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 Quarter ended December 31, 1995

                               OR

[ ]  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 0-4281
                   ALLIANCE GAMING CORPORATION
     (Exact name of registrant as specified in its charter)

                       NEVADA             88-0104066
      (State or other jurisdiction of     (I.R.S. Employer
     Incorporation or organization)     Identification No.)
                                
                      4380 Boulder Highway
                 Las Vegas, Nevada             89121
    (Address of principal executive offices)      (Zip Code)

          Registrant's telephone number: (702) 435-4200



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.
[X]  Yes   [ ]  No

The   number  of  shares  of  Common  Stock,  $0.10  par   value,
outstanding  as of February 8, 1996 according to the  records  of
the  registrant's registrar and transfer agent,  was  12,987,483.
On  the same date, there were no shares outstanding of non voting
Junior Convertible Special Stock, $0.10 par value.








                           I N D E X



PART I.   FINANCIAL INFORMATION                                           Page


Item 1.   Unaudited Financial Statements

     Condensed Consolidated Balance Sheets as of June 30, 1995
           and December 31, 1995 (unaudited)                                 3

     Unaudited Condensed Consolidated Statements of Operations
           for  the three months ended December 31, 1994 and 1995            4

     Unaudited Condensed Consolidated Statements of Operations
           for  the  six months ended December 31, 1994 and  1995            5

     Unaudited Condensed Consolidated Statements of Cash Flows
           for  the  six months ended December 31, 1994 and  1995            6

     Notes to Unaudited Condensed Consolidated Financial Statements          7

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



PART II.  OTHER INFORMATION


Item 1. Legal Proceedings                                                    18

Item 6. Exhibits and reports on Form 8-K                                     18


SIGNATURES                                                                   19







                             PART 1

          ALLIANCE GAMING CORPORATION AND SUBSIDIARIES
              CONDENSED CONSOLIDATED BALANCE SHEETS


                                                            June 30     Dec. 31
                                                              1995       1995
                                                                     (unaudited)
                                                               (In thousands)
ASSETS
Current assets:
    Cash, cash  equivalents and securities available 
       for  sale                                            $ 37,414   $ 29,468
    Receivables, net                                           3,316      3,110
    Inventories                                                  714        672
    Prepaid expenses                                           4,148      2,984
    Other                                                        517        411
        Total current assets                                  46,109     36,645

Property and equipment, net                                   50,352     50,870
Receivables, net                                               5,309      4,809
Excess of costs over net assets of an acquired business,
    net of accumulated amortization of $585 and $694           3,842      3,733
Intangible assets, net of accumulated amortization of
    $5,516  and $5,798                                        12,405     11,638
Investment in minority owned subsidiary                        1,585      1,585
Other                                                          6,746      7,592

         Total Assets                                       $126,348   $116,872

                                
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
   Current maturities of long-term debt                     $  3,995   $  4,054
   Accounts payable                                            1,758      2,295
   Accrued expenses, including due to related parties
      of $931 and $23                                          8,610     10,187
        Total current liabilities                             14,363     16,536

Long-term debt, less current maturities                       97,402     96,052
Othe liabilities                                               3,955      4,082

        Total liabilities                                    115,720    116,670

Minority interest                                                643        919

Stockholders' equity (deficiency):
   Common stock, $0.10 par value; authorized 175,000,000
      shares issued and outstanding 11,654,150 
      and 12,987,483                                           1,165      1,298
   Special stock, $0.10 par value; authorized 10,000,000
      shares; issued and outstanding 1,333,333 and 0             133        ---
   Paid-in capital                                            32,134     32,134
   Unrealized loss on securities available for sale, net        (316)    (1,587)
   Accumulated deficit                                       (23,131)   (32,562)
        Total stockholders' equity  (deficiency)               9,985       (717)

        Total liabilities and stockholders' equity
           (deficiency)                                     $126,348   $116,872

     See notes to unaudited condensed consolidated financial statements.

          ALLIANCE GAMING CORPORATION AND SUBSIDIARIES
    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

         Three Months Ended December 31, 1994 and 1995

                                                            1994        1995
                                                          (In thousands, except
                                                           per  share amounts)
Revenues:
   Gaming
        Routes                                           $  26,794   $ 26,325
        Casinos and taverns                                  3,796     10,489
   Food and beverage sales                                     918        870
   Net equipment sales                                           6          3

                                                            31,514     37,687
Costs and expenses:
   Cost of gaming
        Routes                                              20,113     20,148
         Casinos and taverns                                 2,247      4,728
   Cost of food and beverage                                   691        669
   Cost of equipment sales                                       2          1
   Selling, general and administrative                       3,157      4,849
   Business development expenses                             1,965      5,372
   Corporate expenses                                        2,356      1,560
   Depreciation and amortization                             2,309      2,419

                                                            32,840     39,746
Operating loss                                              (1,326)    (2,059)
Other income (expense):
   Interest income                                             800        392
   Interest expense                                         (1,970)    (2,081)
   Minority share of income                                    (96)      (132)
   Other, net                                                 (398)      (875)

Loss before income taxes                                    (2,990)    (4,755)

Income tax expense                                            (100)    (1,258)

Net loss                                                  $ (3,090)  $ (6,013)

Loss per share of common stock                            $   (.28)  $   (.50)

Weighted average common shares outstanding                  11,231     12,103


      See notes to unaudited condensed consolidated financial
                           statements.
                                
