The following Management's Discussion and Analysis of Financial Condition and
Results of Operations ("MD&A") is intended to help the reader understand
Canterbury Park Holding Corporation, our operations, our financial results and
financial condition, and our present business environment. This MD&A is provided
as a supplement to and should be read in conjunction with our consolidated
financial statements and the accompanying notes to the consolidated financial
statements (the "Notes"). Our actual results could differ materially from those
anticipated in the forward-looking statements included in this discussion as a
result of certain factors, including, but not limited to, those discussed in
"Risk Factors" and "Forward-Looking Statements" included elsewhere in this
Annual Report on Form 10-K.



STRATEGIC OVERVIEW



Canterbury Park Holding Corporation (the "Company," "we," "our," or "us") hosts
pari-mutuel wagering on thoroughbred and quarter horse races and "unbanked" card
games at its Canterbury Park Racetrack and Casino facility (the "Racetrack") in
Shakopee, Minnesota, which is approximately 25 miles southwest of downtown
Minneapolis. The Racetrack is the only facility in the State of Minnesota that
offers live pari-mutuel thoroughbred and quarter horse racing.



The Company's pari-mutuel wagering operations include both wagering on
thoroughbred and quarter horse races during live meets at the Racetrack
each year from May through September, and year-round wagering on races primarily
held at out-of-state racetracks that are televised simultaneously at the
Racetrack ("simulcasting"). Unbanked card games, in which patrons compete
against each other, are hosted in the Casino at the Racetrack. The Casino
operates 24 hours a day, seven days a week. The Casino offers both poker and
table games at up to 80 tables. The Company also derives revenues from related
services and activities, such as food and beverage, parking, advertising
signage, publication sales, and from other entertainment events and activities
held at the Racetrack.



In 2022, Canterbury Development continued to pursue various development
opportunities begun in 2015 for its underutilized land in a project known as
Canterbury Commons. These development opportunities have included contributions
of land to joint ventures, three as of the end of December 2022, and sales of
parcels of land to third parties that will then develop the property. Our
long-term strategic direction is to continue to enhance our Racetrack as a
unique gaming and entertainment destination and develop the approximately 80
acres of underutilized land not needed for our Racetrack Operations.



In the first half of 2021, the continuing COVID-19 pandemic had a negative
impact on the financial condition and operations of the segments within
Canterbury Entertainment, although to a much lesser extent than 2020. We
temporarily suspended all Casino, simulcast, and special event operations at
Canterbury Park for a total of approximately one week at the beginning of
January 2021. Additionally, effective May 28, 2021, all capacity limits,
restrictions on large gatherings, and other restrictions, which had been
implemented in response to the impact of the COVID-19 pandemic, were lifted and
our Racetrack began operating under pre-pandemic guidelines. Our Casino also
began operating without capacity restrictions effective May 28, 2021, but we
maintained throughout the balance of 2021 and throughout 2022 and intend to
maintain certain operational changes and improvements initiated in 2020 in
response to the COVID-19 pandemic. In 2022, our horse racing, casino, and food
and beverage operations were not subject to any COVID-19 related closures or
capacity limitations.

The following summarizes our financial performance for the last five years (in 000's):





Financial Performance Summary         2022         2021             2020             2019             2018
Net Revenues                        $ 66,824     $ 60,400         $ 33,140         $ 59,227         $ 59,142
Operating Expenses                    55,943       42,882   (1)     34,882   (2)     55,591   (3)     53,866   (4)
Gain on Transfer/Sale of Land             12          264            2,368                -            2,371
Income (Loss) Before Income Taxes     10,235       15,798             (189 )          3,963            7,708

Income Tax (Expense) Benefit (2,722 ) (3,999 ) 1,251 


         (1,244 )         (1,990 )
Net Income                             7,513       11,798            1,062            2,718            5,718

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

1 During fiscal year 2021, the Company reduced operating expenses $6,314,000 by

recording an employee retention credit, a refundable tax credit.

