Fair Grounds Corp · 10-K · For 10/31/95

Filed On 2/16/96   ·   SEC File 0-07607   ·   Accession Number 950144-96-576

Annual Report   ·   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Fair Grounds Corporation 10-K                         92    379K 
 2: EX-10.U     Loan Agreement                                        32    109K 
 3: EX-10.V     Disbursement Agreement                                11     33K 
 4: EX-10.W     Commercial Security Agreement                         31    115K 
 5: EX-27       Financial Data Schedule                                1      6K 

10-K   ·   Fair Grounds Corporation 10-K
Document Table of Contents

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934 

        For the fiscal year ended October 31, 1995 Commission file number 0-7607
                                  ----------------                        ------

FAIR GROUNDS CORPORATION
------------------------
(Exact name of registrant as specified in its charter)

Louisiana                                 72-0361770    
--------------------------------------------------------------------------------
(State or other jurisdiction of                       (IRS Employer             
incorporation or organization)                      Identification No.)         

1751 Gentilly Blvd.,  New Orleans LA                     70119            
--------------------------------------------------------------------------------
(Address of principal executive offices)                (Zip Code)            

Registrant's telephone number including area code       504/944-5515            
                                                  ------------------------------

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

Title of each class                Name of each exchange on which registered    
--------------------------------------------------------------------------------

Not applicable                                         NONE                     
--------------------------------------------------------------------------------

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

Common Stock, No Par Value
--------------------------------------------------------------------------------
(Title of Class)

   Indicate by a check mark whether the registrant (1) has filed all
reports 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 report(s), and (2) has been subject to     
such filing requirements for the past 90 days.                                  

Yes   X                         No          
---                            ---

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

       The aggregate market value of the voting stock held by non-affiliates
of the Registrant was $2,432,860 computed by reference to the average bid and   
asked prices of such stock on February 10, 1996.                                

  The number of shares outstanding of the issuer's single class of
common stock was 468,180 as of January 31, 1996.                                

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EXHIBIT INDEX ON PAGE 92

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PART I

ITEM 1.  BUSINESS                                                               

GENERAL OVERVIEW OF BUSINESS                                                    

Fair Grounds Corporation (the "Company"), which was incorporated in 1941, is    
the owner of the Fair Grounds Race Course in New Orleans, Louisiana, at which   
thoroughbred horse racing, off-track betting and video poker gaming are         
conducted.  The Fair Grounds Race Course currently is in its 124th racing       
season, making it the third oldest thoroughbred racing track in the United      
States.  In addition to its live racing operations, the Company currently       
operates five off-track betting facilities, referred to herein as tele-tracks,  
at locations in St. Bernard, Orleans, Jefferson, St. John and LaFourche         
Parishes, Louisiana, as well as a tele-track facility located at the Fair       
Grounds Race Course.  Through Finish Line Management Corporation ("Finish       
Line"), an affiliate, the Company operates tele-track facilities in Terrebone,  
St. Tammany and Jefferson Parishes, Louisiana.  At each location, the Company   
makes available pari-mutuel and video poker wagering and food and beverage      
services to the public and receives revenues from such services.  The Company   
conducts its annual live racing meet and operates its tele-tracks for off-track 
betting pursuant to the rules and under the authority of the Louisiana State    
Racing Commission (the "Racing Commission"), a statutory body, the members of   
which are appointed by the Governor of Louisiana.  The Company's live races are 
simulcasted to its tele-tracks and to other facilities located both inside and  
outside Louisiana.  Since 1992 the Company also has operated video poker gaming 
devices at the Fair Grounds Race Course and each of the Company's tele-track    
facilities.                                                                     

DEVELOPMENTS DURING FISCAL 1995                                                 

New Tele-Track Facility                                                         

In October 1995, the Company opened a tele-track facility in Jefferson Parish,  
approximately 10 miles from the Fair Grounds Race Course.                       

Progress of Construction                                                        

As previously reported, on December 17, 1993, a fire destroyed the main         
clubhouse and grandstand building and all of its contents at the Fair Grounds   
Race Course.  During the remainder of December 1993, the Company made           
arrangements for the installation of temporary racing and patron facilities and 
contracted with equipment vendors, suppliers and contractors for the            
installation of totalisator, television, lighting and other equipment necessary 
to continue the live racing meet.  During the two and one-half week period from 
the date of the fire to January 5, 1994, the temporary facilities were          
installed and the property was readied for the                                  

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reopening of racing.  The Company spent in the aggregate $2.68 million in       
preparing the temporary facilities for the reopening of live racing at the Fair 
Grounds.                                                                        

The temporary facilities were utilized throughout the balance of the 1993-94    
racing season and for the entire 1994-95 racing season and continue to be used  
at the present time.  In addition, the Company's new tele-track facility at the 
Fair Grounds Race Course, which also serves as a temporary clubhouse area, was  
opened on December 22, 1994.  It is a two-story building of concrete and steel  
construction, aggregating approximately 20,000 square feet.  The lower level    
contains tables and chairs, a concessions area, mutuel machines and an area set 
aside for video poker machines.  The second floor contains an area of tables    
and chairs which is currently being used as the clubhouse area.  The new        
facility was constructed on part of the area previously occupied by the old     
main grandstand and clubhouse, and the glass-enclosed front of the building     
overlooks the track.  Those parts of the main grandstand and clubhouse which    
were not totally destroyed by the fire have been torn down and all of the       
debris has been removed.  The total cost for debris removal and the             
construction of the tele-track facility was approximately $3.2 million.         

During the Summer of 1994, the Company approved the plans for a new main racing 
facility and commenced construction of the foundation thereof in August 1994.   
The plans call for the facility to be principally a multi-tiered concrete and   
steel structure, with a total capacity of approximately 10,000 people.  It is   
anticipated that the size of the new facility, together with the new tele-track 
building just completed, to which the new grandstand will be connected, will be 
220,000 square feet in the aggregate.  The old facility contained over 300,000  
square feet.  It is anticipated that there will be general seating in a         
bleacher area in the front of the grandstand, with reserved seating, including  
the new clubhouse area, to be located in tiered areas above the grandstand.  In 
a significant change from the design of the old building, it is anticipated     
that the paddock will be located in the middle of the grandstand and may be     
viewed through a glass area from all levels of the grandstand.  The total cost  
of the facility, together with furniture, fixtures, equipment and certain fees  
and permit costs, was anticipated to be approximately $24.3 million at the time 
construction commenced, which is in addition to the $3.2 million relating to    
debris removal and construction of the tele-track facility, as described above. 

As of January 31, 1996, construction of the facility was approximately 60%      
completed, and the Company had incurred construction costs of approximately     
$15.2 million.  Insurance proceeds recovered to date and interim financing      
provided by First National Bank of Commerce of New Orleans ("FNBC"), as         
described below, provided the source of funds used in such construction.        
However, for the reasons described below, further construction work             

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on the project has been halted.  As a result (i) the cost to complete the       
project cannot now be determined with any certainty and (ii) the Company        
currently anticipates that it will continue to utilize the temporary tent       
facilities and the tele-track facility at least during the remainder of the     
current racing season and possibly for the next racing season.                  

Financing                                                                       

As previously reported, the Company received and accepted a commitment letter   
dated February 6, 1995 from FNBC for a non-revolving line of credit to be used  
as an interim construction loan, convertible to a term loan.  The aggregate     
principal amount of such loan under the terms of such commitment was to have    
been $17.5 million.  The commitment from FNBC provided that the interim         
construction loan was to have closed on or before March 31, 1995.  However, the 
parties agreed to various extensions of such closing date.  FNBC indicated that 
the principal reason for the delay was FNBC's concern with restrictions on and  
the possible elimination of video poker gaming in Louisiana.  See "Legislative  
Action," below.  Inasmuch as video poker franchise tax monies generated by the  
Company and its tele-tracks were to be used for the repayment of the FNBC loan, 
in accordance with the tax relief legislation described herein, any change in   
the video poker gaming laws which restricts or limits video poker as a source   
of revenue may have an adverse impact on such source of repayment.              
Accordingly, final action on the full $17.5 million loan has been delayed until 
after the 1996 Louisiana regular legislative session.                           

During 1995 FNBC provided the Company with short-term interim construction      
loans of $2.15 million on July 17, 1995, $4 million on November 7, 1995, and $1 
million on November 30, 1995.  All of such financing was then consolidated      
under a Loan Agreement dated as of December 18, 1995 between the Company and    
FNBC (the "Loan Agreement"), pursuant to which the Company borrowed an          
aggregate amount of $9,493,050 and utilized a portion of such funds to repay    
the principal amount of the prior loans that was outstanding on December 18,    
1995.  The remaining amount borrowed was utilized to pay construction costs.    

Pursuant to the Loan Agreement, FNBC agreed to extend credit to the Company up  
to aggregate principal amount of $9,493,050 until October 31, 1996.  The Loan   
Agreement states that such commitment is not a revolving credit facility, and   
the commitment is only to make loans up to such aggregate principal amount.     
Accordingly, FNBC has no obligation under the Loan Agreement to lend additional 
funds to the Company.                                                           

Payment of the principal and interest under the Loan Agreement is to be made on 
demand, or if no demand is made, then in 10 monthly installments of $52,740     
principal plus interest, beginning January 17, 1996, and one final payment of   
all principal plus accrued                                                      

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interest on October 31, 1996.  The loan bears interest at 9% per annum.  On     
each monthly payment date, payment of principal and interest is to be made from 
the proceeds of the funds received as a result of the video poker tax relief    
legislation, which funds are to be on deposit in a separate lockbox, in         
accordance with a Disbursement Agreement entered into among Company, FNBC and   
Video Services, Inc. ("VSI") dated July 17, 1995.  The Disbursement Agreement   
provides that VSI acknowledges that the first $2.5 million in video poker       
franchise fee payments otherwise due annually to the State of Louisiana are to  
be remitted to the Company under the terms of the tax relief legislation.  For  
each annual period from July 1 through June 30, such funds are to be debited    
from VSI's bank account and deposited into a lockbox at FNBC.  Such proceeds    
are to be used solely for the purpose of making payments of principal and       
interest from time to time due under the terms of the Loan Agreement.  Any      
amount in excess of the amount of debt service, up to $2.5 million annually, is 
to be applied as a prepayment of the principal amount of the loan, and any      
excess is to be returned to the treasury of the State Louisiana.  The Loan      
Agreement also provides that any fire insurance proceeds (not including         
proceeds payable to any third party) received by the Company are to be used to  
prepay the loan.                                                                

The indebtedness under the Loan Agreement is secured by (i) a second mortgage   
by the Company of all of its real property; (ii) a mortgage by Marie G. Krantz  
of all the real property formerly constituting the Jefferson Downs Race Course; 
(iii) a security interest in all the Company's accounts, inventory, equipment,  
fire insurance proceeds, tax relief monies, construction property, material     
contracts and all deposit accounts; (iv) a security interest in certain         
investment securities owned by Marie G. Krantz; (v) a security interest in all  
furniture, fixtures and equipment owned by the Company, Finish Line and         
Jefferson Downs; (vi) a pledge by Richard Katcher, as Trustee u/t/a between     
John G. Masoni and John G. Masoni, Trustee, pursuant to a restatement of his    
Trust Agreement dated April 19, 1991 as modified on October 24, 1992 (the       
"Trust"), Marie G. Krantz, individually and as Voting Trustee, Bryan G. Krantz, 
Vickie Krantz and Jefferson Downs of an aggregate of 342,584 shares of common   
stock of the Company, constituting all shares of common stock of the Company    
beneficially owned by them (see Item 12, "Security Ownership of Certain         
Beneficial Owners and Management" herein for a description of the amount of     
such shares and the terms of such pledge agreements); (vii) a limited guaranty  
of such indebtedness by Marie G. Krantz; and (viii) a guaranty of such          
indebtedness by Finish Line.                                                    

The Loan Agreement provides that, commencing January 20, 1996, the Company will 
deposit monthly into an account at FNBC all "Excess Cash Flow" generated during 
the immediately preceding month.  Excess Cash Flow is defined as all net income 
for the month; plus or minus non-cash items such as depreciation and            
amortization; plus or minus the changes in accounts receivable, inventory,      
prepaid                                                                         

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expenses, accounts payable and accrued expenses, and any other operating        
balance sheet related activity affecting the cash position; and plus or minus   
capital expenditures.  This obligation ceases if and when the 1996 Louisiana    
regular legislative session adjourns without having theretofore passed any      
statute that adversely affects the status of the video poker tax relief or the  
existing video poker operations of the Company, Finish Line, or Jefferson       
Downs, or that would allow for or require local elections as a condition to the 
continuation of video poker operations; or if there is any such legislation     
requiring local elections, the voters fail to approve any such adverse change.  
Prior to the cessation of such obligation, the Company may not withdraw any     
funds in such account, and FNBC has a security interest in such funds.          

The Loan Agreement contains certain negative covenants pursuant to which the    
Company has agreed that it will not (i) resume construction activities without  
first providing FNBC with satisfactory evidence of the source of funding for    
the balance of such construction; (ii) enter into any agreement with any        
affiliate except to the extent that such agreements are commercially reasonable 
and provide for terms which would normally be obtainable in arm's length        
transaction with an unrelated third party;  and (iii) incur capital             
expenditures during any fiscal year in excess of $200,000 without the consent   
of FNBC.                                                                        

In connection with the Loan Agreement, the Company made a payment to Louie J.   
Roussel, III of $1 million of the remaining $2 million principal balance owed   
to him and agreed that the outstanding principal balance of $1 million will be  
due and payable on October 31, 1996.                                            

Insurance Recovery                                                              

As of January 31, 1996, the Company had received approximately $19.5 million in 
insurance proceeds.  Subsequent to the fire, the Company initiated several      
legal actions to effect recoveries of certain insurance proceeds.  The Company  
filed an action against Allianz Underwriters Insurance Company and Royal        
Indemnity Company, alleging that under Louisiana law such insurers were liable  
to the Company in an amount equal to 10% of the amount of the unpaid insurance  
proceeds, plus interest, attorney's fees and costs, for failure to pay the      
Company's claims on a timely basis.  During 1995, both Allianz and Royal,       
without admitting liability, paid the Company certain amounts in settlement of  
such actions.  The Company also filed an action against Travelers Indemnity     
Company of Illinois, in which the Company is seeking a judgment of              
approximately $14.8 million, which is in addition to the insurance proceeds     
received to date, on the grounds that the insurance policy issued to the        
Company by Travelers was a "blanket" policy, thereby providing coverage for the 
full insured value.  Such actions are pending, and there can be no assurance    
that the Company will be successful in any of its claims.  See Item 3, "Legal   
Proceedings."                                                                   

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It should also be noted that the insurer for AutoTote Limited ("AutoTote"), the 
lessor of the Company's totalisator equipment, filed a subrogation action,      
which is pending, against the Company and its general liability insurance       
carrier, United National Insurance Company, for the loss of totalisator         
equipment destroyed in the fire.  The amount sought is approximately $1.2       
million.  Motions by the parties to determine coverage under the Company's      
general liability policy are pending.                                           

Legislative Action                                                              

In 1994 legislation was adopted which provides that owners of video poker       
devices that are located in licensed establishments owned or operated by        
licensed racing associations eligible for emergency relief under the statute    
are exempt from the franchise payment otherwise due under the Video Draw Poker  
Devices Control Law for a period not to exceed 15 years.  The amount of the     
franchise payment which otherwise would have been paid to the State of          
Louisiana during the exemption period is to be remitted directly to the         
licensed racing association, in an amount up to $2.5 million annually, and such 
funds are to be used solely for providing emergency relief to the licensed      
racing association.  The use of funds by the licensed racing association is     
subject to review and oversight by a legislative committee which may reduce the 
amount of the authorized exemption if the racing association cannot satisfy the 
committee that the exemption is necessary for its ongoing economic viability.   
The legislation also provides that at such time as the emergency relief granted 
under the act exceeds the required annual debt service on any indebtedness      
incurred to address the emergency situation, such indebtedness not to exceed    
$25 million, the excess of such funds is to be remitted to the state treasury.  

During 1995, the Joint Legislative Committee on the Budget approved the         
dedication of funds received from the franchise tax relief described above      
toward the exclusive use by the Company for making payments of principal and    
interest to FNBC.                                                               

There is considerable uncertainty in Louisiana at the present time regarding    
the future of the gaming industry.  The cessation of construction and           
subsequent bankruptcy filing by the land-based casino in New Orleans in         
November 1995 has adversely affected tax revenues for both the State of         
Louisiana and the City of New Orleans.  Notwithstanding that loss of revenue,   
consideration is being given by the Governor of Louisiana, who was elected in   
November 1995, and other state officials to legislation which could curtail     
gaming or the use of video poker gaming devices.  In particular, the Governor   
has indicated that he will call a special session of the legislature for the    
purpose of considering legislation which would mandate local elections to       
approve or disapprove gaming in a particular parish or locality.                

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Possible Future Financing                                                       

The Company believes that it was unable during 1995 to obtain the full amount   
of financing originally committed by FNBC due to the uncertainty regarding the  
future of video poker as a continuing source of revenue.  The Company is        
hopeful that the 1996 Louisiana regular legislative session will adjourn        
without having passed any statute that would adversely affect the status of the 
video poker tax relief previously granted to the Company or the existing video  
poker operations of the Company or Finish Line, or that would allow for or      
require local elections as a condition to the continuation of video poker       
operations.  No assurance can be given, however, that such legislation will not 
be adopted.  If adopted, such legislation will adversely affect the ability of  
the Company to obtain long-term financing from FNBC in accordance with the      
terms of the original commitment.                                               

The Company has received a commitment from VSI to provide a non-interest        
bearing loan in the principal amount of $1.5 million, in consideration for      
which the Company is to agree to extend both the term of its agreement with VSI 
and the term of the option period thereunder by two years.  See "Video Poker    
Operations" below.  VSI's agreement to make such loan is conditioned upon the   
closing of the anticipated long-term bank financing.  The Company also has      
recently received an advance of $1 million from VSI.                            

In addition to the foregoing, Marie G. Krantz has committed to make a $1        
million loan to the Company, which would be conditioned upon the closing of,    
and subordinate in right to payment to, the long-term FNBC financing.  Although 
specific terms of such loan have not been discussed, it is likely that the loan 
would be interest-bearing, and that payments would be made after the repayment  
of the FNBC financing.  The Company is also engaged in discussions with         
AutoTote concerning a possible commitment by AutoTote to lend or advance $2.5   
million to the Company, such amount to be repaid through a subordinated loan    
arrangement or through an extension of the lease terms relating to the          
totalisator equipment.                                                          

In view of the cessation of construction and the additional expense which is    
likely to be incurred as a result of construction delays, it is not certain     
that, even if all of such financing is consummated, including the long-term     
financing by FNBC in accordance with the terms of the original commitment, the  
Company will be able to complete the construction of its new facility as        
presently planned.  It may be necessary to (i) obtain funds from other sources, 
(ii) attempt to increase the amount of long-term financing from FNBC or (iii)   
seek to effect savings in the construction costs related to the completion of   
the facility.  The Company has had no discussions with any other possible       
source of such financing, nor has it reached any understanding with FNBC        
regarding any increase in the financing which the Company hopes to obtain from  
FNBC as originally committed by FNBC.  It should also                           

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be noted that FNBC and the Company are not currently engaged in any discussions 
concerning the terms and conditions of the definitive agreements relating to    
such long-term financing, given the uncertain legislative climate.              
Accordingly, there can be no assurance that definitive agreements will be       
reached, or, if reached, that they will be in accordance with the terms of the  
original commitment.  The foregoing uncertainties raise substantial doubt about 
the Company's ability to continue as a going concern.  In the event that such   
long-term financing is not completed by October 31, 1996, or that the funds     
provided through all sources of such financing are insufficient to meet the     
Company's needs, the Company may consider a number of alternatives, including   
seeking protection from creditors under the United States Bankruptcy Code.  See 
Item 7, "Management's Discussion and Analysis of Financial Condition and        
Results of Operation."                                                          

DESCRIPTION OF BUSINESS                                                         

Live Racing Meet                                                                

Live Racing at the Fair Grounds Race Course.  Annually, upon application and    
after hearing, the Racing Commission grants to each of the horse racing tracks  
operating in Louisiana certain dates during which live racing meets may be      
conducted.  Currently four licensees, including the Company, operate live       
racing meets in Louisiana at various times during the year.                     

The Company's live racing meet generally is conducted annually from             
Thanksgiving Day to late March.  One other track in Louisiana, Delta Downs,     
conducts its live racing meet during the same time period as the Company        
conducts its live meet.  Such track is smaller and conducts its live racing     
meet approximately two hundred miles from New Orleans.  Delta Downs also        
simulcasts to and allows wagering to be accepted on its live races at the       
tele-tracks to which the Company simulcasts its live races and at which         
wagering on the Company's live races is accepted.                               

The Company's live racing meet for the fiscal year ended October 31, 1995 was   
conducted over 88 racing days.  In the prior fiscal year, the Company's live    
meet was conducted over 77 racing days, excluding 10 racing days that were lost 
as a result of the fire.  The total on-track handle, which is the amount of     
money handled during the live racing meet through the Company's mutuel machines 
at the Fair Grounds Race Course, was $25,134,326 in fiscal 1995, $26,110,964 in 
fiscal 1994 and $38,565,606 in fiscal 1993.  See "Sources of Revenue."          

During its annual live racing meet, the Company attracts thoroughbred horses    
from racing stables located in Louisiana and from nationally known racing       
stables in Kentucky and elsewhere.  Of the 8,311 thoroughbred starters at the   
Fair Grounds Race Course                                                        

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during the fiscal 1995 racing meet, approximately 41% were Louisiana-bred.  The 
live racing meet for the fiscal year ended October 31, 1995 featured races with 
guaranteed purses as high as $350,000, although the average purse was           
approximately $16,000 per race and $159,400 per day.  Total purse money         
distributed during the 1995 fiscal year was in excess of $14 million.           

For the fiscal year ending October 31, 1996, the Racing Commission has granted  
the Company a license to conduct its live racing meet during the period from    
November 23, 1995 through March 25, 1996, a total of 88 racing days, with live  
racing being conducted generally five days a week (Wednesday through Sunday)    
and with ten to eleven races during each racing day.                            

