CANTERBURY PARK HOLDING CORP - FORM 10-K

Attached files

file	filename
EX-23.1 - CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - CANTERBURY PARK HOLDING CORP	cphc120783_ex23-1.htm
EXCEL - IDEA: XBRL DOCUMENT - CANTERBURY PARK HOLDING CORP	Financial_Report.xls
EX-31. - CERTIFICATION OF CFO PURSUANT TO SECTION 302 - CANTERBURY PARK HOLDING CORP	cphc120783_ex31-2.htm
EX-31.1 - CERTIFICATION OF CEO PURSUANT TO SECTION 302 - CANTERBURY PARK HOLDING CORP	cphc120783_ex31-1.htm
EX-32 - CERTIFICATION OF CEO/CFO PURSUANT TO SECTION 906 - CANTERBURY PARK HOLDING CORP	cphc120783_ex32.htm
EX-21 - SUBSIDIARIES OF THE COMPANY - CANTERBURY PARK HOLDING CORP	cphc120783_ex21.htm

Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K


(Mark One)
x		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the fiscal year ended December 31, 2011

OR

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the Transition period from ______ to ______

Commission File Number: 001-31569

CANTERBURY PARK HOLDING CORPORATION

(Exact Name of Registrant as Specified in Its Charter)


	Minnesota		41-1775532
	(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)


	1100 Canterbury Road Shakopee, MN 55379
(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (952) 445-7223

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


	Common Stock, $.01 par value		The NASDAQ Stock Market LLC
	Title of Each Class		Name of Exchange on which Registered

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES o NO x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES o NO x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO o

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). YES x NO o

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


	Large accelerated filer o		Non-accelerated filer o

	Accelerated filer o		Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES o NO x

The aggregate market value of the shares of voting and non-voting common equity held by non-affiliates based on the price at which the Company’s common stock was last sold on the NASDAQ Global Market, on June 30, 2011, the last business day of the registrant’s most recently completed second fiscal quarter was approximately $34,181,000.

On March 18, 2012, the Company had 4,112,031 shares of common stock, $.01 par value, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Company’s definitive Proxy Statement for its 2012 Annual Meeting of Shareholders, to be held on June 7, 2012 and which will be filed on or before April 23, 2012, are incorporated by reference into Part III of this Form 10-K.

CANTERBURY PARK HOLDING CORPORATION
FORM 10-K ANNUAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 2011

TABLE OF CONTENTS


		Page
	PART I

ITEM 1.	Business	3
ITEM 1A.	Risk Factors	11
ITEM 1B.	Unresolved Staff Comments	14
ITEM 2.	Properties	14
ITEM 3.	Legal Proceedings	15
ITEM 4.	Mine Safety Disclosures	15

	PART II

ITEM 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	16
ITEM 6.	Selected Financial Data	18
ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	19
ITEM 7A.	Quantitative and Qualitative Disclosures about Market Risk	27
ITEM 8.	Financial Statements and Supplementary Data	28
ITEM 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure	47
ITEM 9A.	Controls and Procedures	47
ITEM 9B.	Other Information	48

	PART III

ITEM 10.	Directors, Executive Officers and Corporate Governance	48
ITEM 11.	Executive Compensation	48
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	48
ITEM 13.	Certain Relationships, Related Transactions and Director Independence	48
ITEM 14.	Principal Accounting Fees and Services	49

	PART IV

ITEM 15.	Exhibits and Financial Statement Schedules	49

SIGNATURES		50

EXHIBIT INDEX		51

CERTIFICATIONS

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Item 1. BUSINESS

(a) General Development of the Business

Canterbury Park Holding Corporation (the “Company”) conducts pari-mutuel wagering operations and hosts “unbanked” card games at its Canterbury Park Racetrack and Card Casino facility (the “Racetrack”) in Shakopee, Minnesota. The Company’s pari-mutuel wagering operations include both wagering on thoroughbred and quarter horse races during live meets at the Racetrack and year-round wagering on races 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 Card Casino at the Racetrack. The Company also derives revenues from related services and activities, such as concessions, parking, advertising, publication sales and from other entertainment events held at the Racetrack.

The Company was incorporated under the laws of Minnesota on March 24, 1994, acquired the Racetrack on March 29, 1994, commenced seven day a week simulcast operations on May 6, 1994, and, beginning in May 1995, launched live horse racing and related pari-mutuel wagering on a seasonal basis, generally from early May to early September. The Company opened the card room on April 19, 2000 with 43 tables and expanded to 50 tables (the maximum permitted by law) in 2001. The ownership and operation of the Racetrack and the Card Casino are significantly regulated by the Minnesota Racing Commission (the “MRC”).

The Company maintains a website at www.canterburypark.com. Our annual reports on Form 10-K, our quarterly reports on Form 10-Q and our periodic reports on Form 8-K (and any amendments to these reports) are available free of charge on our website.

(b) Financial Information About Segments

The Company divides its business into three segments: horse racing, Card Casino and concessions. The horse racing segment represents operations related to pari-mutuel wagering on simulcast and live horse races; the Card Casino segment represents our unbanked card operations; and the concessions segment represents food and beverage services for simulcast and live racing, the Card Casino and special events at the Racetrack.

(c) Narrative Description of Business


(i)	Horse Racing Operations

The Company’s horse racing operations consist of year-round pari-mutuel wagering on simulcast horse races (“simulcasting”) and on live thoroughbred and quarter horse races (“live meets”) held on a seasonal basis beginning in May and generally concluding in August or September each year.

Live Racing

In 2011, the Racetrack hosted 56 days of live racing beginning May 20th and concluding September 11th. The meet included 37 days of mixed thoroughbred and quarter horse racing and 19 days of thoroughbred only racing. The 2010 live meet was 62 days long, beginning May 14th and ending August 29th, and consisted of 48 days of mixed thoroughbred and quarter horse racing and 14 days of thoroughbred only racing.

Currently, Minnesota law requires the Company to schedule a minimum of 125 days of live racing annually, unless the Minnesota Horsemen’s Benevolent and Protective Association (the “MHBPA”) agrees to a lesser number of live racing days. Since 1995, the MHBPA has agreed to waive the 125-day requirement and has allowed the Company to run a live meet of at least 50 days each year. As this agreement is negotiated annually, no assurance can be given that the MHBPA will agree to a shorter live meet than the 125-day statutory minimum after 2012. If the MHBPA does not agree to a live meet shorter than 125 days, the Company’s operations could be adversely impacted by a decrease in the daily purses, potential reduction in the quality of horses, lower attendance, lower overall handle and proportionally greater operating expenses.

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Simulcasting

Simulcasting is the process by which live horse races held at one facility (the “host track”) are transmitted simultaneously to other locations to allow patrons at each receiving location (the “guest track”) to place wagers on races transmitted from the host track. Monies are collected at the guest track and the information with respect to the total amount wagered is electronically transmitted to the host track. All of the amounts wagered at guest tracks are combined into the appropriate pools at the host track with the final odds and payouts based upon all the monies in the respective pools.

The Company offers “full card” simulcast racing (broadcasting of another racetrack’s entire daily live racing program) from up to 20 racetracks per day, seven days a week, 364 days per year, including Churchill Downs, Hollywood Park, Santa Anita, Gulfstream Park, Belmont Park and Saratoga Racecourse. In addition, races of national interest, such as the Kentucky Derby, the Preakness Stakes, the Belmont Stakes, and the Breeders’ Cup, supplement the regular simulcast program. The Company regularly evaluates its agreements with other racetracks in order to offer the most popular simulcast signals of live horse racing that are feasible.

Under applicable provisions of federal and state law, in order to conduct simulcast operations either as a host or guest track, the Company must obtain the consent of the state’s regulatory authority and the organization which represents a majority of the owners and trainers of the horses who race at the Racetrack. In Minnesota, such consent must be obtained from the MRC and the MHBPA.


(ii)	Card Casino Operations

The Card Casino is open 24 hours per day, seven days per week, offering two variations of unbanked card games: poker and table games.

Poker games, including Texas Hold ‘Em, 7-Card Stud and Omaha, with betting limits per hand ranging between $2 and $60, are currently offered in the poker room. A dealer, employed by the Company, regulates the play of the game at each table and deals the cards but does not participate in play. In poker games, the Company is allowed to deduct a percentage from the accumulated wagers and impose other charges for hosting the activity but does not have an interest in the outcome of a game. The Company may add additional prizes, awards or money to any game for promotional purposes. The Company collects a “rake” of 5-10%, depending on the limit of the game, of each addition to the “pot” up to a maximum of $5.00 per hand as its collection revenue. In addition, poker games offer progressive jackpots for most games. In order to fund the jackpot pool, the dealer withholds $1.00 from each final pot in excess of the $15 minimum.

Table games, including Blackjack, Fortune Pai Gow, Let-It-Ride, Three and Four Card Poker, Ultimate Texas Hold ‘Em, EZ Baccarat, and Blackjack Switch are currently offered in the Card Casino. The Company’s table games are required by law to be “unbanked.” “Unbanked” refers to a wagering system or game where wagers lost or won in card games are accumulated into a player pool liability for purposes of enhancing the total amount paid back to winning players. The Company may only serve as custodian of the player pool, may not have an active interest in any card game and does not recognize amounts that dealers “win” or “lose” during the course of play as revenue. The primary source of Card Casino revenue is a percentage of the wagers received from the players as compensation for providing the Card Casino facility and services, referred to as “collection revenue.” In addition, several table games offer a progressive jackpot. The player has the option of playing the jackpot and has the opportunity to win some or the entire jackpot amount, depending upon their hand.


(iii)	Special Events

While pari-mutuel horse racing and card room operations are the Company’s principal businesses, the Company’s facilities are capable of being used for multiple purposes. In an effort to more fully utilize the property and to generate additional revenues, the Company has increasingly used its grandstand, grounds and parking lot for special events and rentals. While the use of the Company’s facilities for particular special events and purposes varies from year to year, the following are among the types of events and purposes for which the Company’s facilities have been used: snowmobile races, major arts and crafts shows, trade shows, concerts, fundraisers, automobile shows and competitions, vehicle and boat storage and private parties.

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(iv)	Sources of Revenue

General

The Company’s revenues are principally derived from Card Casino operations, wagering on live and simulcast horse races and concession sales. For the fiscal year ended December 31, 2011, revenues from Card Casino operations represented 57.3% of total revenues, wagering on horse races generated 23.3% of total revenues and concessions revenue represented 12.4% of total revenues.

Card Casino Operations

The Company receives revenue from its Card Casino, which operates 24 hours per day, seven days per week. The Company currently receives collection revenue from poker and table games tables. Under Minnesota law, the Company is required to pay 10% of the first $6 million of gross card room revenues towards purses for live horse racing at the Racetrack. After meeting the $6 million threshold, the Company must pay 14% of gross card room revenues as purse monies. Of funds allocated for purses, the Company pays 10% of the purse monies to the State of Minnesota Breeders’ Fund. The remaining 90% of purse monies are divided between thoroughbred (90%), quarter horse (9%) and standardbred (1%) purse funds.

Pari-mutuel wagering – General

In pari-mutuel wagering, bettors wager against each other in a pool, rather than against the operator of the facility or with preset odds. From the total amount wagered (“handle”), the Minnesota Pari-Mutuel Horse Racing Act (the “Racing Act”) specifies the maximum percentage, referred to as the “takeout,” which may be withheld by the Racetrack, with the balance returned to the winning bettors. The takeout constitutes one of the Racetrack’s primary sources of operating revenue. From the takeout, funds are set aside for purses and paid to the State of Minnesota for pari-mutuel taxes and the Minnesota Breeders’ Fund (the “MBF”), which is a fund apportioned by the MRC among various purposes related to Minnesota’s horse breeding and horse racing industries. The balance of the takeout remaining after these deductions is commonly referred to as the “retainage.”

The various forms of pari-mutuel wagering can be divided into two categories: straight wagering pools and multiple wagering pools, which are also referred to as “exotic” wagering pools. Examples of straight wagers include: “win,” “place,” and “show.” Examples of exotic wagers include: “daily double,” “exacta,” “trifecta,” and “pick four.”

The amount of takeout earned by the Company depends on where the race is run and the form of wager (straight or exotic). Net revenues from pari-mutuel wagering on live races run at the Racetrack consist of the total amount wagered, less the amounts paid (i) to winning patrons, (ii) for purses, (iii) to the MBF and (iv) for pari-mutuel taxes to the State of Minnesota. Net revenues from pari-mutuel wagering on races being run at out-of-state racetracks and simulcast to the Racetrack have similar expenses but also include a host fee payment to the host track. The host fee, which is calculated as a percentage of monies wagered (generally 3.0% to 4.5%), is negotiated with the host track and must comply with state laws governing the host track. Pari-mutuel revenues also includes commission and breakage revenues on live on-track and simulcast racing, fees received from out-of-state racetracks for wagering on our live races and proceeds from uncashed winning tickets.

Wagering on Live Races

The Racing Act establishes the maximum takeout that may be deducted from the handle. The takeout percentage on live races depends on the type of wager. The total maximum takeouts are 17% from straight wagering pools and 23% from exotic wagering pools. From this takeout, Minnesota law requires deductions for purses, pari-mutuel taxes and the MBF.

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While the Racing Act provides that a minimum of 8.4% of the live racing handle is to be paid as purses to the owners of the horses, the size of the purse is subject to further agreement with the horsepersons’ associations. The MBF receives 1% of the handle. The pari-mutuel tax applicable to wagering on all simulcast and live races is 6% of takeout in excess of $12 million during the twelve-month period beginning July 1 and ending the following June 30.

The following table sets forth the percentage distribution of each dollar wagered on live races at the Racetrack, as established by the Racing Act, and the Racetrack’s retainage for the years ended December 31, 2011 and 2010:


	Live Racing
	Straight				Exotic

Returned to Winning Patrons			83.00	%			77.00	%
Purse (1)		8.40				8.40
Minnesota Breeders’ Fund		1.00				1.00
Minnesota Pari-Mutuel Taxes (2)		.00				.00
Racetrack Retainage (1)		7.60				13.60
Total Takeout			17.00				23.00

Total Handle			100.00	%			100.00	%




(1)	Minnesota law provides that the 8.40% purse payment is a minimum. The actual percentage, if any, above the minimum is determined between the Racetrack and the MHBPA. Any additional amounts paid for purses decrease the Racetrack’s retainage.
(2)	The current pari-mutuel tax structure exempts the first $12 million of takeout during a statutorily mandated twelve-month period. The total pari-mutuel tax liability for a twelve-month period will depend upon the total takeout during that period. There was no pari-mutuel tax liability in 2010 and 2011 and therefore, it is not factored into the above table.

