<PAGE>

                                    UNITED STATES
                          SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C.  20549

                                      FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED: DECEMBER 31, 1997

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934    For the transition period from ______ to _____

COMMISSION FILE NUMBER: 1-9481

                             SANTA FE GAMING CORPORATION
--------------------------------------------------------------------------------
               (Exact name of registrant  as specified in its charter)

        NEVADA                                          88-0304348
--------------------------------        ----------------------------------------
(State or other jurisdiction of        (I.R.S. Employer  Identification  Number)
incorporation or organization)

                    4949 N. RANCHO DRIVE, LAS VEGAS, NEVADA  89130
--------------------------------------------------------------------------------
                 (Address of principal executive office and zip code)

                                    (702) 658-4300
               -------------------------------------------------------
                (Registrant's  telephone  number, including area code)

            -------------------------------------------------------------
                 (Former name, former address and former fiscal year,
                            if changed since last report)

     Indicate by a 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 ISSUERS INVOLVED IN BANKRUPTCY
                     PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

     Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.  YES        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.

       6,195,356                  as of       February 13, 1998
----------------------------------     -----------------------------
     Amount  Outstanding                            Date


<PAGE>

                     SANTA FE GAMING CORPORATION AND SUBSIDIARIES

                                        INDEX
<TABLE>
<CAPTION>

                                                                          PAGE
                                                                          ----
<S>                                                                       <C>
PART I.   FINANCIAL INFORMATION

     Item 1. Consolidated Condensed Financial Statements

               Balance sheets at December 31, 1997
               (unaudited) and September 30, 1997. . . . . . . . . . . . . . 2

               Statements of Operations for the three months
               ended December 31, 1997 and 1996 (unaudited). . . . . . . . . 3

               Statement of Changes in Stockholders' Equity
               for the three months ended December 31, 1997
               (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . 4

               Statements of Cash Flows for the three months
               ended December 31, 1997 and 1996 (unaudited). . . . . . . . . 5

               Notes to Consolidated Condensed Financial
               Statements (unaudited). . . . . . . . . . . . . . . . . . . . 6

               Independent Accountants'  Review Report . . . . . . . . . . .11

     Item 2. Management's Discussion and Analysis of
             Financial Condition and Results of
             Operations. . . . . . . . . . . . . . . . . . . . . . . . . . .12


PART II.    OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . .21

</TABLE>


                                       1
<PAGE>
                     SANTA FE GAMING CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                    December 31,        September 30,
             ASSETS                                                     1997                1997
---------------------------------------------------                 ------------        -------------
                                                                      (Unaudited)
<S>                                                                 <C>                 <C>
Current assets:
  Cash and short-term investments                                   $ 23,063,562         $15,146,217
  Accounts receivable, net                                               938,713             910,867
  Inventories                                                          1,410,472           1,248,199
  Prepaid expenses & other                                             3,506,933           3,546,812
  Assets held for sale                                                 1,605,000           1,605,000
                                                                    ------------        ------------

Total current assets                                                  30,524,680          22,457,095

Land held for development                                             36,589,065          36,589,065

Property and equipment, net                                          103,454,807         104,161,796

Goodwill, net                                                         44,283,271          44,641,391

Other assets                                                          11,220,641           8,446,931
                                                                    ------------        ------------

Total assets                                                        $226,072,464        $216,296,278
                                                                    ------------        ------------
                                                                    ------------        ------------
LIABILITIES and STOCKHOLDERS' EQUITY
---------------------------------------------------
Current liabilities:
  Current portion of long-term debt                                  $71,512,978          $6,644,979
  Accounts payable                                                     5,123,081           5,117,059
  Interest payable                                                     1,860,677           6,612,750
  Accrued and other liabilities                                        7,816,534           6,525,215
  Debt due upon sale of assets                                         1,559,000           1,559,000
                                                                    ------------        ------------

Total current liabilities                                             87,872,270          26,459,003

Long-term debt - less current portion                                121,811,429         168,978,838

Commitments

Stockholders' equity:
  Common stock, $.01 par value; authorized-100,000,000
    shares; issued and outstanding-6,195,356 shares                       61,954              61,954
  Preferred stock, exchangeable, redeemable 8% cumulative,
    stated at $2.14 liquidation value, authorized-10,000,000
    shares; issued and outstanding-8,856,651 shares                   20,848,557          20,469,492
  Additional paid-in capital                                          51,513,504          51,513,504
  Accumulated deficit                                                (55,947,476)        (51,098,739)
                                                                    ------------        ------------
      Total                                                           16,476,539          20,946,211

  Less treasury stock - 4,875 shares, at cost                            (87,774)            (87,774)
                                                                    ------------        ------------

Total stockholders' equity                                            16,388,765          20,858,437
                                                                    ------------        ------------

Total liabilities and stockholders' equity                          $226,072,464        $216,296,278
                                                                    ------------        ------------
                                                                    ------------        ------------

</TABLE>
See the accompanying Notes to Consolidated Condensed Financial Statements.

                                       2
<PAGE>

                   SANTA FE  GAMING CORPORATION AND SUBSIDIARIES
                  CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                    (UNAUDITED)

<TABLE>
<CAPTION>
                                                       Three Months        Three Months
                                                           Ended               Ended
                                                     December 31, 1997   December 31, 1996
                                                     -----------------   -----------------
<S>                                                  <C>                 <C>
Revenues:
  Casino                                                   $21,979,911         $19,877,173
  Hotel                                                      1,433,934           1,539,884
  Food and beverage                                          5,327,218           5,272,243
  Other revenues                                             1,868,478           1,941,283
                                                     -----------------   -----------------

Gross revenues                                              30,609,541          28,630,583

  Less casino promotional allowances                        (3,250,295)         (3,222,744)
                                                     -----------------   -----------------

Net operating revenues                                      27,359,246          25,407,839
                                                     -----------------   -----------------

Operating expenses:
  Casino                                                    10,880,832          10,630,817
  Hotel                                                        449,023             414,718
  Food and beverage                                          3,377,624           3,915,410
  Other operating expenses                                     767,182             767,825
  Selling, general & administrative                          3,043,168           2,586,103
  Corporate expenses                                           816,117             812,080
  Utilities & property expenses                              3,285,940           2,981,869
  Depreciation & amortization                                3,132,762           2,727,536
                                                     -----------------   -----------------

