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

                          FORM 10-K/A
                  Amendment No. 3 to Form 10-K

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
            For the Fiscal Year ended June 30, 1995

                               OR

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

                  Commission File Number 0-4281
                   ALLIANCE GAMING CORPORATION
     (Exact name of registrant as specified in its charter)

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

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

   Securities registered pursuant to Section 12(b) of the Act:
                              None

  Securities registered pursuant to Section 12(g) of the Act:
                  Common Stock, $0.10 par value
                        (Title of Class)

Indicate  by check mark whether the registrant (1) has filed  all
reports  required  to be filed by Section  13  or  15(d)  of  the
Securities  Exchange Act of 1934 during the preceding  12  months
(or  for such shorter period that the registrant was required  to
file  such  reports),  and (2) has been subject  to  such  filing
requirements for the past 90 days.
[X]  Yes   [ ]  No

The  aggregate  market value of the voting  stock  held  by  non-
affiliates of the registrant was approximately $32,641,000 as  of
March 4, 1996.

The   number  of  shares  of  Common  Stock,  $0.10  par   value,
outstanding as of March 4, 1996 according to the  records  of
registrant's registrar and transfer agent, was 11,654,150.

              DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's definitive Proxy Statement  for  its
Annual  Meeting of Stockholders to be held on or about  April  1,
1996 (to be filed) are incorporated by reference into Part III of
this Form 10-K.

                             PART I

ITEM 1.   BUSINESS

Introduction

Alliance  Gaming  Corporation (the "Company")  is  a  diversified
gaming  company  which (at June 30, 1995) operates  approximately
7,184  gaming  devices (primarily video poker  devices  and  slot
machines).   The  Company is the largest  private  gaming  device
route  operator in Nevada and one of the largest  in  the  United
States.   In  its  Nevada  gaming device  route  operations,  the
Company  selects,  owns, installs, manages  and  services  gaming
devices  (approximately 5,208 as of June 30, 1995) in third-party
owned   local   establishments  such  as  taverns,   restaurants,
supermarkets,  drug stores and convenience stores  (approximately
516  locations as of June 30, 1995).  Also in Nevada, the Company
owns  and  operates one full service small casino and leases  and
operates a small casino, one small casino-hotel and three taverns
which  collectively have approximately 703 gaming devices  and  9
table games.  In the fiscal year ended June 30, 1992, the Company
expanded  its gaming device route operations to Louisiana,  where
it  is  the operator of approximately 694 video poker devices  at
the  only  racetrack  and  associated off-track  betting  parlors
("OTBs")  in  the greater New Orleans area.  In March  1995,  the
Company  completed  its  acquisition of the  general  partnership
interest  in  the  Rainbow  Casino  Vicksburg  Partnership,  L.P.
("RCVP").   RCVP owns a dockside casino in Vicksburg, Mississippi
which  contains  approximately 579 gaming devices  and  28  table
games. Additionally, the Company manages the casino pursuant to a
long  term  management  contract.   The  Company  had  previously
acquired  45%  of  RCVP  through a limited  partnership  interest
acquired in July 1994.  The Company also designs and manufactures
gaming   devices  which  are  exclusively  used  in  its   Nevada
operations.

The Company's gaming strategy is to aggressively build its gaming
business in both existing markets, such as Nevada, as well as  in
emerging  gaming markets nationally.  The Company  will  use  its
diversified  gaming expertise, strengthened executive management,
business  partners  and  investment  community  relationships  to
pursue  new casino operations as well as dockside, riverboat  and
Native  American operations in addition to expanding the existing
route  business  as well as the supply and management  of  gaming
devices.

The  Company  was  incorporated in Nevada on September  30,  1968
under  the  name Advanced Patent Technology. The Company  changed
its  name  to  Gaming  and Technology, Inc. in  1983,  to  United
Gaming,  Inc.  in  1988  and to Alliance  Gaming  Corporation  on
December  19,  1994.  The Company conducts its gaming  operations
through  directly  and indirectly owned subsidiaries.   The  term
"Company"  as  used herein refers to Alliance Gaming  Corporation
and such subsidiaries unless the context otherwise requires.  The
Company's principal executive offices are located at 4380 Boulder
Highway, Las Vegas, Nevada 89121; telephone (702)435-4200.


Gaming Device Route Operations

Nevada

Operations.  The Company's Nevada gaming route operations involve
the selection, ownership, installation, operation and maintenance
of  video poker devices, reel-type slot machines and other gaming
devices  in  local  establishments such as taverns,  restaurants,
supermarkets,  drug  stores and convenience  stores  operated  by
third  parties  ("local establishments").  The  Company's  gaming
device  route  operations  target local residents  who  generally
frequent local establishments close to their homes.

The following table sets forth certain historical data concerning
the Company's Nevada gaming device route operations:

                                                       As of June 30
                                      1991     1992    1993     1994     1995
  Number of gaming devices owned     5,240   5,505    5,121    5,148    5,208
  Number of locations                  527     552      508      496      516

The Company enters into gaming device route agreements with local
establishments  through  either space leases  or  revenue-sharing
agreements.   In revenue sharing arrangements, most  common  with
taverns, restaurants and convenience stores, the Company does not
pay  rent, but rather receives a percentage of the revenues  from
the  gaming devices.  In revenue sharing arrangements,  both  the
owner  of  the local establishment and the Company  must  have  a
gaming  license.  In space lease arrangements, most  common  with
supermarkets and drug stores, the Company pays a fixed rental  to
the owner of the local establishment and the Company receives all
of  the  revenues  derived  from the  gaming  devices.   In  such
arrangements, only the Company (and not the establishment  owner)
is  required  to  hold  a  gaming license.   Most  of  the  local
establishments serviced by the Company are restricted by  law  to
operating no more than 15 gaming devices.

Revenue-sharing  arrangements accounted  for  approximately  80%,
86%,  and 86% of the Nevada gaming device route revenues and 77%,
80%,  and  78%  of its operating Nevada route gaming  devices  in
fiscal  1993,  1994,  and 1995.  At June 30, 1995,  the  weighted
average   remaining  term  of  the  Company's   revenue   sharing
arrangements   was   approximately  4.2   years.    Space   lease
arrangements accounted for approximately 20%, 14%, and 14% of the
Nevada  gaming   route  revenues and 23%, 20%,  and  22%  of  its
operating  Nevada route gaming devices in fiscal 1993, 1994,  and
1995.   At June 30, 1995, the weighted average remaining term  of
the Company's space leases was 2.7 years.

The  Company  has  historically been able  to  renew  or  replace
revenues  from  expiring agreements with  revenues  generated  by
renewal  or replacement contracts.  However, during the past  few
years,  increased  competitive  pressures  in  the  gaming  route
business  have  increased the portion of  gaming  route  revenues
payable  to  the  local establishment, decreasing  the  Company's
gross  margins from these operations.  As a result,  the  Company
has  refocused  its  Nevada  gaming device  route  operations  to
emphasize  return  on  investment rather than  increasing  market
share  and  has undertaken a systematic review process to  adjust
its  contract mix to emphasize higher margin contracts and, where
permissible, cancelling or not renewing unprofitable contracts.

