**FORM      10-QSB**

| [X]                            | Quarterly                Report pursuant to Section 13 or 15(d) of the Securities Exchange                Act of                1934 |
|--------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|
|                           |                                                                                                                                 |
|                           | For                the quarterly period ended:  June                30, 2005                                                    |
|                           |                                                                                                                                 |
| [                  ] | Transition                Report pursuant to 13 or 15(d) of the Securities Exchange Act of                1934                       |
|                           |                                                                                                                                 |
|                           | For                the transition period __________                  to                __________                          |
|                           |                                                                                                                                 |
|                           | Commission                File Number:    000-30375                                                                   |

| Nevada                                                                        | 88-0392994                                       |
|-------------------------------------------------------------------------------|--------------------------------------------------|
| (State                or other jurisdiction of incorporation or organization) | (IRS                Employer Identification No.) |

| 4000                WEST ALI BABA, SUITE D **LAS                VEGAS, NEVADA 89118** |
|---------------------------------------------------------------------------------------|
| (Address                of principal executive offices)                               |

| 702-871-7111                                                                                                     |
|------------------------------------------------------------------------------------------------------------------|
| (Issuer’s                telephone number)                                                                 |
|  ____________________________________________________________                                               |
| (Former                name, former address and former fiscal year, if changed since last                report) |

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***Table          of Contents***

|                                                          | **TABLE                OF CONTENTS**                                                            |  Page |
|---------------------------------------------------------------|-------------------------------------------------------------------------------------------------|------------|
|  **PART                I - FINANCIAL INFORMATION**  |
| Item                1:                                        | Financial                Statements                                                        | 3          |
| Item                2:                                        | Management’s                Discussion and Analysis                                  | 16         |
| Item                3:                                        | Controls                and Procedures                                                          | 22         |
|  **PART                II - OTHER INFORMATION**     |
| Item                1:                                        | Legal                Proceedings                                                           | 23         |
| Item                2:                                        | Unregistered                Sales of Equity Securities and Use of                Proceeds  | 23         |
| Item                3:                                        | Defaults                Upon Senior Securities                                             | 23         |
| Item                4:                                        | Submission                of Matters to a Vote of Security                Holders          | 23         |
| Item                5:                                        | Other                Information                                                           | 23         |
| Item                6:                                        | Exhibits                                                                                        | 23         |

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***Table          of Contents***

**PART      I. FINANCIAL INFORMATION**

**Item      1.**
**Financial      Statements**

| (a)   | Consolidated                Balance Sheets as of June 30, 2005 (unaudited), and December 31,                2004; |
|-----------------|-------------------------------------------------------------------------------------------------------------------|

| (b)   | Consolidated                Statements of Operations - three months ended June 30, 2005, and                2004                (unaudited); |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | Consolidated                Statements of Operations - six months ended June 30, 2005 and 2004                (unaudited); |
|-----------------|----------------------------------------------------------------------------------------------------------------------------|

| (d)   | Consolidated                Statements of Stockholders’ Equity - six months ended June 30, 2005 and                2004 (unaudited); |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | Consolidated                Statements of Cash Flow - six months ended June 30, 2005 and 2004                (unaudited); |
|-----------------|---------------------------------------------------------------------------------------------------------------------------|

| (f)   | Notes                to Consolidated Unaudited Financial                Statements. |
|-----------------|-------------------------------------------------------------------------------------|

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***Table          of Contents***