          ALLIANCE GAMING CORPORATION AND SUBSIDIARIES
    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

          Six Months Ended December 31, 1994 and 1995



                                                            1994        1995
                                                         (In thousands, except
                                                           per  share amounts)
Revenues:
   Gaming
        Routes                                          $  52,511   $  52,621
        Casinos and taverns                                 7,861      21,679
   Food  and beverage sales                                 1,950       1,923
   Net equipment sales                                         16           6

                                                           62,338      76,229
Costs and expenses:
   Cost of gaming
         Routes                                            39,214      40,361
         Casinos and taverns                                4,653       9,887
   Cost of food and beverage                                1,414       1,426
   Cost of equipment sales                                      9           1
   Selling, general and administrative                      6,486       9,398
   Business development expenses                            3,508      10,737
   Corporate expenses                                       4,302       3,037
   Depreciation and amortization                            4,613       4,906

                                                           64,199      79,753

Operating loss                                             (1,861)     (3,524)
Other income (expense):
   Interest income                                          1,504         818
   Interest expense                                        (3,915)     (4,288)
   Minority share of income                                  (169)       (276)
   Other, net                                                (286)     (1,373)

Loss before income taxes                                   (4,727)    ( 8,643)

Income tax expense                                           (290)       (788)

Net loss                                                 $ (5,017)   $ (9,431)

Loss per share of common stock                           $   (.45)   $   (.79)

Weighted average common shares outstanding                 11,101      11,879


 See notes to unaudited condensed consolidated financial statements.

          ALLIANCE GAMING CORPORATION AND SUBSIDIARIES
   UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

          Six Months Ended December 31, 1994 and 1995

                                                               1994      1995
                                                               (In thousands)
Cash flows from operating activities:
   Net loss                                                $ (5,017) $ (9,431)
   Adjustments to reconcile net loss to net cash 
      provided by operating activities:
        Depreciation and amortization                         4,613     4,906
        Loss on sale of property and equipment                  560       240
        Write off of other assets                               361       201
        Provision for losses on receivables                     261        20
        Amortization of debt discounts                          179       118
        Equity in losses of affiliate                           405       ---
        Deferred income tax provision                           ---       655
   Net change in operating assets and liabilities:
   Decrease in:
        Inventories                                              28        12
        Prepaid expenses                                      1,577     1,163
        Refundable income taxes                                 ---       312
        Other   assets                                          615       143
   Increase (decrease) in:
        Accounts   and  slot  contracts  payable                101       537
        Accrued expenses                                     (1,333)    1,577
        Minority interests                                      168       276
        Other liabilities                                      (424)     (223)
             Net cash provided by operating activities        2,094       506

Cash flows from investing activities:
       Additions to property and equipment                   (2,905)   (5,004)
       Proceeds from sale of property and equipment             265     2,218
       Additions to receivables                             (12,303)   (6,296)
       Cash collections on receivables                        9,272     6,564
       Investment in subsidiary                              (1,580)      ---
       Proceeds from sale of (purchases of) securities
          available for sale                                   (133)    8,015
       Additions to intangible assets                          (162)     (420)
       Additions to other long-term assets                   (1,959)   (2,179)
             Net cash provided by (used in) 
                investing activities                         (9,505)    2,898

Cash flows from financing activities:
       Reduction of long-term debt                           (1,594)   (2,091)
       Proceeds from long-term debt                             ---       682
       Issuance of stock                                        109       ---
             Net  cash  used in financing activities         (1,485)   (1,409)

Cash and cash equivalents:
       (Decrease) increase for period                        (8,896)    1,995
       Balance, beginning of period                          37,085    13,734
       Balance, end of period                              $ 28,189  $ 15,729

See notes to unaudited condensed consolidated financial statements. 

          ALLIANCE GAMING CORPORATION AND SUBSIDIARIES
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

          Six Months Ended December 31, 1994 and 1995

1. ADJUSTMENTS FOR FAIR PRESENTATION

   In  the  opinion  of  management, the  accompanying  unaudited
   interim   financial   statements  contain   all   adjustments,
   consisting  of  normal  recurring  adjustments,  necessary  to
   present  fairly the financial condition, results of operations
   and  cash  flows  of  the Company for the  respective  periods
   presented. The results of operations for an interim period are
   not necessarily indicative of the results to be expected for a
   full year.

   Certain information and footnote disclosures normally included
   in financial statements presented in accordance with generally
   accepted accounting principles have been condensed or omitted.
   It  is  suggested that the accompanying condensed consolidated
   financial statements be read in conjunction with the financial
   statements and notes in the Company's annual report on Form 10-
   K.  All  intercompany  accounts  and  transactions  have  been
   eliminated in consolidation.

2. RECLASSIFICATIONS

   Certain  reclassifications  have been  made  to  prior  period
   financial   statements   to  conform   with   current   period
   presentations.

3. RECEIVABLES

   The  Company's  gaming  route operations  from  time  to  time
   involve  making  loans  to  location  operators  in  order  to
   participate in revenues over extended periods of time.   These
   loans,  generally made for buildouts, tenant improvements  and
   initial operating expenses, are generally guaranteed on a full
   recourse  basis by the location owner and are secured  by  the
   assets  of  the  location.   The majority  of  the  loans  are
   interest  bearing and are expected to be repaid over a  period
   of  time not to exceed the life of the related revenue sharing
   agreement.   The  loans have varying payment  terms  requiring
   either  weekly or monthly payments.  Annual interest rates  on
   the  loans range from prime plus 1.5% to stated rates  of  12%
   with  various maturity dates ranging through 2007.  The  loans
   are  expected to be repaid from the locations' cash  flows  or
   proceeds from the sale of the leaseholds.