Marketing.   The  Company believes it has a diversified  customer
base  with  no one customer accounting for more than 10%  of  the
Company's  revenues  generated from Nevada  gaming  device  route
operations  during the fiscal year ended June 30, 1995  (although
approximately  14.1%  of such revenues was generated  through  an
affiliated  group  of  such  customers).  Such  affiliated  group
consists of eight partnerships each having one individual partner
who  is  common to all such partnerships.  As the largest  Nevada
gaming  device route operator, the Company believes  that  it  is
able to differentiate itself from its competitors through a full-
service  operation  providing its customers marketing  assistance
and   promotional  allowances  and  using  its  advanced   design
capabilities  to provide gaming devices with features  customized
to  customers'  needs,  such as Gambler's  Choice,  a  multi-game
device tailored to the local gaming market.

Strategy.   The Company believes that technological  enhancements
are  the  key to improving the appeal of its games and locations,
thereby  increasing operating margins.  As a result, the  Company
has  developed  and  is currently testing  a  new  system  called
"Gamblers Bonus".  Gamblers Bonus is designed as a cardless  slot
players' club and player tracking system which, upon approval  of
by Nevada gaming authorities, will allow multiple route locations
to  be  linked  together into a distributed  gaming  environment.
Through this technology, the Company will be able to provide  its
players  and  customers  with many of  the  same  gaming  choices
currently  available  only in a larger scale  casino  environment
such  as  multi-location  progressive  jackpots,  bigger  jackpot
payouts    and    traditional   players'    club    enhancements.
Additionally, the Company will offer a series of new  and  unique
games  available only to members of the Gamblers  Bonus  players'
club.  The Company believes Gamblers Bonus will improve both  the
revenues   and   operating  efficiencies  of  its  Nevada   route
operations  and has the potential to enhance the basic  structure
of the gaming route segment of the gaming industry.

The  Company is continuing its efforts to achieve cost reductions
(subsequent  to cost reductions made in fiscal 1994)  and  adjust
its contract mix to emphasize higher margin arrangements designed
to  incentivize  location  owners to  increase  gaming  revenues.
Additionally,  in keeping with the trends in the  Nevada  market,
the Company is updating its gaming device base with bill-acceptor
equipped  gaming  devices  which are  also  expected  to  improve
revenues  and  operating efficiencies.  The Company continues  to
investigate  further  technological  enhancements.  The   Company
believes  that following these steps will maximize the  potential
of its mature and competitive Nevada gaming route operations.  In
addition, the Company intends to utilize its expertise in  Nevada
gaming   route   operations  to  develop  new   route   operation
opportunities in less mature markets.


Louisiana

Operations.  In March 1992, the Company capitalized on its Nevada
gaming  device  route expertise to obtain a contract  to  operate
video  poker gaming devices in the greater New Orleans, Louisiana
area  through  its  controlled subsidiary, Video  Services,  Inc.
("VSI").   The Company entered into an operating agreement  which
runs  through  May 2002 with Fair Grounds Corporation,  Jefferson
Downs   Corporation   and  Finish  Line  Management   Corporation
(collectively,  "Fair  Grounds")  for  the  Company  to  be   the
exclusive  operator of video poker devices at the only  racetrack
and  nine associated OTB parlors in the greater New Orleans area.
The  Company selects, installs, manages and services video  poker
devices  for each of the 10 facilities owned by Fair Grounds  for
which  it receives a percentage of the revenue generated  by  the
devices.   The  Company currently has installed 694  video  poker
devices in Louisiana.

Under  the  Louisiana gaming laws and regulations,  the  majority
stockholder  of  any  entity operating  video  poker  devices  in
Louisiana must be a domiciled resident of the State of Louisiana.
As a result, the Company owns 49% of the capital stock of VSI and
three  prominent  members  of the Louisiana  business  and  legal
community own the remaining 51%.  The Company, however, owns  all
the  voting  stock  of VSI and the majority of its  officers  and
directors are Company employees.  The Company has a 71%  interest
in  dividends  of VSI in the event dividends are  declared.   The
Company  also  formed two other Louisiana subsidiaries,  Southern
Video  Services,  Inc.  ("SVS") and Video Distributing  Services,
Inc.  ("VDSI").   Both SVS and VDSI are structured  in  a  manner
similar to VSI except that the Company is entitled to receive 60%
of  any SVS dividends.  Under the terms of its contract with Fair
Grounds,  the  Company  must conduct any additional  video  poker
operations  in Louisiana other than gaming at racetracks  or  OTB
parlors  through SVS.  To date, SVS and VDSI have not engaged  in
business in Louisiana.  In addition, the Company and Fair Grounds
may have certain mutual rights of first refusal to participate in
certain  Louisiana riverboat gaming opportunities  of  the  other
party on terms and conditions to be specified.

The  Company is prohibited by the Louisiana Act from engaging  in
both the manufacture and operation of gaming devices in Louisiana
and,  therefore, the Company does not manufacture its own  gaming
devices for use in Louisiana.

On  December  17, 1993, the Company incurred a fire loss  at  the
Fairgrounds Race Course in New Orleans where the Company operated
199 gaming devices prior to the fire, 193 of which were destroyed
in  the  fire.  The Company was fully insured for all  equipment,
leasehold improvements, other assets and business income with the
exception  of  immaterial deductibles.  From  December  17,  1993
through   June  30,  1995,  the  Company  recorded  approximately
$488,000 of income from business interruption insurance proceeds.
The  Company  is  discussing settlement  of  additional  business
interruption claims with the insurance carrier.

Marketing.   VSI  has  developed an extensive  marketing  program
under  the  name "The Players Room" which is designed to  attract
primarily local residents to its facilities.  Media placement has
focused  on  newspaper  and  radio  advertising  with  promotions
including  a  player's club, direct mailings and offerings  of  a
wide range of prizes.

Strategy.    The  Company  intends  to  selectively  expand   its
operations  in  the  greater New Orleans area by  increasing  the
number  of  video  poker  devices  in  certain  of  its  existing
locations  as  demand  warrants, as  well  as  investigating  the
addition  of  new locations under its current contract  with  the
Fair  Grounds  in areas where competitive factors are  favorable.
Under the Louisiana Act, racetracks and OTB parlors are permitted
to  install  an  unlimited number of video  poker  devices  while
truckstops and taverns may install only limited numbers  of  such
devices.


