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 endedMarch
                31, 2006[
                ]
            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 : 9,410,020
      shares of Common Stock as of May 12, 2006.





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


1
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          of Contents





**Table
      of Contents**


**LAS
      VEGAS GAMING, INC.**





**INDEX**


**Page****PART I**
              **FINANCIAL
                  INFORMATION**Item
                1
              Unaudited
                  Condensed Consolidated Financial Statements:Consolidated
                  Balance Sheets as of March 31, 2006 and December
                  31, 2005
              3Consolidated
                  Statements of Operations - three months ended
                  March 31, 2006 and 2005;
              4Consolidated
                  Statement of Stockholders’ Equity -three
                  months ended March 31, 2006;
              5Consolidated
                  Statements of Cash Flows - three months ended
                  March 31, 2006 and 2005
              6NotestoCondensed Consolidated Financial Statements
              7-11Item 2
              Management’s
                  Discussion and Analysis of Financial Condition and
                  Results of Operations
              12Item
                3
              Controls
                  and Procedures
              19**PART
                II**
              **OTHER
                  INFORMATION**Item
                1
              Legal
                  Proceedings
              20Item
                2
              Unregistered
                  Sales of Securities and Use of
                  Proceeds
              20Item
                3
              Defaults
                  Upon Senior Securities
              20Item
                4
              Submission
                  of Matters to a Vote of Security Holders
              20Item
                5
              Other
                  Information
              20Item
                6
              Exhibits
              20


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**LAS
        VEGAS GAMING, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
        BALANCE SHEETS**
 **MARCH
        31, 2006 (UNAUDITED) AND DECEMBER 31, 2005**
  **2006**
              
              
              **2005****ASSETS****Current
                  assets**Cash
              **$**
              **1,275,012**
              
              **$**
              **1,672,381**Accounts
                  receivable, net of allowance of $27,516 for 2006 and 2005
              
              **551,385**
              
              
              **729,590**Inventory
              
              **447,633**
              
              
              **418,015**Prepaid
                  expenses
              
              **170,057**
              
              
              **94,750**Jackpot
                  reserve deposits
              
              **4,055,207**
              
              
              **4,180,134****6,499,294**
              
              
              **7,094,870****Equipment
                  and software, net of accumulated depreciation**
              
              **581,601**
              
              
              **613,645****Other
                  assets**Goodwill
              
              **955,277**
              
              
              **955,277**Trademarks,
                  copyrights, patents and other identifiable intangibles, net
                  ofaccumulated
                  amortization of $291,488 and $163,488
              
              **2,157,930**
              
              
              **833,597**Due
                  from officers, including accrued interest
              
              **73,475**
              
              
              **68,942**Deferred
                  finance charges
              
              **198,719**
              
              
              **151,135**Deposits
                  and other
              
              **141,865**
              
              
              **336,355****$**
              **10,608,161**
              
              **$**
              **10,053,821****LIABILITIES
                  AND STOCKHOLDERS' EQUITY****Current
                  liabilities**Accounts
                  payable and accrued expenses
              **$**
              **456,868**
              
              **$**
              **776,791**Current
                  portion of long-term debt
              
              **633,971**
              
              
              **588,434**Progressive
                  jackpot liability
              
              **1,423,495**
              
              
              **1,224,719****2,514,334**
              
              
              **2,589,944****Long-term
                  debt**
              
              **3,009,302**
              
              
              **3,011,163****Conditionally
                  redeemable equity**Common
                  Stock, 75,000 shares
              
              -
              
              
              **25,000**Series
                  B convertible preferred stock, $.001 par, 346,140 shares issued
                  andoutstanding
                  at March 31, 2006 and December 31, 2005
              
              **1,730,700**
              
              
              **1,730,700****1,730,700**
              
              
              **1,755,700****Stockholders'
                  equity**Convertible
                  preferred stock, $.001 par, 10,000,000 shares authorized:Series
                  A: 536,400 shares issued and outstanding at March 31, 2006 and
December
                  31, 2005
              
              **536**
              
              
              **536**Series
                  C : 56,000 shares issued and outstanding at March 31, 2006 and
December
                  31, 2005
              
              **56**
              
              
              **56**Series
                  D: 125,000 shares issued and outstanding at March 31, 2006 and
December
                  31, 2005
              
              **125**
              
              
              **125**Common
                  stock $.001 par, 90,000,000 shares authorized, 9,300,020
                  and8,465,020
                  shares issued and outstanding at March 31, 2006 and December
                  31, 2005
              