2 During fiscal year 2019, the Company reduced operating expenses $21,000 by

recording a gain on insurance recoveries.

3 During fiscal year 2018, the Company reduced operating expenses $141,000 by

recording a gain on insurance recoveries.

4 During fiscal year 2017, the Company reduced operating expenses by $1,465,000


  by recording a gain on insurance recoveries.




                                       21

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EMPLOYEE RETENTION CREDIT



The employee retention credit ("ERC"), as originally enacted on March 27, 2020
by the CARES Act, is a refundable tax credit against certain employment taxes
equal to 50% of the qualified wages an eligible employer pays to employees after
March 12, 2020, and before January 1, 2021. The Taxpayer Certainty and Disaster
Tax Relief Act (the "Relief Act"), enacted on December 27, 2020, amended, and
extended the ERC. The Relief Act extended and enhanced the ERC for qualified
wages paid after December 31, 2020 through June 30, 2021. Under the Relief Act,
eligible employers may claim a refundable tax credit against certain employment
taxes equal to 70% of the qualified wages an eligible employer pays to employees
after December 31, 2020 through June 30, 2021. The purpose of the ERC is to
encourage employers to keep employees on the payroll, even if they are not
working during the covered period because of the coronavirus outbreak.



The Company qualified for federal government assistance through the ERC
provisions for the 2020 second, third, and fourth quarters, as well as the 2021
first and second quarters. We recognize government grants for which there is a
reasonable assurance of compliance with grant conditions and receipt of credits.
The Company's expected one-time refunds at December 31, 2022 and 2021 were
$6,103,236 and $6,314,468, respectively, and are included on the Consolidated
Balance Sheets as an employee retention credit receivable, as well as on the
Consolidated Statements of Operations as a credit to salaries and benefits
expense in 2021.



We expect to receive the remaining employee retention credit payments in 2023.
Upon receipt, we expect to allocate these funds towards a combination of further
investment in our team members, growth investments, capital expenditures, and
deferred maintenance capital spending.



OPERATIONS REVIEW

YEAR ENDED December 31, 2022 COMPARED TO YEAR ENDED December 31, 2021





EBITDA represents earnings before interest income, income tax expense,
depreciation, and amortization. EBITDA is not a measure of performance or
liquidity calculated in accordance with generally accepted accounting principles
in the United States of America ("GAAP"), and should not be considered an
alternative to, or more meaningful than, net income as an indicator of our
operating performance or cash flows from operating activities as a measure of
liquidity. We present EBITDA as a supplemental disclosure for our Racetrack
Operations because it is a widely used measure of performance of and basis for
valuation of companies in the gaming industry. Other companies that provide
EBITDA information may calculate EBITDA differently than we do. We also compute
Adjusted EBITDA, a non-GAAP measure, which reflects additional adjustments to
EBITDA to eliminate unusual or non-recurring items, as well as items relating to
our real estate development operations. For the year ended December 31, 2022,
Adjusted EBITDA excluded from EBITDA the gain on sale of land, loss on disposal
of assets, and depreciation, amortization and interest related to equity
investments. For the year ended December 31, 2021, Adjusted EBITDA excluded from
EBITDA the gain on transfer of land, employee retention credit, and
depreciation, amortization and interest related to equity investments, as well
as $515,000 of COVID-19 relief grants included in other revenue for that year.

The following table sets forth a reconciliation of net income, a GAAP financial measure, to EBITDA and Adjusted EBITDA (defined above), which are non-GAAP measures, for the years ended:





SUMMARY OF EBITDA DATA



                                                                 Year Ended December 31,
                                                                  2022             2021
NET INCOME                                                    $  7,512,946     $ 11,798,153
Interest income, net                                              (909,958 )       (719,365 )
Income tax (benefit) expense                                     2,721,800        3,999,400
Depreciation                                                     2,981,168        2,844,647
EBITDA                                                          12,305,956       17,922,835
Loss on disposal of assets                                         157,435                -
Gain on sale/transfer of land                                      (12,151 )       (263,581 )
Employee Retention Credit                                                -       (6,314,468 )
Depreciation and amortization related to equity investments      1,782,870

