##### Table of Contents



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

FORM 10-Q

|  |  |                                                                                          
|- |  | -----------------------------------------------------------------------------------------
|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. 
|  |  |                                                                                          
|  |  | For the quarterly period ended September 30, 2002                                        
| 
|  |  | OR                                                                                       
|  |  |                                                                                          
|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
|  |  |                                                                                          
|  |  | For the transition period from      to                                                   

Commission file number 333-0214

HORSESHOE GAMING HOLDING CORP.

---

(Exact name of registrant as specified in its charter)


|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 88-0425131                          
|                                                               |  |                                     
|(State or other jurisdiction
of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                              
|18454 South West Creek Drive, Tinley Park, IL                  |  | 60477                               
|                                                               |  |                                     
|(Address of principal executive office)                        |  | (Zip Code)                          

(708) 429-8300

---

(Registrants telephone number, including area code)




---

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


Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes [X] No [   ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act.).

Yes [   ] No [X]

As of November 14, 2002, the registrant had 13,298 shares of Class A Common
Stock and 9,779 of Class B Common Stock outstanding.





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TABLE OF CONTENTS



|                             |                                                                                               |                                                      |  |  |  |  |  | 
|---------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|PART I FINANCIAL INFORMATION
|                             | Item 1.FINANCIAL STATEMENTS                                                                  
|                             |                                                                                               | CONSOLIDATED CONDENSED BALANCE SHEETS               
|                             |                                                                                               | CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS     
|                             |                                                                                               | CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS     
|                             |                                                                                               | NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
|                             | Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                             | Item 3. Quantitative and Qualitative Disclosure About Market Risk                            
|                             | Item 4. Controls and Procedures                                                              
|PART II OTHER INFORMATION   
|                             | Item 1. LEGAL PROCEEDINGS                                                                    
|                             | Item 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURES                  
|CERTIFICATION               
|EXHIBIT 10.1                
|EXHIBIT 99.1                
|EXHIBIT 99.1                



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##### Table of Contents



HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

|                                                        |  |                                                                                                                 |  |   
|------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------- |  | --
|PART I                                                  |  | FINANCIAL INFORMATION                                                                                           |  |   
|Item 1.                                                 |  | Financial Statements                                                                                            |  |   
|                                                        |  | Consolidated Condensed Balance Sheets as of
September 30, 2002 and December 31, 2001                            |  | 3 
|                                                        |  | Consolidated Condensed Statements of Operations for the
three and nine months ended September 30, 2002 and 2001 |  | 4 
|                                                        |  | Consolidated Condensed Statements of Cash Flows for the
nine months ended September 30, 2002 and 2001           |  | 5 
|                                                        |  | Notes to Consolidated Condensed Financial Statements                                                            |  | 6 
|Item 2.                                                 |  | Managements Discussion and Analysis of Financial Condition
and Results of Operations                           |  | 10
|Item 3.                                                 |  | Quantitative and Qualitative Disclosures About Market Risk                                                      |  | 17
|Item 4.                                                 |  | Controls and Procedures                                                                                         |  | 17
|PART II                                                 |  | OTHER INFORMATION                                                                                               |  |   
|Item 1.                                                 |  | Legal Proceedings                                                                                               |  | 18
|Item 6.                                                 |  | Exhibits and Reports on Form 8-K                                                                                |  | 20
|SIGNATURES                                              |  | 21                                                                                                             
|Certification  Kirk C. Saylor, Chief Financial Officer |  | 22                                                                                                             
|Certification  Jack B. Binion, Chief Executive Officer |  | 23                                                                                                             

2



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##### Table of Contents






PART I FINANCIAL INFORMATION




Item 1. FINANCIAL STATEMENTS

HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES




CONSOLIDATED CONDENSED BALANCE SHEETS


(unaudited)
(in thousands, except for share data)


|                                     |                                                                                                                                  |                             |         |         |         |               |           |              |         |  |  | 
|------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------- | --------------------------- | ------- | ------- | ------- | ------------- | --------- | ------------ | ------- |  |  | 
|                                     |                                                                                                                                  |                             |         |         |         | September 30, |           | December 31,
|                                     |                                                                                                                                  |                             |         |         |         | 2002          |           | 2001        
|                                     |                                                                                                                                  |                             |         |         |         |               |           |             
|ASSETS                              
|Current assets                       |                                                                                                                                  |                             |         |         |         |               |           |             
|                                     | Cash and cash equivalents                                                                                                        |                             | $       | 88,442  |         |               | $         | 220,817      |        
|                                     | Restricted cash                                                                                                                  |                             |         | 24,717  |         |               |           | 14,059       |        
|                                     | Accounts receivable, net of allowance for doubtful
accounts of $7,387 and $13,160, respectively                                  |                             |         | 13,123  |         |               |           | 13,516       |        
|                                     | Inventories                                                                                                                      |                             |         | 5,616   |         |               |           | 5,031        |        
|                                     | Prepaid expenses and other                                                                                                       |                             |         | 8,291   |         |               |           | 12,152       |        
|                                     |                                                                                                                                  |                             |         |         |         |               |           |             
|                                     |                                                                                                                                  | Total current assets        |         |         | 140,189 |               |           |              | 265,575 | 
|                                     |                                                                                                                                  |                             |         |         |         |               |           |             
|Property and equipment, net          |                                                                                                                                  |                             | 470,105 |         |         |               | 482,379   |             
|Goodwill                             |                                                                                                                                  |                             | 252,242 |         |         |               | 254,413   |             
|Other, net                           |                                                                                                                                  |                             | 53,796  |         |         |               | 54,892    |             
|                                     |                                                                                                                                  |                             |         |         |         |               |           |             
|                                     |                                                                                                                                  | $                           | 916,332 |         |         | $             | 1,057,259 |             
|                                     |                                                                                                                                  |                             |         |         |         |               |           |             
|LIABILITIES AND STOCKHOLDERS EQUITY
|Current liabilities                  |                                                                                                                                  |                             |         |         |         |               |           |             
|                                     | Accounts payable                                                                                                                 |                             | $       | 8,819   |         |               | $         | 13,426       |        
|                                     | Accrued expenses and other                                                                                                       |                             |         | 101,202 |         |               |           | 81,428       |        
|                                     | Current maturities of long-term debt                                                                                             |                             |         |        |         |               |           | 9,823        |        
|                                     |                                                                                                                                  |                             |         |         |         |               |           |             
|                                     |                                                                                                                                  | Total current liabilities   |         |         | 110,021 |               |           |              | 104,677 | 
|                                     |                                                                                                                                  |                             |         |         |         |               |           |             
|Long-term liabilities                |                                                                                                                                  |                             |         |         |         |               |           |             
|                                     | Long-term debt, less current maturities                                                                                          |                             |         | 563,724 |         |               |           | 729,698      |        
|                                     | Other long-term liabilities                                                                                                      |                             |         | 7,355   |         |               |           | 10,699       |        
|                                     |                                                                                                                                  |                             |         |         |         |               |           |             
|                                     |                                                                                                                                  | Total long-term liabilities |         |         | 571,079 |               |           |              | 740,397 | 
|                                     |                                                                                                                                  |                             |         |         |         |               |           |             
|Commitments and contingencies        |                                                                                                                                  |                             |         |         |         |               |           |             
|Stockholders equity                 |                                                                                                                                  |                             |         |         |         |               |           |             
|                                     | Common stock, $.01 par value, 50,000 shares authorized, 25,000
shares issued, 23,077 and 23,145 shares outstanding, respectively |                             |         |        |         |               |           |             |        
|                                     | Additional paid-in capital                                                                                                       |                             |         | 59,808  |         |               |           | 59,808       |        
|                                     | Retained earnings                                                                                                                |                             |         | 230,722 |         |               |           | 205,162      |        
|                                     |                                                                                                                                  |                             |         |         |         |               |           |             
|                                     |                                                                                                                                  |                             | 290,530 |         |         |               | 264,970   |             
|                                     | Treasury stock, at cost, 1,923 and 1,855 shares, respectively                                                                    |                             |         | (55,298 | )       |               |           | (52,785      | )      
|                                     |                                                                                                                                  |                             |         |         |         |               |           |             
|                                     |                                                                                                                                  | Total stockholders equity  |         |         | 235,232 |               |           |              | 212,185 | 
|                                     |                                                                                                                                  |                             |         |         |         |               |           |             
|                                     |                                                                                                                                  | $                           | 916,332 |         |         | $             | 1,057,259 |             
|                                     |                                                                                                                                  |                             |         |         |         |               |           |             