**LAS      VEGAS GAMING, INC. AND SUBSIDIARIESCONSOLIDATED      BALANCE SHEETS**

**JUNE      30, 2005 (UNAUDITED) AND DECEMBER 31,      2004**

|                                                                                                            |   | **2005** |            | **2004** |   |
|-----------------------------------------------------------------------------------------------------------------|--------|----------|-----------------|----------|--------|
| **ASSETS**                                                                                                      |   |     |            |     |   |
|                                                                                                            |   |     |            |     |   |
| **Current                  assets**                                                                             |   |     |            |     |   |   |   |
| Cash                                                                                                            |   |     |            |     | **$**  | **586,169** |   |
| Accounts                  receivable, net of allowance                                                          |   | **$**    | **592,632**     |     |   | **643,768** |   |
| Inventory                                                                                                       |   |     | **528,291**     |     |   | **383,545** |   |
| Jackpot                  reserve deposits                                                                       |   |     | **4,134,753**   |     |   | **3,992,680** |   |
|                                                                                                            |   |     | **5,255,676**   |     |   | **5,606,162** |   |
|                                                                                                            |   |     |                 |     |   |  |   |
| **Equipment                  and software, net of accumulated depreciation**                                    |   |     | **545,604**     |     |   | **585,995** |   |
|                                                                                                            |   |     |                 |     |   |  |   |
| **Other                  assets**                                                                               |   |     |            |     |   |   |   |
| Goodwill                                                                                                        |   |     | **955,277**     |     |   | **955,277** |   |
| Trademarks,                  copyrights, patents and other identifiable intangibles, net                  of    |   |     |            |     |   |   |   |
| accumulated                  amortization of $111,155 and $23,046                                               |   |     | **935,515**     |     |   | **30,137** |   |
| Due                  from officers, including accrued interest                                                  |   |     | **59,678**      |     |   | **58,149** |   |
| Deposits                  and other                                                                             |   |     | **79,987**      |     |   | **243,034** |   |
|                                                                                                            |   | **$**    | **7,831,737**   |     | **$**  | **7,478,754** |   |
|                                                                                                            |   |     |            |     |   |   |   |
| **LIABILITIES                  AND STOCKHOLDERS' EQUITY**                                                       |   |     |                 |     |   |  |   |
|                                                                                                            |   |     |            |     |   |   |   |
| **Current                  liabilities**                                                                        |   |     |            |     |   |   |   |
| Accounts                  payable                                                                               |   | **$**    | **713,781**     |     | **$**  | **506,772** |   |
| Note                  payable                                                                                   |   |     | **767,911**     |     |   | **320,000** |   |
| Progressive                  jackpot liability                                                                  |   |     | **1,119,173**   |     |   | **981,636** |   |
|                                                                                                            |   |     | **2,600,866**   |     |   | **1,808,408** |   |
| **Conditionally                  redeemable equity**                                                            |   |     |            |     |   |   |   |
| Series                  B convertible preferred stock, $.001 par, 5,000,000 shares                  authorized, |   |     |            |     |   |   |   |
| 346,140                  shares issued and outstanding                                                          |   |     | **1,730,700**   |     |   | **1,730,700** |   |
| Common                  stock - 75,000 shares                                                                   |   |     | **25,000**      |     |   | **25,000** |   |
|                                                                                                            |   |     | **1,755,700**   |     |   | **1,755,700** |   |
|                                                                                                            |   |     |            |     |   |   |   |
| **Stockholders'                  equity**                                                                       |   |     |            |     |   |   |   |
| Series                  A convertible preferred stock, $.001 par, 5,000,000 shares                  authorized, |   |     |            |     |   |   |   |
| 541,400                  shares issued and outstanding                                                          |   |     | **541**         |     |   | **541** |   |
| Series                  C convertible preferred stock, $.001 par, 5,000,000 shares                  authorized, |   |     |            |     |   |   |   |
| 76,000                  shares issued and outstanding                                                           |   |     | **76**          |     |   | **76** |   |
| Common                  stock $.001 par, 25,000,000 shares authorized, 8,235,020                  and           |   |     |            |     |   |   |   |
| 7,048,955                  shares issued and outstanding                                                        |   |     | **8,235**       |     |   | **7,049** |   |
| Additional                  paid-in capital                                                                     |   |     | **14,549,249**  |     |   | **13,852,317** |   |
| Less                  due from officers and stockholders                                                        |   |     | **(320,000**    | **)**    |   | **(320,000** | **)** |
| Deficit                                                                                                         |   |     | **(10,762,930** | **)**    |   | **(9,625,337** | **)** |
|                                                                                                            |   |     | **3,475,171**   |     |   | **3,914,646** |   |
|                                                                                                            |   |     |            |     |   |   |   |
|                                                                                                            |   | **$**    | **7,831,737**   |     | **$**  | **7,478,754** |   |
|                                                                                                            |   |     |            |     |   |   |   |
|                                                                                                            |   |     |            |     |   |   |   |
| See                  notes to unaudited financial statements                                                    |   |     |            |     |   |   |   |

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***Table          of Contents***