1,735,883


Interest expense related to equity investments                     907,099

905,729


Other revenue, COVID-19 relief grants                                    -         (515,000 )
ADJUSTED EBITDA                                               $ 15,141,209     $ 13,471,398




Adjusted EBITDA increased $1,670,000, or 12.4%, for 2022 compared to 2021. For
2022, Adjusted EBITDA as a percentage of net revenue was 22.8%. For 2021,
Adjusted EBITDA as a percentage of net revenue, excluding the $515,000 other
revenue from COVID-19 relief grants, was 22.5%.

                                       22
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REVENUES



Total net revenues for 2022 were $66,824,000, an increase of $6,424,000, or
10.6%, compared to total net revenues of $60,400,000 for 2021. For 2022 as
compared to 2021, total pari-mutuel revenue increased 7.0%, Casino revenue
increased 5.6%, food and beverage revenue increased 33.0%, and other revenue
increased 26.2%. See below for a further discussion of our sources of revenues
for each of our pari-mutuel, Casino, food and beverage, and other revenues.



PARI-MUTUEL REVENUES



                                    Year Ended December 31,
                                     2022             2021
Simulcast                        $  3,862,000     $  3,959,000
Live racing                         1,890,000        1,663,000
Guest fees                          3,517,000        3,236,000
Other revenue                       1,689,000        1,386,000
Total Pari-Mutuel Revenue        $ 10,958,000     $ 10,244,000

Racing Days
Simulcast only racing days                290              289
Live and simulcast racing days             64               65
Total Number of Racing Days               354              354




Simulcast and Live Racing pari-mutuel revenues include commission and breakage
revenues from on-track live and simulcast wagering. We receive guest fees from
out-of-state racetracks and ADW companies for out-of-state wagering on our live
races. Other revenues include source market fees paid by ADW companies for
wagers made by Minnesota residents on out-of-state races and proceeds from
unredeemed pari-mutuel tickets.



Total 2022 pari-mutuel revenue increased $714,000, or 7.0%, compared to 2021.
The increase in revenue in 2022 compared to 2021 is due to increased business
levels, including higher attendance, visitation, and per cap spend from
consumers that attended our live race meet and increased revenue from
out-of-state wagers.



CASINO REVENUES



                               Year Ended December 31,
                                2022             2021
Poker Games Collection      $  7,607,000     $  7,110,000
Other Poker Revenue            2,875,000        2,133,000
Total Poker Revenue           10,482,000        9,243,000

Table Games Collection        27,392,000       27,120,000
Other Table Games Revenue      2,345,000        1,728,000
Total Table Games Revenue     29,737,000       28,848,000

Total Casino Revenue        $ 40,219,000     $ 38,091,000




The primary source of Casino revenue is a percentage of the wagers received from
the players as compensation for providing the Casino facility and services,
referred to as "collection revenue." Other Revenue presented above includes fees
collected for the administration of tournaments and amounts earned as
reimbursement of the administrative costs of maintaining jackpot funds. Casino
revenue represented 60.2% and 63.1% of the Company's net revenues for the years
ended December 31, 2022 and 2021, respectively.



Total Casino revenue increased $2,128,000, or 5.6%, in 2022 compared to 2021.
The increase is due to increased visitation as we returned to more normalized
operations in 2022 as described above, as well as increased poker drop and
tournament revenue in 2022 from the removal of various capacity restrictions
that were in effect through May 28, 2021. We also intend to maintain certain
operational changes and improvements, to both poker and table games, which we
believe is preferred by players and is contributing to increased revenue and
margins.



                                       23

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FOOD AND BEVERAGE REVENUES



Food and beverage revenue increased $2,041,000, or 33.0%, to $8,227,000 for
the year ended December 31, 2022 compared to 2021. The increase is due to
increased visitation in 2022 as our business recovers from the effects of the
COVID-19 pandemic described above. The Company also increased prices related to
food and beverage sales to offset rising inflationary costs. Furthermore, the
increase is due to being able to host large scale events in 2022, including a
three-day music festival and nine-show concert series in the 2022 third
quarter. As noted above, all capacity limits which had been implemented as a
response to the COVID-19 pandemic were lifted on May 28, 2021.