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

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##### Table of Contents



HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES




CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS


(unaudited)
(in thousands)


|                                                             |                                       |                              |         |                                  |         |                                 |         |          |         |      |         |         |         |   |         |          |         |  
|------------------------------------------------------------ | ------------------------------------- | ---------------------------- | ------- | -------------------------------- | ------- | ------------------------------- | ------- | -------- | ------- | ---- | ------- | ------- | ------- | - | ------- | -------- | ------- | -
|                                                             |                                       |                              |         | Three months ended September 30, |         | Nine months ended September 30,
|                                                             |                                       |                              |         |                                  |         |                                
|                                                             |                                       |                              |         | 2002                             |         | 2001                            |         | 2002     |         | 2001
|                                                             |                                       |                              |         |                                  |         |                                 |         |          |         |     
|Revenues                                                     |                                       |                              |         |                                  |         |                                 |         |          |         |      |         |         |         |   |         |         
|                                                             | Casino                                |                              | $       | 207,905                          |         |                                 | $       | 216,321  |         |      | $       | 625,369 |         |   | $       | 731,406  |        
|                                                             | Food and beverage                     |                              |         | 19,891                           |         |                                 |         | 21,460   |         |      |         | 60,138  |         |   |         | 69,037   |        
|                                                             | Hotel                                 |                              |         | 7,122                            |         |                                 |         | 7,621    |         |      |         | 21,579  |         |   |         | 22,682   |        
|                                                             | Retail and other                      |                              |         | 4,663                            |         |                                 |         | 4,914    |         |      |         | 14,443  |         |   |         | 16,010   |        
|                                                             |                                       |                              |         |                                  |         |                                 |         |          |         |      |         |         |         |   |         |         
|                                                             |                                       |                              | 239,581 |                                  |         |                                 | 250,316 |          |         |      | 721,529 |         |         |   | 839,135 |         
|Promotional allowances and other                             |                                       |                              | (27,641 | )                                |         |                                 | (30,954 | )        |         |      | (84,327 | )       |         |   | (94,280 | )       
|                                                             |                                       |                              |         |                                  |         |                                 |         |          |         |      |         |         |         |   |         |         
|                                                             |                                       | Net revenues                 |         |                                  | 211,940 |                                 |         |          | 219,362 |      |         |         | 637,202 |   |         |          | 744,855 |  
|                                                             |                                       |                              |         |                                  |         |                                 |         |          |         |      |         |         |         |   |         |         
|Expenses                                                     |                                       |                              |         |                                  |         |                                 |         |          |         |      |         |         |         |   |         |         
|                                                             | Casino                                |                              |         | 117,445                          |         |                                 |         | 126,882  |         |      |         | 343,143 |         |   |         | 420,530  |        
|                                                             | Food and beverage                     |                              |         | 6,151                            |         |                                 |         | 6,398    |         |      |         | 18,295  |         |   |         | 21,461   |        
|                                                             | Hotel                                 |                              |         | 663                              |         |                                 |         | 755      |         |      |         | 1,885   |         |   |         | 2,300    |        
|                                                             | Retail and other                      |                              |         | 1,556                            |         |                                 |         | 1,588    |         |      |         | 5,793   |         |   |         | 5,250    |        
|                                                             | General and administrative            |                              |         | 28,364                           |         |                                 |         | 27,302   |         |      |         | 85,151  |         |   |         | 93,765   |        
|                                                             | Corporate expenses                    |                              |         | 5,579                            |         |                                 |         | 3,821    |         |      |         | 18,979  |         |   |         | 16,708   |        
|                                                             | Deferred compensation                 |                              |         | 325                              |         |                                 |         | 1,254    |         |      |         | 8,086   |         |   |         | 580      |        
|                                                             | Net loss (gain) on disposal of assets |                              |         | 397                              |         |                                 |         | (161,425 | )       |      |         | 4,257   |         |   |         | (160,955 | )      
|                                                             | Pre-opening expense                   |                              |         |                                 |         |                                 |         |         |         |      |         |        |         |   |         | 4,064    |        
|                                                             | Depreciation and amortization         |                              |         | 14,008                           |         |                                 |         | 15,329   |         |      |         | 41,794  |         |   |         | 50,176   |        
|                                                             |                                       |                              |         |                                  |         |                                 |         |          |         |      |         |         |         |   |         |         
|                                                             |                                       | Total expenses               |         |                                  | 174,488 |                                 |         |          | 21,904  |      |         |         | 527,383 |   |         |          | 453,879 |  
|                                                             |                                       |                              |         |                                  |         |                                 |         |          |         |      |         |         |         |   |         |         
|Operating income                                             |                                       |                              | 37,452  |                                  |         |                                 | 197,458 |          |         |      | 109,819 |         |         |   | 290,976 |         
|Other income (expense)                                       |                                       |                              |         |                                  |         |                                 |         |          |         |      |         |         |         |   |         |         
|                                                             | Interest expense                      |                              |         | (12,869                          | )       |                                 |         | (17,946  | )       |      |         | (48,132 | )       |   |         | (64,934  | )      
|                                                             | Interest income                       |                              |         | 216                              |         |                                 |         | 1,737    |         |      |         | 2,015   |         |   |         | 2,592    |        
|                                                             | Other, net                            |                              |         |                                 |         |                                 |         | (53      | )       |      |         | (615    | )       |   |         | 411      |        
|                                                             |                                       |                              |         |                                  |         |                                 |         |          |         |      |         |         |         |   |         |         
|                                                             |                                       | Total other income (expense) |         |                                  | (12,653 | )                               |         |          | (16,262 | )    |         |         | (46,732 | ) |         |          | (61,931 | )
|                                                             |                                       |                              |         |                                  |         |                                 |         |          |         |      |         |         |         |   |         |         
|Income before extraordinary loss on early
retirement of debt |                                       |                              | 24,799  |                                  |         |                                 | 181,196 |          |         |      | 63,087  |         |         |   | 229,045 |         
|Extraordinary loss on early retirement
of debt               |                                       |                              |        |                                  |         |                                 | (6,893  | )        |         |      | (9,683  | )       |         |   | (6,893  | )       
|                                                             |                                       |                              |         |                                  |         |                                 |         |          |         |      |         |         |         |   |         |         
|Net income                                                   |                                       | $                            | 24,799  |                                  |         | $                               | 174,303 |          |         | $    | 53,404  |         |         | $ | 222,152 |         
|                                                             |                                       |                              |         |                                  |         |                                 |         |          |         |      |         |         |         |   |         |         