Wagering on Simulcast Races

The amount of takeout from simulcast wagering is determined by the laws of the state in which the host track is located. In addition, the Racing Act establishes a minimum that must be set aside from simulcasting for purse payments on racing within Minnesota. Different amounts are deducted for purses from the takeout depending on whether simulcasting occurs during the “Racing Season,” a statutorily defined 25-week period beginning in early May each year, or outside of the Racing Season. If simulcasting occurs during the Racing Season, the amount set aside for purses further depends on whether the simulcasting is part of a full racing card that occurs during the part of the day that live races are conducted at the Racetrack. For races that are part of a full simulcast racing card that takes place within the time of live races at the Racetrack, the amount reserved for purse payout is 8.4%. For simulcasting conducted during the Racing Season that does not occur within the time period of live races, the purse is equal to 50% of the takeout remaining after deductions for pari-mutuel taxes, payments to the MBF and payments to the host racetrack for host track fees. For simulcasting conducted outside of the Racing Season, the amount that must be contributed to the purses is 25% of the takeout after deducting pari-mutuel taxes, payments to the MBF and host fee payments to the host racetrack.

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The following table sets forth the approximate percentage distribution of each dollar wagered for races simulcast at the Racetrack and the Racetrack’s retainage for the years ended December 31, 2011 and 2010:


	During Racing Season
	Concurrent with Live Card				Not Concurrent with Live Card				Outside of Racing Season

Returned to Winning Patrons (1)			80.50	%			80.50	%			80.50	%
Minnesota Breeders’ Fund		1.00				1.00				1.10
Minnesota Pari-Mutuel Taxes (2)		.00				.00				.00
Purse (3)		8.40				7.35				4.15
Host Track Fees (4)		3.80				3.80				3.80
Racetrack Retainage (3)		6.30				7.35				10.45
Total Takeout			19.50				19.50				19.50

Total Handle			100.00	%			100.00	%			100.00	%


(1)	This amount will depend upon the takeout at the host racetrack. This percentage is determined by local and state law applicable to the host track and ranges from 75.0% to 85.0%.
(2)	The current pari-mutuel tax structure exempts the first $12 million of takeout during a statutorily mandated twelve-month period. The total pari-mutuel tax liability for a twelve-month period will depend upon the total takeout during that period. There was no pari-mutuel tax liability in 2010 and 2011 and therefore, it is not factored into the above table.
(3)	Although Minnesota law specifies purse percentages, the actual percentage is determined by an agreement between the Racetrack and the MHBPA. No expense deduction was allowed in 2010 and 2011.
(4)	Payments to the host track generally range from 3.0% to 4.5% of total handle, subject to negotiation with each host track. For purposes of this table, the host track fee is assumed to be 3.8%.

Concessions Revenue

The Company earns revenue from food and beverage sales in its restaurant, group catering areas and numerous concession stands located throughout the facility. Food and beverage sales are offered during live and simulcast racing in the card room and during special events.

Other Revenue

The Company generates cash revenues from the receipt of reserved seating charges, preferred and valet parking and the sales of various daily pari-mutuel publications. Additional revenues are derived from the use of the Racetrack facilities year-round for special events such as concerts, trade and craft shows, business meetings, private parties, horse expositions and sales, boat and automobile storage and community events. The Company also generates revenue from providing advertising signage space, similar to that appearing at many sports stadiums, and leasing excess parking lot space for various automotive activities and vehicle storage.


(v)	Competition

From 1994 through 2004, the Company was the only racetrack licensed to operate in the State of Minnesota. In January 2005, the MRC granted a license to the North Metro Harness Initiative, LLC (“NMHI”) to construct and operate a harness racetrack in Columbus Township, Anoka County, MN. Columbus Township is approximately 50 miles from Canterbury Park. This license authorized NMHI to engage in pari-mutuel wagering on live and simulcast racing for standardbred (harness) horses. NMHI commenced operations as Running Aces Harness Park (“Running Aces”) in April 2008. In addition, on completing a 50-day live meet as required by Minnesota law, the MRC granted Running Aces a license to operate a card room, and Running Aces began card room operations in competition with the Company in June 2008.

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The Company also competes with other forms of gaming, principally with numerous tribal casinos located throughout the State of Minnesota that offer video slot machines as well as poker. In particular, the largest casino in Minnesota is located approximately four miles from the Racetrack. More recently, unbanked card games have also become available at most tribal casinos. The Company also faces increasing competition from offshore and out-of-state simulcast operations offering Internet and telephone account home wagering systems to Minnesota residents, although Minnesota regulatory authorities consider such wagering to be illegal.

The Company further competes with other forms of entertainment in the Minneapolis-Saint Paul metropolitan area, including a wide range of live and televised professional and collegiate sporting events. In addition, live horse racing competes with a wide variety of summer attractions, including amusements parks, sporting events and other local activities.

The Company competes with racetracks located throughout the United States in securing horses to run at the Racetrack. Attracting owners and trainers is largely dependent on the ability to offer large purses. The Company experiences significant competition for horses from racetracks located near Des Moines, Iowa and Chicago, Illinois, both of which offer substantially larger purses than the Company. This competition is expected to continue for the foreseeable future.


(vi)	Regulation

General

The ownership and operation of the Racetrack in Minnesota is subject to significant regulation by the MRC under the Racing Act and the rules adopted by the MRC. The Racing Act governs the allocation of each wagering pool to winning bettors, the Racetrack, purses, pari-mutuel taxes and the MBF and empowers the MRC to license and regulate substantially all aspects of horse racing in the State. The MRC, among other things, grants operating licenses to racetracks after an application process and public hearings, licenses all employees of a racetrack, jockeys, trainers, veterinarians and other participants, regulates the transfer of ownership interests in licenses, allocates live race days and simulcast-only race days, approves race programs, regulates the conduct of races, sets specifications for the racing ovals, animal facilities, employee quarters and public areas of racetracks, regulates the types of wagers on horse races, and approves significant contractual arrangements with racetracks, including management agreements, simulcast arrangements, and totalizator contracts.

A federal statute, the Interstate Horse Racing Act of 1978, also requires that a racetrack must obtain the consent of the group representing the horsepersons (owners and trainers) racing the breed of horses that race a majority of the time at the racetrack (MHBPA), and the consent of the state agency regulating the racetrack (MRC), in order to transmit simulcast signals of its live races or to receive and use simulcast signals from other racetracks.

Issuance of Class A and Class B Licenses to the Company

The Company holds a Class A License, issued by the MRC, which allows the Company to own and operate the Racetrack. The Class A License is effective until revoked, suspended by the MRC or relinquished by the licensee. Currently, the fee for a Class A License is $253,000 per fiscal year.

The Company also holds a Class B License, issued by the MRC, that allows the Company to sponsor and manage horse racing on which pari-mutuel wagering is conducted at its Class A licensed racetrack and on other horse races run at out-of-state locations as authorized by the MRC. The Class B License is renewable each year by the MRC after a public hearing (if required by the MRC). Currently, the fee for the Class B License is $500 for each assigned race day on which live racing is actually conducted and $100 for each day on which simulcasting is authorized and actually takes place.

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Limitation on the Number of Class A and Class B Licenses

Pursuant to the Racing Act, so long as the Racetrack maintains its Class A License, no other Class A License may be issued to operate a racetrack in the seven-county metropolitan area (the counties of Hennepin, Ramsey, Washington, Scott, Dakota, Anoka and Carver), except the MRC may issue an additional Class A License within the seven-county metropolitan area, provided that the additional license may only be issued for a facility which, among other conditions, is located more than 20 miles from the Racetrack, contains a track no larger than five-eighths of a mile in circumference, and is used exclusively for standardbred (harness) racing. An additional Class A license was issued to Running Aces on January 20, 2005 (see “Competition” above). However, as long as the Company holds its Class A License, only the Company may own and operate a racetrack in the seven county metropolitan area where thoroughbred and quarter horses may be raced.

Limitation on Ownership and Management of an Entity which holds a Class A and/or Class B License

The Racing Act requires prior MRC approval of all officers, directors, 5% shareholders or other persons having a present or future direct or indirect financial or management interest in any person applying for a Class A and Class B license, and if a change of ownership of more than 5% of the licensee’s shares is made after an application is filed or the license issued, the applicant or licensee must notify the MRC of the changes within five days of this occurrence and provide the information required by the Racing Act.

Card Casino Regulation

The MRC is also authorized by law to regulate Card Casino operations, and the law requires that the Company reimburse the MRC for its actual costs, including personnel costs, of regulating the card room. For fiscal years ended December 31, 2011, and 2010, the Company paid $145,000 and $148,000, respectively, to the MRC as reimbursement for costs of regulating Card Casino operations.

The MRC issued an additional Class B License to the Company on January 19, 2000 that authorizes the Company to host unbanked card games. The Class B License is renewable each year by the MRC after a public hearing (if required by the MRC). Currently, the Class B License Fee of $10,000 per calendar year is included in the Class A License Fee of $253,000 per calendar year.

Under federal law, we are required to record and submit detailed reports of currency transactions involving greater than $10,000 at our Card Casino, as well as any suspicious activity that may occur at our facility. Failure to comply with these requirements could result in fines or cessation of operations.

Local Regulation

The Company’s operations are subject to state and local laws, regulations, ordinances and other provisions affecting zoning, public health and other matters which may have the effect of restricting the uses to which the Company’s land and other assets may be used. Also, any development of the Racetrack site is, among other things, subject to applicable zoning ordinances and requires approval by the City of Shakopee and other authorities, and there can be no assurance such approvals would be obtained if any development was undertaken.


(vii)	Legislation

General

For a number of years, the Company has supported legislation introduced during sessions of the Minnesota Legislature that, if enacted, would authorize electronic gaming devices to be operated at the Racetrack (a business model that is generally called a “Racino”). Based on the success of Racinos in several other states, we believe authorizing a Racino at the Racetrack on similar terms to legislation approved in other states would stimulate economic growth in the horse racing and related agriculture businesses in Minnesota, provide growth and development opportunities that would add jobs at the Racetrack and surrounding community, and provide new revenues for state and local governments facing significant budgetary challenges. While efforts to pass Racino legislation were unsuccessful in 2011 and earlier years, the Company is vigorously advocating for a Racino at the Racetrack at the 2012 session of the Minnesota Legislature.

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The Company’s efforts to obtain legislative approval for a Racino have required, and will continue to require, substantial expenditures. Due to the inherent uncertainty of the outcome of legislative activities, there can be no assurance that any bills favorable to the Company’s interests will be enacted into law, and it is possible bills adverse to the Company could be enacted.


(viii)	2011 Suspension of Operations Due to Partial Shutdown of Minnesota State Government

Effective at midnight on June 30, 2011, the Company suspended all operations. This action stemmed from the inability of Minnesota’s Governor and Legislature to reach agreement on the State’s budget for the biennium beginning July 1, 2011. The inability to reach an agreement forced many state agencies to immediately shut down because no monies had been appropriated for their operations. The Minnesota Racing Commission (“MRC”), the agency which regulates Canterbury Park’s pari-mutuel and Card Casino gaming operations, was one of the many state agencies ordered to close, and, without this regulatory oversight, the Company was directed to cease all operations pending the appropriation of funds for the MRC. A budget agreement was approved on July 20, 2011 which included an appropriation for the MRC, and Canterbury Park resumed all operations on July 21, 2011. The suspension of operations until July 21, 2011 had a material, adverse effect on the Company’s results of operations for the year ending December 31, 2011, as compared to the same period in 2010.


(ix)	Marketing

The Company’s primary market is the seven-county Minneapolis-Saint Paul metropolitan area plus the two counties to the south of the Racetrack. Current demographic information indicates that approximately 2.2 million adults age 18 and older reside within the primary market. The City of Shakopee, located in the southwestern portion of the metropolitan area, is one of the fastest growing communities in the region, and Scott County is one of the fastest growing counties in the country.

To support its pari-mutuel horse racing and Card Casino businesses, the Company conducts year-round marketing efforts to maintain the loyalty of live racing and simulcast patrons and attract new racing and Card Casino customers. The Company utilizes newspapers and television advertising, the Internet, other print media, radio and direct mail. Often, the Company combines its marketing efforts to communicate the excitement of both wagering on horse racing and card playing. In addition to its regular advertising program, the Company conducts numerous special promotions and handicapping contests to increase simulcast patronage and maintains successful pari-mutuel player and card room player rewards programs. In addition, the development and maintenance of a customer database over the past several years has enabled the Company to effectively utilize direct mail advertising.

Because wagering on horse racing and playing poker and table games are more complex than many other forms of gaming, such as slot machines or various lottery products, the Company continues to develop and conduct various educational programs, such as complimentary poker and table games lessons, tours of the Racetrack, wagering and handicapping classes and contests that it believes will make pari-mutuel wagering on horse racing and card playing more understandable to the general public.


(x)	Employees

At March 30, 2012, the Company had 273 full-time employees and 286 part-time employees. On a seasonal basis, the Company adds approximately 120 full-time and 250 part-time employees for live racing operations from early May until early September. The Company’s management believes its employee relations are good.

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(xi)	Executive Officers

The executive officers of the Company, their ages and their positions with the Company are as follows:


Name	Age	Position with Company

Randall D. Sampson	53	President, CEO and General Manager

David C. Hansen	55	Vice President of Finance, CFO and Secretary

Michael J. Garin	56	Vice President of Non-Gaming Operations and Asst. Secretary

Mark A. Erickson	55	Vice President of Facilities

Randall D. Sampson has been President and Chief Executive Officer since the formation of the Company in March 1994 and General Manager since September 1995. He has been active in horse industry associations, currently serving as Vice President and Director of the Thoroughbred Racetracks of America and is a past President of the Minnesota Thoroughbred Association. Mr. Sampson also currently serves as a director of Communications Systems, Inc. (NASDAQ:JCS), a manufacturer of telecommunications and data communications products based in Hector, Minnesota. Mr. Sampson is the son of Curtis A. Sampson, the Company’s Chairman of the Board and the beneficial owner of approximately 22% of the Company’s common stock.

