<PAGE>
 
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
 
                                  Form 10-K/A
                                Amendment No. 1
 
 Mark One
 
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
   ACT OF 1934
  For the fiscal year ended December 31, 1998
                                      OR
[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
   EXCHANGE ACT OF 1934
  For the transition period from     to
 
                        Commission File Number 0-28294
 
                             SILICON GAMING, INC.
            (Exact name of Registrant as specified in its charter)
 
<TABLE>
<CAPTION>
<S>                                       <C> 
                 CALIFORNIA                  77-0357939
       (State or other jurisdiction of    (I.R.S. Employer
       incorporation or organization)  Identification Number)
</TABLE>
 
                  2800 W. Bayshore Road, Palo Alto, CA 94303
                   (Address of principal executive offices)
 
                                (650) 842-9000
             (Registrant's telephone number, including area code)
 
          Securities registered pursuant to Section 12(b) of the Act:
 
 
<TABLE>
<CAPTION>
<S>                           <C> 
               Title of Class  Name of each exchange on which registered
               --------------  -----------------------------------------
                    None                         None
                    ----                         ----
</TABLE>
 
          Securities registered pursuant to Section 12(g) of the Act:
                         Common Stock, $.001 per share
 
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [_]
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of regulation S-K is not contained herein, and will not 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-K or any amendment to
this Form 10-K. [X]
 
Aggregate market value of the registrant's Common Stock held by non-affiliates
as of February 28, 1999:
$8,263,413
 
Number of shares outstanding of the issuer's common Stock, $.001 par value, as
of February 28, 1999:
14,288,502
 
                     DOCUMENTS INCORPORATED BY REFERENCE:
                                     None
<PAGE>
 
Part III of the Registrant's Form 10-K for the fiscal year ended 12/31/98 is
amended to read in its entirety as follows:
 
Item 10. Directors and Executive Officers of the Registrant
 
  Set forth below is information regarding the current directors, including
information furnished by them as to principal occupations, certain other
directorships held by them, any arrangements pursuant to which they were
selected as directors or nominees and their ages as of March 1, 1999.
 
<TABLE>
<CAPTION>
                                                                       Director
           Name           Age          Principal Occupation             since
           ----           --- --------------------------------------   --------
 <C>                      <C> <S>                                      <C>
 David S. Morse..........  53 Chairman of the Board, Silicon Gaming,     1993
                               Inc.
 Andrew S. Pascal........  33 President and Chief Executive Officer,     1998
                               Silicon Gaming, Inc.
 William Hart............  58 General Partner, Technology Partners       1994
 Kevin R. Harvey.........  34 General Partner, Benchmark Capital         1995
                               Management
 Thomas J. Volpe.........  63 Sr. Vice President, Financial              1997
                               Operations, Interpublic Group of
                               Companies
</TABLE>
 
  David S. Morse is a founder and current Chairman of the Board of the
Company. Mr. Morse previously served as Chairman from the Company's inception
to September 1996. Mr. Morse also currently serves as Chairman of the Board
for Silicon Entertainment, Inc., a developer of virtual reality-based auto
racing simulations. Mr. Morse is a founder and has served as Chief Executive
Officer of Crystal Dynamics, Inc., an interactive video game developer and
publisher, from July 1992 to June 1993 and from December 1994 to May 1995. Mr.
Morse was founder, President and Chief Executive Officer of New Technologies
Group, Inc., ("NTG"), the company which developed the original video game
technology employed in games developed by The 3DO Company ("3DO"). NTG was one
of the founding partners of 3DO and was subsequently acquired by 3DO. Mr.
Morse served with NTG from July 1989 to June 1993. Mr. Morse was also the
founder, President and Chief Executive Officer of Amiga Computer, Inc., prior
to its acquisition by Commodore Business Machines, Inc. in 1984.
 
  Andrew S. Pascal was elected President and Chief Executive Officer of the
Company in February 1999. Previously Mr. Pascal had served as Executive Vice
President Marketing and Game Development of the Company since October 1994. He
has over 10 years of gaming industry experience with an emphasis in slot
marketing, slot merchandising and slot operations. He joined SGI in October
1994 from Mirage Resorts, Incorporated, where he worked from June 1985 to
October 1994. Mr. Pascal held the position of Director of Slot Operations and
Marketing at The Mirage Hotel and Casino ("The Mirage"). Mr. Pascal also
served on The Mirage's eight-member Operating Committee, which set operating
policy and established the strategic direction for The Mirage and its
employees, from September 1992 to October 1994. Prior to the opening of The
Mirage, Mr. Pascal served as the Director of Slot Marketing for the Golden
Nugget Casino-Hotel.
 