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

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HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES




CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS


FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(unaudited)
(in thousands)


|                                               |                                                                                   |                                                                    |                                                     |          |        |          |         |          |          |          |  
|---------------------------------------------- | --------------------------------------------------------------------------------- | ------------------------------------------------------------------ | --------------------------------------------------- | -------- | ------ | -------- | ------- | -------- | -------- | -------- | -
|                                               |                                                                                   |                                                                    |                                                     |          | 2002   |          | 2001   
|                                               |                                                                                   |                                                                    |                                                     |          |        |          |        
|Cash flows from operating activities           |                                                                                   |                                                                    |                                                     |          |        |          |         |         
|                                               | Net income                                                                        |                                                                    | $                                                   | 53,404   |        |          | $       | 222,152  |         
|                                               | Adjustments to reconcile net income to
net cash provided by operating activities: |                                                                    |                                                     |          |        |          |         |          |         
|                                               |                                                                                   | Depreciation and amortization                                      |                                                     |          | 41,794 |          |         |          | 50,176   |         
|                                               |                                                                                   | Net loss (gain) on disposal of assets                              |                                                     |          | 4,257  |          |         |          | (160,955 | )       
|                                               |                                                                                   | Extraordinary loss on early retirement of debt                     |                                                     |          | 9,683  |          |         |          | 6,893    |         
|                                               |                                                                                   | Amortization of debt discounts,
deferred finance charges and other |                                                     |          | 2,240  |          |         |          | 3,174    |         
|                                               |                                                                                   | Provision for doubtful accounts                                    |                                                     |          | 2,525  |          |         |          | 5,550    |         
|                                               |                                                                                   | Deferred compensation                                              |                                                     |          | 8,086  |          |         |          | 580      |         
|                                               |                                                                                   | Net change in current assets and current liabilities               |                                                     |          | (8,823 | )        |         |          | 3,261    |         
|                                               |                                                                                   |                                                                    |                                                     |          |        |          |         |         
|                                               |                                                                                   |                                                                    | Net cash provided by operating activities           |          |        | 113,166  |         |          |          | 130,831  |  
|                                               |                                                                                   |                                                                    |                                                     |          |        |          |         |         
|Cash flows from investing activities           |                                                                                   |                                                                    |                                                     |          |        |          |         |         
|                                               | Purchases of property and equipment                                               |                                                                    |                                                     | (29,419  | )      |          |         | (33,181  | )       
|                                               | Proceeds from sale of property and equipment                                      |                                                                    |                                                     | 235      |        |          |         | 212      |         
|                                               | Net proceeds from sale of Joliet                                                  |                                                                    |                                                     |         |        |          |         | 447,533  |         
|                                               | Indemnification escrow related to Joliet sale                                     |                                                                    |                                                     |         |        |          |         | (16,293  | )       
|                                               | Net increase in other assets                                                      |                                                                    |                                                     | (3,315   | )      |          |         | (3,028   | )       
|                                               |                                                                                   |                                                                    |                                                     |          |        |          |         |         
|                                               |                                                                                   |                                                                    | Net cash provided by (used in) investing activities |          |        | (32,499  | )       |          |          | 395,243  |  
|                                               |                                                                                   |                                                                    |                                                     |          |        |          |         |         
|Cash flows from financing activities           |                                                                                   |                                                                    |                                                     |          |        |          |         |         
|                                               | Proceeds from long-term debt                                                      |                                                                    |                                                     | 60,000   |        |          |         | 55,000   |         
|                                               | Repayments on long-term debt                                                      |                                                                    |                                                     | (236,031 | )      |          |         | (351,590 | )       
|                                               | Call premium to retire debt                                                       |                                                                    |                                                     | (7,457   | )      |          |         |         |         
|                                               | Purchase of treasury stock                                                        |                                                                    |                                                     | (2,513   | )      |          |         |         |         
|                                               | Capital dividends                                                                 |                                                                    |                                                     | (27,041  | )      |          |         | (69,097  | )       
|                                               | Other                                                                             |                                                                    |                                                     |         |        |          |         | (343     | )       
|                                               |                                                                                   |                                                                    |                                                     |          |        |          |         |         
|                                               |                                                                                   |                                                                    | Net cash used in financing activities               |          |        | (213,042 | )       |          |          | (366,030 | )
|                                               |                                                                                   |                                                                    |                                                     |          |        |          |         |         
|Net change in cash and cash equivalents        |                                                                                   |                                                                    | (132,375                                            | )        |        |          | 160,044 |         
|Cash and cash equivalents, beginning of period |                                                                                   |                                                                    | 220,817                                             |          |        |          | 78,133  |         
|                                               |                                                                                   |                                                                    |                                                     |          |        |          |         |         
|Cash and cash equivalents, end of period       |                                                                                   | $                                                                  | 88,442                                              |          |        | $        | 238,177 |         
|                                               |                                                                                   |                                                                    |                                                     |          |        |          |         |         
|Supplemental cash flow disclosure              |                                                                                   |                                                                    |                                                     |          |        |          |         |         
|                                               | Interest paid                                                                     |                                                                    | $                                                   | 36,525   |        |          | $       | 48,993   |         

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

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HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES




NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


(Unaudited)


Note 1  Basis of Presentation

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

Note 2  Goodwill and Other Intangible Assets

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

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

|                     |                                           |   |                    |       |                    |   |         |       | 
|-------------------- | ----------------------------------------- | - | ------------------ | ----- | ------------------ | - | ------- | ----- | 
|                     |                                           |   | Three months ended |       | Nine months ended 
|                     |                                           |   | September 30, 2001 |       | September 30, 2001
|                     |                                           |   |                    |       |                   
|Reported net income  |                                           | $ | 174,303            |       |                    | $ | 222,152 |      
|Add back:            |                                           |   |                    |       |                    |   |         |      
|                     | Goodwill amortization                     |   |                    | 2,902 |                    |   |         | 9,437 | 
|                     | Indefinite-lived intangibles amortization |   |                    |      |                    |   |         | 167   | 
|                     |                                           |   |                    |       |                    |   |         |      
|Pro forma net income |                                           | $ | 177,205            |       |                    | $ | 231,756 |      
|                     |                                           |   |                    |       |                    |   |         |      

During the third quarter of 2002, in accordance with Emerging Issue Task
Force (EITF) 93-7 Uncertainties Related to Income Taxes in a Purchase
Business Combination, the Company reduced goodwill and accrued liabilities by
$2.2 million related to the favorable resolution of an estimated tax liability
established in connection with the acquisition of Horseshoe Hammond, Inc.