David C. Hansen joined the Company in July 2001 as Vice President of Finance and Chief Financial Officer. From 2000 to 2001, Mr. Hansen served as Director of Accounting for Prairie Meadows Racetrack and Casino in Altoona, IA, one of the nation’s first Racino operations. He served as Controller and later Director of Finance at Treasure Island Resort & Casino, in Red Wing, MN, from 1993 until 2000. Mr. Hansen earned his CPA certification in 1983. Mr. Hansen is a member of the Minnesota Society of Certified Public Accountants, the Hospitality Financial and Technology Professionals Association, and Financial Executives International.

Michael J. Garin was named Vice President of Non-Gaming Operations in October 2009. Prior thereto, Mr. Garin served as the Vice President of Hospitality since May of 1997. He also previously served as President of Canterbury Park Concessions, Inc. from September 1995 to May of 1997. From 1993 to 1994, Mr. Garin served as Food & Beverage Supervisor for Little Six, Inc., one of the largest tribal casino operations in the country. Mr. Garin was President of MMR Vending, Inc., a regional vending company, from 1988 to 1992. Prior to 1988, he was a Regional Director at General Mills Restaurant Group overseeing seven restaurants in three states. Since 2007, Mr. Garin has served on the Board of Directors for the Minnesota Restaurant Association.

Mark A. Erickson has been Vice President of Facilities since May 1997, serving as the Racetrack’s Director of Facilities since April 1994. From 1992 to 1994, Mr. Erickson served as Maintenance Supervisor for the Mall of America, supervising the interior and exterior maintenance for one of the largest shopping malls in North America. Mr. Erickson was Master Electrician for Canterbury Downs from 1986 to 1992, supervising the installation and maintenance of all electrical equipment.

Item 1A. RISK FACTORS

The Company is subject to risk factors that may affect our operating results. Such risk factors include, but are not limited to, the matters discussed below as well as the additional risks discussed under Forward Looking Statements on page 27 of this Form 10-K.

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We face significant competition from other gaming operations that could have a material adverse effect on our operations.

We face intense competition in our market, particularly competition from Native American owned casinos. Such facilities have the advantage of being exempt from certain state and federal taxes and state regulation of indoor smoking, as well as the ability to offer a wider variety of gaming products. We also compete with the Running Aces Harness Park (“Running Aces”) which offers unbanked card games similar to those offered by the Company, as well as pari-mutuel wagering on live races of standardbred (harness) horses and on simulcast races of all horse breeds. Additionally, we compete with illegal Internet wagering on horse races, other forms of gambling, other forms of entertainment and other racetracks throughout the country as previously discussed under Competition above.

We expect competition for our existing and future operations to increase from Running Aces, existing tribal casinos, and racetracks that are able to subsidize their purses with alternative gaming revenues. In addition, several of our tribal gaming competitors have substantially larger marketing and financial resources than we do. We are unable to predict with any certainty the effects of existing and future competition on our operating results.

A downturn in general economic conditions can adversely affect our results of operations.

Consumer demand for entertainment is particularly sensitive to downturns in the economy and the corresponding impact on discretionary spending on leisure activities. Changes in discretionary consumer spending or consumer preferences could be driven by factors such as perceived or actual general economic conditions including housing prices and the availability of credit; high energy, fuel and food costs; the increased cost of travel; the potential for bank failures; the weakening job market; perceived or actual disposable consumer income and wealth; fears of recession and changes in consumer confidence in the economy; or fears of war and future acts of terrorism. These factors could reduce consumer demand for the leisure activities we offer, thus imposing practical limits on pricing and harming our operations.

We are subject to extensive regulation from gaming authorities that could adversely affect us.

The ownership and operation of our Racetrack and Card Casino are subject to significant regulation by the MRC under the Racing Act and the rules adopted by the MRC. The MRC has the authority to impose increases in the Class A and Class B license fees. In addition, State law requires that we reimburse the MRC for its actual costs of regulating the Card Casino, including personnel costs. Increases in these licensing and regulatory costs could adversely affect our results of operations. Also, should the state of Minnesota be unable to pass a budget, which occurred in 2011, the MRC will be unable to regulate the Racetrack and Card Casino, resulting in a shutdown of operations.

Decisions by the MRC in regard to any one or more of the following matters could also adversely affect the Company’s operations: the granting of operating licenses to Canterbury Park and other racetracks after an application process and public hearings; the licensing of all employees of a racetrack, jockeys, trainers, veterinarians and other participants; regulating the transfer of ownership interests in licenses; allocating live race days and simulcast-only race days; approving race programs; regulating the conduct of races; setting specifications for the racing ovals, animal facilities, employee quarters and public areas of racetracks; changes to the types of wagers on horse races; and approval of significant contractual agreements.

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.

Our operations and oversight by the MRC are ultimately subject to the laws of Minnesota and there exists the risk that these laws may be amended in ways adverse to our operations. In particular, we are required to pay taxes and fees in addition to normal federal, state and local income taxes, and such taxes and fees are subject to increase at any time. From time to time, state and local legislators and officials have proposed changes in tax laws, or in the administration of laws affecting our industry, such as the allocation of each wagering pool to winning bettors, the Racetrack, purses and the MBF. In addition, poor economic conditions could intensify the efforts of state and local governments to raise revenues through increases in gaming taxes. It is not possible to determine with certainty the likelihood of changes in tax laws or in the administration of such laws. Such changes, if adopted, could have a material adverse effect on our operations.

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We are also subject to federal laws and Minnesota laws that affect businesses generally. Some of these laws, such as laws pertaining to immigration, have severe penalties for law violations. In addition, it is possible, as a result of the legislative process, that legislation directly or indirectly adverse to the Company may be enacted into law.

We depend on key personnel.

Our future success will depend largely on the skills, efforts and motivation of Randall D. Sampson, our President and Chief Executive Officer, as well as other executive officers and key personnel, on whom we are highly dependent. Our inability to retain key personnel could have a material, adverse impact on our business, financial condition and results of operations.

Energy and fuel price increases may adversely affect our costs of operations and our revenues.

Our facility uses significant amounts of electricity, natural gas and other forms of energy. Increases in the cost of electricity or natural gas negatively affect our results of operations. In addition, energy and fuel price increases could negatively impact our operations by reducing disposable income of potential customers and decreasing visitation to our facility.

We are subject to risks related to our common stock.

Our stock price has been volatile historically and the price of our common stock may fluctuate significantly in the future.

The trading price of our common stock has been and may continue to be subject to wide fluctuations. Our stock price may fluctuate in response to a number of events and factors, such as quarterly variations in operating results, trends in the gaming industry, political developments that may affect our business, or general economic conditions.

In addition, the stock market in general, and prices for companies in our industry in particular, have experienced extreme volatility that often has been unrelated to the operating performance of these companies. These broad market and industry fluctuations may adversely affect the price of our common stock, regardless of our operating performance.

In addition, provisions in our charter documents and Minnesota law may discourage, delay or prevent a merger or acquisition that a shareholder may consider favorable, and could limit the price that investors are will to pay for our common stock. These provisions include the following:


•	advance notice requirements for shareholder proposals;

•	authorization for our board of directors to repurchase shares of our stock if a person acquires 5% or more of our outstanding shares of common stock without prior approval of the Minnesota Racing Commission;

•	limitations on business combinations with interested shareholders; and

•	shareholder approval requirements for any acquisition of 20% or more of our outstanding shares of common stock.

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Some of these provisions may discourage a future acquisition of our company even though our shareholders would receive an attractive value for their shares, or a significant number of our shareholders believe such a proposed transaction would be in their best interest.

Item 1B. UNRESOLVED STAFF COMMENTS

Not Applicable.

Item 2. PROPERTIES

General

The Company’s facilities, which are owned and operated under the name “Canterbury Park,” are a modern complex of buildings and grounds, generally comparable to other major racetracks located throughout the country. The Racetrack’s grandstand has a patron capacity of approximately 10,000 within enclosed areas and a maximum patron capacity of over 30,000 including outside areas around the grandstand. The grandstand and most public outdoor areas contain numerous pari-mutuel windows, odds information boards, video monitors, concessions stands and other amenities. The audio/visual system includes over 600 television monitors with most areas providing multi-screen viewing of the races.

The Racetrack is located approximately 25 miles southwest of downtown Minneapolis. The area immediately surrounding the Racetrack consists of retail, commercial and industrial buildings, farmland and residential areas. The Racetrack is in reasonable proximity to a number of major entertainment destinations including: Valleyfair, an amusement park about two miles from the Racetrack which annually attracts approximately more than one million visitors during the spring and summer; the Renaissance Festival, a seven-weekend late summer annual event attracting approximately 300,000 visitors, located about five miles from the Racetrack; and Mystic Lake Casino, located about four miles from the Racetrack, which draws approximately 5.2 million patrons annually. The Mall of America, the largest enclosed shopping mall in the United States, which attracts more than 40 million visitors per year, is approximately 17 miles from the Racetrack.

Racing Surfaces

The racing surfaces consist of a one-mile oval dirt/limestone track and a 7/8 mile oval turf course. The dirt track includes a mile and one-quarter front stretch chute, a 6-½ furlong backstretch chute and a 3-½ furlong chute and is lighted for night racing.

Grandstand

The grandstand is a modern, air-conditioned enclosed structure of approximately 275,000 square feet with a variety of facilities on six levels. The lower level contains space for support functions such as jockey quarters, administrative offices, Racing Commission offices, first aid, mechanical and electrical rooms. The track level includes pari-mutuel windows, restrooms, a variety of concession stands and other services as well as the card room, which occupies 22,000 square feet on the track level. The mezzanine level contains 1,320 fixed seats in a glass-enclosed, air-conditioned area and an additional 3,000 seats located outside. In addition to the seats, the mezzanine level contains pari-mutuel windows, restrooms, concession stands and other guest facilities. A portion of the mezzanine level is currently being used as a simulcast center during live racing, and for banquets and other events during the off-season. The kitchen level is an intermediate level located between the mezzanine and clubhouse floors. It contains a full-service kitchen which supports a full dining menu for the track-side dining terraces on the clubhouse level and food preparation for the other concession areas. The clubhouse level is a multi-purpose area serving as a simulcast center during wagering sessions on televised races, as well as a full-service dining area during the live racing season. The clubhouse level includes 325 trackside tables, each equipped with a television set, with a total seating capacity of 1,200 patrons and an additional 1,000 seats are located in lounges located throughout the area. The press box and officials’ level is located in the roof trusses over the clubhouse and contains work areas for the press, racing officials, closed-circuit television, photo finish and the track announcer. In addition, the grandstand was structurally built to accommodate skyboxes under the press box/officials’ level, although none have yet been constructed. Escalators and elevators are available to move patrons among the various levels within the grandstand.

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Barn and Backside Facilities

The stable area consists of 33 barns with a total of approximately 1,650 stalls. In the stable area, there are 216 dormitory rooms for the grooms and others working at the Racetrack. The stable area also contains a combination racing office and cafeteria/recreation building for stable personnel, two blacksmith buildings and a one half-mile training track.

Parking

Approximately 7,500 paved parking spaces are available for patron and employee automobiles at the Racetrack, including parking spaces that are reserved for handicapped patrons. The Racetrack also has unpaved areas available for overflow parking for approximately 5,000 additional automobiles. Areas are also reserved for bus parking.

RV Park

The Company owns a recreational vehicle (RV) park, located two miles from the Racetrack in Shakopee, Minnesota on approximately 29 acres adjacent to the Minnesota River. The RV Park has 68 independent sites and 40 dependent sites, an indoor swimming pool, laundry facilities, game room and mini store. In 2010 and most of 2011, this property was leased to an unaffiliated party. In late 2011, the Company resumed directly operating the RV Park, with sites expected to be rented to horsemen participating in Canterbury’s racing operations, seasonal employees and the general public.

Undeveloped Land

Approximately 100 acres of the 380 acres owned by the Company are not necessary for current operations. This property could be developed or sold, in whole or in part, depending upon future opportunities. The Company regularly evaluates other business activities and development opportunities that would maximize the use of the real estate surrounding the Racetrack and which would complement the Company’s primary businesses of horse racing and Card Casino operations.

Use of Properties

All three Company’s operating segments are housed in the Grandstand and use the parking facilities. The racing surfaces, barns, and backside facilities are used exclusively by the Horse Racing segment.

Item 3. LEGAL PROCEEDINGS

There are no material legal proceedings pending against the Company. From time to time, the Company is party to ordinary and routine litigation incidental to our business. We do not expect the outcome of any such litigation pending at this time to have a material adverse effect on our consolidated financial position or results of operations.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II


Item 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

(a)	MARKET INFORMATION

The Company’s common stock trades on the NASDAQ Global Market under the symbol CPHC. The table set forth below indicates the high and low sale prices for the Common Stock in the quarterly periods ending December 31, 2011 and 2010.


	2011				2010
	High		Low		High		Low
Common Stock

First Quarter	$	15.55	$	10.50	$	9.00	$	6.90
Second Quarter		15.20		9.79		9.20		7.26
Third Quarter		14.35		8.46		8.87		7.20
Fourth Quarter		13.40		7.41		12.73		7.60


(b)	HOLDERS

At March 15, 2012, the Company had 793 holders of record of its common stock. In addition, on that date, a depository company held approximately 2,692,000 shares as nominee for an estimated 1,507 beneficial holders.

(c)	DIVIDENDS

No dividends were declared in 2010 or 2011.

