ISLE OF CAPRI CASINOS INC, DEFM14A, 2000-01-12

ISLE OF CAPRI CASINOS INC
DEFM14A, 2000-01-12
MISCELLANEOUS AMUSEMENT & RECREATION

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<PAGE>

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934

Filed by the registrant [X]
Filed by a party other than the registrant [_]

Check the appropriate box:

[_]Preliminary proxy statement
[_]Confidential, For Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[X]Definitive proxy statement
[_]Definitive additional materials
[_]Soliciting material pursuant to (S)240.14a-11(c) or (S)240.14a-12

ISLE OF CAPRI CASINOS, INC.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

Payment of filing fee (Check the appropriate box):

[_]No fee required.

[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies: Isle of
Capri Casinos, Inc. common stock, $0.01 par value per share

(2) Aggregate number of securities to which transaction applies: 6,300,000
(subject to adjustment as described in the proxy statement)

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): $12.53 per
share, based on the average of the high and low prices on December 19,
1999, as reported on the Nasdaq National Market

(4) Proposed maximum aggregate value of transaction: $78,939,000

(5) Total fee paid: $15,789.38

[X]Fee paid previously with preliminary materials.

[_]Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.

(1) Amount previously paid: $

(2) Form, schedule or registration statement no.:

(3) Filing party:

(4) Date filed:
<PAGE>

ISLE OF CAPRI CASINOS, INC.
1641 Popps Ferry Road
Biloxi, Mississippi 39532
(228) 396-7000

PROPOSED MERGER--YOUR VOTE IS VERY IMPORTANT

To Isle of Capri Casinos, Inc. stockholders:

This proxy statement relates to a merger agreement between Isle of Capri
Casinos, Inc. and BRDC, Inc. pursuant to which BRDC will merge with Isle of
Capri. Isle of Capri will continue as the surviving corporation. Under the
terms of the merger agreement, BRDC shareholders will receive shares of Isle
of Capri common stock in exchange for their shares of BRDC common stock.

Isle of Capri is furnishing this proxy statement to its stockholders in
connection with the solicitation of proxies for use at a special meeting of
its stockholders to be held on February 16, 2000 to consider the approval of
the merger agreement and the related issuance of Isle of Capri common stock.

BRDC indirectly owns a 50% interest in a joint venture that operates Lady
Luck Bettendorf, a riverboat casino on the Mississippi River and a hotel and
related facilities located in Bettendorf, Iowa. Lady Luck Gaming Corporation,
a publicly-traded operator of distinctly themed dockside and riverboat casinos
and related entertainment and lodging facilities, indirectly owns the
remaining 50% interest in the joint venture. Lady Luck Gaming Corporation has
entered into a merger agreement with Isle of Capri and a subsidiary of Isle of
Capri whereby Lady Luck Gaming Corporation would become a wholly owned
subsidiary of Isle of Capri.

BRDC is wholly owned by Robert S. Goldstein, a member of Isle of Capri's
board of directors, and family members of Robert S. Goldstein and Bernard
Goldstein, Chairman of the Board and Chief Executive Officer of Isle of Capri.
Because Isle of Capri's board of directors was aware of the potential conflict
of interest presented by this transaction, the board of directors formed a
special committee consisting of two independent directors to evaluate the
transaction and negotiate the merger agreement.

Both the special committee and Isle of Capri's board of directors, by a
unanimous vote in each case, have approved the merger agreement and recommend
that Isle of Capri stockholders vote FOR adoption of the merger agreement and
the related issuance of Isle of Capri common stock.

Only Isle of Capri's stockholders of record at the close of business on
January 7, 2000 are entitled to notice of, and to vote at, the special meeting
or any adjournments or postponements of the special meeting.

Whether or not you plan to attend the special meeting, please take the time
to vote by signing, dating and mailing the enclosed proxy card. Regardless of
the number of shares you own, your vote is very important. Please act today.

We encourage you to read this document carefully.

Thank you for your continued interest and support.

W. RANDOLPH BAKER EMANUEL CRYSTAL
Director and Member of the Special Director and Member of the Special
Committee Committee

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

Proxy statement dated January 10, 2000 and first mailed to stockholders on or
about January 12, 2000.
<PAGE>

ISLE OF CAPRI CASINOS, INC.
1641 Popps Ferry Road
Biloxi, Mississippi 39532
(228) 396-7000

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

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 16, 2000

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

To Isle of Capri Casinos, Inc. stockholders:

Isle of Capri Casinos, Inc. and BRDC, Inc. have entered into a merger
agreement. Under the terms of the merger agreement, BRDC will merge with Isle
of Capri and Isle of Capri will continue as the surviving corporation. BRDC
shareholders will receive up to 6,300,000 shares of Isle of Capri common stock
in connection with the merger subject to calculation based on the formula
discussed in the attached proxy statement.

Isle of Capri has scheduled a special meeting of its stockholders to
consider the approval and adoption of the merger agreement, the issuance of
Isle of Capri common stock in connection with the merger and such other
business as may be properly brought before the special meeting. These items of
business are described in the attached proxy statement.

The date, time and place of the special meeting are as follows:

February 16, 2000
10:00 a.m., local time
Isle of Capri Crowne Plaza Hotel
151 Beach Blvd.
Biloxi, Mississippi 39530

Your vote is important. Please complete, sign, date and return the enclosed
proxy card as soon as possible to make sure your shares are represented. If
you attend the special meeting and wish to vote in person, you may revoke your
proxy and vote in person. If you have instructed a broker to vote your shares,
you must follow directions received from the broker to change or revoke your
proxy.

By Order of the Board of Directors,

BERNARD GOLDSTEIN
Chairman and Chief Executive Officer

Biloxi, Mississippi
January 10, 2000

Whether or not you plan to attend the special meeting in person, please
complete, sign, date and return the enclosed proxy card in the accompanying
self-addressed stamped envelope as soon as possible.

<PAGE>

QUESTIONS AND ANSWERS ABOUT THIS PROXY STATEMENT AND THE MERGER

Q: Why am I receiving these materials?

A: This proxy statement is soliciting your approval of the merger agreement
between our company and BRDC. Under Delaware corporate law, the merger
cannot be completed without the approval of our stockholders.

Q: What will happen in the merger?

A: BRDC will be merged with our company and our company will continue as the
surviving corporation. After completion of both the merger and our pending
merger with Lady Luck Gaming Corporation, we will own 100% of the Lady Luck
Bettendorf riverboat casino, hotel and related facilities located in
Bettendorf, Iowa.

Q: When do you expect the merger to be completed?

A: We are working to complete the merger as soon as possible. A number of
conditions must be satisfied before we can complete the merger, including
approval of the merger by our stockholders and the Iowa Racing and Gaming
Commission. Although we cannot predict when all of the conditions to the
merger will be satisfied, we hope to complete this merger and the merger
with Lady Luck Gaming Corporation during the first calendar quarter of
2000.

Q: How does Isle of Capri's board of directors recommend that I vote my
shares?

A: Our board of directors recommends that you vote FOR the approval of the
merger agreement. Our board of directors based its recommendation and
approval of the merger, in part, on the recommendation of a special
committee of the board of directors consisting of two independent
directors.

Q: Why was a special committee of the board of directors formed?

A: The special committee was formed because of the potential conflicts of
interest presented by the merger. Robert S. Goldstein, a member of our
board of directors, owns 25% of the outstanding shares of BRDC common
stock. All shares of BRDC common stock not owned by Robert S. Goldstein are
owned by other family members of Robert S. Goldstein and Bernard Goldstein,
our Chairman of the Board and Chief Executive Officer. The special
committee of independent directors has determined that the merger is fair
to you and in your best interest.

Q: What should I do now?

A: You should read this proxy statement. Then, if you chose to vote by proxy,
you should complete your proxy card and indicate how you want to vote.
Please sign and mail the proxy card in the enclosed return envelope as soon
as possible.

Q: If my broker holds my shares in "street name," will my broker vote my
shares for me?

A: Your broker will not vote your shares unless you tell the broker how to
vote. To do so, follow the directions your broker provides you.

Q: How can I change my vote after I have mailed my signed proxy card?

A: You may change your vote by signing another proxy card and returning it by
mail prior to the special meeting or attending the special meeting and
voting your shares in person.

Q: Who can I contact if I have further questions?

A: For questions regarding the merger, you should contact:

Allan B. Solomon Rex Yeisley
Isle of Capri Casinos, Inc. Isle of Capri Casinos, Inc.
Executive Vice President Chief Financial Officer
(561) 995-6660 (228) 396-7052

For questions regarding the procedures for voting your shares, including
questions relating to your proxy, you should contact:

D.F. King & Co., Inc.
77 Water Street
New York, New York 10005
(800) 994-3227
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
SUMMARY................................................................... 1
The Companies........................................................... 1
The Special Meeting..................................................... 1
Interests of Isle of Capri Directors and Officers in the Merger that Are
Different from Your Interests.......................................... 2
Recommendation to Stockholders.......................................... 2
Reasons for the Merger.................................................. 2
Opinion of the Special Committee's Financial Advisor.................... 2
The Merger and the Merger Agreement..................................... 2

ISLE OF CAPRI CASINOS, INC.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA......................... 5

BRDC, INC.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA......................... 8

SELECTED UNAUDITED PRO FORMA FINANCIAL DATA............................... 9

THE COMPANIES............................................................. 10
Isle of Capri Casinos, Inc.............................................. 10
BRDC, Inc............................................................... 10

SPECIAL FACTORS TO CONSIDER WHEN DECIDING HOW TO VOTE..................... 11
Dilution to Existing Stockholders;
Impact on Market Value of Isle of Capri Common Stock................... 11
Consequences if the Merger is not Approved.............................. 11

THE SPECIAL MEETING....................................................... 12
Date, Time and Place.................................................... 12
Purpose of the Special Meeting.......................................... 12
Voting Rights of Stockholders; Votes Required for Approval.............. 12
Giving and Revoking Your Proxy; Solicitation............................ 13
No Appraisal or Preemptive Rights....................................... 14

THE MERGER................................................................ 14
Background of the Merger................................................ 14
Interests of Isle of Capri Directors and Officers in the Merger that Are
Different from Your Interests.......................................... 16
Recommendation of the Special Committee and the Board of Directors;
Reasons for the Merger................................................. 16
Opinion of the Special Committee's Financial Advisor.................... 17
Dilution to Public Stockholders; Impact on Market Value of Isle of Capri
Common Stock........................................................... 22
Tax Treatment........................................................... 22
Anticipated Accounting Treatment........................................ 22

MATERIAL TERMS OF THE MERGER AGREEMENT.................................... 23
Structure of the Merger................................................. 23
When the Merger Becomes Effective....................................... 23
Conversion of BRDC Common Stock......................................... 23
Representations and Warranties.......................................... 24
Conduct of Business Covenants........................................... 25
</TABLE>

i
<PAGE>

<TABLE>
<CAPTION>
Page
----
<S> <C>
Indemnification......................................................... 25
Loan Repayment; BRDC Shareholder Guarantees............................. 26
Resale Restrictions..................................................... 26
Other Covenants......................................................... 26
Conditions to Completion of the Merger.................................. 26
Termination of the Merger Agreement..................................... 27
Expenses................................................................ 27
Modification or Amendment to the Merger Agreement....................... 27
Regulatory Requirements................................................. 28

RELATED PARTY TRANSACTIONS................................................ 29

OWNERSHIP OF OUR CAPITAL STOCK............................................ 30

MARKET PRICES AND DIVIDEND INFORMATION.................................... 32

ADDITIONAL INFORMATION.................................................... 32
Deadline for Isle of Capri Stockholder Proposals........................ 32
Incorporation of Information We File with the SEC....................... 32
Forward-Looking Statements.............................................. 33
Where You Can Find More Information..................................... 33

UNAUDITED PRO FORMA FINANCIAL DATA........................................ 34

ANNEXES:
Annex A:Agreement and Plan of Merger...................................... A-1
Annex B:Opinion of CIBC World Markets Corp................................ B-1
Annex C: BRDC, Inc. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................. C-1
Annex D: BRDC, Inc. Consolidated Balance Sheets as of December 31, 1998
and 1997 and Consolidated Statements of Operations for the years
ended December 31, 1998, 1997 (unaudited) and 1996 (unaudited)... D-1
Annex E: BRDC, Inc. Consolidated Balance Sheets as of September 30, 1999
(unaudited) and December 31, 1998 and Consolidated Statements of
Operations for the three and nine months ended September 30, 1999
and 1998 (unaudited)............................................. E-1
Annex F: Lady Luck Bettendorf, L.C. Selected Historical Consolidated
Financial Data................................................... F-1
Annex G: Lady Luck Bettendorf, L.C. Management's Discussion and Analysis
of Financial Condition and Results of Operations................. G-1
Annex H: Lady Luck Bettendorf, L.C. Consolidated Balance Sheets as of
December 31, 1998 and 1997 and Consolidated Statements of
Operations for the years ended December 31, 1998, 1997 and 1996.. H-1
Annex I: Lady Luck Bettendorf, L.C. Consolidated Balance Sheets as of
September 30, 1999 (unaudited) and December 31, 1998 and
Consolidated Statements of Operations for the three and nine
months ended September 30, 1999 and 1998 (unaudited)............. I-1
Annex J: Lady Luck Gaming Corporation Selected Historical Consolidated
Financial Data................................................... J-1
</TABLE>

ii
<PAGE>

SUMMARY

This summary highlights some of the information from this proxy statement
and may not contain all of the information that is important to you. To
understand the merger better and for a more complete description of the legal
terms of the merger, you should read this entire document carefully, including
the annexes and other documents to which we have referred you. See "Additional
Information--Where You Can Find More Information" for more details.

The Companies

Isle of Capri Casinos, Inc.
1641 Popps Ferry Road
Biloxi, Mississippi 39532
Telephone: (228) 396-7000

We are a leading developer, owner and operator of branded gaming and related
lodging and entertainment facilities in growing markets in the United States.
We wholly own and operate five gaming facilities located in Lake Charles and
Bossier City, Louisiana and Biloxi, Vicksburg and Tunica County, Mississippi.
We also own a 57% interest in and operate a gaming facility in Black Hawk, Col-
orado. Each of these six gaming facilities operates under the name "Isle of
Capri" and features our distinctive tropical island theme. In addition, we
wholly own and operate a pari-mutuel harness racing facility in Pompano Beach,
Florida and own a 50% interest in and operate gaming activities aboard a cruise
ship based in New Orleans, Louisiana.

BRDC, Inc.
2117 State Street
Bettendorf, Iowa 52722
Telephone: (319) 344-5100

BRDC indirectly owns a 50% interest in Lady Luck Bettendorf, L.C., a joint
venture that operates the Lady Luck Bettendorf riverboat casino, hotel and re-
lated facilities located in Bettendorf, Iowa. BRDC indirectly owns and leases
to the joint venture all of the real property used by Lady Luck Bettendorf.

Lady Luck Gaming Corporation, with whom we have entered into a merger agree-
ment and expect to close at the same time the merger is completed, indi-
rectly owns the remaining 50% interest in the joint venture. After completion
of both this merger and the merger with Lady Luck Gaming Corporation, we will
own 100% of the joint venture and all of the assets used in the operation of
Lady Luck Bettendorf.

The Special Meeting

Date, Time and Place

February 16, 2000
10:00 a.m., local time
Isle of Capri Crowne Plaza Hotel
151 Beach Blvd.
Biloxi, Mississippi 39530

Purpose of the Special Meeting

At the special meeting, you will be asked to consider and vote upon the fol-
lowing matters:

. the approval and adoption of the merger agreement pursuant to which BRDC will
be merged into our company with our company continuing as the surviving
corporation; and

. such other business as may be properly brought before the special meeting.

Record Date

The close of business on January 7, 2000 is the record date for the special
meeting. Only our stockholders of record on the record date are entitled to re-
ceive notice of, and to vote at, the special meeting. As of the record date,
there were 23,939,089 issued and outstanding shares of Isle of Capri common
stock.

Vote Required; Quorum

Each stockholder on the record date is entitled to one vote on each matter
submitted to a vote at the special meeting for each share of Isle of Capri
common stock then held. A majority of shares of Isle of Capri common stock
outstanding on the record date constitutes a quorum at the special meeting.

<PAGE>

Interests of Isle of Capri Directors and Officers in the Merger that Are
Different from Your Interests

Bernard Goldstein, our Chairman of the Board and Chief Executive Officer,
and Robert S. Goldstein, the son of Bernard Goldstein and a member of our board
of directors, have interests in the merger that are different from your inter-
ests.

Robert S. Goldstein and other members of the Goldstein family own 100% of
the outstanding shares of BRDC common stock and will receive all of the shares
of Isle of Capri common stock issued in connection with the merger. In addi-
tion, in connection with the merger, we will provide funds to BRDC to allow
BRDC to repay a loan in the amount of approximately $3.2 million from Valley
Corporation, a company owned and controlled by the Goldstein family. These mat-
ters are more fully described under "The Merger--Interests of Isle of Capri Di-
rectors and Officers in the Merger that Are Different from Your Interests."

As of the record date for the special meeting, Bernard Goldstein, Robert S.
Goldstein, Valley Corporation and members of the Goldstein family were the rec-
ord owners of an aggregate of 7,836,434 shares of Isle of Capri common stock
(approximately 33% of the outstanding shares of Isle of Capri common stock).
All of such persons have informed us that they intend to vote all of their
shares FOR approval of the merger agreement.

The special committee and our board of directors were aware of these inter-
ests and considered them, among other matters, when approving the merger agree-
ment.

Recommendation to Stockholders

A special committee of independent directors and our board of directors, in
both cases by a unanimous vote, have determined that the merger agreement and
the merger are in the best interests of our company and our stockholders. Ac-
cordingly, the special committee and our board of directors approved the merger
agreement and recommend that you vote your shares FOR approval of the merger
agreement. See "The Merger--Background of the Merger" and "--Recommendation of
the Special Committee and the Board of Directors; Reasons for the Merger."

Reasons for the Merger

The special committee and our board of directors, in reaching their deci-
sions to approve the merger agreement, consulted with their legal and financial
advisors as well as our company's management and considered many factors, in-
cluding the following material factors (the order does not reflect their rela-
tive significance):

. Prospects of Lady Luck Bettendorf: The financial performance, business
operations and prospects of Lady Luck Bettendorf;

. Elimination of Potential Conflict of Interest: The potential conflict of
interest of being joint venture partners with a company owned by the
Goldstein family in the event that we do not acquire BRDC's 50% interest in
Lady Luck Bettendorf at the same time we acquire Lady Luck Gaming
Corporation's indirect 50% interest in Lady Luck Bettendorf; and

. Terms of Merger Agreement: The terms of the merger agreement, including our
right to terminate the merger agreement if our stockholders do not approve
the merger or if the Lady Luck Gaming Corporation merger does not close.

Opinion of the Special Committee's Financial Advisor

The special committee has received an opinion of its financial advisor, CIBC
World Markets Corp., as to the fairness from a financial point of view, to Isle
of Capri of the exchange ratio which will be used to calculate the aggregate
number of shares of Isle of Capri common stock which BRDC shareholders will re-
ceive in the merger. The full text of CIBC World Markets' written opinion dated
December 19, 1999 is attached to this proxy statement as Annex B. We encourage
you to read this opinion carefully in its entirety for a description of the
procedures followed, assumptions made, matters considered and limitations on
the review undertaken. CIBC World Markets' opinion is directed to the special
committee and does not constitute a recommendation to any stockholder as to any
matter relating to the merger.

The Merger and the Merger Agreement

The merger agreement is attached as Annex A to this proxy statement. You
should read the merger agreement because it, and not this proxy statement, is
the legal document that governs the merger.

2
<PAGE>

What BRDC Shareholders Will Receive in the Merger

Upon completion of the merger, each share of BRDC common stock will be con-
verted into and become exchangeable for Isle of Capri common stock. BRDC share-
holders will receive, in the aggregate, up to 6,300,000 shares of Isle of Capri
common stock subject to adjustment based upon:

. the amount of net income Lady Luck Bettendorf earns from October 1, 1999
through the effective time of the merger;

. the amount of debt that BRDC has at the effective time of the merger; and

. the amount of cash Lady Luck Bettendorf distributes to its members after
September 30, 1999.

As of the date of this proxy statement, the merger agreement provides for
the issuance of 6,210,000 shares of Isle of Capri common stock. The exact num-
ber of shares to be issued cannot be determined until the effective time be-
cause of the adjustments above and because the BRDC shareholders have the right
to withdraw up to $10 million in cash which would reduce the number of shares
of Isle of Capri common stock to be issued.

What We Need to Do to Complete the Merger

We will complete the merger only if the conditions set forth in the merger
agreement are satisfied or, if permissible, waived. These conditions include:

. approval by our stockholders of the merger agreement;

. the absence of legal prohibitions to the merger;

. receipt of necessary antitrust approvals;

. receipt of the Iowa Racing and Gaming Commission's approval;

. completion of our merger with Lady Luck Gaming Corporation;

. absence of any material adverse change in the business, properties, condition
(financial or otherwise), prospects or results of operations of BRDC and Lady
Luck Bettendorf, taken as a whole, other than the financial performance or
prospects of Lady Luck Bettendorf;

. the continued accuracy of the representations and warranties of each party;
and

. the performance by each party of its obligations under the merger agreement
including as to BRDC, receipt of consents to the merger under BRDC's material
agreements.

At any time before the merger, to the extent legally allowed, we may waive
compliance with any of the conditions contained in the merger agreement without
your approval. As of the date of this proxy statement, we do not expect that
any condition will be waived.

Termination of the Merger Agreement

We can agree with BRDC to terminate the merger agreement at any time without
completing the merger.

We can terminate the merger agreement, without BRDC's consent, for any of
the reasons listed above as well as if any state gaming authority revokes any
of Lady Luck Bettendorf's licenses or permits or imposes fines, penalties or
restrictions that would reasonably be expected to have a material adverse ef-
fect on the business of Lady Luck Bettendorf.

Either BRDC or our company can, without the consent of the other, terminate
the merger agreement if:

. the special meeting is held and our stockholders do not approve the merger
agreement;

. the merger is not completed before the "outside date," which is defined in
the merger agreement as December 31, 2000 and which can be extended to June
30, 2001 if our separate merger agreement with Lady Luck Gaming Corporation
remains in effect and either party notifies the other party that it wants to
extend the outside date;

. any order permanently restraining, enjoining or otherwise prohibiting
completion of the merger has become final and non-appealable; or

. the other party materially breaches the merger agreement and cannot or does
not correct the breach within a 30-day cure period.

3
<PAGE>

Dilution to Existing Stockholders; Impact on Market Value of Isle of Capri
Common Stock

The issuance of the new shares of Isle of Capri common stock to BRDC share-
holders in connection with the merger will cause dilution of the voting power
of our current stockholders. In addition, the issuance of Isle of Capri common
stock in connection with the merger could cause a decline in the market value
of Isle of Capri common stock because of the increased concentration of owner-
ship by our largest related stockholders after the merger.

Tax Treatment

No income, gain or loss will be recognized by our company or our
stockholders as a result of the merger for U.S. federal income tax purposes.

Anticipated Accounting Treatment

We will account for the merger under the purchase method of accounting. Un-
der that method of accounting, the aggregate consideration that we pay to
shareholders of BRDC will be allocated to BRDC's assets and liabilities based
upon their fair values, with any excess being treated as goodwill.

4
<PAGE>

ISLE OF CAPRI CASINOS, INC.

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

The following table presents the selected historical consolidated financial
data of Isle of Capri for the five fiscal years ended April 30, 1995, April
30, 1996, April 27, 1997, April 26, 1998 and April 25, 1999. This data is
derived from our audited consolidated financial statements and the notes to
those statements. The table also presents our selected historical consolidated
financial data for the six fiscal months ended October 25, 1998 and October
24, 1999. This data is derived from our unaudited consolidated financial
statements. The unaudited financial statements include all adjustments,
consisting of normal recurring accruals, which Isle of Capri considers
necessary for a fair presentation of the financial position and the results of
operations for these periods. Operating results for the six fiscal months
ended October 25, 1998 and October 24, 1999 are not necessarily indicative of
the results that may be expected for the entire fiscal year ending April 30,
2000. This information should be read in conjunction with Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," and the financial statements and the related notes included in
Item 8 of our annual Report on Form 10-K for the fiscal year ended April 25,
1999, which is incorporated by reference into this proxy statement. See
"Additional Information--Incorporation of Information we file with the SEC."

5
<PAGE>

<TABLE>
<CAPTION>
Six Fiscal
Fiscal Year Ended Months Ended
------------------------------------------------- -----------------------
April 30, April 30, April 27, April 26, April 25, October 25, October 24,
1995(1) 1996(1) 1997(1) 1998(1) 1999(1) 1998(1) 1999(1)
--------- --------- --------- --------- --------- ----------- -----------
(In millions, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Net income (loss) per
common share
Basic.................. $ 1.16 0.10 (0.94) 0.32 $(1.03) $ 0.20 $ 0.56
Diluted................ $ 1.16 0.10 (0.94) 0.32 $(1.01) $ 0.20 $ 0.53
Weighted average number
of shares
Basic.................. 16 16 22 23 24 24 24
Diluted................ 16 16 22 23 24 24 25
Book value per share.... $ 2.83 $ 3.13 $ 3.34 $ 3.65 $ 2.63 $ 3.85 $ 3.19
Cash dividends declared
per share.............. $ -- $ -- $ -- $ -- $ -- $ -- $ --
Other Data:
EBITDA(8)............... $ 29.6 $ 27.6 $ 65.1 $ 94.7 $109.2 $ 48.7 $ 66.1
Net cash provided
(required) by:......... -- -- -- -- -- -- --
Operating.............. 8.5 11.8 17.8 65.3 65.2 35.3 43.9
Investing.............. (20.8) (13.5) (97.4) (119.7) (52.0) (28.7) (36.0)
Financing.............. 6.1 1.4 112.9 55.0 19.5 (2.6) (4.2)
Capital expenditures.... $ 46.6 $ 22.2 $ 21.5 $ 65.5 $ 95.5 $ 53.8 $ 40.5
Balance Sheet Data:
Cash and Cash
equivalents............ $ 19.0 $ 18.6 $ 51.8 $ 52.5 $ 85.1 $ 56.5 $ 88.8
Total assets............ 211.9 226.5 528.4 615.7 676.5 626.3 694.2
Long-term debt,
including current
portion................ 138.9 139.8 379.5 442.1 532.8 440.2 528.0
Stockholders' equity.... 42.0 50.3 78.0 86.1 62.0 90.8 75.7
</TABLE>
- --------
(1) The operating results for fiscal years prior to fiscal 1998 are not
comparable to other periods presented because the Isle-Bossier City and
Isle-Lake Charles were accounted for under the equity method until
August 6, 1996, when the remaining interests in these facilities were
acquired by us. In addition, fiscal periods prior to 1996 do not include
the operating results of one of the two Lake Charles riverboats, as it was
acquired in May 1996. Fiscal periods prior to fiscal 1999 are not
comparable to other periods because they do not include the operating
results of Isle-Black Hawk which opened December 30, 1998. Fiscal periods
prior to fiscal 2000 are not comparable because they do not include the
operating results of Isle-Tunica which opened July 26, 1999.
(2) The valuation charge of $9.3 million in fiscal 1996 and $7.0 million in
fiscal 1997 related to the write-down of two riverboats, a barge and
certain gaming equipment, all of which were classified as held for sale.
The valuation charge of $5.1 million for the fiscal year ended April 25,
1999 includes (a) $2.4 million for the write-down of two original
riverboat casino vessels and land that we were planning to develop in
Cripple Creek, Colorado and (b) $2.7 million for future obligations under
an operating lease related to land leased by us in Cripple Creek,
Colorado.
(3) The restructuring charge of $2.5 million in fiscal 1996 includes (a) $2.0
million related to costs associated with a change in executive management
and (b) $0.5 million related to costs associated with certain abandoned
projects.
(4) The reversal of an accrued litigation settlement of $4.2 million for the
fiscal year ended April 25, 1999 related to an accrued boarding tax
liability at the Isle-Bossier City for which it was determined that the
Isle-Bossier city was not liable.
(5) Preopening~ expenses of $0.5 million in fiscal 1995 related to costs
incurred in connection with the opening of the new floating pavilion
facility at the Isle-Vicksburg. Preopening expenses of $1.3 million in
fiscal 1996 related to costs incurred in connection with the opening of
the hotel at the Isle-Biloxi. Preopening expense of $2.5 million in
fiscal 1997 related to costs incurred in connection with the opening of
the Grand Palais riverboat in Lake Charles. Preopening expenses of $3.3
million in fiscal 1999 related to costs incurred in connection with the
opening of the Isle-Black Hawk on December 30, 1998. Preopening expenses
of $3.4 million for the six fiscal months ended October 24, 1999, related
to costs incurred in connection with the opening of the Isle-Tunica on
July 26, 1999.
(6) The gain on disposal related to the sale of an option to purchase 135
acres of land adjacent to the Pompano Park facility.

6
<PAGE>

(7) The equity in income (loss) of unconsolidated joint ventures represents
the unconsolidated operations of the Isle-Bossier for fiscal 1995, 1996,
and 1997 and the Isle-Lake Charles for fiscal 1996 and 1997. The equity
in income (loss) of unconsolidated joint ventures represents the loss
from our 50% ownership interest in Capri Cruises for fiscal 1999 and the
six fiscal months ended October 24, 1999.
(8) EBITDA, or "earnings before interest, income taxes, depreciation and
amortization," is a supplemental financial measurement used by Isle of
Capri in the evaluation of its business. EBITDA is defined as net income
(loss) plus (a) income taxes, (b) interest expense (net of interest
income), (c) depreciation and amortization and (d) intercompany management
fees. Additionally, EBITDA has been adjusted for the following non-
recurring items: (a) accrued litigation settlement reversal, (b) valuation
charge, (c) restructuring charge and (d) preopening expenses as reflected
in our consolidated financial statements and notes to those statements.
EBITDA also excludes equity in income (loss) of unconsolidated joint
ventures and minority interest. These adjustments to EBITDA are allocated
to Isle of Capri and its subsidiaries based on the entity giving rise to
the adjustment. However, EBITDA should only be read in conjunction with
all of our financial data summarized above and our consolidated financial
statements and notes to those statements prepared in accordance with GAAP
appearing elsewhere in this proxy statement. EBITDA is presented not as an
alternative measure of operating results or cash flow from operations (as
determined in accordance with GAAP), but because it is a widely accepted
financial indicator of a company's ability to incur and service debt.

7
<PAGE>

BRDC, INC.

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

The following table presents BRDC's selected historical consolidated
financial data for the four calendar years ended December 31, 1998. The data
for December 31, 1998 is from BRDC's audited consolidated financial statements
and the notes to those statements. The data for the years ended December 31,
1995 through December 31, 1997 is from BRDC's unaudited consolidated financial
statements. The table also presents BRDC's selected historical consolidated
financial data for the nine calendar months ended September 30, 1998 and
September 30, 1999. This data is from BRDC's unaudited consolidated financial
data. The unaudited financial statements include all adjustments consisting of
normal recurring accruals that BRDC considers necessary for a fair
presentation of the financial position and the results of operations for these
periods. Operating results for the nine months ended September 30, 1999 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1999.

<TABLE>
<CAPTION>
Year Ended Nine Months Ended
--------------------------------------------------- ---------------------------
December 31, December 31, December 31, December 31, September 30, September 30,
1995 1996 1997 1998 1998 1999
------------ ------------ ------------ ------------ ------------- -------------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Revenue:
Rental income, related
party................. $ 1,250 $ 1,800 $ 1,800 $ 1,860 $ 1,350 $ 1,350
Management fees........ 225 325 325 325 243 243
Other.................. 3 11 13 104 85 --
---------- ---------- ---------- ---------- ---------- ----------
Total revenue........ 1,478 2,136 2,138 2,289 1,678 1,593
Operating expenses:
General and admin.
expenses.............. 145 91 121 50 38 216
Depreciation........... 62 123 123 121 93 63
---------- ---------- ---------- ---------- ---------- ----------
Total operating
expenses............ 207 214 244 171 131 279
---------- ---------- ---------- ---------- ---------- ----------
Operating income........ 1,271 1,922 1,894 2,118 1,547 1,314
Interest expense........ -- (155) (306) (225) (175) (402)
Interest expense,
related parties........ (353) (495) (581) (719) (532) (230)
Interest income......... -- -- -- -- -- 4
Equity in income (loss)
of unconsolidated joint
ventures............... (206) 3,091 3,427 5,099 3,884 5,242
---------- ---------- ---------- ---------- ---------- ----------
Net income.............. $ 712 $ 4,363 $ 4,434 $ 6,273 $ 4,724 $ 5,928
========== ========== ========== ========== ========== ==========
Net income per common
share
Basic.................. $ 1,780.00 $10,907.50 $11,085.00 $15,682.50 $11,810.00 $14,820.00
Diluted................ $ 1,780.00 $10,907.50 $11,085.00 $15,682.50 $11,810.00 $14,820.00
Weighted average number
of shares
Basic.................. 0.40 0.40 0.40 0.40 0.40 0.40
Diluted................ 0.40 0.40 0.40 0.40 0.40 0.40
Book value per share.... $(1,675.00) $(3,892.50) $ 1,167.50 $10,932.50 $11,677.50 $18,530.00
Cash dividends declared
per share.............. $ 1,800.00 $13,125.00 $ 6,025.00 $ 4,430.00 $ 1,300.00 $ 7,222.50
Other Data:
Net cash provided
(required) by:
Operating.............. $ 662 $ 1,614 $ 1,251 $ 1,131 $ 897 $ 3,438
Investing.............. (2,500) -- -- -- -- 205
Financing.............. 1,843 (1,654) (1,145) (1,088) (921) (3,779)
Balance Sheet Data:
Cash and cash
equivalents............ $ 48 $ 8 $ 114 $ 157 $ 90 $ 21
Total assets............ 5,679 8,491 11,960 16,211 15,579 18,582
Long-term debt,
including current
portion................ 6,212 9,808 11,073 11,757 10,672 10,867
Stockholders' equity
(deficit).............. (670) (1,557) 467 4,373 4,671 7,412
</TABLE>

8
<PAGE>

SELECTED UNAUDITED PRO FORMA FINANCIAL DATA

The following table presents our selected unaudited pro forma financial
data for the fiscal year ended April 25, 1999, and the six fiscal months ended
October 24, 1999. This data is derived from the unaudited pro forma combined
consolidated financial statements, appearing elsewhere in this proxy
statement, which give effect to the merger with Lady Luck Gaming Corporation,
Lady Luck Gaming Corporation's purchase of Miss Marquette and the BRDC
acquisition using the purchase method of accounting, and should be read in
conjunction with the notes to those statements.

<TABLE>
<CAPTION>
Fiscal Year Six Fiscal
Ended Months Ended
April 25, October 24,
1999 1999
----------- ------------
(In millions, except per
share data)
<S> <C> <C>
Income Statement Data:
Revenue:
Casino............................................... $662.5 $398.1
Pari-mutuel commissions and fees..................... 21.4 8.3
Rooms, food, beverage and other...................... 50.0 29.3
------ ------
Total revenue...................................... 733.9 435.7
Operating expenses:
Gaming taxes......................................... 107.6 65.3
Casino, rooms, food, beverage and other.............. 462.1 274.2
Valuation charge..................................... 5.1 --
Accrued litigation settlement (reversal)............. (4.2) --
Preopening expenses.................................. 4.5 3.9
Depreciation and amortization........................ 55.2 28.4
------ ------
Total operating expenses........................... 630.3 371.8
------ ------
Operating income...................................... 103.6 63.9
Interest expense...................................... (94.0) (48.2)
Interest income....................................... 5.3 2.6
Gain on disposal...................................... -- 3.1
Minority interest..................................... 2.2 (1.2)
Other................................................. (0.7) --
Equity in income (loss) of unconsolidated joint
ventures............................................. (1.3) 0.6
------ ------
Income before income taxes and extraordinary item..... 15.1 20.8
Income tax provision.................................. 8.5 9.6
------ ------
Income before extraordinary item...................... 6.6 11.2
Extraordinary loss on extinguishment of debt, net of
income tax benefit................................... (36.3) --
------ ------
Net income (loss)..................................... $(29.7) $ 11.2
====== ======
Net income (loss) per share before extraordinary item
Basic................................................ $ 0.22 $ 0.38
Diluted.............................................. 0.22 0.36
Net income (loss) per common share
Basic................................................ (1.00) 0.38
Diluted.............................................. (0.99) 0.36
Weighted average number of shares
Basic................................................ 30 30
Diluted.............................................. 30 31
Book value per share.................................. $ 3.20 $ 3.20
Cash dividends declared per share..................... -- --
</TABLE>

<TABLE>
<CAPTION>
As of
October 24, 1999:
-----------------
<S> <C>
Balance Sheet Data:
Cash and cash equivalents..................................... $ 196
Total assets.................................................. 1,213
Long-term debt, including current portion..................... 955
Stockholders' equity.......................................... $ 135
</TABLE>

9
<PAGE>

THE COMPANIES

Isle of Capri Casinos, Inc.

We are a leading developer, owner and operator of branded gaming and
related lodging and entertainment facilities in growing markets in the United
States. We wholly own and operate five gaming facilities located in Lake
Charles and Bossier City, Louisiana and Biloxi, Vicksburg and Tunica County,
Mississippi. We also own a 57% interest in and operate a gaming facility in
Black Hawk, Colorado. Each of these six gaming facilities operates under the
name "Isle of Capri" and features our distinctive tropical island theme. In
addition, we wholly own and operate a pari-mutuel harness racing facility in
Pompano Beach, Florida and own a 50% interest in and operate gaming activities
aboard a cruise ship based in New Orleans, Louisiana.

Additional information concerning our company is included in the documents
that we have filed with the Securities and Exchange Commission and
incorporated into this proxy statement by reference. See "Additional
Information--Where You Can Find More Information."

BRDC, Inc.

BRDC indirectly owns a 50% interest in Lady Luck Bettendorf, L.C., a joint
venture that operates the Lady Luck Casino Bettendorf riverboat casino on the
Mississippi River and hotel and related facilities located in Bettendorf,
Iowa. Lady Luck Gaming Corporation, with whom we have entered into a separate
merger agreement which we expect to be consummated at the same time the merger
is completed, indirectly owns the remaining 50% interest in the joint venture.
All net profits and losses of Lady Luck Bettendorf are allocated equally
between BRDC and Lady Luck Gaming Corporation.

A wholly owned subsidiary of BRDC owns and leases to the joint venture all
of the real property used by Lady Luck Bettendorf. Lady Luck Gaming
Corporation owns and leases to the joint venture the riverboat gaming vessel
used by Lady Luck Bettendorf. After completion of both the merger with Lady
Luck Gaming Corporation and the merger with BRDC, we will own 100% of the
joint venture and all of the assets used in the operation of Lady Luck
Bettendorf.

Lady Luck Bettendorf

Lady Luck Bettendorf opened in April 1995. The facility is located in
Bettendorf, Iowa, on the Mississippi River just off Interstate 74, and offers
easy access from the two interstate highways serving the Quad Cities
metropolitan area, Interstate 74 and Interstate 80. Lady Luck Bettendorf is
one of three gaming facilities serving the Quad Cities metropolitan area.

Lady Luck Bettendorf consists of approximately 25,000 square feet of gaming
space on a riverboat gaming vessel that emphasizes spaciousness and excitement
with its ample aisle space, high ceilings and a connecting pavilion and hotel.
Lady Luck Bettendorf features over 1,100 slot machines and 45 table games.
Customers of Lady Luck Bettendorf enjoy related facilities that include a
restaurant, gift shop and a showroom/entertainment area for parties and
special events. In August 1998, construction was completed of a 256-room hotel
with a fully enclosed walkway to Lady Luck Bettendorf, a 500-car parking
garage, approximately 16,000 square feet of convention space and a bypass over
the nearby railroad to improve access.

Financial Information Regarding BRDC and Lady Luck Bettendorf

The following historical financial information relating to BRDC and Lady
Luck Bettendorf is included in annexes attached to this proxy statement and is
incorporated into this proxy statement by reference:

. Annex C: BRDC, Inc. Management's Discussion and Analysis of Financial
Condition and Results of Operations

. Annex D: BRDC, Inc. Consolidated Balance Sheets as of December 31, 1998
and 1997 and Consolidated Statements of Operations for the years ended
December 31, 1998, 1997 (unaudited) and 1996 (unaudited)

10
<PAGE>

. Annex E: BRDC, Inc. Consolidated Balance Sheets as of September 30, 1999
(unaudited) and December 31, 1998 and Consolidated Statements of
Operations for the three and nine months ended September 30, 1999 and
1998 (unaudited)

. Annex F: Lady Luck Bettendorf, L.C. Selected Historical Consolidated
Financial Data

. Annex G: Lady Luck Bettendorf, L.C. Management's Discussion and Analysis
of Financial Condition and Results of Operations

. Annex H: Lady Luck Bettendorf, L.C. Consolidated Balance Sheets as of
December 31, 1998 and 1997 and Consolidated Statements of Operations for
the years ended December 31, 1998, 1997 and 1996

. Annex I: Lady Luck Bettendorf, L.C. Consolidated Balance Sheets as of
September 30, 1999 (unaudited) and December 31, 1998 and Consolidated
Statements of Operations for the three and nine months ended September
30, 1999 and 1998 (unaudited)

. Annex J: Lady Luck Gaming Corporation Selected Historical Consolidated
Financial Data

This historical consolidated financial information includes BRDC's indirect
one-half interest in Lady Luck Bettendorf. BRDC is providing you the
information contained in Annexes C, D and E to aid your analysis of the
financial aspects of the merger. BRDC is not required to file, and has not
filed, these reports or any other business and financial information
concerning BRDC and its operations with the Securities and Exchange
Commission. The consolidated financial information of Lady Luck Bettendorf is
included in Lady Luck Gaming Corporation's filings with the Securities and
Exchange Commission.

SPECIAL FACTORS TO CONSIDER WHEN DECIDING HOW TO VOTE

Dilution to Existing Stockholders;
Impact on Market Value of Isle of Capri Common Stock

The issuance of the new shares of Isle of Capri common stock to the
shareholders of BRDC pursuant to the merger agreement will cause dilution of
the voting power of current Isle of Capri stockholders. In addition, the
issuance of such shares of Isle of Capri common stock to the shareholders of
BRDC could cause a decline in the market value of the Isle of Capri common
stock because of the increased concentration of ownership by our largest
related stockholders.

Consequences if the Merger is not Approved

Approval by our stockholders is a condition precedent to the completion of
the merger. If this requirement is not satisfied, then Isle of Capri and the
shareholders of BRDC have the right under the merger agreement to terminate
such agreement without liability to the other party. In that event, upon the
completion of the merger with Lady Luck Gaming Corporation, Isle of Capri
would indirectly own 50% of Lady Luck Bettendorf with the Goldstein family
owning the other 50%. The Goldstein family would continue to lease all land
required for the operation of Lady Luck Bettendorf, and Isle of Capri would
lease its casino riverboat and operate Lady Luck Bettendorf under a casino
management agreement. The Goldsteins have certain rights under the Lady Luck
Bettendorf operating agreement and other contracts with Lady Luck Gaming
Corporation that, if exercised, could be adverse to Isle of Capri. The
continued joint ownership would place Bernard Goldstein and Robert S.
Goldstein as your directors in on-going conflict of interest situations that
the management of your company and the Goldsteins would prefer to avoid by
completing this transaction.

This transaction increases the stockholders' equity of Isle of Capri and
potentially allows Isle of Capri greater flexibility under the terms of its
existing secured credit facility as such facility may be modified from time to
time. The failure to consummate the merger may reduce, absent other factors,
the amount of available credit that Isle of Capri can draw upon to pursue
expansion opportunities.

11
<PAGE>

THE SPECIAL MEETING

Our board of directors is using this proxy statement to solicit proxies
from the holders of Isle of Capri common stock for use at the special meeting.

Date, Time and Place

February 16, 2000
10:00 a.m., local time
Isle of Capri Crowne Plaza Hotel
151 Beach Blvd.
Biloxi, Mississippi 39530

The special meeting may be adjourned or postponed to another date or place
for proper purposes, including for the purpose of soliciting additional
proxies. Unless revoked, proxies will remain valid following such adjournment
or postponement.

Representatives of Ernst & Young LLP, McGladrey & Pullen, LLP and Arthur
Andersen LLP will not attend the special meeting and will not be available to
answer your questions.

Purpose of the Special Meeting

At the special meeting, you will be asked to consider and vote upon the
following matters:

. a proposal to adopt the merger agreement pursuant to which BRDC will be
merged into our company, with our company continuing as the surviving
corporation of the merger; and

. such other business as may properly be brought before the special
meeting.

We will issue up to 6,300,000 shares of Isle of Capri common stock in
connection with the merger. The exact number of shares of Isle of Capri common
stock to be issued cannot be determined until the date on which the merger is
completed because of calculations to be made at closing and the right of the
BRDC shareholders to withdraw a certain amount of cash which would reduce the
number of shares of Isle of Capri common stock issued in connection with the
merger.

Our board of directors is not aware, as of the date of this proxy
statement, of any other matters that may properly come before the special
meeting. If any such other matters properly come before the special meeting,
or at a subsequent meeting following any adjournment or postponement of the
special meeting, the persons named in the proxy card intend to vote proxies in
accordance with their discretion on any such matters and, unless other
instructions are given, your proxy will give such persons the power to do so.

A special committee of independent directors and our board of directors
carefully reviewed and considered the terms and conditions of the merger and
concluded that the merger is in the best interests of our company and our
stockholders. Accordingly, the special committee and our board of directors,
by a unanimous vote in both cases, approved the merger agreement and recommend
that you vote your shares to approve the merger agreement.

Voting Rights of Stockholders; Votes Required for Approval

The record date to determine who is entitled to vote at the special meeting
is January 7, 2000. Only holders of record of Isle of Capri common stock at
the close of business on the record date are entitled to notice of, or to vote
at, the special meeting. If your shares of Isle of Capri common stock are
registered in the name of a brokerage firm or trustee and you plan to attend
the special meeting, you must obtain from the firm or trustee a letter,
account statement or other evidence of your beneficial ownership of those
shares of Isle of Capri common stock in order to be admitted to the special
meeting. You must bring that documentation to the special meeting to attend.
As of the record date, 23,939,089 shares of Isle of Capri common stock were
outstanding and entitled to vote.

12
<PAGE>

Each of our stockholders of record on the record date is entitled to one
vote on each matter submitted to a vote at the special meeting for each share
of Isle of Capri common stock then held. A majority of the shares of Isle of
Capri common stock outstanding on the record date represented in person, or by
proxy, will constitute a quorum for consideration of such matters at the
special meeting. Abstentions and broker non-votes will be counted as present
or represented for the purpose of determining a quorum.

If a quorum is present at the special meeting, the affirmative vote of a
majority of the shares of Isle of Capri common stock outstanding on the record
date is required to approve and adopt the merger agreement. The Goldstein
family will vote shares they own directly and indirectly aggregating
approximately 33% of the outstanding shares FOR the proposal to approve the
merger.

Abstentions and broker non-votes will not be counted in favor of the
proposal and will not be treated as votes cast on the proposal. Because the
proposal to approve and adopt the merger agreement requires the affirmative
vote of a majority of shares entitled to vote on the proposal, abstentions and
broker non-votes will have the effect of a vote AGAINST such proposal.
Accordingly, we urge you to complete, sign, date and return the enclosed proxy
card in the accompanying self-addressed stamped envelope as soon as possible.

If you own stock or maintain multiple accounts under different names, for
example, with and without a middle initial, you may receive more than one set
of proxy statement materials. To ensure that all of your shares of Isle of
Capri common stock are voted, you must complete, sign, date and return by mail
every proxy card you receive.

Giving and Revoking Your Proxy; Solicitation

Giving Your Proxy

You may vote your shares either in person or by duly authorized proxy. By
granting a proxy, the proxyholders named on the proxy card will vote your
shares in accordance with your directions. If you grant a proxy without
specifying how your shares should be voted, the proxyholders will follow our
board of directors' recommendation and vote your shares FOR the proposal to
approve and adopt the merger agreement. By granting a proxy to vote FOR the
proposal, you will be authorizing the voting of your shares in favor of the
proposal. If any other matters are properly presented for consideration at the
special meeting, or any adjournments or postponements of the special meeting,
the proxyholders will have the discretion to vote your shares in accordance
with their best judgment. As of the date of this proxy statement, our board of
directors does not know of any other business that will be presented for
consideration at the special meeting.

To grant your proxy, please complete the proxy card and sign, date and
return it in the enclosed envelope. To be valid, a returned proxy card must be
signed and dated.

Revoking Your Proxy

The giving of a proxy will not affect your right to vote your shares if you
attend the special meeting and desire to vote in person. You may revoke a
previously submitted proxy at any time before it is voted by executing a
subsequently dated proxy card that is received prior to the special meeting or
by voting your shares in person at the special meeting. Attendance at the
special meeting will not by itself constitute revocation of a proxy. If you
have instructed a broker to vote your shares, you must follow directions
received from the broker to change or revoke your proxy.

Solicitation

In addition to soliciting proxies by mail, officers, directors and
employees of our company, without receiving any additional compensation, may
solicit proxies by telephone, in person or by other means. Arrangements may
also be made with brokerage firms and other custodians, nominees and
fiduciaries to forward proxy solicitation materials to the beneficial owners
of Isle of Capri common stock held of record by those persons, and we will
reimburse the brokerage firms, custodians, nominees and fiduciaries for
reasonable out-of-pocket expenses incurred by them in connection with the
solicitation. We have retained D.F. King to assist in the solicitation of
proxies at an estimated cost of $4,000 plus reasonable expenses.

