<PAGE>

                                           
                          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 SEPTEMBER 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 November 11, 1997. 

<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                                                  55
Item 2     Changes in Securities                                              57
Item 3     Defaults upon Senior Securities                                    57
Item 4     Submission of Matters to a Vote of Security Holders                57
Item 5     Other Information                                                  57
Item 6     Exhibits and Reports on Form 8-K                                   57


<PAGE>

                                ARGOSY GAMING COMPANY
                        CONDENSED CONSOLIDATED BALANCE SHEETS
                          (In Thousands, Except Share Data)

<TABLE>
<CAPTION>

                                                            SEPTEMBER 30,    DECEMBER 31,
                                                                1997             1996
                                                            -------------    ------------
                                                            (UNAUDITED)
<S>                                                         <C>              <C>
CURRENT ASSETS:
     Cash and cash equivalents                              $  45,354        $  38,284
     Income taxes receivable                                    1,967           11,111
     Other current assets                                       8,513            9,446
                                                            ---------        ---------
          Total current assets                                 55,834           58,841
                                                            ---------        ---------
PROPERTY AND EQUIPMENT, NET                                   377,806          314,480
                                                            ---------        ---------
OTHER ASSETS:
     Restricted cash and cash equivalents                      48,104           84,551 
     Goodwill, net                                             22,476           22,923 
     Other, net                                                50,820           51,364 
                                                            ---------        ---------
          Total other assets                                  121,400          158,838 
                                                            ---------        ---------
TOTAL ASSETS                                                $ 555,040        $ 532,159 
                                                            ---------        ---------
                                                            ---------        ---------
CURRENT LIABILITIES:
     Accounts payable and accrued liabilities               $  42,510        $  29,948 
     Other current liabilities                                 27,307           15,018 
                                                            ---------        ---------
          Total current liabilities                            69,817           44,966 
                                                            ---------        ---------
LONG-TERM DEBT                                                407,440          377,308 
OTHER LONG-TERM OBLIGATIONS                                    10,877           20,340 
MINORITY INTERESTS IN EQUITY OF CONSOLIDATED SUBSIDIARIES      17,001           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                                  71,972           71,865 
     Retained (deficit) earnings                              (22,312)             593 
                                                            ---------        ---------
          Total stockholders' equity                           49,905           72,701 
                                                            ---------        ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                  $ 555,040        $ 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>

                                                                  NINE MONTHS ENDED
                                                            ------------------------------
                                                            SEPTEMBER 30,    SEPTEMBER 30,
                                                                1997             1996
                                                            -------------    -------------
                                                             (UNAUDITED)      (UNAUDITED)
<S>                                                         <C>              <C>
REVENUES:
     Casino                                                 $  234,337       $  173,924 
     Admissions                                                 13,152            1,983 
     Food, beverage and other                                   25,717           20,110 
                                                            ----------       ----------
                                                               273,206          196,017 
     Less promotional allowances                               (20,851)         (10,040)
                                                            ----------       ----------
Net revenues                                                   252,355          185,977
                                                            ----------       ----------

COSTS AND EXPENSES:
     Casino                                                    120,077           89,190 
     Food, beverage and other                                   21,526           17,622 
     Other operating expenses                                   21,104           13,631 
     Selling, general and administrative                        52,151           38,937 
     Depreciation and amortization                              25,231           17,066 
     Development and preopening costs                              516            7,372 
     Severance expenses                                          1,750
     Lease termination costs                                                      3,508
     Referendum expenses                                                            383
                                                            ----------       ----------
                                                               242,355          187,709
                                                            ----------       ----------
Income (loss) from operations                                   10,000           (1,732)
                                                            ----------       ----------

OTHER INCOME (EXPENSE):
     Interest income                                             4,733            2,524 
     Interest expense                                          (34,891)         (23,681)
                                                            ----------       ----------
                                                               (30,158)         (21,157)
                                                            ----------       ----------

Loss before income taxes, minority interests and 
     extraordinary item                                        (20,158)         (22,889)
Income tax benefit                                                                8,646
Minority interests                                              (2,747)           1,557
                                                            ----------       ----------
Loss before extraordinary item                                 (22,905)         (12,686)
Extraordinary loss on extinguishment of debt
    (net of income tax benefit of $594)                                            (890)
                                                            ----------       ----------
Net loss                                                       (22,905)      $  (13,576)
                                                            ----------       ----------
                                                            ----------       ----------

Loss before extraordinary item per share                    $    (0.94)      $    (0.52)
Extraordinary loss on extinguishment of debt per
     share (net of income tax benefit of $.02)                               $    (0.04)
                                                            ----------       ----------
Net loss per share                                          $    (0.94)      $    (0.56)
                                                            ----------       ----------
                                                            ----------       ----------

Weighted average shares outstanding                         24,422,088       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
                                                            ------------------------------
                                                            SEPTEMBER 30,    SEPTEMBER 30,
                                                                1997             1996
                                                            -------------    -------------
                                                             (UNAUDITED)      (UNAUDITED)
<S>                                                         <C>              <C>
REVENUES:
     Casino                                                 $   76,753       $   55,778 
     Admissions                                                  4,560 
     Food, beverage and other                                    8,556            7,244
                                                            ----------       ----------
                                                                89,869           63,022 
     Less promotional allowances                                (7,518)          (3,000)
                                                            ----------       ----------
Net revenues                                                    82,351           60,022 
                                                            ----------       ----------

COSTS AND EXPENSES:
     Casino                                                     40,491           29,925 
     Food, beverage and other                                    7,443            6,294 
     Other operating expenses                                    7,352            4,899 
     Selling, general and administrative                        17,110           12,606 
     Depreciation and amortization                               8,829            5,982 
     Development and preopening costs                              193            3,681 
     Referendum expenses                                                            383
                                                            ----------       ----------
                                                                81,418           63,770
                                                            ----------       ---------- 
Income (loss) from operations                                      933           (3,748)
                                                            ----------       ----------

OTHER INCOME (EXPENSE):
     Interest income                                             1,898            1,884 
     Interest expense                                          (11,676)         (12,135)
                                                            ----------       ----------
                                                                (9,778)         (10,251)
                                                            ----------       ----------

Loss before income taxes, minority interests and 
     extraordinary item                                         (8,845)         (13,999)
Income tax benefit                                                                5,447
Minority interests                                                (778)             844
                                                            ----------       ----------

Net loss                                                    $   (9,623)      $   (7,708)
                                                            ----------       ----------
                                                            ----------       ----------
Net loss per share                                          $    (0.39)      $    (0.32)
                                                            ----------       ----------
                                                            ----------       ----------
Weighted average shares outstanding                         24,498,333       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>

                                                                  NINE MONTHS ENDED
                                                            ------------------------------
                                                            SEPTEMBER 30,    SEPTEMBER 30,
                                                                1997             1996
                                                            -------------    -------------
                                                             (UNAUDITED)      (UNAUDITED)
<S>                                                         <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                 $  (22,905)      $  (13,576)
   Adjustments to reconcile net  loss to net cash
     provided by operating activities:
       Depreciation                                             23,691           16,422 
       Amortization                                              2,981            1,928 
       Deferred income taxes                                                       (102)
       Minority interests                                        2,747           (1,557)
       Extraordinary item                                                           890 
       Compensation expense recognized on issuance of stock        107 
       Lease termination costs                                                    2,223
       Changes in operating assets and liabilities:
          Income taxes receivable                                9,144           (8,459)
          Other current assets                                   1,681           (1,601)
          Deposits                                              (1,673)            (989)
          Accounts payable and other current liabilities        13,786           12,954
                                                            ----------       ----------
          Net cash provided by operating activities             29,559            8,133
                                                            ----------       ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of property and equipment                         (82,864)         (73,322)
   Decrease (increase) in restricted cash held by trustees      36,447          (83,029)
   Decrease in long term obligations                            (4,307)
   Increase in other assets                                       (826)
                                                            ----------       ----------
       Net cash used in investing activities                   (51,550)        (156,351)
                                                            ----------       ----------

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         (3,890)          (4,437)
   Capital contributions from partner                                            19,044
   Proceeds from sale of first mortgage notes                                   235,000
   Proceeds from partner loans                                  36,293            5,449
   Repayment of partner loans                                   (1,515)
   Payment of preferred equity return to partner                  (764)
   Partnership equity distributions                               (838)
   Increase in other assets                                       (225)          (9,920)
                                                            ----------       ----------
       Net cash provided by financing activities                29,061          199,636
                                                            ----------       ----------
Net increase in cash and cash equivalents                        7,070           51,418
Cash and cash equivalents, beginning of period                  38,284           16,159
                                                            ----------       ----------
Cash and cash equivalents, end of period                    $   45,354       $   67,577
                                                            ----------       ----------
                                                            ----------       ----------

</TABLE>

    See accompanying notes to condensed consolidated financial statements.

