UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      DC 20549





**FORM
      10-QSB**





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





LAS
      VEGAS GAMING, INC.


(Exact
      name of small business issuer as specified in its charter)





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)








Check
      whether the issuer (1) 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 issuer was required to file such reports),
      and
      (2) has been subject to such filing requirements for the past 90 days [X] Yes
      [
      ] No





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). [
      ] Yes
      [X] No





State
      the
      number of shares outstanding of each of the issuer’s classes of common stock, as
      of the latest practicable date: 8,465,020 common shares as of November 14,
      2005





Transitional
      Small Business Disclosure Format (check one): Yes [ ] No [X]





Table
          of Contents


TABLE
        OF CONTENTS





PagePART
                I - FINANCIAL INFORMATIONItem
                1:
            Financial
                Statements
            3Item
                2:
            Management’s
                Discussion and Analysis
            4Item
                3:
            Controls
                and Procedures
            10PART
                II - OTHER INFORMATIONItem
                1:
            Legal
                Proceedings
            12Item
                2:
            Unregistered
                Sales of Equity Securities and Use of
                Proceeds
            12Item
                3:
            Defaults
                Upon Senior Securities
            12Item
                4:
            Submission
                of Matters to a Vote of Security
                Holders
            13Item
                5:
            Other
                Information
            13Item
                6:
            Exhibits
            13


2
 Table
          of Contents


**PART
      I - FINANCIAL INFORMATION**





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





Our
      unaudited financial statements included in this Form 10-QSB are as
      follows:





(a)
            Unaudited
                Consolidated Balance Sheet as of September 30, 2005.(b)
            Unaudited
                Consolidated Statements of Operations for the three months ended
                September
                30, 2005 and 2004;(c)
            Unaudited
                Consolidated Statements of Operations for the nine months ended September
                30, 2005 and 2004;(d)
            Unaudited
                Consolidated Statements of Stockholders’ Equity for the nine months ended
                September 30, 2005 and 2004;(c)
            Unaudited
                Consolidated Statements of Cash Flows for the nine months ended September
                30, 2005 and 2004; and(d)
            Notes
                to Unaudited Consolidated Financial
                Statements





These
      unaudited financial statements have been prepared in accordance with accounting
      principles generally accepted in the United States of America for interim
      financial information and the SEC instructions to Form 10-QSB. In the opinion
      of
      management, all adjustments considered necessary for a fair presentation have
      been included. Operating results for the interim period ended September 30,
      2005
      are not necessarily indicative of the results that can be expected for the
      full
      year.


3
 Table
          of Contents


LAS
          VEGAS GAMING, INC. AND
          SUBSIDIARIES
 CONSOLIDATED BALANCE
        SHEETS
 SEPTEMBER 30, 2005 (UNAUDITED) AND DECEMBER 31,
      2004


**2005**
            
            **2004****ASSETS****Current
                assets**Cash
            **$**
            **1,671,722**
            
            **$**
            **586,169**Accounts
                receivable, net of allowance
            
            **699,479**
            
            
            **643,768**Inventory
            
            **364,438**
            
            
            **383,545**Prepaid
                expenses and unearned compensation
            
            **177,414**
            
            
            **190,226**Jackpot
                reserve deposits
            
            **4,161,075**
            
            
            **3,992,680****7,074,128**
            
            
            **5,796,388****Equipment
                and software, net of accumulated depreciation**
            
            **630,141**
            
            
            **585,995****Other
                assets**Goodwill
            
            **955,277**
            
            
            **955,277**Trademarks,
                copyrights, patents and other identifiable intangibles, net
                ofaccumulated
                amortization of $163,488 and $23,046
            
            **885,931**
            
            
            **30,137**Due
                from officers, including accrued interest
            
            **64,320**
            
            
            **58,149**Unearned
                compensation
            
            **151,135**
            
            
            **220,290**Deposits
                and other
            
            **74,371**
            
            
            **243,034****$**
            **9,835,303**
            
            **$**
            **7,889,270****LIABILITIES
                AND STOCKHOLDERS' EQUITY****Current
                liabilities**Accounts
                payable and accrued expenses
            **$**
            **850,795**
            
            **$**
            **506,772**Current
                portion of long-term debt
            
            **1,291,964**
            
            
            **320,000**Progressive
                jackpot liability
            
            **1,090,866**
            
            
            **981,636****3,233,625**
            
            
            **1,808,408****Long-term
                debt**
            
            **1,962,214**
            
            
            **-****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,536,400
                shares issued and outstanding
            
            **536**
            
            
            **541**Series
                C convertible preferred stock, $.001 par, 5,000,000 shares
                authorized,56,000
                shares issued and outstanding
            
            **56**
            
            
            **76**Common
                stock $.001 par, 25,000,000 shares authorized, 8,340,020
                and7,048,955
                shares issued and outstanding
            
            **8,340**
            
            
            **7,049**Additional
                paid-in capital
            
            **15,093,380**
            
            
            **14,262,833**Less
                due from officers and stockholders
            
            **(320,000)**
            
            
            **(320,000**Deficit
            
            **(11,898,548)**
            
            
            **(9,625,337)****2,883,764**
            
            
            **4,325,162****$**
            **9,835,303**
            
            **$**
            **7,889,270**


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


F-1
 Table
          of Contents


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


**CONSOLIDATED
      STATEMENTS OF OPERATIONS (UNAUDITED)**


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


**2005**
              
              **2004****Revenues**Casino
                  games
              **$**
              **434,515**
              
              **$**
              **386,374**Product
                  sales
              
              **557,548**
              
              
              **563,951**Other
              
              **447,063**
              
              
              **566,082****1,439,126**
              
              
              **1,516,407****Costs
                  and expenses**Casino
                  games, net of progressive liability changes of $58,966and
                  $(147,542)
              
              **476,076**
              
              
              **373,151**Product
                  costs
              
              **368,925**
              
              
              **319,212**Other
              
              **313,434**
              
              
              **420,459****1,158,435**
              
              
              **1,112,822****Gross
                  operating income**
              
              **280,691**
              
              
              **403,585****Other
                  operating expenses**Selling,
                  general, and administrative expenses
              
              **1,063,774**
              
              
              **473,458**Research
                  and development
              
              **196,756**
              
              
              **63,294**Depreciation
                  and amortization
              
              **117,220**
              
              
              **59,082****1,377,750**
              
              
              **595,834****Operating
                  loss**
              
              **(1,097,059)**
              
              
              **(192,249)****Other
                  income and expense**Finance
                  costs
              
              **(70,678)**
              
              
              **-**Interest
                  and other income
              
              **32,120**
              
              
              **14,672****Net
                  loss**
              **$**
              **(1,135,617)**
              
              **$**
              **(177,577)****Net
                  loss per share, basic and diluted**
              **$**
              **(0.14)**
              