  William Hart has served as a director of the Company since May 1994. Mr.
Hart is a general partner of Technology Partners, a venture capital investment
firm founded by Mr. Hart in 1980, which currently manages $100 million in
funds for early stage venture capital investments. Prior to founding
Technology Partners, Mr. Hart held positions with Cresap, McCormick and Paget,
a management consulting firm, and with IBM Corporation. Mr. Hart serves as a
director of Cellnet Data Systems, Inc., Qualix Group Inc., Trimble Navigation
Ltd., APX, LBE Technologies, Mobex and St. Helena Wine Co.
 
  Kevin R. Harvey has served as a director of the Company since August 1995.
Mr. Harvey is a General Partner of Benchmark Capital Management LLC
("Benchmark"), a Silicon Valley venture capital firm which currently manages a
$90 million fund. Prior to joining Benchmark in 1995, Mr. Harvey successfully
started two software companies. The first, Styleware, a provider of integrated
software for the Apple II personal computer, was founded in 1985 and
subsequently sold to Claris Corporation. His second startup, Approach
Software, provided the first, easy-to-use client server database software for
Windows and was sold to Lotus Development in 1993.
 
                                       2
<PAGE>
 
  Thomas J. Volpe has been a director of the Company since March 1997. Mr.
Volpe has served as Senior Vice President, Financial Operations for The
Interpublic Group of Companies, Inc. ("Interpublic"), an advertising agency
holding company, from March 1986 to present. Mr. Volpe is also a director of
Alliance Atlantis Corporation, a film production company. Additionally, Mr.
Volpe serves as a trustee of St. Francis College, Brooklyn, New York, as a
member of the Board of Directors of the New York City Chapter of the National
Multiple Sclerosis Society, and as a trustee of the Business Council of the
United Nations.
 
  There are no family relationships among executive officers or directors of
the Company.
 
Section 16(a) Beneficial Ownership Reporting Compliance
 
  Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, officers and ten percent beneficial owners to file reports of
ownership and changes in ownership with the SEC. Directors, officers and
greater than ten percent beneficial owners are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.
 
  Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Form 5s were
required for such persons, the Company believes that each of its directors,
officers and greater than ten percent beneficial owners during the fiscal year
ended December 31, 1998 have complied with all filing requirements applicable
to such person.
 
                                       3
<PAGE>
 
Item 11. Executive Compensation
 
Summary of Cash and Other Compensation
 
  The following table sets forth the compensation earned by the Company's Chief
Executive Officer and each of the other four most highly compensated executive
officers whose compensation for the fiscal year ended December 31, 1998
exceeded $100,000 for services rendered in all capacities to the Company during
the last three fiscal years (the "Named Executive Officers").
 
                           Summary Compensation Table
 
<TABLE>
<CAPTION>
                                     Annual
                                  Compensation         Long-Term
                                ----------------- Compensation Awards
   Name and Principal    Fiscal                    Shares Underlying     All Other
        Position          Year  Salary(1)  Bonus    Options Granted   Compensation(2)
   ------------------    ------ --------- ------- ------------------- ---------------
<S>                      <C>    <C>       <C>     <C>                 <C>
Donald J. Massaro(3)....  1998  $253,108       --            --           $2,126
  Former Chairman of the
   Board,                 1997  $250,000  $37,250        45,000           $1,771
  President and Chief
   Executive Officer      1996  $250,000  $15,000            --           $1,728
 
David S. Morse(4).......  1998  $ 64,919       --       155,000(5)            --
  Chairman of the Board
   and Acting               --        --       --            --               --
  Chief Executive
   Officer                  --        --       --            --               --
 
Andrew S. Pascal(6).....  1998  $191,338  $ 2,300       130,000(7)        $  380
  Executive Vice
   President--Marketing   1997  $162,500  $35,003        30,000              332
  and Game Development    1996  $135,129  $15,000       100,000              324
 
Betsy B. Sutter.........  1998  $121,870  $15,000       150,400(8)        $  319
  Vice President--Human
   Resources(9)           1997  $ 82,385       --        25,200           $  198
 
Paul Mathews............  1998  $125,000  $ 6,375       163,336(10)       $  270
  Vice President--
   Business               1997  $110,417       --        40,000           $  262
  Development and
   Government Affairs     1996  $ 89,583  $15,000        33,332           $  216
 