OTHER REVENUES



Other revenue, consisting of admission revenues, corporate sponsorships, space
rentals, and other miscellaneous activities, increased $1,541,000, or 26.2%, to
$7,420,000 in 2022 compared to 2021. Other revenue for 2021 benefited from a
one-time $515,00 COVID-19 relief grant. The increase in 2022 as compared to 2021
is due to the return of more normalized operations, emphasized by hosting a
three-day music festival and ten-show concert series in the 2022 third quarter.



OPERATING EXPENSES



Total operating expenses increased $13,100,000, or 30.5%, to $55,943,000 in
2022, from $42,882,000 in 2021. Total operating expenses as of December 31, 2021
includes a credit to salaries and benefits of $6,314,000 related to the employee
retention credit described above. Excluding the employee retention credit, total
operating expenses increased $6,748,000, or 13.7%, in 2022 compared to 2021 due
to increases in all categories of expense as we returned to more normalized
operations in 2022 as compared to 2021. Total operating expenses as a percentage
of net revenues increased to 83.7% in 2022 from 81.5% in 2021 when removing the
employee retention credit from 2021.



Total purse expense increased $492,000, or 6.1%, in 2022 compared to 2021. The
increase is due to increases in Casino and pari-mutuel revenues. This also
resulted in an increase in Minnesota Breeders' Fund (the "MBF") expense (shown
below). As discussed in greater detail in Item 1 above, Minnesota law requires
us to allocate a portion of Casino revenues, wagering handle on simulcast and
live horse races, and ADW source market fees for future payment as purses for
live horse races and other authorized uses. While most of these amounts were
paid into the purse funds for thoroughbred and quarter horse races, Minnesota
law requires that a portion of the amounts allocated for purses be paid into the
MBF.



                                                       Minnesota Breeders'
                          Purse Expense                   Fund Expense
                      2022            2021            2022            2021
Casino             $ 4,852,000     $ 4,584,000     $   539,000     $   509,000
Simulcast Racing     1,477,000       1,463,000         482,000         467,000
Live Racing          2,201,000       1,991,000          98,000          85,000
Total              $ 8,530,000     $ 8,038,000     $ 1,119,000     $ 1,061,000




Salaries and benefits expense increased $9,249,000, or 61.2%, in 2022 compared
to 2021. The increase is due to the $6,314,000 employee retention credit claimed
under the CARES Act in 2021 that did not offset salaries and benefits expense in
2022. Excluding the employee retention credit, salaries and benefits expense
increased $2,935,000, or 13.7%, in 2022 compared to 2021. The increase in 2022
is due to an increase in overall business operations, an increase in the number
of personnel to support our resumption of normalized operations, as well as an
increase to the wage rate for those personnel.



Cost of food and beverage sales increased $836,000, or 34.3%, in 2022 compared
to 2021. The increase is consistent with the increase in food and beverage
revenues. A contributing factor to the increased expenses were higher costs of
food and beverage items due to inflationary pressures that were offset with the
Company increasing our sale prices on these items.



Advertising and marketing costs increased $1,412,000, or 84.7%, in 2022 compared
to 2021. The increase is primarily attributable to the increased expenditures
that were funded by payments received under the CMA for joint marketing, as well
as an increase in advertising and marketing spend to support our resumption of
more normalized operations in 2022.



Professional and contracted service expenses increased $564,000, or 13.4% in
2022 compared to 2021. The increase is primarily attributable to expenses
associated with increased information technology security as well as costs
related to corporate partnership development and strategic planning for future
operations.



During 2022, the Company recorded a gain on sale of land of $12,000 as of result
of the sale of approximately 4.1 acres of land for approximately $1,200,000 in
gross proceeds.