              **$**
              **(0.03)****Weighted
                  average shares outstanding, basic and diluted**
              
              **8,270,020**
              
              
              **6,943,955**
  The
      accompanying notes are an integral part of these financial
      statements.


F-2
 Table
          of Contents
  LAS
              VEGAS GAMING, INC. AND
              SUBSIDIARIES
  **2005**
                
                **2004****Revenues**Casino
                    games
                **$**
                **1,236,775**
                
                **$**
                **960,651**Product
                    sales
                
                **1,740,343**
                
                
                **1,264,624**Other
                
                **1,398,285**
                
                
                **1,278,542****4,375,403**
                
                
                **3,503,817****Costs
                    and expenses**Casino
                    games, net of progressive liability changes of ($85,371)and
                    $39,889
                
                **1,514,915**
                
                
                **793,840**Product
                    costs
                
                **1,179,103**
                
                
                **788,496**Other
                
                **1,003,577**
                
                
                **931,043****3,697,595**
                
                
                **2,513,379****Gross
                    operating income**
                
                **677,808**
                
                
                **990,438****Other
                    operating expenses**Selling,
                    general, and administrative expenses
                
                **2,198,326**
                
                
                **1,663,991**Research
                    and development
                
                **583,802**
                
                
                **221,498**Depreciation
                    and amortization
                
                **323,884**
                
                
                **191,340**Impairment
                    write-down, game rights
                
                **0**
                
                
                **55,829****3,106,012**
                
                
                **2,132,658****Operating
                    loss**
                
                **(2,428,204)**
                
                
                **(1,142,220)****Other
                    income and expense**Finance
                    costs
                
                **(64,542)**
                
                
                **0**Interest
                    and other income
                
                **219,535**
                
                
                **36,775****Net
                    loss**
                **$**
                **(2,273,211)**
                
                **$**
                **(1,105,445)****Net
                    loss per share, basic and diluted**
                **$**
                **(0.29)**
                
                **$**
                **(0.16)****Weighted
                    average shares outstanding, basic and diluted**
                
                **7,771,095**
                
                
                **6,796,098**
  The accompanying notes are an integral part of
        these financial
        statements.
 F-3
 Table
            of Contents
  **LAS
            VEGAS GAMING, INC. AND SUBSIDIARIES** **CONSOLIDATED
              STATEMENTS OF STOCKHOLDERS' EQUITY** **NINE
                MONTHS ENDED SEPTEMBER 30, 2005 AND 2004**
  Series
                            APreferredStockPar Value
                  
                  Series
                            CPreferredStockPar Value
                  
                  CommonStockPar
                      Value
                  
                  AdditionalPaid-InCapital
                  
                  Due
                          FromOfficer/Shareholder
                  
                  DeficitBalances,
                      January 1, 2005
                  $
                  541
                  
                  $
                  76
                  
                  $
                  7,049
                  
                  $
                  14,262,833
                  
                  $
                  (320,000)
                  
                  $
                  (9,625,337)Net
                      loss
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (2,273,211)Conversion
                      of warrants
                  
                  
                  
                  
                  
                  
                  
                  10
                  
                  
                  9,990Conversion
                      of options
                  
                  
                  
                  
                  
                  
                  
                  180
                  
                  
                  89,820Issuance
                      of warrants
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  33,780Stock-based
                      compensation
                  
                  
                  
                  
                  
                  
                  
                  596
                  
                  
                  297,437Shares
                      issued in connection withacquisition
                  
                  
                  
                  
                  
                  
                  
                  400
                  
                  
                  399,600Conversion
                      of preferred stock tocommon
                      stock
                  
                  (5)
                  
                  
                  (20)
                  
                  
                  105
                  
                  
                  (80)Balances,
                      September 30, 2005
                  $
                  536
                  
                  $
                  56
                  
                  $
                  8,340
                  
                  $
                  15,093,380
                  
                  $
                  (320,000)
                  
                  $
                  (11,898,548)Balances,
                      January 1, 2004
                  $
                  541
                  
                  
                  
                  
                  $
                  6,689
                  
                  $
                  13,248,592
                  
                  $
                  (420,000)
                  
                  $
                  (8,039,496)Net
                      loss
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (1,105,445)Sale
                      of preferred shares
                  
                  
                  
                  
                  76
                  
                  
                  
                  
                  
                  512,778Stock-based
                      compensation
                  
                  
                  
                  
                  
                  
                  
                  119
                  
                  
                  174,982
                  
                  
                  100,000Balances,
                      September 30, 2004
                  $
                  541
                  
                  $
                  76
                  
                  $
                  6,808
                  
                  $
                  13,936,352
                  
                  $
                  (320,000)
                  
                  $
                  (9,144,941)
 The accompanying notes are an integral part
          of these financial
          statements.
 F-4
 Table
              of Contents
 LAS
                      VEGAS GAMING, INC. AND
                      SUBSIDIARIES
 **2005**
                    
                    **2004****Operating
                        activities**Net
                        cash provided by (used in) operating activities
                    **$**
                    **(1,700,447)**
                    
                    **$**
                    **(367,758)****Investing
                        activities**Acquisition
                        of merged company
                    
                    **(500,000)**
                    
                    
                    **-**Interest
                        payments on officer loans
                    
                    **8,573**
                    
                    
                    **-**Purchase
                        of property and equipment
                    
                    **(191,107)**
                    
                    
                    **(57,451)**Disposition
                        of intangibles
                    
                    **-**
                    
                    
                    **51,796**Net
                        cash used in investing activities
                    
                    **(682,534)**
                    
                    
                    **(5,655)****Financing
                        activities**Proceeds
                        from litigation settlement
                    
                    **751,866**
                    
                    
                    **-**Proceeds
                        from Senior Secured Convertible Notes due December2006,
                        net of deferred finance costs
                    
                    **2,595,000**
                    
                    
                    **-**Proceeds
                        from other debt borrowings
                    
                    **328,172**
                    
                    
                    **320,000**Repayment
                        of other debt borrowings
                    
                    **(521,860)**
                    
                    
                    **-**Proceeds
                        from convertible preferred stock
                    
                    **-**
                    
                    
                    **345,499**Conversion
                        of stock options and warrants
                    
                    **99,810**
                    
                    
                    **-**Common
                        stock to employees
                    
                    **215,546**
                    
                    
                    **-**Net
                        cash provided by financing activities
                    
                    **3,468,534**
                    
                    
                    **665,499****Net
                        increase (decrease) in cash**
                    
                    **1,085,553**
                    
                    
                    **292,086****Cash,
                        beginning of period**
                    
                    **586,169**
                    
                    
                    **1,005,561****Cash,
                        end of period**
                    **$**
                    **1,671,722**
                    
                    **$**
                    **1,297,647**
  The
            accompanying notes are an integral part of these
            financial statements.
 F-5
 Table
                  of Contents
  **LAS
              VEGAS GAMING, INC. AND SUBSIDIARIES**
 **NOTES
              TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS**
 **NINE
              MONTHS ENDED SEPTEMBER 30, 2005 AND 2004**
 
 **1.
              Basis of Presentation:**
 
 The
              accompanying consolidated financial statements have been prepared by
              the Company
              pursuant to the rules and regulations of the Securities and Exchange
              Commission
              relating to interim financial statements. Accordingly, certain information
              normally included in the annual financial statements prepared in accordance
              with
              generally accepted accounting principles have been condensed or omitted.
              For
              further information, please refer to the annual financial statements
              of the
              Company, and the related notes, included within the Company’s Annual Report on
              Form 10-KSB for the fiscal year ended December 31, 2004, previously
              filed with
              the Securities & Exchange Commission, from which the information as of that
              date, is derived.
 