**LAS        VEGAS GAMING, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS        (UNAUDITED)**

**THREE        MONTHS ENDED JUNE 30, 2005 AND 2004**

|                                                                               |   | **2005** |          | **2004** |   |
|------------------------------------------------------------------------------------|--------|----------|---------------|----------|--------|
|                                                                               |   |     |          |     |   |
| **Revenues**                                                                       |   |     |          |     |   |
| Casino                  games                                                      |   | **$**    | **394,409**   |     | **$**  | **288,644** |   |
| Product                  sales                                                     |   |     | **644,683**   |     |   | **363,788** |   |
| Other                                                                              |   |     | **438,242**   |     |   | **389,912** |   |
|                                                                               |   |     | **1,477,334** |     |   | **1,042,344** |   |
|                                                                               |   |     |               |     |   |  |   |
| **Costs                  and expenses**                                            |   |     |               |     |   |  |   |
| Casino                  games - net of progressive liability changes of ($147,542) |   |     |          |     |   |   |   |
| In                  2005 and $(107,885) in 2004                                    |   |     | **674,222**   |     |   | **144,453** |   |
| Product                  costs                                                     |   |     | **441,678**   |     |   | **244,205** |   |
| Other                                                                              |   |     | **310,601**   |     |   | **294,077** |   |
|                                                                               |   |     | **1,426,501** |     |   | **682,735** |   |
|                                                                               |   |     |               |     |   |  |   |
| **Gross                  operating income**                                        |   |     | **50,833**    |     |   | **359,609** |   |
|                                                                               |   |     |               |     |   |  |   |
| **Other                  operating expenses**                                      |   |     |          |     |   |   |   |
| Selling,                  general, and administrative expenses                     |   |     | **553,046**   |     |   | **637,183** |   |
| Research                  and development                                          |   |     | **189,878**   |     |   | **74,574** |   |
| Depreciation                  and amortization                                     |   |     | **112,754**   |     |   | **59,097** |   |
|                                                                               |   |     | **855,678**   |     |   | **770,854** |   |
|                                                                               |   |     |          |     |   |   |   |
| **Operating                  loss**                                                |   |     | **(804,845**  | **)**    |   | **(411,245** | **)** |
|                                                                               |   |     |          |     |   |   |   |
| **Other                  income**                                                  |   |     |          |     |   |   |   |
| Interest                                                                           |   |     | **28,117**    |     |   | **10,733** |   |
|                                                                               |   |     |          |     |   |   |   |
| **Net                  loss**                                                      |   | **$**    | **(776,728**  | **)**    | **$**  | **(400,512** | **)** |
|                                                                               |   |     |          |     |   |   |   |
| **Net                  loss per share, basic and diluted**                         |   | **$**    | **(0.10**     | **)**    | **$**  | **(0.06** | **)** |
|                                                                               |   |     |          |     |   |   |   |
| **Weighted                  average shares outstanding, basic and diluted**        |   |     | **7,652,971** |     |   | **6,943,955** |   |
|                                                                               |   |     |          |     |   |   |   |
|                                                                               |   |     |          |     |   |   |   |
|                                                                               |   |     |          |     |   |   |   |
| See                  notes to unaudited financial statements                       |   |     |          |     |   |   |   |

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***Table          of Contents***