              **9,300**
              
              
              **8,465**Additional
                  paid-in capital
              
              **17,152,401**
              
              
              **15,558,130**Less
                  due from officers and stockholders
              
              **(320,000)**
              
              
              **(320,000)**Deficit
              
              **(13,488,593)**
              
              
              **(12,550,298)****3,353,825**
              
              
              **2,697,014****$**
              **10,608,161**
              
              **$**
              **10,053,821**
  The
          accompanying notes are an integral part of these financial
          statements.
  3
 Table
              of Contents
 **LAS
          VEGAS GAMING, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
          STATEMENTS OF OPERATIONS (UNAUDITED)**
 **THREE
          MONTHS ENDED MARCH 31, 2006 AND 2005**
  **2006**
                
                
                **2005****Revenues**Casino
                    games
                **$**
                **455,733**
                
                **$**
                **407,851**Product
                    sales
                
                **454,613**
                
                
                **538,112**Other
                
                **425,872**
                
                
                **512,979****1,336,218**
                
                
                **1,458,942****Costs
                    and expenses**Casino
                    games, net of progressive liability changes of $(87,619)In
                    2006 and $(3,205) in 2005
                
                **526,871**
                
                
                **371,842**Product
                    costs
                
                **315,006**
                
                
                **361,275**Other
                
                **329,560**
                
                
                **380,179****1,171,437**
                
                
                **1,113,296****Gross
                    operating income**
                
                **164,781**
                
                
                **345,646****Other
                    operating expenses**Selling,
                    general, and administrative
                
                **659,695**
                
                
                **580,869**Research
                    and development
                
                **202,000**
                
                
                **197,169**Depreciation
                    and amortization
                
                **147,029**
                
                
                **93,907****1,008,724**
                
                
                **871,945****Operating
                    loss**
                
                **(843,943)**
                
                
                **(526,299)****Other
                    income and expense**Finance
                    costs
                
                **(141,326)**
                
                
                **-**Interest
                    and other income
                
                **46,974**
                
                
                **165,434****Net
                    loss**
                **$**
                **(938,295)**
                
                **$**
                **(360,865)****Net
                    loss per share**
                **$**
                **(0.11)**
                
                **$**
                **(0.05)****Weighted
                    average shares outstanding**
                
                **8,905,020**
                
                
                **7,331,455**
  The
          accompanying notes are an integral part of these financial
          statements.
  4
 Table
            of Contents
  **LAS
          VEGAS GAMING, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
          STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)**
 **THREE
          MONTHS ENDED MARCH 31, 2006**
  Series
                    A
                
                
                Series
                    C
                
                
                Series
                    DPreferred
                
                
                Preferred
                
                
                Preferred
                
                
                Common
                
                
                Additional
                
                
                Due
                    FromStock
                
                
                Stock
                
                
                Stock
                
                
                Stock
                
                
                Paid-In
                
                
                Officer/Par
                    Value
                
                
                Par
                    Value
                
                
                Par
                    Value
                
                
                Par
                    Value
                
                
                Capital
                
                
                Shareholder
                
                
                DeficitBalances,
                    January 1, 2006
                $
                536
                
                $
                56
                
                $
                125
                
                $
                8,465
                
                $
                15,558,130
                
                $
                (320,000)
                
                $
                (12,550,298)Net
                    loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (938,295)Exercise
                    of warrants and options
                
                
                
                
                
                
                
                
                
                
                60
                
                
                87,690Issuance
                    of warrants
                
                
                
                
                
                
                
                
                
                
                
                
                
                82,356Elimination
                    of conditionallyredeemable
                    equity
                
                
                
                
                
                
                
                
                
                
                75
                
                
                24,925Shares
                    issued in connection withacquisition
                
                
                
                
                
                
                
                
                
                
                700
                
                
                1,399,300Balances,
                    March 31, 2006
                $
                536
                
                $
                56
                
                $
                125
                
                $
                9,300
                
                $
                17,152,401
                
                $
                (320,000)
                
                $
                (13,488,593)
 The
          accompanying notes are an integral part of these financial
          statements.
    5
 Table
              of Contents
 **LAS
          VEGAS GAMING, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
          STATEMENTS OF CASH FLOW (UNAUDITED)**
 **FOR
          THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005**
  **2006**
                
                
                **2005****Operating
                    activities**Net
                    cash used in operating activities
                $
                (401,728)
                
                $
                (203,854)**Investing
                    activities**Acquisition
                    of business
                
                
                