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Note 3  Long-Term Debt

In June 2002, the Company redeemed all of its outstanding 9.375% Senior
Subordinated Notes for $166.5 million, including call premium. As a result of
this redemption, the Company recorded an extraordinary loss on early retirement
of debt of $9.7 million in the second quarter of 2002 (see Note 6). In
addition, also in June 2002, the Company repaid approximately $38.0 million in
other debt, bearing interest rates ranging from 9% to 12%. The Company used
cash on hand plus $60.0 million of its Senior Secured Revolving Credit Facility
(Credit Facility) to repay these obligations. As of November 7, 2002, the
Company had $17.0 million outstanding under its Credit Facility and $133.0
million of availability.

Note 4  Deferred Compensation

The Company recorded deferred compensation of $325,000 and $1.3 million
for the three months ended September 30, 2002 and 2001, respectively, and $8.1
million and $580,000 for the nine months ended September 30, 2002 and 2001,
respectively, related to the appreciation of vested stock appreciation rights
in the Horseshoe Gaming Holding Corp. Equity Incentive Plan.

Note 5  Sale of Empress Casino Joliet

On July 31, 2001, the Company sold the stock of Empress Casino Joliet
Corporation (Joliet), a wholly owned subsidiary of the Company, to Argosy
Gaming Company for $465.0 million in cash. The net proceeds from the sale were
$447.5 million. An additional $38.4 million in tax distributions related to
the sale were made in the third quarter of 2001. A gain of $162.5 million
related to the sale of Joliet is included in the net loss (gain) on disposal of
assets for the three and nine months ended September 30, 2001 in the
accompanying consolidated condensed statements of operations.

In connection with the sale of Joliet, the Company deposited $16.3 million
of the net proceeds into escrow to cover potential future indemnifications
related to the Joliet facility. Of this amount, $2.3 million was disbursed in
October 2001. As of September 30, 2002, the escrow balance of $14.2 million is
included in restricted cash in the accompanying consolidated condensed balance
sheets.

Included in the accompanying consolidated condensed statements of
operations are net revenues from Joliet of $24.0 million and $161.6 million for
the three and nine months ended September 30, 2001, respectively. Joliet also
contributed $6.8 million and $47.4 million of operating income before corporate
allocations and other non-recurring items for the three months and nine months
ended September 30, 2001, respectively.

Note 6  Recently Issued Accounting Pronouncements

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

7



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##### Table of Contents



Note 6  Recently Issued Accounting Pronouncements (continued)

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

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

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

Note 7  Contingencies

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

On June 2, 2000, a lawsuit was filed in the United States District Court
for the Northern District of Indiana, against the Company and the Companys
subsidiary in Hammond, Indiana (Horseshoe Hammond or Hammond) on behalf of
current and former employees of Horseshoe Hammond alleging that Horseshoe
Hammond and the Company are responsible for damages to current and former
employees as a result of poor air quality on the gaming vessel operating in
Hammond, Indiana. The lawsuit alleged certain tort claims based on poor air
quality and sought certification as a class on behalf of similarly situated
current and former employees of Horseshoe Hammond. On May 8, 2002, the United
States District Court denied Plaintiffs request for class certification and on
October 18, 2002, plaintiffs counsel amended the suit to add 19 additional
plaintiffs. Horseshoe Hammond and the Company deny the allegations in the
complaint asserted by the named employees and intend to vigorously contest this
matter.

8



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##### Table of Contents



Note 7  Contingencies (continued)

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

Horseshoe Entertainment (HE), the Companys subsidiary that owns and
operates Horseshoe Bossier City, was issued an initial operators license by
the Louisiana Enforcement Division (the Enforcement Division) on November 22,
1993 for a five year period. HE timely submitted its renewal application to
the Enforcement Division and on October 20, 1998, the Louisiana Gaming Control
Board (the Gaming Control Board) granted HEs license renewal subject to
suitability review. HEs license renewal was extended on October 19, 1999,
subject to completion of suitability review. The Enforcement Division filed a
Report with the Louisiana Gaming Control Board on May 13, 2002, documenting the
results of its suitability review. The Report noted a number of issues in
Horseshoes history and dealings with the State of Louisiana that, in the view
of the Enforcement Division, should be considered by the Gaming Control Board
prior to making the final determination on HEs license renewal application.
The Report does not make a recommendation to the Gaming Control Board and, in
fact, the Enforcement Division noted that the Gaming Control Board has the
authority to renew HEs license without conditions, to renew HEs license with
such conditions as the Gaming Control Board deems appropriate or to deny HEs
application for a license renewal. HE believes the Report inaccurately
describes certain matters. The Gaming Control Board is expected to convene a
hearing to act on HEs license renewal during January 2003. At that hearing,
HE will have an opportunity to present its case for license renewal to the
Gaming Control Board and in the process to contest and refute the items in the
Report that are critical of HEs past actions.

On July 5, 2001, James Wellborn and Charles J. Nickel filed a lawsuit in
the 26th Judicial Court (Bossier Parish) against the Municipality of Bossier
City, Louisiana asking the Court to (i) order the City to collect a $3.00 per
person boarding fee from Horseshoe Entertainment, (ii) invalidate a contract
fixing the amount paid by Horseshoe Entertainment to Bossier City as opposed to
a per person boarding fee and (iii) certify the suit as a class action on
behalf of all citizens and taxpayers of Bossier Parish. The Company believes
the suit is without merit and will vigorously defend itself in the action,
including the validity of the contract.

In August 2002, the Louisiana Court of Appeals found that Billy Brooks
Hudson, among others, have the right as taxpayers to prosecute a suit against
the City of Bossier and others, seeking the same relief sought in the case
filed by Wellborn on July 5, 2001. Accordingly, the Louisiana Court of Appeals
directed that the trial court reinstate in the 26th Judicial District Court,
Bossier Parish Louisiana, the previously dismissed case of Hudson et.al. v.
City of Bossier et.al. The Company believes that, like the Wellborn suit, the
Hudson suit is without merit and the Company will vigorously defend itself in
the action.