**LAS          VEGAS GAMING, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS          (UNAUDITED)**

**SIX          MONTHS ENDED JUNE 30, 2005 AND 2004**

|                                                                                   |   | **2005** |           | **2004** |   |
|----------------------------------------------------------------------------------------|--------|----------|----------------|----------|--------|
|                                                                                   |   |     |           |     |   |
| **Revenues**                                                                           |   |     |           |     |   |
| Casino                      games                                                      |   | **$**    | **802,260**    |     | **$**  | **574,277** |   |
| Product                      sales                                                     |   |     | **1,182,795**  |     |   | **700,674** |   |
| Other                                                                                  |   |     | **951,222**    |     |   | **712,460** |   |
|                                                                                   |   |     | **2,936,278**  |     |   | **1,987,411** |   |
|                                                                                   |   |     |                |     |   |  |   |
| **Costs                      and expenses**                                            |   |     |                |     |   |  |   |
| Casino                      games - net of progressive liability changes of ($144,337) |   |     |           |     |   |   |   |
| In                      2005 and $59,719 in 2004                                       |   |     | **1,036,888**  |     |   | **476,518** |   |
| Product                      costs                                                     |   |     | **812,128**    |     |   | **469,284** |   |
| Other                                                                                  |   |     | **690,780**    |     |   | **510,584** |   |
|                                                                                   |   |     | **2,539,796**  |     |   | **1,456,386** |   |
|                                                                                   |   |     |                |     |   |  |   |
| **Gross                      operating income**                                        |   |     | **396,482**    |     |   | **531,025** |   |
|                                                                                   |   |     |                |     |   |  |   |
| **Other                      operating expenses**                                      |   |     |           |     |   |   |   |
| Selling,                      general, and administrative expenses                     |   |     | **1,133,916**  |     |   | **1,190,533** |   |
| Research                      and development                                          |   |     | **387,046**    |     |   | **158,203** |   |
| Depreciation                      and amortization                                     |   |     | **206,664**    |     |   | **132,258** |   |
|                                                                                   |   |     | **1,727,626**  |     |   | **1,480,994** |   |
|                                                                                   |   |     |           |     |   |   |   |
| **Operating                      loss**                                                |   |     | **(1,331,144** | **)**    |   | **(949,969** | **)** |
|                                                                                   |   |     |           |     |   |   |   |
| **Other                      income**                                                  |   |     |           |     |   |   |   |
| Interest                                                                               |   |     | **193,552**    |     |   | **22,102** |   |
|                                                                                   |   |     |           |     |   |   |   |
| **Net                      loss**                                                      |   | **$**    | **(1,137,592** | **)**    | **$**  | **(927,867** | **)** |
|                                                                                   |   |     |           |     |   |   |   |
| **Net                      loss per share, basic and diluted**                         |   | **$**    | **(0.15**      | **)**    | **$**  | **(0.14** | **)** |
|                                                                                   |   |     |           |     |   |   |   |
| **Weighted                      average shares outstanding, basic and diluted**        |   |     | **7,442,679**  |     |   | **6,796,098** |   |
|                                                                                   |   |     |           |     |   |   |   |
|                                                                                   |   |     |           |     |   |   |   |
|                                                                                   |   |     |           |     |   |   |   |
|                                                                                   |   |     |           |     |   |   |   |
| See                      notes to unaudited financial statements                       |   |     |           |     |   |   |   |

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***Table          of Contents***

** **
**LAS        VEGAS GAMING, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF STOCKHOLDERS'        EQUITY (UNAUDITED)**