During 2022, the Company performed a review of any fixed assets that were no
longer in service at December 31, 2022. As a result of this review, management
determined to dispose of assets resulting in a loss on disposal of $175,735. In
addition to this write-off, the Company had three additional asset disposals for
a gain of $18,300, resulting in a net loss on disposal of assets of $157,435 for
the year ended December 31, 2022.

During 2021, the Company recorded a gain on sale of land of $264,000 as of result of the sale of approximately 9.8 acres of land for approximately $3,500,000 in gross proceeds.





                                       24
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The Company recorded a provision for income taxes of
$2,722,000 and $3,999,000 for 2022 and 2021, respectively. The decrease in our
tax expense for 2022 compared to 2021 is due to a decrease in income before
taxes from operations. Our effective tax rate was 26.6% and 25.3% for 2022 and
2021, respectively.

Net income for the years 2022 and 2021 was $7,513,000 and $11,798,000, respectively.

CRITICAL ACCOUNTING ESTIMATES





The preparation of the Consolidated Financial Statements in accordance with GAAP
requires us to make estimates and judgments that are subject to an inherent
degree of uncertainty. The nature of the estimates and assumptions are material
due to the levels of subjectivity and judgment necessary to account for highly
uncertain factors or the susceptibility of such factors to change. The
development and selection of critical accounting estimates, and the related
disclosures, have been reviewed with the Audit Committee of our Board of
Directors. We believe the current assumptions and other considerations used to
estimate amounts reflected in our Consolidated Financial Statements are
appropriate. However, if actual experience differs from the assumptions and
other considerations used in estimating amounts reflected in our Consolidated
Financial Statements, the resulting changes could have a material adverse effect
on our financial condition, results of operations and cash flows.

Estimate of the allowance for doubtful accounts - Property Tax Increment Financing "TIF" Receivable





As of December 31, 2022, the Company recorded a TIF receivable on its
Consolidated Balance Sheet of approximately $13,294,000, which represents
$11,301,000 of principal and $1,993,000 of interest. The TIF receivable requires
significant management estimates and judgement pertaining to whether an
allowance for doubtful accounts is necessary. The TIF receivable was generated
in connection with the Contract for Private Redevelopment, in which the City of
Shakopee has agreed that a portion of the future tax increment revenue generated
from the developed property around the Racetrack will be paid to the Company to
reimburse it for expenses in constructing public infrastructure improvements.



The Company typically performs an annual collectability analysis of the TIF
receivable in the fourth quarter of each year, or more frequently if
indicators of the receivable to be potentially uncollectable exist. The Company
utilizes the assistance of a third party to assist with the projected tax
increments. The quantitative analysis includes assumptions based on the market
values of the completed development projects within Canterbury Commons, which
derives the future projected tax increment revenue. The Company uses the
analysis to determine if the future tax increment revenue will exceed the
Company's development costs on infrastructure improvements. As a result of our
analysis for the year ended December 31, 2022, management believes the TIF
receivable will be fully collectible and no allowance related to this receivable
is necessary.

COOPERATIVE MARKETING AGREEMENT





The amounts received from the marketing payments under the CMA are recorded as a
component of other revenue and the related expenses are recorded as a component
of advertising and marketing expense and depreciation in the Company's
consolidated statements of operations. For the year ended December 31, 2022, the
Company recorded $1,920,000 in other revenue and incurred $1,697,000 in
advertising and marketing expense and $222,000 in depreciation related to the
SMSC marketing payment. For the year ended December 31, 2021, the Company
recorded $1,516,000 in other revenue and incurred $1,391,000 in advertising and
marketing expense and $125,000 in depreciation related to the SMSC marketing
payment. The excess of amounts received over revenue is reflected as deferred
revenue on the Company's consolidated balance sheets.



