<PAGE>

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                          SECURITIES AND EXCHANGE COMMISSION
                                           
                               WASHINGTON, D.C., 20549
                                      FORM 10-Q
                                           
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES 
    EXCHANGE ACT OF 1934 

    FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997.

                                          OR

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

                            COMMISSION FILE NUMBER 0-21122


                                ARGOSY GAMING COMPANY
                (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


              DELAWARE                                37-1304247
    (STATE OR OTHER JURISDICTION                   (I.R.S. EMPLOYER
         OF INCORPORATION)                        IDENTIFICATION NO.)

                                   219 PIASA STREET
                                ALTON, ILLINOIS 62002
                                    (618) 474-7500

    (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
    AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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

    APPLICABLE ONLY TO CORPORATE ISSUERS:

    Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date:  24,498,333 shares of Common
Stock, $.01 par value per share, as of August 11, 1997. 

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<PAGE>

                                  TABLE OF CONTENTS
                                        PART I
                                           
                                           
FINANCIAL STATEMENTS OF ARGOSY GAMING COMPANY

    Condensed Consolidated Balance Sheets                                    1
    Condensed Consolidated Statements of Operations                          2
    Condensed Consolidated Statements of Cash Flows                          4
    Notes to Condensed Consolidated Financial Statements                     5

FINANCIAL STATEMENTS OF GUARANTOR SUBSIDIARIES OF THE COMPANY'S FIRST 
  MORTGAGE NOTES PROVIDED PURSUANT TO RULE 3-10 OF REGULATION S-X.

    FINANCIAL STATEMENTS OF ALTON GAMING COMPANY
       Condensed Balance Sheets                                             10
       Condensed Statements of Income                                       11
       Condensed Statements of Cash Flows                                   13
       Notes to Condensed Financial Statements                              14

    FINANCIAL STATEMENTS OF MISSOURI GAMING COMPANY
       Condensed Balance Sheets                                             15
       Condensed Statements of Operations                                   16
       Condensed Statements of Cash Flows                                   18
       Notes to Condensed Financial Statements                              19

    FINANCIAL STATEMENTS OF ARGOSY OF LOUISIANA, INC.
       Condensed Consolidated Balance Sheets                                20
       Condensed Consolidated Statements of Operations                      21
       Condensed Consolidated Statements of Cash Flows                      23
       Notes to Condensed Consolidated Financial Statements                 24

    FINANCIAL STATEMENTS OF CATFISH QUEEN PARTNERSHIP IN COMMENDAM
       Condensed Balance Sheets                                             25
       Condensed Statements of Operations                                   26
       Condensed Statements of Cash Flows                                   28
       Notes to Condensed Financial Statements                              29

    FINANCIAL STATEMENTS OF JAZZ ENTERPRISES, INC.
       Condensed Balance Sheets                                             30
       Condensed Statements of Operations                                   31
       Condensed Statements of Cash Flows                                   33
       Notes to Condensed Financial Statements                              34

    FINANCIAL STATEMENTS OF THE INDIANA GAMING COMPANY
       Condensed Consolidated Balance Sheets                                35
       Condensed Consolidated Statements of Operations                      36
       Condensed Consolidated Statements of Cash Flows                      38
       Notes to Condensed Consolidated Financial Statements                 39

<PAGE>

                            TABLE OF CONTENTS (CONTINUED)

    FINANCIAL STATEMENTS OF INDIANA GAMING COMPANY, L.P.
       Condensed Balance Sheets                                             41
       Condensed Statements of Operations                                   42
       Condensed Statements of Cash Flows                                   44
       Notes to Condensed Financial Statements                              45
    
    
                                                                              
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS 
OF OPERATIONS                                                               47
       
       
                                       PART II

Item 1     Legal Proceedings                                                54
Item 2     Changes in Securities                                            56
Item 3     Defaults upon Senior Securities                                  56
Item 4     Submission of Matters to a Vote of Security Holders              56
Item 5     Other Information                                                56
Item 6     Exhibits and Reports on Form 8-K                                 56















<PAGE>

                           ARGOSY GAMING COMPANY
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                     (In Thousands, Except Share Data)
<TABLE>
<CAPTION>
                                                            JUNE 30,            DECEMBER 31,
                                                              1997                   1996
                                                           ----------            ------------
                                                           (UNAUDITED)
<S>                                                        <C>                   <C>
CURRENT ASSETS:
     Cash and cash equivalents                              $ 45,154              $ 38,284 
     Income taxes receivable                                   1,967                11,111 
     Other current assets                                      8,423                 9,446 
                                                            --------              --------
          Total current assets                                55,544                58,841 
                                                            --------              --------

PROPERTY AND EQUIPMENT, NET                                  345,599               314,480 
                                                            --------              --------

OTHER ASSETS:
     Restricted cash and cash equivalents                     66,568                84,551 
     Goodwill, net                                            22,625                22,923 
     Other, net                                               50,676                51,364 
                                                            --------              --------
          Total other assets                                 139,869               158,838 
                                                            --------              --------
TOTAL ASSETS                                                $541,012              $532,159 
                                                            --------              --------
                                                            --------              --------

CURRENT LIABILITIES:
     Accounts payable and accrued liabilities               $ 24,642              $ 29,948 
     Other current liabilities                                27,017                15,018 
                                                            --------              --------
          Total current liabilities                           51,659                44,966 
                                                            --------              --------

LONG-TERM DEBT                                               400,077               377,308 
OTHER LONG-TERM OBLIGATIONS                                   12,163                20,340 
MINORITY INTERESTS IN EQUITY OF CONSOLIDATED SUBSIDIARIES     17,650                16,844 

STOCKHOLDERS' EQUITY:
     Common stock, $.01 par; 60,000,000 shares authorized;
        24,498,333 shares issued and outstanding                 245                   243 
     Capital in excess of par                                 71,907                71,865 
     Retained (deficit) earnings                             (12,689)                  593 
                                                            --------              --------
          Total stockholders' equity                          59,463                72,701 
                                                            --------              --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                  $541,012              $532,159 
                                                            --------              --------
                                                            --------              --------
                                                                          
</TABLE>
     See accompanying notes to condensed consolidated financial statements.

                                      1

<PAGE>

                              ARGOSY GAMING COMPANY
                     CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     (In Thousands, Except Share and Per Share Data)
<TABLE>
<CAPTION>
    
                                                                  SIX  MONTHS ENDED
                                                         ---------------------------------
                                                            JUNE 30,              JUNE 30, 
                                                             1997                  1996
                                                         ------------           ----------
                                                         (UNAUDITED)            (UNAUDITED) 
<S>                                                      <C>                   <C>
REVENUES:                                                                                               
     Casino                                              $   157,584                118,147 
     Admissions                                                8,592                  1,995 
     Food, beverage and other                                 17,161                 12,853 
                                                         -----------            -----------
                                                             183,337                132,995 
     Less promotional allowances                             (13,333)                (7,041)
                                                         -----------            -----------
Net revenues                                                 170,004                125,954 
                                                         -----------            -----------
     
COSTS AND EXPENSES:                                                                      
     Casino                                                   79,586                 59,264 
     Food, beverage and other                                 14,083                 11,329 
     Other operating expenses                                 13,752                  8,732 
     Selling, general and administrative                      35,041                 26,231 
     Depreciation and amortization                            16,402                 11,085 
     Development and preopening costs                            323                  3,790 
     Severance expense                                         1,750      
     Lease termination costs                                                          3,508 
                                                         -----------            -----------
                                                             160,937                123,939 
                                                         -----------            -----------
Income from operations                                         9,067                  2,015 
                                                         -----------            -----------
     
OTHER INCOME (EXPENSE):                                                                  
     Interest income                                           2,835                    640 
     Interest expense                                        (23,215)               (11,546)
                                                         -----------            -----------
                                                             (20,380)               (10,906)
                                                         -----------            -----------
     
Loss before income taxes, minority interests and                                         
     extraordinary item                                      (11,313)                (8,891)
Income tax benefit                                                                    3,200 
Minority interests                                            (1,969)                   713 
                                                         -----------            -----------
Loss before extraordinary item                               (13,282)                (4,978)
Extraordinary loss on extinguishment of debt                                             
    (net of income tax benefit of $594)                                                (890)
                                                         -----------            -----------
     
Net loss                                                 $   (13,282)                (5,868)
                                                         -----------            -----------
                                                         -----------            -----------
     
Loss before extraordinary item per share                 $     (0.54)                 (0.20)
Extraordinary loss on extinguishment of debt per                                         
     share (net of income tax benefit of $.02)                                        (0.04)
                                                         -----------            -----------
Net loss per share                                       $     (0.54)                 (0.24)
                                                         -----------            -----------
                                                         -----------            -----------
     
Weighted average shares outstanding                       24,383,332             24,333,333 
                                                          ----------            -----------
                                                          ----------            -----------
     
</TABLE>
     See accompanying notes to condensed consolidated financial statements.

                                      2

<PAGE>
     

                              ARGOSY GAMING COMPANY
                     CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     (In Thousands, Except Share and Per Share Data)
<TABLE>
<CAPTION>
    
                                                                THREE MONTHS ENDED
                                                         ---------------------------------
                                                            JUNE 30,              JUNE 30, 
                                                             1997                  1996
                                                         ------------           ----------
                                                         (UNAUDITED)            (UNAUDITED) 
<S>                                                      <C>                   <C>
REVENUES:                                                                                
     Casino                                              $    81,292           $     59,356 
     Admissions                                                4,569              
     Food, beverage and other                                  8,799                  6,798 
                                                         -----------            -----------
                                                              94,660                 66,154 
     Less promotional allowances                              (7,151)                (2,889)
                                                         -----------            -----------
Net revenues                                                  87,509                 63,265 
                                                         -----------            -----------
     
COSTS AND EXPENSES:                                                          
     Casino                                                   40,365                 30,193 
     Food, beverage and other                                  7,192                  6,053 
     Other operating expenses                                  6,778                  4,364 
     Selling, general and administrative                      17,400                 11,913 
     Depreciation and amortization                             8,508                  5,196 
     Development and preopening costs                            160                  1,935 
     Lease termination costs                                                          3,508 
                                                         -----------            -----------
                                                              80,403                 63,162 
                                                         -----------            -----------
Income from operations                                         7,106                    103 
                                                         -----------            -----------
     
OTHER INCOME (EXPENSE):                                                      
     Interest income                                           1,393                    550 
     Interest expense                                        (11,313)                (7,335)
                                                         -----------            -----------
                                                              (9,920)                (6,785)
                                                         -----------            -----------
     
Loss before income taxes, minority interests and                             
     extraordinary item                                       (2,814)                (6,682)
Income tax benefit                                                                    2,333 
Minority interests                                            (1,451)                   418 
                                                         -----------            -----------
Loss before extraordinary item                                (4,265)                (3,931)
Extraordinary loss on extinguishment of debt                                 
     (net of income tax benefit of $594)                                               (890)
                                                         -----------            -----------
     
Net loss                                                 $    (4,265)          $     (4,821)
                                                         -----------            -----------
                                                         -----------            -----------
     
Loss before extraordinary item per share                 $     (0.17)          $      (0.16)
Extraordinary loss on extinguishment of debt per                             
     share (net of income tax benefit of $.02)                                        (0.04)
                                                         -----------            -----------
Net loss per share                                       $     (0.17)          $      (0.20)
                                                         -----------            -----------
                                                         -----------            -----------
     
Weighted average shares outstanding                       24,432,784             24,333,333 
                                                         -----------            -----------
                                                         -----------            -----------
     
</TABLE>
     See accompanying notes to condensed consolidated financial statements.

                                      3

<PAGE>

                              ARGOSY GAMING COMPANY
                    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (In Thousands)
     
<TABLE>
<CAPTION>
    
                                                                    SIX MONTHS ENDED
                                                           ---------------------------------
                                                              JUNE 30,              JUNE 30, 
                                                               1997                  1996
                                                           ------------           ----------
                                                           (UNAUDITED)            (UNAUDITED) 
<S>                                                        <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES:                                                    
     Net  loss                                              $(13,282)             $  (5,868)
     Adjustments to reconcile net  loss to net cash                                      
       provided by operating activities:                                                 
          Depreciation                                        15,367                 10,640 
          Amortization                                         2,017                  1,269 
          Deferred income taxes                                                      (3,198)
          Minority interests                                   1,969                   (713)
          Extraordinary item                                                            890 
          Lease termination costs                                                     3,151 
          Changes in operating assets and liabilities:                              
              Income taxes receivable                          9,144                
              Other current assets                             1,530                 (1,442)
              Deposits                                          (917)                  (656)
              Accounts payable and other current liabilities     720                  1,386 
                                                            --------              ---------
              Net cash provided by operating activities       16,548                  5,459 
                                                            --------              ---------
     
CASH FLOWS FROM INVESTING ACTIVITIES:                                                    
     Purchases of property and equipment                     (46,486)               (62,083)
     Decrease (increase) in restricted cash held by trustees  17,983                (94,484)
     Decrease in long term obligations                        (3,015)
     Increase in other assets                                   (381)
                                                            --------              ---------
          Net cash used in investing activities              (31,899)              (156,567)
                                                            --------              ---------
     
CASH FLOWS FROM FINANCING ACTIVITIES:                                                    
     Proceeds from line of credit                                                    44,500 
     Repayment of line of credit                                                    (90,000)
     Payments on long-term debt and installment contracts     (3,184)                  (752)
     Capital contributions from partner                                              19,676 
     Proceeds from sale of first mortgage notes                                     235,000 
     Proceeds from partner loans                              26,815                
     Repayment of partner loans                                 (690)               
     Payment of preferred equity return to partner              (489)               
     Increase in other assets                                   (231)                (9,585)
                                                            --------              ---------
          Net cash provided by financing activities           22,221                198,839 
                                                            --------              ---------
Net increase in cash and cash equivalents                      6,870                 47,731 
Cash and cash equivalents, beginning of period                38,284                 16,159 
                                                            --------              ---------
Cash and cash equivalents, end of period                    $ 45,154              $  63,890 
                                                            --------              ---------
                                                            --------              ---------
     

</TABLE>
     See accompanying notes to condensed consolidated financial statements.

                                      4

<PAGE>

                                ARGOSY GAMING COMPANY
                NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
                                     (UNAUDITED)
                                    (In Thousands)
                                           
                                           




1.  BASIS OF PRESENTATION

    Argosy Gaming Company (collectively with its subsidiaries, "Argosy" or
"Company") is engaged in the business of providing casino style gaming and
related entertainment to the public and, through its subsidiaries, operates
riverboat casinos in Alton, Illinois; Lawrenceburg, Indiana; Riverside,
Missouri; Baton Rouge, Louisiana; and Sioux City, Iowa. Indiana Gaming Company,
L.P., ("Indiana Partnership") a limited partnership in which the Company is
general partner and holds a 57.5% partnership interest, opened a riverboat
casino and related entertainment and support facilities at a temporary site in
Lawrenceburg, Indiana on December 10, 1996.  The Indiana Partnership is
developing its permanent facility which is expected to open in December 1997.

    The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with the instructions to Form 10-Q and Article 10 of
Regulation S-X.  Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.  Interim results may not necessarily be indicative of
results which may be expected for any other interim period or for the year as a
whole.  For further information, refer to the financial statements and footnotes
thereto for the year ended December 31, 1996, included in the Company's Annual
Report on Form 10-K (File No. 0-21122).  The accompanying unaudited condensed
consolidated financial statements contain all adjustments which are, in the
opinion of management, necessary to present fairly the financial position and
the results of operations for the periods indicated.  Such adjustments include
only normal recurring accruals.  Certain 1996 amounts have been reclassified to
conform to the 1997 financial statement presentation.

    As of June 30, 1997 the Company is in a net operating loss position and,
therefore, has recorded a valuation allowance of $6.5 million against its
deferred tax assets.

    In February 1997, the Financial Accounting Standards Board issued 
Statement No. 128, EARNINGS PER SHARE, which is required to be adopted on 
December 31, 1997.  At that time, the Company will be required to change the 
method currently used to compute earnings per share and restate all prior 
periods.  The adoption of Statement 128 has no effect on the Company's 
calculation of primary earnings per share.

    The Company has not yet determined what the impact of Statement 128 will be
on the calculation of fully diluted earnings per share.