                
                (500,000)Purchase
                    of property and equipment
                
                (39,317)
                
                
                (20,177)Net
                    cash used in investing activities
                
                (39,317)
                
                
                (520,177)**Financing
                    activities**Collections
                    on behalf of others
                
                45,536
                
                
                660,000Repayment
                    of other debt borrowings
                
                (1,860)
                
                
                (320,000)Other
                
                
                
                
                10,000Net
                    cash provided by financing activities
                
                43,676
                
                
                350,000**Net
                    decrease in cash**
                
                (397,369)
                
                
                (374,031)**Cash,
                    beginning of period**
                
                1,672,381
                
                
                586,169**Cash,
                    end of period**
                $
                1,275,012
                
                $
                212,138**Non-cash
                    investing and financing activities**Common
                    stock issued for assets/acquisition
                $
                1,400,000
                
                $
                400,000Elimination
                    of conditionally redeemable equity
                $
                25,000Issuance
                    of warrants
                $
                82,356Exercise
                    of stock warrants and options
                $
                87,750Liabilities
                    assumed in business acquisition
                
                
                
                $
                278,487
  The
          accompanying notes are an integral part of these financial
          statements.


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**LAS
      VEGAS GAMING, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED
      CONSOLIDATED FINANCIAL STATEMENTS**




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





The
      accompanying condensed 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, 2005,
      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.




2. **Accounting
      for Stock-based Compensation.**




On
      January 1, 2006, the Company formally adopted the fair value recognition
      provisions of Financial Accounting Standards Board (“FASB”) Statement
      No. 123(R), *Share-Based
      Payment* ,
      (“FAS
      123R”). Prior to January 1, 2006, it had accounted for share-based payments
      under the recognition and measurement provisions of FASB Statement No. 123, *Accounting
      for Stock-Based Compensation* (“FAS
      123”). The Company has historically recognized compensation cost based on the
      grant-date fair value estimated in accordance with FAS 123 and based on vesting
      periods associated with stock option and warrant grants.





The
      Company adopted FAS 123R using the modified-prospective-transition method.
      Under
      that transition method, compensation cost recognized in future interim and
      annual reporting periods includes: a) compensation cost for all share-based
      payments granted prior to, but not yet vested as of January 1, 2006, based
      on
      the grant-date fair value estimated in accordance with the original provisions
      of Statement 123, and b) compensation cost for all share-based payments granted
      subsequent to January 1, 2006, based on the grant-date fair value estimated
      in
      accordance with the provisions of FAS 123R. The results for the prior periods
      have not been restated as amounts were deemed insignificant and the Company
      has
      accounted for share-based compensation generally under the provisions of FAS
      123R.





There
      was
      no affect on operations for the quarter ended March 31, 2006 from adopting
      FAS
      123R.





The
      following tables summarize stock option and warrant activity during the first
      quarter of calendar 2006 and for calendar year 2005 under all
      plans:





7
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**Number of**
              **Options/Warrants**
              **(000s)**
            
            **Weighted-**
              **Average**
              **Exercise Price**
              **Per
                Share**
            
            **Weighted-**
              **Average**
              **Remaining**
              **Contractual**
              **Term**
            
            
            **Aggregate**
              **Intrinsic Value**
              **($000s)**Options
                and warrants outstanding at December 31, 2005:
            5,133
            
            $
            2.33
            
            3.4 years
            
            $
            216,459Granted
            230
            
            
            2.00
            
            .74
                years
            
            
            N/AExercised
            (60)
            
            
            1.46
            
            N/A
            
            
            N/ACanceled
            (69)
            
            
            3.16
            
            N/A
            
            
            N/AOptions
                and warrants outstanding March 31, 2006:
            5,234
            
            
            2.31
            
            3.2
                years
            
            $
            0Exercisable
                at March 31, 2006:
            5,059
            
            
            2.30
            
            2.1
                years
            
            $
            0




**Number of**
                **Options/Warrants**
                **(000’s)**
              
              **Weighted-**
                **Average**
                **Exercise Price**
                **Per
                  Share**
              
              **Weighted-**
                **Average**
                **Remaining**
                **Contractual**
                **Term**
              
              
              **Aggregate**
                **Intrinsic Value**
                **($000’s)**Options
                  and warrants outstanding at December 31, 2004:
              3,428
              
              $
              2.50
              
              3.4
                  years
              
              $
              N/AGranted
              1,968
              
              
              1.89
              
              3.4
                  years
              
              $
              N/AExercised
              (190)
              
              
              .53
              
              N/A
              
              
              N/ACanceled
              (73)
              
              
              3.52
              
              N/A
              
              
              N/AOptions
                  and warrants outstanding December 31, 2005:
              5,133
              
              
              2.31
              
              3.4
                  years
              
              $
              216,459Exercisable
                  at December 31, 2005
              4,948
              
              
              2.30
              
              3.3
                  years
              
              $
              0




There
      were approximately 672,162 unvested options and warrants at March 31,
      2006.