   Receivables consist of the following:
                                                   June 30      Dec. 31
                                                    1995          1995
                                                      (In thousands)

        Notes receivable-location operators        $ 7,760      $ 7,764
        Other receivables                              865          155
                                                     8,625        7,919
        Less current amounts                        (3,316)      (3,110)
        Long-term receivables, excluding 
           current amounts                         $ 5,309      $ 4,809

   Receivables  are  presented net of an allowance  for  doubtful
   accounts of approximately $1,659,000 and $1,435,000 as of June
   30,  1995  and December 31, 1995, respectively.  The allowance
   is  allocated between current and long-term receivables  on  a
   pro  rata  basis  related  to notes receivable  from  location
   operators.




          ALLIANCE GAMING CORPORATION AND SUBSIDIARIES
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

          Six Months Ended December 31, 1994 and 1995


4. DEBT

   Long-term debt at June 30, 1995 and December 31, 1995 consists
   of the following:
  
                                                          June 30     Dec. 31
                                                            1995        1995
                                                             (In thousands)

        Convertible subordinated debentures due 2003,
            7.5%                                        $ 85,000    $ 85,000

        Due to stockholder due 1998, 200 basis 
            points over the London Inter Bank offer 
            rate (current rate 7.97%), net of
            discount of $747,619 and $629,573              3,309       2,797

        Hospitality Franchise Systems due 2001, 7.5%       9,065       8,476

        National Gaming Mississippi due 2002, 10.0%          631       1,224

        Other debt                                         3,392       2,609
                                                         101,397     100,106
        Less current maturities                            3,995       4,054
        Long-term debt, less current maturities         $ 97,402    $ 96,052

   Accrued  interest of approximately $1,991,000  (June  30)  and
   $1,973,000  (December 31) is included in accrued  expenses  in
   the  unaudited condensed consolidated balance sheets.  Amounts
   due  to  stockholder  include amounts owed  to  affiliates  of
   Alfred  H.  Wilms,  the Company's largest  stockholder  and  a
   member  of the Board of Directors of the Company, relating  to
   funding of the Company's majority-controlled subsidiary, Video
   Services, Inc.'s ("VSI") gaming device route operations.

5. INCOME TAXES

   The  Company accounts for income taxes in accordance with  the
   provisions of Financial Accounting Standard No. 109 Accounting
   for  Income  Taxes.  Under the asset and liability  method  of
   Statement  109,  deferred  tax  assets  and  liabilities   are
   recognized  for  the future tax consequences  attributable  to
   differences  between the financial statement carrying  amounts
   of  assets  and  liabilities and their respective  tax  bases.
   Deferred tax assets and liabilities are measured using enacted
   tax rates expected to apply to taxable income in the years  in
   which those temporary differences are expected to be recovered
   or  settled.  Under Statement 109, the effect on deferred  tax
   assets  and liabilities of a change in tax rates is recognized
   in income in the period that includes the enactment date.

   Due  to  losses  and  the  lack of available  carrybacks,  the
   Company  recognized no federal income tax expense  or  benefit
   for  the  six  month period ended December 31, 1994  and  1995
   other  than the tax effects of changes in the unrealized gains
   (losses)  on  securities available for sale. At  December  31,
   1995,   the   Company   had  estimated  net   operating   loss
   carryforwards for federal income tax purposes of approximately
   $35,000,000  which  are  available to  offset  future  federal
   taxable  income, if any, expiring 2007 through 2009.  The  tax
   deferred benefit from the net operating losses has been  fully
   reserved.
   
          ALLIANCE GAMING CORPORATION AND SUBSIDIARIES
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

          Six Months Ended December 31, 1994 and 1995


6.     INVESTMENT IN MINORITY OWNED SUBSIDIARY

   The Company and Casino Magic Corporation, through wholly owned
   subsidiaries,  are members in Kansas Gaming  Partners,  L.L.C.
   ("KGP")  and  Kansas Financial Partners, L.L.C. ("KFP"),  both
   Kansas  limited liability companies. Under an option agreement
   (the  "Option Agreement") granted to KGP by Camptown Greyhound
   Racing, Inc. ("Camptown") and The Racing Association of Kansas-
   Southeast  ("TRAK  Southeast"),  KGP  has  been  granted   the
   exclusive right, which right expires on September 13, 2013, to
   operate gaming devices and/or casino-type gaming at Camptown's
   racing  facility in Frontenac, Kansas if and when such  gaming
   is permitted in Kansas. In December 1994, Camptown received  a
   $3,205,000  loan from Boatmen's Bank which was  guaranteed  by
   KFP.  The  Company and Casino Magic Corporation each  invested
   $1,580,000 in KFP which was used to purchase a certificate  of
   deposit   to  collateralize  its  guaranty.  Construction   of
   Camptown's racing facility has been completed and the facility
   opened  for  business  in May 1995. The  racing  facility  was
   temporarily  closed on November 5, 1995 due to poor  financial
   results. Camptown filed for reorganization under Chapter 11 of
   the  U.S.  Bankruptcy Code in January 1996 and has  stated  an
   intention   to   reopen  for  business  following   bankruptcy
   reorganization.  Boatmen's  Bank  demanded  payment   of   the
   Camptown  loan  from KFP under the terms of the guaranty.  KFP
   paid the loan and Boatmen's Bank returned KFP's certificate of
   deposit and KFP assumed Boatmen's Bank's position in the  loan
   to   Camptown  which  is  secured  by  a  second  mortgage  on
   Camptown's  greyhound  racing facility in  Frontenac,  Kansas.
   TRAK Southeast and Camptown continue to be bound by the Option
   Agreement. KFP intends to vigorously pursue all of its  rights
   and  remedies  which may include, among other things,  seeking
   authority  from the bankruptcy court to commence a foreclosure
   action.  In  the case of a foreclosure action,  KFP  would  be
   required  to  assume  or pay the existing  first  mortgage  of
   approximately $2,000,000 if KFP becomes the purchaser  at  any
   such  sale.  The  Company intends to continue to  monitor  its
   investment  in  KFP. While the Company is  encouraged  by  the
   positive  movement  in Kansas towards considering  legislation
   that  would legalize the operation of gaming devices at  pari-
   mutuel  track  locations, there can  be  no  assurance  as  to
   Camptown's ability to maintain its license at the location, or
   any  successful completion or operation of any  part  of  this
   project.