Total operating expenses                                    25,752,648          24,836,358
                                                     -----------------   -----------------

Operating income                                             1,606,598             571,481

Interest expense                                             6,076,270           5,645,112
                                                     -----------------   -----------------

Loss before income tax benefit                              (4,469,672)         (5,073,631)

Federal income tax benefit                                           0          (1,603,274)
                                                     -----------------   -----------------

Net loss                                                    (4,469,672)         (3,470,357)

Dividends paid or accrued on preferred shares                  379,065             379,065
                                                     -----------------   -----------------

Net loss applicable to common shares                       ($4,848,737)        ($3,849,422)
                                                     -----------------   -----------------
                                                     -----------------   -----------------

Average common shares outstanding                            6,195,356           6,195,356
                                                     -----------------   -----------------
                                                     -----------------   -----------------

Loss per common share:
  net loss                                                      ($0.72)             ($0.56)
  dividends paid or accrued on preferred shares                 ($0.06)             ($0.06)
                                                     -----------------   -----------------

Loss per common share                                           ($0.78)             ($0.62)
                                                     -----------------   -----------------
                                                     -----------------   -----------------
</TABLE>

See the accompanying Notes to Consolidated Condensed Financial Statements.

                                       3
<PAGE>

                   SANTA FE GAMING CORPORATION AND SUBSIDIARIES
              CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
                                    (UNAUDITED)

<TABLE>
<CAPTION>

                                                                Additional
                                      Common      Preferred       Paid-in      Accumulated      Treasury
                                       Stock        Stock         Capital        Deficit          Stock          Total
                                      -------    -----------    -----------   ------------     ----------    -----------
<S>                                   <C>        <C>            <C>           <C>              <C>           <C>
Balances, October 1, 1997             $61,954    $20,469,492    $51,513,504   ($51,098,739)      ($87,774)   $20,858,437

Net loss                                                                        (4,469,672)                   (4,469,672)

Preferred stock dividend accrued                     379,065                      (379,065)                            0
                                      -------    -----------    -----------   ------------     ----------    -----------

Balances, December 31, 1997           $61,954    $20,848,557    $51,513,504   ($55,947,476)      ($87,774)   $16,388,765
                                      -------    -----------    -----------   ------------     ----------    -----------
                                      -------    -----------    -----------   ------------     ----------    -----------

</TABLE>

See the accompanying Notes to Consolidated Condensed Financial Statements.

                                       4
<PAGE>

                    SANTA FE GAMING CORPORATION AND SUBSIDIARIES
                  CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                    (UNAUDITED)

<TABLE>
<CAPTION>


                                                             Three Months       Three Months
                                                                 Ended               Ended
                                                           December 31, 1997   December 31, 1996
-----------------------------------------------------      -----------------   -----------------
<S>                                                        <C>                 <C>
Cash flows from operating activities:
 Cash and short-term investments used in operations               ($930,398)          ($300,601)
   Increase in accounts receivable, net                             (27,846)           (300,491)
   Increase in accounts receivable, officer                               0             (12,648)
   Increase in inventories                                         (162,273)            (84,821)
   Decrease  in prepaid expenses & other                             39,880              94,031
   Increase in deferred income taxes                                      0          (1,603,274)
   Increase in other assets                                      (3,376,380)         (1,225,970)
   Increase (decrease) in accounts payable                          371,040            (846,927)
   Decrease in interest payable                                  (4,752,073)         (5,037,292)
   Increase in accrued and other liabilities                      1,411,637           3,578,512
                                                           ----------------    ----------------

Net cash used in operating activities                            (7,426,413)         (5,739,481)
                                                           ----------------    ----------------

Cash flows from investing activities:
   Capital expenditures                                          (1,428,031)           (236,576)
                                                           ----------------    ----------------

Net cash used in investing activities                            (1,428,031)           (236,576)
                                                           ----------------    ----------------

Cash flows from financing activities:
   Cash proceeds of long-term debt                               57,500,000           1,559,000
   Cash paid on long-term debt                                  (40,728,211)         (1,211,094)
                                                           ----------------    ----------------

Net cash provided by financing activities                        16,771,789             347,906
                                                           ----------------    ----------------

Increase (decrease) in cash and short-term investments            7,917,345          (5,628,151)

Cash and short-term investments,
 beginning of period                                             15,146,217          17,497,824
                                                           ----------------    ----------------

Cash and short-term investments,
 end of period                                                  $23,063,562         $11,869,673
                                                           ----------------    ----------------
                                                           ----------------    ----------------


</TABLE>

See the accompanying Notes to Consolidated Condensed Financial Statements.

                                       5
<PAGE>

                     SANTA FE GAMING CORPORATION AND SUBSIDIARIES

                 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                     (unaudited)


NOTE 1 - BASIS OF PRESENTATION AND GENERAL INFORMATION

Santa Fe Gaming Corporation, formerly known as Sahara Gaming Corporation, (the
"Company" or "Santa Fe Gaming"), a publicly traded Nevada corporation, is the
successor corporation of two affiliates, Sahara Resorts and Sahara Casino
Partners, L.P., which combined in a business combination in September, 1993.
The Company's primary business operations are conducted through two wholly owned
subsidiary corporations, Santa Fe Hotel Inc. ("SFHI") and Pioneer Hotel Inc.
("PHI") (the "Operating Companies").  SFHI owns and operates the Santa Fe Hotel
and Casino (the "Santa Fe"), located in Las Vegas, Nevada, and PHI owns and
operates the Pioneer Hotel & Gambling Hall (the  "Pioneer") in Laughlin, Nevada.
The Company owns real estate adjacent to the Santa Fe, and through an indirect
wholly-owned subsidiary of the Company, Sahara Las Vegas Corp. ("SLVC"), on Las
Vegas Boulevard South and in Henderson, Nevada, for possible development
opportunities.

These consolidated condensed financial statements should be read in conjunction
with the consolidated financial statements and notes thereto included in the
Company's Annual Report to stockholders for the year ended September 30, 1997.
The results of operations for the three month period ended  December 31, 1997
are not necessarily indicative of the results to be expected for the entire
year.

In the opinion of the Company, the accompanying unaudited consolidated condensed
financial statements contain all adjustments (consisting of only normal
accruals) necessary to present fairly the financial position of the Company at
December 31, 1997, the results of its operations for the three month periods
ended December 31, 1997 and 1996, the changes in stockholders' equity for the
three month period ended December 31, 1997, and cash flows for the three month
periods ended December 31, 1997 and 1996.