 In
              the
              opinion of management, all adjustments considered necessary for a fair
              presentation have been included. The results for the current interim
              period are
              not necessarily indicative of the results to be expected for the full
              year.
 
 Certain
              amounts, as previously reported, have been reclassified to conform
              to the
              current period presentation. In addition, unearned compensation for
              stock-based
              compensation and additional paid-in-capital have been retroactively
              increased by
              $411,000 previously unrecorded.
 
 **2.**  **Segment
              Information:**
 
 The
              Company conducts its operations through three primary business segments,
“Casino
              Games,”“Products” and “Other.” The “Casino Games” segment generates income
              principally from three games that are played in approximately 37 casinos
              in
              Nevada and another 10 outside Nevada. These games consist of keno-style
              games
              (Nevada NumbersTM and The Million Dollar TicketTM), and Super Bonanza - a
              bingo-style game. The composition of the Company’s casino games revenue for the
              first nine months of 2005 was approximately 63% from the bingo game
              and 37% from
              the keno games. A fourth game (Gambler’s Bonus Million Dollar TicketTM) has
              recently been launched but has not contributed significant revenues
              to date. A
              successful trial period lasting thirty days was completed in several
              locations
              in August and the Company plans to install this game in other locations.
              However, management can give no assurance as to the timing and amount
              of games
              installed in other locations.
 
 The
              “Products” segment generates revenue through the sale of keno, video and bingo
              equipment and supplies. Supplies include bingo paper, keno paper, race
              and
              sports paper and ink. Supplies comprised approximately 53% and 63%
              of all
              Product sales for
              the
              nine months ended September
              30, 2005 and 2004, respectively. The Company’s keno equipment is installed in
              over 70 casinos worldwide.
  F-6
 Table
                  of Contents
  The
              “Other” segment includes revenue from equipment maintenance contracts (42%
              for
              the nine months ended September 30, 2005, compared to 51% for the comparable
              period in 2004); operation of a keno route (28% of revenue for the
              nine months
              ended September 30, 2005, and 26% for the comparable period in 2004);
              the
              distribution of bingo electronic devices (23% and 14%, respectively,
              for the
              nine months ended September 30, 2005 and 2004); and, keno route participation
              agreements (7% and 9%, respectively, for the nine months ended September
              30,
              2005 and 2004). Results for these segments and certain unallocated
              expenditures
              for the nine months ended September 30, 2005 and 2004 are set forth
              below:
 
 
 2005
                      
                      2004RevenuesCasino
                          Games
                      $
                      1,236,775
                      
                      $
                      960,651Product
                          Sales
                      
                      1,740,343
                      
                      
                      1,264,624Other
                      
                      1,398,285
                      
                      
                      1,278,542$
                      4,375,403
                      
                      $
                      3,503,817Operating
                          income/(loss)Casino
                          Games
                      $
                      (278,140)
                      
                      $
                      166,811Product
                          Sales
                      
                      561,240
                      
                      
                      476,128Other
                      
                      394,708
                      
                      
                      347,499Unallocated
                      
                      (3,106,012)
                      
                      
                      (2,132,658)$
                      (2,428,204)
                      
                      $
                      (1,142,220)
 Capital
                          expendituresCasino
                          Games
                      $
                      85,151
                      
                      $
                      5,432Product
                          Sales
                      
                      5,318
                      
                      
                      5,627Other
                      
                      84,449
                      
                      
                      48,652Unallocated
                      
                      55,864
                      
                      
                      15,628$
                      230,782
                      
                      $
                      75,339
 Identifiable
              assets as of September 30, 2005, and December 31, 2004, are set forth
              below:
 
 
 Identifiable
                        assetsCasino
                        Games
                    $
                    5,640,867
                    
                    $
                    5,013,896Product
                        Sales
                    
                    339,384
                    
                    
                    502,983Other
                    
                    720,809
                    
                    
                    580,841Unallocated
                    
                    3,134,243
                    
                    
                    1,791,550$
                    9,835,303
                    
                    $
                    7,889,270
 
  F-7
 Table
                  of Contents
  Identifiable
              assets at September 30, 2005, and December 31, 2004 include recorded
              goodwill of
              $955,277 that has not been allocated between Products Sales and
              Other.
 
 **3.**  **Contingencies:**
 
 **Gaming
              regulations and licensing** .
              The
              Company is licensed with seven individual states and several Native
              American
              organizations. From time to time, the Company will seek licensure in
              other
              gaming jurisdictions so that the Company may fully participate in the
              gaming
              opportunities available in those jurisdictions. Failure to retain its
              licenses
              and to obtain and retain the necessary licenses in other jurisdictions
              would
              prevent the Company from fully implementing its business plans and
              could have an
              adverse effect on the operating results of the Company.
 
 **Progressive
              jackpots** .
              The
              Company directly and/or indirectly purchases insurance to fund the
              base
              progressive jackpots for its Nevada NumbersTM and The Million Dollar TicketTM
              games. Any uninsured portion plus increases to the progressive jackpot
              are
              funded through operations. The Company is ultimately liable for the
              entire
              jackpot once it is won. The following table illustrates the relationship
              between
              the Company’s liability for progressive jackpots and its gross commitment at
              September 30, 2005, and related assumptions:
 
 **Nevada
                        NumbersTM**
                    Progressive
                        Jackpot
                      Liability
                    
                    Gross
                      CommitmentPresent
                        value of $5,000,000 base progressive jackpot, payable in 20 equal
                        annual installments using a 4.59% discount
                      rate,
                        the prevailing 20-year Treasury Bond rate
                    $
                    3,374,880
                    
                    $
                    3,374,880Less
                        portion insured through:
                      Conventional
                        insurance providers
                    
                    (2,900,000)Other
                        participants
                    
                    (237,440)Uninsured
                        portion of base jackpot
                    
                    237,440Present
                        value at 4.59% of the $1,164,775 increase to the progressive jackpot
                        meter
                    
                    786,195
                    
                    
                    786,195Other
                        games
                    
                    67,231
                    
                    
                    1,067,231$
                    1,090,866
                    
                    $
                    5,266,069
 
 As
              of
              September 30, 2005, all amounts required to be on deposit for jackpot
              reserves
              were on deposit.
  F-8
 Table
                  of Contents
  **4.**  **Acquisition:**
 
 Effective
              February 18, 2005, the Company acquired AdLine Gaming Inc. (“AdLine”), a
              developer of digital video technology for the gaming industry. The
              transaction
              was valued at $1,178,487 including $500,000 cash, assumption of $278,487
              in
              liabilities, 400,000 shares of the Company’s common stock and warrants to
              purchase 100,000 shares of the Company’s common stock for $4 a
              share.
 