7.      CASH, CASH EQUIVALENTS AND SECURITIES AVAILABLE FOR SALE

   For  balance sheet presentation the following account balances
   have been combined at December 31, 1995:


                                                     (in thousands)
        Cash and cash equivalents                      $  15,729
        Securities available for sale                     13,739
        Total                                           $ 29,468

   As  of  December  31,  1995 unrealized losses  for  securities
   available  for  sale was $1,587,000 net of the tax  effect  of
   $817,000  and  is  included  as a component  of  stockholder's
   equity.





          ALLIANCE GAMING CORPORATION AND SUBSIDIARIES
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

          Six Months Ended December 31, 1994 and 1995


8. INTANGIBLE ASSETS

   Intangible  Assets includes $4,272,000 net  of  $1,232,000  of
   accumulated   amortization,   for   costs   related   to   the
   commissions,  discounts  and  other  issuance  costs  of   the
   Company's private placement of $85,000,000 aggregate principal
   amount  of 7.5% Convertible Subordinated Debentures due  2003.
   Such  costs are being amortized on a straight line basis  over
   the term of the debentures.


9.      PROPOSED BGII MERGER TRANSACTION

   On   October   18,   1995,  the  Company  and   Bally   Gaming
   International, Inc. ("BGII") entered into a definitive  merger
   agreement  ("Merger")  under which the outstanding  shares  of
   BGII common stock would each be exchanged for $13 in cash  and
   shares of the Company,s common stock.

   On January 22, 1996, the parties reached an agreement to amend
   the  terms  of  the Merger. Under the amended agreement,  each
   share  of  BGII  common stock outstanding  (10,799,501  as  of
   September 30, 1995 less the 1,000,000 shares already owned  by
   the  Company) will receive $7.83 per share in cash,  $3.57  per
   share in the Company's Series B Special Stock which is a  Pay-
   in-Kind  (PIK)  preferred stock, and $0.30 per  share  of  the
   Company's  common  stock totaling $11.70  per  share  of  BGII
   common  stock.  The  PIK  preferred stock  has  an  eight-year
   maturity and has a dividend rate of 15% as follows: PIK at 15%
   for the first five years; 8% PIK and 7% cash for years six and
   seven; and 15% cash in the eighth year of the term. All shares
   of  Series B Special Stock are mandatorily redeemable by the eighth
   anniversary of the date of initial issuance. If the Company fails to 
   redeem such shares by that date, then
   the  number of directors constituting the Company's Board will
   be increased by two and the holders of the shares of Series  B
   Special  Stock will have the right to elect no more  than  two
   directors total to the Company's Board. The holders of  Series
   B  Special Stock will have no other remedies upon such failure
   to  redeem the outstanding shares of Series B Special Stock by
   such  date.  Other than as described herein,  the  holders  of
   shares  of Series B Special Stock have no other voting  rights
   except  as stated by law. The Company intends to seek to  have
   the  Series  B  Special Stock quoted on NASDAQ. The  aggregate
   amount of cash is unchanged from the previous agreement.

   The  transaction  is  subject  to  approval  by  shareholders,
   obtaining  customary  regulatory approvals,  the  securing  of
   $150,000,000  in permanent financing by the Company  including
   $15,000,000 through a registered public offering of the Series
   B  Special Stock, and certain other conditions. The Merger  is
   expected to occur in late April 1996.


10.     LEGAL PROCEEDINGS

  In  June 1995, Bally Entertainment Corporation ("BEC") asserted
  that  a certain agreement between BEC and BGII (the "Noncompete
  Agreement") prohibits the use of the trade name "Bally"  if  it
  is  merged with a company that is in the casino business within
  or  without the United States and operates such business  prior
  to  January  8,  1996.  BGII believes such  claim  is  entirely
  without  merit  since the restriction referred  to  expires  on
  January 8, 1996 and in any event does not relate to the use  of
  the  "Bally"  trade  name,  which is  covered  by  the  License
  Agreement.  The  restriction in the Noncompete  Agreement  will
  not  have  any impact on the combined company after the  Merger
  since  the effective time of the Merger contemplates a  closing
  of   the   Merger  after  the  restriction  in  the  Noncompete
  Agreement  lapses. BEC has not reasserted this  position  since
  
         ALLIANCE GAMING CORPORATION AND SUBSIDIARIES
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
       
         Six Months Ended December 31, 1994 and 1995

10.     LEGAL PROCEEDINGS (continued)

   it  was  informed  by BGII in July 1995 that  the  restriction
   lapses on January 8, 1996. Consequently, BGII believes BEC has
   determined not to contest with BGII's position.