Simulcasting of Live Races.  In addition to conducting live horse racing during 
the live racing meet, the Company simulcasts its live races to, and allows      
wagering to be accepted at, the tele-tracks which it operates in Orleans, St.   
Bernard, St. John and LaFourche Parishes, Louisiana, the tele-tracks which are  
licensed to the Company and operated by Finish Line, and tele-tracks operated   
by the other horse racing tracks in Louisiana.  The Company also simulcasts     
live races to certain other wagering facilities located outside of Louisiana.   
The Company has continued to experience significant increases in the demand for 
the Company's races from out-of-state markets.  Total handle from such out-of-  
state markets during the fiscal 1995 racing season was approximately $92        
million, a 119% increase over the previous racing season.  The Company earns a  
net commission (after payment of purses) of approximately 1.5% of out-of-state  
handle.                                                                         

Off-Track Betting                                                               

Ownership and Operation of Tele-Track Facilities.  Legislation which was        
adopted in 1987 in Louisiana authorizes off-track wagering, and such            
legislation regulates the licensure by the Racing Commission of tele-tracks,    
the ownership of such facilities, the commissions which can be earned on wagers 
and other related matters.  Pursuant to such legislation, in 1988 each of the   
horse racing tracks then operating in Louisiana was granted a license to        
operate tele-tracks at its racetrack and also within a 55-mile radius of its    
racetrack, provided that the voters of the parish where the tele-track was to   
be located approved the establishment of such a facility.  The legislation also 
provides that when two pari-mutuel racetracks are located within the same       
55-mile radius, any tele-tracks opened in such areas are to be jointly owned    
unless one of the eligible racetracks does not wish to participate.  In 1987,   
the Company and Jefferson Downs, which is now an affiliate of the Company and   
which through 1992 conducted live racing at a facility located approximately 12 
miles west of the Fair Grounds Race Course, reached an understanding with       
respect to the operation of tele-tracks in the parishes located within the      
55-mile radius of their respective horse racing tracks.  When Jefferson Downs   
ceased                                                                          

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its live racing in 1992, the Company and Jefferson Downs reached an agreement   
whereby the Company, through Finish Line, operates the tele-tracks formerly     
operated by Jefferson Downs.  Total paid attendance at the Company's            
tele-tracks (excluding the former Jefferson Downs tele-tracks) during the       
fiscal year ended October 31, 1995 was 314,426, compared to 345,905 during      
fiscal 1994 and 471,394 during fiscal 1993, and the total off-track handle at   
such facilities during the 1995 fiscal year was $53,664,907, compared to        
$55,713,253 during fiscal 1994 and $69,922,452 during fiscal 1993.  See         
"Sources of Revenue"  and "Management's Discussion and Analysis of Financial    
Condition and Results of Operations."                                           

During 1992 Jefferson Downs did not renew its license application with the      
Racing Commission and, accordingly, did not conduct live racing in 1993.  In    
August 1992, Jefferson Downs assigned to the Company all of its right, title    
and interest in and to the leases on its tele-track facilities in Terrebone,    
St. Tammany and Jefferson Parishes, Louisiana, such assignment to be effective  
as of the date the Racing Commission approved the transfer to the Company of    
all licenses necessary for the operation of such tele-tracks.  Such approval    
was granted by the Racing Commission in May 1993.                               

On October 9, 1992, the Company entered into a Management Agreement (the        
"Management Agreement") for Finish Line to operate the tele-track facilities    
owned by Jefferson Downs and transferred to the Company, as described above.    
The Management Agreement is for a term of ten years, commencing November 1,     
1992, with the option granted to Finish Line to extend the term for two         
additional five-year periods.  The Management Agreement provides that Finish    
Line is to have the exclusive responsibility for the direction, supervision,    
management and operation of such facilities, is to collect all monies from such 
operation and is to pay all expenses in connection therewith.  The Company is   
to receive 0.1% of the gross pari-mutuel handle at such facilities, and Finish  
Line is to receive monthly compensation equal to the difference between the     
gross receipts collected at such facilities less all expenses (including the    
guaranteed payment to the Company) paid by Finish Line.  In addition, Finish    
Line is to indemnify the Company for, among other things, all obligations under 
the leases assigned by Jefferson Downs to the Company.  The Company believes    
that this arrangement benefits the Company by, among other things, providing    
additional funds to be set aside to supplement purses for live racing at the    
Fair Grounds Race Course.  See "Purse Supplements," below.                      

Simulcasting to Tele-Track Facilities.  When a live racing meet is not in       
progress at the Fair Grounds Race Course, horse races are simulcasted from      
other tracks then conducting live racing in Louisiana as well as from various   
race tracks throughout the United States hosting races of national prominence   
to the Company's tele-tracks, to the tele-track facility located at the Fair    
Grounds Race                                                                    

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Course and to other off-track tele-tracks.  The Company generally is required   
to make payments in the form of host track fees and purse supplements to those  
tracks conducting live races which are simulcasted to the Company's             
tele-tracks.  The Company's tele-tracks generally are open daily, depending on  
patron demands and race offerings, for afternoon and evening racing programs    
which are simulcasted to the tele-tracks.                                       

Purse Supplements.  A portion of the handle generated at tele-track facilities  
is required by Louisiana law to be set aside and used to supplement purses at   
live racing facilities.  Purse supplements are computed on a sliding scale of   
5.5%, 6% and 6.5% on the tele-tracks' daily handle.  Additionally, purse        
supplements of 6.5% of handle are required on all wagers when off-track betting 
is conducted at the racing facility of the primary licensee and an additional   
1.5% of all "exotic" wagers at tele-track facilities is to be paid as purse     
supplements.  Race tracks are also allowed to retain the proceeds from uncashed 
winning pari-mutuel tickets, up to $250,000 for each licensee's meet.  Uncashed 
pari-mutuel tickets exceeding $250,000 per race meet are to be remitted to the  
State of Louisiana.  During the year ended October 31, 1995, the Company        
retained approximately $229,000 in such uncashed mutuel tickets as compared to  
approximately $300,000 in fiscal 1994 and $369,000 in fiscal 1993.              

Video Poker Operations                                                          

In June 1991, the Louisiana legislature enacted the Video Draw Poker Devices    
Control Law, which grants pari-mutuel facilities the right to install and       
operate an unlimited number of video poker machines.  Such legislation also     
allows other types of businesses, such as bars, truck stops and restaurants, to 
operate video poker machines, but restricts the number of machines at those     
establishments.  See "Regulation."  The law requires owners of pari-mutuel      
wagering facilities such as the Company to set aside one-half of the net        
revenues from such devices in excess of certain amounts and to use such amounts 
which are set aside to supplement purses for live racing or, if live racing is  
not then being conducted, to place such amounts in an interest-bearing account  
and utilize them to supplement purses during the next live racing meet.  Any    
such funds which are earned from devices located at a tele-track are to be used 
for purse supplements by the owner of the tele-track or, if it is jointly       
owned, to be divided among the owners in proportion to their ownership          
interests.                                                                      

In February 1992, the Company, Jefferson Downs and Finish Line entered into an  
agreement with VSI, whereby VSI was granted the exclusive right and license by  
the Company to install, maintain and operate video draw poker devices at the    
Fair Grounds Race Course and Jefferson Downs Race Course and at the tele-tracks 
operated by the Company, Jefferson Downs and Finish Line.  Such agreement is    
for an initial term of five years, with an option by VSI to extend              

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the term for an additional five years.  See "Possible Future Financing" above   
for a description of the proposed commitment to extend such term.  The          
agreement provides that the Company is to receive a percentage of the revenues  
from the operation of the devices installed at the Company's facilities.  Such  
percentage is to be calculated on the basis of the average amount collected     
daily from each device during each month, after the payment of prizes, taxes    
and fees.  See "Sources of Revenue."  The devices installed by VSI pursuant to  
such agreement remain the property of VSI.  As of October 31, 1995, there were  
a total of 250 devices in operation at all of the Company's facilities.  In     
addition, there were a total of 449 devices at the tele-tracks operated by      
Finish Line as of October 31, 1995.                                             

The agreement also provides for the Company and Finish Line to share in an      
annual promotional fee of $270,000 paid by VSI.  During fiscal 1995, by         
agreement between the Company and Finish Line, the total amount of such         
promotional fee was retained by the Company.  Of such amount, $135,000 was set  
aside for purse supplements to be paid during the Company's 1995-96 racing      
meet.                                                                           

SOURCES OF REVENUE                                                              

General                                                                         

During the last several fiscal years and in the current and future fiscal       
years, off-track betting in connection with live racing meets has had and is    
expected to continue to have a substantial impact on horse racing and           
pari-mutuel wagering in Louisiana.  See "Management's Discussion and Analysis   
of Financial Condition and Results of Operations." Through the development and  
operation of the tele-tracks described herein, the Company has endeavored to    
create additional revenue producing sites, the revenues from which have         
partially offset declines in on-track attendance and handle and related         
revenues since those off-track facilities began operation.                      

The Company's business continues to be seasonal as a result of the Company's    
live racing season.  The Company has received and should continue to receive a  
majority of its revenues during the first and second quarters of its fiscal     
year when its live racing meet is held.  Prior to the commencement of off-track 
wagering, the Company did not earn significant revenues in the third and fourth 
quarters of its fiscal year.  Because the Company's tele-tracks are now         
operated year-round, the Company earns revenues throughout the fiscal year, but 
on a smaller scale in the third and fourth quarters than in the first and       
second quarters of its fiscal year.  In addition, video poker operations are    
conducted year-round; however, revenue from video poker operations generally is 
higher during the months when live racing is conducted at the Company's race    
track, since attendance there is higher during such period.                     

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For information regarding the Company's operating revenues, income or loss from 
operations, other income, net income or loss and total assets, see "Selected    
Financial Data."                                                                

Income from Wagering                                                            

The principal component of the Company's revenue is generated from pari-mutuel  
wagering, both on-track and off-track.  In pari-mutuel wagering on horses,      
those who wager on the first, second and third place horses share the total     
stakes, or pool, less a percentage retained by the Company.  The term "pool"    
means the total amount wagered to win (first place), to place (second place),   
or to show (third place) on every horse in a given race, or exacta and trifecta 
wagers on certain combinations of horses.  Under the pari-mutuel system,        
bettors wager against each other and not against the racing facility, which has 
no interest in which horse wins or loses.  Racing facilities are authorized     
under Louisiana law to retain a stated percentage of the total money handled    
through the mutuel machines located at such racing facilities and their         
tele-tracks on each racing day.  Mutuel commissions range from 17% to 25% of    
money handled depending upon the type of wager.  For the fiscal year ended      
October 31, 1995, the Company received pari-mutuel commissions and related      
income of $15.8 million, compared to $16.2 million for fiscal 1994 and $24.2    
million for fiscal 1993.  Total commission income less pari-mutuel taxes was    
$14.1 million for fiscal 1995, $14.5 million for fiscal 1994 and $21.1 million  
for fiscal 1993.                                                                

The Company also receives, during its live racing meet, a percentage of the     
handle from all tele-tracks to which its races are simulcasted, except its own, 
in the form of host track fees as compensation for the simulcasting of its      
races to such facilities.  The Company also pays host track fees to other       
racing facilities for the simulcasting of races to the Company's tele-tracks.   
For the fiscal year ended October 31, 1995, the Company received host track     
fees of $3.9 million and paid host track fees of $1.5 million.  During fiscal   
1994 the Company received host track fees of $2.5 million and paid host track   
fees of $1.5 million and during 1993 the Company received host track fees of    
$2.2 million and paid host track fees of $2.0 million.                          

Breakage, which is the residual amounts remaining in the betting pool after     
winnings are paid out to the nearest dime, is retained by the racing facility   
and tele-tracks as revenue.                                                     

Income from Video Poker Operations                                              

For the fiscal year ended October 31, 1995, revenue from video poker operations 
was $1.1 million.  In addition, the Company received $703,488 in video poker    
tax relief revenues.  As previously described, there were a total of 250        
devices in                                                                      

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operation at the Company's facilities (not including the tele-tracks operated   
by Finish Line) as of October 31, 1995.                                         

Other Sources of Revenue                                                        

Additional revenue to the Company is generated from program sales, admission    
charges collected by the racing facility and tele-tracks, parking, and food and 
beverage services, all of which are operated directly by the Company.  Pursuant 
to its agreement with the publisher of the Daily Racing Form, the Company is    
the wholesaler for sales of the Daily Racing Form in the greater New Orleans    
area.  For two weekends each year, after the live racing meet has concluded,    
the infield of the Fair Grounds Race Course is used by a non-profit             
organization in New Orleans to host a Jazz and Heritage Festival.  As           
compensation for the use of its facilities, the Company receives all revenues   
from beverage concessions during the Jazz and Heritage Festival.  The Company   
and the sponsor of the Jazz and Heritage Festival have entered into an          
agreement for the use of the Company's facilities through the 1997 Festival.    
Revenues from the 1995 Festival were $1.2 million, compared to $1.1 million for 
1994 and $0.7 million for 1993.                                                 

COMPETITION                                                                     

The Company continues to face intense competition from other companies in the   
gaming industry, including those which offer pari-mutuel wagering.  Activities  
which compete or which have the potential for competing with the Company's      
racing facility, tele-tracks and video poker operations include riverboat and   
dockside gambling, state-sponsored lotteries and video poker in restaurants,    
bars, hotels and truck stops.  All such activities are present in the State of  
Louisiana or the Mississippi Gulf Coast area.                                   

Pari-mutuel wagering for live races has experienced declining revenues for the  
last several years, not only at the Fair Grounds Race Course but also at other  
facilities located in Louisiana.  The growth of gaming in the United States in  
recent years has been reflected in various forms, including riverboats,         
dockside gaming facilities, Native American gaming ventures, land-based         
casinos, state-sponsored lotteries, and expanded off-track wagering             
opportunities.  According to information published by the Research Institute of 
the South, gross wagering on live races declined nearly 12% nationally from     
1982 to 1994, with much greater decreases in states that have introduced such   
other forms of gaming.  The impact of the lottery, video poker, and casinos or  
riverboats on live racing in Louisiana has been felt by all of the existing     
tracks; from 1990 through 1994 the average daily handle, on a statewide basis,  
decreased by approximately 44%.  Additional forms of gaming which may be        
introduced in the future, as well as future expansions, additions and           
enhancements to existing facilities by the Company's competitors, could result  
in funds                                                                        

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being directed away from the Company's on-track and off-track facilities.       

Horse Racing                                                                    

The Company's racing facility and tele-tracks compete for patrons with a number 
of sporting events and leisure time and entertainment activities in the New     
Orleans area and throughout Louisiana, including race tracks and tele-tracks    
owned and operated by three other licensees.                                    

The Company also competes with other racetracks in Louisiana and throughout the 
United States in securing high caliber thoroughbred horses to run at the        
Company's racetrack.  As a result of increased purses which should continue to  
be available because of increased purse supplements to the Company, the Company 
believes that the quality of racing at the Fair Grounds Race Course has         
improved and will continue to improve.                                          

Other Forms of Legalized Gaming                                                 

Louisiana Lottery.  A state-wide lottery began operations in Louisiana in       
September 1991.  The Company believes that at its inception the Louisiana       
lottery contributed significantly to a decline in the Company's average daily   
pari-mutuel handle (consisting of both on-track and off-track wagering) at its  
inception; however, the lottery has had little impact during the last several   
fiscal years.                                                                   

Casino Gambling.  A number of dockside casinos are currently operating in or    
near Biloxi, Mississippi, located on the Mississippi Gulf Coast approximately   
60 miles east of New Orleans.  Several other such casinos have been proposed    
for the same area, and a substantial number of dockside gaming facilities are   
in operation in Vicksburg, Greenville, Natchez, Coahoma County and Tunica       
County, Mississippi.                                                            

The Louisiana Riverboat Economic Development and Gaming Control Act, which      
became effective in July 1991, approved the conduct of riverboat gaming         
activities on 12 separate waterways in Louisiana.  The legislation authorizes   
the issuance of up to 15 licenses to operate riverboat casinos within the       
State, with no more than six in any one Parish.  As of January 1, 1996, 14      
licenses had been granted and there were 12 licensed riverboats in operation in 
Louisiana, four of which were operating in the New Orleans area.                

In 1992, the Louisiana legislature approved a single land-based casino to be    
developed in downtown New Orleans.  Such legislation provided that the casino   
is to be the only such authorized casino in the State of Louisiana.  The City   
of New Orleans awarded contracts for the development and operation of such      
casino project, and in May 1995 temporary gambling operations commenced and     

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construction on the permanent casino facility was begun.  Construction was      
halted in the Fall of 1995 when the casino filed for bankruptcy and all         
gambling and construction operations have ceased.  The Company does not believe 
that                                                                            

Video Poker Operations.  As described herein, the Video Draw Poker Devices      
Control Law allows pari-mutuel facilities to have an unlimited number of video  
poker devices at such facilities.  Any person who has been granted a license to 
sell alcoholic beverages for consumption on the premises may be granted a       
license for the placement of devices on such premises; however, with the        
exception of pari-mutuel facilities and truck stop facilities, a licensee may   
not have more than three such devices.  Truck stop facilities may have no more  
than 50 devices.  Devices which are placed in restaurants are to be operated    
only in designated areas which are separate from the dining area of such        
restaurants.  The Company believes that there are numerous establishments       
throughout the New Orleans area at which video poker devices are located;       
however, the Company does not believe that the placement of such devices at     
such other establishments has had a material adverse effect on the revenue      
which has been generated from the operation of such devices at the Company's    
racetrack and tele-tracks.                                                      

REGULATION                                                                      

The Company's operation of pari-mutuel wagering at its racetrack and            
tele-tracks is subject to extensive regulation pursuant to  Louisiana law and   
the rules and regulations of the Racing Commission, which govern, among other   
things, (i) the awarding of licenses for the conduct of live racing meets; (ii) 
the conduct of thoroughbred horse racing; (iii) the types of wagering which may 
be offered by the Company and other pari-mutuel facilities; and (iv) the        
disposition of revenue generated from wagering.  Off-track wagering is also     
regulated by the Racing Commission, pursuant to legislation enacted in          
Louisiana in 1987 and described elsewhere herein.  Such legislation, and        
subsequent regulations adopted by the Racing Commission, govern the ownership   
and operation of off-track wagering facilities, the commissions which           
facilities may earn on wagers and the amounts which must be set aside as purse  
supplements, as described elsewhere herein.                                     

The Video Draw Poker Devices Control Law is subject to the regulation by the    
gaming enforcement division of the Louisiana State Police.  Such legislation    
describes the specifications which must be met before devices can be utilized   
in Louisiana, and also sets forth certain licensing, accounting and reporting   
requirements.  See "Legislative Action" above for a discussion of possible      
changes to state law which may adversely affect video poker gaming.             

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EMPLOYEES                                                                       

During its live racing season the Company employed on-track approximately 550   
persons, including 170 in the mutuel department, 125 in the concessions         
department, 65 in the security department and 190 in the administrative,        
racing, parking, maintenance and publicity departments.                         

In connection with tele-track operations, the Company currently employs         
approximately 320 persons including 100 in the mutuel department, 60 in the     
catering department, 35 in the security department and 25 in the                
administrative, admissions, maintenance and publicity departments, some of whom 
are employed on-track during the live racing season and are included in the     
total employees referred to above.                                              

ITEM 2.  PROPERTIES                                                             

The Company owns its racetrack site which consists of approximately 145 acres   
of land held in fee ownership, situated within a fenced area adjacent to        
Gentilly Boulevard in the New Orleans city limits, and within ten minutes drive 
from downtown New Orleans.  Located on such property is a one-mile oval, sandy  
loam race track and a seven-furlong turf track inside the main track.           

The Company currently leases its temporary facilities, consisting of the large  
main tent previously described, as well as certain modular buildings containing 
executive and administrative offices, and totalisator equipment.                

The Company owns the newly completed tele-track facility described above, as    
well as the new grandstand facility as to which construction commenced during   
1995 but has been curtailed, as described above.                                

The Company also owns 50 modern concrete barns with supporting buildings and    
facilities which are located on the property and are capable of quartering      
approximately 2,000 horses.  There is an all-concrete parking lot which can     
accommodate approximately 4,000 vehicles within the fenced area.                

Substantially all of the real property and equipment of the Company is subject  
to a collateral mortgage in the amount of $10 million which secures the         
Company's indebtedness to Louie J. Roussel, III, currently in the principal     
amount of $1 million, as described in the Notes to the Company's Financial      
Statements included herewith.  In addition, all of the Company's real property  
is subject to a second collateral mortgage in the aggregate amount of $17.5     
million, and all of the Company's furniture, fixtures, equipment, and other     
items of personal property are subject to a security                            

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interest, which secure the Company's indebtedness to FNBC under the Loan        
Agreement, as described above.                                                  

The Company leases the facilities for its tele-tracks under lease agreements    
with various terms.  The tele-tracks formerly licensed to Jefferson Downs and   
now licensed to the Company are also leased; however, as described herein,      
Finish Line has agreed to indemnify the Company for, among other things, all    
obligations under the leases assigned by Jefferson Downs to the Company.  See   
Note 10 of Notes to the Financial Statements included elsewhere herein for a    
description of the Company's lease obligations.                                 

ITEM 3.  LEGAL PROCEEDINGS.                                                     

The Company is a party to a number of legal proceedings which have arisen as a  
result of the December 1993 fire, or in connection with the Company's efforts   
to collect insurance proceeds after the fire.  The following is a brief         
description of such fire-related proceedings:                                   

1.       On May 14, 1994 the Company filed an action in the 24th Judicial       
      District Court in the State of Louisiana against Travelers Indemnity
     Company of Illinois ("Travelers") and others.  The Company contends
      that the insurance policy provided by Travelers provides the Company
       with blanket coverage in the amount of $24.1 million in excess of the
     $10 million of underlying coverage provided by Allianz Underwriters
      Insurance Company ("Allianz") and Royal Indemnity Company ("Royal");
     accordingly, the Company maintains that Travelers is liable for the
difference between $24.1 million and the amount already paid  
      (approximately $9.3 million), plus statutory penalties of 10% of the
    amount not paid, interest, attorney's fees and costs.  The Company
   further contends that, in the event the court determines that the
       amount of coverage is less than that claimed by the Company, then the
insurance agent and the insurance broker who arranged for the 
   insurance, are liable to the Company for any damages.  Travelers'
      position is that the excess policy did not provide blanket coverage,
   and that its liability under such policy is limited to the amount
       which it has already paid.  Travelers filed a separate action in June
        1994 in the U.S. District Court for the Eastern District of Louisiana,
   asking for a declaratory judgment that the policy did not provide
   blanket coverage.  The federal court action was dismissed and the
state court action is proceeding.                             

2.       The Company filed an action against Allianz in March 1994, in the      
        Civil District Court for Orleans Parish.  Allianz subsequently removed
    the action to the U. S. District Court for the Eastern District of
Louisiana.  The Company contended that Allianz, which was the 
Company's primary insurer, failed                             

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     to pay the policy benefits of $5 million on a timely basis, thereby
     subjecting it to statutory penalties of 10% of the amount not paid,
     plus interest, attorney's fees and costs.  The Company also alleged
   that Allianz acted in bad faith in its handling of the claim.  In
    March 1995, prior to the commencement of the trial, the action was
settled without any admission of liability.                   

3.       The Company filed an action against Royal in December 1994, in the     
   Civil District Court for Orleans Parish, alleging that Royal also
       failed to pay on a timely basis under its policy.  The issues in this
       proceeding were substantially similar to the issues in the litigation
 against Allianz described above.  In October 1995, prior to the
commencement of the trial, the action was settled.            

4.       The Company filed an action in December 1994, in the Civil District    
     Court for Orleans Parish, against ADT Security Systems, the company
 which provided and maintained the fire alarm system at the Fair
 Grounds Race Course, and other defendants.  The complaint seeks
       unspecified damages, not otherwise compensated for by insurance, that
were allegedly caused by the negligence of one or more of the 
defendants.                                                   

5.       The Company and its general liability insurance carrier, United        
      National Insurance Company are defendants in a civil action filed in
   December 1994 in the United States District Court for the Eastern
   District of Louisiana, by St. Paul Mercury Insurance Company, the
  insurer for AutoTote.  The complaint alleges that such insurance
     company is subrogated to the rights of AutoTote to collect damages,
       and that it has paid AutoTote in excess of $1 million for the loss of
 totalisator equipment at the Fair Grounds Race Course which was
 destroyed in the fire.  Subsequently, United National Insurance
       Company filed an action against the Company, denying coverage for the
subrogation claim.                                            

As to the pending matters described above, there can be no assurance that the   
Company will be successful in any of its claims or defenses.  Accordingly, no   
assurance can be given that additional recoveries of insurance proceeds, if     
any, will reimburse the Company adequately for the loss or destruction of its   
property in the fire.                                                           

Except as described above, there are no material pending legal proceedings,     
other than ordinary routine litigation incidental to its business, to which the 
Company is a party or of which any of its property is the subject.              