Certain reclassifications have been made in the 1996 consolidated financial
statements in order to conform to the presentation used in 1997.

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Significant estimates used by the Company include estimated useful lives for
depreciable and amortizable assets, certain other estimated liabilities and
valuation reserves, and estimated cash flows in assessing the recoverability of
long-lived assets.  Actual results may differ from estimates.

                                       6
<PAGE>

Recently Adopted Accounting Standard

During the quarter ended December 31, 1997, the Company adopted Statement of 
Financial Accounting Standards ("SFAS") No. 128 "Earnings per Share."   SFAS 
No. 128 requires the presentation of basic net income (loss) per share and 
diluted net income (loss) per share.  Basic per share amounts are computed by 
dividing net income (loss) by average shares outstanding during the period.  
Diluted per share amounts are computed by dividing net income (loss) by 
average shares outstanding plus the dilutive effect of common share 
equivalents.  Since the Company incurred a net loss during the three-month 
period ended December 31, 1997 and 1996, both basic and diluted per share 
calculations are based upon average shares outstanding of 6,195,356 during 
this period.  The effect of options outstanding to purchase common shares was 
not included in diluted calculations during the quarter ended December 31, 
1996.  Diluted net income per share during the first quarter ended December 
31, 1997 is determined considering the dilutive effect of outstanding stock 
options.  The effect of options outstanding to purchase common shares was not 
included in diluted calculations during the quarter ended December 31, 1997 
since the exercise price of such options was greater than the average price 
of the Company's common shares.

NOTE 2 - CASH AND SHORT-TERM INVESTMENTS

At December 31, 1997, approximately $6.7 million of the Company's consolidated
cash and short term investments was held by SFHI and was subject to certain
restrictions and limitations on its use, including restrictions on its
availability for distribution to the Company, by the terms of an indenture
pursuant to which $115 million principal amount of 11% First Mortgage Notes due
2000 ("11% Notes") of SFHI was issued.  As of December 31, 1997, SFHI did not
meet the conditions precedent to making a distribution to the Company.

At December 31, 1997, approximately $12.7 million of the Company's consolidated
cash and short-term investments was held by PHI and was subject to certain
restrictions, including restrictions on its availability for distribution to the
Company, by the terms of an indenture pursuant to which the 13 1/2% First 
Mortgage Notes due 1998 ("13 1/2% Notes") of Pioneer Finance Corp. were 
issued.  As of December 31, 1997, PHI did not meet the conditions precedent 
to making a distribution to the Company.

At December 31, 1997, approximately $2.1 million of the Company's consolidated
cash and short-term investments was held by SLVC and was subject to certain
restrictions and limitations on its use by the terms of $57.5 million principal
amount of notes due 1999 ("SLVC Notes") of SLVC was issued.

NOTE 3 - ASSETS HELD FOR SALE

In November 1997, the Company entered into an agreement to sell the 22 acre
parcel of land next to the Santa Fe for approximately $3.6 million.  The
agreement is subject to certain contingencies and will terminate if closing does
not occur before May 15, 1998.  At

                                       7
<PAGE>

closing, the buyer may elect to pay half the purchase price in cash,
approximately $1.8 million, and execute a promissory note in favor of the
Company for the balance.  The promissory note will bear interest a the prime
rate and mature on May 15, 1998.  The promissory note may be extended for six
months at an interest rate of four percent above the prime rate and the payment
of 10% of the principal balance.

NOTE 4 - CURRENT PORTION OF LONG-TERM DEBT

As of December 31, 1997, the Company's current liabilities exceeded current 
assets by $57.3 million.  The Company has approximately $71.5 million in 
current maturities of long-term debt due to third parties during the 
twelve-month period ending December 31, 1998, comprised primarily of $5.5 
million principal amount of 10 1/4% Subordinated Debentures due June 1998 
(the "10 1/4% Debentures"), $60.0 million of principal amount of 13 1/2% 
Notes due December 1998 issued by Pioneer Finance Corporation and guaranteed 
by the Company (the "13 1/2%  Notes"), a $4.8 million balloon payment due on 
the note payable by the Company to Sierra Construction Corp. ("Sierra 
Construction") due December 1998 and principal amortization payments under 
other notes payable and capital leases.  The scheduled maturities applicable 
to third party debt under other notes payable and capital leases at SFHI and 
PHI during the twelve month period ending December 31, 1998 are $800,000 and 
$100,000, respectively.

Although management has in the past and is currently exploring refinancing or 
debt modification alternatives, as well as possible dispositions or financing 
of certain assets, in order to satisfy the current maturities of long-term 
debt obligations as they become due in the twelve month period ending 
December 31, 1998, no assurance can be given that the Company will be able to 
refinance or modify some or all of its indebtedness or dispose of, or obtain 
financing with respect to any assets. The Company has no arrangements for any 
such refinancings, modifications, disposition or other financings. Any such 
refinancing or modification would be subject to the Company's future 
operations and the prevailing market conditions at the time of such proposed 
transaction and may require the approval of the Nevada Gaming Authorities for 
such refinancings or asset sales.  If the Company is ultimately unable to 
refinance or modify any such debt prior to maturity, and/or obtain sufficient 
proceeds from asset dispositions or financings to repay such debt, and if the 
holders of the various debt instruments were to demand payment upon the 
maturity dates, events of default would occur which would lead to 
cross-defaults in other material agreements of the Company including, without 
limitation, agreements relating to substantially all of the outstanding 
long-term debt of the Company and its subsidiaries.

NOTE 5 - LONG-TERM DEBT

In November 1997, the Company entered into an amended and restated agreement of
the SLVC Notes pursuant to which the principal amount of notes was increased
from $35 million to $57.5 million.  SLVC issued two tranches of promissory
notes, $37 million principal amount with an interest rate of 9.75% and $20.5
million with an interest rate of 13.25%.  Certain other provisions of the loan
agreement were amended, including the elimination of any sinking fund principal
payments prior to maturity in December 1999.  The additional proceeds were used
by SLVC primarily to acquire the 39 acre parcel of land in

                                       8
<PAGE>

Henderson, Nevada from its affiliate Santa Fe Valley, Inc. ("SFVI") for cash
consideration of $20 million.  SFVI used approximately $5 million to repay the
12 1/4% Notes and paid a dividend of $5 million to PHI.  The balance of the
proceeds of approximately $10 million was retained by SFVI.