                                       5

<PAGE>

                                ARGOSY GAMING COMPANY
                NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
                                (UNAUDITED) CONTINUED
                                    (In Thousands)
                                       




2.  COMMITMENTS AND CONTINGENT LIABILITIES

    LAWRENCEBURG, INDIANA DEVELOPMENT--On June 30, 1995 the Indiana 
Partnership was awarded a preliminary suitability certificate from the 
Indiana Gaming Commission to develop a riverboat casino project on the Ohio 
River in Lawrenceburg, Indiana.  On December 10, 1996 the Indiana Partnership 
was awarded a gaming license and commenced operations at a temporary 
facility.  The Indiana Partnership is in the process of constructing its 
permanent facility which is expected to open in December 1997.

    Provisions of the partnership agreement governing the Indiana Partnership
stipulate that capital contributions up to a total project cost of $225 million,
will be made on the same basis as the partners' equity ownership with any excess
project cost being the responsibility of the Company.  Funding for the Indiana
Partnership is to be provided by capital equity contributions for the first
$52,500 and capital loans by the partners for the balance. 

    Under terms of the Lawrenceburg partnership agreement, after the third
anniversary date of commencement of operations at the Lawrenceburg casino, each
limited partner has the right to sell its interest to the other partners (pro
rata in accordance with their respective percentage interests).  In the event of
this occurrence, if the partners cannot agree on a selling price, the Indiana
Partnership will be sold in its entirety.

    The partnership may only operate at its temporary site for one year from
the opening of the temporary facility.  The completion of the permanent facility
is subject to the satisfaction of numerous conditions including weather
conditions and the receipt of numerous permits and licenses.  There can be no
assurance that the permanent facility will be open within one year of the
opening of the temporary facility.

    OTHER--A predecessor entity to the Company ("Predecessor"), as a result of
a certain shareholder loan transaction, could be subject to federal and certain
state income taxes (plus interest and penalties, if any) if it is determined
that it failed to satisfy all of the requirements of the S-Corporation
provisions of the Internal Revenue Code ("Code") relating to the prohibition
concerning a second class of stock.

    An audit is currently being conducted by the Internal Revenue Service
("IRS") of the Company's federal income tax returns for the 1992 and 1993 tax
years and the IRS has asserted the S-Corporation status as one of the issues
although the IRS has yet to make a formal claim of deficiency.  If the IRS
successfully challenges the Predecessor's S-Corporation status, the Company
would be required to pay federal and certain state income taxes on the
Predecessor's taxable income from the commencement of its operations until
February 25, 1993 (plus interest and penalties, if any, thereon until the date
of payment).  If the Predecessor was required to pay federal and state income
taxes on its taxable earnings through February 25, 1993, such payments could
amount to approximately $13,200, including interest through June 30, 1997, but
excluding penalties, if any.  While the Company believes the Predecessor has
legal authority for its position that it is not subject to federal and certain
state income taxes because it met the S-Corporation requirements, no assurances
can be given that the Predecessor's position will be upheld.  This contingent
liability could have a material adverse effect on the Company's results of
operations, financial condition and cash flows.  No provision has been made for
this contingency in the accompanying condensed consolidated financial
statements.

                                       6

<PAGE>

                                ARGOSY GAMING COMPANY
                NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
                                (UNAUDITED) CONTINUED
                                    (In Thousands)
                                           




    The Company is subject, from time to time, to various legal and regulatory
proceedings, in the ordinary course of business.  The Company believes that
current proceedings will not have a material effect on the financial condition
of the Company.



3.  SUBSIDIARY GUARANTORS

    On June 5, 1996, the Company issued its $235 million First Mortgage Notes,
due 2004, ("Mortgage Notes") in a private placement transaction.  In October,
1996, the Company exchanged all of the outstanding privately placed Mortgage
Notes for a like amount of identical Mortgage Notes registered with the
Securities and Exchange Commission.  The Mortgage Notes rank senior in right of
payment to all existing and future indebtedness of the Company.

    The Mortgage Notes are unconditionally guaranteed, on a joint and several
basis, by the following wholly-owned subsidiaries of the Company: Alton Gaming
Company, The Missouri Gaming Company, The St. Louis Gaming Company, Iowa Gaming
Company, Jazz Enterprises, Inc., Argosy of Louisiana, Inc., Catfish Queen
Partnership in Commendam and The Indiana Gaming Company (the "Guarantors").  The
Mortgage Notes are secured, subject to certain prior liens, by a first lien on
(i) substantially all of the assets of the Company including the assets used in
the Company's Alton, Riverside, Baton Rouge and Sioux City operations, (ii) a
pledge of all the capital stock of, and partnership interests in, the Company's
subsidiaries, excluding the Company's partnership interest in its Sioux City
property, (iii) a pledge of the intercompany notes payable to the Company from
its subsidiaries and (iv) an assignment of the proceeds of the management
agreement relating to the proposed Lawrenceburg Casino project.  The collateral
for the Mortgage Notes does not include assets of the Indiana Partnership.  

    The following tables present summarized balance sheet information of the 
Company as of June 30, 1997 and December 31, 1996 and summarized operating 
statement information for the six and three months ended June 30, 1997 and 
1996. The column labeled "Parent Company" represents the holding company for 
each of the Company's direct subsidiaries, the column labeled "Guarantors" 
represents each of the Company's direct subsidiaries, all of which are 
wholly-owned by the parent company, and the column labeled "Non-Guarantors" 
represents the partnerships which operate the Company's casino in Sioux City 
and Lawrenceburg, Indiana.  The Company believes that separate financial 
statements and other disclosures regarding the Guarantors, except as 
otherwise required under Regulation S-X, are not material to investors.  

                                       7

<PAGE>

                                ARGOSY GAMING COMPANY 
                      NOTES TO CONDENSED CONSOLIDATED FINANCIAL      
                           STATEMENTS (UNAUDITED) CONTINUED     
                                    (In Thousands)    
                             
     Summarized balance sheet information as of  June 30, 1997 and December 31,
1996 is as follows:

<TABLE>
<CAPTION>

                                                                           JUNE 30, 1997
                                              -------------------------------------------------------------------------

                                                 PARENT                         NON-
                                                 COMPANY      GUARANTORS     GUARANTORS    ELIMINATIONS    CONSOLIDATED
                                               -----------    -----------    ----------    ------------    ------------
<S>                                            <C>            <C>            <C>           <C>             <C>

ASSETS: 
     Current assets                            $    23,116    $    27,500    $    21,888    $   (16,960)   $    55,544 
     Non-current assets                            397,908        358,303        160,532       (431,275)       485,468 
                                               -----------    -----------    -----------    ------------    ------------
                                               $   421,024    $   385,803    $   182,420    $  (448,235)   $   541,012 
                                               -----------    -----------    -----------    ------------    ------------
                                               -----------    -----------    -----------    ------------    ------------
LIABILITIES AND EQUITY:                                                                                                
     Current liabilities                       $    11,561    $    38,080    $    35,582    $   (33,564)   $    51,659 
                                                           
     Non-current liabilities                       350,000        303,239        108,512       (331,861)       429,890 
                                                           
     Stockholders' equity                           59,463         44,484         38,326        (82,810)        59,463 
                                               -----------    -----------    -----------    ------------    ------------
                                               $   421,024    $   385,803    $   182,420    $  (448,235)   $   541,012 
                                               -----------    -----------    -----------    ------------    ------------
                                               -----------    -----------    -----------    ------------    ------------

</TABLE>

<TABLE>
<CAPTION>

                                                                          DECEMBER 31, 1996
                                              -------------------------------------------------------------------------

                                                 PARENT                         NON-
                                                 COMPANY      GUARANTORS     GUARANTORS    ELIMINATIONS    CONSOLIDATED
                                               -----------    -----------    ----------    ------------    ------------
<S>                                            <C>            <C>            <C>           <C>             <C>

ASSETS:                                                                                                                
     Current assets                            $    29,353    $    25,301    $    13,191   $     (9,004)   $    58,841 
     Non-current assets                            403,873        314,287        119,727       (364,569)       473,318 
                                               -----------    -----------    -----------    ------------   -----------
                                               $   433,226    $   339,588    $  132,918     $ (373,573)    $  532,159 
                                               -----------    -----------    -----------    ------------   -----------
                                               -----------    -----------    -----------    ------------   -----------
                                                                                                                       
LIABILITIES AND EQUITY:                                                                                                
     Current liabilities                       $    10,525    $    26,939    $    20,630    $   (13,128)   $    44,966 
     Non-current liabilities                       350,000        267,428         78,856       (281,792)       414,492 
     Stockholders' equity                           72,701         45,221         33,432        (78,653)        72,701 
                                               -----------    -----------    -----------    ------------   -----------
                                               $   433,226    $   339,588    $   132,918    $ (373,573)    $  532,159 
                                               -----------    -----------    -----------    ------------   -----------
                                               -----------    -----------    -----------    ------------   -----------

</TABLE>

                                       8

<PAGE>

                               ARGOSY GAMING COMPANY
                     NOTES TO CONDENSED CONSOLIDATED FINANCIAL 
                          STATEMENTS (UNAUDITED) CONTINUED
                                   (In Thousands)

     Summarized operating statement information for the six and three months 
ended June 30,  1997 and 1996 is as follows:                                  

<TABLE>
<CAPTION>

                                                                   SIX MONTHS ENDED JUNE 30, 1997
                                              -------------------------------------------------------------------------

                                                 PARENT                         NON-
                                                 COMPANY      GUARANTORS     GUARANTORS    ELIMINATIONS    CONSOLIDATED
                                               -----------    -----------    ----------    ------------    ------------
<S>                                            <C>            <C>            <C>           <C>             <C>

Net revenues                                   $     3,358    $   100,973    $   72,608    $    (6,935)    $    170,004
Costs and expenses                                   8,975         93,539        62,885         (4,462)         160,937
Net interest expense                                15,972            535         2,086          1,787           20,380
Net (loss) income                              $   (13,282)   $     3,680    $    4,896    $    (8,576)    $    (13,282)

</TABLE>

<TABLE>
<CAPTION>

                                                                   SIX MONTHS ENDED JUNE 30, 1996
                                              -------------------------------------------------------------------------

                                                 PARENT                         NON-
                                                 COMPANY      GUARANTORS     GUARANTORS    ELIMINATIONS    CONSOLIDATED
                                               -----------    -----------    ----------    ------------    ------------
<S>                                            <C>            <C>            <C>           <C>             <C>

Net revenues                                   $     2,114    $   115,933    $   10,167    $    (2,260)    $    125,954
Costs and expenses                                   8,446        105,033        12,770         (2,310)         123,939
Net interest expense                                 7,638          3,098           170             --           10,906
Net (loss) income                              $    (5,868)   $     4,450    $   (2,774)   $    (1,676)    $     (5,868)

</TABLE>

<TABLE>
<CAPTION>

                                                                   THREE MONTHS ENDED JUNE 30, 1997
                                              -------------------------------------------------------------------------

                                                 PARENT                         NON-
                                                 COMPANY      GUARANTORS     GUARANTORS    ELIMINATIONS    CONSOLIDATED
                                               -----------    -----------    ----------    ------------    ------------
<S>                                            <C>            <C>            <C>           <C>             <C>

Net revenues                                   $     1,500    $    52,143    $   39,596    $    (5,730)    $     87,509
Costs and expenses                                   3,251         46,821        33,170         (2,839)          80,403
Net interest expense                                 7,905            (19)          727          1,307            9,920
Net (loss) income                              $    (4,265)    $    2,940     $   4,321     $   (7,261)    $     (4,265)

</TABLE>

<TABLE>
<CAPTION>

                                                                   THREE MONTHS ENDED JUNE 30, 1996
                                              -------------------------------------------------------------------------

                                                 PARENT                         NON-
                                                 COMPANY      GUARANTORS     GUARANTORS    ELIMINATIONS    CONSOLIDATED
                                               -----------    -----------    ----------    ------------    ------------
<S>                                            <C>            <C>            <C>           <C>             <C>

Net revenues                                   $       945     $   58,249    $    5,083    $    (1,012)    $     63,265
Costs and expenses                                   3,043         54,120         7,781         (1,782)          63,162
Net interest expense                                 4,998          1,704            83             --            6,785
Net (loss) income                              $    (4,821)    $    1,033    $   (2,781)   $     1,748     $     (4,821)

</TABLE>

                                       9

<PAGE>



                               ALTON GAMING COMPANY
                             CONDENSED BALANCE SHEETS
                  (In Thousands, Except Share and Per Share Data)
<TABLE>
<CAPTION>


                                                                  JUNE 30,      DECEMBER 31,
                                                                    1997            1996
                                                                -------------   ------------
                                                                 (UNAUDITED)
<S>                                                               <C>           <C>  
CURRENT ASSETS:
  Cash                                                              $  3,592       $  3,563 
  Other current assets                                                 1,745          1,482 
                                                                    --------       --------
    Total current assets                                               5,337          5,045
                                                                    --------       --------
DUE FROM AFFILIATES                                                   14,102         10,592 

NET PROPERTY AND EQUIPMENT                                            29,326         30,112 

OTHER ASSETS                                                               4              7 
                                                                    --------       --------
TOTAL ASSETS                                                       $  48,769      $  45,756 
                                                                    --------       --------
                                                                    --------       --------

CURRENT LIABILITIES:
  Accounts payable                                                    $  527       $  1,547 
  Other accrued liabilities                                            4,211          4,299 
  Income taxes payable to affiliate                                    1,528 
                                                                    --------       --------
    Total current liabilities                                          6,266          5,846 
                                                                    --------       --------
OTHER LONG-TERM OBLIGATIONS - RELATED PARTY                              178            171 

DEFERRED INCOME TAXES                                                  3,656          3,494 

STOCKHOLDER'S EQUITY:
  Common stock - $1 par value, 1,000 shares authorized, 
     issued and outstanding                                                1              1 
  Capital in excess of par                                               256            256 
  Retained earnings                                                   38,412         35,988 
                                                                    --------       --------
    Total stockholder's equity                                        38,669         36,245 
                                                                    --------       --------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY                         $  48,769      $  45,756 
                                                                    --------       --------
                                                                    --------       --------
</TABLE>


             See accompanying notes to condensed financial statements.





                                      10

<PAGE>

                              ALTON GAMING COMPANY
                         CONDENSED STATEMENTS OF INCOME
                                 (In Thousands)


<TABLE>
<CAPTION>
                                                                     SIX MONTHS ENDED
                                                                --------------------------
                                                                  JUNE 30,       JUNE 30,
                                                                    1997           1996
                                                                ------------   -----------
                                                                (UNAUDITED)    (UNAUDITED)
<S>                                                              <C>           <C>
REVENUES:
  Casino                                                          $  32,055     $  37,442 
  Food, beverage and other                                            3,613         3,693 
                                                                  ---------     ---------
                                                                     35,668        41,135 
  Less promotional allowances                                          (983)       (1,193)
                                                                  ---------     ---------
Net revenues                                                         34,685        39,942 
                                                                  ---------     ---------

COSTS AND EXPENSES
  Casino                                                             15,848        17,490 
  Food, beverage and other                                            3,423         3,489 
  Other operating expenses                                            2,737         2,732 
  Selling, general and administrative                                 5,260         6,194 
  Depreciation and amortization                                       2,109         2,071 
  Management fees - related party                                     1,288         1,872 
                                                                  ---------     ---------
                                                                     30,665        33,848 
                                                                  ---------     ---------
Income from operations                                                4,020         6,094 

OTHER INCOME (EXPENSE)
  Interest income                                                        23            23 
  Interest expense                                                       (7)          (21)
                                                                  ---------     ---------
                                                                         16             2 
                                                                  ---------     ---------
Income before income taxes                                            4,036         6,096 
Income tax expense                                                   (1,612)       (2,439)
                                                                  ---------     ---------
 
Net income                                                         $  2,424      $  3,657 
                                                                  ---------     ---------
                                                                  ---------     ---------


                   See accompanying notes to condensed financial statements.