13
<PAGE>

No Appraisal or Preemptive Rights

Holders of Isle of Capri common stock are not entitled under Delaware
corporate law to seek dissenters' or appraisal rights in connection with the
merger. Holders of Isle of Capri common stock also are not entitled to
preemptive rights with respect to the issuance of Isle of Capri common stock
in connection with the merger. Shareholders of BRDC have voted to approve the
merger and, therefore, are not entitled to exercise dissenters' rights under
Iowa corporate law.

THE MERGER

Background of the Merger

In August 1999, Isle of Capri contacted representatives of Lady Luck Gaming
Corporation concerning Isle of Capri's interest in acquiring Lady Luck Gaming
Corporation. The first meeting between the parties and their representatives
concerning the proposed transaction took place on September 1, 1999. Also on
that date, representatives of Isle of Capri met with representatives of CIBC
World Markets, the agent bank on Isle of Capri's existing credit facility, to
discuss financing for a proposed transaction between Lady Luck Gaming
Corporation and Isle of Capri. At that meeting, CIBC World Markets indicated a
willingness to finance an acquisition of all the outstanding shares of Lady
Luck Gaming Corporation for cash, and the refinancing of substantially all of
Lady Luck Gaming Corporation's outstanding indebtedness.

At a meeting of Isle of Capri's board of directors on September 3, 1999,
the management of Isle of Capri updated the board of directors on the
preliminary discussions with Lady Luck Gaming Corporation and the general
parameters of the proposed transaction. In addition, management discussed with
the board of directors the fact that one of the more attractive Lady Luck
Gaming Corporation properties, Lady Luck Bettendorf, was 50% indirectly owned
by Lady Luck Gaming Corporation and 50% indirectly owned by the wife and three
of the sons of Bernard Goldstein, the Chairman of the Board and Chief
Executive Officer of Isle of Capri (including Robert S. Goldstein, a director
of Isle of Capri). The board discussed the relative benefits and detriments to
Isle of Capri and its stockholders of owning, following the closing of the
potential merger with Lady Luck Gaming Corporation, 50% of Lady Luck
Bettendorf in partnership with the family of Isle of Capri's Chairman and
Chief Executive Officer, as compared to purchasing the other 50% interest in
Lady Luck Bettendorf for an acceptable price simultaneously with (and subject
to) the closing of the merger with Lady Luck Gaming Corporation. In
particular, the board of directors considered, among others, the following
factors (not necessarily in the following order):

. the substantial conflicts of interest that could arise in the future
between Isle of Capri, on the one hand, and the family of the Chairman
and Chief Executive Officer (including Robert S. Goldstein, a director of
Isle of Capri), on the other, in the event that Isle of Capri merged with
Lady Luck Gaming Corporation but did not purchase the other 50% of Lady
Luck Bettendorf;

. the increased financial flexibility to Isle of Capri of being able to
include 100% of the results of operations of Lady Luck Bettendorf in Isle
of Capri's consolidated results of operations, including being able to
include 100% of Lady Luck Bettendorf's cash flow and assets in Isle of
Capri's borrowing base, and the comparative improvement in Isle of
Capri's debt coverage ratios resulting from being able to include in
those calculations all of Lady Luck Bettendorf's cash flow;

. the historical results of operations of Lady Luck Bettendorf, including
its market share in its gaming market, and its future prospects; and

. the improved operating flexibility that would be afforded to Isle of
Capri by virtue of not having to take into account the rights and
interests of a joint venture partner with respect to the operation of the
Lady Luck Bettendorf property.

Based upon these and other factors, the board of directors of Isle of Capri
appointed a special committee of the board of directors, consisting of
Randolph Baker and Emanuel Crystal, to pursue the possibility of reaching an
agreement with representatives of the Goldstein family to purchase the 50%
interest in Lady Luck Bettendorf not owned by Lady Luck Gaming Corporation,
subject to Isle of Capri acquiring Lady Luck Gaming Corporation in a
simultaneous transaction. The special committee retained CIBC World Markets to
act as its financial advisor with respect to the proposed transaction.

14
<PAGE>

During the period from about September 10, 1999 through October 4, 1999,
the special committee and its representatives met with representatives of the
Goldstein family on numerous occasions and several proposals as to price and
structure were exchanged. The special committee determined that it would be
preferable to acquire the Goldstein family interest in Lady Luck Bettendorf in
exchange for Isle of Capri stock rather than cash, after consultation with
CIBC World Markets, Isle of Capri's prospective lender in the Lady Luck Gaming
Corporation transaction, given the possibility that the credit facility being
negotiated to finance a potential Lady Luck Gaming Corporation transaction,
may not be available to Isle of Capri (depending upon the status of various
parts of Isle of Capri's pending expansion program) unless Isle of Capri's pro
forma debt-to-equity ratio were improved by an increase in the Company's
equity capital, which could be accomplished through the proposed purchase of
the 50% of Lady Luck Bettendorf from the Goldstein family or through an equity
offering. The Goldstein family's representatives indicated that it was
essential to any transaction that it be structured as a tax-free
reorganization, the effects of which were reviewed from Isle of Capri's
standpoint. In addition, the parties discussed the treatment of the real
estate essential to Lady Luck Bettendorf's operations, which Lady Luck
Bettendorf currently leases from Bettendorf Riverfront Development Company,
L.C., the entity owned by the Goldstein family that also owns the family's 50%
interest in Lady Luck Bettendorf. The special committee determined that it
would be advantageous to Isle of Capri to also purchase that real estate,
rather than to continue to lease it from the Goldstein family.

At the October 4, 1999 meeting of the special committee, the special
committee, together with its legal and financial advisors, discussed the
status of the negotiations with representatives of the Goldstein family and
the draft letter of intent that had been negotiated relating to the proposed
transaction. See "Recommendation of the Special Committee and the Board of
Directors; Reasons for the Merger." The initial proposed aggregate
consideration of 6,300,000 shares of Isle of Capri common stock was based upon
assumed trailing twelve-month EBITDA results for the twelve months ended
September 30, 1999 and the level of net indebtedness of Lady Luck Bettendorf
as of and for the twelve months ended September 30, 1999, each of which was
unknown at the time; based upon the actual results as of September 30, 1999,
the initial number of shares was decreased to 6,210,000. It was noted that
negotiations with the Goldstein family's representatives regarding the terms
of the letter of intent had been extensive. It was also noted that the parties
had agreed that the number of Isle of Capri shares constituting the merger
consideration to BRDC's shareholders would not be adjusted to account for
changes in Isle of Capri's stock price between the date of execution of the
letter of intent and closing, but rather that each party would bear the risk
of changes in the stock price from and after the date the merger consideration
was agreed upon in the letter of intent. Finally, it was noted by the special
committee that the Goldstein family had agreed to indemnify Isle of Capri with
respect to certain future losses which could be incurred by Isle of Capri in
connection with the real estate and environmental matters.

At a meeting on October 4, 1999, the special committee voted to approve the
letter of intent and recommended its execution to Isle of Capri's board of
directors. At a meeting on October 4, 1999, Isle of Capri's board of directors
approved both the merger with Lady Luck Gaming Corporation and, subject to
closing of the merger with Lady Luck Gaming Corporation, the acquisition of
the 50% interest in Lady Luck Bettendorf not owned by Lady Luck Gaming
Corporation on the terms set forth in the letter of intent with the Goldstein
family. It was noted that while the acquisition of the 50% interest in Lady
Luck Bettendorf not currently owned by Lady Luck Gaming Corporation was not a
condition precedent to Isle of Capri's merger with Lady Luck Gaming
Corporation, the failure to do so would, among other things, likely have
adverse consequences to Isle of Capri's future financial flexibility and
present substantial future conflict of interest issues to Isle of Capri
relating to a 50%-owned Bettendorf property.

Between October 4, 1999 and December 19, 1999, representatives of Isle of
Capri, acting through the special committee and its legal counsel, and
representatives of the Goldstein family and their legal counsel negotiated the
terms of the Agreement and Plan of Merger. At a special committee meeting on
December 19, 1999, CIBC World Markets reviewed with the special committee its
financial analyses of the exchange ratio provided for in the merger agreement
and rendered its opinion as to the fairness, from a financial point of view,
to Isle of Capri of the exchange ratio. After discussion with its legal
counsel, the special committee voted to

15
<PAGE>

approve the Agreement and Plan of Merger relating to the acquisition of the
50% interest in Lady Luck Bettendorf owned indirectly by members of the
Goldstein family, and recommended its approval to Isle of Capri's board of
directors. At a meeting of the full board of directors on December 19, 1999,
CIBC World Markets also made its financial presentation to the full board of
directors. After discussion with legal counsel, Isle of Capri's board of
directors voted to approve and adopt the Agreement and Plan of Merger,
directed its officers to execute it on behalf of Isle of Capri, recommended
that the Agreement and Plan of Merger be approved by Isle of Capri's
stockholders, and directed that a preliminary proxy statement relating thereto
be prepared and filed.

Interests of Isle of Capri Directors and Officers in the Merger that Are
Different from Your Interests

In considering whether to approve the merger agreement, you should be aware
that Bernard Goldstein, our Chairman of the Board and Chief Executive Officer,
and Robert S. Goldstein, a member of our board of directors, have interests in
the merger that are different from the interests of our stockholders
generally.

Robert S. Goldstein and the other members of the Goldstein family listed
below own 100% of the outstanding shares of BRDC common stock and will receive
all of the shares of Isle of Capri common stock issued in connection with the
merger:

. Irene S. Goldstein, the wife of Bernard Goldstein;

. Jeffrey D. Goldstein, a son of Bernard Goldstein; and

. Richard A. Goldstein, a son of Bernard Goldstein.

Under the terms of the merger agreement, we are required to provide funds
to BRDC to permit BRDC to repay a loan in the amount of approximately $3.2
million that Valley Corporation made to BRDC. Bernard Goldstein owns
approximately 45.2% of Valley Corporation, and Robert S. Goldstein owns
approximately 1.0% of Valley Corporation. Other members of Bernard Goldstein's
family own the remaining shares of Valley Corporation common stock that are
not owned by Bernard Goldstein and Robert S. Goldstein.

As of the record date for determining the stockholders entitled to notice
of, and to vote at, the special meeting, Bernard Goldstein, Robert S.
Goldstein, Valley Corporation and other members of the Goldstein family were
the record owners of an aggregate of 7,836,434 shares of Isle of Capri common
stock (approximately 33% of the outstanding shares of Isle of Capri common
stock). Each of such persons has informed us that they each intend to vote all
of their shares FOR approval of the merger agreement.

The special committee and our board of directors were aware of these
interests and considered them, among other matters, when approving the merger
agreement.

Recommendation of the Special Committee and the Board of Directors; Reasons
for the Merger

The special committee, in reaching its decision to recommend approval of
the merger agreement to our board of directors, consulted with its legal and
financial advisors as well as our company's management and considered many
factors. Our board of directors, in reaching its decision to approve the
merger agreement, consulted with its legal and financial advisors and members
of the special committee as well as our company's management and considered
many factors. The factors that both the special committee and our board of
directors considered include the following material factors (the order does
not reflect their relative significance):

. Prospects of Lady Luck Bettendorf: The financial performance, business
operations and prospects of Lady Luck Bettendorf;

. Elimination of Potential Conflict of Interest: The potential conflict of
interest of being joint venture partners with a company owned by the
Goldstein family in the event that we do not acquire BRDC's 50% interest
in Lady Luck Bettendorf at the same time we acquire Lady Luck Gaming
Corporation's indirect 50% interest in Lady Luck Bettendorf;

16
<PAGE>

. Terms of Merger Agreement: The terms of the merger agreement, including
our right to terminate the merger agreement if our stockholders do not
approve the merger or if the Lady Luck Gaming Corporation merger is not
completed; and

. Opinion of the Special Committee's Financial Advisor: The opinion of CIBC
World Markets, the special committee's financial advisor, as to the
fairness, from a financial point of view, to Isle of Capri of the
exchange ratio provided for in the merger.

Opinion of the Special Committee's Financial Advisor

Isle of Capri engaged CIBC World Markets to act as exclusive financial
advisor to the special committee in connection with the merger. On December
19, 1999, at a meeting of the Isle of Capri special committee held to evaluate
the proposed merger, CIBC World Markets rendered an oral opinion, which
opinion was confirmed by delivery of a written opinion dated December 19,
1999, to the effect that, as of that date and based on and subject to the
matters described in its opinion, the exchange ratio provided for in the
merger agreement was fair to Isle of Capri from a financial point of view.

The full text of CIBC World Markets' written opinion dated December 19,
1999, which describes the assumptions made, matters considered and limitations
on the review undertaken, is attached as Annex B and is incorporated into this
document by reference. CIBC World Markets' opinion is directed to the Isle of
Capri special committee, addresses only the fairness of the exchange ratio
from a financial point of view to Isle of Capri, and does not constitute a
recommendation to any stockholder as to any matters relating to the proposed
merger. The summary of CIBC World Markets' opinion described below is
qualified in its entirety by reference to the full text of its opinion.

In arriving at its opinion, CIBC World Markets:

. reviewed a draft dated December 17, 1999 of the merger agreement;

. reviewed audited financial statements of Isle of Capri for the fiscal
years ended April 26, 1998 and April 25, 1999, a preliminary draft of the
audited balance sheet of BRDC for the fiscal year ended December 31, 1997
and a preliminary draft of audited financial statements of BRDC for the
fiscal year ended December 31, 1998;

. reviewed unaudited financial statements of Isle of Capri for the six
months ended October 24, 1999, unaudited financial statements of BRDC for
the nine months ended September 30, 1999, unaudited balance sheets of
Lady Luck Bettendorf for the fiscal years ended December 31, 1997 and
December 31, 1998 and for the nine months ended September 30, 1999, and
unaudited income statements of Lady Luck Bettendorf for the fiscal years
ended December 31, 1995 through December 31, 1998 and for the nine months
ended September 30, 1999;

. reviewed publicly available financial forecasts relating to Isle of Capri
and financial projections prepared by the management of Lady Luck Gaming
Corporation relating to Lady Luck Bettendorf;

. reviewed the historical market prices and trading volume for Isle of
Capri common stock;

. held discussions with the senior managements of Isle of Capri and Lady
Luck Gaming Corporation with respect to the businesses and prospects for
future growth of Isle of Capri and Lady Luck Bettendorf, and held
discussions with representatives of BRDC with respect to the BRDC real
estate;

. reviewed the lease among Green Bridge Company, Bettendorf Riverfront
Development Company, L.C., Lady Luck Bettendorf and Lady Luck Quad
Cities, Inc. relating to the BRDC real estate and an appraisal dated
January 12, 1995 of the BRDC real estate;

. reviewed and analyzed publicly available financial data for companies
that CIBC World Markets deemed comparable to Isle of Capri and Lady Luck
Bettendorf;

. performed a discounted cash flow analysis of Lady Luck Bettendorf using
assumptions of future performance provided to CIBC World Markets by the
management of Lady Luck Gaming Corporation and a discounted cash flow
analysis of the lease payments relating to the BRDC real estate;

17
<PAGE>

. reviewed and analyzed publicly available information for the
transactions CIBC World Markets deemed relevant in evaluating the
merger;

. reviewed public information concerning Isle of Capri and Lady Luck
Bettendorf; and

. performed other analyses and reviewed other information as it deemed
appropriate.

In rendering its opinion, CIBC World Markets relied on and assumed, without
independent verification or investigation, the accuracy and completeness of
all of the financial and other information provided to or discussed with CIBC
World Markets by Isle of Capri, BRDC and Lady Luck Gaming Corporation and
their respective employees, representatives and affiliates. With respect to
forecasts relating to Lady Luck Bettendorf provided for or discussed with CIBC
World Markets by Lady Luck Gaming Corporation, CIBC World Markets assumed, at
the direction of the management of Lady Luck Gaming Corporation, without
independent verification or investigation, that these forecasts were
reasonably prepared on bases reflecting the best available information,
estimates and judgments of the management of Lady Luck Gaming Corporation.
CIBC World Markets was not provided with internal forecasts for Isle of Capri,
but it reviewed and discussed with the management of Isle of Capri publicly
available forecasts relating to Isle of Capri and assumed, with the consent of
Isle of Capri, without independent verification or investigation, that these
forecasts represented reasonable estimates and judgments as to the future
financial condition and operating results of Isle of Capri. With respect to
the appraisal relating to the BRDC real estate reviewed by CIBC World Markets,
CIBC World Markets assumed, with the consent of Isle of Capri, without
independent verification or investigation, that the appraisal was reasonably
prepared reflecting the best available information, estimates and judgments of
the preparer of the appraisal.

CIBC World Markets did not make or, with the exception of the appraisal
relating to the BRDC real estate, obtain any independent evaluations or
appraisals of the assets or the liabilities of Isle of Capri, BRDC, Lady Luck
Bettendorf or affiliated entities. CIBC World Markets assumed, with the
consent of the Isle of Capri, that the merger will be treated as a tax-free
reorganization for federal income tax purposes. CIBC World Markets also
assumed with the consent of Isle of Capri that, in the course of obtaining the
necessary regulatory or third party approvals for the merger and related
transactions, no limitations, restrictions or conditions would be imposed that
would have a material adverse effect on Isle of Capri, BRDC or Lady Luck
Bettendorf or the contemplated benefits to Isle of Capri of the merger or
related transactions. In addition, representatives of Isle of Capri advised
CIBC World Markets and CIBC World Markets therefore assumed that the final
terms of the merger agreement would not vary materially from the draft
reviewed by CIBC World Markets.

CIBC World Markets expressed no opinion as to the underlying valuation,
future performance or long-term viability of Isle of Capri, the BRDC real
estate or Lady Luck Bettendorf, or the price at which the Isle of Capri common
stock would trade after announcement or consummation of the merger. As
discussed with Isle of Capri, for purposes of its opinion, CIBC World Markets
evaluated the implied value of the Isle of Capri common stock issuable in the
merger based solely on the closing stock price of Isle of Capri common stock
one trading day prior to Isle of Capri's public announcement of the execution
of the definitive agreement for the Lady Luck Gaming Corporation transaction
and the execution of the letter of intent for the proposed merger. With this
exception, CIBC World Markets' opinion was necessarily based on the
information available to CIBC World Markets and general economic, financial
and stock market conditions and circumstances as they existed and could be
evaluated by CIBC World Markets as of the date of its opinion. Although
subsequent developments may affect the opinion of CIBC World Markets, it does
not have any obligation to update, revise or reaffirm its opinion. No other
instructions or limitations were imposed by the special committee upon CIBC
World Markets with respect to the investigations made or the procedures
followed by it in rendering its opinion.

The following is a summary of the material financial analyses performed by
CIBC World Markets in connection with its opinion to the special committee
dated December 19, 1999. The financial analyses summarized below include
information presented in tabular format. In order to fully understand CIBC
World Markets' financial analyses, the tables must be read together with the
text of each summary. The tables alone do not constitute a complete
description of the financial analyses. Considering the data set forth in the
tables below without considering the full narrative description of the
financial analyses, including the methodologies and assumptions underlying the
analyses, could create a misleading or incomplete view of CIBC World Markets'
financial analyses.

18
<PAGE>

Introduction.

CIBC World Markets performed an analysis of BRDC by deriving separate
reference ranges for the BRDC real estate and BRDC's 50% interest in Lady Luck
Bettendorf, both of which will be acquired by Isle of Capri in the merger.
CIBC World Markets then added the results of these separate ranges in order to
arrive at an aggregate equity reference range for BRDC. CIBC World Markets'
analysis of the BRDC real estate was based on a "Discounted Cash Flow
Analysis" and its analysis of BRDC's 50% interest in Lady Luck Bettendorf was
based on a "Selected Companies Analysis," "Precedent Transactions Analysis"
and "Discounted Cash Flow Analysis," as more fully described below. CIBC World
Markets also performed a "Pro Forma Merger Analysis" as described below.

BRDC Real Estate.

Discounted Cash Flow Analysis.

CIBC World Markets performed a discounted cash flow analysis of the BRDC
real estate by estimating the present value of the projected stream of lease
payments during the term of the lease and the future value of the improvements
on the real estate. The present value of the stream of lease payments and
improvements on the real estate was calculated using discount rates ranging
from 12% to 14%. Estimated financial data used in this analysis were based on
the terms contained in the real estate lease and internal estimates of the
management of BRDC.

BRDC's 50% Interest in Lady Luck Bettendorf.

Selected Companies Analysis.

CIBC World Markets reviewed financial and stock market information for the
following six selected publicly held small capitalization companies in the
gaming industry:

. Ameristar Casinos, Inc.

. Hollywood Casino Corporation

. Lady Luck Gaming Corporation

. Monarch Casino & Resort, Inc.

. President Casinos, Inc.

. Riviera Holdings Corporation

CIBC World Markets reviewed, among other things, enterprise values,
calculated as equity market value, plus debt, less cash, as multiples of,
latest 12 month revenues, earnings before interest, taxes, depreciation and
amortization, commonly known as EBITDA, and earnings before interest and
taxes, commonly known as EBIT. CIBC World Markets then applied a range of
selected multiples of latest 12 months revenues, EBITDA and EBIT derived from
the selected companies to corresponding financial statistics of Lady Luck
Bettendorf. All multiples for the selected companies were based on closing
stock prices on December 14, 1999. Estimated financial data for the selected
companies were based on publicly available research analysts' estimates.

Precedent Transactions Analysis.

CIBC World Markets reviewed the purchase prices and implied transaction
multiples in the following seven selected transactions in the gaming industry:

<TABLE>
<CAPTION>
Acquiror Target
-------- ------
<S> <C>
. Harrah's Entertainment, Inc. Players International, Inc.
. Lady Luck Gaming Corporation Miss Marquette
. Boyd Gaming Corporation Blue Chip Casino, LLC
. Churchill Downs Incorporated Hollywood Park Race Track
. Churchill Downs Incorporated Calder Race Course, Inc.
. Horseshoe Gaming Holding Co. Empress Entertainment, Inc.
. Ladbroke Group plc Colorado Gaming & Entertainment Co.
</TABLE>

19
<PAGE>

CIBC World Markets reviewed enterprise values in the selected transactions
as multiples of latest 12 months revenues, EBITDA and EBIT. CIBC World Markets
then applied a range of selected multiples of latest 12 months revenues,
EBITDA and EBIT derived from the selected transactions to corresponding
financial statistics of Lady Luck Bettendorf. All multiples were based on
publicly available information at the time of announcement of the
transactions.

Discounted Cash Flow Analysis.

CIBC World Markets performed a discounted cash flow analysis of Lady Luck
Bettendorf to estimate the present value of the projected free cash flows that
Lady Luck Bettendorf could generate for the period of October 1, 1999 through
December 31, 1999 and fiscal years 2000 through 2003, based on internal
estimates of the management of Lady Luck Gaming Corporation. The range of
estimated terminal values for Lady Luck Bettendorf was calculated by applying
terminal value multiples ranging from 5.5x to 6.5x to Lady Luck Bettendorf's
projected fiscal year 2003 EBITDA. The present value of the cash flows and
terminal values were calculated using discount rates ranging from 9.0% to
13.0%. Estimated financial data used in this analysis were based on internal
estimates of Lady Luck Gaming Corporation management.

Aggregate BRDC Reference Range.

Based on the valuation methodologies described above, CIBC World Markets
derived the following aggregate equity reference ranges for BRDC, as compared
to the equity value for BRDC implied in the merger based on the exchange ratio
and the closing stock price of Isle of Capri common stock on October 5, 1999,
which is the trading day prior to Isle of Capri's public announcement of the
execution of the definitive agreement for the Lady Luck Gaming Corporation
merger and the execution of the letter of intent for the proposed merger:

<TABLE>
<CAPTION>
Aggregate Equity
Reference Range for BRDC
--------------------------
<S> <C>
Lady Luck Bettendorf Selected Companies
Analysis plus BRDC Real Estate
Discounted Cash Flow Analysis.................. $47,915,000 to $71,322,000
Lady Luck Bettendorf Precedent Transactions
Analysis plus BRDC Real Estate
Discounted Cash Flow Analysis.................. $53,189,000 to $80,128,000
Lady Luck Bettendorf Discounted Cash Flow
Analysis plus BRDC Real Estate
Discounted Cash Flow Analysis.................. $49,989,000 to $68,595,000

<CAPTION>
Equity Value for BRDC
Implied in the Merger
--------------------------
<S> <C>
$61,518,000
</TABLE>

Pro Forma Merger Analysis.

CIBC World Markets analyzed the potential pro forma effect of the merger on
Isle of Capri's estimated earnings per share, commonly known as EPS, for
fiscal years 2001 through 2005, based on publicly available research analysts'
estimates of Isle of Capri. This analysis indicated that the proposed merger
could be dilutive to, or result in a decrease in, Isle of Capri's estimated
EPS in fiscal years 2001 through 2005. The actual results achieved by the
combined company may vary from projected results and the variations may be
material.

Other Factors.

In rendering its opinion, CIBC World Markets also reviewed and considered,
among other things:
. historical and projected financial data for Isle of Capri, BRDC and Lady
Luck Bettendorf;

. research analysts' reports for Isle of Capri, including fiscal year 2000
EPS growth rate estimates of these analysts;

20
<PAGE>

. a comparison of the trading multiples of Isle of Capri and selected mid-
capitalization companies in the gaming industry as a measure of latest 12
months EBITDA and EBIT; and

. historical market prices and trading volume of Isle of Capri common stock
and the relationship between movements in Isle of Capri common stock,
movements in the S&P 500 index and movements in the common stock of
selected mid-capitalization companies in the gaming industry for the
latest six months, 12 months and three years ended December 14, 1999.

The above summary is not a complete description of CIBC World Markets'
opinion to the Isle of Capri special committee or the financial analyses
performed and factors considered by CIBC World Markets in connection with its
opinion. The preparation of a fairness opinion is a complex analytical process
involving various determinations as to the most appropriate and relevant
methods of financial analyses and the application of those methods to the
particular circumstances and, therefore, a fairness opinion is not readily
susceptible to summary description. CIBC World Markets believes that its
analyses and the summary above must be considered as a whole and that
selecting portions of its analyses and factors or focusing on information
presented in tabular format, without considering all analyses and factors or
the narrative description of the analyses, could create a misleading or
incomplete view of the processes underlying CIBC World Markets' analyses and
opinion.

In performing its analyses, CIBC World Markets considered industry
performance, general business, economic, market and financial conditions and
other matters existing as of the date of its opinion, many of which are beyond
the control of Isle of Capri. No company, transaction or business used in the
analyses as a comparison is identical to Isle of Capri, BRDC, Lady Luck
Bettendorf or the merger, and an evaluation of the results of those analyses
is not entirely mathematical. Rather, the analyses involve complex
considerations and judgments concerning financial and operating
characteristics and other factors that could affect the acquisition, public
trading or other values of the companies, business segments or transactions
being analyzed.

The estimates contained in CIBC World Markets' analyses and the ranges of
valuations resulting from any particular analysis are not necessarily
indicative of actual values or future results, which may be significantly more
or less favorable than those suggested by its analyses. In addition, analyses
relating to the value of businesses or securities do not purport to be
appraisals or to reflect the prices at which businesses or securities actually
may be sold. Accordingly, CIBC World Markets' analyses and estimates are
inherently subject to substantial uncertainty.

The type and amount of consideration payable in the merger was determined
through negotiation between Isle of Capri and BRDC. Although CIBC World
Markets provided financial advice to Isle of Capri during the course of
negotiations, the decision to enter into the merger was solely that of the
Isle of Capri special committee and board of directors. CIBC World Markets'
opinion and financial analyses were only one of many factors considered by the
Isle of Capri special committee in its evaluation of the merger and should not
be viewed as determinative of the views of the Isle of Capri special
committee, the board of directors or management with respect to the merger or
the exchange ratio provided for in the merger.

Isle of Capri selected CIBC World Markets based on CIBC World Markets'
reputation, expertise and familiarity with Isle of Capri and its business.
CIBC World Markets is an internationally recognized investment banking firm
and, as a customary part of its investment banking business, is regularly
engaged in valuations of businesses and securities in connection with
acquisitions and mergers, underwritings, secondary distributions of
securities, private placements and valuations for other purposes. CIBC World
Markets and its affiliates have in the past provided services to Isle of Capri
and Lady Luck Gaming Corporation unrelated to the proposed merger, including
equity and debt financings, and currently are providing services to Isle of
Capri with respect to the Lady Luck Gaming Corporation merger, for which
services CIBC World Markets and its affiliates have received and will receive
compensation. In the ordinary course of business, CIBC World Markets and its
affiliates may actively trade the securities of Isle of Capri for their own
account and for the accounts of customers and, accordingly, may at any time
hold a long or short position in such securities.

21
<PAGE>

Isle of Capri has agreed to pay CIBC World Markets for its services with
respect to its opinion an opinion fee of $300,000. In addition, Isle of Capri
has agreed to reimburse CIBC World Markets for its out-of-pocket expenses,
including fees and expenses of its legal counsel, and to indemnify CIBC World
Markets and related parties against liabilities, including liabilities under
the federal securities laws, relating to, or arising out of, its engagement.

Dilution to Public Stockholders; Impact on Market Value of Isle of Capri
Common Stock

As of the date of this proxy statement, the merger agreement provides for
the issuance of 6,210,000 shares, subject to adjustment up to 6,300,000
shares, of Isle of Capri common stock in connection with the merger. The
following table shows the approximate ownership percentage in our company that
Bernard Goldstein, our Chairman of the Board and Chief Executive Officer,
Robert S. Goldstein, a member of our board of directors, and other members of
the Goldstein family who are BRDC shareholders would have before and after the
merger assuming that we issued 6,300,000 shares in connection with the merger:

<TABLE>
<CAPTION>
Percentage of Outstanding Shares of
Isle of Capri Common Stock
-----------------------------------
Beneficially
Beneficially Shares Owned After
Owned Prior Issued in the
to Merger Merger(1) Merger(2)
------------ --------- ------------
<S> <C> <C> <C>
Bernard Goldstein (3).................... 16.1% 0.0% 12.8%
Robert S. Goldstein (4).................. 4.7 6.6 8.9
Other BRDC Shareholders (5).............. 9.5 19.7 23.2
---- ---- ----
Total.................................. 30.3% 26.3% 44.9%
</TABLE>
- --------
(1) Calculated as a percentage of currently outstanding shares of 23,939,089.
(2) Calculated as a percentage of assumed outstanding shares of 30,239,089.
(3) Does not include shares of Isle of Capri common stock beneficially owned
by members of Bernard Goldstein's family. Bernard Goldstein disclaims
ownership of the shares owned by members of his family. Includes shares
owned through Bernard Goldstein's ownership in Valley Corporation, trusts
established for his benefit and shares issuable upon exercise of stock
options that are exercisable within 60 days.
(4) Does not include shares of Isle of Capri common stock beneficially owned
by members of Robert S. Goldstein's family. Robert S. Goldstein disclaims
ownership of the shares owned by members of his family including shares
held in a trust of which he is co-trustee. Includes shares owned through
Robert S. Goldstein's ownership in Valley Corporation and shares issuable
upon exercise of stock options that are exercisable within 60 days.
(5) Does not include shares of Isle of Capri common stock beneficially owned
by Bernard Goldstein and Robert S. Goldstein. The other members of the
Goldstein family who are BRDC shareholders disclaim ownership of the
shares owned by Bernard Goldstein and Robert S. Goldstein. Includes shares
owned through the other BRDC shareholders' ownership in Valley
Corporation.

While we cannot currently determine the exact number of shares of Isle of
Capri common stock that will be issued in connection with the merger, the
issuance will cause dilution of the voting power of our current stockholders
other than the BRDC shareholders.

Tax Treatment

No income, gain or loss will be recognized by our company or our
stockholders as a result of the merger for U.S. federal income tax purposes.

Anticipated Accounting Treatment

Isle of Capri will account for the merger under the purchase method of
accounting. Under that method of accounting, the aggregate consideration that
we pay to shareholders of BRDC will be allocated to BRDC's assets and
liabilities based upon their fair values, with any excess being treated as
goodwill.

22
<PAGE>

MATERIAL TERMS OF THE MERGER AGREEMENT

Set forth below is a summary of the material terms of the merger agreement.
This summary is qualified in its entirety by reference to the merger
agreement. A copy of the merger agreement is attached as Annex A to this proxy
statement and is incorporated into this proxy statement by reference. You
should read the merger agreement because it, and not this proxy statement, is
the legal document that governs the merger.

Structure of the Merger

At the effective time of the merger, BRDC will merge with and into our
company and the separate corporate existence of BRDC will end. Our company
will be the surviving corporation in the merger.

When the Merger Becomes Effective

We will file a certificate of merger with the Delaware Secretary of State
and the Iowa Secretary of State on or before the third business day following
the date the last of the closing conditions to the merger is fulfilled or
waived or at such other time and on such other date as BRDC and our company
may agree. The merger will become effective at the time and on the date on
which we file the certificate of merger. That time is the "effective time of
the merger."

Conversion of BRDC Common Stock

At the effective time of the merger, each share of BRDC common stock issued
and outstanding immediately prior to the effective time will be converted into
and become exchangeable for that number of shares of Isle of Capri common
stock equal to the final number of shares of Isle of Capri common stock to be
issued pursuant to the merger agreement (up to 6,300,000 shares) divided by
the number of shares of BRDC common stock outstanding immediately prior to the
effective time of the merger.

The number of shares of Isle of Capri common stock will be adjusted upward
or downward from 6,210,000 shares based upon the net amount of the following
items to be determined as of the effective time of the merger:

. increased by one-half of the net income or reduced by one-half of the net
loss of Lady Luck Bettendorf from October 1, 1999 through the effective
time of the merger;

. increased or decreased by the amount by which BRDC's indebtedness as of
the effective time of the merger exceeds or is less than $10.2 million;
and

. decreased by the sum of all amounts distributed by Lady Luck Bettendorf
to its members after September 30, 1999 through the effective time of the
merger.

The result of combining the above amounts shall be divided by the
negotiated per share price of $9.486.

Any cash distributions that Lady Luck Bettendorf makes to BRDC and which
BRDC distributes to its shareholders prior to the effective time of the merger
will reduce the number of shares of Isle of Capri common stock issued in
connection with the merger.

If, before the effective time of the merger, BRDC or our company declares
or effects a stock split (including a reverse split), stock dividend, stock
distribution, reorganization or recapitalization with respect to its shares or
any similar transaction occurs relating to its shares, the exchange ratio will
be equitably adjusted to reflect that event.

No fractional shares of Isle of Capri common stock will be issued in the
merger. Each BRDC shareholder will be entitled to receive in exchange for each
tendered share of BRDC common stock the nearest whole number of shares of Isle
of Capri common stock determined using the exchange ratio described above.

23
<PAGE>

Representations and Warranties

BRDC and its shareholders make representations and warranties in the merger
agreement as to, among other things:

. the corporate organization, existence, good standing and qualification to
do business of BRDC and its subsidiaries;

. BRDC's capitalization and BRDC's ownership interest in its subsidiary and
its indirect ownership interest in Lady Luck Bettendorf;

. the power and authority of BRDC and its shareholders to execute, deliver
and perform the merger agreement and to complete the merger;

. required governmental and third-party approvals;

. BRDC's consolidated financial statements;

. the absence of undisclosed liabilities;

. changes in BRDC's business since the end of its prior fiscal year;

. tax returns and tax payments;

. real property and personal property owned or leased by BRDC and its
subsidiaries;

. intellectual property owned or used by BRDC and its subsidiaries;

. significant agreements to which BRDC or any of its subsidiaries is a
party;

. litigation affecting BRDC or any of its subsidiaries;

. compliance with applicable laws, including environmental laws, by BRDC
and its subsidiaries;

. employee benefits plans of BRDC and its subsidiaries;

. labor matters affecting BRDC or any of its subsidiaries;

. insurance coverage applicable to BRDC and its subsidiaries;

. BRDC's and its subsidiaries' preparedness with respect to Year 2000
compliance;

. brokers and finders;

. each BRDC shareholder's investment intent with respect to the Isle of
Capri common stock that such BRDC shareholder will receive in connection
with the merger;

. information supplied by BRDC and BRDC shareholders that is included in
this proxy statement (other than as related to pro forma financial
statements, other forward-looking information or projections); and

. qualification of the merger as a reorganization under the Internal
Revenue Code.

We make representations and warranties in the merger agreement as to, among
other things:

. our corporate organization, existence, good standing and qualification to
do business;

. our corporate power and authority to execute, deliver and perform the
merger agreement and to complete the merger;

. required governmental and third-party approvals, including the required
approval of our stockholders;

. the financial statements and information we file with the Securities and
Exchange Commission;

. changes in our business since the end of our prior fiscal year;

. litigation affecting our company;

. qualification of the merger as a reorganization under the Internal
Revenue Code;

. receipt of an opinion from the special committee's financial advisor; and

. receipt of a waiver from Lady Luck Gaming Corporation of its rights to
purchase BRDC's indirect interest in Lady Luck Bettendorf as a result of
this transaction.

24
<PAGE>

Conduct of Business Covenants

The merger agreement provides that, subject to certain exceptions, BRDC and
its subsidiaries must conduct their business only in the usual, regular and
ordinary course until the effective time of the merger. The merger agreement
also includes limitations, prohibitions and other provisions relating to
BRDC's and its subsidiaries' conduct of business before the effective time of
the merger with respect to:

. changes in capital stock and payment of dividends;

. issuance of stock and convertible securities;

. charter and bylaw amendments;

. acquisitions and dispositions except in the ordinary course of business;

. incurrence or repayment of debt;

. increases in compensation and amendments to employee benefit or
retirement plans;

. execution, modification or termination of leases or material contracts;

. changes in accounting policies or procedures;

. tax elections;

. settlement of claims in litigation;

. capital expenditure levels;

. related party transactions; and

. asserting rights to purchase Lady Luck Gaming Corporation's indirect 50%
interest in Lady Luck Bettendorf as a result of Lady Luck Gaming
Corporation entering into the merger with Isle of Capri or terminating
the casino management agreement of Lady Luck Gaming Corporation.

The merger agreement does not limit BRDC's ability to distribute cash to
its shareholders. Subject to the requirement that cash and marketable
securities of Lady Luck Bettendorf at the effective time not be less than $2.5
million, Lady Luck Bettendorf is permitted to distribute cash in the following
amounts to BRDC prior to the effective time of the merger:

. 45% of one-half of Lady Luck Bettendorf's net income earned for the month
of September 30, 1999;

. 45% of one-half of Lady Luck Bettendorf's net income earned from October
1, 1999 through the effective time of the merger; and

. discretionary distributions of up to $10.0 million if cash of Lady Luck
Bettendorf is available.

The merger agreement also provides that, subject to certain exceptions, we
will conduct our company's business only in the usual, regular and ordinary
course until the effective time of the merger.

Indemnification

We have agreed to indemnify and hold harmless the BRDC shareholders against
all losses they or their successors incur as a result of entering into the
merger agreement and the completion of the merger except for losses related to
a breach of representation, warranty or covenant related to BRDC and its
subsidiary that is made by BRDC or the shareholders but not related to Lady
Luck Bettendorf and for matters described below for which the BRDC
shareholders have agreed to indemnify Isle of Capri.

The BRDC shareholders have agreed to jointly and severally indemnify and
hold harmless our company, our affiliates and all directors, officers,
employees, agents and controlling persons of our company and its affiliates
against all losses relating to (1) breaches of the representations and
warranties that BRDC and its shareholders made in the merger agreement related
to land owned by BRDC that is leased to Lady Luck Bettendorf and (2) an
environmental condition which exists on the land at the effective time.

25
<PAGE>

Our indemnification obligation to the BRDC shareholders is not subject to a
deductible, has no limitation in amount and survives indefinitely after
completion of the merger. The BRDC shareholders' indemnification obligation to
us only arises in the event we discover (1) a breach of their representations
or warranties as to the land or (2) an environmental condition which exists on
the land at the effective time, within three years of the effective time. We
are not entitled to be indemnified for the first $250,000 of our losses. Our
total claims against the BRDC shareholders are limited to $3,000,000 in the
aggregate. Prior to collecting indemnification from BRDC shareholders for
environmental conditions on the land, Isle of Capri must request a prior owner
of the property to address such matters.

Loan Repayment; BRDC Shareholder Guarantees

Immediately after the effective time of the merger, we will cause BRDC to
repay in full a loan with a balance of approximately $3.2 million that a
corporation wholly owned by members of the Goldstein family made to BRDC. We
also will use commercially reasonable efforts to obtain releases of any
guarantees and pledged collateral of BRDC shareholders to third parties with
respect to BRDC's obligations. For more information regarding the $3.2 million
loan that we will repay, see "The Merger--Interests of Isle of Capri Directors
and Officers in the Merger that Are Different from Your Interests."

Resale Restrictions

The shares of Isle of Capri common stock we issue in connection with the
merger will not be registered under applicable securities laws. However, we
have agreed to provide the BRDC shareholders the right to include their shares
in an underwritten offering of shares that Isle of Capri initiates. BRDC
shareholders are prohibited from transferring any of their shares of Isle of
Capri common stock they receive in connection with the merger unless the
transfer is permitted under applicable securities laws.

Other Covenants

BRDC and our company have agreed to cooperate with each other and to use
commercially reasonable efforts:

. to take all necessary, proper and advisable actions to complete the
merger; and

. to promptly prepare and file all documentation and filings necessary or
advisable to obtain approval of the merger.

At our request, BRDC and its shareholders will terminate any related party
agreements to which BRDC or any of its subsidiaries is a party which it has
not disclosed to us.

The merger agreement also contains covenants by us as to:

. the preparation and filing of this proxy statement; and

. the holding of the special meeting.

Conditions to Completion of the Merger

We will complete the merger only if the conditions set forth in the merger
agreement are satisfied or waived to the extent permitted. The conditions to
both BRDC's obligation and our obligation to complete the merger include:

. approval by our stockholders of the merger agreement;

. the absence of any law or order prohibiting completion of the merger;

. receipt of necessary antitrust approvals of the merger;

. receipt of the Iowa Racing and Gaming Commission's approval of the
merger; and

26
<PAGE>

. completion of our merger with Lady Luck Gaming Corporation.

Additional conditions to our obligation to complete the merger include:

. the accuracy, as qualified for materiality, of the representations and
warranties of BRDC and its shareholders;

. performance by BRDC and its shareholders in all material respects of
their pre-merger obligations under the merger agreement, including
obtaining consents to material agreements of BRDC; and

. the absence of any material adverse change in the business, properties,
condition, prospects or results of operations of BRDC and Lady Luck
Bettendorf, taken as a whole, since September 30, 1999, other than
changes to the financial performance or prospects of Lady Luck
Bettendorf.

Additional conditions to BRDC's obligation to complete the merger include:

. the accuracy, as qualified for materiality, of our representations and
warranties;

. our performance in all material respects of our pre-merger obligations
under the merger agreement; and

. release of guarantees and pledged collateral of BRDC's shareholders
related to BRDC's and its subsidiaries' indebtedness or an agreement from
Isle of Capri to indemnify.

At any time before the effective time of the merger, BRDC or our company
may waive any of these conditions without the approval of our respective
stockholders. As of the date of this proxy statement, we do not expect that
any condition will be waived.

Termination of the Merger Agreement

We can agree with BRDC to terminate the merger agreement at any time
without completing the merger.

We also can terminate the merger agreement, without BRDC's consent based
upon the above conditions or if any state gaming authority revokes any of Lady
Luck Bettendorf's licenses or permits or imposes fines, penalties or
restrictions that would reasonably be expected to have a material adverse
effect on the business of Lady Luck Bettendorf.

Either BRDC or our company can terminate the merger agreement, without the
consent of the other, if:

. the special meeting is held and our stockholders do not approve the
merger agreement;

. the merger is not completed before the "outside date," which is defined
in the merger agreement as December 31, 2000 and which can be extended to
June 30, 2001 if our separate merger agreement with Lady Luck Gaming
Corporation remains in effect and either party notifies the other party
that it wants to extend the outside date;

. any order permanently restraining, enjoining or otherwise prohibiting
completion of the merger has become final and non-appealable; or

. the other party materially breaches the merger agreement and cannot or
does not correct the breach within a 30-day cure period.

Expenses

BRDC and our company will pay our own expenses in connection with the
merger and the related transactions except that we will pay the accounting
fees of BRDC incurred in connection with the preparation of this proxy
statement and governmental filing fees incurred by the shareholders of BRDC in
connection with the merger.

Modification or Amendment to the Merger Agreement

At any time prior to stockholder approval of the merger agreement, BRDC and
our company can modify or amend the merger agreement if our respective boards
of directors agree to do so. After stockholder approval is received, BRDC and
our company can modify or amend the merger agreement only if further approval
of our stockholders would not be needed. At any time prior to the effective
time of the merger, either BRDC or our company can waive its right to require
the other to comply with the merger agreement where the law allows.

27
<PAGE>

Regulatory Requirements

Antitrust Approval

Under the Hart-Scott-Rodino Act and the rules promulgated thereunder by the
Federal Trade Commission, we cannot complete the merger until notifications
have been given and certain information has been furnished to the Federal
Trade Commission and the Antitrust Division of the Department of Justice and
specified waiting period requirements have been satisfied.

BRDC and our company intend to file notification and report forms under the
Hart-Scott-Rodino Act with the Federal Trade Commission and the Antitrust
Division together with requests for early termination of the waiting period,
as soon as practicable.

At any time before or after completion of the merger, the Antitrust
Division or the Federal Trade Commission or any state could take such action
under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the completion of the merger, to rescind
the merger or to seek divestiture of particular assets of our company or BRDC.
Private parties also may seek to take legal action under the antitrust laws
under certain circumstances.

Gaming Authority Approval

We cannot complete the merger without the approval of the Iowa Racing and
Gaming Commission. The Iowa Racing and Gaming Commission must review the
merger to determine whether or not it is compatible with the State of Iowa's
gaming regulations and policies concerning the responsibility, financial
stability and character of gaming operators and persons financially interested
or involved in gaming operations. The Iowa Racing and Gaming Commission
requires any individual who will have a material relationship with Lady Luck
Bettendorf, including certain of our corporate officers, to be investigated
and found suitable.

We have filed notification and application forms with the Iowa Racing and
Gaming Commission.

28
<PAGE>

RELATED PARTY TRANSACTIONS

On October 5, 1999, we entered into a merger agreement with Lady Luck
Gaming Corporation, which indirectly owns a 50% interest in Lady Luck
Bettendorf. Under the terms of this merger agreement, a wholly owned
subsidiary of our company will be merged with and into Lady Luck Gaming
Corporation. Lady Luck Gaming Corporation will continue as the surviving
corporation in the merger and as a wholly owned subsidiary of our company. We
will pay $12.00 cash for each share of Lady Luck Gaming Corporation common
stock outstanding at the effective time of the Lady Luck Gaming Corporation
merger. We are not obligated to complete the merger of BRDC into our company
until the Lady Luck Gaming Corporation merger is completed.

BRDC owns the land on which Lady Luck Bettendorf is located and leases it
to Lady Luck Bettendorf for $150,000 per month. After the effective time, Isle
of Capri will own this land. Lady Luck Gaming Corporation owns the riverboat
that is leased to Lady Luck Bettendorf. Lady Luck Bettendorf makes monthly
lease payments of approximately $189,000 (before use tax) to Lady Luck Gaming
Corporation under the terms of this lease.

Lady Luck Gaming Corporation also manages Lady Luck Bettendorf. Under the
terms of its management agreement, Lady Luck Gaming Corporation is paid a
monthly fee equal to 2% of gross revenues (as defined in the management
agreement) plus 7% of EBITDA (as defined in the management agreement) not to
exceed 4% of annual gross revenue generated by Lady Luck Bettendorf, less
$37,500. BRDC provided consulting services concerning licensing, staffing and
management of the marine aspects of the gaming vessel and any land based
development for which it was paid $325,000 per year by Lady Luck Gaming
Corporation. After the effective time, BRDC will no longer receive this fee.

A corporation wholly owned by the Goldstein family leases to Lady Luck
Bettendorf on a month-to-month basis (1) land for parking at a monthly rent of
$20,000 and (2) warehouse space at a monthly rent of $3,360. We expect that
Lady Luck Bettendorf will continue to rent these properties after the
effective time. Lady Luck Bettendorf has also agreed to remove its
construction debris from property owned by a wholly owned corporation of the
Goldstein family.

Isle of Capri reimburses Alter Trading Corporation, a company owned by
Bernard Goldstein, Robert S. Goldstein and other members of the Goldstein
family, for annual lease payments of approximately $99,000 with respect to
property leased by Alter Trading Corporation. The land was leased at Isle of
Capri's request in order to secure a site for possible casino operations.

During the prior fiscal quarter of Isle of Capri, Allan B. Solomon, the
Executive Vice President, Secretary and General Counsel of the Company, paid
in full a loan from the Company in the aggregate amount of $215,788.

Isle of Capri manages the Isle of Capri-Black Hawk for a fee which is equal
to two percent of revenue (after deducting one-half of gaming taxes), plus ten
percent of operating income, the total of which is not to exceed four percent
of revenue, as defined.

29
<PAGE>

OWNERSHIP OF OUR CAPITAL STOCK

The following table sets forth certain information with respect to the
beneficial ownership of our outstanding common stock as of December 31, 1999
(unless otherwise indicated) by (i) each of our directors, (ii) our chief
executive officer and our executive officers, (iii) all our directors and
officers as of December 31, 1999 as a group and (iv) based on information
available to us and a review of statements filed with the Securities and
Exchange Commission pursuant to Sections 13(d) and 13(g) of the Securities
Exchange Act of 1934, each person that owned beneficially (directly or
together with affiliates) more than 5% of our common stock. Unless otherwise
indicated, all persons listed have sole voting and dispositive power over the
shares beneficially owned.

