<PAGE>

______________________________________________________________________________

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
______________________________________________________________________________

                                   FORM 10-KSB

            ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JANUARY 31, 2003
______________________________________________________________________________

                          Commission File No. 000-20685

                             AMERICAN WAGERING, INC.
                             -----------------------
                 (Name of Small Business Issuer in its Charter)

     Nevada                                  88-0344658
     ------                                  ----------
     (State or other jurisdiction of         (I.R.S.  Employer
     incorporation  or  organization)         Identification  No.)


                    675 Grier Drive, Las Vegas, Nevada 89119
                    ----------------------------------------
         (Address  of principal  executive  offices)  (Zip  Code)

                            (702)  735-0101
                            ---------------
                      (Issuer's telephone number)


Securities  registered  under  Section  12(b)  of  the  Exchange  Act:   None

Securities  registered  under  Section  12(g)  of  the  Exchange  Act:

                          Common Stock, $.01 par value
                          ----------------------------
                                Title  of  Class


Check  whether  the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 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


Check  if there is no disclosure of delinquent filers in response to Item 405 of
Regulation  S-B  is  not  contained  in  this  form,  and  no disclosure will be
contained,  to  the  best  of  registrant's  knowledge,  in  definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or  any  amendment  to  this  Form  10-KSB.

The  issuer's  revenues  for  the  fiscal  year  ended  January  31,  2003  were
$11,562,085.

The  aggregate  market  value of the voting and non-voting stock (which consists
solely  of  shares  of Common Stock) held by non-affiliates as of April 14, 2003
computed  by  reference  to the average bid and asked price for the registrant's
Common Stock as quoted on the NASD Over-The-Counter Bulletin Board on such date,
was  approximately  $940,422.

The  number  of  shares of the issuer's Common Stock outstanding as of April 14,
2003  was  7,836,846.


                                       1

<PAGE>


                                     PART I


Item  1.     Description  of  Business

Primary  business  formation and operating activities.  In August 1995, American
Wagering,  Inc., a Nevada Corporation (the "Company"), was formed as the holding
Company  for  Leroy's  Horse  and  Sports  Place  ("Leroy's").  Leroy's  was
incorporated  under  the  laws  of  the  State  of  Nevada on November 14, 1977.
Leroy's,  through  a  central computer system located at the Company's Las Vegas
headquarters,  operates  a  statewide  network  of  sports  and  race  wagering
facilities  in 46 casinos.  Leroy's offers a "turn-key" sports and race wagering
operation  that  allows  casinos  to satisfy their patrons desire for sports and
race  wagering without bearing the risk and overhead associated with running the
operation.  By combining volume from a number of locations, the Company believes
that  Leroy's  more  effectively  hedges risks and more efficiently covers fixed
overhead.  In  October 1996, the Company acquired from Autotote Corporation, all
of  the  shares  of  capital stock of Autotote CBS, Inc. (which was subsequently
renamed  Computerized  Bookmaking  Systems,  Inc.  ("CBS")),  along with certain
software and licensing rights pursuant to a stock transfer agreement between the
Company  and  Autotote  Corporation.  CBS designs, sells, installs and maintains
sports  and  race  book  equipment, software and computer systems for the sports
betting  industry.  The  Company paid $3 million in cash to Autotote Corporation
and  guaranteed  CBS'  obligation under its mortgage (in the principal amount of
approximately  $2  million as of such date).  The mortgage is on the real estate
and  building  located  at 675 Grier Drive, Las Vegas, Nevada, where the Company
currently  maintains  its  corporate  offices.

Recent  material  litigation  and  related business activities.  On November 14,
2002,  the  U.S.  District Court of Nevada, issued a verdict in favor of Michael
Racusin  ("Racusin")  and against the Company in the gross amount of $2,310,000.
The  Company,  however,  is  contesting  the  pre-judgment  interest Racusin has
claimed relating to this matter.  A more complete discussion of this verdict and
the  interest  component  is  found  in  the "Legal Proceedings" section of this
10-KSB found in Item 3.  The estimated range of possible loss to the Company for
interest related to this litigation is from zero to $1,510,126 as of January 31,
2003.  The  Company  had  previously  estimated  and accrued an interest cost of
$328,624,  which  will  not  be  adjusted until the final outcome is known.  The
anticipated  final judgment is material to the Company and, at the present time,
management  is  considering  the options available to the Company, including the
filing  of  Chapter  11  bankruptcy.  The  Company  recorded  $1,643,625 against
additional  paid-in  capital  in  the  quarter  ended  October  31,  2002, which
represents  the  stock  award  less  amounts  previously  paid  by  the Company.

The  Company  also  owned  and  operated Mega$ports (ACT) Pty. Ltd. ("Mega$ports
(ACT)")  located  in Canberra, Australia, an international wagering hub licensed
to  accept  both  fixed odds and pari-mutuel interactive wagers on the telephone
and  Internet.  On  July  27, 2000, the Company settled a complaint filed by the
State  Gaming  Control  Board,  without admitting or denying the allegations, by
agreeing  to pay a fine of $10,000 and to divest itself of any and all interests
and  rights pertaining to Mega$ports (ACT). On June 18, 2002 the Company entered
into  a  Share  Sale  agreement  with  Euraust Limited ("Euraust"), in which the
Company agreed to sell the Mega$ports (ACT) subsidiary to Euraust.  On March 20,
2003,  the  Chairmen  of  the  State  Gaming  Control  Board  and  Nevada Gaming
Commission  concluded  that a complete divestiture cannot occur so long as there
is a continuing obligation from Eurast to pay the Company on its note receivable
(valued  at  $624,600)  based  on  a percentage of handle.  The Company has been
unsuccessful  in  its  attempts  to  negotiate  a modification or discount for a
lump-sum  payment with Eurast.  As of January 31, 2003, the Company wrote-off as
uncollectible  the existing note to gain on disposal of discontinued operations.

Other  business  activities  and  historical  background.  The Company owned AWI
Keno,  Inc.  ("AWIK")  which  designed,  installed,  operated  and  maintained
computerized  keno  systems.  In  July  2002,  the Company discontinued its keno
operations.  In  preparation  of the release of the self-service race and sports
wagering  terminals projected to begin in the first quarter of fiscal year 2004,
AWIK  was  renamed  AWI  Manufacturing,  Inc.  ("AWIM").

On  July  28,  1998,  the Company acquired certain assets from Advanced Computer
Services,  Inc.  ("ACS"),  a  systems  competitor  of  CBS, pursuant to an asset
purchase  agreement  between the Company and ACS and settled certain litigations
between  them.  The  Company  paid  ACS  $500,000  in  cash  and $250,000 in the
Company's  Common  Stock  for the assets, including software and restrictions on
ACS  and  its shareholder not to compete or solicit the Company's customers. The
Company's  two  new  subsidiaries,  AWI  Sports Systems, Inc. ("AWISSI") and AWI
Hotel  Systems,  Inc.  ("AWIHSI")  were  the  designated  acquirer of the sports
wagering  software  and hotel systems


                                       2

<PAGE>



software,  respectively  and  assumed  certain  contractual  obligations of ACS,
including  all customer contracts. The Company initially owned 80% of AWISSI and
51%  of AWIHSI and the sole shareholder of ACS owned the remaining interests. On
June 8, 2000, the Company terminated a systems consulting agreement and sold the
assets  of  AWIHSI  to  the  sole owner of ACS in exchange for ACS's 49% and 20%
interests  in  AWISSI  and  AWIHSI.

In  November  1999, the Company formed Secured Telephone Operating Platform, LLC
("STOP"),  which designs, installs, and operates a telephone call identification
system  for its customers.  The system determines the origin of a telephone call
and accepts or rejects the call based on its origination.  The system is used in
conjunction  with  telephone  account  wagering  within  the  State  of  Nevada.
Currently,  the  STOP  system  is  being  used  by  one  casino.

Las  Vegas  Area  Market

The  Company's  primary  market  for  sports and race book operations is the Las
Vegas Valley and surrounding areas (hereinafter, "Las Vegas Area").  At December
31,  2002,  the  Las  Vegas  Area  included  103 sports books and 81 race books.
Leroy's currently operates 21 of its 46 sports books in the Las Vegas Area.  The
Las  Vegas  Area  attracts both local residents and Las Vegas visitors.  The Las
Vegas  population  was approximately 1.5 million in 2002.  Las Vegas is Nevada's
principal  tourist  destination.  Gaming  and  entertainment  are  the  major
attractions,  complemented  by  warm  weather  and  the  availability  of  many
year-round  recreational  activities.  The  number  of visitors traveling to Las
Vegas  in  2002  was  approximately  35.1 million.  Las Vegas' principal tourist
market  is  the western region of the United States, most significantly Southern
California,  Arizona  and  Texas.  Las  Vegas  is  also  among the nation's most
popular  convention  sites, having hosted conventions in 2002 that were attended
by  more  than  5.1  million  people  who,  it is estimated, spent $5.9 billion,
excluding  gaming  activity.


From  1989 to 2001, gaming revenues for Clark County (which consists principally
of the Las Vegas Area) have increased 123.5%, from approximately $3.4 billion in
1989  to approximately $7.6 billion in 2001.  The Clark County gaming market has
historically  achieved  significant  growth despite adverse economic, regulatory
and competitive events during the past decade, including the expansion of gaming
in  other  jurisdictions  across  the  United  States.

Reno  Area  Market

The  Reno  gaming  market  and  surrounding areas (the "Reno Area") is home to 5
Leroy's  sports and race books. Reno is the second largest city in Nevada with a
population  of  approximately  359,000 for 2002.  Reno is located at the base of
the Sierra Nevada Mountains along Interstate 80, approximately 135 miles east of
Sacramento,  California.  The Reno Area is a popular resort spot, which attracts
tourists  by  offering gaming as well as numerous summer and winter recreational
activities.

Sports  Wagering

Sports  wagering  is  legal  in  the  State  of  Nevada  and in numerous foreign
countries,  including Canada, Mexico and Australia.  Sports wagering at Nevada's
race  and sports books increased from approximately $290 million in 1980 to $1.9
billion  in 2002.  During that same period, the number of sports books in Nevada
increased  from  24  to 160.  With the advent of cable and satellite television,
both commercially and privately, viewing access to sporting events has increased
significantly.  When  sporting  events  are  televised,  there  is  increased
excitement,  which,  the  Company  believes,  leads  to  more interest in sports
betting.

A  sports  wagering facility, or "sports book," is a gambling establishment that
sets  odds  and point spreads and accepts bets on the outcome of sporting events
such as football, basketball, baseball, and hockey games.  Sports books set odds
and  point  spreads  aiming  not  to reflect the final result, but to maintain a
"balanced  book"  by  offering  odds  or  point  spreads that will attract equal
amounts  of  bets  on  each  side of a particular event.  As a general matter, a
customer's  odds  or  point  spread (the "line") are fixed at the time he or she
makes  his or her bet, regardless of any subsequent movement in the line.  Under
this  system,  a  sports book operator attracts bets by changing or "moving" the
line  up or down to encourage wagering on a specific team.  To the extent that a
book  on  a  particular event is not balanced, the book-making operation takes a
risk on the outcome of the event.  This is the fundamental difference from other
forms  of  organized  gambling where profits result from customer play against a
statistical  advantage that the gambling operator (the "House") possesses, or in
pari-mutuel  wagering,  used by major North American Horse


                                       3

<PAGE>


Racing Tracks and jai alai establishments, where the House receives a guaranteed
percentage  for  operating  expenses,  profit  and  taxes  and  the remainder is
distributed  to  the  winners.

This fundamental difference is part of the appeal for many sports customers, but
it also creates risk for the sports book.  A bookmaker operates in a system that
is  interrelated  with  oddsmakers  and  customers.  A  bookmaker collects bets,
adjusts odds to account for the preferences of their patrons and pay the winners
and,  if  the  book  is  balanced,  for  each type of sports bet the House has a
"theoretical advantage".  For example, for a straight football bet involving the
outcome  of  one game, it is common practice that the customer wagers $11 to win
$10.  Accordingly,  if the book were evenly balanced, the sports book would earn
$1  for  each  $22  wagered,  or  4.55%  (the  winner  would  receive  $21).

Oddsmakers  (whose services are purchased by the bookmakers) initially set lines
to  hopefully split the bets evenly between the betting participants.  Customers
have  opinions  concerning  the odds and bet accordingly, which requires initial
lines  to  be  adjusted.  As  a  result,  in  practice,  a sports book is rarely
perfectly balanced.  The sports books profit depends upon the reliability of the
oddsmaker  and  its  own  acumen  at  adjusting the odds when required.  Because
customers  are  betting  on  propositions  of uncertain probability and are paid
according to the line at which they make their bets rather than the closing odds
(as  in  a  pari-mutuel  system),  the  sports  book  is not assured of either a
constant  profit  over  time  or  for  a  single  event.

A  sports  book also attempts to limit the potential risk by setting game limits
and  line  movement.  For  example, the opening line for a football game ideally
would  split  the bets from the time it was posted until kick-off.  However, the
opening  line  generally  is unbalanced.  Because a sports book does not want to
take  the  risk  of accepting unlimited bets on one side of a game, it creates a
game  limit,  the  maximum  amount  of money that will be accepted at the posted
line.  When  the  game  limit  is  reached,  the line is changed, or "moved," to
attract  action  on  the  "other"  side.

The  game  limit  is  established  by the sports book based upon the "earn" in a
sport,  which is a function of the amount the sports book would earn if the odds
guaranteed  it a constant commission regardless of the outcome (the "theoretical
hold  percentage"), the quality of the line, and the customer mix.  For example,
when  the  sports  book anticipates that the majority of the bets will come from
sophisticated  customers  who  know as much as, or more than, the oddsmaker, the
limit will be relatively low.  The Company believes that events with the highest
fan  popularity  and  media  coverage,  such  as  professional  football, have a
relatively small proportion of sophisticated customers.  Accordingly, the sports
books  expected earn on such an event would be higher and would justify a higher
game  limit.

In  order  to  effectively balance its books, a bookmaking operation must take a
sufficient  volume  of  wagers to offset large wagers on any given event.  While
many  of  the  large  casinos  in  Las Vegas have sufficient customer traffic to
underwrite  the  risks inherent in a sports book, some large and smaller casinos
typically do not.  Some larger casinos are not interested in operating their own
sports  book  because  of  the  associated  overhead.  As  a result, the Company
believes that many casinos cannot profitably operate a sports gambling operation
and, if they do, they are exposed to significant financial risks associated with
an  "unbalanced  book".  Nevertheless,  many  of these casinos believe that they
need  to  offer  their  customers a sports book to remain competitive with other
casinos.  The  Company  has  attempted  to fill this need and operates 46 sports
books  in major metropolitan areas in Nevada (21 are in the Las Vegas Area, 5 in
the  Reno/Sparks  Area,  20  throughout the State of Nevada, including Laughlin,
Jean,  Carson  City,  Crystal  Bay, Mesquite, Elko, Gardnerville, Hawthorne, Sun
Valley,  Spring  Creek,  Verdi,  Wendover,  Winnemucca,  Pahrump,  etc.).  The
locations  include  the  Riviera Hotel/Casino, Tropicana Resort/Casino, and Four
Queens  Hotel/  Casino  in  the  Las  Vegas Area and Fitzgerald's Casino, Carson
Nugget  Casino, and Rail City Casino in the Reno Area.  Under Nevada gaming law,
Leroy's  is permitted to own and operate sports books located on the premises of
other  non-restricted gaming licensees.  The remaining sports books in the state
are  operated  primarily  by  the  casinos  in  which  they  reside.

When  Leroy's  began  operations  in  1978, it was one of only 7 sports and race
books in Las Vegas. Currently, virtually every major casino in Nevada offers its
patrons  a  sports  and  race  book.  The typical sports book location leased by
Leroy's  encompasses  approximately 300 square feet, contains a board displaying
the  odds, television monitors showing sporting events, betting stations, ticket
sellers  and cashiers.  Most leases are at fixed rates, are cancelable by either
party  on  30  to  90  days  notice,  and some have incentive (or participation)
clauses.  As  a  bet  is  placed,  the  wagering data is entered into a computer
terminal  which  is connected via a communications device to Leroy's centralized
computer  system  which confirms the line, determines that the bet is within the
limits  set  for  the



                                       4

<PAGE>


particular  event,  records  the  information on a central database and issues a
ticket  evidencing  the bet. The ticket is then distributed to the customer with
Leroy's  simultaneously  recording  the  wager. Personnel at Leroy's main office
monitor  all  bets  and adjust the odds as necessary to reflect the various bets
throughout  all  of  Leroy's  locations.

The  Company  believes  that  Leroy's has lower maximum betting limits than many
sports  books  operated  by  the larger casinos.  It has established these lower
limits  in  an  effort  to  limit bets from the more sophisticated customers who
often  place larger bets.  In addition, in order to limit the more sophisticated
bettors  from  utilizing strategies that would provide an advantage, the Company
sets  even  lower limits for bets placed over the telephone, which are currently
accepted  only from within the State of Nevada and are limited to $2,200 per day
per  customer  (unless a higher limit for a specific customer is approved by the
State  Gaming Control Board).  The Company believes that geographical dispersion
across  the  State  of Nevada is more likely to attract bets from customers more
evenly  on  both  sides  of  a  line,  thereby  further  limiting  its  risk.

