<PAGE>
 
--------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION

                            WASHINGTON, D.C.  20549
                                 _____________
                                   FORM 10-Q

(Mark One)

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

     For the Quarterly Period Ended September 30, 1997

                                       OR

___  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     For the Transition Period from _______________________ to_________________

                        Commission file number 333-4356

                         COAST HOTELS AND CASINOS, INC.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                              <C>
           NEVADA                                                            88-0345706
  (State or other jurisdiction of                                          (I.R.S. Employer
 incorporation or organization)                                        identification number)

4500 WEST TROPICANA AVE., LAS VEGAS, NEVADA                                    89103
(Address of principal executive offices)                                    (Zip code)
</TABLE>
                                (702) 365-7000
             (Registrant's telephone number, including area code)

                                      None

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

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes  X    No__
                                                -        

                     APPLICABLE ONLY TO CORPORATE ISSUERS:

     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.

      Shares of Common Stock outstanding as of  September 30, 1997:  1,000
<PAGE>
 
 _______________________________________________________________________________
ITEM 1.  FINANCIAL STATEMENTS.

                         COAST HOTELS AND CASINOS, INC.
               (A WHOLLY OWNED SUBSIDIARY OF COAST RESORTS, INC.)
                            CONDENSED BALANCE SHEETS
                   (AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                             SEPTEMBER 30,         DECEMBER 31,
                                                                                 1997                  1996
                                                                             -------------          -----------
<S>                                                                      <C>                  <C>
                                ASSETS
 
CURRENT ASSETS:
   Cash and cash equivalents..........................................            $ 22,110             $ 53,369
   Restricted cash equivalents, in escrow account.....................                   -                8,186
   Accounts receivable, net...........................................               4,182                3,659
   Other current assets...............................................              16,265               14,427
                                                                             -------------          -----------
   TOTAL CURRENT ASSETS...............................................              42,557               79,641
PROPERTY AND EQUIPMENT, net...........................................             300,595              286,025
OTHER ASSETS..........................................................               8,500                6,680
                                                                             -------------          -----------
                                                                                  $351,652             $372,346
                                                                             =============          =========== 
                                LIABILITIES AND
                             STOCKHOLDER'S EQUITY
 
CURRENT LIABILITIES:
   Accounts payable...................................................            $  5,891             $ 13,479
   Accrued liabilities................................................              31,497               23,864
   Construction accounts payable......................................               7,851               23,517
   Current portion of long-term debt..................................               8,031                6,781
                                                                             -------------          -----------
   TOTAL CURRENT LIABILITIES..........................................              53,270               67,641
                                                                              -------------          -----------
LONG-TERM DEBT, less current portion..................................             192,334              195,764
                                                                             -------------          -----------
DEFERRED RENT.........................................................               4,360                2,577
                                                                             -------------          -----------
OTHER LIABILITIES.....................................................               5,981                5,686
                                                                             -------------          -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY:
   Common Stock, $1.00 par value, 25,000 shares authorized,
   1,000 shares issued and outstanding................................                   1                    1
   Additional paid - in capital.......................................              95,858               95,858
   Retained earnings (deficit)........................................                (152)               4,819
                                                                             -------------          -----------
   TOTAL STOCKHOLDER'S EQUITY.........................................              95,707              100,678
                                                                             -------------          -----------
                                                                                  $351,652             $372,346
                                                                             =============          =========== 
</TABLE>
    The accompanying notes are an integral part of these condensed financial
                                  statements.

                                       2
<PAGE>
 
                         COAST HOTELS AND CASINOS, INC.
              (A WHOLLY OWNED SUBSIDIARY OF COAST RESORTS, INC.)
                      CONDENSED STATEMENTS OF OPERATIONS
    FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
                            (AMOUNTS IN THOUSANDS)
                                  (UNAUDITED)