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(d)	SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The following table sets forth information as of December 31, 2011 regarding our equity compensation plans:

Securities Authorized for Issuance Under Equity Compensation Plans


Plan Category (1)	(a) Number of shares of common stock to be issued upon exercise of outstanding options, warrants and rights		(b) Weighted-average exercise price of outstanding options, warrants and rights		(c) Number of shares of common stock remaining available for future issuance under equity compensation plans (excluding shares in column (a))

Equity compensation plans approved by security holders:
1994 Stock Plan		318,002	$	9.89		221,000
1995 Employee Stock Purchase Plan		—		—		105,414

Equity compensation plans not approved by security holders:
Stock Option Plan for Non-Employee Consultants and Advisors (2)		—		—		167,500

Total		318,002				493,914


	(1) The Company does not have individual compensation arrangements involving the granting of options, warrants, rights or restricted stock.

	(2) Adopted by the Company’s Board of Directors in 1997, the purpose of the Stock Option Plan for Non-Employee Consultants and Advisors is to attract and retain the services of experienced and knowledgeable non-employee consultants and advisors to assist in projects having strategic significance for the Company, to provide an alternative form of cash compensation to such persons and to provide such persons with the opportunity to participate in the Company’s long term progress and success.


(e)	REGULATION S-K, ITEM 201(e) INFORMATION

Not applicable.

(f)	RECENT SALE OF UNREGISTERED SECURITIES

Not applicable.

(h)	PURCHASES OF EQUITY SECURITIES BY THE ISSUER

On January 16, 2008, the Company announced that its Board of Directors had authorized a program to repurchase up to an additional 250,000 shares of the Company’s common stock pursuant to Exchange Act Rule 12b-18 in open market transactions, block purchases of privately negotiated transactions. During the fiscal year 2011, the Company did not repurchase any shares of common stock. As of December 31, 2011, there are 33,457 shares that the Company may buy back as a result of this repurchase program.

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Item 6. SELECTED FINANCIAL DATA

The following table sets forth selected consolidated financial data for each of the five fiscal years ended December 31, 2011. The operating and balance sheet data for the years ended and as of December 31, 2011, 2010, 2009, 2008, and 2007 are derived from our audited consolidated financial statements. The following information should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and with our consolidated financial statements and the related notes thereto included elsewhere in this report.

(In thousands except for per share amounts)


	Year Ended December 31
OPERATING DATA	2011			2010¹			2009			2008			2007

Net Revenues	$	40,586		$	39,920		$	39,589		$	46,025		$	52,880

Operating Expenses		39,540			41,197			39,363			45,310			48,723


Income (Loss) Before Income Tax (Expense) Benefit		1,053			(1,264	)		261			823			4,486

Income Tax (Expense) Benefit		(655	)		272			(200	)		(385	)		(1,865	)

Net Income (Loss)	$	398		$	(992	)	$	61		$	438		$	2,621

Basic Net Income (Loss) per Share	$	.10		$	(.25	)	$	.02		$	.11		$	.65
Diluted Net Income (Loss) per Share		.10			(.25	)		.02			.11			.62
Dividends per Share		.00			.00			.00			.25			.25

Cash Flows from Operating Activities	$	3,441		$	2,984		$	1,931		$	1,649		$	4,608

	At December 31
BALANCE SHEET DATA	2011			2010			2009			2008			2007

Land, Buildings & Equipment, Net	$	22,776		$	23,948		$	23,850		$	24,932		$	25,038

Total Assets		34,184			32,648			31,752			32,244			36,106

Total Stockholders’ Equity		27,474			26,546			27,302			26,681			28,578

Number of Common Shares Outstanding at Year End		4,102			4,054			4,022			3,938			4,084

¹ During fiscal year 2010, the Company incurred a one-time loss on disposal of assets in the amount of $909,540 relating to the remodeling of our existing card room.

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Item 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 condition and results of operations 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 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.

STRATEGIC OVERVIEW

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 until late summer and year-round wagering on races 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 Card Casino at the Racetrack. The Card Casino, which was completely remodeled in 2010, operates 24 hours a day, seven days a week. The Card Casino offers both poker and table games at 50 tables, which is the maximum number of tables permitted by Minnesota law. The Company also derives revenues from related services and activities, such as concessions, parking, advertising, publication sales and from other entertainment events held at the Racetrack

Our three largest sources of revenues, Card Casino operations, pari-mutuel operations and concessions sales, generate cash revenues. Consequently, the Company is highly liquid and has not utilized its line of credit in over eight years. The following summarizes our financial performance for the last five years.


Financial Performance Summary	2011			2010			2009			2008			2007

Net Revenues	$	40,586		$	39,920		$	39,589		$	46,025		$	52,880

Operating Expenses		39,540			41,197			39,363			45,310			48,723

Income (Loss) Before Income Taxes		1,053			(1,264	)		261			823			4,486

Income Tax (Expense) Benefit		(655	)		272			(200	)		(385	)		(1,865	)

Net Income (Loss)	$	398		$	(992	)	$	61		$	438		$	2,621

The primary strengths of Canterbury Park are our dedicated and capable staff, our first-class facilities located on 380-acres of land (including approximately 100 acres of underutilized property) and the legal authority to offer our unique gaming products in our market area.

Our management team has extensive knowledge of the horse racing, Card Casino, and concession operations, and our staff has demonstrated a commitment to our customers. We continue to implement improvements to our comprehensive customer satisfaction measurement and enhancement program. Our management team has a good relationship with our workforce and is able to retain qualified personnel as demonstrated by our low turnover rate.

Our facilities are modern by racetrack industry standards, and we have invested heavily in the past few years to update and upgrade them to meet the needs of our customers and horsemen. Our 380-acre site, in a prime location on the edge of the Minneapolis – St. Paul metropolitan area in one of the fastest-growing counties in Minnesota, provides us with great long-term growth and development opportunities, and our Board of Directors regularly considers additional uses for underutilized portions of our property. Our long-term strategic direction is to more fully develop our property as a unique gaming and entertainment destination.

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We have a strong commitment to live racing and have been particularly successful in attracting new customers and providing a quality live racing experience for our horse racing fans as well as the horsemen who enter their horses in live races at Canterbury Park. However, we still face a number of longer-term challenges as we work to improve the results of our pari-mutuel operations, including declines in handle and intense competition for racehorses with tracks that are able to subsidize their purses with non-horse racing related gaming revenues.

We continue to believe that our best option for long-term growth is to gain authority under Minnesota law to offer additional gaming options, which would enhance horse racing with increased purses, provide growth and development opportunities and produce significant new tax revenues for state and local governments. In addition, we believe that additional gaming options would provide significant job opportunities for the area. The effort to obtain legislative authority for these initiatives has required, and will continue to require, substantial expenditures. Due to the inherent uncertainty of the outcome of political process, there can be no assurance that any bills favorable to the Company’s interests will be enacted into law, and it is possible, as a result of the legislative process, that legislation directly or indirectly adverse to the Company may be enacted into law.

OPERATIONS REVIEW

YEAR ENDED DECEMBER 31, 2011 COMPARED TO YEAR ENDED DECEMBER 31, 2010

The following table sets forth a reconciliation of net income, a GAAP financial measure, to EBITDA and Adjusted EBITDA (each defined below), which are non-GAAP measures, for the years ended December 31, 2011 and 2010. EBITDA represents earnings before interest income, income tax expense, and depreciation and amortization. EBITDA is not a measure of performance or liquidity calculated in accordance with generally accepted accounting principles (“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. EBITDA has been presented as a supplemental disclosure because it is a widely used measure of performance and basis for valuation of companies in our industry. Moreover, other companies that provide EBITDA information may calculate EBITDA differently than we do. Adjusted EBITDA represents EBITDA plus material, one-time non-cash expenses. During the year ended December 31, 2010, Adjusted EBITDA included the loss on disposal of assets during the remodel of our card room.


	Dec. 31, 2011			Dec. 31, 2010
Net income (loss)	$	397,667		$	(992,206	)
Interest income, net of interest expense		(5,848	)		(12,913	)
Income tax expense (benefit)		655,082			(272,000	)
Depreciation		1,894,277			2,043,758
EBITDA	$	2,941,178		$	766,639
Loss on disposal of assets (net)		—			906,940
Adjusted EBITDA	$	2,941,178		$	1,673,579

Adjusted EBITDA increased as a percentage of net revenues to 7.2% for the year ended December 31, 2011 compared to 4.2% for the year ended December 31, 2010.

Total net operating revenues for the year ended December 31, 2011 were $40.6 million, an increase of $666,242, or 1.7%, compared to total operating revenues of $39.9 million for the year ended December 31, 2010. Total Card Casino revenues increased 5.5%, pari-mutuel revenues decreased 7.0% and concession revenues decreased 3.4% in fiscal 2011 compared to fiscal 2010. More detailed discussions of pari-mutuel and Card Casino revenues follow.

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SUMMARY OF PARI-MUTUEL OPERATING DATA


	Year Ended Dec. 31, 2011		Year Ended Dec. 31, 2010
Racing Days
Simulcast only days		288		301
Live and simulcast days		56		62
Total Racing Days		344		363
On-Track Handle
Simulcast handle on non-live race days	$	23,954,000	$	25,250,000
Simulcast handle on live race days		8,077,000		9,204,000
Total simulcast handle		32,031,000		34,454,000

Live racing handle		9,605,000		10,581,000
Total On-Track Handle		41,636,000		45,035,000

Out-of-state Live Handle		12,834,000		13,365,000
Total Handle	$	54,470,000	$	58,400,000
On-Track Average Daily Handle
Simulcast only days	$	83,000	$	84,000
Live and simulcast days		316,000		319,000

Pari-mutuel revenues include commission and breakage revenues on live on-track and simulcast racing, fees received from out-of-state racetracks for wagering on our live races and proceeds from uncashed winning tickets. Pari-mutuel revenues decreased to $9.5 million in 2011 from $10.2 million in 2010, primarily reflecting a decrease in simulcast and on-track live racing handle in 2011 compared to 2010.

Total handle wagered on simulcast races in 2011 decreased $2,423,000, or 7.0%, compared to 2010. The decrease is primarily attributable to the government imposed shutdown of operations that occurred from July 1 to July 20, 2011. We offered 19 fewer days of simulcast wagering in 2011 as compared to 2010, primarily as a result of the shutdown of operations for 20 days in which no simulcast wagering occurred.

On-track live handle decreased by $976,000, or 9.2%, for the 2011 live meet compared to the live meet in 2010. In addition, wagering at out-of-state tracks on races conducted at the Racetrack during the 2011 live meet decreased $531,000, or 4.0%, compared to the 2010 meet. The decrease is primarily attributable to the government imposed shutdown of operations that occurred from July 1 to July 20, 2011. During the shutdown, no live meet wagering occurred and, ultimately, we were forced to run six fewer race days for the 2011 live meet compared to 2010. The Company also lost the opportunity to earn revenues simulcasting our live meet signal to other tracks during the shutdown as well.

Revenues recognized on proceeds from winning pari-mutuel tickets which were not presented for payment within one year of the end of the live meet in which the wagers were made decreased approximately $24,000 in 2011 compared to 2010, primarily due to reduced amounts wagered on simulcast horse races.

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SUMMARY OF CARD CASINO REVENUES


	Year Ended Dec. 31, 2011		Year Ended Dec. 31, 2010

Poker Games	$	10,265,000	$	11,126,000
Table Games		10,709,000		9,080,000
Total Collection Revenue		20,974,000		20,206,000

Other Revenue		2,411,000		1,954,000

Total Card Casino Revenue	$	23,385,000	$	22,160,000

Number of Days Offered		344		364
Average Revenue per Day	$	68,000	$	60,900

The primary source of Card Casino revenue is a percentage of the wagers received from the players as compensation for providing the Card 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 for the administrative costs of maintaining the jackpot funds. Card Casino revenues represent 57.6% and 55.5% of net revenues for 2011 and 2010, respectively.

The Card Casino is divided into two areas, the poker area and the table games area. The average daily collection amount per game is dependent upon the number of tables utilized to offer the game. Patron demand determines the number of tables to be used for a specific game.

Total Card Casino revenue increased $1,224,000, or 5.5%, compared to 2010. The increase in Card Casino revenue is due primarily to the increase in table games revenue of $1,629,000, or 17.9%, in 2011 over 2010. The Company believes the rebounding economy and related increase in discretionary spending more than offset the negative impact from the government imposed shutdown of operations from July 1 to July 20, 2011.

We expect that competition from Running Aces, illegal Internet wagering, and wagering at tribal casinos will continue to challenge our efforts to grow our Card Casino operating revenues in future periods. As a result, we continue to search for opportunities to make Canterbury Park the most attractive alternative when our customers want to wager on card games.

SUMMARY OF CONCESSION REVENUES

Concession revenues remained relatively stable at $5,042,387, a slight decrease of $176,000, or 3.4%, compared to 2010, due primarily to a decrease in the number of live race days as a result of the government imposed shutdown of operations that occurred from July 1 to July 20, 2011.

SUMMARY OF OTHER REVENUES

Other revenue increased $346,000, or 13.8%, to $2,848,000 in fiscal year 2011 compared to 2010. This increase was due primarily to reinstating admission charges in 2011 that were not collected during the 2010 live meet in honor of the 25^th anniversary of the founding of Canterbury Park (then Canterbury Downs).

OPERATING EXPENSES

Total operating expenses decreased approximately $1,658,000, or 4.0%, to $39,540,000 in 2011, from $41,197,000 in 2010. Total operating expenses as a percentage of net revenues decreased slightly to 97.4% from 103.2% in 2010. The primary factors contributing to these decreases are discussed in the following paragraphs.

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Total purse expense decreased $204,000, or 3.5%, in 2011 compared to 2010 as presented in the table below. As discussed in greater detail in Item 1(c) (iv) above, Minnesota law requires us to allocate a portion of amounts received from betting in the card room and wagering on simulcast and live horse races for future payment as purses for live horse races and other authorized uses. While most of these amounts are paid into the purse funds for thoroughbred, quarter horse and standardbred races, Minnesota law requires that a portion of such amounts allocated for purses be paid into the MBF. A description of how the purse expense was derived from these three sources and allocated for purse funds and to the MBF is presented below. The increase in Card Casino revenues in 2011 compared to 2010 resulted in the increases in Card Casino purse and MBF expense shown in the table below. Total purse expense associated with simulcast and live racing decreased in 2011 compared to 2010 primarily due to lower wagering levels.