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





**Gaming
      regulations and licensing** .
      The
      Company is licensed with eight individual states and several Native American
      organizations. From time to time, the Company will seek licensure in other
      gaming jurisdictions to participate in such gaming opportunities. 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.




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**Progressive
      jackpots** .
      The
      Company 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 “Maximum Exposure” at March 31, 2006, and related
      assumptions:





**Nevada
                NumbersTM**
            
            Progressive
              Jackpot
              Liability
            
            
            Maximum
              ExposurePresent
                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
            $
            3,254,169
            
            $
            3,254,169Present
                value at 5.07% of the $1,230,788 increase to the progressive jackpot
                meter
            
            801,038
            
            
            801,038Jackpot
                reserve deposits
            
            4,055,207
            
            
            4,055,207Less
                portion insured throughconventional
                insurance providers
            
            (2,900,000)Other
                games
            
            268,288
            
            
            1,268,288$
            1,423,495
            
            $
            5,323,495


As
      of
      March 31, 2006, all amounts required to be on deposit for jackpot reserves
      were
      on deposit.





**4.**  **Acquisition
      of Rights:**





During
      the three months ended March 31, 2006, the Company issued 700,000 shares of
      common stock at $2 per share in exchange for the rights to WagerVision from
      AdLine Network, the same company from which AdLine Gaming was purchased in
      2005.
      The rights purchased allow for “wagering” or “betting” activity to be conducted
      in the home via AdLine Network technology. The
      Company is currently amortizing this asset over an estimated useful life of
      5
      years. Further,
      the Company will pay AdLine Network 5% of its net revenue (gross revenue less
      the theoretical cost of any pay-outs) derived from the purchased
      rights.





In
      addition, the agreement contained a mutual release of claims to clear any
      misunderstandings that arose between the parties in connection with this or
      any
      prior agreement between the parties.




**5.**  **Debt:**





In
      July
      2005, the Company obtained $3,000,000 in new financing by issuing Senior Secured
      Convertible Notes (“notes”). In March 2006, the Company entered into an
      agreement to refinance the debt. The funding took place in April 2006. Pursuant
      to Financial Accounting Standards Board Statement No. 6, *Classification
      of Short-Term Obligations Expected to Be Refinanced* ,  debt
      as
      of March 31, 2006, has been classified in the balance sheet based on retroactive
      effect to the April refinancing (Note 7).




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**6.**  **Net
      Loss per Share:**





Basic
      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 9.3 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 to do so would have been
      anti-dilutive.





**7.**  **Subsequent
      event:**





In
      April
      2006, the Company obtained funding related to the restructured financing
      arrangement with the holders of its $3,000,000 Senior Secured Notes due December
      2006. The restructured financing will increase the indebtedness of the Notes
      to
      $5,000,000 and monthly principal payments of $209,333 will begin in March 2007
      with quarterly commitment fee payments of $125,000 beginning on July 1, 2006.
      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 noteholder in conjunction with this debt.





The
      Company replaced its previously issued 1,050,000 warrants issued to the
      noteholders with 2,500,000 and the warrants vest immediately and have a
      five-year life with an exercise price of $1.48. The value of the warrants is
      estimated to be approximately $2.1 million and will be expensed over the term
      of
      the notes. Additionally, fees of approximately $300,000 have been incurred
      with
      the restructured debt, which will capitalized and amortized over the term of
      the
      notes. The Company plans to use the net proceeds of approximately $1.7 million
      for general corporate purposes and funding of additional games. In the second
      quarter, the Company will charge to expense approximately $190,000 of
      unamortized loan issue costs associated with the prior financing arrangement
      in
      the second quarter of 2006.





**8.**  **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 21 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 three months of 2006 was approximately 66% (versus 62% in 2005) from
      the
      bingo game and 34%  from
      the
      keno games. A fourth game (Gambler’s Bonus Million Dollar TicketTM, a game within
      the PromoNet product line) is soon to be launched and will increase the keno
      component of the Games segment considerably. A successful trial period lasting
      30 days at five locations was completed in August of 2005 and the Company plans
      to install this game in up to 400 other locations. Currently, the game is set
      to
      launch on June 15, 2006.