<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED        NINE MONTHS ENDED
                                                            SEPTEMBER 30,            SEPTEMBER 30,
                                                     -------------------------------------------------
                                                          1997        1996         1997         1996
                                                        ---------   ---------   ----------   ----------
<S>                                                     <C>         <C>         <C>          <C>
OPERATING REVENUES:
    Casino.........................................      $50,655     $36,324     $154,235     $107,624
    Food and beverage..............................       15,233       9,248       45,416       28,637
    Hotel..........................................        6,475       3,577       20,811       10,594
    Other..........................................        4,937       2,597       14,112        7,511
                                                      -----------   ----------  ----------   ----------
            GROSS OPERATING REVENUES...............       77,300      51,746      234,574      154,366
        Less:  promotional allowances..............       (6,859)     (4,088)     (19,430)     (12,508)
                                                      -----------   ----------  ----------   ----------
            NET OPERATING REVENUES.................       70,441      47,658      215,144      141,858
                                                      -----------   ----------  ----------   ----------
OPERATING EXPENSES:
    Casino.........................................       27,878      18,661       83,052       52,503
    Food and beverage..............................       11,429       7,222       36,651       21,894
    Hotel..........................................        3,022       1,753        9,154        5,238
    Other..........................................        4,114       1,954       11,709        5,652
    General and administrative.....................       14,164      10,486       45,624       29,198
    Land lease.....................................        1,119          --        3,358           --
    Depreciation and amortization..................        4,743       1,969       14,227        5,591
                                                      -----------   ----------  ----------   ----------
TOTAL OPERATING EXPENSES...........................       66,469      42,045      203,775      120,076
                                                      -----------   ----------  ----------   ----------
    OPERATING INCOME...............................        3,972       5,613       11,369       21,782
                                                      -----------   ----------  ----------   ----------
OTHER INCOME (EXPENSES)
  Interest expense.................................       (6,577)     (5,884)     (19,607)     (16,061)
  Interest income..................................           --         959           98        3,406
  Interest capitalized.............................          543       2,670          543        4,901
  Gain on disposal of assets.......................           52          --          895            2
                                                      -----------   ----------  ----------   ----------
TOTAL OTHER INCOME (EXPENSES)......................       (5,982)     (2,255)     (18,071)      (7,752)
                                                      -----------   ----------  ----------   ----------
 
INCOME (LOSS) BEFORE INCOME TAX        
PROVISION (BENEFIT)................................       (2,010)      3,358       (6,702)      14,030
                                                      -----------   ----------  ----------   ----------
INCOME TAX PROVISION (BENEFIT).....................         (681)      1,175       (1,731)       7,411
                                                      -----------   ----------  ----------   ----------
NET INCOME (LOSS)..................................      $(1,329)    $ 2,183     $ (4,971)    $  6,619
                                                      ===========   ==========  ==========   ==========
PRO FORMA DATA (reflecting change in tax status):
    Provision (benefit) for income taxes...........         (681)      1,175       (1,731)       4,911
                                                      -----------   ----------  ----------   ----------
    Net income (loss)..............................      $(1,329)    $ 2,183     $ (4,971)    $  9,119
                                                      ===========   ==========  ===========  ==========
</TABLE>
    The accompanying notes are an integral part of these condensed financial
                                  statements.