Professional  and  college  football  games  currently comprise about 40% of the
amount  bet  at  the  Leroy's locations with professional and college basketball
games  comprising  about  29%.  Professional  baseball  is  next  at  about 23%.
Historically,  Leroy's  business  has been seasonal in nature with approximately
56%  of  its  handle  arising  during  the  months of September through January.
Leroy's  wagering handle for the September 2002 to January 2003 season consisted
primarily  of football with approximately 64%, basketball with approximately 19%
and  baseball with approximately 8%.  Hockey and boxing comprise the majority of
the  balance.  Leroy's  race  books utilize the same personnel and facilities as
its  sports  books,  but  Leroy's  does  not set its own odds for race wagering.
Leroy's  accepts  wagers for races by offering race patrons the same odds as the
racetracks  at  which  the races occur.  Leroy's only offers race wagering for a
few  major  events,  such  as  the  Triple  Crown  and the Breeders Cup. Leroy's
currently offers pari-mutuel race wagering at it's locations in the Sahara Hotel
and  Casino and in the Silverton Hotel and Gambling Hall in Las Vegas.  Leroy's'
operates  a  daily  race  book  with wagers merged into the on-track pari-mutuel
pools  at  these  two  locations.

With the popularity and accessibility of personal computers, bettors now have an
additional  medium  from which to wager on sporting events.  While online sports
betting  has  existed  for  approximately  20  years, few people had access to a
computer  or the Internet.  The Company believes that the dynamic growth in home
computing  combined  with  the  convenience  of  betting online will enhance the
continued  growth  of  the  sports  betting  industry in general but may have an
adverse  impact  upon  the  Company's  live  wagering facilities in the state of
Nevada.  At  this  time,  the  Company  cannot  predict what impact, if any, the
growth of online wagering may have on the Company's overall handle (total amount
wagered).

Pari-mutuel  Wagering

Race  -  In  December 1997, Leroy's joined the Nevada Pari-mutuel Association to
allow  pari-mutuel  race wagering at one or more of its' locations.  Leroy's, in
association  with  a  disseminator,  offers  pari-mutuel  wagering  on events at
racetracks  throughout  the  country  including  Santa  Anita  in California and
Aqueduct  in  New York.  The Company currently offers pari-mutuel race at two of
its  locations.

Sports  -  From  June  1997  through  March  2000,  the  Company  test  marketed
pari-mutuel  sports  wagering  at its Nevada books and at approximately 18 other
books  throughout  the  State.  The  Company's  subsidiary,  Mega$ports,  Inc.,
acquired,  developed,  and  marketed  the technology.  Lack of patron acceptance
resulted  in  the  Company's decision to discontinue the betting alternative and
let  its  Nevada  gaming  license  expire  in  July 2000.  In preparation of the
non-gaming  kiosk operations projected to begin in fiscal year 2004, Mega$ports,
Inc.  was  renamed  Contest  Sports  Systems,  Inc.  ("CSS").

Systems  Operations

CBS  is  a  technology-driven  company  that  designs,  installs  and  maintains
computerized  sports  and  race  wagering  systems.  CBS is the leading race and
sports  wagering  systems  supplier  in  the State of Nevada and provides either
wagering  systems  and/or  services  to  the majority all of the sports and race
books  in  Nevada  that  are  not  operated by the Company's Leroy's subsidiary.
Casinos and other sports wagering facilities generally purchase the computerized
wagering  system  and  enter into an agreement for repair and maintenance of the
system  and  software  support.  Operating  revenues  mainly consist of race and
sports  wagering  equipment sales and the related maintenance contract revenues.
CBS  sells  its  race  and  sports  wagering  systems  to casinos under purchase


                                       5

<PAGE>


agreements  and  provides training for the system operators and terminal clerks.
CBS  does  not  provide  the  operations  and supervisory personnel necessary to
operate  the system.  The Company also owns and supports an alternative product,
AWISSI's  Nevada  Sports  Wagering  software.

STOP  designs, installs, and operates a telephone call identification system for
its customers.  The system determines the origin of a telephone call and accepts
or  rejects  a  call based on its origination. The system is used in conjunction
with  telephone  account  wagering  within  the State of Nevada and is currently
operating  in  one  casino.

Keno  Operations

AWIK  was  formed  during the second quarter of fiscal 1999.  In July, 2002, the
Company  discontinued its keno operations.  In preparation of the release of the
self-service  race and sports wagering terminals projected to begin in the first
quarter  of  fiscal  year  2004,  AWI  Keno  was renamed AWI Manufacturing, Inc.
("AWIM").

Discontinued  Operations

Discontinued operations  includes the sale of Mega$ports (ACT) Pty. Ltd. and the
closure  of  the  keno  operations.

Operating  Strategy

The  Company's  primary  operating  strategies for the foreseeable future are to
focus  on  its  core  businesses,  operating race and sports books in Nevada and
developing, selling and maintaining related systems, becoming more efficient and
cutting  costs.  In Nevada, the Company's strategy is to expand upon its current
base  of  books.  The  Company  is  also  developing  a  new self-service sports
wagering  terminal  which it expects to complete in the first quarter of  fiscal
2004.  This  new  terminal  would  allow  patrons  to  place wagers on their own
without  the  assistance of employees.  Patrons will be able to wager 24 hours a
day  on  all  available events.  The self-service sports wagering terminal would
allow  the  Company  to  operate profitably in smaller casinos where labor costs
have  been  prohibitive  and  to  achieve improved efficiency at larger casinos.
Additionally,  the Company is developing a nongaming version of the self-service
terminal  which it expects to complete in fiscal year end 2004.  The Company has
implemented  and  is  also  initiating  other  cost  cutting  measures.

Proposed  Government  Regulation

The Company intends to continue to present casinos with a "turn key" sports book
operation  that allows the casino to satisfy their patron's desires for race and
sports  gaming  without  bearing the risk and overhead associated with operating
the book themselves.  Leroy's anticipates continuing to utilize its computer and
communication expertise and equipment, by operating its satellite locations from
one  central  hub,  thereby  reducing the overhead that each individual location
would  have  in personnel and equipment.  The Company believes that as televised
sporting  events  continue  to proliferate, sports betting will continue to grow
and the Company expects that it can capitalize on such growth.  In the past, the
U.S.  Congress  has submitted bills which, if passed, would prohibit wagering on
the  Olympics  and  on high school and college games.  Leroy's currently accepts
wagers  on  college  games  and  estimates  that  such  wagering  represents
approximately 29% of its revenues.  Passage of any such legislation would have a
significant  negative  impact  on  the  Company's  operations.

Regulation  and  Licensing

The  ownership  and  operation of race and sports books in Nevada are subject to
extensive  state  and  local  regulation.  The  Company's  gaming operations are
subject  to  the  Nevada  Gaming  Control  Act  and its regulations (hereinafter
collectively  referred  to  as  the "Nevada Act") and various local regulations.
The Company's gaming operations also are subject to the licensing and regulatory
control  of  the  Nevada  Gaming Commission (the "Commission"), the State Gaming
Control Board (the "Board"), the Clark County Liquor Gaming Licensing Board, the
City of Las Vegas and other local jurisdictions.  The Commission, the Board, the
Clark County Liquor Gaming Licensing Board, the City of Las Vegas and such other
local  jurisdictions  are  hereinafter  collectively  referred to as the "Nevada
Gaming  Authorities".

The  laws,  regulations  and  supervisory  procedures  of  the  Nevada  Gaming
Authorities  have  their  genesis in various declarations of public policy which
are  concerned  with,  among  other  things:  (i)  the prevention of unsavory or



                                       6

<PAGE>


unsuitable  persons  from having a direct or indirect involvement with gaming at
any  time  or  in  any  capacity;  (ii)  the  establishment  and  maintenance of
responsible  accounting  practices  and  procedures;  (iii)  the  maintenance of
effective  controls  over  the  financial  practices of licensees, including the
establishment  of  minimum  procedures  for  internal  fiscal  affairs  and  the
safeguarding  of  assets  and  revenues,  providing  reliable record keeping and
requiring  the  filing  of  periodic reports with the Nevada Gaming Authorities;
(iv)  the  prevention of cheating and fraudulent practices; and (v) the creation
of  a  source  of  state  and local revenues though taxation and licensing fees.
Changes in such laws, regulations and procedures could have an adverse effect on
the  Company's  gaming  operations.

The  Company  has  been found suitable as the publicly traded parent of entities
holding  Nevada  gaming  licenses.  Leroy's  is  licensed  by  the Nevada Gaming
Authorities  as  the owner/operator of 46 non-restricted race and/or sports book
licenses;  AWIM  is  licensed by the Nevada Gaming Authorities as a Manufacturer
and  a  Distributor.  Gaming  licenses  require the periodic payment of fees and
taxes.  Furthermore,  gaming  licenses  are  not  transferable.

The  Company  is  registered  in Nevada as a publicly traded corporation and, as
such,  is  required  to  submit,  on  a  periodic  basis, detailed financial and
operating  reports to the Commission.  Additionally, the Company may be required
to  furnish  any  other  information requested by the Commission.  No person may
become  a  stockholder  of,  or  receive  any percentage of profits from Leroy's
and/or  AWIM  (as  non-public  entities)  without  first  obtaining licenses and
approvals from the appropriate Nevada Gaming Authorities.  The Company, Leroy's,
CBS  and  AWIM  have  received  from  the  Nevada Gaming Authorities the various
registrations,  approvals,  permits  and  licenses  required to engage in gaming
activities  in  Nevada.

The  Nevada Gaming Authorities may investigate any individual who has a material
relationship, or involvement with the Company in order to determine whether such
individual is suitable or should be licensed as a business associate of a gaming
licensee.  Officers,  directors and certain key employees must file applications
with  the  Nevada Gaming Authorities and may be required to be licensed or found
suitable  by  the  Nevada  Gaming  Authorities.  Officers,  directors  and  key
employees  of  the  Company who are actively and directly involved in the gaming
activities may be required to be licensed or found suitable by the Nevada Gaming
Authorities.  The Nevada Gaming Authorities may deny an application of licensing
for  any  cause  deemed  reasonable.  A  finding of suitability is comparable to
licensing,  and  both  require the submission of detailed personal and financial
information followed by a thorough investigation.  An applicant for licensing or
a  finding  of  suitability  must  pay  all  of  the costs of the investigation.
Changes in licensed positions must be reported to the Nevada Gaming Authorities.
In  addition  to  their  authority  to  deny  an  application  for  a finding of
suitability  or  licensure, the Nevada Gaming Authorities also have jurisdiction
to  disapprove  a change in a corporate position.  The officers and directors of
the  Company  and its subsidiaries have been found suitable by the Nevada Gaming
Authorities.

If  the  Nevada  Gaming  Authorities  were  to  find an officer, director or key
employee  unsuitable  for  licensing  or  unsuitable  to  continue  having  a
relationship with the Company, the companies involved would be required to sever
all  relationships with such a person.  Additionally, the Commission may require
the  Company  to  terminate  the  employment  of  any person who refuses to file
appropriate applications.  Determinations of suitability or questions pertaining
to  licensing  are  not  subject  to  judicial  review  in  Nevada.

If  it  were  determined  that the Nevada Act was violated by the Company or its
subsidiaries,  the  gaming  licenses  or registration held by the Company and it
subsidiaries  could  be  limited,  conditioned,  suspended or revoked subject to
compliance  with  certain  statutory and regulatory procedures.  However, at the
discretion  of  the  Commission,  the  Company  and any person involved could be
subject  to  substantial  fines  for  each separate violation of the Nevada Act.
Furthermore,  a  supervisor  could be appointed by the Commission to operate the
Company's gaming properties and, under certain circumstances, earnings generated
during  the  supervisor's appointment (except for the reasonable rental value of
the  Company's  gaming  properties)  could  be forfeited to the State of Nevada.
Limitation,  conditioning or suspension of any gaming license or the appointment
of a supervisor could, and certainly the revocation of any gaming license would,
materially  adversely  affect  the  Company's  gaming  operations.

A beneficial holder of the Company's voting securities, regardless of the number
of  shares  owned,  may be required to file an application, be investigated, and
have  his  or  her  suitability  as  a beneficial holder of the Company's voting
securities  be  determined  if  the  Commission  has reason to believe that such
ownership  would  otherwise  be  inconsistent  with the declared policies of the
State of Nevada.  The applicant must pay all costs of the investigation incurred
by  the  Nevada  Gaming  Authorities  in  conducting  such an investigation.  In
addition,  the Clark County



                                       7

<PAGE>


Liquor  Gaming  Licensing Board has taken the position that it has the authority
to  approve  all  persons  owning  or  controlling  the stock of any corporation
controlling  a  gaming  license.

The  Nevada  Act  requires any person who acquires more than 5% of the Company's
voting  securities  to report the acquisition to the Commission.  The Nevada Act
requires  that  beneficial owners of more 10% of the Company's voting securities
apply  to  the  Commission for a finding of suitability within 30 days after the
Chairman  of  the  Board  mails  written  notice requiring such a filing.  Under
certain  circumstances,  an  "institutional  investor", as defined in the Nevada
Act,  which  acquires  more  than  10%,  but not more than 15%, of the Company's
voting  securities may apply to the Commission for a waiver of such a finding of
suitability  if  such  institutional  investor  holds  the voting securities for
investment purposes only.  An institutional investor shall not be deemed to hold
the  voting securities for investment purposes only unless the voting securities
were  acquired  and  are  held  in  the  ordinary  course  of  business  as  an
institutional  investor  and  not  for  the  purpose  of  causing,  directly  or
indirectly,  the election of a majority of the members of the Board of Directors
of  the  Company,  any  change  in  the  Company's  corporate  charter,  bylaws,
management,  policies  or  operations  of  the  Company,  or  any  of its gaming
affiliates,  or  any  other action which the Commission finds to be inconsistent
with  holding  the  Company's  voting  securities  for investment purposes only.
Activities  which  are  not  deemed  to  be  inconsistent  with  holding  voting
securities for investment purposes only include: (i) voting on all matters voted
on  by  stockholders; (ii) making financial and other inquiries of management of
the type normally made by securities analysts for informational purposes and not
to  cause  a  change  in  its management, policies or operations; and (iii) such
other  activities  as  the  Commission  may determine to be consistent with such
investment  intent.  If  the  Commission  grants  a  waiver to an "institutional
investor,"  the  waiver  does  not  include  a  waiver  or  exemption  from  the
requirement for prior approval to "acquire control" of a registered corporation.
If  the  beneficial  holder of voting securities who must be found suitable is a
corporation,  partnership  or  trust,  it  must  submit  detailed  business  and
financial information, including a list of the beneficial owners.  The applicant
is  required  to  pay  all  costs  of  investigation.

Any  person  who  fails  or  refuses  to apply for a finding of suitability or a
license  within  30  days after being ordered to do so by the Commission, or the
Chairman  of the Board, may be found unsuitable.  The same restrictions apply to
a  record  owner  if  the  record  owner,  after  request, fails to identify the
beneficial  owners.  Any stockholder found unsuitable and who holds, directly or
indirectly,  any  beneficial  ownership  of  the  Common  Stock  of a registered
corporation  beyond  such  period of time as may be prescribed by the Commission
may  be  guilty  of  a criminal offense.  The Company is subject to disciplinary
action  if,  after  it  receives  notice  that  a  person  is unsuitable to be a
stockholder  or  to  have  any  other  relationship  with  the  Company  or  its
Subsidiaries,  the  Company:  (i) pays that person any dividend or interest upon
voting  securities of the Company; (ii) allows that person to exercise, directly
or  indirectly,  any  voting  right  conferred  through  securities held by that
person; (iii) pays remuneration in any form to that person for services rendered
or  otherwise;  or  (iv)  fails  to  pursue  all  lawful efforts to require such
unsuitable  person  to  relinquish his voting securities for cash at fair market
value.  Any  person  required  by the Commission to be found suitable but who is
found  unsuitable shall be guilty of a criminal offense if he holds, directly or
indirectly, the beneficial ownership of the voting or debt securities beyond the
time  prescribed  by  the  Commission.

The  Company is required to maintain a current stock ledger in Nevada, which may
be examined by the Nevada Gaming Authorities at any time.  If any securities are
held  in trust by an agent or by a nominee, the record holder may be required to
disclose  the identity of the beneficial owner to the Nevada Gaming Authorities.
A failure to make such a disclosure may be grounds for finding the record holder
unsuitable.  The  Company  is  also  required  to  render  maximum assistance in
determining  the identity of the beneficial owner.  The Commission has the power
to require the Company's stock certificates to bear a legend indicating that the
securities  are  subject to the Nevada Act. However, to date, the Commission has
not  imposed  such  a  requirement  on  the  Company.