**SIX MONTHS        ENDED JUNE 30, 2005 AND 2004**

|                                                         |   | Series                  A  |   | Series                  C  |   |                       |   |       |   |                      |   |       |   |
|--------------------------------------------------------------|--------|----------------------------|--------|----------------------------|--------|----------------------------|--------|------------|--------|---------------------------|--------|------------|--------|
|                                                         |   | Preferred                  |   | Preferred                  |   | Common                     |   | Additional |   | Due                  From |   |       |   |
|                                                         |   | Stock                      |   | Stock                      |   | Stock                      |   | Paid-In    |   | Officer/                  |   |       |   |
|                                                         |   | Par                  Value |   | Par                  Value |   | Par                  Value |   | Capital    |   | Shareholder               |   | Deficit    |   |
|                                                         |   |                       |   |                       |   |                       |   |       |   |                      |   |       |   |
| Balances,                  January 1, 2005                   |   | $                          | 541    |                       | $      | 76                         |   | $          | 7,049  |                      | $      | 13,852,317 |   | $ | (320,000 | ) | $ | (9,625,337 | ) |
|                                                         |   |                       |   |                       |   |                            |   |       |   |                      |   |            |   |   |   |   |   |   |   |
| Net                  loss                                    |   |                       |   |                       |   |                       |   |       |   |                      |   |       |   |   |   |   |   | (1,137,592 | ) |
|                                                         |   |                       |   |                       |   |                            |   |       |        |                      |   |            |   |   |   |   |   |   |   |
| Conversion                  of warrants                      |   |                       |   |                       |   |                            |   |       | 10     |                      |   | 9,990      |   |   |   |   |   |   |   |
|                                                         |   |                       |   |                       |   |                       |   |       |   |                      |   |       |   |   |   |   |   |   |   |
| Conversion                  of options                       |   |                       |   |                       |   |                       |   |       | 180    |                      |   | 89,820     |   |   |   |   |   |   |   |
|                                                         |   |                       |   |                       |   |                       |   |       |   |                      |   |       |   |   |   |   |   |   |   |
| Stock-based                  compensation                    |   |                       |   |                       |   |                       |   |       | 596    |                      |   | 197,522    |   |   |   |   |   |   |   |
|                                                         |   |                       |   |                       |   |                            |   |       |   |                      |   |            |   |   |   |   |   |   |   |
| Shares                  issued in connection with            |   |                       |   |                       |   |                            |   |       | 400    |                      |   | 399,600    |   |   |   |   |   |   |   |
| acquisition                                                  |   |                       |   |                       |   |                            |   |       |   |                      |   |            |   |   |   |   |   |   |   |
|                                                         |   |                       |   |                       |   |                            |   |       |   |                      |   |            |   |   |   |   |   |   |   |
|                                                         |   |                       |   |                       |   |                       |   |       |   |                      |   |       |   |   |   |   |   |   |   |
| Balances,                  June 30, 2005                     |   | $                          | 541    |                       | $      | 76                         |   | $          | 8,235  |                      | $      | 14,549,249 |   | $ | (320,000 | ) | $ | (10,762,929 | ) |
|                                                         |   |                       |   |                       |   |                            |   |       |   |                      |   |            |   |   |   |   |   |   |   |
|                                                         |   |                       |   |                       |   |                       |   |       |   |                      |   |       |   |   |   |   |   |   |   |
| Balances,                  January 1, 2004                   |   | $                          | 541    |                       |   |                            |   | $          | 6,689  |                      | $      | 13,248,592 |   | $ | (420,000 | ) | $ | (8,039,496 | ) |
|                                                         |   |                       |   |                       |   |                       |   |       |   |                      |   |       |   |   |   |   |   |   |   |
| Net                  loss                                    |   |                       |   |                       |   |                       |   |       |   |                      |   |       |   |   |   |   |   | (927,212 | ) |
|                                                         |   |                       |   |                       |   |                       |   |       |   |                      |   |       |   |   |   |   |   |   |   |
| Sale                  of 167,000 preferred shares            |   |                       |   |                       |   | 48                         |   |       | 119    |                      |   | 240,332    |   |   |   |   |   |   |   |
|                                                         |   |                       |   |                       |   |                       |   |       |   |                      |   |       |   |   |   |   |   |   |   |
| Stock-based                  compensation                    |   |                       |   |                       |   |                       |   |       |   |                      |   | 159,985    |   |   |   |   |   |   |   |
|                                                         |   |                       |   |                       |   |                       |   |       |   |                      |   |       |   |   |   |   |   |   |   |
|                                                         |   |                       |   |                       |   |                       |   |       |   |                      |   |       |   |   |   |   |   |   |   |
| Balances,                  June 30, 2004                     |   | $                          | 541    |                       | $      | 48                         |   | $          | 6,808  |                      | $      | 13,648,909 |   | $ | (420,000 | ) | $ | (8,966,708 | ) |
|                                                         |   |                       |   |                       |   |                       |   |       |   |                      |   |       |   |   |   |   |   |   |   |
|                                                         |   |                       |   |                       |   |                       |   |       |   |                      |   |       |   |   |   |   |   |   |   |
| See                  notes to unaudited financial statements |   |                       |   |                       |   |                       |   |       |   |                      |   |       |   |   |   |   |   |   |   |

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***Table          of Contents***