   BEC  has also asserted that its permission is required for use
   of  the  "Bally" trade name by any entity other than BGII  and
   that  a  merger between BGII and another company would violate
   the  terms  of  the License Agreement. BGII has  denied  these
   claims  and  believes that the surviving company in  a  merger
   will  be permitted to use the "Bally" trade name in accordance
   with  the terms of such License Agreement. BGII believes  that
   no  breach  of such License Agreement is caused by the  Merger
   and  the  use  of  the  "Bally" trade name  by  the  surviving
   corporation.  In  a  letter  dated  November  9,   1995,   BEC
   reasserted its position. On November 20, 1995 the Company, the
   Company's  Merger  Subsidiary, and BGII  commenced  an  action
   against  BEC in Federal District Court in Delaware  seeking  a
   declaratory  judgment, among other things, that the  surviving
   company  in  the Merger will be permitted to use  the  "Bally"
   trade  name  in  accordance  with the  terms  of  the  License
   Agreement,  and  seeking  injunctive  relief  (the  " Alliance
   Action").  On  November  28, 1995,  BEC  commenced  an  action
   against  BGII, Bally Gaming (a BGII subsidiary), the  Company,
   and  the Company's Merger Subsidiary in Federal District Court
   in  New     Jersey  to enjoin the defendants  from  using  the
   "Bally"  trade name (the "BEC Action"). The BEC Action alleges
   that  BGII's continued use of the trade name after the  Merger
   will  (1) constitute a prohibited assignment of BGII's  rights
   to  use the trade name and (2) exceed the scope of the license
   granted to BGII     because BGII will be under control of  the
   Company. Also on November 28, 1995, BEC filed a motion  to  di
   smiss,  transfer  to New Jersey, or stay the  Alliance  Action
   pending resolution of the BEC Action. BGII, Bally Gaming,  the
   Company,  and  the  Company's  Merger  Subsidiary  intend   to
   vigorously  defend  their position in these actions.  However,
   there  can be no assurance that BEC will not be successful  in
   its action to prohibit the surviving corporation in the Merger
   from  using  the  "Bally" trade name. The loss of  the  "Bally"
   trade  name would have a material adverse effect on the gaming
   machine operations of the surviving corporation in the Merger.


 11.    INITIAL SERIES SPECIAL STOCK

   In  September  1993,  Kirkland-Ft. Worth Investment  Partners,
   L.P.  ("Kirkland")  invested  $5,000,000  in  the  Company  in
   exchange  for  1,333,333  shares of the  Company's  Non-Voting
   Junior Convertible Special Stock, which are convertible  on  a
   share  for  share  basis into shares of the  Company's  Common
   Stock,  and  warrants  to purchase up to 2,750,000  shares  of
   common stock subject to certain conditions. In December  1995,
   Kirkland  elected  to convert the entire 1,333,333  shares  of
   Special Stock into shares of the Company's Common Stock.


        ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS

Financial Condition

Liquidity and Capital Resources:

At  December  31,  1995,  the  Company  had  working  capital  of
approximately    $20,109,000,   a   decrease   of   approximately
$11,637,000 from June 30, 1995.  The decrease in working  capital
is  due in part to a decrease in cash and cash equivalents  which
were  used to fund development activities in connection with  the
Company's business strategy. As of December 31, 1995, the Company
had   $29,468,000  in  cash,  cash  equivalents  and   securities
available   for  sale,  of  which  approximately  $7,000,000   is
necessary  to  fund  ongoing gaming operations  in  the  ordinary
course of business.

On  October 18, 1995, the Company and Bally Gaming International,
Inc. ("BGII") entered into a definitive agreement under which the
outstanding  shares of BGII common stock will each  be  exchanged
for  $13  in  cash and the Company's shares of common  stock.  On
January  22, 1996, the parties reached an agreement to amend  the
terms of the merger agreement. Under the amended agreement,  each
share  of  BGII  common  stock  outstanding  (10,799,501  as   of
September 30, 1995 less the 1,000,000 shares already owned by the
Company) will receive $7.83 per share in cash, $3.57 per share  in
the Company's Series B Special Stock which is a Pay-in-Kind (PIK)
preferred  stock,  and  $0.30 per share of the  Company's  common
stock  totaling  $11.70 per share of BGII common stock.  The  PIK
preferred  stock has an eight-year maturity and  has  a  dividend
rate  of 15% as follows: PIK at 15% for the first five years;  8%
PIK  and  7%  cash for years six and seven; and 15% cash  in  the
eighth year of the term. All shares of Series B Special Stock are
mandatorily  redeemable on the eighth anniversary of the date
of the initial issuance. If the Company fails  to  redeem
such  shares  by that date, then the number of directors  constituting
the  Company's Board will be increased by two and the holders  of
the shares of Series B Special Stock will have the right to elect
no  more  than  two directors total to the Company's  Board.  The
holders  of  Series B Special Stock will have no  other  remedies
upon  such failure to redeem the outstanding shares of  Series  B
Special  Stock by such date. Other than as described herein,  the
holders of shares of Series B Special Stock have no other  voting
rights  except as stated by law. The Company intends to  seek  to
have  the  Series B Special Stock quoted on NASDAQ. The aggregate
amount  of  cash  is unchanged from the previous  agreement.  The
transaction  is  subject  to approval by shareholders,  obtaining
customary  regulatory approvals, the securing of $150,000,000  in
permanent financing by the Company including $15,000,000  through
a  registered public offering of the Series B Special Stock,  and
certain other conditions. The Merger is expected to occur in late
April   1996.   The   Company  intends  to  seek   financing   of
approximately $180,000,000 in connection with its intended merger
with  BGII,  with the additional proceeds to be used for  working
capital purposes.