	Purse Expense				Minnesota Breeders’ Fund Expense

	2011		2010		2011		2010

Card Casino	$	2,730,000	$	2,576,000	$	303,000	$	286,000

Simulcast Racing		1,873,000		2,016,000		363,000		387,000

Live Racing		976,000		1,191,000		96,000		106,000

Total	$	5,579,000	$	5,783,000	$	762,000	$	779,000

Under Minnesota law, the Company is required to pay 10% of the first $6 million of gross Card Casino revenues towards purses for live horse racing at the Racetrack. After meeting the $6 million threshold, the Company must pay 14% of gross Card Casino revenues as purse monies. Of funds allocated for purses, the amounts paid are allocated 90% to the purse funds and 10% to the MBF.

The amounts paid to the purse fund for simulcast racing differ depending upon whether the simulcast wagering occurs during the “Racing Season,” a statutorily defined 25-week period beginning in early May each year, or outside of the Racing Season. We paid an average of 5.85% of handle to the purse fund in both 2011 and 2010. We pay 5.50% of pari-mutuel simulcast commission revenues to the MBF; consequently, lower revenues result in lower MBF expense.

We also experienced a reduction in host fees of $39,000, or 2.7%, in 2011 compared to 2010 primarily as a result of lower wagering due to the government imposed shutdown of operations that occurred from July 1 to July 20, 2011. This decrease in wagering more than offset a rate increase imposed from numerous tracks around the country in 2011.

Salary and benefit expenses decreased by $223,000, or 1.3%, for the twelve months ended December 31, 2011 compared to the twelve months ended December 31, 2010. The decrease is primarily attributable to the government imposed shutdown that occurred from July 1 to July 20, 2011. During the shutdown, the Company was forced to furlough substantially all of its approximately 1,100 full time and part time employees.

A loss on disposal of assets in the amount of $909,540 was recorded during the year ended 2010 and related primarily to the remodeling of our existing card room. There was no loss on disposal of assets during the year ended December 31, 2011.

Advertising expense decreased $224,000, or 17.0% in 2011 compared to 2010. The decrease is primarily due to lower agency fees resulting from increased use of internal resources and decreased expenditures during the government imposed shutdown of operations from July 1 to July 20, 2011.

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Other operating expenses increased $173,000, or 2.5%, in 2011 compared to 2010. The increase is primarily due to increased expenditures in support of legislation that would authorize electronic gaming devices at the Racetrack.

Net other income decreased $7,000, or 54.7%, in 2011 compared to 2010. This decrease is primarily attributable to a decrease in interest income on our primary bank account balance during 2011.

Income taxes as a percentage of pre-tax loss and income decreased to 62.2% for the year ended December 31, 2011 from 78.5% for the year ended December 31, 2010. The decrease is primarily attributable to the increase in net income before taxes in 2011 compared to 2010. The higher than statutory income tax rate is due to the Company’s expenditures on non-deductible lobbying expenses in pursuit of passing Racino legislation.

Net income increased $1,390,000, which resulted in net income for 2011 in the amount of $398,000 compared to a net loss of $992,000 for the year ended December 31, 2010. As mentioned above, the primary reasons for this change was the loss on disposal of assets that during the first quarter of 2010 and the increase in Card Casino revenue in 2011.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States of America 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time the consolidated financial statements are prepared. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with generally accepted accounting principles. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

Our significant accounting policies are included in Note 1 to our consolidated financial statements. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements:

Property and Equipment - We have significant capital invested in our property and equipment, which represents approximately 66.6% of our total assets at December 31, 2011. We utilize our judgment in various ways including: determining whether an expenditure is considered a maintenance expense or a capital asset; determining the estimated useful lives of assets; and determining if or when an asset has been impaired. Management periodically reviews the carrying value of property and equipment for potential impairment by comparing the carrying value of these assets with their related expected future net cash flows. Should the sum of the related expected future net cash flows be less than the carrying value, we will determine whether an impairment loss should be recognized. An impairment loss would be measured by the amount by which the carrying value of the asset exceeds the fair value of the asset. To date, we have determined that no impairment of these assets exists.

Stock Based Employee Compensation – ASC 718, Compensation – Stock Compensation (“ASC 718”), requires recognition of employee services provided in exchange for a share-based payment based on the grant date fair market value. We utilize our judgment in determining the assumptions used to determine the fair value of options granted using a Black-Scholes model.

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CONTINGENCIES

In connection with the purchase of the Racetrack, the Company entered into an Earn Out Promissory Note dated March 29, 1994. In accordance with the Earn Out Note, if (i) off-track betting becomes legally permissible in the State of Minnesota and (ii) we begin to conduct off-track betting with respect to or in connection with its operations, we will be required to pay to the IMR Fund, L.P. the greater of $700,000 per operating year as defined, or 20% of the net pretax profit as defined, for each of five operating years. At this time, we believe that the likelihood that these two conditions will be met and that we will be required to pay these amounts is remote. At the date (if any) that these two conditions are met, the five minimum payments will be discounted back to their present value and the sum of those discounted payments will be capitalized as part of the purchase price in accordance with generally accepted accounting principles. The purchase price will be further increased if payments become due under the “20% of Net Pretax Profit” calculation. The first payment is to be made 90 days after the end of the third operating year in which off-track betting is conducted by us. Remaining payments would be made within 90 days of the end of each of the next four operating years.

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, 2011 and as of the date of this report will not have a material impact on the consolidated financial statements.

LIQUIDITY AND CAPITAL RESOURCES

CASH FLOWS FROM OPERATING ACTIVITIES

Net cash provided by operations during the year ended December 31, 2011 was $3,441,441 and was the result of several factors. Net income for 2011 was $397,667. In addition, depreciation during 2011 was $1,894,277. Also, deferred income taxes increased $362,300 primarily due to the carryback of the 2010 federal net operating loss and the partial utilization of the state net operating loss in 2011. Finally, income taxes receivable decreased $540,198 due to the utilization of prepaid income taxes carried on the balance sheet at December 31, 2010 due to the Company having federal taxable income in 2011.

Net cash provided by operations during the year ended December 31, 2010 was $2,984,065 and was the result of several factors. During the first quarter of 2010, the Company incurred a one-time loss on disposal of assets in the amount of $909,540 relating to the remodel of our card room. In addition, depreciation during 2010 was $2,043,758. Finally, during the third quarter of 2010, the Company had a cost segregation study performed on our assets in use. Primarily as a result of the study, our deferred tax liability increased $839,450. These items were somewhat offset by an increase in restricted cash in the amount of $391,662 due primarily to the increase in the amount payable to the Minnesota Horsemen’s Benevolence & Protective Association (MHBPA).

CASH FLOWS FROM INVESTING ACTIVITIES

Cash used in investing activities for the year ended December 31, 2011 of $920,632 resulted primarily from purchasing a variety of fixtures and equipment for operational purposes.

Cash used in investing activities for the year ended December 31, 2010 of $2,417,119 resulted primarily from costs to remodel our Card Casino totaling $2,296,000. The Company used cash on hand to fund the project and avoided drawing on its line of credit.

CASH FLOWS FROM FINANCING ACTIVITIES

Cash provided by financing activities was $296,508 for the year ended December 31, 2011 consisted of proceeds and excess tax benefits received upon the exercise of stock options and proceeds received upon the exercise of shares of common stock purchased by employees pursuant to our Employee Stock Purchase Plan.

Cash provided by financing activities was $143,319 for the year ended December 31, 2010 and represented proceeds received upon the exercise of stock options and shares of common stock purchased by employees pursuant to our Employee Stock Purchase Plan.

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CASH AND CAPITAL RESOURCES

At December 31, 2011, we had unrestricted cash and cash equivalents of $8,268,000 compared to $5,451,000 at December 31, 2010. This $2.8 million increase consists of $3.4 million net cash provided by operating activities and $0.3 million net cash provided by financing activities, offset by $0.9 million net cash used in investing activities. In addition, as of December 31, 2011, we had $3.0 million of capacity under a commercial revolving credit line as part of a general credit and security agreement with Bremer Bank that will expire on May 6, 2012. The Company plans to renew this credit line before it expires. We had no borrowings under the credit line in 2011 or 2010.

Our three largest sources of revenue: pari-mutuel wagering, Card Casino operations and concessions, are all based on cash transactions. Consequently, we have significant inflows of cash on a daily basis. We designate cash balances which 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’s table games are required by law to be “unbanked”. “Unbanked” refers to a wagering system or game where wagers “lost” or “won” by the host are accumulated into a player pool liability for purposes of enhancing the total amount paid back to players in any other card game. The Company may only serve as custodian of the player pool. It may not have an active interest in any card game and does not recognize net “wins” or “losses” as revenue. 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 approximately $128,000 at December 31, 2011 compared to $206,000 at December 31, 2010.

The Card Casino offers progressive jackpots for poker games. Amounts collected for these jackpot funds are accrued as liabilities until paid to winners. At December 31, 2011, accrued jackpot funds totaled approximately $557,000 compared to $516,000 at December 31, 2010. 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 Card Casino are played using chips. The value of chips issued and outstanding, referred to as the “outstanding chip liability,” was approximately $145,000 at December 31, 2011, compared to $187,000 at December 31, 2010. 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 $5,235,000 and $5,207,000 in purse funds for the years ended December 31, 2011 and 2010, respectively. Minnesota Statutes specify that amounts transferred into trust are the property of the trust and not the Company. Unpaid purse fund obligations due the MHBPA were $158,616 and $193,592 at December 31, 2011 and 2010, respectively.

The Company believes that unrestricted funds available in its cash accounts, amounts available under its revolving line of credit, along with funds generated from operations, will be sufficient to satisfy its liquidity and capital resource requirements for regular operations for the foreseeable future.

OFF-BALANCE SHEET ARRANGEMENTS

The Company currently has no off-balance sheet arrangements and has no intent to enter into any such agreements in the near future.

COMMITMENTS AND CONTRACTUAL OBLIGATIONS

In March 2008, the Company entered into a six-year service agreement with its totalizator provider. Pursuant to the agreement, the vendor provides totalizator equipment and computer programs which record and process all wagers and calculate odds and payoffs. In April 2009, the Company entered into a four-year service agreement to outsource its information technology (IT) function. Amounts charged to operations under these agreements for the years ended December 31, 2011 and 2010 were approximately $615,000 and $637,000, respectively.

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The Company has entered into operating leases for rental of office equipment, equipment to print certain publications, and track equipment to maintain the Racetrack. Amounts charged to operations under these agreements for the years ended December 31, 2011 and 2010 were approximately $128,000 and $140,000, respectively. All such leases expire on or before December 31, 2014.

Since December 31, 2011, there have been no material changes outside the ordinary course of business to our contractual obligations as set forth above. As of December 31, 2011, we had no borrowings pursuant to our line of credit and were not party to capital lease obligations, significant purchase obligations or other long-term obligations.

FORWARD-LOOKING STATEMENTS

From time to time, in reports filed with the Securities and Exchange Commission, in press releases, and in other communications to shareholders or the investing public, we may make forward-looking statements concerning possible or anticipated future financial performance, prospective business activities or plans which are typically preceded by words such as “believes,” “expects,” “anticipates,” “intends” or similar expressions. For such forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in federal securities laws. Shareholders and the investing public should understand that such forward-looking statements are subject to risks and uncertainties which could affect our actual results and cause actual results to differ materially from those indicated in the forward-looking statements. Such risks and uncertainties include, but are not limited to: material fluctuations in attendance at the Racetrack, decline in interest in wagering on horse races at the Racetrack, at other tracks, or on unbanked card games offered at the Card Casino, competition from other venues offering unbanked card games or other forms of wagering, competition from other sports and entertainment options, costs associated with our efforts to obtain legislative authority for additional gaming options, increases in compensation and employee benefit costs, increases in the percentage of revenues allocated for purse fund payments, higher than expected expense related to new marketing initiatives, the impact of wagering products and technologies introduced by competitors, legislative and regulatory decisions and changes, the general health of the gaming sector, and other factors that are beyond our ability to control or predict.


Item 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Canterbury Park is not required to provide the information requested by this Item as it qualifies as a smaller reporting company.

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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

(a) Financial Statements

The following financial statements of the Company are set forth on pages 29 through 46 of the Form 10-K:


		Page

Report of Independent Registered Public Accounting Firm		29

Consolidated Balance Sheets as of December 31, 2011 and 2010		30

Consolidated Statements of Operations for the years ended December 31, 2011 and 2010		31

Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2011 and 2010		32

Consolidated Statements of Cash Flows for the years ended December 31, 2011 and 2010		33

Notes to Consolidated Financial Statements for the years ended December 31, 2011 and 2010		34

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders
Canterbury Park Holding Corporation

We have audited the accompanying consolidated balance sheets of Canterbury Park Holding Corporation (a Minnesota corporation) and subsidiaries (the “Company”) as of December 31, 2011 and 2010, and the related consolidated statements of operations, stockholders’ equity and cash flows for the years then ended. 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Canterbury Park Holding Corporation and subsidiaries as of December 31, 2011 and 2010, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.


/s/ Grant Thornton LLP
Minneapolis, Minnesota
March 30, 2012

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CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2011 AND 2010


	2011		2010

ASSETS

CURRENT ASSETS
Cash	$	8,268,779	$	5,451,462
Restricted cash		1,146,163		1,341,656
Short-term investments (Note 3)		201,669		—
Accounts receivable, net of allowance of $27,773 and $34,805, respectively		540,167		394,314
Inventory		183,122		176,211
Prepaid expenses		682,404		564,984
Income taxes receivable		—		381,898
Deferred income taxes (Note 4)		315,200		320,400
Due from Minnesota horsemen associations		44,372		49,241
Total current assets		11,381,876		8,680,166

LONG-TERM ASSETS
Deposits		26,400		20,000
Land, buildings and equipment, net (Note 2)		22,776,115		23,948,330

	$	34,184,391	$	32,648,496

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES
Accounts payable	$	2,432,818	$	2,252,527
Card Casino accruals		1,314,173		1,433,798
Accrued wages and payroll taxes		775,256		686,964
Due to MHBPA (Note 1)		158,616		193,592
Accrued property taxes		606,252		562,349
Payable to horsepersons		17,745		21,551
Income taxes payable		97,000		—
Total current liabilities		5,401,860		5,150,781

LONG-TERM LIABILITIES
Deferred income taxes (Note 4)		1,309,000		951,900

COMMITMENTS AND CONTINGENCIES (Notes 9 and 10)		—		—

STOCKHOLDERS’ EQUITY (Notes 5 and 6)
Common stock, $.01 par value, 10,000,000 shares authorized, 4,101,701 and 4,053,660, respectively, shares issued and outstanding		41,017		40,537
Additional paid-in capital		16,413,468		15,883,899
Retained earnings		11,019,046		10,621,379
Total stockholders’ equity		27,473,531		26,545,815

	$	34,184,391	$	32,648,496

See notes to consolidated financial statements.