 The
              value
              of the acquisition was based on the cash consideration exchanged plus
              the
              liabilities assumed and the per-share value of the Company’s common shares
              issued, which was estimated at $1, including the value of the related
              warrants.
 
 The
              unaudited condensed balance sheet of AdLine immediately prior to the
              acquisition
              is summarized as follows:
 
 Parts
                      inventory
                    $
                    144,000Software
                      patents
                    
                    28,000Furniture
                      and fixtures
                    
                    41,000$
                    213,000Accounts
                      payable
                    $
                    207,487Non-current
                      related party payables
                    
                    71,000Deficit
                    
                    (65,487)$
                    213,000
  AdLine’s
              unaudited net loss for the year ended December 31, 2004, was approximately
              $87,000 consisting of general and administrative expenses with no
              revenues.
 
 The
              Company’s management estimated that the previously recorded cost of AdLine’s
              inventory and furniture and fixtures approximates fair value and that
              the
              Company’s excess purchase price will be substantially all assigned to the
              software patents since the primary reason for the acquisition was to
              obtain this
              identifiable asset, resulting in no goodwill.
 
 The
              amount assigned to the patents was $993,487 with amortization over
              a period of
              five years. Accumulated amortization relating to the patents is approximately
              $132,000 at September 30, 2005.
  F-9
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                  of Contents
  **5.**  **Debt:**
 
 In
              July
              2005, the Company obtained $3,000,000 in new financing by issuing Senior
              Secured
              Convertible Notes (“notes”). The notes were originally due in equal monthly
              payments of $250,000 from January 2006 through December 2006. However,
              in
              September 2005, the Company amended the agreement whereby the notes
              are now due
              in monthly payments of $125,000 beginning April 2006 with a final payment
              of
              $2,000,000 in December 2006. An annual commitment fee equal to 10%
              of the
              principal amount is payable to the note holder in equal monthly installments
              until the note is paid in full.
 
 Along
              with the issuance of the notes, the note holder received warrants to
              purchase
              1,050,000 shares of the Company’s common stock at $1.48 per share for a period
              of up to five years from the date of the issuance of the notes. No
              portion of
              the proceeds was assigned to the warrants.
 
 The
              Company has the right to prepay, in cash, all or a portion of the notes
              for 115%
              of the outstanding principal amount to be repaid. Upon 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.
 
 The
              notes
              are 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 at a
              price of
              $1.345 per share. Additionally, upon the completion of an underwritten
              offering,
              50% of the aggregate principal amount of the notes 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.
              As the
              completion of an underwritten offering is contingent upon several factors
              being
              considered by the Company, and as the Company may decide whether to
              pursue an
              underwritten offering, no charge was recorded for the beneficial conversion
              feature granted to the note holder in conjunction with this debt. The
              value of
              the beneficial conversion feature is approximately $400,000 and was
              not recorded
              as a charge to earnings due to the affirmation contingency.
 
 As
              a
              result, debt consists of the following at September 30, 2005:
 
 Senior
                        Secured Convertible Notes, net of unamortized
                        deferred     finance costs of
                        $401,079
                    $
                    2,598,921Litigation
                        settlement obligation
                    
                    463,793Other
                        notes payable
                    
                    191,4643,254,178Less
                        current portion of long-term debt
                    
                    1,291,964$
                    1,962,214
  F-10
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                  of Contents
  **6.**  **Stockholders’
              equity:**
 
 **a.
              Convertible preferred stock:** From
              time to time, pursuant to the registration exemption provided by Section
              4(2) of
              the United States Securities Act of 1933 and Rule 506 of Regulation
              D, the
              Company has offered for sale shares of preferred convertible stock.
 
 During
              the nine months ended September 30, 2004, the Company completed its
              Series B
              convertible preferred stock offering by selling 29,600 preferred shares
              in
              exchange for $148,000. In 2003, 316,540 preferred shares were issued
              in exchange
              for $1,582,700. The Company also issued 400,000 shares of its common
              stock
              valued at $1 to the group that provided capital raising services in
              connection
              with this offering. An employee of the Company is also a principal
              in the
              service provider. Pursuant to the Series B offering, if at any time,
              the funds
              provided by the Series B convertible preferred shareholders pursuant
              to this
              offering are no longer needed or used by the Company to provide jackpot
              security
              for Nevada NumbersTM, then each holder of the Series B convertible preferred
              stock shall have the right to put ( *i.e.* ,
              sell
              back) up to 50% of the Series B convertible preferred stock to the
              Company for
              the amount paid for that stock.
 
 Furthermore,
              if the funds provided by the Series B convertible preferred shareholders
              pursuant to this offering are no longer needed or used by the Company
              to provide
              jackpot security for The Million Dollar TicketTM, then each holder of the Series
              B convertible preferred stock shall have the right to put up to 50%
              of their
              Series B convertible preferred stock to the Company in exchange for
              the amount
              paid for that stock. The opportunity to exercise these puts remains
              open for 90
              days from the date the holders are notified that the funds are no longer
              being
              used or needed for jackpot security. In addition, beginning on July
              31, 2008 and
              ending on October 31, 2008, the Series B convertible preferred shareholders
              have
              the right, at their election, to put any Series B convertible preferred
              stock to
              the Company for the amount paid for that stock.
 
 Additionally,
              in the nine months ended September 30, 2004, the Company sold 76,000
              shares of
              its Series C convertible preferred stock for $380,000. There were no
              fees
              associated with this offering.
 
 During
              the third quarter ended September 30, 2005, 5,000 shares of the Company’s series
              A preferred stock were converted into 5,000 shares of the Company’s common stock
              and 20,000 shares of the Company’s Series C preferred stock were converted into
              100,000 shares of the Company’s common stock.
 
 **b.
              Other equity transactions.** During
              the nine months ended September 30, 2005, the Company entered into
              various
              common stock equity transactions. Among others, the Company issued
              approximately
              596,000 shares of its common stock in exchange for certain services
              provided by
              non-employees and employees, who agreed to accept common stock at $0.50
              per
              share for services in lieu of cash compensation. **** As
              discussed
  F-11
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                  of Contents
  in
              Note
              4, the Company also issued 400,000 shares of its common stock as part
              of the
              consideration for its acquisition of Adline in February 2005 at $1.00
              per
              share.
 
 **c.
              Net loss per share:** Basic
              and diluted net loss per share is computed by dividing net loss by
              the weighted
              average number of common shares outstanding during the period. Potentially
              dilutive securities (approximately 8.0 million shares, excluding the
              number of
              shares repurchased with the cash proceeds from the exercise of the
              warrants and
              options) such as convertible preferred stock, options and warrants
              were not
              included in the diluted net loss calculation because the effect would
              have been
              anti-dilutive.
 
