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, 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





State the
number of shares outstanding of each of the issuer’s classes of common stock, as
of the latest practicable date: 7,533,955 shares of Common Stock as of April 30,
2005.





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
























**TABLE OF CONTENTS**
    PagePART
      I - FINANCIAL INFORMATIONItem
      1:
    Financial Statements
    3Item
      2:
    Management’s Discussion and Analysis
    12Item
      3:
    Controls and Procedures
    15PART
      II - OTHER INFORMATIONItem
      1:
    Legal Proceedings
    16Item
      2:
    Unregistered Sales of Equity Securities and Use of
      Proceeds
    16Item
      3:
    Defaults Upon Senior Securities
    16Item
      4:
    Submission of Matters to a Vote of Security
      Holders
    16Item
      5:
    Other Information
    16Item
      6:
    Exhibits
    16











2





**PART
I. FINANCIAL INFORMATION**





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





GENERAL





The
Company’s general unaudited financial statements included with the Form 10QSB
are as follows:





(a)
    Balance
      Sheets as of March 31, 2005 (unaudited), and December 31,
      2004;





(b)
    Statements
      of Operations - three months ended March 31, 2005, and 2004
      (unaudited);





(c)
    Statements
      of Stockholders’ Equity - three months ended March 31, 2005 and 2004
      (unaudited);





(d)
    Statements
      of Cash Flow - three months ended March 31, 2005 and 2004
      (unaudited);





(e)
    Notes
      to Unaudited Financial Statements.





The
unaudited financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and the
instructions to Form 10-QSB. In the opinion of management, all adjustments
(consisting only of normal recurring adjustments) considered necessary for a
fair presentation have been included. Operating results for this interim period
are not necessarily indicative of the results that can be expected for the full
year.











3





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


**BALANCE
SHEETS**


**MARCH
31, 2005 (UNAUDITED) AND DECEMBER 31, 2004**





**ASSETS**
    
    **2005**
    
    **2004****Current
      assets**Cash
    
    **$**
    **212,138**
    
    **$**
    **586,169**Accounts
      receivable, net of allowance
    
    
    **664,190**
    
    
    **643,768**Inventory
    
    
    **605,849**
    
    
    **383,545**Jackpot
      reserve deposits
    
    
    **4,010,350**
    
    
    **3,992,680****5,492,527**
    
    
    **5,606,162****Equipment
      and software, net of accumulated depreciation**
    
    
    **589,038**
    
    
    **585,995****Other
      assets**Goodwill
    
    
    **955,277**
    
    
    **955,277**Trademarks,
      copyrights, patents and other identifiable intangibles, net of
      accumulated
      amortization
      of $56,625 and $23,046
    
    
    **987,848**
    
    
    **30,137**Due
      from officers, including accrued interest
    
    
    **62,552**
    
    
    **58,149**Deposits
      and other
    
    
    **89,750**
    
    
    **243,034****$**
    **8,176,992**
    
    **$**
    **7,478,754****LIABILITIES
      AND STOCKHOLDERS’ EQUITY****Current
      liabilities**Accounts
      payable
    
    **$**
    **962,454**
    
    **$**
    **506,771**Note
      payable
    
    
    **432,507**
    
    
    **320,000**Progressive
      jackpot liability
    
    
    **967,155**
    
    
    **981,636****2,362,116**
    
    
    **1,808,407**Temporary
      equity - 75,000 shares of common stock conditionally
      redeemable
    
    
    **25,000**
    
    
    **25,000**Total
      liabilities
    
    **$**
    **2,387,116**
    
    **$**
    **1,833,407******
      **Stockholders'
      equity**Series
      A convertible preferred stock, $.001 par, 5,000,000 shares authorized,
      541,400
      shares issued and outstanding
    
    
    **541**
    
    
    **541**Series
      B convertible preferred stock, $.001 par, 5,000,000 shares authorized,
      325,140
      and 316,540 shares issued and outstanding
    
    
    **346**
    
    
    **346**Series
      C convertible preferred stock, $.001 par, 5,000,000 shares authorized,
      28,000
      issued and outstanding
    
    
    **76**
    
    
    **76**Common
      stock $.001 par, 25,000,000 shares authorized, 7,533,955 and 6,688,955
      shares issued and outstanding
    
    
    **7,459**
    
    
    **7,049**Additional
      paid-in capital
    
    
    **16,087,657**
    
    
    **15,582,672**Less
      due from officers and stockholders
    
    
    **(320,000**
    **)**
    
    **(320,000**
    **)**Deficit
    
    
    **(9,986,203**
    **)**
    
    **(9,625,337)**
    **)****5,789,876**
    
    
    **5,645,347****$**
    **8,176,992**
    
    **$**
    **7,478,754**





See notes
to unaudited financial statements.