                                              11


</TABLE>

<PAGE>


                              ALTON GAMING COMPANY
                         CONDENSED STATEMENTS OF INCOME
                                (In Thousands)

<TABLE>
<CAPTION>

                                                                    THREE MONTHS ENDED
                                                                --------------------------
                                                                  JUNE 30,      JUNE 30,
                                                                    1997          1996
                                                                ------------  ------------
                                                                (UNAUDITED)    (UNAUDITED)
<S>                                                             <C>           <C>
REVENUES:
  Casino                                                         $  15,633     $  18,944 
  Food, beverage and other                                           1,796         1,901 
                                                                  --------      --------
                                                                    17,429        20,845 
  Less promotional allowances                                         (486)         (566)
                                                                  --------      --------
Net revenues                                                        16,943        20,279 
                                                                  --------      --------

COSTS AND EXPENSES
  Casino                                                             7,709         8,898 
  Food, beverage and other                                           1,653         1,806 
  Other operating expenses                                           1,285         1,352 
  Selling, general and administrative                                2,529         3,138 
  Depreciation and amortization                                      1,089         1,039 
  Management fees - related party                                      467           946 
                                                                  --------      --------
                                                                    14,732        17,179
                                                                  --------      -------- 
Income from operations                                               2,211         3,100 

OTHER INCOME (EXPENSE)
  Interest income                                                       14            16 
  Interest expense                                                      (4)          (11)
                                                                  --------      --------
                                                                        10             5 
                                                                  --------      --------
Income before income taxes                                           2,221         3,105 
Income tax expense                                                    (886)       (1,118)
                                                                  --------      --------
Net income                                                        $  1,335      $  1,987 
                                                                  --------      --------
                                                                  --------      --------

                    See accompanying notes to condensed financial statements.

</TABLE>

                                               12


<PAGE>

ALTON GAMING COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
(In Thousands)

<TABLE>
<CAPTION>

                                                                    SIX MONTHS ENDED
                                                                --------------------------
                                                                  JUNE 30,      JUNE 30,
                                                                    1997          1996
                                                                ------------  ------------
                                                                (UNAUDITED)    (UNAUDITED)
<S>                                                              <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                        $  2,424      $  3,657 
Adjustments to reconcile net income to net cash provided
   by operating activities:
       Depreciation                                                  2,109         2,071 
       Deferred income taxes                                            87           317 
       Changes in operating assets and liabilities:
            Other current assets                                      (186)          431 
            Accounts payable                                        (1,020)         (764)
            Accrued liabilities                                        (88)          380 
            Income taxes payable to affiliate                        1,528         2,122 
                                                                  --------      --------
            Net cash provided by operating activities                4,854         8,214 
                                                                  --------      --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment                                 (1,322)         (690)
                                                                  --------      --------
           Net cash used in investing activities                    (1,322)         (690)
                                                                  --------      --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Due from affiliate                                                  (3,510)       (7,550)
Increase (decrease)  in other long-term obligations - related party      7          (852)
                                                                  --------      --------
           Net cash used in financing activities                    (3,503)       (8,402)
                                                                  --------      --------

Net increase (decrease)  in cash and cash equivalents                   29          (878)
Cash and cash equivalents, beginning of period                       3,563         3,873 
                                                                  --------      --------
Cash and cash equivalents, end of period                          $  3,592      $  2,995 
                                                                  --------      --------
                                                                  --------      --------



                       See accompanying notes to condensed financial statements.

</TABLE>


                                                 13

<PAGE>



                                 ALTON GAMING COMPANY
                       NOTES TO CONDENSED FINANCIAL STATEMENTS
                                (Dollars in Thousands)
                                           
                                           
1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION - Alton Gaming Company ("Company"), an Illinois 
Corporation and a wholly-owned subsidiary of Argosy Gaming Company 
("Argosy"), is engaged in the business of providing casino-style gaming and 
related entertainment to the public through the operation of the Alton Belle 
Casino in Alton, Illinois.

The accompanying unaudited condensed financial statements have been prepared 
in accordance with the instructions to Article 10 of Regulation S-X.  
Accordingly, they do not include all of the information and footnotes 
required by generally accepted accounting principles for complete financial 
statements.  Interim results may not necessarily be indicative of results 
which may be expected for any other interim period or for the year as a 
whole.  For further information refer to the financial statements and 
footnotes thereto for the year ended December 31, 1996 included in Argosy's 
Annual Report on Form 10-K (File No. 0-21122).  The accompanying unaudited 
condensed financial statements contain all adjustments which are, in the 
opinion of management, necessary to present fairly the financial position and 
the results of operations for the periods indicated. Such adjustments include 
only normal recurring accruals.  Certain 1996 amounts have been reclassified 
to conform to the 1997 presentation.

2.  COMMITMENTS AND CONTINGENCIES

A predecessor entity to the Company ("Predecessor"), as a result of a certain 
shareholder loan transaction, could be subject to federal and certain state 
income taxes (plus interest and penalties, if any) if it is determined that 
it failed to satisfy all of the requirements of the S-Corporation provisions 
of the Internal Revenue Code relating to the prohibition concerning a second 
class of stock.  An audit is currently being conducted by the Internal 
Revenue Service ("IRS") of the Company's federal income tax returns for the 
1992 and 1993 tax years and the IRS has asserted the S-Corporation status as 
one of the issues although the IRS has yet to make a formal claim of 
deficiency.  If the IRS successfully challenges the Predecessor's 
S-Corporation status, the Company would be required to pay federal and 
certain state income taxes on the Predecessor's taxable income from the 
commencement of its operations until February 25, 1993 (plus interest and 
penalties, if any, thereon until the date of payment).  If the Predecessor 
was required to pay federal and certain state income taxes on its taxable 
earnings through February 25, 1993, such payments could amount to 
approximately $13,200, including interest through June 30, 1997, but 
excluding penalties, if any.  While the Company believes the Predecessor has 
legal authority for its position that it is not subject to  federal and  
certain state income taxes because it met the S-Corporation requirements, no 
assurances can be given that the Predecessor's position will be upheld.  This 
contingent liability could have a material adverse effect on the Company's 
results of operations, financial condition and cash flows.  No provision has 
been made for this contingency in the accompanying financial statements.

On June 5, 1996, Argosy issued $235 million of 13 1/4% First Mortgage Notes, 
due 2004 ("Mortgage Notes").  The assets of the Company are pledged as 
collateral, and the Company is a guarantor, under the terms of the Mortgage 
Notes. 

 





                                      14

<PAGE>

                        THE MISSOURI GAMING COMPANY                            
                         CONDENSED BALANCE SHEETS
            (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>

                                                                        JUNE 30,       DECEMBER 31,
                                                                          1997             1996
                                                                      ------------     ------------
                                                                      (UNAUDITED)
<S>                                                                   <C>                <C>

CURRENT ASSETS:
     Cash                                                             $     6,626      $     6,143 
     Other current assets                                                   2,084            1,563 
                                                                      ------------     ------------
          Total current assets                                              8,710            7,706 
                                                                      ------------     ------------

NET PROPERTY AND EQUIPMENT                                                  74,075          75,773 

OTHER ASSETS                                                                 2,788           3,272 
                                                                      ------------     ------------

TOTAL ASSETS                                                          $     85,573     $    86,751 
                                                                      ------------     ------------
                                                                      ------------     ------------

CURRENT LIABILITIES:
     Accounts payable                                                 $     1,564      $     3,505 
     Income taxes payable to affiliate                                      4,509            4,435 
     Other accrued liabilities                                              4,299            4,244 
                                                                      ------------     ------------
          Total current liabilities                                        10,372           12,184 
                                                                      ------------     ------------

DUE TO AFFILIATES                                                          56,406           56,345 

DEFERRED INCOME TAXES                                                       1,419              907 

STOCKHOLDER'S EQUITY:
     Common stock - $.01 par value, 1000 shares authorized
        issued and outstanding
     Capital in excess of par                                               5,000            5,000 
     Retained earnings                                                     12,376           12,315 
                                                                      ------------     ------------
          Total stockholder's equity                                       17,376           17,315 
                                                                      ------------     ------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY                            $    85,573      $    86,751 
                                                                      ------------     ------------
                                                                      ------------     ------------

</TABLE>

           See accompanying notes to condensed financial statements.           



                                     15

<PAGE>

                        THE MISSOURI GAMING COMPANY
                    CONDENSED STATEMENTS OF OPERATIONS
                              (In Thousands)

<TABLE>
<CAPTION>

                                                                      SIX MONTHS ENDED
                                                                --------------------------
                                                                  JUNE 30,       JUNE 30,
                                                                    1997           1996
                                                                -----------    -----------
                                                                (UNAUDITED)    (UNAUDITED)
<S>                                                             <C>            <C>

REVENUES
     Casino                                                      $   31,667     $   44,002 
     Admissions                                                                      1,993 
     Food, beverage and other                                         4,936          5,344 
                                                                -----------    -----------
                                                                     36,603         51,339 
     Less promotional allowances                                     (2,428)        (4,010)
                                                                -----------    -----------
Net revenues                                                         34,175         47,329 
                                                                -----------    -----------


COSTS AND EXPENSES
     Casino                                                          16,792         22,391 
     Food, beverage and other                                         4,151          4,713 
     Other operating expenses                                         1,874          2,342 
     Selling, general and administrative                              5,813          7,057 
     Depreciation and amortization                                    2,738          4,252 
     Preopening costs                                                                  322 
     Lease termination costs                                                         3,508 
                                                                -----------    -----------
                                                                     31,368         44,585 
                                                                -----------    -----------
Income from operations                                                2,807          2,744 

OTHER INCOME (EXPENSE):
Interest income                                                          94 
Interest expense - related party                                     (2,758)        (2,914)
                                                                -----------    -----------
                                                                     (2,664)        (2,914)
                                                                -----------    -----------
Income (loss) before income taxes                                       143           (170)
Income tax (expense) benefit                                            (82)            68 
                                                                -----------    -----------
Net income (loss)                                               $        61    $      (102)
                                                                -----------    -----------
                                                                -----------    -----------

</TABLE>

           See accompanying notes to condensed financial statements.



                                     16

<PAGE>

                        THE MISSOURI GAMING COMPANY
                    CONDENSED STATEMENTS OF OPERATIONS
                              (In Thousands)

<TABLE>
<CAPTION>

                                                                    THREE MONTHS ENDED
                                                                --------------------------
                                                                  JUNE 30,       JUNE 30,
                                                                    1997           1996
                                                                -----------    -----------
                                                                (UNAUDITED)    (UNAUDITED)
<S>                                                             <C>            <C>

REVENUES
     Casino                                                     $   15,217     $   21,837 
     Food, beverage and other                                        2,439          2,888 
                                                                -----------    -----------
                                                                    17,656         24,725 
     Less promotional allowances                                    (1,268)        (1,300)
                                                                -----------    -----------
Net revenues                                                        16,388         23,425 
                                                                -----------    -----------

COSTS AND EXPENSES
     Casino                                                          8,034         11,094 
     Food, beverage and other                                        2,055          2,434 
     Other operating expenses                                          914          1,087 
     Selling, general and administrative                             2,853          3,292 
     Depreciation and amortization                                   1,369          1,754 
     Lease termination costs                                                        3,508 
                                                                -----------    -----------
                                                                    15,225         23,169 
                                                                -----------    -----------
Income from operations                                               1,163            256 

OTHER INCOME (EXPENSE):
Interest income                                                         59 
Interest expense - related party                                    (1,364)        (1,616)
                                                                -----------    -----------
                                                                    (1,305)        (1,616)
                                                                -----------    -----------
Loss before income taxes                                              (142)        (1,360)
Income tax expense                                                      55            509 
                                                                -----------    -----------
Net loss                                                        $      (87)    $     (851)
                                                                -----------    -----------
                                                                -----------    -----------

</TABLE>

           See accompanying notes to condensed financial statements.



                                     17

<PAGE>

                        THE MISSOURI GAMING COMPANY
                    CONDENSED STATEMENTS OF CASH FLOWS
                              (In Thousands)

<TABLE>
<CAPTION>

                                                                      SIX MONTHS ENDED
                                                                --------------------------
                                                                  JUNE 30,       JUNE 30,
                                                                    1997           1996
                                                                -----------    -----------
                                                                (UNAUDITED)    (UNAUDITED)
<S>                                                             <C>            <C>

CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss)                                               $       61     $     (102) 
Adjustments to reconcile net income (loss) to net cash     
 provided by operating activities                                    
   Depreciation                                                      2,618          4,132 
   Amortization                                                        120            120
   Deferred income taxes                                                 7           (355)
   Lease termination costs                                                          3,508
   Changes in operating assets and liabilities:
     Other current assets                                              366           (243) 
     Accounts payable                                               (1,941)        (6,060) 
     Accrued liabilities                                               268          1,569 
     Income taxes payable to affiliate                                  74             62
     Other assets                                                     (136)           900 
                                                                -----------    -----------
     Net cash provided by operating activities                       1,437          3,531
                                                                -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment                                   (921)       (13,296)
                                                                -----------    -----------
   Net cash used in investing activities                              (921)       (13,296)
                                                                -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on installment contracts                                      (94)          (458)
Due to affiliate                                                        61         14,917
                                                                -----------    -----------
   Net cash (used in) provided by financing activities                 (33)        14,459
                                                                -----------    -----------
Net increase in cash and cash equivalents                              483          4,694
Cash and cash equivalents, beginning of period                       6,143          4,131
                                                                -----------    -----------
Cash and cash equivalents, end of period                        $    6,626     $    8,825
                                                                -----------    -----------
                                                                -----------    -----------
</TABLE>

           See accompanying notes to condensed financial statements.



                                     18

<PAGE>

                             THE MISSOURI GAMING COMPANY
                       NOTES TO CONDENSED FINANCIAL STATEMENTS
                                (Dollars In Thousands)
                                           

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    The Missouri Gaming Company (a Missouri corporation and a wholly owned
    subsidiary of Argosy Gaming Company, ("Argosy")) owns and operates a
    riverboat casino and related facilities in Riverside, Missouri.  The
    Company commenced operations on June 22, 1994, at a temporary
    facility. The Company began construction of a permanent facility
    during 1995.  The permanent facility was opened to the public on
    January 15, 1996 and serves as a dining and entertainment outlet to
    the riverboat casino.

    The accompanying unaudited condensed financial statements have been
    prepared in accordance with the instructions to Article 10 of
    Regulation S-X.  Accordingly, they do not include all of the
    information and footnotes required by generally accepted accounting
    principles for complete financial statements.  Interim results may not
    necessarily be indicative of results which may be expected for any
    other interim period or for the year as a whole.  For further
    information refer to the financial statements and footnotes thereto
    for the year ended December 31, 1996 included in Argosy's Annual
    Report on Form 10-K (File No. 0-21122).  The accompanying unaudited
    condensed financial statements contain all adjustments which are, in
    the opinion of management, necessary to present fairly the financial
    position and the results of operations for the periods indicated. 
    Such adjustments include only normal recurring accruals.  Certain 1996
    amounts have been reclassified to conform to the 1997 presentation.

2.  COMMITMENTS AND CONTINGENCIES       

    The Company is restricted from making certain distributions to Argosy
    and other affiliates unless approved by state gaming authorities.

    On June 5, 1996, Argosy issued $235 million of 13 1/4% First Mortgage
    Notes, due 2004 ("Mortgage Notes").  The assets of the Company are
    pledged as collateral, and the Company is a guarantor under the terms
    of the Mortgage Notes.



                                     19

<PAGE>


                            ARGOSY OF LOUISIANA, INC.
                   CONDENSED CONSOLIDATED BALANCE SHEETS
              (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                  JUNE 30,   DECEMBER 31,
                                                                    1997         1996
                                                                -----------  -----------
                                                                (UNAUDITED)
<S>                                                              <C>           <C>
CURRENT ASSETS:
  Cash and cash equivalents                                       $ 3,450       $ 3,051
  Other current assets                                              2,166         2,776
                                                                  -------       -------
       Total current assets                                         5,616         5,827
                                                                  -------       -------

NET PROPERTY AND EQUIPMENT                                         46,728        49,021

OTHER ASSETS                                                        1,967         2,206
                                                                  -------       -------
TOTAL ASSETS                                                      $54,311       $57,054
                                                                  -------       -------
                                                                  -------       -------

CURRENT LIABILITIES:
  Accounts payable                                                $   484       $ 1,127
  Other accrued liabilities                                         4,482         3,497
  Current maturities of long-term 
   debt-related party                                               5,578         5,578
                                                                  -------       -------
       Total current liabilities                                   10,544        10,202
                                                                  -------       -------

LONG-TERM DEBT-RELATED PARTY                                       43,708        42,812

DEFERRED INCOME TAXES                                                   0         1,160

MINORITY INTEREST IN CONSOLIDATED PARTNERSHIP                       2,969         3,174

STOCKHOLDER'S DEFICIT:
  Common stock - $1 par value, 1,000 shares 
   authorized issued and outstanding                                    1             1
  Accumulated deficit                                              (2,911)         (295)
                                                                  -------       -------
       Total stockholder's deficit                                 (2,910)         (294)
                                                                  -------       -------
TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIT                       $54,311       $57,054
                                                                  -------       -------
                                                                  -------       -------
</TABLE>

    See accompanying notes to condensed consolidated financial statements.