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




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comprised
      approximately 63% and 50% of all Product sales for
      the
      three months ended March
      31,
      2006 and 2005, respectively. The Company’s keno equipment is installed in over
      70 casinos worldwide.





The
      “Other” segment includes revenue from equipment maintenance contracts (39% for
      the three months ended March 31, 2006, compared to 41% for the comparable period
      in 2005); operation of a keno route (22% of revenue for the three months ended
      March 31, 2006, and 31% for the comparable period in 2005); the distribution
      of
      bingo electronic devices (29% and 21%, respectively, for the three months ended
      March 31, 2006 and 2005); and, keno route participation agreements (10% and
      7%,
      respectively, for the three months ended March 31, 2006 and 2005). Results
      for
      these segments and certain unallocated expenditures for the three months ended
      March 31, 2006 and 2005 are set forth below:




2006
            
            2005RevenuesCasino
                Games
            $
            455,733
            
            $
            417,027Product
                Sales
            
            454,613
            
            
            528,936Other
            
            425,872
            
            
            512,979$
            1,336,218
            
            $
            1,458,942Operating
                income/(loss)Casino
                Games
            $
            (71,138)
            
            $
            (49,491)Product
                Sales
            
            139,606
            
            
            129,565Other
            
            96,312
            
            
            124,530Unallocated
            
            (1,008,723)
            
            
            (730,903)$
            (843,943)
            
            $
            (526,299)Capital
                ExpendituresCasino
                Games
            $
            19,346
            
            $
            18,185Product
                SalesOther
            
            12,711Unallocated
            
            7,260
            
            
            42,992$
            39,317
            
            $
            61,177




Identifiable
      assets as of March 31, 2006, and December 31, 2005, are set forth
      below:




Identifiable
                assetsCasino
                Games
            
            $
            7,088,609
            
            $
            5,809,723Product
                Sales
            
            
            472,726
            
            
            456,634Other
            
            
            429,802
            
            
            496,081Unallocated
            
            
            2,617,024
            
            
            3,291,383$
            10,608,161
            
            $
            10,053,821




Identifiable
      assets at March 31, 2006, and December 31, 2005 include recorded goodwill of
      $955,277 at both dates that has not been allocated between Products Sales and
      Other.


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**I****tem
      2.****Management’s
      Discussion and Analysis of Financial Condition and Results 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 the Company’s
      annual report on Form 10-KSB for the year ended December 31, 2004. These
      historical financial statements may not be indicative of the Company’s future
      performance.





**Overview**





We
      are 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).





We
      have
      developed keno and bingo style casino games. Our keno style games include Nevada
      Numbers Ô and
      a
      linked, progressive 10-spot game known as The Million Dollar TicketTM. Our bingo
      style game, named Super Bonanza, is currently being played in 25 locations
      in
      six different states. During 2006, we will continue to expend resources into
      launching our PromoNet product line (specifically called Gamblers Bonus Million
      Dollar TicketTM) and PortalVision (and its derivates like Pop-Up Nevada
      NumbersTM). Gamblers Bonus Million Dollar TicketTM will be operated in cooperation
      with the largest slot route operator in Nevada. Customers of the slot route
      operator/establishment owner will be awarded drawing tickets to a promotional
      jackpot based on predetermined winning slot payout combinations. The slot
      operator/establishment owner will compensate us for each ticket that is issued.
      In mid 2005, resources were directed at the testing phase of establishing
      Gamblers Bonus Million Dollar TicketTM. Efforts in 2006 will focus on launching
      the game and earning some revenue from it. Pop-up Nevada NumbersTM (a component
      of the PortalVision product line) is another distribution method for Nevada
      NumbersTM where slot customers in larger casinos (with unrestricted licenses
      where keno is approved) can purchase a ticket at any touch screen video slot
      machine with “ticket in ticket out” technology.





Late
      in
      2004, we completed the engineering of a state-of-the-art keno system (Optima).
      Initial customer interest has been encouraging and it is anticipated that the
      sale of keno systems will increase over the next couple of years. With the
      installation of the new keno equipment, our customers will now be able to avail
      themselves of several new keno games (Multiplier and Supersize) and services
      (I-Net) we are offering. Additionally, our bingo electronics supplier recently
      introduced a new version of its electronic bingo device that should allow our
      electronic bingo revenue to grow as well.