4




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


**STATEMENTS
OF OPERATIONS (UNAUDITED)**


**THREE
MONTHS ENDED MARCH 31, 2005 AND 2004**








**2005**
    
    **2004****Revenues:**
      Casino games
    
    **$**
    **417,027**
    
    **$**
    **285,633**Product
      sales
    
    
    **528,937**
    
    
    **336,885**Other
    
    
    **512,979**
    
    
    **322,548****1,458,943**
    
    
    **945,066****Costs
      and expenses**Casino
      games - net of progressive liability changes of ($3,205)
      In
      2005 and $59,719 in 2004
    
    
    **371,842**
    
    
    **277,744**Product
      costs
    
    
    **361,275**
    
    
    **225,079**Other
    
    
    **376,093**
    
    
    **214,775****1,109,210**
    
    
    **717,598****Gross
      operating income**
    
    
    **349,733**
    
    
    **227,468****Other
      operating expenses**Selling,
      general, and administrative expenses
    
    
    **588,916**
    
    
    **555,082**Research
      and development
    
    
    **193,209**
    
    
    **83,629**Depreciation
      and amortization
    
    
    **93,907**
    
    
    **73,161**Impairment
      write-down, game rights
    
    
    ****
    
    
    **55,829******
    
    
    **876,032**
    
    
    **767,701****Operating
      loss**
    
    
    **(526,299**
    **)**
    
    **(540,233**
    **)****Other
      income (expense)**Interest
      income
    
    
    **25,434**
    
    
    **11,369**Litigation
      settlement proceeds
    
    
    **140,000**
    
    
    **________****Net
      loss**
    
    **$**
    **(360,865**
    **)**
    **$**
    **(528,864**
    **)****Net
      loss per share, basic and diluted**
    
    **$**
    **(0.05**
    **)**
    **$**
    **(0.08**
    **)****Weighted
      average shares outstanding, basic and diluted**
    
    
    **7,331,455**
    
    
    **6,688,955**











See notes
to unaudited financial statements.





5





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


**STATEMENTS
OF STOCKHOLDERS' EQUITY (UNAUDITED)**


**THREE
MONTHS ENDED MARCH 31, 2005 AND 2004**








Series
      A
    
    Series
      B
    
    Series
      CPreferred
    
    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, 2005
    
    $
    541
    
    $
    346
    
    $
    76
    
    $
    7,049
    
    $
    15,582,671
    
    
    ($320,000
    )
    
    ($9,625,337
    )Net
      loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (360,865
    )Conversion
      of warrants
    
    
    
    
    
    
    
    
    
    
    
    10
    
    
    9,990Stock-based
      compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    95,396Shares
      issued in connection with acquisition
    
    
    
    
    
    
    
    
    
    
    
    400
    
    
    399,600Balances,
      March 31, 2005
    
    $
    541
    
    $
    346
    
    $
    76
    
    $
    7,459
    
    $
    16,087,657
    
    
    ($320,000
    )
    
    ($9,986,202
    )Balances,
      January 1, 2004
    
    $
    541
    
    $
    317
    
    
    
    
    $
    6,614
    
    $
    14,806,050
    
    
    ($420,000
    )
    
    ($8,039,496
    )Net
      loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (528,845
    )Sale
      of 36,000 preferred shares
    
    
    
    
    
    8
    
    $
    28
    
    
    
    
    
    172,238Stock-based
      compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80,917Balances,
      March 31, 2004
    
    $
    541
    
    $
    325
    
    $
    28
    
    $
    6,614
    
    $
    15,059,205
    
    
    ($420,000
    )
    
    ($8,568,341
    )











See notes
to unaudited financial statements.