**LAS        VEGAS GAMING, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH        FLOW (UNAUDITED)**

**FOR        THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004**

|                                                                   |   | **2005** |         | **2004** |   |
|------------------------------------------------------------------------|--------|----------|--------------|----------|--------|
| **Operating                    activities**                            |   |     |         |     |   |   |   |
| Net                    cash provided by (used in) operating activities |   | **$**    | **(825,085** | **)**    | **$**  | **(367,758** | **)** |
|                                                                   |   |     |              |     |   |  |   |
| **Investing                    activities**                            |   |     |              |     |   |  |   |
| Acquisition                    of merged company                       |   |     | **(500,000** | **)**    |   |   |   |
| Interest                    payments on officer loans                  |   |     | **8,573**    |     |   |   |   |
| Purchase                    of property and equipment                  |   |     | **(37,164**  | **)**    |   | **(57,451** | **)** |
| Disposition                    of intangibles                          |   |     |         |     |   | **51,796** |   |
|                                                                   |   |     |         |     |   |   |   |
| Net                    cash used in investing activities               |   |     | **(528,591** | **)**    |   | **(5,655** | **)** |
|                                                                   |   |     |         |     |   |   |   |
| **Financing                    activities**                            |   |     |         |     |   |   |   |
| Proceeds                    from litigation settlement                 |   |     | **706,912**  |     |   |   |   |
| Proceeds                    from borrowings                            |   |     | **299,999**  |     |   | **320,000** |   |
| Repayment                    of borrowings related to acquisition      |   |     | **(320,000** | **)**    |   |   |   |
| Proceeds                    from convertible preferred stock           |   |     |         |     |   | **345,499** |   |
| Exercise                    of options                                 |   |     | **89,820**   |     |   |   |   |
| Other                                                                  |   |     | **(9,224**   | **)**    |   |   |   |
|                                                                   |   |     |         |     |   |   |   |
| Net                    cash provided by financing activities           |   |     | **767,507**  |     |   | **665,499** |   |
|                                                                   |   |     |         |     |   |   |   |
| **Net                    increase (decrease) in cash**                 |   |     | **(586,169** | **)**    |   | **292,086** |   |
|                                                                   |   |     |         |     |   |   |   |
| **Cash,                    beginning of period**                       |   |     | **586,169**  |     |   | **1,005,561** |   |
|                                                                   |   |     |         |     |   |   |   |
| **Cash,                    end of period**                             |   | **$**    | **-**        |     | **$**  | **1,297,647** |   |
|                                                                   |   |     |         |     |   |   |   |
| **Non-cash                    investing and financing activities**     |   |     |         |     |   |   |   |
|                                                                   |   |     |         |     |   |   |   |
| Acquired                    debt from acquisition                      |   | **$**    | **278,487**  |     |   |   |   |
|                                                                   |   |     |         |     |   |   |   |
| Common                    stock issued in connection with acquisition  |   |     | **400,000**  |     |   |   |   |
|                                                                   |   |     |         |     |   |   |   |
|                                                                   |   | **$**    | **678,487**  |     |   |   |   |
|                                                                   |   |     |         |     |   |   |   |
|                                                                   |   |     |         |     |   |   |   |
| See                    noted to unaudited financial statements         |   |     |         |     |   |   |   |

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***Table          of Contents***

**LAS      VEGAS GAMING, INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS**

**SIX      MONTHS ENDED JUNE 30, 2005 AND 2004**

**1.**
**Basis      of Presentation:**

**2.**
**Segment      Information:**

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***Table          of Contents***

**LAS      VEGAS GAMING, INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS**

**SIX      MONTHS ENDED JUNE 30, 2005 AND 2004**

|                                   |   |  2005 |       |   2004 |   |
|----------------------------------------|--------|------------|------------|------------------|--------|
| Revenues                               |   |       |       |             |   |   |   |
| Casino                Games            |   | $          | 802,260    |             | $      | 574,277 |   |
| Product                Sales           |   |       | 1,182,795  |             |   | 700,674 |   |
| Other                                  |   |       | 951,222    |             |   | 712,460 |   |
|                                   |   | $          | 2,936,278  |             | $      | 1,987,411 |   |
| Operating                income/(loss) |   |       |       |             |   |   |   |
| Casino                Games            |   | $          | (295,751   | )                | $      | 74,802 |   |
| Product                Sales           |   |       | 275,308    |             |   | 224,362 |   |
| Other                                  |   |       | 235,222    |             |   | 186,670 |   |
| Unallocated                            |   |       | (1,545,923 | )                |   | (1,435,803 | ) |
|                                   |   | $          | (1,331,144 | )                | $      | (949,969 | ) |

| Capital                expenditures |   |   |   |   |   |   |   |
|-------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| Casino                Games         |   | $      | 5,476  |   | $      | 1,754  |   |
| Product                Sales        |   |   | 5,318  |   |   | 1,079  |   |
| Other                               |   |   | 18,185 |   |   | 50,504 |   |
| Unallocated                         |   |   | 49,185 |   |   | 8,148  |   |
|                                |   | $      | 78,164 |   | $      | 61,485 |   |

| Identifiable                assets |   |   |      |   |   |      |   |
|------------------------------------|--------|--------|-----------|--------|--------|-----------|--------|
| Casino                Games        |   | $      | 5,565,328 |   | $      | 5,013,896 |   |
| Product                Sales       |   |   | 424,876   |   |   | 502,983   |   |
| Other                              |   |   | 573,710   |   |   | 580,841   |   |
| Unallocated                        |   |   | 1,267,823 |   |   | 1,381,034 |   |
|                               |   | $      | 7,831,737 |   | $      | 7,478,754 |   |