During
      the current reporting period, we purchased the rights to WagerVision from AdLine
      Network for 700,000 shares of our common stock. The rights we purchased allow
      for “wagering” or “betting” activity to be conducted in the home (“WagerVision”)
      via AdLine Technologies. Further, we will pay AdLine Network 5% of our net
      revenue (our gross revenue less the theoretical cost of any pay outs) derived
      from the purchased rights.





Over
      the
      next several months, resources will be directed at launching Gamblers Bonus
      Million Dollar TicketTM, developing WagerVision, and selling tickets from slot
      machines via PortalVision. We believe that implementation of all three of these
      projects will have a significant positive impact on our financial
      condition.




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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 Portal Vision,
      PromoNet, and WagerVision. Keno equipment sales are expected to occur to a
      greater extent outside of Nevada as is the growth from Super Bonanza
      Bingo.





**Results
      of Operations**





**Three
      months ended March 31, 2006 and 2005**





**Revenues.** We
      conduct our operations through three primary business segments: “Casino Games,”
“Products” and “Other.” Please refer to Note 8 of the Consolidated Financial
      Statements for a description and further analysis of these segments. In general,
      revenues for the three months ended March 31, 2006, were $1,336,218, a decrease
      of $122,725 compared with the same period for 2005. The decrease was due to
      lower Product segment sales and less volume from the Other segment
      (specifically, Nevada Keno). These decreases were partially offset by an
      increase in revenue from the Casino Game segment. The prime driver of the
      increase in the Casino Games segment was the increase in Super Bonanza revenue
      (nearly $46,000) 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.





**Gross
      operating income** .
      Our
      gross operating income was $180,865 less than the prior year mainly due to
      the
      additional expense of almost $177,000 incurred when the Company’s agreement with
      Park Place Entertainment expired. With the exception of this additional expense,
      the combination of the reduction in sales and costs left gross operating income
      approximately flat year over year. The flat gross operating income was achieved
      despite the nearly 10% decrease in sales because of generally higher interest
      rates and the impact these had on the operating expenses of Nevada
      NumbersTM.





**Selling,
      general, and administrative.** Our
      selling, general and administrative expenses for the three months ended March
      31, 2006, increased approximately $70,000 compared with the same period for
      2005, primarily due to an increase in sales and marketing related expenses
      ($22,000) , warrant vesting expenses ($40,500), and increased gaming show
      expenses ($8,000) due to new business development.





**Research
      and development.** Our
      research and development expenses for the three months ended March 31, 2006,
      increased $8,791 compared with the same period for 2005. This increase was
      principally due to consulting fees from engineering costs associated with new
      customer locations.





**Depreciation
      and Amortization.** Our
      depreciation and amortization expenses for the three months ended March 31,
      2006, increased $53,122 compared with the same period for 2005. $40,000 of
      this
      increase was a result of increased amortization of intangibles associated with
      acquisitions of AdLine Gaming and WagerVision.





**Liquidity
      and Capital Resources**





Historically,
      we have used more cash in our operations than we generate from revenues and
      compensate for the shortfall with various forms of financing. Through 2006,
      we
      expect to continue this trend. With the infusion of funds from the recent bridge
      financing from CAMOFI, described below, management feels it has enough cash
      on
      hand together with anticipated revenues to operate through




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2006.
      However, in order to properly finance the Company beyond 2006, it is our plan
      to
      raise a significant amount of money through a registered offering in the summer
      of 2006. We plan to use the net proceeds of the underwritten portion of the
      offering (approximately $30,000,000 before expenses of sale if the entire
      offering and over allowance is sold) for a number of purposes. Specifically,
      the
      money will be for the development and deployment of PortalVision, PromoNet,
      and
      WagerVision, as well as to repay CAMOFI and other accumulated debts. At the
      conclusion of the offering, it is also our plan to begin trading on an organized
      exchange, although we can give no assurance that this plan will be
      accomplished.





As
      of
      March 31, 2006, we maintained $4,055,207 in jackpot reserve deposits. We are
      required to maintain cash deposits in conjunction with the operation of certain
      of our jackpot award games.





Other
      than any jackpots that might be won by gaming patrons, our most significant
      capital resource requirement will be due to the planned acquisition of 500
      LCD
      monitors costing approximately $1.0 million associated with the operation of
      Gamblers Bonus Million Dollar TicketTM. Operation of the game is expected to
      commence late in the second quarter of 2006.