Casino Operations

On  July  16,  1994,  the  Rainbow Casino located  in  Vicksburg,
Mississippi  permanently opened for business. Through  a  wholly-
owned  subsidiary, the Company originally purchased a 45% limited
partnership  interest in RCVP, a Mississippi limited  partnership
which   owns  the  casino,  all  assets  (including  the   gaming
equipment)  associated  with  the  casino  and  certain  adjacent
parcels of land. As consideration for its 45% limited partnership
interest, the Company paid $2,000,000 in cash and issued  600,000
shares  of  its  common stock to The Rainbow  Casino  Corporation
("RCC"),  an  unaffiliated Mississippi corporation, and  its  two
sole  shareholders. The 55% general partnership interest in  RCVP
was held by RCC. In connection with the completion of the casino,
the  Company funded a $3,250,000 advance to RCC on the same terms
as  RCC's  financing  from  Hospitality Franchise  Systems,  Inc.
("HFS") (other than the fact that such advance is subordinate  to
payments  due to HFS). On March 29, 1995, the Company consummated
certain  transactions whereby the Company acquired from  RCC  the
controlling  general partnership interest in RCVP  and  increased
its  partnership  interest.  In exchange for  the  assumption  by
National  Gaming  Mississippi,  Inc.  ("NGM"),  a  subsidiary  of
National  Gaming  Corporation,  of  approximately  $1,140,000  of
liabilities (plus a financing fee payable to HFS) related to  the
completion  of  certain incomplete elements of the project  which
survived  the opening of the casino (for which RCC  was  to  have
been responsible, but failed to satisfy), a related $652,000 cash
payment by the Company to NGM and commitments by the Company  and
NGM  to  fund  additional  financing  required  to  complete  the
project:  (i)  a  subsidiary of the Company  became  the  general
partner  and  RCC  became  the  limited  partner  and  (ii)   the
respective  partnership interests were adjusted. As a  result  of
these  transactions, RCVP assumed $1,304,000 of new debt of which
50%  was  payable to the Company. Under the adjusted  partnership
interests,  RCC is entitled to receive 10% of the  net  available
cash flows after debt service and other items, as defined, (which
amount  shall  increase to 20% of cash above  $35,000,000  (i.e.,
only on such incremental amount)), for a period of 15 years, such
period  being  subject to one year extensions for  each  year  in
which  a minimum payment of $50,000 is not made. This transaction
was  accounted  for as an acquisition using the purchase  method.
Accordingly, the purchase price was allocated to assets  acquired
based on their estimated fair values.  This treatment resulted in
no  cost  in  excess  of  net  assets acquired  (goodwill)  being
recognized.  The Rainbow Casino's results of operations have been
included in the consolidated results of operations since the date
of  acquisition.  Also,  the  Company's  5.2%  royalty  on  gross
revenues  was  terminated  on  the date  it  became  the  general
partner.   The entire project consists of the Rainbow Casino  and
also includes an 89-room Days Inn hotel and a 10 acre indoor  and
outdoor  entertainment  complex called  Funtricity  Entertainment
Park, which was developed by a subsidiary of Six Flags.  Both the
hotel and entertainment park opened in late May 1995.  The entire
property, known as Vicksburg Landing, is the only destination  of
its   kind  in  Mississippi  containing  a  unique  casino/family
entertainment complex.

At   June  30,  1995,  the  Company's  Nevada  casino  operations
consisted of owning and operating the Plantation and leasing  and
operating a small casino and one small casino-hotel.

In  April  1990, the Company purchased, for an aggregate purchase
price  of  $9,700,000, substantially all of  the  assets  of  the
Plantation Casino (the "Plantation") located near the  border  of
Reno  and  Sparks in northern Nevada. The Plantation is a  20,000
square  foot  casino containing 477 gaming devices,  keno  and  7
table games, including blackjack, craps, roulette and poker.   In
addition, the Plantation offers a race and sports book  which  is
leased  to  an  independent race and sports book  operator.   The
Plantation,  which  also  includes  an  approximately  300   seat
restaurant, is convenient to both Reno and Sparks and  caters  to
the local market.

In  July 1993, the Company began leasing and operating the casino
at  the 326 room Quality Inn located approximately one mile  from
the  Las  Vegas  Strip.  The casino at Quality Inn  contains  156
gaming devices and 3 table games.  The Company's lease to operate
this  facility expired in July 1995.  The Company has chosen  not
to  exercise its renewal rights under this lease.  The Company is
currently  operating under modified lease terms which  expire  in
December 1995.

The  Company  leases  and operates the Mizpah  Hotel  and  Casino
("Mizpah"),  a  small casino and hotel in Tonopah,  Nevada.   The
Mizpah  has  56  rooms,  two restaurants and  70  gaming  devices
catering primarily to local residents and travelers between  Reno
and  Las Vegas.  The Company's Mizpah lease has a remaining  term
of approximately 7.5 years with an option on the Company's behalf
to terminate the lease arrangement at any time after December 31,
1995 with 120 days notice.  The Company has notified the landlord
of the Mizpah of its intention to exercise the termination clause
of the lease and gave the requisite 120 days notice at that time.
Accordingly, the Company's lease will expire in April 1996.

Marketing.  The Company's casinos target the cost conscious local
market.   The Company promotes its casinos primarily by providing
quality food at reasonable prices and through special promotional
events.  The Company believes its experience with operating small
casinos  targeted to local markets will enable it to  effectively
operate  casinos  in  emerging  gaming  jurisdictions  that  have
similar characteristics.


Tavern Operations

The Company currently operates two taverns in the Las Vegas area.
The  taverns  were  acquired when the  owners  of  the  locations
defaulted on their subleases with the Company.  The two locations
operate a total of 80 gaming devices.  In addition, each  of  the
locations  include full-service restaurants.   The  Company  owns
three   additional  such  locations  which  defaulted  on   their
subleases, but which are not currently open for business  or  are
operated  by unaffiliated third parties pending the sale  of  the
properties.

The  remaining  terms  of the leases on the  taverns  range  from
approximately 3 to 15 years with an average remaining lease  term
of   approximately  7  years.   The  lease  payments  range  from
approximately  $6,700 to $10,280 per month for locations  ranging
in  size  from  approximately 3,500 square feet to  approximately
7,000  square feet. The Company's tavern operations are  designed
to attract the local customer and emphasize repeat business.

Due  to  continuing  operating losses and the incompatibility  of
small  independent  tavern operations with the Company's  overall
growth strategy, in fiscal 1994 the Company elected to dispose of
its currently operated taverns. As a result of this decision, the
Company wrote down certain assets related to the taverns to their
net  realizable  value and expensed the present value  of  future
lease  payments  net  of  assumed  future  sublease  income.  See
"Management's Discussion and Analysis of Financial Condition  and
Results of Operations of Alliance- Results of Operations-  Fiscal
1995  Compared  with Fiscal 1994- Expenses".   Subsequently,  the
Company  has  entered into an agreement to sell  all  six  tavern
locations  to  an  unaffiliated third party.  This  agreement  is
subject   to,   among  other  conditions,  obtaining  appropriate
approvals  from  Nevada gaming authorities, which  approvals  are
expected by the end of December 1995.  No material gain  or  loss
will  be  recognized  upon consummation of  this  sale,  but  the
Company  expects ongoing results of operations to  improve  as  a
result of the disposition of these unprofitable tavern locations.