6




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


**STATEMENTS
OF CASH FLOW (UNAUDITED)**


**FOR
THE THREE MONTHS ENDED MARCH 31, 2005 AND 200** **4**














**2005**
    
    **2004****Operating
      activities**Net
      cash used in operating activities
    
    **$**
    **(203,854**
    **)**
    $
    (234,159
    )**Investing
      activities**Jackpot reserve deposits
    
    
    
    
    
    (142,390
    )Acquisition
    
    
    **(500,000**
    **)**Purchase of property and equipment
    
    
    **(20,177**
    **)**
    
    (35,043
    )Net cash used in investing activities
    
    
    **(520,177******
    ******)******
    
    (177,433
    )**Financing
      activities**Proceeds
      from litigation settlement
    
    
    **660,000**
    
    
    320,000Repayment of borrowings
    
    
    **(320,000**
    **)**Proceeds from sale of preferred stock
    
    
    
    
    
    183,000Conversion of warrants
    
    
    **10,000**Net
      cash provided by financing activities
    
    
    **350,000**
    
    
    503,000**Net
      increase (decrease) in cash**
    
    
    **(374,031**
    **)**
    
    91,408**Cash,
      beginning of period**
    
    
    **586,169**
    
    
    1,005,561**Cash,
      end of period**
    
    **$**
    **212,138**
    
    $
    1,096,969**Non-cash
      investing and financing activities****Acquisition**Common
      stock issued
    
    **$**
    **400,000******Liabilities
      assumed
    
    
    **278,487****$**
    **678,487**














See notes
to unaudited financial statements.





7


**LAS
VEGAS GAMING, INC. AND SUBSIDIARY**
 **NOTES
TO UNAUDITED FINANCIAL STATEMENTS**


**THREE
MONTHS ENDED MARCH 31, 2005 AND 2004**





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





The
accompanying 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 December
31, 2004, 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.





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





LVGI
conducts its operations through three primary business segments, “Casino Games,”
“Products” and “Other.” The “Casino Games” segment generates income from three
games with a fourth one nearly ready to launch. The three games are played in 37
casinos in Nevada and another seven outside Nevada. LVGI’s games consist of keno
style games (Nevada NumbersTM and The Million Dollar TicketTM), and Super Bonanza
- a bingo style game. The composition of LVGI’s casino games revenue is about
62% bingo and 38% keno.





The
“Products” segment generates revenues through the sale of keno and bingo
equipment and supplies. Bingo supplies include bingo paper and ink. Bingo
products comprised about 50% and 78% of our Product sales for the
three months ended March 31, 2005 and
2004. Keno supplies consist of various paper items, including inside/outside
tickets and certain promotional products. Keno products made up about 14% and 3%
of our Product sales for the three months ended March 31, 2005 and 2004. Bingo
equipment sales made up 2% and 1% of our product sales for the three months
ended March 31, 2005 and 2004 while keno equipment sales comprised 34% and 18%
respectively. The Company’s keno equipment is installed in over 70 casinos
worldwide.





The
“Other” segment includes revenue from equipment maintenance contracts (41% for
the three months ended March 31, 2005 compared to 57% for the three months ended
March 31, 2004); operation of a keno route (31% of revenue for the three months
ended March 31, 2005 and none for the 1 st Qtr of
2004); the distribution of “hand-held” bingo electronics (21% and 31% for the
three months ended March 31, 2005 and 2004); and, keno route participation
agreements (7% and 12% for the three months ended March 31, 2005 and 2004).
Results for these segments and certain unallocated expenditures for the three
months ended March 31, 2005 and 2004 are set forth below:






8





2005
    
    2004RevenuesCasino
      Games
    
    $
    417,027
    
    $
    285,633Product
      Sales
    
    
    528,937
    
    
    336,885Other
    
    
    512,979
    
    
    322,548$
    1,458,943
    
    $
    945,066Operating
      income/(loss)Casino
      Games
    
    $
    (49,491
    )
    $
    (90,527
    )Product
      Sales
    
    
    129,565
    
    
    108,854Other
    
    
    124,530
    
    
    95,361Unallocated
    
    
    (653,921
    )
    
    (650,185
    )$
    (526,299
    )
    $
    (540,233
    )











Capital
      expenditures
    
    2005
    
    2004Casino
      Games
    
    $
    18,185
    
    $
    3,424Product
      SalesOther
    
    
    
    
    
    31,619Unallocated
    
    
    42,992
    
    
    __
      _____$
    61,177
    
    $
    35,043





Identifiable
assets as of March 31, 2005, and December 31, 2004, are set forth
below:




Identifiable
      assetsCasino
      Games
    
    $
    5,798,661
    
    $
    5,327,045Product
      Sales
    
    
    524,749
    
    
    510,698Other
    
    
    522,260
    
    
    812,159Unallocated
    
    
    1,331,322
    
    
    828,852$
    8,176,992
    
    $
    7,478,754





Identifiable
assets of $8,176,992 and $7,478,754 at March 31, 2005 and December 31, 2004
include recorded goodwill of $955,277 (Note 8) that has not been allocated
between Products Sales and Other.