CAMOFI
      Master Fund Loan





On
      March
      31, 2006, we entered into a bridge financing agreement in which we would receive
      $5.0 million in financing. This loan was funded in April 2006. Proceeds were
      used to retire a $3.0 million loan under a 2005 bridge financing and the
      remainder to provide for our on-going business purposes. In general, this bridge
      financing involved the following documents containing the referenced terms:





1.
            A
                Senior Secured Convertible Note with a principal amount equal to
                $5,000,000 registered in the name of CAMOFI, due on January 1, 2008.
                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
                an
                amount equal to 115% of the principal amount to be
                repaid.





b.
            On
                the closing of a Qualified Offering, defined as an equity financing
                that
                results in cumulative aggregate proceeds of at least $10,000,000
                to our
                company, 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 Note not converted to Common Stock at 110%
                of the
                principal amount thereof to such date of prepayment or
                repayment.





c.
            For
                as long as the Note is outstanding, we must pay, quarterly on July
                1,
                October 1, January 1 and April 1 (commencing July 1, 2006), a commitment
                fee to the Holder equal to
                $125,000.





d.
            On
                the first business day of each month, commencing on the first business
                day
                of April 2007 and ending upon the full redemption of the Note, we
                must
                redeem $208,333 (and other amounts provided in the Note upon certain
                contingencies).





e.
            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, including an overall
                limitation that the total number of shares issued cannot exceed 4.99%
                of
                our issued and outstanding common
                stock).




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f.
            Upon
                the completion of a Qualified Offering, 30% 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 we
                receive
                in a Qualified Offering.





g.
            If
                any Event of Default occurs (as defined in the agreement), 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 term Event of Default includes: 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 and certain registration related
                failures.





2.
            A
                Warrant registered in the name of the Purchaser to purchase 2,500,000
                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
                180
                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 are 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 certain of our
                assets.





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.





The
      proceeds of the Note were to be used as follows: $1.0 million to increase our
      jackpot reserves (if necessary to meet Nevada Gaming Control Board
      requirements); $3 million to retire the Senior Secured Convertible Notes due
      December 30, 2006; and the remainder for general corporate
      purposes.





Net
      cash
      used by investing activities in 2005 included the $500,000 consumed in the
      purchase of AdLine Gaming.





Cash
      provided by financing activities in 2005 included non-recurring litigation
      settlement proceeds of approximately $660,000.





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**Critical
      Accounting Estimates and Policies**





Although
      our financial statements necessarily make use of certain accounting estimates
      by
      management, except as described below, we believe 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** .
      The
      Company is 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 include, among other analysis, cash flow and
      profitability forecasts, including the impact on other operations of the
      Company. 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 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.





**Stock-Based
      Compensation.** The fair
      value of each option award is estimated on the date of grant using the
      Black-Scholes-Merton option valuation model with the weighted average
      assumptions noted in the following table. The expected term of options granted
      is derived from historical data on employee exercise and post-vesting employment
      termination behavior. The risk-free rate (5%) for periods within the contractual
      life of the option is based on the U.S. Treasury yield curve in effect at the
      time of grant. Since there has been no public market for the Company’s common
      stock, no volatility factor has been considered in estimating the value of
      the
      options and warrants.





For
      options granted prior to January 1, 2006, and valued in accordance with FAS
      123,
      the expected volatility used to estimate the fair value of the options was
      based
      solely on the historical volatility on our stock; we used the graded vested
      method used for expense attribution.





For
      options granted after January 1, 2006, and valued in accordance with FAS 123R,
      we will use the straight-line method will be used for expense attribution,
      and
      we will estimate forfeitures and only recognize expense for those shares
      expected to vest.




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**Three
                months ended****March
                31, 2006**
            
            **March
                31, 2005**Weighted
                average assumptions:Expected
                stock price volatility
            N/A
            
            
            N/ARisk-free
                interest rate
            5.0%
            
            
            5.0%Expected
                option lives (in years)
            4-10
            
            
            4-10Expected
                dividend yield
            N/A
            
            
            N/AEstimated
                fair value of options, net of tax effect
            N/A
            
            
            N/AEstimated
                fair value of options per share, net of tax effect
            N/A
            
            
            N/A





The
      Black-Scholes-Merton option valuation model requires the input of highly
      subjective assumptions, including the expected life of the stock-based award
      and
      stock price volatility. The assumptions listed above represent management’s best
      estimates, but these estimates involve inherent uncertainties and the
      application of management judgment. As a result, if other assumptions had been
      used, the recorded stock-based compensation expense could have been materially
      different from that depicted above. In addition, the requirement is to estimate
      the expected forfeiture rate and only recognize expense for those shares
      expected to vest. If our actual forfeiture rate is materially different from
      our
      estimate, the share-based compensation expense could be materially
      different.