9



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##### Table of Contents






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

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

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

10



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##### Table of Contents



Results of OperationsFinancial Highlights

|                                                   |                                                   |   |                                  |        |                       |   |               |         |   |  |          |     |  
|-------------------------------------------------- | ------------------------------------------------- | - | -------------------------------- | ------ | --------------------- | - | ------------- | ------- | - |  | -------- | --- | -
|                                                   |                                                   |   | Three months ended September 30, |        | % Increase/(Decrease)
|                                                   |                                                   |   |                                  |        |                      
|                                                   |                                                   |   | 2002                             |        | 2001                  |   | 2002 vs. 2001
|                                                   |                                                   |   |                                  |        |                       |   |              
|                                                   |                                                   |   | (dollars in thousands)           |        |                       |   |              
|Casino revenues                                    |                                                   |   |                                  |        |                       |   |               |         |   |  |          |    
|                                                   | Bossier City                                      |   | $                                | 63,609 |                       |   | $             | 64,881  |   |  |          | -2  | %
|                                                   | Tunica                                            |   |                                  | 61,736 |                       |   |               | 65,190  |   |  |          | -5  | %
|                                                   | Hammond                                           |   |                                  | 82,560 |                       |   |               | 62,675  |   |  |          | 32  | %
|                                                   | Joliet (a)                                        |   |                                  |       |                       |   |               | 23,575  |   |  |          | (b  | )
|                                                   |                                                   |   |                                  |        |                       |   |               |         |   |  |          |    
|                                                   |                                                   | $ | 207,905                          |        |                       | $ | 216,321       |         |   |  | -4       | %  
|                                                   |                                                   |   |                                  |        |                       |   |               |         |   |  |          |    
|Net revenues                                       |                                                   |   |                                  |        |                       |   |               |         |   |  |          |    
|                                                   | Bossier City                                      |   | $                                | 65,895 |                       |   | $             | 66,794  |   |  |          | -1  | %
|                                                   | Tunica                                            |   |                                  | 61,446 |                       |   |               | 64,281  |   |  |          | -4  | %
|                                                   | Hammond                                           |   |                                  | 84,599 |                       |   |               | 64,285  |   |  |          | 32  | %
|                                                   | Joliet (a)                                        |   |                                  |       |                       |   |               | 24,002  |   |  |          | (b  | )
|                                                   |                                                   |   |                                  |        |                       |   |               |         |   |  |          |    
|                                                   |                                                   | $ | 211,940                          |        |                       | $ | 219,362       |         |   |  | -3       | %  
|                                                   |                                                   |   |                                  |        |                       |   |               |         |   |  |          |    
|Operating income (loss)                            |                                                   |   |                                  |        |                       |   |               |         |   |  |          |    
|                                                   | Bossier City (c)                                  |   | $                                | 10,865 |                       |   | $             | 11,526  |   |  |          | -6  | %
|                                                   | Tunica (c)                                        |   |                                  | 14,924 |                       |   |               | 16,175  |   |  |          | -8  | %
|                                                   | Hammond (c)                                       |   |                                  | 17,487 |                       |   |               | 5,638   |   |  |          | 210 | %
|                                                   | Joliet (a) (c)                                    |   |                                  |       |                       |   |               | 6,829   |   |  |          | (b  | )
|                                                   | Gain on assets held for sale                      |   |                                  |       |                       |   |               | 162,485 |   |  |          | (b  | )
|                                                   | Corporate expenses                                |   |                                  | (5,579 | )                     |   |               | (3,821  | ) |  |          | 46  | %
|                                                   | Deferred compensation                             |   |                                  | (325   | )                     |   |               | (1,254  | ) |  |          | (b  | )
|                                                   | Other                                             |   |                                  | 80     |                       |   |               | (120    | ) |  |          | 167 | %
|                                                   |                                                   |   |                                  |        |                       |   |               |         |   |  |          |    
|                                                   |                                                   | $ | 37,452                           |        |                       | $ | 197,458       |         |   |  | -81      | %  
|                                                   |                                                   |   |                                  |        |                       |   |               |         |   |  |          |    
|Other information                                  |                                                   |   |                                  |        |                       |   |               |         |   |  |          |    
|                                                   | Interest expense, net                             |   | $                                | 12,653 |                       |   | $             | 16,209  |   |  |          | -22 | %
|                                                   | Extraordinary loss                                |   | $                                |       |                       |   | $             | 6,893   |   |  |          | (b  | )
|                                                   | Net income                                        |   | $                                | 24,799 |                       |   | $             | 174,303 |   |  |          | -86 | %
|Operating margin (operating income/net revenue)(d) |                                                   |   |                                  |        |                       |   |               |         |   |  |          |    
|                                                   | Bossier City (c)                                  |   |                                  | 16     | %                     |   |               | 17      | % |  | -1pts.  
|                                                   | Tunica (c)                                        |   |                                  | 24     | %                     |   |               | 25      | % |  | -1pts.  
|                                                   | Hammond (c)                                       |   |                                  | 21     | %                     |   |               | 9       | % |  | 12pts.  
|                                                   | Joliet (a)(c)                                     |   |                                  |       |                       |   |               | 28      | % |  | (b)     
|                                                   | Consolidated                                      |   |                                  | 18     | %                     |   |               | 90      | % |  | -72 pts.
|                                                   | Consolidated  excluding gain from sale of Joliet |   |                                  | 18     | %                     |   |               | 16      | % |  | 2pts    



---

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

11



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##### Table of Contents



Three months ended September 30, 2002 and 2001

A 32% increase in net revenues in Hammond in the third quarter of 2002 as
compared to the prior year period, nearly offset the absence of Joliet (which
was sold July 31, 2001) revenues during the 2002 quarter and softened the
decline experienced in Bossier and Tunica. Excluding Joliet in the 2001
period, consolidated net revenues increased 8% in the quarter ended September
30, 2002 as compared to the prior year period. As a result of the reductions
in net revenues experienced in Bossier City and Tunica, operating income
decreased as well at those properties, while Hammonds operating income
increased significantly in the third quarter of 2002 as compared to the prior
year period.

With the adoption of Statement of Financial Accounting Standards No. 142
Goodwill and Other Intangible Assets (SFAS 142), the Company ceased
amortization on most intangibles, including goodwill, on January 1, 2002. Such
amortization expense totaled approximately $2.9 million in the third quarter of
2001. Excluding amortization expense in the prior year period, operating
income decreased 9% in both Bossier City and Tunica, and increased 121% in
Hammond in the third quarter of 2002 as compared to the prior year quarter. In
addition, operating margins in the third quarter of 2002 were 16%, 24% and 21%
for Bossier City, Tunica and Hammond, respectively, as compared to operating
margins of 18%, 25% and 12%, respectively, in the 2001 period when calculated
on a comparable basis.

Casino revenues in Bossier City decreased 2% in the third quarter of 2002
primarily as the result of a reduction in slot volumes. This is consistent
with the decrease that the Shreveport/Bossier City market experienced in the
same period. Margins in Bossier City were negatively impacted in the 2002
quarter by a 1% increase in gaming tax. The gaming tax rate in Louisiana
increased from 19.5% to 20.5% in April 2002 and is scheduled to increase to
21.5% in April 2003. No further increases in tax rates are currently scheduled
to occur after April 2003.

Operating margins in Tunica in the third quarter of 2002 decreased to 24%
as compared to 25% in the prior year period. In addition, net revenue decreased
4% and operating income decreased 8% between the two periods. Revenue
decreases in the third quarter of 2002 are the result of an 8% decrease in
coin-in during the 2002 quarter as compared to the prior year quarter. The
2001 period also included costs associated with an enhanced direct mail program
that did not meet expectations.

Revenue increases in Hammond in the third quarter of 2002 were aided by
the August 1, 2002 transition to dockside gaming. With the conversion to
dockside, Hammond will now be assessed a graduated state gaming tax ranging
from 15% to 35%. In addition, the calculation of the admission tax was
modified to count patrons on a per entry basis as opposed to a per cruise
basis. Beginning August 1, 2002, the Company calculated its effective tax rate
based on estimated taxes to be paid by year-end. Beginning January 1, 2003,
with a full year on the graduated tax scale, the Company estimates that its
gaming tax will increase from current levels by approximately six percentage
points.