Thomas E. Carlson(11)...  1998  $172,508       --        63,333(7)        $  653
  Former Vice
   President--Chief       1997  $148,333  $25,157        30,000           $  627
  Financial Officer       1996  $128,115  $15,000        33,333           $  571
 
Paul Kurth(12)..........  1998  $126,871  $ 3,633       166,668(13)       $3,112
  Former Vice
   President--Operations  1997  $136,667       --        45,000           $3,826
                          1996  $120,000  $15,000            --           $2,160
</TABLE>
--------
 (1) Salary includes any compensation deferred under Company's 401(k) plan.
 (2) Represents life insurance premiums paid by the Company for the benefit of
     the Named Executive Officer.
 (3) Mr. Massaro resigned from the Company in August 1998. Salary includes
     amounts paid to Mr. Massaro in connection with his separation from the
     Company.
 (4) Mr. Morse was elected Chairman of the Board in August 1998 and served as
     Acting Chief Executive Officer from August 1998 to February 1999.
 (5) Represents 5,000 shares granted to Mr. Morse in his capacity as a director
     and 75,000 shares granted to him as Acting Chief Executive Officer, which
     shares were repriced in December 1998.
 (6) Mr. Pascal currently serves as President and Chief Executive Officer of
     the Company, to which he was elected in February 1999.
 (7) Represents options granted in prior years and repriced in September 1998.
 (8) Represents 25,200 shares granted in prior years and repriced in January
     1998 and in September 1998; 50,000 shares granted in 1998 and repriced in
     September 1998.
 (9) Ms. Sutter was hired in March, 1997.
(10) Represents 40,000 shares granted in prior years and repriced in January
     1998 and in September 1998; 16,666 shares granted in a prior year and
     repriced in September 1998; 33,335 shares granted in 1998, repriced in
     September 1998 and subsequently cancelled in October 1998.
(11) Mr. Carlson resigned from the Company in March 1999.
(12) Mr. Kurth resigned from the Company in October 1998.
(13) Represents 45,000 shares granted in prior years and repriced in January
     1998 and in September 1998; 38,334 shares granted in 1998 and repriced in
     September 1998.
 
                                       4
<PAGE>
 
Stock Option Grants
 
  The following table sets forth further information regarding individual
grants of options for the Company's Common Stock during the year ended
December 31, 1998 for each Named Executive Officer. Such grants were made
pursuant to the Company's 1994 Stock Option Plan and 1997 Non-Qualified Stock
Option Plan. In accordance with the rules of the Securities and Exchange
Commission ("SEC"), the table sets forth the hypothetical gains or "option
spreads" that would exist for the options at the end of their respective ten-
year terms based on assumed annualized rates of compound stock price
appreciation of 5% and 10% from the dates the options were granted to the end
of the respective option terms. Actual gains, if any, are dependent on the
future performance of the Company's Common Stock and overall market
conditions. There can be no assurance that the potential realizable values
shown in this table will be achieved.
 
                       Option Grants in Last Fiscal Year
 
<TABLE>
<CAPTION>
                                                                              Potential Realizable
                                                                             Value at Assumed Annual
                           Number of      % of Total                          Rates of Stock Price
                            Shares         Options                           Appreciation for Option
                          Underlying      Granted to  Exercise                       Term(4)
                            Options       Employees     Price     Expiration -----------------------
          Name           Granted(1)(2)     in 1998   Per Share(3)    Date        5%          10%
          ----           -------------    ---------- -----------  ---------- ----------- -----------
<S>                      <C>              <C>        <C>          <C>        <C>         <C>
Donald J. Massaro.......          0              0         --            --           --          --
 
David S. Morse..........      5,000          .1493     $9.375       5/26/08  $ 29,479.44 $ 74,706.68
                             75,000         2.2402     $6.00        8/19/08  $283,002.58 $717,184.11
                             75,000(5)      2.2402     $1.875       8/19/08  $ 85,306.13 $214,440.69
 
Andrew S. Pascal........    100,000(6)      2.9870     $4.00        10/9/06  $193,198.26 $463,727.61
                             30,000(6)       .8961     $4.00        4/16/07  $ 62,512.71 $152,227.21
 
Betsy B. Sutter.........        200(7)       .006      $9.125      12/10/07  $  1,135.84 $  2,871.64
                                200(6)       .006      $4.00       12/10/07  $    456.08 $  1,131.21
                             25,000(7)       .7467     $9.125       3/19/07  $129,050.96 $319,561.41
                             25,000(6)       .7467     $4.00        3/19/07  $ 51,525.73 $125,203.41
                             50,000         1.4935     $7.00        7/28/08  $220,113.12 $557,809.86
                             50,000(8)      1.4935     $4.00        7/28/08  $123,868.46 $312,822.47
 