                                       4

<PAGE>


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




1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   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 September 30, 1997 the Company is in a net operating loss position 
and, therefore, has recorded a valuation allowance of $10.4  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
                             (Dollars 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 $13.6 million including interest through 
September 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
                           (Dollars 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 
(other than the assets of the Indiana Partnership) 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 following tables present summarized balance sheet information of the 
Company as of September 30, 1997 and December 31, 1996 and summarized 
operating statement information for the nine and three months ended September 
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 
casinos in Sioux City, Iowa 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
                             (Dollars in Thousands)


   Summarized balance sheet information as of  September 30, 1997 and 
December 31, 1996 is as follows:

<TABLE>
<CAPTION>

                                                                           SEPTEMBER 30, 1997
                                       ------------------------------------------------------------------------------------------
                                          PARENT                                  NON-
                                          COMPANY         GUARANTORS           GUARANTORS        ELIMINATIONS        CONSOLIDATED
                                       ----------        ------------         -----------        ------------        ------------
<S>                                    <C>               <C>                  <C>                <C>                 <C>         
ASSETS:
     Current assets                    $   33,149          $   23,405          $   16,857        $   (17,577)         $   55,834
     Non-current assets                   389,046             379,240             202,154           (471,234)            499,206
                                       ----------          ----------          ----------        ------------         ----------
                                       $  422,195          $  402,645          $  219,011        $  (488,811)         $  555,040
                                       ----------          ----------          ----------        ------------         ----------
                                       ----------          ----------          ----------        ------------         ----------
LIABILITIES AND EQUITY:
     Current liabilities               $   22,290          $   40,644          $   45,111        $   (38,228)         $   69,817 
     Non-current liabilities              350,000             317,322             135,932           (367,936)            435,318 
     Stockholders' equity                  49,905              44,679              37,968            (82,647)             49,905 
                                       ----------          ----------          ----------        ------------         ----------
                                       $  422,195          $  402,645          $  219,011        $  (488,811)         $  555,040
                                       ----------          ----------          ----------        ------------         ----------
                                       ----------          ----------          ----------        ------------         ----------


                                                                            DECEMBER  31, 1996
                                       ------------------------------------------------------------------------------------------
                                         PARENT                                  NON-
                                         COMPANY           GUARANTORS          GUARANTORS        ELIMINATIONS        CONSOLIDATED
                                       ----------          ----------          ----------        ------------        ------------
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
                             (Dollars in Thousands)

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

<TABLE>
<CAPTION>

                                                                  NINE MONTHS ENDED SEPTEMBER 30, 1997
                                       ------------------------------------------------------------------------------------------
                                         PARENT                                  NON-
                                         COMPANY           GUARANTORS          GUARANTORS        ELIMINATIONS        CONSOLIDATED
                                       ----------          ----------          ----------        ------------        ------------
<S>                                    <C>                 <C>                 <C>               <C>                 <C>
Net revenues                           $    4,634          $  146,983          $  110,255         $   (9,517)         $  252,355 
Costs and expenses                         11,622             140,962              96,214             (6,443)            242,355 
Net interest expense                      (23,692)                395              (3,400)            (3,461)            (30,158)
Net (loss) income                         (22,905)              2,743               6,508             (9,251)            (22,905)

                                                                  NINE MONTHS ENDED SEPTEMBER 30, 1996
                                       ------------------------------------------------------------------------------------------
                                         PARENT                                  NON-
                                         COMPANY           GUARANTORS          GUARANTORS        ELIMINATIONS        CONSOLIDATED
                                       ----------          ----------          ----------        ------------        ------------
Net revenues                           $      359          $  170,764          $   14,964         $     (110)         $  185,977 
Costs and expenses                          9,272             161,693              20,935             (4,191)            187,709 
Net interest expense                      (15,952)             (4,687)               (418)              (100)            (21,157)
Net (loss) income                         (16,033)              3,424              (6,390)             5,423             (13,576)
                                                                     
                                                                     
                                                                 THREE MONTHS ENDED SEPTEMBER 30, 1997
                                       ------------------------------------------------------------------------------------------
                                         PARENT                                  NON-
                                         COMPANY           GUARANTORS          GUARANTORS        ELIMINATIONS        CONSOLIDATED
                                       ----------          ----------          ----------        ------------        ------------
Net revenues                           $    1,276          $   46,010          $   37,647         $   (2,582)         $   82,351 
Costs and expenses                          2,647              47,423              33,329             (1,981)             81,418 
Net interest expense                       (7,720)                930              (1,314)            (1,674)             (9,778)
Net (loss) income                          (9,623)               (937)              1,612               (675)             (9,623)

                                                                 THREE MONTHS ENDED SEPTEMBER 30, 1996
                                       ------------------------------------------------------------------------------------------
                                         PARENT                                  NON-
                                         COMPANY           GUARANTORS          GUARANTORS        ELIMINATIONS        CONSOLIDATED
                                       ----------          ----------          ----------        ------------        ------------
Net revenues                           $      117          $   54,830          $    4,796         $      279          $   60,022 
Costs and expenses                          2,695              56,422               8,165             (3,512)             63,770 
Net interest expense                       (8,315)             (1,589)               (247)              (100)            (10,251)
Net (loss) income                          (8,497)               (727)             (3,615)             5,131             (7,708)

</TABLE>

                                       9

<PAGE>

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

<TABLE>
<CAPTION>

                                                            SEPTEMBER 30,    DECEMBER 31,
                                                                1997             1996
                                                            -------------    ------------
                                                            (UNAUDITED)
<S>                                                         <C>              <C>
CURRENT ASSETS:
     Cash                                                    $  3,710         $  3,563 
     Other current assets                                       1,642            1,482 
                                                             --------         --------
          Total current assets                                  5,352            5,045 
                                                             --------         --------

DUE FROM AFFILIATES                                            16,318           10,592 

NET PROPERTY AND EQUIPMENT                                     28,255           30,112 

OTHER ASSETS                                                        4                7 
                                                             --------         --------

TOTAL ASSETS                                                 $ 49,929         $ 45,756 
                                                             --------         --------
                                                             --------         --------


CURRENT LIABILITIES:
     Accounts payable                                        $    903         $  1,547 
     Other accrued liabilities                                  4,939            4,299 
     Income taxes payable to affiliate                          1,460 
                                                             --------         --------
          Total current liabilities                             7,302            5,846 
                                                             --------         --------
                                                             --------         --------

OTHER LONG-TERM OBLIGATIONS - RELATED PARTY                       184              171 

DEFERRED INCOME TAXES                                           3,745            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                                         38,441           35,988 
                                                             --------         --------
          Total stockholder's equity                           38,698           36,245 
                                                             --------         --------

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY                   $ 49,929         $ 45,756 
                                                             --------         --------
                                                             --------         --------

</TABLE>

           See accompanying notes to condensed financial statements.


                                      10

<PAGE>

                             ALTON GAMING COMPANY
                        CONDENSED STATEMENTS OF INCOME
                                (In Thousands)

<TABLE>
<CAPTION>

                                                                  NINE MONTHS ENDED
                                                            ------------------------------
                                                            SEPTEMBER 30,    SEPTEMBER 30,
                                                                1997             1996
                                                            -------------    -------------
                                                             (UNAUDITED)      (UNAUDITED)
<S>                                                         <C>              <C>
REVENUES:
     Casino                                                  $ 46,905         $ 56,084 
     Food, beverage and other                                   5,613            5,909 
                                                             --------         --------
                                                               52,518           61,993 
     Less promotional allowances                               (1,523)          (1,728)
                                                             --------         --------
Net revenues                                                   50,995           60,265 
                                                             --------         --------

COSTS AND EXPENSES:
     Casino                                                    23,944           26,869 
     Food, beverage and other                                   5,299            5,586 
     Other operating expenses                                   4,170            4,254 
     Selling, general and administrative                        8,528            9,390 
     Depreciation and amortization                              3,237            3,141 
     Management fees -- related party                           1,766            3,380 
                                                             --------         --------
                                                               46,944           52,620 
                                                             --------         --------
Income from operations                                          4,051            7,645 

OTHER INCOME (EXPENSE):
     Interest income                                               48               38 
     Interest expense                                             (11)             (29)
                                                             --------         --------
                                                                   37                9 
                                                             --------         --------
Income before income taxes                                      4,088            7,654 
Income tax expense                                             (1,635)          (3,061)
                                                             --------         --------

Net income                                                   $  2,453         $  4,593 
                                                             --------         --------
                                                             --------         --------

</TABLE>

           See accompanying notes to condensed financial statements.


                                      11

<PAGE>
                             ALTON GAMING COMPANY
                        CONDENSED STATEMENTS OF INCOME
                                (In Thousands)

<TABLE>
<CAPTION>

                                                                  THREE MONTHS ENDED
                                                            ------------------------------
                                                            SEPTEMBER 30,    SEPTEMBER 30,
                                                                1997             1996
                                                            -------------    -------------
                                                             (UNAUDITED)      (UNAUDITED)
<S>                                                         <C>              <C>
REVENUES:
     Casino                                                  $ 14,850         $ 18,642 
     Food, beverage and other                                   2,000            2,217 
                                                             --------         --------
                                                               16,850           20,859 
     Less promotional allowances                                 (540)            (535)
                                                             --------         --------
Net revenues                                                   16,310           20,324 
                                                             --------         --------

COSTS AND EXPENSES:
     Casino                                                     8,096            9,378 
     Food, beverage and other                                   1,876            2,097 
     Other operating expenses                                   1,433            1,521 
     Selling, general and administrative                        3,268            3,196 
     Depreciation and amortization                              1,128            1,070 
     Management fees -- related party                             478            1,507 
                                                             --------         --------
                                                               16,279           18,769 
                                                             --------         --------
Income from operations                                             31            1,555 

OTHER INCOME (EXPENSE):
     Interest income                                               25               13 
     Interest expense                                              (4)              (8)
                                                             --------         --------
                                                                   21                5 
                                                             --------         --------
Income before income taxes                                         52            1,560 
Income tax expense                                                (23)            (624)
                                                             --------         --------

Net income                                                   $     29         $    936 
                                                             --------         --------
                                                             --------         --------

</TABLE>

           See accompanying notes to condensed financial statements.