 **7.**  **Subsequent
              event:**
 
 In
              October 2005, the Company sold 125,000 shares of its common stock and
              125,000
              shares of its preferred series D each for $2 per share or a total of
              $500,000 to
              an unrelated party. As part of the transaction, the Company has agreed
              to
              appoint the new shareholder to its Board of Directors. Additionally,
              the buyer
              of the stock receives (a) certain rights including, among others, a
              monthly
              consulting fee of $5,000 (related to his planned efforts to secure
              incremental
              business and raise capital for the Company) and (b) rights to purchase
              up to 10%
              of the Company’s outstanding common stock at a 20% discount contingent upon
              future capital being raised.


F-12




**Item
      2.    Management’s Discussion and Analysis of
      Financial Condition and Results of Operation**





**Forward-Looking
      Statements**




Historical
      results and trends should not be taken as indicative of future operations.
      Management’s statements contained in this report that are not historical facts
      are forward-looking statements within the meaning of Section 27A of
      the
      Securities Act of 1933, as amended, and Section 21E of the Securities and
      Exchange Act of 1934 (the “Exchange Act”), as amended. Actual results may differ
      materially from those included in the forward-looking statements. We intend
      such
      forward-looking statements to be covered by the safe-harbor provisions for
      forward-looking statements contained in the Private Securities Litigation Reform
      Act of 1995, and is including this statement for purposes of complying with
      those safe-harbor provisions. Forward-looking statements, which are based on
      certain assumptions and describe our future plans, strategies and expectations,
      are generally identifiable by use of the
      words “believe,”“expect,”“intend,”“anticipate,”“estimate,”“project,”“prospects,”
      or similar expressions. Our ability to predict results or the actual effect
      of
      future plans or strategies is inherently uncertain. Factors which could have
      a
      material adverse affect on the operations and our future prospects on a
      consolidated basis include, but are not limited to: changes in economic
      conditions, legislative/regulatory changes, availability of capital, interest
      rates, competition, and generally accepted accounting principles. These risks
      and uncertainties should be considered in evaluating forward-looking statements
      and undue reliance should not be placed on such statements. Further information
      concerning our business, including additional factors that could materially
      affect our financial results, are included in this discussion as well as in
      our
      other filings with the Securities and Exchange Commission.





**Plan
      of Operations**




This
      discussion is intended to further the reader’s understanding of the consolidated
      financial condition and results of operations of Las Vegas Gaming, Inc. (the
      “Company” or “LVGI”). It should be read in conjunction with the financial
      statements included in this quarterly report on Form 10-QSB and our annual
      report on Form 10-KSB for the year ended December 31, 2004. These historical
      financial statements may not be indicative of our future
      performance.





**Overview**





Las
      Vegas
      Gaming, Inc. and subsidiaries (the “Company” or “LVGI”) is in the business of
      developing, marketing and distributing casino games, selling gaming supplies
      and
      keno equipment, and providing various related services to the gaming industry.
      Currently, we have the rights to a number of games, including, “Nevada
      Numbers Ô ”,
“The
      Million Dollar TicketTM”, “Super Bonanza Bingo” and “Gamblers Bonus Million
      Dollar TicketTM” (GBMDT).





Over
      the
      next several months, resources will be directed at launching and developing
      several new products, including the following:





1.
            Gamblers
                Bonus Million Dollar TicketTM;


2.
            A
                hand-held gaming device;


3.
            The
                capability of wagering on sports from a television
                set;


4.
            Pop-up
                Nevada NumbersTM.




Gamblers
      Bonus Million Dollar TicketTM. In mid-July 2005, we began the launch of a
      promotional version of The Million Dollar TicketTM (currently called Gamblers
      Bonus Million Dollar TicketTM). Gamblers Bonus Million Dollar TicketTM is being
      operated by United Coin and Machine Company, UCMC, the largest video poker
      route
      operator in Nevada. Customers are awarded tickets to a drawing


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for
      various prizes. The top prize is $1 million. Tickets are awarded based on a
      large variety of predetermined poker hands. UCMC will compensate LVGI for each
      ticket that is awarded.





Hand
      Held
      Gaming Device. The hand-held gaming device we are developing will be capable
      of
      playing keno, bingo, poker and various slot games, as well as placing sports
      bets. We are currently working to beta test this device with a large cruise
      ship
      line.





TV
      Sports
      Betting. Capitalizing on our acquisition of AdLine Gaming in the first quarter
      of 2005, we are attempting to extend its technology to enable sports bettors
      in
      Nevada to place bets while watching their television. This project is currently
      in development and we are thus still uncertain as to its potential for
      success.





Pop-up
      Nevada NumbersTM. Pop-up Nevada NumbersTM is another distribution method for
      Nevada NumbersTM where slot customers in larger casinos (with unrestricted
      licenses) can purchase a ticket at any touch screen video slot machine with
      “ticket in ticket out” (cashless) technology. This project is also currently in
      development and we are thus still uncertain as to its potential for
      success.





Implementation
      of all four of these projects can have a significant impact on our results,
      if
      successful.





We
      also
      recently completed the engineering of Optima, a state-of-the-art game management
      system. Initial customer interest has been encouraging and it is anticipated
      that the sale of our Optima system will increase over the next couple of years.
      Additionally, our bingo electronics supplier is introducing some new products
      that we hope will allow our electronic bingo revenue to grow as
      well.





The
      vast
      majority of our sales are generated in Nevada, with the majority coming from
      the
      southern part of the state. Looking forward to the next several years, we expect
      this concentration to increase, as a result of the launch of Pop-up Nevada
      NumbersTM, wagering from the television, and Gamblers Bonus Million Dollar
      TicketTM.  Keno equipment sales are expected to occur to a greater extent
      outside of Nevada.





**Liquidity
      and Capital Resources** **Payments
                  due by periods****(1)****:**
 **2005****(1)**
              
              **2006**
              
              **2007**
              
              **2008**
              
              **2009
                  and thereafter**
              
              **Totals**Debt:Adline
              $
              -
              
              $
              71,000
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              71,000CAMOFI
                  Master LDC (2)
              
              
              
              
              3,000,000
              
              
              
              
              
              
              
              
              
              
              
              3,000,000Vehicle
              
              1,860
              
              
              7,442
              
              
              7,442
              
              
              3,721
              
              
              
              
              
              20,465Other
              
              99,999
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              99,999AWI
                  Litigation Settlement
              
              
              
              
              463,793
              
              
              
              
              
              
              
              
              
              
              
              463,793**Totals**
              $
              101,859
              
              $
              3,542,235
              
              $
              7,442
              
              $
              3,721
              
              $
              -
              
              $
              3,655,257


(1)
            Payments
                due for 2005 include only the three months ending December 31,
                2005


(2)
            Payments
                shown for CAMOFI Master LDC exclude expected amortization of deferred
                finance charges of approximately $401,000 at September 30,
                2005.