Paul Mathews............     40,000(7)      1.1947     $9.125       4/16/07  $208,624.49 $517,728.76
                             40,000(6)      1.1947     $4.00        4/16/07  $ 83,350.28 $202,969.61
                             33,335          .9957     $7.00        7/28/08  $146,749.42 $371,891.83
                             33,335(8)(9)    .9957     $4.00        7/28/08  $ 82,583.10 $208,558.74
                             16,666(6)       .4978     $4.00        5/28/06  $ 30,443.36 $ 72,335.09
 
Thomas E. Carlson.......     33,333(6)       .9956     $4.00        5/28/06  $ 60,888.55 $144,674.52
                             30,000(6)       .8961     $4.00        4/16/07  $ 62,512.71 $152,227.20
 
Paul Kurth..............     45,000(7)      1.3441     $9.125       4/16/07  $234,702.55 $582,444.86
                             45,000(6)      1.3441     $4.00        4/16/07  $ 93,769.07 $228,340.81
                             38,334         1.145      $7.00        7/28/08  $168,756.33 $427,661.66
                             38,334(8)      1.145      $4.00        7/28/08  $ 94,967.47  239,834.73
</TABLE>
--------
(1) Options granted in 1998 were granted under the 1994 Stock Option Plan, the
    1996 Outside Directors' Stock Option Plan and the 1997 Non-Qualified Stock
    Option Plan. The Board of Directors has discretion, subject to plan
    limits, to modify the terms of outstanding options.
(2) With the exception of the options for 5,000 shares that were granted to
    Mr. Morse under the 1996 Outside Directors' Plan which provides that
    options become exercisable upon vesting, each option is fully exercisable
    from the time of grant, subject to the Company's right to repurchase any
    unvested shares at the original exercise price in the event of the
    optionee's termination. Shares vest at the rate of 1/4 of the shares after
    one year and then 1/48 of the total number of shares each month
    thereafter. Each option expires ten years from the date of grant. Under
    the 1997 Outside Directors' Plan, shares vest monthly over 36 months.
(3) The per-share exercise price of options granted represents the fair market
    value of the underlying shares of Common Stock on the dates the respective
    options were granted as reported on the Nasdaq Stock Market.
(4) Amounts represent hypothetical gains that could be achieved for the
    respective options if exercised at the end of the option term. The assumed
    5% and 10% rates of stock price appreciation are provided pursuant to the
    rules of the Securities and Exchange Commission and do not represent the
    Company's estimate or projection of the future Common Stock price.
(5) Represents repricing in December 1998 of option granted in 1998.
(6) Represents repricing in September 1998 of options granted prior to 1998.
(7) Represents repricing in January 1998 of options granted prior to 1998.
(8) Represents repricing in September 1998 of options granted in 1998.
(9) Option cancelled in October 1998 by agreement between Mr. Mathews and the
    Board of Directors.
 
                                       5
<PAGE>
 
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
 
The following table sets forth certain information regarding the exercise of
options by the named Executive Officers during 1998 and unexercised stock
options held by each of the Named Executive Officers as of December 31, 1998:
 
<TABLE>
<CAPTION>
                          Number of Securities
                               Underlying              Value of Unexercised
                         Unexercised Options at      In-the-Money Options at
                           December 31, 1998           December 31, 1998(1)
                      ---------------------------- ----------------------------
                      Exercisable(2) Unexercisable Exercisable(2) Unexercisable
                      -------------- ------------- -------------- -------------
<S>                   <C>            <C>           <C>            <C>
Donald J. Massaro....     45,000             0            0              0
David S. Morse.......     90,693         9,307            0              0
Andrew S. Pascal.....    130,000             0            0              0
Betsy B. Sutter......     75,200             0            0              0
Paul Mathews.........     56,666             0            0              0
Thomas E. Carlson....     63,333             0            0              0
Paul Kurth...........          0             0            0              0
</TABLE>
--------
(1) Market value of underlying securities at year end ($1.375) minus the
    exercise price.
(2) With certain exceptions, all options are fully exercisable, subject to the
    Company's right to repurchase any unvested shares at the original exercise
    price in the event of the optionee's termination.
 