In  the  future, although it does not intend to, the Company  may
acquire other taverns due to defaults of current tenants on their
subleases  or  otherwise.  In each such case,  the  Company  will
evaluate the prospects and determine the best method of disposing
of such locations.


Manufacturing Operations

The Company currently manufactures and distributes gaming devices
in  Nevada  for  use in its gaming device route operations.   The
Company  manufactured  approximately 80% of  the  gaming  devices
currently used in its Nevada gaming device route operations.  The
manufacturing process generally involves the assembly of standard
components which are readily available from various sources.  The
Company  is not dependent upon any one supplier for the materials
or components used in its manufacturing operations.

The Company also participates in the development of gaming ideas,
technology  and manufacturing.  The Company has developed  gaming
devices  with bill acceptor and ticket printer features, as  well
as   touch  screen  and  multi-game  capabilities.   The  Company
anticipates utilizing these devices in many of its Nevada  gaming
device  route locations instead of the traditional coin  operated
devices.   The Company believes the adoption of the bill acceptor
and  ticket printer features will increase the reliability of its
Nevada  gaming  devices,  thereby reducing  service  costs.   The
Company  believes its development and manufacturing  capabilities
are a competitive advantage.


Competition

Nevada.   Gaming of all types is available throughout  Nevada  in
numerous locations, including many locations similar to those  at
which  the  Company operates gaming devices.  All of these  other
gaming opportunities may compete directly or indirectly with  the
Company.  Many of the Company's competitors possess substantially
greater financial and other resources than the Company.  Many  of
such  competitors  include large casino-hotels which  offer  more
variety and amenities and may be perceived to have more favorable
locations than the Company.

The  Company is subject to substantial direct competition for its
space  lease  and  revenue sharing gaming device  locations  from
several   large   gaming  route  operators  and  numerous   small
operators,  located  principally  in  Las  Vegas,  Reno  and  the
surrounding  areas. The Company and Jackpot Enterprises  are  the
dominant  gaming route operators in Nevada. The principal  method
of  competition for gaming route operators include  the  economic
terms  of  the  space lease or revenue sharing  arrangement,  the
services provided and the reputation of the route operator. Price
competition is intense and has reduced the Company's gross margin
on  such operations over the past several years as the percentage
of  the  gaming  device revenues retained by local  establishment
owners  has  increased.   The  Company  expects  this  trend   to
continue.

The operation of casinos and taverns is also a highly competitive
business.   The  principal competitive factors  in  the  industry
include the quality and location of the facility, the nature  and
quality  of the amenities and customer services offered  and  the
implementation and success of marketing programs.  The  Company's
primary  casino and tavern operations focus on the  local  market
rather   than  the  tourist  market.   Accordingly,  the  Company
believes   that  the  principal  competition  for  the  Company's
operations  comes  from  smaller casinos and  taverns.   Although
large  hotels and casinos also attract gaming customers from  the
local market.

Louisiana.   The Company is subject to extensive competition  for
contracts  to  operate  video poker  devices  and  the  Company's
racetrack  and OTB parlors compete with various truck  stops  and
locations  with liquor licenses throughout the New Orleans  area.
Each  truck  stop is permitted to operate up to  50  video  poker
devices  and each tavern is permitted to operate up  to  3  video
poker devices.  In addition, Louisiana has authorized river  boat
gaming  statewide and several riverboats are operating in Orleans
Parish.  Riverboats are permitted to have live table games and an
unlimited  number  of  gaming devices, including  slot  machines.
Louisiana has also authorized one land based casino, permitted to
include  live  table  games  and an unlimited  number  of  gaming
devices,  which is now open and operating in temporary facilities
in New Orleans.

The  adjacent state of Mississippi has legalized dockside gaming,
which  attracts  many  local and tourist  players  from  the  New
Orleans  area.   The  Company  has one  such  casino  located  in
Vicksburg,   Mississippi.   Dockside   gaming   in   Mississippi,
riverboat  casinos  in  Louisiana and the land  based  casino  in
Orleans  Parish have a wide variety of gaming devices  and  table
games, while the Louisiana Act limits the Company's operations to
video poker devices only.  Further, the Louisiana Act limits  the
jackpot that may be paid by a video poker device to a maximum  of
$1,000  per play in some cases and $500 per play in others  while
other gaming activities have no such limits.

Mississippi.   Dockside  gaming,  in  the  form  of  full-service
casinos,  is  legal throughout the state of Mississippi  with  no
limit on the number of licenses to be granted by the state gaming
authorities.  As a result, the operation of casinos has become  a
highly   competitive  business.   Like  Nevada,   the   principal
competitive  factors  in  the industry include  the  quality  and
location of the facility, the nature and quality of the amenities
and  customer services offered and the implementation and success
of marketing programs.  The Rainbow Casino appeals to both locals
and visitors to historic Vicksburg, Mississippi.  Upon completion
of  the three phase plan for the Rainbow Entertainment Park which
includes  an  88-room Days Inn resort and a 10-acre entertainment
complex  to  be  developed by a subsidiary of Six Flags,  Rainbow
will  be the only destination of its kind in Mississippi  and  as
such hopes to encourage a significant number of repeat visits  by
both  locals  and  tourists.  The Rainbow Casino  is  the  fourth
gaming  facility to open in Vicksburg, Mississippi and, as  such,
faces substantial direct competition for gaming customers in  the
region.

Patents, Copyrights and Trade Secrets

The  Company  does  not  believe patent, copyright  or  trademark
protection to be material to its business.  However, the  Company
has  copyrighted both the source code and the video  presentation
of  its games and registered many of these copyrights with the U.
S.  Copyright  Office  under the Copyright  Act  of  1976.   Game
version  upgrades and new games are currently in the  process  of
United  States patent and copyright registration.   In  addition,
some of the games have federal and/or state trademarks registered
with  the  U.S. Patent and Trademark office.  Some of  the  games
(either  currently used or reserved for future development)  also
are  covered by patents filed with the U.S. Patent and  Trademark
office.

The Company has registered the trademark "CEI" and its design and
the logos of United Gaming, Inc. and United Coin Machine Co. with
the U.S. Patent and Trademark Office.