                                       3
<PAGE>
 
                         COAST HOTELS AND CASINOS, INC.
               (A WHOLLY OWNED SUBSIDIARY OF COAST RESORTS, INC.)
                       CONDENSED STATEMENTS OF CASH FLOWS
             FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
                             (AMOUNTS IN THOUSANDS)
                                  (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                          NINE MONTHS ENDED
                                                                                            SEPTEMBER 30,
                                                                            -----------------------------------------
                                                                                    1997                    1996
                                                                            -----------------      ------------------
<S>                                                                            <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
       Net income (loss)................................................             $ (4,971)              $   6,619
                                                                            -----------------      ------------------
       ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO NET
        CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
       Depreciation and amortization....................................               14,227                   5,575
       Provision for bad debts..........................................                1,700                   1,595
       Gain on disposal of assets.......................................                 (895)                     (2)
       Deferred income taxes............................................                    9                   2,500
       Other non-cash expenses..........................................                2,236                     355
       Changes in assets and liabilities:
       Net increase in accounts receivable and other assets.............               (4,535)                 (1,234)
       Net increase in accounts payable and accrued liabilities.........                   45                  11,191
                                                                            -----------------      ------------------
       TOTAL ADJUSTMENTS................................................               14,597                  19,980
                                                                            -----------------      ------------------
       NET CASH PROVIDED BY OPERATING ACTIVITIES........................                9,626                  26,599
                                                                            -----------------      ------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
       Capital expenditures, net of construction accounts payable.......              (43,888)                (82,617)
       Proceeds from disposal of assets.................................                1,143                      21
       Net reductions (additions) to restricted cash equivalents........                8,186                 (56,378)
                                                                            -----------------      ------------------
       NET CASH USED IN INVESTING ACTIVITIES............................              (34,559)               (138,974)
                                                                            -----------------      ------------------
CASH FLOW FROM FINANCING ACTIVITIES:
       Proceeds from issuance of long-term debt,
         net of discounts and commissions...............................                3,200                 164,098
       Principal payments on long-term debt.............................               (5,832)                 (1,505)
       Proceeds from borrowings under bank line of credit...............                   --                   1,045
       Principal payments on bank line of credit........................                   --                 (29,200)
       Payments for debt issue costs....................................                   --                  (1,236)
       Advances to affiliates...........................................               (3,694)                 (4,015)
                                                                            -----------------      ------------------
       NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                             (6,326)                129,187
                                                                            -----------------      ------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS....................              (31,259)                 16,812
CASH AND CASH EQUIVALENTS, at beginning of year.........................               53,369                  14,539
                                                                            -----------------      ------------------
CASH AND CASH EQUIVALENTS, at end of period.............................             $ 22,110               $  31,351
                                                                            =================      ==================
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.

                                       4
<PAGE>
 
                         COAST HOTELS AND CASINOS, INC.
               (A WHOLLY OWNED SUBSIDIARY OF COAST RESORTS, INC.)
                    NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE 1 - BACKGROUND INFORMATION AND BASIS OF PRESENTATION

Background Information

     Coast Hotels and Casinos, Inc. ("The Company"), a Nevada corporation, is a
wholly owned subsidiary of Coast Resorts, Inc. ("Coast Resorts"), which is also
a Nevada corporation.  The Company owns and operates the following Las Vegas
hotel-casinos:

        . Gold Coast Hotel and Casino, approximately one mile west of the Las
          Vegas Strip on Flamingo Road.

        . Barbary Coast Hotel and Casino, located on the Las Vegas Strip.

        . The Orleans Hotel and Casino, located approximately one mile west of
          the Las Vegas Strip on Tropicana Avenue.

     The Gold Coast and Barbary Coast hotel-casinos had previously been owned
and operated independently by two partnerships, Gold Coast Hotel and Casino, a
Nevada limited partnership, and Barbary Coast Hotel and Casino, a Nevada general
partnership (collectively, the "Predecessor Partnerships").  On January 1, 1996,
the partners of the Predecessor Partnerships completed a reorganization (the
"Reorganization") with Coast Resorts.  Coast Resorts was formed in September
1995 for the purpose of effecting such Reorganization of the Predecessor
Partnerships.  Coast Resorts, Gold Coast and Barbary Coast were all related
through common ownership and management control.

     In the Reorganization, the partners of the Predecessor Partnerships each
transferred to Coast Resorts their respective partnership interests in the
Predecessor Partnerships in exchange for an aggregate of 1,000,000 shares of
common stock, par value $.01 per share, of Coast Resorts ("Coast Resorts Common
Stock").  Coast Resorts immediately contributed to the Company all of the assets
and liabilities of the Predecessor Partnerships other than those relating to the
Coast West Lease (see Note 4), which Coast Resorts contributed to Coast West,
Inc. ("Coast West"), another wholly owned subsidiary of Coast Resorts.  Coast
Resorts retained the liability for an aggregate principal amount of $51.0
million in notes payable to former partners and retained the liability for $1.5
million relating to demand notes due to a related party (the "Exchange
Liabilities").  On January 16, 1996, the Exchange Liabilities were exchanged for
494,353 shares of Coast Resorts Common Stock, based upon management's estimate
of the fair market value of such Coast Resorts Common Stock.

                                       5
<PAGE>
 
                         COAST HOTELS AND CASINOS, INC.
               (A WHOLLY OWNED SUBSIDIARY OF COAST RESORTS, INC.)