NOTE 6 - LEASES

In November 1997, SFHI amended the terms of operating leases for gaming and 
other equipment to extend the term of the leases from up to 36 months to 48 
months, to defer payment on the leases until August 1998, to increase lease 
payments from August 1998 to the termination of the leases to $253,000 per 
month and to replace older gaming equipment with new equipment.  In January 
1998, the Company entered into operating leases for an additional 200 slot 
and video poker machines with terms for 36 months.  Lease payments in the 
aggregate, commencing in August 1998, will be approximately $300,000 per 
month.

In December 1997, PHI purchased gaming equipment subject to operating leases 
for approximately $1.1 million.  Monthly lease payments for gaming equipment 
will decrease by $44,000 as a result.

NOTE 7 - SUPPLEMENTAL INFORMATION

Supplemental statement of cash flows information for the three month periods
ended December 31, 1997 and 1996 is presented below:

<TABLE>
<CAPTION>

                                                  (dollars in thousands)
                                                    1997          1996
                                                   -------       -------
<S>                                                <C>           <C>
  Cash paid during the period  for interest,
  net of amount capitalized of $108,337 and
  $-0- for 1997 and 1996, respectively             $10,287       $10,358
                                                   -------       -------
                                                   -------       -------

</TABLE>

                                       9
<PAGE>

8. SUPPLEMENTAL STATEMENT OF  SUBSIDIARY INFORMATION -
    FOR THE THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996

     THE COMPANY'S PRIMARY OPERATIONS ARE IN THE HOTEL/CASINO INDUSTRY AND IN
FISCAL YEARS 1997 AND 1996 WERE CONDUCTED THROUGH PHI AND SFHI. OTHER BELOW
INCLUDES FINANCIAL INFORMATION FOR THE COMPANY'S OTHER OPERATIONS BEFORE
ELIMINATING ENTRIES.  IDENTIFIABLE ASSETS LISTED BELOW EXCLUDES BALANCES DUE
BETWEEN AFFILIATES.  IN ADDITION  TO THE FINANCIAL INFORMATION FOR THE THREE
MONTHS ENDED DECEMBER 31, 1997 AND 1996, AS SET FORTH IN THE TABLE BELOW, SEE
NOTES 2 AND 4 FOR ADDITIONAL DISCUSSION OF SUBSIDIARY OPERATIONS.

<TABLE>
<CAPTION>

(dollars in thousands)                   YEAR        PHI          SFHI        OTHER     ELIMINATIONS    TOTAL
---------------------                    ----     --------      -------      -------    ------------  --------
<S>                                      <C>       <C>          <C>            <C>      <C>           <C>
  OPERATING REVENUES                     1997     $  9,910      $17,143      $   457           $(151) $ 27,359
                                                  --------      -------      -------    ------------  --------
                                                  --------      -------      -------    ------------  --------
                                         1996     $  9,929      $15,197      $   669           $(387) $ 25,408
                                                  --------      -------      -------    ------------  --------
                                                  --------      -------      -------    ------------  --------

  OPERATING INCOME (LOSS)                1997     $   (320)     $ 2,711      $  (684)          $(100) $  1,607
                                                  --------      -------      -------    ------------  --------
                                                  --------      -------      -------    ------------  --------
                                         1996     $   (250)     $   759      $   212           $(150) $    571
                                                  --------      -------      -------    ------------  --------
                                                  --------      -------      -------    ------------  --------
  INTEREST EXPENSE                       1997     $  2,045      $ 3,336      $   795           $(100) $  6,076
                                                  --------      -------      -------    ------------  --------
                                                  --------      -------      -------    ------------  --------
                                         1996     $  1,974      $ 3,235      $   586           $(150) $  5,645
                                                  --------      -------      -------    ------------  --------
                                                  --------      -------      -------    ------------  --------
  DEPRECIATION AND AMORTIZATION          1997     $  1,433      $ 1,443      $   257                  $  3,133
                                                  --------      -------      -------    ------------  --------
                                                  --------      -------      -------    ------------  --------
                                         1996     $  1,400      $ 1,288      $    40                  $  2,728
                                                  --------      -------      -------    ------------  --------
                                                  --------      -------      -------    ------------  --------
  RENTS                                  1997     $    307      $   604                               $    911
                                                  --------      -------      -------    ------------  --------
                                                  --------      -------      -------    ------------  --------
                                         1996     $    278      $   617                               $    895
                                                  --------      -------      -------    ------------  --------
                                                  --------      -------      -------    ------------  --------
  CAPITAL EXPENDITURES                   1997      $ 1,278         $290          $17                  $  1,585
                                                  --------      -------      -------    ------------  --------
                                                  --------      -------      -------    ------------  --------
                                         1996      $   233         $160         $126                  $    519
                                                  --------      -------      -------    ------------  --------
                                                  --------      -------      -------    ------------  --------
  IDENTIFIABLE ASSETS                    1997      $97,525      $74,522      $55,270         ($1,245) $226,072
                                                  --------      -------      -------    ------------  --------
                                                  --------      -------      -------    ------------  --------
                                         1996     $112,574      $78,551      $32,349         ($1,245) $222,229
                                                  --------      -------      -------    ------------  --------
                                                  --------      -------      -------    ------------  --------
</TABLE>

                                       10
<PAGE>

INDEPENDENT ACCOUNTANTS' REVIEW REPORT

Santa Fe Gaming Corporation:

We have reviewed the accompanying consolidated condensed balance sheet of Santa
Fe Gaming Corporation and subsidiaries (the "Company") as of December 31, 
1997, the related consolidated condensed statements of operations and of cash 
flows for the three-month periods ended December 31, 1997 and 1996, and of 
stockholders' equity for the three-month period ended December 31, 1997 in 
accordance with Statements on Standards for Accounting and Review Services 
issued by the American Institute of Certified Public Accountants.  All 
information included in these financial statements is the representation of 
the Company's management.

A review of interim financial information consists principally of inquiries of
Company personnel and analytical procedures applied to financial data.  It is
substantially less in scope than an audit in accordance with generally accepted
auditing standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole.  Accordingly, we do not
express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to such consolidated condensed financial statements in order for them to
be in conformity with generally accepted accounting principles.

