. Once Mr. Binion's primary
focus was outside of Nevada, his contact and relationship withMr. Walters has
diminished.

     WHEREFORE, Empress Casino Joliet prays that the Illinois Gaming Board:

          1.   Reverse its decision denying renewal of Empress Casino Joliet's
               owner's license and its initial findings that Jack Binion is
               unsuitable and that Empress, since its acquisition by HGHC, has
               failed to meet the requirements of the Act and the Rules and
               renew said license; or, in the alternative,

          2.   Grant this Request for Hearing and proceed pursuant to 86 Ill.
               Adm. Code Section 3000.400 et seq.; and


                                       33
<PAGE>   34

          3.   Award such other relief as this Board finds just and equitable.

Dated: July 26, 2000                            Respectfully submitted,

                                                /s/  William J. Kunkle
                                                     --------------------------
                                                     William J. Kunkle


         William J. Kunkle
         Steven E. Nieslawski
         Melisa G. Thompson
         CAHILL, CHRISTIAN & KUNKLE, LTD.
         224 South Michigan Avenue Suite 1300
         Chicago, Illinois 60604                      Anton R. Valukas
         (312) 341-1688                               Charles B. Sklarsky
                                                      JENNER & BLOCK
                                                      One IBM Plaza
         Donna B. More                                45th Floor
         MORE LAW GROUP, P.C.                         Chicago, Illinois 60611
         180 North LaSalle Street                     (312) 222-9350
         Suite 1415
         Chicago, Illinois 60601
         (312) 629-9100


                                       34