                                      12

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

<TABLE>
<CAPTION>

                                                                  NINE MONTHS ENDED
                                                            ------------------------------
                                                            SEPTEMBER 30,    SEPTEMBER 30,
                                                                1997             1996
                                                            -------------    -------------
                                                             (UNAUDITED)      (UNAUDITED)
<S>                                                         <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                   $  2,453         $  4,593 
Adjustments to reconcile net income to net cash provided
   by operating activities:
       Depreciation                                             3,237            3,141 
       Deferred income taxes                                      175              463 
       Changes in operating assets and liabilities:
            Other current assets                                  (82)            (102)
            Other assets                                            3              170 
            Accounts payable                                     (644)             280 
            Other accrued liabilities                             640           (1,094)
            Income taxes payable to affiliate                   1,460            2,601 
                                                             --------         --------
            Net cash provided by operating activities           7,242           10,052 
                                                             --------         --------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment                            (1,382)          (1,175)
                                                             --------         --------
           Net cash used in investing activities               (1,382)          (1,175)
                                                             --------         --------

CASH FLOWS FROM FINANCING ACTIVITIES:
Due from affiliate                                             (5,726)          (8,373)
Increase in other long-term obligations -- related party           13               10 
                                                             --------         --------
           Net cash used in financing activities               (5,713)          (8,363)
                                                             --------         --------

Net increase in cash and cash equivalents                         147              514 
Cash and cash equivalents, beginning of period                  3,563            3,873 
                                                             --------         --------
Cash and cash equivalents, end of period                     $  3,710         $  4,387 
                                                             --------         --------
                                                             --------         --------

</TABLE>

           See accompanying notes to condensed financial statements.


                                      13
<PAGE>

                             ALTON GAMING COMPANY
                   NOTES TO CONDENSED FINANCIAL STATEMENTS
                                  (UNAUDITED)
                            (Dollars in Thousands)


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   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 $13.6 million, including interest through September 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>
                                                               SEPTEMBER 30,        DECEMBER 31,
                                                                   1997                 1996
                                                               -------------        ------------
                                                                (UNAUDITED)
<S>                                                            <C>                  <C>
CURRENT ASSETS:
     Cash                                                         $  4,034           $  6,143 
     Other current assets                                            1,874              1,563 
                                                               -------------        ------------
          Total current assets                                       5,908              7,706 
                                                               -------------        ------------

NET PROPERTY AND EQUIPMENT                                          72,352             75,773 

OTHER ASSETS                                                         2,490              3,272 
                                                               -------------        ------------

TOTAL ASSETS                                                     $  80,750          $  86,751 
                                                               -------------        ------------
                                                               -------------        ------------

CURRENT LIABILITIES:
     Accounts payable                                             $  1,840           $  3,505 
     Income taxes payable to affiliate                               3,811              4,435 
     Other accrued liabilities                                       4,180              4,244 
                                                               -------------        ------------
          Total current liabilities                                  9,831             12,184 
                                                               -------------        ------------

DUE TO AFFILIATES                                                   52,543             56,345 

DEFERRED INCOME TAXES                                                1,674                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                                              11,702             12,315 
                                                               -------------        ------------
          Total stockholder's equity                                16,702             17,315 
                                                               -------------        ------------

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY                       $  80,750          $  86,751 
                                                               -------------        ------------
                                                               -------------        ------------
</TABLE>

See accompanying notes to condensed financial statements.


                                     15

<PAGE>

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

                                                        NINE MONTHS ENDED
                                               ---------------------------------
                                               SEPTEMBER 30,       SEPTEMBER 30,
                                                   1997                 1996
                                               -------------       -------------
                                                (UNAUDITED)         (UNAUDITED)

REVENUES:
     Casino                                      $  46,412          $  64,706
     Admissions                                                         1,983
     Food, beverage and other                        7,233              8,145
                                               -------------       -------------
                                                    53,645             74,834
     Less promotional allowances                   (3,706)             (5,360)
                                               -------------       -------------
Net revenues                                        49,939             69,474
                                               -------------       -------------


COSTS AND EXPENSES:
     Casino                                         24,916             33,402
     Food, beverage and other                        6,244              7,169
     Other operating expenses                        2,978              3,594
     Selling, general and administrative             8,508             10,271
     Depreciation and amortization                   4,462              5,751
     Preopening costs                                                     383 
     Lease termination costs                                            3,508 
                                               -------------       -------------
                                                    47,108             64,078
                                               -------------       -------------
Income from operations                               2,831              5,396

OTHER INCOME (EXPENSE):
Interest income (expense)                              201                (30)
Interest expense - related party                   (4,006)             (4,515)
                                               -------------       -------------
                                                   (3,805)             (4,545)
                                               -------------       -------------
(Loss) income before income taxes                    (974)                851
Income tax benefit (expense)                           361               (462)
                                               -------------       -------------
Net income (loss)                                 $  (613)             $  389
                                               -------------       -------------
                                               -------------       -------------

See accompanying notes to condensed financial statements.


                                     16

<PAGE>

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

                                                       THREE MONTHS ENDED
                                               ---------------------------------
                                               SEPTEMBER 30,       SEPTEMBER 30,
                                                   1997                 1996
                                               -------------       -------------
                                                (UNAUDITED)         (UNAUDITED)
REVENUES:
     Casino                                      $  14,745          $  20,704 
     Food, beverage and other                        2,297              2,790 
                                               -------------       -------------
                                                    17,042             23,494 
     Less promotional allowances                   (1,278)             (1,350)
                                               -------------       -------------
Net revenues                                        15,764             22,144 
                                               -------------       -------------


COSTS AND EXPENSES:
     Casino                                          8,124             11,011
     Food, beverage and other                        2,093              2,457
     Other operating expenses                        1,104              1,252
     Selling, general and administrative             2,695              3,215
     Depreciation and amortization                   1,724              1,500
     Preopening costs                                                      61
                                               -------------       -------------
                                                    15,740             19,496
                                               -------------       -------------
Income from operations                                  24              2,648

OTHER INCOME (EXPENSE):
Interest income (expense)                              107                 (6)
Interest expense - related party                   (1,248)             (1,625)
                                               -------------       -------------
                                                   (1,141)             (1,631)
                                               -------------       -------------
Loss (income) before income taxes                  (1,117)              1,017
Income tax benefit (expense)                           443               (526)
                                               -------------       -------------
Net (loss) income                                 $  (674)             $  491
                                               -------------       -------------
                                               -------------       -------------

See accompanying notes to condensed financial statements.


                                     17

<PAGE>

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

<TABLE>
<CAPTION>
                                                                       NINE MONTHS ENDED
                                                               ---------------------------------
                                                               SEPTEMBER 30,        SEPTEMBER 30,
                                                                   1997                 1996
                                                               -------------        ------------
                                                                (UNAUDITED)          (UNAUDITED)
<S>                                                            <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                                 $  (613)             $  389 
Adjustments to reconcile net income (loss) to net cash
   provided by operating activities
     Depreciation                                                    4,296              5,571 
     Amortization                                                      166                180 
     Deferred income taxes                                             261                622 
     Lease termination costs                                                            2,223 
     Changes in operating assets and liabilities:
          Other current assets                                         827                463 
          Accounts payable                                         (1,665)                397 
          Other accrued liabilities                                    151              1,455 
          Income taxes payable to affiliate                          (624)               (386)
          Other assets                                               (136)                200 
                                                               -------------        ------------
          Net cash provided by operating activities                  2,663             11,114 
                                                               -------------        ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment                                  (876)            (18,488)
                                                               -------------        ------------
     Net cash used in investing activities                           (876)            (18,488)
                                                               -------------        ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on installment contracts                                     (94)               (588)
Due to affiliate                                                   (3,802)             16,832 
                                                               -------------        ------------
     Net cash (used in) provided by  financing activities          (3,896)             16,244 
                                                               -------------        ------------

Net increase in cash and cash equivalents                          (2,109)              8,870 
Cash and cash equivalents, beginning of period                       6,143              4,131 
                                                               -------------        ------------
Cash and cash equivalents, end of period                          $  4,034          $  13,001 
                                                               -------------        ------------
                                                               -------------        ------------
</TABLE>


See accompanying notes to condensed financial statements.

                                     18

<PAGE>


                             THE MISSOURI GAMING COMPANY
                       NOTES TO CONDENSED FINANCIAL STATEMENTS
                                     (UNAUDITED)
                                (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>
                                                                         SEPTEMBER 30,      DECEMBER 31,
                                                                              1997              1996
                                                                         -------------      ------------
                                                                          (UNAUDITED)
<S>                                                                      <C>                <C>
CURRENT ASSETS:
     Cash and cash equivalents                                             $  2,760           $  3,051
     Other current assets                                                     1,104              2,776
                                                                         -------------      ------------
          Total current assets                                                3,864              5,827
                                                                         -------------      ------------

NET PROPERTY AND EQUIPMENT                                                   45,176             49,021

OTHER ASSETS                                                                  1,848              2,206
                                                                         -------------      ------------

TOTAL ASSETS                                                               $ 50,888           $ 57,054
                                                                         -------------      ------------
                                                                         -------------      ------------

CURRENT LIABILITIES:
     Accounts payable                                                      $    560           $  1,127
     Other accrued liabilities                                                3,769              3,497
     Current maturities of long-term debt-related party                       5,578              5,578
                                                                         -------------      ------------
          Total current liabilities                                           9,907             10,202
                                                                         -------------      ------------

LONG-TERM DEBT-RELATED PARTY                                                 43,650             42,812

DEFERRED INCOME TAXES                                                                            1,160

MINORITY INTEREST IN CONSOLIDATED PARTNERSHIP                                 2,810              3,174

STOCKHOLDER'S DEFICIT:
     Common stock - $1 par value, 1,000 shares authorized
        issued and outstanding                                                    1                  1 
     Accumulated deficit                                                     (5,480)              (295)
                                                                         -------------      ------------
          Total stockholder's deficit                                        (5,479)              (294)
                                                                         -------------      ------------
TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIT                                $ 50,888           $ 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>
                                                                NINE MONTHS ENDED
                                                          ------------------------------
                                                          SEPTEMBER 30,    SEPTEMBER 30,
                                                               1997             1996
                                                          -------------    -------------
                                                           (UNAUDITED)      (UNAUDITED)
<S>                                                       <C>              <C>
Revenues:
     Casino                                                 $ 37,856         $ 38,995
     Food, beverage and other                                  5,487            4,038
                                                          -------------    -------------
                                                              43,343           43,033
     Less promotional allowances                              (3,302)          (2,388)
                                                          -------------    -------------
Net revenues                                                  40,041           40,645
                                                          -------------    -------------