<TABLE>
<CAPTION>
Shares of Percentage of
Common Stock Outstanding
Beneficially Shares
Name and Address of 5% Beneficial Owners Owned(1) Owned(1)
---------------------------------------- ------------ -------------
<S> <C> <C>
Bernard Goldstein (2)............................ 3,896,430 16.1%
2200 Corporate Boulevard, N.W.
Boca Raton, FL 33431
John M. Gallaway (3)............................. 254,500 *
Allan B. Solomon (4)............................. 430,500 1.8%
Robert S. Goldstein (5).......................... 1,129,182 4.7%
Alan Glazer (6).................................. 38,500 *
Emanuel Crystal (7).............................. 70,476 *
W. Randolph Baker (8)............................ 42,500 *
Timothy M. Hinkley (9)........................... 87,874 *
Rexford A. Yeisley (10).......................... 92,300 *
Valley Corporation (11).......................... 1,428,826 6.0%
Dimensional Fund Advisors, Inc. (12)............. 1,581,750 6.6%
Neil G. Bluhm (13)............................... 1,317,261 5.5%
All Officers and Directors as a Group (13
persons) (14)................................... 6,171,655 24.6%
</TABLE>
- --------
*Less than 1%.
(1) Calculated pursuant to Rule 13d-3 under the Exchange Act. Under Rule 13d-
3(d), shares not outstanding that are subject to options, warrants, rights
or conversion privileges exercisable within 60 days of December 31, 1999
are deemed outstanding for the purpose of calculating the number and
percentage owned by such person, but are not deemed outstanding for the
purpose of calculating the percentage owned by each other person listed.
(2) Does not include an aggregate of 4,378,252 shares (including 69,000 shares
issuable upon exercise of stock options and warrants that are exercisable
within 60 days) that are beneficially owned by members of Bernard
Goldstein's family. Bernard Goldstein disclaims beneficial ownership of
the shares owned by members of his family. Includes 645,829 shares owned
through Mr. Goldstein's ownership in Valley Corporation, trusts
established for his benefit and 248,500 shares issuable upon exercise of
stock options that are exercisable within 60 days.
(3) Includes 198,500 shares issuable upon exercise of stock options that are
exercisable within 60 days.
(4) Includes 235,500 shares issuable upon exercise of stock options that are
exercisable within 60 days.
(5) Does not include an aggregate of 7,145,499 shares (including 248,500
shares issuable upon exercise of stock options and warrants that are
exercisable within 60 days and shares held in a trust of which he is a co-
trustee) that are beneficially owned by members of Robert S. Goldstein's
family. Robert S. Goldstein disclaims beneficial ownership of the shares
owned by members of his family. Includes 14,288 owned by Mr. Goldstein's
ownership in Valley Corporation and 69,000 shares issuable upon exercise
of stock options that are exercisable within 60 days.
(6) Includes 28,500 shares issuable upon exercise of stock options that are
exercisable within 60 days.
(7) Includes 46,500 shares issuable upon exercise of stock options that are
exercisable within 60 days and 1,976 shares owned by Mr. Crystal's wife.

30
<PAGE>

(8) Includes 12,500 shares issuable upon exercise of stock options that are
exercisable within 60 days.
(9) Includes 87,874 shares issuable upon exercise of stock options that are
exercisable within 60 days.
(10) Includes 90,000 shares issuable upon exercise of stock options that are
exercisable within 60 days.
(11) Valley Corporation is owned by Bernard Goldstein and members of his
family. Bernard Goldstein and Robert S. Goldstein own 45.2% and 1.0% of
Valley Corporation, respectively.
(12) Pursuant to a Schedule 13G we received, Dimensional Fund Advisors, Inc.,
a registered investment advisor, is deemed to have beneficial ownership
of 1,581,750 shares as of December 31, 1998, all of which shares are held
in portfolios of four registered investment companies and certain other
investment vehicles, including commingled group trusts, to all of which
Dimensional Fund Advisors, Inc. serves as investment advisor and
investment manager. Dimensional Fund Advisors Inc. disclaims beneficial
ownership of all such shares.
(13) Pursuant to a Schedule 13D we received, Neil G. Bluhm is deemed to have
beneficial ownership of 1,242,336 shares of Isle of Capri common stock as
of April 1, 1999, which includes 50,000 and 751,700 shares held by LAMB
Partners. Mr. Bluhm is a general partner of certain partnerships and has
shared voting and investment power with respect to the shares held by the
partnerships. Mr. Bluhm disclaims beneficial ownership of such shares.
Also includes 74,925 shares held by certain other general partners of
such partnerships.
(14) Information provided is for the individuals who were officers and
directors of the Company on December 31, 1999 and includes 1,139,374
shares issuable upon exercise of stock options that are exercisable
within 60 days. The amount does not include 3,249,068 shares beneficially
owned by relatives of Bernard Goldstein and Robert S. Goldstein, other
than them, the beneficial ownership of which is disclaimed by Bernard
Goldstein and Robert S. Goldstein. If such shares were included in the
category "All Officers and Directors as a Group," the number of shares of
Common Stock beneficially owned by such group as of December 31, 1999
would have been 9,420,723, and the percentage of outstanding shares of
Common Stock owned by such group as of December 31, 1999 would have been
39.4%.

31
<PAGE>

MARKET PRICES AND DIVIDEND INFORMATION

Shares of our common stock are quoted on the Nasdaq National Market under
the symbol "ISLE". Shares of BRDC common stock are not publicly traded, and no
market exists for BRDC common stock.

The following table sets forth, for the periods and dates indicated, the
range of high and low closing prices for our common stock as reported on the
Nasdaq National Market:

<TABLE>
<CAPTION>
Closing Price Per Share
-----------------------
High Low
-----------------------
<S> <C> <C>
Fiscal Year Ended April 26, 1998
First Quarter........................................ $ 2.81 $ 1.94
Second Quarter....................................... $ 3.66 $ 1.97
Third Quarter........................................ $ 3.19 $ 2.38
Fourth Quarter....................................... $ 3.31 $ 2.56
Fiscal Year Ended April 25, 1999
First Quarter........................................ $ 4.13 $ 3.00
Second Quarter....................................... $ 3.63 $ 1.75
Third Quarter........................................ $ 4.25 $ 2.44
Fourth Quarter....................................... $ 6.50 $ 3.88
Fiscal Year Ended April 30, 2000
First Quarter........................................ $ 8.69 $ 5.75
Second Quarter....................................... $ 13.00 $ 7.50
Third Quarter (through January 7, 2000).............. $ 13.88 $ 10.94
October 5, 1999 (the last trading day before we
announced the merger)................................. $ 10.06 $ 9.81
January 7, 2000 (the most recent practicable trading
day before the date of this proxy statement).......... $ 11.06 $ 10.13
</TABLE>

We have never paid dividends on our common stock, and the current policy of
our board of directors is to retain earnings to provide for the growth of our
company. In addition, our senior credit facility and the indenture governing
our senior subordinated notes limit our ability to pay dividends.
Consequently, we do not expect to pay cash dividends on Isle of Capri common
stock in the foreseeable future.

ADDITIONAL INFORMATION

Deadline for Isle of Capri Stockholder Proposals

If you wish to submit a proposal to be considered for inclusion in the
proxy material for our 2000 annual stockholder meeting, it must be received at
our company's principal executive offices, Attention: Bernard Goldstein,
Chairman of the Board and Chief Executive Officer, no later than April 22,
2000.

Incorporation of Information We File with the SEC

This proxy statement "incorporates by reference" important business and
financial information about our company that is not included in or delivered
with the proxy statement. This means:

. incorporated documents are considered part of this proxy statement;

. we can disclose important information to you by referring you to those
documents; and

. information that we file with the Securities and Exchange Commission will
automatically update and supersede the information in this proxy
statement.

The following documents are incorporated into this proxy statement by
reference:

. our Annual Report on Form 10-K for the fiscal year ended April 25, 1999;

32
<PAGE>

. our Quarterly Report on Form 10-Q for the fiscal quarter ended July 25,
1999;

. our Quarterly Report on Form 10-Q for the fiscal quarter ended October
24, 1999;

. our Current Reports on Form 8-K filed on October 15, 1999 and December
30, 1999; and

. all documents filed by us under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 after the date of this proxy statement
and before the special meeting is held.

You may obtain copies of the information incorporated into this proxy
statement by reference without charge upon oral or written request to: Isle of
Capri Casinos, Inc., Attention: Chief Financial Officer, 1641 Popps Ferry
Road, Biloxi, Mississippi 39532; Telephone: (228) 396-7000.

To obtain timely delivery of any of this information, you must make your
request at least five business days prior to the date of the special meeting.
The date by which you must make your request is February 11, 2000.

Forward-Looking Statements

This proxy statement includes or incorporates by reference forward-looking
statements as they are defined in the Securities Act of 1933 and the
Securities Exchange Act of 1934. We based these forward-looking statements on
our current expectations and our projections about future events. These
forward-looking statements could be negatively affected by risks,
uncertainties and assumptions about us, including, among other things:

. the effect of general economic, credit and capital market conditions on
our business;

. competition in our existing and any future markets;

. changes in gaming laws and regulations;

. our failure to obtain or retain licenses or regulatory approvals;

. our failure to complete or successfully operate planned expansion
projects; and

. our failure to obtain adequate financing to meet our goals.

All future written and oral forward-looking statements made by us or on our
behalf are also subject to these factors. We undertake no obligation to
publicly update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise. In light of these risks,
uncertainties and assumptions, the forward-looking events discussed in or
incorporated by reference into this proxy statement might not occur.

Where You Can Find More Information

You may read and copy the reports, statements and other information we file
with the Securities and Exchange Commission at the Securities and Exchange
Commission's public reference room at 450 Fifth Street, N.W., Washington, D.C.
20549. You can request copies of these documents by writing to the Securities
and Exchange Commission but must pay photocopying fees. Please call the
Securities and Exchange Commission at 1-800-SEC-0330 for further information
on the operation of the public reference rooms. Our filings with the
Securities and Exchange Commission are also available to the public on the
Securities and Exchange Commission's Internet site (http://www.sec.gov).

33
<PAGE>

UNAUDITED PRO FORMA FINANCIAL DATA

The following unaudited pro forma condensed consolidated financial
statements are based on the historical financial statements of the Company
adjusted to give effect to the Lady Luck Gaming Corporation ("LUCK")
Acquisition, LUCK's purchase of Gamblers Supply Management Company ("Miss
Marquette" or "MM"), and the BRDC, Inc. ("BRDC") Acquisition. The unaudited
pro forma condensed consolidated balance sheet as of October 24, 1999 gives
effect to the LUCK Acquisition, LUCK's purchase of Miss Marquette, and the
BRDC Acquisition as if such transactions had occurred on October 24, 1999. The
unaudited pro forma condensed consolidated statement of operations for the
year ended April 25, 1999, and the unaudited pro forma condensed consolidated
statement of operations for the six months ended October 24, 1999, gives
effect to the LUCK Acquisition, LUCK's purchase of Miss Marquette, and the
BRDC Acquisition as if such transactions had occurred on April 27, 1998.

The LUCK Acquisition, LUCK's purchase of Miss Marquette and the BRDC
Acquisition have been or will be accounted for by the Company using the
purchase method of accounting. The pro forma adjustments are based upon
currently available information and certain assumptions that management
believes are reasonable. In the opinion of the Company's management, all
adjustments necessary to present fairly the pro forma statements have been
made. The actual purchase price adjustments will be determined based on the
fair market value of the assets and liabilities acquired and may differ
significantly from the amounts reflected in the pro forma adjustments.

The unaudited pro forma condensed consolidated financial statements are not
necessarily indicative of the financial position or results of operation which
would have been achieved had the above mentioned transactions occurred on the
indicated dates, nor are they necessarily indicative of the results of future
operations. The unaudited pro forma condensed consolidated financial
statements should be read in conjunction with the financial statements and
related notes of the Company and LUCK which are incorporated herein by
reference as well as Miss Marquette and BRDC which are included elsewhere in
this Proxy Statement.

34
<PAGE>

ISLE OF CAPRI CASINOS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
October 24, 1999
(In thousands)

<TABLE>
<CAPTION>
ISLE/LUCK-MM
10/24/1999 09/30/1999 09/30/1999 Pro Forma
ISLE LUCK GSMC (MM) Condensed
Historical Historical Historical Adjustments Consolidated
---------- ---------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
------
Current Assets:
Cash and cash
equivalents...... $ 88,841 $ 22,201 $ 2,306 $ 108,068 1 $ 221,416
Marketable
securities...... -- 18,092 -- -- 18,092
Accounts
receivable...... 4,641 736 1 -- 5,378
Income tax
receivable...... 800 -- -- -- 800
Deferred income
taxes........... 4,684 -- -- -- 4,684
Prepaid expenses
and other
assets.......... 7,291 2,243 370 -- 9,904
--------- --------- -------- --------- -----------
Total current
assets.......... 106,257 43,272 2,677 108,068 260,274
Property and
equipment--net... 437,924 131,874 28,323 (10,923)2 587,198
Other assets:
Investments in &
advances to
joint ventures.. 2,606 17,204 -- -- 19,810
Property held
for development
or sale......... 3,782 -- -- -- 3,782
Licenses and
other intangible
assets, net of
accumulated
amortization.... 61,956 -- -- -- 61,956
Goodwill, net of
accumulated
amortization.... 51,631 -- -- 89,991 3 141,622
Berthing,
concession, and
leasehold
rights, net of
accumulated
amortization.... 3,963 -- -- -- 3,963
Deferred
financing costs,
net of
accumulated
amortization.... 18,330 1,226 -- 11,774 4 31,330
Notes
receivable...... -- -- 100 -- 100
Deferred income
taxes........... -- -- 282 19,761 5 20,043
Restricted cash 3,840 -- -- -- 3,840
Prepaid deposits
and other....... 3,890 4,601 -- -- 8,491
--------- --------- -------- --------- -----------
Total assets.... $ 694,179 $ 198,177 $ 31,382 $ 218,671 $ 1,142,409
========= ========= ======== ========= ===========
</TABLE>

09/30/1999 09/30/1999 Pro Forma
BRDC LLB Condensed
Historical Historical Adjustments Consolidated
---------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS
------
Current Assets:
Cash and cash
equivalents...... $ 21 $ 8,410 $ (34,222)13 $ 195,625
Marketable
securities...... -- -- -- 18,092
Accounts
receivable...... -- 124 -- 5,502
Income tax
receivable...... -- -- -- 800
Deferred income
taxes........... -- -- -- 4,684
Prepaid expenses
and other
assets.......... -- 1,508 -- 11,412
-------- -------- --------- -----------
Total current
assets.......... 21 10,042 (34,222) 236,115
Property and
equipment--net... 1,357 52,946 14,243 14 655,744
Other assets:
Investments in &
advances to
joint ventures.. 17,204 -- (34,408)15 2,606
Property held
for development
or sale......... -- -- -- 3,782
Licenses and
other intangible
assets, net of
accumulated
amortization.... -- -- -- 61,956
Goodwill, net of
accumulated
amortization.... -- -- 43,162 16 184,784
Berthing,
concession, and
leasehold
rights, net of
accumulated
amortization.... -- -- -- 3,963
Deferred
financing costs,
net of
accumulated
amortization.... -- -- -- 31,330
Notes
receivable...... -- -- -- 100
Deferred income
taxes........... -- -- -- 20,043
Restricted cash -- -- -- 3,840
Prepaid deposits
and other....... -- 738 -- 9,229
-------- -------- --------- -----------
Total assets.... $ 18,582 $ 63,726 $ (11,225) $ 1,213,492
======== ======== ========= ===========
</TABLE>

35
<PAGE>

ISLE OF CAPRI CASINOS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (continued)
October 24, 1999
(In thousands)

<TABLE>
<CAPTION>
ISLE LUCK- MM
10/24/99 9/30/99 9/30/99 Pro Forma
ISLE LUCK GSMC (MM) Condensed
Historical Historical Historical Adjustments Consolidated
---------- ---------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
LIABIITIES AND STOCKHOLDERS'
EQUITY/MEMBERS' EQUITY
- -----------------------------
Current liabilities:
Current maturities of
long-term debt................ $ 7,988 $ 1,052 $ 2,207 $ 5,491 6 $ 16,738
Accounts payable:
Trade.......................... 15,394 2,697 344 -- 18,435
Related party.................. -- -- -- -- --
Accrued liabilities:
Interest....................... 3,039 1,859 -- -- 4,898
Payroll and related............ 26,482 -- 1,145 2,748 7 30,375
Property and other taxes....... 15,578 985 -- -- 16,563
Progressive jackpots
and slot club awards.......... 6,324 -- -- -- 6,324
Amounts due to parent company.. -- -- 11,762 (11,762) 8 --
Other.......................... 8,682 10,466 819 500 9 20,467
-------- --------- -------- -------- ----------
Total current liabilities.... 83,487 17,059 16,277 (3,023) 113,800
Long-term debt, less
current maturities............... 520,023 176,614 2,669 238,634 10 937,940
Deferred income taxes.............. 9,673 -- -- -- 9,673
Minority interest.................. 5,333 -- -- -- 5,333
Preferred stock.................... -- 22,442 -- (22,442) 11 --
Equity:
Common stock..................... 237 29 10 (39) 12 237
Additional paid-in capital....... 63,693 31,382 14,677 (46,059) 12 63,693
Retained earnings
(deficit)/members' equity........ 11,733 (49,349) (2,251) 51,600 12 11,733
-------- --------- -------- -------- ----------
Total stockholders'
equity/members' equity........ 75,663 (17,938) 12,436 5,502 75,663
-------- --------- -------- -------- ----------
Total liabilities and
stockholders' equity/
members' equity........... $694,179 $ 198,177 $ 31,382 $218,671 $1,142,409
======== ========= ======== ======== ==========
</TABLE>

<TABLE>
<CAPTION>
9/30/99 9/30/99 Pro Forma
BRDC LLB Condensed
Historical Historical Adjustments Consolidated
---------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
LIABIITIES AND STOCKHOLDERS'
EQUITY/MEMBERS' EQUITY
- -----------------------------
Current liabilities:
Current maturities of
long-term debt................ $ 1,700 $ 1,829 $ (3,529)17 $ 16,738
Accounts payable:
Trade.......................... 205 1,277 -- 19,917
Related party.................. -- 443 -- 443
Accrued liabilities:
Interest....................... 16 -- -- 4,914
Payroll and related............ -- -- -- 30,375
Property and other taxes....... -- 200 -- 16,763
Progressive jackpots
and slot club awards.......... -- 883 -- 7,207
Amounts due to parent company.. -- -- -- --
Other.......................... 82 3,181 -- 23,730
------ -------- -------- ----------
Total current liabilities.... 2,003 7,813 (3,529) 120,087
Long-term debt, less
current maturities............... 9,167 21,505 (30,672)17 937,940
Deferred income taxes.............. -- -- 5,697 18 15,370
Minority interest.................. -- -- -- 5,333
Preferred stock.................... -- -- -- --
Equity:
Common stock..................... -- -- 62 19 299
Additional paid-in capital....... -- -- 59,037 19 122,730
Retained earnings
(deficit)/members' equity........ 7,412 34,408 (41,820)20 11,733
------ -------- -------- ----------
Total stockholders'
equity/members' equity........ 7,412 34,408 17,279 134,762
------ -------- -------- ----------
Total liabilities and
stockholders' equity/
members' equity........... $18,582 $ 63,726 $(11,225) $1,213,492
======= ======== ======== ==========
</TABLE>

36
<PAGE>

ISLE OF CAPRI CASINOS, INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

1) Reflects proceeds of $475 million from the refinancing of the Senior
Secured Credit Facility, net of $230.9 million of cash paid to refinance
certain debt, $58.9 million of cash paid to LUCK shareholders to purchase
the outstanding stock, $22.4 million paid to redeem the LUCK Preferred
Stock, $41.7 million paid in the acquisition of Miss Marquette, $13.0
million in acquisition and financing costs.

2) Reflects the write down of certain assets including the riverboat and
other equipment related to the Miss Marquette acquisition.

3) Reflects the excess of cost over the estimated fair value of the net
assets acquired in the LUCK and Miss Marquette Acquisitions. The Company
has tentatively allocated the purchase price of these assets at their
current net book values.

4) Reflects certain refinancing costs of $13.0 million, net of the write-off
of deferred financing costs totaling $1.2 million related to debt which
was retired as a result of this transaction.

5) Reflects (1) the deferred tax assets at 40% tax rate associated with
LUCK's purchase of Miss Marquette, and (2) the elimination of LUCK's
deferred tax asset valuation allowance of $15.7 million.

6) Reflects the Current Portion of $ 13.8 million relating to the new Senior
Credit Facility, net of the current portion totaling $8.3 million of debt
that was retired as a result of this transaction.

7) Reflects the accrual of the buyout of the LUCK management contracts.

8) Reflects the reduction of debt owed by Miss Marquette to its parent which
was not included in the purchase of Miss Marquette.

9) Reflects the reduction of other assets related to Miss Marquette.

10) Reflects proceeds of $475 million from the refinancing of the Senior
Secured Credit Facility, net of $222.6 million of cash paid to refinance
certain debt, net of the Current Portion of $ 13.8 million relating to the
new Senior Credit Facility.

11) Reflects the redemption of the Preferred Stock of LUCK.

12) Reflects the elimination of the Common Stock, Additional Paid-in Capital
and Retained Earnings (Deficit) of LUCK and Miss Marquette in
consolidation with ISLE.

13) Reflects the pay-off of $34.2 million of debt related to the BRDC and
Bettendorf Acquisitions and the elimination of BRDC's cash.

14) Reflects the write up of land related to the BRDC Acquisition to its
current fair value.

15) Reflects the elimination of the Investment in Subsidiary (Bettendorf)
owned separately by LUCK and BRDC.

16) Reflects the excess of cost over the estimated fair market value of the
net assets acquired in the BRDC and Bettendorf Acquisitions. The Company
has tentatively allocated the purchase price of these assets (with the
exception of the land discussed above) at their current net book values.

17) Reflects the pay-off of debt related to the BRDC and Bettendorf
Acquisitions.

18) Reflects the estimated deferred tax liabilities at 40% tax rate associated
with the purchase of BRDC.

19) Reflects the issuance of ISLE Common Stock as part of the BRDC
Acquisition.

20) Reflects the elimination of the Retained Earnings / Members' Equity of
BRDC and Bettendorf, respectively in consolidation with Isle.

37
<PAGE>

ISLE OF CAPRI CASINOS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Fiscal Year Ended April 25, 1999
(In thousands, except per share data)

<TABLE>
<CAPTION>
12 Fiscal 12 Fiscal
12 Fiscal Months (1) 12 Fiscal Months (1)
Months (1) Ended Months (1) Ended
Ended March 31, ISLE LUCK-MM Ended March 31,
April 25, March 31, 1999 Pro Forma March 31, 1999 Pro Forma
1999 ISLE 1999 LUCK GSMC (MM) Condensed 1999 BRDC LLB Condensed
Historical Historical Historical Adjustments Consolidated Historical Historical Adjustments Consolidated
---------- ---------- ---------- ----------- ------------ ---------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue
Casino.......... $424,379 $122,113 $33,025 $ -- $579,517 $ -- $82,986 $ -- $662,503
Rooms........... 10,829 4,324 470 -- 15,623 -- 2,125 -- 17,748
Pari-mutuel
commissions and
fees............ 21,351 -- -- -- 21,351 -- -- -- 21,351
Rent............ -- -- -- -- -- 1,871 -- (1,800)(7) 71
Management fees
from
unconsolidated
joint venture... -- 2,382 -- -- 2,382 325 -- (2,707)(8) --
Food, beverage
and other....... 23,818 18,017 4,329 -- 46,164 -- 7,747 (2,268)(9) 51,643
-------- -------- ------- ------- -------- ------ ------- ------- --------
Total revenue... 480,377 146,836 37,824 -- 665,037 2,196 92,858 (6,775) 753,316
Less:
Promotional
allowances...... -- (12,248) (2,028) -- (14,276) -- (5,161) -- (19,437)
-------- -------- ------- ------- -------- ------ ------- ------- --------
Net revenues.... 480,377 134,588 35,796 -- 650,761 2,196 87,697 (6,775) 733,879
Operating
Expenses
Casino.......... 77,679 50,171 17,250 -- 145,100 -- 22,542 -- 167,642
Rooms........... 3,914 1,755 170 -- 5,839 -- 1,364 -- 7,203
Gaming taxes.... 86,855 -- -- -- 86,855 -- 20,717 -- 107,572
Management
fees--
affiliates...... -- -- -- -- -- -- 2,382 (2,382)(8) --
Pari-mutuel..... 15,741 -- -- -- 15,741 -- -- -- 15,741
Food and
beverage........ 14,204 4,603 2,183 -- 20,990 -- 3,057 -- 24,047
Marine and
facilities...... 28,218 -- -- -- 28,218 -- 2,470 -- 30,688
Marketing and
administrative.. 144,541 42,860 7,493 -- 194,894 112 15,244 (325)(8) 209,925
Valuation
charge.......... 5,097 -- -- -- 5,097 -- -- -- 5,097
Accrued
litigation
settlement
(reversal)...... (4,215) -- -- -- (4,215) -- -- -- (4,215)
Preopening
expenses........ 3,320 -- -- -- 3,320 -- 1,157 -- 4,477
Related party
license fees.... -- 3,463 -- -- 3,463 -- -- -- 3,463
Gain (loss) on
sale of assets.. -- 2,848 -- -- 2,848 -- (259) -- 2,589
Rental
expenses--
affiliates...... -- -- -- -- -- -- 4,343 (4,068)(7,9) 275
Consulting
agreement....... -- -- -- 500(2) 500 -- -- -- 500
Depreciation and
amortization.... 36,277 8,206 2,433 3,600(3) 50,516 187 2,819 1,726 (10) 55,248
-------- -------- ------- ------- -------- ------ ------- ------- --------
Total operating
expenses........ 411,631 113,906 29,529 4,100 559,166 299 75,836 (5,049) 630,252
-------- -------- ------- ------- -------- ------ ------- ------- --------
Operating
income.......... 68,746 20,682 6,267 (4,100) 91,595 1,897 11,861 (1,726) 103,627
</TABLE>

38
<PAGE>

ISLE OF CAPRI CASINOS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (continued)
For the Fiscal Year Ended April 25, 1999
(In thousands, except per share data)

<TABLE>
<CAPTION>
12 Fiscal 12 Fiscal
12 Fiscal Months (1) 12 Fiscal Months (1)
Months (1) Ended Months (1) Ended
Ended March 31, ISLE LUCK-MM Ended March 31,
April 25, March 31, 1999 Pro Forma March 31, 1999
1999 ISLE 1999 LUCK GSMC (MM) Condensed 1999 BRDC LLB
Historical Historical Historical Adjustments Consolidated Historical Historical Adjustments
---------- ---------- ---------- ----------- ------------ ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest
expense......... (48,638) (21,572) (2,715) (21,063)(4) (93,988) (910) (1,401) 2,311 (11)
Interest income. 2,907 2,226 -- -- 5,133 -- 145 --
Minority
interest........ 2,209 -- -- -- 2,209 -- -- --
Other........... -- (703) -- -- (703) -- -- --
Equity in income
(loss) of
unconsolidated
joint ventures.. (1,340) 5,043 -- -- 3,703 5,043 -- (10,086)(12)
-------- -------- ------- -------- -------- ---------- ------- --------
Income before
income taxes and
extraordinary
item............ 23,884 5,676 3,552 (25,163) 7,949 6,030 10,605 (9,501)
Income tax
provision....... 11,775 90 1,242 (3,327)(5) 9,780 -- -- (1,257)(5)
-------- -------- ------- -------- -------- ---------- ------- --------
Income before
extraordinary
item............ 12,109 5,586 2,310 (21,836) (1,831) 6,030 10,605 (8,244)
Extraordinary
loss on
extinguishment
of debt, net of
income tax
benefit......... (36,285) -- -- -- (36,285) -- -- --
-------- -------- ------- -------- -------- ---------- ------- --------
Net income...... $(24,176) $ 5,586 $ 2,310 $(21,836) $(38,116) $ 6,030 $10,605 $ (8,244)
======== ======== ======= ======== ======== ========== ======= ========
Preferred stock
dividends....... -- (2,272) -- 2,272 (6) -- -- -- --
-------- -------- ------- -------- -------- ---------- ------- --------
Income (loss)
applicable to
common
stockholders.... $(24,176) $ 3,314 $ 2,310 $(19,564) $(38,116) $ 6,030 $10,605 $ (8,244)
======== ======== ======= ======== ======== ========== ======= ========
Earnings (loss)
per common share:
Income (loss)
before
extraordinary
item and
preferred
dividends....... $ 0.51 $ 1.14 $15,075.00
Extraordinary
loss, net....... (1.54) -- --
-------- -------- ----------
Net income
(loss)
applicable to
common
stockholders.... $ (1.03) $ 0.68 $15,075.00
======== ======== ==========
Earnings (loss)
per common
share--assuming
dilution:
Income (loss)
before
extraordinary
item and
preferred
dividends....... $ 0.51 $ 1.14 $15,075.00
Extraordinary
loss, net....... (1.52) -- --
-------- -------- ----------
Net income
(loss)
applicable to
common
stockholders.... $ (1.01) $ 0.68 $15,075.00
======== ======== ==========
Weighted average
basic shares..... 23,569 4,881 0.400 (13)
Weighted average
diluted shares... 23,859 4,881 0.400 (13)
<CAPTION>
Pro Forma
Condensed
Consolidated
------------
<S> <C>
Interest
expense......... (93,988)
Interest income. 5,278
Minority
interest........ 2,209
Other........... (703)
Equity in income
(loss) of
unconsolidated
joint ventures.. (1,340)
------------
Income before
income taxes and
extraordinary
item............ 15,083
Income tax
provision....... 8,523
------------
Income before
extraordinary
item............ 6,560
Extraordinary
loss on
extinguishment
of debt, net of
income tax
benefit......... (36,285)
------------
Net income...... $ (29,725)
============
Preferred stock
dividends....... --
------------
Income (loss)
applicable to
common
stockholders.... $ (29,725)
============
Earnings (loss)
per common share:
Income (loss)
before
extraordinary
item and
preferred
dividends....... $ 0.22
Extraordinary
loss, net....... (1.22)
------------
Net income
(loss)
applicable to
common
stockholders.... $ (1.00)
============
Earnings (loss)
per common
share--assuming
dilution:
Income (loss)
before
extraordinary
item and
preferred
dividends....... $ 0.22
Extraordinary
loss, net....... (1.21)
------------
Net income
(loss)
applicable to
common
stockholders.... $ (0.99)
============
Weighted average
basic shares..... 29,799
Weighted average
diluted shares... 30,089
</TABLE>

39
<PAGE>

ISLE OF CAPRI CASINOS, INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
For the Fiscal Year Ended April 25, 1999

1) The historical financial statements have been updated to a period within
93 days of ISLE's fiscal year end of April 25, 1999, and reflects 12
months ended March 31, 1999.
2) Reflects compensation expense related to a consulting, advisory and
noncompete agreement with a former LUCK shareholder.
3) Reflects the amortization of goodwill related to the LUCK and Miss
Marquette Acquisitions. Goodwill is being amortized over 25 years.
4) Reflects interest expense on the new Senior Credit Facility of $42.8
million and amortization of deferred financing costs related to this debt
of $2.6 million, net of interest expense on debt retired as a result of
these acquisition transactions totaling $24.2 million.
5) Reflects income tax effects of pro forma adjustments.
6) Reflects the redemption of the Preferred Stock of LUCK.
7) Reflects the elimination of land rental revenue received by BRDC from
Bettendorf and the corresponding elimination of land rental expense on
Bettendorf's books.
8) Reflects the elimination of Casino Management Fees received by LUCK from
Bettendorf and Vessels Management Fees received by BRDC from Bettendorf
and the corresponding elimination of Casino Management Fees expense and
Vessels Management Fees expense on Bettendorf's books.
9) Reflects the elimination of vessel rental revenue received by LUCK from
Bettendorf and the corresponding elimination of vessel rental expense on
Bettendorf's books.
10) Reflects the amortization of goodwill related to the BRDC Acquisition.
Goodwill is being amortized over 25 years.
11) Reflects the reduction of interest expense related to the pay-off of debt
as part of the BRDC Acquisition.
12) Reflects the elimination of Equity in Income of Unconsolidated
Subsidiaries for LUCK and BRDC related to their ownership interests in
Bettendorf.
13) Reflects the issuance of ISLE Common Stock as part of the BRDC
Acquisition.

40
<PAGE>

ISLE OF CAPRI CASINOS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Six Fiscal Months Ended October 24, 1999
(In thousands, except per share data)

<TABLE>
<CAPTION>
6 Fiscal 6 Fiscal
6 Fiscal Months (1) 6 Fiscal Months (1)
Months (1) Ended Months (1) Ended
October 24, Ended Sept. 30, ISLE LUCK-MM Ended Sept. 30,
1999 Sept. 30, 1999 GSMC Pro Forma Sept. 30, 1999 Pro forma
ISLE 1999 LUCK (MM) Condensed 1999 BRDC LLB Condensed
Historical Historical Historical Adjustments Consolidated Historical Historical Adjustments Consolidated
----------- ---------- ---------- ----------- ------------ ---------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue
Casino.......... $269,813 $65,541 $16,986 $ -- $352,340 $_ -- $45,764 $ -- $398,104
Rooms........... 5,445 3,191 281 -- 8,917 -- 2,319 -- 11,236
Pari-mutuel
commissions and
fees............ 8,349 -- -- -- 8,349 -- -- -- 8,349
Rent............ -- -- -- -- -- 900 -- (900)(7) --
Management fees
from
unconsolidated
joint venture... -- 1,456 -- -- 1,456 162 -- (1,618)(8) --
Food, beverage
and other....... 13,595 10,045 2,531 -- 26,171 -- 4,723 (1,134)(9) 29,760
-------- ------- ------- ------ -------- ------ ------- ------- --------
Total revenue... 297,202 80,233 19,798 -- 397,233 1,062 52,806 (3,652) 447,449
Less:
Promotional
allowances...... -- (7,559) (1,168) -- (8,727) -- (2,953) -- (11,680)
-------- ------- ------- ------ -------- ------ ------- ------- --------
Net revenues.... 297,202 72,674 18,630 -- 388,506 1,062 49,853 (3,652) 435,769
Operating
Expenses
Casino.......... 50,204 27,767 8,511 -- 86,482 -- 12,697 -- 99,179
Rooms........... 2,448 951 91 -- 3,490 -- 1,032 -- 4,522
Gaming taxes.... 53,748 -- -- -- 53,748 -- 11,593 -- 65,341
Management
fees--
affiliates...... -- 2,054 -- -- 2,054 -- 1,456 (1,456)(8) 2,054
Pari-mutuel..... 6,466 -- -- -- 6,466 -- -- -- 6,466
Food and
beverage........ 8,309 2,461 1,151 -- 11,921 -- 1,408 -- 13,329
Marine and
facilities...... 18,545 -- -- -- 18,545 -- 1,199 -- 19,744
Marketing and
administrative.. 91,378 24,067 3,382 -- 118,827 55 7,869 (162)(8) 126,589
Preopening
expenses........ 3,420 437 -- -- 3,857 -- 46 -- 3,903
Related party
license fees.... -- 1,886 -- -- 1,886 -- -- -- 1,886
Rental
expenses--
affiliates...... -- -- -- -- -- -- 2,244 (2,034)(7,9) 210
Consulting
agreement....... -- -- -- 250 (2) 250 -- -- -- 250
Depreciation and
amortization.... 17,925 4,670 1,247 1,800 (3) 25,642 42 1,854 863 (10) 28,401
-------- ------- ------- ------ -------- ------ ------- ------- --------
Total operating
expenses........ 252,443 64,293 14,382 2,050 333,168 97 41,398 (2,789) 371,874
-------- ------- ------- ------ -------- ------ ------- ------- --------
Operating
income.......... 44,759 8,381 4,248 (2,050) 55,338 965 8,455 (863) 63,895
</TABLE>

41
<PAGE>

ISLE OF CAPRI CASINOS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (continued)
For the Six Fiscal Months Ended October 24, 1999
(In thousands, except per share data)

<TABLE>
<CAPTION>
6 Fiscal
6 Fiscal Months (1) 6 Fiscal 6 Fiscal
Months (1) Ended Months (1) Months (1)
Ended Sept. 30, ISLE LUCK-MM Ended Ended
October 24, Sept. 30, 1999 GSMC Pro Forma Sept. 30, Sept. 30,
1999 ISLE 1999 LUCK (MM) Condensed 1999 BRDC 1999 LLB
Historical Historical Historical Adjustments Consolidated Historical Historical Adjustments
----------- ---------- ---------- ----------- ------------ ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest expense. (25,565) (10,739) (1,161) (10,775)(4) (48,240) (427) (901) 1,328 (11)
Interest income.. 1,543 966 -- -- 2,509 4 108 --
Gain (loss) on
sale of assets... 3,106 -- -- -- 3,106 -- (2) --
Minority
interest......... (1,191) -- -- -- (1,191) -- -- --
Other............ -- (1) -- -- (1) -- -- --
Equity in income
(loss) of
unconsolidated
joint ventures... 637 3,830 -- -- 4,467 3,829 -- (7,659)(12)
-------- -------- ------- -------- -------- ---------- ------ -------
Income before
income taxes..... 23,289 2,437 3,087 (12,825) 15,988 4,371 7,660 (7,194)
Income tax
provision........ 10,129 60 1,080 (1,085)(5) 10,184 -- -- (609)(5)
-------- -------- ------- -------- -------- ---------- ------ -------
Net income....... $ 13,160 $ 2,377 $ 2,007 $(11,740) $ 5,804 $ 4,371 $7,660 $(6,585)
======== ======== ======= ======== ======== ========== ====== =======
Preferred stock
dividends........ -- (1,239) -- 1,239 (6) -- -- -- --
-------- -------- ------- -------- -------- ---------- ------ -------
Income (loss)
applicable to
common
stockholders..... $ 13,160 $ 1,138 $ 2,007 $(10,501) $ 5,804 $ 4,371 $7,660 $(6,585)
======== ======== ======= ======== ======== ========== ====== =======
Earnings (loss)
per common share:
Income (loss)
before
extraordinary
item and
preferred
dividends....... $ 0.56 $ 0.49 $10,927.50
Extraordinary
loss, net....... -- -- --
-------- -------- ----------
Net income
(loss)
applicable to
common
stockholders.... $ 0.56 $ 0.23 $10,927.50
======== ======== ==========
Earnings (loss)
per common
share--assuming
dilution
Income (loss)
before
extraordinary
item and
preferred
dividends....... $ 0.53 $ 0.49 $10,927.50
Extraordinary
loss, net....... -- -- --
-------- -------- ----------
Net income
(loss)
applicable to
common
stockholders.... $ 0.53 $ 0.23 $10,927.50
======== ======== ==========
Weighted average
basic shares..... 23,643 4,881 0.400 (13)
Weighted average
diluted shares... 24,946 4,881 0.400 (13)
<CAPTION>
Pro forma
Condensed
Consolidated
------------
<S> <C>
Interest expense. (48,240)
Interest income.. 2,621
Gain (loss) on
sale of assets... 3,104
Minority
interest......... (1,191)
Other............ (1)
Equity in income
(loss) of
unconsolidated
joint ventures... 637
------------
Income before
income taxes..... 20,825
Income tax
provision........ 9,575
------------
Net income....... $ 11,250
============
Preferred stock
dividends........ --
------------
Income (loss)
applicable to
common
stockholders..... $ 11,250
============
Earnings (loss)
per common share:
Income (loss)
before
extraordinary
item and
preferred
dividends....... $ 0.38
Extraordinary
loss, net....... --
------------
Net income
(loss)
applicable to
common
stockholders.... $ 0.38
============
Earnings (loss)
per common
share--assuming
dilution
Income (loss)
before
extraordinary
item and
preferred
dividends....... $ 0.36
Extraordinary
loss, net....... --
------------
Net income
(loss)
applicable to
common
stockholders.... $ 0.36
============
Weighted average
basic shares..... 29,873
Weighted average
diluted shares... 31,176
</TABLE>

42
<PAGE>

ISLE OF CAPRI CASINOS, INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
For the Six Months Ended October 24, 1999

1) The historical financial statements have been updated to a period within
93 days of ISLE's six months ended of October 24, 1999, and reflects 6
months ended September 30, 1999.
2) Reflects compensation expense related to a consulting, advisory and
noncompete agreement with a former LUCK shareholder.
3) Reflects the amortization of goodwill related to the LUCK and Miss
Marquette Acquisitions. Goodwill is being amortized over 25 years.
4) Reflects interest expense on the new Senior Credit Facility of $21.4
million and amortization of deferred financing costs related to this debt
of $1.3 million, net of interest expense on debt retired as a result of
these acquisition transactions totaling $11.9 million.
5) Reflects income tax effects of pro forma adjustments.
6) Reflects the redemption of the Preferred Stock of LUCK.
7) Reflects the elimination of land rental revenue received by BRDC from
Bettendorf and the corresponding elimination of land rental expense on
Bettendorf's books.
8) Reflects the elimination of Casino Management Fees received by LUCK from
Bettendorf and Vessels Management Fees received by BRDC from Bettendorf
and the corresponding elimination of Casino Management Fees expense and
Vessels Management Fees expense on Bettendorf's books.
9) Reflects the elimination of vessel rental revenue received by LUCK from
Bettendorf and the corresponding elimination of vessel rental expense on
Bettendorf's books.
10) Reflects the amortization of goodwill related to the BRDC Acquisition.
Goodwill is being amortized over 25 years.
11) Reflects the reduction of interest expense related to the pay-off of debt
as part of the BRDC Acquisition.
12) Reflects the elimination of Equity in Income of Unconsolidated
Subsidiaries for LUCK and BRDC related to their ownership interest in
Bettendorf.
13) Reflects the issuance of ISLE Common Stock as part of the BRDC
Acquisition.

43
<PAGE>

ANNEX A

Agreement and Plan of Merger

dated as of December 19, 1999

among

ISLE OF CAPRI CASINOS, INC.,

BRDC, INC.

and

THE SHAREHOLDERS OF BRDC, INC.
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----

ARTICLE I

The Merger

<S> <C>
Section 1.1. The Merger................................................... A-1
Section 1.2. Effective Time of the Merger................................. A-1
Section 1.3. Closing...................................................... A-2
Section 1.4. Effect of the Merger......................................... A-2
Section 1.5. Certificate of Incorporation and Bylaws of the Surviving
Corporation.............................................................. A-2
Section 1.6. Directors and Officers of the Surviving Corporation.......... A-2
Section 1.7. Subsidiaries of the Surviving Corporation.................... A-2

ARTICLE II

Effect of the Merger on Securities of the Constituent Corporations

Section 2.1. Conversion of Securities..................................... A-2
Section 2.2. Review of Merger Consideration Calculation................... A-4
Section 2.3. Exchange of Certificates..................................... A-5

ARTICLE III

Representations and Warranties of the Company and the Shareholders

Section 3.1. Organization of the Company and its Subsidiaries............ A-5
Section 3.2. Capitalization.............................................. A-6
Section 3.3. Authority; No Conflict; Required Filings and Consents....... A-6
Section 3.4. Public Filings; Financial Statements........................ A-7
Section 3.5. No Undisclosed Liabilities.................................. A-7
Section 3.6. Absence of Certain Changes or Events........................ A-8
Section 3.7. Taxes....................................................... A-8
Section 3.8. Real Property, Title and Related Matters.................... A-10
Section 3.9. Title to Personal Property; Liens........................... A-11
Section 3.10. Intellectual Property....................................... A-11
Section 3.11. Agreements, Contracts and Commitments....................... A-11
Section 3.12. Litigation.................................................. A-12
Section 3.13. Environmental Matters....................................... A-12
Section 3.14. Employee Benefit Plans...................................... A-13
Section 3.15. Compliance.................................................. A-14
Section 3.16. Labor Matters............................................... A-15
Section 3.17. Insurance................................................... A-15
Section 3.18. Year 2000................................................... A-15
Section 3.19. Brokers..................................................... A-15
Section 3.20. Tax Treatment............................................... A-15
Section 3.21. Acquisition for Investment.................................. A-15
Section 3.22. Proxy Statement............................................. A-16
</TABLE>

A-i
<PAGE>

<TABLE>
<CAPTION>
Page
----

ARTICLE IV

Representations and Warranties of Buyer

<S> <C>
Section 4.1. Organization of Buyer........................................ A-16
Section 4.2. Authority; No Conflict; Required Filings and Consents........ A-16
Section 4.3. Public Filings; Financial Statements......................... A-17
Section 4.4. Absence of Certain Changes or Events......................... A-17
Section 4.5. Litigation................................................... A-18
Section 4.6. Voting Requirements.......................................... A-18
Section 4.7. Tax Treatment................................................ A-18
Section 4.8. Opinion of Financial Advisor................................. A-18
Section 4.9. Lady Luck Waiver............................................. A-18

ARTICLE V

Covenants

Section 5.1. Conduct of Business......................................... A-18
Section 5.2. Cooperation; Notice; Cure................................... A-21
Section 5.3. Access to Information....................................... A-21
Section 5.4. Governmental Approvals...................................... A-21
Section 5.5. Publicity................................................... A-22
Section 5.6. Indemnification............................................. A-22
Section 5.7. Further Assurances and Actions.............................. A-23
Section 5.8. Tax-free Reorganization..................................... A-23
Section 5.9. Loan Repayment.............................................. A-23
Section 5.10. Related Party Agreements.................................... A-23
Section 5.11. LL Bettendorf Distributions................................. A-23
Section 5.12. Other Distributions......................................... A-24
Section 5.13. Shareholder Guarantees...................................... A-24
Section 5.14. Resale Restrictions......................................... A-24
Section 5.15. Legend...................................................... A-24
Section 5.16. Proxy Statement............................................. A-24
Section 5.17. Special Meeting............................................. A-24
Section 5.18. Registration Rights......................................... A-25

ARTICLE VI

Conditions to the Merger

Section 6.1. Conditions to Each Party's Obligation to Effect the Merger... A-25
Section 6.2. Additional Conditions to Obligations of the Shareholders and
the Company.............................................................. A-25
Section 6.3. Additional Conditions to Obligations of Buyer................ A-26
</TABLE>

A-ii
<PAGE>

<TABLE>
<CAPTION>
Page
----

ARTICLE VII

Termination and Amendment

<S> <C>
Section 7.1. Termination.................................................. A-26
Section 7.2. Effect of Termination........................................ A-27
Section 7.3. Fees and Expenses............................................ A-27
Section 7.4. Amendment.................................................... A-28
Section 7.5. Extension; Waiver............................................ A-28

ARTICLE VIII

Miscellaneous

Section 8.1. Survival of Representations, Warranties, Covenants and
Agreements............................................................... A-28
Section 8.2. Notices...................................................... A-28
Section 8.3. Interpretation............................................... A-29
Section 8.4. Counterparts................................................. A-29
Section 8.5. Entire Agreement; No Third-Party Beneficiaries............... A-29
Section 8.6. Governing Law................................................ A-29
Section 8.7. Assignment................................................... A-29
Section 8.8. Severability; Enforcement.................................... A-30
Section 8.9. Specific Performance......................................... A-30
</TABLE>

A-iii
<PAGE>

Index of Defined Terms

The following terms have the respective meanings specified in the indicated
Sections of the Agreement:

<TABLE>
<CAPTION>
Agreement
Term Section
- ---- -----------
<S> <C>
Additional Tax Distributions.................. 5.11
Adjustment Statement.......................... 2.2(a)
Aggregate Merger Consideration.................2.1(d)
Agreement .................................... Recitals
Allocated Net Income ......................... 2.1(d)
Articles of Merger............................ 1.2
BRDC, LC ..................................... Recitals
Buyer......................................... Recitals
Buyer Balance Sheet........................... 4.3(b)
Buyer Common Stock............................ 2.1(a)
Buyer Disclosure Schedule..................... Article IV
Buyer Indemnified Parties..................... 5.6(b)
Buyer Material Adverse Effect................. 4.1
Buyer SEC Reports............................. 4.3(a)
Buyer Share................................... 2.1(a)
Buyer Share Price............................. 2.1(d)
Buyer Special Meeting......................... 5.16
Buyer Stockholder Approval.................... 4.6
Calculation of Merger Consideration........... 2.1(a)
Case.......................................... 5.6(b)
Cash Distribution Amount...................... 2.1(d)
Certificate of Merger......................... 1.2
CIBC.......................................... 4.8
Closing....................................... 1.3
Closing Date.................................. 1.3
Code.......................................... Recitals
Company....................................... Recitals
Company Audited Financial Statements.......... 3.4(b)
Company Balance Sheet......................... 3.4(c)
Company Closing Balance Sheet................. 2.1(d)
Company Common Stock.......................... 2.1
Company Disclosure Schedule................... Article III
Company Indebtedness.......................... 2.1(d)
Company Indebtedness Adjustment............... 2.1(d)
Company Material Adverse Effect............... 3.1
Company Material Contracts.................... 3.11(a)
Company Underwriter........................... 5.18
DGCL.......................................... 1.1
Discretionary Distributions................... 5.11
DNR Leased Property........................... 3.8(c)
do not ever cancel............................ 3.18
Effective Time................................ 1.2
Employee Plans................................ 3.14(a)
Encumbrances.................................. 3.8(c)
Environmental Law............................. 3.13(b)
Environmental Reports......................... 3.13(a)
</TABLE>

A-iv
<PAGE>

<TABLE>
<CAPTION>
Agreement
Term Section
- ---- -----------
<S> <C>
ERISA............................................................... 3.14(a)
ERISA Affiliate..................................................... 3.14(a)
Exchange Act........................................................ 3.3(c)
Exchange Ratio...................................................... 2.1(d)
GAAP................................................................ 2.1(d)
Gaming Laws......................................................... 3.15(a)
Governmental Approvals.............................................. 5.4
Governmental Entity................................................. 3.3(c)
Green Bridge........................................................ 3.13(a)
Hazardous Substance................................................. 3.13(b)
HSR Act............................................................. 3.3(c)
IBCA................................................................ 1.1
include, includes or including...................................... 8.3
Indebtedness........................................................ 3.11(a)
Independent Accountant.............................................. 2.2(a)
IRS................................................................. 3.7(c)
knowledge........................................................... Article III
Lady Luck........................................................... Recitals
Lady Luck Merger Agreement.......................................... Recitals
Lady Luck SEC Reports............................................... 3.4(b)
Lady Luck Transaction............................................... Recitals
Liens............................................................... 3.1
LLB Closing Statement of Operations................................. 2.1(d)
LL Bettendorf....................................................... Recitals
LL Bettendorf Statement of Changes in Members Equity................ 2.1(d)
Losses.............................................................. 5.6(a)
made available...................................................... 8.3
Merger.............................................................. Recitals
Merger Consideration................................................ 2.1(a)
Multiemployer Plan.................................................. 3.14(e)
Net Adjustment Amount............................................... 2.1(d)
Notifying Party..................................................... 5.4(a)
Outside Date........................................................ 7.1(b)
Owned Real Property................................................. 3.8(c)
PBGC................................................................ 3.14(f)
Permits............................................................. 3.15(a)
Permitted Distributions............................................. 5.11
Permitted Encumbrances.............................................. 3.8(c)
prohibited transactions............................................. 3.14(c)
Proxy Statement..................................................... 5.15
Purchase Agreement.................................................. 5.6(d)
SEC................................................................. 3.3(c)
Securities Act...................................................... 4.3(a)
Services............................................................ 3.18
Settlement Amount................................................... 2.2(a)
Settlement Amount Certificate....................................... 2.2(a)
Settlement Date..................................................... 2.2(c)
Shareholder Indemnified Parties..................................... 5.6(a)
Shareholders........................................................ Recitals
single employer..................................................... 3.14(a)
</TABLE>

A-v
<PAGE>

<TABLE>
<CAPTION>
Agreement
Term Section
- ---- ---------
<S> <C>
strategic alliances................... 3.11(a)
Subsidiary............................ 3.1
Surviving Corporation................. 1.1
Tax or Taxes.......................... 3.7(a)
Terminating Buyer Breach...............7.1(e)
Terminating Company Breach............ 7.1(d)
the date hereof....................... 8.3
the date of this Agreement............ 8.3
Total Securities...................... 5.18
Transactions.......................... Recitals
Unreimbursed Amounts.................. 5.6(c)
Voting Debt........................... 3.2(c)
Welfare Plan.......................... 3.14(g)
without limitation.................... 8.3
Year 2000 Ready....................... 3.18
</TABLE>

A-vi
<PAGE>

AGREEMENT AND PLAN OF MERGER

Agreement and Plan of Merger (the "Agreement"), dated as of December 19,
1999, by and among Isle of Capri Casinos, Inc., a Delaware corporation
("Buyer"), BRDC, Inc., an Iowa corporation (the "Company"), and Jeffrey D.
Goldstein, Richard A. Goldstein, Robert S. Goldstein and Irene S. Goldstein
(collectively, the "Shareholders").