CONTINGENCIES



Effective on December 21, 2021, the Company entered into a Contribution and
Indemnity Agreement ("Indemnity Agreement") with affiliates of Doran Companies
("Doran") relating to debt financing by Doran Canterbury I, LLC as borrower,
which is guaranteed by Doran affiliates. Under the Indemnity Agreement, the
Company is obligated to reimburse and indemnify each loan guarantor for any
amounts paid by such loan guarantor to the lender on debt financing by Doran
Canterbury I, LLC, up to a maximum of $5,000,000. Effective on October 27, 2022,
the Indemnity Agreement was amended to increase the maximum indemnification by
an additional $700,000.



                                       25

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The Company is periodically involved in various claims and legal actions arising
in the normal course of business. Management believes that the resolution of any
pending claims and legal actions at December 31, 2022 and as of the date of this
report will not have a material impact on the Company's consolidated financial
position or results of operations.



The Company has committed to payment of statutory distributions under a $500,000
bond issued to the MRC as required under Minnesota law. The Company was not
required to make any payments related to this bond in 2022 or 2021, and there is
no liability related to this bond on the balance sheet as of December 31, 2022.

LIQUIDITY AND CAPITAL RESOURCES

CASH FLOWS FROM OPERATING ACTIVITIES





Cash provided by operating activities for 2022 was $11,217,000 as a result of
net income of $7,513,000 and was increased by 2022 noncash charges from
depreciation of $2,981,000, stock-based compensation expense of $449,000,
stock-based employee match contribution of $618,000, and loss from equity
investment of $1,568,000. Cash from operating activities in 2022 was reduced by
a gain on sale of land of $12,000. The Company also experienced a decrease in
Casino accruals of $573,000 and an increase in income taxes receivable of
$788,000 in 2022 as compared to 2021. This was partially offset by an
increase in our TIF receivable of $792,000 and a decrease in employee retention
credit receivable of $211,000.



Cash provided by operating activities for 2022 was $13,498,000 as a result of
net income of $11,798,000 and was increased by 2021 noncash charges from
depreciation of $2,845,000, stock-based compensation expense of $548,000,
stock-based employee match contribution of $557,000, and loss from equity
investment of $2,703,000. Cash from operating activities in 2021 was reduced by
a gain on sale of land of $264,000. The Company also experienced an increase in
Casino accruals of $929,000 and a decrease in income taxes receivable of
$2,768,000 in 2021 as compared to 2020. This was partially offset by a
decrease in payable to horsepersons of $1,451,000, an increase in TIF receivable
of $614,000, and an increase in employee retention credit receivable of
$6,314,000.

CASH FLOWS FROM INVESTING ACTIVITIES





Net cash used in investing activities for 2022 of $9,275,000 was used primarily
for additions to land, buildings, and equipment, an increase in related party
receivable, purchases of short-term investments, and an equity investment
contribution. This was partially offset by proceeds received from the sale of
land.



Net cash used in investing activities for 2022 of $2,502,000 was used primarily
for additions to land, buildings, and equipment, increase in related party
receivable, and an equity investment contribution. This was partially offset by
proceeds received from the sale of land.

CASH FLOWS FROM FINANCING ACTIVITIES





Net cash used in financing activities for 2022 was $1,435,000 primarily due to
the reinstituted quarterly cash dividend as well as payments for taxes of equity
awards,  partially offset by proceeds from the issuance of common stock.



Net cash provided by financing activities for 2022 was $130,000 primarily due to
proceeds from the issuance of common stock, partially offset by payments for
taxes of equity awards. Given that we reinstituted our quarterly cash dividend
in January 2022, we expect net cash used by financing activities to increase in
2022.

CASH AND CAPITAL RESOURCES





At December 31, 2022, we had cash, cash equivalents, and restricted cash of
$16,106,000 compared to $15,599,000 at December 31, 2021. This $507,000 increase
consisted of $11,217,000 of net cash provided by operating activities, offset by
$9,275,000 of net cash used in financing activities and $1,435,000 of net cash
used in investing activities. We believe our existing cash and cash equivalents,
along with our short-term investments and cash flow from operations and
availability of borrowing under our revolving line of credit agreement, will be
sufficient to meet our liquidity and working capital requirements beyond the
next 12 months.