                                   20
<PAGE>

                        ARGOSY OF LOUISIANA, INC.
             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                               (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                SIX MONTHS ENDED
                                                            -----------------------
                                                              JUNE 30,   JUNE 30,
                                                                1997       1996
                                                            ----------- -----------
                                                            (UNAUDITED) (UNAUDITED)
<S>                                                          <C>         <C>
REVENUES
  Casino                                                      $26,196     $27,036
  Food, beverage and other                                      3,686       2,549
                                                              -------     -------
                                                               29,882      29,585
  Less promotional allowances                                  (2,238)     (1,495)
                                                              -------     -------
Net revenues                                                   27,644      28,090
                                                              -------     -------

COST AND EXPENSES
  Casino                                                       15,081      13,365
  Food, beverage and other                                      3,462       2,297
  Other operating expenses                                      2,552       2,349
  Selling, general and administrative                           6,560       5,481
  Depreciation and amortization                                 2,789       2,731
                                                              -------     -------
                                                               30,444      26,223
                                                              -------     -------

(Loss) income from operations                                  (2,800)      1,867
Interest (expense) income net:
  Interest to related party                                      (802)
  Other                                                            47          75 
                                                              -------     -------

(Loss) income before income taxes and minority interest        (3,555)      1,942
Income tax benefit (expense)                                      734        (947)
Minority interest                                                 205         (78)
                                                              -------     -------
Net (loss) income                                             $(2,616)     $  917
                                                              -------     -------
                                                              -------     -------
</TABLE>


    See accompanying notes to condensed consolidated financial statements.


                                   21
<PAGE>

                       ARGOSY OF LOUISIANA, INC.
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                              (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                               THREE MONTHS ENDED
                                                            -----------------------
                                                              JUNE 30,   JUNE 30,
                                                                1997       1996
                                                            ----------- -----------
                                                            (UNAUDITED) (UNAUDITED)
<S>                                                          <C>         <C>
REVENUES
  Casino                                                      $13,405     $13,765 
  Food, beverage and other                                      1,973       1,450 
                                                              -------     -------
                                                               15,378      15,215
  Less promotional allowances                                  (1,247)       (820)
                                                              -------     -------
Net revenues                                                   14,131      14,395 
                                                              -------     -------

COST AND EXPENSES
  Casino                                                        7,750       7,094 
  Food, beverage and other                                      1,828       1,386 
  Other operating expenses                                      1,228       1,245 
  Selling, general and administrative                           3,546       2,863 
  Depreciation and amortization                                 1,397       1,374 
                                                              -------     -------
                                                               15,749      13,962 
                                                              -------     -------

(Loss) income from operations                                  (1,618)        433 
Interest (expense) income net:
  Interest to related party                                      (401)
  Other                                                            27         432 
                                                              -------     -------

(Loss) income before income taxes and minority interest        (1,992)        865 
Income tax benefit (expense)                                      257        (879)
Minority interest                                                 116          (9)
                                                              -------     -------
Net loss                                                      $(1,619)    $   (23)
                                                              -------     -------
                                                              -------     -------
</TABLE>

    See accompanying notes to condensed consolidated financial statements.


                                   22
<PAGE>

                        ARGOSY OF LOUISIANA, INC.
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                   SIX MONTHS ENDED
                                                               -----------------------
                                                                 JUNE 30,   JUNE 30,
                                                                   1997       1996
                                                               ----------- -----------
                                                               (UNAUDITED) (UNAUDITED)
<S>                                                             <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income                                               $(2,616)     $  917 
Adjustments to reconcile net (loss) income to net cash 
  (used in) provided by operating activities:
    Depreciation                                                  2,549       2,492 
    Amortization                                                    240         239 
    Minority interest                                              (205)         78 
    Deferred income taxes                                          (734)        711 
    Changes in operating assets and liabilities:
       Other current assets                                         185         942 
       Accounts payable                                            (643)       (512)
       Other accrued liabilities                                    985       1,962 
                                                                -------     -------
       Net cash (used in) provided by operating activities         (239)      6,829
                                                                -------     -------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment                                (258)       (488)
                                                                -------     -------
     Net cash used in investing activities                         (258)       (488)
                                                                -------     -------

CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in advances from affiliates                     896      (6,231)
Payments on notes payable and long-term debt                                   (292)
Decrease in other assets                                                         69 
                                                                -------     -------
     Net cash provided by (used in) financing activities            896      (6,454)
                                                                -------     -------

Net increase (decrease) in cash and cash equivalents                399        (113)
Cash and cash equivalents, beginning of period                    3,051       5,201 
                                                                -------     -------
Cash and cash equivalents, end of period                        $ 3,450     $ 5,088
                                                                -------     -------
                                                                -------     -------
</TABLE>

    See accompanying notes to condensed consolidated financial statements.


                                   23
<PAGE>

                        ARGOSY OF LOUISIANA, INC.
            NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                         (Dollars In Thousands)
                                           
1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    DESCRIPTION OF BUSINESS

    Argosy of Louisiana, Inc. (collectively with its controlled
    partnership Catfish Queen Partnership in Commendam ("Partnership")
    "the Company") was formed on July 29, 1993.  The Company entered a
    partnership agreement with Jazz Enterprises, Inc. ("Jazz") to form the
    Partnership to provide riverboat gaming and related entertainment in
    Baton Rouge, Louisiana.  The Company, a wholly owned subsidiary of
    Argosy Gaming Company (Argosy),  is the 90% general partner of the
    Partnership, along with the 10% partner in commendam Jazz, which
    became a wholly owned subsidiary of Argosy in 1995.  On September 21,
    1994, Jazz contributed its State of Louisiana Riverboat Gaming License
    and certain leases with a fair value of $3,271 to the Company.  On
    September 21, 1994, the Company's riverboat casino, Belle of Baton
    Rouge, commenced operations.

    The accompanying unaudited condensed consolidated financial statements
    have been prepared in accordance with the instructions to Article 10
    of Regulation S-X.  Accordingly, they do not include all of the
    information and footnotes required by generally accepted accounting
    principles for complete financial statements.  Interim results may not
    necessarily be indicative of results which may be expected for any
    other interim period or for the year as a whole.  For further
    information refer to the financial statements and footnotes thereto
    for the year ended December 31, 1996 included in Argosy's Annual
    Report on Form 10-K (File No. 0-21122).  The accompanying unaudited
    condensed consolidated financial statements contain all adjustments
    which are, in the opinion of management, necessary to present fairly
    the financial position and the results of operations for the periods
    indicated.  Such adjustments include only normal recurring accruals. 
    Certain 1996 amounts have been reclassified to conform to the 1997
    presentation.

2.  COMMITMENTS

    On September 21, 1994, the City of Baton Rouge and the Parish of East
    Baton Rouge (collectively referred to as "City-Parish") and Jazz
    entered into an agreement which requires Jazz and the Company to pay
    to the City-Parish $2.50 per passenger.  Additionally, Jazz agreed to
    pay to the City-Parish an additional fee which is now $2.50 per
    passenger until construction of a hotel commences by Jazz or another
    Argosy affiliate.  

    Argosy has guaranteed the additional $2.50 per passenger, if required,
    for the initial five-year certification term approved by the Louisiana
    Gaming Control Board.  Through June 30, 1997, the Company has paid all
    admission payments due under the above agreements.

    On June 5, 1996 Argosy issued $235 million of 13 1/4% First Mortgage Notes,
    due 2004 ("Mortgage Notes"). The assets of the Company are pledged as 
    collateral, and the Company is a guarantor, under the terms of the 
    Mortgage Notes.


                                   24

<PAGE>



                    CATFISH QUEEN PARTNERSHIP IN COMMENDAM
                           CONDENSED BALANCE SHEETS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                  JUNE 30,   DECEMBER 31,
                                                                    1997         1996
                                                                -----------  -----------
                                                                (UNAUDITED)
<S>                                                              <C>           <C>
CURRENT ASSETS:
     Cash and cash equivalents                                    $ 3,450      $ 3,051
     Other current assets                                             969        1,134
                                                                  -------      -------
          Total current assets                                      4,419        4,185
                                                                  -------      -------

NET PROPERTY AND EQUIPMENT                                         46,413       48,704

OTHER ASSETS                                                        1,968        2,206
                                                                  -------      -------

TOTAL ASSETS                                                      $52,800      $55,095
                                                                  -------      -------
                                                                  -------      -------

CURRENT LIABILITIES:
     Accounts payable                                             $   483      $ 1,127 
     Other accrued liabilities                                      4,964        3,497 
     Accrued interest-related party                                   302
     Notes payable and current maturities of long-term 
       debt-related party                                           5,578        5,578
                                                                  -------      -------
          Total current liabilities                                11,327       10,202
                                                                  -------      -------

LONG-TERM DEBT-RELATED PARTY                                       13,793       13,793 
PARTNERS' EQUITY                                                   27,680       31,100 
                                                                  -------      -------

TOTAL LIABILITIES AND PARTNERS' EQUITY                            $52,800      $55,095 
                                                                  -------      -------
                                                                  -------      -------

</TABLE>

    See accompanying notes to condensed financial statements.

                                   25
<PAGE>

                 CATFISH QUEEN PARTNERSHIP IN COMMENDAM
                   CONDENSED STATEMENTS OF OPERATIONS
                             (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                SIX MONTHS ENDED
                                                            -----------------------
                                                              JUNE 30,   JUNE 30,
                                                                1997       1996
                                                            ----------- -----------
                                                            (UNAUDITED) (UNAUDITED)
<S>                                                          <C>         <C>
REVENUES:
     Casino                                                   $26,196     $27,036
     Food, beverage and other                                   3,686       2,549
                                                              -------     -------
                                                               29,882      29,585
     Less promotional allowances                               (2,238)     (1,495)
                                                              -------     -------
Net revenues                                                   27,644      28,090
                                                              -------     -------

COSTS AND EXPENSES
     Casino                                                    15,081      13,365
     Food, beverage and other                                   3,462       2,297
     Other operating expenses                                   2,552       2,349
     Selling, general and administrative                        6,425       5,323
     Depreciation and amortization                              2,789       2,731
                                                              -------     -------
                                                               30,309      26,065
                                                              -------     -------

(Loss) income from operations                                  (2,665)      2,025

INTEREST (EXPENSE) INCOME (NET):
     Related parties                                             (802)       (802)
     Other                                                         47          73
                                                              -------     -------
                                                                 (755)       (729)
                                                              -------     -------
Net (loss) income                                             $(3,420)    $ 1,296
                                                              -------     -------
                                                              -------     -------
</TABLE>

     See accompanying notes to condensed financial statements.

                                   26
<PAGE>


                  CATFISH QUEEN PARTNERSHIP IN COMMENDAM
                    CONDENSED STATEMENTS OF OPERATIONS
                            (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                               THREE MONTHS ENDED
                                                            -----------------------
                                                              JUNE 30,   JUNE 30,
                                                                1997       1996
                                                            ----------- -----------
                                                            (UNAUDITED) (UNAUDITED)
<S>                                                          <C>         <C>
REVENUES:
     Casino                                                   $13,405     $13,765
     Food, beverage and other                                   1,973       1,450
                                                              -------     -------
                                                               15,378      15,215 
     Less promotional allowances                               (1,247)       (820)
                                                              -------     -------
Net revenues                                                   14,131      14,395
                                                              -------     -------

COSTS AND EXPENSES
     Casino                                                     7,750       7,094
     Food, beverage and other                                   1,828       1,386
     Other operating expenses                                   1,228       1,245
     Selling, general and administrative                        3,478       2,785
     Depreciation and amortization                              1,397       1,374
                                                              -------     -------
                                                               15,681      13,884
                                                              -------     -------

(Loss) income from operations                                  (1,550)        511

INTEREST (EXPENSE) INCOME (NET):
     Related parties                                             (401)       (401)
     Other                                                         27          29
                                                              -------     -------
                                                                 (374)       (372)
                                                              -------     -------
Net (loss) income                                             $(1,924)    $   139
                                                              -------     -------
                                                              -------     -------
</TABLE>

     See accompanying notes to condensed financial statements.

                                   27
<PAGE>

                    CATFISH QUEEN PARTNERSHIP IN COMMENDAM
                      CONDENSED STATEMENTS OF CASH FLOWS
                                (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                   SIX MONTHS ENDED
                                                               -----------------------
                                                                 JUNE 30,   JUNE 30,
                                                                   1997       1996
                                                               ----------- -----------
                                                               (UNAUDITED) (UNAUDITED)
<S>                                                             <C>         <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income                                                $(3,420)    $ 1,296 
Adjustments to reconcile net (loss) income to net cash
  (used in) provided by operating activities:
     Depreciation                                                  2,549       2,492 
     Amortization                                                    240         239 
     Changes in operating assets and liabilities:
          Other current assets                                       165       1,010 
          Accounts payable                                          (644)       (489)
          Accrued interest to related parties                        302         802 
          Other accrued liabilities                                  448         235 
                                                                 -------     -------
     Net cash (used in) provided by operating activities            (360)      5,585 
                                                                 -------     -------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment                                 (258)       (488)
                                                                 -------     -------
     Net cash used in investing activities                          (258)       (488)
                                                                 -------     -------

CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in advances from affiliates                    1,017      (4,918)
Payments on notes payable and long-term debt                                    (292)
                                                                 -------     -------
     Net cash provided by (used in) financing activities           1,017      (5,210)
                                                                 -------     -------
Net increase (decrease) in cash and cash equivalents                 399        (113)
Cash and cash equivalents, beginning of period                     3,051       5,201
                                                                 -------     -------
Cash and cash equivalents, end of period                         $ 3,450     $ 5,088
                                                                 -------     -------
                                                                 -------     -------
</TABLE>

    See accompanying notes to condensed financial statements.


                                   28
<PAGE>

                 CATFISH QUEEN PARTNERSHIP IN COMMENDAM
                 NOTES TO CONDENSED FINANCIAL STATEMENTS
                       (DOLLARS IN THOUSANDS)

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    BASIS OF PRESENTATION

    Catfish Queen Partnership in Commendam ("Partnership") was formed to 
provide riverboat gaming and related entertainment in Baton Rouge, Louisiana. 
The Partnership is comprised of a 90% general partner, Argosy of Louisiana, 
Inc. ("General Partner"), a wholly owned subsidiary of Argosy Gaming Company 
("Argosy"), and a 10% partner in commendam, Jazz Enterprises, Inc. ("Jazz") 
which became a wholly owned subsidiary of Argosy in 1995. 

    The accompanying unaudited condensed financial statements have been 
prepared in accordance with the instructions to Form 10-Q and Article 10 of 
Regulation S-X.  Accordingly, they do not include all of the information and 
footnotes required by generally accepted accounting principles for complete 
financial statements.  Interim results may not necessarily be indicative of 
results which may be expected for any other interim period or for the year as 
a whole.  For further information, refer to the financial statements and 
footnotes thereto for the year ended December 31, 1996, included in the 
Argosy's Annual Report on Form 10-K (File No. 0-21122).  The accompanying 
unaudited condensed financial statements contain all adjustments which are, 
in the opinion of management, necessary to present fairly the financial 
position and the results of operations for the periods indicated.  Such 
adjustments include only normal recurring accruals.  Certain 1996 amounts 
have been reclassified to conform to the 1997 financial statement 
presentation.