Business Development Activity

On  June  19,  1995, the Company publicly proposed  a  negotiated
acquisition  of  Bally Gaming International,  Inc.  ("BGII")  for
$12.50  per  share of BGII common stock.  Prior  to  making  this
offer,  the Company had acquired 500,000 shares of BGII stock  on
the  open  market  and  at June 30, 1995  held  1,000,000  shares
(approximately 9.3% of BGII's total outstanding shares, based  on
BGII's  most  recent  public filings) which  it  acquired  at  an
average  cost  of  approximately $10.41  per  share.   Under  the
proposed terms of the offer, approximately 60% of BGII shares not
held by the Company would be acquired for cash with the remainder
exchanged  for shares of the Company's common stock.   The  offer
was  contingent  upon satisfactory due diligence, regulatory  and
stockholder approval and reasonable financing.  At the  time  the
offer  was  made  public,  the Company  requested  expedited  due
diligence,  subject  to a confidentiality  agreement.   BGII  had
previously  announced a planned merger with WMS Industries,  Inc.
("WMS")  which included an exclusive period for WMS to  negotiate
the  terms  of that proposed merger. WMS's exclusive  negotiating
period  had  expired several weeks before the Company's  proposal
was  made without announcement or action on the part of  BGII  or
WMS.   On July 25, 1995, after being refused due diligence access
and the announcement by BGII that a definitive agreement had been
reached  to merge with WMS, the Company announced its  intent  to
make  a  tender offer for BGII.  The tender offer was on  largely
the  same terms as the originally proposed acquisition.   On  the
same  date,  the  Company announced it had  filed  litigation  in
Delaware Chancery Court requesting that the court require BGII to
grant  the  Company  due  diligence  access,  enjoin  BGII   from
proceeding  with  the WMS merger (including a  provision  therein
requiring  the sale of BGII's German operations) and declare  the
breakup  fee  provided for in the WMS merger to be invalid.   The
Company  indicated that it would increase the price per share  of
BGII  stock  to $13.00 per share if the breakup fee was  declared
invalid. The tender offer was conditioned upon the Company  being
validly tendered a number of shares of BGII stock, which combined
with  its  own holdings of such stock, would give the  Company  a
majority   of  BGII's  outstanding  shares.   The  tender   offer
commenced   on   July  28,  1995  and,  as  extended   to   date.
Subsequently, the Company announced its intention to proceed with
a  consent  solicitation  to  elect  a  majority  of  independent
directors  to the BGII Board of Directors.  On August  14,  1995,
the  Company, BGII and WMS jointly announced an agreement whereby
the  parties  would  hold in abeyance all activities  related  to
pending   litigation  until  September  1,  1995,  refrain   from
commencing  new  litigation  until that  same  date,  BGII  would
schedule its annual shareholder meeting for consideration of  the
proposed WMS merger and the election of directors on October  30,
1995,  and  the Company would extend the expiration date  of  the
tender offer until September 12, 1995 and refrain from soliciting
proxies  until  September 1, 1995.  On  September  1,  1995,  the
Company disclosed that it had obtained firm financing commitments
to  fund  the  tender  offer and that such commitments  were  not
conditioned  on due diligence of BGII.  Accordingly, the  Company
extended the expiration date of its tender offer to September 29,
1995.   BGII and WMS filed lawsuits against the Company  alleging
numerous  public misrepresentations had been made by the  Company
with  regards  to  the WMS-BGII agreement, the  Company's  tender
offer and the level of cooperation of BGII's board of directors.

Through  a  wholly owned subsidiary, Native American Investments,
Inc. ("NAI"), the Company has a contract to develop Class II  and
III  gaming  opportunities with an Indian  tribe  in  California.
Class  II  gaming includes bingo, pulltabs and non  banking  card
games  that  are already permitted in a state, and is subject  to
the   concurrent  jurisdiction  of  the  National  Indian  Gaming
Commission  ("NIGC") and the applicable Indian tribe.  Class  III
gaming  is  a residual category composed of all forms  of  gaming
that  are  not  Class I gaming (which consists of  non-commercial
social  games  played  solely  for prizes  of  minimal  value  or
traditional forms of Indian gaming) or Class II gaming, including
casino  style  gaming.  The contract is subject  to  negotiations
resulting in satisfactory compacts with the state and approval of
the  contract  by  the  National Indian Gaming  Commission.   The
Governor of California has to date refused to negotiate a compact
covering Indian gaming in California and is currently engaged  in
related  litigation  with certain Indian tribes.   In  one  case,
Rumsey  Indian Rancheria vs. Wilson, which had been  appealed  to
the  U.S.  Ninth  Circuit Court of Appeals, a three  judge  panel
ruled  that the State of California may be obligated to negotiate
compacts with Indian tribes for Class III gaming with respect  to
slot  machines. However, the determination of a legal  definition
for slot machines was remanded to the U.S. Federal District Court
for  the  Eastern District of California.  In the case of Western
Telcon vs. California State Lottery, a three judge panel from the
Second Appellate District Court of Appeals ruled that the state's
lottery machines are the legal equivalent of slot machines.  This
ruling  was  recently  upheld by the full Court.   The  State  of
California  has appealed this ruling to the state Supreme  Court.
There  can  be no assurance as to the ultimate outcome  of  these
litigation  activities or the successful completion or  operation
of any part of this project.

The  Company  and Casino Magic Corporation, through wholly  owned
subsidiaries,  are  members  in Kansas  Gaming  Partners,  L.L.C.
("KGP")  and  Kansas  Financial Partners,  L.L.C.  ("KFP"),  both
Kansas  limited  liability companies. Under an  option  agreement
(the  "Option  Agreement") granted to KGP by  Camptown  Greyhound
Racing,  Inc. ("Camptown") and The Racing Association of  Kansas-
Southeast  ("TRAK Southeast"), KGP has been granted the exclusive
right,  which  right expires on September 13,  2013,  to  operate
gaming  devices  and/or casino-type gaming at  Camptown's  racing
facility  in  Frontenac,  Kansas  if  and  when  such  gaming  is
permitted  in  Kansas.  In  December 1994,  Camptown  received  a
$3,205,000 loan from Boatmen's Bank which was guaranteed by  KFP.
The Company and Casino Magic Corporation each invested $1,580,000
in  KFP  which was used to purchase a certificate of  deposit  to
collateralize  its  guaranty. Construction of  Camptown's  racing
facility  has been completed and the facility opened for business
in  May  1995.  The  racing facility was  temporarily  closed  on
November  5,  1995 due to poor financial results. Camptown  filed
for  reorganization under Chapter 11 of the U.S. Bankruptcy  Code
in  January  1996  and  has  stated an intention  to  reopen  for
business  following  bankruptcy  reorganization.  Boatmen's  Bank
demanded payment of the Camptown loan from KFP under the terms of
the guaranty. KFP paid the loan and Boatmen's Bank returned KFP's
certificate of deposit and KFP assumed Boatmen's Bank's  position
in  the loan to Camptown which is secured by a second mortgage on
Camptown's  greyhound racing facility in Frontenac, Kansas.  TRAK
Southeast  and  Camptown  continue to  be  bound  by  the  Option
Agreement. KFP intends to vigorously pursue all of its rights and
remedies which may include, among other things, seeking authority
from  the  bankruptcy court to commence a foreclosure action.  In
the case of a foreclosure action, KFP would be required to assume
or pay the existing first mortgage of approximately $2,000,000 if
KFP  becomes the purchaser at any such sale. The Company  intends
to  continue  to  monitor  its investment  in  KFP.  The  Company
believes  that the Kansas legislature may consider at  least  two
gaming bills this session. One bill, if approved by two thirds of
both  houses of the Kansas legislature, would call for  a  public
vote  to amend the Kansas constitution to allow slot machines  at
up to two gaming locations in each legislative district, with one
location being reserved for any licensed pari-mutuel location  in
the  district. The second bill, if passed by a majority  of  both
houses of  the Kansas legislature, would allow, subject to  local
option  election of the citizens in the county, slot machines  at
licensed pari-mutuel race tracks.