Whereas, the Company, through its wholly owned subsidiary Bettendorf
Riverfront Development Company, L.C., an Iowa limited liability company
("BRDC, LC"), owns 50% of the membership interests of Lady Luck Bettendorf,
L.C., an Iowa limited liability company ("LL Bettendorf");

Whereas, Buyer and Lady Luck Gaming Corporation ("Lady Luck") have entered
into an Agreement and Plan of Merger (the "Lady Luck Merger Agreement"),
pursuant to which Lady Luck would become a wholly owned subsidiary of Buyer
(the "Lady Luck Transaction");

Whereas, upon the closing of the Lady Luck Transaction (the consummation of
which is subject to various conditions precedent) and subject to the terms and
conditions set forth herein, Buyer desires to acquire from the Shareholders,
and the Shareholders desire to transfer to Buyer, all of the outstanding
capital stock of the Company;

Whereas, the Board of Directors of the Company has determined that the
merger of the Company with and into Buyer, upon the terms and subject to the
conditions set forth in this Agreement (the "Merger"), is fair to, and in the
best interests of, the Company and the Shareholders;

Whereas, the Board of Directors of Buyer, acting through a special
committee thereof, has determined that the Merger is fair to, and in the best
interests of, Buyer and its stockholders.

Whereas, the Boards of Directors of Buyer and the Company and the
Shareholders have each approved and adopted this Agreement and approved the
Merger and the other transactions contemplated hereby (the "Transactions");
and

Whereas, the parties intend, by executing this Agreement, to adopt a plan
of reorganization within the meaning of Section 368 of the Internal Revenue
Code of 1986, as amended (the "Code"), and to cause the Merger to qualify as a
reorganization under the provisions of Section 368(a)(1)(A) of the Code.

Now, Therefore, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties agree as follows:

ARTICLE I

The Merger

Section 1.1. The Merger. Upon the terms and subject to the provisions of
this Agreement and in accordance with Section 490.1101 of the Iowa Business
Corporation Act ("IBCA") and Section 252 of the Delaware General Corporation
Law (the "DGCL"), at the Effective Time (as defined in Section 1.2), the
Company shall be merged with and into Buyer. As a result of the Merger, the
separate corporate existence of the Company shall cease and Buyer shall
continue as the surviving corporation (the "Surviving Corporation").

Section 1.2. Effective Time of the Merger. Subject to the provisions of
this Agreement (including Section 7.1 hereof), a certificate of merger (the
"Certificate of Merger") and articles of merger ("Articles of Merger") with
respect to the Merger in appropriate form shall be duly prepared, executed and
acknowledged and thereafter delivered to the Secretary of State of the State
of Delaware and the Secretary of State of the State of Iowa, as applicable,
for filing, as provided in the DGCL and IBCA, as applicable, as early as
practicable on the Closing

A-1
<PAGE>

Date (as defined in Section 1.3). The Merger shall become effective at the
later of the date of filing of the Certificate of Merger or the Articles of
Merger (the "Effective Time").

Section 1.3. Closing. The closing of the Merger (the "Closing") will take
place at such time and place to be agreed upon by the parties hereto, on a
date to be specified by Buyer and the Company, which shall be no later than
the third business day after satisfaction or, if permissible, waiver of the
conditions set forth in Article VI and on the closing date of the Lady Luck
Transaction (the "Closing Date"), unless another date is agreed to by Buyer
and the Company.

Section 1.4. Effect of the Merger. Upon becoming effective, the Merger
shall have the effects set forth in the IBCA and DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all
properties, rights, privileges, powers and franchises of the Company and Buyer
shall vest in the Surviving Corporation, and all debts, liabilities and duties
of the Company and Buyer shall become the debts, liabilities and duties of the
Surviving Corporation.

Section 1.5. Certificate of Incorporation and Bylaws of the Surviving
Corporation. At the Effective Time, the Certificate of Incorporation and
Bylaws of the Buyer in effect immediately prior to the Effective Time shall be
the Certificate of Incorporation and Bylaws of the Surviving Corporation, in
each case until duly amended in accordance with applicable law.

Section 1.6. Directors and Officers of the Surviving Corporation. The
directors of Buyer immediately prior to the Effective Time shall be the
initial directors of the Surviving Corporation, each to hold office in
accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation. The officers of Buyer immediately prior to the Effective Time
shall be the initial officers of the Surviving Corporation, each to hold
office in accordance with the Certificate of Incorporation and Bylaws of the
Surviving Corporation.

Section 1.7. Subsidiaries of the Surviving Corporation. The Surviving
Corporation may undertake transactions having the effect of reorganizing the
structure of the Subsidiaries of the Company from time to time after the
Effective Time provided that such transactions shall not disqualify the Merger
as a reorganization under the provisions of Section 368(a)(1)(A) of the Code.

ARTICLE II

Effect of the Merger on Securities of
the Constituent Corporations

Section 2.1. Conversion of Securities. At the Effective Time, by virtue of
the Merger and without any action on the part of any of the parties hereto or
the holders of any of the following:

(a) Company Common Stock. Each share of common stock, no par value per
share, of the Company ("Company Common Stock") issued and outstanding
immediately prior to the Effective Time (other than shares to be canceled
and retired in accordance with Section 2.1(b)), together with all rights in
respect thereto, shall be converted into and become exchangeable for the
number of shares of Buyer Common Stock, par value $0.01 per share ("Buyer
Common Stock") (each share of Buyer Common Stock, a "Buyer Share," and
collectively, the "Buyer Shares"), as calculated by the Exchange Ratio (as
defined in Section 2.1(d)) (the "Merger Consideration"); provided however,
that the number of shares of Buyer Common Stock issued shall not exceed
6,300,000 shares as provided for in Section 5.11. The Company shall deliver
to Buyer at or before the Closing its good faith estimate of the
calculation of Merger Consideration prepared consistent with the terms
defined in Section 2.1(d) (the "Calculation of Merger Consideration") and
the number of Buyer Shares issued and delivered at Closing shall be based
upon such estimate. Fractional shares shall not be issued, and each
Shareholder shall receive in exchange for each tendered share of Company
Common Stock the nearest number of whole Buyer Shares determined by the
Exchange Ratio. As of the Effective Time, all shares of Company Common
Stock upon which the Merger Consideration is payable

A-2
<PAGE>

pursuant to this Section 2.1(a) shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
holder of a certificate representing any such shares shall cease to have
any ownership or other rights with respect thereto, except the right to
receive the Merger Consideration in exchange for such shares upon the
surrender of such certificate in accordance with Section 2.3.

(b) Cancellation of Treasury Stock. All shares of Company Common Stock
that are owned by the Company as treasury stock shall be canceled and
retired and shall cease to exist, and no consideration shall be delivered
in exchange therefor.

(c) Adjustments to Merger Consideration. The Merger Consideration shall
be adjusted to reflect fully the effect of any stock split, reverse split,
stock dividend (including any dividend or distribution of securities
convertible into Company Common Stock or Buyer Common Stock, as
applicable), reorganization, recapitalization or any other like change with
respect to Company Common Stock or Buyer Common Stock occurring after the
date hereof and prior to the Effective Time.

(d) As used in this Section 2.1, the following terms shall have the
following meanings:

"Exchange Ratio" shall mean the quotient of the Aggregate Merger
Consideration divided by the number of shares of Company Common Stock
outstanding immediately prior to the Closing.

"Aggregate Merger Consideration" shall mean 6,210,000 shares of
Buyer Common Stock as increased (if the Net Adjustment Amount is
positive) or decreased (if the Net Adjustment Amount is negative) by
the quotient of the Net Adjustment Amount divided by the Buyer Share
Price.

"Net Adjustment Amount" shall mean (i) the Allocated Net Income,
minus (ii) the Company Indebtedness Adjustment, minus (iii) the Cash
Distribution Amount.

"Allocated Net Income" shall be equal to one-half of the net income
of LL Bettendorf from October 1, 1999 through and including the
Effective Time as derived from the LLB Closing Statement of Operations.

"LLB Closing Statement of Operations" shall mean the consolidated
statement of operations of LL Bettendorf and its subsidiary for the
period from October 1, 1999 through and including the Effective Time
which shall be prepared by LL Bettendorf in accordance with generally
accepted accounting principles ("GAAP") applied on a basis consistent
with the LL Bettendorf Statement of Operations for the year ended
December 31, 1998.

"Company Indebtedness Adjustment" shall be the difference between
(i) the Company Indebtedness and (ii) $10,200,000, it being understood
that if the Company Indebtedness is less than $10,200,000, the Company
Indebtedness Adjustment shall be a negative number.

"Company Indebtedness" shall mean the total indebtedness of the
Company and BRDC, LC at the Effective Time as derived from the Company
Closing Balance Sheet and shall not include any indebtedness of LL
Bettendorf.

"Company Closing Balance Sheet" shall mean the consolidated balance
sheet of the Company which shall be prepared by the Company in
accordance with GAAP applied on a basis consistent with the Company
Audited Financial Statements for the year ended December 31, 1998 as of
the Effective Time.

"Cash Distribution Amount" shall be equal to the sum of all amounts
distributed by LL Bettendorf to BRDC, LC after September 30, 1999
through and including the Effective Time (excluding payments of rent
and management fees under existing agreements) as reflected on the
Company Statement of Shareholders' Equity.

"LL Bettendorf Statement of Changes in Members' Equity" shall mean
the consolidated statement of changes in members' equity of LL
Bettendorf which shall be prepared as of the Effective Time in
accordance with GAAP applied on a basis consistent with the audited
balance sheet of LL Bettendorf as of December 31, 1998 for the period
from October 1, 1999 through the Effective Time which shall set forth
all distributions to its members.

A-3
<PAGE>

"Buyer Share Price" shall be equal to $9.486 per share (the average
per share closing price of the Buyer's Common Stock as quoted on the
Nasdaq Stock Market for the forty-five (45) Nasdaq Stock Market trading
days ended September 22, 1999).

Section 2.2. Review of Merger Consideration Calculation.

(a) The Shareholders shall deliver to Buyer their final Calculation of
Merger Consideration prepared consistent with the terms defined in Section
2.1(d) within 30 days of the Effective Time. The Buyer shall have until 30
days after receipt of the Calculation of Merger Consideration to review the
Calculation of Merger Consideration prepared by the Shareholders and propose
any adjustments thereto, but only on the basis that the Calculation of Merger
Consideration was not made on the basis provided for in Section 2.1(d),
including, without limitation, that the LLB Closing Statement of Operations
and Company Closing Balance Sheet were not prepared in accordance with GAAP,
consistently applied. All adjustments proposed by the Buyer to the Calculation
of Merger Consideration shall be set out in detail in a written statement
delivered to the Shareholders (the "Adjustment Statement"). If within 30 days
after receipt by the Buyer of the Calculation of Merger Consideration, the
Shareholders have not received an Adjustment Statement from the Buyer, the
Calculation of Merger Consideration delivered by the Shareholders shall be
final and binding on the parties. If the Shareholders receive an Adjustment
Statement from Buyer during such 30 day period, the Shareholders and the Buyer
shall use reasonable efforts to resolve the differences, but if a final
resolution thereof is not obtained within 30 days after the Buyer delivers to
the Shareholders the Adjustment Statement, Buyer and the Shareholders shall
promptly retain Deloitte & Touche LLP or another nationally recognized
independent accounting firm acceptable to both the Shareholders and Buyer (the
"Independent Accountant") to resolve any remaining disputes related to the
Adjustment Statement. Either the Shareholders or Buyer may retain the
Independent Accountant upon the expiration of such 30-day period. If the
Independent Accountant is retained, then (i) the Shareholders and Buyer shall
each submit to the Independent Accountant in writing not later than 15 days
after the Independent Accountant is retained their respective positions with
respect to the Adjustment Statement, together with such supporting
documentation as they deem necessary or as the Independent Accountant
requests, (ii) the Independent Accountant shall, within 30 days after
receiving the positions of both the Shareholders and Buyer and all
supplementary supporting documentation requested by the Independent Accountant
or if such information is not received, 30 days after the Independent
Accountant's written request, render its decision as to the disputed items,
which decision shall be final and binding on, and nonappealable by, the
Shareholders and Buyer. The fees and expenses of the Independent Accountant
shall be paid one half by Buyer and one half by the Shareholders. The decision
of the Independent Accountant shall also include a certificate of the
Independent Accountant setting forth the final amount of the Merger
Consideration and the Settlement Amount (the "Settlement Amount Certificate").
The Calculation of Merger Consideration shall be deemed to include all
proposed adjustments not disputed by the Buyer and those adjustments accepted
or made by the decision of the Independent Accountant in resolving the
disputed items (the "Settlement Amount").

(b) On or before the Settlement Date (as hereinafter defined), either:

(i) If the Settlement Amount is greater than zero, Buyer shall deliver
the Settlement Amount in Buyer Shares (the number of Buyer Shares
determined by dividing the Settlement Amount by the Buyer Share Price) to
the Shareholders; or

(ii) If the Settlement Amount is less than zero, Buyer shall make a
claim against the Buyer Shares distributed to the Shareholders (the number
of Buyer Shares determined by dividing the Settlement Amount by the Buyer
Share Price) and the Shareholders shall tender to the Buyer such number of
Buyer Shares.

(i) If Buyer has not timely delivered an Adjustment Statement to the
Shareholders, 30 days after the date Buyer receives the Calculation of
Merger Consideration;

(ii) If the Shareholders and Buyer have any disputes regarding the
Adjustment Statement and resolve those disputes, five business days after
such resolution;

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(iii) Subject to clause (ii) above, if the Independent Accountant has
been retained, five business days after the date of the Independent
Accountant's decision; or

(iv) Such other date as may be agreed between the Shareholders and
Buyer.

Section 2.3. Exchange of Certificates. At the Closing, (a) the Shareholders
shall deliver to Buyer certificates representing shares of Company Common
Stock, duly endorsed (or accompanied by duly executed stock powers), with
signatures guaranteed by a commercial bank or by a member firm of the New York
Stock Exchange, for transfer to Buyer and (b) Buyer shall deliver to each
Shareholder a Certificate representing the number of whole shares of Buyer
Common Stock that such Shareholder is entitled to receive pursuant to Section
2.1(a).

ARTICLE III

Representations and Warranties of the Company and the Shareholders

The Company and the Shareholders jointly and severally represent and
warrant to Buyer that the statements contained in this Article III are true
and correct except as set forth in the disclosure schedule delivered by the
Company and the Shareholders to Buyer on or before the date of this Agreement
(the "Company Disclosure Schedule"). Any reference in the Agreement to the
"Company's knowledge" or the "Company's best knowledge," or to "the best of
the Company's knowledge," or words of similar import, shall be deemed a
reference to the actual knowledge of any of (i) the Shareholders and (ii)
Robert G. Ellis and Michael L. Sampson. The Company Disclosure Schedule has
been prepared based upon the foregoing definition.

Section 3.1. Organization of the Company and its Subsidiaries. The Company
and each of its Subsidiaries (as defined below) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has all requisite corporate or limited liability company
power and authority to carry on its business as now being conducted and as
will be conducted until the Effective Time. Each Subsidiary of the Company is
listed on Section 3.1 of the Company Disclosure Schedule. The Company and each
of its Subsidiaries are duly qualified or licensed to do business and are in
good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be so
qualified, licensed or in good standing would not have a material adverse
effect on the business, properties, condition (financial or otherwise),
prospects or results of operations of the Company and each of its
Subsidiaries, taken as a whole (a "Company Material Adverse Effect"). The
Company has delivered to Buyer a true and correct copy of the Articles of
Incorporation and bylaws of the Company and the Articles of Incorporation, or
Articles of Organization and Operating Agreement of each of its Subsidiaries,
in each case as amended to the date of this Agreement. Assuming the receipt of
all regulatory approvals required to be obtained by Buyer, the respective
organizational documents of the Company and each of its Subsidiaries do not
contain any provision that would limit or otherwise restrict the ability of
Buyer, following the Effective Time, from owning or operating the business
conducted by the Company and its Subsidiaries on the same basis as such
business has been operated to the date hereof by the Company and its
Subsidiaries. Except as set forth on the Company Disclosure Schedule, all the
outstanding shares of capital stock of, or membership or other equity
interests in, each of the Company's Subsidiaries, which are owned by the
Company or its Subsidiaries, have been validly issued and are fully paid and
nonassessable and are owned directly or indirectly by the Company, free and
clear of all pledges, claims, liens, charges, encumbrances, security interests
and rights of others of any kind or nature whatsoever (collectively, "Liens")
and free of any other restriction not set forth in the organizational
documents (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or interests). As used in this Agreement, the
term "Subsidiary" means, with respect to any party, any corporation or other
organization, whether incorporated or unincorporated, of which (i) such party
or any other Subsidiary of such party is a general partner or (ii) at least
fifty percent (50%) of the securities or other interests having by their terms
ordinary voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or by
any one or more of its Subsidiaries, or by such

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party and one or more of its Subsidiaries; and for the avoidance of doubt the
term "Subsidiary" includes, in the case of the Company, BRDC, LC, LL
Bettendorf and Lady Luck Bettendorf Marina Corporation.

Section 3.2. Capitalization.

(a) The authorized capital stock of the Company consists entirely of 10,000
shares of Common Stock, with no par value per share. As of the date hereof,
400 shares of Common Stock were issued and outstanding, all of which are
validly issued, fully paid and nonassessable. The Company directly owns 100%
of the membership interests in BRDC, LC. As of the date hereof, BRDC, LC owns
50% of LL Bettendorf's outstanding membership interests, and all such
membership interests owned by BRDC, LC are validly issued, fully paid and
nonassessable. LL Bettendorf has a single Subsidiary, Lady Luck Bettendorf
Marina Corporation.

(b) Except as disclosed in Section 3.2(b) of the Company Disclosure
Schedule, there are no obligations, contingent or otherwise, of the Company or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares
of or membership interests in or the capital stock or ownership interests of
any other entity or to provide funds to or make any investment in an amount
greater than $100,000 in the aggregate (in the form of a loan, capital
contribution or otherwise) in any other entity, other than guarantees of bank
obligations or indebtedness for borrowed money of a wholly owned Subsidiary
entered into in the ordinary course of business. All of the outstanding shares
of capital stock or other ownership interests of each of the Company=s
Subsidiaries, which are owned by the Company or its Subsidiaries, are duly
authorized, validly issued, fully paid and nonassessable and all such shares
and ownership interests are owned directly or indirectly by the Company, free
and clear of all Liens and free of any other restriction (including any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or interests).

(c) There are no bonds, debentures, notes or other indebtedness having
voting rights (or convertible into securities having such rights) in
connection with the Transactions ("Voting Debt" of the Company or any of its
Subsidiaries that are issued and outstanding, other than the debt securities
or other indebtedness set forth in Section 3.2(c) of the Company Disclosure
Schedule. Except as set forth in Section 3.2(c) of the Company Disclosure
Schedule, (i) there are no shares of capital stock of any class of the Company
or any equity interests of any of its Subsidiaries, or any security
exchangeable into or exercisable for such capital stock or equity securities,
issued, reserved for issuance or outstanding; (ii) there are no options,
warrants, equity securities, calls, rights, commitments or agreements of any
character to which the Company or any of its Subsidiaries is a party or by
which any of them is bound obligating the Company or any of its Subsidiaries
to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other ownership interests (including
Voting Debt) of the Company or any of its Subsidiaries or obligating the
Company or any of its Subsidiaries to grant, extend, accelerate the vesting of
or enter into any such option, warrant, equity security, call, right,
commitment or agreement; and (iii) there are no voting trusts, proxies or
other voting agreements or understandings with respect to the shares of
capital stock of the Company or equity interests of any of the Company's
Subsidiaries.

Section 3.3. Authority; No Conflict; Required Filings and Consents.

(a) The Shareholders and the Company have all requisite power and authority
to enter into this Agreement and to consummate the transactions contemplated
by this Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by the Shareholders and
the Company have been duly authorized by all necessary corporate action on the
part of the Company (including a unanimous vote of the Shareholders) and the
Shareholders. This Agreement has been duly executed and delivered by the
Shareholders and the Company and constitutes the valid and binding obligation
of the Shareholders and the Company, enforceable against the Shareholders and
the Company in accordance with its terms.

(b) Other than as disclosed in Section 3.3(b) of the Company Disclosure
Schedule, the execution and delivery of this Agreement by the Shareholders and
the Company do not, and the consummation of the

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transactions contemplated hereby will not, (i) conflict with, or result in any
violation or breach of, any provision of the Articles of Incorporation or
bylaws of Company, Operating Agreement or comparable charter or organizational
documents of any of the Company's Subsidiaries, (ii) result in any violation
or breach of, or constitute (with or without notice or lapse of time, or both)
a default (or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of any material benefit) under, or
require a consent or waiver under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, contract or other agreement,
instrument or obligation to which the Shareholders, the Company or any of the
Company's Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound, or (iii) subject to the governmental
filings and other matters referred to in Section 3.3(c) or on the Company
Disclosure Schedule as referred to therein, conflict with or violate any
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company, any of its
Subsidiaries or any of its or their properties or assets, except in the case
of clauses (ii) and (iii) for any such conflicts, violations, defaults,
terminations, cancellations or accelerations which (x) are not, individually
or in the aggregate, reasonably likely to have a Company Material Adverse
Effect or (y) would not prevent or materially delay the consummation of the
Transactions.

(c) Except as disclosed in Section 3.3(c) of the Company Disclosure
Schedule, no consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency, commission,
gaming authority or other governmental authority or instrumentality
("Governmental Entity") is required of the Company or the Shareholders in
connection with the execution and delivery of this Agreement, the consummation
of the Transactions contemplated hereby or the operation of the business as
presently conducted by LL Bettendorf from and after the date hereof through
the Effective Time, except for (i) the filing of pre-merger notification
reports under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended ("HSR Act"), (ii) the filing of the Certificate of Merger and Articles
of Merger with respect to the Merger with the Secretary of State of the State
of Delaware and the Secretary of State of the State of Iowa, as applicable,
(iii) the filing by Buyer of the Proxy Statement (as such term is defined in
Section 5.15(a) below) with the Securities and Exchange Commission (the "SEC")
in accordance with the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (iv) any approvals and filing of notices required under any
gaming industry regulation applicable to Buyer, (v) such consents, approvals,
orders, authorizations, permits, filings or registrations related to, or
arising out of, compliance with statutes, rules or regulations regulating the
consumption, sale or serving of alcoholic beverages and (vi) such immaterial
filings and consents as may be required under any environmental, health or
safety law or regulation pertaining to any notification, disclosure or
required approval triggered by the Transactions.

Section 3.4. Public Filings; Financial Statements.

(a) None of the Company or any of its Subsidiaries is required to file
forms, reports and documents with the SEC.

(b) The balance sheets of the Company as of December 31, 1997 and 1998 and
the related statements of operations, retained earnings and cash flows for the
years then ended, audited by McGladrey & Pullen, LLP (the "Company Audited
Financial Statements") present fairly the financial position of the Company in
accordance with GAAP, consistently applied.

(c) The unaudited balance sheet (the "Company Balance Sheet") of the
Company at September 30, 1999 and the related unaudited statements of
operations and retained earnings for the twelve month period then ended
present fairly the financial position of the Company in accordance with GAAP,
consistently applied, subject to normal recurring year-end adjustments and the
absence of notes (that if presented, would not differ materially from those
included in the Company Audited Financial Statements).

Section 3.5. No Undisclosed Liabilities. Except as set forth on the Company
Balance Sheet and in Section 3.5 of the Company Disclosure Schedule and except
for liabilities and obligations incurred since the date of the Company Balance
Sheet in the ordinary course of business consistent with past practice, the
Company and its

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Subsidiaries do not have any liabilities accrued, contingent or otherwise, and
whether due or to become due, required to be reflected in financial
statements, including the notes thereto in accordance with GAAP, consistently
applied.

Section 3.6. Absence of Certain Changes or Events. Except as disclosed in
Section 3.6 of the Company Disclosure Schedule, from the date of the Company
Balance Sheet through the date hereof, the Company and its Subsidiaries have
conducted their respective businesses only in the ordinary course consistent
with past practice, and there has not been (a) any event, series of events,
condition or series of conditions that has had, or could reasonably be
expected to have, a Company Material Adverse Effect; (b) any declaration,
setting aside or payment of any dividend or other distribution (whether in
cash, stock or property) with respect to any of the Company's or any of its
Subsidiaries' membership interests or other equity interests; (c) any split,
combination or reclassification of any of its membership interests or other
equity interests or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in substitution for, its
membership interests; (d) (i) any granting by the Company or its Subsidiaries
to any manager or officer of the Company or its Subsidiaries of any increase
in compensation, except in the ordinary course of business consistent with
prior practice, (ii) any granting by the Company or its Subsidiaries to any
manager or officer of the Company or its Subsidiaries of any options, (iii)
any granting by the Company or its Subsidiaries to any manager or officer of
the Company or its Subsidiaries of any increase in severance or termination
pay; or (iv) any entry by the Company or its Subsidiaries into any employment,
severance or termination agreement with any of its managers, officers or other
employees, consultants or independent contractors; (e) any change in
accounting methods, principles or practices of the Company or its
Subsidiaries, except insofar as may have been required by a change in GAAP;
(f) any Tax election that individually or in the aggregate would have a
Company Material Adverse Effect; or (g) any settlement of pending or
threatened litigation involving the Company or any of its Subsidiaries
(whether brought by a private party or a Governmental Entity).

Section 3.7. Taxes.

(a) For the purposes of this Agreement, a "Tax" or, collectively, "Taxes,"
means any and all federal, state, local and foreign taxes, assessments and
other governmental charges, duties, impositions and liabilities, including
taxes based upon or measured by gross receipts, income, profits, sales, use
and occupation, and value added, ad valorem, transfer, gains, franchise,
withholding, payroll, recapture, employment, excise, unemployment insurance,
social security, business license, occupation, business organization, stamp,
environmental and property taxes, together with all interest, penalties and
additions imposed with respect to such amounts. For purposes of this
Agreement, "Taxes" also includes any obligations under any agreements or
arrangements with any other person with respect to Taxes of such other person
(including pursuant to Treas. Reg. (S) 1.1502-6 or comparable provisions of
state, local or foreign tax law) and including any liability for Taxes of any
predecessor entity.

(b) The Company and its Subsidiaries have: (i) filed all federal, state,
local and foreign Tax returns and reports required to be filed by them prior
to the date of this Agreement (taking into account all applicable extensions),
and such Tax returns and reports (taking into account all amendments thereto)
are true, correct and complete in all material respects; (ii) paid all Taxes
due and payable; (iii) provided for in its books of account all Taxes that are
not yet due and payable that have accrued with respect to or are applicable to
the periods ended on and including the Effective Time; and (iv) paid or
accrued all Taxes for which a notice of assessment or collection has been
received (other than amounts being contested in good faith by appropriate
proceedings with the relevant taxing authority and for which adequate reserves
in accordance with GAAP are being maintained).

(c) Except as set forth in Section 3.7(c) of the Company Disclosure
Schedule, no Tax return of the Company or any of its Subsidiaries is under
examination by the Internal Revenue Service (the "IRS") or any other taxing
authority, and neither the IRS nor any other taxing authority has asserted any
claim for Taxes, or to the Company's knowledge, is threatening to assert any
claims for Taxes. No material issues relating to Taxes were raised by the
relevant taxing authority in any completed audit or examination that can
reasonably be expected to recur in a later taxable period.

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(d) The Company and its Subsidiaries have withheld or collected and paid
over to the appropriate governmental authorities (or are properly holding for
such payment) all Taxes required by law to be withheld or collected. None of
the Company or any of its Subsidiaries has made an election under Section
341(f) of the Code. There are no liens for Taxes upon the assets of the
Company or any of its Subsidiaries (other than liens for Taxes that are not
yet due or delinquent or that are being contested in good faith by appropriate
proceedings with the relevant taxing authority and for which adequate reserves
in accordance with GAAP are being maintained).

(e) None of the Company or any of its Subsidiaries is or has been a member
of an affiliated group of corporations filing a consolidated federal income
tax return (or a group of corporations filing a consolidated, combined or
unitary income tax return under comparable provisions of state, local or
foreign Tax law) other than a group the common parent of which is the Company.

(f) None of the Company or any of its Subsidiaries has any obligation under
any agreement or arrangement with any other person with respect to Taxes of
such other person (including pursuant to Treas. Reg. (S) 1.1502-6 or
comparable provisions of state, local or foreign Tax law) and including any
liability for Taxes of any predecessor entity.

(g) Except as disclosed in Section 3.7(g) of the Company Disclosure
Schedule, none of the Company or any of its Subsidiaries shall be required to
include in a taxable period ending after the Effective Time taxable income
attributable to income that accrued in a Tax period prior to the Effective
Time but that was not recognized in any such prior Tax period as a result of
the installment method of accounting, the completed contract or percentage
contract methods of accounting (including the look-back method under Section
460(b)(2) of the Code), the cash method of accounting or Section 481 of the
Code or any comparable provision of state, local, or foreign Tax law, or for
any other reason.

(h) Except as disclosed in Section 3.7(h) of the Company Disclosure
Schedule, (i) there are no outstanding agreements or waivers extending, or
having the effect of extending, the statutory period of limitation applicable
to any Tax returns required to be filed with respect to the Company or any of
its Subsidiaries, (ii) none of the Company nor any of its Subsidiaries, nor
any affiliated group, within the meaning of Section 1504 of the Code, of which
the Company or any of its Subsidiaries is or has ever been a member, has
requested any extension of time within which to file any Tax return, which
return has not yet been filed, and (iii) no power of attorney with respect to
any Taxes has been executed or filed with any taxing authority by or on behalf
of the Company or any of its Subsidiaries.

(i) Buyer shall not be required to withhold any amounts from the Merger
Consideration pursuant to Section 1445 of the Code and the regulations
thereunder.

(j) Except for the Company's interest in LL Bettendorf and BRDC, LC or as
otherwise disclosed in Section 3.7(j) of the Company Disclosure Schedule,
neither the Company, nor any of its Subsidiaries is subject to any joint
venture, partnership or other arrangement or contract which is treated as a
partnership for federal income tax purposes.

(k) Neither of the Company, nor any of its Subsidiaries has made or become
obligated to make, and will not as a result of any event connected with the
Transactions, become obligated to make any "excess parachute payment" as
defined in Section 280G of the Code (without regard to subsection (b)(4)
thereof).

(l) The Company has been a validly electing S Corporation within the
meaning of Sections 1361 and 1362 of the Code and any similar provisions of
state or local law at all times during its existence and the Company will be
an S corporation up to and including the day before the Effective Time.

(m) Each of BRDC, LC and LL Bettendorf (and any predecessor of BRDC, LC or
LL Bettendorf) has been treated as a partnership or disregarded entity and not
as an association taxable as a corporation or as a "publicly traded
partnership" for federal, state and local income tax purposes at all times
during its existence and will continue to be so treated up to and including
the Effective Time. No election has been made pursuant to Treasury

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Regulations Sections 301.7701-1 through 301.7701-3, or any comparable
provision of state or local law, to treat BRDC, LC or Bettendorf LC as an
association taxable as a corporation.

Section 3.8. Real Property, Title and Related Matters.

(a) Section 3.8(a) of the Company Disclosure Schedule sets forth a true and
complete list as of the date of this Agreement of (i) all material contracts
or agreements (including leases, ground leases, licenses, options and other
agreements) relating to Owned Real Property (as defined below) and all
material contracts or agreements (including leases, ground leases, licenses,
options and other agreements) relating to the DNR Leased Property (as defined
below) in which the Shareholders, the Company, BRDC, LC or their respective
affiliates are a party, and (ii) a brief description of each piece of Owned
Real Property. The Company or one of its Subsidiaries, as the case may be, has
good and marketable title to all Owned Real Property and to all fixtures
thereon, free and clear of any Encumbrances (as defined below), except for
Permitted Encumbrances (as defined below). The Company does not lease any real
property. The only real property leased by BRDC, LC is the DNR Leased
Property. BRDC, LC has the right to quiet enjoyment of the DNR Leased Property
for the full term of the lease in accordance with the terms of such lease.
Except as set forth in Section 3.8(a) of the Company Disclosure Schedule,
there are no rights or options of any third party to acquire any of the Owned
Real Property or any ownership therein.

(b) Each lease or other contract referred to in Section 3.8(b) of the
Company Disclosure Schedule, relating to Owned Real Property and the DNR
Leased Property is a valid contract or agreement enforceable against the
Company or one of its Subsidiaries, as the case may be, in accordance with its
terms and, to the Company's knowledge, against the other parties thereto. None
of the Company or any of its Subsidiaries is in material default, nor has any
of them received any written notice alleging that it or they are in material
default, under the leases, ground leases, subleases, licenses, options or
other agreements set forth in Section 3.8(b) of the Company Disclosure
Schedule relating to Owned Real Property and the DNR Leased Property. To the
Company's knowledge, no other party to any such leases, ground leases,
licenses, options or other agreements is in material default thereunder.

"Encumbrances" means all leases, mortgages, liens, pledges, charges,
options, encumbrances or defects of title of any kind or character.

"DNR Leased Property" means certain real estate on the Mississippi River
bottom leased from Iowa Department of Natural Resources pursuant to that
certain State of Iowa Department of Natural Resources lease of record known as
Lease No. 87-R.

"Owned Real Property" means all of the real property owned by the Company
or BRDC, LC, together with all buildings and other structures, facilities or
improvements currently or hereafter located thereon, all fixtures, systems,
equipment and personal property attached or appurtenant thereto, and all
easements, licenses, rights and appurtenances relating to the foregoing.

"Permitted Encumbrances" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced: (i) Encumbrances that are disclosed in Section 3.8(a) of the
Company Disclosure Schedule, (ii) liens for Taxes, assessments, fees and other
governmental charges or levies which are not yet due, payable or delinquent,
(iii) such survey exceptions or reciprocal easement agreements that would not
prevent the Company or any Subsidiary from continuing to conduct the business
conducted by LL Bettendorf currently conducted and which would not have a
Company Material Adverse Effect, (iv) the provisions of any federal, state or
local law, ordinance or regulation, provided the same are not violated by the
current use of the property, (v) Encumbrances imposed by law, such as
materialmen's, mechanics', carriers', workmen's and repairmen's liens and
other similar liens arising in the ordinary course of business, securing
obligations that are not in excess of $50,000 in the aggregate at any time,
(vi) pledges or deposits to

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secure obligations under workers' compensation laws or similar legislation or
to secure public or statutory obligations, (vii) Encumbrances securing
obligations of LL Bettendorf which are discussed in Section 3.8(a) of the
Company Disclosure Statement, and (viii) Encumbrances securing the Company
Indebtedness, which are discussed in Section 3.8(a) of the Company Disclosure
Statement.

Section 3.9. Title to Personal Property; Liens. Each of the Company and its
Subsidiaries has good and valid title to, or an adequate leasehold interest
in, its respective material tangible personal properties and assets (including
all riverboats, buildings and related fixtures and equipment operated by LL
Bettendorf and its Subsidiary) in order to allow each of them to conduct, and
to continue to conduct through the Effective Time, its respective businesses
as and where currently conducted. Section 3.9 of the Company Disclosure
Schedule is a full and complete list of all leases, licenses and similar
agreements relating to all material tangible personal property used by the
Company and its Subsidiaries in the conduct of their respective businesses
that is not owned by them. Except as disclosed in Section 3.9 of the Company
Disclosure Schedule, all such material tangible personal assets and properties
are sufficiently free of Liens to allow the Company and its Subsidiaries to
conduct, and to continue to conduct, their respective businesses as currently
conducted, and the consummation of the transactions contemplated by this
Agreement will not alter or impair such ability in any respect which,
individually or in the aggregate, would have a Company Material Adverse
Effect.

Section 3.10. Intellectual Property. Section 3.10 of the Company Disclosure
Schedule lists all (i) trademark and service mark registrations and
applications owned by the Company or its Subsidiaries, and (ii) trademark,
service mark and trade name license agreements to which the Company or its
Subsidiaries is a party or pursuant to which the business of the Company and
its Subsidiaries is conducted. Except as disclosed in Section 3.10 of the
Company Disclosure Schedule, to the Company's knowledge, all material
trademarks, trademark applications, trade names, service marks, trade secrets
(including customer lists and customer databases), copyrights, patents,
licenses, know-how and other proprietary intellectual property rights used in
connection with the businesses of the Company and its Subsidiaries as
currently conducted are without material restrictions or material conditions
on use, and do not conflict with the intellectual property rights of others
which, individually or in the aggregate, would be reasonably likely to have a
Company Material Adverse Effect.

Section 3.11. Agreements, Contracts and Commitments.

(a) Except as disclosed in Section 3.11(a) of the Company Disclosure
Schedule, as of the date of this Agreement, none of the Company or any of its
Subsidiaries is a party to any oral or written (i) agreement, contract,
indenture or other instrument relating to Indebtedness (as defined below) in
an amount exceeding $50,000, (ii) partnership, joint venture or limited
liability or management agreement with any person, (iii) agreement, contract
or other instrument relating to any merger, consolidation, business
combination, share exchange or business acquisition, or for the purchase,
acquisition, sale or disposition of any material assets, of the Company or any
of its Subsidiaries, (iv) agreement, contract or other instrument relating to
any "strategic alliances" (i.e., cross-marketing, affinity relationship,
etc.), (v) contract, agreement or commitment which materially restricts
(geographically or otherwise) the conduct of any line of business by the
Company or any of its Subsidiaries, (vi) any contract, agreement or other
instrument having as a party a partnership, joint venture or limited liability
company in which the Company or any of its Subsidiaries is a partner, joint
venture party or member which would otherwise satisfy the criteria in clauses
(i), (iii), (iv) or (v) if the Company or any such Subsidiary were a party to
such contract, agreement or other instrument, (vii) any other contract,
agreement or commitment that requires annual or remaining payments in excess
of $50,000 after the date hereof or (viii) any other contract, agreement or
commitment that requires annual or remaining payments in excess of $50,000 and
that is not cancelable by the Company or one of its Subsidiaries without
penalty on 30 days' notice or less (collectively, the "Company Material
Contracts"). The term "Indebtedness" as used herein means any liability in
respect of (A) borrowed money, (B) capitalized lease obligations, (C) the
deferred purchase price of property or services (other than trade payables in
the ordinary course of business), and (D) guarantees of any of the foregoing.
Section 3.11(a) of the Company Disclosure Schedule lists all contracts,
agreements, other instruments or commitments, written or oral, between the
Company and any of its Subsidiaries and the Shareholders, any

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officer or director of the Company or any of their affiliates or family
members, which shall continue to be binding on the Surviving Corporation or
any of its Subsidiaries.

(b) Except as disclosed in Section 3.11(b) of the Company Disclosure
Schedule, as of the date of this Agreement, to the Company's knowledge, (i)
each of the Company Material Contracts is valid and binding upon the Company
or its Subsidiaries that is party thereto (and on all other parties thereto)
in accordance with its terms and is in full force and effect, (ii) there is no
breach or violation of or default by the Company or any of its Subsidiaries
under any of the Company Material Contracts, whether or not such breach,
violation or default has been waived which will have a Company Material
Adverse Effect, and (iii) no event has occurred with respect to the Company or
any of its Subsidiaries which, with notice or lapse of time or both, would
constitute such a breach, violation or default, or give rise to a right of
termination, modification, cancellation, foreclosure, imposition of a Lien,
prepayment or acceleration under any of the Company Material Contracts which
will have a Company Material Adverse Effect.

Section 3.12. Litigation. Except as specifically disclosed in Section 3.12
of the Company Disclosure Schedule, (a) there is no action, suit or
proceeding, claim, arbitration or investigation against or affecting the
Company or any of its Subsidiaries pending, or to the Company's knowledge,
threatened against or affecting, the Company or any of its Subsidiaries, or
any property or asset of the Company or any of its Subsidiaries, before any
court, arbitrator, or administrative, governmental or regulatory authority or
body, domestic or foreign, that is not fully covered by insurance; and (b)
there is no judgment, order, injunction or decree of any Governmental Entity
outstanding against the Company or any of its Subsidiaries.

Section 3.13. Environmental Matters.

(a) The Company, BRDC, LC and the Shareholders have delivered to Buyer all
environmental reports related to any property owned, leased or operated by the
Company or its Subsidiaries in their possession or prepared on their behalf
(the "Environmental Reports"). Except as disclosed in the Environmental
Reports and in Section 3.13(a) of the Company Disclosure Schedule: (i) the
Company and BRDC, LC have complied with all applicable Environmental Laws (as
defined in Section 3.13(b)); (ii) to the Company's knowledge neither the
Company nor BRDC, LC is subject to liability for any Hazardous Substance
disposal or contamination on any third party property; (iii) neither the
Company, BRDC, LC nor Green Bridge Company ("Green Bridge") has released any
Hazardous Substance in violation of any Environmental Law; (iv) neither the
Company nor BRDC, LC has received any notice, demand, letter, claim or request
for information alleging that the Company or any Subsidiary may be in
violation of or liable under any Environmental Law; (v) neither the Company
nor BRDC, LC is subject to any orders, decrees, injunctions or other
arrangements with any Governmental Entity or is subject to any indemnity or
other agreement with any third party relating to liability under any
Environmental Law or relating to Hazardous Substances and (vi) there are no
Hazardous Substances (as defined in Section 3.13(b) on, in or under the Owned
Real Property (including soils, groundwater, surface water, buildings or other
structures) which are required to be removed or remediated by, or which give
rise to liability under, any Environmental Laws.

(b) As used in Section 3.13, the following terms shall have the following
meanings:

"Environmental Law" means any federal, state, local or foreign law,
regulation, order, decree, permit, authorization, binding opinion, applicable
common law or agency requirement relating to: (A) the protection,
investigation or restoration of the environment, or natural resources
(including rivers and other waterways), (B) the handling, generation, storage,
transfer, emission, discharge, use, presence, disposal, release or threatened
release of any Hazardous Substance, or (C) noise, odor, wetlands, pollution,
or contamination.

"Hazardous Substance" means any substance that is: (A) listed, classified
or regulated pursuant to any Environmental Law; (B) any petroleum product or
by-product, asbestos-containing material, lead-containing paint or plumbing,
polychlorinated biphenyls, radioactive materials or radon; or (C) any other
substance which is the subject of regulatory action by any Governmental Entity
pursuant to any Environmental Law.

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Section 3.14. Employee Benefit Plans.

(a) Section 3.14(a) of the Company Disclosure Schedule contains a true and
complete list of all employee benefit plans (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), all
employment, retention, change of control and severance agreements, and all
bonus, stock option, stock purchase, incentive, deferred compensation,
supplemental retirement, severance and other similar employee benefit plans,
programs, policies and agreements, written or otherwise, in each case that is
sponsored, maintained, contributed to or required to be contributed to by the
Company or any of its Subsidiaries or any trade or business (whether or not
incorporated) which, together with the Company or any of its Subsidiaries,
would be deemed a "single employer" under Section 4001(b) of ERISA (an "ERISA
Affiliate"), or to which the Company, any of its Subsidiaries or any ERISA
Affiliate is a party for the benefit of any current or former employee,
consultant, director or independent contractor of the Company or any of its
Subsidiaries (together, the "Employee Plans").

(b) The Shareholders and the Company have delivered or made available to
Buyer all documents related to the Employee Plans, including, without
limitation: (i) true and complete copies of all Employee Plan documents and
any summary plan descriptions, summary annual reports and insurance contracts
relating thereto, (ii) detailed summaries of all unwritten Employee Plans,
(iii) true and complete copies of the most recent financial statements and
actuarial reports with respect to all Employee Plans for which financial
statements or actuarial reports are required or have been prepared, (iv) the
most recent determination letter from the IRS (if applicable) for any such
Employee Plan, and (v) true and complete copies of any filing with or report
to any Governmental Entity with respect to any Employee Plan made by the
Company or any of its Subsidiaries during the twenty-four months prior to the
date of this Agreement, including, without limitation, annual reports for
Employee Plans, and a copy of any correspondence to the Company or any of its
Subsidiaries from any Governmental Entity with respect to any such Employee
Plan during such period.

(c) To the Company's knowledge, all Employee Plans conform in all material
respects to, and are being administered and operated in all material respects
in compliance with, the requirements of ERISA, the Code and all other
applicable laws, including applicable laws of foreign jurisdictions. Except as
set forth in Section 3.14(c) of the Company Disclosure Schedule, there have
not been any "prohibited transactions," as such term is defined in Section
4975 of the Code or Section 406 of ERISA, involving any of the Employee Plans
that could subject the Company or any of its Subsidiaries to any penalties or
taxes imposed under the Code or ERISA. Section 3.14(c) of the Company
Disclosure Schedule sets forth a true and complete list of all outstanding
loans from the Company or any of its Subsidiaries to any current or former
director, officer, employee or consultant.

(d) Except as set forth in Section 3.14(d) of the Company Disclosure
Schedule, any Employee Plan that is intended to be qualified under Section
401(a) of the Code and exempt from tax under Section 501(a) of the Code has
been determined by the IRS to be so qualified, has received a favorable
determination letter from the IRS covering any provision for which the
remedial amendment period (within the meaning of Section 401(b) of the Code)
has not expired, and such determination remains in effect and has not been
revoked. Nothing has occurred since the date of any such determination that is
reasonably likely to affect adversely such qualification or exemption in any
material respect or result in the imposition of material excise taxes or
income taxes on unrelated business income under the Code or ERISA with respect
to any Employee Plan. All contributions or other amounts payable with respect
to each Employee Plan have been paid or accrued in accordance with GAAP,
ERISA, the Code and the terms of each such plan.