Changes  in control of the Company through merger, consolidation, stock or asset
acquisitions,  management  or  consulting agreements, or any act or conduct by a
person  whereby  he  or  she  obtains  control,  may not occur without the prior
approval  of the Commission. Entities seeking to acquire control of a registered
corporation  must satisfy the Board and the Commission in a variety of stringent
standards  prior  to  assuming  control  of  such  registered  corporation.  The
Commission  may  also  require controlling stockholders, officers, directors And
other  persons  having  a  material  relationship or involvement with the Entity
proposed  to  acquire  control,  to  be investigated and licensed as part of the
approval  process  related  to  the  transaction.


The  Nevada legislature has declared that some corporate acquisitions opposed by
management,  repurchases  of  voting  securities  and  corporate defense tactics
affecting Nevada gaming licenses and registered corporations that are



                                       8

<PAGE>

affiliated  with  those  operations,  may  be injurious to stable and productive
corporate  gaming.  The  Commission  has  established  a  regulatory  scheme  to
ameliorate  the  potentially  adverse  effects  of these business practices upon
Nevada's  gaming  industry  and  to  further  Nevada's policy to: (i) assure the
financial  stability  of  corporate  gaming operators and their affiliates; (ii)
preserve  the  beneficial  aspects of conducting business in the corporate form;
and  (iii) promote a neutral environment for the orderly governance of corporate
affairs.  Approvals  are, in certain circumstances, required from the Commission
before  the  Company can make exceptional repurchases of voting securities above
the  current  market price thereof and before a corporate acquisition opposed by
management  can be consummated. The Nevada Act also requires prior approval of a
plan  of recapitalization proposed by a Company's board of directors in response
to a tender offer made directly to the registered Company's stockholders for the
purposes  of  acquiring  control  of  the  registered  corporation.

License  fees  and  taxes,  computed in various ways depending upon the  type of
gaming activity involved, are payable to the State of Nevada and to the counties
and  cities  in  which the Nevada licensees respective operations are conducted.
Depending upon the particular fee or tax involved, these fees indicate taxes are
payable  either monthly, quarterly, semi-annually or annually and are based upon
either:  (i)  a percentage of gross revenues received; (ii) the number of gaming
devices  operated; or (iii) the number of games operated.  Nevada licensees that
hold  a  license  as  an  operator  of  a  slot  route,  or  a  manufacturers or
distributors  license,  also  pay certain fees and taxes to the State of Nevada.

Any  person who is licensed, required to be licensed, registered, or required to
be  registered,  or  is  under  common  control  with  such  person (hereinafter
collectively referred to as "licensees") and who propose to become involved in a
gaming  venture  outside  the  State  of  Nevada is required to deposit with the
Board,  and  thereafter  maintain,  a  revolving  fund  to  pay  the expenses of
investigation  by  the Board of his or her participation in such foreign gaming.
The Company has filed the appropriate foreign gaming reports and has established
the  required  revolving  fund.  The  revolving  fund  is subject to increase or
decrease  in  the  discretion  of the Commission. Thereafter, such licensees are
required  to  comply  with  certain reporting requirements imposed by the Nevada
Act.  Licensees  are  also  subject  to disciplinary action by the Commission if
they  knowingly  violate  any laws of the foreign jurisdiction pertaining to the
foreign  gaming  operation,  fail  to  conduct  the  foreign gaming operation in
accordance with the standards of honesty and integrity required of Nevada gaming
operations,  engage in activities that are harmful to the State of Nevada or its
ability  to  collect  gaming  taxes  and fees, or employ a person in the foreign
operation  who  has been denied a license or finding of suitability in Nevada on
the  basis  of  personal  unsuitability.  Recent  changes  in  the Nevada Gaming
Control  Act  would  allow the Company to seek a determination of suitability of
any  associate  or activity associated with the foreign gaming opportunity prior
to  engaging  in  that  activity.

Pursuant  to  the  Professional  and  Amateur Sports Protection Act (hereinafter
referred  to  as the "Sports Protection Act"), which became effective January 1,
1993, the proliferation of legalized sports books and wagering was significantly
curtailed.  Although  the  Sports  Protection  Act  generally  prohibits  sports
wagering  in  every  jurisdiction,  including those jurisdictions subject to the
Indian  Gaming  Regulatory  Act,  the  Sports  Protection Act does permit sports
wagering  in  those  jurisdictions  that authorized sports wagering prior to the
effective  date  of  the Sports Protection Act.  Thus, sports books and wagering
are  permitted to continue to operate in Nevada provided the wager originates in
Nevada  and  is  received  by  a  licensed Sports Book in Nevada.  Moreover, the
Interstate  Wire  Act (hereinafter referred to as the "Wire Act") also prohibits
those  in  the  business  of  betting  and  wagering  from  utilizing  a  wire
communication  facility  for  the transmission in interstate or foreign commerce
any bets, wagers or information assisting in the placing of such bets and wagers
on  any  sporting  event  or contest unless such betting or wagering activity is
specifically  authorized  in  each  jurisdiction  involved.

Leroy's  may  not accept bets received by use of wire communications facilities,
including telephones and computers, unless such bets originated in jurisdictions
wherein such betting or wagering is legal.  Nevada has amended the Nevada Gaming
Control  Act  to  allow  licensed  race  and  sports  books  in Nevada to accept
interstate  pari-mutuel  wagers  from  other  jurisdictions in which pari-mutuel
wagering  is  legal.  However,  the  regulations of the Nevada Gaming Commission
currently prohibit any licensed race and sports book in the State of Nevada from
accepting  any telephone wagers from interstate locations.  In order for Leroy's
to  take  advantage  of the business opportunities provided by this amendment to
the law, the Nevada Gaming Commission must amend its regulatory restrictions "ab
initio"  or  Leroy's  can  petition  the  Commission  to  remove such regulatory
restrictions in whole or in part.  There can be no assurance that any regulatory
amendment  will  be  authorized,  that  any such amendment would be favorable to
Leroy's,  or  that  any  such  amendment  would  not  be  burdensome to Leroy's.



                                       9

<PAGE>


The U.S. Congress has proposed several bills that would prohibit any person from
engaging  in  the  business  of betting or wagering via electronic communication
facilities,  including  the  Internet,  if  the transmission is not legal in the
state  or  foreign  country  in  which  the transmission either originates or is
received.  If  any  such  bill were to become law, the Company's ability to take
advantage  of  interstate  pari-mutuel wagering opportunities would be adversely
impacted.

Competition

There  is  intense  competition  among companies in the gaming industry, most of
which  have  significantly  greater  financial,  marketing,  technical and other
resources than the Company.  Leroy's faces competition from all other sports and
race  wagering  operations  throughout  Nevada.  There  are currently 160 sports
books  in  Nevada,  of which the Company owns and operates 46.  Virtually all of
the major casinos in Nevada have sports and race books, some of which are larger
and  offer  more amenities than the Company's locations and some casinos operate
sports books at other casinos.  CBS faces competition from the larger casinos as
well  as keeping up with the rapidly growing field of technology.  There also is
a  possibility  of  another  systems  provider  moving  to  Nevada.

Gaming has become more accepted by society in recent years.  However, the gaming
industry  is  subject  to  shifting  consumer  preferences  and  perceptions.  A
dramatic  shift  in  consumer  acceptance  or interest in gaming could adversely
affect  the  Company.  In addition, the Company's operations compete, to varying
degrees,  with  gaming  operations  in  other parts of the United States and the
world  and  with  state-sponsored  lotteries,  on  and  off-track wagering, card
parlors,  riverboat  and  Native  American  gaming  ventures  and other forms of
legalized  gaming.  While  the  Nevada  market  is  continuing to offer expanded
tourist  attractions, there can be no assurance that this market will be able to
sustain  its  current  growth  or  current  levels of tourism.  Legalized casino
gaming  in  other states and on Native American reservations provide competition
to  the  Company and its primary market and could adversely affect the Company's
operations,  particularly  if  such  gaming  were to occur in areas close to the
Company's  operations.

Future  operating  results  of  the Company are subject to significant business,
economic,  regulatory  and  competitive uncertainties and contingencies, many of
which are beyond the control of the Company.  There can be no assurance that the
Company's  overall  business  strategy  will  be  successful  in  achieving  the
Company's  goal  of attracting additional customers to the Company or increasing
the  Company's  gaming  revenues  and  operating  profits.

Employees

The  Company  and  its  subsidiaries  had  approximately  208 full and part-time
domestic employees at January 31, 2003 with 152 employed by Leroy's, 44 employed
by  CBS  and  12  employed  by the Company.  No employees of the Company and its
subsidiaries  are  currently  represented by a labor union.  The Company and its
subsidiaries  do  not  currently  know  whether  or  to what extent, if any, its
employees  will, in the future, be governed by collective bargaining agreements.

The  continuing  proliferation  of legalized gaming in the United States and the
resulting  increase  in  the  number  of  casinos  have  created  a  competitive
environment  for  qualified  casino  management  personnel and other experienced
casino  employees  on  a  national  basis.  Management  believes  that  this
industry-wide  factor will make it more difficult for the Company to attract and
retain  a  trained  labor  force, which may adversely affect the business of the
Company.  If  the  Company  is unable to attract and retain qualified management
personnel,  the  growth  and  profitability  of  the  Company  may  be adversely
affected.

Item  2.     Description  of  Property

The  Company's  corporate  offices,  central  computer  operations  and  systems
operations  are located in a 29,250 square foot building at 675 Grier Drive, Las
Vegas, Nevada, which is owned by the Company's subsidiary, CBS.  CBS is a debtor
under  a  mortgage  loan  on the building of which approximately $1.7 million is
outstanding  as  of  January  31,  2003.  The loan, which accrues interest of 8%
annually,  is  due  in full in September 2015 and is secured by a deed of trust,
assignment  of  leases  and  rents  in  favor  of  the  lender.  The Company has
guaranteed  CBS  obligations  under  this  loan.



                                       10

<PAGE>


Leroy's  operates  46  sports  books  subject  to  lease  agreements  in  major
metropolitan areas in Nevada. The average book occupies approximately 300 square
feet  and ranges from 80 to 1,000 square feet. Lease terms generally vary from 1
to  10  years  and typically provide for automatic extensions and termination by
either  party  with  a  90-day notice. Total rental expense under the leases was
approximately  $456,000  and  $417,000  for the years ended January 31, 2003 and
2002,  respectively.

Item  3.     Legal  Proceedings

Racusin

On  November  14,  2002,  the  U.S. District Court of Nevada issued a verdict in
favor of Michael Racusin ("Racusin") and against the Company in the gross amount
of  $2,310,000.  The  draft of the final judgment order received on November 20,
2002  from  Racusin's  legal  counsel  was  in  the  amount of $3,791,216, which
included  interest  in  the amount of $1,481,216 (as of November 20, 2002).  The
draft  of  the  final  judgment  allows  for  an  offset of $756,340 (the amount
previously  paid  by  the  Company  to  Racusin  pursuant  to the original trial
judgment  in  September 1997).  Upon the advice of legal counsel, the Company is
contesting  the  interest portion of the judgment ($1,481,216) due to the timely
payment  of  the  original trial judgment by the Company in September 1997.  The
range of possible loss to the Company for interest related to this litigation is
from  $0  to  $1,510,126  as  of  January  31, 2003.  The Company had previously
accrued  $328,624  for  interest,  which  will  not  be adjusted until the final
outcome  is  known.

The post-trial issues have been fully briefed and are awaiting a decision by the
trial  judge  which  is  expected within the next six months.  No opinion can be
expressed  as to the likelihood of the outcome on the pre/post judgment interest
issue.  It  is  also  possible  that  the  decision on the post-trial issues may
result  in  an appeal or other legal actions; such appeal or other legal action,
if  commenced,  could  extend this matter for an additional three to five years.

The  anticipated  final  judgment  is material to the financial viability of the
Company  and,  at  the  present  time,  management  is  considering  the options
available  to the Company, including the filing of a Chapter 11 bankruptcy.  The
Company  has  recorded  $1,643,625  against  additional  paid-in  capital in the
quarter  ended  October  31, 2002, which represents the stock award less amounts
previously  paid  by the Company.  The Company has been in litigation since 1995
with  Michael  Racusin  who  introduced  certain  underwriters to the Company in
connection with the Company's initial public offering.  The Company disputed Mr.
Racusin's claim for compensation under agreements that the Company believed were
unenforceable.

Imagineering  Systems,  Inc.

On  October 21, 1998, Imagineering Systems, Inc. ("ISI") filed a civil complaint
against the Company claiming, among other things, breach of contract and implied
covenant  of  good  faith  and  fair  dealing.  On November 8, 1998, the Company
brought  an  action to recover on loans it made to ISI.  On October 2, 2000, the
Company's  "Notice  for  Summary Judgment" for the claim of relief for breach of
Promissory  Note  was  granted.  The  Company was awarded $76,583 plus interest.
The  execution  of  the  judgment  was stayed until the outcome of the ISI civil
complaint  is  known.

On October 17, 2000, a trial by jury was held and, on October 30, 2000, the jury
rendered  a  verdict in favor of ISI in the amount of $397,500 plus interest for
breach  of  contract and $1,000,000 plus interest for breach of implied covenant
of  good  faith  and fair dealing.  The Company immediately brought a post-trial
motion  asking  the  court  to:  (1) disregard the jury verdict; (2) order a new
trial; or (3) reduce the amount of the judgment.  On February 1, 2001, the Court
filed  its decision which: (a) refused to set aside the jury's award of $397,500
on  the  breach  of  contract claim; and (b) granted a new trial on the issue of
damages  awarded  on the claim for breach of the covenant of good faith and fair
dealing unless ISI agreed to a reduction from $1,000,000 to $500,000, which they
did.  As  a  result  of the Court's decision and ISI's actions, the award to ISI
was effectively reduced from $1,397,500 plus interest to $897,500 plus interest.
Any  potential  damage  award  would  not  be  covered  by  insurance.

The  Company  has  appealed  the Court's decision based upon a number of factors
including,  but  not  limited  to:  (1)  the award for damages on both breach of
contract  and  implied  covenant  of  good faith and fair dealing is contrary to
Nevada contract law; (2) the award of damages for the breach of implied covenant
of good faith and fair dealing



                                       11

<PAGE>


constitutes  specific  performance;  and  (3)  ISI  did  not  provide sufficient
evidence  at  trial  for  the  award  of  damages  for  breach  of  contract.

The  Nevada  Supreme  Court heard oral arguments from the parties regarding this
matter on April 16, 2003; a written opinion resulting from the oral arguments is
expected  within  the next three to nine months.  No opinion can be expressed as
to  the outcome.  The potential range of loss in this matter would be from $0 to
$1,397,500,  plus  any  statutory interest.  It is also possible that the appeal
may  result  in  a  new  trial  on  the  issue of damages which could extend the
potential  outcome  of  this  matter  for  an  additional  three  to five years.

Based upon the advice of counsel, the Company has accrued $213,000 plus interest
(net  of  $76,503  plus  interest)  with  respect  to  this  litigation.

Internet  Operations  Investigation

On  July  27,  2000,  the  Nevada  Gaming  Commission approved a settlement of a
complaint  against the Company filed by the State Gaming Control Board.  Without
admitting  or  denying  the  allegations contained in the complaint, the Company
agreed  to  pay  a fine of $10,000 and to divest itself of any and all interests
and  rights  pertaining  to  the  Mega$ports  (ACT)  Pty.  Ltd.  subsidiary.

On  July  1,  2002,  the Company completed a sale of Mega$ports (ACT) to Euraust
Limited  ("Euraust"), an Australian company.  On March 20, 2003, the Chairmen of
the  State  Gaming  Control  Board and Nevada Gaming Commission concluded that a
complete  divestiture  cannot  occur so long as there is a continuing obligation
from  Eurast  to  pay  the  Company  on its note (valued at $624,600) based on a
percentage  of  handle.  The  Company  has  been unsuccessful in its attempts to
negotiate  a  modification  or  discount  for  a  lump-sum  payment with Eurast.
Accordingly,  as of January 31, 2003, the Company wrote off as uncollectible the
existing  note  to  gain  on  disposal  of  discontinued  operations.

Willow  International  Ventures  Corporation

On October 9, 2001, Willow International Ventures Corporation ("Willow") filed a
civil  complaint  against  the  Company  claiming,  among other things:  (1) the
Company's federally trademarked name "Mega$ports" (used in the United States and
Australia)  is  invalid;  (2)  Willow's  ownership  of  the  Internet  domain
"www.megasports.com";  (3)  public  confusion regarding the similarity of names;
(4) unfair competitive practices by the Company; (5) false and misleading use of
the  trademark  "Mega$ports"  by the Company; (6) violation of the Lanham Act by
the  Company;  and  (7)  damages  in  excess  of $75,000 (the exact amount to be
determined  at  trial).  On  November  20, 2001, the Company filed an Answer and
Counterclaim  to  the  civil complaint brought by Willow denying the allegations
made therein and seeking injunctive relief and the recovery of actual and treble
damages,  Willow's  profits,  costs,  attorneys'  fees  and  other  relief.