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***Table          of Contents***

**LAS      VEGAS GAMING, INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS**

**SIX      MONTHS ENDED JUNE 30, 2005 AND 2004**

**3.**
**Contingencies:**

**Gaming      regulations and licensing**

**Progressive      jackpots**

| **Nevada                NumbersTM**                                                                                                                                                                            |   | Progressive                JackpotLiability |       |  GrossCommitment |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|------------|-----------------------|--------|
| Present                value of $5,000,000 baseprogressive jackpot, payable in 20                equalannual installments using a 4.28% discountrate, the                prevailing 20-year Treasury Bond rate |   | $                                           | 3,456,751  |                  | $      | 3,456,751 |   |
| Less                portion insured through:Conventional                insurance providers                                                                                                                         |   |                                        | (2,900,000 | )                     |   |   |   |
| Other                participants                                                                                                                                                                                   |   |                                        | (278,376   | )                     |   |   |   |
| Uninsured                portion of base jackpot                                                                                                                                                                    |   |                                        | 278,376    |                  |   |   |   |
| Present                value at 4.28% of the $1,132,813 increase to the progressive jackpot                meter                                                                                                    |   |                                        | 783,170    |                  |   | 783,170 |   |
| Other                games                                                                                                                                                                                          |   |                                        | 26,148     |                  |   | 1,026,148 |   |
|                                                                                                                                                                                                                |   | $                                           | 1,087,694  |                  | $      | 5,266,069 |   |

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***Table          of Contents***

**LAS      VEGAS GAMING, INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS**

**SIX      MONTHS ENDED JUNE 30, 2005 AND 2004**

**4.**
**Acquisition:**

| Parts                  inventory                    |   | $      | 144,000  |   |
|-----------------------------------------------------|--------|--------|----------|--------|
| Software                  patents                   |   |   | 28,000   |   |
| Furniture                  and fixtures             |   |   | 41,000   |   |
|                                                |   | $      | 213,000  |   |
|                                                |   |   |     |   |
| Accounts                  payable                   |   | $      | 207,487  |   |
| Non-current                  related party payables |   |   | 71,000   |   |
| Deficit                                             |   |   | (65,487) |   |
|                                                |   | $      | 213,000  |   |

**5.**
**Financing:**

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***Table          of Contents***

**LAS      VEGAS GAMING, INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS**

**SIX      MONTHS ENDED JUNE 30, 2005 AND 2004**

**6.**
**Debt:**

**7.**
**Stockholder’s      equity:**

**a.      Convertible preferred stock:**

*i.e.*

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***Table          of Contents***

**LAS      VEGAS GAMING, INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS**

**SIX      MONTHS ENDED JUNE 30, 2005 AND 2004**

| ·   | Series                A - 80% of the proceeds to be used for “on deposit money” for insured                jackpots. 20% of the proceeds can be used for general corporate purposes.                The shares are freely convertible on a one for one basis into common.                Most                of the Series A shares have already been converted to common. In                the event                of liquidation, these shares would have preference over the common                shares. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Series                B - all proceeds to be used for “on deposit money” for insured jackpots.                These shares are freely convertible on a one preferred share for                five                common shares. In the event of liquidation, these shares would be                senior                to common, but junior to the Series A. Additionally, for 3 months                toward                the end of 2008, the owners of Series B shares can put the shares                back to                the Company for what they paid for them. Also, in the event that                one of                the insured jackpot games is cancelled, the Series B investors can                get                half their investment money back. If both games are cancelled they                can get                all their investment money back. These instruments are conditionally                redeemable (Note 7b), contingent upon the holders’ exercising their option                to convert into common shares. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Series                C - all proceeds to be used for general corporate purposes. These                shares                are freely convertible on the basis of one preferred share for five                common                shares. In the event of liquidation, these shares would be senior                to                common, but junior to the Series A and Series                B. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**b.      Conditionally redeemable stock:**

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**LAS      VEGAS GAMING, INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS**

**SIX      MONTHS ENDED JUNE 30, 2005 AND 2004**

**c.      Net loss per share:**

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**I****tem      2.****Management’s      Discussion and Analysis of Financial Condition and Results of Operations**
**Forward-Looking      Statements**

**Overview**

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***Table          of Contents***