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

No matters were submitted to a vote of security holders during the fourth       
quarter of the fiscal year covered by this report.                              

PART II 

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER      
MATTERS                                                                         

Prior to March 1994, the Company's common shares were listed for trading on the 
National Association of Securities Dealers Automated Quotation ("NASDAQ")       
System.  Since that time, however, the common shares of the Company have not    
been listed on NASDAQ or any other established trading market.  Trading in the  
common shares of the Company generally has been sporadic and trading volume     
generally is very low.  The range of high and low bid quotations for the two    
most recent fiscal years by quarters as set forth below does not necessarily    
reflect actual trades, but represents inter-dealer quotations without mark-up,  
mark-down or commission, as reported by the National Association of Securities  
Dealers, Inc.  Quotations subsequent to March 1994 were obtained from Carr      
Securities.                                                                     

                                                                · Download Table

    Fiscal      1994      1994     1995      1995  
Quarter Ended  Low Bid  High Bid  Low Bid  High Bid
-------------  -------  --------  -------  --------
                                                   
January 31      $ 9.00   $13.00   $ 16.00   $ 24.00

April 30        $ 9.00   $12.00   $ 16.00   $ 24.00

July 31         $ 9.00   $12.00   $ 20.00   $ 25.00

October 31      $10.00   $14.00   $ 20.00   $ 25.00

As of January 31, 1996, there were 457 shareholders of record of the 469,940    
issued and outstanding common shares of the Company.                            

There were no cash dividends declared or paid during fiscal 1995 or fiscal 1994.

The Company paid cash dividends in the amount of $0.05 per share during each of 
the four quarters of the fiscal year ended October 31, 1993 to the shareholders 
of record on the dates the dividends were declared.  Total dividends declared   
and paid during fiscal 1993 were $93,652.                                       

The Company is not subject to any restrictions (other than non-contractual      
business considerations) affecting its present or                               

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future ability to pay dividends with respect to its common shares, except that  
the provisions of the Loan Agreement effectively preclude the Company from      
declaring and paying dividends without the consent of FNBC.                     

See Item 7, "Management's Discussion and Analysis of Financial Condition and    
Results of Operations".                                                         

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ITEM 6.  SELECTED FINANCIAL DATA                                                

FAIR GROUNDS CORPORATION  
SELECTED FINANCIAL DATA   
For the Five Years Ended October 31 

                                                        · Enlarge/Download Table

                                        1995          1994          1993          1992        1991    
                                    -----------   -----------   -----------   -----------  -----------
                                                                                                      
OPERATING REVENUES                  $23,031,031   $22,371,571   $30,718,482   $32,667,468  $31,913,874

OPERATING EXPENSES                   26,394,452    26,094,568    34,308,263    32,192,537   30,505,367
                                    -----------   -----------   -----------   -----------  -----------

INCOME (LOSS) FROM OPERATIONS        (3,363,421)   (3,722,997)   (3,589,781)      474,931    1,408,507

INTEREST EXPENSE                         12,318       284,926       502,624       661,092      960,207

OTHER INCOME                          2,459,163       605,553       651,950     1,068,874      773,717
                                    -----------   -----------   -----------   -----------  -----------

INCOME (LOSS) BEFORE                                                                                  
  INCOME TAXES, MINORITY                                                                              
  INTEREST, EXTRAORDINARY                                                                             
  ITEM, AND CUMULATIVE EFFECT                                                                         
  OF CHANGES IN ACCOUNTING                                                                            
  PRINCIPLES                           (916,576)   (3,402,370)   (3,440,455)      882,713    1,222,017

PROVISION (BENEFIT)                                                                                   
  FOR INCOME TAXES                     (300,460)   (1,878,635)     (383,787)      123,509      244,316

MINORITY INTEREST                           -             -         142,661       575,831      532,197

EXTRAORDINARY ITEM - GAIN                                                                             
  FROM FIRE (net of taxes)                  -       9,312,758           -             -            -  

CUMULATIVE EFFECT OF                                                                                  
  CHANGES IN ACCOUNTING                                                                               
  PRINCIPLES                            104,000       (75,094)          -             -            -  
                                    -----------   -----------   -----------   -----------  -----------

NET INCOME (LOSS)                   $  (512,116)  $ 7,713,929   $(3,199,329)  $   183,373  $   445,504
                                    ===========   ===========   ===========   ===========  ===========

COMMON SHARES OUTSTANDING               469,940       469,940       469,940       469,940      469,940
                                    ===========   ===========   ===========   ===========  ===========

NET INCOME (LOSS) PER COMMON SHARE  $     (1.09)  $     16.48   $     (6.83)  $      0.39  $      0.95
                                    ===========   ===========   ===========   ===========  ===========

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                                                        · Enlarge/Download Table
                                                                                                      
CASH DIVIDENDS DECLARED PER SHARE  $     None.  $      None.  $       0.20  $       0.15         NONE.
                                   ===========  ============  ============  ============  ============

TOTAL ASSETS                       $30,954,654  $ 26,470,322  $ 20,496,529  $ 20,919,257  $ 20,953,854
                                   ===========  ============  ============  ============  ============

NOTES PAYABLE (EXCLUDING                                                                              
  CURRENT PORTION)                 $       -    $  1,000,000  $  6,000,000  $  7,000,000  $  8,359,721
                                   ===========  ============  ============  ============  ============

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ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND        
RESULTS OF OPERATIONS                                         

GENERAL                                                                         

Fire.  As previously reported, on the night of Friday, December 17, 1993, the   
17th racing day in the Company's 87 racing day schedule for 1993-94, after the  
conclusion of live racing for the day at the Fair Grounds Race Course, a fire   
swept through and destroyed the grandstand and clubhouse facilities and all     
their contents.  Included in that area was the grandstand with a seating        
capacity of approximately 10,000, the clubhouse facilities, the racing paddock, 
and substantially all of the administrative, racing operations, and other       
offices of the Company.  As a result of the fire, racing operations at the Fair 
Grounds Race Course, and all operations at the Company's tele-track facilities, 
were temporarily suspended.                                                     

Immediately after the fire, management determined that it would be in the       
Company's best interest to reopen the Fair Grounds Race Course and continue the 
live racing schedule as soon as possible.  Accordingly, during the remainder of 
December 1993, the Company made arrangements for the installation of temporary  
racing and patron facilities.  During the two and one-half week period from the 
date of the fire to January 5, 1994, the temporary facilities were installed    
and the property was readied for the reopening of racing.  Tele-track           
operations were reopened on December 29, 1993, and the Fair Grounds Race Course 
was reopened for live racing on January 5, 1994.  In total, the Company lost 10 
days of its 87 racing day schedule for the year ended October 31, 1994 due to   
the fire, resulting in a substantial loss of revenues to the Company.           

The Company currently continues to use its temporary facilities,  Attendance    
and handles continue to be less than the pre-fire levels as a result of the     
limited amenities afforded by the temporary facilities.  In addition, the       
Company continues to feel the effects of competition from other gaming venues   
in the greater New Orleans and surrounding areas.                               

RESULTS OF OPERATIONS                                                           

FISCAL 1995 COMPARED TO FISCAL 1994                                             

Revenues.  During the fiscal years ended October 31, 1995 and 1994, the Company 
derived its pari-mutuel income by conducting live racing meets of 88 and 77     
days, respectively, and in the operation of its tele-tracks for off-track       
wagering.  During each such fiscal year, the Company operated tele-tracks in    
New Orleans at the Fair Grounds Race Course and on Bourbon Street, and at       
locations in Lafourche, St. Bernard and St. John Parishes, Louisiana.  On       
October 26, 1995, the Company opened a new tele-track facility in Jefferson     
Parish.  Through Finish Line, the Company operated tele-                        

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track facilities in Terrebonne, St. Tammany, and Jefferson Parishes, Louisiana, 
that were formerly operated by Jefferson Downs Corporation.                     

For the fiscal year ended October 31, 1995, the Company reported a net loss of  
$512,116, compared to net income of $7,713,929 for the fiscal year ended        
October 31, 1994.  The net income for the fiscal 1994 year was the direct       
result of the Company's recognition of an extraordinary gain attributable to    
the December 17, 1993 fire.  As a result of the fire in fiscal 1994, the        
Company recorded an extraordinary gain of $9.3 million, net of related income   
taxes of $5.4 million.  The extraordinary gain is equal to insurance proceeds   
received in excess of the net book value of the destroyed property, plant and   
equipment.  The extraordinary gain is also net of approximately $145,000 paid   
to third party vendors in fiscal 1994 for losses to their property caused by    
the fire.  The Company had no extraordinary gain during fiscal 1995.            

The Company's losses before the extraordinary gain and charge for cumulative    
effect of change in accounting for income taxes were $616,116 and $1,523,735    
for fiscal years 1995 and 1994, respectively.  The significant decrease in the  
loss from 1994 to 1995 was primarily the result of an increase in other income  
during fiscal 1995.                                                             

For the fiscal year ended October 31, 1995, the Company experienced an increase 
in operating revenues of $659,460, or 3.0%, from the previous fiscal year.  The 
increase in operating revenues during fiscal 1995 is the result of a            
significant increase in host track fee revenue partially offset by declines in  
most other categories of operating revenue.  Host track fees increased          
$1,391,530, or 55.9%, from fiscal 1994 due to a significant increase in         
out-of-state simulcasting of the Company's live races.  For the 1995 fiscal     
year racing meet, the Company reported $92 million in handle from out-of-state  
simulcasting, compared to $42 million in handle for fiscal 1994.                

While host track fees increased significantly, most other components of         
operating revenue, including commissions, concessions, admissions, parking,     
video poker and programs and forms, declined.  Such declines are the direct     
result of further decreases in attendance and pari-mutuel wagering from 1994.   
Comparative in-state pari-mutuel wagering and attendance figures for the fiscal 
years ended October 31, 1995 and 1994 are as follows:                           

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                                                                · Download Table

                           1995        1994     
                       -----------  ----------- 
                                                
Pari-mutuel wagering:                           
    On-track handle    $25,134,326  $26,110,964 
    Off-track handle    53,664,907   55,713,253 
                       -----------  ----------- 

Total Wagering         $78,799,233  $81,824,217 
                       ===========  =========== 

Attendance                 445,480      475,557*
                       ===========  =========== 

* Note:  Attendance figures for fiscal year ended October 31, 1994 are          
estimated.                                                    

The decline in total wagering and attendance are primarily the result of the    
limited amenities afforded by the temporary facilities as well as increasing    
competition from other forms of gaming.                                         

Racing Expenses.  Racing expenses for the fiscal year ended October 31, 1995    
remained constant, increasing by only $58,262 from the prior fiscal year.  Many 
components of such racing expenses fluctuated significantly, including an       
increase of $449,387,or 6.2%, in purse expense, primarily due to the increase   
in out-of-state simulcasting, partially offset by declines in on-track and      
off-track wagering.  Contracts and services declined by $224,822, or 10.1%,     
from the previous fiscal year, due to the decrease in various services and      
relating to the temporary racing facilities.                                    

Utility expenses decreased by $142,371, or 19.7%, from fiscal 1994, primarily   
due to a change in pari-mutuel scheduling for some of the Company's smaller     
tele-track facilities.  During 1995, the Company implemented a four-day racing  
schedule at such facilities, compared to a five-day schedule during 1994 and    
previous years.  The company also received during 1995 certain utility refunds  
relating to excess charges from prior fiscal years.                             

General and Administrative Expenses.  General and administrative expenses for   
the fiscal year ended October 31, 1995 increased by $241,622, or 6.0%, from the 
previous fiscal year, primarily as a result of increases in legal, audit and    
director fees and an increase in office expense, partially offset by a          
reduction in property taxes.  Legal, audit and director fees increased          
$227,356, or 30.5%, primarily due to the fire-related litigation.  Office       
expense increased $81,272, or 31.3%, due to increases in telephone expense      
relating to increased out-of-state activity.  Property tax expense declined by  
$231,737, or 49.3%.                                                             

Other Income and Expenses.  For the fiscal year ended October 31, 1995, other   
income increased $2,126,218, or 636%, from the 1994 fiscal year due primarily   
to $703,488 from video poker franchise tax exemptions and insurance proceeds in 
the amount of $430,073.                                                         

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FISCAL 1994 COMPARED TO FISCAL 1993                                             

Revenues.  During the fiscal years ended October 31, 1994 and 1993, the Company 
derived its pari-mutuel income by conducting live racing meets of 77 and 86     
days, respectively, and in the operation of its tele-tracks for off-track       
wagering.  During each such fiscal year, the Company operated tele-tracks in    
New Orleans at the Fair Grounds Race Course and on Bourbon Street, and at       
locations in Lafourche, St. Bernard and St. John Parishes, Louisiana.  Through  
Finish Line, the Company operated tele-track facilities in Terrebonne, St.      
Tammany, and Jefferson Parishes, Louisiana, that were formerly operated by      
Jefferson Downs Corporation.                                                    

For the fiscal year ended October 31, 1994, the Company reported net income of  
$7,713,929 as compared to a loss of $3,199,329 for the fiscal year ended        
October 31, 1993.  The significant increase in net income for the fiscal 1994   
year was the direct result of the Company's recognition of an extraordinary     
gain attributable to the December 17, 1993 fire and recognition of a $2.5       
million loss on a litigation judgment in fiscal 1993.  As a result of the fire  
in fiscal 1994, the Company recorded an extraordinary gain of $9.3 million, net 
of related income taxes of $5.4 million.  The extraordinary gain is equal to    
insurance proceeds received in excess of the net book value of the destroyed    
property, plant and equipment.  The extraordinary gain is also net of           
approximately $145,000 paid to third party vendors in fiscal 1994 for losses to 
their property caused by the fire.                                              

The Company's loss before the extraordinary gain and charge for cumulative      
effect of change in accounting for income taxes was $1,523,735 and $3,199,329   
for fiscal years 1994 and 1993, respectively.  The fiscal 1993 loss was         
primarily the result of recording an estimated liability at October 31, 1993 of 
$2.5 million for a litigation judgment against the Company.  The 1994 fiscal    
year net loss before extraordinary item is primarily the result of the December 
17, 1993 fire.                                                                  

For the fiscal year ended October 31, 1994, the Company experienced a           
$8,346,911, or 27%, decline in operating revenues from the previous fiscal      
year.  The decline in revenues is the direct result of a decrease in total      
pari-mutuel wagering and attendance from the fiscal year ended October 31,      
1993.  Comparative pari-mutuel wagering and attendance figures for the fiscal   
years ended October 31, 1994 and 1993 are as follows:                           

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                                                                · Download Table

                           1994          1993    
                       -----------   ------------
                                                 
Pari-mutuel wagering:                            
    On-track handle    $26,110,964    $38,565,606
    Off-track handle    55,713,253     69,922,452
                       -----------   ------------

Total Wagering         $81,824,217   $108,488,058
                       ===========   ============

Attendance                 475,557*       668,660
                       ===========   ============

* Note:  Attendance figures for fiscal year ended October 31, 1994 are          
estimated.                                                    

The 24.6% decline in total wagering and the 28.9% decline in attendance are     
primarily the result of the December 17, 1993 fire.  As a result of the         
declines in wagering and attendance, most of the components of the Company's    
operating revenues declined from amounts reported for the fiscal year ended     
October 31, 1993.                                                               

The Company believes the significant decline in total handle results primarily  
from the fire, including actual racing days lost as well as the limited         
amenities afforded by the temporary racing facilities, and from other gaming    
venues in the New Orleans area, including dockside and riverboat gambling in    
neighboring Mississippi and in the New Orleans area and video poker operations  
by non-affiliated parties.                                                      

During the current racing season, the Company has continued to experience a     
decline in on-track handle and handle from tele-track operations.  Through 52   
days of racing during the current season, on-track handle was $14.5 million,    
which is approximately 17% less than the handle for the same number of racing   
days during the 1993-94 racing season.  Handle generated from the Company's and 
Finish Line's tele-track operations has also declined from the prior racing     
season.  There has also been an approximate 16% decrease in the handle          
generated from simulcasts of Fair Grounds races to other tracks and tele-track  
facilities in Louisiana.  On the other hand, handle generated from simulcasts   
of Fair Grounds races to locations outside of Louisiana has increased           
significantly.  Through 52 racing days, the total out-of-state handle was $52.3 
million, compared to $30.5 million for the same period during the prior racing  
season.                                                                         

Racing Expenses.  Most of the components of the Company's racing expenses for   
the fiscal year ended October 31, 1994 declined in the same proportion as the   
decline in operating revenues.  Fiscal 1994 depreciation expense, however,      
increased over the fiscal year ended October 31, 1993 due to depreciation       
associated with the Company's expenditure of $2.68 million for temporary        
facilities, which have a useful life of approximately 30 months.  Depreciation  
expense for the temporary facilities in the amount of $890,000 was reported for 

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the fiscal year ended October 31, 1994.  Additionally, for the fiscal year      
ended October 31, 1994, the Company incurred approximately $530,000 in racing   
expenses relating directly to the temporary facilities at the Fair Grounds Race 
Course.                                                                         

General and Administrative Expenses.  General and administrative expenses for   
the fiscal year ended October 31, 1994 decreased $2,770,440 or 42% from the     
previous fiscal year primarily due to the accrual of a $2.5 million loss from a 
litigation judgment during the fiscal year ended October 31, 1993.  The accrual 
was the result of a summary judgment affirmed by the United States Court of     
Appeals against the Company in the amount of approximately $2.5 million for     
alleged breach of contract with one of its vendors ("AmTote").  In August 1994, 
after discussions among the representatives of the parties, the Company and     
AmTote agreed to settle the claim for $2.3 million.                             

For the fiscal year ended October 31, 1994, the Company experienced significant 
fluctuations in certain components of its general and administrative expenses   
such as salaries and related taxes and benefits, insurance expense, and legal,  
audit and director fees.  Fiscal 1994 salaries and related taxes and benefits   
declined $304,305, or 19%, from the previous fiscal year due to the Company's   
elimination of various administrative positions, and a reduction in executive   
salaries which took effect during the latter part of fiscal 1993.  Insurance    
expense increased $227,339, or 34%, from the fiscal year ended October 31, 1993 
due to increases in various premiums as well as payments for insurance          
deductibles owed for general liability and workers compensation claims.  Fiscal 
1994 legal, audit, and director fees increased $176,619, or 31%, from the       
previous fiscal year due to various accounting and legal services in connection 
with the Company's fire insurance litigation with its insurance carriers.       

Other Income and Expenses.  For the fiscal year ended October 31, 1994, other   
income increased $171,301, or 115%, from the 1993 fiscal year due to an         
increase in Jazz and Heritage Festival income, an increase in interest income,  
and a decrease in interest expense, offset by an increase in loss on            
investments.                                                                    

For the fiscal year ended October 31, 1994, the Company experienced an increase 
over fiscal 1993 in Jazz and Heritage Festival income of $434,461, or 64%, due  
to higher attendance at the Festival as a result of favorable weather           
conditions.  In the previous fiscal year, the Festival experienced inclement    
weather.  Interest income increased $162,194, or 9.4%, from the previous fiscal 
year due to an increase in cash available for investing primarily as a result   
of fire insurance proceeds received by the Company.  Interest expense decreased 
$172,698, or 37.7%, due to a $5 million payment on notes payable to Louie       
Roussel, III and Victory Life Insurance Company as discussed in Note 5 of Notes 
to the Financial Statements included herewith.  Loss on the sale of interests   
in partnerships                                                                 

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increased $581,361 from the previous fiscal year primarily due to the loss on   
the March 1994 sale of the Company's interests in various partnerships.         

LIQUIDITY AND CAPITAL RESOURCES                                                 

Cash and cash equivalents decreased $6,920,720 during the fiscal year ended     
October 31, 1995 compared to an increase of $5,256,885 during the fiscal year   
ended October 31, 1994.  The decrease in cash and cash equivalents in fiscal    
1995 was the result of cash used for investing activities of $13,711,659,       
partially offset by cash provided from operating activities of $5,084,796 and   
cash provided from financing activities of $1,706,143.  The cash used for       
investing activities was in connection with the capital expenditures for the    
completion of the new tele-track facility and the commencement of construction  
of the new clubhouse and grandstand facility.  Cash provided from operations    
was primarily the result of an increase in accounts payable and accrued         
liabilities due to an increase in construction contracts payable relating to    
the new grandstand facility.  Cash provided from financing sources was          
primarily the result of a $2,150,000 bridge loan to the Company from FNBC, as   
described elsewhere herein.                                                     

As of January 31, 1996, the Company had received $19,478,791 in insurance       
proceeds resulting from fire loss claims submitted to the Company's insurance   
carriers.  The Company has filed suit against one of its insurance carriers, as 
described elsewhere herein, seeking to recover an additional approximate $14.8  
million under its insurance policy with such carrier.                           

The Company's new tele-track facility at the Fair Grounds Race Course, which    
also serves as a temporary clubhouse area, was opened on December 22, 1994.     
The total cost for debris removal and the construction of the tele-track        
facility was approximately $3.2 million.                                        

During the Summer of 1994, the Company approved the plans for a new racing      
facility and commenced construction of the foundation thereof in August 1994.   
The total cost of the facility, together with furniture, fixtures, equipment    
and certain fees and permit costs, was anticipated to be approximately $24.3    
million at the time construction commenced, which is in addition to the $3.2    
million relating to debris removal and construction of the tele-track facility, 
as described above.                                                             

As of January 31, 1996, construction of the facility was approximately 60%      
completed, and the Company had incurred construction costs of approximately     
$15.2 million.  Insurance proceeds recovered to date and interim financing      
provided by FNBC, as described herein, provided the source of funds used in     
such construction.  However, for the reasons described below, further           
construction work on the project has been halted.  As a result (i)              

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the cost to complete the project cannot now be determined with any certainty    
and (ii) the Company currently anticipates that it will continue to utilize the 
temporary tent facilities and the tele-track facility at least during the       
remainder of the current racing season and possibly for the next racing season. 