During  the  six  months  ended December 31,  1995,  the  Company
incurred  approximately  $10,737,000  in  costs  associated  with
pursuit  of  the  Company's  business  strategy.   The  Company's
strategy  is to use its strengthened management team, diversified
gaming   expertise   and   business  and   investment   community
relationships  to develop new opportunities in the  operation  of
land-based,  dockside  and  riverboat casinos  (including  Native
American casinos), gaming systems and technology, and the  supply
and  management  of gaming devices. Included in these  costs  are
expenses  of $9,437,000 associated with the Company's tender  and
consent  solicitation  for the common stock  of,  and  subsequent
entering into a definitive merger agreement with, BGII.

On  July  16,  1994,  the  Rainbow Casino located  in  Vicksburg,
Mississippi  permanently opened for business. In connection  with
the  completion  of  the casino and the acquisition  of  its  45%
limited  partnership interest, through a wholly-owned subsidiary,
the  Company   funded  a  $3,250,000 advance  to  Rainbow  Casino
Corporation  ("RCC")  on the same terms as RCC's  financing  from
Hospitality  Franchise Systems, Inc. ("HFS"). On March  29,  1995
the  Company consummated certain transactions whereby the Company
acquired from RCC the controlling general partnership interest in
Rainbow  Casino Vicksburg Partnership ("RCVP") and increased  its
partnership interest. In exchange for commitments by the  Company
and  National  Gaming Mississippi, Inc. ("NGM"), a subsidiary  of
National Gaming Corporation, to provide additional financing  (up
to a maximum of $2,000,000 each) to be used for the completion of
certain elements of the project which survived the opening of the
casino  (for  which  RCC was to have been  responsible  for,  but
failed to satisfy), and a $500,000 payment also funded jointly by
the  Company  and NGM paid to HFS as a waiver fee, the  following
occurred:  (i)  a  subsidiary of the Company became  the  general
partner  and  RCC  became  the  limited  partner  and  (ii)   the
respective partnership interests were adjusted. As adjusted,  RCC
is  entitled to receive 10% of the net available cash flows  from
gaming  revenues, as defined (which amount shall increase to  20%
of cash flow from gaming revenues above $35,000,000 (i.e. only on
such  incremental amount)), for a period of 15 years, such period
being  subject to one year extensions for each year  in  which  a
minimum payment of $50,000 is not made. Since March 29, 1995  the
results   of   operations  of  the  Rainbow  Casino   have   been
consolidated.

The  Company  and Casino Magic Corporation, through wholly  owned
subsidiaries,  are  members  in Kansas  Gaming  Partners,  L.L.C.
("KGP")  and  Kansas  Financial Partners,  L.L.C.  ("KFP"),  both
Kansas  limited  liability companies. Under an  option  agreement
(the  "Option  Agreement") granted to KGP by  Camptown  Greyhound
Racing,  Inc. ("Camptown") and The Racing Association of  Kansas-
Southeast  ("TRAK Southeast"), KGP has been granted the exclusive
right,  which  right expires on September 13,  2013,  to  operate
gaming  devices  and/or casino-type gaming at  Camptown's  racing
facility  in  Frontenac,  Kansas  if  and  when  such  gaming  is
permitted  in  Kansas.  In  December 1994,  Camptown  received  a
$3,205,000 loan from Boatmen's Bank which was guaranteed by  KFP.
The Company and Casino Magic Corporation each invested $1,580,000
in  KFP  which was used to purchase a certificate of  deposit  to
collateralize  its  guaranty. Construction of  Camptown's  racing
facility  has been completed and the facility opened for business
in  May  1995.  The  racing facility was  temporarily  closed  on
November  5,  1995 due to poor financial results. Camptown  filed
for  reorganization under Chapter 11 of the U.S. Bankruptcy  Code
in  January  1996  and  has  stated an intention  to  reopen  for
business  following  bankruptcy  reorganization.  Boatmen's  Bank
demanded payment of the Camptown loan from KFP under the terms of
the guaranty. KFP paid the loan and Boatmen's Bank returned KFP's
certificate of deposit and KFP assumed Boatmen's Bank's  position
in  the loan to Camptown which is secured by a second mortgage on
Camptown's  greyhound racing facility in Frontenac, Kansas.  TRAK
Southeast  and  Camptown  continue to  be  bound  by  the  Option
Agreement. KFP intends to vigorously pursue all of its rights and
remedies which may include, among other things, seeking authority
from  the  bankruptcy court to commence a foreclosure action.  In
the case of a foreclosure action, KFP would be required to assume
or pay the existing first mortgage of approximately $2,000,000 if
KFP  becomes the purchaser at any such sale. The Company  intends
to  continue to monitor its investment in KFP. While the  Company
is   encouraged  by  the  positive  movement  in  Kansas  towards
considering  legislation  that would legalize  the  operation  of
gaming  devices at pari-mutuel track locations, there can  be  no
assurance as to Camptown's ability to maintain its license at the
location, or any successful completion or operation of  any  part
of this project.

Cash  provided  by  operations for the six  months  decreased  by
approximately $1,588,000 from amounts reported for the prior year
period.  The  change  is primarily due to  an  increase  in  cash
provided  by  the  casino and tavern operations of  approximately
$5,700,000  which was attributable to the Rainbow Casino,  offset
by an increase in business development costs over the same period
from  the prior year of $7,229,000, primarily related to the BGII
merger.