**Liquidity      and Capital Resources**

| 1.   | A                senior secured convertible note with a principal amount of $3,000,000,                due                on December 30, 2006. Certain of the material terms of this note                are as                follows: |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| a.   | The                Company has the right to prepay, in cash, all or a portion of the                note for                115% of the principal amount to be                repaid. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b.   | On                the closing of an underwritten offering meeting certain criteria,                or in                the event that no such offering occurs prior to the maturity date,                the                Company is required to prepay or repay, in cash, the aggregate principal                amount of the notes not yet converted to common stock at 110% of                the                principal amount thereof to such date of prepayment or                repayment. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| c.   | The                note is convertible into shares of the Company’s common stock at the                option of the holder, in whole or in part at any time and from time                to                time (subject to certain limitations set forth in the                agreement). |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| d.   | Upon                the completion of an underwritten offering, 50% of the aggregate                principal                amount of the note shall automatically convert into shares of common                stock                at the lesser of $1.345 or 75% of the effective price per share received                by the Company in an underwritten                offering. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| e.   | If                any event of default (as defined in the agreement) occurs, the full                principal amount of the note, together with any other amounts owing                in                respect thereof, to the date of acceleration will become, at the                holder’s                election, immediately due and payable in cash. The aggregate amount                payable upon an event of default is 120% of the principal amount                of the                note. The events of default include: failure to pay amounts due under                the                note; failure to observe covenants; a default under a material agreement;                certain bankruptcy events; a breach of certain representations and                warranties; suspension of trading in the common stock; a change of                control                of the Company; and, certain registration related                failures. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.   | A                warrant registered in the name of the purchaser to purchase 1,050,000                shares of the Company common stock on or prior to the close of business                on                the five-year anniversary of the initial exercise date of the warrant                at a                price of $1.48 per share. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.   | A                registration rights agreement requiring the Company to register with                the                Securities and Exchange Commission the resale of 125% of the following                within 210 days: (a) all of the shares of common stock issuable upon                conversion of the note assuming all of the notes are converted; (b)                all                shares issuable as amortization payments on the note assuming all                permissible amortization payments are made in shares of common stock                and                the note is held until maturity; (c) all of the shares of common                stock                issuable upon exercise of the warrant; (d) any securities issued                or                issuable upon any stock split, dividend or other distribution                recapitalization or similar event with respect to the foregoing;                and, (e)                any additional shares issuable in connection with any anti-dilution                provisions in the notes or the                warrants. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.   | A                security agreement, signed by the Company and its subsidiaries, securing                the repayment of the note with all the assets of the Company except                for                cash and leases. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.   | A                subsidiary guaranty, duly executed by the Company’s subsidiaries                guarantying the repayment of the note and the                agreement. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6.   | A                lock-up agreement signed by the Company CEO restricting the re-sale                of his                common stock for a period of six months from the date the registration                statement is effective. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7.   | Beginning                in January of 2006 the Company is obligated to make installment payments                of $250,000 monthly until December                2006. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**Results      of Operations**

**Critical      Accounting Estimates and Policies**

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**Goodwill.**

**Recent      Accounting Pronouncements.**

*Share-Based      Payment *
*Accounting      for Stock-Based Compensation*

*      Exchanges of Non-monetary Assets, an Amendment of APB Opinion No. 29, Accounting      for Non-monetary Transactions.*
* *

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*Accounting      Changes and Error Corrections, a replacement of APB Opinion No. 20 and SFAS      No.      3*
*Accounting      Changes*
*Reporting      Accounting Changes in Interim Financial Statements*

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**Item      3. **
**Controls      and Procedures**

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**PART      II - OTHER INFORMATION**

Item

Item      2.    

Item      3.

Item      4.  

Item      5.   

Item      6. 

| Exhibit                Number | Description                of Exhibit                                                                                                                                                                                                          |
|-------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.1                          | Certification                of Chief Executive Officer pursuant to                18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002                                                 |
| 31.2                          | Certification                of Chief Financial Officer pursuant to                18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002                                                 |
| 32.1                          | Certification                of Chief Executive Officer and                Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted                pursuant to Section 906 of the Sarbanes-Oxley Act of                2002 |

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**SIGNATURES**

|   | Las                Vegas Gaming, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Date:  | August                15, 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |   By:/s/   Russell                R.                Roth                                                                                                               Russell R. Roth Title:                    Chief                Executive Officer and Chief Financial Officer  |

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