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We
      have
      historically used cash from our operating activities and have relied on equity
      and debt financing to fund our operations. For the foreseeable future, we may
      continue to use cash from our operations and will be dependent on further debt
      or equity financing to fund developmental activities, operating costs, and
      debt
      obligations. Management, however, can give no assurance that it will be able
      to
      obtain financing at acceptable terms.





On
      July
      1, 2005, we entered into a securities purchase agreement (dated June 30, 2005)
      in which we sold notes in the face amount of $3,000,000 with CAMOFI Master
      LDC.
      A copy of this agreement was filed on form 8K on July 18, 2005. Under this
      agreement, we became simultaneously obliged to enter into additional commitment
      agreements, the terms and description of which generally are:





**1.**
            **A
                senior secured convertible note with a principal amount of $3,000,000,
                due
                on December 31, 2006. Certain of the material terms of this note
                are as
                follows:**




a.
            We
                have the right to prepay, in cash, all or a portion of the note for
                115%
                of the outstanding 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,
                we are
                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 our 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 us in an underwritten offering.





e.
            An
                annual commitment fee equal to 10% of the principal amount is payable
                to
                the Note holders in equal monthly installments until the note is
                paid in
                full.





f.
            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 our common stock; a change in
                our
                control; and, certain registration related
                failures.





2.
            A
                warrant registered in the name of the purchaser to purchase 1,050,000
                shares of our 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 us to register with the Securities
                and Exchange Commission the resale of 125% of the following within
                210
                days: (a) all of the shares of


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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 us and our subsidiaries, securing the
                repayment of the note with all our assets except for cash and
                leases.





5.
            A
                subsidiary guaranty, duly executed by our subsidiaries guarantying
                the
                repayment of the note and the
                agreement.





6.
            A
                lock-up agreement signed by our 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 2006, we were obligated to make payments of $250,000 monthly
                through December 2006. However, in September 2005, the agreement
                was
                amended whereby we are obligated to make installment payments of
                $125,000
                monthly, from April 2006 to November 2006 and a final payment in
                December
                2006 of $2,000,000.





The
      proceeds of the notes acquired were used, in part, as follows: $1.0 million
      to
      increase our jackpot reserves (if necessary to meet Nevada Gaming Control Board
      requirements) and $1.1 million for Pop-Up development/gaming device and LCD
      procurement, as necessary.





In
      October 2005, we sold 125,000 shares of our common stock and 125,000 shares
      of
      our preferred series D stock for $2 per share to an unrelated party, Mr. Steve
      Crystal. As part of the transaction, we agreed to appoint Mr. Crystal to our
      Board of Directors. Additionally, Mr. Crystal received certain rights including,
      among others, a monthly consulting fee of $5,000 (related to his efforts to
      secure incremental business and raise capital for us) and rights to purchase
      up
      to 10% of our outstanding common stock at a 20% discount contingent upon future
      capital being raised. It is expected that Mr. Crystal will be a significant
      contributor to our efforts to raise additional capital. Our plan is to use
      the
      $500,000 raised from this sale of stock for working capital and general
      corporate purposes.





During
      the first and second quarters, we received approximately $156,000 and $233,999,
      respectively, to fund the Nevada Gaming bankroll requirements. In the first
      quarter, repayment terms were uncertain and the entire amount was classified
      under current liabilities. In the second quarter, $90,000 of this amount was
      used by the lender to exercise options and the remainder was reclassified as
      interest free loans, with no definite due date. During the first quarter,
      $660,000 was received from the AWI bankruptcy settlement. $370,000 was booked
      as
      a payable to prior shareholders of ISI under the terms of the acquisition.
      Additional payments for the American Wagering Inc. bankruptcy settlement were
      received in the second quarter, and these were also booked as payables per
      terms
      of the acquisition agreement. During the first quarter, we completed an
      acquisition of AdLine Gaming, effectively acquiring a note payable for $71,000,
      due during the fourth quarter of 2005 with no interest.





As
      of
      September 30, 2005, we maintained $4,161,075 in jackpot reserve deposits
      (collectively, “Liquid Resources”). We are required to maintain cash deposits in
      conjunction with the operation of certain of our jackpot award games. In July
      2005, LVGI secured $3 million in interim financing. We anticipate that these
      funds should be adequate to fund our operations over the next several months
      by
      which time we plan to secure additional financing. However, no assurances can
      be
      given that we will obtain such


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financing,
      if needed, and the absence of such additional financing may have a material
      adverse impact on our financial stability. Additionally, catastrophic events,
      unexpected competition or lower interest rates could derail our expected growth
      and cash flows.





**Recently
      Issued Accounting Standards**





Emerging
      Issues Task Force (“EITF”) 04-8. In
      December 2004, the Financial Accounting Standards Board (the “FASB”) issued EITF
      No. 04-8, *The
      Effect of Contingently Convertible Debt on Diluted Earnings per
      Share* ,
      requiring the inclusion of convertible shares in diluted EPS regardless of
      whether the market price trigger has occurred for all periods presented. We
      would include the effect of our contingently convertible debt for our
      potentially dilutive securities. However, because of net losses, there is no
      impact to our calculation of dilutive earnings per share.





SFAS
      123(R). In
      December 2004, the FASB issued Statement of Financial Accounting Standard
      (“SFAS”) No. 123 (revised 2004), *Share-Based
      Payment* ,
      replacing SFAS No. 123, *Accounting
      for Stock-Based Compensation* ,
      and
      superseding APB No. 25, *Accounting
      for Stock Issued to Employees* .
      SFAS
      No. 123(R) requires recognition of share-based compensation in the financial
      statements. SFAS No. 123(R) will be effective for us and will be adopted in
      the
      first quarter of 2006. We anticipate no material impact on our future results
      of
      operations, financial position or cash flows as a result of adopting this
      statement.





SFAS
      151. In
      November 2004, the FASB issued SFAS No. 151, *Inventory
      Costs* ,
      amending ARB 43 Chapter 4, “Inventory Pricing.” SFAS 151 clarifies the
      accounting for abnormal amounts of idle facility expense, freight and handling
      costs, and wasted material (spoilage). SFAS 151 introduces the concept of
“normal capacity” requiring allocation of fixed production overheads to
      inventory based upon normal capacity of production facilities. Unallocated
      overhead costs must be expensed in the period in which they are incurred. This
      statement is effective for inventory costs incurred during fiscal years
      beginning after June 15, 2005. We anticipate no material impact on our future
      results of operations’ financial position or cash flows as a result of adopting
      this statement.





SFAS
      154.  In
      May
      2005, the FASB issued SFAS No. 154 *,
      Accounting Changes and Error Corrections, a Replacement of*  *APB
      Opinion No. 20 and SFAS No. 3* . SFAS No. 154replaces
      APB Opinion No. 20,*Accounting**Changes*and SFAS
      No 3,*Reporting
      Accounting Changes in Interim Financial Statements*and
      changes the requirement for the accounting for and reporting of a change in
      accounting principles. SFAS No. 154 applies to all voluntary changes in
      accounting principles and to changes required by any accounting pronouncement
      that does not include specific transition provisions. The provisions of SFAS
      No.
      154 will be effective for accounting changes made in fiscal years beginning
      after December 15, 2005.We
      have
      no present expectation to make any accounting changes in the foreseeable future
      that would be subject to SFAS No. 154.