As previously reported, the Company received and accepted a commitment letter   
dated February 6, 1995 from FNBC for a non-revolving line of credit to be used  
as an interim construction loan, convertible to a term loan.  The aggregate     
principal amount of such loan under the terms of such commitment was to have    
been $17.5 million.  The commitment from FNBC provided that the interim         
construction loan was to have closed on or before March 31, 1995.  However, the 
parties agreed to various extensions of such closing date.  FNBC indicated that 
the principal reason for the delay was FNBC's concern with restrictions on and  
the possible elimination of video poker gaming in Louisiana.  Inasmuch as video 
poker franchise tax monies generated by the Company and its tele-tracks were to 
be used for the repayment of the FNBC loan, in accordance with the tax relief   
legislation described herein, any change in the video poker gaming laws which   
restricts or limits video poker as a source of revenue may have an adverse      
impact on such source of repayment.  Accordingly, final action on the full      
$17.5 million loan has been delayed until after the 1996 Louisiana regular      
legislative session.  During 1995 FNBC provided the Company with short-term     
interim construction loans of $2.15 million on July 17, 1995, $4 million on     
November 7, 1995, and $1 million on November 30, 1995.  All of such financing   
was then consolidated under the Loan Agreement, pursuant to which the Company   
borrowed an aggregate amount of $9,493,050 and utilized a portion of such funds 
to repay the principal amount of the prior loans that was outstanding on        
December 18, 1995.  The remaining amount borrowed was utilized to pay           
construction costs.  Pursuant to the Loan Agreement, FNBC agreed to extend      
credit to the Company up to aggregate principal amount of $9,493,050 until      
October 31, 1996.  The Loan Agreement states that such commitment is not a      
revolving credit facility, and the commitment is only to make loans up to such  
aggregate principal amount.  Accordingly, FNBC has no obligation under the Loan 
Agreement to lend additional funds to the Company.                              

Payment of the principal and interest under the Loan Agreement is to be made on 
demand, or if no demand is made, then in 10 monthly installments of $52,740     
principal plus interest, beginning January 17, 1996, and one final payment of   
all principal plus accrued interest on October 31, 1996.  The loan bears        
interest at 9% per annum.  On each monthly payment date, payment of principal   
and interest is to be made from the proceeds of the funds received as a result  
of the video poker tax relief legislation, which funds are to be on deposit in  
a separate lockbox, in accordance with a Disbursement Agreement.                

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In connection with the Loan Agreement, the Company made a payment to Louie J.   
Roussel, III of $1 million of the remaining $2 million principal balance owed   
to him and agreed that the outstanding principal balance of $1 million will be  
due and payable on October 31, 1996.                                            

There is considerable uncertainty in Louisiana at the present time regarding    
the future of the gaming industry.  The cessation of construction and           
subsequent bankruptcy filing by the land-based casino in New Orleans in         
November 1995 has adversely affected tax revenues for both the State of         
Louisiana and the City of New Orleans.  Notwithstanding that loss of revenue,   
consideration is being given by the Governor of Louisiana, who was elected in   
November 1995, and other state officials to legislation which could curtail     
gaming, including the use of video poker gaming devices.  In particular, the    
Governor has indicated that he will call a special session of the legislature   
for the purpose of considering legislation which would mandate local elections  
to approve or disapprove gaming in a particular parish or locality.             

The Company believes that it was unable during 1995 to obtain the full amount   
of financing originally committed by FNBC due to the uncertainty regarding the  
future of video poker as a continuing source of revenue.  The Company is        
hopeful that the 1996 Louisiana regular legislative session will adjourn        
without having passed any statute that would adversely affect the status of the 
video poker tax relief previously granted to the Company or the existing video  
poker operations of the Company or Finish Line, or that would allow for or      
require local elections as a condition to the continuation of video poker       
operations.  No assurance can be given, however, that such legislation will not 
be adopted.  If adopted, such legislation will adversely affect the ability of  
the Company to obtain long-term financing from FNBC in accordance with the      
terms of the original commitment.                                               

The Company has received a commitment from VSI to provide a non-interest        
bearing loan in the principal amount of $1.5 million, in consideration for      
which the Company is to agree to extend both the term of its agreement with VSI 
and the term of the option period thereunder by two years.  See "Video Poker    
Operations" below.  VSI's agreement to make such loan is conditioned upon the   
closing of the anticipated long-term bank financing.  The Company also has      
recently received an advance of $1 million from VSI.                            

In addition to the foregoing, Marie G. Krantz has committed to make a $1        
million loan to the Company, which would be conditioned upon the closing of,    
and subordinate in right of payment to, the long-term FNBC financing.  Although 
specific terms of such loan have not been discussed, it is likely that the loan 
would be interest-bearing, and that payments would be made after the repayment  
of the FNBC financing.  The Company is also engaged in discussions with         
AutoTote concerning a possible commitment by AutoTote to lend or                

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advance $2.5 million to the Company, such amount to be repaid through a         
subordinated loan arrangement or through an extension of the lease terms        
relating to the totalisator equipment.                                          

In view of the cessation of construction and the additional expense which is    
likely to be incurred as a result of construction delays, it is not certain     
that, even if all of such financing is consummated, including the long-term     
financing by FNBC in accordance with the terms of the original commitment, the  
Company will be able to complete the construction of its new facility as        
presently planned.  It may be necessary to (i) obtain funds from other sources, 
(ii) attempt to increase the amount of long-term financing from FNBC or (iii)   
seek to effect savings in the construction costs related to the completion of   
the facility.  The Company has had no discussions with any other possible       
source of such financing, nor has it reached any understanding with FNBC        
regarding any increase in the financing which the Company hopes to obtain from  
FNBC as originally committed by FNBC.  It should also be noted that FNBC and    
the Company are not currently engaged in any discussions concerning the terms   
and conditions of the definitive agreements relating to such long-term          
financing, given the uncertain legislative climate.  Accordingly, there can be  
no assurance that definitive agreements will be reached, or, if reached, that   
they will be in accordance with the terms of the original commitment.  The      
foregoing uncertainties raise substantial doubt about the Company's ability to  
continue as a going concern.  In the event that such long-term financing is not 
completed by October 31, 1996, or that the funds provided through all sources   
of such financing are insufficient to meet the Company's needs, the Company may 
consider a number of alternatives, including seeking protection from creditors  
under the United States Bankruptcy Code.                                        

IMPACT OF INFLATION                                                             

To date, inflation has not had a material effect on the Company's operations.   

ITEM 8.  FINANCIAL STATEMENTS                                                   

The following financial statements of the Company, including the notes thereto, 
and the Report of Independent Certified Public Accountants are included         
herewith:                                                                       

Report of Independent Certified Public Accountants            

Balance Sheets, October 31, 1995 and 1994                     

     Statements of Operations for the Three Years Ended October 31, 1995

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   Statements of Changes in Stockholders' Equity for the Three Years
Ended October 31, 1995                                        

     Statements of Cash Flows for the Three Years Ended October 31, 1995

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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors                                                       
and Stockholders of the                                                     
Fair Grounds Corporation                                                    

We have audited the accompanying balance sheets of the Fair Grounds Corporation 
as of October 31, 1995 and 1994, and the related statements of operations, of   
changes in stockholders' equity, and of cash flows for the years ended October  
31, 1995 and 1994.  These financial statements and the supplemental schedules   
discussed below are the responsibility of the Company's management.  Our        
responsibility is to express an opinion on these financial statements based on  
our audits.                                                                     

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

In our opinion, the financial statements referred to above present fairly, in   
all material respects, the financial position of the Company as of October 31,  
1995 and 1994 and the results of its operations and its cash flows for the      
years ended October 31, 1995 and 1994 in conformity with generally accepted     
accounting principles.                                                          

As a result of the December 17, 1993 fire, the accompanying statements of       
operations, of changes in stockholders' equity, and of cash flows for the year  
ended October 31, 1993 and the schedules listed under Item 14(a)2 herein as of  
and for the year ended October 31, 1993 were not audited by us and,             
accordingly, we do not express an opinion on them.                              

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The accompanying financial statements for 1995 have been prepared assuming that 
the Company will continue as a going concern.  As discussed in Note 12 to the   
financial statements, construction of the Company's new grandstand/clubhouse    
facility, which was previously destroyed in 1993 by a fire, has been halted     
pending completion of bank and other external financing.  The timing and the    
amount of any financing ultimately obtained to complete the construction of the 
Company's grandstand/clubhouse facility raises substantial doubt about the      
Company's ability to continue as a going concern.  The financial statements do  
not include any adjustments that might result from the outcome of this          
uncertainty.                                                                    

Our audits were made for the purpose of forming an opinion on the basic         
financial statements taken as a whole.  The schedules listed under Item 14(a)2  
herein are presented for purposes of complying with the Securities and Exchange 
Commission's rules and are not a required part of the basic financial           
statements.  The schedules related to the 1995 and 1994 financial statements    
have been subjected to the auditing procedures applied in our audits of the     
basic financial statements and, in our opinion, are fairly stated in all        
material respects to the financial data required to be set forth herein in      
relation to the basic financial statements taken as a whole.                    

As described in Note 1 to the financial statements, the Company adopted the     
provisions of the Financial Accounting Standards Board's Statement of Financial 
Accounting Standards No. 115 "Accounting for Certain Investments in Debt and    
Equity Securities", effective November 1, 1994.                                 

/s/ Rebowe & Company                                                            

Metairie, Louisiana                                                             
January 19, 1996                                                                

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FAIR GROUNDS CORPORATION
BALANCE SHEETS
October 31

                                                                · Download Table

ASSETS                                  1995         1994     
                                    -----------   ----------- 
                                                              
CURRENT ASSETS                                                
    Cash and cash equivalents       $ 1,118,590   $ 8,039,310 
    Cash and cash                                             
        equivalents - restricted        154,909           -   
    Accounts receivable                 854,281       593,200 
    Mutuel settlements                  172,385        98,560 
    Securities available for sale       457,900     1,376,297 
    Insurance proceeds receivable           -         487,341 
    Inventory                            80,565        73,858 
    Deferred income taxes                59,940        20,940 
    Refundable income taxes                 -         566,289 
    Prepaid expenses                    557,033       360,387 
                                    -----------   ----------- 

            Total Current Assets      3,455,603    11,616,182 
                                    -----------   ----------- 

OTHER ASSETS                             71,264        34,574 
                                    -----------   ----------- 

PROPERTY, PLANT AND EQUIPMENT                                 
    Buildings and improvements       13,881,970    10,206,873 
    Construction in progress         15,207,395     4,723,474 
    Land improvements                 4,270,535     4,188,282 
    Temporary facilities              2,686,044     2,680,917 
    Automotive equipment                818,111       783,642 
    Machinery and equipment             789,347       680,562 
    Furniture and fixtures              171,497       155,672 
                                    -----------   ----------- 

            Total                    37,824,899    23,419,422 

    Less: accumulated depreciation                            
        and amortization            (13,683,393)  (11,886,137)
                                    -----------   ----------- 

    Depreciable property - net       24,141,506    11,533,285 
    Land                              3,286,281     3,286,281 
                                    -----------   ----------- 

            Property - net           27,427,787    14,819,566 
                                    -----------   ----------- 
            TOTAL ASSETS            $30,954,654   $26,470,322 
                                    ===========   =========== 

(Continued)                                                                     

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FAIR GROUNDS CORPORATION
BALANCE SHEETS (CONTINUED)
October 31

                                                                · Download Table

LIABILITIES AND STOCKHOLDERS' EQUITY        1995         1994     
                                        -----------   ----------- 
                                                                  
CURRENT LIABILITIES                                               
    Notes payable - current             $ 3,706,143   $ 1,000,000 
    Accounts payable                        897,016       550,489 
    Construction contract                                         
        payable                           4,864,199     1,654,820 
    Accrued liabilities:                                          
        Deferred purses                   5,666,212     5,500,485 
        Host track fees                     270,439       144,338 
        Uncashed mutuel tickets             259,606       284,388 
        Other                               252,528       547,009 
    Deferred revenues                        50,149        53,580 
                                        -----------   ----------- 

            Total Current Liabilities    15,966,292     9,735,109 
                                        -----------   ----------- 

NOTES PAYABLE                                   -       1,000,000 
                                        -----------   ----------- 

DEFERRED INCOME TAXES                     4,020,035     4,199,886 
                                        -----------   ----------- 

            Total Liabilities            19,986,327    14,934,995 
                                        -----------   ----------- 

COMMITMENTS AND CONTINGENCIES                   -             -   
                                        -----------   ----------- 

STOCKHOLDERS' EQUITY                                              
    Capital stock - no par value;                                 
        authorized 600,000 shares,                                
        issued and outstanding                                    
        469,940 shares                    1,525,092     1,525,092 
    Additional paid-in capital            1,942,350     1,942,350 
    Retained earnings                     7,601,742     8,113,858 
    Unrealized loss on securities                                 
        available for sale                  (54,884)          -   
                                        -----------   ----------- 

            Total                        11,014,300    11,581,300 

    Less: treasury stock at cost,                                 
                1,760 shares                (45,973)      (45,973)
                                        -----------   ----------- 

            Total Stockholders' Equity   10,968,327    11,535,327 
                                        -----------   ----------- 

            TOTAL LIABILITIES AND                                 
                STOCKHOLDERS' EQUITY    $30,954,654   $26,470,322 
                                        ===========   =========== 

See accompanying notes to financial statements.                                 

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FAIR GROUNDS CORPORATION
STATEMENTS OF OPERATIONS
For the Years Ended October 31

                                                        · Enlarge/Download Table

                                                                          Unaudited  
                                                 1995          1994         1993     
                                             -----------   -----------   ----------- 
                                                                                     
REVENUES                                                                             
    Pari-mutuel commissions                  $15,766,962   $16,236,356   $24,154,352 
    Breakage                                     355,283       345,219       610,086 
    Uncashed mutuel tickets                      229,358       299,586       368,886 
                                             -----------   -----------   ----------- 

            Total                             16,351,603    16,881,161    25,133,324 

    Less: pari-mutuel tax                     (2,204,735)   (2,425,262)   (4,070,957)
                                             -----------   -----------   ----------- 

    Commission income                         14,146,868    14,455,899    21,062,367 
    Host track fees                            3,878,400     2,486,870     2,243,653 
                                             -----------   -----------   ----------- 

            Total Mutuel Income              $18,025,268   $16,942,769   $23,306,020 

    Concessions                                1,596,941     1,627,681     2,547,670 
    Admissions (net of taxes)                    339,319       458,825       890,965 
    Parking                                       14,401        36,992       140,239 
    Video poker                                1,132,127     1,354,792     1,492,109 
    Programs and forms                         1,317,547     1,462,243     1,803,726 
    Miscellaneous                                605,428       488,269       537,753 
                                             -----------   -----------   ----------- 

            Total Operating Revenues         $23,031,031   $22,371,571   $30,718,482 
                                             -----------   -----------   ----------- 

RACING EXPENSES                                                                      
    Purses                                     7,754,856     7,305,469    10,121,228 
    Salaries and related taxes and benefits    4,895,632     4,960,205     6,276,511 
    Contracts and services                     1,997,706     2,222,528     1,915,244 
    Depreciation                               1,797,256     1,856,388     1,577,937 
    Host track fees                            1,481,528     1,454,358     2,013,887 
    Program paper, forms and other supplies    1,250,947     1,392,729     1,665,728 
    Utilities                                    580,424       722,795       858,979 
    Advertising and promotion                    701,860       636,834       760,879 
    Cost of sales - concessions                  688,965       634,943     1,092,789 
    Repairs and maintenance                      317,102       336,781       611,641 
    Rent                                         271,794       256,923       239,199 
    Miscellaneous                                511,590       411,445       500,631 
                                             -----------   -----------   ----------- 

            Total Racing Expenses            $22,249,660   $22,191,398   $26,734,653 
                                             -----------   -----------   ----------- 

(Continued)                                                                     

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FAIR GROUNDS CORPORATION
STATEMENTS OF OPERATIONS (CONTINUED)
For the Years Ended October 31

                                                        · Enlarge/Download Table

                                                                                        Unaudited  
                                                                  1995         1994        1993    
                                                              ----------   ----------   ---------- 
                                                                                                   
GENERAL AND ADMINISTRATIVE                                                                         
    EXPENSES                                                                                       
    Salaries and related taxes and benefits                   $1,287,744   $1,261,149   $1,565,454 
    Insurance                                                    918,356      900,513      673,174 
    Property taxes                                               238,570      470,307      459,602 
    Legal, audit and director fees                               973,249      745,893      569,274 
    Contracts and services                                       163,972      154,356      182,121 
    Office expenses                                              340,923      259,651      353,177 
    Litigation settlement                                            -       (200,000)   2,500,000 
    Miscellaneous                                                221,978      311,301      370,808 
                                                              ----------   ----------   ---------- 

            Total General and Administrative Expenses         $4,144,792   $3,903,170   $6,673,610 
                                                              ----------   ----------   ---------- 

LOSS FROM OPERATIONS                                          (3,363,421)  (3,722,997)  (3,589,781)

OTHER INCOME (EXPENSE)                                                                             
    Jazz and Heritage Festival income - net                   $1,153,749   $1,112,887   $  678,426 
    Video poker tax relief                                       703,488          -            -   
    Insurance settlements                                        618,182          -            -   
    Losses on sale and write-down of partnership investments         -       (604,363)     (57,079)
    Interest expense                                             (12,318)    (284,926)    (502,624)
    Interest income                                               95,825      179,376       17,182 
    Short-term loan closing costs                               (101,799)         -            -   
    Unrealized loss on securities                                    -       (104,000)         -   
    Equity in earnings from unconsolidated                                                         
        investments in affiliates                                    -         59,849       13,421 
    Loss on sale of property, plant and equipment                    -         (4,119)         -   
    Loss on sale of securities available for sale                (10,282)     (34,077)         -   
                                                              ----------   ----------   ---------- 
        Total Other Income                                    $2,446,845   $  320,627   $  149,326 
                                                              ----------   ----------   ---------- 

(Continued)                                                                     

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FAIR GROUNDS CORPORATION
STATEMENTS OF OPERATIONS (CONTINUED)
For the Years Ended October 31

                                                        · Enlarge/Download Table

                                                                                Unaudited   
                                                        1995          1994         1993     
                                                      ---------   -----------   ----------- 
                                                                                            
LOSS BEFORE INCOME TAXES, MINORITY INTEREST,                                                
    EXTRAORDINARY ITEM, AND CUMULATIVE EFFECT OF                                            
    CHANGES IN ACCOUNTING PRINCIPLES                  $(916,576)  $(3,402,370)  $(3,440,455)

PROVISION (BENEFIT) FOR INCOME TAXES                   (300,460)   (1,878,635)     (383,787)

MINORITY INTEREST IN EARNINGS OF SUBSIDIARY                 -             -         142,661 
                                                      ---------   -----------   ----------- 

LOSS BEFORE EXTRAORDINARY ITEM AND CUMULATIVE EFFECT                                        
    OF CHANGES IN ACCOUNTING PRINCIPLES                (616,116)   (1,523,735)   (3,199,329)

EXTRAORDINARY ITEM - GAIN FROM FIRE                                                         
    (net of $5,363,801 of related                                                           
    income taxes in 1994)                                   -       9,312,758           -   

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING FOR                                               
    INVESTMENTS IN 1995 AND INCOME TAXES IN 1994        104,000       (75,094)          -   
                                                      ---------   -----------   ----------- 

NET INCOME (LOSS)                                     $(512,116)  $ 7,713,929   $(3,199,329)
                                                      =========   ===========   =========== 

(Continued)                                                                     

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FAIR GROUNDS CORPORATION
STATEMENTS OF OPERATIONS (CONTINUED)
For the Years Ended October 31

                                                        · Enlarge/Download Table

                                                                             Unaudited
                                                            1995     1994       1993  
                                                           ------   ------   ---------
                                                                                      
PER SHARE OF COMMON STOCK:                                                            

    LOSS BEFORE EXTRAORDINARY ITEM AND CUMULATIVE EFFECT                              
        OF CHANGES IN ACCOUNTING PRINCIPLES                $(1.32)  $(3.25)    $(6.83)

    EXTRAORDINARY ITEM, NET OF INCOME TAXES                    .-    19.89         .- 

    CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES     .23     (.16)        .- 
                                                           ------   ------     ------ 

    NET INCOME (LOSS)                                      $(1.09)  $16.48     $(6.83)
                                                           ======   ======     ====== 

See accompanying notes to financial statements.                                 

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FAIR GROUNDS CORPORATION
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY 
For the Years Ended October 31

                                                        · Enlarge/Download Table

                                                                Unrealized                           
                                                                  Loss On                            
                                       Additional               Securities                 Total     
                             Capital     Paid-In    Retained     Available    Treasury  Stockholders'
                              Stock      Capital    Earnings     For Sale      Stock       Equity    
                           ----------  ----------  ----------    ---------------------   ------------
                                                                                                     
Balance, October 31, 1992  $1,525,092  $1,942,350  $3,692,910    $     -     $ (45,973)  $ 7,114,379 

    Net loss (unaudited)          -           -    (3,199,329)         -          -       (3,199,329)

    Cash Dividend                                                                                    
        (per share $0.20)                                                                            
        (unaudited)               -           -       (93,652)         -          -          (93,652)
                           ----------  ----------  ----------    ---------   ---------   ----------- 

Balance, October 31, 1993                                                                            
    (unaudited)             1,525,092   1,942,350     399,929          -       (45,973)    3,821,398 

    Net income                    -           -     7,713,929          -          -        7,713,929 
                           ----------  ----------  ----------    ---------   ---------   ----------- 

Balance, October 31, 1994   1,525,092   1,942,350   8,113,858          -       (45,973)   11,535,327 

    Net loss                      -           -      (512,116)         -          -         (512,116)

    Unrealized loss on                                                                               
     securities available                                                                            
     for sale                     -           -           -        (54,884)       -          (54,884)
                           ----------  ----------  ----------    ---------   ---------   ----------- 

Balance, October 31, 1995  $1,525,092  $1,942,350  $7,601,742    $ (54,884)  $ (45,973)  $10,968,327 
                           ==========  ==========  ==========    =========   =========   =========== 

See accompanying notes to financial statements.                                 