COST AND EXPENSES:
     Casino                                                   22,236           19,794
     Food, beverage and other                                  5,120            3,549
     Other operating expenses                                  3,892            3,764
     Selling, general and administrative                       9,765            8,233
     Depreciation and amortization                             4,178            4,661
     Referendum costs                                                             383
                                                          -------------    -------------
                                                              45,191           40,384
                                                          -------------    -------------

(Loss) income from operations                                 (5,150)             261
INTEREST (EXPENSE) INCOME NET:
     Interest to related party                                (1,202)
     Other                                                        69               95
                                                          -------------    -------------

(Loss) income before income taxes 
   and minority interest                                      (6,283)             356
Income tax benefit (expense)                                     734             (263)
Minority interest                                                364              (12)
                                                          -------------    -------------
Net (loss) income                                           $ (5,185)         $    81
                                                          -------------    -------------
                                                          -------------    -------------
</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
                                                             ---------------------------------
                                                             SEPTEMBER 30,       SEPTEMBER 30,
                                                                  1997                1996
                                                             -------------       -------------
                                                              (UNAUDITED)         (UNAUDITED)
<S>                                                          <C>                 <C>
REVENUES:
     Casino                                                    $  11,660           $  11,959
     Food, beverage and other                                      1,801               1,489
                                                             -------------       -------------
                                                                  13,461              13,448
     Less promotional allowances                                  (1,064)               (893)
                                                             -------------       -------------
Net revenues                                                      12,397              12,555
                                                             -------------       -------------

COST AND EXPENSES:
     Casino                                                        7,155               6,431
     Food, beverage and other                                      1,658               1,254
     Other operating expenses                                      1,340               1,414
     Selling, general and administrative                           3,205               2,752
     Depreciation and amortization                                 1,389               1,930
     Referendum costs                                                                    383
                                                             -------------       -------------
                                                                  14,747              14,164
                                                             -------------       -------------

Loss from operations                                              (2,350)             (1,609)
INTEREST (EXPENSE) INCOME NET:
     Interest to related party                                      (400)                 24
     Other                                                            22
                                                             -------------       -------------

Loss before income taxes and minority interest                    (2,728)             (1,585)
Income tax benefit                                                                       684
Minority interest                                                    159                  65
                                                             -------------       -------------
Net loss                                                       $  (2,569)            $  (836)
                                                             -------------       -------------
                                                             -------------       -------------
</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>
                                                                                       NINE MONTHS ENDED
                                                                              ----------------------------------
                                                                              SEPTEMBER 30,        SEPTEMBER 30,
                                                                                   1997                1996
                                                                               (UNAUDITED)          (UNAUDITED)
                                                                              -------------        -------------
<S>                                                                           <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income                                                              $  (5,185)            $    81
Adjustments to reconcile net (loss) income to net cash (used in)
   provided by operating activities:
     Depreciation                                                                  3,819               4,302
     Amortization                                                                    359                 359
     Minority interest                                                              (364)                 12
     Deferred income taxes                                                          (735)              1,076
     Changes in operating assets and liabilities:
          Other current assets                                                       369                (498)
          Accounts payable                                                          (567)               (162)
          Other accrued liabilities                                                1,152                 243
                                                                              -------------        -------------
          Net cash (used in) provided by operating activities                     (1,152)              5,413
                                                                              -------------        -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment                                                 (307)               (516)
                                                                              -------------        -------------
     Net cash used in investing activities                                          (307)               (516)
                                                                              -------------        -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in advances from affiliates                                    1,168              (7,519)
Payments on notes payable and long-term debt                                                            (385)
Decrease in other assets                                                                                  69
                                                                              -------------        -------------
     Net cash provided by (used in) financing activities                           1,168              (7,835)
                                                                              -------------        -------------

Net decrease in cash and cash equivalents                                           (291)             (2,938)
Cash and cash equivalents, beginning of period                                     3,051               5,201
                                                                              -------------        -------------
Cash and cash equivalents, end of period                                        $  2,760            $  2,263
                                                                              -------------        -------------
                                                                              -------------        -------------
</TABLE>

See accompanying notes to condensed consolidated financial statements.

                                     23
<PAGE>


                              ARGOSY OF LOUISIANA, INC.
                 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                     (UNAUDITED)
                                (Dollars in Thousands)

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   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.

   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 September 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>

                                                                             SEPTEMBER 30,        DECEMBER 31,
                                                                                 1997                1996
                                                                             -------------        ------------
                                                                              (UNAUDITED)
<S>                                                                          <C>                  <C>
CURRENT ASSETS:
     Cash and cash equivalents                                                   $  2,760           $  3,051 
     Other current assets                                                           1,104              1,134 
                                                                             -------------        ------------
          Total current assets                                                      3,864              4,185 
                                                                             -------------        ------------

NET PROPERTY AND EQUIPMENT                                                         44,860             48,704 

OTHER ASSETS                                                                        1,848              2,206 
                                                                             -------------        ------------
TOTAL ASSETS                                                                    $  50,572          $  55,095 
                                                                             -------------        ------------
                                                                             -------------        ------------

CURRENT LIABILITIES:
     Accounts payable                                                           $     560          $   1,127 
     Accounts payable - related party                                                 959 
     Other accrued liabilities                                                      3,959              3,497 
     Accrued interest-related party                                                   702 
     Notes payable and current maturities of long-term debt-related party           5,578              5,578 
                                                                             -------------        ------------
          Total current liabilities                                                11,758             10,202 
                                                                             -------------        ------------

LONG-TERM DEBT-RELATED PARTY                                                       13,793             13,793 
PARTNERS' EQUITY                                                                   25,021             31,100 
                                                                             -------------        ------------
TOTAL LIABILITIES AND PARTNERS' EQUITY                                          $  50,572          $  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>

                                                                                   NINE MONTHS ENDED
                                                                           -----------------------------------
                                                                            SEPTEMBER 30,       SEPTEMBER 30,
                                                                                 1997                1996
                                                                           ---------------      --------------
                                                                              (UNAUDITED)         (UNAUDITED)
<S>                                                                         <C>                 <C>

REVENUES:
     Casino                                                                     $  37,856          $  38,995 
     Food, beverage and other                                                       5,487              4,038 
                                                                           ---------------      --------------
                                                                                   43,343             43,033 
     Less promotional allowances                                                  (3,302)             (2,388)
                                                                           ---------------      --------------
Net revenues                                                                       40,041             40,645 
                                                                           ---------------      --------------
COSTS AND EXPENSES:
     Casino                                                                        22,236             19,794 
     Food, beverage and other                                                       5,120              3,549 
     Other operating expenses                                                       3,892              3,764 
     Selling, general and administrative                                            9,562              7,993 
     Depreciation and amortization                                                  4,178              4,118 
     Referendum expenses                                                                                 383 
                                                                           ---------------      --------------
                                                                                   44,988             39,601 
                                                                           ---------------      --------------

(Loss) income from operations                                                     (4,947)              1,044 
INTEREST (EXPENSE) INCOME (NET):
     Related parties                                                              (1,202)             (1,202)
     Other                                                                             70                 95 
                                                                           ---------------      --------------
                                                                                  (1,132)             (1,107)
                                                                           ---------------      --------------
Net loss                                                                       $  (6,079)             $  (63)
                                                                           ---------------      --------------
                                                                           ---------------      --------------

</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
                                                                           -----------------------------------
                                                                            SEPTEMBER 30,       SEPTEMBER 30,
                                                                                 1997                1996
                                                                           ---------------      --------------
                                                                              (UNAUDITED)         (UNAUDITED)
<S>                                                                         <C>                 <C>
REVENUES:
     Casino                                                                     $  11,660          $  11,959 
     Food, beverage and other                                                       1,801              1,489 
                                                                           ---------------      --------------
                                                                                   13,461             13,448 
     Less promotional allowances                                                   (1,064)              (893)
                                                                           ---------------      --------------
Net revenues                                                                       12,397             12,555 
                                                                           ---------------      --------------

COSTS AND EXPENSES:
     Casino                                                                         7,155              6,431 
     Food, beverage and other                                                       1,658              1,254 
     Other operating expenses                                                       1,340              1,414 
     Selling, general and administrative                                            3,137              2,666 
     Depreciation and amortization                                                  1,389              1,388 
     Referendum expenses                                                                                 383 
                                                                           ---------------      --------------
                                                                                   14,679             13,536 
                                                                           ---------------      --------------

Loss from operations                                                               (2,282)              (981)
INTEREST (EXPENSE) INCOME (NET):
     Related parties                                                                 (400)              (400)
     Other                                                                             23                 22 
                                                                           ---------------      --------------
                                                                                     (377)              (378)
                                                                           ---------------      --------------
Net loss                                                                        $  (2,659)         $  (1,359)
                                                                           ---------------      --------------
                                                                           ---------------      --------------

</TABLE>

                  See accompanying notes to condensed financial statements.