The Company recorded a gain of $162.5 million in the quarter ended
September 30, 2001 as a result of the sale of Joliet to Argosy Gaming Company.

Corporate expenses increased 46% in the third quarter of 2002, due
primarily to a prior year allocation of Joliet related corporate expenses to
the gain on sale of Joliet.

Interest expense, net decreased 22% in the third quarter of 2002 as
compared to the prior year period, primarily due to lower outstanding debt
balances during the 2002 quarter.

12



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##### Table of Contents



Results of OperationsFinancial Highlights

|                                                   |                                                   |   |                                 |         |                       |   |               |         |   |  |         |     |  
|-------------------------------------------------- | ------------------------------------------------- | - | ------------------------------- | ------- | --------------------- | - | ------------- | ------- | - |  | ------- | --- | -
|                                                   |                                                   |   | Nine months ended September 30, |         | % Increase/(Decrease)
|                                                   |                                                   |   |                                 |         |                      
|                                                   |                                                   |   | 2002                            |         | 2001                  |   | 2002 vs. 2001
|                                                   |                                                   |   |                                 |         |                       |   |              
|                                                   |                                                   |   | (dollars in thousands)          |         |                       |   |              
|Casino revenues                                    |                                                   |   |                                 |         |                       |   |               |         |   |  |         |    
|                                                   | Bossier City                                      |   | $                               | 194,076 |                       |   | $             | 184,771 |   |  |         | 5   | %
|                                                   | Tunica                                            |   |                                 | 198,356 |                       |   |               | 192,482 |   |  |         | 3   | %
|                                                   | Hammond                                           |   |                                 | 232,937 |                       |   |               | 195,979 |   |  |         | 19  | %
|                                                   | Joliet (a)                                        |   |                                 |        |                       |   |               | 158,174 |   |  |         | (b  | )
|                                                   |                                                   |   |                                 |         |                       |   |               |         |   |  |         |    
|                                                   |                                                   | $ | 625,369                         |         |                       | $ | 731,406       |         |   |  | -14     | %  
|                                                   |                                                   |   |                                 |         |                       |   |               |         |   |  |         |    
|Net revenues                                       |                                                   |   |                                 |         |                       |   |               |         |   |  |         |    
|                                                   | Bossier City                                      |   | $                               | 200,921 |                       |   | $             | 190,931 |   |  |         | 5   | %
|                                                   | Tunica                                            |   |                                 | 196,763 |                       |   |               | 192,315 |   |  |         | 2   | %
|                                                   | Hammond                                           |   |                                 | 239,518 |                       |   |               | 200,057 |   |  |         | 20  | %
|                                                   | Joliet (a)                                        |   |                                 |        |                       |   |               | 161,552 |   |  |         | (b  | )
|                                                   |                                                   |   |                                 |         |                       |   |               |         |   |  |         |    
|                                                   |                                                   | $ | 637,202                         |         |                       | $ | 744,855       |         |   |  | -14     | %  
|                                                   |                                                   |   |                                 |         |                       |   |               |         |   |  |         |    
|Operating income (loss)                            |                                                   |   |                                 |         |                       |   |               |         |   |  |         |    
|                                                   | Bossier City (c)                                  |   | $                               | 33,168  |                       |   | $             | 27,219  |   |  |         | 22  | %
|                                                   | Tunica (c)                                        |   |                                 | 56,511  |                       |   |               | 53,447  |   |  |         | 6   | %
|                                                   | Hammond (c)                                       |   |                                 | 46,946  |                       |   |               | 22,138  |   |  |         | 112 | %
|                                                   | Joliet (a) (c)                                    |   |                                 |        |                       |   |               | 47,405  |   |  |         | (b  | )
|                                                   | Gain on assets held for sale                      |   |                                 |        |                       |   |               | 162,485 |   |  |         | (b  | )
|                                                   | Corporate expenses                                |   |                                 | (18,979 | )                     |   |               | (16,708 | ) |  |         | 14  | %
|                                                   | Preopening expense (d)                            |   |                                 |        |                       |   |               | (4,064  | ) |  |         | (b  | )
|                                                   | Deferred compensation                             |   |                                 | (8,086  | )                     |   |               | (580    | ) |  |         | (b  | )
|                                                   | Other                                             |   |                                 | 259     |                       |   |               | (366    | ) |  |         | 171 | %
|                                                   |                                                   |   |                                 |         |                       |   |               |         |   |  |         |    
|                                                   |                                                   | $ | 109,819                         |         |                       | $ | 290,976       |         |   |  | -62     | %  
|                                                   |                                                   |   |                                 |         |                       |   |               |         |   |  |         |    
|Other information                                  |                                                   |   |                                 |         |                       |   |               |         |   |  |         |    
|                                                   | Interest expense, net                             |   | $                               | 46,117  |                       |   | $             | 62,342  |   |  |         | -26 | %
|                                                   | Extraordinary loss                                |   | $                               | 9,683   |                       |   | $             | 6,893   |   |  |         | (b  | )
|                                                   | Net income                                        |   | $                               | 53,404  |                       |   | $             | 222,152 |   |  |         | -76 | %
|Operating margin (operating income/net revenue)(e) |                                                   |   |                                 |         |                       |   |               |         |   |  |         |    
|                                                   | Bossier City (c)                                  |   |                                 | 17      | %                     |   |               | 14      | % |  | 3pts.  
|                                                   | Tunica (c)                                        |   |                                 | 29      | %                     |   |               | 28      | % |  | 1pts.  
|                                                   | Hammond (c)                                       |   |                                 | 20      | %                     |   |               | 11      | % |  | 9pts.  
|                                                   | Joliet (a)(c)                                     |   |                                 |        |                       |   |               | 29      | % |  |         | (b  | )
|                                                   | Consolidated                                      |   |                                 | 17      | %                     |   |               | 39      | % |  | -22pts.
|                                                   | Consolidated  excluding gain from sale of Joliet |   |                                 | 17      | %                     |   |               | 17      | % |  | 0pts.  



---

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

13



---



##### Table of Contents



Nine months ended September 30, 2002 and 2001

The Company experienced a consolidated 14% decline in net revenues in the
first nine months of 2002 versus 2001 due to the sale of Joliet in July 2001.
Net revenues at the three remaining properties increased a combined 9% when
compared to the nine months ended September 30, 2001. Excluding the effects of
the January 1, 2002 adoption of SFAS 142 related to the amortization of
goodwill and intangibles, the Company generated increases in operating income
and operating margins at its Bossier City, Tunica and Hammond properties in the
first nine months of 2002 as compared to the prior year period.

Excluding the $9.6 million in amortization expense that was recorded in
the 2001 period, operating income increased 17%, 4% and 62% in Bossier City,
Tunica and Hammond, respectively, in the nine months ended September 30, 2002
as compared to the prior year period. In addition, operating margins in the
first nine months of 2002 were 17%, 29% and 20% for Bossier City, Tunica and
Hammond, respectively, as compared to operating margins of 15%, 28% and 14%,
respectively, in the 2001 period when calculated on a comparable basis.

Improved results in Bossier City in the first nine months of 2002 were
achieved despite the 1% increase in gaming taxes that went into effect on April
1, 2002. Revenue increases in the 2002 period were achieved through both
volume and hold increases in both slots and table games.