Employment, Severance and Change of Control Agreements
 
  In May 1995, the Company entered into an employment agreement with Donald J.
Massaro pursuant to which Mr. Massaro was employed as the Company's President
and Chief Executive Officer. The agreement entitled Mr. Massaro to a salary of
$20,833.33 per month. Under the agreement, Mr. Massaro agreed to serve on the
Board of Directors while serving as Chief Executive Officer and to resign from
the Board at such time as his employment were terminated. In October 1996, Mr.
Massaro was appointed Chairman of the Board of Directors. The agreement also
provided for loans to Mr. Massaro from the Company for living expenses. Mr.
Massaro resigned from the Company in August 1998. See "Certain Relationships
and Related Transactions."
 
  Upon Mr. Massaro's resignation from the company in August 1998, Mr. Morse
was re-elected Chairman of thte Board and Acting Chief Executive Officer. Mr.
Morse's compensation was fixed by contract at a rate of $175,000 per year to
be paid monthly until a new chief Executive Officer was appointed. In February
1999 the Board appointed Mr. Andrew Pascal President and Chief Executive
Officer.
 
                                       6
<PAGE>
 
Item 12. Security Ownership of Certain Beneficial Owners and Management
 
  The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of March 1, 1999 by (i) each person
known by the Company to own beneficially more than five percent of the
outstanding shares of Common Stock, (ii) each director of the Company, (iii)
each of the executive officers named in the "Executive Compensation -- Summary
Compensation Table" on page 7 and (iv) all directors and current executive
officers as a group.
 
<TABLE>
<CAPTION>
                                                            Shares of Common
                                                           Stock Beneficially
                                                                Owned(1)
                                                          --------------------
   Five Percent Shareholders, Directors and Executive               Percentage
                        Officers                           Number   Ownership
   --------------------------------------------------     --------- ----------
<S>                                                       <C>       <C>
DDJ Capital Management, LLC(2)........................... 1,066,460    7.15
  141 Linden Street, Suite 4
  Wellesley, MA 02482-7910
FMR Corp.(3).............................................   893,500    6.25
  82 Devonshire Street
  Boston, MA 02109
David S. Morse(4)........................................   694,453    4.83
William Hart(5)..........................................   693,596    4.85
Andrew S. Pascal.........................................   648,469    4.41
Kevin R. Harvey(6).......................................   616,153    4.31
Thomas E. Carlson(7).....................................   317,659    2.19
Paul D. Mathews..........................................   261,264    1.80
Betsy B. Sutter..........................................   225,200    1.55
Donald J. Massaro........................................   212,651    1.49
Thomas J. Volpe(8).......................................   148,609    1.04
Paul Kurth...............................................    29,166       *
All directors and current executive officers as a group
 (10 persons)(9)......................................... 3,964,382   25.00
</TABLE>
--------
 *  less than one percent
(1) Beneficial ownership is determined in accordance with the rules of the
    Securities and Exchange Commission. In computing the number of shares
    beneficially owned by a person and the percentage ownership of that
    person, shares of Common Stock subject to options or warrants held by that
    person that are currently exercisable or will become exercisable within 60
    days after March 1, 1999 are deemed outstanding, while such shares are not
    deemed outstanding for purposes of computing percentage ownership of any
    other person. In general, options granted under the 1994 Stock Option Plan
    are fully exercisable from the date of grant, subject to the Company's
    right to repurchase any unvested shares at the original exercise price
    upon termination of employment. The information set forth in this table
    does not include among shares beneficially owned or outstanding shares of
    Common Stock issuable upon conversion of Nonvoting Redeemable Convertible
    Preferred Stock (the "Nonvoting Preferred"), which is convertible only
    upon 75 days' prior notice to the Company. Unless otherwise indicated in
    the footnotes below, the persons and entities named in the table have sole
    voting and investment power with respect to all shares beneficially owned,
    subject to community property laws where applicable.
(2) Based on information provided in Schedule 13D as filed 11/3/98 by DDJ
    Capital Management, LLC ("DDJ"). Includes 625,000 shares issuable upon
    exercise of currently exercisable warrants.
(3) Based on information provided in Schedule 13G as filed 2/1/99 by FMR Corp.
(4) Includes 600,000 shares held by Mr. Morse and his spouse as Trustees of
    the Morse Family Trust dated 12/20/84. Also includes 93,471 shares subject
    to options exercisable within 60 days after March 1, 1999.
(5) Includes 591,768 shares held by Technology Partners Fund V, L.P., of which
    TPW Management V, L.P. ("TPW") is the general partner, and 24,002 shares
    held by TPW. Mr. Hart is the Managing Partner of TPW. Mr. Hart disclaims
    beneficial ownership of these shares except to the extent of his
    proportionate interest therein. Includes 18,471 shares subject to options
    exercisable within 60 days after March 1, 1999.
 