Growth Strategy

The  Company's  growth  strategy is to  utilize  its  diversified
gaming  expertise,  strengthened executive  management,  business
partners  and  investment  community relationships  to  pursue  a
variety  of  business  and investment opportunities  in  existing
market  areas  such as Las Vegas and other Nevada  locations,  as
well  as emerging gaming markets, including land based, dockside,
or  riverboat  (including  Native American  owned)  casinos,  the
operation  of gaming device routes and the supply and  management
of gaming devices.

The  Company  believes  it is well positioned  to  capitalize  on
investment   opportunities  in  both  existing  gaming   markets,
especially  in  Nevada, as well as emerging  jurisdictions  as  a
result  of (i) its diversified gaming expertise including  gaming
device  route  management, casino operations  and  gaming  device
design  and  manufacture,  (ii) an experienced  management  team,
(iii)   its   affiliation  with  Kirkland-Ft.  Worth   Investment
Partners,  L.P.  ("Kirkland") and Gaming Systems  Advisors,  L.P.
("GSA")  and (iv) its demonstrated ability to expand  its  gaming
operations  to new jurisdictions, as evidenced by its  operations
in Louisiana and Mississippi.


Employees

As  of  June  30,  1995, the Company employed  approximately  825
persons  in  the State of Nevada and approximately 10 persons  in
various  states  related to its business development  activities,
VSI  employed approximately 62 persons in the State of  Louisiana
and  RCVP employed 347 persons in the State of Mississippi.  None
of   such   employees  is  covered  by  a  collective  bargaining
agreement.   The  Company  believes its  relationships  with  its
employees are satisfactory.

Gaming Regulations and Licensing

Nevada.   The ownership and operation of casino gaming facilities
in  Nevada are subject to (i) the Nevada Gaming Control  Act  and
the  regulations  promulgated thereunder (the "Nevada  Act")  and
(ii)  various  local  ordinances and regulations.  The  Company's
gaming, manufacturing, distributing and slot route operations are
subject  to  the licensing and regulatory control of  the  Nevada
State  Gaming  Control Board ("Nevada Board"), the Nevada  Gaming
Commission  ("Nevada Commission"), the County Liquor  and  Gaming
Licensing  Board ("Clark County Board") and various other  county
and  city  regulatory  agencies, all of  which  are  collectively
referred to as the "Nevada Gaming Authorities".

The  laws,  regulations and supervisory procedures of the  Nevada
Gaming  Authorities are based upon declarations of public  policy
which  are concerned with, among other things, (i) the prevention
of  unsavory  or  unsuitable persons from having  any  direct  or
indirect  involvement with gaming at any time  in  any  capacity;
(ii)  the establishment and maintenance of responsible accounting
practices  and  procedures; (iii) the  maintenance  of  effective
control  over  the  financial practices of  licensees,  including
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 preventing of  cheating
and fraudulent practices; and (v) providing a source of state and
local  revenues through taxation and licensing fees.   Change  in
such  laws,  regulations and procedures  could  have  an  adverse
effect  on the Company's gaming, manufacturing, distributing  and
slot route operations.

The  Company  is  registered  with the  Nevada  Commission  as  a
publicly  traded  corporation  ("Registered  Corporation").   The
Company's  direct and indirect subsidiaries which conduct  gaming
operations  at various locations, operate a gaming  device  route
and  manufacture  and  distribute gaming  devices  (collectively,
"Nevada Subsidiaries") are required to be licensed by the  Nevada
Gaming Authorities.  The licenses held by the Nevada Subsidiaries
require the periodic payments of fees, or fees and taxes, and are
not transferable.  The Company has been found suitable to own the
stock  of  the Nevada Subsidiaries, each of which is a  corporate
licensee  (individually, "Corporate Licensee"  and  collectively,
"Corporate Licensees") under the terms of the Nevada  Act.  As  a
Registered  Corporation, the Company is required periodically  to
submit  detailed financial and operating reports  to  the  Nevada
Commission  and  furnish any other information which  the  Nevada
Commission may require. No person may become a stockholder of, or
receive   any  percentage  of  the  profits  from  the  Corporate
Licensees without first obtaining licenses and approvals from the
Nevada  Gaming Authorities.  The Company and Corporate  Licensees
have  obtained  from  the Nevada Gaming Authorities  the  various
registrations, approvals, permits and licenses required in  order
to  engage  in gaming activities, gaming device route operations,
and in the manufacture and distribution of gaming devices for use
or play in Nevada or for distribution outside of Nevada.

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

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 or  Corporate
Licensees,  the  companies  involved  would  have  to  sever  all
relationships  with  such  person.   In  addition,   the   Nevada
Commission may require the Company or the Corporate Licensees  to
terminate  the  employment  of any person  who  refuses  to  file
appropriate  applications.  Determinations of suitability  or  of
questions  pertaining to licensing are not  subject  to  judicial
review in Nevada.

The  Company  and  Corporate Licensees  that  hold  nonrestricted
licenses  are required to submit detailed financial and operating
reports to the Nevada Commission.  A nonrestricted license  is  a
license  for an operation consisting of 16 or more slot machines,
or  a  license for any number of slot machines together with  any
other  game,  gaming  device, race book or  sports  pool  at  one
establishment.  Substantially all material loans,  leases,  sales
of securities and similar financing transactions by the Corporate
Licensees  that hold a nonrestricted license must be reported  to
or approved by the Nevada Commission.

If  it  were  determined that the Nevada Act was  violated  by  a
Corporate  Licensee,  the  licenses it holds  could  be  limited,
conditioned,  suspended or revoked, subject  to  compliance  with
certain  statutory and regulatory procedures.  In  addition,  the
Company,  the Corporate Licensees and the persons involved  could
be  subject  to substantial fines for each separate violation  of
the  Nevada  Act  at  the  discretion of the  Nevada  Commission.
Further  a supervisor could be appointed by the Nevada Commission
to  operate any nonrestricted gaming establishment operated by  a
Corporate  Licensee  and,  under certain circumstances,  earnings
generated   during  the  supervisor's  appointment  (except   for
reasonable rental of the casino) could be forfeited to the  State
of  Nevada.  Limitation, conditioning or suspension of the gaming
licenses  of  the  Corporate Licensees or the  appointment  of  a
supervisor  could  (and revocation of any gaming  license  would)
materially adversely affect the Company's gaming operations.