                    NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE 1 - BACKGROUND INFORMATION AND BASIS OF PRESENTATION (CONTINUED)

Basis of Presentation

     The accompanying financial statements are unaudited and have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with Article 10 of Regulation S-X.  Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.  The unaudited
financial statements should be read in conjunction with the audited financial
statements and footnotes for the year ended December 31, 1996.  In the opinion
of management, all adjustments and normal recurring accruals considered
necessary for a fair presentation of the results for the interim period have
been included.  The interim results reflected in the unaudited financial
statements are not necessarily indicative of expected results for the full year.

 
NOTE 2 - CONSTRUCTION COMMITMENTS
     In the first quarter of 1997, the Company began construction of Phase Two
of The Orleans.  The project,  expected to cost $35 to $40 million, will include
twelve movie theaters, a child care facility, additional restaurants, gaming
facilities and space for live entertainment. Management anticipates that the
first part of the project, including the movie theaters and child care facility,
will open in December 1997. In addition, in October 1997 the Company completed
and opened a new restaurant at the Barbary Coast, estimated to cost $1.9
million.  As of September 30, 1997, the Company had incurred $20.7 million and
$1.7 million, respectively, of costs related to the two construction projects.

NOTE 3 - INCOME TAXES

     Prior to the Reorganization, the Company operated as individual
partnerships which did not pay federal income taxes.  The partners of the
Predecessor Partnerships were taxed on their proportionate share of each of
their respective partnership's taxable income or loss.  Effective January 1,
1996 and in connection with the Reorganization, the Predecessor Partnerships
were terminated.  The change in status to a "C" corporation resulted in the
recognition of net deferred tax liabilities, and a corresponding charge to
earnings through the income tax provision of approximately $2.5 million for the
quarter ended March 31, 1996.  In addition, upon termination of the partnership
tax status on January 1, 1996, all undistributed earnings of the Predecessor
Partnerships were reclassified to additional paid-in capital.

     Subsequent to the Reorganization, the Company is included in the
consolidated federal income tax return filed by Coast Resorts.  The Company's
tax is allocated based on the amount of tax it would incur if it filed a
separate return.  Coast Resorts will pay the Company an amount equal to the tax
benefit arising from the utilization of net operating losses of the Company to
the extent that such losses result in a reduction in the amount of tax payable
by

                                       6
<PAGE>
 
                         COAST HOTELS AND CASINOS, INC.
               (A WHOLLY OWNED SUBSIDIARY OF COAST RESORTS, INC.)

                    NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE 3 - INCOME TAXES (CONTINUED)

Coast Resorts.  For the three months and nine months ended September 30, 1997,
the income tax benefit differs from that computed at the federal statutory
corporate tax rate due to limitations on Coast Resorts' ability to utilize the
net operating losses generated by the Company and adjustment of prior year tax
liabilities.
     The pro forma provision for income taxes and the related pro forma net
income reflect adjustments to income taxes assuming that the recognition of net
deferred tax liabilities occurred prior to January 1, 1996.

 
NOTE 4-ADVANCES TO COAST WEST

     The Company has agreed to provide advances to Coast West sufficient to make
payments on the Coast West Lease (described below) and other obligations, up to
a maximum of $8 million.  The Coast West Lease relates to a parcel of land
located in the western area of Las Vegas to be used for future expansion
opportunities.  The Coast West Lease term runs through December 31, 2055, with
three 10-year renewal options, with monthly payments of $166,667 in 1995,
$171,667 in 1996 and $176,667 in 1997.  Monthly rent increases by the amount of
$5,000 in January of each year.  The Coast West Lease includes a put option
exercisable by the landlord requiring the purchase of the land at fair market
value at the end of the 20th through 24th years of the Coast West Lease,
provided that the purchase price shall not be less than ten times, nor more than
fifteen times, the annual rent at such time.  Based on the terms of the Coast
West Lease, the potential purchase price commitment ranges from approximately
$31.0 million to approximately $51.0 in the years 2014 through 2018.  As of
September 30, 1997, the Company had advanced Coast West approximately $5.1
million related to the Coast West lease payments and certain development
expenses.  Coast West is a development stage enterprise and has no source of
income and is therefore solely dependent on the advances provided by the
Company. There can be no assurance that Coast West will develop a gaming
property at the Coast West site, or that it will be able to repay any advances
made by the Company. Accordingly, the Company has recorded an allowance for
doubtful accounts in an amount equal to the advances.