2.   COMMITMENTS

    On September 21, 1994, the City of Baton Rouge and the Parish of East 
Baton Rouge (collectively referred to as "City-Parish") and Jazz entered into 
an agreement which requires Jazz and the Company to pay to the City-Parish 
$2.50 per passenger. Additionally, Jazz agreed to pay to the City-Parish an 
additional passenger fee which is now $2.50 per passenger until actual 
construction of a hotel commences by Jazz or another Argosy affiliate. 

    Argosy has guaranteed the additional $2.50 per passenger if required, for 
the initial five-year certification term approved by the Louisiana Gaming 
Control Board. Through June 30, 1997, the Partnership has paid all admission 
payments due under the above agreements. 

    On June 5, 1996, Argosy issued $235 million of 13 1/4% First Mortgage 
Notes, due 2004 ("Mortgage Notes").  The assets of the Partnership are 
pledged as collateral, and the Partnership is a guarantor, under the terms of 
the Mortgage Notes.

                                   29

<PAGE>

                            JAZZ ENTERPRISES, INC.
                           CONDENSED BALANCE SHEETS
                                (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                            JUNE 30,      DECEMBER 31,
                                                                              1997           1996
                                                                          ------------    ------------
                                                                          (UNAUDITED)
<S>                                                                       <C>             <C>
CURRENT ASSETS:
  Cash and cash equivalents                                                                $
  Other current assets                                                                             78 
                                                                          ------------    ------------
   Total current assets                                                                            78 
                                                                          ------------    ------------

NET PROPERTY AND EQUIPMENT                                                     55,514          57,297 
GOODWILL, NET                                                                  20,220          20,519 
NOTE RECEIVABLE                                                                 1,892           1,892 
OTHER ASSETS                                                                    3,721           3,685 
                                                                          ------------    ------------

TOTAL ASSETS                                                               $   81,347      $   83,471 
                                                                          ------------    ------------
                                                                          ------------    ------------

CURRENT LIABILITIES:
  Accounts payable and accrued liabilities                                 $    4,221      $    3,478 

LONG-TERM DEBT                                                                 79,922          81,485 
STOCKHOLDER'S DEFICIT
  Common stock, no par value, 100,000 shares authorized, 200 shares
   issued and outstanding
  Retained deficit                                                             (2,796)         (1,492)
                                                                          ------------    ------------

TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIT                                $   81,347      $   83,471 
                                                                          ------------    ------------
                                                                          ------------    ------------
</TABLE>


          See accompanying notes to condensed financial statements.



                                      30
<PAGE>

                            JAZZ ENTERPRISES, INC.
                      CONDENSED STATEMENTS OF OPERATIONS
                                (In Thousands)
<TABLE>
<CAPTION>
                                                              SIX MONTHS ENDED
                                                         ----------------------------
                                                           JUNE 30,        JUNE 30,
                                                             1997            1996
                                                         ------------    ------------
                                                          (UNAUDITED)     (UNAUDITED)
<S>                                                      <C>             <C>
REVENUES:
  Lease revenue                                           $    1,571      $    1,633 
  Rent revenue                                                   184             184 
                                                         ------------    ------------
                                                               1,755           1,817 
                                                         ------------    ------------

COSTS AND EXPENSES:
  Operating expenses                                             445             194 
  Selling, general and administrative                            635             791 
  Depreciation and amortization                                1,177             359 
  Preopening costs                                                               100 
                                                         ------------    ------------
                                                               2,257           1,444 
                                                         ------------    ------------

(Loss) income from operations                                   (502)            373 

OTHER (EXPENSE) INCOME:
  Interest expense                                              (460)           (481)
  Equity in (loss) income of unconsolidated partnership         (342)            130 
                                                         ------------    ------------
(Loss) income before income taxes                             (1,304)             22 
Income tax expense                                                                (9)
                                                         ------------    ------------
Net (loss) income                                         $   (1,304)     $       13 
                                                         ------------    ------------
                                                         ------------    ------------
</TABLE>


          See accompanying notes to condensed financial statements.



                                      31
<PAGE>

                            JAZZ ENTERPRISES, INC.
                      CONDENSED STATEMENTS OF OPERATIONS
                                (In Thousands)
<TABLE>
<CAPTION>
                                                                 THREE MONTHS ENDED
                                                            ----------------------------
                                                              JUNE 30,        JUNE 30,
                                                                1997            1996
                                                            ------------    ------------
                                                             (UNAUDITED)     (UNAUDITED)
<S>                                                         <C>             <C>
REVENUES:
  Lease revenue                                              $      804      $      837 
  Rent revenue                                                       95              86 
                                                            ------------    ------------
                                                                    899             923 
                                                            ------------    ------------

COSTS AND EXPENSES:
  Operating expenses                                                300             105 
  Selling, general and administrative                               296             523 
  Depreciation and amortization                                     588             184 
  Preopening costs
                                                            ------------    ------------
                                                                  1,184             812 
                                                            ------------    ------------

(Loss) income from operations                                      (285)            111 

OTHER (EXPENSE) INCOME:
  Interest expense                                                 (230)           (240)
  Equity in (loss) income of unconsolidated partnership            (192)             14 
                                                            ------------    ------------
Loss before income taxes                                           (707)           (115)
Income tax benefit                                                                   46 
                                                            ------------    ------------
Net loss                                                     $     (707)     $      (69)
                                                            ------------    ------------
                                                            ------------    ------------
</TABLE>


          See accompanying notes to condensed financial statements.



                                      32
<PAGE>

                            JAZZ ENTERPRISES, INC.
                      CONDENSED STATEMENTS OF CASH FLOWS
                                (In Thousands)
<TABLE>
<CAPTION>
                                                               SIX MONTHS ENDED
                                                           ------------------------
                                                           JUNE 30,        JUNE 30,
                                                             1997            1996
                                                         ------------    ------------
                                                          (UNAUDITED)     (UNAUDITED)
<S>                                                      <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
 Net (loss) income                                        $   (1,304)     $       13 
Adjustments to reconcile net (loss) income to net cash
 provided by operating activities:
  Depreciation                                                   878              61 
  Amortization                                                   299             298 
  Equity in (loss) income of unconsolidated partnership          342            (130)
  Changes in operating assets and liabilities:
     Other current assets                                         78 
     Accounts payable and accrued liabilities                    743             526 
                                                         ------------    ------------
     Net cash provided by operating activities                 1,036             768 
                                                         ------------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                                          (943)        (12,113)
  Increase in other assets                                      (376)           (143)
                                                         ------------    ------------
     Net cash used in investing activities                    (1,319)        (12,256)
                                                         ------------    ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Principal payments on long-term debt                           (89)
  Advances from affiliate                                        372          11,477 
                                                         ------------    ------------
     Net cash provided by financing activities                   283          11,477 
                                                         ------------    ------------
Net increase (decrease) in cash and cash equivalents               0             (11)
Cash and cash equivalents, beginning of period                     0              32 
                                                         ------------    ------------
Cash and cash equivalents, end of period                  $      -        $       21 
                                                         ------------    ------------
                                                         ------------    ------------
</TABLE>


          See accompanying notes to condensed financial statements.



                                      33
<PAGE>

                            JAZZ ENTERPRISES, INC.
                   NOTES TO CONDENSED FINANCIAL STATEMENTS
                            (DOLLARS IN THOUSANDS)


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    BASIS OF PRESENTATION

     Jazz Enterprises, Inc., ("Jazz" or "the Company") a Louisiana corporation
was incorporated on June 10, 1992 for the purpose of developing a riverboat
gaming operation and an entertainment complex known as "Catfish Town" in Baton
Rouge, Louisiana.

     In July 1993, the Company entered into a partnership with Argosy of
Louisiana, Inc. (a wholly owned subsidiary of Argosy Gaming Company ("Argosy")
("ALI") in which the Company owns 10% and ALI owns 90%, to operate a riverboat
casino in Baton Rouge, Louisiana, which opened September 30, 1994.  The Company
contributed its Certificate of Preliminary Approval and certain leases to the
partnership.

     On December 5, 1994, the stockholders of Jazz entered in an agreement to
sell 100% of the common stock of Jazz to Argosy.  The transaction was
consummated on May 30, 1995 and was accounted for as a purchase, therefore
establishing a new basis of accounting.  Terms of the transaction allowed Argosy
to acquire Jazz's 10% limited partnership interest in the Baton Rouge casino and
all of Jazz's interest in Catfish Town real estate development.

     The accompanying unaudited condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q and Article 10 of
Regulation S-X.  Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.  Interim results may not necessarily be indicative of
results which may be expected for any other interim period or for the year as a
whole.  For further information, refer to the financial statements and footnotes
thereto for the year ended December 31, 1996, included in Argosy's Annual
Report on Form 10-K (File No. 0-21122).  The accompanying unaudited condensed
financial statements contain all adjustments which are, in the opinion of
management, necessary to present fairly the financial position and the results
of operations for the periods indicated.  Such adjustments include only normal
recurring accruals.  Certain 1996 amounts have been reclassified to conform to
the 1997 financial statement presentation.

2.  COMMITMENTS

    On September 21, 1994, the City of Baton Rouge and the Parish of East 
Baton Rouge (collectively referred to as "City-Parish") and the Company 
entered into an agreement which required the Company and the partnership to 
pay to the City-Parish $2.50 per passenger.  Additionally, the Company agreed 
to pay to the City-Parish an additional passenger fee which is now $2.50 per 
passenger until actual construction of a hotel commences by the Company or 
another Argosy affiliate.

    Argosy has guaranteed the additional $2.50 per passenger if required, for
the initial five-year certification term approved by the Louisiana Riverboat
Gaming Commission.  Through June 30, 1997, the partnership has paid all
admission payments due under the above agreements.

    On June 5, 1996, Argosy issued $235 million of 13 1/4% First Mortgage
Notes, due 2004 ("Mortgage Notes").  The assets of the Company are pledged as
collateral, and the Company is a guarantor, under the terms of the Mortgage
Notes.



                                      34
<PAGE>

                          THE INDIANA GAMING COMPANY
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                     (In Thousands, except share data)

<TABLE>
<CAPTION>



                                                                    JUNE 30,      DECEMBER 31,
                                                                      1997          1996
                                                                   ----------     ------------
                                                                  (UNAUDITED)
<S>                                                               <C>             <C>
CURRENT ASSETS:
     Cash and cash equivalents                                     $   18,028      $  9,216
     Other current assets                                               2,004         1,844
                                                                   ----------      --------
          Total current assets                                         20,032        11,060
                                                                   ----------      --------

NET PROPERTY AND EQUIPMENT                                            106,968        69,392
OTHER ASSETS:
     Deposits                                                             777             5
     Cash and cash equivalents-restricted                              18,425        14,919
     Intangible assets, net                                            30,907        31,459
                                                                   ----------      --------
          Total other assets                                           50,109        46,383
                                                                   ----------      --------

TOTAL ASSETS                                                       $  177,109    $  126,835
                                                                   ----------      --------
                                                                   ----------      --------


CURRENT LIABILITIES:
     Accounts payable                                              $    1,335    $    3,115
     Accrued interest and dividends payable-related parties             2,714         2,198
     Other accrued liabilities                                          9,553         5,616
     Current maturities of long-term debt-related parties               6,165         2,900
     Current maturities of other long-term obligations                  5,169         5,169
                                                                   ----------      --------
          Total current liabilities                                    24,936        18,998
                                                                   ----------      --------

LONG-TERM DEBT-RELATED PARTY                                          128,413        86,612
OTHER LONG-TERM OBLIGATIONS                                            11,985        15,000
MINORITY INTERESTS                                                     15,389        14,490
STOCKHOLDER'S DEFICIT:
     Common stock - $.01 par value, 1,000 shares authorized
        issued and outstanding
     Accumulated deficit                                               (3,614)       (8,265)
                                                                   ----------      --------

Total liabilities and stockholder's deficit                        $  177,109    $  126,835
                                                                   ----------      --------
                                                                   ----------      --------
</TABLE>

    See accompanying notes to condensed consolidated financial statements.

                                      35

<PAGE>

                          THE INDIANA GAMING COMPANY
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                               (In Thousands)

<TABLE>
<CAPTION>

                                                                 SIX MONTHS ENDED
                                                            --------------------------
                                                             JUNE 30,       JUNE 30,
                                                               1997           1996
                                                            -----------    -----------
                                                            (UNAUDITED)    (UNAUDITED)
<S>                                                         <C>            <C>
REVENUES:
     Casino                                                  $  57,418
     Admissions                                                  8,592
     Food, beverage and other                                    2,981
                                                            -----------    -----------
                                                                68,991
     Less promotional allowances                                (7,122)
                                                            -----------    -----------
Net revenues                                                    61,869
                                                            -----------    -----------

COST AND EXPENSES:
     Casino                                                     25,469
     Food, beverage and other                                    2,206
     Other operating expenses                                    6,330
     Selling, general and administrative                        10,466
     Depreciation and amortization                               5,390
     Management fees-related parties                               869
     Preopening                                                                2,843 
                                                            -----------    -----------
                                                                50,730         2,843 
                                                            -----------    ----------- 
Income (loss) from operations                                   11,139        (2,843)

OTHER INCOME (EXPENSE):
     Interest income                                               597
     Interest expense                                           (1,170)
                                                            -----------    -----------
                                                                  (573)
                                                            -----------    -----------
Income (loss) before income taxes and minority interests        10,566        (2,843)
Income tax expense                                              (3,854)
Minority interests                                              (2,061)        1,165 
                                                            -----------    -----------
Net income (loss)                                            $   4,651     $  (1,678)
                                                            -----------    -----------
                                                            -----------    -----------

</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                   36

<PAGE>

                          THE INDIANA GAMING COMPANY
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                              (In Thousands)


<TABLE>
<CAPTION>

                                                                 SIX MONTHS ENDED
                                                            --------------------------
                                                             JUNE 30,       JUNE 30,
                                                               1997           1996
                                                            -----------    -----------
                                                            (UNAUDITED)    (UNAUDITED)
<S>                                                         <C>            <C>
REVENUES:
     Casino                                                  $  31,698
     Admissions                                                  4,569
     Food, beverage and other                                    1,580 
                                                            -----------    -----------
                                                                37,847 
     Less promotional allowances                                (3,858)
                                                            -----------    -----------
Net revenues                                                    33,989 
                                                            -----------    -----------

COST AND EXPENSES:
     Casino                                                     13,564 
     Food, beverage and other                                    1,221 
     Other operating expenses                                    3,188 
     Selling, general and administrative                         5,468 
     Depreciation and amortization                               2,932 
     Management fees-related parties                               527 
     Preopening                                                                1,631
                                                            -----------    -----------
                                                                26,900         1,631 
                                                            -----------    -----------
Income (loss) from operations                                    7,089        (1,631)

OTHER INCOME (EXPENSE):
     Interest income                                               292 
     Interest expense                                             (426)
                                                            -----------    -----------
                                                                  (134)
                                                            -----------    -----------
Income (loss) before income taxes and minority interests         6,955        (1,631)
Income tax expense                                              (2,393)
Minority interests                                              (1,442)          670
                                                            -----------    -----------
Net income (loss)                                            $   3,120     $    (961)
                                                            -----------    -----------
                                                            -----------    -----------

</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                    37

<PAGE>

                          THE INDIANA GAMING COMPANY
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (In Thousands)


<TABLE>
<CAPTION>

                                                                    SIX MONTHS ENDED
                                                               --------------------------
                                                                JUNE 30,       JUNE 30,
                                                                  1997           1996
                                                               -----------    -----------
                                                               (UNAUDITED)    (UNAUDITED)
<S>                                                            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                               $   4,651     $  (1,678)
Adjustments to reconcile net loss to net cash provided by 
   (used in) operating activities:
      Depreciation                                                  4,778            34 
      Amortization                                                    612 
      Minority interests                                            2,061        (1,165)
   Changes in operating assets and  liabilities:
           Other current assets                                      (160)         (963)
           Deposits                                                  (772)         (780)
           Accounts payable                                        (1,780)         (608)
           Accrued interest payable to related parties               (151)
           Accrued liabilities                                      6,930            86 
                                                               -----------    -----------
           Net cash provided by (used in) operating activities     16,169        (5,074)
CASH FLOWS FROM INVESTING ACTIVITIES:
      Restricted cash held in escrow                               (3,506)
      Purchases of property and equipment                         (42,355)      (27,586)
      Payments under development agreement and other
         infrastructure improvements                               (3,015)
                                                               -----------    -----------
           Net cash used in investing activities                  (48,876)      (27,586)
CASH FLOWS FROM FINANCING ACTIVITIES:
      Increase in advances from affiliates                         18,941        16,939 
      Payments on installment contracts                            (2,998)
      Proceeds from contributed capital                                          19,043 
      Repayment of long term debt - related party                    (690)
      Proceeds from long-term debt - related party                 26,815           632 
      Payment of preferred return to partner                         (489)
      Other                                                           (60)
                                                               -----------    -----------
           Net cash provided by financing activities               41,519        36,614 
                                                               -----------    -----------
Net increase in cash and cash equivalents                           8,812         3,954 
Cash and cash equivalents, beginning of period                      9,216             2 
                                                               -----------    -----------
Cash and cash equivalents, end of period                        $  18,028     $   3,956 
                                                               -----------    -----------
                                                               -----------    -----------

</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                      38

<PAGE>

                            THE INDIANA GAMING COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                              (Dollars in Thousands)
                                           

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    BASIS OF PRESENTATION-The Indiana Gaming Company, a wholly owned 
subsidiary of Argosy Gaming Company ("Argosy") (collectively with its 
controlled partnership Indiana Gaming Company L.P. ("Partnership") "the 
Company") was formed effective April 11, 1994 to provide riverboat gaming and 
related entertainment in Lawrenceburg, Indiana. The Company is a 57 1/2% 
general partner in the Partnership, together with, three limited partners 
including, Conseco Entertainment, L.L.C., ("Conseco") a 29% limited partner, 
Centaur, Inc., a 9.5% limited partner and RJ Investments, Inc., a 4% limited 
partner. On December 10, 1996, the Company commenced operations at a 
temporary site and ceased being in the development stage. The Company is 
constructing its permanent site which it expects to open in December 1997. 