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FAIR GROUNDS CORPORATION
STATEMENTS OF CASH FLOWS
For the Years Ended October 31

                                                        · Enlarge/Download Table

                                                                                         Unaudited  
                                                                  1995        1994         1993     
                                                               ---------   ----------   ----------- 
                                                                                                    
CASH FLOWS FROM OPERATING ACTIVITIES                                                                
    Net income (loss)                                          $(512,116)  $7,713,929   $(3,199,329)

    Adjustments to reconcile net income (loss) to                                                   
        net cash provided by (used for) operating activities:                                       
            Extraordinary item - gain from fire                      -     (9,312,758)          -   
            Depreciation                                       1,797,256    1,856,388     1,577,937 
            Gain (loss) on sale of property                          -          4,119          -    
            Equity in earnings from unconsolidated                                                  
                investments in affiliates                            -        (59,849)      (13,421)
            Provision for deferred taxes                        (218,851)  (1,312,346)     (322,308)
            Loss on sale and write-down of partnership               -        604,363        57,079 
            Unrealized loss on marketable securities                 -        104,000           -   
            Charge for cumulative effect of change in                                               
                accounting for income taxes and investment                                          
                securities - available for sale                 (104,000)      75,094           -   
            Loss on sale of investment securities                 10,282       34,077           -   
            Loss on advance to affiliate                             -          7,500           -   
            Litigation settlement                                    -       (200,000)    2,500,000 
            Change in assets and liabilities:                                                       
                (Increase) decrease in:                                                             
                 Accounts receivable                            (328,198)      (2,617)     (332,434)
                 Insurance proceeds receivable                   487,341          -             -   
                 Inventory                                        (6,707)      55,392         5,466 
                 Refundable income taxes                         566,289     (504,810)      140,306 
                 Prepaid expenses                               (196,646)      41,172        54,886 
                 Cash and cash equivalents - restricted         (154,909)         -             -   

(Continued)                                                                     

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FAIR GROUNDS CORPORATION
STATEMENTS OF CASH FLOWS (CONTINUED)
For the Years Ended October 31

                                                        · Enlarge/Download Table

                                                                                              Unaudited  
                                                                       1995        1994         1993     
                                                                   -----------   ----------   ---------- 
                                                                                                         
        Increase (decrease) in:                                                                          
            Accounts payable and accrued liabilities                 3,582,759     (476,787)   1,955,563 
            Deferred purses                                            165,727      496,343          -   
            Deferred revenues                                           (3,431)     (93,129)    (105,242)
            Minority interest                                              -        (73,859)     (13,328)
                                                                   -----------   ----------   ---------- 

                Total Adjustments                                    5,596,912   (8,757,707)   5,504,504 
                                                                   -----------   ----------   ---------- 

            Net cash provided by (used for) operating activities     5,084,796   (1,043,778)   2,305,175 
                                                                   -----------   ----------   ---------- 

CASH FLOWS PROVIDED BY (USED FOR) INVESTING ACTIVITIES                                                   
        Capital expenditures                                       (14,625,149)  (8,130,078)    (240,866)
        Acquisition of partnership interest, net of cash acquired          -           (172)         -   
        Proceeds from insurance claims                                     -     18,838,556          -   
        Payments to third parties on insurance claims                      -       (145,052)         -   
        Proceeds from sale of equity investments in affiliates             -        535,000          -   
        Investment proceeds paid to affiliate                              -       (214,000)         -   
        Purchase of securities available for sale                     (763,872)  (1,445,287)  (1,703,557)
        Proceeds from sale of securities available for sale          1,714,052    1,860,983          -   
        Distributions from investments in affiliates                       -            -         45,000 
        Repayments on loans to affiliates                                  -          2,802       27,682 
        Deposits                                                       (36,690)      (2,089)       5,316 
        Proceeds from sale of property                                     -            -         71,895 
                                                                   -----------   ----------   ---------- 

            Net cash provided by (used for) investing activities   (13,711,659)  11,300,663   (1,794,530)
                                                                   -----------   ----------   ---------- 

(Continued)                                                                     

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FAIR GROUNDS CORPORATION
STATEMENTS OF CASH FLOWS (CONTINUED)
For the Years Ended October 31

                                                        · Enlarge/Download Table

                                                                                          Unaudited  
                                                                   1995         1994        1993     
                                                                ----------   ----------   ---------- 
                                                                                                     
CASH FLOWS USED FOR FINANCING ACTIVITIES                                                             
    Proceeds from short-term borrowings                          3,533,443    1,000,000      350,000 
    Video poker tax relief payments                               (703,488)         -            -   
    Principal repayments of short-term borrowings               (1,123,812)  (1,000,000)    (450,000)
    Principal repayments of long-term borrowings                       -     (5,000,000)  (1,044,441)
    Cash dividends paid                                                -            -        (93,652)
                                                                ----------   ----------   ---------- 

        Net cash provided from (used for) financing activities   1,706,143   (5,000,000)  (1,238,093)
                                                                ----------   ----------   ---------- 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS            (6,920,720)   5,256,885     (727,448)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                   8,039,310    2,782,425    3,509,873 
                                                                ----------   ----------   ---------- 

CASH AND CASH EQUIVALENTS AT END OF YEAR                        $1,118,590   $8,039,310   $2,782,425 
                                                                ==========   ==========   ========== 

See accompanying notes to financial statements.                                 

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FAIR GROUNDS CORPORATION
NOTES TO FINANCIAL STATEMENTS 
For the Years Ended October 31, 1995, 1994 and 1993 (Unaudited) 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                             

Preparation of October 31, 1993 Financial Statements                            

As a result of a fire, an audit of the October 31, 1993 financial statements    
was not possible due to the destruction of the accounting records and           
therefore, no opinion was expressed by the Company's independent certified      
public accountants with respect to the financial statements as of October 31,   
1993 and the fiscal year then ended.  Management believes all material          
adjustments which are necessary for a fair presentation of fiscal 1993          
financial statements have been recorded.                                        

Nature of Business                                                              

The Company conducts a live fall/spring race meeting for thoroughbred horses    
and participates in inter-track wagering as a host track and as a receiving     
track.  In addition, the Company currently operates five off-track betting      
facilities located in Southeast Louisiana, as well as a tele-track facility     
located at the Fair Grounds Race Course.                                        

Uninsured Cash Deposits                                                         

As of October 31, 1995 and 1994, the Company had deposits in various financial  
institutions in the aggregate of $1,718,335 and $8,023,281, respectively.  Such 
deposits exceeded insured limits as of October 31, 1995 and 1994 by $1,206,763  
and $1,491,622, respectively.                                                   

Cash and Cash Equivalents                                                       

The Company considers all highly liquid debt instruments purchased with an      
original maturity of three months or less to be cash equivalents.               

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FAIR GROUNDS CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 
For the Years Ended October 31, 1995, 1994 and 1993 (Unaudited) 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                 

Cash and Cash Equivalents - Restricted                                          

Cash of approximately $48,000 is restricted to pay certain future loan related  
costs in accordance with a bank note payable obtained in fiscal 1995.  In       
addition, the Company has a certificate of deposit of approximately $107,000 as 
of October 31, 1995 that is pledged as a security deposit for the Company's     
worker's compensation program.                                                  

Inventory                                                                       

Inventory consists primarily of food and beverage items and is stated at the    
lower of cost or market.  Cost is determined by the first-in, first-out method. 

Property, Plant and Equipment                                                   

Property, plant and equipment is stated at cost.  Depreciation is provided by   
the straight-line method.  The estimated useful lives of the buildings range    
from 20 to 40 years.  Lives of other depreciable assets range from              
approximately 3 to 20 years.  Depreciation on the Company's temporary           
facilities is provided by the straight-line method over an estimated useful     
life of 3 years.  For financial reporting purposes, leasehold improvements are  
amortized over the lesser of the term of the related lease or the estimated     
useful lives of the assets.                                                     

Deferred Revenues                                                               

Promotional fees received by the Company are deferred and recognized as income  
over the following racing meet.                                                 

Securities Available for Sale                                                   

Effective November 1, 1994, the Company adopted a new accounting standard for   
investment securities in accordance with Statement of Financial Accounting      
Standards ("SFAS") No. 115, Accounting for Certain Investments in Debt and      
Equity Securities.  This accounting standard requires the Company to classify   
its securities as held to maturity, available for sale, or trading.  The        
Company has classified all of its securities as available for sale and accounts 
for them at fair value with the unrealized gain or loss shown as a separate     
component of stockholders' equity.  The effect of this accounting change is     
applied prospectively; therefore, there is no restatement of prior year         
amounts.  Prior to November 1, 1994, the Company accounted for investment       
securities in accordance with                                                   

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FAIR GROUNDS CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 
For the Years Ended October 31, 1995, 1994 and 1993 (Unaudited) 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                 

SFAS No. 12, and, accordingly, investment securities were carried at the lower  
of aggregate cost or market.  The Company has reported the cumulative effect of 
the change in its method of accounting for investment securities of $104,000 in 
its Statement of Operations for the year ending October 31, 1995.  The Company  
records realized gains and losses on investment securities as they are sold,    
using the specific identification method.                                       

Uncashed Mutuel Tickets                                                         

Holders of uncashed winning pari-mutuel tickets have until 90 days after the    
end of a given race meet to cash their winning tickets.  Tickets that expire    
become revenues of the Company, up to a maximum of $250,000 per race meet.      
Uncashed pari-mutuel tickets exceeding $250,000 per race meet are remitted to   
the State of Louisiana.                                                         

Income Taxes                                                                    

Effective November 1, 1993, the Company adopted Financial Accounting Standards  
Board's Statement of Financial Accounting Standards ("SFAS") 109, Accounting    
for Income Taxes.  The adoption of SFAS 109 supersedes APB Opinion 11, which    
was applied in fiscal year 1993 and prior.  Under SFAS 109, deferred tax assets 
and liabilities are recognized for the future tax consequences attributable to  
differences between the financial statement amounts of assets and liabilities   
and their respective tax bases.  Deferred tax assets and liabilities are        
measured using enacted tax rates expected to apply to taxable income in the     
years in which those temporary differences are expected to be recovered or      
settled.  Under SFAS 109, the effect on deferred tax assets and liabilities of  
a change in tax rates is recognized in income in the period that included the   
enactment date.                                                                 

Pursuant to APB Opinion 11, which was applied in fiscal year 1993 and prior,    
deferred income taxes are recognized for income and expense items that are      
reported in different years for financial reporting and income tax purposes     
using the tax rate applicable for the year of the calculation.  Under this      
method, deferred taxes are not adjusted for subsequent changes in tax rates.    

The Company has reported the cumulative effect of the change in its method of   
accounting for income taxes of approximately $75,000 in its Statement of        
Operations for the year ending October 31, 1994.                                

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FAIR GROUNDS CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 
For the Years Ended October 31, 1995, 1994 and 1993 (Unaudited) 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                 

Deferred Purses                                                                 

Deferred purses include those amounts required by Louisiana law to be withheld  
from commissions earned by an off-track betting licensee and paid as purse      
supplements during the licensee's succeeding live racing meet.                  

Net Income (Loss) Per Share                                                     

Net income (loss) per share is determined by dividing net income (loss) by the  
weighted average number of common shares outstanding during the period.  Per    
share amounts were determined using 468,180 common shares outstanding.          

Reclassifications                                                               

Certain reclassifications of previously reported amounts have been made to      
conform with fiscal 1995 presentation.  Such reclassifications had no effect on 
previously reported net income.                                                 

NOTE 2 - EXTRAORDINARY ITEM - DECEMBER 17, 1993 FIRE                            

On December 17, 1993, a fire destroyed the grandstand and clubhouse areas at    
the Fair Grounds Race Course.  The net book value of assets destroyed in the    
fire was approximately $4.5 million.  The Company believes that its property    
and casualty insurance policies provide coverage in the aggregate amount of     
approximately $34 million for buildings, contents, fixtures, equipment, items   
of personal property, loss of income from operations ("business interruption"), 
and loss of works of art.  The Company has submitted claims to its insurance    
carriers and  through October 31, 1995 had recovered an aggregate of            
$19,478,791, of which the Company has paid approximately $145,000 to certain    
third parties as a result of claims filed for property owned by them and        
destroyed by the fire.  The Company has filed a civil action against one of its 
insurance carriers in an attempt to recover an additional approximate $14.8     
million.                                                                        

The Company and its tele-tracks were forced to cease operations for ten racing  
days in fiscal 1994 as a result of the fire until temporary facilities could be 
built.  Temporary facilities were built at an aggregate cost of $2.7 million.   
The Company reopened its tele-track facilities on December 29, 1993 and resumed 
live racing operations on January 5, 1994.                                      

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FAIR GROUNDS CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 
For the Years Ended October 31, 1995, 1994 and 1993 (Unaudited) 

NOTE 2 - EXTRAORDINARY ITEM - DECEMBER 17, 1993 FIRE ((CONTINUED)               

As a result of the fire, the Company recorded for the fiscal year ended October 
31, 1994, an extraordinary gain of $9.3 million, net of related income taxes of 
$5.4 million.  The extraordinary gain is equal to insurance proceeds, which     
includes $1,500,000 of business interruption insurance proceeds, in excess of   
the $4.5 million net book value of the destroyed property, plant and equipment. 

NOTE 3 - STATEMENTS OF CASH FLOWS SUPPLEMENTAL DISCLOSURES                      

Cash paid during the following fiscal years for:                                

                                                                · Download Table

                             1995              1994               1993  
                           --------          --------           --------
                                                                        
Interest                   $245,296          $312,121           $502,624

The 1995 cash paid for interest includes capitalized interest of $232,979,      
which is included in Construction in Progress at October 31, 1995.              

There were no noncash investing or financing activities for fiscal years ended  
October 31, 1995, 1994, and 1993.                                               

NOTE 4 - SECURITIES AVAILABLE FOR SALE                                          

At October 31, 1995, securities were classified as available for sale and       
consisted of the following:                                                     

                                                                · Download Table

                                                                    Gross   
                              Amortized          Market           Unrealized
                                Cost             Value               Loss   
                              ---------         --------          ----------
                                                                            
Preferred and common stocks   $303,534          $269,900           $(33,634)

Municipal bond funds           209,250           188,000            (21,250)
                              --------          --------           -------- 

                              $512,784          $457,900           $(54,884)
                              ========          ========           ======== 

During fiscal year ending October 31, 1995, proceeds from sales of securities   
available for sale were $1,714,052 and gross realized losses from such sales    
were $10,282.                                                                   

At October 31, 1994, investment securities were accounted for at the lower of   
aggregate cost or market.  The total cost and market value of the investment    
securities was $1,480,297 and $1,376,297, respectively, with an unrealized loss 
of $104,000 charged to operations in fiscal 1994.                               

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FAIR GROUNDS CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 
For the Years Ended October 31, 1995, 1994 and 1993 (Unaudited) 

NOTE 5 - NOTES PAYABLE                                                          

                                                                · Download Table

                                                                 October 31         
                                                        --------------------------- 
                                                           1995             1994    
                                                        ----------       ---------- 
                                                                                    
Victory Life Insurance Company;                                                     
    Demand note, interest at the prime rate,                                        
    8.75% at October 31, 1995, secured by a                                         
    first mortgage note on certain property.            $1,500,000       $1,500,000 

Louie J. Roussel, III;                                                              
    Demand note, interest at the prime rate,                                        
    8.75% at October 31, 1995, secured by a                                         
    first mortgage note on certain property.               500,000          500,000 

First National Bank of Commerce ("FNBC");                                           
    Note, interest at 0.5% over the New York prime                                  
    rate (9.25% at October 31, 1995) secured                                        
    by a second mortgage note on certain property, and                              
    342,584 common shares of the Company owned                                      
    in the aggregate by the Trust, the Krantzes, and                                
    Jefferson Downs, due on January 17, 1996.            1,494,477              -   

INAC Corp.;                                                                         
    Installment note - insurance premium financing;                                 
    interest at 6.98%, due February 1996.                  211,666              -   
                                                        ----------       ---------- 

                                                         3,706,143        2,000,000 

Less: Current portion                                   (3,706,143)      (1,000,000)
                                                        ----------       ---------- 

Long-term portion                                       $      -         $1,000,000 
                                                        ==========       ========== 

On July 17, 1995, FNBC provided a short-term interim loan to the Company in the 
amount of $2,150,000 ($1,494,477 outstanding balance as of October 31, 1995)    
for construction costs relating to the rebuilding of the grandstand and         
clubhouse facilities.  As a result of this loan, the Company became eligible to 
receive the benefit of                                                          

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FAIR GROUNDS CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 
For the Years Ended October 31, 1995, 1994 and 1993 (Unaudited) 

NOTE 5 - NOTES PAYABLE (CONTINUED)                                              

the video poker franchise tax exemption which was signed into law in 1994 under 
the Video Poker Emergency Relief Act.  During fiscal 1995 the Company           
recognized $703,488 in video poker tax relief pertaining to the exemption.      
These monies were applied to the interim loan and related interest.             

See Note 13 related to subsequent events affecting notes payable.               

NOTE 6 - INCOME TAXES                                                           

As discussed in Note 1, effective November 1, 1993, the Company adopted SFAS    
109.  The cumulative effect of the adoption of SFAS 109 of $75,094, as          
determined as of November 1, 1993, is included as a reduction of income in the  
accompanying fiscal year 1994 Statement of Operations.  Prior years' financial  
statements have not been restated to apply the provisions of SFAS 109.          

The components of the income tax provisions (benefits) are as follows:          

                                                                · Download Table

                                October 31                  
               -------------------------------------------- 
                  1995             1994             1993    
               ----------       -----------       --------- 
                                                            
Current:                                                    
    Federal    $      -         $  (469,048)       $(56,495)
    State             -             (97,241)         (4,984)
               ----------       -----------       --------- 
        Total         -            (566,289)        (61,479)

Deferred         (300,460)       (1,312,346)       (322,308)
               ----------       -----------       --------- 

        Total  $ (300,460)      $(1,878,635)      $(383,787)
               ==========       ===========       ========= 

For the year ended October 31, 1995 and 1994, the tax effects of temporary      
differences that gave rise to significant portions of the deferred tax assets   
and deferred tax liabilities are presented below along with a summary of        
activity in the valuation allowance.                                            

                                                                · Download Table

                                         October 31      
                                 ------------------------
                                   1995            1994  
                                 -------          -------
                                                         
Current deferred tax asset:                              
    General liability insurance  $59,940          $22,940
                                 -------          -------

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FAIR GROUNDS CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 
For the Years Ended October 31, 1995, 1994 and 1993 (Unaudited) 

NOTE 6 - INCOME TAXES (CONTINUED)                                               

                                                                · Download Table

                                                         October 31           
                                                 ---------------------------- 
                                                     1995            1994     
                                                 -----------      ----------- 
                                                                              
Non-current deferred tax assets:                                              
    Property                                         118,787           57,941 
    Net operating loss carryforward                  765,122          550,974 
    Capital loss carryforward                         24,110          107,187 
                                                 -----------      ----------- 
        Total non-current deferred tax assets        908,019          716,102 
Non-current deferred tax liability                                            
    Deferred tax gain on fire                     (4,808,801)      (4,808,801)
                                                 -----------      ----------- 

Net non-current deferred tax liability           $(3,900,782)     $(4,092,699)
                                                 ===========      =========== 
Valuation allowance at November 1, 1993             $107,187         $872,090 
Valuation allowance utilized during the year        (107,187)        (872,090)
Valuation allowance established during the year      119,253          107,187 
                                                 -----------      ----------- 
Valuation allowance at October 31, 1994          $   119,253      $   107,187 
                                                 ===========      =========== 

A reconciliation of the provision (benefit) for taxes on income at the          
Company's federal statutory income tax rate to the tax provision (benefit) for  
financial reporting purposes for fiscal year ending October 31, 1995 and 1994   
is as follows:                                                                  

                                                        · Enlarge/Download Table

                                                                      October 31         
                                                              -------------------------- 
                                                                 1995            1994    
                                                              ---------      ----------- 
                                                                                         
Expected tax benefit                                          $(276,276)     $(1,156,806)
State income taxes                                              (24,377)        (102,071)
Change in valuation allowance                                    12,066         (764,903)
Non-deductible expenses                                         159,356           70,295 
Additional realizable carryback credits                         (81,609)             -   
Additional realizable carry-forward net operating losses        (89,620)             -   
Current statutory rate in excess of effective carryback rate        -             74,850 
                                                              ---------      ----------- 
Actual tax benefit                                            $(300,460)     $(1,878,635)
                                                              =========      =========== 

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FAIR GROUNDS CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 
For the Years Ended October 31, 1995, 1994 and 1993 (Unaudited) 

NOTE 6 - INCOME TAXES (CONTINUED)                                               

A reconciliation of the provision (benefit) for taxes on income at the          
Company's federal statutory income tax rate to the tax provision (benefit) for  
financial reporting purposes for fiscal year ending October 31, 1993 is as      
follows:                                                                        

                                                                · Download Table
                                                                                 
Expected tax at statutory federal income tax rates                               
Increase (decrease) in taxes resulting from:                         $(1,218,260)
        State income taxes net of federal tax benefit                   (107,493)
        Non-deductible contributions, penalties, and other expenses       16,966 
        Reduction for unrealized deferred tax benefit                    925,000 
                                                                     ----------- 

        Actual tax expense (benefit)                                 $  (383,787)
                                                                     =========== 

The timing differences in the recognition of revenues and expenses for tax and  
financial reporting purposes that result in a deferred tax expense as of        
October 31, 1993 are as follows:                                                

                                                                · Download Table
                                                                                  
Excess book depreciation                                                $(159,294)
Current book expense not deductible in the current year                  (885,181)
Prior year book expense deductible in the current year                       -    
Earnings from equity investments in excess of current book recognition   (100,677)
State income taxes net of federal income tax                             (102,156)
Reduction for unrealizable deferred tax benefit                           925,000 
                                                                        --------- 
    Deferred tax expense                                                $(322,308)
                                                                        ========= 

As of October 31, 1995, the Company has a net operating loss carryforward and a 
capital loss carryforward for financial statement and tax return purposes of    
approximately $2.1 million and $10,282, respectively, which, if unused, begin   
to expire in 2009 and 1999, respectively.                                       

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FAIR GROUNDS CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 
For the Years Ended October 31, 1995, 1994 and 1993 (Unaudited) 

NOTE 6 - INCOME TAXES (CONTINUED)                                               

SFAS 109 requires an evaluation of the future realization of a tax benefit of   
existing deductible temporary differences or a net operating loss carryforward. 
This realization ultimately depends on sufficient taxable income of the         
appropriate character, including reversals of existing taxable temporary        
differences.                                                                    

In future years, the Company will have reversals of taxable temporary           
differences that will offset the net operating loss carryforwards of $2.1       
million.  At October 31, 1995 a valuation allowance has been established for    
the Company's deferred tax asset for a portion of its net operating and capital 
loss carryovers due to the uncertainty of its future realization.               

The Company has recorded a deferred tax liability of $4,808,801 as a result of  
the deferred gain on the fire for income tax purposes. The Company intends to   
reinvest all fire insurance proceeds into new facilities currently under        
construction within the two year roll-over period.  Once constructed, the       
Company will have a difference between the book and tax basis of such           
facilities.  This taxable difference will reverse out with the scheduled        
depreciation of such assets.                                                    

At October 31, 1994 current income taxes of $555,000 related to the $1.5        
million of business interruption insurance received are included net of the     
extraordinary gain from the fire.                                               

NOTE 7 - COMMITMENTS AND CONTINGENCIES                                          

Fire Related Litigation                                                         

The Company is a party to a number of legal proceedings which have arisen as a  
result of the December 1993 fire further described in Note 2, or in connection  
with the Company's efforts to collect insurance proceeds after the fire.  The   
following is a brief description of such fire-related proceedings:              

1.       On May 14, 1994 the Company filed an action in the 24th Judicial       
      District Court in the State of Louisiana against Travelers Indemnity
      Company of Illinois ("Travelers"), and others.  The Company contends
      that the insurance policy provided by Travelers provides the Company
       with blanket coverage in the amount of $24.1 million in excess of the
     $10 million of underlying coverage provided by Allianz Underwriters
      Insurance Company ("Allianz") and Royal Indemnity Company ("Royal");
     accordingly, the Company maintains that Travelers is liable for the
difference between                                            

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FAIR GROUNDS CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 
For the Years Ended October 31, 1995, 1994 and 1993 (Unaudited) 

NOTE 7 - COMMITMENTS AND CONTINGENCIES (CONTINUED)                              

$24.1 million and the amount already paid (approximately $9.3 
   million), plus statutory penalties of 10% of the amount not paid,
    interest, attorney's fees and costs.  The Company further contends
        that, in the event the court determines that the amount of coverage is
     less than that claimed by the Company, then the insurance agent and
       the insurance broker who arranged for the insurance are liable to the
  Company for any damages.  Travelers' position is that the excess
       policy did not provide blanket coverage, and that its liability under
 such policy is limited to the amount which it has already paid.
      Travelers filed a separate action in June 1994 in the U.S.  District
       Court for the Eastern District of Louisiana, asking for a declaratory
  judgment that the policy  did not provide blanket coverage.  The
        federal court action has now been dismissed and the state court action
is proceeding.                                                

2.       The Company filed an action against Allianz in March 1994 in the Civil 
        District Court for the Parish of Orleans, State of Louisiana.  Allianz
       subsequently removed the action from state court to the United States
    District Court for the Eastern Division of Louisiana.  The Company
  contended that Allianz, which was the Company's primary property
      insurer, failed to pay the policy benefits of $5 million on a timely
   basis, thereby subjecting it to a statutory penalty of 10% of the
    amount not paid, interest, attorney's fees and costs.  The Company
     also alleged that Allianz acted in bad faith in its handling of the
       claim.  In March 1995, prior to commencement of the trial, the action
was settled without any admission of liability.               