On  August  28,  2002,  Willow  and the Company settled both the lawsuit and the
counterclaim.  In  anticipation of the settlement, on July 22, 2002, the Company
officially  changed the name of Mega$ports, Inc. to Contest Sports Systems, Inc.
and,  as  a  result  of  the  settlement,  the  Company wrote off the Mega$ports
trademark  in  the  amount  of  $252,532  in  the  quarter  ended July 31, 2002.

Jean  Development  Company,  et.  al.

The  Company is a defendant in a claim brought by Jean Development Company, Jean
Development  West  and Railroad Pass Investment Group alleging the nonpayment of
fees  associated  with  the  operation  of  the keno game by AWI Keno, Inc.  The
Company  is  currently  involved  in  discussions  and expects this matter to be
settled  without  material  impact  on  the  Company.  In the event a settlement
cannot  be reached, the Company believes the impact of the lawsuit will not have
a  material  effect  on  our  financial  position, results of operations or cash
flows.  AWI  Keno,  Inc.  was  subsequently  renamed  AWI  Manufacturing,  Inc.

Other

The Company or any subsidiary is not a party to any other material pending legal
proceeding  nor,  to  the  Company's  knowledge,  is  any  other  material legal
proceeding  threatened  against  it  or  any  of  its subsidiaries.  The Company
maintains  insurance  coverage,  including  property,  workers  compensation and
general  liability  insurance,  which  it


                                       12

<PAGE>


considers  adequate  for the size of the Company and the nature of its business.
Except  as  otherwise  noted,  management  does  not  believe the outcome of the
above-described proceedings will have a material adverse effect on the Company's
financial  position  or  results  of  operations.

Item  4.     Submission  of  Matters  to  a  Vote  of  Security  Holders
None.


                                       13

<PAGE>



                                     PART II


Item  5.     Market  for  Common  Equity  and  Related  Stockholder  Matters

The  Company's  Common  Stock  had  been  reported by the NASDAQ National Market
System  under  the  symbol  "BETM"  since  1996.  Effective  August  4, 2000 the
Company's  securities  began  trading  on  the  OTC  Bulletin Board (OTCBB). The
following  table  sets  forth  the  range of high and low bid quotations for the
Company's Common Stock for each of the periods indicated as reported by the NASD
OTCBB.


<TABLE>
<CAPTION>


             Fiscal Year Ending January 31, 2003
---------------------------------------------------
Quarter Ended                          High $ Low $
---------------------------------------------------
<S>                                  <C>     <C>
April 30, 2002                         0.48   0.28
July 31, 2002                          0.75   0.29
October 31, 2002                       0.43   0.13
January 31, 2003                       0.28   0.11

             Fiscal Year Ending January 31, 2002
---------------------------------------------------

Quarter Ended                        High $  Low $
---------------------------------------------------
April 30, 2001                         0.60   0.33
July 31, 2001                          0.50   0.25
October 31, 2001                       0.50   0.25
January 31, 2002                       0.50   0.20

</TABLE>



The  approximate  number  of record holders of shares of the Common Stock of the
Company  outstanding  as of April 18, 2003, was 45.  No cash dividends have been
declared  or  paid  on  the  Company's  Common  Stock.

Item  6.     Management's  Discussion  and  analysis  or  plan  of  operation.

The  Company's primary operating strategy for its continuing operations over the
next  twelve  months is to focus on its core businesses of operating race/sports
books  through Leroy's, developing/selling/maintaining race/sports books systems
through  CBS,  and  leasing  self-service  wagering  kiosks  through  AWIM.  The
self-service  sports  wagering  kiosk  would  allow  us to operate profitably in
smaller  casinos where labor costs have been prohibitive and to achieve improved
efficiency  at  larger  casinos.  The  Company  is  also developing a non-gaming
version of the kiosk that it anticipates will be ready in the fiscal year ending
January  31,  2004.

In  preparation  for  the  kiosk  operations projected to begin during the first
quarter  of fiscal year ending January 31, 2004, AWI Keno, Inc., a subsidiary of
the  Company, was renamed AWI Manufacturing, Inc. ("AWIM") and Mega$ports, Inc.,
a  subsidiary  of CBS, was renamed Contest Sports Systems, Inc.  ("CSS").  Kiosk
operations  will  be accounted for under either AWIM or CSS depending on whether
the  particular  kiosk  is  the  gaming  or  non-gaming  version.

The  Company will continue to explore possible new locations for sports and race
book  facilities,  including  foreign  jurisdictions.  We will also continue our
review  of  existing  locations  in  order to close those locations that are not
operating  efficiently.  Based  on  our  strategy, the number of sports and race
books  operated  by  Leroy's  may  increase or decrease in the future due to the
closure of unprofitable locations, or host properties, and closures due to other
factors beyond our control or the possible opening of new locations with greater
potential for profitability.   There is no assurance that we will be able to add
new  locations  and/or  that  any  new  locations  so  added will be profitable.

Management's  Discussion  and  Analysis  of  analysis of financial condition and
results  of  operations.

Fiscal  year  ended  January 31, 2003, compared to the fiscal year ended January
31,  2002

Revenues  for the fiscal year 2003 decreased $444,324 (3.7%) to $11,562,085 from
revenues  of  fiscal  2002.  The decrease is primarily due to a $468,905 (19.7%)
decrease  in  nonrecurring equipment sales in the systems segment


                                       14

<PAGE>

(which  tend to vary significantly from year-to-year based upon the needs of the
industry).  The  operating  income of $796,414 for 2003 was $1,138,289 less than
2002  as  a  result  of  costs  associated  with developing the new self-service
terminal,  increased  cost  of  litigation,  and  an  adjustment  to  reinstate
previously  earned  vacation  benefits of certain officers that had been capped.

Wagering  Operations

Revenues  from  wagering  remained  relatively  constant  between  fiscal years.
Handle was $89,303,884 in 2003, an increase of $3,129,050 (3.6%).  The Company's
net  win percentage was 7.5% in fiscal year 2003 compared to 7.8% in fiscal year
2002.

The  increase in wagering handle is attributable to an increase in the number of
wagering  locations  and the inclusion of two professional football championship
games  in  fiscal year 2003; one in February, 2002 and one in January, 2003.  An
increase  or  decrease  in  handle, however, is not necessarily indicative of an
increase  or  decrease  in  revenues  or profits. There is no assurance that the
Company's  handle  will not decrease in the future.  Elimination of unprofitable
locations,  closure  of  host  properties,  changes  in  state  and/or  federal
regulations,  and  other  factors  beyond  the  Company's  control may result in
declines  in  handle.

The  number  of  sports  and  race  book locations owned and operated by Leroy's
increased  by  5  (12.2%)  to  46  at  January  31, 2003. The Company intends to
continue to open new locations that management expects to operate profitably and
to  continue  its review of existing locations in order to close those locations
that  are  not  operating  efficiently. There is no assurance that the number of
sports  and  race  books operated by the Company will not decrease in the future
due  to  elimination  of unprofitable locations, closure of host properties, and
other  factors  beyond  the  Company's  control.  There is no assurance that the
Company will be able to add new locations and/or that any new locations so added
will  be  profitable.

Wagering  operating costs increased $519,408 (11.2%) to $5,158,093 primarily due
to  an increase in direct costs.  Direct costs increased $565,927 (13.5%) due to
costs associated with operating the new locations ($298,382), costs incurred for
the  football  contest  ($105,000)  sponsored  during the 2002-2003 professional
football  season,  and  an overall increase in operating the existing locations,
including  employee  related  expenses  ($162,545).  The  significant  increases
associated  with  the  operation  of new locations were taxes ($79,763), cost of
race  operations  ($60,884),  rents  ($43,818),  communications  ($24,987),  and
location  set-up  and maintenance ($28,839). Selling, general and administrative
expenses  increased  $5,324  (2.5%) due to employee related expenses. Offsetting
the  increases  in direct costs and selling, general and administrative expenses
was  a  $51,843  (23.7%)  decrease  in  depreciation  expense.

Systems  Operations

Revenues from Systems decreased $451,352 (8.5%) to $4,850,621.  The decrease was
primarily  attributed  to  a decrease in equipment and software license sales of
$468,905  (19.7%) in 2003.  The Company's gross profit margin increased 15.9% to
49.8%  as a result of decreased component costs.  Maintenance revenues increased
$31,779  (1.2%) to $2,686,660 in 2003 and related maintenance expenses increased
$38,571  (2.9%)  to  $1,309,927.  CBS equipment sales are low volume high dollar
sales  based  on the need of the market, which is limited based on the number of
casinos  that operate race and sports books.  Equipment sales are not recurring,
as  the  impetus for a sale is outdated or expired equipment at existing casinos
or  the  opening  of  a  new  sports  book.

Direct  Costs

Total  direct  costs  for wagering and systems operations of $7,021,365 for 2003
increased  $516,255 (7.9%) from 2002 as a result of the matters discussed above.

Research  and  Development  Costs

Research and development costs of $933,514 for the fiscal year ended January 31,
2003,  increased  by  $77,534  (9.1%)  from  research  and  development costs of
$855,980  for  the  fiscal  year  ended  January 31, 2002 primarily driven by an
$84,656  (10.4%)  increase  in  employee  related  expenses.



                                       15

<PAGE>


Selling,  General  and  Administrative  Costs

Selling,  general  and  administrative costs of $2,397,903 for 2003 increased by
$250,962  (11.7%)  from  2002  primarily  as a result of an increase of employee
related  expenses of $451,406 or 45.8% offset by a decrease in legal and outside
services  of  $323,988  or  40.9%.  The  employee  related  expenses  included a
one-time  charge  of  approximately  $250,000  to  reinstate  previously  earned
vacation  benefits  of  certain  officers  that  had  been  capped.

Depreciation  and  Amortization

Depreciation  and  amortization  was $412,889 for 2003, compared to $563,675 for
2002  primarily  due  the  reduction  in  amortization  expense due to SFAS 142.

Interest  Expense

Interest expense of $156,365 for fiscal year ended 2003 decreased $4,722 (2.9%).
The  decrease  is  principally due to the reduced interest paid on the principal
balance  on  the  building  mortgage.

Discontinued  Operations

Discontinued  operations  reported  in  fiscal 2002 were presented in accordance
with  the  requirements  of  APB  Opinion  No.  30,  Reporting  the  Results  of
Operations-Reporting  the  Effects  of  Disposal of a Segment of a Business, and
Extraordinary,  Unusual  and Infrequently Occurring Events and Transactions.  In
fiscal  2003,  the  Company  adopted Statement of Financial Accounting Standards
(SFAS)  No.  144, Accounting for the Impairment or Disposal of Long-Lived Assets
and  has  reported  disposal  activities  indicated  in  fiscal 2003 and 2003 in
accordance  therewith

The  discontinued  operations  loss,  net  of  income taxes, of $207,998 for the
fiscal  year  ended  2003  is  attributable  to the sale of the Mega$ports (ACT)
operation  and  the  closure  of  the  keno  operation.

Current  Year  Earnings

The Company's "Consolidated Statements of Operations for the years ended January
31,  2003  and 2002" (see attached financial statements) indicates Net Income in
the  amount  of  $423,564  for  the  year  ended January 31, 2003 as compared to
$914,654 for the year ended January 31, 2002.  Net income, excluding the effects
of  operating income described in the preceding sections,  was reduced by losses
from  discontinued  operations  of  $207,998  and a write-down of the Mega$ports
trademark  in  the  amount  of  $252,532  due  to  a  litigation  settlement.

Liquidity  and  Capital  Resources

The  Company  has  negative  cash flow exposures due to the litigation judgments
against  the Company in two lawsuits referred herein as the Racusin case and the
Imagineering  case.  Final  judgment  in  the Imagineering and Racusin cases, if
significantly  in excess of the minimum amount estimated and accrued, could have
a  significant  negative  impact  on  our  cash  balances  and  cash  flows.

On  November  14,  2002,  the U.S. District Court of Nevada, issued a verdict in
favor  of  Michael  Racusin ("Racusin") and against the Company in the amount of
$2,310,000  before  interest.  The  Company, however, is contesting the interest
Racusin  has  claimed  relating to this judgment.  A more complete discussion of
this  verdict  and  the  interest  component is found in the "Legal Proceedings"
section  of  this  10KSB  found  under Item 3. The range of possible loss to the
Company for interest related to this litigation is from zero to $1,510,126 as of
January  31,  2003;  the  Company  had previously accrued $328,624 for interest,
which  will not be reduced until the final outcome is known.  The expected final
judgment  is  material to the viability of the Company and, at the present time,
management  is  considering  the options available to the Company, including the
filing of a Chapter 11 bankruptcy.   The Company has recorded $1,643,625 against
additional  paid-in  capital  in  the  quarter  ended  October  31,  2002, which
represents  the  stock  award  less  amounts  previously  paid  by  the Company.

On  December  31,  2002,  the Company was notified that their bonds covering the
Gaming  Control  Board  Regulation  22.040  Reserve  Requirement  were cancelled
effective  March 1, 2003 due to the rehabilitation (bankruptcy) of the insurance
company  providing  the  bonds.  The  Regulation  requires the Company have cash
reserves  to  cover  any



                                       16

<PAGE>



outstanding  wagering  liability  such  as unpaids, future tickets and telephone
account  deposits.  To  meet  the regulation requirements, the Company set aside
$1,000,000  in  a  three-month  revolving certificate of deposit on February 25,
2003  which  will  be  marked  as  restricted  cash.

The  Company  is  involved  in  various  litigation matters that could result in
losses  sufficient  to  threaten the financial viability of the company.  Unless
the  litigation  matters  are resolved satisfactorily, or the Company is able to
finance them adequately, management believes that the Company may not be able to
satisfy  its  operating  cash  requirements for at least the next 12 months from
existing  cash  balances  and  anticipated  cash  flows.  For  these reasons our
independent  auditors,  Piercy, Bowler, Taylor and Kern, have indicated in their
report dated April 8, 2003, that they have substantial doubt as to the Company's
ability  to  continue  as a going concern.  The Company plans to accumulate cash
liquidity  in fiscal 2004 to fund possible effects of litigation, seasonality of
sports  betting, timing of system sales, and the possible effects of legislation
to  ban  wagering on amateur athletic events.  The Company has possible negative
cash  flow  exposures due to potential litigation judgments (chiefly Racusin and
Imagineering  Systems,  Inc.;  see  "Legal  Proceedings").  Final  judgments
significantly  in  excess  of  amounts accrued could have a significant negative
impact  on  the  Company's  existing  cash  balances and anticipated cash flows.
Final  judgments in connection with these matters could be determined within the
next  twelve months   At the present time, management is considering the options
available  to  the  Company,  including  the  filing  of  Chapter  11.

Critical  Accounting  Policies  and  Practices

Wagering  Revenue.  The  Company recognizes revenue from wagering when the event
is  completed  and  the  winner  or  loser  of  the  bet  is known.  The revenue
recognized on each event is the net of the handle (amount bet on the event) less
the paid outs to the customer on the customer's winning tickets.  The amount bet
on  an  event  is  not  indicative  of  the  win  or  loss.

Systems Equipment Contract Sales.  The Company recognizes revenue on its systems
sales  when  the  installation  is  complete.  The contract generally requires a
deposit  upon  signing  which is recorded as a deposit until the installation is
complete.

Systems  Maintenance  Revenue.  The  Company  maintains the systems it sells and
charges a monthly maintenance fee by contract to its customers.  The maintenance
revenue  is  recorded  in  the  month  it  is  billed  per  the  contract terms.

Contractual  Obligations  and  Commercial  Commitments
<TABLE>
<CAPTION>



                    2004      2005      2006      2007      2008
                  -------------------------------------------------
<S>               <C>       <C>       <C>       <C>       <C>
Long-term debt    $114,669  $125,635  $113,921  $117,591  $110,559

Operating leases   520,970   497,974   485,979   469,998   469,998
                  -------------------------------------------------

Total             $635,639  $623,609  $599,900  $587,589  $580,557
                  =================================================

</TABLE>



Long  term debt includes the mortgage on the building and loans for automobiles.
Included  in  the  operating  leases  are rents payable at the Leroy's operating
locations,  an  automobile,  and  copy  machines.  Rent at the Leroy's locations
includes  the  base  rent  due  per  the contract terms.  The rental leases also
include one location in which the rent is calculated based on a formula relating
to  the  activity  of  the  location.  The rent to be paid for that location was
estimated  for  the  purpose  of  this  schedule.

Forward-Looking  Statement

Certain  information  included in this report and other materials filed or to be
filed  by  the  Company  with the Securities and Exchange Commission (as well as
information included in oral statements or written statements made or to be made
by  the Company) contains statements that are forward looking within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities  Exchange  Act of 1934.  Such statements include information relating
to  current  expansion  projects,  plans for future expansion projects and other
business  development  activities  as  well as other capital spending, financing
sources  and  the  effects of regulations (including gaming and tax regulations)
and  competition.  Such forward-looking information involves important risks and
uncertainties  that could significantly affect anticipated results in the future
and,  accordingly,  such  results  may  differ  from  those  expressed  in  any
forward-looking statements made by or on behalf of the Company.  These risks and



                                       17

<PAGE>

uncertainties  include,  but  are  not limited to, those relating to the Company
taking  financial  risks  on the outcome of sports events as a principal betting
against  its patrons, domestic or global economic conditions, changes in federal
or  state tax laws or the administration of such laws, changes in gaming laws or
regulations  (including the legalization of gaming in certain jurisdictions) and
applications  for  licenses  and approvals under applicable laws and regulations
(including  gaming  laws  and  regulations).