(e) Except as set forth in Section 3.14(e) of the Company Disclosure
Schedule, none of the Company, any of its Subsidiaries or any ERISA Affiliate
(i) at any time in the past has had a current or contingent obligation to
contribute to any multiemployer plan (as defined in Section 3(37) of ERISA)
("Multiemployer Plan"), or (ii) at any time in the past has had any liability,
contingent or otherwise, under Title IV of ERISA or Section 412 of the Code.
As of the date of this Agreement, no Employee Plan is subject to Title IV of
ERISA and no Employee Plan is a Multiemployer Plan.

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(f) There are no pending, nor to the Company's knowledge, any threatened or
anticipated claims by or on behalf of any Employee Plan, or by or on behalf of
any individual participants or beneficiaries of any Employee Plan, alleging
any breach of fiduciary duty on the part of the Company or any of its
Subsidiaries or any of their officers, directors, managers or employees under
ERISA or any other applicable regulations, or claiming benefit payments other
than those made in the ordinary operation of such plans, or alleging any
violation of any other applicable laws. The Employee Plans are not the subject
of any investigation, audit or action by the IRS, the Department of Labor or
the Pension Benefit Guaranty Corporation ("PBGC").

(g) With respect to any Employee Plan that is an employee welfare benefit
plan (within the meaning of Section 3(l) of ERISA) (a "Welfare Plan"), (i)
each Welfare Plan for which contributions are claimed as deductions under any
provision of the Code is in compliance in all material respects with all
applicable requirements pertaining to such deduction, and (ii) any Employee
Plan that is a group health plan (within the meaning of Section 4980B(g)(2) of
the Code) complies, and in each and every case has complied in all material
respects with all of the requirements of ERISA and Section 4980B of the Code.
No welfare benefit fund (within the meaning of Section 419(e)(1) of the Code)
or voluntary employees' beneficiary association (within the meaning of Section
501(c)(9) of the Code) has been established or maintained in connection with a
Welfare Plan.

Section 3.15. Compliance.

(a) Except as disclosed in Section 3.15(a) of the Company Disclosure
Schedule, the Company and each of its Subsidiaries, and each of their
respective directors, managers, officers, persons performing management
functions similar to officers, general managers, employees, suppliers and
consultants, hold all permits, registrations, findings of suitability,
licenses, variances, exemptions, certificates of occupancy, orders and
approvals of all Governmental Entities (including all authorizations under
Environmental Laws, the Merchant Marine Act of 1920 and the Shipping Act of
1916, Certificates of Inspection issued by the US Coast Guard and permits and
approvals issued by the United States Army Corps of Engineers and pursuant to
the Gaming Laws (as defined below)), necessary to own, manage and conduct the
businesses and operations of the Company and its Subsidiaries as currently
conducted, each of which is in full force and effect, and no notice of
revocation has been received in respect thereof (the "Permits"). Except as
disclosed in Section 3.15(a) of the Company Disclosure Schedule, to the
Company's knowledge, the businesses of the Company and its Subsidiaries are
not being conducted in violation of any law, ordinance or regulation of any
Governmental Entity which will have a Company Material Affect. Except as
disclosed in Section 3.15(a) of the Company Disclosure Schedule, no
investigation or review by any Governmental Entity with respect to the
business of the Company or its Subsidiaries is pending or, to the Company's
best knowledge, threatened, nor has any Governmental Entity indicated any
intention to conduct the same.

(b) As used herein, the term "Gaming Laws" means any federal, state, local
or foreign statute, ordinance, rule, regulation, permit, consent,
registration, finding of suitability, approval, license, judgment, order,
decree, injunction or other authorization, including any condition or
limitation placed thereon, governing or relating to the current or
contemplated casino and gaming activities and operations of the Company or its
Subsidiaries, including any applicable state gaming law and any federal or
state laws relating to currency transactions.

(c) Except as disclosed in Section 3.15(c) of the Company Disclosure
Schedule, to the Company's knowledge, (i) neither the Company nor any
Subsidiary, nor any manager, officer, key employee or partner of the Company,
or any Subsidiary, has received any written claim, demand notice, complaint,
court order or administrative order from any Governmental Entity in the past
three years under, or relating to any violation or possible violation of, any
Gaming Laws which did or would be reasonably likely to result in fines or
penalties of $10,000 or more; (ii) there are no facts, which, if known to the
regulators under the Gaming Laws, could reasonably be expected to result in
the revocation, limitation or suspension of a license, finding of suitability,
registration, permit or approval of it or them, or any officer, director or
other person performing management functions similar to an officer or partner,
under any Gaming Laws; and (iii) neither the Company nor any Subsidiary has
suffered a suspension or revocation of any material license, finding of
suitability, registration, permit or approval held under the Gaming Laws.

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Section 3.16. Labor Matters. Except as disclosed in Section 3.16 of the
Company Disclosure Schedule, (i) there are no proceedings pending between the
Company or any of its Subsidiaries and any of their respective employees
before the Equal Employment Opportunity Commission, Department of Labor or any
other Governmental Entity; (ii) to the best knowledge of the Company, there
are no activities or proceedings of any labor union to organize any non-
unionized employees; (iii) neither the Company nor any of its Subsidiaries has
received notice of any alleged unfair labor practice charges and/or complaints
pending against the Company or its Subsidiaries or any of their respective
representatives or employees before the National Labor Relations Board or any
current union representation questions involving employees of the Company or
its Subsidiaries; (iv) to the Company's knowledge, the Company's and its
Subsidiaries' employment policies and practices comply in all material
respects with applicable law; and (v) there is no strike, slowdown, work
stoppage, labor dispute or lockout or, to the best knowledge of the Company,
threat thereof, by or with respect to any employees of the Company or any of
its Subsidiaries. Neither the Company nor any of its Subsidiaries are parties
to any collective bargaining agreements or other labor union contracts
applicable to individuals employed or previously employed by the Company or
any of its Subsidiaries and, except as disclosed in Section 3.16 of the
Company Disclosure, no collective bargaining agreement or labor union contract
is being negotiated by the Company or its Subsidiaries.

Section 3.17. Insurance. All material fire and casualty, general liability,
business interruption, product liability, and sprinkler and water damage
insurance policies maintained by the Company or its Subsidiaries are listed on
Section 3.17 of the Company Disclosure Schedule. At the Effective Time, all
such insurance policies, or replacements thereof, will be outstanding and duly
in force. To the Company's knowledge, no notice of termination or non-renewal
of any such insurance policy has been received by the Company or its
Subsidiaries.

Section 3.18. Year 2000. The Company has conducted an initial review of
whether its systems, processes, products, equipment and services are Year 2000
Ready. The Company has provided to Buyer all reports prepared by it or its
outside consultants regarding the Company's Year 2000 Readiness. "Year 2000
Ready" means that the systems, processes, products, equipment and services of
the Company (including any software embedded in any products) ("Services")
will correctly identify, recognize and process four-digit year dates, and the
Services will: (a) continue to function properly with regard to dates before,
during and after the transition to year 2000, including, but not limited to,
the ability to roll dates from December 31, 1999 to January 1, 2000 and beyond
with no errors or system interruptions; (b) accurately perform calculations
and comparisons on dates that span centuries; (c) accept and properly process
dates that could span more than 100 years (e.g., calculating a person's age
from their birth date and the current date); (d) properly sort and sequence
dates that span centuries; (e) understand that the year 2000 starts on a
Saturday; (f) recognize that February 29, 2000 is a valid date and that the
year 2000 has 366 days; (g) prohibit use of date fields for any purpose other
than to store valid dates; (h) preclude the use of 12/31/99 or any other valid
date to indicate something other than a date (e.g., 12/31/99 in a date field
means "do not ever cancel"); and (i) comply with and conform to the
specifications of American National Standard ANSI X3.30-1985, Representation
for Calendar Date and Ordinal Date for Information Interchange. The Company
has made no express or implied warranties regarding its Year 2000 Readiness or
any of its Services, except as disclosed in Section 3.18 of the Company
Disclosure Schedule.

Section 3.19. Brokers. None of the Shareholders, the Company, any of the
Company's Subsidiaries, or any of their respective managers, officers or
employees has employed any broker, financial advisor or finder, or incurred
any liability for any brokerage fees, commissions, finder's or other fees, in
connection with the transactions contemplated by this Agreement.

Section 3.20. Tax Treatment. None of the Shareholders, the Company, or any
of the Company's Subsidiaries has taken or agreed to take any action, or is
aware of any fact or circumstance, that would prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a)(1)(A) of
the Code.

Section 3.21. Acquisition for Investment. Each Shareholder is acquiring
shares of Buyer Common Stock to be issued in the Merger for investment for his
or her own account and not with a view to, or for sale in connection with, any
distribution thereof, except for distributions made in compliance with the
requirements of the Securities

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Act. Each Stockholder is an "accredited investor" (as defined in Rule 501
promulgated under the Securities Act) and (either alone or together with his
or her advisors) has sufficient knowledge and experience in financial and
business matters so as to be capable of evaluating the merits and risks of its
investment in the shares of Buyer Common Stock and is capable of bearing the
economic risks of such investment.

Section 3.22. Proxy Statement. The information related to the Company and
its Subsidiaries and its Shareholders (other than related to pro forma
financial statements or other forward looking information or projections)
supplied by the Company and the Shareholders for inclusion in the Proxy
Statement (as defined in Section 5.15(a)) pursuant to Items 5 and 14 of
Schedule 14A promulgated by the SEC under the Exchange Act, shall not, on the
date the Proxy Statement is first mailed to stockholders of Buyer, at the time
of the Buyer Special Meeting (as defined in Section 5.16) and at the Effective
Time, contain any statement which, at such time and in light of the
circumstances under which it shall be made, is false or misleading with
respect to any material fact, omit to state any material fact necessary in
order to make the statements made in the Proxy Statement not false or
misleading, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Buyer Special Meeting which has become false or misleading.

ARTICLE IV

Representations and Warranties of Buyer

Buyer represents and warrants to the Shareholders and the Company that the
statements contained in this Article IV are true and correct, except as set
forth herein and in the disclosure schedule delivered by Buyer to the
Shareholders and the Company on or before the date of this Agreement (the
"Buyer Disclosure Schedule"). Any reference in this Agreement to Buyer's
"knowledge" or "best knowledge," or to "the best of Buyer's knowledge," or
words of similar import, shall be deemed a reference to the actual knowledge
of any of the corporate officers of Buyer for all purposes, after having made
due inquiry. The Buyer Disclosure Schedule has been prepared based upon the
foregoing definition.

Section 4.1. Organization of Buyer. Buyer is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has all requisite corporate power and authority to carry on
its business as now being conducted and as proposed to be conducted. Buyer is
duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so qualified, licensed or in good
standing would not have a material adverse effect on the business, properties,
condition (financial or otherwise), prospects or results of operations of
Buyer and its Subsidiaries, taken as a whole (a "Buyer Material Adverse
Effect"). A true and correct copy of the Certificate of Incorporation and
bylaws of Buyer, in each case as amended to the date of this Agreement, are
included as exhibits to the Buyer SEC Reports (as defined herein).

Section 4.2. Authority; No Conflict; Required Filings and Consents.

(a) Buyer has all requisite corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby by Buyer have been duly authorized by
all necessary corporate action on the part of Buyer. This Agreement has been
duly executed and delivered by Buyer and constitutes the valid and binding
obligation of Buyer, enforceable against it in accordance with its terms.

(b) Other than as disclosed in Section 4.2(b) of the Buyer Disclosure
Schedule, the execution and delivery of this Agreement by Buyer does not, and
the consummation of the transactions contemplated hereby will not, (i)
conflict with, or result in any violation or breach of, any provision of the
Certificate of Incorporation or bylaws of Buyer or the comparable charter or
organizational documents of any of its Subsidiaries, (ii) result in any
violation or breach of, or constitute (with or without notice or lapse of
time, or both), a default (or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of any material
benefit) under, or

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require a consent or waiver under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, contract or other agreement,
instrument or obligation to which Buyer is a party or by which it or any of
its or its Subsidiaries' properties or assets may be bound, or (iii) subject
to the governmental filings and other matters referred to in Section 4.3(c),
conflict with or violate any permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Buyer
or any of its Subsidiaries or any of its or their properties or assets, except
in the case of clauses (ii) and (iii) for any such conflicts, violations,
defaults, terminations, cancellations or accelerations which (x) are not,
individually or in the aggregate, reasonably likely to have a Buyer Material
Adverse Effect, or (y) would not impair or materially delay the consummation
of the Transactions.

(c) Except as disclosed in Section 4.2(c) of the Buyer Disclosure Schedule,
no consent, approval, order or authorization of, or registration, declaration
or filing with, any Governmental Entity is required by or with respect to
Buyer or any of its Subsidiaries in connection with the execution and delivery
of this Agreement or the consummation of the transactions contemplated hereby,
other than (i) the filing of the pre-merger notification report under the HSR
Act, (ii) the filing of the Certificate of Merger and Articles of Merger with
respect to the merger with the Secretary of State of the State of Delaware and
the Secretary of State of the State of Iowa, as applicable, (iii) any
approvals and filing of notices required under any applicable gaming industry
regulation, (iv) such consents, approvals, orders, authorizations, permits,
filings or registrations related to, or arising out of, compliance with
statutes, rules or regulations regulating the consumption, sale or serving of
alcoholic beverages, (v) such immaterial filings and consents as may be
required under any environmental, health or safety law or regulation
pertaining to any notification, disclosure or required approval triggered by
the transactions contemplated by this Agreement, and (vi) such other filings,
consents, approvals, orders, registrations and declarations as may be required
under the laws of any jurisdiction in which Buyer or any of its Subsidiaries
conducts any business or owns any assets the failure of which to obtain would
not have a Buyer Material Adverse Effect.

Section 4.3. Public Filings; Financial Statements.

(a) Buyer has filed all forms, reports and documents required to be filed
by Buyer with the SEC since January 1, 1996 (the "Buyer SEC Reports"). The
Buyer SEC Reports (including any financial statements filed as a part thereof
or incorporated by reference therein) (i) at the time filed, complied in all
material respects with the applicable requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the Exchange Act, as the case may
be, and (ii) did not, at the time they were filed (or if amended or superseded
by a filing prior to the date of this Agreement, then on the date of such
filing), contain any untrue statement of a material fact or omit to state a
material fact required to be stated in such Buyer SEC Reports or necessary in
order to make the statements in such Buyer SEC Reports, in the light of the
circumstances under which they were made, not misleading.

(b) Each of the consolidated financial statements (including, in each case,
any related notes) of Buyer contained in the Buyer SEC Reports complied as to
form in all material respects with the applicable published rules and
regulations of the SEC with respect thereto, was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes to such financial statements or, in the case of
unaudited statements, as permitted by Form 10-Q under the Exchange Act) and
fairly presented the consolidated financial position of Buyer and its
consolidated Subsidiaries as of the dates and the consolidated results of its
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring year-
end adjustments which, with respect to interim periods since December 31,
1998, were not or are not expected to be material in amount. The audited
balance sheet of Buyer as of April 25, 1999 is referred to herein as the
"Buyer Balance Sheet."

Section 4.4. Absence of Certain Changes or Events. Except as disclosed in
the Buyer SEC Reports or in Section 4.4 of the Buyer Disclosure Schedule,
since the date of the Buyer Balance Sheet, Buyer and its Subsidiaries have
conducted their respective businesses only in the ordinary course and in a
manner consistent with past practice, and there has not been (a) any Buyer
Material Adverse Effect, (b) any declaration, setting

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aside or payment of any dividend or other distribution (whether in cash, stock
or property) with respect to any of Buyer's capital stock, (c) any split,
combination or reclassification of any of its capital stock or any issuance or
the authorization of any issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock, (d)(i) any
granting by Buyer or any of its Subsidiaries to any director or officer of
Buyer or its Subsidiaries of any increase in compensation, except in the
ordinary course of business consistent with prior practice or as was required
under employment agreements in effect as of the date of the most recent
financial statements included in the Buyer SEC Reports, (ii) any granting by
Buyer or any of its Subsidiaries to any director or officer of any stock
options, except as was required under employment agreements in effect as of
the date of the most recent financial statements included in the Buyer SEC
Reports, (iii) any granting by Buyer or any of its Subsidiaries to any officer
of any increase in severance or termination pay, except as was required under
any employment, severance or termination agreements, plans or arrangements in
effect as of the date of the most recent financial statements included in the
Buyer SEC Reports or (iv) any entry by Buyer or any of its Subsidiaries into
any employment, severance or termination agreement with any officer, (e) any
change in accounting methods, principles or practices having a material
adverse effect on Buyer, except insofar as may have been required by a change
in GAAP, (f) any Tax election that individually or in the aggregate would have
a Buyer Material Adverse Effect, or (g) any settlement of pending or
threatened litigation involving Buyer or any of its Subsidiaries (whether
brought by a private party or a Governmental Entity) other than any settlement
which is not reasonably likely to have a Buyer Material Adverse Effect.

Section 4.5. Litigation. Except as disclosed in the Buyer SEC Reports or in
Section 4.5 of the Buyer Disclosure Schedule, there is no action, suit or
proceeding, claim, arbitration or investigation against or affecting Buyer or
any of its Subsidiaries pending, or as to which Buyer or any of its
Subsidiaries has received any written notice of assertion against or
affecting, Buyer or any of its Subsidiaries or any property or asset of Buyer
or any of its Subsidiaries, before any court, arbitrator, or administrative,
governmental or regulatory authority or body, domestic or foreign, that
individually or in the aggregate could reasonably be expected to (i) have a
Buyer Material Adverse Effect or (ii) prevent or materially delay the
consummation of the transactions contemplated by this Agreement.

Section 4.6. Voting Requirements. The affirmative vote of the holders of a
majority of Buyer Common Stock present at the Buyer Special Meeting of
Stockholders (at which a quorum is present) in favor of the issuance of Buyer
Common Stock pursuant to this Agreement, consistent with the requirements of
the Nasdaq National Market System (the "Buyer Stockholder Approval"), is the
only vote of the holders of any class or series of Buyer's capital stock
necessary to approve the transactions contemplated by this Agreement.

Section 4.7. Tax Treatment. Neither Buyer nor any of its Subsidiaries has
taken or agreed to take any action, or is aware of any fact or circumstance,
that would prevent the Merger from qualifying as a reorganization within the
meaning of Section 368(a)(1)(A) of the Code.

Section 4.8. Opinion of Financial Advisor. The Board of Directors of Buyer
has received the written opinion of CIBC World Markets Corp. ("CIBC") dated
the date of this Agreement to the effect that the Exchange Ratio is fair to
the Buyer from a financial point of view.

Section 4.9. Lady Luck Waiver. Buyer has obtained the written waiver by
Lady Luck of all rights of Lady Luck arising under Article 8 of the Operating
Agreement for LL Bettendorf arising as a result of the Company entering into
this Agreement.

ARTICLE V

COVENANTS

Section 5.1. Conduct of Business.

(a) By Shareholders and the Company. Except as set forth in Section 5.1(a)
of the Company Disclosure Schedule, during the period from the date of this
Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, the Shareholders and the Company agree
(except to the extent that Buyer shall otherwise consent in writing) that they
will use their reasonable best efforts to cause the businesses

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of the Company and its Subsidiaries to be carried on in the usual, regular and
ordinary course in substantially the same manner as previously conducted, to
pay its debts and Taxes when due subject to good faith disputes over such
debts or Taxes, to pay or perform its other obligations when due, and, to the
extent consistent with such business, use all commercially reasonable efforts
consistent with past practices and policies to preserve intact its present
business organization, keep available the services of its present officers and
key employees, and preserve its relationships with customers, suppliers,
distributors and others having business dealings with it. Whenever used in
this Article V, the term "cause" means using a party's reasonable best
efforts, through the exercise of voting and management power and otherwise, to
cause such action to be taken or not taken. Without limiting the generality of
the foregoing, during the period from the date of this Agreement until the
earlier of the termination of this Agreement or the Effective Time, the
Shareholders and the Company agree (except as otherwise contemplated by this
Agreement or to the extent that Buyer shall otherwise consent in writing) as
follows:

(i) Dividends; Changes in Stock. The Company shall not and shall not
cause its Subsidiaries to, except for Permitted Distributions, (A) declare,
set aside or pay any dividends on, or make any other distributions (whether
in cash, stock or property) in respect of, any of its capital stock or
membership interests, (B) split, combine or reclassify any of its capital
stock or membership interest or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of
its capital stock or membership interests, or (C) purchase, redeem or
otherwise acquire any shares of capital stock of the Company or membership
interests of any of its Subsidiaries or any other securities thereof or any
rights, warrants or options to acquire any such shares or other securities.

(ii) Issuance of Securities. The Company shall not, and shall cause its
Subsidiaries not to, issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities.

(iii) Governing Documents. The Company shall not, and shall cause its
Subsidiaries not to, amend its Certificate of Incorporation, Bylaws,
Articles of Organization, Operating Agreement or other comparable charter
or organizational documents.

(iv) No Acquisitions. The Company shall not, and shall cause its
Subsidiaries not to, acquire or agree to acquire (including, without
limitation, by merger, consolidation or acquisition of stock or assets) any
business or any interest therein, including through the acquisition of any
interest in any corporation, partnership, joint venture, association or
other business organization or division thereof.

(v) No Dispositions. The Company shall not, and shall cause its
Subsidiaries not to, sell, lease, license, mortgage or otherwise encumber,
or otherwise dispose of, any of its properties or assets other than in the
ordinary course of business.

(vi) Indebtedness. The Company shall not, and shall cause its
Subsidiaries not to, (y) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell any debt
securities or warrants or other rights to acquire any debt securities of
the Company or any of its Subsidiaries, or guarantee any debt securities of
another person, other than short-term bank financing in the ordinary course
of business consistent with past practice, or (z) make any loans, advances
or capital contributions to, or investments in, any other person.

(vii) Employee Benefits. The Company shall not, and shall cause its
Subsidiaries not to, (A) adopt, enter into, terminate or amend any
employment, severance, retention or similar agreement or contract; (B)
negotiate or enter into any collective bargaining agreement or labor union
contract; (C) increase, in any manner, the compensation or fringe benefits
of, or pay any bonus to, any director, officer or employee (except for
normal increases of cash compensation or cash bonuses in the ordinary
course of business, consistent with past practice); (D) adopt or establish
any new benefit plan or amend any existing benefit plan, except as required
by law, or pay any benefit not provided for under any existing plan; (E)
adopt, establish or amend any severance pay plan, or increase in any manner
the severance or termination pay of any officer or employee; (F) modify the
provisions of any stock option plan, adjust or modify the terms of

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any outstanding options, or take any action to accelerate the vesting of,
or cash out rights associated with, any option, or remove existing
restrictions in any option plan or other plan or arrangement; (G) grant any
new awards under any stock option plan or other bonus, incentive,
performance or compensation plan or arrangement, stock appreciation rights,
stock-based or stock-related awards, performance units or restricted stock;
(H) take any action to fund, or in any other way secure, the payment of
compensation or benefits under any employee plan, welfare plan or other
employee plan, agreement, contract or arrangement; (I) hire any individual
as an employee who will be paid an annual base salary that equals or
exceeds $75,000 or who will be other than an "at will" employee; or (J)
hire any independent contractor or consultant, in each case without the
prior written consent of the Buyer.

(viii) Leases or Material Contracts. The Company shall not, and shall
cause its Subsidiaries not to, (i) enter into any lease or agreement of any
nature that would obligate the Company or any of its Subsidiaries to pay
$50,000 or more annually, (ii) enter into any lease or agreement of any
nature that is not terminable by the Company or one of its Subsidiaries
upon 90 days' notice without penalty, or (iii) modify, amend or terminate
any existing agreement of such type or waive, release or assign any
material rights or claims contained therein, except in the ordinary course
of business consistent with past practice.

(ix) Accounting Matters. The Company shall not, and shall cause its
Subsidiaries not to, make any material change in accounting methods,
principles or practices, except as required by GAAP or the applicable
regulations under the Securities Act and the Exchange Act.

(x) Tax Matters. The Company shall not, and shall cause its Subsidiaries
not to, make any material Tax election, enter into any settlement or
compromise with respect to any material income Tax liability, or waive or
extend the statute of limitations in respect of any Taxes.

(xi) Settlement. The Company shall not, and shall cause its Subsidiaries
not to, settle any pending or threatened litigation involving the Company
or any such Subsidiary (whether brought by or against a private party or a
Government Entity), except for settlements that, in the aggregate, involve
payments not covered by insurance, by the Company or any such Subsidiary,
of less than $50,000 and which settle entire claims or causes of action
arising out of the same or similar facts and circumstances or do not impose
any restrictions on the business or operations of the Company or any of its
Subsidiaries.

(xii) Capital Expenditures. Except as set forth in Section 5.1(a)(xii)
of the Company Disclosure Schedule, the Company and its Subsidiaries,
considered as a whole, shall not make capital expenditures in excess of
$50,000 individually or $100,000 in the aggregate.

(xiii) Related Party Transactions. Subject to Section 5.11, the Company
shall not, and shall cause its Subsidiaries not to, enter into or amend the
terms of any transaction of any nature whatsoever with its or its
Subsidiaries' directors, officers, employees, Shareholders, members or
their respective affiliates.

(xiv) Lady Luck Transaction. Neither the Shareholders, the Company nor
BRDC, LC shall take any steps to assert rights they may have as a result of
Lady Luck entering into the Lady Luck Merger Agreement, to (i) purchase
Lady Luck's membership interest in LL Bettendorf or (ii) terminate the
management agreement between Lady Luck and LL Bettendorf; provided,
however, that the Shareholders, the Company and BRDC, LC may take all steps
which they deem necessary to preserve such rights, including, giving any
notices they deem necessary or desirable.

(xv) General. The Company shall not, and shall cause its Subsidiaries
not to, authorize any of, or commit or agree to take any of, the foregoing
actions.

(b) By Buyer. Except as disclosed in the Buyer SEC Reports, during the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, Buyer agrees as to itself
and its Subsidiaries (except to the extent that the Company shall otherwise
consent in writing) to carry on its business in the usual, regular and
ordinary course in substantially the same manner as previously conducted, to
pay its debts and Taxes when due subject to good faith disputes over such
debts or Taxes, and to pay or perform its other obligations when due.

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Section 5.2. Cooperation; Notice; Cure. Subject to compliance with
applicable law, from the date hereof until the Effective Time, each of Buyer,
the Shareholders and the Company shall confer on a regular and frequent basis
with one or more representatives of the other party to report on the general
status of ongoing operations. Each of the Shareholders, the Company and Buyer
shall promptly notify the other in writing of, and will use all commercially
reasonable efforts to cure before the Closing Date, any event, transaction or
circumstance, as soon as practical after it becomes known to such party, that
causes or will cause any covenant or agreement of the Shareholders and the
Company or Buyer under this Agreement to be breached in any material respect
or that renders or will render untrue in any material respect any
representation or warranty of the Shareholders and the Company or Buyer
contained in this Agreement.

Section 5.3. Access to Information. Upon reasonable notice, the Company
shall, and shall cause its Subsidiaries to, afford to Buyer, and its officers,
employees, accountants, counsel and other representatives, reasonable access,
during normal business hours during the period prior to the Effective Time, to
all its personnel, properties, books, contracts, commitments and records, and
during such period, the Company shall, and shall cause its Subsidiaries to,
furnish promptly to Buyer (a) copies of monthly financial reports and
development reports, (b) a copy of each report, schedule and other document
filed or received by it during such period pursuant to the requirements of
federal or state securities laws, and (c) all other information concerning its
business, properties and personnel as Buyer may reasonably request. Buyer will
hold any such information furnished to it by the Shareholders, the Company or
any such Subsidiary in confidence. No information or knowledge obtained in any
investigation pursuant to this Section 5.3 shall affect or be deemed to modify
any representation or warranty contained in this Agreement or the conditions
to the obligations of the parties to consummate the Transactions.

Section 5.4. Governmental Approvals.

(a) The parties hereto shall cooperate with each other and use all
commercially reasonable efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, to
obtain as promptly as practicable without conditions, restrictions or
limitations that are more restrictive than those conditions, restrictions and
limitations applicable to the Company and its Subsidiaries on the date hereof,
all permits, registrations, licenses, findings of suitability, consents,
variances, exemptions, orders, approvals and authorizations of all third
parties and Governmental Entities which are necessary or advisable to
consummate the transactions contemplated by this Agreement ("Governmental
Approvals"). Each of the parties hereto and their respective officers,
managers, directors and affiliates shall file, as necessary, within 60 days
after the date hereof, all required initial applications and documents in
connection with obtaining approvals of the Transactions under the Gaming Laws
and shall file initial applications and documents related to all other
Governmental Approvals within such time as necessary for such Governmental
Approvals to be granted on or before the effective date of the respective
approvals required under the Gaming Laws and shall act reasonably and promptly
thereafter in responding to additional requests in connection therewith. Each
of the Shareholders, the Company and Buyer (the "Notifying Party") will
notify, and the Company shall cause LL Bettendorf to notify, the other parties
reasonably promptly of the receipt of material comments or requests from
Governmental Entities relating to Governmental Approvals, and will supply, and
the Company shall cause LL Bettendorf to supply, the other parties with copies
of all material correspondence documents or descriptions of communications
between the Notifying Party or any of its representatives and Governmental
Entities with respect to Governmental Approvals; provided, however, that the
Notifying Party shall not be required to supply the other parties with copies
of correspondence, documents or descriptions of communications relating to the
personal applications of individual applicants, except for evidence of filing.

(b) The Shareholders, the Company and Buyer shall promptly advise, and the
Company shall cause LL Bettendorf to advise, each other, upon receiving any
communication from any Governmental Entity whose consent or approval is
required for consummation of the transactions contemplated by this Agreement
which causes such party to believe that there is a reasonable likelihood that
any approval needed from a Governmental Entity will not be obtained or that
the receipt of any such approval will be materially delayed. The Shareholders,
the Company and Buyer shall take, and the Company shall cause its Subsidiaries
to take, any and all actions

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reasonably necessary to vigorously defend, lift, mitigate and rescind the
effect of any litigation or administrative proceeding adversely affecting this
Agreement or the transactions contemplated hereby or thereby, including,
without limitation, promptly appealing any adverse court or administrative
order or injunction to the extent reasonably necessary for the foregoing
purposes.

Section 5.5. Publicity. The Shareholders, the Company and Buyer shall agree
on the form and content of the initial press release regarding the
transactions contemplated hereby and thereafter shall consult with each other
before issuing, and shall use all reasonable efforts to agree upon, any press
release or other public statement with respect to any of the transactions
contemplated hereby and shall not issue any such press release or make any
such public statement prior to such consultation, except as may be required by
law or in connection with presentations or discussions with or before gaming
regulators.

Section 5.6. Indemnification.

(a) From and after the Effective Time, Buyer agrees that it will indemnify
and hold harmless the Shareholders, each of their respective heirs, successors
and permitted assigns, their affiliates, and the respective directors,
officers, employees, agents and controlling persons of their affiliates
(collectively, the "Shareholder Indemnified Parties"), against any costs,
expenses (including attorneys' fees), judgments, fines, losses, claims,
damages, liabilities or amounts paid in settlement (collectively, "Losses")
incurred by the Shareholder Indemnified Party as a result of, or arising out
of entering into and consummating the transactions contemplated herein other
than any Loss (i) resulting from or arising out of a breach or inaccuracy of
any representation, warranty or covenant of the Company or the Shareholders
contained in this Agreement solely as they relate to the Company or BRDC, LC
or (ii) for which the Shareholders have an obligation to provide indemnity
under Section 5.6(b).

(b) From and after the Effective Time, each of the Shareholders, jointly
and severally, agrees to indemnify and hold harmless the Buyer, its
affiliates, and the respective directors, officers, employees, agents and
controlling persons of Buyer and its affiliates (collectively, the "Buyer
Indemnified Parties") against any Losses incurred by the Buyer Indemnified
Parties as a result of, or arising out of, (i) any breach or inaccuracy in the
representations and warranties of the Company and the Shareholders contained
in Section 3.8(a), and (ii) notwithstanding the matters disclosed in Section
3.13(a) of the Company Disclosure Schedule and as otherwise known by Buyer,
any Hazardous Substances on, in or under the Owned Real Property at the
Effective Time (including soils, groundwater, surface water, buildings or
other structures) which are required to be removed or remediated by, or which
give rise to liability under any Environmental Laws.

(c) The Buyer Indemnified Parties shall not be entitled to indemnification
hereunder except to the extent that they incur indemnifiable Losses in excess
of $250,000, and then only to the extent of such excess; the aggregate
liability of the Shareholders hereunder shall not exceed $3,000,000; and no
claim for indemnification may be made by any party hereto except in writing
setting forth with reasonable particularity the bases for such claim which is
delivered during the period that the representation, warranty or covenant on
which the claim is based continues to survive as provided in Section 8.1, or
if the claim is made under Section 5.6(b) clause (ii) within 3 years of the
Effective Time. After the Effective Time, the sole and exclusive remedy of the
Buyer Indemnified Parties against the Shareholders for all matters coming
within the scope of the representations and warranties contained in this
Agreement shall be to bring a claim for indemnity under Section 5.6(b),
subject to all of the limitations applicable to such claim.

(d) The Shareholders shall conduct and control the management and
implementation of the clean up, defense, response, proceedings or settlement
relating to any Losses for which the Shareholders have an indemnity obligation
under Section 5.6(b). Buyer and the Shareholders shall cooperate with each
other and Buyer may participate therein at its cost. The Shareholders shall
conduct any clean-up in a manner which does not unreasonably interfere with
the conduct of Buyer's business. Prior to collecting indemnification from the
Shareholders for any Loss related to Owned Real Property other than related to
a breach of the representations and warranties contained in Section 3.8, Buyer
will use all commercially reasonable efforts to have such matter

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addressed to Buyer's satisfaction by J.I. Case Company and its successors or
assigns ("Case") pursuant to the terms of the Purchase/Sale Agreement (the
"Purchase Agreement") dated November 4, 1988 between Case and Green Bridge.
Buyer will assert its rights under the Agreement as a successor in title to
the Owned Property and the Shareholders will cause Green Bridge to cooperate
fully with Buyer and take any steps necessary to pursue its rights under the
Purchase Agreement.

Section 5.7. Further Assurances and Actions.

(a) Subject to the terms and conditions herein, each of the parties hereto
agrees to use its reasonable best efforts to take, or cause to be taken
(including action to be taken by the Company and its Subsidiaries), all
appropriate action, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and
make effective the transactions contemplated by this Agreement, including,
without limitation, (i) using their respective reasonable best efforts to
obtain all licenses, permits, consents, approvals, authorizations,
qualifications and orders of Governmental Entities and parties to contracts
with each party hereto as are necessary for consummation of the transactions
contemplated by this Agreement, and (ii) to fulfill all conditions precedent
applicable to such party pursuant to this Agreement.

(b) In case, at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement or to vest
the Buyer with full title to all properties, assets, rights, approvals,
immunities and franchises of any of the parties to the transactions
contemplated hereby, the proper officers and/or directors of Buyer and the
Company shall take or cause LL Bettendorf to take, all such necessary action.

Section 5.8. Tax-free Reorganization. Each party will use its commercially
reasonable efforts to cause the Merger to qualify as a reorganization within
the meaning of Section 368(a)(1)(A) of the Code, and will not take any action
reasonably likely to cause the Merger not so to qualify.

Section 5.9. Loan Repayment. Immediately following the Effective Time,
Buyer will cause BRDC, LC to repay in full its loan from Valley Corporation in
the approximate amount of $3,200.000.

Section 5.10. Related Party Agreements. At the request of Buyer, the
Shareholders shall cause and the Company shall cause its Subsidiaries to
terminate all contracts, agreements, other instruments or commitments, written
or oral, between the Company and any of its Subsidiaries on the one hand and
the Shareholders, any officer or director of the Company or any of their
affiliates or family members on the other, that exist but that are not
disclosed as related party agreements in Section 3.11 of the Company
Disclosure Schedule.

Section 5.11. LL Bettendorf Distributions. Anything contained herein to the
contrary notwithstanding, LL Bettendorf will make distributions to BRDC, LC of
the following amounts, which shall be distributed by BRDC, LC to the Company
and by the Company to the Shareholders ("Permitted Distributions"): (i) 45% of
one-half of LL Bettendorf's net income for the month of September, 1999, (ii)
45% of Allocated Net Income ("Additional Tax Distributions") and (iii)
discretionary amounts requested by the Shareholders immediately prior to the
Effective Time (the "Discretionary Distributions") provided that, the sum of
Additional Tax Distributions and Discretionary Distributions shall not (i)
exceed $10,000,000 plus the Allocated Net Income or (ii) result in LL
Bettendorf having less than $2,500,000 in cash or marketable securities at the
Effective Time and provided further, subject to the foregoing limitations,
that the Discretionary Distributions shall not be less than the amount
necessary such that the Aggregate Merger Consideration shall not exceed
6,300,000 Buyer Shares. If not previously made, the Buyer will cause LL
Bettendorf to make the Discretionary Distributions immediately prior to
Closing and shall obtain any required consents of LL Bettendorf's, BRDC LC's
and the Company's lenders as listed in Section 3.3 of the Company Disclosure
Schedule.

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Section 5.12. Other Distributions. Nothing contained in this Agreement
shall restrict in any way the ability of BRDC, LC to make distributions to the
Company and the Company to make distributions to the Shareholders, it being
understood that BRDC, LC and the Company will distribute all available cash to
the Shareholders prior to Closing. During the period prior to the Closing
BRDC, LC shall continue to receive rent payments and management fees from LL
Bettendorf and its affiliates consistent with prior practices, and shall
receive such payments prorated to the Effective Time even if not yet due and
payable. The Buyer will cause LL Bettendorf to make any such payments not
previously made, immediately prior to Closing.

Section 5.13. Shareholder Guarantees. Buyer shall use commercially
reasonable efforts (including, but not limited to, the provision of Buyer's
guarantee but not contingent upon the payment of significant fees or
relinquishing significant rights) prior to the Effective Time to obtain the
release of the Shareholders and all of their affiliates from all guarantees of
indebtedness of the Company or any of its Subsidiaries or of LL Bettendorf and
to obtain the release of all collateral pledged by Shareholders or their
affiliates in connection with such guarantees.

Section 5.14. Resale Restrictions. Each Shareholder agrees that he or she
will not transfer any shares of Buyer Common Stock received pursuant to this
Agreement except (i) pursuant to an effective registration statement under the
Securities Act, (ii) in compliance with Rule 144 promulgated under the
Securities Act, (iii) upon receipt by Buyer of an opinion of counsel to such
Shareholder (which counsel shall be reasonably satisfactory to Buyer) in form
and substance customary in similar situations, or of a no-action letter from
the SEC addressed to Buyer or such Shareholders to the effect that no
registration statement is required under the 1933 Act, (iv) for estate
planning purposes to members of his or her immediate family or to a trust,
family limited partnership, family limited liability company, corporation or
other entity which is owned and controlled by the Shareholder or members of
his or her immediate family, or (v) upon a Shareholder's death to his or her
heirs, provided that the transferee in the case of clauses (iv) and (v) agrees
to be subject to the resale limitations set forth in this Section 5.14.

Section 5.15. Legend. (a) Each Certificate representing shares of Buyer
Common Stock to be received by each Shareholder pursuant to this Agreement
shall be endorsed with legends as may be required by the Securities Act and
applicable state securities laws.

(b) Any certificate issued at any time in exchange or substitution for any
certificate bearing such legends (except a new certificate issued upon the
completion of a transfer pursuant to a registered public offering under the
Securities Act and made in accordance with the Securities Act) shall also bear
such legends, unless shares of Buyer Common Stock represented thereby are in
the reasonable good faith judgment of Buyer (with advice from counsel to
Buyer, as Buyer may deem appropriate), no longer subject to the restrictions
imposed under the Securities Act or state securities laws, in which case the
applicable legend (or legends) may be removed.

Section 5.16. Proxy Statement.

(a) As promptly as practicable after the execution of this Agreement, Buyer
shall prepare and file with the SEC, in preliminary form, a proxy statement to
be sent to Buyer's stockholders in connection with, and for their
consideration of, this Agreement and the Merger (the "Proxy Statement").

(b) Buyer shall make all other necessary filings with respect to the Merger
under the Exchange Act, applicable state blue sky laws and the rules and
regulations thereunder.

Section 5.17. Special Meeting. Buyer shall duly call, give notice of,
convene and hold a special meeting of its stockholders for the purpose of
voting upon this Agreement and the Merger (the "Buyer Special Meeting") as
promptly as reasonably practicable after the date hereof. Except as otherwise
required to comply with the fiduciary duties of the Board of Directors of
Buyer, Buyer shall, through its Board of Directors, recommend to its
stockholders adoption and approval of this Agreement and the Merger and shall
use all reasonable efforts to solicit from its stockholders proxies in favor
of such matters.

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Section 5.18. Registration Rights. If Buyer proposes to file a registration
statement under the Securities Act with respect to an offering by Buyer for
its own account of Buyer Common Stock (other than a registration statement on
Form S-4 or S-8 or any successor or similar form thereto), then Buyer shall
give written notice of such proposed registration and distribution at least 30
days prior to the proposed filing date and offer the opportunity to register
such amount of Buyer Shares as each Shareholder may request in writing.
Subject to the obligations of the Shareholders set forth below, the Buyer
shall use commercially reasonable efforts to cause the managing underwriter or
underwriters of a proposed underwritten offering (the "Company Underwriter")
to permit the Shareholders to participate in the registration for such
offering and to include such Buyer Shares in such offering. Any Buyer Shares
of the Shareholders which have been requested to be registered shall be
included in the offering on the same terms and conditions as the Buyer Common
Stock being offered by Buyer. Notwithstanding the foregoing, if the Company
Underwriter advises Buyer that in its opinion the total amount of Buyer Common
Stock which the Shareholders, Buyer and any other persons or entities who have
a right to participate in the registration intend to include in such offering
(the "Total Securities") is sufficiently large as to have a materially adverse
effect on the distribution of the Total Securities, then the amount of
securities to be offered for the account of the Shareholders and such other
persons or entities shall be reduced pro rata to the extent necessary to
reduce the Total Securities to the amount recommended by the Company
Underwriter. Buyer shall bear all registration expenses in connection with any
registration except for the discounts or commissions of the Company
Underwriter applicable to the Buyer Shares of the Shareholders, which shall be
paid as set forth below. A Shareholder may not participate in any underwritten
registration unless such Shareholder (a) agrees to sell such Shareholder's
Buyer Shares on the basis provided in any underwriting arrangements entered
into by Buyer, (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements, custody agreements and other
documents reasonably required under the terms of such underwriting
arrangements and (c) agrees to pay his or her pro rata portion of all
underwriting discounts and commissions of the Company Underwriter and agrees
to cooperate with the Buyer in connection with the preparation and filing of
the registration statement.

ARTICLE VI

Conditions to The Merger

Section 6.1. Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to this Agreement to effect the
Merger shall be subject to the satisfaction or waiver by each party prior to
the Effective Time of the following conditions:

(a) Stockholder Approval. This Agreement and the Merger shall have been
approved by the stockholders of Buyer in the manner required under the
Rules of the Nasdaq National Market.

(b) No Injunctions. No Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any order, executive order, stay, decree,
judgment or injunction, statute, rule or regulation which is in effect and
which has the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger.

(c) Governmental Approvals. All Governmental Approvals required to
consummate the transactions contemplated by this Agreement shall have been
obtained, all such approvals shall remain in full force and effect, all
statutory waiting periods in respect thereof (including, without
limitation, under the HSR Act) shall have expired, and no such approval
shall contain any conditions, limitations or restrictions which Buyer
reasonably determines in good faith will have or would reasonably be
expected to have a Company Material Adverse Effect or a Buyer Material
Adverse Effect.

(d) Lady Luck Transaction. The Closing of the Lady Luck Transaction
shall have occurred including Buyer's acquisition of Lady Luck's interest
in LL Bettendorf.

Section 6.2. Additional Conditions to Obligations of the Shareholders and
the Company. The obligations of the Shareholders and the Company to effect the
Merger are subject to the satisfaction of each of the following conditions
prior to the Effective Time, any of which may be waived in writing exclusively
by the Shareholders and the Company:

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(a) Representations and Warranties. The representations and warranties
of Buyer set forth in this Agreement shall be true and correct in all
material respects (except for those qualified as to materiality or a Buyer
Material Adverse Effect, which shall be true and correct) as of the date of
this Agreement and, except to the extent such representations explicitly
speak as of an earlier date, as of the Closing Date as though made on and
as of the Closing Date. The Shareholders and the Company shall have
received a certificate signed on behalf of Buyer by the Chief Executive
Officer and the Chief Financial Officer of Buyer to such effect.

(b) Performance of Obligations of Buyer. Buyer shall have performed in
all material respects all material obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and the
Shareholders and the Company shall have received a certificate signed on
behalf of Buyer by the Chief Executive Officer and the Chief Financial
Officer of Buyer to such effect.

(c) Release of Guarantees. Buyer shall have obtained the release of, or
agreed to indemnify, the Shareholders and all of their affiliates from the
guarantees of indebtedness of the Company or any of its Subsidiaries and
obtained the release of all collateral pledged by Shareholders or their
affiliates in connection with each of the guarantees listed in Section
6.2(c) of the Company Disclosure Schedule.

Section 6.3. Additional Conditions to Obligations of Buyer. The obligations
of Buyer to effect the Merger are subject to the satisfaction of each of the
following conditions prior to the Effective Time, any of which may be waived
in writing exclusively by Buyer:

(a) Representations and Warranties. The representations and warranties
of the Shareholders and the Company set forth in this Agreement shall be
true and correct in all material respects (except for those qualified as to
materiality or a Company Material Adverse Effect, which shall be true and
correct) as of the date of this Agreement and, except to the extent such
representations and warranties explicitly speak as of an earlier date, as
of the Closing Date as though made on and as of the Closing Date. Buyer
shall have received a certificate signed by each Shareholder and signed on
behalf of the Company by the Chief Executive Officer and the Chief
Financial Officer of the Company to such effect.

(b) Performance of Obligations of the Shareholders and the Company. The
Shareholders and the Company shall have performed in all material respects
all material obligations required to be performed by them under this
Agreement at or prior to the Closing Date, including, without limitation,
that pursuant to the agreements listed in Section 3.11 of the Company
Disclosure Schedule, that all consents required under such agreements as a
result of the consummation of the Merger shall have been obtained by the
Company and are in full force and effect except (i) the consents required
by Section 5.11 and (ii) for those agreements as to which the consequences
of the failure to obtain a consent, individually or in the aggregate, would
not constitute a Company Material Adverse Effect. Buyer shall have received
a certificate signed by the Shareholders and signed on behalf of the
Company by the Chief Executive Officer and the Chief Financial Officer of
the Company to such effect.

(c) No Material Adverse Change. No material adverse change shall have
occurred in the business, properties, condition (financial or otherwise),
prospects or results of operations of the Company and its Subsidiaries,
taken as a whole, since September 30, 1999; however, for purposes of the
foregoing, a change as to the financial performance or prospects of LL
Bettendorf shall be disregarded for this condition.

ARTICLE 7

TERMINATION AND AMENDMENT

Section 7.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time (with respect to Sections 7.1(b) through 7.1(g),
by written notice by the terminating party to the other party), whether before
or after approval of the matters presented in connection with the Merger by
the stockholders of Buyer:

(a) by mutual written consent of the Shareholders and the Company and
Buyer; or

(b) by any of the Buyer, the Shareholders or the Company if the Merger
shall not have been consummated by December 31, 2000 (the "Outside Date");
provided that either Buyer or the Shareholders

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<PAGE>

or the Company may extend the Outside Date to June 30, 2001 by providing
written notice thereof to the other party between three (3) and five (5)
business days prior to and including December 31, 2000 if (i) the Merger
shall not have been consummated by such date but the Merger Agreement (as
it may have been amended or supplemented to such date) remains in effect;
or

(c) by any of the Buyer, the Shareholders or the Company if a court of
competent jurisdiction or other Governmental Entity shall have issued an
order, decree or ruling, or taken any other final action not subject to
appeal, in each case having the effect of permanently restraining,
enjoining or otherwise prohibiting the Merger; or

(d) by Buyer, (i) upon a material breach of any representation,
warranty, covenant or agreement on the part of the Shareholders, or the
Company set forth in this Agreement, or if any representation or warranty
of the Shareholders or the Company shall have become untrue in any material
respect, in either case such that the conditions set forth in Section 6.3
would not be satisfied (a "Terminating Company Breach"); provided, however,
that, if such Terminating Company Breach is curable by the Shareholders or
the Company through best efforts within 30 days and for so long as the
Shareholders and the Company continue to exercise such best efforts during
such 30-day period, Buyer may not terminate this Agreement under this
Section 7.1(d); or (ii) if at the Buyer Special Meeting (including any
adjournment or postponement), the requisite vote of the stockholders of
Buyer in favor of the approval and adoption of this Agreement and the
Merger shall not have been obtained; or

(e) by the Shareholders or the Company, (i) upon a material breach of
any representation, warranty, covenant or agreement on the part of Buyer
set forth in this Agreement, or if any representation or warranty of Buyer
shall have become untrue in any material respect, in either case such that
the conditions set forth in Section 6.2 would not be satisfied (a
"Terminating Buyer Breach"); provided, however, that, if such Terminating
Buyer Breach is curable by Buyer through best efforts within 30 days and
for so long as Buyer continues to exercise such best efforts during such
30-day period, the Shareholders or the Company may not terminate this
Agreement under this Section 7.1(e); or (ii) if at the Buyer Special
Meeting (including any adjournment or postponement), the requisite vote of
the stockholders of Buyer in favor of the approval and adoption of this
Agreement and the Merger shall not have been obtained;

(f) by Buyer, if (A) any state gaming authority revokes any of LL
Bettendorf's licenses or permits to operate the casino riverboat, or (B) a
gaming regulatory authority imposes fines or penalties against, or requires
other payments by, LL Bettendorf and/or any of its current or former
directors, officers, employees, agents or representatives (to the extent
that LL Bettendorf is responsible for any such fines, penalties or other
payments and such fines, penalties or other payments are not covered by
insurance policies of LL Bettendorf) relating to the actions of LL
Bettendorf and/or its current or former directors, officers, agents or
representatives in an aggregate amount or which impose restrictions upon
operations that would reasonably be expected to have a material adverse
effect on the business of the LL Bettendorf casino (with materiality
determined with respect to the enterprise value of such business); or

(g) by Buyer, if a material adverse change as described in Section
6.3(c) has occurred.