Cash provided by investing activities for the six months improved
$12,403,000 from the same period in the prior year due  primarily
to  the  proceeds  from  the  sale  of  approximately  $8,015,000
securities  available  for  sale.   Also,  cash  collections   on,
net  of  additions  to,  receivables  improved   by
$3,299,000 compared to the same period last year.

Cash  used  in  financing activities for the six months  declined
$76,000  from  the  same period last year due  primarily  to  the
Company's principal reductions on its existing long-term debt  of
$2,091,000 offset by proceeds of $682,000 from issuing additional
long-term debt.

Management  believes  the Company's present working  capital  and
funds  generated from operations will be sufficient to  meet  its
existing commitments, debt payments and other obligations as they
become  due.   As  discussed  in previous  reports,  however,  it
remains  a  part  of  the  Company's business  strategy  to  seek
complementary  gaming opportunities, including  opportunities  in
which its route and casino experience may be applicable.  As part
of  its business activities, the Company is regularly involved in
the   identification,  investigation  and  development  of   such
opportunities.  Accordingly, in order to support such activities,
the  Company may in the future elect to issue additional debt  or
equity  securities  if and when appropriate opportunities  become
available on terms satisfactory to management.

Results of Operations.

Three Months Ended December 31, 1994 and 1995

Revenues:

Total revenues for the three months ended December 31, 1995  were
$37,687,000, an increase of $6,173,000 (19.6%) over those for the
same  period in 1994.  Revenues from all gaming route  operations
decreased  $469,000  (1.7%) to approximately $26,325,000  in  the
second quarter of fiscal 1996. Revenues from the Louisiana  route
operations increased $334,000 (an increase of 9.0%) primarily  as
a  result of an expansion of operations from the opening of a new
OTB  parlor in October 1995. Revenue from Nevada route operations
decreased approximately $803,000 (3.5%) over those for  the  same
period  last  year.   The  decrease in the  Nevada  gaming  route
revenues was attributable to a $1.65 decrease in the average  net
win per gaming device per day for the three months ended December
31,  1995 compared to the same period in 1994 (accounting  for  a
decrease  of  approximately  $793,000)  and  a  decrease  in  the
weighted  average  number of gaming devices on location  for  the
three  months  ended December 31, 1995 as compared  to  the  same
period  in  1994  (accounting  for a  decrease  of  approximately
$10,000).  Revenues from casino and tavern operations,  including
food  and  beverage  sales,  increased  approximately  $6,645,000
(141.0%) during the current year quarter as compared to those for
the  prior  year as revenues recognized from the Rainbow  Casino,
which  were  consolidated beginning March 29, 1995, exceeded  the
revenues lost with the termination of the Company's lease at  the
Royal  Casino  and the reduction of operations at  the  Company's
tavern locations.


Costs and Expenses:

Costs of Revenues

Cost of gaming route revenues for the quarter ended December  31,
1995  increased  $35,000 (0.2%) over the same  quarter  in  1994.
Costs  of  revenues from route operations in Louisiana  increased
$157,000 (an increase of 6.5% from last year) as a result  of  an
expansion  of operations from the opening of a new OTB parlor  in
October  1995. Costs of gaming revenues for Nevada  gaming  route
revenues decreased $122,000 (0.7%) as compared to the prior  year
as  revenues  declined and increased slightly  as  a  percent  of
Nevada  gaming  route revenues primarily due to  increased  costs
associated  with  additional and renewed space  lease  contracts.
Cost of route revenues includes rents under both space lease  and
revenue  sharing  arrangements, gaming taxes  and  direct  labor,
including  related  taxes and benefits. The cost  of  casino  and
tavern  revenues  including costs of food and  beverage  revenues
increased  $2,459,000 (83.7%) compared to 1994 results  primarily
due   to   the  Rainbow  Casino  cost  of  revenues  which   were
consolidated   beginning  March  29,  1995.  This  increase   was
partially offset from the termination of the Company's  lease  at
the Royal Casino and the reduction of operations at the Company's
tavern  locations.  Cost of casino and tavern  revenues  includes
cost  of  goods  sold,  gaming  taxes,  rent  and  direct  labor,
including related taxes and benefits.

Expenses

For  the  quarter  ended December 31, 1995 the  Company  incurred
developmental costs associated with pursuing the Company's growth
strategy  of approximately $5,372,000, an increase of  $3,407,000
(173.4%)  over  the same period from last year.   These  business
development  expenses include salaries and wages,  related  taxes
and   benefits,  professional  fees,  travel  expense  and  other
expenses   associated  with  supporting  the   Company's   growth
strategy. Current quarter development costs also include expenses
of $4,760,000 associated with the Company's merger with BGII.

Selling,  general  and  administrative expenses  for  the  period
increased  approximately $1,692,000 (53.6%) from the prior  year.
Expenses  for  casinos and taverns increased $1,984,000  (224.4%)
from  the prior year primarily due to the Rainbow Casino expenses
which  were consolidated beginning March 29, 1995. This  increase
was  partially offset from the termination of the Company's lease
at  the  Royal  Casino  and the reduction of  operations  at  the
Company's tavern locations. Such expenses related to gaming route
operations  decreased  $294,000  (12.9%)  from  the  prior   year
reflecting  steps  taken  to  control  costs,  including  reduced
staffing  levels.  Corporate general and administrative  expenses
decreased $796,000 (33.8%). This decrease was caused primarily by
controlling  costs  and  reducing staffing  levels.  The  Company
expects  that there may be further increases in selling,  general
and  administrative  expenses related  to  the  addition  of  new
management  and development personnel and other costs  associated
with supporting the Company's business strategy.