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CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2011 AND 2010


	2011			2010

OPERATING REVENUES:
Pari-mutuel	$	9,512,476		$	10,222,981
Card Casino		23,384,552			22,160,076
Concessions		5,042,387			5,218,523
Other		2,847,966			2,501,697
Total Revenues		40,787,381			40,103,277
Less: Promotional allowances		(200,955	)		(183,093	)
Net Revenues		40,586,426			39,920,184
OPERATING EXPENSES:
Purses		5,578,949			5,782,877
Minnesota Breeders’ Fund		761,929			778,715
Other pari-mutuel expenses		1,412,084			1,451,192
Salaries and benefits		17,476,580			17,699,849
Cost of concession and other sales		2,950,202			3,044,434
Depreciation		1,894,277			2,043,758
Loss on disposal of assets		—			906,940
Utilities		1,139,332			1,112,776
Advertising and marketing		1,090,772			1,314,649
Other		7,235,400			7,062,113
Total Operating Expenses		39,539,525			41,197,303

INCOME (LOSS) FROM OPERATIONS		1,046,901			(1,277,119	)

OTHER (EXPENSE) INCOME:
Interest expense		(802	)		(225	)
Interest income		6,650			13,138
Net Other Income		5,848			12,913

INCOME (LOSS) BEFORE INCOME TAXES		1,052,749			(1,264,206	)

Income tax (expense) benefit (Note 4)		(655,082	)		272,000

NET INCOME (LOSS)	$	397,667		$	(992,206	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING		4,084,762			4,038,103

WEIGHTED AVERAGE NUMBER OF DILUTIVE SHARES OUTSTANDING		4,133,339			4,038,103

BASIC NET INCOME (LOSS) PER COMMON SHARE (Note 7)	$	.10		$	(.25	)

DILUTED NET INCOME (LOSS) PER COMMON SHARE (Note 7)	$	.10		$	(.25	)

See notes to consolidated financial statements.

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CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
YEARS ENDED DECEMBER 31, 2011 AND 2010


	Number of Shares		Common Stock		Additional Paid-in Capital			Retained Earnings			Total

Balance at December 31, 2009		4,021,702	$	40,217	$	15,648,200		$	11,613,585		$	27,302,002

Exercise of stock options		28,101		281		114,651			—			114,932
Stock-based compensation		—		—		187,959			—			187,959
Net tax shortfall from exercise of stock options		—		—		(95,502	)		—			(95,502	)
Shares issued under Employee Stock Purchase Plan		3,857		39		28,591			—			28,630
Net loss		—		—		—			(992,206	)		(992,206	)

Balance at December 31, 2010		4,053,660	$	40,537	$	15,883,899		$	10,621,379		$	26,545,815

Exercise of stock options		45,640		456		213,214			—			213,670
Stock-based compensation		—		—		233,541			—			233,541
Tax benefit from exercise of stock options		—		—		61,300			—			61,300
Shares issued under Employee Stock Purchase Plan		2,401		24		21,514			—			21,538
Net income		—		—		—			397,667			397,667
Balance at December 31, 2011		4,101,701	$	41,017	$	16,413,468		$	11,019,046		$	27,473,531

See notes to consolidated financial statements.

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CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2011 AND 2010


	2011			2010
Operating Activities:
Net income (loss)	$	397,667		$	(992,206	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation		1,894,277			2,043,758
Stock–based compensation expense		233,541			187,959
(Gain) loss on disposal of assets		(1,400	)		906,940
Tax (benefit) shortfall from exercise of stock options		(61,300	)		95,502
Increase in deferred income taxes		362,300			956,850
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable		(145,853	)		10,878
Decrease (increase) in restricted cash		195,493			(391,662	)
Increase in other current assets		(130,731	)		(97,599	)
Decrease (increase) in income taxes receivable		540,198			(403,923	)
Increase in accounts payable and accrued wages & payroll taxes		266,884			226,551
(Decrease) increase in Card Casino accruals		(119,625	)		258,415
Increase in accrued property taxes		43,903			51,213
Decrease in payable to horsepersons		(3,806	)		(9,893	)
(Decrease) increase in due to MHBPA		(30,107	)		141,282
Net cash provided by operating activities		3,441,441			2,984,065

Investing Activities:
Additions to land, buildings and equipment		(720,363	)		(3,035,613	)
Proceeds from sale of equipment		1,400			2,600
Proceeds from redemption of investments		29,430			644,387
Purchase of investments		(231,099	)		(28,493	)
Net cash used in investing activities		(920,632	)		(2,417,119	)

Financing Activities:
Proceeds from issuance of common stock		235,208			143,319
Tax benefit from exercise of stock options		61,300			—
Net cash provided by financing activities		296,508			143,319

Net increase in cash		2,817,317			710,265

Cash at beginning of year		5,451,462			4,741,197

Cash at end of year	$	8,268,779		$	5,451,462

Non-cash investing and financing activities:
Additions to buildings and equipment funded through accounts payable	$	29,286		$	27,587
Proceeds from issuance of common stock funded through shares swapped	$	210,470		$	251,530
Supplemental disclosure of cash flow information:
Income taxes (refunded) paid, net of amount paid (refunded)	$	(247,436	)	$	914,971

See notes to consolidated financial statements.

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CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2011 AND 2010


1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

	Business – Canterbury Park Holding Corporation was incorporated on March 24, 1994. On March 29, 1994, the Company acquired all the outstanding securities of Jacobs Realty, Inc. (JRI) from Irwin Jacobs and IMR Fund, L.P. (an investment fund for various pension plans and trusts). JRI was merged into the Company, and the acquisition was accounted for under the purchase method of accounting whereby the acquired assets and liabilities have been recorded at the Company’s cost. The primary asset of JRI was Canterbury Downs Racetrack and the 325 acres of surrounding land.

	On May 20, 1994, the Company adopted a plan of Reorganization pursuant to which the sole shareholder of Canterbury Park Concessions, Inc. (CPC), and majority shareholder of the Company, agreed to exchange his shares of CPC stock for 198,888 shares of the Company’s common stock concurrent with the closing of a public offering. Pursuant to the Plan of Reorganization, CPC became a wholly owned subsidiary of the Company in August 1994 when the Company completed the initial public offering of its common stock. This reorganization was treated in a manner similar to a pooling of interests. Net proceeds received by the Company from the public offering were approximately $4,847,000, which along with additional borrowings under the Company’s line of credit with the majority shareholder, were used to pay off the remaining notes payable from the acquisition of JRI.

	The consolidated financial statements include the accounts of the Company, CPC and Shakopee Valley RV Park Acquisition Company, LLC after elimination of intercompany accounts and transactions.

	Reclassifications – Certain cash flow classifications included in the consolidated financial statements have been reclassified from the prior years’ presentations to conform to the current year presentation.

	Revenue Recognition – Our revenues are derived primarily from the operations of a Card Casino, pari-mutuel wagering on simulcast and live horse races, concession sales, and related activities. Collection revenue from Card Casino operations, a set percentage of wagers, is recognized at the time that the wagering process is complete. Pari-mutuel revenues are recognized upon occurrence of the live race that is presented for wagering and after that live race is made official by the respective state’s racing regulatory body. Revenues related to concession and publication sales and parking and admission fees are recognized as revenue when the service has been performed or the product has been delivered. All sales taxes are presented on a net basis and are excluded from revenue.

	Estimates – The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

	Unrestricted Cash – Cash includes all investments with original maturities of three months or less or which are readily convertible into known amounts of cash and are not legally restricted. Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash.

	Restricted Cash – Restricted cash represents refundable deposits and amounts due to horsemen for purses, stakes and awards, and amounts accumulated in card game progressive jackpot pools, the player pool and poker promotional fund to be used to repay card players in the form of promotions, giveaways, prizes, or by other means.

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	Uncashed Winning Tickets – The Company records a liability for winning tickets upon the completion of a race. As winning tickets are redeemed, this liability is reduced for the respective cash payment. We recognize revenue associated with the uncashed winning tickets when the likelihood of the redemption of the winning ticket is remote.

	Promotional Allowances – The Company offers certain promotional allowances at no charge to patrons who participate in our player rewards program. The retail value of these promotional items is shown as a deduction from total revenues on the Company’s consolidated statements of operations.

	Due to Minnesota Horsemen’s Benevolent and Protective Association, Inc. (“MHBPA”) – The Minnesota Pari-Mutuel Horse Racing Act specifies that the Company is required to segregate a portion of funds (recorded as purse expense in the statements of operations), received from card room operations and wagering on simulcast and live horse races, for future payment as purses for live horse races or other uses of the horsepersons’ associations. Pursuant to an agreement with the MHBPA, the Company has transferred into a trust account or paid directly to the MHBPA, approximately $5,235,000 and $5,207,000 for the years ended December 31, 2011 and 2010, respectively, related to thoroughbred races. Minnesota Statutes specify that amounts transferred into the trust account are the property of the trust and not of the Company.

	Impairment of Long-Lived Assets – Management of the Company periodically reviews the carrying value of property and equipment for potential impairment by comparing the carrying value of these assets with their related expected future net cash flows. Should the sum of the related expected future net cash flows be less than the carrying value, management will determine whether an impairment loss should be recognized. An impairment loss would be measured by the amount by which the carrying value of the asset exceeds the fair value of the asset. To date, management has determined that no impairment of these assets exists.

	Advertising and Marketing – Advertising and marketing costs are charged to expense as incurred. The related amounts are presented separately in the Company’s consolidated statements of operations.

	Land, Buildings, and Equipment – Land, buildings, equipment, and building improvements are capitalized at a level of $1,000 or greater and are recorded at cost. Repair and maintenance costs are charged to operations when incurred. Furniture, fixtures, and equipment are depreciated using the straight-line method over estimated useful lives ranging from 5 – 7 years, while buildings are depreciated over 15 – 39 years. Building improvements are amortized using the straight-line method over the useful life of the assets.

	Card Casino Accruals – Minnesota law allows the Company to collect amounts from patrons to fund progressive jackpot pools in the Card Casino. These amounts, along with amounts earned by the player pool, promotional funds, and the outstanding chip liability, are accrued as short-term liabilities at each balance sheet date.

	Income Taxes – Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to reverse.

	Interest and penalties associated with uncertain income tax positions are presented in income tax expense. During the twelve months ended December 31, 2011, we recognized no expenses for interest and penalties. During the twelve months ended December 31, 2010, we recognized expenses of $19,003 for interest and penalties. We do not have any amounts accrued at December 31, 2011 for the payment of interest and penalties.

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	As of December 31, 2011 the Company had state net operating losses of approximately $390,000. These losses, if unutilized, will expire in 2024. The Company also has approximately $13,000 of state alternative minimum tax credits as of December 31, 2011, which carry forward indefinitely.

	Net Income Per Share – Basic net income per common share is based on the weighted average number of common shares outstanding during each year. Diluted net income per common share takes into effect the dilutive effect of potential common shares outstanding. The Company’s only potential common shares outstanding are stock options.

	Fair Values of Financial Instruments – Due to the current classification of all financial instruments of the Company and given the short-term nature of the related account balances, carrying amounts reported in the consolidated balance sheets approximate fair value.

	Stock Based Employee Compensation – We recognize employee services provided in exchange for a share-based payment based on the grant date fair market value over the requisite period.

	The Company uses the Black-Scholes method to measure the compensation cost for stock options. The Black-Scholes method requires the use of significant assumptions to estimate the fair value of the stock option awards. The expected term of both the board of director and key employee options was calculated using the simplified method. The expected volatility was calculated primarily with reliance on historical volatility rates. During 2010, the Company adjusted its dividend yield rate to reflect the current expectation that no dividends will be declared. This assumption was also used in 2011. The risk-free rate utilized in the Black-Scholes calculations was the U.S. Constant Maturity Treasury Security for the period equivalent to the expected term of the option.

	The fair value of options granted under the 1994 Stock Plan during 2011 and 2010 was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions and results:


	2011			2010
Dividend yield		0.00	%		0.00	%
Expected volatility		50	%		44	%
Risk-free interest rate		2.02	%		2.54	%
Expected term of options in years		5.5			5.9
Fair value of options on grant date	$	93,750		$	345,855


	For more information on our stock-based compensation plans, see Note 6.

2.	LAND, BUILDINGS AND EQUIPMENT

	Land, buildings and equipment, at cost, consists of the following at December 31:


	2011			2010

Land	$	6,673,076		$	6,673,076
Buildings and building improvements		20,196,599			19,937,187
Furniture and equipment		16,270,494			16,344,381
		43,140,169			42,954,644
Accumulated depreciation		(20,364,054	)		(19,006,314	)
	$	22,776,115		$	23,948,330

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3.	FAIR VALUE

	Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

	There are three levels of inputs that may be used to measure fair value:

	Level 1 – Quoted prices in active markets for identical assets or liabilities.

	Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

	Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

	Assets and liabilities measured at fair value on a recurring basis for December 31, 2011 are summarized below. The Company had no assets and liabilities measured at fair value on a recurring basis for December 31, 2010.