**Recently
      Issued Accounting Standards**





SFAS
      151. In
      November 2004, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standards (“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. The Company anticipates no material impact on
      its
      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.





SFAS
      155 .
      In
      February 2006, the FASB issued SFAS 155, *Accounting
      for Certain Hybrid Financial Instruments,* which
      amends SFAS 133, *Accounting
      for Derivative Instruments and Hedging Activities,* and SFAS
      140, *Accounting
      for Transfers and Servicing of Financial Assets and Extinguishments of
      Liabilities—a replacement of FASB Statement No. 125.* SFAS 155
      will be effective for all financial instruments issued or acquired after the
      beginning of an entity’s first fiscal year that begins after September 15, 2006.
      Management has not yet evaluated and determined the likely effect of SFAS 155
      on
      the Company’s future financial statements.





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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. The Company
        intends 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 future plans, strategies and
        expectations of the Company, are generally identifiable by use of the words
        “believe,”“expect,”“intend,”“anticipate,”“estimate,”“project,”“prospects,” or
        similar expressions. The Company’s 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 future prospects
        of
        the Company 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 the Company and its business, including additional
        factors that could materially affect the Company’s financial results, is
        included herein and in the Company’s other filings with the SEC.




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




As
      required by Rule 13a-15 under the Securities Exchange Act of 1934 (the “Exchange
      Act”), the Company carried out an evaluation of the effectiveness of the design
      and operation of its disclosure controls and procedures as of March 31, 2006.
      This evaluation was carried out under the supervision, and with the
      participation, of the Chief Executive Officer and Chief Financial Officer,
      Mr.
      Russell R. Roth. Based upon that evaluation, the Chief Executive Officer and
      Chief Financial Officer concluded that the Company’s disclosure controls and
      procedures are effective in timely alerting management to material information
      required to be included in the Company’s periodic SEC filings. There have been
      no significant changes in internal controls or in other factors that could
      significantly affect internal controls subsequent to the date the evaluation
      was
      performed. Disclosure
      controls and procedures are controls and other procedures that are designed
      to
      ensure that information required to be disclosed in reports filed or submitted
      under the Exchange Act is recorded, processed, summarized and reported, within
      the time periods specified in the Securities and Exchange Commission's rules
      and
      forms. Disclosure controls and procedures include, without limitation, controls
      and procedures designed to ensure that information required to be disclosed
      in
      the reports filed under the Exchange Act is accumulated and communicated to
      management, including the Chief Executive and Financial Officer, to allow timely
      decisions regarding required disclosure.




**Limitations
      on the Effectiveness of Internal Controls**





Management
      of the Company does not expect that disclosure controls and procedures or
      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 the Company 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 its 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 Securities and Use of Proceeds**




The
      information set forth below relates to our issuances of securities without
      registration under the Securities Act during the reporting period which were
      not
      previously included in a Current Report on Form 8-K:





1.
            We
                issued 760,000 shares of common stock and reclassified 75,000 shares
                of
                common stock from conditionally redeemable equity to regular equity.
                The
                reclassification occurred because the right to redeem the common
                stock
                expired. 700,000 of the common shares were issued pursuant to the
                acquisition of certain intangible rights from WagerVision and 60,000
                common shares were issued pursuant to stock option and warrant
                exercises.


2.
            We
                issued warrants to purchase 30,000 shares of our common stock with
                a
                four-year exercise period at a $2 exercise price to three members
                of our
                Advisory Board.


3.
            We
                issued warrants to purchase 200,000 shares of our common stock with
                a
                90-day exercise period at a $2 exercise price pursuant to a severance
                arrangement.




**Item
      3.****Defaults
      upon Senior Securities**




None




**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 March
      31, 2006.




**Item
      5.****Other
      Information**




None





**Item
      6.****Exhibits**





Exhibit
                Number
            Description
                of Exhibit31.1
            Certification
                of Chief Executive Officer pursuant to
                Section 302 of the Sarbanes-Oxley Act of 200231.2
            Certification
                of Chief Financial Officer pursuant to
                Section 302 of the Sarbanes-Oxley Act of 200232.1
            Certification
                pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002





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**SIGNATURES**




Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.




Las
                Vegas Gaming, Inc.Date:
            May
                15, 2006By:    /s/
                Russell R. Roth
              Russell
                R. Roth
              Title:****Chief
                Executive Officer, and
              Chief
                Financial Officer and Director