                                       7
<PAGE>
 
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
     AND RESULTS OF OPERATIONS

 

RESULTS OF OPERATIONS

     The following table sets forth, for the periods indicated, certain
financial information regarding the results of operations of the Company:

<TABLE>
<CAPTION>
                                                THREE MONTHS ENDED                      NINE MONTHS ENDED
                                                  SEPTEMBER 30,                           SEPTEMBER 30,
                                     -------------------------------------------------------------------------------
                                              1997              1996                    1997               1996
                                        ----------------   ---------------        -----------------   --------------
<S>                                     <C>                <C>                    <C>                  <C>

GOLD COAST
Net operating revenues.................      $29,994           $34,652                 $ 93,950          $105,420
Operating income.......................      $ 4,822           $ 6,271                 $ 16,847          $ 22,588
EBITDA (1).............................      $ 6,029           $ 7,479                 $ 20,455          $ 26,057

BARBARY COAST
Net operating revenues.................      $10,884           $13,006                 $ 33,509          $ 36,438
Operating income.......................      $   611           $   773                 $    518          $  2,997
EBITDA (1).............................      $ 1,008           $ 1,182                 $  1,721          $  4,227

THE ORLEANS
Net operating revenues.................      $29,563                 -                 $ 87,686                 -
Operating income.......................      $   245                 -                 $   (972)                -
EBITDA (1).............................      $ 3,628                 -                 $  9,182                 -
EBITDAR (1)............................      $ 4,153                 -                 $ 10,757                 -

TOTAL (INCLUDING CORPORATE)
Net operating revenues.................      $70,441           $47,658                 $215,144          $141,858
Operating income.......................      $ 3,972           $ 5,613                 $ 11,369          $ 21,782
EBITDA (1).............................      $ 9,311           $ 7,582                 $ 27,382          $ 27,373
EBITDAR (1)............................      $ 9,836                 -                 $ 28,957                 -

</TABLE>
(1)  "EBITDA" is defined as operating income plus depreciation, amortization and
     deferred (non-cash) rent. "EBITDAR" is defined as operating income plus
     depreciation, amortization and rent expense (both cash and deferred).
     EBITDA and EBITDAR should not be construed as alternatives to operating
     income as an indicator of the company's operating performance, or as
     alternatives to cash provided by operating activities as an indicator of
     cash flows or a measure of liquidity. EBITDA and EBITDAR are presented
     solely as supplemental disclosure because management believes that they are
     widely used measures of financial performance in the gaming industry.

                                       8
<PAGE>
 
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
     AND RESULTS OF OPERATIONS (CONTINUED)

Three Months Ended September 30, 1997 Compared to Three Months Ended September
30, 1996 and Nine Months ended September 30, 1997 Compared to Nine Months Ended
September 30, 1996

     Net revenues for the Company were $70.4 million in the quarter ended
September 30, 1997, an increase of $22.7 million (47.6%) over revenues of $47.7
million in the same quarter in 1996.  For the nine months ended September 30,
1997, net revenues were $215.1 million, an increase of $73.2 million (51.6%)
over revenues of $141.9 million in the first nine months of 1996.  The increases
were due to the opening of the Company's newest hotel-casino, The Orleans, in
December 1996.

     Operating income decreased $1.6 million (28.6%) to $4.0 million in the
quarter ended September 30, 1997 compared to $5.6 million in the third quarter
of 1996.  For the first nine months of 1997, operating income decreased $10.4
million (47.7%) to $11.4 million compared to $21.8 million in the same period in
1996.  The decreases were primarily due to lower-than-expected revenues at the
Company's newest hotel-casino, The Orleans, as well as continued decreased
revenues at the Company's other two hotel-casinos, the Gold Coast and the
Barbary Coast (discussed below).