Section 7.2. Effect of Termination. In the event of termination of this
Agreement as provided in Section 7.1, this Agreement shall immediately become
void and there shall be no liability or obligation on the part of Buyer, the
Shareholders or the Company, or their respective officers, directors,
managers, members, Shareholders or affiliates, except as set forth in Sections
5.3 and 7.3, and except that such termination shall not limit liability for a
willful breach of this Agreement; provided that the provisions of this Section
7.2 and Section 7.3 of this Agreement shall remain in full force and effect
and survive any termination of this Agreement.

Section 7.3. Fees and Expenses. All fees and expenses incurred in
connection with this Agreement and the Merger shall be paid by the party
incurring such expenses, whether or not the Merger is consummated except that
Buyer shall reimburse the Shareholders for (i) accounting fees incurred by the
Company related to the Proxy Statement or Buyer SEC Reports, including the
cost of preparing the Company Audited Financial Statements and (ii) any
governmental filing fees incurred by the Shareholders in connection with the
consummation of this transaction.

A-27
<PAGE>

Section 7.4. Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection
with the Merger by the stockholders of Buyer; but, after any such approval, no
amendment shall be made which by law requires further approval by such
stockholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.

Section 7.5. Extension; Waiver. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective Boards
of Directors may, to the extent legally allowed (i) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto, and (iii) waive
compliance with any of the agreements or conditions contained here. Any
agreement on the part of a party hereto to any such extension or waiver shall
be valid only if set forth in a written instrument signed on behalf of such
party.

ARTICLE 8

Miscellaneous

Section 8.1. Survival of Representations, Warranties, Covenants and
Agreements. The representations, warranties, covenants and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement shall not
survive the Effective Time, except for (i) the representations and warranties
contained in Sections 3.8(a) which shall survive for 3 years after the
Effective Time; and (ii) the indemnification provided in Section 5.6, which
shall survive until the expiration of the applicable statute of limitations
related to the claims which are the subject of the loss; and (iii) the
agreements contained in Sections 2.2, 5.7, 5.8, 5.9, 5.13 and 5.18 and Article
VIII, which shall survive the Effective Time indefinitely.

Section 8.2. Notices. Any and all notices, demands or other communications
required or desired to be given hereunder by any party shall be in writing and
shall be validly given or made to another party if served personally, or by
facsimile or air courier, or deposited in the United States mail, certified or
registered, postage prepaid, return receipt requested. If such notice, demand
or other communications be served personally, or by facsimile or air courier,
service shall be conclusively deemed made at the time of such service. If such
notice, demand or other communications be given by mail, it shall be
conclusively deemed given three (3) days after the deposit thereof in the
United States mail, addressed to the party to whom such notice, demand or
other communication is to be given as hereinafter set forth:

(a) if to the Shareholders or the Company, to:

BRDC, Inc.
2117 State Street, Suite 300
Bettendorf, Iowa 52722
Attention: Michael L. Sampson

with copies to:

BRDC, Inc.
2117 State Street, Suite 300
Bettendorf, Iowa 52722
Attention: Robert G. Ellis

and

Lord Bissell & Brook
115 South LaSalle Street, 35th Floor
Chicago, Illinois 60603
Attention: David L. Kendall

A-28
<PAGE>

(b) if to Buyer, to:

Isle of Capri Casinos, Inc.
1641 Popps Ferry Road
Biloxi, Mississippi 39532
Attention: President

with copies to:

Isle of Capri Casinos, Inc.
2200 Corporate Boulevard, N.W.
Suite 310
Boca Raton, Florida 33431
Attention: Allan B. Solomon

and

Mayer, Brown & Platt
190 South LaSalle Street, Suite 3100
Chicago, Illinois 60603
Attention: Paul W. Theiss

Section 8.3. Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation." The phrase "made available" in
this Agreement shall mean that the information referred to has been made
available if requested by the party to whom such information is to be made
available. The phrases "the date of this Agreement,""the date hereof," and
terms of similar import, unless the context otherwise requires, shall be
deemed to refer to December 19, 1999.

Section 8.4. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each
of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.

Section 8.5. Entire Agreement; No Third-Party Beneficiaries. This Agreement
and all documents and instruments referred to herein (a) constitute the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof, and (b)
except as provided in Section 5.6, are not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder. Each party
hereto agrees that, except for the representations and warranties contained in
this Agreement, none of Buyer, the Shareholders or the Company makes any other
representations or warranties, and each hereby disclaims any other
representations and warranties made by itself or any of its officers,
directors, employees, agents, financial and legal advisors or other
representatives, with respect to the execution and delivery of this Agreement
or the transactions contemplated hereby, notwithstanding the delivery or
disclosure to any of them or their respective representatives of any
documentation or other information with respect to any one or more of the
foregoing.

Section 8.6. Governing Law. This Agreement shall be governed by and
construed, and the obligations, rights and remedies of the parties hereunder
shall be determined, in accordance with the laws of the State of Iowa without
reference to the conflicts of law or choice of law doctrine of such state.

Section 8.7. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other party. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the
parties and their respective successors and assigns.

A-29
<PAGE>

Section 8.8. Severability; Enforcement. Except to the extent that the
application of this Section 8.8 would have a Buyer Material Adverse Effect
with respect to Buyer or a Company Material Adverse Effect with respect to the
Shareholders and the Company, the invalidity of any portion hereof shall not
affect the validity, force or effect of the remaining portions hereof.

If it is ever held that any covenant hereunder is too broad to permit
enforcement of such covenant to its fullest extent, each party agrees that a
court of competent jurisdiction may enforce such covenant to the maximum
extent permitted by law, and each party hereby consents and agrees that such
scope may be judicially modified accordingly in any proceeding brought to
enforce such covenant.

Section 8.9. Specific Performance. The parties hereto agree that the remedy
at law for any breach of this Agreement will be inadequate and that any party
by whom this Agreement is enforceable shall be entitled to specific
performance in addition to any other appropriate relief or remedy. Such party
may, in its sole discretion, apply to a court of competent jurisdiction for
specific performance or injunctive or such other relief as such court may deem
just and proper in order to enforce this Agreement or prevent any violation
hereof, and, to the extent permitted by applicable laws, each party hereto
waives any objection to the imposition of such relief.

In Witness Whereof, Isle of Capri Casinos, Inc., BRDC, Inc. and the
Shareholders have caused this Agreement to be signed by their respective duly
authorized officers or have signed personally as of the date first written
above.

Isle of Capri Casinos, Inc.

/s/ Allan B. Solomon
By: _________________________________
Its: Executive Vice President
___________________________________

BRDC, Inc.

/s/ Jeffrey D. Goldstein
By: _________________________________
Its: President
___________________________________

Shareholders of BRDC, Inc.

/s/ Jeffrey D. Goldstein
_____________________________________
Jeffrey D. Goldstein

/s/ Richard A. Goldstein
_____________________________________
Richard A. Goldstein

/s/ Robert S. Goldstein
_____________________________________
Robert S. Goldstein

/s/ Irene S. Goldstein
_____________________________________
Irene S. Goldstein

A-30
<PAGE>

ANNEX B

[LOGO OF CIBC]
December 19, 1999

The Special Committee of the Board of Directors
Isle of Capri Casinos, Inc.
711 Dr. Martin Luther King, Jr. Blvd.
Biloxi, Mississippi 39530

Members of the Special Committee of the Board:

You have asked CIBC World Markets Corp. ("CIBC World Markets") to render a
written opinion ("Opinion") to the Special Committee of the Board of Directors
as to the fairness, from a financial point of view, to Isle of Capri Casinos,
Inc. ("Isle of Capri") of the Exchange Ratio (defined below) provided for in
an Agreement and Plan of Merger (the "Merger Agreement") to be entered into
among Isle of Capri, BRDC, Inc. ("BRDC") and the shareholders of BRDC. The
Merger Agreement provides for, among other things, the merger of BRDC with and
into Isle of Capri (the "Merger") pursuant to which each outstanding share of
the common stock, no par value per share, of BRDC (the "BRDC Common Stock")
will be converted into the right to receive that number of shares of the
common stock, par value $0.01 per share, of Isle of Capri ("Isle of Capri
Common Stock") equal to the quotient of (i) 6,210,000 shares of Isle of Capri
Common Stock, increased or decreased by the quotient of (x) the Net Adjustment
Amount (as defined in the Merger Agreement) divided by (y) $9.486 per share,
divided by (ii) the number of shares of BRDC Common Stock outstanding
immediately prior to the closing of the Merger; provided that the number of
shares of Isle of Capri Common Stock issued in the Merger will not exceed
6,300,000 shares (the number of shares of Isle of Capri Common Stock into
which such shares of BRDC Common Stock will be so converted in the Merger, the
"Exchange Ratio"). Representatives of Isle of Capri have advised us that, as a
result of Isle of Capri's acquisition of BRDC in the Merger, Isle of Capri
will acquire the real estate owned by BRDC (the "BRDC Real Estate") and the
50% membership interest in Lady Luck Bettendorf, L.C. ("LL Bettendorf")
currently held by a wholly owned subsidiary of BRDC. Representatives of Isle
of Capri also have advised us that Isle of Capri and Lady Luck Gaming
Corporation ("Lady Luck"), which through a wholly owned subsidiary owns the
remaining 50% membership interest in LL Bettendorf, have entered into an
Agreement and Plan of Merger pursuant to which Lady Luck would become a wholly
owned subsidiary of Isle of Capri (the "Lady Luck Transaction") and that, upon
the closing of the Merger and the Lady Luck Transaction, Isle of Capri will
indirectly own 100% of the membership interests of LL Bettendorf.

In arriving at our Opinion, we:

(a) reviewed a draft dated December 17, 1999 of the Merger Agreement;

(b) reviewed audited financial statements of Isle of Capri for the
fiscal years ended April 26, 1998 and April 25, 1999, a preliminary draft
of the audited balance sheet of BRDC for the fiscal year ended December 31,
1997 and a preliminary draft of audited financial statements of BRDC for
the fiscal year ended December 31, 1998;

(c) reviewed unaudited financial statements of Isle of Capri for the six
months ended October 24, 1999, unaudited financial statements of BRDC for
the nine months ended September 30, 1999, unaudited balance sheets of LL
Bettendorf for the fiscal years ended December 31, 1997 and December 31,
1998 and for the nine months ended September 30, 1999, and unaudited income
statements of LL Bettendorf for the fiscal years ended December 31, 1995
through December 31, 1998 and for the nine months ended September 30, 1999;

(d) reviewed publicly available financial forecasts relating to Isle of
Capri and financial projections prepared by the management of Lady Luck
relating to LL Bettendorf;

(e) reviewed the historical market prices and trading volume for Isle of
Capri Common Stock;

B-1
<PAGE>

(f) held discussions with the senior managements of Isle of Capri and
Lady Luck with respect to the businesses and prospects for future growth of
Isle of Capri and LL Bettendorf, and held discussions with representatives
of BRDC with respect to the BRDC Real Estate;

(g) reviewed the lease among Green Bridge Company, Bettendorf Riverfront
Development Company, L.C., LL Bettendorf and Lady Luck Quad Cities, Inc.
relating to the BRDC Real Estate and an appraisal dated January 12, 1995 of
the BRDC Real Estate;

(h) reviewed and analyzed certain publicly available financial data for
certain companies we deemed comparable to Isle of Capri and LL Bettendorf;

(i) performed a discounted cash flow analysis of LL Bettendorf using
certain assumptions of future performance provided to us by the management
of Lady Luck and a discounted cash flow analysis of the lease payments
relating to the BRDC Real Estate;

(j) reviewed and analyzed certain publicly available information for
transactions that we deemed relevant in evaluating the Merger;

(k) reviewed public information concerning Isle of Capri and LL
Bettendorf; and

(l) performed such other analyses and reviewed such other information as
we deemed appropriate.

In rendering our Opinion, we relied upon and assumed, without independent
verification or investigation, the accuracy and completeness of all of the
financial and other information provided to or discussed with us by Isle of
Capri, BRDC and Lady Luck and their respective employees, representatives and
affiliates. With respect to forecasts relating to LL Bettendorf provided to or
discussed with us by Lady Luck, we assumed, at the direction of the management
of Lady Luck, without independent verification or investigation, that such
forecasts were reasonably prepared on bases reflecting the best available
information, estimates and judgments of the management of Lady Luck. As you
are aware, we have not been provided with internal forecasts for Isle of
Capri, but have reviewed and discussed with the management of Isle of Capri
publicly available forecasts relating to Isle of Capri and have assumed, with
the consent of Isle of Capri, without independent verification or
investigation, that such forecasts represent reasonable estimates and
judgments as to the future financial condition and operating results of Isle
of Capri. As to the appraisal reviewed by us with respect to the BRDC Real
Estate, we assumed, with the consent of Isle of Capri, without independent
verification or investigation, that such appraisal was reasonably prepared
reflecting the best available information, estimates and judgments of the
preparer thereof. We also assumed, with the consent of Isle of Capri, that the
Merger will be treated as a tax-free reorganization for federal income tax
purposes and that the Lady Luck Transaction will be effected prior to
consummation of the Merger in all material respects in accordance with its
terms. We further have assumed with the consent of Isle of Capri that, in the
course of obtaining the necessary regulatory or third party approvals for the
Merger and related transactions, no limitations, restrictions or conditions
will be imposed that would have a material adverse effect on Isle of Capri,
BRDC or LL Bettendorf or the contemplated benefits to Isle of Capri of the
Merger or such related transactions. In addition, representatives of Isle of
Capri have advised us and we therefore also have assumed that the final terms
of the Merger Agreement will not vary materially from the draft reviewed by
us. We have neither made nor, with the exception of the appraisal relating to
the BRDC Real Estate, obtained any independent evaluations or appraisals of
the assets or the liabilities of Isle of Capri, BRDC, LL Bettendorf or
affiliated entities. We are not expressing any opinion as to the underlying
valuation, future performance or long-term viability of Isle of Capri, the
BRDC Real Estate or LL Bettendorf, or the price at which the Isle of Capri
Common Stock will trade subsequent to announcement or consummation of the
Merger. As you are aware, for purposes of our Opinion, we evaluated the
implied value of the Isle of Capri Common Stock issuable in the Merger based
solely on the closing stock price of Isle of Capri Common Stock one trading
day prior to Isle of Capri's public announcement of the execution of the
definitive agreement with respect to the Lady Luck Transaction and the
execution of the letter of intent with respect to the proposed Merger. Except
for the foregoing, our Opinion is necessarily based on the information
available to us and general economic, financial and stock market conditions
and circumstances as they exist and can be evaluated by us on the date hereof.
It should be understood that, although subsequent developments may affect this
Opinion, we do not have any obligation to update, revise or reaffirm the
Opinion.

B-2
<PAGE>

As part of our investment banking business, we are regularly engaged in
valuations of businesses and securities in connection with acquisitions and
mergers, underwritings, secondary distributions of securities, private
placements and valuations for other purposes.

We have acted as financial advisor to the Special Committee of the Board of
Directors of Isle of Capri with respect to this Opinion and will receive a fee
for our services in connection with the delivery of this Opinion. We and our
affiliates have in the past provided services to Isle of Capri and Lady Luck
unrelated to the Merger, including equity and debt financing, and currently
are providing financial advisory and other services to Isle of Capri with
respect to the Lady Luck Transaction, including the financing thereof, for
which services we and our affiliates have received and will receive
compensation. In the ordinary course of business, CIBC World Markets and its
affiliates may actively trade securities of Isle of Capri for their own
account and for the accounts of customers and, accordingly, may at any time
hold a long or short position in such securities.

Based upon and subject to the foregoing, and such other factors as we
deemed relevant, it is our opinion that, as of the date hereof, the Exchange
Ratio is fair to Isle of Capri from a financial point of view. This Opinion is
for the use of the Special Committee of the Board of Directors of Isle of
Capri in its evaluation of the Merger and does not constitute a recommendation
to any stockholder as to how such stockholder should vote on any matters
relating to the Merger.

Very truly yours,

/s/ CIBC World Markets Corp.

CIBC WORLD MARKETS CORP.

B-3
<PAGE>

ANNEX C

BRDC, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

December 31, 1998

Results of Operations

All statements contained herein that are not historical facts, including
but not limited to, statements regarding the Company's current business
strategy are based on current expectations. These statements are forward-
looking in nature and involve a number of risks and uncertainties. Generally,
the words "anticipates," "believes," "estimates," "expects" and similar
expressions as they related to the Company and its management are intended to
identify forward-looking statements. Actual results may differ materially.
Among the factors that could cause actual results to differ materially are the
following: the availability of sufficient capital to finance the Joint
Venture's business plan on terms satisfactory to the Company; competitive
factors, such as legalization of gaming in jurisdictions from which the Joint
Venture draws significant number of patrons and an increase in the number of
casinos serving the markets in which the Joint Venture's casino is located;
changes in labor, equipment and capital costs; changes in regulations
affecting the gaming industry; future acquisitions, mergers or strategic
partnerships; general business and economic conditions. The Company wishes to
caution readers not to place undue reliance on any forward-looking statements,
which statements are made pursuant to the Private Litigation Reform Act of
1995. These forward-looking statements speak only as of the date they are
made. The Company expressly disclaims any obligation or undertaking to
disseminate any updates or revisions to any forward-looking statement
contained in this report to reflect any change in its expectations with regard
to that forward-looking statement or any change in events, conditions or
circumstances on which that forward-looking statement is based.

Year Ended December 31, 1998 Compared to Year Ended December 31, 1997:

For the year ended December 31, 1998 as compared to 1997, consolidated
gross revenues increased to $2.289 million from $2.138 million, respectively,
an increase of $151 thousand or 7%. The Company's gross revenues include
income from leasing land to the Bettendorf Joint Venture and management fee
income for managing the Bettendorf Joint Venture's marine and real estate
operations.

The Company's investment in the Bettendorf Joint Venture is accounted for
under the equity method and the Company's portion of income or loss from the
Bettendorf Joint Venture is included in other income. The Company's equity in
income of Lady Luck Bettendorf, L.C. increased to $5.099 million from $3.427
million, respectively, an increase of $1.672 million or 49%. (For a detailed
explanation of this increase please refer to Lady Luck Bettendorf, L.C.'s
Management's Discussion and Analysis of Financial Condition and Results of
Operations included herein.)

Operating income was $2.118 million for the year ended December 31, 1998.
Operating income was $1.894 million for the year ended December 31, 1997.

Income applicable to common stockholders was $6.273 million or $15,683 per
share for the year ended December 31, 1998 compared to $4.434 million or
$11,085 per share for the year ended December 31, 1997. The increase was
mainly attributable to the increase in income from the joint venture.

C-1
<PAGE>

BRDC, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS--(Continued)

December 31, 1998

Liquidity and Capital Resources

During the twelve months ended December 31, 1998, the Company generated
$1.131 million from operations. The primary sources during the twelve months
ended December 31, 1998 of cash and noncash resources were: (1) cash flow from
operations; (2) cash on hand at the beginning of the year and (3) $3.5 million
of borrowings from a related party. The primary uses of cash and noncash
resources during the twelve months ended December 31, 1998, other than
operating expenditures, include:

1. $2.552 million for repayment of related party debt.

2. $1.772 million for cash distributions to stockholders.

3. $.264 million for repayment of debt.

4. $.595 million distribution of assets in lieu of cash dividends to
stockholders.

The Company has no knowledge of any pending litigation that could have an
adverse and material effect on the Company.

The Company is subject to certain federal, state and local environmental
protection, health and safety laws, regulations and ordinances that apply to
businesses generally, including the Clean Air Act, the Clean Water Act, the
Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act, the Oil Pollution Act, and the
Occupational Safety and Health Act.

Impact of Inflation

Absent changes in the competitive and economic conditions or in specific
prices affecting the industry, management does not expect that inflation will
have a significant impact on the Company's operations. Changes in specific
prices (such as fuel and transportation prices) relative to the general rate
of inflation may materially affect the hotel-casino industry. There has been
no material impact from inflation during the periods covered by the
accompanying financial statements.

C-2
<PAGE>

BRDC, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS--(Continued)

September 30, 1999
(Unaudited)

Results of Operations

Nine Months Ended September 30, 1999 Compared to Nine Months Ended September
30, 1998:

For the nine months ended September 30, 1999, as compared to 1998,
respectively, consolidated gross revenues decreased to $1.593 million from
$1.678 million a decrease of $.085 million, or 5%. This decrease was mainly
attributable to a decrease in other income relating to a parking facility. The
Company's gross revenues include income from leasing land to the Bettendorf
Joint Venture and management fee income for managing the Bettendorf Joint
Venture's marine and real estate operations.

The Company's equity in income of Lady Luck Bettendorf, L.C. increased to
$5.242 million from $3.884 million, respectively, an increase of $1.358
million or 35%. (For a more detailed explanation of this increase please refer
to Lady Luck Bettendorf, L.C.'s Management's Discussion and Analysis of
Financial Condition and Results of Operations included herein.)

Operating income was $1.314 million for the nine months ended September 30,
1999 and was $1.547 million for the nine months ended September 30, 1998.

Income applicable to common stockholders was $5.928 million or $14,820 per
share for the nine month period ended September 30, 1999 compared to $4.724
million or $11,810 per share for the nine months ended September 30, 1998. The
increase was primarily related to the increase in income from the Bettendorf
Joint Venture.

C-3
<PAGE>

BRDC, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS--(Continued)

September 30, 1999
(Unaudited)

Liquidity and Capital Resources

During the nine months ended September 30, 1999, the Company generated
$3.438 million in cash from operations. The primary sources during the nine
months ended September 30, 1999 of cash and noncash resources were: (1) cash
flow from operations including a $2.5 million distribution of earnings from
the Bettendorf Joint Venture; (2) cash on hand at the beginning of the year;
(3) $8.5 million from refinancing of debt. The primary uses of cash and
noncash resources during the nine months ended September 30, 1999, other than
operating expenditures, include:

1. $6.174 million for the payment of related party debt.

2. $3.216 million for the repayment of debt.

3. $2.889 million for cash distributions to stockholders.

The Company has no knowledge of any pending litigation that could have an
adverse and material effect on the Company.

Impact of Inflation

Absent changes in competitive and economic conditions or in specific prices
affecting the industry, management does not expect that inflation will have a
significant impact on the Company's operations. Changes in specific prices
(such as fuel and transportation prices) relative to the general rate of
inflation may materially affect the hotel-casino industry. There has been no
material impact from inflation during the periods covered by the accompanying
financial statements.

C-4
<PAGE>

ANNEX D

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
BRDC, Inc.
Independent Auditor's Report.............................................. D-1
Consolidated Balance Sheets, December 31, 1998 and 1997................... D-2
Consolidated Statements of Operations for the years ended December 31,
1998, 1997 (unaudited) and 1996 (unaudited).............. ............... D-3
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1998, 1997 (unaudited) and 1996 (unaudited)................. D-4
Consolidated Statements of Cash Flows for the years ended December 31,
1998, 1997 (unaudited) and 1996 (unaudited).............................. D-5
Notes to Consolidated Financial Statements................................ D-6
</TABLE>

D-i
<PAGE>

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors
BRDC, Inc.
Bettendorf, Iowa

We have audited the accompanying balance sheets of BRDC, Inc. and
subsidiary as of December 31, 1998 and 1997, and the statement of income,
stockholders' equity and cash flows for the year ended December 31, 1998.
These financial statements 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 audit 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 BRDC, Inc. and subsidiary
as of December 31, 1998 and 1997, and the results of their operations and
their cash flows for the year ended December 31, 1998, in conformity with
generally accepted accounting principles.

Moline, Illinois McGladrey & Pullen, LLP
November 22, 1999

D-1
<PAGE>

BRDC, INC.

CONSOLIDATED BALANCE SHEETS

As of December 31, 1998 and 1997
(Dollars in thousands, except share and per share data)

<TABLE>
<CAPTION>
ASSETS
------
1998 1997
------- -------
<S> <C> <C>
Current Assets:
Cash and cash equivalents......................................... $ 157 $ 114
Accounts receivable
Other........................................................... 50 50
Related parties................................................. 173 348
------- -------
Total current assets.......................................... 380 512
Property and improvements--net...................................... 1,420 2,136
Other assets,
Investment in Lady Luck Bettendorf, L.C........................... 14,411 9,312
------- -------
Total assets.................................................. $16,211 $11,960
======= =======
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------ ------- -------
<S> <C> <C>
Current liabilities:
Accounts payable, related party................................... $ 22 $ 377
Current maturities of long-term debt
Other........................................................... 620 500
Related parties................................................. 259 333
Accrued liabilities:
Interest........................................................ 19 19
Interest, related parties....................................... 40 24
------- -------
Total current liabilities..................................... 960 1,253
Long-term debt, less current maturities
Other............................................................. 1,634 2,018
Related parties................................................... 9,244 8,222
------- -------
Total long-term debt.......................................... 10,878 10,240
------- -------
Stockholders' equity:
Common stock, no par value; 10,000 shares authorized; shares
issued and outstanding: 400 and 400, respectively................ -- --
Retained earnings................................................. 4,373 467
------- -------
Total stockholders' equity.................................... 4,373 467
------- -------
Total liabilities and stockholders' equity.................... $16,211 $11,960
======= =======
</TABLE>

See notes to consolidated financial statements.

D-2
<PAGE>

BRDC, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended December 31, 1998, 1997 and 1996
(In thousands, except share and per share data)

<TABLE>
<CAPTION>
1998 1997 1996
---------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Revenue
Rent, related party...................... $ 1,860 $ 1,800 $ 1,800
Management fee........................... 325 325 325
Other.................................... 104 13 11
---------- ---------- ----------
Total Revenue.......................... 2,289 2,138 2,136
Operating Expenses
General and administrative............... 50 121 91
Depreciation............................. 121 123 123
---------- ---------- ----------
Total operating expenses............... 171 244 214
---------- ---------- ----------
Operating income......................... 2,118 1,894 1,922
Interest expense......................... (225) (306) (155)
Interest expense, related parties........ (719) (581) (495)
Equity in income of unconsolidated joint
venture................................. 5,099 3,427 3,091
---------- ---------- ----------
Net income............................... $ 6,273 $ 4,434 $ 4,363
========== ========== ==========
Net income per common share--basic....... $15,682.50 $11,085.00 $10,907.50
Net income per common share--assuming
dilution................................ $15,682.50 $11,085.00 $10,907.50
Weighted average basic shares............ 400 400 400
Weighted average diluted shares.......... 400 400 400
</TABLE>

See notes to consolidated financial statements.

D-3
<PAGE>

BRDC, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)

For the Years Ended December 31, 1998, 1997 and 1996
(In thousands, except number of shares)

<TABLE>
<CAPTION>
Shares of Total
Common Common Retained Stockholders'
Stock Stock Earnings Equity
--------- ------ -------- -------------
<S> <C> <C> <C> <C>
Balance, December 31, 1995
(unaudited).............. 400 $-- $ (670) $ (670)
Net Income.............. -- -- 4,363 4,363
Distributions........... -- -- (5,250) (5,250)
--- ---- ------- -------
Balance, December 31, 1996
(unaudited).............. 400 -- (1,557) (1,557)
Net Income.............. -- -- 4,434 4,434
Distributions........... -- -- (2,410) (2,410)
--- ---- ------- -------
Balance, December 31,
1997..................... 400 -- 467 467
Net Income.............. -- -- 6,273 6,273
Distributions........... -- -- (2,367) (2,367)
--- ---- ------- -------
Balance, December 31,
1998..................... 400 $-- $ 4,373 $ 4,373
=== ==== ======= =======
</TABLE>

See notes to consolidated financial statements.

D-4
<PAGE>

BRDC, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 1998, 1997 and 1996
(In thousands)

<TABLE>
<CAPTION>
1998 1997 1996
------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Operating Activities:
Net Income................................... $ 6,273 $ 4,434 $ 4,363
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation............................... 121 123 123
Equity in income of unconsolidated joint
venture................................... (5,099) (3,427) (3,091)
Changes in current assets and liabilities:
Decrease (increase) in accounts
receivable.............................. -- (50) 225
Decrease (increase) in accounts
receivable, related party............... 175 (9) (109)
Increase (decrease) in accounts payable,
related party........................... (355) 157 103
Increase in accrued interest, related
parties................................. 16 4 --
Increase in accrued interest............. -- 19 --
------- ------- -------
Net cash provided by operating activities.... 1,131 1,251 1,614
------- ------- -------
Financing Activities:
Proceeds from long-term debt................. -- -- 3,948
Proceeds from long-term debt, related
parties..................................... 3,500 2,500 --
Principal payments on long-term debt......... (264) (1,132) (298)
Principal payments on long-term debt, related
parties..................................... (2,552) (103) (54)
Cash distributions........................... (1,772) (2,410) (5,250)
------- ------- -------
Net cash (used in) financing activities...... (1,088) (1,145) (1,654)
------- ------- -------
Net increase (decrease) in cash and cash
equivalents................................. 43 106 (40)
Cash and cash equivalents at beginning of
period...................................... 114 8 48
------- ------- -------
Cash and cash equivalents at end of period... $ 157 $ 114 $ 8
======= ======= =======
Supplemental Schedule of Noncash Financing
Activities:
Distribution of assets to stockholders..... $ 595 $ -- $ --
Supplemental Disclosure of Cash Flow
Information:.
Cash paid for interest..................... 928 864 650
</TABLE>

See notes to consolidated financial statements.

D-5
<PAGE>

BRDC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 1998
(Dollars in Thousands)

1. Nature of Business and Significant Accounting Policies

Nature of business

BRDC, Inc. and subsidiary, collectively, (the "Company") was formed to
acquire real estate.

The Company owns approximately 24.6 acres of land in Bettendorf, Iowa and
100% of Bettendorf Riverfront Development Company, L.C. ("BRDC"). The Company
leases land to its unconsolidated joint venture, Lady Luck Bettendorf, L.C.
(The Bettendorf Joint Venture). In addition, the Company receives a management
fee for services concerning licensing, staffing and management of the marine
aspects of a gaming vessel.

Bettendorf Riverfront Development Company, L.C. and Lady Luck Quad Cities,
Inc. ("LLQC") formed an Iowa limited liability company, Lady Luck Bettendorf,
L.C. for the purpose of operating a riverboat casino on the Mississippi River
based in Bettendorf, Iowa. Under the terms of the Articles of Organization,
The Bettendorf Joint Venture's term will expire in 2065. BRDC and LLQC each
contributed $3,000 for a 50% ownership interest in The Bettendorf Joint
Venture. All net profits and losses from all operations of The Bettendorf
Joint Venture are allocated equally between LLQC and BRDC. BRDC and LLQC are
each represented by two managers with most management decisions of The
Bettendorf Joint Venture requiring the approval of both members.

The Bettendorf Joint Venture commenced operations on April 21, 1995. The
Bettendorf Joint Venture is located on a leased parcel of land which is
adjacent to Interstate 74 on the Mississippi River. The Bettendorf Joint
Venture's operations consist of a 30,000 square foot casino with approximately
50 table and card games and 1,157 slot machines within three floors of a
gaming vessel, which is approximately 300 feet by 100 feet, a 256 room hotel,
buffet style restaurant, gift shop, commercial center, sports bar, 500 space
parking garage and a land based entertainment area for parties, show and
special events. The first floor has a Las Vegas casino theme, the second floor
has a sports theme and the poker room is on the third floor. The vessel is
certified for 2,500 passengers including crew. The Bettendorf Joint Venture's
market is concentrated in a radius of 50 miles of the Quad City Area and the
Chicago area serviced by ongoing bus programs.

The Company records its investment in the above joint venture under the
equity method of accounting.

Significant accounting policies

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

Principles of consolidation. The consolidated financial statements include
the accounts of BRDC, Inc. and its wholly-owned subsidiary, Bettendorf
Riverfront Development Company, L.C. All material intercompany accounts and
transactions have been eliminated in consolidation.

Cash and cash equivalents. The Company considers all highly liquid
investments purchased with an original maturity of three months or less as
cash equivalents. The carrying amount of cash and cash equivalents
approximates its fair value.

D-6
<PAGE>

BRDC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1998
(Dollars in Thousands)

Property and equipment. Property and equipment are stated at cost.
Depreciation is computed using the straight-line method. Estimated useful
lives for financial reporting purposes are as follows:

<TABLE>
<S> <C>
Buildings 31 years
Land improvements 15-20 years
</TABLE>

Costs of major improvements are capitalized, while costs of normal repairs
and maintenance are charged to expense as incurred.

Income taxes. The Company, with the consent of its stockholders, elected to
be taxed under sections of federal and state income tax laws, which provide
that, in lieu of corporation income taxes, the stockholders separately account
for their pro rata shares of the Company's items of income, deductions, losses
and credits.

The Company expects to pay dividends to assist the stockholders in paying
their federal and state income tax liabilities resulting from the taxation of
their proportionate share of the Company's income and deductions.

Net income per share: Net income per share is computed on the basis of the
weighted average number of common shares outstanding each year. The Company
does not have any dilutive securities.

Financial instruments: The Company has reviewed the following financial
instruments and has determined that their fair values approximated their
carrying values as of December 31, 1998 and 1997: accounts receivable,
accounts payable and accrued expenses. Notes payable are at approximately
current rates except for a term loan which was paid off after year-end and
which approximates fair value.

Unaudited information: The information presented for the years ended
December 31, 1997 and 1996 are unaudited; however, in the opinion of
management, all adjustments necessary for a fair presentation of the financial
statements have been included.

2. Certain Risks and Uncertainties

The Joint Venture's operations in Iowa are dependent upon its continued
ability to be licensed by the respective gaming authorities. Such licenses are
reviewed periodically by the gaming authorities in these states.

3. Reorganization

In 1998, the members of Bettendorf Riverfront Development Company, L.C.
contributed their membership interests to BRDC, Inc. in exchange for the stock
of BRDC, Inc. BRDC, Inc. had no assets or liabilities prior to the exchange.

Since the Company and Bettendorf Riverfront Development Company, L.C. were
under common control, the transaction has been accounted for in a manner
similar to a pooling-of-interest and as such the financial statements have
been retroactively restated.

D-7
<PAGE>

BRDC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1998
(Dollars in Thousands)

4. Property and Improvements

The property and improvements as of December 31, 1998 and 1997 are as
follows:

<TABLE>
<CAPTION>
1998 1997
------ ------
<S> <C> <C>
Land....................................................... $ 163 $ 238
Land improvements.......................................... 1,297 1,950
Outlet mall................................................ 257 257
------ ------
Total property and improvements.......................... 1,717 2,445
Less accumulated depreciation.............................. 297 309
------ ------
Total property and improvements, net of accumulated
depreciation............................................ $1,420 $2,136
====== ======
</TABLE>

5. Long-Term Debt

<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Term loan, related party, unsecured, due in monthly
installments of $37, including interest at 7 1/2%, with
a final payment due October 9, 2003.................... $ 3,469 $ --
Term loan, due in monthly installments of $65,
includinginterest at variable rates of .50% under the
National Bank Prime (effective rates of 7.75% as of
December 31, 1998 and 8% as of December 31, 1997) with
final payment due April 2, 2002. This loan is secured
by a real estate mortgage on land, guaranteed by the
stockholders and related parties, assignment of a lease
between The Bettendorf Joint Venture and the Company
and a pledge of the membership interest in the joint
venture. Subsequent to year-end, this note was paid
off.................................................... 2,254 2,518
Term loan, related party, due in monthly installments of
$53, including interest at 9.5% with a final payment
due April 13, 2025. This note is secured by land which
was acqired by the Company. Subsequent to year-end,
this note was paid off................................. 6,034 6,098
Term loan, related party, unsecured, due in monthly
installments of $41, including interest at 9 1/2%, with
a final payment due October 31, 2004. This loan was
paid off on October 8, 1998............................ -- 2,457
------- -------
Total debt.............................................. 11,757 11,073
Less: current maturities................................ 879 833
------- -------
Total long-term debt.................................... $10,878 $10,240
======= =======
</TABLE>

6. Leases

The Company has entered into a long-term operating lease agreement with The
Bettendorf Joint Venture. The lease is for an initial term of 10 years,
expiring on May 2005, with nine 10-year options. The Company receives annual
rent payments of $1,800 from The Bettendorf Joint Venture. The Bettendorf
Joint Venture has an option to purchase the land during the initial term of
the lease for its appraised fair market value. The Bettendorf Joint Venture
has not exercised this option as of December 31, 1998. The lease requires the
lessee to pay for all related property taxes.

D-8
<PAGE>

BRDC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1998
(Dollars in Thousands)

7. Investment in Joint Venture of Lady Luck Bettendorf, L.C.

The Company, through its subsidiary, owns 50% of Lady Luck Bettendorf, L.C.
(The Bettendorf Joint Venture).

The Company is accounting for its investment in The Bettendorf Joint
Venture by the equity method of accounting under which the net income or loss
of the joint venture is recognized as income or loss in the Company's income
statement and added to or subtracted from the investment account.

A summary balance sheet of the joint venture as of December 31, 1998 and
1997 is as follows:

<TABLE>
<CAPTION>
1998 1997
------- -------
ASSETS
------
<S> <C> <C>
Current assets.......................................... $ 6,870 $ 4,636
Property and equipment, net............................. 52,727 25,459
Other assets............................................ 750 854
------- -------
$60,347 $30,949
======= =======

<CAPTION>
LIABILITIES AND MEMBERS' EQUITY
-------------------------------
<S> <C> <C>
Current liabilities..................................... $ 8,154 $ 8,947
Long-term debt.......................................... 23,370 3,377
Members' equity......................................... 28,823 18,625
------- -------
$60,347 $30,949
======= =======
</TABLE>

Summarized results of operations for the years ended December 31, 1998,
1997 and 1996 are as follows:

<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Net revenues...................................... $84,508 $71,612 $65,202
Costs and expenses................................ 74,310 64,758 59,020
------- ------- -------
Net income........................................ $10,198 $ 6,854 $ 6,182
======= ======= =======
</TABLE>

A summary of changes in the Company's investment in the Bettendorf Joint
Venture for the years ended December 31, 1998 and 1997 are as follows:

<TABLE>
<CAPTION>
1998 1997
------- ------
<S> <C> <C>
Investment, beginning of period........................... $ 9,312 $5,885
Equity in net income of unconsolidated affiliate.......... 5,099 3,427
------- ------
Investment, end of period................................. $14,411 $9,312
======= ======
</TABLE>

Included in the Company's retained earnings is $11,411 and $6,312 of
undistributed retained earnings of the Joint Venture as of December 31, 1998
and 1997.

8. Subsequent Events

Subsequent to year-end, the Company entered into an agreement with a bank
to borrow $8,500. The proceeds were used to retire the notes payable to a
related party and a term loan. The new loan bears interest at 7.3% with
monthly payments of $170 with a final payment due February 1, 2004. The loan
is collateralized by substantially all the assets of the Company. The loan can
be prepaid if the borrower gives proper notice and pays a prepayment premium.

The shareholders of the Company have entered into a letter of intent for a
tax-free merger with the Isle of Capri Casinos, Inc. The agreement is subject
to approval by the shareholders of the Isle of Capri Casinos, Inc. Effective
with the merger, the separate corporate existence of the Company shall cease.

D-9
<PAGE>

ANNEX E

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
BRDC, Inc.
Consolidated Balance Sheets, September 30, 1999 (unaudited) and December
31, 1998................................................................. E-1
Consolidated Statements of Operations for the three and nine months ended
September 30, 1999 and 1998 (unaudited).................................. E-2
Consolidated Statements of Cash Flows for the nine months ended September
30, 1999 and 1998 (unaudited)............................................ E-3
Notes to Unaudited Consolidated Financial Statements...................... E-4
</TABLE>

E-i
<PAGE>

BRDC, INC.

CONSOLIDATED BALANCE SHEETS

As of September 30, 1999 and December 31, 1998
(Dollars in thousands, except share and per share data)

<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1999 1998
------ ------------- ------------
(Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents.............................. $ 21 $ 157
Accounts receivable....................................
Other................................................ -- 50
Related parties...................................... -- 173
------- -------
Total current assets............................... 21 380
Property and improvements--net........................... 1,357 1,420
Other assets,
Investment in Lady Luck Bettendorf, L.C................ 17,204 14,411
------- -------
Total assets....................................... $18,582 $16,211
======= =======
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
Current Liabilities:
Accounts payable, related party........................ $ -- $ 22
Current maturities of long-term debt...................
Other................................................ 1,500 620
Related parties...................................... 200 259
Advances, related party................................ 205 --
Accrued liabilities:
Deferred revenue..................................... 82 --
Interest............................................. -- 19
Interest, related parties............................ 16 40
------- -------
Total current liabilities.......................... 2,003 960
Long-term debt, less current maturities
Other.................................................. 6,038 1,634
Related parties........................................ 3,129 9,244
------- -------
Total long-term debt............................... 9,167 10,878
------- -------
Stockholders' equity:
Common stock, no par value; 10,000 shares authorized;
400 shares issued and outstanding..................... -- --
Retained earnings...................................... 7,412 4,373
------- -------
Total stockholders' equity......................... 7,412 4,373
------- -------
Total liabilities and stockholders' equity......... $18,582 $16,211
======= =======
</TABLE>

See notes to consolidated financial statements.

E-1
<PAGE>

BRDC, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended September 30, 1999 and 1998

(UNAUDITED)
(In thousands, except share and per share data)

<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- ----------------------
1999 1998 1999 1998
--------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Revenue
Rent, related party............ $ 450 $ 450 $ 1,350 $ 1,350
Management fee................. 81 81 243 243
Other.......................... -- 3 -- 85
--------- --------- ---------- ----------
Total Revenue................ 531 534 1,593 1,678
Operating Expenses
General and administrative..... 14 23 216 38
Depreciation................... 21 31 63 93
--------- --------- ---------- ----------
Total operating expenses..... 35 54 279 131
--------- --------- ---------- ----------
Operating income............... 496 480 1,314 1,547
Interest expense............... (145) (57) (402) (175)
Interest expense, related
parties....................... (64) (175) (230) (532)
Interest income................ 2 -- 4 --
Equity in income of
unconsolidated joint venture.. 1,951 786 5,242 3,884
--------- --------- ---------- ----------
Net income..................... $ 2,240 $ 1,034 $ 5,928 $ 4,724
========= ========= ========== ==========
Net income per common share--
basic......................... $5,600.00 $2,585.00 $14,820.00 $11,810.00
Net income per common share--
assuming dilution............. $5,600.00 $2,585.00 $14,820.00 $11,810.00
Weighted average basic shares.. 400 400 400 400
Weighted average diluted
shares........................ 400 400 400 400
</TABLE>

See notes to consolidated financial statements.

E-2
<PAGE>

BRDC, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30, 1999 and 1998
(UNAUDITED)
(In thousands)

<TABLE>
<CAPTION>
Nine Months Ended
---------------------------
September 30, September 30,
1999 1998
------------- -------------
<S> <C> <C>
Operating Activities:
Net Income $ 5,928 $4,724
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation.................................... 63 93
Earnings in excess of distribution of
unconsolidated joint venture................... (2,793) (3,884)
Changes in current assets and liabilities:
Decrease in accounts receivable............... 50 32
Decrease in accounts receivable, related
party........................................ 173 116
(Decrease) in accounts payable, related party. (22) (184)
(Decrease) in accrued interest, related
parties...................................... (24) --
(Decrease) in accrued interest................ (19) --
Increase in deferred revenue.................. 82 --
------- ------
Net cash provided by operating activities......... 3,438 897
------- ------
Investing Activities:
Advances from related party....................... 205 --
------- ------
Financing Activities:
Proceeds from long-term debt...................... 8,500 --
Principal payments on long-term debt.............. (3,216) (155)
Principal payments on long-term debt, related
parties.......................................... (6,174) (246)
Cash distributions................................ (2,889) (520)
------- ------
Net cash (used in) financing activities........... (3,779) (921)
------- ------
Net (decrease) in cash and cash equivalents....... (136) (24)
Cash and cash equivalents at beginning of period.. 157 114
------- ------
Cash and cash equivalents at end of period........ $ 21 $ 90
======= ======
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest.......................... $ 675 $ 707
</TABLE>

See notes to consolidated financial statements.

E-3
<PAGE>

BRDC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 1999
(Unaudited)

1. The Company and Basis of Presentation

In the opinion of management, the information furnished reflect all
adjustments (consisting of normal recurring adjustments) considered necessary
for a fair presentation of the financial portion as of September 30, 1999 and
the results of operations and cash flows for the periods ended September 30,
1999 and 1998. The results for the three and nine month periods ended
September 30, 1999 are not necessarily indicative of future financial results.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the amounts of revenues and expenses during the reporting period. Actual
results could differ from these estimates.

BRDC, Inc. and subsidiary collectively (the "Company") was formed to
acquire real estate.

Bettendorf Riverfront Development Company, L.C. and Lady Luck Quad Cities,
Inc. ("LLQC") formed an Iowa limited liability company, Lady Luck Bettendorf,
L.C. for the purpose of operating a riverboat casino on the Mississippi River
based in Bettendorf, Iowa. Under the terms of the Articles of Organization,
The Bettendorf Joint Venture's term will expire in 2065. BRDC and LLQC each
contributed $3,000,000 for a 50% ownership interest in The Bettendorf Joint
Venture. All net profits and losses from all operations of The Bettendorf
Joint Venture are allocated equally between LLQC and BRDC. BRDC and LLQC are
each represented by two managers with most management decisions of The
Bettendorf Joint Venture requiring the approval of both members.

The Bettendorf Joint Venture commenced operations on April 21, 1995. The
Bettendorf Joint Venture is located on a leased parcel of land that is
adjacent to Interstate 74 on the Mississippi River. The Bettendorf Joint
Venture's operations consist of a 30,000 square foot casino with approximately
50 table and card games and 1,157 slot machines within three floors of a
gaming vessel, which is approximately 300 feet by 100 feet, a 256 room hotel,
buffet style restaurant, gift shop, commercial center, sports bar, 500 space
parking garage and a land based entertainment area for parties, shows and
special events. The first floor has a Las Vegas casino theme, the second floor
has a sports theme and the poker room is on the third floor. The vessel is
certified for 2,500 passengers including crew. The Bettendorf Joint Venture's
market is concentrated in a radius of 50 miles of the Quad City Area and the
Chicago area serviced by ongoing bus programs.

The Company records its investment in the above joint venture under the
equity method of accounting.

E-4
<PAGE>

BRDC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

September 30, 1999
(Unaudited)

2. Certain Risks and Uncertainties

3. Investment in Unconsolidated Affiliate

The Company leases certain real property to The Bettendorf Joint Venture at
a lease rate equal to $150,000 per month. The lease is for an initial term of
10 years, expiring May 2005, with nine 10-year options. The Bettendorf Joint
Venture has an option to purchase the land during the initial term of the
lease for its appraised fair market value. The Bettendorf Joint Venture has
not exercised this option as of September 30, 1999.

Summarized balance sheet information for the Bettendorf Joint Venture as of
September 30, 1999 and December 31, 1998 is as follows (in thousands):

<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
ASSETS
------
<S> <C> <C>
Current assets................................. $ 10,042 $ 6,870
Property and equipment, net.................... 52,946 52,727
Other assets................................... 738 750
-------- -------
$ 63,726 $60,347
======== =======
<CAPTION>
LIABILITIES AND MEMBERS' EQUITY
-------------------------------
<S> <C> <C>
Current liabilities............................ $ 7,813 $ 8,154
Long-term debt................................. 21,505 23,370
Members' equity................................ 34,408 28,823
-------- -------
$ 63,726 $60,347
======== =======
</TABLE>

E-5
<PAGE>

BRDC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

September 30, 1999
(Unaudited)

Summarized results of operations for the Bettendorf Joint Venture for the
three and nine month periods ended September 30, 1999 and 1998 are as follows
(in thousands):

<TABLE>
<CAPTION>
Three Months Nine Months
Ended September Ended September
30, 30,
--------------- ---------------
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net revenues.............................. $25,203 $21,446 $72,042 $62,168
Costs and expenses........................ 21,299 19,873 61,557 54,401
------- ------- ------- -------
Net income................................ $ 3,904 $ 1,573 $10,485 $ 7,767
======= ======= ======= =======
</TABLE>

A summary in changes in the Company's investment in the Bettendorf Joint
Venture for each of the nine month periods ended September 30, 1999 and 1998
are as follows (in thousands):

<TABLE>
<CAPTION>
1999 1998
------- -------
<S> <C> <C>
Investment, beginning of period......................... $14,411 $ 9,312
Equity in net income of unconsolidated affiliate........ 5,242 3,884
Distributions to the Company............................ (2,449) --
------- -------
Investment, end of period............................... $17,204 $13,196
======= =======
</TABLE>

Included in the Company's stockholders' equity is $14,204 and $10,197 of
undistributed retained earnings of the joint venture as of September 30, 1999
and 1998.