We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Santa Fe Gaming Corporation and
subsidiaries as of September 30, 1997, and the related consolidated statements
of operations, stockholders' equity and cash flows for the year then ended (not
presented herein); and in our report dated December 8, 1997 we expressed an
unqualified opinion on those consolidated financial statements.  In our opinion,
the information set forth in the accompanying consolidated condensed balance
sheet as of September 30, 1997 is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.

As discussed in Note 4 to the consolidated condensed financial statements, as 
of December 31, 1997 the Company's current liabilities exceeded current 
assets by $57.3 million, which is due to $71.5 million in current maturities 
of long term debt due to third parties during the twelve-months ended 
December 31, 1998. Management of the Company is exploring alternatives to 
address the $71.5 million current maturities of long term debt, which 
consists primarily of the Pioneer Hotel, Inc. 13 1/2% Notes of $60 million, 
including, but not limited to, disposition of asset, modifications to 
existing lease agreements, a possible reduction of indebtedness or 
refinancing of modification of the 13 1/2% Notes. If the Company is 
ultimately unable to refinance or modify any such debt prior to maturity, 
and/or obtain sufficient proceeds from asset dispositions or financings to 
repay such debt, and if the holders of the various debt instruments were to 
demand payment upon the maturity dates, events of default would occur which 
would lead to cross-defaults in other material agreements of the Company 
including, without limitation, agreements relating to substantially all of 
the outstanding long-term debt of the Company and its subsidiaries. Although 
management has in the past and is currently exploring refinancing 
alternatives, as well as possible dispositions or financing of certain 
assets, in order to satisfy long-term debt obligations as they become due, no 
assurance can be given that the Company will be able to refinance or modify 
some or all of its indebtedness or dispose of, or obtain financing with 
respect to any assets.


DELOITTE & TOUCHE LLP


Las Vegas, Nevada
February 13, 1998

                                       11
<PAGE>

                             SANTA FE GAMING CORPORATION

                       MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                    FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS - THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996

CONSOLIDATED

Consolidated revenues for the three month period ended December 31, 1997 were
$27.4 million, a $2.0 million, or 7.7%, increase from $25.4 million for the same
period in 1996.   Revenues increased by $1.9 million at  the Santa Fe Hotel and
Casino (the "Santa Fe") and were unchanged at the Pioneer Hotel and Gambling
Hall (the "Pioneer").

Consolidated operating income for the three month period ended December 31, 1997
was $1.6 million, a $1.0 million, or 181.1%, increase from $600,000 for the same
period in  1996.  Operating income increased by $1.9 million at the Santa Fe and
decreased by $100,000 at the Pioneer.

Consolidated interest expense for the three month period ended December 31, 1997
was $6.1 million, a $500,000 increase compared to $5.6 million for the same
period in 1996.  Interest expense increased by $100,000 at the Santa Fe in the
1997 period due to increased indebtedness outstanding under a $5.0 million 
revolving note issued to the Company in December 1996. Interest expense of 
Sahara Las Vegas Corp. ("SLVC") increased by $300,000 in the 1997 period due 
to the issuance of $37.5 million principal amount of additional notes in 
November 1997.

Consolidated net loss before income taxes for the three month period ended
December 31, 1997 was $4.5 million, a $600,000 decrease compared to net loss of
$5.1 million in the same period in the prior year.  Net loss before income taxes
decreased by  $1.8 million at the Santa Fe and increased by $100,000 at the
Pioneer.

Santa Fe Gaming Corporation ("the Company") did not record an income tax 
benefit in the current quarter due to the uncertainty of the Company's 
ability to recognize a benefit of the net operating loss. Consolidated net 
loss, applicable to common shares was $4.8 million compared to $3.8 million 
in the prior year period.

SANTA FE

Revenues at the Santa Fe increased 12.8%, or $1.9 million, in the three months
ended December 31, 1997 to $17.1 million as compared to $15.2 million in the
same period in the prior year.  Casino revenues increased 17.7%, or $2.0
million, to $13.4 million from $11.4 million when compared to the same three
month period of 1996.


                                       12
<PAGE>

Operating expenses were unchanged.  Casino expenses increased by 4.0%, or 
$200,000, primarily due to increased payroll expenses.  Selling, general and 
administrative  expenses increased by 6.0%, or $100,000 and depreciation and 
amortization expense increased 12.0%, or $200,000.  Such increases were 
offset by cost control related decreases of 18.7% or $500,000 in food and 
beverage expenses.  Operating income for the period increased $1.9 million, 
or 257.0%, to $2.7 million in 1997 from $800,000 in 1996.

Santa Fe Hotel, Inc. ("SFHI") is negotiating with the Teamsters, Operating
Engineers, Culinary and Bartenders Unions ("Unions") with respect to collective
bargaining agreements covering certain employees at the Santa Fe.  If 
negotiations result in agreements between SFHI and the Unions, operating 
expenses are expected to increase.  In the event negotiations fail to result 
in agreements,  the Unions may call a strike, which would result in operating 
revenues being adversely affected.  In either event, there would be a 
material adverse effect on the results of operations and financial condition 
of Santa Fe and the Company.

PIONEER

Revenues at the Pioneer were unchanged at $9.9 million in the December 1997
quarter compared to the prior year.  Casino revenues were $8.6 million in 1997,
representing an increase of 1.0%, or $100,000, compared to $8.5 million in the
1996 period.  This was offset by a decrease in room revenue of $100,000.

Operating expenses increased $100,000, or .5%, to $10.2 million in the quarter
ended December 31, 1997, primarily due to slight increases in utilities and
property expenses and depreciation and amortization expenses.   Accordingly,
operating income decreased by 28.3%, or $100,000, to a loss of $300,000 in the
fiscal 1998 quarter from a loss of $200,000 in 1996.

LIQUIDITY AND CAPITAL RESOURCES; TRENDS AND FACTORS RELEVANT TO FUTURE
OPERATIONS

As of December 31, 1997, the Company held cash and short-term investments of
$23.1 million compared to $15.1 million at September 30, 1997.  The Company's
cash used for operations was $7.4 million for the three months ended December
31, 1997 as compared to $5.7 million for  the prior year's quarter.  Cash used
for investing activities was $1.4 million and $200,000, during the three month
periods ended December 1997 and 1996, respectively.  This is principally due to
the acquisition of gaming equipment at the Pioneer in the current period.   Cash
provided from financing activities was $16.8 million in the three month period
compared to $300,000 during the same period in 1996.  The increase results 
from the issuance of $22.5 million of additional SLVC Notes in November 1997, 
with net proceeds to SLVC of approximately $20 million.