    The accompanying unaudited condensed consolidated financial statements 
have been prepared in accordance with the instructions to Form 10Q and 
Article 10 of Regulation S-X.  Accordingly, they do not include all of the 
information and footnotes required by generally accepted accounting 
principles for complete financial statements.  Interim results may not 
necessarily be indicative of results which may be expected for any other 
interim period or for the year as a whole.  For further information refer to 
the financial statements and footnotes thereto for the year ended December 
31, 1996, included in Argosy's Annual Report on Form 10-K (File No. 0-21122). 
The accompanying unaudited condensed consolidated financial statements 
contain all adjustments which are, in the opinion of management, necessary to 
present fairly the financial position and the results of operations for the 
periods indicated.  Such adjustments include only normal recurring accruals.  
Certain 1996 amounts have been reclassified to conform to the 1997 financial 
statement presentation.

2.  INCOME TAXES

   At December 31, 1996, the Company had net operating loss carryforward for 
income tax purposes of approximately $260 and recorded a valuation allowance 
against its deferred tax assets.  During the six months ended June 30, 1997 
the Company utilized the net operating loss carryforward.

3.  COMMITMENTS AND CONTINGENCIES

    CITY INFRASTRUCTURE IMPROVEMENTS AND UNRESTRICTED GRANTS-In accordance 
with the terms of the Development Agreement, the Company entered into a lease 
with the City of Lawrenceburg for docking privileges for the riverboat 
casino. The initial term of the lease is for six years and thereafter 
automatically extends for up to nine renewal term periods of five years each, 
unless terminated by the Company. Under the terms of the Development 
Agreement, the Company pays an annual fee to the City of Lawrenceburg ranging 
from 5%-14% of Adjusted Gross Receipts, as defined, with a minimum of $6 
million per year. 

    The Company has agreed to pay the City of Lawrenceburg approximately 
$33,848 in reimbursements for infrastructure improvements and unrestricted 
grants. These have been recorded as an intangible asset in the accompanying 
balance sheets.  The reimbursement for infrastructure improvements and 
unrestricted city grants are being amortized over the 28 year term, including 
extensions, of the Development Agreement. 

                                      39

<PAGE>

                          THE INDIANA GAMING COMPANY
                NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            (DOLLARS IN THOUSANDS)


    Included in other long term obligations at June 30, 1997 is $17,154 
representing the remaining grants and infrastructure payments due by the 
Company under the terms of the Riverboat Gaming Development Agreement with 
the City of Lawrenceburg ("Development Agreement"). Upon the final completion 
of the permanent site $8,000 is due. The remaining $9,154 is payable as 
follows: $2,154 ratably over the first year subsequent to opening of the 
temporary site, $5,000 ratably over the second year subsequent to the opening 
of the temporary site and $2,000 ratably over the third year subsequent to 
the opening of the temporary site. 

    COMPLETION OF PERMANENT FACILITY-Provisions of the partnership agreement 
stipulate that capital contributions, including partner loans up to a total 
project cost, as defined, of $225 million will be made 57 1/2% by the Company 
and 42 1/2% by the limited partners with any excess project cost being the 
sole responsibility of the Company. 

    Pursuant to Indiana gaming law, the Company may only operate at its 
temporary site for one year from the opening of the temporary facility. The 
completion of the permanent facility is subject to the satisfaction of 
numerous conditions including weather conditions and the receipt of numerous 
permits and licenses. There can be no assurance that the permanent facility 
will be open within one year of the opening of the temporary facility. 

    BONDING OBLIGATION-The Company is required, by Indiana Gaming Statute, to 
post a bond in favor of the Indiana Gaming Commission to collateralize 
certain obligations to the City of Lawrenceburg under the Development 
Agreement, and to the State of Indiana. This bond is collateralized by 
certain real estate of the Company. 

    PERMANENT RIVERBOAT CASINO-The Partnership has entered into an agreement 
for the construction of its permanent riverboat facility. Total estimated 
costs of this contract is approximately $39 million. As of June 30, 1997, the 
Company had made approximately $27.1 million in progress payments. 

    TERMINATION OF LAWRENCEBURG PARTNERSHIP-Under the terms of the 
partnership agreement, after the third anniversary date of commencement of 
operations each limited partner has the right to sell its interest to the 
other partners (pro rata in accordance with their respective percentage 
interests). In the event of this occurrence, if the partners cannot agree on 
a selling price, the Partnership will be sold in its entirety. 

    GUARANTY OF PARENT OBLIGATIONS-On June 5, 1996 Argosy issued $235 million 
of 13 1/4% First Mortgage Notes, due 2004 ("Mortgage Notes"). The Company has 
pledged its interest in the Partnership, and its rights to certain payments 
from the Partnership, as collateral, under the terms of the Mortgage Notes. 
Additionally, the Company is a guarantor of the Mortgage Notes.

                                      40

<PAGE>



                                    INDIANA GAMING COMPANY, L.P.
                                      CONDENSED BALANCE SHEETS
                                            (In Thousands)

<TABLE>
<CAPTION>

                                                                  JUNE 30,     DECEMBER 31, 
                                                                    1997           1996 
                                                                ------------   ------------ 
                                                                (UNAUDITED) 
<S>                                                             <C>            <C>
CURRENT ASSETS:
     Cash and cash equivalents                                   $  18,028        $  9,216 
     Other current assets                                            2,004           1,844 
                                                                 ---------        --------
        Total current assets                                        20,032          11,060 
                                                                 ---------        --------
NET PROPERTY AND EQUIPMENT                                         105,707          68,349 
OTHER ASSETS:
     Deposits                                                          777               5 
     Cash and cash equivalents-restricted                           18,425          14,919 
     Intangible assets, net                                         30,963          31,459 
                                                                 ---------        --------
        Total other assets                                          50,165          46,383 
                                                                 ---------        --------
TOTAL ASSETS                                                    $  175,904      $  125,792 
                                                                 ---------        --------
                                                                 ---------        --------
CURRENT LIABILITIES:
     Accounts payable                                             $  1,596        $  3,464 
     Accrued interest and dividends payable-related parties          6,489           5,240 
     Other accrued liabilities                                       5,699           5,616 
     Due to affiliates                                                                 777 
     Current maturities of long-term debt-related parties           13,225           7,066 
     Current maturities of other long-term obligations               5,169           5,169 
                                                                 ---------        --------
        Total current liabilities                                   32,178          27,332 
                                                                 ---------        --------
LONG-TERM DEBT-RELATED PARTIES                                      92,574          49,463 
OTHER LONG-TERM OBLIGATIONS                                         11,985          15,000 
PARTNERS' EQUITY:
     General partner                                                22,522          19,549 
     Limited partners                                               16,645          14,448 
                                                                 ---------        --------
        Total partners' equity                                      39,167          33,997 
                                                                 ---------        --------
TOTAL LIABILITIES AND PARTNERS' EQUITY                          $  175,904      $  125,792 
                                                                 ---------        --------
                                                                 ---------        --------


                     See accompanying notes to condensed financial statements.

</TABLE>


                                                 41
<PAGE>


                                     INDIANA GAMING COMPANY, L.P.
                                  CONDENSED STATEMENTS OF OPERATIONS
                                           (In Thousands)

<TABLE>
<CAPTION>
                                                                     SIX MONTHS ENDED
                                                               ---------------------------
                                                                 JUNE 30,       JUNE 30,
                                                                   1997           1996
                                                               ------------   ------------
                                                                (UNAUDITED)    (UNAUDITED)
<S>                                                            <C>            <C>
REVENUES:
     Casino                                                     $  57,418 
     Admissions                                                     8,592 
     Food, beverage and other                                       2,981 
                                                                 ---------      --------
                                                                   68,991 
     Less promotional allowances                                   (7,122)
                                                                 ---------      --------
Net revenues                                                       61,869 
                                                                 ---------      --------
COST AND EXPENSES:
     Casino                                                        25,469 
     Food, beverage and other                                       2,206 
     Other operating expenses                                       6,330 
     Selling, general and administrative                           10,466 
     Depreciation and amortization                                  5,390 
     Management fees-related parties                                2,175 
     Preopening                                                                    2,742 
                                                                 ---------      --------
                                                                    52,036         2,742 
                                                                 ---------      --------
Income (loss) from operations                                        9,833        (2,742)

OTHER INCOME (EXPENSE):
     Interest income                                                   597 
     Interest expense                                               (2,519)
                                                                 ---------      --------
                                                                    (1,922)
                                                                 ---------      --------
Net income (loss) prior to preferred equity return                   7,911        (2,742)
Preferred equity return                                             (2,741)
                                                                 ---------      --------
Net income (loss) attributable to common equity partners          $  5,170     $  (2,742)
                                                                 ---------      --------
                                                                 ---------      --------



                  See accompanying notes to condensed financial statements.


</TABLE>

                                             42

<PAGE>

                                 INDIANA GAMING COMPANY, L.P.
                              CONDENSED STATEMENTS OF OPERATIONS
                                       (In Thousands)

<TABLE>
<CAPTION>
                                                                    THREE MONTHS ENDED
                                                                -------------------------
                                                                 JUNE 30,       JUNE 30,
                                                                   1997           1996
                                                                ----------     ----------
                                                                (UNAUDITED)    (UNAUDITED)
<S>                                                            <C>            <C>
REVENUES:
     Casino                                                     $  31,698 
     Admissions                                                     4,569 
     Food, beverage and other                                       1,580 
                                                                 ---------      --------
                                                                   37,847 
     Less promotional allowances                                   (3,858)
                                                                 ---------      --------
Net revenues                                                       33,989 
                                                                 ---------      --------
COST AND EXPENSES:
     Casino                                                        13,564 
     Food, beverage and other                                       1,221 
     Other operating expenses                                       3,188 
     Selling, general and administrative                            5,468 
     Depreciation and amortization                                  2,932 
     Management fees-related parties                                1,319 
     Preopening                                                                    1,577 
                                                                 ---------      --------
                                                                   27,692          1,577 
                                                                 ---------      --------
Income (loss) from operations                                       6,297         (1,577)

OTHER INCOME (EXPENSE):
     Interest income                                                  292 
     Interest expense                                                (940)
                                                                 ---------      --------
                                                                     (648)
                                                                 ---------      --------
Net income (loss) prior to preferred equity return                  5,649         (1,577)
Preferred equity return                                            (1,378)
                                                                 ---------      --------
Net income (loss) attributable to common equity partners         $  4,271      $  (1,577)
                                                                 ---------      --------
                                                                 ---------      --------


                           See accompanying notes to condensed financial statements.

</TABLE>

 


                                                      43

<PAGE>


                                           INDIANA GAMING COMPANY, L.P.
                                        CONDENSED STATEMENTS OF CASH FLOWS
                                                (In Thousands)

<TABLE>
<CAPTION>

                                                                                  SIX MONTHS ENDED 
                                                                             -------------------------
                                                                              JUNE 30,       JUNE 30,
                                                                                1997           1996
                                                                             -----------   -----------
                                                                             (UNAUDITED)    (UNAUDITED)
<S>                                                                          <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income (loss)                                                        $  5,170      $  (2,742)
     Adjustments to reconcile net income (loss) to net cash provided by
       (used in) operating activities:
        Depreciation                                                             4,778             34 
        Amortization                                                               612 
        Accrued preferred equity dividends                                       2,741 
     Changes in operating assets and liabilities:
        Other current assets                                                      (160)          (906)
        Accounts payable                                                        (1,868)          (608)
        Accrued interest payable to related parties                               (336)
        Deposits                                                                  (772)          (780)
        Accrued liabilities                                                      2,244             93 
                                                                             ---------       --------
           Net cash provided by (used in) operating activities                  12,409         (4,909)
                                                                             ---------       --------
CASH FLOWS FROM INVESTING ACTIVITIES:
        Restricted cash held in escrow                                          (3,506)
        Purchases of property and equipment                                    (42,137)       (26,886)
        Payments under development agreement and other 
          infrastructure improvements                                           (3,015)
                                                                             ---------       --------
           Net cash used in investing activities                               (48,658)       (26,886)
                                                                             ---------       --------
CASH FLOWS FROM FINANCING ACTIVITES:
        Payments on installment contracts                                       (2,998)
        Proceeds from contributed capital                                                      34,264 
        Proceeds from long-term debt - related party                            50,885          1,485 
        Repayment of long term debt - related party                             (1,615)
        Payment of preferred return to partners                                 (1,151)
        Other                                                                      (60)
                                                                             ---------       --------
           Net cash provided by financing activities                            45,061         35,749 
                                                                             ---------       --------
Net increase in cash and cash equivalents                                        8,812          3,954 
Cash and cash equivalents,  beginning of period                                  9,216              2 
                                                                             ---------       --------
Cash and cash equivalents,  end of period                                    $  18,028       $  3,956 
                                                                             ---------       --------
                                                                             ---------       --------


                              See accompanying notes to condensed financial statements.

</TABLE>

                                                        44

<PAGE>

                                            INDIANA GAMING COMPANY, L.P.
                                      NOTES TO CONDENSED FINANCIAL STATEMENTS
                                              (Dollars in Thousands)
                                           


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    BASIS OF PRESENTATION-Indiana Gaming Company,  L.P. ("Partnership"), an 
Indiana limited partnership, was formed effective April 11, 1994 to provide 
riverboat gaming and related entertainment in Lawrenceburg, Indiana. The 
Partnership is comprised of a 57.5% general partner, The Indiana Gaming 
Company ("General Partner"), a wholly owned subsidiary of Argosy Gaming 
Company, ("Argosy"), and three limited partners including, Conseco 
Entertainment, L.L.C., ("Conseco") a 29% limited partner, Centaur, Inc., a 
9.5% limited partner and RJ Investments, Inc., a 4% limited partner. Net 
income (loss) is allocated to the partners based on their respective 
ownership interests. On December 10, 1996, the Partnership commenced 
operations at a temporary site and ceased being in the development stage. The 
Partnership is constructing its permanent site which it expects to open in 
December 1997. 

    The accompanying unaudited condensed financial statements have been 
prepared in accordance with the instructions to Form 10Q and Article 10 of 
Regulations S-X.  Accordingly, they do not include all of the information and 
footnotes required by generally accepted accounting principles for complete 
financial statements.  Interim results may not necessarily be indicative of 
results which may be expected for any other interim period or for the year as 
a whole.  For further information, refer to the financial statements and 
footnotes thereto for the year ended December 31, 1996, included in Argosy's 
Annual Report on Form 10-K (File No.0-21122).  The accompanying unaudited 
condensed financial statements contain all adjustments which are, in the 
opinion of management, necessary to present fairly the financial position and 
the results of operations for the periods indicated.  Such adjustments 
include only normal recurring accruals.  Certain 1996 amounts have been 
reclassified to conform to the 1997 financial statement presentation.