E-6
<PAGE>

BRDC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

September 30, 1999
(Unaudited)

4. Long-term Debt

As of September 30, 1999 and December 31, 1998, long-term debt consisted of
the following (in thousands):

<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
<S> <C> <C>
Note payable, related party, due in monthly
installments of $37, including interest at 7 1/2%,
due October 9, 2003 unsecured..................... $ 3,329 $ 3,469
Notes payable to a bank; due in monthly
installments of $170 including interest at 7.3%;
due February 2004; This loan is secured by a real
estate mortgage on land, guaranteed by the
stockholders and related parties, assignment of a
lease between The Bettendorf Joint Venture and the
Company and a pledge of the membership interest in
the joint venture................................. 7,538 --
Term loan, due in monthly installments of $65,
including interest at variable rates of .50% under
the National Bank Prime (effective rates of 7.75%
as of December 31, 1998 and 8% as of December 31,
1997) with final payment due April 2, 2002. This
loan is secured by a real estate mortgage on land,
guaranteed by the stockholders and related
parties, assignment of a lease between The
Bettendorf Joint Venture and the Company and a
pledge of the membership interest in the joint
venture. Subsequent to year-end, this note was
paid off.......................................... -- 2,254
Mortgage note payable to a related party, monthly
payments of principal and interest of $53.
Interest at 9 1/2%; due April 2025; collateralized
by a deed of trust................................ -- 6,034
------- -------
Total debt......................................... 10,867 11,757
Less: current maturities........................... 1,700 879
------- -------
Total long-term debt............................... $ 9,167 $10,878
======= =======
</TABLE>

5. Subsequent Event

E-7
<PAGE>

ANNEX F

Lady Luck Bettendorf, L.C. Selected Historical Consolidated Financial Data

The selected historical consolidated financial data presented below for,
and as of the end of, each of the fiscal years in the four-year period ended
December 31, 1998 have been derived from the audited consolidated financial
statements of Lady Luck Bettendorf, L.C. The financial data for the nine-month
periods ended September 30, 1999 and September 30, 1998 are derived from
unaudited consolidated financial statements of Lady Luck Bettendorf. The
unaudited financial statements include all adjustments consisting of normal
recurring accruals that Lady Luck Bettendorf considers necessary for a fair
presentation of the financial position and the results of operations for these
periods. Operating results for the nine months ended September 30, 1999 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1999.

<TABLE>
<CAPTION>
Fiscal Year Ended December Nine Fiscal Months
31, Ended September 30,
------------------------------ --------------------
1995 1996 1997 1998 1998 1999
------ ------ ------ ------ --------- ---------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net revenues............. 36,475 65,202 71,612 84,508 62,168 72,042
Casino expenses and
gaming and admission
taxes................... 17,534 31,811 36,366 41,606 30,386 35,396
Food and beverage
expenses................ 1,572 2,413 1,537 1,932 1,369 1,229
Hotel expenses........... -- -- -- 762 264 1,634
Other operating expenses. 437 945 519 724 691 906
Selling, general and
administrative and
marine and rent......... 13,084 21,328 23,336 22,243 16,893 16,443
Related party
management/license fees. 782 1,117 1,569 2,292 1,673 2,054
Depreciation and
amortization............ 676 1,156 1,489 2,369 1,585 2,737
Pre-opening expense...... 2,467 -- -- 1,157 1,194 46
Operating income (loss).. (77) 6,432 6,796 11,423 8,113 11,597
Other income/(expense)... (334) (250) 58 (1,225) (346) (1,112)
Net income (loss)........ (411) 6,182 6,854 10,198 7,767 10,485
Net cash provided by
operating activities.... 5,935 7,566 8,607 14,734 10,207 12,937

BALANCE SHEET DATA:
Cash and cash equivalent. 2,569 5,119 3,839 5,620 6,971 8,410
Current assets........... 3,142 5,935 4,636 6,870 8,511 10,042
Property and equipment,
net..................... 11,435 12,435 25,459 52,727 50,198 52,946
Total assets............. 14,577 18,370 30,949 60,347 59,415 63,726
Current liabilities...... 7,108 5,492 8,947 8,154 10,325 7,813
Total liabilities........ 8,988 6,599 12,324 31,524 33,022 29,318
Members' equity.......... 5,589 11,771 18,625 28,823 26,392 34,408
Working capital
(deficit)............... (3,966) 443 (4,311) (1,284) (1,814) 2,229
</TABLE>

F-1
<PAGE>

ANNEX G

LADY LUCK BETTENDORF, L.C.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

December 31, 1998

Results of Operations

All statements contained herein that are not historical facts, including
but not limited to, statements regarding the Company's current business
strategy, the Company's prospective joint ventures, asset sales and expansions
of existing projects and the Company's plans for future development and
operations, are based on current expectations. These statements are forward-
looking in nature and involve a number of risks and uncertainties. Generally,
the words "anticipates," "believes," "estimates," "expects" and similar
expressions as they relate to the Company and its management are intended to
identify forward-looking statements. Actual results may differ materially.
Among the factors that could cause actual results to differ materially are the
following: the availability of sufficient capital to finance the Company's
business plan on terms satisfactory to the Company; competitive factors, such
as legalization of gaming in jurisdictions from which the Company draws
significant numbers of patrons and an increase in the number of casinos
serving the markets in which the Company's casinos are located; changes in
labor, equipment and capital costs; the ability of the Company to consummate
its contemplated joint ventures on terms satisfactory to the Company and to
obtain necessary regulatory approvals for them; changes in regulations
affecting the gaming industry; future acquisitions, mergers or strategic
partnerships; general business and economic conditions; the Company's ability
to become Year 2000 compliant in a timely manner and within its cost
estimates, including the risk that one or more of the representations provided
to the Company by its suppliers may ultimately be proven false. The Company
wishes to caution readers not to place undue reliance on any forward-looking
statements, which statements are made pursuant to the Private Litigation
Reform Act of 1995. These forward-looking statements speak only as of the date
they are made. The Company expressly disclaims any obligation or undertaking
to disseminate any updates or revisions to any forward-looking statement
contained in this report to reflect any change in its expectations with regard
to that forward-looking statement or any change in events, conditions or
circumstances on which that forward-looking statement is based.

Twelve Months Ended December 31, 1998 Compared to the Twelve Months Ended
December 31, 1997

For the twelve months ended December 31, 1998 as compared to 1997, Net
Revenues (after the deduction of promotional allowances) increased to $84.5
million from $71.6 million, respectively, an increase of $12.9 million or 18%.
Substantially all of this $12.9 million increase is due to the following
activities: $9.8 million was the result of increased slot revenues, $1.2
million was the result of hotel revenues, $0.8 million was the result of
increased food & beverage revenues, and $0.2 million was the result of banquet
revenues. These increases to revenues were primarily the result of a
development plan that added a 500-car parking garage that opened November 26,
1997, a 256-room hotel located adjacent to the casino and connected via a
climate-controlled skywalk that opened August 29, 1998, a railroad overpass
that opened on August 29, 1998, the addition of about 200 slot machines that
occurred during the summer of 1998, and the relocation of the buffet to the
hotel which increased seating capacity from 225 to 350. In addition, a 25,000
square foot convention facility including a 4,000 square foot banquet kitchen
was opened in September 1998. Casino expenses increased from $18.3 million to
$21.5 million, an increase of $3.2 million or 17%. The primary factors that
influenced this increase was the amount of cash redeemed by customers that are
earned by using a player's card, and other expenses associated with the
increased volume of business experienced relative to prior year. The hotel
incurred expenses of $0.8 million that did not exist in the prior year due to
the hotel not opening until 1998. Food and beverage expenses increased from
28% of sales to 31% of sales due to a higher quality product that is being
served in the "live-action" buffet that was added in 1998 and the additional
labor costs resulting from the "live-action" buffet format. Gaming and
admission taxes decreased as a percentage of casino revenue from 26% to

G-1
<PAGE>

25% due to a higher win-per-customer that was experienced in 1998. Effective
September 1, 1998, the Company re-negotiated its tax agreements with the Scott
County Regional Authority "SCRA" (the holder of the casino gaming license),
and the City of Bettendorf. The nature of this change was to convert its "per-
head" tax to a "percentage tax" whereby the Company's taxes are computed on
the basis of casino revenue generated. The Company believes that future gaming
taxes will be about 26% of casino revenue. However, the beginning of the tax
fiscal year for the State of Iowa is July 1 and this results in lower taxes on
the first $3 million in gaming revenue. The effect of this law allows the
Company to realize $350,000 in tax savings during the third quarter (July-
September). Management fees to affiliates increased from 2.2% of net revenue
to 2.7% of net revenue, an increase of $0.7 million ($2.3 million from $1.6
million). The management fee increase was the result of increased revenues and
increased EBITDA margins [the Company's management fee is calculated based on
2% of revenues (as defined) plus 7% of EBITDA (as defined) not to exceed 4% of
gross revenues (as defined)].

Selling, general and administrative and marine and rent expenses decreased
from $23.3 million to $22.2 million, a decrease of $1.1 million or 5% due to
an equipment lease that was purchased on January 1, 1998. The effect of this
purchase reduced annual rental fees by $1.5 million. This savings was
partially offset by a $0.3 million increase in property taxes and a $0.1
million increase in guest claims. Other expenses increased from $0.5 million
to $0.7 million, an increase of $0.2 million or 40% primarily due to banquets
($0.1 million) which did not exist in 1997 and gift shop expenses ($0.1
million) which increased due to the relocation of the gift shop to the hotel.
This relocation of the gift shop increased its visibility resulting in more
sales and corresponding expense increases. Pre-opening expenses for 1998 were
$1.2 million that did not exist in 1997--these pre-opening expenses were the
result of opening the hotel in August 1998. Interest expense increased from
$0.1 million to $1.1 million [$1.0 million increase or 1,000% due to the
interest expense associated with the $17.5 million mortgage and $7.5 million
TIF (tax-incremental financing)]. The $17.5 million mortgage commenced on
October 15, 1998 while the TIF ($7.5 million total available under the TIF)
was drawn upon throughout 1998. A $0.3 million loss on assets was incurred in
1998 that did not exist in 1997 due to casino re-configuration changes that
relocated the Roger Craig Sports Bar--the original cost to erect this bar was
written off in accordance with Generally Accepted Accounting Principles. Net
income increased from $6.9 million to $10.2 million, an increase of $3.3
million or 48%.

Liquidity and Capital Resources

During the twelve months ended December 31, 1998, the Company generated
$14.7 million in cash from operations. The primary sources during the twelve
months ended December 31, 1998 of cash and non-cash resources were: (1) cash
flow from operations; (2) cash on hand at the beginning of the year; (3) first
mortgage note of $17.5 million that was issued on October 15, 1998, and (4)
$4.2 million in tax-incremental financing (TIF) provided by the City of
Bettendorf. The primary uses of cash and non-cash resources during the twelve
months ended December 31, 1998, other than operating expenditures, include:

A. $28.4 million for net property and equipment as follows:

. $19.3 million for continuation of construction of a 256-room hotel
that opened on August 29, 1998

. $3.5 million for continuation of construction of a railroad overpass
that opened on August 29, 1998

. $2.1 million for the build-out and equipment for the convention
center that opened in the Fall, 1998

. $2.0 million for the acquisition and installation of 200 additional
slot machines

. $1.5 million for maintenance capital expenditures

B. $6.5 million for the re-payment of debt, construction payables, and
slot contracts.

G-2
<PAGE>

million) and 47-slip marina ($1.2 million). The construction of the marina is
subject to regulatory approvals from the Department of Natural Resources (DNR)
and Coast Guard Corps of Engineers. No assurances can be made that these
approvals will be made. These capital expenditures are expected to be funded
from cash generated from operations and cash on hand. The Company's marina
obligation is more fully discussed below.

Pursuant to a development agreement with the City of Bettendorf, the
Company is developing a marina with seasonal transient docking facilities. The
development agreement requires that in the event that the construction of the
marina is not completed before April 1, 1999, unless completion is restricted
beyond the control of the Company, the Company must pay the City $100,000 per
month until the project has been completed. The Company is currently pursuing
the necessary licenses for development of the marina. As approvals for the
licenses are pending environmental evaluations and flood plain analyses, the
continued development of the marina is beyond the control of the Company. As
of December 31, 1998, the Company has incurred approximately $65,000 of costs
related to the marina and anticipates that, if constructed, the marina will
cost an additional amount of approximately $1.1 million.

No further significant expenditures for projects under development are
committed to be made by the Company from existing cash or cash flow from
operations. Various amounts of cash and non-cash resources may be used during
1999 for other capital improvements, expansions or acquisitions that cannot
currently be estimated and may be contingent on market conditions and other
factors. If significant cash or other resources become available, the Company
may make additional capital expenditures. In any case, the amount of capital
expenditures will be based on cash available and market conditions at the time
any commitment is made.

The Company has no knowledge of any pending litigation that could have an
adverse and material effect on the Company.

Year 2000

The Company's computer systems may or may not be Year 2000 compliant. The
Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year, which may result in
systems failures and disruptions to operations on or after January 1, 2000. In
order to address this issue, the Company has retained an outside consultant to
help it to assess the computer systems used in the Company's business that are
not Year 2000 compliant, and prepare and implement its Year 2000 computer
compliance program.

G-3
<PAGE>

expenditures not in excess of $250,000 will be necessary to complete
remediation. The Company expects to fund these costs through cash on hand and
operating cash flows. If those suppliers fail to provide upgrades in a timely
manner or the upgrades are not functional, this failure or non-functionality
may have a material adverse effect on the Company, including the loss of the
authority to operate electronic gaming devices in the jurisdiction that the
Company operates in if the electronic monitoring systems were to become non-
functional and waivers were not granted by the licensing authorities. The
Company also intends to develop an internal contingency plan for disaster
recovery and processing by December 1999.

In addition, the Company estimates that the costs related to the repair and
replacement of the low priority systems that are not yet Year 2000 compliant
and any costs related to not using those systems until they are Year 2000
compliant will not have a material adverse effect on the Company.

Impact of Inflation

Seasonality and Weather

Severe weather conditions could cause the Company to lose the use of our
dockside facility for an extended period. The inability to use a dockside
facility during any period could have a material adverse effect on the
Company's financial results. Seasonal revenue fluctuations may occur with
winter months typically yielding lower revenue due to adverse weather
conditions.

G-4
<PAGE>

LADY LUCK BETTENDORF, L.C.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

September 30, 1999
(Unaudited)

Results of Operations

Nine Months Ended September 30, 1999 Compared to the Nine Months Ended
September 30, 1998

For the nine months ended September 30, 1999 as compared to 1998, Net
Revenues (after the deduction of promotional allowances) increased to $72.0
million from $62.2 million, respectively, an increase of $9.8 million or 16%.
Of this $9.8 million increase, $6.4 million was the result of increased slot
revenues, $2.9 million was the result of hotel revenues, and $0.5 million was
the result of banquet revenues. These increases to revenues were primarily the
result of a development plan that added a 500-car parking garage that opened
November 26, 1997, a 256-room hotel located adjacent to the casino and
connected via a climate-controlled skywalk that opened August 29, 1998, a
railroad overpass that opened on August 29, 1998, the addition of about 200
slot machines that occurred during the summer of 1998, and the relocation of
the buffet to the hotel which increased seating capacity from 225 to 350. In
addition, a 25,000 square foot convention facility including a 4,000 square
foot banquet kitchen was opened in September 1998. Casino expenses increased
from $15.6 million to $18.4 million, an increase of $2.8 million or 18%. The
primary factors that influenced this increase was the amount of cash redeemed
by customers that are earned by using a player's card, and other expenses
associated with the increased volume of business experienced relative to the
prior year. The hotel incurred expenses of $1.6 million that were minimal in
the prior year due to the hotel not opening until late August 1998. Food and
beverage expenses decreased from 30% of sales to 22% of sales due to a 22%
increase in revenues which coupled with lower expenses resulted in increased
margins. Gaming and admission taxes increased as a percentage of casino
revenue from 25% to 26%. Effective September 1, 1998, the Company re-
negotiated its tax agreements with the Scott County Regional Authority "SCRA"
(the holder of the casino gaming license), and the City of Bettendorf.

G-5
<PAGE>

The nature of this change was to convert its "per-head" tax to a "percentage
tax" whereby the Company's taxes are computed on the basis of casino revenue
generated. The Company believes that future gaming taxes will be about 26% of
casino revenue. However, the beginning of the tax fiscal year for the State of
Iowa is July 1 and this results in lower taxes on the first $3 million in
gaming revenue. The effect of this law allows the Company to realize $0.4
million in tax savings during the third quarter (July-September). Management
fees to affiliates increased from 2.7% of net revenue to 2.9% of net revenue,
an increase of $0.4 million ($2.05 million from $1.67 million). The management
fee increase was the result of increased revenues and increased EBITDA margins
[the Company's management fee is calculated based on 2% of revenues (as
defined) plus 7% of EBITDA (as defined) not to exceed 4% of gross revenues (as
defined)]. Selling, general and administrative and marine and rent expenses
decreased from $16.9 million to $16.4 million, a decrease of $0.5 million or
3% due to lower marketing costs. Other expenses increased from $0.7 million to
$0.9 million, an increase of $0.2 million or 29% primarily due to banquets
($0.2 million) which did not exist until September 1998. Pre-opening expenses
for 1999 were $0.05 million that was $1.15 million less than 1998. This
reduction was the result of opening the hotel in August 1998. Interest expense
increased from $0.15 million to $1.25 million [$1.1 million increase or 733%
due to the interest expense associated with the $17.5 million mortgage and
$7.5 million TIF (tax-incremental financing)]. The $17.5 million mortgage
commenced on October 15, 1998 while the TIF was drawn upon throughout 1998. A
$0.3 million loss on assets was incurred in 1998 that did not exist in 1999
due to casino re-configuration changes that relocated the Roger Craig Sports
Bar--the original cost to erect this bar was written off in accordance with
Generally Accepted Accounting Principles. Net income increased from $7.8
million to $10.5 million, an increase of $2.7 million or 35%.

Three Months Ended September 30, 1999 Compared to the Three Months Ended
September 30, 1998

For the three months ended September 30, 1999 as compared to 1998, Net
Revenues (after the deduction of promotional allowances) increased to $25.2
million from $21.4 million, respectively, an increase of $3.8 million or 18%.
Of this $3.8 million increase, $2.8 million was the result of increased slot
revenues and $1.0 million was the result of hotel revenues. These increases to
revenues were primarily the result of a development plan that added a 500-car
parking garage that opened November 26, 1997, a 256-room hotel located
adjacent to the casino and connected via a climate-controlled skywalk that
opened August 29, 1998, a railroad overpass that opened on August 29, 1998,
the addition of about 200 slot machines that occurred during the summer of
1998, and the relocation of the buffet to the hotel which increased seating
capacity from 225 to 350. In addition, a 25,000 square foot convention
facility including a 4,000 square foot banquet kitchen was opened in September
1998. Casino expenses increased from $5.5 million to $6.5 million, an increase
of $1.0 million or 18%. The primary factors that influenced this increase was
the amount of cash redeemed by customers that are earned by using a player's
card, and other expenses associated with the increased volume of business
experienced relative to the prior year. The hotel incurred expenses of $0.5
million that were minimal in the prior year due to the hotel not opening until
late August 1998. Food and beverage expenses decreased from 37% of sales to
22% of sales due to an 18% increase in revenues which coupled with lower
expenses resulted in increased margins. Gaming and admission taxes increased
as a percentage of casino revenue from 23.7% to 24.5%. Effective September 1,
1998, the Company re-negotiated its tax agreements with the Scott County
Regional Authority "SCRA" (the holder of the casino gaming license), and the
City of Bettendorf. The nature of this change was to convert its "per-head"
tax to a "percentage tax" whereby the Company's taxes are computed on the
basis of casino revenue generated. The Company believes that future gaming
taxes will be about 26% of casino revenue. However, the beginning of the tax
fiscal year for the State of Iowa is July 1 and this results in lower taxes on
the first $3 million in gaming revenue. The effect of this law allows the
Company to realize $350,000 in tax savings during the third quarter (July-
September). Management fees to affiliates increased from 2.7% of net revenue
to 2.9% of net revenue, an increase of $153,000 ($0.74 million from $0.58
million). The management fee increase was the result of increased revenues and
increased EBITDA margins [the Company's management fee is calculated based on
2% of revenues (as defined) plus 7% of EBITDA (as defined) not to exceed 4% of
gross revenues (as defined)]. Selling, general and administrative and marine
and rent expenses remained constant at $5.8 million. Other expenses increased
from $0.2 million to $0.3 million, an increase of $0.1 million or 50%
primarily due to banquets ($0.1 million) which did not exist until September
1998. Pre-opening expenses for 1999 were $0.05 million that was $1.15 million
less than 1998. This reduction was the result of opening the hotel in August
1998.

G-6
<PAGE>

Interest expense increased from $0.15 million to $0.47 million [$0.32
million increase or 213% due to the interest expense associated with the $17.5
million mortgage and $7.5 million TIF (tax-incremental financing)]. The $17.5
million mortgage commenced on October 15, 1998 while the TIF was drawn upon
throughout 1998. A $0.3 million loss on assets was incurred in 1998 that did
not exist in 1999 due to casino re-configuration changes that relocated the
Roger Craig Sports Bar--the original cost to erect this bar was written off in
accordance with Generally Accepted Accounting Principles. Net income increased
from $1.6 million to $3.9 million, an increase of $2.3 million or 144%.

Liquidity and Capital Resources

During the nine months ended September 30, 1999, the Company generated
$12.9 million in cash from operations. The primary sources during the nine
months ended September 30, 1999 of cash and non-cash resources were: (1) cash
flow from operations; and (2) cash on hand at the beginning of the year. The
primary uses of cash and non-cash resources during the nine months ended
September 30, 1999, other than operating expenditures, include:

A. $2.8 million for net property and equipment as follows:

. $0.8 million for various maintenance capital expenditures

. $0.6 million for the construction of administrative offices that were
required when a building was demolished (discussed below) in
accordance with the development agreement with the City of Bettendorf

. $0.4 million for the acquisition of additional slot machines

. $0.3 million as part of the $1.2 million budget for a high-end
restaurant [See Note C for further discussion].

. $0.3 million for various improvements to the casino and vessel

. $0.2 million for the acquisition of additional equipment including a
property and interior sign package

. $0.2 million for the demolition of a building that housed the
Company's administrative offices

B. $2.5 million for the re-payment of debt and capital lease payments.

C. $4.9 million for the distribution of equity to owners (described
below).

Although the Company was allowed to distribute 45% of monthly net income to
its owners (Lady Luck Gaming Corporation and Bettendorf Riverfront Development
Company) beginning in September 1998, the owners agreed not to distribute
monthly net income until January 1, 1999. Each entity will receive 22.5% of
net income. These cash outlays are expected to be funded through cash
generated from operations. The company expects to spend about $1 million in
capital improvements during the rest of 1999 primarily in construction costs
for a high-end restaurant. The company originally expected this cost to be
approximately $1.2 million; however, due to the pending merger with the Isle
of Capri, certain design and re-design charges will be made. It is not
expected that the cost of these changes will exceed $500,000 above and beyond
the original $1.2 million budget. In addition, the Company is obligated to
build a 47-slip marina ($1.6 million). The construction of the marina is
subject to regulatory approvals from the Department of Natural Resources (DNR)
and Coast Guard Corps of Engineers. No assurances can be made that these
approvals will be made. It is not expected to receive any approvals in 1999.
These capital expenditures are expected to be funded from cash generated from
operations and cash on hand. The Company's marina obligation is more fully
discussed below.

G-7
<PAGE>

The Company is currently pursuing the necessary licenses for development of
the marina. As approvals for the licenses are pending environmental
evaluations and flood plain analyses, the continued development of the marina
is beyond the control of the Company, thus no liquidated damages are being
assessed. As of September 30, 1999, the Company has incurred approximately
$78,000 of costs related to the marina and anticipates that, if constructed,
the marina will cost an additional amount of approximately $1.5 million. The
original estimate at December 31, 1998 of $1.1 million was revised to $1.5
million at September 30, 1999, due to additional development costs not
originally anticipated.

No further significant expenditures for projects under development are
committed to be made by the Company from existing cash or cash flow from
operations. Various amounts of cash and non-cash resources may be used during
the remainder of 1999 for other capital improvements, expansions or
acquisitions that cannot currently be estimated and may be contingent on
market conditions and other factors. If significant cash or other resources
become available, the Company may make additional capital expenditures. In any
case, the amount of capital expenditures will be based on cash available and
market conditions at the time any commitment is made.

The Company has no knowledge of any pending litigation that could have an
adverse and material effect on the Company.

Year 2000

The Company has divided the systems into two categories: (1) systems that
would have a significant effect on operations or financial statements (the
"mission critical systems"), such as slot systems and lodging and gaming
systems, and (2) low priority systems (for example, individual personal
computers or workstations). Both groups are being pursued for adherence to
compliant standards. Also, each category includes both IT Systems (for
example, network software and hardware systems) and Non-IT Systems (for
example, devices that are potentially date sensitive due to their dependency
on a built in computer chip or proprietary software developed by a third
party). The Company has primarily relied on representations of the suppliers
of its systems to determine whether a system is Year 2000 compliant. However,
the Company will conduct testing of the date dependent functions of specific
systems in 1999. As of September 30, 1999, the Company has determined that the
total costs related to the repair and replacement of the mission critical
systems that it has evaluated that are not yet Year 2000 compliant would not
have a material adverse effect on the Company. In making this determination,
the Company has relied on written representations from the Company's computer
system suppliers that those suppliers will provide the Company with applicable
software upgrades in a timely manner. As of September 30, 1999, the Company
has not expended significant funds on Year 2000 compliance and expects
expenditures not in excess of $250,000 will be necessary to complete
remediation. The Company expects to fund these costs through cash on hand and
operating cash flows. If those suppliers fail to provide upgrades in a timely
manner or the upgrades are not functional, this failure or non-functionality
may have a material adverse effect on the Company, including the loss of the
authority to operate electronic gaming devices in the jurisdiction that the
Company operates in if the electronic monitoring systems were to become non-
functional and waivers were not granted by the licensing authorities. The
Company has so far obtained representations from its vendors, as

G-8
<PAGE>

follows, that compliant versions are available: (1) 100% of specialized
software vendors; (2) 98% of "shrink-wrap" software vendors; (3) 95% of IT
hardware vendors; and, (4) 97% of non-IT hardware vendors. The balance of the
Company's unique systems have been evaluated and determined not to be mission
critical. Those that are not Year 2000 compliant and cannot be made Year 2000
compliant in a cost efficient or timely manner may have a material adverse
effect on the Company. The Company also intends to develop an internal
contingency plan for disaster recovery and processing by December 1999.

Impact of Inflation

Seasonality and Weather

G-9
<PAGE>

ANNEX H

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Lady Luck Bettendorf, L.C.
Report of Independent Public Accountants.................................. H-1
Consolidated Balance Sheets, December 31, 1998 and 1997................... H-2
Consolidated Statements of Operations for the years ended December 31,
1998, 1997 and 1996...................................................... H-3
Consolidated Statements of Members' Equity for the years ended December
31, 1998, 1997 and 1996.................................................. H-4
Consolidated Statements of Cash Flows for the years ended December 31,
1998, 1997 and 1996...................................................... H-5
Notes to Consolidated Financial Statements................................ H-7
</TABLE>

H-i
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Members of Lady Luck Bettendorf, L.C.:

We have audited the accompanying consolidated balance sheets of LADY LUCK
BETTENDORF, L.C. and subsidiary (the "Company") (an Iowa limited liability
company) as of December 31, 1998 and 1997, and the related consolidated
statements of operations, changes in members' equity and cash flows for each
of the three years in the period ended December 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of LADY LUCK BETTENDORF, L.C.
and subsidiary as of December 31, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1998, in conformity with generally accepted accounting
principles.

Arthur Andersen LLP

Las Vegas, Nevada
January 29, 1999

H-1
<PAGE>

LADY LUCK BETTENDORF, L.C.

CONSOLIDATED BALANCE SHEETS

As of December 31, 1998 and 1997

ASSETS

<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents.......................... $ 5,620,000 $ 3,839,000
Accounts receivable, net of allowance for doubtful
accounts of $103,000 and $141,000, respectively... 246,000 27,000
Inventories........................................ 432,000 105,000
Prepaid expenses and other current assets.......... 572,000 665,000
----------- -----------
Total current assets............................. 6,870,000 4,636,000
----------- -----------
PROPERTY AND EQUIPMENT:
Buildings.......................................... 38,818,000 6,335,000
Leasehold improvements............................. 5,358,000 4,755,000
Furniture, fixtures and equipment.................. 13,960,000 8,178,000
----------- -----------
58,136,000 19,268,000
Less: accumulated depreciation..................... (5,474,000) (3,311,000)
----------- -----------
52,662,000 15,957,000
Construction in progress........................... 65,000 9,502,000
----------- -----------
Total property and equipment, net................ 52,727,000 25,459,000
----------- -----------
Other assets....................................... 750,000 854,000
----------- -----------
TOTAL ASSETS......................................... $60,347,000 $30,949,000
=========== ===========
</TABLE>

LIABILITIES AND MEMBERS' EQUITY

<TABLE>
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of capital leases..................... $ 124,000 $ 91,000
Current portion of long-term debt..................... 2,390,000 1,262,000
Accounts payable...................................... 1,058,000 481,000
Accounts payable-affiliates........................... 187,000 707,000
Construction and retention payable.................... -- 3,102,000
Accrued gaming taxes.................................. 318,000 723,000
Accrued progressive and slot club activities.......... 861,000 694,000
Other accrued liabilities............................. 3,216,000 1,887,000
----------- -----------
Total current liabilities........................... 8,154,000 8,947,000
COMMITMENTS AND CONTINGENCIES
Long-term capital leases, less current portion........ 290,000 48,000
Long-term debt, less current portion.................. 23,080,000 3,329,000
----------- -----------
Total liabilities................................... 31,524,000 12,324,000
----------- -----------
Members' equity......................................... 28,823,000 18,625,000
----------- -----------
TOTAL LIABILITIES AND MEMBERS' EQUITY................... $60,347,000 $30,949,000
=========== ===========
</TABLE>

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

H-2
<PAGE>

LADY LUCK BETTENDORF, L.C.

CONSOLIDATED STATEMENTS OF OPERATIONS

For The Years Ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
REVENUES:
Casino................................. $80,916,000 $69,338,000 $62,202,000
Hotel.................................. 1,210,000 -- --
Food and beverage...................... 6,221,000 5,470,000 5,680,000
Other.................................. 1,095,000 883,000 664,000
----------- ----------- -----------
Gross revenues....................... 89,442,000 75,691,000 68,546,000
Less: promotional allowances........... (4,934,000) (4,079,000) (3,344,000)
----------- ----------- -----------
Net revenues......................... 84,508,000 71,612,000 65,202,000
COSTS AND EXPENSES:
Casino................................. 21,525,000 18,343,000 16,080,000
Hotel.................................. 762,000 -- --
Food and beverage...................... 1,932,000 1,537,000 2,413,000
Gaming and admission taxes............. 20,081,000 18,023,000 15,731,000
Management fees--affiliates............ 2,292,000 1,569,000 1,117,000
Marine operations...................... 2,498,000 2,372,000 2,340,000
Selling, general and administrative.... 15,543,000 15,145,000 12,766,000
Rental expenses--affiliates............ 4,202,000 5,819,000 6,222,000
Other expenses......................... 724,000 519,000 945,000
Depreciation and amortization.......... 2,369,000 1,489,000 1,156,000
Pre-opening expenses 1,157,000 -- --
----------- ----------- -----------
Total costs and expenses............. 73,085,000 64,816,000 58,770,000
----------- ----------- -----------
Operating income..................... 11,423,000 6,796,000 6,432,000
----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest income........................ 142,000 139,000 51,000
Interest expense, net.................. (1,052,000) (81,000) (301,000)
Loss on sale of assets................. (315,000) -- --
----------- ----------- -----------
NET INCOME........................... $10,198,000 $ 6,854,000 $ 6,182,000
=========== =========== ===========
</TABLE>

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

H-3
<PAGE>

LADY LUCK BETTENDORF, L.C.

CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS' EQUITY

For The Years Ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>
Lady Luck Bettendorf
Quad Riverfront
Cities, Development
Inc. Company,L.C. Total
----------- ------------ -----------
<S> <C> <C> <C>
Balance at December 31, 1995.............. $ 2,795,000 $ 2,794,000 $ 5,589,000
Net Income................................ 3,091,000 3,091,000 6,182,000
----------- ----------- -----------
Balance at December 31, 1996.............. 5,886,000 5,885,000 11,771,000
Net Income................................ 3,427,000 3,427,000 6,854,000
----------- ----------- -----------
Balance at December 31, 1997.............. 9,313,000 9,312,000 18,625,000
Net Income................................ 5,099,000 5,099,000 10,198,000
----------- ----------- -----------
Balance at December 31, 1998.............. $14,412,000 $14,411,000 $28,823,000
=========== =========== ===========
</TABLE>

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

H-4
<PAGE>

LADY LUCK BETTENDORF, L.C.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For The Years Ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................. $10,198,000 $ 6,854,000 $6,182,000
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization........ 2,369,000 1,489,000 1,156,000
Loss on sale of assets............... 315,000 -- --
Pre-opening expenses................. 1,157,000 -- --
(Increase) decrease in operating
assets:
Accounts receivable, net........... (219,000) (17,000) 96,000
Inventories........................ (327,000) 20,000 (50,000)
Prepaid expenses and other current
assets............................ 93,000 16,000 (289,000)
Increase (decrease) in operating
liabilities:
Accounts payable (including
affiliates)....................... 57,000 (699,000) 694,000
Accrued gaming taxes............... (405,000) 113,000 76,000
Accrued progressive and slot club
activities........................ 167,000 104,000 14,000
Other accrued liabilities.......... 1,329,000 727,000 (313,000)
----------- ----------- ----------
Net cash provided by operating
activities.............................. 14,734,000 8,607,000 7,566,000
----------- ----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment additions....... (28,354,000) (14,335,000) (2,089,000)
(Decrease) increase in construction and
retention payable..................... (3,102,000) 3,102,000 --
Pre-opening costs...................... (1,157,000) -- --
Other assets, net...................... 58,000 (854,000) --
----------- ----------- ----------
Net cash used in investing activities.... (32,555,000) (12,087,000) (2,089,000)
----------- ----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings............... 23,049,000 3,893,000 645,000
Payments on debt and capital leases.... (3,447,000) (1,693,000) (3,572,000)
----------- ----------- ----------
Net cash provided by (used in) financing
activities.............................. 19,602,000 2,200,000 (2,927,000)
----------- ----------- ----------
</TABLE>

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

H-5
<PAGE>

LADY LUCK BETTENDORF, L.C.

CONSOLIDATED STATEMENTS OF CASH FLOWS--(Continued)

For the Years Ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
NET INCREASE IN CASH AND CASH EQUIVALENTS.... 1,781,000 (1,280,000) 2,550,000
CASH AND CASH EQUIVALENTS:
Beginning of period........................ 3,839,000 5,119,000 2,569,000
---------- ---------- ----------
End of period.............................. $5,620,000 $3,839,000 $5,119,000
========== ========== ==========
SUPPLEMENTAL DISCLOSURE:
Cash paid for interest net of amounts
capitalized of $505,000, $114,000, and
$100,000 for 1998, 1997 and 1996,
respectively.............................. $ 608,000 $ 81,000 $ 301,000
========== ========== ==========
</TABLE>

Supplemental Schedule of Non-Cash Investing and Financing Activities:

The Company entered into several contracts with manufacturers for the
purchase of slot machines and other equipment which totaled approximately
$1,552,000, $177,000 and $67,000 for the years ended December 31, 1998, 1997
and 1996, respectively.

During 1996, approximately $2,556,000 of long-term debt was refinanced at
more favorable terms to the Company

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

H-6
<PAGE>

LADY LUCK BETTENDORF, L.C.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 1998

1. THE COMPANY AND BASIS OF PRESENTATION

Bettendorf Riverfront Development Company, L.C. ("BRDC") and Lady Luck Quad
Cities, Inc. ("LLQC") formed an Iowa limited liability company, Lady Luck
Bettendorf, L.C. (the "Company") for the purpose of operating a riverboat
casino on the Mississippi River based in Bettendorf, Iowa. Under the terms of
the Articles of Organization, the Company's term will expire in 2065. BRDC and
LLQC each contributed $3,000,000 for a 50% ownership interest in the Company.
All net profits and losses from all operations of the Company are allocated
equally between LLQC and BRDC. BRDC and LLQC are each represented by two
managers with most management decisions of the Company requiring the approval
of both members. On October 21, 1997, Lady Luck Bettendorf Marina Corporation
("LLBMC"), a wholly owned subsidiary of the Company, was created for the
purpose of owning the marina and parking garage. The Board of Directors of
LLBMC is comprised of the managers of the Company.

The Company commenced operations on April 21, 1995. The Company is located
on a leased parcel of land that is adjacent to Interstate 74 on the
Mississippi River. The Company's operations consist of a 30,000 square foot
casino with approximately 50 table and card games and 1,157 slot machines
within three floors of a gaming vessel, which is approximately 300 feet by 100
feet, a 256 room hotel, buffet style restaurant, gift shop, commercial center,
sports bar, 500 space parking garage and a land based entertainment area for
parties, shows, and special events. The first floor has a Las Vegas casino
theme, the second floor has a sports theme and the poker room is on the third
floor. The vessel is certified for 2.500 passengers including crew. The
Company's market is concentrated in a radius of 50 miles of the Quad City Area
and the Chicago area serviced by ongoing bus programs.

The Company has substantially completed a $39,500,000 expansion project
pursuant to its master plan. During 1998, the Company completed a 256-room
hotel and an overpass that allows vehicles to cross over active railroad
tracks. The Company completed a 500 car parking garage in 1997. Financing for
this project was obtained through a $17,500,000 mortgage with the Rock Island
Bank, N.A. signed on June 23, 1997, a second mortgage with Cement
Transportation Corporation, a related party, for $5,000,000 signed on June 23,
1997, of which $1,250,000 was drawn and fully repaid during 1998, and a
development agreement signed on June 17, 1997 with the City of Bettendorf
which secured $7,500,000 of tax incremental financing. The balance of the
expansion project has been paid from the Company's cash on hand. The planned
marina remains under development and is not expected to require additional
financing to pay for its completion.

During the year ended December 31, 1998, approximately $17,500,000 was
drawn from the Rock Island Bank, N.A. mortgage and the Company repaid $200,000
of principal. Additionally, $7,500,000 of tax incremental financing has been
funded by the City of Bettendorf through a development agreement dated June
17, 1997.

AGREEMENTS

City of Bettendorf "Development Agreement dated August 16, 1994"

The Company entered into an agreement, which was amended in August 1998,
with the City of Bettendorf (the "City"), a municipal corporation of the State
of Iowa, for the purpose of developing a gaming operation in the City. In
return for certain conditions, the City endorsed and supported the Company in
obtaining an Iowa gaming license. The Company is in compliance with the
conditions of the agreement and related amendment as follows:

a. The Company obtained an Iowa gaming license effective April 1, 1995
and began operations on April 21, 1995.

H-7
<PAGE>

LADY LUCK BETTENDORF, L.C.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1998

b. The Company was to use commercially reasonable efforts to facilitate
completion of the existing commercial center improvements so that the
commercial center would be opened for business on or before September 1,
1996 (See Note 8). A portion of the commercial center was opened in October
1995 for the holiday season. As part of the hotel project discussed above,
the Company has opened approximately 25,000 square feet of banquet, kitchen
and convention space and anticipates utilizing the remaining 66,000 square
feet for a restaurant, office space and other facilities.

c. Under the original agreement, which was in effect until August 31,
1998, the Company paid a development fee to the City of 2% on adjusted
gross receipts exceeding $35,000,000 but not to exceed $44,000,000 during
each twelve month period starting on the day gaming operations began, April
21, 1995. The maximum revenues subject to the 2% fee were $9,000,000
resulting in maximum percentage based fees of $180,000. Additionally, the
company paid a fee equal to $.50 per passenger under the original
agreement.

d. Under the amended agreement, effective as of September 1, 1998, the
Company is to pay weekly, a development fee, in lieu of the previous 2% of
adjusted gross receipts and $.50 fee per passenger, to the City of
Bettendorf. The new development fee equals 1.65% of adjusted gross receipts
with the minimum annual fee of $1,020,000. The minimum annual fee shall
terminate at the Company's option for any year during which any of certain
defined conditions subsequently occur which result in a decrease of
adjusted receipts to less than $64,000,000. The minimum annual fee was not
terminated as of December 31, 1998.

e. If the Company so elects to terminate the minimum annual fee, the
City shall have the corresponding option to elect to receive for such year
a Development Fee as computed under the original agreement as noted above.

The Company has accrued City gaming fees of $26,000 and $165,000 as of
December 31, 1998 and 1997, respectively.

City of Bettendorf "Development Agreement dated June 17, 1997"

The Company entered into an agreement with the City for the purpose of
redeveloping a portion (24.6 acres) of the former J.I. Case property and
immediate berth area around the Lady Luck boat as a joint project to be known
as "The Bettendorf Downtown Riverfront Project."

This project includes the construction of a 256 room waterfront hotel, a
railroad overpass for vehicular access, a downtown riverfront parking center
for 500 cars, improved area for public parking and a marina with seasonal
transient docking facilities. As part of this agreement, the City issued
$9,500,000 in tax incremental financing bonds (the "TIF Bonds"), $7,500,000 of
which was used by the Company to construct the overpass, parking garage,
related site improvements and pay for disruption damages caused by
construction of the overpass. To enable financing of the City's obligations,
the Company will pay incremental property taxes on the developed property
assessed at a valuation of not less than $32,000,000 until the TIF Bonds
mature. In the event that the taxes generated by the project and other
qualifying developments in the redevelopment district do not fund the
repayment of the total TIF Bonds prior to their scheduled maturity, the
Company will pay the City $0.25 per person for each person entering the boat
until the remaining balance has been repaid. The City agreed to accept
conveyance of the overpass from Lady Luck upon its completion. The cost of the
overpass, parking garage, site improvements and disruption damages did not
exceed the financing from the City of Bettendorf. Costs incurred through
December 31, 1998 related to this project are $7,400,000.

H-8
<PAGE>

LADY LUCK BETTENDORF, L.C.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1998

costs related to the marina and anticipates that, if constructed, the marina
will cost an additional amount not in excess of $1,000,000. The Company is
currently pursuing the necessary licenses for development of the marina. As
approvals for the licenses are pending environmental evaluations and flood
plain analyses, the continued development of the marina is beyond the control
of the Company.

Pursuant to the agreement, the Company has paid an agreed upon amount of
$200,000 for damages which have been awarded to certain businesses disrupted
by the overpass construction.

In addition, the Company is responsible in 1999 for demolishing the Plaza
building at 1823 State Street and preparing the site for donation back to the
City. The Company estimates this process will cost $200,000.

Riverbend Regional Authority "Operator's Contract dated August 11, 1994"

The Company entered into an agreement, which was amended in August 1998,
with the Riverbend Regional Authority, an Iowa not-for-profit corporation (the
"RRA") and the holder of the Iowa gaming license, to operate a gaming boat.
The Company is in compliance with the conditions of the agreement as follows:

a. The Company has obtained and is operating a riverboat gaming facility
with a minimum capacity of 900 gaming positions.

b. Under the original agreement, which was in effect until August 31,
1998, the Company paid RRA $1.00 for each of the first 500,000 admissions
and $1.50 for each admission in excess thereof computed on an annual basis
commencing on the date gaming operations began, April 21, 1995.

These admission fees were paid weekly.

If the adjusted gross gaming receipts exceeded $44,000,000 during any
twelve-month period starting on the day gaming operations began, the
Company was required to pay RRA 2% of any such excess. The company exceeded
this level in 1997 and 1996, and began to make these additional
contributions weekly until April 21, 1998 and 1997, respectively.

c. Under the amended agreement, commencing on September 1, 1998 and
continuing for the term of the contract, the Company shall pay a fee to RRA
equal to 4.1% of the adjusted gross receipts. In order to assist RRA in its
budgeting and grant process, subject to the following conditions, the
Company is to pay the RRA a minimum annual fee of $3,000,000 (the "Floor
Amount"). The Floor Amount will be reconciled on an annual basis from
September 1 through August 31 of each year with any deficiency due and
payable on September 10, with the deficiency calculated as the difference
between the Floor Amount and the accumulated weekly percentage fee. The
Floor Amount shall be automatically terminated for any year during which
any of certain defined conditions subsequently occur which result in a
decrease of adjusted gross receipts to less than $64,000,000.

d. The Company has executed a "Development Agreement" with the City of
Bettendorf as required by this agreement.

The Company has accrued RRA gaming fees of $50,000 and $398,000 as of December
31, 1998 and 1997, respectively.

Lady Luck Casino, Inc. "Casino Management Agreement dated September 30, 1994"

H-9
<PAGE>

LADY LUCK BETTENDORF, L.C.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1998

LLCI as the manager of the casino, effective January 1, 1996. Andrew H.
Tompkins, International Marco Polo Services, Inc. ("IMPSI"), formerly known as
LLCI, and LLGC are all affiliates of the Company. The Management Company is to
supervise and control the Company's operations, provide marketing and
accounting services, allow the use of the Lady Luck name in connection with
the operations and access to the customer list. Cash payments made by the
Company to IMPSI, LLGC and their affiliates for services provided to the
Company or payments made on behalf of the Company for insurance, marketing and
advertising production, medical and other insurance, 401(k) plan contributions
and other items totaled approximately $6,379,000, $2,328,000 and $1,885,000
for the years ended December 31, 1998, 1997 and 1996, respectively, excluding
management fees and rental expenses paid to these related parties. The
Management Company believes that all expenses and costs applicable to the
Company are reflected in the accompanying consolidated financial statements on
a basis which is representative of what they would have been if the Company
operated on a stand-alone basis. Highlights of the agreement are as follows:

a. Term--The term of the "Casino Management Agreement" is from September
30, 1994 to September 30, 2033.

b. Management Fee--A management fee of 2% of casino gross revenues (as
defined) plus 7% of earnings before income tax, depreciation and
amortization (as defined), together not to exceed 4% of the annual casino
gross revenues (as defined), will be paid to the Management Company.
Effective June 1996, the management fee was reduced by $37,500 per month.
The management fees incurred during the periods ended December 31, 1998,
1997 and 1996 were approximately $2,292,000, $1,569,000 and $1,117,000,
respectively. The outstanding and unpaid management fees at December 31,
1998 and 1997, were approximately $196,000 and $81,000 respectively. BRDC
will provide consulting services concerning licensing, staffing, and
management of the marine aspects of the gaming vessel and any land based
development. The Management Company is to pay part of its fee, up to
$325,000 annually, to BRDC for these consulting services.

c. Working Capital Reserve--The agreement requires that $500,000 be
maintained in a casino bank account (as defined) as working capital for all
financial needs of the casino. At December 31, 1998 and 1997, the casino
bank account had a book balance of approximately $76,000 and $656,000,
respectively. At December 31, 1998, approximately $706,000 of cash was
transferred back to the bank in anticipation of heightened casino activity
at year-end. This cash was transferred back to the bank immediately after
the year-end holiday. LLGC has indicated that this transaction does not
violate the provisions of the Management Agreement. Accordingly, the
Company has constructively maintained $500,000 of cash for working capital
purposes at December 31, 1998.

d. Maintenance Capital Improvements and Furniture, Fixtures and
Equipment "Replacement Reserve Account"--The Management Company is required
to reserve a percentage of casino gross revenues (as defined) each year
(the "Replacement Reserve Account") to pay the cost of additions to and
replacements of furniture, fixtures and equipment, and to provide for
capital improvements as follows:

<TABLE>
<S> <C>
1st operating year.................. 1.5%
2nd operating year.................. 2.5%
3rd operating year.................. 3.0%
4th operating year.................. 4.0%
5th operating year.................. 5.0%
</TABLE>

H-10
<PAGE>

LADY LUCK BETTENDORF, L.C.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1998

2. CERTAIN RISKS AND UNCERTAINTIES

The Company's operations are dependent on the continued licensing or
qualification of the Company. Such licensing and qualification are reviewed
periodically by the gaming authorities in the State of Iowa.

The company receives a significant amount of their revenues from patrons
within 50 miles of the property. If economic conditions in these areas were to
decline materially or additional casino licenses were awarded in these
locations, the Company's results of operations could be materially affected.

3.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Principles of Consolidation--The consolidated financial statements
included the accounts of the Company and its wholly owned subsidiary.
Significant intercompany accounts and transactions have been eliminated.

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

c. Cash and Cash Equivalents--The Company considers all highly liquid
investments purchased with an original maturity of three months or less as
cash equivalents. The carrying amount of cash and cash equivalents
approximates its fair value.

d. Inventories--Inventories are stated at the lower of cost, as determined
by the first-in, first-out method, or market value.

e. Property and Equipment--Property and equipment are stated at cost.
Depreciation is computed using the straight-line method. Estimated useful
lives for financial reporting purposes are as follows:

<TABLE>
<S> <C>
Buildings.................................................... 40 years
Leasehold improvements....................................... 15-20 years
Furniture, fixtures and equipment............................ 5-7 years
</TABLE>

Costs of major improvements are capitalized, while costs of normal repairs and
maintenance are charged to expense as incurred. Portions of property,
furniture, fixtures and equipment are pledged as collateral for long-term debt
(See Note 4).

f. Revenue Recognition--In accordance with gaming industry practice, the
Company recognizes casino revenues as the net win from gaming activities,
which is the difference between gaming wins and losses. Casino revenues are
net of accruals for anticipated payouts of progressive slot jackpots and
certain table games. Such anticipated jackpot payments are reflected as
current liabilities in the accompanying balance sheets. Revenues from the
hotel, convention and banquet facilities, food, beverage, entertainment and
the gift shop are recognized at the time the related service or sale is
performed/made.