                                            27

<PAGE>

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

<TABLE>
<CAPTION>

                                                                                     NINE MONTHS ENDED
                                                                           -----------------------------------
                                                                            SEPTEMBER 30,       SEPTEMBER 30,
                                                                                 1997                1996
                                                                           ---------------     ---------------
                                                                              (UNAUDITED)         (UNAUDITED)
<S>                                                                         <C>                 <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                                         $ (6,079)          $    (63)
Adjustments to reconcile net loss to net cash
  (used in) provided by operating activities:
     Depreciation                                                                   3,819              3,759 
     Amortization                                                                     359                359 
     Changes in operating assets and liabilities:
          Other current assets                                                         29                523 
          Accounts payable                                                           (567)              (143)
          Accrued interest to related parties                                         702              2,011 
          Deposits                                                                                        69 
          Other accrued liabilities                                                   464                297 
                                                                           ---------------     ---------------
     Net cash (used in) provided by operating activities                           (1,273)             6,812 
                                                                           ---------------     ---------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment                                                  (307)              (516)
                                                                           ---------------     ---------------
     Net cash used in investing activities                                           (307)              (516)
                                                                           ---------------     ---------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in advances from affiliates                                     1,289             (8,849)
Payments on notes payable and long-term debt                                                            (385)
                                                                           ---------------     ---------------
     Net cash provided by (used in) financing activities                            1,289             (9,234)
                                                                           ---------------     ---------------
Net increase (decrease) in cash and cash equivalents                                 (291)            (2,938)
Cash and cash equivalents, beginning of period                                      3,051              5,201 
                                                                           ---------------     ---------------
Cash and cash equivalents, end of period                                         $  2,760           $  2,263 
                                                                           ---------------     ---------------
                                                                           ---------------     ---------------

</TABLE>

                   See accompanying notes to condensed financial statements.

                                            28

<PAGE>




                        CATFISH QUEEN PARTNERSHIP IN COMMENDAM
                       NOTES TO CONDENSED FINANCIAL STATEMENTS
                                     (UNAUDITED)
                                (Dollars in Thousands)
                                           

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     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 September 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>

                                                   SEPTEMBER 30,      DECEMBER 31,
                                                       1997               1996
                                                   -------------      --------------
<S>                                                    (UNAUDITED)
CURRENT ASSETS:                                     <C>               <C>
     Cash and cash equivalents                       $      83           $  
     Other current assets                                  154                 78 
                                                    --------------      -------------
        Total current assets                               237                 78 
                                                    --------------      -------------
                                            
NET PROPERTY AND EQUIPMENT                              54,918              57,297 
GOODWILL, NET                                           20,071              20,519 
NOTE RECEIVABLE                                          1,892               1,892 
OTHER ASSETS                                             3,904               3,685 
                                                    --------------      -------------
TOTAL ASSETS                                         $  81,022           $  83,471 
                                                    --------------      -------------
                                                    --------------      -------------

CURRENT LIABILITIES:
     Accounts payable and accrued liabilities        $   4,100           $   3,478 

LONG-TERM DEBT                                          80,559              81,485 
STOCKHOLDER'S DEFICIT:
    Common stock, no par value, 100,000 shares 
     authorized, 200 shares issued and outstanding
    Retained deficit                                     (3,637)             (1,492)
                                                    --------------       -------------
TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIT          $   81,022          $   83,471 
                                                    --------------       -------------
                                                    --------------       -------------
</TABLE>

                    See accompanying notes to condensed financial statements.


                                     30

<PAGE>



                               JAZZ ENTERPRISES, INC.
                           CONDENSED STATEMENTS OF OPERATIONS
                                    (In Thousands)

<TABLE>
<CAPTION>

                                                           NINE MONTHS ENDED
                                                   ---------------------------------
                                                   SEPTEMBER 30,       SEPTEMBER 30,
                                                       1997                1996
                                                   -------------       -------------
                                                   (UNAUDITED)         (UNAUDITED)
<S>                                                <C>                 <C>
REVENUES:
     Lease revenue                                  $  2,271           $  2,346 
     Rent revenue                                        303                274 
                                                    -----------        -----------
                                                       2,574              2,620 
                                                    -----------        -----------

COSTS AND EXPENSES:
     Operating expenses                                  705                275 
     Selling, general and administrative                 956              1,192 
     Depreciation and amortization                     1,766                987 
     Preopening costs                                                       100 
                                                    -----------         ----------
                                                       3,427              2,554 
                                                    -----------         ----------

(Loss) income from operations                           (853)                  66

OTHER (EXPENSE) INCOME:
     Interest expense                                   (684)                (717)
     Equity in loss of unconsolidated partnership       (608)                  (6)
                                                    -----------         -----------
Loss before income taxes                              (2,145)                (657)
Income tax expense                                 
                                                   ------------         -----------
Net loss                                           $  (2,145)            $   (657)
                                                   ------------         -----------
                                                   ------------         -----------

</TABLE>


                 See accompanying notes to condensed financial statements.


                                     31

<PAGE>



                               JAZZ ENTERPRISES, INC.
                         CONDENSED STATEMENTS OF OPERATIONS
                                 (In Thousands)

<TABLE>
<CAPTION>
                                                             THREE MONTHS ENDED
                                                      --------------------------------
                                                      SEPTEMBER 30,       SEPTEMBER 30,
                                                         1997                1996
                                                      --------------      -------------
                                                        (UNAUDITED)         (UNAUDITED)
<S>                                                   <C>                 <C>
REVENUES:
     Lease revenue                                     $  700             $  714 
     Rent revenue                                         119                 89 
                                                       ---------          ----------
                                                          819                803 
                                                       ---------          ----------
COSTS AND EXPENSES:
     Operating expenses                                   260                 81 
     Selling, general and administrative                  321                401 
     Depreciation and amortization                        589                628 
                                                       --------           ----------
                                                        1,170              1,110 
                                                       --------           ----------

Loss from operations                                     (351)               (307)

OTHER EXPENSE:
     Interest expense                                    (224)               (236)
     Equity in loss of unconsolidated partnership        (266)               (136)
                                                       ---------            --------
Loss before income taxes                                 (841)               (679)
Income tax benefit                                                              9 
                                                      ----------          ----------
Net loss                                              $  (841)            $  (670)
                                                      ----------          ----------
                                                      ----------          ----------

</TABLE>


                  See accompanying notes to condensed financial statements.


                                     32

<PAGE>


                                  JAZZ ENTERPRISES, INC.
                            CONDENSED STATEMENTS OF CASH FLOWS
                                     (In Thousands)

<TABLE>
<CAPTION>
                                                            NINE MONTHS ENDED
                                                    --------------------------------
                                                    SEPTEMBER 30,       SEPTEMBER 30,
                                                       1997                1996
                                                    -------------       --------------
                                                     (UNAUDITED)         (UNAUDITED)
<S>                                                <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES
 Net loss                                           $  (2,145)            $ (657)
Adjustments to reconcile net loss to net cash
   provided by operating activities:
     Depreciation                                       1,318                540 
     Amortization                                         448                448 
     Equity in loss of unconsolidated partnership         608                  6 
     Changes in operating assets and liabilities:
          Other current assets                            (76)              (141)
          Accounts payable and accrued liabilities        622                415 
                                                     ---------            --------
          Net cash provided by operating activities       775                611 
                                                     ---------            --------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Capital expenditures                                (785)            (25,387)
     Increase in other assets                            (826)               (179)
                                                     ---------            --------
          Net cash used in investing activities        (1,611)            (25,566)
                                                     ---------            --------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Principal payments on long-term debt                (298)               (295)
     Advances from affiliate                            1,217              25,218 
                                                     ---------            --------
          Net cash provided by financing activities       919              24,923 
                                                     ---------            --------
Net increase (decrease) in cash and cash equivalents       83                 (32)
Cash and cash equivalents, beginning of period              -                  32 
                                                     ---------            --------
Cash and cash equivalents, end of period                $  83             $  -   
                                                     ---------            --------
                                                     ---------            --------
</TABLE>


                  See accompanying notes to condensed financial statements.


                                     33

<PAGE>


                                JAZZ ENTERPRISES, INC.
                       NOTES TO CONDENSED FINANCIAL STATEMENTS
                                     (UNAUDITED)
                                (Dollars in Thousands)
                                           


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     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 into 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 September 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>

                                                                                    SEPTEMBER 30,       DECEMBER 31,
                                                                                       1997                1996
                                                                                    -------------       ------------
<S>                                                                                 <C>                 <C>
                                                                                    (UNAUDITED)
CURRENT ASSETS:
     Cash and cash equivalents                                                      $     13,014        $     9,216
     Other current assets                                                                  1,914              1,844
                                                                                    -------------       ------------
          Total current assets                                                            14,928             11,060
                                                                                    -------------       ------------
   
NET PROPERTY AND EQUIPMENT                                                               145,076             69,392
OTHER ASSETS:   
     Deposits                                                                              1,305                  5
     Cash and cash equivalents-restricted                                                 22,030             14,919
     Intangible assets, net                                                               30,599             31,459
                                                                                    -------------       ------------
          Total other assets                                                              53,934             46,383
                                                                                    -------------       ------------

TOTAL ASSETS                                                                        $    213,938        $   126,835 
                                                                                    -------------       ------------
                                                                                    -------------       ------------



CURRENT LIABILITIES:
     Accounts payable                                                               $        856        $     3,115
     Accrued interest and dividends payable-related parties                                3,200              2,198
     Other accrued liabilities                                                            16,327              5,616
     Current maturities of long-term debt-related parties                                  7,246              2,900
     Current maturities of other long-term obligations                                     5,169              5,169
                                                                                    -------------       ------------
          Total current liabilities                                                       32,798             18,998
                                                                                    -------------       ------------

LONG-TERM DEBT-RELATED PARTY                                                             156,983             86,612
OTHER LONG-TERM OBLIGATIONS                                                               10,693             15,000
MINORITY INTERESTS                                                                        14,771             14,490
STOCKHOLDER'S DEFICIT:
     Common stock - $.01 par value, 1,000 shares authorized
        issued and outstanding
     Accumulated deficit                                                                  (1,307)            (8,265)
                                                                                    -------------       ------------

TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIT                                         $    213,938        $   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>

                                                                                            NINE MONTHS ENDED
                                                                                    ---------------------------------
                                                                                    SEPTEMBER 30,       SEPTEMBER 30,
                                                                                       1997                1996
                                                                                    -------------       ------------
<S>                                                                                 <C>                 <C>
                                                                                    (UNAUDITED)          (UNAUDITED)