Cautionary  Statements

As  provided for under the Private Securities Litigation Reform Act of 1995, the
Company  wishes  to caution investors that the following important risk factors,
among  others,  in  some  cases have affected and in the future could affect the
Company's  actual  results  of  operations  and  cause  such  results  to differ
materially form those anticipated in the forward-looking statements made in this
document  and  elsewhere  by  or  on  behalf  of  the  Company.

Strict  Regulation  by  Gaming Authorities.  The ownership and operation of race
and sports books in Nevada are subject to strict regulation under various state,
county  and  municipal  laws.  The Company and its required officers and certain
shareholders  have  received  the necessary licenses, permits and authorizations
required to own, distribute and operate race and sports book equipment.  Failure
of  the  Company or any if its key personnel to obtain or maintain the requisite
licenses,  permits  and authorizations would have a materially adverse effect on
the  Company's  ability to operate.  Expansion of the Company's activities could
be  hindered by delays in obtaining requisite state licenses or the inability to
obtain  such  licenses.  No  assurance can be given as to the term for which the
Company's  licenses  will  be renewed in a particular jurisdiction or as to what
license  conditions,  if  any, may be imposed by such jurisdiction in connection
with  any future renewals.  The Company cannot predict the effects that adoption
of  and  changes  in gaming laws, rules and regulations might have on its future
operations.

Competition.  There  is  intense  competition  among  companies  in  the  gaming
industry,  most  of  which  have  significantly  greater  financial,  marketing,
technical  and  other  resources  than  the  Company.  Additionally,  CBS  faces
competition  from  other  larger  casinos as well as keeping up with the rapidly
growing  field  of technology.  There is also the possibility of another systems
provider  moving  to Nevada.  Significant competition encountered by the Company
may  have a materially adverse effect on the Company.  There can be no assurance
that the Company will be able to compete successfully against current and future
competitors.

Demand  for  the  Company's  Products  and  Services.  The  Company believes its
ability  to  increase revenue, cash flow and profitability will depend, in part,
upon  continued market acceptance of the Company's products and services.  There
can  be  no  assurance  that the market acceptance of the Company's products and
services will continue.  Changes in market conditions in the gaming industry and
financial  condition  of  host  locations  or  customers could limit or diminish
market  acceptance  of  these  products  and  services.  Any  interruption  in
professional or college football and/or professional or college basketball games
would  adversely  affect  the  Company.

Legislation.  The  U.S.  Congress has proposed several bills that would prohibit
any  person  from engaging in the business of betting or wagering via electronic
communication  facilities if the transmission is not legal in the state in which
the  transmission  either  originates  or  is  received.  In  addition, the U.S.
Congress  has  proposed  several  bills  that  would  prohibit  any  person from
accepting  wagers  on amateur sporting events including high school, college and
Olympic  events.  There is no guarantee that Congress will not pass a bill which
would  adversely  effect  the  operations  of  the  Company.

Dependence on Current Management.  The Company's success is largely dependent on
the  efforts  of  Victor  Salerno,  its  Chief  Executive Officer.  Although the
Company  maintains  a  "key  person" life insurance policy and has an employment
agreement  with  Mr.  Salerno,  the  loss  of  Mr. Salerno's services could have
materially  adverse  effect  on  the  Company's  business.

Potential  Fluctuations  in  Results.  The  Company's  quarterly  results  have
historically  fluctuated  primarily  due to outside factors such as professional
and  college  sports  seasons  and  timing  of  sales  and  installation for CBS
equipment sales.  Thus the results of any quarter are not necessarily indicative
of  the  results  that  may  be  expected  for  any  other  interim period.  See
"Management's  Discussion  and  Analysis  of  Financial Condition and Results of
Operations."


                                       18

<PAGE>



Litigation.  The  Company  is involved in two lawsuits (see "Legal Proceedings")
of  which  the outcome could have a material adverse effect on the operations of
the  Company,  including  the  possibility  of  bankruptcy.



                                       19

<PAGE>



Item  7.     Financial  Statements

REPORT  OF  INDEPENDENT  AUDITORS                                         26

CONSOLIDATED  BALANCE  SHEETS                                             27

CONSOLIDATED  STATEMENTS  OF  OPERATIONS                                  28

CONSOLIDATED  STATEMENTS  OF  STOCKHOLDERS'  EQUITY                       29

CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS                                 30

NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS                            31

Item  8.       Changes  in  Registrant's  Certifying  Accountants

The Company had no changes in, or disagreements with, its auditors on accounting
or  financial  disclosures  during  the  reported  fiscal  year.


                                       20





<PAGE>


                                    PART III

Item  9.       Directors,  Executive  Officers,  Promoters and Control Persons;
Compliance  with  Section  16(a)  of  the  Exchange  Act

The  directors  and  executive  officers  of  the  Company  are  as  follows:
<TABLE>
<CAPTION>


Name                                   Age                Position
--------------------------------------------------------------------------------------------
<S>                            <C>                 <C>
Victor J. Salerno                      58           President, Chief Executive Officer,
                                                    Chief Operating Officer, and Director

Timothy F. Lockinger                   42           Chief Financial Officer,
                                                    Secretary, Treasurer, and
                                                    Director

W. Larry Swecker                       58           Director


Judy Salerno                           51           Director


Robert D. Ciunci                       56           Director

</TABLE>



Victor  J. Salerno has been President, Chief Executive Officer and a Director of
the  Company  since  its  inception.  Mr.  Salerno has been the President, Chief
Executive  Officer and a Director of Leroy's since September, 1979.  Mr. Salerno
served  as  an Executive Vice-President and Director of Autotote CBS Corporation
(subsequently  purchased  by  the  Company  and  renamed Computerized Bookmaking
Systems,  Inc.).  He  is  a past President of the Nevada Association of Race and
Sports  Operators.

Timothy F. Lockinger was named Chief Financial Officer, Secretary, Treasurer and
Director  of the Company in January, 2001.  Mr. Lockinger has served the Company
in  various  consulting  practices  since  1989  and,  most recently, joined the
Company  on  a  full-time  basis  in August, 1997 as a manager of Mega$ports and
Leroy's.  Mr.  Lockinger  was  Director of Regulatory Compliance for Casino Data
Systems, Chief Financial Officer for Si Redd at International Technical Systems,
and a Senior Agent with the Nevada Gaming Control Board's Audit Division and has
operated  his  own  consulting/accounting  firm.

W.  Larry Swecker became a Director of the Company in April, 2000.  Mr. Swecker,
a  Certified  Public  Accountant, has been President of Swecker & Company. Ltd.,
Certified  Public  Accountants,  since  January  1979.  Prior  to  that he was a
partner  in  the  firm of Keltner Milam & Company, Certified Public Accountants,
from  1975  to  1979.  Mr.  Swecker  was  employed  as  a revenue agent with the
Internal  Revenue  Service  from  1972 to 1975.  He has a Bachelor of Science in
Business  Administration  from  the University of Nevada Reno.  Mr. Swecker is a
member  of  the  Audit,  Compensation, and Compliance Committees of the Board of
Directors.

Judy Salerno became a Director of the Company in January, 2001.   Ms. Salerno is
the  daughter of Leroy Merillat, the founder of Leroy's Horse & Sports Place and
was  formerly married to Victor Salerno.  Ms. Salerno is a private investor with
numerous  holdings  and  has  been  a  homemaker  for  the  past  five  years.

Robert  D.  Ciunci  has been a director of the Company since August 1, 1995, and
currently is at Autotote Corporation.  Until January, 2001, Mr. Ciunci served as
Chief  Operating Officer, Chief Financial Officer and Secretary and Treasurer of
the Company.  From 1981 to June 1995, he was employed by Autotote Corporation, a
Company  that provides computerized wagering systems to racetracks and off-track
race  wagering  establishments,  as  its  Vice  President Finance, Secretary and
Treasurer.  He  holds  a  Masters  Degree  in  business  administration and is a
Certified  Public  Accountant.

Item  10.  Executive  Compensation

The  following  table  sets  forth certain information covering the compensation
paid  or  accrued  by the Company during the fiscal years indicated to its Chief
Executive  Officer  and  to  its most highly compensated executive officer whose
annual  salary  and  bonus  exceeded  $100,000  during the year ended January 31
(these  individuals  may  be  referred  to  as  "named  executive  officers"):



                                       21

<PAGE>


<TABLE>
<CAPTION>

                       SUMMARY  COMPENSATION  TABLE
                       ----------------------------
                                                                               Long-Term
                                                                              Compensation
                                                                                 Awards
                                               Fiscal Annual Compensation      Underlying
                      Principal                Year   --------------------     Options
Name                  Position                 Ended  Salary    Bonus ($)        (1)
-----------------------------------------------------------------------------------------
<S>                   <C>                      <C>   <C>        <C>          <C>
Victor J. Salerno    Chief Executive Officer   2003  $240,000     $45,498
                                               2002  $200,000     $45,733       30,000
                                               2001  $200,000     $23,201            0

Timothy F. Lockinger Chief Financial Officer   2003  $120,000     $18,383       15,000
                                               2002  $100,000     $10,147       15,000
                                               2001       N/A         N/A          N/A

Robert D. Ciunci     Former Chief Financial    2003       N/A         N/A          N/A
                     Officer                   2002  $150,000           0            0
                                               2001  $150,000           0            0
</TABLE>




The  following  table  sets  forth  the number of exercisable and un-exercisable
options  as  of  January  31,  2003, and the value of such options for the Chief
Executive  Officer  and  the  named  Executive  Officers.

                 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                       AND FISCAL YEAR-END OPTIONS VALUES
<TABLE>
<CAPTION>


            AGGREGATED  OPTION  EXERCISES  IN  LAST  FISCAL  YEAR
                  AND  FISCAL  YEAR-END  OPTIONS  VALUES

                                 Number of      % of
                                 Securities     Total Options
                                 Underlying     Granted to
                                 Options        Employees in         Exercise or    Expiration
Name                             Granted        Fiscal Year          Base price     Date
-------------------------------------------------------------------------------------------------------
<S>                             <C>           <C>                    <C>             <C>
Victor J. Salerno               30,000              8.4%                    $0.70          8/8/2006
Timothy F. Lockinger            15,000              4.2%                    $0.70          8/8/2006
</TABLE>




<TABLE>
<CAPTION>



                                             Number of
                                             Securities
                                             Underlying       Value of
                                             Unexercised      Unexercised
                   No.                       Options          In The Money
                   of                        At Fiscal        Options at
                   Shares                    year end         Fiscal Year End
                   Acquired or    Value      Exercisable/     ($)Exercisable/
Name               Exercised      Realized($)Un-exercisable   Un-exercisable
----               -------------  --------   --------------   --------------
<S>                <C>            <C>        <C>              <C>
Victor J. Salerno      0          $ 0         30,000/0        $0/$0
Timothy F. Lockinger   0          $ 0         15,000/0        $0/$0
</TABLE>



Compensation  of  Directors

Directors  who  are not employees or consultants of the Company receive a fee of
$1,000 per month plus travel expenses.  Committee Chairman receive an additional
$500  per  month  for  each  committee  chaired.

During  the  fiscal  year  ended  January  31,  2003,  pursuant to the Company's
Directors  Stock  Option  Plan,  options to purchase 400 shares of the Company's
Common Stock at an exercise price of $0.12 per share were granted to Mr. Swecker
a  Director  of  the Company.  These options become fully exercisable on January
31,  2004  and expire on January 31, 2013.  During the fiscal year ended January
31,  2002,  pursuant  to  the  same  plan, options to purchase 400 shares of the
Company's  Common  Stock at an exercise price of $0.35 per share were granted to
Mr.  Swecker,  these  options  become  fully exercisable on January 31, 2003 and
expire  on  January  31,  2012.

Employment  Agreements

On  June  28,  2002,  and effective as of July 1, 2002, the Company entered into
employment  agreements  with  Victor  Salerno  and  Timothy  Lockinger.


                                       22

<PAGE>



Mr.  Salerno's  agreement has a 5-year initial term and automatically renews for
additional  5-year  terms  unless  either  party  gives the other party 180-days
written  notice  to  terminate.  Mr.  Lockinger's agreement has a 3-year initial
term  and  automatically  renews for additional 3-year terms unless either party
gives  the  other  party  180-days  written  notice  to  terminate.

Pursuant  to  the  terms of his employment agreement, Mr. Salerno is employed as
the  Chief Executive Officer, Chief Operating Officer, President and Director of
the Company and as President and Director of each of the Company's subsidiaries.
In  addition,  Mr.  Salerno is entitled to receive a performance bonus each year
equal  to five percent (5%) of the Company's pre-tax earnings (as defined in the
employment  agreement)  for  the prior fiscal year.  In the event the employment
agreement  is  terminated  by  the Company in violation thereof, the Company has
agreed  to  pay,  as  termination benefits to Mr. Salerno, a continuation of his
base  salary,  performance  bonus,  and  all other benefits under the employment
agreement  for  a  period of 5 years.  Mr. Salerno is entitled to participate in
the  Company's  benefit  plans available to the Company's officers and employees
generally.

Pursuant  to the terms of his employment agreement, Mr. Lockinger is employed as
the  Chief  Financial  Officer, Secretary, Treasurer and Director of the Company
and  as Secretary, Treasurer and Director of each of the Company's subsidiaries.
In  addition, Mr. Lockinger is entitled to receive a performance bonus each year
equal  to  two percent (2%) of the Company's pre-tax earnings (as defined in the
employment  agreement)  for  the prior fiscal year.  In the event the employment
agreement  is  terminated  by  the Company in violation thereof, the Company has
agreed  to  pay, as termination benefits to Mr. Lockinger, a continuation of his
base  salary,  performance  bonus,  and  all other benefits under the employment
agreement  for a period of 3 years.  Mr. Lockinger is entitled to participate in
the  Company's  benefit  plans available to the Company's officers and employees
generally.

Item  11.  Security  Ownership  of  Certain Beneficial Owners and Management and
Related  Stockholder  Matters.

The  following table sets forth, as of April 18, 2003, the number and percentage
of  shares  of  Common  Stock,  which  according  to information supplied to the
Company, are beneficially owned by: (i) each person who is a beneficial owner of
more  than  5%  of  the  Common  Stock;  (ii)  each  of the directors, and named
executive  officers of the Company individually; and (iii) all current directors
and  executive  officers  of the Company as a group.  Under rules adopted by the
Securities  and Exchange Commission, a person is deemed to be a beneficial owner
of  Common  Stock  with  respect  to  which he or she has or shares voting power
(which  includes  the power to vote or to direct the voting of the security), or
investment  power  (which  includes  the  power  to dispose of, or to direct the
disposition  of,  the  security).  A  person is also deemed to be the beneficial
owner  of  shares  with  respect  to  which  he  or  she  could obtain voting or
investment  power within 60 days of April 30, 2003, such as upon the exercise of
options  or warrants.  Except as otherwise indicated below, the persons named in
the  table  have  sole voting and investment power with respect to all shares of
Common  Stock held by them.  Unless otherwise indicated the principal address of
each  person named in the table is c/o American Wagering, Inc., 675 Grier Drive,
Las  Vegas,  Nevada  89119.
<TABLE>
<CAPTION>

                                                Number
Name                                            of Shares  Percentage
---------------------------------------------------------------------
<S>                                                <C>        <C>
Victor J. Salerno                                  2,164,600  27.6%
Judy Salerno                                       1,447,600  18.5%
Robert Barengo                                       525,800   6.7%
Robert D. Ciunci                                     108,000   1.4%
Timothy F. Lockinger                                  22,500   0.3%
W. Larry Swecker                                      20,800   0.3%
                                                  ------------------

All directors and executive officers
 as a group (6 persons)                            4,289,300  54.7%
                                                  ==================
</TABLE>


                                       23

<PAGE>


Section  16(a)  Beneficial  Ownership  Reporting  Compliance

The following persons may have failed to file, on a timely basis, the identified
reports  required  by  section  16(a) of the Exchange Act during the most recent
fiscal  year.
<TABLE>
<CAPTION>



                        Number   Transactions      Known Failures
Name and                of Late  Not               to File a
Principal Position      Reports  Timely Reported   Required Form
----------------------------------------------------------------
<S>                   <C>         <C>              <C>
Victor Salerno
CEO and Director      None           None             None

Timothy F. Lockinger
CFO and Director      None           None             None

W. Larry Swecker
Director              None           None             None

Judith Salerno
Director              None           None             None

Robert D. Ciunci
Director              Unknown        Unknown          Unknown

Robert Barengo
Shareholder           None           None             None


</TABLE>



Item  12.      Certain  Relationships  and  Related  Transactions

None  of  the  following persons has any direct or indirect material interest in
any  transaction  to which the Company is a party since the incorporation, or in
any  transaction  to  which  the  Company  is  proposed  to  be  a  party:

     (a)  any  director  or  officer;
     (b)  any  proposed  nominee  for  election  as  a  director;
     (c)  any  person  who  beneficially  owns,  directly  or indirectly, shares
          carrying  more than 10% of the voting rights attached to the Company's
          common  stock;  or
     (d)  any  relative  or  spouse  of  any  of  the  foregoing persons, or any
          relative  of such spouse, who has the same house as such person or who
          is  a  director  or  officer  of  any  parent  or  subsidiary

The  Company's  policy regarding related transactions requires that any director
or  officer who has an interest in any transaction disclose the presence and the
nature  of  the  interest to the board of directors prior to any approval of the
transaction  by the board of directors.  The transaction may then be approved by
a  majority of the disinterested directors, provided that an interested director
may  be  counted  in  determining the presence of a quorum at the meeting of the
board  of  directors to approve the transaction.  The Company's policy regarding
compensation  for  directors  and  officers  is that the board of directors may,
without regard to personal interest, establish the compensation of directors for
services  in  any  capacity.