H-11
<PAGE>

LADY LUCK BETTENDORF, L.C.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1998

allowances. The estimated cost of providing these promotional allowances is
included in casino departmental expenses for the years ended December 31,
1998, 1997 and 1996 as follows:

<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Hotel................................... $ 276,000 $ -- $ --
Food and beverage....................... 4,279,000 3,392,000 2,981,000
Other................................... 563,000 593,000 465,000
</TABLE>

h. Slot Patron Incentive Estimates--The Company provides slot patrons'
incentives based on the dollar amount of play on slot machines. An accrual has
been established based on an estimate of the outstanding value of these
incentives, utilizing the age and prior history of redemptions. This amount is
reflected as a current liability in the accompanying balance sheets.

i. Advertising--Advertising costs are expensed the first time such
advertisement appears. Total advertising costs (including direct mail
marketing) were approximately $1,380,000, $1,497,000, and $1,399,000 in 1998,
1997 and 1996, respectively.

j. Pre-Opening Costs--Pre-opening costs include direct incremental project
salaries and other pre-opening costs incurred during the pre-opening phase of
projects. Pre-opening costs directly related to construction of projects were
capitalized as incurred and charged to expense in the period each project
commenced operations. Statement of Position 98-5, "Reporting on the Costs of
Start-Up Activities," is effective for fiscal years beginning after December
15, 1998 and requires that all pre-opening/start-up activities be expensed as
incurred. The Company had adopted this Statement of Position effective January
1, 1999 and will expense future pre-opening costs as incurred.

k. Income Taxes--No provision for U.S. Federal income taxes or state income
taxes is recorded in the financial statements as such liability is the
responsibility of the Members.

l. Reclassifications--Certain prior year balances have been reclassified to
conform to current year presentation and have no impact on net income.

4. DEBT

At December 31, 1998 and 1997, long-term debt consisted of the following:

<TABLE>
<CAPTION>
1998 1997
----------- -----------
<C> <S> <C> <C>
a. Atronic Casino Technology LTD, LLC--$521,000 non
interest bearing note; principal payments of
$43,721 per month; due in September 1999;
collateralized by gaming equipment.............. $ 363,000 $ --

b. Aristocrat, Inc.--$224,000 non interest bearing
note; principal payments of $14,529 per month;
for twelve months; due in July 1999;
collateralized by gaming equipment.............. 94,000 --

c. WMS Gaming, Inc.--$429,000 noninterest bearing
note; principal payments of $37,508 per month;
due in June 1999; collateralized by gaming
equipment....................................... 205,000 --

d. Rock Island Bank, N.A.--$17,500,000 loan;
interest at 7.93% per annum which re-sets after
5 years; principal and interest payments of
$211,729 per month; due October 2008;
collateralized by certain land improvements,
including the hotel............................. 17,308,000 --
</TABLE>

H-12
<PAGE>

LADY LUCK BETTENDORF, L.C.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1998

<TABLE>
<CAPTION>
1998 1997
----------- -----------

<C> <S> <C> <C>
e. Northwest Bank and Trust Co.--$3,200,000 loan;
interest of 9.25%; principal payment of
$100,000 per month plus interest; due on
demand not earlier than February 1998 and no
later than October 1998; collateralized by
gaming equipment and guaranteed up to
$1,100,000 by affiliates of BRDC.............. $ -- $ 1,100,000

f. Sigma Note--$87,000 note; imputed interest of
8%; payment of $3,716 per month for eighteen
months; due in March 1998; collateralized by
gaming equipment.............................. -- 11,000

g. Rock Island Bank Loan--$312,000 loan; imputed
interest of 9.25%, payment of $17,806 per
month for 19 months; due in October 1998;
collateralized by certain business
improvements.................................. -- 151,000
h. Tax Incremental Financing Payable--Interest of
approximately 6.7%; payments made through
incremental property taxes to the City of
Bettendorf until paid in full, maturity no
later than 2011............................... 7,500,000 3,329,000
----------- -----------
25,470,000 4,591,000
Less: current portion......................... (2,390,000) (1,262,000)
----------- -----------
Total long-term debt.......................... $23,080,000 $ 3,329,000
=========== ===========
</TABLE>

The Company also entered into a second mortgage agreement on May 27, 1997
with Cement Transportation Corporation ("CTC"), a related party, in the amount
of $5,000,000. Security was provided through the second mortgage on the hotel,
future dockside retail facilities and commercial space. The loan was for a
period of five years. The loan was interest bearing at a rate of 12% over the
life of the loan. The agreement required the Company to pay a minimum of 45%
of its net earnings (as defined) annually until the loan is repaid. In
addition, pursuant to the agreement, no distributions could be made to the
members, other than those payments to CTC to pay off this loan until such time
as the CTC loan is paid in full. The first mortgage agreement with Rock Island
Bank also prevents greater than 45% of net earnings to be made in any one year
in respect to the second mortgage. The Company drew down and fully repaid
approximately $1,250,000 in 1998.

The mortgage agreement with Rock Island Bank, N.A. for $17,500,000 provides
for, among other things, restrictions on the Company's ability to make
payments on the CTC debt in excess of 45% of the Company's operating income
after interest expense (as determined in accordance with generally accepted
accounting principles). Additionally, upon payment in full of the CTC debt
(which occurred in 1998), the Company may not declare, make or become
obligated to make any distribution (except for payments for services or goods
actually provided) to any of its Members in excess of 45% of the Company's
operating income after expense (as determined in accordance with generally
accepted accounting principles).

Scheduled maturities of long-term debt for each of the years ended December
31 are as follows:

<TABLE>
<S> <C>
1999......................................................... $ 2,390,000
2000......................................................... 1,858,000
2001......................................................... 2,006,000
2002......................................................... 2,162,000
2003......................................................... 2,324,000
Thereafter................................................... 14,730,000
-----------
Total...................................................... $25,470,000
===========
</TABLE>

H-13
<PAGE>

LADY LUCK BETTENDORF, L.C.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1998

5. CAPITAL LEASES

In July 1997, the Company entered into a two-year capital lease agreement
to purchase certain gaming equipment with a fair market value of $130,000 at
an interest rate of 8%. In October 1997, the Company entered into a two-year
lease agreement to purchase certain operating equipment with a fair market
value of $48,000 at an interest rate of 8%. In September 1998, the Company
entered into two five-year capital lease agreements for certain operating
equipment with fair market values of $284,000 and $90,000 at interest rates of
8% and 10%, respectively. The future lease payments under the leases, together
with the present value of the lease payments, consisted of the following at
December 31, 1998:

<TABLE>
<S> <C>
1999........................................................... $138,000
2000........................................................... 86,000
2001........................................................... 87,000
2002........................................................... 86,000
2003........................................................... 65,000
--------
Minimum lease payments......................................... 462,000
Less amounts representing interest............................. (48,000)
--------
$ 14,000
========
</TABLE>

6. OTHER ACCRUED LIABILITIES

Other accrued liabilities consist of the following as of December 31:

<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Accrued salaries, vacation and bonuses............. $ 800,000 $ 717,000
Accrued management fees--affiliates................ 196,000 81,000
Accrued advertising--affiliates.................... 111,000 109,000
Accrued property taxes............................. 260,000 269,000
Other.............................................. 1,849,000 711,000
---------- ----------
Total other accrued liabilities.................. $3,216,000 $1,887,000
========== ==========
</TABLE>

7. RELATED PARTY TRANSACTIONS

The Company purchased property from a related party as follows:

In order to complete the obligations of the Development Agreement dated
June 17, 1997 with the City of Bettendorf, the Company purchased the Plaza
Building located at 1823 State Street from Green Bridge Company, a related
party, for $372,000. These premises are required to be demolished before
December 31, 1999, at an estimated cost of $200,000, including environmental
remediation. The Company entered into an agreement with a related party to
purchase slot machines totaling approximately $51,000 in 1998.

The Company entered into a second mortgage agreement on May 27, 1997 with
"Cement Transportation Corporation," a related party, for a loan of
$5,000,000. Security was provided through the hotel, future dockside retail
facilities and commercial facility. The loan was for a period of five years.
The loan was interest bearing at 12% over the life of the loan (see Note 4).
The Company drew down and fully repaid approximately $1,250,000 in 1998.

H-14
<PAGE>

LADY LUCK BETTENDORF, L.C.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1998

The Company has entered into long-term operating leases with related
parties. They are as follows:

a. Land--The Company has entered into a long-term operating lease
agreement with BRDC. The lease is for an initial term of 10 years, expiring
May 2005, with nine 10-year options. The parties have set the lease payment
at $150,000 per month, based on a negotiated value. The Company has an
option to purchase the land during the initial term of the lease for its
appraised fair market value. The Company has not executed this option as of
December 31, 1998.

b. Boat--The Company has entered into a long-term operating lease, a
charter hire lease, with LLGC and Lady Luck Kimmswick, Inc., a Missouri
corporation. This lease is for an initial term of 5 years, expiring in May
2000, with a 10-year renewal option. The lease payment is $189,000 per
month, before use tax. The Company has an option to purchase the Boat
during the initial lease term for its appraised fair market value. The
Company has not executed this option as of December 31, 1998.

c. Equipment--The Company had entered into a long-term operating lease
with Lady Luck Gaming Finance Corporation to lease equipment. The lease was
for an initial term of 36 months, expiring April 1998, with two 1-year
renewal options. Effective January 1, 1998, the Company exercised its
option to purchase this equipment prior to the expiration of the lease for
a negotiated amount of $712,000.

d. Parking--The Company is in negotiation with Green Bridge Company, a
related party, to secure additional leased land for the purpose of
providing parking for customers and employees. It is anticipated that the
value of this additional parking will not exceed $20,000 per month
retroactive to September 1, 1998. The term of this lease is anticipated to
be month-to-month.

8. COMMERCIAL CENTER DEVELOPMENT

In October 1995, the Company completed construction of a 91,000 square foot
commercial center. Effective August 1998, the Company completed a 25,000
square foot banquet, kitchen and convention facility within the commercial
center. The Company anticipates utilizing the remaining square footage for a
restaurant, office space and other facilities. It is anticipated that the
office space will be completed in April 1999 and the restaurant by Fall 1999.
The Company anticipates hiring a consultant to locate other tenants;
utilization of the remaining space is contingent upon the determination of the
specific tenants. As the Company executes these plans, additional tenant and
other construction costs will be incurred, the amount of which depends on the
specific plan. Management intends to fund these costs from operations.

9. LITIGATION

The Company is party to various litigation arising in the normal course of
business. Management is of the opinion that ultimate resolution of these
matters will not have a material adverse effect on the financial position or
the results of operations of the Company.

H-15
<PAGE>

LADY LUCK BETTENDORF, L.C.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1998

10. COMMITMENTS AND CONTINGENCIES

Lease Commitments--Future minimum lease payments for the land, boat and
gaming equipment required under operating leases that have non-cancelable
lease terms in excess of one year as of December 31, 1998 are as follows:

<TABLE>
<S> <C>
1999......................................................... $ 4,347,000
2000......................................................... 4,246,000
2001......................................................... 4,215,000
2002......................................................... 4,204,000
2003......................................................... 4,203,000
Thereafter................................................... 71,163,000
-----------
Total...................................................... $92,378,000
===========
</TABLE>

Management intends to renew the boat lease for an additional 10 years and
the land lease for an additional 30 years, these renewal options have been
assumed in the above disclosure.

H-16
<PAGE>

ANNEX I

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Lady Luck Bettendorf, L.C.
Consolidated Balance Sheets, September 30, 1999 (unaudited) and December
31, 1998................................................................. I-1
Consolidated Statements of Operations for the three and nine months ended
September 30, 1999 and 1998 (unaudited).................................. I-2
Consolidated Statements of Cash Flows for the nine months ended September
30, 1999 and 1998 (unaudited)............................................ I-3
Notes to Unaudited Consolidated Financial Statements...................... I-4
</TABLE>

I-i
<PAGE>

LADY LUCK BETTENDORF, L.C.

CONSOLIDATED BALANCE SHEETS

As of September 30, 1999 and December 31, 1998

ASSETS

<TABLE>
<CAPTION>
September December
30, 1999 31, 1998
----------- -----------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents.......................... $ 8,410,000 $ 5,620,000
Accounts receivable, net of allowance for doubtful
accounts of $208,000 and $103,000, respectively... 124,000 246,000
Inventories........................................ 405,000 432,000
Prepaid expenses and other current assets.......... 1,103,000 572,000
----------- -----------
Total current assets............................. 10,042,000 6,870,000
----------- -----------
PROPERTY AND EQUIPMENT:
Buildings.......................................... 39,836,000 38,818,000
Leasehold improvements............................. 5,700,000 5,358,000
Furniture, fixtures and equipment.................. 15,287,000 13,960,000
----------- -----------
60,823,000 58,136,000
Less: accumulated depreciation..................... (8,305,000) (5,474,000)
----------- -----------
52,518,000 52,662,000
Construction in progress........................... 428,000 65,000
----------- -----------
Total property and equipment, net................ 52,946,000 52,727,000
----------- -----------
Other assets....................................... 738,000 750,000
----------- -----------
TOTAL ASSETS......................................... $63,726,000 $60,347,000
=========== ===========

LIABILITIES AND MEMBERS' EQUITY

CURRENT LIABILITIES:
Current portion of capital leases.................. $ 56,000 $ 124,000
Current portion of long-term debt.................. 1,773,000 2,390,000
Accounts payable................................... 1,277,000 1,058,000
Accounts payable-affiliates........................ 443,000 187,000
Accrued gaming taxes............................... 200,000 318,000
Accrued progressive and slot club activities....... 883,000 861,000
Other accrued liabilities.......................... 3,181,000 3,216,000
----------- -----------
Total current liabilities........................ 7,813,000 8,154,000
COMMITMENTS AND CONTINGENCIES
Long-term capital leases, less current portion..... 170,000 290,000
Long-term debt, less current portion............... 21,335,000 23,080,000
----------- -----------
Total liabilities................................ 29,318,000 31,524,000
----------- -----------
Members' equity...................................... 34,408,000 28,823,000
----------- -----------
TOTAL LIABILITIES AND MEMBERS' EQUITY................ $63,726,000 $60,347,000
=========== ===========
</TABLE>

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

I-1
<PAGE>

LADY LUCK BETTENDORF, L.C.

CONSOLIDATED STATEMENTS OF OPERATIONS

For The Three and Nine Months Ended September 30, 1999 and 1998
(Unaudited)

<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Casino................... $23,014,000 $20,348,000 $66,297,000 $59,626,000
Hotel.................... 1,264,000 308,000 3,234,000 308,000
Food and beverage........ 1,903,000 1,614,000 5,538,000 4,551,000
Other.................... 568,000 281,000 1,281,000 1,165,000
----------- ----------- ----------- -----------
Gross revenues......... 26,749,000 22,551,000 76,350,000 65,650,000
Less: promotional
allowances.............. (1,546,000) (1,105,000) (4,308,000) (3,482,000)
----------- ----------- ----------- -----------
Net revenues........... 25,203,000 21,446,000 72,042,000 62,168,000
COSTS AND EXPENSES:
Casino................... 6,471,000 5,496,000 18,438,000 15,550,000
Hotel.................... 537,000 202,000 1,634,000 264,000
Food and beverage........ 428,000 591,000 1,229,000 1,369,000
Gaming and admission
taxes................... 5,649,000 4,827,000 16,958,000 14,836,000
Management fees--
affiliates.............. 737,000 584,000 2,054,000 1,673,000
Marine operations........ 589,000 638,000 1,770,000 1,860,000
Selling, general and
administrative.......... 4,100,000 4,152,000 11,237,000 11,881,000
Rental expenses--
affiliates.............. 1,124,000 1,051,000 3,436,000 3,152,000
Other expenses........... 279,000 178,000 906,000 691,000
Depreciation and
amortization............ 943,000 582,000 2,737,000 1,585,000
Pre-opening expenses..... 46,000 1,194,000 46,000 1,194,000
----------- ----------- ----------- -----------
Total costs and
expenses.............. 20,903,000 19,495,000 60,445,000 54,055,000
----------- ----------- ----------- -----------
Operating income....... 4,300,000 1,951,000 11,597,000 8,113,000
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest income.......... 70,000 45,000 140,000 117,000
Interest expense, net.... (466,000) (148,000) (1,250,000) (148,000)
Loss on sale of assets... -- (275,000) (2,000) (315,000)
----------- ----------- ----------- -----------
NET INCOME................. $ 3,904,000 $ 1,573,000 $10,485,000 $ 7,767,000
=========== =========== =========== ===========
</TABLE>

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

I-2
<PAGE>

LADY LUCK BETTENDORF, L.C.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For The Nine Months Ended September 30, 1999 and 1998
(Unaudited)

<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income......................................... $10,485,000 $ 7,767,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization.................... 2,687,000 1,267,000
Loss on sale of assets........................... 2,000 315,000
Pre-opening expenses............................. 46,000 24,000
(Increase) decrease in operating assets:
Accounts receivable, net....................... 123,000 (83,000)
Inventories.................................... 27,000 (310,000)
Prepaid expenses and other current assets...... (775,000) (374,000)
Increase (decrease) in operating liabilities:
Accounts payable (including affiliates)........ 109,000 758,000
Accrued gaming taxes........................... (118,000) 45,000
Accrued progressive and slot club activities... 22,000 33,000
Other accrued liabilities...................... 329,000 765,000
----------- -----------
Net cash provided by operating activities............ 12,937,000 10,207,000
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment additions................... (2,834,000) (25,997,000)
(Decrease) increase in construction and retention
payable........................................... -- (2,960,000)
Other assets, net.................................. 46,000 44,000
----------- -----------
Net cash used in investing activities................ (2,788,000) (28,913,000)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings........................... -- 23,444,000
Payments on debt and capital leases................ (2,460,000) (1,606,000)
Distribution of equity to owners................... (4,899,000) --
----------- -----------
Net cash provided by (used in) financing activities.. (7,359,000) 21,838,000
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS............ 2,790,000 3,132,000
CASH AND CASH EQUIVALENTS:
Beginning of period................................ 5,620,000 3,839,000
----------- -----------
End of period...................................... $ 8,410,000 $ 6,971,000
=========== ===========
</TABLE>

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

I-3
<PAGE>

LADY LUCK BETTENDORF, L.C.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 1999
(Unaudited)

1. THE COMPANY AND BASIS OF PRESENTATION

Bettendorf Riverfront Development Company, L.C. ("BRDC") and Lady Luck Quad
Cities, Inc. ("LLQC") formed an Iowa limited liability company, Lady Luck
Bettendorf, L.C. (the "Company") for the purpose of operating a riverboat
casino on the Mississippi River based in Bettendorf, Iowa. Under the terms of
the Articles of Organization, the Company's term will expire in 2065. BRDC and
LLQC each contributed $3,000,000 for a 50% ownership interest in the Company.
All net profits and losses from all operations of the Company are allocated
equally between LLQC and BRDC. BRDC and LLQC are each represented by two
managers with most management decisions of the Company requiring approval of
both members. On October 21, 1997, Lady Luck Bettendorf Marina Corporation
("LLBMC"), a wholly owned subsidiary of the Company, was created for the
purpose of owning the marina and parking garage. The Board of Directors of
LLBMC is comprised of the managers of the Company.

The Company commenced operations on April 21, 1995. The Company is located
on a leased parcel of land, which is adjacent to Interstate 74 on the
Mississippi River. The Company's operations consist of a 30,000 square foot
casino with approximately 50 table and card games and 1,157 slot machines
within three floors of a gaming vessel, which is approximately 300 feet by 100
feet, a 256-room hotel, buffet style restaurant, gift shop, commercial center,
sports bar, 500-space parking garage and a land based entertainment area for
parties, shows, and special events. The first floor has a Las Vegas casino
theme, the second floor has a sports theme and the poker room is on the third
floor. The vessel is certified for 2,500 passengers including crew. The
Company's market is concentrated in a radius of 50 miles of the Quad City Area
and the Chicago area serviced by ongoing bus programs.

The Company has substantially completed a $39,500,000 expansion project
pursuant to its master plan. During 1998, the Company completed a 256-room
hotel and an overpass that allows vehicles to cross over active railroad
tracks. The Company completed a 500-car parking garage in 1997. Financing for
this project was obtained through a $17,500,000 mortgage with the Rock Island
Bank, N.A. (Note: Rock Island Bank, N.A. was acquired by Mercantile Bank on
August 3, 1998. On September 17, 1999, Mercantile Bank was acquired by Firstar
Bank. For the purposes of this disclosure, all references to Rock Island Bank,
Mercantile Bank, and Firstar Bank shall have the same meaning.) signed on June
23, 1997, a second mortgage with Cement Transportation Corporation, a related
party, for $5,000,000 signed on June 23, 1997, of which $1,250,000 was drawn
and fully repaid during 1998, and a development agreement signed on June 17,
1997 with the City of Bettendorf which secured $7,500,000 of tax incremental
financing. The balance of the expansion project has been paid from the
Company's cash on hand. The planned marina remains under development and is
not expected to require additional financing to pay for its completion.

During the nine and three months ended September 30, 1999, no additional
money was drawn from the $17,500,000 Rock Island Bank, N.A. mortgage and the
Company repaid approximately $900,000 and $308,000 of principal, respectively.
Additionally, $7,500,000 of tax incremental funding has been funded by the
City of Bettendorf through a development agreement dated June 17, 1997.

AGREEMENTS

City of Bettendorf "Development Agreement dated August 16, 1994"

I-4
<PAGE>

LADY LUCK BETTENDORF, L.C.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

September 30, 1999
(Unaudited)

gaming license. The Company is in compliance with the conditions of the
agreement and related amendment as follows:

a. The Company obtained an Iowa gaming license effective April 1, 1995
and began operations on April 21, 1995.

b. The Company was to use commercially reasonable efforts to facilitate
completion of the existing commercial center improvements so that the
commercial center would be opened for business on our before September 1,
1996 (See Note 8). A portion of the commercial center was opened in October
1995 for the holiday season. As part of the hotel project discussed above,
the Company has opened approximately 25,000 square feet of banquet, kitchen
and convention space and anticipates utilizing the remaining 66,000 square
feet for a restaurant, office space and other facilities.

c. Under the original agreement, which was in effect until August 31,
1998, the Company paid a development fee to the City of 2% on adjusted
gross receipts exceeding $35,000,000 but not to exceed $44,000,000 during
each twelve month period starting on the day gaming operations began, April
21, 1995. The maximum revenues subject to the 2% fee were $9,000,000
resulting in maximum percentage based fees of $180,000. Additionally, the
Company paid a fee equal to $0.50 per passenger under the original
agreement.

d. Under the amended agreement, effective as of September 1, 1998, the
Company is to pay weekly, a development fee, in lieu of the previous 2% of
adjusted gross receipts and $0.50 fee per passenger, to the City of
Bettendorf. The new development fee equals 1.65% of adjusted gross receipts
with the minimum annual fee of $1,020,000. The minimum annual fee shall
terminate at the Company's option for any year during which any of certain
defined conditions subsequently occur which result in a decrease of
adjusted receipts to less than $64,000,000. The minimum annual fee was not
terminated as of September 30, 1999.

The Company has accrued City gaming fees of $16,000 and $11,000 as of
September 30, 1999 and 1998, respectively.

City of Bettendorf "Development Agreement dated June 17, 1997"

This project includes the construction of a 256-room waterfront hotel, a
railroad overpass for vehicular access, a downtown riverfront parking center
for 500 cars, improved area for public parking and a marina with seasonal
transient docking facilities. As part of this agreement, the City issued
$9,500,000 in tax incremental financing bonds (the "TIF Bonds"), $7,500,000 of
which was used by the Company to construct the overpass, parking garage,
related site improvements and pay for disruption damages caused by
construction of the overpass. To enable financing of the City's obligations,
the Company will pay incremental property taxes on the developed property
assessed at a valuation of not less than $32,000,000 until the TIF Bonds
mature. In the event that the taxes generated by the project and other
qualifying developments in the redevelopment district do not fund the
repayment of the total TIF Bonds prior to their scheduled maturity, the
Company will pay the City $0.25 per person for each person entering the boat
until the remaining balance has been repaid. The City agreed to

I-5
<PAGE>

LADY LUCK BETTENDORF, L.C.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

September 30, 1999
(Unaudited)

accept conveyance of the overpass from Lady Luck upon its completion. The cost
of the overpass, parking garage, site improvements and disruption damages did
not exceed the financing from the City of Bettendorf. Costs incurred through
September 30, 1999 related to this project are $7,500,000.

In the event that the construction of the marina is not completed before
April 1, 1999, unless completion is restricted beyond the control of the
Company, the Company will pay the City $100,000 per month until the project
has been completed. As of September 30, 1999, the Company has incurred
approximately $78,000 of costs related to the marina and anticipates that, if
constructed, the marina will cost an additional amount not in excess of
$1,000,000. The Company is currently pursuing the necessary licenses for
development of the marina. As approvals for the licenses are pending
environmental evaluations and flood plain analyses, the continued development
of the marina is beyond the control of the Company.

Pursuant to the agreement, the Company has paid and agreed upon amount of
$200,000 for damages, which have been awarded to certain businesses disrupted
by the overpass construction.

In addition, the Company is responsible in 1999 for demolishing the Plaza
building at 1823 State Street and preparing the site for donation back to the
City. The Company completed this process for a cost of $225,000.

Riverbend Regional Authority "Operator's Contract dated August 11, 1994"

a. The Company has obtained and is operating a riverboat gaming facility
with a minimum capacity of 900 gaming positions.

b. Under the original agreement, which was in effect until August 31,
1998, the Company paid RRA $1.00 for each of the first $500,000 admissions
and $1.50 for each admission in excess thereof computed on an annual basis
commencing on the date gaming operations began, April 21, 1995.

These admission fees were paid weekly.

If the adjusted gross gaming receipts exceeded $44,000,000 during any
twelve-month period starting on the day gaming operations began, the
Company was required to pay RRA 2% of any such excess. The Company exceeded
this level in 1997 and 1996, and began to make these additional
contributions weekly until April 21, 1998 and 1997, respectively.

I-6
<PAGE>

LADY LUCK BETTENDORF, L.C.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

September 30, 1999
(Unaudited)

d. The Company has executed a "Development Agreement" with the City of
Bettendorf as required by this agreement.

The Company has accrued RRA gaming fees of $31,000 and $21,000 as of
September 30, 1999 and 1998, respectively.

Lady Luck Casino, Inc. "Casino Management Agreement dated September 30, 1994"

The Company entered into an agreement with Andrew H. Tompkins and Lady Luck
Casino, Inc. ("LLCI"), a Nevada corporation, to manage the operations of the
Company. In May 1996 the agreement was amended and Lady Luck Gaming
Corporation ("LLGC") (the "Management Company"), a Delaware corporation,
replaced LLCI as the manager of the casino, effective January 1, 1996. Andrew
H. Tompkins, International Marco Polo Services, Inc. ("IMPSI") formerly known
as LLCI, and LLGC are all affiliates of the Company. The Management Company is
to supervise and control the Company's operations, provide marketing and
accounting services, allow the use of the Lady Luck name in connection with
the operations and access to the customer list. Cash payments made by the
Company to IMPSI, LLGC and their affiliates for services provided to the
Company or payments made on behalf of the Company for insurance, marketing and
advertising production, medical and other insurance, 401(k) plan contributions
and other items totaled approximately $4,727,000 and $4,858,000 for the nine
months ended September 30, 1999 and 1998, respectively, excluding management
fees and rental expenses paid to these related parties. These amounts totaled
$1,626,000 and $1,460,000 for the three-month period ended September 30, 1999
and 1998. The Management Company believes that all expenses and costs
applicable to the Company are reflected in the accompanying consolidated
financial statements on a basis which is representative of what they would
have been if the Company operated on a stand-alone basis. Highlights of the
agreement are as follows:

a. Term--The term of the "Casino Management Agreement" is from September
30, 1994 to
September 30, 2033.

Effective June 1996, the management fee was reduced by $37,500 per
month. The management fees incurred during the nine month period ended
September 30, 1999 and 1998 were approximately $2,054,000 and $1,673,000,
respectively. The amounts for the three-month period ended September 30,
1999 and 1998, were $737,000 and $584,000, respectively. The outstanding
and unpaid management fees at September 30, 1999 and 1998, were
approximately $193,000 and $299,000, respectively. BRDC will provide
consulting services concerning licensing, staffing, and management of the
marine aspects of the gaming vessel and any land based development. The
Management Company is to pay part of its fee, up to $325,000 annually, to
BRDC for these consulting services.

I-7
<PAGE>

LADY LUCK BETTENDORF, L.C.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

September 30, 1999
(Unaudited)

d. Maintenance Capital Improvements and Furniture, Fixtures and
Equipment "Replacement Reserve Account"--The management Company is required
to reserve a percentage of casino gross revenues (as defined) each year
(the "Replacement Reserve Account") to pay the cost of additions to and
replacements of furniture, fixtures and equipment, and to provide for
capital improvements as follows:

<TABLE>
<S> <C>
1st Operating Year.................. 1.5%
2nd Operating Year.................. 2.5%
3rd Operating Year.................. 3.0%
4th Operating Year.................. 4.0%
5th Operating Year (and each year
thereafter)........................ 5.0%
</TABLE>

This requirement has been constructively met as the Company has made and paid
for replacements and capital improvements from the casino bank account, in
excess of the approximately $3,315,000 and $2,385,000 that were required to be
funded as of the nine month period ended September 30, 1999 and 1998,
respectively. The Company also met the requirements with respect to the three
month period ended September 30, 1999 and 1998 by investing over $1,151,000
and $814,000, respectively.

2. CERTAIN RISKS AND UNCERTAINTIES

The Company receives a significant amount of their revenues from patrons
within 50 miles of the property. If economic conditions in these areas were to
decline materially or additional casino licenses were awarded in these
locations, the Company's results of operations could be materially affected.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Principles of Consolidation--The consolidated financial statements
include the accounts of the Company and its wholly owned subsidiary.
Significant intercompany accounts and transactions have been eliminated.

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

d. Inventories--Inventories are stated at the lower of cost, as
determined by the first-in, first-out method, or market value.

e. Property and Equipment--Property and equipment are stated at cost.
Depreciation is computed using the straight-line method. Estimated useful
lives for financial reporting purposes are as follows:

<TABLE>
<S> <C>
Buildings................................ 40 Years
Leasehold Improvements................... 15-20 Years
Furniture, fixtures and equipment........ 5-7 Years
</TABLE>

I-8
<PAGE>

LADY LUCK BETTENDORF, L.C.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

September 30, 1999
(Unaudited)

Costs of major improvements are capitalized, while costs of normal repairs
and maintenance are charged to expense as incurred. Portions of property,
furniture, fixtures and equipment are pledged as collateral for long-term
debt (See Note 4).

g. Promotional Allowances--The retail value of food, beverage and other
items provided on a complimentary basis to customers without charge is
included in gross revenues and then deducted as promotional allowances. The
estimated cost of providing these promotional allowances is included in
casino departmental expenses for the nine months ended September 30, 1999
and 1998 are as follows:

<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Hotel............. $ 578,000 $ 98,000
Food and Beverage. 3,535,000 3,187,000
Other............. 246,000 234,000
---------- ----------
Total........... $4,359,000 $3,519,000
========== ==========
</TABLE>

The estimated cost of providing these promotional allowances is included in
casino departmental expenses for the three months ended September 30, 1999
and 1998 are as follows:

<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Hotel............. $ 206,000 $ 98,000
Food and Beverage. 1,256,000 993,000
Other............. 69,000 77,000
---------- ----------
Total........... $1,531,000 $1,168,000
========== ==========
</TABLE>
h. Slot Patron Incentive Estimates--The Company provides slot patrons'
incentives based on the dollar amount of play on slot machines. An accrual
has been established based on an estimate of the outstanding value of these
incentives, utilizing the age and prior history of redemptions. This amount
is reflected as a current liability in the accompanying balance sheets.

i. Advertising--Advertising costs are expensed for the first time such
advertisement appears. Total advertising costs (including direct mail
marketing) were approximately $1,441,000 and $926,000 for the nine month
period ended September 30, 1999 and 1998, respectively. These amounts for
the three-month period ended September 30, 1999 and 1998 were $600,000 and
$181,000, respectively.

j. Pre-Opening Costs--Pre-opening costs include direct incremental
project salaries and other pre-opening costs incurred during the pre-
opening phase of projects. Pre-opening costs directly related to
construction of projects were capitalized as incurred and charged to
expense in the period each project commenced operations. Statement of
Position 98-5, "Reporting on the Costs of Start-Up Activities," is
effective for fiscal years beginning after December 15, 1998 and requires
that all pre-opening/start-up activities be expensed as incurred. The
Company has adopted this Statement of Position effective January 1, 1999
and will expense future pre-opening costs as incurred.

k. Income Taxes--No provision for U.S. Federal income taxes or state
income taxes is recorded in the financial statements as such liability is
the responsibility of the Members.

I-9
<PAGE>

LADY LUCK BETTENDORF, L.C.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

September 30, 1999
(Unaudited)

l. Reclassifications--Certain prior year balances have been reclassified
to conform to current year presentation and have no impact on net income.

4. DEBT

At September 30, 1999 and December 31, 1998, long-term debt consisted of
the following:

<TABLE>
<CAPTION>
September December
30, 1999 31, 1998
----------- -----------
<C> <S> <C> <C>
a. Atronic Casino Technology LTD, LLC--$521,000
non-interest bearing note; principal
payments of $43,721 per month; due in
September 1999; collateralized by gaming
equipment................................... $ -- $ 363,000
b. Aristocrat, Inc.--$224,000 non interest
bearing note; principal payments of $14,529
per month; for twelve months; due in July
1999; collateralized by gaming equipment.... -- 94,000
c. WMS Gaming, Inc.--$429,000 non-interest
bearing note; principal payments of $37,508
per month; due in June 1999; collateralized
by gaming equipment......................... -- 205,000
d. Rock Island Bank, N.A.--$17,500,000 loan;
interest at 7.93% per annum which re-sets
after 5 years; principal and interest
payments of $211,729 per month; due October
2008; collateralized by certain land
improvements, including the hotel........... 16,408,000 17,308,000
e. Tax Incremental Financing Payable--Interest
of approximately 6.7%; payments made through
incremental property taxes to the City of
Bettendorf until paid in full, maturity no
later than 2011............................. 6,700,000 7,500,000
----------- -----------
23,108,000 25,470,000
Less: current portion....................... (1,773,000) (2,390,000)
----------- -----------
Total long-term debt........................ $21,335,000 $23,080,000
=========== ===========
</TABLE>

The Company also entered into a second mortgage agreement on May 27, 1997
with Cement Transportation Corporation ("CTC"), a related party, in the amount
of $5,000,000. Security was provided through the second mortgage on the hotel,
future dockside retail facilities and commercial space. The loan was for a
period of five years. The loan was interest bearing at a rate of 12% over the
life of the loan. The agreement required the Company to pay a minimum of 45%
of its net earnings (as defined) annual until the loan is repaid. In addition,
pursuant to the agreement, no distributions could be made to the members,
other than those payments to CTC to pay off this loan until such time as the
CTC loan is paid in full. . The Company drew down and fully repaid
approximately $1,250,000 in 1998. The first mortgage agreement with Rock
Island Bank also prevents distributions greater than 45% of net earnings to be
made in any one year in respect to the mortgage

The mortgage agreement with Rock Island Bank, N.A. for $17,500,000 provides
for, among other things, restrictions on the Company's ability to make
payments on the CTC debt in excess of 45% of the Company's operating income
after interest expense (as determined in accordance with generally accepted
accounting principles). Additionally, upon payment in full of the CTC debt
(which occurred in 1998), the Company may not declare, make or become
obligated to make any distribution (except for payments for services or goods
actually provided) to any of its Members in excess of 45% of the Company's
operating income after interest expense (as determined in accordance with
generally accepted accounting principles).

I-10
<PAGE>

LADY LUCK BETTENDORF, L.C.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

September 30, 1999
(Unaudited)

Scheduled maturities of long-term debt for each of the years ended
September 30 are as follows:

<TABLE>
<S> <C>
2000......................... $ 1,773,000
2001......................... 1,910,000
2002......................... 2,061,000
2003......................... 2,223,000
2004......................... 2,398,000
Thereafter................... 12,743,000
-----------
Total...................... $23,108,000
===========
</TABLE>

5. CAPITAL LEASES

In July 1997, the Company entered into a two-year capital lease agreement
to purchase certain gaming equipment with a fair market value of $130,000 at
an interest rate of 8%. In October 1997, the Company entered into a two-year
lease agreement to purchase certain operating equipment with a fair market
value of $48,000 at an interest rate of 8%. In September 1998, the Company
entered into two five-year capital lease agreements for certain operating
equipment with fair market values of $284,000 and $90,000 at interest rates of
8% and 10%, respectively. The future lease payments under these leases,
together with the present value of the lease payments, consisted of the
following at September 30, 1999:

<TABLE>
<S> <C>
2000........................................................... $ 71,000
2001........................................................... 71,000
2002........................................................... 71,000
2003........................................................... 61,000
2004........................................................... --
--------
Minimum lease payments......................................... 274,000
Less amounts representing interest............................. (48,000)
--------
Total........................................................ $226,000
========
</TABLE>

6. OTHER ACCRUED LIABILITIES

Other accrued liabilities consist of the following as of September 30, 1999
and December 31, 1998, respectively:

<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Accrued salaries, vacation and bonuses............ $ 933,000 $ 800,000
Accrued management fees--affiliates............... 193,000 196,000
Accrued advertising--affiliates................... 99,000 111,000
Accrued property taxes............................ 945,000 260,000
Other............................................. 1,011,000 1,849,000
---------- ----------
Total other accrued liabilities................. $3,181,000 $3,216,000
========== ==========
</TABLE>

I-11
<PAGE>

LADY LUCK BETTENDORF, L.C.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

September 30, 1999
(Unaudited)

7. RELATED PARTY TRANSACTIONS

The Company purchased property from a related party as follows:

In order to complete the obligations of the Development agreement dated
June 17, 1997 with the City of Bettendorf, the Company purchased the Plaza
Building located at 1823 State Street from Green Bridge Company, a related
party, for $372,000. These premises are required to be demolished before
December 31, 1999. The building was demolished in August 1999 for a cost of
$225,000, including environmental remediation. The Company entered into an
agreement with a related party to purchase slot machines totaling
approximately $51,000 in 1998.

The Company entered into a second mortgage agreement on May 27, 1997 with
"Cement Transportation Corporation", a related party, for a loan of
$5,000,000. Security was provided through the hotel, future dockside retail
facilities and commercial facility. The loan was for a period of five years.
The loan was interest bearing at 12% over the life of the loan (see Note 4).
The Company drew down and fully repaid approximately $1,250,000 in 1998.

The Company has entered into long-term operating leases with related
parties. They are as follows:

d. Parking--The Company has entered into a lease with Green Bridge
Company, a related party, to secure additional leased land for the purpose
of providing parking for customers and employees. The lease for this
additional parking is $20,000 per month effective September 1, 1998. The
term of this lease is month-to-month.

8. COMMERCIAL CENTER DEVELOPMENT

In October 1995, the Company completed construction of a 91,000 square-foot
commercial center. Effective August 1998, the Company completed a 25,000
square-foot banquet, kitchen and convention facility within the commercial
center. The Company anticipates utilizing the remaining square footage for a
restaurant and other facilities. The office space was completed in April 1999
and it is anticipated that the restaurant will be completed by March 2000. The
Company anticipates hiring a consultant to locate other tenants; utilization
of the remaining space is contingent upon the determination of the specific
tenants. As the Company executes these plans, additional tenant and other
construction costs will be incurred, the amount of which depends on the
specific plan. Management intends to fund these costs from operations.

I-12
<PAGE>

LADY LUCK BETTENDORF, L.C.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

September 30, 1999
(Unaudited)

9. LITIGATION

10. COMMITMENTS AND CONTINGENCIES

<TABLE>
<S> <C>
2000......................................................... $ 4,421,000
2001......................................................... 4,311,000
2002......................................................... 4,294,000
2003......................................................... 4,283,000
2004......................................................... 4,258,000
Thereafter................................................... 78,000,000
-----------
Total...................................................... $99,567,000
===========
</TABLE>

Management intends to renew the boat lease for an additional 10 years and the
land lease for an additional 30 years, these renewal options have been assumed
in the above disclosure.

11. SUBSEQUENT EVENT

On Oct. 5, 1999, LLGC, a 50% owner of the Company and Isle of Capri signed
a definitive agreement whereby Isle of Capri will acquire 100 percent of LLGC
in a merger transaction (the "Merger"). Under the terms of the agreement, the
LLGC's common stockholders will receive cash in the amount of $12 per share
for an aggregate share consideration of approximately $59 million and Isle of
Capri will assume all of LLGC's outstanding long-term debt in the amount of
approximately $176.6 million. The agreement also provides for the redemption
of LLGC's outstanding preferred stock in the amount of approximately $22
million. Closing is expected in the first half of 2000 pending the approval of
at least 75% of LLGC's stockholders and gaming regulators in all applicable
jurisdictions and other contingencies. Pursuant to a Stockholder Support
Agreement entered into by Tompkins, the owner of approximately 46% of LLGC's
Common Stock, and Isle of Capri, Tompkins will sell to Isle of Capri shares of
LLGC's Common Stock equal to 34.99% of the issued and outstanding shares of
LLGC's Common Stock and, under certain circumstances, Tompkins will sell the
balance of the shares of LLGC's Common Stock owned by him to Isle of Capri. In
addition, Tompkins has agreed to vote his shares in favor of approval of the
Merger and has placed his shares in an escrow for the benefit of Isle of
Capri. Effective with the merger, the separate corporate existence of LLGC
shall cease.

In a separate agreement, the shareholders of BRDC, Inc., a 50% owner of the
Company, have entered into a letter of intent for a tax-free merger with the
Isle of Capri Casinos, Inc. The agreement is subject to approval by the
shareholders of the Isle of Capri Casinos, Inc. Effective with the merger, the
separate corporate existence of BRDC, Inc. shall cease.

I-13
<PAGE>

ANNEX J

Lady Luck Gaming Corporation Selected Historical Consolidated Financial Data

The selected historical consolidated financial data presented below for,
and as of the end of, each of the fiscal years in the five-year period ended
December 31, 1998 have been derived from the audited consolidated financial
statements of Lady Luck Gaming Corporation ("Lady Luck"). The financial data
for the nine-month periods ended September 30, 1998 and September 30, 1999 are
derived from unaudited consolidated financial statements of Lady Luck. The
unaudited financial statements include all adjustments consisting of normal
recurring accruals that Lady Luck considers necessary for a fair presentation
of the financial position and the results of operations for these periods.
Operating results for the nine months ended September 30, 1999 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1999.

<TABLE>
<CAPTION>
Fiscal Years Ended: Nine Months Ended:
-------------------------------------------------------------------- ----------------------------
December 31, December 31, December 31, December 31, December 31, September 30, September 30,
1994 1995 1996 1997 1998 1998 1999
------------ ------------ ------------ ------------ ------------ ------------- -------------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net revenues............ 117,155 149,590 162,824 158,860 144,079 111,115 113,237
Casino expenses......... 41,859 49,703 56,806 57,301 52,497 40,857 40,873
Food and beverage
expenses............... 7,215 8,582 6,928 6,644 4,941 3,974 3,467
Hotel expenses.......... 652 1,667 1,925 2,236 1,640 1,210 1,333
Other operating
expenses............... 574 310 282 258 143 120 51
Selling, general and
administrative......... 51,926 49,539 53,786 52,939 45,252 35,260 34,371
Related party
management/license
fees................... 2,471 5,520 3,434 2,953 3,370 2,453 2,944
Depreciation and
amortization........... 7,067 9,694 11,289 12,886 8,506 6,760 6,760
Pre-opening expense..... 2,970 -- 247 -- -- -- 437
Litigation claims....... -- -- 1,100 700 -- -- --
Gain on sale of assets.. -- -- -- -- (2,848) (2,848) --
Reserve for loss on sale
of assets.............. -- -- -- 7,621 -- -- --
Project development
costs, write-downs and
reserves............... 15,635 509 404 7,784 -- -- --
Asset impairment write-
down................... -- -- -- 20,698 -- -- --
Loss on sale of
investment in
unconsolidated
affiliate.............. -- -- -- 1,912 -- -- --
Abandonment loss........ 9,344 -- -- -- -- -- --
Operating income (loss). (22,558) 24,066 26,623 (15,072) 30,578 23,329 23,001
Other (expense)......... (15,393) (19,024) (20,415) (21,390) (20,337) (15,571) (14,807)
Income (loss) before
income tax and
extraordinary items.... (37,951) 4,862 6,208 (36,462) 10,241 7,758 8,194
Net income (loss)....... (35,665) 6,718 6,139 (36,511) 10,166 7,713 8,104
Net cash provided by
(used in) operating
activities............. 8,590 17,083 13,492 10,114 9,080 5,719 12,783
BALANCE SHEET DATA:
Cash and cash
equivalents............ 28,914 22,148 15,490 19,552 28,834 18,191 22,201
Restricted cash......... 7,847 8,858 -- 15,388 -- 15,230 --
Marketable securities... -- -- -- -- 19,219 15,469 18,092
Current assets.......... 44,679 35,219 19,523 41,930 51,194 52,507 43,272
Property and equipment,
net.................... 170,345 155,664 173,119 128,375 120,904 116,149 131,874
Total assets............ 226,963 217,281 223,718 185,306 191,685 187,224 198,177
Current liabilities..... 216,954 23,702 19,892 22,258 18,701 16,838 17,059
Total liabilities....... 221,137 200,675 200,973 199,072 195,285 193,277 193,673
Series A mandatory
cumulative redeemable
preferred.............. 13,097 14,669 16,430 18,402 20,611 20,036 22,442
Stockholders' equity
(deficit).............. (7,271) 1,937 6,315 (32,168) (24,211) (26,089) (17,938)
Working capital
(deficit).............. (172,275) 11,517 (369) 19,672 32,493 35,669 26,213
</TABLE>

J-1
<PAGE>

<TABLE>
<CAPTION>
Fiscal Years Ended: Nine Months Ended:
------------------------------------------------------------------ ----------------------------
December 31, December 31, December 31, December 31, December 31, September 30, September 30,
1994 1995 1996 1997 1998 1998 1999
------------ ------------ ------------ ------------ ------------ ------------- -------------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED DATA
BASIC AND DILUTED NET
INCOME (LOSS) PER SHARE
(1):
Before extraordinary
items and preferred
stock dividend......... (8.72) 0.92 1.26 (7.48) 2.08 1.58 1.66
Extraordinary items..... 0.26 0.47 -- -- -- -- --
Applicable to common
stockholders........... (8.79) 1.07 0.90 (7.88) 1.63 1.25 1.29
Shares used in computing
net income per share... 4,217 4,825 4,881 4,881 4,881 4,881 4,881
Shares outstanding at
period end............. 4,548 4,881 4,881 4,881 4,881 4,881 4,881
Cash dividends declared
per common share....... -- -- -- -- -- -- --
Book value per share.... (1.60) 0.40 1.29 (6.59) (4.96) (5.35) (3.68)
</TABLE>
- -------
(1) Lady Luck effected a one-for-six reverse stock split on June 4, 1998, and
the sales prices set forth above have been restated for periods before
June 4, 1998 to reflect the decreased number of shares of Common Stock
outstanding.

This data should be read in conjunction with the audited consolidated
financial statements and related notes and the report of independent public
accountants included in Lady Luck's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998, and the unaudited financial statements and
related notes included in Lady Luck's Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 1999, both of which accompany this Proxy
Statement and are incorporated herein by reference.

J-2
<PAGE>

PROXY PROXY

ISLE OF CAPRI CASINOS, INC.

Solicited by the Board of Directors for the Special Meeting
to be held February 16, 2000

The undersigned hereby appoints Bernard Goldstein, John M. Gallaway and Allan B.
Solomon, and each of them, the proxy or proxies of the undersigned with full
power of substitution to vote all shares of the common stock of Isle of Capri
Casinos, Inc., a Delaware corporation (the "Company"), that the undersigned is
entitled to vote at the Special Meeting of Stockholders of the Company to be
held on February 16, 2000, or adjournments thereof, with all powers the
undersigned would possess if personally present, on the following as specified
and, in their discretion, on such other matters as may properly come before the
meeting.
<PAGE>

[X] Please mark your votes as in this example

Proposal 1: Approve and adopt the merger agreement pursuant to which BRDC,
Inc. will be merged into Isle of Capri Casinos, Inc. with Isle of
Capri Casinos, Inc., as surviving corporation.

FOR AGAINST ABSTAIN
[_] [_] [_]

Please sign exactly as your name appears on this Proxy. If shares are registered
in more than one name, the signatures of all such holders are required. A
corporation should sign in its full corporate name by a duly authorized officer,
stating such officer's title and official capacity, giving the full title as
such. A partnership should sign in the partnership name by an authorized person,
stating such person's title and relationship to the partnership.

___________________________ DATED _____________, 2000
(Signature)

___________________________ DATED _____________, 2000
(Signature if held jointly)

NOTE: Please complete, date, sign and return this proxy promptly, using the
enclosed envelope.