	Fair Value Measurements as of December 31, 2011
Description	Total		Level 1		Level 2		Level 3

Short-term investments (Certificates of Deposit)	$	201,669	$	—	$	201,669	$	—
Total	$	201,669	$	—	$	201,669	$	—


4.	INCOME TAXES

	A reconciliation between income taxes computed at the statutory federal income tax rate and the effective tax rate is as follows:


	2011			2010

Federal tax expense (benefit) at statutory rates	$	357,935		$	(429,400	)
Nondeductible lobbying expense		179,263			144,900
State expense (benefit), net of federal impact		114,799			(45,100	)
Stock option expense		28,942			41,100
Other		(25,857	)		16,500
	$	655,082		$	(272,000	)


	Income tax expense (benefit) for the years ended December 31, 2011 and 2010 consists of the following:


	2011		2010
Current
Federal	$	533,847	$	(1,064,650	)
State		16,171		(46,800	)
		550,018		(1,111,450	)
Deferred, primarily Federal		105,064		839,450
	$	655,082	$	(272,000	)

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	Deferred income tax expense differs from the actual change in the net deferred tax liability due to a federal net operating loss carryback. The Company recovered approximately $257,236 in federal taxes paid in a prior tax year in November 2011. The Company recognized certain tax deficiencies related to stock option plans in the amount of $117,400 for the year ended December 31, 2010. The deficiency was recorded as a decrease in additional paid-in capital.

	Current and long term temporary differences and tax carryforwards at December 31 are as follows:


	2011			2010
Current
Vacation accrual	$	66,900		$	104,400
Player rewards program accrual		224,400			199,900
Other		23,900			16,100
Net current deferred tax asset	$	315,200		$	320,400

	2011			2010
Long-Term
Tax depreciation greater than book depreciation	$	(1,388,400	)	$	(1,364,800	)
Deferred gain on sale of land		(104,000	)		(104,000	)
Stock options		143,800			93,700
Net operating loss carryforwards		25,200			406,000
Other		14,400			17,200
Net long-term deferred tax liability	$	(1,309,000	)	$	(951,900	)


	The Company is subject to U.S. and Minnesota taxation. The Company is no longer subject to U.S. federal, state or local examinations by tax authorities for years before 2007.

5.	STOCKHOLDERS’ EQUITY Employee Stock Purchase Plan:

	On April 3, 1995, the Board of Directors adopted an Employee Stock Purchase Plan (the “ESPP”). The ESPP is open to all employees of the Company working more than 15 hours per week. Pursuant to Board action taken in September 2011, the ESPP was amended to consist of three-month phases. From the plan inception date until September 30, 2011, the ESPP consisted of one-year phases. The first phase using the amended ESPP commenced on October 1, 2011 and under the terms of the plan, employees are allowed to set aside a portion of their payroll earnings to purchase shares of the Company’s common stock. The purchase price is 95% of the fair market value of the shares on the termination date of the phase. The plan provides for the sale of up to 350,000 shares. The plan issued 2,401 and 3,857 shares in 2011 and 2010, respectively. The ESPP has issued a total of 244,586 shares since its inception.

	401(k) Plan:

	On June 1, 1998 the Company established a defined contribution savings plan for employees who had completed one year of service, as defined in the Plan document. The defined contribution savings plan allows for employee compensation deferral contributions under Section 401(k) of the Internal Revenue Code and discretionary contributions by the Company. In January 2009, the Company suspended its employer contributions for fiscal 2009. In March 2011, the Company reinstated its discretionary contribution match. Employer contributions charged to operations in 2011 were approximately $82,997. There were no employer contributions charged to operations in 2010.

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	Employee Stock Ownership Plan:

	In December 2004, the Company’s Board of Directors approved an Employee Stock Ownership Plan (the “ESOP”) effective for calendar years beginning January 1, 2004. All eligible employees of the Company participate in the ESOP after completing one full calendar year of service. Contributions to the ESOP are determined by the Board of Directors and can be made in cash or shares of the Company’s common stock. Annual contributions are allocated to each participant based on compensation and vest in accordance with a six year graded vesting schedule. Compensation expense for the ESOP is determined based on the average fair value of shares on the date the Company commits to the contribution to the ESOP. For the purposes of earnings per share, ESOP shares are included in weighted-average common shares outstanding at year-end as the shares are committed to be contributed on that date. On October 24, 2008, the Company suspended its ESOP contribution for fiscal 2008. As of the date of this filing, the Company had taken no action to resume making contributions.

	Stock Repurchase Plan:

	On January 16, 2008, the Company announced that its Board of Directors had authorized the repurchase of up to an additional 250,000 shares of the Company’s common stock pursuant to Exchange Act Rule 12b-18. During 2008, the Company repurchased 216,543 shares of common stock at an average price of $8.71 for an aggregate purchase price of $1,886,034. The Company did not repurchase any shares in 2010 or 2011.

6.	STOCK BASED COMPENSATION

	Stock Options:

	The Company’s 1994 Stock Plan (the “Plan”) provides for the granting of awards in the form of stock options, restricted stock, stock appreciation rights, and deferred stock to key employees and non-employees, including directors of and consultants to the Company and any subsidiary, to purchase up to a maximum of 1,450,000 shares of common stock. The Company currently has 221,000 shares available for grant under the Plan. Options that are granted under the Plan may be either options that qualify as “incentive stock options” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (Incentive Stock Options), or those that do not qualify as Incentive Stock Options (Non-Qualified Stock Options). The Plan is administered by the Board of Directors which determines the persons who are to receive awards under the Plan, the type of award to be granted, the number of shares subject to each award and, if an option, the exercise price of each option. The Plan also provides for formula grants of Non-Qualified Stock Options to non-employee directors and consultants of the Company.

	The Plan provides that payment of the exercise price may be made in the form of unrestricted shares of common stock already owned by the optionee. The Company calculates the fair market value of unrestricted shares as the average of the high and low sales prices on the date of exercise. The Company’s common stock is purchased upon the exercise of stock options, and restricted stock awards are settled in shares of the Company’s common stock.

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	Stock option activity related to the Plan during the years ended December 31, 2011 and 2010 is summarized below:


	2011					2010
	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price

Outstanding at beginning of year		368,437		$	9.21		403,244		$	10.15

Granted		15,000			13.30		106,500			8.15
Exercised		(62,185	)		6.82		(62,557	)		5.86
Expired/Forfeited		(3,250	)		7.23		(78,750	)		15.27

Outstanding at end of year		318,002		$	9.89		368,437		$	9.21

Options exercisable at end of year		257,252		$	10.44		264,812		$	9.92


	The grant-date fair value of options outstanding and exercisable at December 31, 2011 and 2010 was $1,091,000 and $1,129,000, respectively. The weighted average remaining contractual term of these options is 5.8 and 5.2 years, respectively.

	The weighted-average grant-date fair value of options granted during the years 2011 and 2010 was $93,750 and $382,808, respectively. The total fair value of options exercised during the years ended December 31, 2011 and 2010 was $229,000 and $231,000, respectively. The total income tax benefit recognized in the income statement for stock-based compensation arrangements was $61,000 and $23,000 for 2011 and 2010, respectively.

	As of December 31, 2011, total compensation cost related to non-vested stock options not yet recognized was $170,226, which is expected to be recognized over the next 1.67 years on a weighted-average basis.

	The following table summarizes information concerning all options outstanding and options exercisable as of December 31, 2011:


Range of Exercise Price	Options Outstanding		Weighted Average Remaining Contractual Life in Years		Weighted Average Exercise Price		Options Exercisable		Weighted Average Exercise Price
$5.00 – 7.50		110,252		6.8	$	6.25		90,252	$	6.31
$7.51 – 11.25		88,250		7.8	$	8.36		47,500	$	8.43
$11.26 – 16.50		90,000		5.0	$	13.52		90,000	$	13.52
$16.51 – 17.25		29,500		2.6	$	16.94		29,500	$	16.94
Total		318,002		6.2	$	9.89		257,252	$	10.44


	Board of Director Grants

	Prior to June 2, 2011, the Company’s Stock Plan provided for annual, automatic grants to each non-employee member of the Board of Directors on the first business day each February of non-qualified stock options to acquire 3,000 shares of common stock. Pursuant to this provision, on February 1, 2011, 15,000 options were granted to five non-employee board members with an exercise price per share equal to the market price on the date of grant of $13.30. The stock options vest over a six-month period and expire in ten years. The compensation cost associated with this grant of Board of Directors options is $93,750 and was recognized as expense over the six-month vesting period. On February 1, 2010, 15,000 options were granted to the five non-employee board members with an exercise price per share equal to the market price on the date of grant of $7.05.

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	Pursuant to Board action taken on April 15, 2011 and shareholder approval on June 2, 2011, the Company’s Stock Plan was amended to authorize annual grants of restricted stock or stock options, or both, as determined by the Board, and, pursuant to the amended Stock Plan, on June 2, 2011, 1,000 shares of restricted stock were granted to each of the five non-employee members of the Board of Directors. The restricted stock will vest 100% after one year and will be subject to restrictions on resale for an additional year. The compensation cost associated with the total grant of 5,000 shares is $73,300 that will be recognized as expense over the one-year vesting period.

	2009 Employee Stock Option Grant

	On April 23, 2009, 100,000 options were granted to employees with an exercise price equal to the market price on the date of grant of $6.00. The stock options vest over a 42-month period and expire in ten years. The compensation cost associated with this grant of employee options is $92,555 to be recognized as expense over the 42-month vesting period. The compensation cost related to these employee option awards included in salaries and benefits expense was $26,444 for the years ended December 31, 2011 and 2010. As of December 31, 2011, there was $22,037 of total unrecognized compensation cost related to these stock options which is expected to be recognized over 0.8 years.

	2010 Employee Stock Option Grant

	On February 25, 2010, 86,500 options were granted to employees with an exercise price equal to the market price on the date of grant of $8.28. The stock options vest over a 42-month period and expire in ten years. The compensation cost associated with this grant of employee options is $282,355 to be recognized as expense over the 42-month vesting period. The compensation cost related to these employee option awards included in salaries and benefits expense for the years ended December 31, 2011 and 2010 was $70,589 and $94,118, respectively. As of December 31, 2011, there was $117,648 of total unrecognized compensation cost related to these stock options which is expected to be recognized over 1.7 years.

	2010 Non-Employee Consultant and Advisor Grant

	On November 4, 2010, 5,000 options were granted to a non-employee consultant with an exercise price equal to the market price on the date of grant of $9.15. The stock options vest immediately and expire in ten years. There was no compensation cost associated with this grant for the year ended December 31, 2011. The compensation cost associated with this grant for the year ended December 31, 2010 was $18,050. As of December 31, 2011, there was no unrecognized compensation cost related to these stock options.

	2011 Employee Stock Option Grant

	On September 8, 2011, 54,250 shares of deferred stock awards were granted to employees with a price per share equal to the market price on the date of grant of $9.27. The issuance of these deferred stock awards is contingent upon the Company obtaining legislation authorizing the operation of a Racino at Canterbury Park on or before December 31, 2012 and the Racino opens for business to the public pursuant to such legal authority by December 31, 2014. There was no compensation cost associated with this grant for the year ended December 31, 2011.

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7.	EARNINGS PER SHARE COMPUTATIONS

	The following is a reconciliation of the numerator and denominator of the earnings per common share computations:


	2011		2010

Net income (loss) (numerator) amounts used for basic and diluted per share computations:	$	397,667	$	(992,206	)

Weighted average shares (denominator) of common stock outstanding:
Basic		4,084,762		4,038,103
Plus dilutive effect of stock options		48,577		—
Diluted		4,133,339		4,038,103

Net income (loss) per common share:
Basic	$	.10	$	(.25	)
Diluted		.10		(.25	)


	Options to purchase 104,500 shares of common stock at an average of $14.80 per share were outstanding but not included in the computation of diluted EPS at December 31, 2011 because the options were out of the money at December 31, 2011.

	Options to purchase 368,437 shares of common stock at an average of $9.21 per share were outstanding at December 31, 2010 but were not included in the computation of diluted EPS because the Company experienced a net loss for the year ended December 31, 2010.

8.	GENERAL CREDIT AGREEMENT

	The Company has a general credit agreement with Bremer Bank, which provides a revolving credit line of up to $3,000,000. On May 8, 2011, the Company signed an amendment with Bremer Bank extending the expiration date from May 8, 2011 to May 6, 2012, while keeping previous provisions intact. The Company had no borrowings under this credit line at December 31, 2011 and December 31, 2010. The credit agreement contains certain covenants requiring the Company to maintain certain financial ratios. The Company was in compliance with these requirements as of December 31, 2011. The Company believes that unrestricted funds available in its cash accounts, funds available under this line of credit, along with funds generated from operations, will be sufficient to satisfy its liquidity and capital resource requirements during 2012.

9.	OPERATING LEASES AND COMMITMENTS

	Purchase Obligations

	In March 2008, the Company entered into a six-year service agreement with its totalizator provider. Pursuant to the agreement, the vendor provides totalizator equipment and computer programs which record and process all wagers and calculate odds and payoffs. In April 2009, the Company entered into a four-year service agreement to outsource its information technology (IT) function. Amounts charged to operations under these agreements for the years ended December 31, 2011 and 2010 were approximately $615,000 and $637,000, respectively.

	Operating Lease Obligations

	The Company has entered into operating leases for rental of office equipment, equipment to print certain publications, and track equipment to maintain the Racetrack. Amounts charged to operations under these agreements for the years ended December 31, 2011 and 2010 were approximately $128,000 and $140,000, respectively. All such leases expire on or before December 31, 2014. Future lease payment obligations under these leases are provided in the table below.

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	FUTURE MINIMUM LEASE PAYMENTS

	The following table reflects our future minimum lease payments as of December 31, 2011:


	Payments Due by Period

*Lease Obligation*	TOTAL		2012		2013		2014

Operating Lease Obligations (1)	$	91,400	$	53,600	$	29,500	$	8,300


	(1)	Includes operating lease obligations for general office and printing equipment rental.


10.	CONTINGENCIES

	In connection with the purchase of the Racetrack (Note 1), the Company entered into an Earn Out Promissory Note dated March 29, 1994. In accordance with the Earn Out Note, if (i) off-track betting becomes legally permissible in the State of Minnesota and (ii) the Company begins to conduct off-track betting with respect to or in connection with its operations, the Company will be required to pay to the IMR Fund, L.P. the greater of $700,000 per operating year, as defined, or 20% of the net pretax profit, as defined for each of five operating years. At this time, management believes that the likelihood that these two conditions will be met, and that the Company will be required to pay these amounts is remote. At the date (if any) that these two conditions are met, the five minimum payments will be discounted back to their present value and the sum of those discounted payments will be capitalized as part of the purchase price in accordance with generally accepted accounting principles. The purchase price will be further increased if payments become due under the “20% of Net Pretax Profit” calculation. The first payment is to be made 90 days after the end of the third operating year in which off-track betting is conducted by the Company. Remaining payments would be made within 90 days of the end of each of the next four operating years.