The Company's earnings before interest, taxes, depreciation, amortization and
rents ("EBITDAR") were $5.7 million and $4.2 million for the three months ended
December 31,


                                       13
<PAGE>

1997 and 1996, respectively.  EBITDAR for the 1997 three month period represents
 .81 times rent and interest expense, compared to .64 times rent and interest
expense  in the prior year three month period.  The Company had approximately 
$900,000 in rent expenses in each of the three month periods ended December 
31, 1997 and 1996.  EBITDAR should not be construed as a substitute for 
operating income or a better indicator of liquidity than cash flow from 
operating activities, which are determined in accordance with GAAP, it is 
included herein to provide additional information with respect to the ability 
of the Company to meet its future debt service, capital expenditure and 
working capital requirements.  Although EBITDAR is not necessarily a measure 
of the Company's ability to fund its cash needs, management believes that 
certain investors find EBITDAR to be a useful tool for measuring the ability 
of the Company to service its debt.

DEBT OBLIGATIONS  - The Company has approximately $71.5 million in current
maturities of long term debt due to third parties during the twelve-month period
ending December 31, 1998, comprised primarily of a $5.5 million principal amount
of 10 1/4% Subordinated Debenture due June 1998 (the "10 1/4% Debentures"), 
$60.0 million of principal amount of 13 1/2% Notes due December 1998 issued 
by Pioneer Finance Corporation and guaranteed by the Company (the "13 1/2%  
Notes"), a $4.8 million balloon payment due on the note payable by the 
Company to Sierra Construction Corp. ("Sierra Construction") due December 
1998 and principal amortization payments under other notes payable and 
capital leases.  The scheduled maturities applicable to third party debt 
under other notes payable and capital leases at SFHI and PHI during the 
twelve month period ending December 31, 1998 are $800,000 and $100,000, 
respectively.

Although management has in the past and is currently exploring refinancing or 
debt modifications alternatives, as well as possible dispositions or 
financing  of certain assets, in order to satisfy the current maturities of 
long-term debt obligations as they become due in the twelve month period 
ending December 31, 1998, no assurance can be given that the Company will be 
able to refinance or modify some or all of its indebtedness or dispose of, or 
obtain financing with respect to any assets.  The Company has no arrangements 
for any such refinancings, disposition or other financings.  Any such 
refinancing or modification would be


                                       14
<PAGE>

subject to the Company's future operations and the prevailing market conditions
at the time of such proposed transaction and may require the approval of the
Nevada Gaming Authorities for such refinancings or asset sales.  If the 
Company is ultimately unable to refinance or modify any such debt prior to 
maturity, and/or obtain sufficient proceeds from asset dispositions or 
financings to repay such debt, and if the holders of the various debt 
instruments were to demand payment upon the maturity dates, events of default 
would occur which would lead to cross-defaults in other material agreements 
of the Company including, without limitation, agreements relating to 
substantially all of the outstanding long-term debt of the Company and its 
subsidiaries.

The Company had $121.8 million in long-term debt, net of current maturities 
and debt discount, as of December 31, 1997.  Of such amounts, approximately 
$57.5 million and $66.3 million mature in December 1999 and December 2000, 
respectively, comprised primarily of $57.5 million of SLVC  Notes due 
December 1999 (the "SLVC Notes"), issued by SLVC and guaranteed by the 
Company and $66 million of 11% Notes due December 2000 (the "11% Notes") 
issued by SFHI and guaranteed by the Company.

Debt agreements restrict the distribution of cash from certain of the 
Company's subsidiaries to the Company.  Cash flow from SFHI and Pioneer 
Hotel, Inc. ("PHI") and SLVC, is not currently, and is not expected in the 
foreseeable future to be, available for distribution to the Company.  In 
addition, debt agreements limit additional indebtedness of such subsidiaries. 
Therefore, the Company and its subsidiaries other than SLVC, PHI and SFHI, 
(collectively "Corporate") must rely on existing cash and available 
resources, including the 22 acre parcel of real property subject to a sales 
agreement, or, cause subsidiaries to dispose of or refinance assets, to 
provide liquidity to fund Corporate cash requirements including obligations 
that may arise as a result of the Company's guarantee of subsidiary debt.  
See more detailed discussion of Liquidity for SLVC, PHI, SFHI and Corporate, 
below.

LIQUIDITY - CORPORATE - Approximately $4.8 million of the Company's current
assets at December 31, 1997, including approximately $1.5 million of cash and
short-term investments, was held by Corporate.

In November 1997, Corporate entered into an agreement to sell the 22 acre 
parcel of real property located adjacent to the Santa Fe.  The sale is 
subject to several contingencies, and will terminate if such contingencies 
are not satisfied by May 15, 1998.  If the sale is completed, the Company 
will receive consideration of approximately $3.6 million, comprised of $1.8 
million in cash and a promissory note in the amount of $1.8 million, of which 
approximately $1.6 million would be required to retire debt against the 
property.

In December 1997, Corporate and SFHI amended the terms of a $5 million note  due
from  SFHI to extend the maturity date until May 31, 1998.  In addition, a $5
million revolving note facility due from SFHI was also modified to extend the
maturity date until May 31, 1998.

Corporate consists primarily of non-operating entities which do not generate
cash flow from operations.  Corporate cash resources include interest income on,
and approximately $10 million principal amount outstanding under two notes 
from SFHI which mature in May 1998.  Corporate's principal uses of cash are 
for debt service, administrative and professional expenses of the parent 
company, and costs associated with the evaluation and development of proposed 
projects.  Corporate debt service includes payment obligations on $5.5 
million principal amount of the 10 1/4% Debentures, a $5.2 million note 
payable to Sierra Construction and a $1.6 million loan on a 22 acre parcel of 
land due December 1999.  See "Debt Obligations" above.

Additional potential uses of cash by Corporate include the payment of a
guaranteed tenant loan if the Company terminates the lease to which the parcel
on Las Vegas Boulevard


                                       15
<PAGE>

South is subject (which loan had an outstanding balance of $5.2 million as of
December 31, 1997) and the payment of $750,000 to the recreational vehicle park
operator to which the Company transferred its rights and obligations relating to
Camperland recreational vehicle group contracts if the operator chooses to
relocate the Camperland membership to a mutually acceptable new location.