Additionally, we expect to receive the remaining employee retention credit
payments of $6,103,236 in 2023. Upon receipt, we expect to allocate these funds
towards a combination of further investment in our team members, growth
investments, capital expenditures, and deferred maintenance capital spending. We
also have finalized our stable area improvement plan, and are awaiting grading
and utility permits from the city to begin the barn relocation and redevelopment
process. We expect to invest approximately $15 million in the stable area
improvement plan as currently designed, staged over the course of the next two
years. We expect to use nearly all of the proceeds from the land sale to Swervo
in connection with the amphitheater to fund the stable area improvement plan, as
well as our other sources of liquidity. Following the expiration of the CMA on
December 31, 2022, we will not receive any purse enhancement, marketing payments
or other amounts under the CMA, which for 2022 was $7,280,000 in purse
enhancement payments and $1,620,000 in marketing payments.



                                       26
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The Company has a general credit and security agreement with a financial
institution. This agreement was amended as of December 23, 2020 to extend the
maturity date to February 28, 2021. The agreement was also amended as of
February 28, 2021 to extend the maturity date to January 31, 2024 and
increase its revolving credit line up to $10,000,000. The line of credit is
collateralized by all receivables, inventory, equipment, and general intangibles
of the Company, as well as a mortgage on certain real property. The Company had
no borrowings under the credit line during the year ended December 31, 2022. As
of December 31, 2022, the outstanding balance on the line of credit was $0. The
credit agreement contains covenants requiring the Company to maintain certain
financial ratios. The Company was in compliance with these requirements at all
times throughout 2022.



Our three largest sources of revenue: pari-mutuel wagering, Casino operations,
and food and beverage, are all based on cash transactions. Consequently, we have
significant inflows of cash on a daily basis. We designate cash balances that
will be required to satisfy certain short-term liabilities such as progressive
jackpots, the player pool, and amounts due horsemen for purses and awards as
"restricted" as a separate balance sheet item.



The Company offers unbanked table games that refer to a wagering system or game
where wagers "lost" or "won" by the host are accumulated into a "player pool" to
enhance the total amount paid back to players in any other card game. The
Company is required to return accumulated player pool funds to the players
through giveaways, promotional items, prizes or by other means. The player pool
liability was $1,064,000 and $973,000 at December 31, 2022 and 2021,
respectively. Additionally, the table games jackpot pool was $309,000 and
$675,000 at December 31, 2022 and 2021, respectively.



The Company also maintains a poker promotional pool where a portion of the poker
"rake" is collected and accumulated into a promotional pool to enhance the total
amount paid back to poker players. The Company is required to return accumulated
poker promotional pool funds to the players through poker jackpots, giveaways,
promotional items, prizes or by other means. The poker promotional pool
liability was $576,000 and $934,000 at December 31, 2022 and 2021,
respectively.



The Casino offers progressive jackpots for poker games. Amounts collected for
these jackpot funds are accrued as liabilities until paid to winners. At
December 31, 2022 and 2021, accrued jackpot funds totaled $132,000 and $189,000,
respectively. The MRC regulates the operation of the player pool and progressive
jackpot pools. These liabilities have the potential for significant fluctuation
on a daily basis.



All games in the Casino are played using chips. The value of chips issued and
outstanding, referred to as the "outstanding chip liability," was $587,000 and
$475,000 at December 31, 2022 and 2021, respectively. This liability has the
potential for significant fluctuation on a daily basis depending upon the demand
for chip redemptions and sales.



Our second largest individual operating expense item is purse expense. Pursuant
to an agreement with the MHBPA, we transferred into a trust account or paid
directly to the MHBPA, approximately $7,846,000 and $8,903,000 in purse funds
related to thoroughbred races for 2022 and 2021, respectively. Minnesota law
provides that amounts transferred into this trust account are the property of
the trust and not the Company. There were no unpaid purse fund obligations due
to the MHBPA at December 31, 2022 or 2021.