	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, 2011 and as of the date of this report will not have a material impact on the consolidated financial statements.

	The Company has committed to payment of statutory distributions under a $500,000 bond issued to the Minnesota Racing Commission as required by Minnesota statute.

11.	RELATED-PARTY TRANSACTIONS

	The Company paid a total of $46,733 and $50,100 in 2011 and 2010, respectively, to the Chair and Vice Chair of the Company in consideration for the services they provided pursuant to consulting agreements. In addition, another non-employee Board member received $12,000 in 2010 for services regarding the Company’s strategic planning matters. Finally, an additional non-employee Board member received $18,000 in 2010 for services regarding the Company’s effort to pass Racino legislation.

12.	OPERATING SEGMENTS

	The Company has three reportable operating segments: horse racing, Card Casino, and concessions. The horse racing segment includes simulcast and live horse racing operations, the Card Casino segment includes operations of Canterbury Park’s Card Casino, and the concessions segment provides concessions during simulcast and live racing, in the Card Casino and during special events. The Company’s reportable operating segments are strategic business units that offer different products and services. The horse racing and Card Casino segments are regulated by the Minnesota Racing Commission.

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Depreciation, interest expense and income taxes are allocated to the segments but no allocation is made to concessions for shared facilities. However, the concessions segment paid approximately 25% of gross revenues on live racing and special event days to the horse racing segment for use of the facilities in 2011 and 2010. The following tables provide information about the Company’s operating segments (in 000’s):


	Year Ended December 31, 2011
	Horse Racing			Card Casino		Concessions		Total

Net revenues from external customers	$	12,148		$	23,385	$	5,053	$	40,586

Intersegment revenues		315			—		1,383		1,698

Net interest income		7			—		—		7

Depreciation		1,119			634		141		1,894

Segment (loss) income before income taxes		(2,000	)		3,221		544		1,765

Segment Assets	$	30,832		$	2,838	$	11,222	$	44,892

	Year Ended December 31, 2010
	Horse Racing			Card Casino		Concessions		Total

Net revenues from external customers	$	12,517		$	22,160	$	5,243	$	39,920

Intersegment revenues		590			—		1,545		2,135

Net interest income		13			—		—		13

Depreciation		1,123			768		153		2,044

Segment (loss) income before income taxes		(2,336	)		1,347		410		(579	)

Segment Assets	$	28,446		$	3,566	$	10,353	$	42,365

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	The following are reconciliations of reportable segment revenue, income before income taxes, and assets, to the Company’s consolidated totals (in 000’s):


	2011			2010
Revenues
Net revenues for reportable segments	$	42,284		$	42,055
Elimination of intersegment revenues		(1,698	)		(2,135	)
Total consolidated net revenues	$	40,586		$	39,920

Income (loss) before income taxes
Total segment income (loss) before income taxes	$	1,765		$	(579	)
Elimination of intersegment income before income taxes		(712	)		(685	)
Total consolidated income (loss) before income taxes	$	1,053		$	(1,264	)


	December 31, 2011			December 31, 2010

Assets
Total asset for reportable segments	$	44,892		$	42,365
Elimination of intercompany receivables		(10,708	)		(9,717	)
Total consolidated assets	$	34,184		$	32,648


13.	SUPPLEMENTARY FINANCIAL INFORMATION (UNAUDITED)


	2011 Quarter Ended:

	March 31			June 30			September 30			December 31

Net revenues	$	8,307,810		$	11,665,520		$	10,917,762		$	9,695,334

Operating expenses		7,670,842			11,691,019			11,217,248			8,960,416

Net income (loss)		210,555			(348,056	)		230,132			305,036

Basic earnings (loss) per share		.05			(.09	)		.06			.07

Diluted earnings (loss) per share		.05			(.09	)		.06			.07

	2010 Quarter Ended:

	March 31			June 30			September 30			December 31

Net revenues	$	7,788,613		$	11,453,879		$	12,011,366		$	8,666,326

Operating expenses		8,578,307			11,989,419			12,159,378			8,470,199

Net (loss) income		(639,641	)		(380,969	)		(132,875	)		161,279

Basic (loss) earnings per share		(.16	)		(.09	)		(.03	)		.04

Diluted (loss) earnings per share		(.16	)		(.09	)		(.03	)		.04

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14.	LOSS ON DISPOSAL OF ASSETS

	In January 2010, and in accordance with Minnesota Statute 240, the Company obtained approval from the MRC to remodel its existing card room. Construction and architectural contracts with various firms were signed shortly thereafter, and the card room was moved to a temporary location on the mezzanine level on January 25, 2010. The Company used cash on hand to fund the project and avoided drawing on its line of credit. As part of the remodeling project, the Company disposed of assets during the first quarter of 2010 with an original cost of $2,354,619 and associated accumulated depreciation of $1,445,079, resulting in a loss on disposal of $909,540. The remodeling project was completed during the second quarter of 2010 and on April 14, 2010, Canterbury Park opened its new Card Casino.

15.	SUSPENSION OF ALL OPERATIONS FROM JULY 1 TO JULY 20, 2011

	Effective at midnight on June 30, 2011, the Company suspended all operations. This action stemmed from the inability of Minnesota’s Governor and Legislature to reach agreement on the State’s budget for the biennium beginning July 1, 2011. The inability to reach an agreement forced many state agencies to immediately shut down because no monies had been appropriated for their operations. The Minnesota Racing Commission (“MRC”), the agency which regulates Canterbury Park’s pari-mutuel and Card Casino gaming operations, was one of the many state agencies ordered to close, and, without this regulatory oversight, the Company was directed to cease all operations pending the appropriation of funds for the MRC. A budget agreement was approved on July 20, 2011 which included an appropriation for the MRC, and Canterbury Park resumed all operations on July 21, 2011. The suspension of operations until July 21, 2011 had a material, adverse effect on the Company’s results of operations for the year ending December 31, 2011, as compared to 2010.

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

	Not Applicable.

Item 9A.	CONTROLS AND PROCEDURES

(a)	Evaluation of Disclosure Controls and Procedures:

	The Company’s Chief Executive Officer, Randall D. Sampson, and Chief Financial Officer, David C. Hansen, have reviewed the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based upon this review, these officers have concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that the Company files under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that the disclosure controls are also effective to ensure that information required to be disclosed in the Company’s Exchange Act reports is accumulated and communicated to management, including the chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure.

(b)	Management’s annual report on internal control over financial reporting:

	Management is responsible for establishing and maintaining an adequate system of internal control over financial reporting of the Company. This system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

	The Company’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

	Because of its inherent limitations, internal control over financial reporting can only provide reasonable assurance and may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

	Management conducted an evaluation of the effectiveness of the system of internal control over financial reporting as of December 31, 2011. In making this evaluation, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework. Based on management’s evaluation and those criteria, management concluded that the Company’s system of internal control over financial reporting was effective as of December 31, 2011.

(c)	Changes in Internal Control Over Financial Reporting:

	There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) under the Securities Exchange Act of 1934) that occurred during our fiscal quarter ended December 31, 2011, that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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Item 9B.	OTHER INFORMATION

	Not Applicable.

PART III

Item 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

	Information Incorporated by Reference.

	Information required under Item 401 (except as noted below), 405, 406, and 407 (c) (3), (d) (4), and (d) (5) of Regulation S-K to the extent applicable to the Company will be set forth in the Company’s Proxy Statement for the Annual Meeting of Shareholders to be held on June 7, 2012 (the “2012 Proxy Statement”), a definitive copy of which will be filed with the Commission within 120 days of the close of the 2011 fiscal year, which information is incorporated herein by reference. Information required under Item 402 of Regulation S-K regarding executive officers is presented under Item 1(c)(x) herein.

	Code of Ethics

	The Company has adopted a code of ethics applicable to all employees of and consultants to the Company. A copy of the Code of Conduct can be obtained free of charge upon written request directed to the Company’s Secretary at the executive offices of the Company.

Item 11.	EXECUTIVE COMPENSATION

	Information required under Item 402 of Regulation S-K to the extent applicable to the Company will be set forth in the Company’s 2012 Proxy Statement which information is incorporated herein by reference.

Item 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

	Information required under Item 201(d) and 403 of Regulation S-K to the extent applicable to the Company will be set forth in the Company’s 2012 Proxy Statement which information is incorporated herein by reference.

Item 13.	CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

	Information, if any, required by Item 404 of Regulation S-K to the extent applicable to the Company will be set forth in the Company’s 2012 Proxy Statement which information is incorporated herein by reference.

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Item 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES

	Information required by Item 14 of this Form 10-K and Item 9(e) of Schedule 14A will be set forth in a section entitled “The Company’s Auditors” in the Company’s 2012 Proxy Statement which information is incorporated herein by reference.

PART IV

Item 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

	(a).	The following Consolidated Financial Statements of Canterbury Park Holding Corporation and subsidiaries are included in Part II, Item 8 pages 29-46:

		Report of Independent Registered Public Accounting Firm

		Consolidated Balance Sheets as of December 31, 2011 and 2010

		Consolidated Statements of Operations for the years ended December 31, 2011 and 2010

		Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2011 and 2010

		Consolidated Statements of Cash Flows for the years ended December 31, 2011 and 2010

		Notes to Consolidated Financial statements

	(b).	The exhibits listed on the “Exhibits Index” on pages 51 & 52 are filed with this Form 10-K or incorporated by reference in this report.

	(c).	No financial statement schedules are required by Item 8 and Item 15(c) of Form 10-K.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Dated:	March 30, 2012	CANTERBURY PARK HOLDING CORPORATION

		By	/s/ Randall D. Sampson
			Randall D. Sampson
			President and Chief Executive Officer

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

Power of Attorney

Each person whose signature appears below constitutes and appoints CURTIS A. SAMPSON, DALE H. SCHENIAN and RANDALL D. SAMPSON as his true and lawful attorneys-in-fact and agents, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any of all amendments to this Annual Report on Form 10-K and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, each acting alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all said attorneys-in-fact and agents, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue thereof.


Signature	Title	Date

/s/ Curtis A. Sampson	Chairman of the Board	March 30, 2012
Curtis A. Sampson

/s/ Dale H. Schenian	Vice Chairman; Director	March 30, 2012
Dale H. Schenian

/s/ Randall D. Sampson	Chief Executive Officer, President,	March 30, 2012
Randall D. Sampson	General Manager, Treasurer and
	Director

/s/ Patrick R. Cruzen	Director	March 30, 2012
Patrick R. Cruzen

/s/ Burton F. Dahlberg	Director	March 30, 2012
Burton F. Dahlberg

/s/ Carin J. Offerman	Director	March 30, 2012
Carin J. Offerman

/s/ David C. Hansen	Chief Financial Officer* and Secretary	March 30, 2012
David C. Hansen

* Principal Accounting Officer

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CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARY

Exhibit Index To
Form 10-K for the Year Ended December 31, 2011


Exhibit Table Reference	Title of Document	Location in Consecutive Numbering System as Filed with the Securities and Exchange Commission

3.1	Articles of Incorporation, as amended.	Filed as Exhibit 3.1 to the Forms SB-2 Registration Statement of the Company, File No. 33-81262C, (the “SB-2 Registration Statement”) and incorporated herein by reference.

3.2	Bylaws, as amended	Filed as Exhibit 3.2 to the SB-2 Registration Statement and incorporated herein by reference.

10.1	Plan of Reorganization dated as of May 20, 1994 between Canterbury Park Holding Corporation and Canterbury Park Concessions, Inc.	Filed as Exhibit 10.1 to the SB-2 Registration Statement and incorporated herein by reference.

10.2	Restated Stock Purchase Agreement	Filed as Exhibit 10.2 to the SB-2 Registration Statement and incorporated herein by reference.

10.3	Letter dated April 4, 1994 from the Minnesota Horsemen’s Benevolent and Protective Association, Inc. to Minnesota Racing Commission waiving 125 day racing minimum	Filed as Exhibit 10.3 to the SB-2 Registration Statement and incorporated herein by reference.

10.5	Stock Option Plan, as amended*	Filed as Exhibit 4.1 to the Registration Statement on Form S-8 of the Company filed on August 28, 1997 (File No. 333-34509) and incorporated herein by reference.

10.6	Form of Non-qualified Stock Option Agreement	Filed as Exhibit 10.6 to the SB-2 Registration Statement and incorporated herein by reference.

* Denotes an exhibit that covers management contracts or compensatory plans or arrangements.

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Exhibit Table Reference	Title of Document	Location in Consecutive Numbering System as Filed with the Securities and Exchange Commission

10.7	Curtis A. Sampson Guaranty to HRA	Filed as Exhibit 10.7 to the SB-2 Registration Statement and incorporated herein by reference.

10.10	General Credit and Security Agreement dated as of June 3, 1998 between Canterbury Park Holding Corporation and Bremer Bank N.A. (previously First American Bank, N.A.) This exhibit 10.10 replaces exhibit 10.10 filed previously as an exhibit to the SB-2 Registration Statement.	Filed as Exhibit 10.10 to the Form 10-KSB for the fiscal year ended December 31, 1998 and incorporated herein by reference.

10.11	Stock Purchase Savings Plan	Filed as Exhibit 10.11 to Form 10-KSB for the fiscal year ended December 31, 1997 and incorporated herein by reference.

10.13	Stock Option Plan for Non-Employee Consultants and Advisors	Filed as Exhibit 4.3 to the Registration Statement on Form S-8 of the Company filed on August 28, 1997 (File No. 333-34509) and incorporated herein by reference.

21	Subsidiaries of the Registrant	Filed herewith.

23.1	Consent of Independent Registered Public Accounting Firm	Filed herewith.

24	Power of Attorney	Included in signature page at page 50.


31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act 0f 2002	Filed herewith.

31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith.

32	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith.

The exhibits referred to in this Exhibit will be supplied to a shareholder at a charge of $.25 per page upon written request directed to the Company’s Secretary at the executive offices of the Company.

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