Any   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 suitability  as  a
beneficial  holder of the Company's voting securities  determined
if  the  Nevada  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 investigation incurred by the Nevada Gaming Authorities
in conducting any such investigation.

The Nevada Act requires any person who acquires more than 5% of a
Registered   Corporation's  voting  securities  to   report   the
acquisition  to the Nevada Commission.  The Nevada  Act  requires
that   beneficial  owners  of  more  than  10%  of  a  Registered
Corporation's  voting securities apply to the  Nevada  Commission
for a finding of suitability within 30 days after the Chairman of
the  Nevada Board mails the written notice requiring such filing.
Under  certain  circumstances,  an  "institutional  investor"  as
defined in the Nevada Act, which acquires more than 10%, but  not
more  than  15%, of a Registered Corporation's voting  securities
may  apply to the Nevada Commission for a waiver of such  finding
of   suitability  if  such  institutional  investor   holds   the
securities   for  investment  purposes  only.  An   institutional
investor  shall  not  be  deemed to hold  voting  securities  for
investment  purposes 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 Registered Corporation,  any
change in the Registered Corporation's corporate charter, bylaws,
management, policies or operations of the Registered Corporation,
or  any  of its gaming affiliates, or any other action which  the
Nevada  Commission  finds  to be inconsistent  with  holding  the
Registered   Corporation'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  Nevada  Commission  may  determine   to   be
consistent with such investment intent.  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 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 Nevada Commission or the Chairman of the Nevada Board
may be found unsuitable.  The same restrictions apply to a record
owner  if the record owner, after request, fails to identify  the
beneficial  owner.   Any  stockholder found  unsuitable  and  who
holds,  directly or indirectly, any beneficial ownership  of  the
common  stock beyond such period of time as may be prescribed  by
the  Nevada  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  the  Corporate
Licensees,  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,
including,  if necessary, the immediate purchase of  said  voting
securities  for  cash  at fair market value.   Additionally,  the
Clark  County  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 Commission may, in its discretion, require the holder
of  any  debt  securities of a Registered  Corporation,  to  file
applications, be investigated and be found suitable  to  own  the
debt security.  If the Nevada Commission determines that a person
is  unsuitable to own such security, then pursuant to the  Nevada
Act, the Registered Corporation can be sanctioned, including  the
loss  of  its  approvals, if, without the prior approval  of  the
Nevada  Commission,  it  (i)  pays  the  unsuitable  person   any
dividend,   interest   or  any  distribution   whatsoever;   (ii)
recognizes  any  voting  right  by  such  unsuitable  person   in
connection with such securities; (iii) pays the unsuitable person
remuneration  in  any  form; or (iv) makes  any  payment  to  the
unsuitable  person  by way of principal, redemption,  conversion,
exchange, liquidation or similar transaction.

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 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 Nevada Commission has the power to
impose  a  requirement  that  a  Registered  Corporation's  stock
certificates  bear  a legend indicating that the  securities  are
subject  to  the Nevada Act.  The Nevada Commission  has  imposed
this requirement on the Company.
The  Company  may  not make a public offering of  its  securities
without  the  prior  approval of the  Nevada  Commission  if  the
securities  or  proceeds therefrom are intended  to  be  used  to
construct, acquire or finance gaming facilities in Nevada, or  to
retire  or  extend obligations incurred for such  purposes.   Any
such  approval,  if  granted,  does  not  constitute  a  finding,
recommendation or approval by the Nevada Commission or the Nevada
Board  as  to the accuracy or adequacy of the prospectus  or  the
investment  merits of the securities offered. Any  representation
to  the  contrary  is unlawful.  The Nevada Commission  has  also
imposed  a  requirement on the Company that it must  receive  the
prior  administrative approval of the Nevada Board  Chairman  for
any  offer  for  the  sale of an equity  security  in  a  private
transaction.

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 obtains control, may
not  occur  without the prior approval of the Nevada  Commission.
Entities  seeking to acquire control of a Registered  Corporation
must  satisfy the Nevada Board and Nevada Commission in a variety
of   stringent  standards  prior  to  assuming  control  of  such
Registered  Corporation.  The Nevada Commission may also  require
controlling  stockholders, officers, directors and other  persons
having  a  material relationship or involvement with  the  entity
proposing to acquire control, to be investigated and licensed  as
a part of the approval process relating 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
corporate gaming licensees, and Registered Corporations that  are
affiliated with those operations, may be injurious to stable  and
productive   corporate   gaming.  The   Nevada   Commission   has
established  a  regulatory scheme to ameliorate  the  potentially
adverse  affects  of these business practices on Nevada's  gaming
industry  and  to  further Nevada's policy  to:  (i)  assure  the
financial  stability  of  corporate gaming  licensees  and  their
affiliates;  (ii) preserve the beneficial aspects  of  conducting
business  in  the  corporate form; and (iii)  promote  a  neutral
environment   for   orderly  governance  of  corporate   affairs.
Approvals are, in certain circumstances, required from the Nevada
Commission  before a Registered Corporation 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  the  Registered
Corporation's  Board of Directors in response to a  tender  offer
made  directly  to the Registered Corporation's stockholders  for
the purposes of acquiring control of the Registered Corporation.

License fees and taxes, computed in various ways depending on the
type of gaming or activity involved, are payable to the State  of
Nevada,  and  to the counties and cities in which the  Licensees'
respective   operations  are  conducted.   Depending   upon   the
particular fee or tax involved, these fees and taxes are  payable
either  monthly, quarterly or annually and are based upon  either
(i)  a percentage of the gross revenues received, (ii) the number
of  gaming  devices  operated,  or  (iii)  the  number  of  games
operated.   A  casino entertainment tax is also  paid  by  casino
operations  where entertainment is furnished in  connection  with
the  selling  of food or refreshments.  The Corporate  Licensee's
that hold a license as an operator of a gaming device route, or a
manufacturer's or distributor's license also pay certain fees  to
the State of Nevada.

Any  person who is licensed, required to be licensed, registered,
required  to be registered, or is under common control with  such
persons  (collectively "Licensees"), and who proposes  to  become
involved  in  a gaming venture outside of Nevada, is required  to
deposit  with  the  Nevada  Board,  and  thereafter  maintain,  a
revolving  fund in the amount of $10,000 to pay the  expenses  of
investigation by the Nevada Board of their participation in  such
foreign  gaming.  The revolving fund is subject  to  increase  or
decrease  in the discretion of the Nevada Commission. Thereafter,
Licensees   are   required  to  comply  with  certain   reporting
requirements  imposed  by  the Nevada  Act.  Licensees  are  also
subject  to disciplinary action by the Nevada 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  operations who has been denied a license or  finding  of
suitability in Nevada on the ground of personal unsuitability.

The  sale of alcoholic beverages at establishments operated by  a
Corporate   Licensee  are  subject  to  licensing,  control   and
regulation  by applicable regulatory agencies.  All licenses  are
revocable  and are not transferable.  The agencies involved  have
full  power  to  limit, condition, suspend  or  revoke  any  such
license,  and any such disciplinary action could (and  revocation
would) have a material adverse affect upon the operations of  the
Corporate Licensees.