9








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


**NOTES
TO UNAUDITED FINANCIAL STATEMENTS**


**THREE
MONTHS ENDED MARCH 31, 2005 AND 2004**







**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 Company.







**4.     
Acquisition:**


****


On
February 18, 2005, through a wholly owned subsidiary the Company acquired all of
the stock of AdLine Gaming Inc., a Georgia corporation ("AdLine") from AdLine
Network, LLC (“AdLine Network), AdLine’s sole shareholder, and AdLine was
dissolved and merged into the subsidiary, which will shortly be merged into the
Company, thereby completing the acquisition of the assets of AdLine.





Under the
terms of the merger agreement, the Company delivered to AdLine Network $500,000
in cash, 400,000 shares of the Company’s common stock, and warrants to purchase
100,000 additional shares of its common stock at $4 per share, exercisable
within 5 years of the closing date of the merger agreement. The stock and
warrants are recorded at fair value based upon the trading price ($1 per share)
at the acquisition date. Liabilities of $278,487 were assumed by the Company
resulting in a total purchase price of $1,178,487.





The
operations of AdLine, which began in 2005, are included in the Company’s
financial statements for the period from acquisition (February 18, 2005) through
March 31, 2005. If the acquisition had occurred on January 1, 2005, the total
revenue of the Company would have been $1,458,943, net loss would have been
$372,514 and loss per share would have been $ .05 on a pro forma basis for the
quarter ended March 31, 2005.





As a
result of the merger, the Company has acquired AdLine’s patent pending digital
video technology that services the gaming industry. Management believes that
this acquisition will enable the Company to become more profitable in the gaming
industry by enabling it to increase the distribution of its Nevada Numbers TM game.
AdLine’s technology also provides the platform on which the Company’s Gambler’s
Bonus Lottery is played. Except as disclosed herein and other than in respect of
the merger agreement, there is no other material relationship between the
Company and AdLine or AdLine Network .





10








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


**NOTES
TO UNAUDITED FINANCIAL STATEMENTS**


**THREE
MONTHS ENDED MARCH 31, 2005 AND 2004**







**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
March 31, 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 4.93% discount rate, the prevailing 20-year Treasury
      Bond rate
    
    $
    3,288,640
    
    $
    3,288,640Less
      portion insured through:
      Conventional
      insurance providers
    
    
    (2,900,000
    )Other
      participants
    
    
    (
      194,320
    )Uninsured
      portion of base progressive jackpot
    
    
    194,320Present
      value at 4.93% of the $1,097,278 increase to the progressive jackpot
      meter
    
    
    721,710
    
    
    721,710Other
      Games
    
    
    20,336
    
    
    1,020,336$
    936,366
    
    $
    5,030,686










11





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




**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.




**Overview**





The
following discussion should be read in conjunction with the condensed unaudited
consolidated financial statements and notes thereto of the Company appearing
elsewhere in this report.





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 ”,
“Nevada Keno”, “The Million Dollar TicketTM”, and “Super Bonanza Bingo”, “Super
Bonanza” and “Super Jackpot Coverall.”





During
2005 resources will be directed at developing and implementing a promotional
version of The Million Dollar TicketTM (referred to in previous filings as
Gamblers Bonus Lottery) and Pop-up Nevada NumbersTM. The promotional version of
The Million Dollar TicketTM will be operated in cooperation with the largest
video poker route operator in Nevada. Customers will be awarded drawing tickets
to a promotional jackpot based on predetermined poker hands. The route operator
will compensate LVGI for each ticket that is issued. 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.






12





LVGI
recently completed the engineering of Optima, a state-of-the-art game management
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. Additionally, our bingo electronics supplier is introducing some new
products that should 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 and the promotional version of The Million Dollar TicketTM. Keno
equipment sales are expected to occur to a greater extent outside of
Nevada.





**Completion
of Acquisition of Adline Gaming Inc.**





On
February 18, 2005, LVGI consummated an Agreement and Plan of Merger dated
January 14, 2005 (the "Merger Agreement"). As per the Merger Agreement, on that
date, Las Vegas Gaming Merger Sub, Inc., a Nevada corporation and LVGI’s wholly
owned subsidiary ("LVMS") acquired all of the stock of AdLine Gaming Inc., a
Georgia corporation ("AdLine") from AdLine Network, LLC (“AdLine Network),
AdLine’s sole shareholder, and AdLine was dissolved and merged into LVMS. LVMS
will shortly be merged into LVGI.