     Net loss for the quarter ended September 30, 1997 was $1.3 million compared
to net income of $2.2 million in the quarter ended September 30, 1996.  For the
first nine months of 1997 net loss was $5.0 million compared to net income of
$6.6 million in the first nine months of 1996.  The decreases were due to
increased interest expense as well as the decreases in operating income at the
Gold Coast and Barbary Coast described below and the lower-than-expected
operating results at The Orleans.

     Gold Coast.  Net revenues for the Gold Coast Hotel and Casino declined in
     ----------                                                               
the three months and nine months ended September 30, 1997 compared to revenues
in the same periods in 1996.  For the three months ended September 30, 1997, net
revenues were $30.0 million compared to $34.7 million in 1996, a decrease of
$4.7 million (13.5%).  For the nine months ended September 30, 1997, net
revenues were $94.0 million compared to $105.4 million in 1996, a decrease of
$11.4 million (10.8%).  Compared to 1996, third quarter casino revenues declined
$3.5 million (13.6%) and nine month casino revenues declined $9.4 million
(12.0%), primarily due to lower customer wagering volume.  Food and beverage
business decreased as a result of reduced customer traffic, causing revenues to
decline $856,000 in the third quarter and $2.7 million in the first nine months
of 1997, down 12.4% and 12.5%, respectively, compared to the same two periods in
1996.  Lower hotel room occupancy rates contributed to a $277,000 (10.8%)
decline in third quarter hotel revenues and a $125,000 (1.6%) decline in hotel
revenues for the nine months ended September 30, 1997.  Management attributes
the overall revenue decline at the Gold Coast to the increased competition from
the openings of new casinos (including The Orleans) and expanded capacity in
others.  Gold Coast operating expenses were $25.2 million in the third quarter
compared to $28.4 million in the third quarter of 1996, a reduction of 11.3%.
For the first nine months of 1997, operating expenses were $77.1 million, down
6.9% from 1996 expenses of $82.8 million.  Due to the lower revenues, operating
income at the Gold Coast was $4.8 million in the third quarter of 1997 compared
to $6.3 million in the second quarter of 1996, down 23.8%.   For the nine months
ended

                                       9
<PAGE>
 
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
     AND RESULTS OF OPERATIONS (CONTINUED)

September 30, 1997, Gold Coast operating income was $16.8 million compared to
$22.6 million in 1996, down 25.7%.

     Barbary Coast.  Net revenues for the Barbary Coast Hotel and Casino were
     -------------                                                           
$10.9 million in the third quarter of 1997 compared to $13.0 million in the same
period in 1996, a decrease of 16.2%.  For the first nine months of 1997, net
revenues were $33.5 million, an 8.0% decrease from revenues of $36.4 million in
the first nine months of 1996.  The lower revenues were due to a decline in
casino revenues, down $2.1 million (19.8%) in the third quarter, primarily as a
result of lower pari-mutuel wagering in the race book.  For the nine months
ended September 30, 1997, casino revenues declined $3.2 million (10.2%) compared
to 1996, primarily as a result of an 8.5% decrease in table games wagering
volume and a lower table games win percentage than in the previous year.
Operating expenses remained relatively constant for the two periods, but the
lower revenues caused operating income to decline to $611,000 in the third
quarter of 1997, compared to $773,000 in 1996.  For the nine months ended
September 30, 1997, operating income was $518,000 compared to $3.0 million in
the first nine months of 1996.

     The Orleans.  The three months ended September 30, 1997 represented the
     -----------                                                            
third full quarter of operations for The Orleans, which opened on December 18,
1996.  Net operating revenues for the three months and nine months ended
September 30, 1997 were $29.6 million and  $87.7 million, respectively.
Operating income was $245,000 in the third quarter of 1997 compared to operating
income of $1.3 million in the second quarter and an operating loss of $2.5
million in the first quarter.  Compared to the second quarter of 1997, third
quarter table games handle (wagering volume) decreased 7.3%, but slot wagering
increased 6.8%.  Third quarter hotel revenues declined 10.5% compared to the
second quarter, reflecting a lower occupancy rate and lower average daily room
rates.  Restaurant customer volume increased 9.4% in the third quarter,
contributing to a 4.9% increase in food and beverage revenues over the second
quarter.