**Results
      of operations**





**Nine
      months ended September 30, 2005 and 2004:**





Revenues
      for the nine months ended September 30, 2005, were $4,375,403, an increase
      of
      $871,586 or 20% from the nine months ended September 30, 2004. The increase
      was
      across all product lines with the Products segment increasing the most at 27%
      while the Games segment increased 22%, and the Other segment increased 9%.
      The
      increase in the Products segment was again mainly due to the new Optima system
      sales in the states of Washington (four new systems), Nebraska (three new
      systems), Arizona (two new systems) and in Montana (five new
      systems).


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The
      prime
      driver of the increase in the Games segment was the increase in Super Bonanza
      revenue (approximately $52,000) as we continue to expand this product into
      other
      regional areas in the U.S. The significant increase in Super Bonanza revenue
      (and to a somewhat lesser degree, The Million Dollar TicketTM in Nevada) was
      partially offset by the continued slow erosion in Nevada NumbersTM revenue and
      the discontinuance of The Million Dollar TicketTM outside Nevada. Management
      believes that, due to lack of insurance available to many smaller capitalized
      customers, sales of this product have declined in jurisdictions outside
      Nevada.





The
      operating loss for the nine month period ending September 30, 2005 increased
      by
      approximately $1,285,984 over the comparable period in 2004. Several factors
      contributed to this decline in operating results including:





·
            An
                increase in administrative wages and salaries (approximately $456,000)
                arising from the hiring of certain management personnel and providing
                for
                market based increases for current key executives which were approved
                by
                our Board of Directors in August 2005 but remain
                unpaid;


·
            An
                increase in professional fees (approximately $65,000) associated
                with
                raising of capital and correspondence with outside regulatory agencies
                as
                well as increases in sales related costs (approximately
                $130,000);


·
            An
                increase in costs of sales (approximately $200,000) related to the
                roll-out of our Million Dollar TicketTM launch whereby significant costs
                have been expended ahead of the eventual revenues to be ultimately
                received from the product;


·
            An
                increase in research and development costs of approximately $285,000
                relating to the acquisition of Adline;
                and


·
            An
                increase in depreciation and amortization expense (approximately
                $150,000)
                from the purchases of property and equipment and from the acquisition
                of
                certain intangible assets related to the Adline acquisition during
                2005.





The
      Games
      segment lost approximately $444,951 more in the nine months ended September
      30,
      2005 over the same time frame of 2004. A large portion of this was due to
      increased salaries of almost $183,000. Additionally, we incurred increased
      insurance costs of approximately $97,000 and unexpected losses from jackpot
      awards and higher interest rates of approximately $150,000.





**Critical
      Accounting Estimates and Policies**





Although
      our financial statements necessarily make use of certain accounting estimates
      by
      management, except as described below, we believe there are no matters that
      are
      the subject of such estimates are so highly uncertain or susceptible to change
      as to present a significant risk of a material impact on our financial condition
      or operating performance. Moreover, we do not employ any critical accounting
      policies that are selected from among available alternatives or require the
      exercise of significant management judgment to apply.





**Goodwill** .
      We are
      organized into reporting units as reflected in the segment information described
      in Note 1 to the consolidated financial statements. This organization, among
      other things, enables appropriate goodwill impairment analysis. Since the
      recorded goodwill relates to recently acquired segments (TWIN and ISI) of our
      business, and since the operations of such segments are producing significant
      positive cash flow and operating results, management believes that the fair
      value of the reporting units exceeds their carrying amounts and, therefore,
      there is no impairment and no need to compare the carrying value to an “implied
      fair value” calculation. However, goodwill will continue to be evaluated
      periodically for impairment as events or circumstances warrant. Such evaluations
      may


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include,
      among other analysis, cash flow and profitability forecasts, including the
      impact on our other operations. Numerous estimations are required in predicting
      the future profitability of the related businesses and the marketability of
      their products within the competitive market; in other words, the businesses’
      competitive position and estimated ability to compete. Although operating
      results continue to improve for the recently acquired segments, the conservative
      belief that profitability at past levels at least will continue negates, in
      management’s opinion, the need for further impairment consideration at this
      time. Management further believes that the synergy of the acquisitions will
      continue to have positive effects as well.





**Private
      Securities Litigation Reform Act**





Certain
      statements in this Quarterly Report on Form 10-QSB which are not historical
      facts are forward-looking statements, such as statements relating to future
      operating results, existing and expected competition, financing and refinancing
      sources and availability and plans for future business development or expansion
      activities, capital expenditures and expansion of business operations into
      new
      areas. Such forward-looking statements involve a number of risks and
      uncertainties that may significantly affect our liquidity and results in the
      future and, accordingly, actual results may differ materially from those
      expressed in any forward looking statements. Such risks and uncertainties
      include, but are not limited to, those related to effects of competition,
      leverage and debt service, general economic conditions, changes in gaming laws
      or regulations (including the legalization of gaming in various jurisdictions)
      and risks related to business development activities and the start-up of
      non-gaming operations.





**Quantitative
      and Qualitative Disclosures About Market Risk**




Market
      risk is the risk of loss arising from changes in market rates and prices, such
      as interest rates, foreign currency exchange rates and commodity process. We
      do
      not have any interest-bearing debt as of September 30, 2005. However, we are
      required to maintain certain cash reserves and deposits for jackpots that we
      must pay when a patron wins a jackpot award. The Nevada NumbersTM jackpot award
      of $5.0 million is to be paid over 20 years based on a present value calculation
      discounted at the prevailing 20-year U.S. Treasury bond rate. Therefore, we
      maintain certain market rate risk related to this jackpot. A change in the
      U.S.
      Treasury bond rates of 1% would cause an approximate $250,000 change in the
      amount of jackpot expense accrued and which would be ultimately paid over the
      25-year period.





**Item
      3.     Controls and Procedures**





We
      carried out an evaluation of the effectiveness of the design and operation
      of
      our disclosure controls and procedures (as defined in Exchange Act Rules
      13a-15(e) and 15d-15(e)) as of September 30, 2005. This evaluation was carried
      out under the supervision and with the participation of our Chief Executive
      Officer and Chief Financial Officer, Mr. Russell Roth. Based upon that
      evaluation, our Chief Executive Officer and Chief Financial Officer concluded
      that, as of September 30, 2005, our disclosure controls and procedures are
      effective. There have been no significant changes in our internal controls
      over
      financial reporting during the quarter ended September 30, 2005 that have
      materially affected or are reasonably likely to materially affect such controls.