3.       The Company filed an action against Royal in December 1994, in the     
   Civil District Court for Orleans Parish, alleging that Royal also
       failed to pay on a timely basis under its policy.  The issues in this
       proceeding were substantially similar to the issues in the litigation
 against Allianz described above.  In October 1995, prior to the
commencement of the trial, the action was settled.            

4.       The Company filed an action in December 1994, in the Civil District    
     Court for Orleans Parish, against ADT Security Systems, the company
 which provided and maintained the fire alarm system at the Fair
 Grounds Race Course, and other defendants.  The complaint seeks
       unspecified damages, not otherwise compensated for by insurance, that
were allegedly caused by the negligence of one or more of the 
defendants.                                                   

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FAIR GROUNDS CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 
For the Years Ended October 31, 1995, 1994 and 1993 (Unaudited) 

NOTE 7 - COMMITMENTS AND CONTINGENCIES (CONTINUED)                              

5.       The Company is a defendant, along with its general liability insurance 
        carrier, United National Insurance Company, in a civil action filed in
   December 1994 in the United States District Court for the Eastern
  District of Louisiana by St. Paul Mercury Insurance Company, the
  insurer for AutoTote.  The complaint alleges that such insurance
     company is subrogated to the rights of AutoTote to collect damages,
       and that it has paid AutoTote in excess of $1 million for the loss of
 totalisator equipment at the Fair Grounds Race Course which was
 destroyed in the fire.  Subsequently, United National Insurance
     Company has filed suit against the Company seeking to deny coverage
for such subrogation claim.                                   

As to the pending matters described above, there can be no assurance that the   
Company will be successful in any of its claims or defenses.  Accordingly, no   
assurance can be given that additional recoveries of insurance proceeds, if     
any, will reimburse the Company adequately for the loss or destruction of its   
property in the fire.                                                           

Except as described above, there are no material pending legal proceedings,     
other than ordinary routine litigation incidental to its business, to which the 
Company is a party or of which any of its property is the subject.              

Status of Construction of Facilities                                            

A new tele-track facility and temporary clubhouse area was opened on December   
22, 1994.  The total cost for debris removal and the construction of the        
tele-track was approximately $3.2 million.                                      

During the Summer of 1994, the Company approved the plans for a new main        
facility. The total cost of the facility, together with furniture, fixtures,    
equipment and certain fees and permit costs, was anticipated to be              
approximately $25.3 million at the time construction commenced.                 

As of October 31, 1995, construction of the facility was approximately 60%      
completed, and the Company had incurred construction costs of approximately     
$15.2 million.  Insurance proceeds recovered to date and interim bank financing 
provided the source of funds used in such construction.  However, for the       
reasons described below, further construction work on the project has been      
halted.  As a result, the cost and timing to complete the project cannot now be 
determined with any certainty.                                                  

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FAIR GROUNDS CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 
For the Years Ended October 31, 1995, 1994 and 1993 (Unaudited) 

NOTE 7 - COMMITMENTS AND CONTINGENCIES (CONTINUED)                              

Construction Financing                                                          

As previously reported, the Company received and accepted a commitment letter   
dated February 6, 1995 from FNBC for a non-revolving line of credit to be used  
as an interim construction loan, convertible to a term loan.  The aggregate     
principal amount of such loan under the terms of such commitment was to have    
been $17.5 million.  The commitment from FNBC provided that the interim         
construction loan was to have closed on or before March 31, 1995.  However, the 
parties agreed to various extensions of such closing date.  FNBC indicated that 
the principal reason for the delay was FNBC's concern with restrictions on and  
the possible elimination of video poker gaming in Louisiana.  Inasmuch as video 
poker franchise tax monies generated by the Company and its tele-tracks were to 
be used for the repayment of the FNBC loan, in accordance with the tax relief   
legislation described below, any changes in the video poker gaming laws which   
restricts or limits video poker as a source of revenue may have an adverse      
impact on such source of repayment.  Accordingly, final action on the full      
$17.5 million loan has been delayed until after the 1996 Louisiana regular      
legislative session.                                                            

In 1994, legislation was adopted which provides that owners of video poker      
devices that are located in licensed establishments owned or operated by        
licensed racing associations eligible for emergency relief under the statute    
are exempt from the franchise payment otherwise due under the Video Draw Poker  
Devices Control Law for a period not to exceed 15 years.  The amount of the     
franchise payment which otherwise would have been paid to the State  of         
Louisiana during the exemption period is to be remitted directly to the         
licensed racing association, in an amount up to $2.5 million annually, and such 
funds are to be used for providing emergency relief to the licensed racing      
association.  The use of funds by the licensed racing association is subject to 
review and oversight by a legislative committee, which may reduce the amount of 
the authorized exemption if the racing association cannot satisfy the committee 
that the exemption is necessary for its ongoing economic viability.  The        
legislation also provides that at such time as the emergency relief granted     
under the act exceeds the required annual debt service on any indebtedness      
incurred to address the emergency situation, such indebtedness not to exceed    
$25 million, the excess of such funds is to be remitted to the state treasury.  
During 1995, the Joint Legislation Committee on the Budget approved the         
dedication of funds received from the franchise tax relief described above      
toward the exclusive use by the Company for making principal and interest       
payments to FNBC.                                                               

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FAIR GROUNDS CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 
For the Years Ended October 31, 1995, 1994 and 1993 (Unaudited) 

NOTE 7 - COMMITMENTS AND CONTINGENCIES (CONTINUED)                              

Interim Financing                                                               

During 1995, FNBC provided the Company with short-term interim construction     
loans of $2.15 million on July 17, 1995.  In addition, as further described in  
Note 13, FNBC provided the Company with an additional $4 million on November 7, 
1995, and $1 million on November 30, 1995.  As also described in Note 13, all   
of such financing was then consolidated under a Loan Agreement dated as of      
December 18, 1995 between the Company and FNBC, pursuant to which the Company   
borrowed an aggregate amount of $9,493,050 and utilized a portion of such funds 
to repay the principal amount of the prior loans that was outstanding on        
December 18, 1995.  The remaining amount borrowed was utilized to pay           
construction costs.                                                             

Possible Future Financing                                                       

The Company believes that it was unable during 1995 to obtain the full amount   
of financing originally committed by FNBC due to the uncertainty regarding the  
future of video poker as a continuing source of revenue.  The Company is        
hopeful that the 1996 Louisiana regular legislative session will adjourn        
without having passed any statute that would adversely affect the status of the 
video poker tax relief previously granted to the Company or the existing video  
poker operations of the Company or Finish Line, or that would allow for or      
require local elections as a condition to the continuation of video poker       
operations.  No assurance can be given, however, that such legislation will not 
be adopted.  If adopted, such legislation will adversely affect the ability of  
the Company to obtain long-term financing from FNBC in accordance with the      
terms of the original commitment.                                               

The Company has received a commitment from VSI to provide a non-interest        
bearing loan in the principal amount of $1.5 million, in consideration for      
which the Company is to agree to extend both the term of its agreement with VSI 
and the term of the option period thereunder by two years.  The loan from VSI   
is conditioned upon the closing of the long-term bank financing.                

In addition to the foregoing, Marie G. Krantz (Chairman of the Board of         
Directors and Treasurer of the Company) has committed to make a $1 million loan 
to the Company, which would be conditioned upon the closing of, and subordinate 
in right of payment to the permanent FNBC financing.  Although specific terms   
of such loans have not been discussed, it is likely that the loan would be      
interest-bearing, and that payments would                                       

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FAIR GROUNDS CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 
For the Years Ended October 31, 1995, 1994 and 1993 (Unaudited) 

NOTE 7 - COMMITMENTS AND CONTINGENCIES (CONTINUED)                              

be made after the repayment of the FNBC financing.  The Company is also engaged 
in discussions with AutoTote concerning a possible commitment by AutoTote to    
lend or advance $2.5 million to the Company, such amount to be repaid through a 
subordinated loan arrangement or through an extension of the lease terms        
relating to the totalisator equipment.                                          

See Note 12 - Contingencies - Going Concern as to the Company's ability to      
finance the completion of construction of its facilities and to continue as a   
going concern.                                                                  

NOTE 8 - AMTOTE LITIGATION SETTLEMENT                                           

The Company was a defendant in a lawsuit filed in federal court in Louisiana by 
American Totalisator Company, Inc.  ("AmTote"), for alleged breach of contract. 
In 1992, AmTote was awarded a judgment against the Company in the amount of     
$2.2 million plus attorney's fees, costs and interest.  As a result of the      
judgment, the Company recorded an estimated liability of $2.5 million for the   
year ended October 31, 1993.  In September 1993, the federal court of appeals   
affirmed the judgment in favor of AmTote.  In August 1994, after discussions    
among the representatives of the parties, the Company and AmTote settled the    
claim for $2.3 million.                                                         

NOTE 9 - RELATED PARTY TRANSACTIONS                                             

Marie G. Krantz, Chairman of the Board of Directors and Treasurer of the        
Company, has voting control over 339,604 shares of common stock of the Company  
(72.27% of the outstanding common stock of the Company) owned by the Masoni     
Trust.  In addition, Marie G. Krantz and Bryan G. Krantz together are the       
beneficial owners of 100% of the outstanding shares of Jefferson Downs          
Corporation.                                                                    

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FAIR GROUNDS CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 
For the Years Ended October 31, 1995, 1994 and 1993 (Unaudited) 

NOTE 9 - RELATED PARTY TRANSACTIONS (CONTINUED)                                 

In August 1992,  the Company entered into a Management Agreement with Finish    
Line Management Corporation ("Finish Line"), which is beneficially owned by     
Marie G. Krantz and Bryan G. Krantz, to operate five tele-track facilities      
previously operated by Jefferson Downs for a period of ten years, commencing    
November 1, 1992, with the option granted to Finish Line to extend the term of  
the Management Agreement for two additional five year periods.  The Management  
Agreement provides that Finish Line is to have the exclusive responsibility for 
the direction, supervision, management and operation of such facilities, is to  
collect all monies from such operation and is to pay all expenses in connection 
therewith.  The Company is to receive a monthly payment of 0.1% of the gross    
pari-mutuel handle at such facilities plus purse supplements, and Finish Line   
is to receive monthly compensation equal to the difference between the gross    
receipts collected at such facilities less all expenses (including the payment  
to the Company described herein) paid by Finish Line.  In addition, Finish Line 
is to indemnify the Company for, among other things, all obligations under the  
leases assigned by Jefferson Downs to the Company.  During the fiscal years     
ended October 31, 1995, 1994 and 1993, the Company received $67,593, $87,788    
and $51,182, respectively, from Finish Line in accordance with the Management   
Agreement.                                                                      

Accounts receivable from Finish Line were $237,632 and $272,248 at October 31,  
1995 and 1994, respectively.                                                    

The following table reflects the host track fees and purse supplement receipts  
from Finish Line for the fiscal years ended October 31, 1995, 1994, and 1993.   

                                                                · Download Table

                                      Received by the Company          
                                       and Paid by Finish Line         
                                   for the Years Ended October 31      
                           --------------------------------------------
                              1995             1994             1993   
                           ----------       ----------       ----------
                                                                       
Host track fees            $  520,267       $  483,294       $  491,876
                           ==========       ==========       ==========

Purse supplement receipts  $2,448,955       $2,450,827       $2,580,000
                           ==========       ==========       ==========

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FAIR GROUNDS CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 
For the Years Ended October 31, 1995, 1994 and 1993 (Unaudited) 

NOTE 9 - RELATED PARTY TRANSACTIONS (CONTINUED)                                 

Marie G. Krantz and Bryan G. Krantz are each 50% owners of Continental          
Advertising, Inc. ("Continental").  During fiscal years ended October 31, 1995  
and 1994, the Company made advances to Continental of $462,321 and $394,000,    
respectively, for advertising services rendered by Continental.  Due to the     
fire and related destruction of accounting records discussed in Note 1 to the   
financial statements, the Company is unable to  report on transactions with     
Continental for the fiscal year ended October 31, 1993.  It is management's     
opinion that such transactions would be immaterial to the Company's financial   
statements. As of October 31, 1995 and 1994, the Company was due and included   
in accounts receivable $28,575 and $120,449 from Continental, respectively.     

In February 1992, the Company, Jefferson Downs and Finish Line entered into an  
agreement with Video Services, Inc.  ("VSI"), whereby VSI was granted the       
exclusive right and license by the Company to install, maintain and operate     
video draw poker devices at the Fair Grounds Race Course, Jefferson Downs Race  
Course and at the tele-tracks then operated by the Company, Jefferson Downs and 
Finish Line.  Such agreement is for an initial term of five years, with an      
option by VSI to extend the term for an additional five years.  The agreement   
provides that the Company is to receive a percentage of the revenues from the   
operation of the devices installed at the Company's facilities (not including   
the facilities operated for the Company by Finish Line).  Such percentage is to 
be calculated on the basis of the average amount collected daily from each      
device during each month, after the payment of prizes, taxes and fees.          
One-half of the net revenues from such devices, after deduction of certain      
amounts, are required by State Statute to be paid as purse supplements during   
the live racing meet.  In addition, this agreement entitles the Company and     
Finish Line to share in a $270,000 annual promotional fee paid by VSI.  In      
fiscal 1995, 1994 and 1993, upon agreement of the Company and Finish Line, the  
Company received the total promotional fee of $270,000.  Of this amount,        
$135,000 was set aside each year as purse supplements to be paid during the     
upcoming racing season.                                                         

The devices which have been installed and are to be installed by VSI remain the 
property of VSI.  As of October 31, 1995, 1994 and 1993, there were a total of  
250, 182 and 304 devices, respectively, in operation at all of the Company's    
facilities.  In addition, there were a total of 449, 508 and 467 devices in     
operation at the Finish Line facilities as of October 31, 1995, 1994 and 1993,  
respectively.                                                                   

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FAIR GROUNDS CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 
For the Years Ended October 31, 1995, 1994 and 1993 (Unaudited) 

NOTE 9 - RELATED PARTY TRANSACTIONS (CONTINUED)                                 

Gross video poker revenues and related purse supplements for the years ended    
October 31, 1995, 1994, and 1993 are as follows:                                

                                                                · Download Table

                                     1995             1994             1993   
                                  ----------       ----------       ----------
                                                                              
Gross video poker revenue         $1,132,127       $1,354,792       $1,492,109
                                  ==========       ==========       ==========

Purse supplements                 $  433,443       $  540,258       $  474,401
                                  ==========       ==========       ==========

In February 1992 the Company and Jefferson Downs also became shareholders in    
Southern Video Services, Inc. ("SVS"), a Louisiana corporation which is an      
affiliate of VSI.  Jefferson Downs subsequently transferred its interest to     
Marie Krantz and Bryan Krantz.  SVS was organized for the purpose of operating  
video poker  devices in authorized locations in Louisiana other than facilities 
covered by the agreement with VSI, as described above.  Each of the Company and 
the Krantzes as a group own shares of non-voting common stock of SVS,           
constituting approximately 17% of the total common stock of SVS outstanding.    
VSI and Louisiana Ventures, Inc., which is also a shareholder of SVS, are       
affiliates of United Gaming, Inc., which owns and operates coin-operated gaming 
devices in Nevada and Louisiana.                                                

NOTE 10 -LEASES                                                                 

The Company has various operating leases for the use of buildings and parking   
facilities to operate off-track betting facilities in Louisiana.  The location, 
lease terms, and monthly payments are as follows:                               

                                                        · Enlarge/Download Table

                                                                                     Monthly 
       Location                                Lease Term                            Payment 
       --------                                ----------                            ------- 
                                                                                             
  St. Bernard Parish,                      January 1, 1995 to                                
  Louisiana                                January 31, 1999                           $ 6,000

  LaPlace, Louisiana                       February 1, 1995 to                               
                                           January 31, 1996                           $ 4,166
---------------------------------------------------------------------------------------------

  Bourbon Street -                         March 15, 1991 to                                 
  New Orleans,                             March 14, 1999                             $10,000
  Louisiana                                                                                  
---------------------------------------------------------------------------------------------

  Thibodeaux,                              May 1, 1995 to                                    
  Louisiana                                April 30, 1996                             $ 2,100
---------------------------------------------------------------------------------------------

  Metairie,                                August 1, 1995 to                                 
  Louisiana                                January 31, 1996                           $ 8,200

                                           February 1, 1996 to                               
                                           July 31, 1997                              $ 8,500
=============================================================================================

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FAIR GROUNDS CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 
For the Years Ended October 31, 1995, 1994 and 1993 (Unaudited) 

NOTE 10 - LEASES (CONTINUED)                                                    

The tele-tracks formerly licensed to Jefferson Downs and now licensed to the    
Company are also leased; however, as described herein, Finish Line has agreed   
to indemnify the Company for, among other things, all obligations under the     
leases assigned by Jefferson Downs to the Company.                              

In December 1993, the Company entered into a three year lease on the modular    
buildings that house the executive, administrative, and operations personnel    
and the totalisator equipment being used by the Company.  Rent expense relating 
to this lease for the years ended October 31, 1995 and 1994 is approximately    
$71,000 and $49,000, respectively.                                              

Future obligations over the primary lease terms, not including renewal periods, 
of the Company's long-term leases (other than the leases assigned by Jefferson  
Downs to the Company) as of October 31, 1995 are as follows:                    

                                                                · Download Table

Year Ending                              
October 31                               
-----------                              
                                         
  1996                         $  352,092
  1997                            255,666
  1998                            192,000
  1999                             63,000
  Thereafter                           - 
                               ----------
  Total                        $  862,758
                               ==========

In 1990, the Company entered into an agreement with Autotote Limited whereby    
Autotote Limited is to provide wagering services for the Company until November 
1997, including all computer and other related services to carry out the        
totalisator function for the Company.  The Company has agreed to pay Autotote   
Limited 0.0045% of the total on-track pari-mutuel handle of the Company, plus   
fixed equipment rental fees for its off-track betting facilities.  The minimum  
to be paid to Autotote Limited for each year of the agreement is $200,000.  No  
estimates of future obligations under this agreement have been included in the  
above table.  For the fiscal years ended October 31, 1995 and 1994, the Company 
incurred $200,000 in minimum rental fees and $503,175 and $346,383,             
respectively, in equipment and contingent rental fees in connection with its    
agreement with Autotote Limited.  Such rental fees were recorded as racing      
expenses - contracts and services.  Due to the fire and related destruction of  
accounting records discussed in Note 1 to the financial statements, the amounts 
of minimum and contingent rental fees for fiscal 1993 can not be determined.    

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FAIR GROUNDS CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 
For the Years Ended October 31, 1995, 1994 and 1993 (Unaudited) 

NOTE 11 - STOCK OPTION PLAN                                                     

The Company has a stock option plan where all incentive stock options granted   
under the Plan are intended to qualify as incentive stock options under Section 
422(b) of the Internal Revenue Code.  Under the Plan, the option price per      
share must be at least equal to 100% of the fair market value per share of the  
common shares of the Company on the date of the grant.  An aggregate of 20,000  
common shares have been reserved for issue and may be granted up to February    
28, 2001.  No options were granted or exercised during fiscal years ending      
October 31, 1995, 1994 or 1993.  No options were outstanding at October 31,     
1995.                                                                           

NOTE 12 - CONTINGENCIES - GOING CONCERN                                         

The accompanying financial statements for 1995 have been prepared assuming that 
the Company will continue as a going concern.  In view of the cessation of      
construction and the additional expense which is likely to be incurred as a     
result of construction delays, it is not certain that, even if all of the       
financing, as described in Note 7, is consummated, including the long-term      
financing by FNBC in accordance with the terms of the original commitment, the  
Company will be able to complete the construction of its new facility as        
presently planned.  It may be necessary to (i) obtain funds from other sources, 
(ii) attempt to increase the amount of long-term financing from FNBC or (iii)   
seek to effect savings in the construction costs related to the completion of   
the facility.  The Company has had no discussions with any other possible       
source of such financing, nor has it reached any understanding with FNBC        
regarding any increase in the financing which the Company hopes to obtain from  
FNBC as originally committed by FNBC.  It should also be noted that FNBC and    
the Company are not currently engaged in any discussions concerning the terms   
and conditions of the definitive agreements relating to such long-term          
financing, given the uncertain legislative climate.  Accordingly, there can be  
no assurance that definitive agreements will be reached, or, if reached, that   
they will be in accordance with the terms of the original commitment.  The      
foregoing uncertainties raise substantial doubt about the Company's ability to  
continue as a going concern.  In the event that such long-term financing is not 
completed by October 31, 1996, or that the funds provided through all sources   
of such financing are insufficient to meet the Company's needs, the Company may 
consider a number of alternatives, including seeking protection from creditors  
under the United States Bankruptcy Code.                                        

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FAIR GROUNDS CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 
For the Years Ended October 31, 1995, 1994 and 1993 (Unaudited) 

NOTE 13 - SUBSEQUENT EVENTS                                                     

On December 18, 1995, First National Bank of Commerce of New Orleans ("FNBC")   
provided the Company with a short-term interim construction loan in the amount  
of $9,493,050, which included approximately $921,300 of the remaining principal 
balance of the $2,150,000 previously loaned to the Company in July 1995 and     
approximately $5,000,000 loaned to the Company in November 1995, for            
construction costs relating to the rebuilding of the grandstand and clubhouse   
facilities.                                                                     

Pursuant to the loan agreement, FNBC agreed to extend credit to the Company up  
to an aggregate principal amount of $9,493,050 until October 31, 1996.  The     
loan agreement states that such commitment is not a revolving credit facility,  
and the commitment is only to make loans up to such aggregate principal amount. 
Accordingly, FNBC has no obligation under the loan agreement to lend additional 
funds to the Company.                                                           

Payment of the principal and interest under the loan agreement is to be made on 
demand, or if no demand is made, then in 10 monthly installments of $52,740     
principal plus interest, beginning January 17, 1996, and one final payment of   
all principal plus accrued interest on October 31, 1996.  The loan bears        
interest at 9% per annum.  On each monthly payment date, payment of principal   
and interest is to be made from the proceeds of the funds received as a result  
of the video poker tax relief legislation, which funds are to be on deposit in  
a separate lockbox, in accordance with a Disbursement Agreement entered into    
among Company, FNBC and Video Services, Inc. ("VSI") dated July 17, 1995.  The  
Disbursement Agreement provides that VSI acknowledges that the first $2.5       
million in video poker franchise fee payments otherwise due annually to the     
State of Louisiana are to be remitted to the Company under the terms of the tax 
relief legislation.  For each annual period from July 1 through June 30, such   
funds are to be debited from VSI's bank account and deposited into a lockbox at 
FNBC.  Such proceeds are to be used solely for the purpose of making payments   
of principal and interest from time to time due under the terms of the loan     
agreement.  Any amount in excess of the amount of debt service, up to $2.5      
million annually, is to be applied as a prepayment of the principal amount of   
the loan, and any excess of the debt service is to be returned to the Treasury  
of the State of Louisiana.  The loan agreement also provides that  any fire     
insurance proceeds (not including proceeds payable to any third party),         
received by the Company are to be used to prepay the loan.                      