LIQUIDITY AND CAPITAL RESOURCES

     The Company's principal sources of liquidity have consisted of cash
provided by operating activities and, until termination of a bank credit
facility in January 1996, bank financing.  On January 30, 1996, the Company
issued $175.0 million principal amount  of 13% first mortgage notes due 2002
("First Mortgage Notes").  The net proceeds from the issuance, after deducting
discounts and commissions, were approximately $164.1 million.  Of that amount,
approximately $29.2 million was used by the Company to repay all outstanding
indebtedness under the Company's revolving credit facility, which was
terminated, $19.3 million was deposited into an escrow account to fund the
Company's first two semi-annual interest payments on the First Mortgage Notes,
and approximately $114.8 million was applied to the cost of developing The
Orleans.  The balance of approximately $800,000 was used to pay, in part, the
offering expenses of approximately $2.4 million.  Additionally, approximately
$30 million of equipment for The Orleans was financed through a capital lease.

     The Company is permitted by the indenture pursuant to which the First
Mortgage Notes were issued, to

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<PAGE>
 
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
     AND RESULTS OF OPERATIONS (CONTINUED)

 

borrow up to an additional $20 million for working capital purposes, and is in
discussions with respect to working capital financing.  In August 1997, the
Company incurred $3.2 million in equipment financing, resulting in an aggregate
of $27.6 million of equipment financing outstanding at September 30, 1997.

     The Company's consolidated cash requirements, in addition to debt service
on the First Mortgage Notes and equipment capital leases, include land lease
payments for its properties, ongoing maintenance capital expenditures at its
existing facilities and periodic enhancements to those facilities.  The
Company's capital expenditures (exclusive of those associated with the
development and construction of The Orleans) for 1996 were approximately $6.2
million, most of which related to normal maintenance capital expenditures.
Management expects that maintenance capital expenditures for 1997 will be
approximately $6.0 million.

     In the first quarter of 1997, the Company began construction of Phase Two
of The Orleans.  The project,  expected to cost $35 to $40 million, will include
twelve movie theaters, a child care facility, additional restaurants, gaming
facilities and space for live entertainment.  Management anticipates that the
first part of the project, including the movie theaters and child care facility,
will open in December 1997.  Through September 30, 1997, the Company had
incurred $20.7 million of costs related to the project.  In October 1997, the
Company completed and opened a new restaurant at the Barbary Coast which has an
estimated total cost of $1.9 million.  Both the Orleans and Barbary Coast
projects have been financed with existing cash reserves and cash from
operations.  

 

FORWARD LOOKING STATEMENTS

     The statements in this Management's Discussion and Analysis which are not
historical fact are forward looking statements that are made pursuant to the
Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.
The statements are subject to risks and uncertainties, including, but not
limited to increased competition, both in Nevada and other jurisdictions,
dependence on the Las Vegas area and the Southern California region for a
majority of the Company's customers, uncertainties associated with construction
projects, including the related disruption of operations and the availability of
financing, if necessary, which could cause actual results to vary materially
from those discussed herein.

 

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
     Not Applicable

                                       11
<PAGE>
 
PART II.  OTHER INFORMATION

 

Item 1:   Legal Proceedings.

     None.

Item 2:   Changes in Securities.

     None.

Item 3:   Defaults Upon Senior Securities.

     None.

Item 4:   Submission of Matters to a Vote of Security Holders.

     None.

Item 5:   Other Information.

     None.

Item 6:   Exhibits and Reports on Form 8-K:

     (a)  Exhibits.

          10.25     Employment Agreement dated January 1, 1997 between
                    Coast Hotels and Casinos, Inc. and Harlan Braaten.

          27.       Financial Data Schedule.

     (b)  Reports on Form 8-K.

          There were no reports filed on Form 8-K during the three months ended
September 30,  1997.

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<PAGE>
 
     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Quarterly Report on Form 10-Q to be signed on
its behalf by the undersigned thereunto duly authorized.

<TABLE>
<CAPTION>
<S>                                               <C> 
Date:  November 14, 1997                          COAST HOTELS AND CASINOS, INC., a Nevada corporation

                                                                 By:   /s/ Gage Parrish
                                                                       ----------------
                                                                       Gage Parrish
                                                                       Vice President and Chief Financial Officer
</TABLE>

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