Slot volume in Tunica decreased 2% in the nine months ended September 30,
2002, as compared to the 2001 period. This volume decrease can be directly
attributed to the quarter ended September 30, 2002. Overall, Tunicas
year-to-date net revenues increased 2% over the 2001 period. This increase was
primarily due to an increased hold percentage in slots as compared to the 2001
period. In addition, operating income in Tunica for the nine months ended
September 30, 2002 includes approximately $1.9 million in positive adjustments
related to favorable resolutions on various tax matters. Also, prior year net
revenues in Tunica include approximately $2.0 million related to a reduction in
the amount of promotional costs incurred for player database marketing.

Hammond has shown significant improvements in the nine months ended
September 30, 2002 as compared to the same period in 2001, benefiting from the
Horseshoe branding efforts that have evolved since the property was acquired in
late 1999. See also the impact of dockside gaming as previously discussed in
the results of operations for the three months ended September 30, 2002 and
2001.

Corporate expenses increased 14% in the first nine months of 2002, due
primarily to the resolution of a 1999  2001 Louisiana franchise tax audit.
The Company paid approximately $2.3 million in franchise tax plus interest, in
the first nine months of 2002, related to this audit. Positively impacting
corporate expenses in the 2002 period was a reduction in life insurance expense
on a key executive. In addition, seven months of the monthly consulting
payments to the former owners of Joliet, amounting to $2.3 million, was
included in corporate expense in the 2001 period. Upon the sale of Joliet, the
present value of the remaining liability was accrued and charged against the
gain on the sale of Joliet, thereby excluding those payments from corporate
expense in the 2002 period.

Deferred compensation increased $7.5 million in the first nine months of
2002 due to additional appreciation on vested stock appreciation rights.

Interest expense, net decreased 26% in the nine months ended September 30,
2002 as compared to the prior year period, primarily due to lower outstanding
debt balances during 2002.

14



---



##### Table of Contents



Liquidity and Capital Resources

As of September 30, 2002, the Company had cash and cash equivalents of
$88.4 million. During the nine months ended September 30, 2002, cash provided
by operating activities was $113.2 million, net cash used in investing
activities was $32.5 million and net cash used in financing activities was
$213.0 million.

In June 2002, the Company redeemed all of its outstanding 9.375% Senior
Subordinated Notes for $166.5 million, including call premium. As a result of
this redemption, the Company recorded an extraordinary loss on early retirement
of debt of $9.7 million in the second quarter of 2002. In addition, also in
June 2002, the Company repaid approximately $38.0 million in other debt in June
2002, bearing interest rates ranging from 9% to 12%. The Company used cash on
hand plus $60.0 million of its Senior Secured Revolving Credit Facility
(Credit Facility) to repay these obligations. As of November 7, 2002, the
Company had $17 million outstanding under its Credit Facility.

Management believes that the Companys cash and cash equivalents, cash
from operations and $133.0 million in available borrowing capacity on its
Credit Facility will be adequate to meet the Companys debt service obligations
and capital expenditure commitments for the next twelve months.

Ownership Transactions

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

Goodwill

During the third quarter of 2002, in accordance with EITF 93-7
Uncertainties Related to Income Taxes in a Purchase Business Combination, the
Company reduced goodwill and accrued liabilities by $2.2 million related to the
favorable resolution of an estimated tax liability established in connection
with the acquisition of Horseshoe Hammond, Inc.

Contingencies

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

On June 2, 2000, a lawsuit was filed in the United States District Court
for the Northern District of Indiana, against the Company and the Companys
subsidiary in Hammond, Indiana (Horseshoe Hammond or Hammond) on behalf of
current and former employees of Horseshoe Hammond alleging that Horseshoe
Hammond and the Company are responsible for damages to current and former
employees as a result of poor air quality on the gaming vessel operating in
Hammond, Indiana. The lawsuit alleged certain tort claims based on poor air
quality and sought certification as a class on behalf of similarly situated
current and former employees of Horseshoe Hammond. On May 8, 2002, the United
States District Court denied Plaintiffs request for class certification and on
October 18, 2002, plaintiffs counsel amended the suit to add 19 additional
plaintiffs. Horseshoe Hammond and the Company deny the allegations in the
complaint asserted by the named employees and intend to vigorously contest this
matter.

15



---



##### Table of Contents



Contingencies (continued)

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

Horseshoe Entertainment (HE), the Companys subsidiary that owns and
operates Horseshoe Bossier City, was issued an initial operators license by
the Louisiana Enforcement Division (the Enforcement Division) on November 22,
1993 for a five year period. HE timely submitted its renewal application to
the Enforcement Division and on October 20, 1998, the Louisiana Gaming Control
Board (the Gaming Control Board) granted HEs license renewal subject to
suitability review. HEs license renewal was extended on October 19, 1999,
subject to completion of suitability review. The Enforcement Division filed a
Report with the Louisiana Gaming Control Board on May 13, 2002, documenting the
results of its suitability review. The Report noted a number of issues in
Horseshoes history and dealings with the State of Louisiana that, in the view
of the Enforcement Division, should be considered by the Gaming Control Board
prior to making the final determination on HEs license renewal application.
The Report does not make a recommendation to the Gaming Control Board and, in
fact, the Enforcement Division noted that the Gaming Control Board has the
authority to renew HEs license without conditions, to renew HEs license with
such conditions as the Gaming Control Board deems appropriate or to deny HEs
application for a license renewal. HE believes the Report inaccurately
describes certain matters. The Gaming Control Board is expected to convene a
hearing to act on HEs license renewal during January 2003. At that hearing,
HE will have an opportunity to present its case for license renewal to the
Gaming Control Board and in the process to contest and refute the items in the
Report that are critical of HEs past actions.

On July 5, 2001, James Wellborn and Charles J. Nickel filed a lawsuit in
the 26th Judicial Court (Bossier Parish) against the Municipality of Bossier
City, Louisiana asking the Court to (i) order the City to collect a $3.00 per
person boarding fee from Horseshoe Entertainment, (ii) invalidate a contract
fixing the amount paid by Horseshoe Entertainment to Bossier City as opposed to
a per person boarding fee and (iii) certify the suit as a class action on
behalf of all citizens and taxpayers of Bossier Parish. The Company believes
the suit is without merit and will vigorously defend itself in the action,
including the validity of the contract.

In August 2002, the Louisiana Court of Appeals found that Billy Brooks
Hudson, among others, have the right as taxpayers to prosecute a suit against
the City of Bossier and others, seeking the same relief sought in the case
filed by Wellborn on July 5, 2001. Accordingly, the Louisiana Court of Appeals
directed that the trial court reinstate in the 26th Judicial District Court,
Bossier Parish Louisiana, the previously dismissed case of Hudson et.al. v.
City of Bossier et.al. The Company believes that, like the Wellborn suit, the
Hudson suit is without merit and the Company will vigorously defend itself in
the action.