Six Months Ended December 31, 1994 and 1995

Revenues:

Total  revenues for the six months ended December 31,  1995  were
$76,229,000,  an increase of $13,891,000 (22.3%) over  those  for
the  same  period  in  1994.   Revenues  from  all  gaming  route
operations increased $110,000 (0.2%) to approximately $52,621,000
in  the  first  six  months  of fiscal 1996.  Revenues  from  the
Louisiana  route  operations increased $147,000  (a  increase  of
1.9%)  primarily  as a result of an expansion of operations  from
the  opening of a new OTB parlor in October 1995.  Revenues  from
Nevada  route  operations decreased approximately $36,000  (0.1%)
over  those for the same period last year.  The decrease  in  the
Nevada gaming route revenues was attributable to a $0.52 decrease
in  the  average net win per gaming device per day  for  the  six
months  ended  December 31, 1995 compared to the same  period  in
1994  (accounting for a decrease of approximately $499,000) which
exceeded  an  increase in the weighted average number  of  gaming
devices on location for the six months ended December 31, 1995 as
compared  to the same period in 1994 (accounting for an  increase
of  approximately  $463,000). Revenues  from  casino  and  tavern
operations,   including  food  and  beverage   sales,   increased
approximately $13,791,000 (140.6%) during the current six  months
as  compared  to those for the prior year as revenues  recognized
from  the Rainbow Casino, which were consolidated beginning March
29,  1995, exceeded the revenues lost with the termination of the
Company's  lease  at  the  Royal  Casino  and  the  reduction  of
operations at the Company's tavern locations.


Costs and Expenses:

Costs of Revenues

Cost  of  gaming route revenues for the six months ended December
31,  1995  increased $1,147,000 (2.9%) over the  same  period  in
1994.  Costs  of  revenues  from route  operations  in  Louisiana
decreased $53,000 (a decrease of 1.1% from last year) as a result
of  controlling direct labor costs. Costs of gaming revenues  for
Nevada  gaming  route  revenues increased  $1,200,000  (3.5%)  as
compared to the prior year and increased slightly as a percent of
Nevada  gaming  route revenues primarily due to  increased  costs
associated  with  additional and renewed space  lease  contracts.
Cost of route revenues includes rents under both space lease  and
revenue  sharing  arrangements, gaming taxes  and  direct  labor,
including  related taxes and benefits.  The cost  of  casino  and
tavern  revenues  including costs of food and  beverage  revenues
increased  $5,246,000 (86.5%) compared to 1994 results  primarily
due   to   the  Rainbow  Casino  cost  of  revenues  which   were
consolidated   beginning  March  29,  1995.  This  increase   was
partially offset from the termination of the Company's  lease  at
the Royal Casino and the reduction of operations at the Company's
tavern  locations.  Cost of casino and tavern  revenues  includes
cost  of  goods  sold,  gaming  taxes,  rent  and  direct  labor,
including related taxes and benefits.

Expenses

For  the  six months ended December 31, 1995 the Company incurred
developmental  costs  associated  with  pursuing  the   Company's
business  strategy of approximately $10,737,000, an  increase  of
$7,229,000  (206.1%) over the same period from last year.   These
business development expenses include salaries and wages, related
taxes  and benefits, professional fees, travel expense and  other
expenses  associated  with  supporting  the  Company's  strategy.
Current   year  development  costs  also  include   expenses   of
$9,437,000  associated  with  the Company's  tender  and  consent
solicitation  for  the common stock of, and  subsequent  entering
into   a   definitive   merger  agreement  with,   Bally   Gaming
International, Inc.

Selling,  general  and  administrative expenses  for  the  period
increased  approximately $2,912,000 (44.9%) from the prior  year.
Expenses  for  casinos and taverns increased $3,629,000  (198.3%)
from  the prior year primarily due to the Rainbow Casino expenses
which  were consolidated beginning March 29, 1995. This  increase
was  partially offset from the termination of the Company's lease
at  the  Royal  Casino  and the reduction of  operations  at  the
Company's tavern locations. Such expenses related to gaming route
operations  decreased  $717,000  (15.4%)  from  the  prior   year
reflecting  steps  taken  to  control  costs,  including  reduced
staffing  levels.  Corporate general and administrative  expenses
decreased  $1,265,000 (29.4%). This decrease was caused primarily
by  controlling costs and reducing staffing levels.  The  Company
expects  that there may be further increases in selling,  general
and  administrative  expenses related  to  the  addition  of  new
management  and development personnel and other costs  associated
with supporting the Company's growth strategy.


                             PART II

Item 1. Legal Proceedings

         See "Notes to Unaudited Condensed Consolidated Financial
Statements-  10. Legal Proceedings" for        a  description  of
certain legal proceedings.

Item 6. Exhibits and Reports on Form 8-K

             a.   Exhibits

             Exhibit
             Number    Description

             10.67     Agreement  and  Plan   of  Merger  among  Alliance  
                       Gaming Corporation,  BGII Acquisition  Corp.  and
                       Bally  Gaming International,  Inc.  as  of
                       October 18, 1995.

             10.68     Employment Agreement, dated as of October 28, 1995,
                       between the Company and Robert Miodunski.

             b.   Reports on Form 8-K

                       There were no reports filed on Form 8-K for the 
                       three months ended December 31, 1995.






                           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.



   ALLIANCE GAMING CORPORATION
         (Registrant)





   By     /s/ Steve  Greathouse
        Chairman of the Board of Directors,
        President and Chief Executive Officer




   By     /s/ John W. Alderfer
        Sr. Vice President, Treasurer
        and Chief Financial Officer