REVENUES:
     Casino                                                                         $     87,775        $
     Admissions                                                                           13,152 
     Food, beverage and other                                                              4,620 
                                                                                    -------------       ------------
                                                                                         105,547 
     Less promotional allowances                                                         (11,461)
                                                                                    -------------       ------------
Net revenues                                                                              94,086 
                                                                                    -------------       ------------

COST AND EXPENSES:
     Casino                                                                               39,438 
     Food, beverage and other                                                              3,568 
     Other operating expenses                                                              9,654 
     Selling, general and administrative                                                  15,637 
     Depreciation and amortization                                                         8,324
     Management fees-related parties                                                       1,289
     Preopening                                                                                               5,659
                                                                                    -------------       ------------
                                                                                          77,910              5,659
                                                                                    -------------       ------------
Income (loss) from operations                                                             16,176             (5,659)

OTHER INCOME (EXPENSE):
     Interest income                                                                       1,056
     Interest expense                                                                     (1,977)
                                                                                    -------------       ------------
                                                                                            (921)
                                                                                    -------------       ------------
Income (loss) before income taxes and minority interests                                  15,255             (5,659)
Income tax expense                                                                        (5,425)
Minority interests                                                                        (2,872)             2,383
                                                                                    -------------       ------------
Net income (loss)                                                                   $      6,958        $    (3,276)
                                                                                    -------------       ------------
                                                                                    -------------       ------------
</TABLE>


    See accompanying notes to condensed consolidated financial statements.

                                       36

<PAGE>

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

<TABLE>
<CAPTION>

                                                                                            THREE MONTHS ENDED
                                                                                    ---------------------------------
                                                                                    SEPTEMBER 30,       SEPTEMBER 30,
                                                                                       1997                1996
                                                                                    -------------       ------------
<S>                                                                                 <C>                 <C>
                                                                                    (UNAUDITED)          (UNAUDITED)
REVENUES:
     Casino                                                                         $     30,357        $
     Admissions                                                                            4,560
     Food, beverage and other                                                              1,639
                                                                                    -------------       ------------
                                                                                          36,556
     Less promotional allowances                                                          (4,339)
                                                                                    -------------       ------------
Net revenues                                                                              32,217 
                                                                                    -------------       ------------

COST AND EXPENSES:
     Casino                                                                               13,969
     Food, beverage and other                                                              1,362
     Other operating expenses                                                              3,324
     Selling, general and administrative                                                   5,171
     Depreciation and amortization                                                         2,934
     Management fees-related parties                                                         420
     Preopening                                                                                               2,816 
                                                                                    -------------       ------------
                                                                                          27,180              2,816 
                                                                                    -------------       ------------
Income (loss) from operations                                                              5,037             (2,816)

OTHER INCOME (EXPENSE):
     Interest income                                                                         459
     Interest expense                                                                       (807)
                                                                                    -------------       ------------
                                                                                            (348)
                                                                                    -------------       ------------
Income (loss) before income taxes and minority interests                                   4,689             (2,816)
Income tax expense                                                                        (1,571)
Minority interests                                                                          (811)             1,218 
                                                                                    -------------       ------------
Net income (loss)                                                                   $      2,307        $    (1,598)
                                                                                    -------------       ------------
                                                                                    -------------       ------------
</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>
                                                                                             NINE MONTHS ENDED
                                                                                    ---------------------------------
                                                                                    SEPTEMBER 30,       SEPTEMBER 30,
                                                                                       1997                1996
                                                                                    -------------       ------------
<S>                                                                                 <C>                 <C>
                                                                                    (UNAUDITED)          (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                                                   $      6,958        $    (3,276)
Adjustments to reconcile net income (loss) to net cash
    provided by (used in) operating activities:
      Depreciation                                                                           921                 64
      Amortization                                                                         7,403 
      Minority interests                                                                   2,872             (2,383)
   Changes in operating assets and  liabilities:
           Other current assets                                                              (70)            (1,507)
           Deposits                                                                       (1,300)            (1,336)
           Accounts payable                                                               (2,259)              (581)
           Accrued interest payable to related parties                                        13                129 
           Accrued liabilities                                                            10,053                224 
                                                                                    -------------       ------------
           Net cash provided by (used in) operating activities                            24,591             (8,666)
CASH FLOWS FROM INVESTING ACTIVITIES:
      Restricted cash held in escrow                                                      (7,111)            (8,237)
      Purchases of property and equipment                                                (78,604)           (35,449)
      Payments under development agreement and other
         infrastructure improvements                                                      (4,307)
                                                                                    -------------       ------------
           Net cash used in investing activities                                         (90,022)           (43,686)
CASH FLOWS FROM FINANCING ACTIVITIES:
      Increase in advances from affiliates                                                39,610             31,743 
      Payments on installment contracts                                                   (3,497)            (1,062)
      Proceeds from contributed capital                                                                      19,044
      Repayment of long term debt - related party                                         (1,515)
      Proceeds from long-term debt - related party                                        36,293              5,449 
      Payment of preferred return to partner                                                (764)
      Partnership equity distributions                                                      (838)
      Other                                                                                  (60)               (25)
                                                                                    -------------       ------------
           Net cash provided by financing activities                                      69,229             55,149 
                                                                                    -------------       ------------
Net increase in cash and cash equivalents                                                  3,798              2,797 
Cash and cash equivalents, beginning of period                                             9,216                  2
                                                                                    -------------       ------------
Cash and cash equivalents, end of period                                            $     13,014        $     2,799 
                                                                                    -------------       ------------
                                                                                    -------------       ------------
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       38

<PAGE>

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

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     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 nine months ended 
September 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
                         (UNAUDITED) (CONTINUED)
                          (Dollars in Thousands)
                                     
                                     
                                     
     Included in other long term obligations at September 30, 1997 is $15,862 
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 $7,862 is payable as 
follows: $862 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. 

     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>

                                                                            SEPTEMBER 30,        DECEMBER 31,
                                                                                1997                 1996 
                                                                            -------------       -------------
                                                                             (UNAUDITED) 
<S>                                                                         <C>                 <C>
CURRENT ASSETS:
     Cash and cash equivalents                                                  $  13,014           $  9,216 
     Other current assets                                                           1,914              1,844 
                                                                            -------------       -------------
        Total current assets                                                       14,928             11,060 
                                                                            -------------       -------------

NET PROPERTY AND EQUIPMENT                                                        143,774             68,349 
OTHER ASSETS:
     Deposits                                                                       1,305                  5 
     Cash and cash equivalents-restricted                                          22,030             14,919 
     Intangible assets, net                                                        30,599             31,459 
                                                                            -------------       -------------
        Total other assets                                                         53,934             46,383 
                                                                            -------------       -------------
TOTAL ASSETS                                                                   $  212,636         $  125,792 
                                                                            -------------       -------------
                                                                            -------------       -------------

CURRENT LIABILITIES:
     Accounts payable                                                          $      934         $    3,464 
     Accrued interest and dividends payable-related parties                         7,578              5,240 
     Other accrued liabilities                                                     10,904              5,616 
     Due to affiliates                                                              1,963                777 
     Current maturities of long-term debt-related parties                          17,052              7,066 
     Current maturities of other long-term obligations                              5,169              5,169 
                                                                            -------------       -------------
        Total current liabilities                                                  43,600             27,332 
                                                                            -------------       -------------

LONG-TERM DEBT-RELATED PARTIES                                                    119,365             49,463 
OTHER LONG-TERM OBLIGATIONS                                                        10,693             15,000 
PARTNERS' EQUITY:
     General partner                                                               22,413             19,549 
     Limited partners                                                              16,565             14,448 
                                                                            -------------       -------------
        Total partners' equity                                                     38,978             33,997 
                                                                            -------------       -------------

TOTAL LIABILITIES AND PARTNERS' EQUITY                                         $  212,636         $  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>
                                                                                   NINE MONTHS ENDED
                                                                            ---------------------------------
                                                                            SEPTEMBER 30,      SEPTEMBER 30, 
                                                                                1997                1996
                                                                            -------------      --------------
                                                                              (UNAUDITED)        (UNAUDITED) 
<S>                                                                         <C>                <C> 
REVENUES:
     Casino                                                                   $    87,775         $  
     Admissions                                                                   13,152 
     Food, beverage and other                                                      4,620 
                                                                            -------------       -------------
                                                                                 105,547 
     Less promotional allowances                                                 (11,461)
                                                                            -------------       -------------
Net revenues                                                                      94,086 
                                                                            -------------       -------------

COST AND EXPENSES:
     Casino                                                                       39,438 
     Food, beverage and other                                                      3,568 
     Other operating expenses                                                      9,654 
     Selling, general and administrative                                          15,637 
     Depreciation and amortization                                                 8,324 
     Management fees-related parties                                               3,224 
     Preopening                                                                                       5,608 
                                                                            -------------       -------------
                                                                                  79,845              5,608 
                                                                            -------------       -------------
Income (loss) from operations                                                     14,241             (5,608)

OTHER INCOME (EXPENSE):
     Interest income                                                               1,056 
     Interest expense                                                             (4,209)
                                                                            -------------       -------------
                                                                                  (3,153)
                                                                            -------------       -------------
Net income (loss) prior to preferred equity return                                11,088             (5,608)
Preferred equity return                                                           (4,134)            (2,468)
                                                                            -------------       -------------
Net income (loss) attributable to common equity partners                       $   6,954          $  (8,076)
                                                                            -------------       -------------
                                                                            -------------       -------------


                                     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
                                                                            ---------------------------------
                                                                            SEPTEMBER 30,       SEPTEMBER 30, 
                                                                                 1997                1996
                                                                            -------------       -------------
                                                                              (UNAUDITED)        (UNAUDITED) 
<S>                                                                         <C>                  <C>
REVENUES:
     Casino                                                                     $  30,357                 $  
     Admissions                                                                    4,560 
     Food, beverage and other                                                      1,639 
                                                                            -------------       -------------
                                                                                  36,556 
     Less promotional allowances                                                  (4,339)
                                                                            -------------       -------------
Net revenues                                                                      32,217 
                                                                            -------------       -------------

COST AND EXPENSES:
     Casino                                                                       13,969 
     Food, beverage and other                                                      1,362 
     Other operating expenses                                                      3,324 
     Selling, general and administrative                                           5,171 
     Depreciation and amortization                                                 2,934 
     Management fees-related parties                                               1,049 
     Preopening                                                                                        2,866 
                                                                            -------------       -------------
                                                                                   27,809              2,866 
                                                                            -------------       -------------
Income (loss) from operations                                                       4,408             (2,866)

OTHER INCOME (EXPENSE):
     Interest income                                                                 459 
     Interest expense                                                             (1,690)
                                                                            -------------       -------------
                                                                                  (1,231)
                                                                            -------------       -------------
Net income (loss) prior to preferred equity return                                  3,177             (2,866)
Preferred equity return                                                           (1,393)             (2,468)
                                                                            -------------       -------------
Net income (loss) attributable to common equity partners                         $  1,784          $  (5,334)
                                                                            -------------       -------------
                                                                            -------------       -------------



                                   See accompanying notes to condensed financial statements.