Disclosure
      controls and procedures are controls and other procedures that are designed
      to
      ensure that information required to be disclosed in our reports filed or
      submitted under the Exchange Act are recorded, processed, summarized and
      reported, within the time periods specified in the SEC's rules and forms.
      Disclosure controls and procedures include, without limitation, controls and
      procedures designed to ensure that information required to be disclosed in
      our
      reports filed under the Exchange Act


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is
      accumulated and communicated to management, including our Chief Executive
      Officer and Chief Financial Officer, to allow timely decisions regarding
      required disclosure.





Limitations
      on the Effectiveness of Internal Controls





Our
      management does not expect that our disclosure controls and procedures or our
      internal control over financial reporting will necessarily prevent all fraud
      and
      material error. An internal control system, no matter how well conceived and
      operated, can provide only reasonable, not absolute, assurance that the
      objectives of the control system are met. Further, the design of a control
      system must reflect the fact that there are resource constraints, and the
      benefits of controls must be considered relative to their costs. Because of
      the
      inherent limitations in all control systems, no evaluation of controls can
      provide absolute assurance that all control issues and instances of fraud,
      if
      any, within our operations have been detected. These inherent limitations
      include the realities that judgments in decision-making can be faulty, and
      that
      breakdowns can occur because of simple error or mistake. Additionally, controls
      can be circumvented by the individual acts of some persons, by collusion of
      two
      or more people, or by management override of the internal control. The design
      of
      any system of controls also is based in part upon certain assumptions about
      the
      likelihood of future events, and there can be no assurance that any design
      will
      succeed in achieving our stated goals under all potential future conditions.
      Over time, control may become inadequate because of changes in conditions,
      or
      the degree of compliance with the policies or procedures may deteriorate.




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**PART
      II - OTHER INFORMATION**





**Item
      1.     Legal
      Proceedings**





We
      are
      not a party to any pending legal proceeding. We are not aware of any pending
      legal proceeding to which any of our officers, directors, or any beneficial
      holders of 5% or more of our voting securities are adverse to us or have a
      material interest adverse to us.





**Item
      2.     Unregistered Sales of Equity
      Securities and Use of Proceeds**





In
      July
      2005, we
      obtained $3,000,000 in new financing by issuing Senior Secured Convertible
      Notes
      (“notes”). The notes are due in monthly payments of $125,000 beginning April
      2006 with a final payment of $2,000,000 in December 2006. An annual commitment
      fee equal to 10% of the principal amount is payable to the note holder in equal
      monthly installments until the note is paid in full.





Along
      with the issuance of the notes, the note holder received warrants to purchase
      1,050,000 shares of our common stock at $1.48 per share for a period of up
      to
      five years from the date of the issuance of the notes.





The
      notes
      are convertible into shares of our
      common stock at the option of the holder, in whole or in part, at any time
      and
      from time to time at a price of $1.345 per share. Additionally, upon the
      completion of an underwritten offering, 50% of the aggregate principal amount
      of
      the notes automatically convert into shares of common stock at the lesser of
      $1.345 or 75% of the effective price per share received by us in the
      underwritten offering.





These
      notes were issued pursuant to the general exemption from registration provided
      by Section 4(2) of the Securities Act as well as rule 506 of Regulation D of
      the
      Act.





During
      the reported quarter, 5,000 shares of our series A preferred stock were
      converted into 5,000 shares of our common stock and 20,000 shares of our Series
      C preferred stock were converted into 100,000 shares of our common
      stock.





In
      addition, during the nine months ended September 30, 2005, we entered into
      various common stock equity transactions. Among others, we issued approximately
      596,000 shares of our common stock in exchange for certain services provided
      by
      non-employees consultants and employees, who agreed to accept common stock
      at
      $0.50 per share for services in lieu of cash compensation. ****





Subsequent
      to the reported quarter, in October 2005, we sold 125,000 shares of our common
      stock and 125,000 shares of our preferred series D each for $2 per share for
      a
      total of $500,000 to an unrelated party. As part of the transaction, we agreed
      to appoint the buyer to our Board of Directors. Additionally, the buyer of
      the
      stock receives certain rights including, among others, (a) a monthly consulting
      fee of $5,000 (related to his planned efforts to secure incremental business
      and
      raise capital for the Company); and (b) the right to purchase up to 10% of
      our
      outstanding common stock at a 20% discount contingent upon future capital being
      raised.





**Item
      3.     Defaults upon Senior
      Securities**





None


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**Item
      4.     Submission of Matters to a Vote of
      Security Holders**





No
      matters have been submitted to our security holders for a vote, through the
      solicitation of proxies or otherwise, during the quarterly period ended
      September 30, 2005. Subsequent to the end of the quarter, however, on October
      21, 2005, we held our annual shareholder meeting in which we voted on and
      approved the following:





1.  The
      re-election of our three directors; and




2.  The
      approval of an amendment to our Articles of Incorporation to authorize our
      Board
      of Directors
      to create and issue different classes of common stock.





**Item
      5.     Other
      Information**




Effective
      October 31, 2005, Mr. Stephen Crystal was appointed to serve as a member of
      our
      board of directors until the next annual meeting of the shareholders or until
      removed by other action as allowed by the corporate bylaws.


Mr.
        Crystal has also been appointed as the Chairman of our Compensation Committee.
 
 Stephen
        Crystal is currently vice chairman, president and co-owner of Barrick Gaming
        Corp., a private company operating six hotel casinos in downtown Las Vegas,
        Nevada. He has held that position since 2000. Collectively, Barrik Gaming
        Corp.
        manages 2000 employees, operating 2000 hotel rooms and 250,000 square feet
        of
        gaming. In addition, Mr. Crystal is a partner in the St. Louis, Missouri
        based
        law firm of Armstrong Teasdale, serving clients on a national as well as
        international level. Mr. Crystal has been a member of the Washington DC chapter
        of Young Presidents Organization since 2004. Mr. Crystal is also the owner
        of an
        investment company, JMC Investments, LLC and through that company has made
        numerous investments in real estate, gaming and other private operating
        businesses. Mr. Crystal is a member of the International Masters of Gaming
        Law
        Organization and has been recognized by Best Lawyers as a Best Lawyer in
        the
        gaming sector. Mr. Crystal currently holds an owner/operator gaming license
        in
        the State of Nevada and law licenses in Missouri, Kansas and the District
        of
        Columbia.
 
 Mr.
        Crystal has not had any material direct or indirect interest in any of our
        transactions or proposed transactions over the last two years.
 
 There
        are
        no family relationships between Mr. Crystal and any of our officers or
        directors.




**Item
      6.      Exhibits**





**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 200231.2
            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 200232.1
            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**





In
      accordance with the requirements of the Securities and Exchange Act of 1934,
      the
      Registrant has duly caused this report to be signed on its behalf by the
      undersigned, thereunto duly authorized.





Las
                Vegas Gaming, Inc.Date:
            November
                17, 2005By:       /s/
                Russell R. Roth
              **Russell
                Roth**
              Title:**Chief
                Executive Officer, Chief Financial Officer, and
                Director**