On December 9, 1998, the Company redeemed shareholder notes of $1,892,424 in the
aggregate  for 18,924 shares of Series A Preferred Stock at $100 per share.  The
holders  of  the  Series  A  Preferred  Stock  are  entitled  to  receive,  upon
declaration  by  the Board of Directors, cumulative cash dividends at the annual
rate  per  share  of  10%.  Such  dividends  were  payable  in  equal  quarterly
installments on each March 31, June 30, September 30 and December 31, commencing
with December 31, 1998, and have been payable monthly on the first of each month
since  1999  by  an amendment by the Board of Directors.  The Series A Preferred
Stock is not convertible but is redeemable, in whole or (on a pro rata basis) in
part,  at  any  time at the option of the Company, by resolution of the Board of
Directors.  A  management  shareholder has foregone his redemption rights for an
indefinite  period  and the affected shares have been reclassified to redeemable
preferred  stocks.  The  holders of Series A Preferred Stock are not entitled to
vote  (on  a  cumulative basis or otherwise) as a class or with the Common Stock
upon  any  matters  submitted  to


                                       24

<PAGE>


shareholders  for  a vote, except as otherwise mandated under Nevada law. During
fiscal year ending January 31, 2003 there were 500 shares redeemed and dividends
of  $145,391  were  paid.

Item  13.  Exhibits  and  Reports  on  Form  8-K

(a)     Exhibits

Exhibit
Number   Description
------   -----------
23.1     Consent of Independent Aditor


99.1     Certification of  Chief  Executive Officer and Chief Financial Officer
         pursuant  to  18  U.S.C. Section 1350, as adopted pursuant To Section
         906 of the Sarbanes-Oxley  Act  of  2002


(b)     Reports  on  Form  8-K

On  November  15,  2002,  an 8-K was filed with respect to an Item 5 matter, the
judgment  in  the  Racusin  case.

Item  14.      Disclosure  Controls  and  Procedures.

As  required  by  Rule 13a-15 under the Exchange Act, the Company carried out an
evaluation  of  the  effectiveness  of the design and operation of the Company's
disclosure  controls  and procedures within the 90 days prior to the filing date
of  this report.  This evaluation was carried out under the supervision and with
the  participation  of  the  Company's management, including the Company's Chief
Executive  Officer  and  Company's  Chief  Financial  Officer.  Based  upon that
evaluation,  the  Company's  Chief Executive Officer and Chief Financial Officer
concluded  that  the Company's disclosure controls and procedures are effective.
There  have been no significant changes in the Company's internal controls or in
other  factors, which could significantly affect internal controls subsequent to
the  date  the  Company  carried  out  its  evaluation.

Disclosure  controls  and  procedures are controls and other procedures that are
designed  to ensure that information required to be disclosed in Company reports
filed or submitted under the Exchange Act is recorded, processed, summarized and
reported,  within  the  time  periods  specified  in the Securities and Exchange
Commission's  rules  and  forms.  Disclosure  controls  and  procedures include,
without  limitation, controls and procedures designed to ensure that information
required  to  be  disclosed  in  Company reports filed under the Exchange Act is
accumulated  and  communicated  to  management,  including  the  Company's Chief
Executive  Officer  and  Chief  Financial  Officer,  to  allow  timely decisions
regarding  required  disclosure.





                                       25

<PAGE>


REPORT  OF  INDEPENDENT  AUDITORS


To  The  Board  of  Directors  and  Stockholders  of  American  Wagering,  Inc.:

     We  have  audited  the accompanying consolidated balance sheets of AMERICAN
WAGERING,  INC.  (a  Nevada  Corporation) and subsidiaries (the "Company") as of
January  31,  2003  and  2002,  and  the  related  consolidated  statements  of
operations, stockholders' equity and cash flows for the years then ended.  These
financial  statements  are  the responsibility of the Company's management.  Our
responsibility  is  to express an opinion on these financial statements based on
our  audits.

     We  conducted  our  audits  in accordance with auditing standards generally
accepted  in the United States. Those standards require that we plan and perform
the  audit to obtain reasonable assurance about whether the financial statements
are  free  of  material  misstatement.  An  audit  includes examining, on a test
basis,  evidence  supporting  the  amounts  and  disclosures  in  the  financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made  by  management,  as well as evaluating the overall
financial  statement  presentation.  We  believe  that  our  audits  provide  a
reasonable  basis  for  our  opinion.

     In  our opinion, the financial statements referred to above present fairly,
in  all material respects, the financial position of American Wagering, Inc. and
subsidiaries  as  of  January  31,  2003  and  2002,  and  the  results of their
operations  and  their  cash  flows  for the years then ended in conformity with
accounting  principles  generally  accepted  in  the  United  States.

     The  accompanying  consolidated  financial  statements  have  been prepared
assuming  the Company will continue as a going concern.  As discussed in Note 7,
the  Company  is  involved  in  various  litigation matters that could result in
losses  sufficient  to  threaten  the financial viability of the Company.  These
matters  raise  substantial  doubt  as to the Company's ability to continue as a
going concern.  Management's plans regarding these matters are also discussed in
Note  7.  The  financial  statements  do  not include any adjustments that might
result  from  the  outcome  of  this  uncertainty.



PIERCY  BOWLER  TAYLOR  &  KERN
Certified  Public  Accountants  &  Business  Advisors
A  Professional  Corporation




Las  Vegas,  Nevada
April  8,  2003






                                       26

<PAGE>






                             AMERICAN WAGERING, INC.
                           CONSOLIDATED BALANCE SHEETS
                         AS OF JANUARY 31, 2003 AND 2002
<TABLE>
<CAPTION>



ASSETS                                           2003           2002
                                             ----------------------------
<S>                                          <C>            <C>
CURRENT ASSETS
   Cash                                      $  4,329,654   $  3,618,049
   Restricted deposits                            176,837        306,264
   Accounts receivable, net
   of allowance for doubtful
   accounts of $32,750 and
   $14,910                                        542,493        657,422
   Inventories                                    424,482        450,590
   Deferred tax asset, net                        440,481        272,000
   Prepaid expenses and
   other current assets                           177,175        234,880
                                             ----------------------------

                                                6,091,122      5,539,205

PROPERTY AND EQUIPMENT, net                     3,113,766      3,280,757
GOODWILL                                          103,725        103,725
OTHER INTANGIBLES                                  57,756        367,135
OTHER ASSETS                                      134,875        230,995
                                             ----------------------------

                                             $  9,501,244   $  9,521,817
                                             ============================

LIABILITIES AND STOCKHOLDERS'
 EQUITY
CURRENT LIABILITIES
   Current portion of long-term debt         $    114,669   $     90,585
   Accounts payable                               248,957        263,565
   Accrued expenses                               814,332        724,054
   Unpaid winning tickets                         953,868      1,109,674
   Customer deposits and other
   current liabilities                            593,549        784,061
   Litigation payable                           2,185,405        521,167
                                             ----------------------------

                                                4,910,780      3,493,106
LONG-TERM DEBT, less current
 portion                                        1,672,546      1,720,340
OTHER LONG-TERM
LIABILITIES                                        25,000             --

                                             ----------------------------

                                                6,608,326      5,213,446
                                             ----------------------------

REDEEMABLE SERIES A PREFERRED STOCK  - 3,238 and
 2,738 SHARES                                     323,800        273,800
                                             ----------------------------


STOCKHOLDERS' EQUITY
Series A preferred stock - 10% cumulative;
   .01 par value;
   authorized:  25,000,000 shares;
   issued and outstanding:
   10,924 and 11,924 shares                     1,092,400      1,192,400
Common stock - $.01 par value;
   authorized: 25,000,000 shares;
   issued: 7,897,946 shares                        78,979         78,979
Additional paid-in capital                     12,738,889     14,382,515
Deficit                                       (11,013,657)   (11,291,830)
Less  61,100 common shares
in treasury, at cost                             (327,493)      (327,493)
                                             ----------------------------

                                                2,569,118      4,034,571
                                             ----------------------------

                                             $  9,501,244   $  9,521,817
                                             ============================
</TABLE>





See  notes  to  consolidated  financial  statements.


                                       27

<PAGE>


                             AMERICAN WAGERING, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  FOR THE YEARS ENDED JANUARY 31, 2003 AND 2002
<TABLE>
<CAPTION>



                                             2003          2002
                                         ---------------------------

<S>                                      <C>           <C>
REVENUES
  Wagering                               $ 6,711,464   $ 6,704,436
  Systems                                  4,850,621     5,301,973
                                         --------------------------
                                          11,562,085    12,006,409
                                         --------------------------

OPERATING COSTS AND EXPENSES
  Direct costs:
  Wagering                                 4,769,120     4,203,193
  Systems                                  2,252,245     2,301,917
                                        ---------------------------
                                           7,021,365     6,505,110
   Research and development                  933,514       855,980
   Selling, general and administrative     2,397,903     2,146,941
   Depreciation and amortization             412,889       563,675
                                         --------------------------

                                          10,765,671    10,071,706
                                         --------------------------


OPERATING INCOME                             796,414     1,934,703
                                         --------------------------


OTHER INCOME (EXPENSE)
   Interest income                            44,747        66,015
   Interest expense                         (156,365)     (161,087)
   Litigation judgment and settlements      (273,145)       (3,026)
   Other, net                                 51,430        41,013
                                         --------------------------

                                            (333,333)      (57,085)
                                         --------------------------

INCOME BEFORE INCOME TAX
 BENEFIT AND DISCONTINUED
OPERATIONS                                   463,081     1,877,618

INCOME TAX BENEFIT                          (168,481)     (264,815)
                                         --------------------------

INCOME FROM CONTINUING OPERATIONS            631,562     2,142,433
                                         --------------------------

DISCONTINUED OPERATIONS
  Loss from operations of
  discontinued segments                     (213,955)   (1,227,779)
  Gain on disposal of
  discontinued operations                      5,957            --
                                         --------------------------

                                            (207,998)   (1,227,779)
                                         --------------------------


NET INCOME                               $   423,564       914,654
                                         ==========================

BASIC AND DILUTED INCOME
 (LOSS) PER SHARE
   Income from continuing operations     $      0.06   $      0.25
   Loss from discontinued operations     $     (0.03)  $     (0.15)
   Net income                            $      0.04   $      0.09
</TABLE>


See  notes  to  consolidated  financial  statements



                                       28

<PAGE>




                             AMERICAN WAGERING, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  FOR THE YEARS ENDED JANUARY 31, 2003 AND 2002

<TABLE>
<CAPTION>


                                                                                              Additional
                                                                                               Paid-in
                             Preferred Stock         Common Stock         Treasury Stock       Capital
                           Shares    Par Value    Shares    Par Value    Shares       Cost     Dollars
                           -------------------------------------------------------------------------------
<S>                        <C>         <C>          <C>        <C>      <C>       <C>          <C>
Balance:  January 31, 2001    11,924   $1,192,400   7,897,946  $78,979  (61,100)  ($327,493)   $14,382,514

Preferred stock dividends         --           --          --       --       --            --           --

Net Income                        --           --          --       --       --            --           --
                           -------------------------------------------------------------------------------
Balances, January 31,2002     11,924    1,192,400   7,897,946   78,979  (61,100)     (327,493)  14,382,514

Preferred stock dividends         --           --          --       --       --            --           --

Reclassified to redeemable
preferred stock                 (500)     (50,000)         --       --       --            --           --

Preferred stock redemption      (500)     (50,000)         --       --       --            --           --


Racusin litigation judgment       --           --          --       --       --            --   (1,643,625)

Net Income                        --           --          --       --       --            --            --
                           --------------------------------------------------------------------------------

Balances,  January 31,2003    10,924   $1,092,400   7,897,946  $78,979  (61,100)    ($327,493)  $12,738,889
===========================================================================================================

                                            Deficit
                                            -------------
<S>                                         <C>

Balance:  January 31, 2001                  ($12,057,827)

Preferred stock dividends                       (148,657)

Net Income                                       914,654
                                            -------------

Balances,  January 31,2002                   (11,291,830)
                                            -------------

Preferred stock dividends                       (145,391)

Reclassified to redeemable preferred stock            --

Preferred stock redemption                            --

Racusin litigation judgment                           --

Net Income                                       423,564
                                            -------------

Balances,  January 31,2003                  ($11,013,657)
                                            =============
</TABLE>








See  notes  to  consolidated  financial  statements


                                       29

<PAGE>


                             AMERICAN WAGERING, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  FOR THE YEARS ENDED JANUARY 31, 2003 AND 2002
<TABLE>
<CAPTION>



                                               2003         2002
                                            -------------------------
<S>                                         <C>          <C>
OPERATING ACTIVITIES
    Net cash provided by (used in)
    operating activities                    $1,201,017   $1,771,510
                                            -------------------------

INVESTING ACTIVITIES
    Investment in restricted deposits           (8,637)      (4,628)
    Withdrawals of restricted deposits         138,064           --
    Purchase of property and equipment        (424,736)    (398,978)
    Proceeds from sale of assets                    --      106,099
                                            -------------------------

    Net cash provided by (used in)
    investing activities                      (295,309)    (297,507)
                                            -------------------------

FINANCING ACTIVITIES
    Repayment of borrowings                    (99,204)     (94,209)
    Proceeds from borrowings                   100,493       88,618
    Redemption of preferred stock              (50,000)          --
    Dividends                                 (145,392)    (148,657)
                                            -------------------------

    Net cash used in financing activities     (194,103)    (154,248)
                                            -------------------------


NET INCREASE IN CASH                           711,605    1,319,755
CASH AT BEGINNING OF YEAR                    3,618,049    2,298,294
                                            -------------------------
CASH AT END OF YEAR                         $4,329,654   $3,618,049
                                            =========================
</TABLE>






See  notes  to  consolidated  financial  statements.

<PAGE>


                             AMERICAN WAGERING, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 2003

1.     Nature  of  Operations  and  Background  Information

Business  Activities

American  Wagering, Inc. and subsidiaries, (collectively, the Company), owns and
operates  46  race  and sports wagering locations (books) in leased space within
casinos throughout the State of Nevada.  In addition, the Company design, sells,
installs,  and  maintains  computerized  race and sports book systems, including
wagering by telephone systems, in Nevada.  The Company has divested itself of an
Internet  wagering  operation  located  in Canberra, Australia (See Note 8).  In
July  2002,  the  Company  discontinued  its  keno  operations.  The  Company is
currently  developing  a self-service wagering terminal which it projects having
in  operation  in  the  first  quarter  of  Fiscal  Year  2004.

Concentrations

Because  the  Company  operates  primarily  in  the larger metropolitan areas of
Nevada  in  the highly regulated gaming industry, realization of its receivables
and  its  future  operations could be affected by adverse economic conditions in
Nevada  and its key feeder markets in the Western United States, and by possible
future  anti-wagering  legislation  and  regulatory  limitations on the scope of
wagering.  100%  of  the  Company's wagering revenue comes from its Nevada books
and  more  than one-fourth of that is derived from professional football events.
If  the  professional  football  season  were to be interrupted, this could have
significant adverse impact on future operations.  Management also estimates that
approximately  29%  of  the  Company's Nevada wagering relates to college sports
and,  therefore,  the  passage of amateur sports anti-wagering legislation could
have a material adverse impact upon future operations.  In addition, because the
Company  generates  substantial  revenue from system sales to a relatively small
population  of  potential  customers,  a  decline in the size or number of these
contracts  could  also  adversely  affect  future  operations.

The  Company  manages its concentrations of credit risk by evaluating the credit
worthiness  of  systems  customers before extending credit and by perfecting and
using,  when  necessary,  security  interests  in the hardware and software.  In
establishing an allowance for doubtful collection, if any, the Company considers
the customer, the relative strength of the Company's legal position, the related
cost  of  any  proceedings, and general economic conditions.  The maximum losses
that the Company would incur if a customer failed to pay would be limited to the
amount  due  after  any  allowances  provided.