2.  COMMITMENTS AND CONTINGENCIES

    CITY INFRASTRUCTURE IMPROVEMENTS AND UNRESTRICTED GRANTS-In accordance 
with the terms of the Development Agreement, the Partnership entered into a 
lease with the City of Lawrenceburg for docking privileges for its riverboat 
casino. The initial term of the lease is for six years and thereafter 
automatically extends for up to nine renewal term periods of five years each, 
unless terminated by the Partnership.  Under the terms of the Development 
Agreement, the Partnership pays an annual fee to the City of Lawrenceburg 
ranging from 5%-14% of Adjusted Gross Receipts, as defined, with a minimum of 
$6 million per year.









                                      45


<PAGE>
                          INDIANA GAMING COMPANY, L.P.
               NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
                            (Dollars in Thousands)
                                       


    The Partnership has agreed to pay the City of Lawrenceburg $33,848 in 
reimbursements for infrastructure improvements and unrestricted grants. 
Subsequent to the commencement of operations at the temporary site, these 
have been recorded as an intangible asset in the accompanying balance sheets. 
The reimbursement for infrastructure improvements and unrestricted city 
grants are being amortized over the 28 year term, including extensions, of 
the Development Agreement. 

   Included in other long term obligations at June 30, 1997 is $17,154 
representing the remaining grants and infrastructure payments due by the 
Partnership under the terms of the Riverboat Gaming Development Agreement 
with the City of Lawrenceburg ("Development Agreement"). Upon the final 
completion of the permanent site $8,000 is due. The remaining $9,154 is 
payable as follows: $2,154 ratably over the first year subsequent to opening 
of the temporary site, $5,000 ratably over the second year subsequent to the 
opening of the temporary site and $2,000 ratably over the third year 
subsequent to the opening of the temporary site. 

   COMPLETION OF PERMANENT FACILITY-Provisions of the partnership agreement 
stipulate that capital contributions, including partner loans up to a total 
project cost, as defined, of $225 million will be made 57 1/2% by the General 
Partner and 42 1/2% by the limited partners with any excess project cost 
being the sole responsibility of the General Partner. 

   The Partnership may only operate at its temporary site for one year from 
the opening of the temporary facility.  The completion of the permanent 
facility is subject to the satisfaction of numerous conditions including 
weather conditions and the receipt of numerous permits and licenses. There 
can be no assurance that the permanent facility will be open within one year 
of the opening of the temporary facility. 

   BONDING OBLIGATION-The Partnership is required, by Indiana Gaming Statute, 
to post a bond in favor of the Indiana Gaming Commission to collateralize 
certain obligations to the City of Lawrenceburg under the Development 
Agreement, and to the State of Indiana. This bond is collateralized by 
certain real estate of the Partnership. 

   PERMANENT RIVERBOAT CASINO-The Partnership has entered into an agreement 
for the construction of its permanent riverboat facility. Total estimated 
costs of this contract is approximately $39 million. As of June 30, 1997 the 
Partnership had made approximately $27.1 million in progress payments. 

   TERMINATION OF LAWRENCEBURG PARTNERSHIP-Under the terms of the Partnership 
Agreement, after the third anniversary date of commencement of operations 
each limited partner has the right to sell its interest to the other partners 
(pro rata in accordance with their respective percentage interests). In the 
event of this occurrence, if the partners cannot agree on a selling price, 
the Partnership will be sold in its entirety. 








                                      46

<PAGE>
                                ARGOSY GAMING COMPANY
                  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                         CONDITION AND RESULTS OF OPERATIONS
                                           


OVERVIEW

    The Company opened its first riverboat casino, the Alton Belle Casino, in 
Alton, Illinois in September 1991. Subsequently, the Company opened the 
Argosy Casino in Riverside, Missouri in June 1994; the Belle of Baton Rouge 
in Baton Rouge, Louisiana in September 1994; and the Belle of Sioux City in 
Sioux City, Iowa in October 1994. In addition, the Company, through its 57.5% 
equity interest in Indiana Gaming Company, L.P., opened a temporary casino in 
Lawrenceburg, Indiana on December 10, 1996 and expects to open the permanent 
gaming facility in December 1997. The anticipated opening date of the 
permanent Lawrenceburg facility is a forward looking statement that involves 
certain risks and uncertainties and there can be no assurance that the 
projected opening date will be met, as the opening is subject to numerous 
conditions, including licensing, permitting and construction.

    The Company's results of operations for the three months and six months 
ended June 30, 1997 were adversely affected by increased competition at its 
Alton and Riverside properties, and the Company expects the competitive 
environment in the St. Louis and Kansas City areas to remain intense. The 
increased competition has resulted in the Company reporting decreased 
revenues at its Alton and Riverside properties in 1997. The Company believes 
that it will continue to be difficult to sustain historical levels of 
operating revenues and profitability at these properties. In addition, the 
Company is incurring significant costs and capital expenditures in developing 
the Lawrenceburg casino project. These increased costs, competitive pressures 
on revenues and the increased interest expense associated with the issuance, 
in June 1996, of $235 million of First Mortgage Notes ("Mortgage Notes"), 
will continue to adversely affect the Company's results of operations.
    
     The Company is in a net operating loss carryforward position at June 30, 
1997 and, as such, the Company has not recorded an income tax benefit on its 
1997 operating losses due to the uncertainty of realization.


                                      47

<PAGE>

                             ARGOSY GAMING COMPANY
               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS
                                 (continued)

<TABLE>
<CAPTION>

                                      SIX MONTHS ENDED            THREE MONTHS ENDED
                                  --------------------------    -------------------------
                                   JUNE 30,        JUNE 30,      JUNE 30,      JUNE 30,  
                                     1997            1996          1997          1996    
                                  -----------    -----------    -----------   -----------
                                  (UNAUDITED)    (UNAUDITED)    (UNAUDITED)   (UNAUDITED)
<S>                                <C>           <C>            <C>           <C>        
GROSS REVENUES                                                                           
     Alton                         $  35,668      $  41,135      $  17,429     $  20,845 
     Riverside                        36,603         51,339         17,656        24,725 
     Baton Rouge                      29,882         29,585         15,378        15,215 
     Sioux City                       11,296         10,497          5,897         5,280 
     Lawrenceburg                     68,991           --           37,847          --   
     Corporate                           710            254            353             4 
     Other                               187            185            100            85 
                                  -----------    -----------    -----------   -----------
          Total                   $  183,337     $  132,995      $  94,660     $  66,154 
                                  -----------    -----------    -----------   -----------
                                  -----------    -----------    -----------   -----------
                                                                                         
NET REVENUE                                                                              
     Alton                         $  34,685      $  39,942      $  16,943     $  20,279 
     Riverside                        34,175         47,329         16,388        23,425 
     Baton Rouge                      27,644         28,090         14,131        14,395 
     Sioux City                       10,739         10,167          5,607         5,083 
     Lawrenceburg                     61,869           --           33,989          --   
     Corporate                           705            241            351          --   
     Other                               187            185            100            83 
                                  -----------    -----------    -----------   -----------
          Total                   $  170,004     $  125,954      $  87,509     $  63,265 
                                  -----------    -----------    -----------   -----------
                                  -----------    -----------    -----------   -----------
                                                                                         
INCOME (LOSS) FROM OPERATIONS(1)                                                         
     Alton                          $  5,308       $  7,966       $  2,678      $  4,046 
     Riverside(4)                      2,807          6,252          1,163         3,764 
     Baton Rouge                      (1,094)         3,658           (746)        1,348 
     Sioux City                          349            578            365           164 
     Lawrenceburg                     11,139           --            7,089          --   
     Corporate(3)                     (6,521)        (6,705)        (2,901)       (3,044)
     Other(5)                         (1,171)        (1,562)          (542)       (1,090)
                                  -----------    -----------    -----------   -----------
          Total                    $  10,817      $  10,187       $  7,106      $  5,188 
                                  -----------    -----------    -----------   -----------
                                  -----------    -----------    -----------   -----------
                                                                                         
EBITDA(1)(2)                                                                             
     Alton                          $  7,417      $  10,037       $  3,767      $  5,085 
     Riverside(4)                      5,545         10,504          2,532         5,518 
     Baton Rouge                       1,695          6,389            651         2,722 
     Sioux City                          826            961            606           362 
     Lawrenceburg                     16,529           --           10,021          --   
     Corporate(3)                     (5,266)        (5,882)        (2,243)       (2,629)
     Other(5)                            473           (737)           280          (673)
                                  -----------    -----------    -----------   -----------
          Total                    $  27,219      $  21,272      $  15,614     $  10,385 
                                  -----------    -----------    -----------   -----------
                                  -----------    -----------    -----------   -----------
</TABLE>


                                       48
<PAGE>

                             ARGOSY GAMING COMPANY
                MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS
                                  (continued)
                                       


(1) Income from operations and EBITDA are presented before consideration of any
    fees paid to the Company and in the case of Sioux City and Lawrenceburg
    before the 30% and 42.5% minority interests, respectively.

(2) "EBITDA" is defined as earnings before interest, taxes, depreciation and
    amortization and is presented before any management fees paid to Argosy. 
    EBITDA should not be construed as an alternative to operating income, or
    net income (as determined in accordance with generally accepted accounting
    principles) as an indicator of the Company's operating performance, or as
    an alternative to cash flows generated by operating, investing and
    financing activities (as an indicator of cash flow or a measure of
    liquidity).  EBITDA is presented solely as a supplemental disclosure because
    management believes that it is a widely used measure of operating
    performance in the gaming industry and for companies with a significant
    amount of depreciation and amortization.  The Company has other significant
    uses of cash flows, including capital expenditures, which are not reflected
    in EBITDA.

(3) Excludes severance expenses of approximately $1.8 million for the six
    months ended June 30, 1997, and excludes a one-time charge of $1.5 million
    in connection with the termination of a private placement for the six
    months ended June 30, 1996.

(4) Excludes $3,508 for the six months and three months ended June 30, 1996
    related to lease termination costs in connection with assets formerly used
    at the Riverside temporary facility.

(5) Excludes pre-opening expenses of approximately $1.6 million and $3.2
    million for the three and six months ended June 30, 1996 primarily related
    to Lawrenceburg.


                                      49

<PAGE>

                           ARGOSY GAMING COMPANY
            MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                     CONDITION AND RESULTS OF OPERATIONS
                                 (continued)
                                       

SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996

    CASINO--Casino revenues for the six months ended June 30, 1997 increased 
to $157.6 million from $118.1 million for the six months ended June 30, 1996 
due to the opening of the Lawrenceburg casino, which generated $57.4 million 
of casino revenues, offset by decreased revenues at the company's other 
properties.  Alton casino revenues decreased from $37.4 to $32.1 million and 
Riverside casino revenues decreased from $44.0 to $31.7 million due to the 
effects of increased competition.  Baton Rouge casino revenues decreased from 
$27.0 million to $26.2 million.

    Casino expenses increased to $79.6 million for the six months ended June 
30, 1997 from $59.3 million for the six months ended June 30, 1996 due 
primarily to the opening of the Lawrenceburg casino.

    FOOD AND BEVERAGE--Food, beverage and other revenues increased $4.3 
million to $17.2 million for the six month period ended June 30, 1997, due to 
the opening of the Lawrenceburg casino and increased sales in Baton Rouge.  
Food, beverage and other net profit improved $1.6 million to $3.1 million for 
the six months ended June 30, 1997 due primarily to the increased sales.

    OTHER OPERATING EXPENSES--Other operating expenses increased $5.0 million 
to $13.8 million for the six months ended June 30, 1997.  This increase is 
due primarily to costs associated with operating the Lawrenceburg casino.

    SELLING, GENERAL AND ADMINISTRATIVE--Selling, general and administrative 
expenses increased $8.8 million to $35.0 million for the six months ended 
June 30, 1997 due primarily to the opening of the Lawrenceburg casino.  This 
increase was somewhat offset when the Company recorded a charge of 
approximately $1.5 million in professional and other fees related to its 
response to a Marion County, Indiana grand jury document subpoena and the 
related termination of a private placement of First Mortgage Notes in 1996.

    DEPRECIATION AND AMORTIZATION--Depreciation and amortization increased 
$5.3 million from $11.1 million for the six months ended June 30, 1996 to 
$16.4 million for the six months ended June 30, 1997.  This increase is due 
primarily to additional assets associated with the Lawrenceburg casino.

    DEVELOPMENT AND PREOPENING COSTS--Development and preopening costs 
decreased from $3.8 million for the six month period ended June 30, 1996 to 
$.3 million for the six month period ended June 30, 1997.  The primary 
decrease is due to expenses related to developing the casino in Lawrenceburg, 
Indiana in 1996.

    INTEREST EXPENSE--Net interest expense increased $9.5 million to $20.4 
million for the six months ended June 30, 1997.  The increase is attributable 
to interest expense on borrowings on the Company's $235 million First 
Mortgage Notes which were issued in June, 1996.

    NET LOSS--Net loss increased from $5.9 million for the six months ended 
June 30, 1996 to $13.3 million for the six months ended June 30, 1997 
primarily for the reasons discussed above.  In addition, the Company recorded 
a pretax charge of $3.5 million related to lease termination costs in 
connection with assets formerly used at its temporary facility in Riverside.  
Also, the Company recorded an extraordinary loss of $.9 million (net of tax) 
related to the write off of deferred finance costs associated with 
extinguishment of its revolving secured line of credit in 1996.  In 1997, the 
Company is in a net operating loss position and, therefore, has not recorded 
any tax benefit against its losses for the six months ended June 30, 1997.


                                      50

<PAGE>

                             ARGOSY GAMING COMPANY
              MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                     CONDITION AND RESULTS OF OPERATIONS
                                  (continued)
                                       
THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THREE MONTHS ENDED JUNE 30, 1996

    CASINO--Casino revenues for the three months ended June 30, 1997 
increased to $81.3 million from $59.4 million for the three months ended June 
30, 1996 due to the opening of the Lawrenceburg casino, which generated $31.7 
million of casino revenues, offset by decreased revenues at the Company's 
other properties. Alton casino revenues decreased from $18.9 to $15.6 million 
and Riverside casino revenues decreased from $21.8 to $15.2 million due to 
the effects of increased competition.  Baton Rouge casino revenues decreased 
from $13.8 million to $13.4 million.

    Casino expenses increased to $40.4 million for the three months ended 
June 30, 1996 from $30.2 million for the three months ended June 30, 1996 due 
primarily to the opening of the Lawrenceburg casino.

    FOOD AND BEVERAGE--Food, beverage and other revenues increased $2.0 
million to $8.8 million for the three month period ended June 30, 1997, due 
to the opening of the Lawrenceburg casino and increased sales in Baton Rouge. 
Riverside revenues decreased to $2.4 million from $2.9 million while Alton 
revenues decreased from $1.9 million to $1.8 million.  Food, beverage and 
other net profit improved $.9 million to $1.6 million for the three months 
ended June 30, 1997 due primarily to the increased sales.

    OTHER OPERATING EXPENSES--Other operating expenses increased $2.4 million 
to $6.8 million for the three months ended June 30, 1997.  This increase is 
due primarily to costs associated with operating the Lawrenceburg casino.

    SELLING, GENERAL AND ADMINISTRATIVE--Selling, general and administrative 
expenses increased $5.5 million to $17.4 million for the three months ended 
June 30, 1997 due primarily to the opening of the Lawrenceburg casino.

    DEPRECIATION AND AMORTIZATION--Depreciation and amortization increased 
$3.3 million from $5.2 million for the three months ended June 30, 1996 to 
$8.5 million for the three months ended June 30, 1997.  This increase is due 
primarily to additional assets associated with the Lawrenceburg casino.

    DEVELOPMENT AND PREOPENING COSTS--Development and preopening costs 
decreased from $1.9 million for the three month period ended June 30, 1996 to 
$.2 million for the three month period ended June 30, 1997.  The primary 
decrease is due to expenses related to developing the casino in Lawrenceburg, 
Indiana in 1996.