In March 2014, the Company entered into a seven-year agreement with a new
totalizator provider, which was extended an additional year in 2021. Pursuant to
the agreement, the vendor provides totalizator equipment and related software
that records and processes all wagers and calculates odds and payoffs. The
amounts charged to operations for totalizator expenses for the years ended
December 31, 2022 and 2021 were $253,000 and $262,000, respectively. In March
2022, the Company entered into a five-year agreement with a new totalizator
provider. Under the new agreement, $166,400 was charged to operations in 2022.
The future minimum purchase obligations under the new agreement are $166,400 per
year for each of the next four years.



In August 2018, the Company entered into a Contract for Private Redevelopment
with the City of Shakopee in connection with a Tax Increment Financing District
("TIF District") which was amended in September 2021. The Company is obligated
to construct certain public infrastructure improvements within the TIF District,
and will be reimbursed by the City of Shakopee by future tax increment revenue
generated from the developed property. See Note 12 for a more detailed
description of the agreement.



                                       27

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FORWARD-LOOKING STATEMENTS



This Annual Report on Form 10-K contains various "forward-looking statements"
within the meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements are typically
identified by the use of terms such as "anticipate," "believe," "could,"
"estimate," "expect," "intend," "may," "might," "plan," "predict," "project,"
"seek," "should," "will," and similar words or similar expressions (or negative
versions of such words or expressions). We also may make forward-looking
statements in other reports filed with the SEC, in press releases, and in other
communications to shareholders or the investing public.



Forward-looking statements are not guarantees of future actions, outcomes,
results or performance. Any forward-looking statement made by us or on our
behalf speaks only as of the date on which such statement is made. There are
many important factors that could cause our future results to differ materially
from historical results or trends, results anticipated or planned by us, or the
results expressed in or implied by any forward-looking statements. These
important factors include, but are not limited to:

? Our business is sensitive to reductions in discretionary consumer spending as

a result of downturns in the economy and other factors outside of our control.

? Because purse enhancement payments and marketing payments under our CMA with

SMSC will not continue after December 31, 2022, we are likely to experience

decreased revenue and profitability from live racing.

? We may not be able to attract a sufficient number of horses and trainers to

achieve above average field sizes.

? We face significant competition, both directly from other racing and gaming

operations and indirectly from other forms of entertainment and leisure time

activities, which could have a material adverse effect on our operations.




  ? Nationally, the popularity of horse racing has declined.

? A lack of confidence in the integrity of our core businesses could affect our

ability to retain our customers and engage with new customers.

? Horse racing is an inherently dangerous sport and our racetrack is subject to


    personal injury litigation.


  ? Our business depends on using totalizator services.

? Inclement weather and other conditions may affect our ability to conduct live

racing.

? Our business and operations have been, and may in the future, be adversely

affected by epidemics, pandemics, outbreaks of disease, and other adverse

public health developments, including COVID-19.

? We are subject to changes in the laws that govern our business, including the

possibility of an increase in gaming taxes, which would increase our costs,

and changes in other laws may adversely affect our ability to compete.

? We are subject to extensive regulation from gaming authorities that could

adversely affect us.

? We rely on the efforts of our partner Doran for the development and profitable

operation of our Triple Crown Residences at Canterbury Park joint venture.




  ? We rely on the efforts of our partner Greystone Construction for a new
    development project.

? We may not be successful in executing our real estate development strategy.




  ? We are obligated to make improvements in the TIF district and will be
    reimbursed only to the extent of future tax revenue.


  ? We may be adversely affected by the effects of inflation.

? An increase in the minimum wage mandated under Federal or Minnesota law could

have a material adverse effect on our operations and financial results.

? Our success may be affected if we are not able to attract, develop and retain

qualified personnel.

? The payment and amount of future dividends is subject to Board of Director

discretion and to various risks and uncertainties.

? Our information technology and other systems are subject to cyber security

risk including misappropriation of customer information or other breaches of

information security.

? We process, store, and use personal information and other data, which subjects

us to governmental regulation and other legal obligations related to privacy,

and our actual or perceived failure to comply with such obligations could harm


    our business.

We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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