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FAIR GROUNDS CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 
For the Years Ended October 31, 1995, 1994 and 1993 (Unaudited) 

NOTE 13 - SUBSEQUENT EVENTS (CONTINUED)                                         

The indebtedness under the loan agreement is secured by (i) a second mortgage   
by the Company of all of its real property; (ii) a mortgage by Marie G. Krantz  
of all the real property formerly constituting the Jefferson Downs Race Course; 
(iii) a security interest in all the Company's accounts, inventory, equipment,  
fire insurance proceeds, tax relief monies, construction property, material     
contracts and all deposit accounts; (iv) a security interest in certain         
investment securities owned by Marie G. Krantz; (v) a security interest in all  
furniture, fixtures and equipment owned by the Company, Finish Line and         
Jefferson Downs; (vi) a pledge by Richard Katcher, as Trustee u/t/a between     
John G. Masoni and John G. Masoni, Trustee, pursuant to a restatement of his    
Trust Agreement dated April 19, 1991 as modified on October 24, 1992 (the       
"Trust"), Marie G. Krantz, individually and as Voting Trustee, Bryan G. Krantz, 
Vickie Krantz and Jefferson Downs of an aggregate of 342,584 shares of common   
stock of the Company, constituting all shares of common stock of the Company    
beneficially owned by them; (vii) a limited guaranty of such indebtedness by    
Marie G. Krantz and Finish Line; and a guaranty of such indebtedness by Finish  
Line.                                                                           

The loan agreement provides that, commencing January 20, 1996, the Company will 
deposit monthly into an account at FNBC all "Excess Cash Flow" generated during 
the immediately preceding month.  Excess Cash Flow is defined as all net income 
for the month; plus or minus non-cash items such as depreciation and            
amortization; plus or minus the changes in accounts receivable, inventory,      
prepaid expenses, accounts payable and accrued expenses, and any other          
operating balance sheet related activity affecting the cash position; and plus  
or minus capital expenditures.  This obligation ceases if and when the 1996     
regular session of the Louisiana Legislature adjourns without having passed any 
statute that adversely affects the status of the video poker tax relief or the  
existing video poker operations of the Company or Finish Line, or that would    
allow for or require local elections as a condition to the continuation of      
video poker operations; of if there is any such legislation requiring local     
elections, the voters fail to approve any such adverse change.  Prior to the    
cessation of such obligation, the Company may not withdraw any funds in such    
account, and FNBC has a security interest in such funds.                        

The loan agreement contains certain negative covenants pursuant to which the    
Company has agreed that it will not (i) resume construction activities without  
first providing FNBC with satisfactory evidence of the source of funding for    
the balance of such construction; (ii) enter into any agreement with any        
affiliate except to the extent that such agreements are commercially reasonable 
and provide for terms which would                                               

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FAIR GROUNDS CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 
For the Years Ended October 31, 1995, 1994 and 1993 (Unaudited) 

NOTE 13 - SUBSEQUENT EVENTS (CONTINUED)                                         

normally be obtainable in an arm's length transaction with an unrelated third   
party; and (iii) incur capital expenditures during any fiscal year in excess of 
$200,000 without the consent of FNBC.                                           

On December 26, 1995, the Company paid $1,000,000 of principal on the           
$2,000,000 remaining balances related to its promissory notes held by Louie J.  
Roussel, III and agreed to pay the remaining $1,000,000 in principal on October 
31, 1996.                                                                       

In January 1996, the Company received an advance of $1,000,000 from VSI, which  
the Company plans to repay in six equal monthly installments beginning in       
February 1996.                                                                  

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND         
FINANCIAL DISCLOSURE                                                            

Not applicable.                                                                 

PART III

ITEM 10.         DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT             

The following table shows each director and executive officer of the Company,   
his or her age, present positions and offices with the Company, principal       
occupation and the name and principal business of the corporation or other      
organization in which such occupation has been carried on, and, with respect to 
each director, the year he or she first became a director of the Company and    
directorships in certain other corporations, based upon information furnished   
to the Company by each such director and executive officer or otherwise         
available to the Company.  Unless otherwise indicated, each director and        
executive officer has engaged in the occupations stated below for at least the  
last five years.  No family relationships exist between or among any director   
or executive officer of the Company, except that Bryan G. Krantz is the son of  
Marie G. Krantz.                                                                

                                                                · Download Table

                                                            Director
Name                                               Age        Since 
----                                               ---      --------
                                                                    
Directors                                                           

KATHERINE F. DUNCAN                                68        1991   
Private investor; Director of                                       
Planned Giving of Audubon                                           
Institute, Inc., which                                              
operates the Audubon Zoo                                            
and the Aquarium of the Amer-                                       
icas, since July 1991;                                              
Vice President and Secretary of                                     
Foster Company, a company                                           
engaged in the sale and                                             
rental of decorative awn-                                           
ings and special-event                                              
tents, prior to July 1991.                                          

RICHARD KATCHER                                    77        1994   
Practicing attorney with                                            
Baker and Hostetler, Cleveland,                                     
Ohio                                                                

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                                                                · Download Table
                                                                 
BRYAN G. KRANTZ                                    35        1990
President and General Manager                                    
of the Company since April 1990;                                 
Vice President of Jefferson Downs                                
Corporation, a company which                                     
owns a racing track that was used                                
until November 1992 to conduct live                              
horse racing, and which owns an off-                             
track betting facility in Louisiana;                             
General Manager of Jefferson Downs                               
Corporation prior to May 1990;                                   
President of Finish Line Management                              
Corporation, which operates certain                              
off-track betting facilities in                                  
Louisiana.                                                       

MARIE G. KRANTZ                                    60        1990
Chairman of the Board of Directors                               
and Treasurer of the Company since                               
April 1990; Chairman of the Board and                            
President of Jefferson Downs                                     
Corporation; Secretary/Treasurer                                 
of Finish Line Management Corporation.                           

RONALD J. MAESTRI                                  55        1991
Athletic Director, University of                                 
New Orleans.                                                     

CHARMAINE R. MOREL                                 61        1987
Assistant to the Financial Manager,                              
Mike's on the Avenue, a restaurant in                            
New Orleans, since October 1991;                                 
Secretary-Treasurer of Empire                                    
Land Corporation, a corporation                                  
engaged in oil and gas production,                               
prior to October 1991; Secretary-                                
Treasurer of Victory Management Group,                           
Inc., an insurance holding company,                              
from January 1993 to December 1995.                              

DONALD L. PELTIER                                  69        1977
Practicing attorney with                                         
Peltier, Morvant & Cavell (or its                                
predecessor); Chairman of the                                    
Board of Argent Bank (or its                                     
predecessor), a banking institution.                             

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Executive Officers (In Addition to Those Listed Above)                          

                                                                · Download Table
                                                               
WILLIAM A. HOF                                     61       -  
Vice President of the Company since                            
February 1992; Director of Operations;                         
Director of Operations of Jefferson                            
Downs prior to the closing of its                              
facility in November 1992.                                     

MERVIN MUNIZ, JR.                                  53       -  
Vice President of the Company;                                 
Racing Secretary                                               

GORDON M. ROBERTSON                                54       -  
Vice President of the Company since                            
February 1992; Chief Financial Officer                         
since August 1990; General Manager of                          
Jefferson Downs prior to November 1992.                        

JOAN B. STEWART                                    62       -  
Secretary of the Company                                       

ITEM 11.         EXECUTIVE COMPENSATION                                         

SUMMARY OF EXECUTIVE COMPENSATION                                               

The following table sets forth certain information concerning the annual and    
long-term compensation for services in all capacities to the Company for the    
fiscal years ended October 31, 1995, October 31, 1994 and October 31, 1993, for 
the chief executive officer of the Company.                                     

SUMMARY COMPENSATION TABLE

                                                        · Enlarge/Download Table

                                                Annual Compensation                      
                               ----------------------------------------------------------
                                                                                 Other   
                                                                                Annual   
Name and                                                                        Compen-  
Principal Position             Year          Salary              Bonus          sation   
------------------             ----         --------            -------------------------
                                                                                         
BRYAN G. KRANTZ                                                                          
President and General Manager  1995         $ 75,000               0            $3,600(1)
                               1994           75,000               0             3,600(1)
                               1993           75,000               0             3,600(1)

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(1)      Consists of the annual retainer paid to Mr. Krantz as a director.      

INFORMATION CONCERNING STOCK OPTION PLAN                                        

In 1991, the Board of Directors of the Company adopted, and the  shareholders   
ratified, the Fair Grounds Corporation Stock Option Plan (the "Stock Option     
Plan").  The Stock Option Plan, which is administered by a committee of the     
Board of Directors, provides that options to purchase up to 20,000 common       
shares of the Company may be granted to key employees, as determined by the     
committee.  Key employees may be granted options for common shares of any       
value; however, the aggregate fair market value of common shares with respect   
to which incentive stock options are exercisable by an optionee during any      
calendar year may not exceed $100,000.  The committee has the authority to      
determine the number of common shares that an optionee may purchase upon        
exercise of an option.  The exercise price per share may not be less than the   
fair market value per share of the Company's common shares at the time an       
option is granted.  Each option granted will be exercisable only during the     
term fixed by the committee, and may not be exercisable prior to the expiration 
of six months from the date of the grant.  Options granted under the Stock      
Option Plan may be either "incentive stock options" for purposes of the         
Internal Revenue Code or nonqualified stock options.  During the fiscal year    
ended October 31, 1995, no options were granted or exercised under the Stock    
Option Plan.  There are currently no options outstanding under the Stock Option 
Plan.                                                                           

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION                     

The following non-employee directors served on the Compensation Committee of    
the Board of Directors of the Company during the fiscal year ended October 31,  
1995: Richard Katcher, Charmaine R. Morel and Donald L. Peltier.  As described  
herein, Mr. Katcher is trustee of the Trust which is the beneficial owner of    
339,604 common shares of the Company, constituting approximately 72.5% of the   
common shares issued and outstanding, which shares are held by Marie G. Krantz  
as Voting Trustee.  In connection with the financing described herein, the      
Trust entered into a Pledge Agreement pursuant to which it pledged and granted  
to FNBC a security interest in the common shares of the Company beneficially    
owned by the Trust.  See Item 12, "Security Ownership of Certain Beneficial     
owners and Management," for a description of the terms of such Pledge           
Agreement.                                                                      

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ITEM 12.         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND            
MANAGEMENT                                                                      

BENEFICIAL OWNERSHIP                                                            

The following table sets forth certain information regarding the beneficial     
ownership of common shares of the Company, as of January 1, 1996, of (i) each   
person who, to the knowledge of the Company, owns beneficially more than 5% of  
the outstanding common shares of the Company, (ii) each director and nominee    
for election as a director, (iii) the executive officer listed in the summary   
compensation table and (iv) all directors and executive officers of the Company 
as a group.  The information set forth in the following table is based upon     
statements filed by such persons with the Securities and Exchange Commission    
and information otherwise available to the Company.  Unless otherwise           
indicated, each person has sole voting and investment power of the common       
shares of the Company beneficially owned by him or her.                         

                                                                · Download Table

                                                 AMOUNT AND NATURE  PERCENT 
                                                   OF BENEFICIAL       OF   
BENEFICIAL OWNER                                     OWNERSHIP      CLASS(A)
----------------                                 -----------------  --------
                                                                            
Katherine F. Duncan                                      480            *   
Richard Katcher                                      339,604(b)(e)    72.5% 
Marie G. Krantz                                      340,584(c)(e)    72.7% 
Bryan G. Krantz                                        2,600(d)(e)      *   
Ronald J. Maestri                                        480            *   
Charmaine R. Morel                                       480            *   
Donald L. Peltier                                      2,513(f)         *   

All Directors and Executive Officers as a Group      346,537(g)       74.0% 

* Less than 1% of Class                                                         

(a)      For purposes of this table, the percentage of class beneficially owned 
 has been computed,in accordance with Rule 13d-3(d)(1) under the
        Securities Exchange Act of 1934, on the basis of 468,180 common shares
outstanding on January 1, 1996.                               

(b)      Richard Katcher, as Trustee u/t/a between John G. Masoni and John G.   
   Masoni, Trustee, pursuant to a restatement of his Trust Agreement
     dated April 19, 1991 as modified on October 24, 1992 (the "Trust"),
       has reported to the Commission that the Trust is the beneficial owner
   of 339,604 common shares, constituting approximately 72.5% of the
  common shares issued and outstanding, which are held by Marie G.
    Krantz as Voting Trustee, and that the Trust has the sole power to
  dispose or to direct the disposition of such common shares.  The
address of this beneficial owner is 3200 National City Center,
Cleveland, Ohio.                                              

(c)      Marie G. Krantz has reported to the Commission that she is the         
       beneficial owner of 380 common shares held directly by her and of 100
common shares                                                 

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  held by Jefferson Downs, constituting less than 1% of the common
     shares issued and outstanding, and that she may be deemed to be the
     beneficial owner of the 340,104 common shares held by her as Voting
      Trustee.  In her capacity as Voting Trustee, Marie G. Krantz has the
       sole power to vote or to direct the vote of the 340,104 common shares
      held by her as Voting Trustee.  She has the sole power to vote or to
direct the vote and the sole power to dispose or to direct the
        disposition of the 380 common shares held directly by her.  She may be
     deemed to share with Bryan G. Krantz the power to vote or to direct
       the vote and the power to dispose or to direct the disposition of the
     100 common shares held by Jefferson Downs.  Ms. Krantz's address is
1751 Gentilly Boulevard, New Orleans, Louisiana 70119.        

(d)      Bryan G. Krantz has reported to the Commission that he is the          
  beneficial owner of 500 common shares held by Marie G. Krantz as
       Voting Trustee, constituting less than 1% of the common shares issued
        and outstanding, 2,000 common shares held jointly by him and his wife,
       constituting less than 1% of the common shares issued and outstanding
      and 100 shares held by Jefferson Downs, constituting less than 1% of
    the common shares issued and outstanding.  Bryan G. Krantz has the
   sole power to dispose or direct the disposition of the 500 common
       shares held by Marie G. Krantz as Voting Trustee, and shares with his
        wife the power to vote or direct the vote and to dispose or direct the
       disposition of the 2,000 common shares held jointly with her.  He may
        be deemed to share with Marie G. Krantz the power to vote or to direct
       the vote and the power to dispose or to direct the disposition of the
    100 common shares held by Jefferson Downs. Mr. Krantz's address is
1751 Gentilly Boulevard, New Orleans, Louisiana 70119.        

(e)      The Trust and the Krantzes, who are the beneficial owners of an        
      aggregate of 342,584 common shares, constituting approximately 73.2%
        of the common shares outstanding, have reported to the Commission that
     they constitute a "group" within the meaning of section 13(d)(3) of
      the Exchange Act.  By virtue of their beneficial ownership of common
    shares of the Company and the matters set forth in filings made by
   them under Section 13(d) of the Exchange Act, the Trust, Marie G.
       Krantz and Bryan G. Krantz may be deemed to be controlling persons of
  the Company.  See "Pledge of Common Shares to FNBC" below, for a
        description of the pledge agreements in favor of FNBC, as security for
the Company's obligations under the Loan Agreement.           

(f)      Includes 679 common shares held directly by Mr. Peltier and 1,834      
      common shares of the Company held by members of Mr. Peltier's family
      who have given Mr. Peltier powers of attorney to vote and dispose of
such common shares.                                           

(g)      The number of common shares shown as beneficially owned includes any   
directors qualifying shares held by each director.            

PLEDGE OF COMMON SHARES TO FNBC                                                 

As described above, all of the 342,584 common shares of the Company owned in    
the aggregate by the Trust, Marie Krantz, Bryan Krantz, Vickie Krantz and       
Jefferson Downs are subject to pledge agreements (the "Pledge Agreements") in   
favor of FNBC, as security for the Company's obligations under the Loan         
Agreement described elsewhere herein.  Pursuant to the Pledge Agreements, each  
such shareholder has granted to FNBC a security interest in all common shares   
of the Company owned by such shareholder, and in any additional common shares   
which may be received.  So long as the Company's indebtedness under the Loan    
Agreement remains outstanding, the                                              

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common shares subject to the Pledge Agreements may not be sold, transferred or  
disposed of in any way.  Unless and until an event of default occurs, each      
shareholder is entitled to exercise all voting rights and receive all dividends 
with respect to such shares.  In the event of a default, including a default    
under any other guaranty or security agreement entered into in connection with  
the Loan Agreement, FNBC will be entitled, among other things, to transfer all  
or part of the pledged shares into its name, exercise all voting rights and     
sell all or any part of such shares. Any such sale of all or a substantial      
portion of the common shares subject to the Pledge Agreements would result in a 
change of control of the Company.  For a description of certain events of       
default under the loan Agreement and related documents, see Item 1, "Business - 
Developments During 1995."                                                      

ITEM 13.         CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                 

During 1992 Jefferson Downs, a corporation owned by Marie G. Krantz and Bryan   
G. Krantz, did not renew its license application with the Louisiana Racing      
Commission for live racing and, accordingly, did not conduct live racing in     
1993.  In August 1992, Jefferson Downs assigned to the Company all of its       
right, title and interest in and to the leases on its tele-track facilities in  
Terrebone, St. Tammany and Jefferson Parishes, Louisiana.  Such assignment was  
effective on May 27, 1993, the date the Louisiana Racing Commission approved    
the transfer to the Company of all licenses necessary for the operation of such 
tele-tracks.                                                                    

During 1992 the Company entered into a Management Agreement (the "Management    
Agreement") with Finish Line.  The Management Agreement provides that Finish    
Line is to operate the former Jefferson Downs tele-track facilities described   
above for a period of ten years, commencing November 1, 1992, with the option   
granted to Finish Line to extend the term of the Management Agreement for two   
additional five-year periods.  The Management Agreement provides that Finish    
Line is to have the exclusive responsibility for the direction, supervision,    
management and operation of such facilities, is to collect all monies from such 
operation and is to pay all expenses in connection therewith.  The Company is   
to receive 0.1% of the gross pari-mutuel handle at such facilities, and Finish  
Line is to receive monthly compensation equal to the difference between the     
gross receipts collected at such facilities less all expenses (including the    
payment to the Company described above) paid by Finish Line.  In addition,      
Finish Line is to indemnify the Company for, among other things, all            
obligations under the leases assigned by Jefferson Downs to the Company.        
During the fiscal year ended October 31, 1995, Finish Line paid the Company     
$67,593 under the Management Agreement, host track fees of $520,267 and purse   
supplements of $2,448,955.  As of October 31, 1995, the Company had accounts    
receivable from Finish Line in the aggregate amount of $237,632.                

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The Company, Jefferson Downs and Finish Line are parties to an agreement with   
VSI, whereby VSI has the exclusive right and license to install, maintain and   
operate video draw poker devices at the Fair Grounds Race Course and Jefferson  
Downs Race Course and at the tele-tracks operated by the Company, Jefferson     
Downs and Finish Line.  Such agreement was entered into in November 1992 for an 
initial term of five years, with an option by VSI to extend the term for an     
additional five years.  The agreement provides that the Company is to receive a 
percentage of the revenues from the operation of the devices installed at the   
Company's facilities.  Such percentage is to be calculated on the basis of the  
average amount collected daily from each device during each month, after the    
payment of prizes, taxes and fees.  The devices which have been installed and   
are to be installed by VSI pursuant to such agreement remain the property of    
VSI.  As of October 31, 1995, there were a total of 250 devices in operation at 
all of the Company's facilities (excluding the tele-tracks operated for the     
Company by Finish Line) and 449 devices in operation at facilities managed by   
Finish Line.  In fiscal 1995, the Company received gross revenue of $1,132,127, 
including amounts to be paid as purse supplements of $433,443.  In addition,    
such agreement provides that the Company, Jefferson Downs and Finish Line are   
entitled to receive an annual promotional allowance from VSI in the aggregate   
amount of $270,000, which for the fiscal year ended October 31, 1995 was paid   
in full to the Company.  The agreement also provides for advances annually      
from VSI against future revenues of up to $1 million in the aggregate to the    
Company, Jefferson Downs and Finish Line.  The Company received all of such     
advance during the year ended October 31, 1995 and has also received such an    
advance during the current fiscal year.  The Company anticipates that it will   
continue to receive revenues pursuant to the agreement with VSI.                

The Company and Marie and Bryan Krantz are also shareholders in Southern Video  
Services, Inc. ("SVS"), a Louisiana corporation which is an affiliate of VSI.   
SVS was organized for the purpose of operating video poker devices in           
authorized locations in Louisiana other than the facilities covered by the      
agreement with VSI, as described above.  Each of the Company and Marie and      
Bryan Krantz as a group owns shares of nonvoting common stock of SVS,           
constituting approximately 17% of the total common stock of SVS outstanding.    
VSI and Louisiana Ventures, Inc., which is also a shareholder of SVS, are       
affiliates of United Gaming, Inc., which owns and operates coin-operated gaming 
devices in Nevada and Louisiana.  SVS is not actively engaged in any business   
in Louisiana.                                                                   

Marie Krantz is a director, the President and the owner of 66 2/3% of the       
outstanding common stock, and Bryan Krantz is a director, Vice President and    
the owner of 33 1/3% of the outstanding common stock, of Jefferson Downs.       
Marie Krantz is a director, executive officer and the owner of 66 2/3% of the   
outstanding common stock, and Bryan Krantz is a director, executive officer and 
the owner of 33 1/3% of the outstanding common stock, of Finish Line.  By       
virtue                                                                          

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of such positions and ownership and their positions with and relationship with  
such entities, the Company, Finish Line and Jefferson Downs may be deemed to be 
affiliates.                                                                     

Marie Krantz and Bryan Krantz each own 50% of the outstanding common stock of   
Continental Advertising, Inc.  ("Continental"), an advertising agency which     
provided advertising services to the Company during the last fiscal year.       
During the 1995 fiscal year, the Company made advances to Continental of        
$462,321.  As of October 31, 1995, the Company was due $28,575 from             
Continental.  The Company expects to continue to utilize Continental's services 
during the current fiscal year.                                                 

As described elsewhere herein, the Company and FNBC are parties to the Loan     
Agreement, and the Company's indebtedness thereunder has been guaranteed by     
Marie Krantz and Finish Line.  In addition, Marie G. Krantz has granted FNBC a  
security interest in certain investment securities held by her, and Finish Line 
and Jefferson Downs have granted to FNBC a security interest in substantially   
all of the property, furniture, fixtures and equipment owned by each such       
corporation.  For a description of the terms and conditions of the Loan         
Agreement and the security interests granted to FNBC, see Item 1, "Business -   
Developments During 1995."  Also in connection with the Loan Agreement, each of 
Marie Krantz, Bryan Krantz, Vickie Krantz, Richard Katcher and Jefferson Downs  
has pledged to FNBC all of the common shares of the Company owned by such       
shareholder.  For a description of the terms and conditions of the pledge       
agreements relating to such shares, see Item 12, "Securities Ownership of       
Certain Beneficial Owners and Management."                                      

From time to time, persons who are officers, directors or principal             
shareholders of the Company own or have interests in horses racing at the       
Company's race track.  Such races are conducted under the rules and regulations 
of the Louisiana Racing Commission, and no officer, director or principal       
shareholder receives any extra or special benefits not shared by all others so  
racing.                                                                         

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PART IV 

ITEM 14.  EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K     

(a)(1)   The following unaudited financial statements are included in Part II,  
Item 8:                                                                         

                                                        · Enlarge/Download Table

Financial Statements                                                                                          Page  
--------------------                                                                                          ----  
                                                                                                                    
                 Report of Independent Certified Public                                                             
                 Accountant                                                                                   36    

                 Balance Sheets, October 31, 1995 and 1994                                                    37    

                 Statements of Operations for the Three Years                                                       
                 Ended October 31, 1995                                                                       40    

                 Statements of Changes in Stockholder's                                                             
                 Equity for the Three Years Ended                                                                   
                 October 31, 1995                                                                             44    

                 Statements of Cash Flows for the Three                                                             
                 Years Ended October 31, 1995                                                                 45    

                 Notes to Financial Statements                                                                48    

(a)(2)   The following unaudited financial statement                                                                
         schedules for the years ended October 31, 1995,                                                            
         1994 and 1993 are filed herewith:                                                                          

                 Schedule II - Amounts Receivable from                                                              
                 Related Parties                                                                              88    

                 Schedule V - Property, Plant and Equipment                                                   89    

                 Schedule VI - Accumulated Depreciation and                                                         
                 Amortization of Property, Plant and Equipment                                                90    

                 Schedule IX - Short-Term Borrowings                                                          91    

(b)              Report on Form 8-K:  None                                                                          

(c)              Exhibits:  The following exhibits are filed as part of this report.  Those exhibits which have been
                 previously filed and incorporated herein by reference are identified by reference to the previous  
                 filing.                                                                                            

(3)(a)           Articles of Incorporation of Fair Grounds Corporation, as amended                                  

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                                                        · Enlarge/Download Table
                                                                                                                
         (incorporated herein by reference to Exhibit (3)(a) to the Form 10-K of the Company                    
         for the fiscal year ended October 31, 1991, filed on January 29, 1992).                                