    INTEREST EXPENSE--Net interest expense increased $3.1 million to $9.9 
million for the three months ended June 30, 1997.  The increase is 
attributable to interest expense on borrowings on the Company's $235 million 
First Mortgage Notes which were issued in June, 1996.

    NET LOSS--Net loss decreased from $4.8 million for the three months ended 
June 30, 1996 to $4.3 million for the three months ended June 30, 1997 
primarily for the reasons discussed above.  In addition, the Company recorded 
a pretax charge of $3.5 million related to lease termination costs in 
connection with assets formerly used at its temporary facility in Riverside.  
Also, the Company recorded an extraordinary loss of $.9 million (net of tax) 
related to the write off of deferred finance costs associated with 
extinguishment of its revolving secured line of credit in 1996.  In 1997, the 
Company is in a net operating loss position and, therefore, has not recorded 
any tax benefit against its losses for the three months ended June 30, 1997.


                                      51

<PAGE>

COMPETITION

    The Company's Alton Casino faces competition from four other riverboat 
casino facilities currently operating in the St. Louis area and expects the 
level of competition to remain intense in the future.  The most recent casino 
complex to open includes two independently owned facilities, each of which 
operate two dockside vessels.  This casino complex, which increased gaming 
capacity in St. Louis by approximately 50%, opened in March of 1997.  The 
Company's Riverside Casino faces competition from four casino companies in 
the Kansas City area that offer dockside gaming, two of which offer two 
gaming vessels each.  The Company's Baton Rouge Casino faces competition from 
one casino located in downtown Baton Rouge, a nearby native American casino 
and multiple casinos throughout Louisiana.  Currently, the Company faces 
competition in Sioux City, Iowa, from two land-based Native American casinos, 
slot machines at a pari-mutual race track in Council Bluffs, Iowa and from 
two riverboat casinos in the Council Bluffs, Iowa/Omaha, Nebraska market, 
which opened in January 1996.  The Indiana Partnership faces competition from 
one other riverboat casino in the Cincinnati market, which opened in October 
1996.  There could be further unanticipated competition in any market which 
the Company operates as a result of legislative changes or other events.  The 
Company expects each market in which it participates, both current and 
prospective, to be highly competitive.

LIQUIDITY AND CAPITAL RESOURCES

    In the six months ended June 30, 1997, the Company generated cash flows 
from operating activities of $16.5 million compared to $5.5 million for the 
same period in 1996.  The increase in cash flow is primarily attributed to 
the opening of the Lawrenceburg Casino and the receipt of a $9.1 million 
income tax refund.

    In the six months ended June 30, 1997, the Company used cash flows for 
investing activities of $31.9 million versus $156.6 million for the six 
months ended June 30, 1996.  The primary use of funds in 1997 was the 
investment in the construction of the Lawrenceburg facility.  In 1996, the 
Company placed $94.5 million in a restricted fund to be used for the 
construction of the Lawrenceburg facility and used $62.1 million for capital 
expenditures primarily at the Lawrenceburg facility.

    During the six months ended June 30, 1997, the Company generated $22.2 
million in cash flows from financing activities compared to generating $198.8 
million of cash flows from financing activities for the same period in 1996. 
The primary sources of cash flows in 1997 were $26.8 million in loans from 
the Company's partner in Lawrenceburg offset by payments on installment 
contracts. In 1996, the Company received proceeds from its issuance of $235 
million of first mortgage notes and capital contributions from its partner of 
$19.7 million offset by the repayment of $90 million on its previous line of 
credit.

    As of June 30, 1997, the Company had approximately $45.2 million of cash, 
cash equivalents, and marketable securities, including approximately $18.0 
million held at the Indiana Partnership, which can be used for general 
working capital purposes.  In addition, the Company had $48.1 million in a 
disbursement account to be used to fund the Company's portion of the 
remaining Lawrenceburg construction costs which cannot be used for any other 
purpose.  In addition to the disbursement account the Indiana Partnership has 
placed approximately $18.4 million in an escrow account representing unbilled 
construction costs of the permanent Lawrenceburg facility.  

On June 5, 1996 the Company issued $235 million of First Mortgage Notes which 
are due June 2004.  Additionally, the Company has $115 million of Convertible 
Subordinated Notes outstanding which were issued in June 1994 and are due 
June 2001.


                                      52

<PAGE>


                             ARGOSY GAMING COMPANY 
              MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 
                     CONDITION AND RESULTS OF OPERATIONS
                                  (continued)
                                       
    The Company has made a significant investment in property and equipment 
and plans to make significant additional investments at certain of its 
existing properties, particularly Lawrenceburg, Indiana.  As a result of its 
June 1995 acquisition of Jazz, the Company is now the developer of the 
Catfish Town real estate project in Baton Rouge, Louisiana.  The Company 
estimates that the completion of the Catfish Town project will cost an 
additional $2 to $5 million (primarily tenant allowance) as of June 30, 1997. 
 Further, if the Predecessor's status as an S-Corporation, which has been 
asserted as an issue by the IRS during an ongoing audit, is successfully 
challenged, the Company currently estimates that it would require up to 
approximately $13.2 million (excluding penalties) to fund the potential 
income tax liability.  

    The Company currently estimates that the total costs of the Lawrenceburg 
Casino and entertainment project will approximate $225 million.  This is a 
forward looking statement that involves certain risks and uncertainties and 
this amount is subject to numerous factors including weather and other 
construction risks.  As of June 30, 1997, approximately $158 million has been 
contributed to the partnership for the project by all partners, including 
preopening costs.  Of the remaining Lawrenceburg construction costs, 
approximately $25 million is anticipated to be funded through equipment 
financing from third party lenders and the balance will be funded by the 
Company (57.5% ) and its partners (42.5%). In the event project costs exceed 
$210 million, the Company and its partner will fund such costs on the same 
percentages to a total project cost of $225 million. Any project costs in 
excess of $225 million must be funded by the Company.  

    The Company currently believes that cash on hand will be sufficient to 
fund its current operations and its obligations with respect to the 
Lawrenceburg casino development.  If there are any events which negatively 
impact the sources or uses of cash such as an overrun in the project costs 
related to the Lawrenceburg Casino, a deterioration in the Company's existing 
operations, an adverse IRS ruling,  or if the Company  should fail to be able 
to open the permanent facility in Lawrenceburg within a 12 month period, the 
Company's ability to meet its debt service requirements could be 
significantly impaired.

CAUTIONARY STATEMENTS FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE 
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

    THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE 
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.  WHEN USED IN THIS 
DOCUMENT, THE WORDS "ANTICIPATE", "BELIEVE", "ESTIMATE" AND "EXPECT" AND 
SIMILAR EXPRESSIONS ARE GENERALLY INTENDED TO IDENTIFY FORWARD-LOOKING 
STATEMENTS. INVESTORS ARE CAUTIONED THAT ANY FORWARD-LOOKING STATEMENTS, 
INCLUDING THOSE REGARDING THE INTENT, BELIEF OR CURRENT EXPECTATIONS OF THE 
COMPANY OR ITS MANAGEMENT, ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND 
INVOLVE RISKS AND UNCERTAINTIES, AND THAT ACTUAL RESULTS MAY DIFFER 
MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS AS A  RESULT OF 
VARIOUS FACTORS INCLUDING, BUT NOT LIMITED TO, (i) GENERAL ECONOMIC 
CONDITIONS IN THE MARKETS IN WHICH THE COMPANY OPERATES, (ii) INCREASED 
COMPETITIVE PRESSURES IN THE MARKETS IN WHICH THE COMPANY OPERATES, (iii) 
DELAYS OR COST-OVERRUNS WITH RESPECT TO THE LAWRENCEBURG CASINO WHICH COULD 
SIGNIFICANTLY IMPAIR THE ABILITY OF THE COMPANY TO MEET ITS DEBT SERVICE 
REQUIREMENTS, (iv) THE EFFECT OF FUTURE LEGISLATION OR REGULATORY CHANGES ON 
THE COMPANY'S OPERATIONS, AND (v) OTHER RISKS DETAILED FROM TIME TO TIME IN 
THE COMPANY'S SECURITIES AND EXCHANGE COMMISSION FILINGS.  THE COMPANY DOES 
NOT INTEND TO UPDATE THESE FORWARD-LOOKING STATEMENTS. 


                                      53

<PAGE>

                             ARGOSY GAMING COMPANY
                               OTHER INFORMATION
                                       

PART II. OTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS -

CHALLENGE TO LICENSE FOR LAWRENCEBURG CASINO BY UNSUCCESSFUL APPLICANT

    On November 29, 1996, Schilling Casino Corporation d/b/a Empire Casino & 
Resort ("Empire"), an unsuccessful competing applicant for the riverboat 
owner's license in Lawrenceburg, Indiana that was awarded to the Indiana 
Partnership by the Indiana Gaming Commission (the "Commission"), filed with 
the Commission a purported "Request for Hearing" (the "Request") on the 
denial of Empire's application for the Lawrenceburg license. Empire's 
Request, which has been referred to an Administrative Law Judge (the "ALJ"), 
did not seek a stay of the award of the license to the Indiana Partnership or 
of the Indiana Partnership's commencement of regular gaming operations from 
its temporary gaming facility at Lawrenceburg, which commenced December 10, 
1996. The Company and the Indiana Partnership were granted leave to intervene 
in the administrative proceedings on the Empire Request. 

    The grounds asserted in the Empire Request include claims that (i) the 
application process followed by the Commission did not afford Empire due 
process and violated Indiana laws; (ii) the Indiana Partnership failed to 
comply with conditions in the certificate and failed to open the temporary 
gaming facility in a timely fashion, (iii) the Indiana Partnership made 
misrepresentations to the Commission during the licensing hearings; (iv) the 
Commission could  not lawfully have extended the certificate beyond June 30, 
1996 (one year after the date of its initial award) without reconsidering all 
other applications; and (v) the endorsement of the Indiana Partnership by the 
City of Lawrenceburg was without legal authority and was given improper 
weight by the Commission. 

    The Company and the Indiana Partnership filed with the ALJ a motion or 
summary judgment to dismiss Empire's Request; the Commission filed with 
the ALJ a motion for partial summary judgment on Empire's Request; and Empire 
filed with the ALJ its "discovery plan describing discovery it wished to 
pursue in the matter, as to which the Company and the Indiana Partnership 
filed a motion for protective order.

    After briefing by the parties and a hearing before the ALJ, the ALJ 
issued on June 13, 1997 his findings of fact and conclusions of law and his 
recommended orders to the Commission (the "ALJ Entries") on the various 
matters presented to the ALJ.  The ALJ Entries rejected the claims asserted 
in the Empire Request; granted the Commission's motion for partial summary 
judgment; and denied the discovery sought by Empire.  The ALJ Entries also 
treated the motion for summary judgment filed by the Company and the Indiana 
Partnership as moot (given the recommendation that the Commission's motion 
for partial summary judgment be granted); and denied the Company's and 
Indiana Partnership's motion to dismiss, which had been based in part on the 
claim that the Empire Request did not timely comply with governing procedural 
requirements for such a request.  Finally, the ALJ Entries stated that Empire 
would be entitled to an evidentiary hearing only for the purpose of 
attempting to establish that it should have been awarded the Lawrenceburg, 
Indiana riverboat owner's license, an issue on which Commission regulations 
place the burden of proof on Empire.

Empire has served counsel for the Company and the Indiana Partnership with 
exceptions and objections to the ALJ Entries, which Empire purports to have 
filed with the Commission.  The Company and the Indiana Partnership have 
filed exceptions to the ALJ Entries with the Commission, to preserve for the 
record those issues on which they disagree with the ALJ Entries.  The 
Commission will consider and act upon the ALJ Entries at a future meeting, 
the date of which has not yet been set.  After action by the Commission on 
the ALJ entries, parties could have the opportunity to seek judicial review 
of the Commission's administrative action.  No assurance can be give (i) as 
to the ultimate action the Commission will take in response to the ALJ 
Entries; or (iii) that Empire 


                                      54

<PAGE>

will not continue to take steps to seek revocation of the license awarded to 
the Indiana Partnership, including seeking judicial review of any ultimate 
administrative ruling by the Commission denying the Empire Request.

CAPITOL HOUSE PRESERVATION COMPANY, L.L.C. VS. JAZZ ENTERPRISES, INC., ET AL.

    In July 1995, Capitol House Preservation Company, L.L.C. ("Capitol 
House") filed a cause of action in the U. S. District Court of the Middle 
District of Louisiana against Jazz, the former shareholders of Jazz ("Former 
Jazz Shareholders").  Catfish Queen Partnership (the "Partnership"), Argosy 
of Louisiana, Inc. ("Argosy Louisiana") and the Company alleging that Jazz 
and Argosy obtained the gaming license for Baton Rouge based upon false and 
fraudulent pretenses and declarations and financial misrepresentations.  The 
complain alleges tortious conduct as well as violations of RICO and seeks 
damages of $158 million plus court costs and attorneys' fees.  The plaintiff 
was an applicant for a gaming license in Baton Rouge whose application was 
denied by the Louisiana Enforcement Division.  The Company believes the 
allegations of the plaintiff are without merit and intends to vigorously 
defend such cause of action.

    On June 7, 1995, the Company consummated its purchase of all of the 
outstanding capital stock of Jazz from the Former Jazz Shareholders.  The 
Company intends to seek indemnification form the Former Jazz Shareholders for 
any liability the Company, Argosy Louisiana or Jazz suffers as a result of 
such cause of action.  As part of the consideration payable by the Company to 
the Former Jazz Shareholder for the acquisition of Jazz, the Company agreed 
at the time of such acquisition to annual deferred purchase price payments of 
$1,350,000 for each of the first ten years after closing and $500,000 for 
each of the next ten years.  Payments are to be made quarterly by the 
Company.  The definitive acquisition documents provide the Company with 
off-set rights against such deferred purchase price payments for 
indemnification claims of the Company against the Former Jazz Shareholders 
and for the liabilities that the Former Jazz Shareholder contractually agreed 
to retain.  There can be no assurance that the Former Jazz Shareholders will 
have assets sufficient to satisfy any claim in excess of the Company's 
off-set rights.

    The defendants filed a Motion to Dismiss, or alternatively to abstain and 
stay the action, pending resolution of certain Louisiana state court claims 
filed by Capitol House.  The trial court decided in favor of the defendants 
and dismissed the suit without prejudice to the rights of plaintiff to revive 
the suit after the conclusion of the pending state court matters.  The 
plaintiff appealed this dismissal to the U. S. Fifth Circuit Court of 
Appeals.  While the appeal was pending, several of the Louisiana state court 
claims were resolved. On March 11, 1997, the U. S. Fifth Circuit Court of 
Appeals vacated the trial court's dismissal and remanded the case to the 
district court for further proceedings.  The case is now back in the district 
court and will proceed.  The defendants intend to go forward with the 
previously filed motion to dismiss.  No date has yet been set for hearing on 
the motion.

This case came up on the Call Docket recently.  At that time Judge Polozola 
indicated that he would continue on the motion to stay order regarding 
discovery pending his ruling on the defendants motion to dismiss.  He set the 
case for the call docket again on September 10, 1997 at 9:00 A.M. and 
indicated the he could set a trial date at that time for March-April 1998.

                                      55

<PAGE>

Item 2.  CHANGES IN SECURITIES - None

Item 3.  DEFAULTS UPON SENIOR SECURITIES - None

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - 

<TABLE>
<CAPTION>

                                Votes For   Votes Against   Withheld/Abstain   Broker Non-Votes
                                ---------   -------------   ----------------   ----------------
     <S>                       <C>          <C>             <C>                <C>
     Election of Directors      
         George L. Bristol     20,797,486         0              108,417               0
        Jimmy F. Gallagher     20,795,986         0              109,917               0

</TABLE>

Item 5.  OTHER INFORMATION-None

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      EXHIBITS.

              27 - Financial Data Schedule

(b)      REPORTS ON FORM 8-K - None

                                      56

<PAGE>

                             ARGOSY GAMING COMPANY
                                  SIGNATURES



    Pursuant to the requirement 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.






Date:  August 12, 1997            /s/   Dale R. Black
       ---------------            --------------------------------------
                                  Vice President-Corporate Controller
                                    (Principal Accounting Officer)

                                      57