Under the
terms of the Merger Agreement, LVGI delivered to AdLine Network $500,000 in
cash, 400,000 shares of LVGI’s common stock, and warrants to purchase 100,000
shares of LVGI’s common stock at a price of $4 per share exercisable within 5
years of the closing date of the Merger Agreement.





AdLine is
a provider of patent pending digital video technology that services the gaming
industry. LVGI’s management believes that this acquisition will enable the
Company to become more profitable in the gaming industry by assisting in the
distribution of the Nevada Numbers TM game.





AdLine
currently provides the platform on which the Gambler’s Bonus Lottery is
played.




**Liquidity
and Capital Resources**





As of
March 31, 2005, we maintained $212,138 in cash and $4,010,350 in jackpot reserve
deposits (collectively, “Liquid Resources). Management anticipates that we will
begin operating at a cash flow surplus sometime in the next two quarters as we
roll out the promotional version of Million Dollar Ticket and continue
increasing the number of locations offering Super Bonanza. Management also
anticipates an increase in keno equipment sales due to the recent release and
approval of Optima. Rising interest rates, resulting in lower jackpot reserve
deposits during this interval, could also positively impact cash
flows.





We are
currently seeking an additional $3 million to $5 million in capital through the
sale of common stock in a private placement. We anticipate that the funds
generated from this offering will be sufficient capital and liquidity for our
operations over the next twelve months. While no assurances can be given, the
combination of new games, expansion of current games, a somewhat better keno
equipment market and generally higher long term interest rates, all bode well
for the our future








13








earnings.
Of course, catastrophic events, mergers or lower interest rates could derail our
expected growth.




**Results
of operations**





Revenues
for the three months ended March 31, 2005, were $1,458,943, an increase of
$513,877 from the three months ended March 31, 2004. Operating costs and
expenses directly associated with the production of this revenue increased
$389,880 from the three months ended March 31, 2004. These increased revenues
and related costs were largely due to the growth of Super Bonanza and the costs
related to the AdLine merger in February.


****


**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 the Company does 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 which
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 recently acquired segments, the conservative assumption that
past profitability levels 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 have had positive effects as
well.





**Recent
Accounting Pronouncements** **.**





In
December 2004, the Financial Accounting Standards Board issued Statement No.
153, *Exchanges of Non* *-* *monetary
Assets, an Amendment of APB Opinion No. 29, Accounting for Non* *-* *monetary
Transactions.*  The
amendments made by Statement No. 153 are based on the principle that exchanges
of non - monetary
assets should be measured based on the fair value of the assets exchanged.  Further,
the amendments eliminate the narrow exception in APB Opinion No. 29 ** for
non - monetary
exchanges of similar productive assets and replace it with a broader exception
for exchanges of non - monetary
assets that do not have commercial substance.  The
Statement is effective for non - monetary
asset








14





exchanges
occurring in fiscal periods beginning after June 15, 2005.  We do not
presently expect to enter into any transactions that would be affected by
adopting Statement No. 153.




**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, 2005.
This evaluation was carried out under the supervision, and with the
participation, of the Chief Executive and Financial Officer, Mr. Russell Roth.
Based upon that evaluation, the Chief Executive and 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 our
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




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 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.







15





**PART
II - OTHER INFORMATION**


**Item 1.** Legal
Proceedings





None.





**Item
2.****** **Changes
in Securities and Use of Proceeds**





The
Company issued 10,000 shares of common stock during the quarter ended March 31,
2005. These shares were issued pursuant to the exercise of a similar number of
warrants. An additional 400,000 shares of common stock were issued pursuant to
the acquisition of AdLine Gaming, Inc. Sales were exempt under Rule 506 of
Regulation D of the Securities Act of 1933.





**Item 3.** Defaults
upon Senior Securities





None





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





None





**Item 5.** Other
Information





None





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





Exhibit
      Number
    Description
      of Exhibit31.1
    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 pursuant to
      18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002











16





**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
      23, 2005By:/s/ 
      Russell R.
      Roth
      Russell
      R. Roth
      Title:****President,
      Chief Executive Officer and Chief Financial Officer













17