                                       7
<PAGE>
 
   Excludes 290,118 shares of Common Stock issuable upon conversion of
   Nonvoting Preferred. Assuming conversion of all outstanding shares of
   Nonvoting Preferred, Technology Partners Fund V, L.P. would be the
   beneficial owner of 6.74% of the Company's outstanding Common Stock.
(6) Includes 520,400 shares held by Benchmark Capital Partners, L.P., and
    60,600 shares held by Benchmark Founders' Fund, L.P. Mr. Harvey is a
    member of Benchmark Capital Management LLC ("BCM"), the general partner of
    each of these entities. Mr. Harvey disclaims beneficial ownership of these
    shares except to the extent of his proportionate interest therein.
    Includes 18,471 shares subject to options exercisable within 60 days after
    March 1, 1999. Excludes 450,987 shares of Common Stock issuable upon
    conversion of Nonvoting Preferred. Assuming conversion of all outstanding
    shares of Nonvoting Preferred, BCM would be the beneficial owner of 7.23%
    of the Company's outstanding Common Stock.
(7) Includes 213,333 shares subject to options exercisable within 60 days
    after March 1, 1999.
(8) Includes 133,333 shares held by Interpublic Benefit Protection Trust, of
    which Mr. Volpe is a trustee.
(9) Includes 1,567,555 shares issuable upon exercise of stock options that are
    currently exercisable or will become exercisable within 60 days after
    March 1, 1998. Excludes two officers who resigned from the Company in
    August and October, respectively. Includes two executive officers who were
    appointed in February 1999. Also includes 600,000 shares held by Mr. Morse
    and his spouse as Trustees of the Morse Family Trust; 591,768 shares held
    by Technology Partners Fund V, L.P. and 24,002 shares held by TPW, of
    which Mr. Hart, the Managing Partner of TPW, the general partner of
    Technology Partners Fund V, L.P., disclaims beneficial ownership except to
    the extent of his proportionate interest therein; 520,400 shares and
    60,600 shares beneficially owned by BCM, of which Mr. Harvey, a member of
    BCM, disclaims beneficial ownership except to the extent of his
    proportionate interest therein; and 133,333 shares held by Interpublic
    Benefit Protection Trust, of which Mr. Volpe is a trustee. Excludes
    290,118 shares and 450,987 shares, respectively, of Nonvoting Preferred
    beneficially owned by Technology Partners Fund V, L.P. and BCM. Assuming
    conversion of all outstanding shares of Nonvoting Preferred, the Company's
    executive officers and directors as a group would be deemed to be the
    beneficial owner of 28.35% of the Company's outstanding Common Stock.
 
Item 13. Certain Relationships and Related Transactions
 
  Pursuant to Mr. Massaro's employment agreement, the Company agreed to loan
Mr. Massaro up to $75,000 per year for living expenses, secured by Common
Stock of the Company owned by Mr. Massaro. The loan bore interest at 8% per
annum. At the time of Mr. Massaro's resignation from the Company in August
1998, $150,000 in principal was outstanding. In connection with Mr. Massaro's
departure, the loan and interest thereon was forgiven. See "Executive
Compensation Employment, Severance and Change of Control Agreements."
 
  In connection with the sale of Series C Preferred Stock to Interpublic, of
which director Thomas J. Volpe is Vice President, Financial Operations, the
Company and Interpublic entered into a letter agreement dated March 11, 1996
pursuant to which the Company agreed, among other things, not to enter into
strategic alliances with Interpublic's competitors without its written
consent, to provide Interpublic with periodic data regarding customer
installations, and to provide Interpublic with preferred access with respect
to placement of advertisements on the Company's products or integrating
advertisements into promotional offerings of the Company's customers on behalf
of Interpublic's advertising clients.
 
                                       8
<PAGE>
 
                                  SIGNATURES
 
  Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this amendment to report
to be signed on its behalf by the undersigned, thereunto duly authorized.
 
                                          Silicon Gaming, Inc.
 
                                                   /s/ Andrew S. Pascal
                                          By___________________________________
                                                     Andrew S. Pascal
                                                President, Chief Executive
                                                         Officer,
                                            Acting Chief Financial Officer and
                                                         director
 
                                          Date: April 29, 1999
 
                                       9