2.     Summary  of  Significant  Accounting  Policies

Basis  of  Presentation

The consolidated financial statements include the accounts of American Wagering,
Inc.  (the  Company)  and  its  subsidiaries,  Leroy's  Horse  and  Sports Place
(Leroy's),  Computerized Bookmaking Systems, Inc. (CBS), AWI Manufacturing, Inc.
(AWIM)  (formerly  AWI Keno. Inc.), AWI Sports Systems, Inc. (AWISSI), AWI Hotel
Systems,  Inc.  (HSI) dissolved June 2002, Secured Telephone Operating Platform,
Inc.  (STOP),  Contest  Sports  Systems, Inc. (CSS) (formerly Mega$ports, Inc.),
Mega$ports  (ACT)  Pty  Ltd.  (Mega$ports  (ACT))  sold  June 2002, and American
Wagering  Management  Company,  Inc.  (AWMCI)  dissolved  February  2003.  All
subsidiaries  are  100%-owned  since  June  2000,  when the Company acquired the
remaining  minority  interest  in  AWISSI  (49%).  All significant inter-company
accounts  and  transactions  have  been  eliminated  in  the  consolidation.

Use  of  Estimates

Timely preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates that affect reported
amounts,  some  of  which  may  require revision in future periods.  Setting and
adjusting  betting  lines  on sporting events that had not yet taken place as of
the  most recent balance sheet date might change materially before the event and
within  one  year.


                                       31

<PAGE>


Cash  Equivalents

Cash  equivalents  include  highly liquid investments with initial maturities of
three months or less.  Excluded from cash and cash equivalents as of January 31,
2003,  is $176,837 restricted to meet certain Nevada ($161,798), tax liabilities
($6,558) and workers compensation coverage requirements ($8,481).  Excluded from
cash  and  cash  equivalents  as  of January 31, 2002, is $306,264 in restricted
deposits  to  meet  certain  Nevada  ($100,000) and foreign ($61,784) regulatory
requirements,  litigation requirements ($138,064), and tax liabilities ($6,416).
The  foreign  regulatory deposit is included in net liabilities of business held
for  sale.

Inventories

Inventories consisting primarily of systems components and replacement parts are
stated at the lower of cost (based on the first-in, first-out method) or market.

Property  and  Equipment

Property  and  equipment  (Note  3)  is  stated  at  cost,  net  of  accumulated
depreciation  computed  using the straight-line method over the estimated useful
lives  of  the  assets.

Goodwill  and  Other  Intangible  Assets

As  of  the  most  recent balance sheet date, goodwill primarily consists of the
excess  of  the  purchase  price  over  fair  value  of  net  assets acquired in
connection  with  the  acquisition  of  CBS, the subsidiary that designs, sells,
installs,  and maintains the Company's primary computerized race and sports book
systems  product

Other intangible assets consist of agreements restricting potential competitors,
trademarks,  software  and  rights  for  manufacturing and distribution that are
amortized on a straight-line basis over their estimated useful lives or contract
terms  from  two  years  to  in  perpetuity.

Goodwill  and  other intangible assets are evaluated periodically for impairment
as  events  or  circumstances  warrant.  Such  evaluations  include, among other
analysis, cash flow and profitability projections, including the impact on other
operations  of  the  Company.

In  July  2001,  the  Financial  Accounting Standards Board issued SFAS No. 142,
Goodwill  and Other Intangibles.  Under SFAS No. 142, goodwill and certain other
intangibles are no longer subject to amortization over an estimated useful life.
Rather,  goodwill  and other indeterminate life intangible assets are subject to
at  least  an  annual  recoverability  test,  which  assesses  for  impairment.
Management  evaluated  goodwill and other intangible assets for impairment as of
January  31,  2003.  Such evaluation included, among other analysis, future cash
flow  and  profitability  estimates.  There  were no impairment provisions taken
for, and no material effect of the adoption of SFAS 142 on the fiscal year ended
January  31,  2003.

Revenue  Recognition

Fixed  odds  race  and  sports  wagering  revenue  is  the net win from wagering
activities,  which  is  the difference between wagering wins and losses.  Wagers
accepted  on  future  events  are reflected as liabilities (included in customer
deposits)  until  the  outcome  is  known.  Wagering  revenues  also  includes
commissions  earned  on  pari-mutuel  race wagers.  Systems sales are recognized
when  the  software  and  hardware  are  installed  at  the customer's location.
Maintenance  fee  revenue  is  recognized  evenly over the term of the contract.

Advertising

The Company expenses all advertising costs as incurred.  Advertising expense was


$69,564  and  $145,121  for  2003  and  2002.


                                       32

<PAGE>



Stock-based  Compensation

The  Company  accounts for stock-based employee compensation using the intrinsic
value method in Accounting Principles Board (APB) Opinion No. 25, Accounting for
Stock  Issued  to  Employees.  Intrinsic value represents the excess, if any, of
the  market  price of the stock at the grant date over the exercise price of the
options.

Discontinued  Operations

Discontinued  operations  (Note  8)  reported  in  fiscal 2002 were presented in
accordance  with  the  requirements  of
APB Opinion No. 30, Reporting the Results of Operations-Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring  Events  and  Transactions.  In  fiscal  2003,  the  Company  adopted
Statement  of  Financial  Accounting Standards (SFAS) No. 144 Accounting for the
Impairment or Disposal of Long-Lived Assets and has reported disposal activities
indicated  in  fiscal  2003  and  2003  in  accordance  therewith.

Foreign  Currency  Translation

Assets  and  liabilities  of foreign operations are translated into U.S. dollars
using rates of exchange at the end of the year.  Income and expense accounts are
translated  into  U.S. dollars using average rates of exchange.  The net gain or
loss resulting from translation is shown as a component of comprehensive income.
Gains and losses from foreign currency transactions are included in direct costs
as  a  component  of  operating  expenses.  Gains  and  losses from both foreign
currency  translation  and  foreign  currency  transactions for the fiscal years
ending  January  31,  2003  and  2002,  were  not  material.

Net  Income  Per  Share

Basic  net  income  per share is computed by dividing net income by the weighted
average  number  of common shares outstanding during the year.  Diluted earnings
per share considers potentially dilutive securities (options) as outstanding and
net income is adjusted for preferred stock dividends.  For the operating periods
presented,  the  tables  below reconciles net income and weighted average shares
outstanding  used to calculate basic income per share to those used to calculate
diluted  net  income  per  share:

<TABLE>
<CAPTION>




                                    2003         2002
                                 ------------------------
<S>                              <C>          <C>
Net income                       $  423,564   $  914,654
Preferred stock dividends          (145,391)    (148,657)
                                 ------------------------
Net income, as adjusted          $  278,173   $  765,997
                                 ========================

Basic weighted average shares
outstanding                       7,836,846    7,836,846
                                 ========================
Diluted weighted average shares
outstanding                       8,151,304    8,007,516
                                 ========================
</TABLE>



Financial  Instruments

The  Company's  financial  instruments consist of cash, certificates of deposit,
accounts  and  notes  receivable,  accounts  payable,  accrued  expenses, unpaid
winning  tickets,  advance deposits, and long-term debt.  The Company's cash and
short-term  investments  are  diversified  among security types and issuers, and
approximate fair value.  The fair values of other financial instruments that are
short-term  and/or  that  have  little  or no risk are considered to have a fair
value  equal  to  book  value.  Assets and liabilities that are included in this
category  are  accounts  receivable,  accounts payable, accrued expenses, unpaid
winning  tickets and advance deposits.  The Company believes the fair values and
the  carrying  value  of  notes  receivable  and  long-term  debt  are  also not
materially  different from their carrying values due to the instruments interest
rates  approximating market rates for similar borrowings at January 31, 2003 and
2002.


                                       33

<PAGE>



Reclassifications

Certain  amounts  in  the  2002  consolidated  financial  statements  have  been
reclassified  to  conform  with  the  2003  presentation.

3.     Property  and  Equipment

Property  and  equipment  consists  of  the following as of January 31, 2003 and
2002:


<TABLE>
<CAPTION>



                                       2003          2002
                                   --------------------------
<S>                                <C>           <C>
Land                               $   575,000   $   575,000
Building/Improvements                2,142,099     2,142,099
Equipment, furniture and fixtures    2,432,376     2,585,551
Other                                    6,200         6,200
                                   --------------------------
                                     5,155,675     5,308,850
Accumulated depreciation            (2,041,909)   (2,028,093)
                                   --------------------------
                                   $ 3,113,766   $ 3,280,757
                                   ==========================
</TABLE>



4.     Long-term  Debt

Long-term  debt  consists  of  an  8%  mortgage  note  payable  in equal monthly
installments  of  principal  and  interest  through 2015, collateralized by real
property and of 11.5% to 12% notes payable collateralized by automobiles.  As of
January  31,  2003, annual maturities of total long-term debt excluding interest
for  the next five years range from approximately $113,000 to $126,000 per year.

5.     Series  A  Preferred  Stock

Holders  of  the  Series  A  Preferred  Stock  are  entitled  to  receive,  upon
declaration  by the Board of Directors, cumulative cash dividends monthly at the
annual  rate  per share of 10%.  The Series A Preferred Stock is not convertible
but  is  redeemable, in whole or (on a pro rata basis) in part, at any time with
approval  of  the  Company, 500 shares ($50,000) were redeemed for cash in 2003.
The  holders  of  Series  A  Preferred  Stock  are  not  entitled  to vote (on a
cumulative  basis  or  otherwise)  as  a class or with the Common Stock upon any
matters  submitted  to  shareholders for a vote, except as mandated under Nevada
law.  A  preferred  shareholder has forgone his right to have shares redeemed in
accordance with the pro-rata provision for an indefinite period and the affected
shares  have  been  reclassified to redeemable preferred stock and may be put to
the  Company  for  redemption  at  any  time.

6.     Capital  Stock  and  Stock  Options

The  Company's  Board  of  Directors  has approved a program to repurchase up to
250,000  shares of the Company's publicly held common stock from time to time in
the  open  market.  As  of January 31, 2003, 61,100 shares had been repurchased.
The  timing  and  amount  of  future  share  repurchases, if any, will depend on
various  factors, including market conditions, available alternative investments
and  the  Company's  financial  position.

At  both January 31, 2003 and 2002, the Company had in effect stock option plans
(employee  and  director  plans) under which options may be granted to employees
and  directors  of  the  Company.  Under  these plans the Company has authorized
1,211,500  and  20,000  shares,  respectively.  At  August  9, 2001, the Company
adopted  its  "2001  Stock Option Plan" which replaced the Company's "1995 Stock
Option  Plan" for employees.  Options granted have an exercise price equal to or
greater than the market price of the Company's common stock on the date of grant
and  a  term  of  five to ten years and generally become exercisable on a single
date  from  one  to  five  years  from  the  date  of  grant.

Management  replaced  all outstanding employee options of the 1995 plan with the
options  provided  for  in  the  2001  Stock  Option  Plan.

Summarized  information  regarding  the  options  by recipient category follows:


                                       34

<PAGE>


<TABLE>
<CAPTION>



                                           Employees  Plan                      Directors  Plan
                                ------------------------------------------------------------------------
                                       2003              2002               2003            2002
                                ------------------------------------------------------------------------
                                          Wtd. Avg           Wtd.  Avg          Wtd.  Avg       Wtd  Avg
                                          Exercise           Exercise           Exercise        Exercise
                                Number    Price     Number   Price      Number  Price   Number  Price
                               -------------------------------------------------------------------------
<S>                            <C>       <C>       <C>        <C>      <C>     <C>     <C>     <C>
Outstanding at the beginning
 of the year - ("1995 Stock
 Option Plan")                      --         --    80,434   $  6.63   5,200  $ 6.30   4,800  $ 6.79
Outstanding at the beginning
of the year
--("2001 Stock Option Plan")   347,850         --
   Granted                          --         --   356,769   $  0.59     400  $ 0.12     400  $ 0.35
   Exercised                        --         --        --         .       0       0       0       0
   Forfeited                   (57,532)  $   0.50    (8,919)  $  0.50       0       0       0       0
   Expired                          --         --         0         0       0       0       0       0
  Terminated, expired,
 forfeited - "1995 Plan"            --         --   (80,434)  $  6.63

Outstanding at the end
of the year                    290,318   $   0.60   347,850   $  0.59   5,600  $ 5.86   5,200  $ 6.30
                               =======================================================================
Exercisable at the
 end of the year               290,318   $   0.60   347,850   $  0.59   5,200  $ 6.30   4,800  $ 6.79
                               =======================================================================
Weighted average fair
 value of options
granted on grant date                          --             $  0.28          $ 5.86          $ 6.30
                                         ==========          =========        =========       ========
Options available for
grant at the end of the year   921,182              863,650            14,400          14,800
                               =========           ==========         ========         =======
</TABLE>




<TABLE>
<CAPTION>


          Employees
------------------------------------------------
                       Average
Options                Life
Outstanding            Contractual
At January   Exercise  Remaining  Options
31, 2003     Price     (Years)    Exercisable
-----------------------------------------------
<S>         <C>         <C>       <C>
11,138      $   0.50       2.5      11,138
20,020      $   0.50       2.5      20,020
29,670      $   0.50       2.5      29,670
35,210      $   0.60       2.5      35,210
101,280     $   0.60       2.5     101,280
87,000      $   0.70       2.5      87,000
6,000       $   0.40       2.8       6,000
----------                        ---------
290,318                            290,318
==========                        =========
</TABLE>



<TABLE>
<CAPTION>

               Directors
               ---------
Directors                Average
Options                  Contractual
Outstanding              Life
At January     Exercise  Remaining   Options
1, 2003        Price     (Years)     Exercisable
------------------------------------------------
<S>            <C>       <C>         <C>
700            $10.75    4.0             700
700           $ 6.69     5.0             700
2000          $ 5.89     5.4            2000
700           $ 6.56     6.0             700
700           $ 5.75     7.0             700
400           $ 0.35     9.0             400
400           $ 0.12    10.0               0
------
5,600                                  5,200
======                                 =====
</TABLE>




The  following  table discloses the Company's proforma net income (loss) and net
income  (loss)  per  share  using  the  alternative  "fair value-based approach"
described  in  SFAS No. 123, Stock Based Compensation.  The table also discloses
the  weighted-average  assumptions  used  in  estimating  the fair value of each
option  grant on the date of grant using the Black-Scholes option-pricing model.

The  proforma  adjustment relates to stock options granted under the "2001 Plan"
for which a fair value on the date of grant was determined using a Black-Scholes
option pricing model.  There is no effect on  profoma net income for fiscal year
end  2003  because  options  granted  had  no  value.

<TABLE>
<CAPTION>



                                          2003       2002
                                       ---------------------
<S>                                     <C>        <C>
Net income
  As reported                           $423,564   $914,654
                                        ---------  ---------
  Proforma                              $423,564   $852,918
Basic and diluted net income per share
  As reported                           $   0.04   $   0.10
  Proforma                              $   0.03   $   0.09
Weighted-average assumptions
Expected stock price volatility            49.56%     62.20%
Risk-free interest rate                     3.02%      4.66%
Expected option lives                    5 years    5 years
</TABLE>


                                       35

<PAGE>


7.     Commitments  and  Contingencies

Litigation  Judgments  and  Settlements

Racusin

On  November  14,  2002,  the  U.S. District Court of Nevada issued a verdict in
favor  of Michael Racusin ("Racusin") and against the Company.  The draft of the
final  judgment order received on November 20, 2002 from Racusin's legal counsel
was  in  the  amount of $3,791,216, which included $1,481,216 of interest (as of
November  20,  2002).  The  draft  of the final judgment allows for an offset of
$756,340  (the  amount previously paid by the Company to Racusin pursuant to the
original  trial  judgment in September 1997).  Upon the advice of legal counsel,
the  Company  is  contesting  the  entire  interest  portion  of  the  judgment
($1,481,216)  due  to  the  timely payment of the original trial judgment by the
Company  in  September  1997.  The  range  of  possible  loss to the Company for
interest  related  to this litigation is from $0 to $1,510,126 as of January 31,
2003.  The  Company had previously accrued $328,624 for interest, which will not
be  adjusted  until  the  final  outcome  is  known.

The post-trial issues have been fully briefed and are awaiting a decision by the
trial  judge  which  is  expected within the next six months.  No opinion can be
expressed  as to the likelihood of the outcome on the pre/post judgment interest
issue.  It  is  also  possible  that  the  decision on the post-trial issues may
result  in  an  appeal  or  other  legal actions.  The new trial on the issue of
damages  could  extend  this  matter  for  an  additional  three  to five years.

The  anticipated  final  judgment  is material to the financial viability of the
Company  and,  at  the  present  time,  management  is  considering  the options
available  to the Company, including the filing of a Chapter 11 bankruptcy.  The
Company  has  recorded  $1,643,625  against  additional  paid-in  capital in the
quarter  ended  October  31, 2002, which represents the stock award less amounts
previously  paid by the Company.   The Company has been in litigation since 1995
with  Michael  Racusin  who  introduced  certain  underwriters to the Company in
connection with the Company's initial public offering.  The Company disputed Mr.
Racusin's claim for compensation under agreements that the Company believed were
unenforceable.