(3)(b)                                                                                                        * 
         Amended and Restated By-Laws of Fair Grounds Corporation (incorporated herein by                       
         reference to Exhibit (3)(b) to the Form 10-K of the Company for the fiscal year                        
         ended October 31, 1990).                                                                               

(9)                                                                                                           * 
         Voting Trust Agreement dated as of August 31, 1993, by and among Bryan G. Krantz                       
         and Richard Katcher, Trustee, as grantors, and Marie G. Krantz as Voting Trustee                       
         (incorporated herein by reference to exhibit 2 to Amendment No. 3 to Schedule 13D                      
         filed by such persons on October 13, 1993).                                                            

(10)(a)                                                                                                       * 
         Agreement dated December 1, 1987, between Fair Grounds Corporation and Jefferson Downs, Inc.           
         (incorporated herein by reference to Exhibit (10)(a) to the Form 10-K of the Company for               
         the fiscal year ended October 31, 1988).                                                               

(10)(b)                                                                                                       * 
         Agreement dated March 30, 1988, between Fair Grounds Corporation and Jefferson Downs, Inc.             
         (incorporated herein by reference to Exhibit (10)(b) to the Form 10-K of the Company for the fiscal    
         year ended October 31, 1988).                                                                          

(10)(c)                                                                                                       * 
         Agreement dated March 29, 1989, between Fair Grounds Corporation and Jefferson Downs, Inc.             
         (incorporated herein by reference to Exhibit (10)(c) to the Form 10-K of the Company for the fiscal    
         year ended October 31, 1989).                                                                          

(10)(d)                                                                                                       * 
         Agreement dated November 3, 1989, between Fair Grounds Corporation and Jefferson Downs, Inc.           
         (incorporated herein by reference to Exhibit (10)(d)                                                   

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                                                        · Enlarge/Download Table
                                                                                                                
         to the Form 10-K of the Company for the fiscal year ended October 31, 1989).                           

(10)(e)                                                                                                       * 
         Net Commercial Lease Agreement dated November 10, 1988, between Pelican Homestead and Savings          
         Association and Fair Grounds Corporation (incorporated herein by reference to Exhibit (10)(e) to       
         the Form 10-K of the Company for the fiscal year ended October 31, 1989).                              

(10)(f)                                                                                                       * 
         Lease of Commercial Property dated February 1, 1989, between Mereaux and Nunez, Inc. and Fair          
         Grounds Corporation (incorporated herein by reference to Exhibit (10)(f) to the Form 10-K of the       
         Company for the fiscal year ended October 31, 1989).                                                   

(10)(g)                                                                                                       * 
         Lease Agreement dated March 8, 1989, between Richard F. Keyworth and Fair Grounds Corporation          
         (incorporated herein by reference to Exhibit (10)(g) to the Form 10-K of the Company for the fiscal    
         year ended October 31, 1989).                                                                          

(10)(h)                                                                                                       * 
         Promissory Note dated November 19, 1989, in the principal amount of $5,000,000 from Fair Grounds       
         Corporation to National Savings Life Insurance Company (incorporated herein by reference to Exhibit    
         (10)(h) to the Form 10-K of the Company for the fiscal year ended October 31, 1989).                   

(10)(i)                                                                                                       * 
         Promissory Note dated November 19, 1989, in the principal amount of $4,980,000 from Fair Grounds       
         Corporation to Louie J. Roussel, III (incorporated herein by reference to Exhibit (10)(i) to the       
         Form 10-K of the Company for the fiscal year ended October 31, 1989).                                  

(10)(j)                                                                                                       * 
         Promissory Note dated December 27, 1990, in the principal amount of                                    

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                                                        · Enlarge/Download Table
                                                                                                                 
         $4,980,000 from Fair Grounds Corporation to Louie J. Roussel, III (incorporated herein by               
         reference to Exhibit (10)(j) to the Form 10-K of the Company for the fiscal year ended                  
         October 31, 1990).                                                                                      

(10)(k)                                                                                                        * 
         Promissory Note dated December 27, 1990, in the principal amount of $5,000,000 from Fair Grounds        
         Corporation to Victory Life Insurance Company (incorporated herein by reference to                      
         Exhibit (10)(k) to the Form 10-K of the Company for the fiscal year ended October 31, 1990).            

(10)(l)                                                                                                        * 
         Fair Grounds Corporation Stock Option Plan (incorporated herein by reference to Appendix A to the       
         definitive Information Statement of the Company dated February 26, 1991).                               

(10)(m)                                                                                                        * 
         Commercial Lease Agreement dated April 1, 1991 between Blake's Superette, Inc. and Fair Grounds         
         Corporation (incorporated herein by reference to Exhibit (10)(m) to the Form 10-K of the Company for    
         the fiscal year ended October 31, 1991, filed on January 29, 1992).                                     

(10)(n)                                                                                                        * 
         Lease Agreement dated November 21, 1991 between Jefferson Downs Corporation and Fair Grounds            
         Corporation (incorporated herein by reference to Exhibit (10)(n) to the Form 10-K of the Company for    
         the fiscal year ended October 31, 1991, filed on January 29, 1992).                                     

(10)(o)                                                                                                         *
         Agreements regarding Purchase and Sale of Partnership Interests by and between Jefferson Downs          
         Corporation and Fair Grounds Corporation, dated as of August 11, 1992. (Incorporated herein by          
         reference to Exhibit (10)(o) to the Form 10-K of the Company for the fiscal                             

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                                                        · Enlarge/Download Table
                                                                                                                
         year ended October 31, 1992, filed on February 15, 1993.)                                              

(10)(p)                                                                                                       * 
         Assignments of Lease by Jefferson Downs Corporation to Fair Grounds Corporation, dated as of           
         August 31, 1992. (Incorporated herein by reference to Exhibit (10)(p) to the Form 10-K of the          
         Company for the fiscal year ended October 31, 1992, filed on February 15, 1993.)                       

(10)(q)                                                                                                         
         Management Agreement by and between Finish Line Management Corp. and Fair Grounds Corporation,         
         dated October 9, 1992. (Incorporated herein by reference to Exhibit (10)(q) to the Form 10-K           
         of the Company for the fiscal year ended October 31, 1992, filed on February 15, 1993.)                

(10)(r)                                                                                                       * 
         Letter of Intent between K-III Information Group and Fair Grounds Corporation, dated                   
         November 20, 1992.  (Incorporated herein by reference to Exhibit (10)(r) to the Form 10-K              
         of the Company for the fiscal year ended October 31, 1992, filed on February 15, 1993.)                

(10)(s)                                                                                                       * 
         Incentive Stock Option Agreement between Fair Grounds Corporation and William H. Kurtz, dated as of    
         February 4, 1992. (Incorporated herein by reference to Exhibit (10)(s) to the Form 10-K of the         
         Company for the fiscal year ended October 31, 1992, filed on February 15, 1993.)                       

(10)(t)                                                                                                       * 
         Agreement dated February 28, 1992, by and between Video Services, Inc., Fair Grounds Corporation,      
         Jefferson Downs Corporation and Finish Line Management Corp. (Incorporated herein by reference to      
         Exhibit (10)(t) to the Form 10-K of the Company for the fiscal year ended                              

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                                                        · Enlarge/Download Table
                                                                                                               
         October 31, 1992, filed on February 15, 1993.)                                                        
(10)(u)                                                                                                        
         Loan Agreement dated as of December 18, 1995, between Fair Grounds Corporation and First National Bank
         of Commerce                                                                                           

(10)(v)                                                                                                        
         Disbursement Agreement dated as of July 17, 1995 by and among Fair Grounds Corporation, Vide Services,
         Inc. and First National Bank of Commerce                                                              

(10)(w)                                                                                                        
         Commercial Security Agreement dated as of July 17, 1995 between Fair Grounds Corporation and First    
         National Bank of Commerce                                                                             

*        Incorporated herein by reference as indicated.                         

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SIGNATURES

Pursuant to the requirements of Section 12 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.                                     

                                              FAIR GROUNDS CORPORATION

                                     By: /s/ Bryan G. Krantz
                                                --------------------------
Date: February 15, 1996                            Bryan G. Krantz, President   
-----------------                                                   

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

Name                                  Capacity               Date     
--------------                             --------            -----------      
PRINCIPAL EXECUTIVE OFFICER:                                                    

/s/ Bryan G. Krantz                                                             
------------------------------                                                  
Bryan G. Krantz                            President           February 15, 1996

PRINCIPAL FINANCIAL OFFICER:                                                    

/s/ Gordon M. Robertson                                                         
------------------------------                                                  
Gordon M. Robertson                        Chief Financial     February 15, 1996
             Officer

PRINCIPAL ACCOUNTING OFFICER:                                                   

/s/ Jill P. Incaprera                                                           
------------------------------                                                  
Jill P. Incaprera                          Principal           February 15, 1996
                Accounting
             Officer

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                                                                · Download Table
                                                                  
DIRECTORS:                                                        

/s/ Marie G. Krantz                                               
--------------------------------                                  
Marie G. Krantz                   Director       February 15, 1996
                                  and Chairman                    
                                  of the Board                    

/s/ Bryan G. Krantz                                               
--------------------------------                                  
Bryan G. Krantz                   Director       February 15, 1996
                                  and President                   

/s/ Katherine F. Duncan                                           
--------------------------------                                  
Katherine F. Duncan               Director       February 15, 1996

/s/ Ronald J. Maestri                                             
--------------------------------                                  
Ronald J. Maestri                 Director       February 15, 1996

/s/ Charmaine R. Morel                                            
--------------------------------                                  
Charmaine R. Morel                Director       February 15, 1996

/s/ Donald L. Peltier                                             
--------------------------------                                  
Donald L. Peltier                 Director       February 15, 1996

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                                                                     SCHEDULE II
AMOUNTS RECEIVABLE FROM RELATED PARTIES 
For The Years Ended October 31, 1995, 1994 and 1993 

                                                        · Enlarge/Download Table

COLUMN A                               COLUMN B     COLUMN C           COLUMN D              COLUMN E       
                                      Balance at                      Deductions            Balance at      
                                      Beginning                  Amounts      Amount       End of Period    
Name of Debtor                        of Period    Additions    Collected      Sold   Current    Non-Current
--------------                        ---------    ---------    ---------     ------  -------    -----------
                                                                                                            
1995                                                                                                        
====                                                                                                        

None.                                                                                                       

1994                                                                                                        
====                                                                                                        

Intertrack Partners of Madison (b)   $232,872     $    -      $    595      $232,277  $    -       $    -   
Intertrack Partners of Rapides (b)    286,305          -         1,289       285,016       -            -   
Intertrack Partners of Ouachita (c)     7,500          -         7,500           -         -            -   
Fast, Inc.                             16,864          -         2,118        14,746       -            -   
                                     --------     ------      --------      --------  --------     -------- 
                                     $543,541     $    -      $ 11,502      $532,039  $    -       $    -   
                                     ========     ======      ========      ========  ========     ======== 

1993 (Unaudited)                                                                                            
====                                                                                                        

Intertrack Partners of Rapides (b)   $288,914     $    -      $  2,609      $    -    $  3,668     $282,637 
Intertrack Partners of Ouachita (c)    27,600          -        20,100           -         -          7,500 
Fast, Inc. (a)                         18,546          -         1,682           -       1,682       15,182 
                                     --------     ------      --------      --------  --------     -------- 
                                     $335,060     $    -      $ 24,391      $    -    $  5,350      305,319 
                                     ========     ======      ========      ========  ========     ======== 
Intertrack Partners of Madison                                                                              
    eliminated through                                                                                      
    1993 consolidation                                                                              232,872 
                                                                                                   -------- 
                                                                                                   $543,541 
                                                                                                   ======== 

(a)      Note receivable at 9% interest, payable in yearly installments through 
December 1999.                                                

(b)      Note receivable at 9% interest, payable in quarterly installments      
through December 2019.                                        

(c)      Advance, no repayment terms stated at this time.                       

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                                                                      SCHEDULE V
PROPERTY, PLANT AND EQUIPMENT 
For the Years Ended October 31, 1995, 1994 and 1993 

                                                        · Enlarge/Download Table

COLUMN A                           COLUMN B      COLUMN C      COLUMN D        COLUMN E      COLUMN F 
                                  Balance at                                    Assets        Balance 
                                  Beginning      Additions    Retirements      Destroyed      at End  
Description                       of Period       at Cost      or Sales         By Fire      of Period
-----------                       ----------     ---------    -----------      ---------     ---------
                                                                                                      
OCTOBER 31, 1995                                                                                      
Land                            $ 3,286,281   $       -     $       -      $        -     $ 3,286,281 
Buildings and improvements       10,206,873     3,675,097           -               -      13,881,970 
Temporary facilities              2,680,917         5,127           -               -       2,686,044 
Construction in progress          4,723,474    14,119,779    (3,637,088)            -      15,207,395 
Machinery and equipment           1,464,204       143,254           -               -       1,607,458 
Furniture and fixtures              155,672        15,825           -               -         171,497 
Land improvements                 4,188,282        82,253           -               -       4,270,535 
                                -----------   -----------   -----------    ------------   ----------- 
                                $26,705,703   $18,042,565   $(3,637,088)   $        -     $41,111,180 
                                ===========   ===========   ===========    ============   =========== 

OCTOBER 31, 1994                                                                                      
Land                            $ 3,286,281   $       -     $       -      $        -     $ 3,286,281 
Buildings and improvements       19,419,664        20,022           -        (9,232,813)   10,206,873 
Temporary facilities                    -       2,680,917           -               -       2,680,917 
Construction in progress               -        4,723,474           -               -       4,723,474 
Machinery and equipment           3,860,902       453,062       (14,980)     (2,834,780)    1,464,204 
Furniture and fixtures              497,557        27,216           -          (369,101)      155,672 
Land improvements                 4,382,941           -             -          (194,659)    4,188,282 
                                -----------   -----------   -----------    ------------   ----------- 
                                $31,447,345   $ 7,904,691   $   (14,980)   $(12,631,353)  $26,705,703 
                                ===========   ===========   ===========    ============   =========== 

OCTOBER 31, 1993 (Unaudited)                                                                          
Land                            $ 3,401,281   $       -     $       -      $        -     $ 3,401,281 
Buildings and improvements       20,038,877       183,559           -               -      20,222,436 
Machinery and equipment           4,002,872        44,181        (1,401)            -       4,045,652 
Furniture and fixtures              536,985        13,126           -               -         550,111 
Land improvements                 4,456,666           -         (73,725)            -       4,382,941 
                                -----------   -----------   -----------    ------------   ----------- 
                                $32,436,681   $   240,866   $   (75,126)   $        -      32,602,421 
                                ===========   ===========   ===========    ============               
Intertrack Partners of Madison                                                                        
  effects of consolidation                                                                 (1,155,076)
                                                                                          ----------- 
                                                                                          $31,447,345 
                                                                                          =========== 

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                                                                     SCHEDULE VI
ACCUMULATED DEPRECIATION AND AMORTIZATION OF
PROPERTY, PLANT AND EQUIPMENT 
For the Years Ended October 31, 1995, 1994 and 1993 

                                                        · Enlarge/Download Table

COLUMN A                           COLUMN B     COLUMN C      COLUMN D        COLUMN E      COLUMN F  
                                  Balance at                                   Assets        Balance  
                                  Beginning   Depreciation   Retirements      Destroyed      at End   
Description                       of Period     Expense       or Sales         By Fire      of Period 
-----------                       ----------  ------------   -----------      ---------     --------- 
                                                                                                      
OCTOBER 31, 1995                                                                                      
Buildings and improvements      $  6,832,699   $   746,330     $     -     $        -     $ 7,579,029 
Temporary facilities                 890,667       747,810           -              -       1,638,477 
Machinery and equipment            1,009,981       103,196           -              -       1,113,177 
Furniture and fixtures               119,920         9,158           -              -         129,078 
Land improvements                  3,032,870       190,762           -              -       3,223,632 
                                ------------   -----------     ---------    -----------   ----------- 
                                $ 11,886,137   $ 1,797,256     $     -      $       -     $13,683,393 
                                ============   ===========     =========    ===========   =========== 
OCTOBER 31, 1994                                                                                      
Buildings and improvements      $ 12,085,279   $   665,712     $     -      $(5,918,292)  $ 6,832,699 
Temporary facilities                     -         890,667           -              -         890,667 
Construction in progress                 -             -             -              -             -   
Machinery and equipment            3,027,123        99,797       (10,861)    (2,106,078)    1,009,981 
Furniture and fixtures               360,305        10,117           -         (250,500)      119,920 
Land improvements                  2,920,357       190,095           -          (77,582)    3,032,870 
                                ------------   -----------     ---------    -----------   ----------- 
                                $ 18,393,064   $ 1,856,388     $ (10,861)   $(8,352,454)  $11,886,137 
                                ============   ============    =========    ===========   =========== 
OCTOBER 31, 1993 (Unaudited)                                                                          
Buildings and improvements      $ 11,162,679   $ 1,028,865     $     -      $       -     $12,191,544 
Machinery and equipment            2,920,321       269,166           -              -       3,189,487 
Furniture and fixtures               350,340        32,290           -              -         382,630 
Land improvements                  2,651,451       244,385           -              -       2,895,836 
                                ------------   -----------     ---------    -----------   ----------- 
                                $ 17,084,791   $ 1,574,706     $     -      $       -      18,659,497 
                                ============   ===========     =========    ===========   =========== 
Intertrack Partners of Madison                                                                        
  effects of consolidation                                                                   (266,433)
                                                                                          ----------- 
                                                                                          $18,393,064 
                                                                                          =========== 

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                                                                     SCHEDULE IX
SHORT-TERM BORROWINGS 
For the Years Ended October 1995, 1994 and 1993 

                                                        · Enlarge/Download Table

                            Weighted                 Maximum      Average               
                             Average                  Amount       Amount     Average   
Category of                  Balance    Interest   Outstanding  Outstanding   Interest  
Aggregate                    at End   Rate at End   During the   During the  Rate During
Borrowings                 of Period   of Period      Period       Period    the Period 
-----------                ---------  -----------  -----------  -----------  -----------
                                                                               (Note B) 
                                                                                        
Notes payable:                                                                          

        1995              $3,706,143       9.00%   $4,454,117   $2,425,563       9.60%  

        1994              $      -         7.75%   $1,000,000   $  416,000       7.75%  

        1993 (Unaudited)  $      -         7.00%   $  450,000   $  200,000       7.00%  

NOTES:                                                                          

(A)      The average amount outstanding during the year represents the average  
monthly principal balances outstanding during the year.       

(B)      The weighted average interest rates during the year were computed by   
      dividing the actual interest on short-term borrowings by the average
short-term borrowings.                                        

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EXHIBIT INDEX 

                                                                · Download Table

Exhibit                         Description                                    Page
-------                         -----------                                    ----
                                                                                   

(10)(u)  Loan Agreement dated as of December 18, 1995, between Fair Grounds     93 
         Corporation and First National Bank of Commerce                           

(10)(v)  Disbursement Agreement dated as of July 17, 1995 by and among Fair    125 
         Grounds Corporation, Vide Services, Inc. and First National Bank of       
         Commerce                                                                  

(10)(w)  Commercial Security Agreement dated as of July 17, 1995 between Fair  136 
         Grounds Corporation and First National Bank of Commerce                   

(27)     Financial Data Schedule (included in electronic filing only)              


92

Dates Referenced Herein   and   Documents Incorporated By Reference

				Referenced-On Page
This 10-K Filing		Date		First		Last			Other Filings
		1/29/92		81		83
		2/4/92		84
		2/28/92		84
		8/11/92		83
		8/31/92		84
		10/9/92		11		84
		10/24/92		5		75
		10/31/92		44		85
		11/1/92		11		77
		11/20/92		84
		2/15/93		84		85
		5/27/93		77
		8/31/93		81
		10/13/93		81
		10/31/93		21		90
		11/1/93		50		55
		12/17/93		2		52
		12/29/93		25		51
		1/5/94		2		51
		5/14/94		19		57
		10/31/94		25		90
		11/1/94		37		49
		12/22/94		3		59
		1/1/95		65
		2/1/95		65
		2/6/95		4		60
		3/31/95		4		60
		5/1/95		65
		7/17/95		4		92
		8/1/95		65
		10/26/95		25
For The Period Ended		10/31/95		1		90			NT 10-K
		11/7/95		4		61
		11/23/95		10
		11/30/95		4		61
		12/18/95		4		92
		12/26/95		70
		1/1/96		16		75
		1/17/96		4		68
		1/19/96		37
		1/20/96		5		69
		1/31/96		1		65			10-Q, NT 10-Q
		2/1/96		65
		2/10/96		1
		2/15/96		86		87
Filed On / Filed As Of		2/16/96
		3/25/96		10
		4/30/96		65					10-Q, NT 10-Q
		10/31/96		4		70			10-K405, NT 10-K
		7/31/97		65					10-Q
		1/31/99		65					10-Q, 10-Q/A
		3/14/99		65
		2/28/1		67
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