Prior to fiscal 1997, the Company satisfied the semi-annual dividend payments on
its preferred stock through the issuance of paid in kind dividends.  Commencing
in fiscal 1997, dividends paid on the preferred stock, to the extent declared,
are required to be  paid in cash.  In addition, the Company has the right to 
redeem the preferred stock for its liquidation preference or from and after 
September 30, 1998 to exchange in whole or in part the preferred stock at its 
liquidation preference for junior subordinated notes.  The Company is a party 
to financing arrangements that restrict the Company's ability to exchange the 
preferred stock to subordinated notes commencing in September 1998 and to 
declare and pay dividends or make distributions with respect to the Company's 
capital stock, which currently prohibit the payment of cash dividends on the 
preferred stock or the redemption of the preferred stock.  In the event not 
declared, dividends accrue on the preferred stock.  The Company accrued the 
semi-annual preferred stock dividends due in March and September 1997.  To 
the extent the Company accrues four consecutive semi-annual preferred stock 
dividends, the preferred stockholders will have the right to appoint two 
members to the Board of Directors at the next annual meeting of shareholders.  
In March 1999, the dividend rate will increase to 11.0% from 8.0% and will 
increase by 50 basis points each semi-annual period thereafter, up to a maximum 
of 16%.

Management believes that Corporate has sufficient working capital and available
resources to meet its operating and debt service requirements through the 
twelve month period ending December 31, 1998, including the maturity of $5.5 
million principal amount of 10 1/4% Debentures in June 1998 and the $4.8 
million note due Sierra Construction in December 1998.   Available resources 
includes proceeds that may be available from the sale of real property and  
repayment of up to approximately $10 million principal amount due to the 
Company  from SFHI discussed above, or from the sale of the notes due from 
SFHI to third parties.  No assurance can be given that the Company would have 
available resources to satisfy the outstanding indebtedness.  Management is 
also exploring other alternatives to satisfy the outstanding indebtedness.

The Company has guaranteed the debt of its subsidiaries PHI, SLVC and SFHI, 
including $60 million principal amount of 13 1/2 Notes due December 1998. 
Furthermore, in the event that cash at SLVC, SFHI or PHI is insufficient to 
meet liquidity requirements, Corporate may make contributions or, to the 
extent permitted by financing arrangements, loans to either SLVC, SFHI or PHI 
to prevent an event of default under debt instruments to which SLVC, SFHI or 
PHI is a party and which loans have been guaranteed by Corporate.  In order 
to generate the necessary liquidity the Company may cause its subsidiaries to 
dispose of or refinance certain assets to generate sufficient liquidity to 
meet the cash requirements.  No assurance can be given that Corporate would 
have available resources to make such contributions of loans.  See Liquidity - 
SFHI, Liquidity - PHI and Liquidity - SLVC.

LIQUIDITY - SFHI - At December 31, 1997, approximately  $9.5 million of the
Company's current assets, including approximately $6.7 million of cash and short
term investments, was held by SFHI.

Results from operations at the Santa Fe for the three months ended December 31,
1997 generated EBITDAR of $5.0 million, approximately 1.27 times rent and
interest expense, compared to $2.9 million of EBITDAR in 1996, or approximately
 .75 times rent and interest expense.  The Santa Fe had approximately $600,000 
in rent expense in the fiscal 1998 and 1997 period.  Management believes that 
Santa Fe's EBITDAR in prior periods was adversely impacted


                                       16
<PAGE>

as a result of increased competition in its market area and restricted access to
the property due to road construction that was ongoing from April 1996 
through February 1998.

SFHI's principal uses of cash from operations are for operating lease payments,
interest payments on indebtedness and capital expenditures to maintain the
facility.  Effective November 1997, SFHI amended and restated most of its
operating lease agreements for gaming equipment to extend the term from 36
months to 48 months and defer payments until August 1998, at which time the 
monthly lease payments in the aggregate will be approximately $300,000.  
Capital expenditures to maintain the facility in fiscal 1998 are expected to 
be approximately the same that was expended in fiscal 1997.

Management believes that, based on operations for the three month period 
ended December 31, 1997, SFHI will have sufficient cash resources to meet its 
operating expense requirements through the twelve month period ending 
December 31, 1998, although no assurance can be given to that effect.  
Results for the 1998 first quarter  improved compared to the same quarter in 
the prior year. However, results for the 1998 first quarter are not 
necessarily indicative of results for the entire fiscal year.  Management 
believes SFHI will be able to refinance the two notes due in May 1998 or 
obtain an extension from the Company, with respect to some or all of the $10 
million principal amount.  SFHI is exploring alternatives to improve 
liquidity, including, but not limited to, further operating lease 
modifications and possible refinancings or modification of the 11% Notes.  
The Company has no arrangements for any such refinancings, dispositions or 
other financings.  To the extent that SFHI is unable to generate sufficient 
cash to meet its debt service requirements, Corporate may, to the extent of 
available funds, make capital contributions or make advances to SFHI.  No 
assurance can be given that Corporate would have available resources to make 
contributions or advances.  See "Liquidity-Corporate".

LIQUIDITY - PHI - At December 31, 1997, approximately $14.1 million of the
Company's current assets, including approximately $12.7 million of cash and
short term investments, was held by PHI including $9.5 million of the cash 
and short-term investments held by a subsidiary.

Results from operations at the Pioneer for the three months ended December 31,
1997, generated EBITDAR of  $1.7 million, approximately .71 times rent and
interest expense,  compared to $1.6 million of EBITDAR in 1996, or approximately
 .73 times rent and interest expense.  The Pioneer reported approximately 
$300,000 in rent expense in the fiscal 1998 and 1997 period.  Rent in future 
periods will be reduced by approximately $130,000 per quarter compared to the 
current quarter ended December 31, 1997 due to the purchase of gaming 
equipment previously

                                       17
<PAGE>

under lease in December 1997.   Results for the first quarter are not
necessarily indicative of the results to be expected in the future.

PHI's principal uses of cash are for lease payments, interest payments on
indebtedness and capital expenditures to maintain the facility.  Capital
expenditures to maintain the facility in fiscal 1998 are expected to be
approximately the same that was expended in fiscal 1997.  However, PHI is
expected to incur approximately $1.5 million to purchase gaming equipment in the
1998 period of which $1.1 million was incurred as of December 31, 1997.