Imagineering  Systems,  Inc.

On  October 21, 1998, Imagineering Systems, Inc. ("ISI") filed a civil complaint
against the Company claiming, among other things, breach of contract and implied
covenant  of  good  faith  and  fair  dealing.  On November 8, 1998, the Company
brought  an  action to recover on loans it made to ISI.  On October 2, 2000, the
Company's  "Notice  for  Summary Judgment" for the claim of relief for breach of
Promissory  Note  was  granted.  The Company was awarded $76,583, plus interest.
The  execution  of  the  judgment  was stayed until the outcome of the ISI civil
complaint  is  known.

On October 17, 2000, a trial by jury was held and, on October 30, 2000, the jury
rendered  a  verdict in favor of ISI in the amount of $397,500 plus interest for
breach  of  contract and $1,000,000 plus interest for breach of implied covenant
of  good  faith  and fair dealing.  The Company immediately brought a post-trial
motion  asking  the  court  to:  (1) disregard the jury verdict; (2) order a new
trial; or (3) reduce the amount of the judgment.  On February 1, 2001, the Court
filed  its decision which: (a) refused to set aside the jury's award of $397,500
on  the  breach  of  contract claim; and (b) granted a new trial on the issue of
damages  awarded  on the claim for breach of the covenant of good faith and fair
dealing  unless  ISI  agreed  to reduce the judgment for $1,000,000 to $500,000,
which  they  did.  As  a  result  of the Court's decision and ISI's actions, the
award  to  ISI  was  effectively  reduced  from  $1,397,500,  plus  interest, to
$897,500,  plus  interest.  Any  potential  damage award would not be covered by
insurance.

The  Company  has  appealed  the Court's decision based upon a number of factors
including,  but  not  limited  to:  (1)  the award for damages on both breach of
contract  and  implied  covenant  of  good faith and fair dealing is contrary to
Nevada contract law; (2) the award of damages for the breach of implied covenant
of good faith and fair dealing constitutes specific performance; and (3) ISI did
not  provide sufficient evidence at trial for the award of damages for breach of
contract.

Currently,  this  matter is pending before the Nevada Supreme Court.  The Nevada
Supreme  court  heard  the  oral argument on April 16, 2003.  An opinion on this
appeal  may  not  be  issued  for  an  additional  six months subsequent to oral
argument.  No  opinion  can be expressed as to the outcome.  The potential range
of  loss  in  this  matter  would



                                       36

<PAGE>


be  from $0 to $1,397,500, plus any statutory interest. It is also possible that
the  appeal may result in a new trial on the issue of damages which could extend
the  potential  outcome  of  this  matter for an additional three to five years.
Based  upon  the advice of counsel, the Company has accrued the lower end of the
possible  outcome  of $213,000, plus interest, less $76,583 plus interest due to
the  Company,  with  respect  to  this  litigation.

Willow  International  Ventures  Corporation

In 2001, the Company was sued for trademark infringement by Willow International
Ventures  Corporation ("Willow") regarding the name "Mega$ports".  On August 28,
2002,  Willow  and  the  Company settled.  In anticipation of the settlement, on
July  22,  2002,  the Company officially changed the name of Mega$ports, Inc. to
Contest  Sports  Systems,  Inc.  and, as a result of the settlement, the Company
wrote  off  the  Mega$ports  trademark  in the amount of $252,532 in the quarter
ended  July  31,  2002.

Operating  Leases

The  Company  has  operating  lease commitments for the majority of its race and
sports  book  locations  and  for leased office equipment.  Rent expense for all
operating  leases  was  approximately $453,000 and $417,000 during the operating
periods presented.  The Company also paid $120,000 in 2003 and $108,000 in 2002,
included in rent expense above, to a company whose board of directors includes a
shareholder  of the Company.  Future minimum lease payments under non-cancelable
operating  leases  total  $246,497  for  2004, $124,360 for 2005 and $79,074 for
2006.

8.  Discontinued  Operations

On  July  27,  2000,  the  Nevada  Gaming  Commission approved a settlement of a
complaint  against the Company filed by the State Gaming Control Board.  Without
admitting  or  denying  the  allegations contained in the complaint, the Company
agreed  to  pay  a fine of $10,000 and to divest itself of any and all interests
and  rights  pertaining  to  the  Mega$ports  (ACT)  Pty.  Ltd.  subsidiary.

On  July  1,  2002,  the Company completed a sale of Mega$ports (ACT) to Euraust
Limited  ("Euraust").  On  March  20,  2003,  the  Chairmen  of the State Gaming
Control Board and Nevada Gaming Commission concluded that a complete divestiture
cannot  occur so long as there is a continuing obligation from Eurast to pay the
Company  on  its note (valued at $624,600) based on a percentage of handle.  The
Company  has  been  unsuccessful  in its attempts to negotiate a modification or
discount  for  a  lump-sum payment with Eurast .  Accordingly, as of January 31,
2003,  the  Company  wrote  off  as  uncollectible  the existing note to gain on
disposal  of  discontinued  operations.

On  February  26,  2002, the Company temporarily closed its keno operations.  It
was  the  Company's  intent  to  restructure  AWIK  and reopen the game.  Due to
prohibitive  costs  the  Company  discontinued  keno  operations  in  July 2002.

Results  from  discontinued  operations  are  as  follows:
<TABLE>
<CAPTION>



                              2003         2002
                           ------------------------
<S>                        <C>         <C>
Net Loss from operations:
  Mega$ports ACT           $(163,610)  $  (590,884)
  Keno                       (50,345)     (636,895)
                           ------------------------
                            (213,955)   (1,227,779)
                           ------------------------
Gain (loss) on disposal:
  Mega$ports ACT             165,309            --
  Keno                      (159,352)           --
                           ------------------------
                               5,957            --
                           ------------------------
                           $(207,998)  $(1,227,779)
                           ========================
</TABLE>



9.     Income  Taxes

The  tax  effect  of significant temporary differences representing deferred tax
assets  and  liabilities  for  the  Company  is  as  follows:


                                       37

<PAGE>


<TABLE>
<CAPTION>



                                           2003          2002
<S>                                    <C>           <C>
Deferred tax assets
Net operating loss carryforward        $ 1,006,709     1,047,198
Depreciation and amortization              263,646       323,412
Allowances for accounts receivable          11,135         5,069
Allowances for inventory obsolescence        9,319       100,734
Unrealized loss on investment
in subsidiary                            1,106,283     1,106,283
Accrued liabilities                        345,254       257,373
Other                                       54,121        39,954
                                       ------------  ------------
                                         2,796,467     2,880,023
Valuation allowance                     (2,355,986)   (2,608,023)
                                       ------------  ------------

                                       $   440,481   $   272,000
                                       ============  ============
</TABLE>



Income  tax expense (benefit) for continuing operations is comprised as follows:
<TABLE>
<CAPTION>



             2003        2002
          ----------------------
<S>       <C>         <C>
Current   $      --   $   7,185
Deferred   (168,481)   (272,000)
          ----------  ----------
          $(168,481)  $(264,815)
          ==========  ==========
</TABLE>



The  difference  between the normal federal statutory tax rate of 34% applied to
income  from  continuing  operations  before  income  taxes  and  the  Company's
effective  tax  rate  is:
<TABLE>
<CAPTION>



                                           2003         2002
                                        ------------------------
<S>                                     <C>         <C>
Income taxes at federal statutory rate  $ 157,447   $   638,389
Non-deductible expenses                    19,719        32,069
Losses of foreign subsidiary                   --       580,472
Benefit of NOL carryforwards              (75,325)   (1,519,788)
Other temporary differences              (101,841)      276,043
Decrease in deferred tax
valuation allowances                     (168,481)     (272,000)
                                        ----------  ------------
                                        $(168,481)  $  (264,815)
                                        ==========  ============
</TABLE>



At  January  31,  2003,  the Company had tax net operating loss carryforwards of
$2,960,910  of  which $445,207 will expire in 2019 and $2,515,703 will expire in
2020.

10.     Business  Segments

The  Company conducts its continuing operations with customers through 2 primary
business segments, Wagering Unit and Systems Unit.  Its Wagering Unit (Wagering)
operates 47 race and sports books throughout Nevada.  Its Systems Unit (Systems)
designs,  markets,  installs  and maintains sports and race book systems for the
sports  betting  industry.

Amounts  for  2002 presented below have been reclassified to conform to the 2003
presentation,  including  the  elimination  of  the  discontinued  keno segment.
Financial  performance  measurements  for  Wagering,  Systems, and SG&A (certain
unallocated  selling,  general,  and  administrative costs) are set forth below.
<TABLE>
<CAPTION>



                                 2003          2002
                             ------------  ------------

<S>                          <C>           <C>
Depreciation
   Wagering                  $   166,725   $   218,568
   Systems                       135,166       142,930
   SG&A                           54,150        54,596
                             ------------  ------------
                             $   356,041   $   416,094
                             ============  ============
Operating income (loss)
   Wagering                  $ 1,553,371   $ 2,065,751
   Systems                     1,307,141     1,735,439




                                       38

<PAGE>



   SG&A                       (2,064,098)   (1,866,487)
                             ------------  ------------
                             $   796,414   $ 1,934,703
                             ============  ============
Capital expenditures
   Wagering                  $   193,198   $   193,727
   Systems                       228,162       169,298
   SG&A                            3,376        35,953
                             ------------  ------------

                             $   424,736   $   398,978
                             ============  ============
Identifiable assets
   Wagering                  $ 3,322,507   $ 2,491,624
   Systems                     4,982,606     4,415,875
   SG&A                        1,196,131     2,614,318
                             ------------  ------------

                             $ 9,501,244   $ 9,521,817
                             ============  ============

Discontinued operations
   Operating loss:
      Mega$ports Australia   $  (163,610)  $  (590,884)
      Keno                       (50,345)     (636,895)
                             ------------  ------------

                             $  (213,955)  $(1,227,779)
                             ------------  ------------
</TABLE>



11.     Supplementary  Cash  Flow  Information


<TABLE>
<CAPTION>



                                          2003         2002
                                       ------------------------
<S>                                    <C>          <C>
   Reconciliation of net income
    to net cash provided by
    operating activities
    Net income                         $  423,564   $  914,654
    Depreciation and amortization         453,117      674,285
    Provision for doubtful accounts
    (recovery)                             17,840      (17,073)
    Loss on asset dispositions            195,459      147,676
    Litigation judgments                  273,145      521,167
    Decrease (increase) in operating
    assets:
      Accounts receivable                  97,088      (54,009)
      Inventories                          26,108      (45,250)
      Prepaid expenses                     57,705       45,024
      Deferred tax assets, net           (168,481)    (272,000)
      Other                                96,120     (170,501)

    Increase (decrease) in operating
    liabilities:
      Accounts payable                    (14,608)    (134,882)
      Accrued expenses                     90,278     (334,335)
      Unpaid winning tickets             (155,806)     201,434

      Customer deposits and other        (190,512)     295,320
                                       ------------------------
   Net cash provided by (used in)
   operating activities                $1,201,017   $1,771,510
                                       ===========  ===========
   Cash paid for interest              $  144,566   $  161,087
                                       ===========  ===========
   Cash paid for income taxes          $       --   $   14,385
                                       ===========  ===========

</TABLE>




SUPPLEMENTAL  DISCLOSURES  OF  NON-CASH  ACTIVITIES

Fiscal  Year  ended  January  31,  2003  Transactions  -  Non-cash  reduction of
additional  paid  in  capital  of  $1,643,625  for  2003  by increase of accrued
litigation  payable.

Fiscal  Year  ended  January  31,  2002  Transactions  -  None

                                       39

<PAGE>


                                   SIGNATURES


In  accordance  with Section 13 or 15(d) of the Exchange Act, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly  authorized.


                                   AMERICAN  WAGERING,  INC.



                                By: /s/ Victor Salerno
                                   -----------------
                                   Victor Salerno,
                                   President and Chief Executive Officer

     In  accordance  with  the requirements of the Exchange Act, this report has
been  signed  by  the  following  persons  in  the  capacities  and on the dates
indicated.

          Signature                 Title                        Date
          ---------                 -----                        ----

/s/ Victor Salerno
---------------------------   President; Chief Executive     April  25,  2003
Victor Salerno                Officer;  Director

/s/ Timothy  Lockinger
---------------------------   Chief Financial Officer,       April 25, 2003
Timothy  Lockinger            Secretary Treasurer,
                              and  Director

/s/ W.  Larry  Swecker
---------------------------   Director                       April  25,  2003
W.  Larry  Swecker


/s/ Judith  Salerno
---------------------------   Director                       April  25,  2003
Judith  Salerno



<PAGE>


                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER

The  undersigned  chief  executive  officer,  individually,  certifies  that:

1.   I  have  reviewed  this  annual  report on Form10-KSB of American Wagering,
     Inc.;

2.   Based  on  my  knowledge,  this  annual  report does not contain any untrue
     statement  of a material fact or omit to state a material fact necessary to
     make  the  statements  made, in light of the circumstances under which such
     statements  were made, not misleading with respect to the period covered by
     this  annual  report;

3.   Based  on  my  knowledge,  the  financial  statements,  and other financial
     information  included in this annual report, fairly present in all material
     respects  the  financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The  registrant's  other  certifying  officers  and  I  are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in  Exchange  Act  Rules  13a-14  and  15d-14) for the registrant and have:

     a)   designed  such  disclosure  controls  and  procedures  to  ensure that
          material  information  relating  to  the  registrant,  including  its
          consolidated  subsidiaries, is made known to us by others within those
          entities,  particularly  during the period in which this annual report
          is  being  prepared;

     b)   evaluated  the  effectiveness  of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this  annual  report  (the  "Evaluation  Date");  and

     c)   presented  in  this  annual  report  our  conclusions  about  the
          effectiveness  of  the disclosure controls and procedures based on our
          evaluation  as  of  the  Evaluation  Date;

5.   The  registrant's  other certifying officers and I have disclosed, based on
     our  most  recent  evaluation,  to  the registrant's auditors and the audit
     committee  of  registrant's  board  of directors (or persons performing the
     equivalent  functions):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which  could  adversely  affect  the registrant's ability to
          record,  process,  summarize  and  report  financial  data  and  have
          identified  for  the  registrant's auditors any material weaknesses in
          internal  controls;  and

     b)   any  fraud, whether or not material, that involves management or other
          employees  who  have  a  significant role in the registrant's internal
          controls;  and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     annual  report  whether  or  not there were significant changes in internal
     controls  or  in  other  facts  that  could  significantly  affect internal
     controls  subsequent  to  the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

     /s/ Victor Salerno
     ---------------------------------------
     Victor Salerno, Chief Executive Officer          Date:  April  25, 2003



<PAGE>


                    CERTIFICATION OF CHIEF FINANCIAL OFFICER

The  undersigned  chief  financial  officer,  individually,  certifies  that:

1.   I  have  reviewed  this  annual  report on Form10-KSB of American Wagering,
     Inc.;

2.   Based  on  my  knowledge,  this  annual  report does not contain any untrue
     statement  of a material fact or omit to state a material fact necessary to
     make  the  statements  made, in light of the circumstances under which such
     statements  were made, not misleading with respect to the period covered by
     this  quarterly  report;

3.   Based  on  my  knowledge,  the  financial  statements,  and other financial
     information  included in this annual report, fairly present in all material
     respects  the  financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The  registrant's  other  certifying  officers  and  I  are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in  Exchange  Act  Rules  13a-14  and  15d-14) for the registrant and have:

     a)   designed  such  disclosure  controls  and  procedures  to  ensure that
          material  information  relating  to  the  registrant,  including  its
          consolidated  subsidiaries, is made known to us by others within those
          entities,  particularly  during the period in which this annual report
          is  being  prepared;

     b)   evaluated  the  effectiveness  of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this  annual  report  (the  "Evaluation  Date");  and

     c)   presented  in  this  annual  report  our  conclusions  about  the
          effectiveness  of  the disclosure controls and procedures based on our
          evaluation  as  of  the  Evaluation  Date;

5.   The  registrant's  other certifying officers and I have disclosed, based on
     our  most  recent  evaluation,  to  the registrant's auditors and the audit
     committee  of  registrant's  board  of directors (or persons performing the
     equivalent  functions):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which  could  adversely  affect  the registrant's ability to
          record,  process,  summarize  and  report  financial  data  and  have
          identified  for  the  registrant's auditors any material weaknesses in
          internal  controls;  and

     b)   any  fraud, whether or not material, that involves management or other
          employees  who  have  a  significant role in the registrant's internal
          controls;  and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     annual  report  whether  or  not there were significant changes in internal
     controls  or  in  other  facts  that  could  significantly  affect internal
     controls  subsequent  to  the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

     /s/ Timothy  F. Lockinger
     ----------------------------------------------
     Timothy  F. Lockinger, Chief Financial Officer      Date: April  25,  2003