16



---



##### Table of Contents






Item 3. Quantitative and Qualitative Disclosure About Market Risk

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




Item 4. Controls and Procedures

The Company maintains disclosure controls and procedures that are designed
to ensure that information required to be disclosed in the Companys Exchange
Act reports is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commissions rules and forms,
and that such information is accumulated and communicated to the Companys
management, including its Chief Executive Officer and Chief Financial Officer,
as appropriate, to allow timely decisions regarding required disclosure. In
designing and evaluating the disclosure controls and procedures, management
recognized that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired
control objectives, and management necessarily was required to apply its
judgement in evaluating the cost-benefit relationship of possible controls and
procedures.

Within 90 days prior to the date of this report, the Company carried out
an evaluation, under the supervision and with the participation of the
Companys management, including the Companys Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the Companys disclosure controls
and procedures. Based on the foregoing, the Companys Chief Executive Officer
and Chief Financial Officer concluded that the Companys disclosure controls
and procedures were effective.

There have been no significant changes in the Companys internal controls
or in other factors that could significantly affect the internal controls
subsequent to the date the Company completed its evaluation.

17



---



##### Table of Contents






PART II OTHER INFORMATION




Item 1. LEGAL PROCEEDINGS

On June 2, 2000, a lawsuit was filed in the United States District Court
for the Northern District of Indiana, against the Company and the Companys
subsidiary in Hammond, Indiana (Horseshoe Hammond or Hammond) on behalf of
current and former employees of Horseshoe Hammond alleging that Horseshoe
Hammond and the Company are responsible for damages to current and former
employees as a result of poor air quality on the gaming vessel operating in
Hammond, Indiana. The lawsuit alleged certain tort claims based on poor air
quality and sought certification as a class on behalf of similarly situated
current and former employees of Horseshoe Hammond. On May 8, 2002, the United
States District Court denied Plaintiffs request for class certification and on
October 18, 2002, plaintiffs counsel amended the suit to add 19 additional
plaintiffs. Horseshoe Hammond and the Company deny the allegations in the
complaint asserted by the named employees and intend to vigorously contest this
matter.

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

Horseshoe Entertainment (HE), the Companys subsidiary that owns and
operates Horseshoe Bossier City, was issued an initial operators license by
the Louisiana Enforcement Division (the Enforcement Division) on November 22,
1993 for a five year period. HE timely submitted its renewal application to
the Enforcement Division and on October 20, 1998, the Louisiana Gaming Control
Board (the Gaming Control Board) granted HEs license renewal subject to
suitability review. HEs license renewal was extended on October 19, 1999,
subject to completion of suitability review. The Enforcement Division filed a
Report with the Louisiana Gaming Control Board on May 13, 2002, documenting the
results of its suitability review. The Report noted a number of issues in
Horseshoes history and dealings with the State of Louisiana that, in the view
of the Enforcement Division, should be considered by the Gaming Control Board
prior to making the final determination on HEs license renewal application.
The Report does not make a recommendation to the Gaming Control Board and, in
fact, the Enforcement Division noted that the Gaming Control Board has the
authority to renew HEs license without conditions, to renew HEs license with
such conditions as the Gaming Control Board deems appropriate or to deny HEs
application for a license renewal. HE believes the Report inaccurately
describes certain matters. The Gaming Control Board is expected to convene a
hearing to act on HEs license renewal during January 2003. At that hearing,
HE will have an opportunity to present its case for license renewal to the
Gaming Control Board and in the process to contest and refute the items in the
Report that are critical of HEs past actions.

18



---



##### Table of Contents



Item 1. LEGAL PROCEEDINGS (continued)

On July 5, 2001, James Wellborn and Charles J. Nickel filed a lawsuit in
the 26th Judicial Court (Bossier Parish) against the Municipality of Bossier
City, Louisiana asking the Court to (i) order the City to collect a $3.00 per
person boarding fee from Horseshoe Entertainment, (ii) invalidate a contract
fixing the amount paid by Horseshoe Entertainment to Bossier City as opposed to
a per person boarding fee and
(iii) certify the suit as a class action on behalf of all citizens and
taxpayers of Bossier Parish. The Company believes the suit is without merit
and will vigorously defend itself in the action, including the validity of the
contract.

In August 2002, the Louisiana Court of Appeals found that Billy Brooks
Hudson, among others, have the right as taxpayers to prosecute a suit against
the City of Bossier and others, seeking the same relief sought in the case
filed by Wellborn on July 5, 2001. Accordingly, the Louisiana Court of Appeals
directed that the trial court reinstate in the 26th Judicial District Court,
Bossier Parish Louisiana, the previously dismissed case of Hudson et.al. v.
City of Bossier et.al. The Company believes that, like the Wellborn suit, the
Hudson suit is without merit and the Company will vigorously defend itself in
the action.

19



---



##### Table of Contents






Item 6. EXHIBITS AND REPORTS ON FORM 8-K

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



---

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

20



---



##### Table of Contents






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                        |  |                                                       |  |                                                                                                  
|----------------------- |  | ----------------------------------------------------- |  | -------------------------------------------------------------------------------------------------
|                        |  | HORSESHOE GAMING HOLDING CORP.
a Delaware corporation
|                        |  |                                                       |  |                                                                                                  
|                        |  |                                                       |  |                                                                                                  
|Date: November 14, 2002 |  | By:                                                   |  | /s/ Kirk C. Saylor                                                                               
|                        |  |                                                       |  |                                                                                                  
|                        |  |                                                       |  | Kirk C. Saylor
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)

21



---



##### Table of Contents






CERTIFICATION

I, Kirk C. Saylor, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Horseshoe Gaming
Holding Corp.;                                                                                                                                                                                                                                         
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                     



| | (a) |  | Designed such disclosure controls and procedures
to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly
during the period in which this quarterly report is being
prepared;
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | Evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the
Evaluation Date); and                                                                                                  
|
| | (c) |  | Presented in this quarterly report our
conclusions about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the Evaluation
Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) |  | All significant deficiencies in the design or
operation of internal controls which could adversely affect
the registrants ability to record, process, summarize and
report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | Any fraud, whether or not material, that involves
management or other employees who have a significant role in
the registrants internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        |  |                                       
|----------------------- |  | --------------------------------------
|Date: November 14, 2002 |  | /s/ Kirk C. Saylor                    
|                        |  |                                       
|                        |  | Kirk C. Saylor
Chief Financial Officer

22



---



##### Table of Contents



CERTIFICATION

I, Jack B. Binion, certify that:



|1) |  | I have reviewed this quarterly report on Form 10-Q of Horseshoe Gaming
Holding Corp.;                                                                                                                                                                                                                                         
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2) |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3) |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4) |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                     



| | (a) |  | Designed such disclosure controls and procedures
to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly
during the period in which this quarterly report is being
prepared;
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | Evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the
Evaluation Date); and                                                                                                  
|
| | (c) |  | Presented in this quarterly report our
conclusions about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the Evaluation
Date;                                                                                                                        



|5) |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) |  | All significant deficiencies in the design or
operation of internal controls which could adversely affect
the registrants ability to record, process, summarize and
report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | Any fraud, whether or not material, that involves
management or other employees who have a significant role in
the registrants internal controls; and                                                                                                                                        



|6) |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        |  |                                       
|----------------------- |  | --------------------------------------
|Date: November 13,
2002 |  | /s/ Jack B. Binion                    
|                        |  |                                       
|                        |  | Jack B. Binion
Chief Executive Officer

23