Management believes that, based on operations for the three month period ended
December 31, 1997,  PHI  will have sufficient cash and available resources to
meet its operating requirements  through the twelve months ending December 31,
1998, although no assurance can be given to that effect.  Results for the 
1998 first quarter were flat compared to the same quarter in the prior year.  
However, results for the 1998 first quarter are not necessarily indicative of 
the results for the entire year.  Approximately $10.0 million of cash is held 
by a subsidiary and could be available to satisfy in part the obligations 
under the 13 1/2% Notes.  The 13 1/2% Notes mature in December 1998.  PHI is 
exploring alternatives to improve liquidity and to address the maturity of 
the 13 1/2% Notes, including, but not limited to, modifications to existing 
lease agreements, a possible reduction of indebtedness or refinancing or 
modification of the 13 1/2% Notes.  The Company has no arrangements for any 
such refinancings, dispositions or other financings. No assurance can be 
given that the Company would have available resources to do so.  No assurance 
can be given that PHI can pay the outstanding principal amount of 13 1/2% 
Notes at maturity.

LIQUIDITY - SLVC - At December 31, 1997, approximately $2.1 million of the
Company's  cash and short-term investments was held by SLVC.

SLVC owns a 27 acre parcel of real estate on Las Vegas Boulevard South which is
subject to a lease with a water theme park operator.  SLVC generates minimal
cash from the lease agreement after payment of property costs.  SLVC receives
interest income on $33.1 million principal amount of 11% Notes which are held as
collateral for the SLVC Notes.  SLVC's principal uses of cash on hand, cash
generated under the lease agreement, and interest income on the 11% Notes is to
satisfy principal and interest obligations on the SLVC Notes.

Additional potential uses of cash by SLVC include the redemption of $7.0 million
principal amount of SLVC Notes or, alternatively, the redemption of $7.0 
million principal amount of 11% Notes, in the event cash flow, before a 
maximum $2.4 million in lease obligations at the Santa Fe, is less than $13.5 
million for any four quarter period.

SLVC holds a 39 acre parcel of real property in Henderson, Nevada and is 
evaluating the development of a casino entertainment complex on the site.  
The Company has completed preliminary engineering and architectural drawings. 
 Any future development costs will be the responsibility of Corporate and any 
future development is subject to, among other things, the Company's ability 
to obtain necessary financing.  No assurance can be given that the Company 
will obtain development financing or develop successfully the Henderson 
property.

                                       18
<PAGE>

Management believes that SLVC has available resources, consisting primarily of
restricted working capital and interest income on the 11% Notes held as
collateral, to meet operating and debt service requirements through the twelve
months ending December 31, 1998, although no assurance can be given to that
effect.

RELATED PARTIES  From 1991 through 1993 LICO, a company wholly-owned by Mr.
Lowden, Chairman of the Board, Chief Executive Officer and 53% stockholder of
the Company, borrowed an aggregate of $476,000 from a subsidiary of the Company,
pursuant to an unsecured demand loan which bears interest at 2% over the prime
rate.  The outstanding balance of the loan including accrued interest was
$700,000 as of December 31, 1997.  In January 1998, the Company offset amounts
due Mr. Lowden under certain compensation arrangements against the outstanding
balance of the loan.

In November 1993, Mr. Lowden and Bank of America (the "Bank") entered into a
personal loan agreement under which the principal balance of the loan is
amortized through quarterly principal payments through April 1998, with any
remaining principal balance due July 31, 1998.  The loan is secured by
substantially all of the common stock of the Company owned by Mr. Lowden (the
"Pledged Shares").  Mr. Lowden's loan agreement provides that in the event the
market value of the Pledged Shares is less than three times the outstanding loan
balance, the bank, at its sole option, may require either an immediate reduction
in the outstanding balance or the pledging of additional collateral acceptable
to the bank such that the value of the pledged collateral is at least three
times the outstanding loan balance.  Based on the recent trading price of the
Company's common stock, the market value of the Pledge Shares has from time to
time been less than three times the outstanding loan balance.  Mr. Lowden has
advised the Company that pursuant to discussions between Mr. Lowden and the
Bank, Mr. Lowden has reduced the loan balance to $877,000 by paying an
additional $50,000 and has provided additional collateral to  the Bank.  If an
event of default were to occur under Mr. Lowden's personal loan with the bank,
and if the bank acquired the Pledged Shares upon foreclosure, Mr. Lowden's
ownership of the Company's outstanding common stock would be reduced to below
50%.  If Mr. Lowden ceases to own more than 50% of the outstanding shares of the
Company's common stock, an event of default would result under certain of the
Company's long-term indebtedness, which could result in cross-defaults under
substantially all of the Company's other long-term indebtedness, including the
13 1/2% Notes, SLVC Notes and 11% Notes.

COMPUTERIZED OPERATIONS AND THE YEAR 2000

During recent years, there has been significant global awareness raised
regarding the potential disruption to business operations worldwide resulting
form the inability of current technology to process properly the change from the
year 1999 to 2000.  Although,  based on a review of its data processing,
operating and other computer-based systems, the Company does not currently
believe that it will experience any significant adverse effects or material
costs resulting therefrom, the Company cannot provide any assurance in this
regard, and any such costs or effect could materially and adversely effect the
operations of the Company.

                                       19
<PAGE>

EFFECTS OF INFLATION

The Company has been generally successful in recovering costs associated with
inflation through price adjustments in its hotel operations.  Any such increases
in costs associated with casino operations and maintenance of properties may not
be completely recovered by the Company.

PRIVATE SECURITIES LITIGATION REFORM ACT

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


                                          20
<PAGE>

                             SANTA FE GAMING CORPORATION

                             PART II - OTHER INFORMATION

Item 1 - Legal Proceedings

              None

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:
                  10.90       Purchase Agreement by and between Santa Fe
                              Gaming Corporation and Steve Allen dated
                              November 21, 1997

                  23          Consent of Deloitte & Touche LLP.

                  27          Financial Data Schedule.

               B. Reports:  None




                                          21
<PAGE>

                                      SIGNATURES


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



                              SANTA FE GAMING CORPORATION, Registrant


                              By: /s/ Thomas K. Land
                                 ------------------------------------------
                                   Thomas K. Land, Chief Financial Officer


Dated: February 13, 1998


                                          22