</TABLE>

                                                 43

<PAGE>




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


<TABLE>
<CAPTION>

                                                                                   NINE MONTHS ENDED
                                                                            ---------------------------------
                                                                            SEPTEMBER 30,       SEPTEMBER 30, 
                                                                                 1997                1996
                                                                            -------------       -------------
                                                                              (UNAUDITED)        (UNAUDITED) 
<S>                                                                         <C>                  <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income (loss)                                                           $  6,954          $  (8,076)
     Adjustments to reconcile net income (loss) to net cash provided by
       (used in) operating activities:
        Depreciation                                                                 921                  64 
        Amortization                                                               7,403 
        Accrued preferred equity dividends                                         4,134               2,468 
     Changes in operating assets and liabilities:
        Other current assets                                                         (70)             (1,450)
        Accounts payable                                                          (2,530)               (292)
        Accrued interest payable to related parties                                     3                275 
        Deposits                                                                  (1,300)             (1,336)
        Accrued liabilities                                                         5,486              1,127 
                                                                            -------------       -------------
           Net cash provided by (used in) operating activities                     21,001             (7,220)
                                                                            -------------       -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
        Restricted cash held in escrow                                            (7,111)             (8,237)
        Purchases of property and equipment                                      (78,345)            (34,732)
        Payments under development agreement and other 
          infrastructure improvements                                            (4,307)
                                                                            -------------       -------------
           Net cash used in investing activities                                 (89,763)            (42,969)
                                                                            -------------       -------------
CASH FLOWS FROM FINANCING ACTIVITES:
        Payments on installment contracts                                         (3,497)             (1,062)
        Proceeds from contributed capital                                                             34,264
        Proceeds from long-term debt - related party                               83,445             19,809 
        Repayment of long term debt - related party                               (3,557)
        Payment of preferred return to partners                                   (1,798)
        Partnership equity distribution                                           (1,973)
        Other                                                                        (60)                (25)
                                                                            -------------       -------------
           Net cash provided by financing activities                               72,560             52,986 
                                                                            -------------       -------------
Net increase in cash and cash equivalents                                           3,798              2,797 
Cash and cash equivalents,  beginning of period                                     9,216                  2 
                                                                            -------------       -------------
Cash and cash equivalents,  end of period                                       $  13,014           $  2,799 
                                                                            -------------       -------------
                                                                            -------------       -------------

                            See accompanying notes to condensed financial statements.

</TABLE>






                                                 44



<PAGE>



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



1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     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
                               (UNAUDITED) (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 September 30, 1997 is $15,862 
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 $7,862 is 
payable as follows: $862 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. 

   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 nine months 
ended September 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 the competitive pressures in these markets will continue to adversely 
effect the 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 
September 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>

                                                     NINE MONTHS ENDED             THREE MONTHS ENDED
                                                 ----------------------------  -----------------------------
                                                 SEPTEMBER 30,  SEPTEMBER 30,  SEPTEMBER 30,   SEPTEMBER 30,
                                                     1997           1996           1997           1996
                                                 -------------  -------------  -------------   -------------
                                                  (UNAUDITED)    (UNAUDITED)    (UNAUDITED)    (UNAUDITED)
<S>                                              <C>            <C>            <C>             <C>
GROSS REVENUES
     Alton                                         $  52,518      $  61,994      $  16,850      $  20,859 
     Riverside                                        53,645         74,834         17,042         23,495 
     Baton Rouge                                      43,343         43,033         13,461         13,448 
     Sioux City                                       17,022         15,510          5,726          5,013 
     Lawrenceburg                                    105,547              -         36,556              - 
     Corporate                                           824            377            118            123 
     Other                                               307            269            116             84 
                                                 -------------  -------------  -------------   -------------
          Total                                    $ 273,206      $ 196,017      $  89,869      $  63,022 
                                                 -------------  -------------  -------------   -------------
                                                 -------------  -------------  -------------   -------------

NET REVENUES
     Alton                                         $  50,995      $  60,266      $  16,310      $  20,323 
     Riverside                                        49,939         69,474         15,764         22,145 
     Baton Rouge                                      40,041         40,645         12,397         12,555 
     Sioux City                                       16,171         14,964          5,431          4,796 
     Lawrenceburg                                     94,086              -         32,217              - 
     Corporate                                           816            359            116            119 
     Other                                               307            269            116             84 
                                                 -------------  -------------  -------------   -------------
          Total                                    $ 252,355      $ 185,977      $  82,351      $  60,022 
                                                 -------------  -------------  -------------   -------------
                                                 -------------  -------------  -------------   -------------

INCOME (LOSS) FROM OPERATIONS(1)
     Alton                                         $   5,817      $  11,026      $     509      $   3,060 
     Riverside(3)                                      2,831          8,904             24          2,652 
     Baton Rouge(4)                                   (2,676)         3,773         (1,582)           116 
     Sioux City                                          493            102            143           (476)
     Lawrenceburg                                     16,176              -          5,037              - 
     Corporate(5)                                     (9,056)        (9,972)        (2,532)        (3,267)
     Other(6)                                         (1,835)        (3,915)          (666)        (1,934)
                                                 -------------  -------------  -------------   -------------
          Total                                    $  11,750      $   9,918      $     933       $    151 
                                                 -------------  -------------  -------------   -------------
                                                 -------------  -------------  -------------   -------------

EBITDA(1)(2)
     Alton                                         $   9,054      $  14,167      $   1,637       $  4,130 
     Riverside(3)                                      7,293         14,655          1,748          4,152 
     Baton Rouge(4)                                    1,502          7,891           (193)         1,504 
     Sioux City                                        1,212            697            386           (263)
     Lawrenceburg                                     24,500              -          7,971              - 
     Corporate(5)                                     (7,211)        (8,741)        (1,941)        (2,859)
     Other(6)                                            631         (1,685)           154           (531)
                                                 -------------  -------------  -------------   -------------
          Total                                    $  36,981      $  26,984      $   9,762       $  6,133 
                                                 -------------  -------------  -------------   -------------
                                                 -------------  -------------  -------------   -------------

</TABLE>

                                                    48

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



(1)  Income (loss) 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 $3.5 million for the nine months ended September 30, 1996 related
     to lease termination costs in connection with assets formerly used at the
     Riverside temporary facility.

(4)  Excludes referendum expenses of approximately $.4 million for the three and
     nine months ended September 30, 1996.

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

(6)  Excludes pre-opening expenses of approximately $3.5 million and $6.2
     million for the three and nine months ended September 30, 1996 primarily
     related to Lawrenceburg.

                                               49

<PAGE>


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

     CASINO--Casino revenues for the nine months ended September 30, 1997 
increased to $234.3 million from $173.9 million for the nine months ended 
September 30, 1996 due to the opening of the Lawrenceburg casino, which 
generated $87.8 million of casino revenues, offset by decreased revenues at 
the company's other properties.  Alton casino revenues decreased from $56.1 
to $46.9 million and Riverside casino revenues decreased from $64.7 to $46.4 
million due to the effects of increased competition.  Baton Rouge casino 
revenues decreased from $39.0 million to $37.9 million.

     Casino expenses increased to $120.1 million for the nine months ended 
September 30, 1997 from $89.2 million for the nine months ended September 30, 
1996 due primarily to the opening of the Lawrenceburg casino.

     FOOD AND BEVERAGE--Food, beverage and other revenues increased $5.6 
million to $25.7 million for the nine month period ended September 30, 1997, 
due to the opening of the Lawrenceburg casino and increased sales in Baton 
Rouge.  Food, beverage and other net profit improved $1.7 million to $4.2 
million for the nine months ended September 30, 1997 due primarily to the 
increased sales in Lawrenceburg.

     OTHER OPERATING EXPENSES--Other operating expenses increased $7.5 
million to $21.1 million for the nine months ended September 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 $13.3 million to $52.2 million for the nine months ended 
September 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 
$8.1 million from $17.1 million for the nine months ended September 30, 1996 
to $25.2 million for the nine months ended September 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 $7.4 million for the nine month period ended September 30, 
1996 to $.5 million for the nine month period ended September 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 $9.0 million to $30.2 
million for the nine months ended September 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 $13.6 million for the nine months 
ended September 30, 1996 to $22.9 million for the nine months ended September 
30, 1997 primarily for the reasons discussed above.  In addition, in 1996 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 

                                      50

<PAGE>

                                ARGOSY GAMING COMPANY
                  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                         CONDITION AND RESULTS OF OPERATIONS
                                     (continued)
                                           
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 nine months ended September 30, 1997.

THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE MONTHS ENDED 
SEPTEMBER 30, 1996

     CASINO--Casino revenues for the three months ended September 30, 1997 
increased to $76.8 million from $55.8 million for the three months ended 
September 30, 1996 due to the opening of the Lawrenceburg casino, which 
generated $30.4 million of casino revenues, offset by decreased revenues at 
the Company's other properties.  Alton casino revenues decreased from $18.6 
to $14.9 million and Riverside casino revenues decreased from $20.7 to $14.7 
million due to the effects of increased competition.  Baton Rouge casino 
revenues decreased from $12.0 million to $11.7 million.

     Casino expenses increased to $40.5 million for the three months ended 
September 30, 1996 from $30.0 million for the three months ended September 
30, 1996 due primarily to the opening of the Lawrenceburg casino.

     FOOD AND BEVERAGE--Food, beverage and other revenues increased $1.4 
million to $8.6 million for the three month period ended September 30, 1997, 
due to the opening of the Lawrenceburg casino and increased sales in Baton 
Rouge. Riverside revenues decreased from $2.8 million to $2.3 million while 
Alton revenues decreased from $2.2 million to $2.0 million.  Food, beverage 
and other net profit improved $.3 million to $1.2 million for the three 
months ended September 30, 1997 due primarily to the increased sales.

     OTHER OPERATING EXPENSES--Other operating expenses increased $2.5 
million to $7.4 million for the three months ended September 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 $4.5 million to $17.1 million for the three months ended 
September 30, 1997 due primarily to the opening of the Lawrenceburg casino.

     DEPRECIATION AND AMORTIZATION--Depreciation and amortization increased 
$2.8 million from $6.0 million for the three months ended September 30, 1996 
to $8.8 million for the three months ended September 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 $3.7 million for the three month period ended September 30, 
1996 to $.2 million for the three month period ended September 30, 1997.  The 
primary decrease is due to expenses related to developing the casino in 
Lawrenceburg, Indiana in 1996.

     INTEREST EXPENSE--Net interest expense decreased $.5 million to $9.8 
million for the three months ended September 30, 1997.  This decrease is 
attributable to the capitalization of interest expense related to the 
construction of the permanent casino site in Lawrenceburg, Indiana which is 
expected to open in December 1997.

     NET LOSS--Net loss increased from $7.7 million for the three months 
ended September 30, 1996 to $9.6 million for the three months ended September 
30, 1997 primarily for the reasons discussed above.  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 September 30, 1997.

                                       51

<PAGE>

                                ARGOSY GAMING COMPANY
                  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                         CONDITION AND RESULTS OF OPERATIONS
                                     (continued)
                                           
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 nine months ended September 30, 1997, the Company generated cash 
flows from operating activities of $29.6 million compared to $8.1 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 nine months ended September 30, 1997, the Company used cash flows 
for investing activities of $51.6 million versus $156.4 million for the nine 
months ended September 30, 1996.  The primary use of funds in 1997 was the 
investment in the construction of the Lawrenceburg facility.  In 1996, the 
Company placed $94.3 million in a restricted fund to be used for the 
construction of the Lawrenceburg facility and used $73.3 million for capital 
expenditures primarily at the Lawrenceburg facility.

     During the nine months ended September 30, 1997, the Company generated 
$29.1 million in cash flows from financing activities compared to generating 
$199.6 million of cash flows from financing activities for the same period in 
1996.  The primary sources of cash flows in 1997 were $36.3 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 
$19.0 million offset by the repayment of $90.0 million on its previous line 
of credit.

     As of September 30, 1997, the Company had approximately $45.4 million of 
cash, cash equivalents, and marketable securities, including approximately 
$13.0 million held at the Indiana Partnership, which can be used for general 
working capital purposes.  In addition, the Company had $26.1 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 $22.0 million in an escrow account representing unbilled 
construction costs of the permanent Lawrenceburg facility.  

                                         52

<PAGE>

                                ARGOSY GAMING COMPANY
                  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                         CONDITION AND RESULTS OF OPERATIONS
                                     (continued)
                                           
     On June 5, 1996 the Company issued $235 million of First Mortgage Notes 
which are due September 2004.  Additionally, the Company has $115 million of 
Convertible Subordinated Notes outstanding which were issued in June 1994 and 
are due June 2001.

     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.  The Company 
currently estimates that the total construction 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 September 30, 1997, approximately $192.5 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, as defined, 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.  

     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 
September 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 $13.6 million (excluding penalties) 
to fund the potential income tax liability.  

     The Company believes that cash on hand will be sufficient to find its 
current capital expenditure obligations, including the completion of the 
permanent Lawrenceburg casino development. The Company's ability to meet its 
operating and debt service requirements, however, is substantially dependent 
upon the success of the permanent Lawrenceburg casino. If the permanent 
Lawrenceburg casino fails to meet the Company's operating and cash flow 
expectations or there are any other events that negatively impact its sources 
or uses of cash, such as a delayed opening or overrun in the project costs at 
the permanent Lawrenceburg casino, a significant deterioration in the 
operating results of the Company's other properties, or an adverse IRS 
ruling, the Company may be unable to meet future debt service payments 
without obtaining additional debt or equity financing or without the 
disposition of assets. No assurance can be given that the Company would be 
able to obtain such additional financing on suitable terms or sell assets on 
favorable terms, if required. In light of the foregoing, the Company has 
retained and has been working with a financial advisory firm to consider 
various options with respect to the Company's capital structure, including 
possible debt and equity financings and asset dispositions.

                                       53
<PAGE>

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

                                      54
<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 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.  The 
ALJ Entries rejected the claims asserted in Empire's Request; granted the 
Commission's motion for partial summary judgment; and denied the discovery 
sought by Empire.  The ALJ Entries treated the motion for summary judgment 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 Empire's Request did not timely comply 
with procedural requirements.  Finally, the ALJ Entries stated Empire would 
be entitled to an evidentiary hearing only for purposes of attempting to 
establish that it should have been awarded the Lawrenceburg license, an issue 
on which Commission regulations place the burden of proof on Empire.

     Empire submitted to the Commission exceptions and objections to the ALJ 
Entries.  (The Company and the Indiana Partnership also filed exceptions to 
the ALJ Entries, to preserve for the record any subsequent hearing or 
judicial review proceeding those points on which they disagreed with the ALJ 
Entries.) At a meeting on August 19, 1997, at which counsel for Empire and 
counsel for the Company and the Indiana Partnership addressed the Commission, 
the Commission considered the ALJ Entries and the exceptions and objections 
of the parties, and entered an order adopting the ALJ Entries in their 
entirety (the "Commission Order").

                                       55

<PAGE>

     On August 25, 1997, the Commission formally notified Empire that it had 
entered the Commission Order as the "final determination of the Commission" 
on Empire's Request, and advised that any person who wished to seek judicial 
review of the Commission Order was required to file a petition for review in 
an appropriate court within thirty days of service of the notice.  The 
Commission notice also advised Empire that it could seek a hearing on the 
denial of its license application, as contemplated by the ALJ Entries.

     Empire has not filed any petition for judicial review of the Commission 
Order, and the time for filing of such a petition expired in late September 
1997.  Furthermore, in response to an order issued by the ALJ on September 3, 
1997, Empire's counsel notified the ALJ in writing on September 15, 1997, 
that it would not seek a hearing before the ALJ on the denial of its license 
application.  As a result of the foregoing, Empire's Request has now been 
finally resolved in a manner adverse to Empire and favorable to the Company 
and the Indiana Partnership, and presents no further challenge to the 
Commission's award of the Lawrenceburg license to the Indiana Partnership.

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 have re-urged the previously 
filed motion to dismiss.  Oral argument on the motion to dismiss is scheduled 
for November 13, 1997.

                                       56

<PAGE>

GAMING INDUSTRY CLASS ACTIONS

     The Company was named, along with two gaming equipment suppliers, 41 of 
the country's largest gaming operators and four gaming distributors (the 
"Gaming Industry Defendants") in three class action lawsuits which were filed 
in Las Vegas, Nevada.  The suits alleged that the Gaming Industry Defendants 
violated the Racketeer Influenced and Corrupt Organizations Act ("RICO") by 
engaging in a course of fraudulent and misleading conduct intended to induce 
people to play their gaming machines based upon a false belief concerning how 
those gaming machines actually operate, as well as the extent to which there 
is actually an opportunity to win on any given play.  The suits sought 
unspecified compensatory and punitive damages.  On January 14, 1997, the 
Court consolidated all three actions under the case name WILLIAM H. POULOS, 
ETC. VS. CEASARS WORLD, INC., ET AL.  The Gaming Industry Defendants 
currently are awaiting the Court's ruling on their numerous motions to 
challenge the sufficiency of the plaintiffs' consolidated amended complaint.  
The Company is unable to determine what effect, if any, the suit would have 
on its business or operations. 

Item 2.   CHANGES IN SECURITIES - None

Item 3.   DEFAULTS UPON SENIOR SECURITIES - None

Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - None
               
Item 5.   OTHER INFORMATION-None

Item 6.   EXHIBITS AND REPORTS ON FORM 8-K

(a)       EXHIBITS.

                  27 - Financial Data Schedule

(b)       REPORTS ON FORM 8-K 

                  1.   Report on Form 8-K dated September 18, 1997, filed with 
                       the Securities and Exchange Commission containing 
                       information announcing the scheduled inaugural cruise of 
                       the new riverboat casino in Lawrenceburg, Indiana.
               
                                         57
<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: November 13, 1997                 /s/ Dale R. Black
     ----------------------             ---------------------------------------
                                            Dale R. Black
                                            Vice President-Corporate Controller
                                            (Principal Accounting Officer)
                         

                                          58