Louisiana.    The   manufacture,  distribution,   servicing   and
operation of video draw poker devices ("Devices") in Louisiana is
subject to the Louisiana Video Draw Poker Devices Control Law and
the  Rules and Regulations promulgated thereunder (the "Louisiana
Act").  Licensing and regulatory control is provided by the Video
Gaming  Division of the Gaming Enforcement Section of the  Office
of  State  Police  within the Department  of  Public  Safety  and
Corrections  (the "Division").  The laws and regulations  of  the
Division  are  based upon a primary consideration of  maintaining
the  health, welfare and safety of the general public and upon  a
policy  which  is  concerned  with protecting  the  video  gaming
industry  from  elements  of organized  crime,  illegal  gambling
activities  and other harmful elements as well as protecting  the
public  from illegal and unscrupulous gaming to ensure  the  fair
play of Devices.

Each  of  the  indirect operating subsidiaries for the  Company's
gaming  operations in Louisiana, VSI and SVS, has been granted  a
license  as  a Device owner by the Division.  The other  indirect
subsidiary of the Company, VDSI, has been granted a license as  a
distributor  by  the  Division.  These  gaming  subsidiaries  are
Louisiana  Licensees under the terms of the Louisiana  Act.   The
licenses  held by the Louisiana Licensees expire at  midnight  on
June 30 of each year and must be renewed annually through payment
of  fees.  All license fees must be paid on or before May  15  in
each year licenses are renewable.

The Division may deny, impose a condition on or suspend or revoke
a license, renewal or application for a license for violations of
any  rules  and regulations of the Division or any violations  of
the  Louisiana Act. In addition, fines for violations  of  gaming
laws or regulations may be levied against the Louisiana Licensees
and  the persons involved for each violation of the gaming  laws.
The  issuance, condition, denial, suspension or revocation  is  a
pure  and  absolute  privilege and is at the  discretion  of  the
Division in accordance with the provisions of the Louisiana  Act.
A  license  is  not  property or a protected interest  under  the
constitution  of  either  the  United  States  or  the  State  of
Louisiana.

The  Division  has  the  authority to conduct  overt  and  covert
investigations of any person involved directly or  indirectly  in
the  video gaming industry in Louisiana.  This investigation  may
extend  to information regarding a person's immediate family  and
relatives  and  their affiliations with certain organizations  or
other business entities. The investigation may also extend to any
person  who has or controls more than a 5% ownership,  income  or
profits  interest in an applicant for or holder of a  license  or
who  is  a  key  employee,  or who has the  ability  to  exercise
significant influence over the licensee.  All persons or entities
investigated   must   meet  all  suitability   requirements   and
qualifications  for  a  licensee.   The  Division  may  deny   an
application  for  licensing  for any  cause  which  it  may  deem
reasonable.   The applicant for licensing must pay a  filing  fee
which also covers the cost of the investigation.

In  order  for  a corporation to be licensed by the  Division,  a
majority of the stock of the corporation must be owned by persons
who have been domiciled in Louisiana for a period of at least two
years prior to the date of the application.

Devices  must  meet  strict  specifications  established  by  the
Division.  The number of devices permitted depends on the type of
location at which the Devices are operated.  Fees payable to  the
Division  include an application fee which is non-refundable,  an
annual  fee  based  upon a percentage of net  revenues  from  the
operation  of  each  Device,  a  Device  owner's  fee,  a  Device
operators  fee, a license establishment fee and a Device  owner's
franchise  fee.   All  fees are payable in  either  quarterly  or
annual installments depending on the fee being paid.

Mississippi.   The ownership and operation of gaming  devices  in
Mississippi  is  subject to extensive state and  local  laws  and
regulations,  including the Mississippi Gaming Control  Act  (the
"Mississippi   Act")  and  the  regulations   (the   "Mississippi
Regulations")  promulgated thereunder.   The  Mississippi  Gaming
Commission (the "Mississippi Commission") oversees licensing  and
regulatory  compliance.   Gaming in Mississippi  can  be  legally
conducted  only on vessels of a certain minimum size in navigable
waters  of  the Mississippi River or in waters of  the  State  of
Mississippi  which lie adjacent and to the south (principally  in
the  Gulf  of  Mexico) of the counties of Hancock,  Harrison  and
Jackson,  and  only  in  counties in  Mississippi  in  which  the
registered  voters  have not voted to prohibit  such  activities.
The  voters  in Jackson County, the southeastern-most  county  of
Mississippi,  have  voted  to prohibit  gaming  in  that  county.
However, gaming could be authorized in Jackson County should  the
voters  fail  to  disapprove of gaming  in  that  county  in  any
referendum, which could be held annually.  The underlying  policy
of  the  Mississippi Act is to ensure that gaming  operations  in
Mississippi  are  conducted (i) honestly and competitively,  (ii)
free  of criminal and corruptive influences and (iii) in a manner
which  protects the rights of the creditors of gaming operations.
Gaming  in  the future may also be legally conducted on  American
Indian  lands  in Mississippi as regulated in part  by  the  1988
Indian  Gaming Regulatory Act, which activity will not be subject
to the Mississippi Act.

The  Mississippi  Act  requires  that  a  person  (including  any
corporation  or other entity) must be licensed to conduct  gaming
activities in Mississippi.  A license will be issued only  for  a
specified  location which has been approved as a gaming  site  by
the Mississippi Commission.  The Company, through its interest in
Rainbow  Casino-Vicksburg Partnership  ("RCVP")  must  apply  for
renewal  of such licenses, which renewal cannot be assured.   The
Mississippi Act also requires that each officer or director of  a
gaming  licensee,  or  other person who exercises  a  significant
influence over the licensee, either directly or indirectly,  must
be  found  suitable by the Mississippi Commission.  In  addition,
any  employee  of  the  licensee which is  directly  involved  in
gaming,   must   obtain  a  work  permit  from  the   Mississippi
Commission.  The Mississippi Commission will not issue a  license
or  make  a  finding of suitability unless it is satisfied,  only
after an extensive investigation paid for by the applicant,  that
the  persons associated with the gaming licensee or applicant for
a  license are of good character, honesty and integrity, with  no
relevant   or   material  criminal  record.   In  addition,   the
Mississippi  Commission will not issue a  license  unless  it  is
satisfied  that  the licensee is adequately  financed  or  has  a
reasonable   plan   to  finance  its  proposed  operations   from
acceptable  sources,  and  that  persons  associated   with   the
applicant  have  sufficient  business  probity,  competence   and
experience  to  engage  in the proposed gaming  enterprise.   The
Mississippi  Commission may refuse to issue a work  permit  to  a
gaming  employee  (i)  if  the employee  has  committed  larceny,
embezzlement  or  any  crime  of moral  turpitude,  or  knowingly
violated the Mississippi Act or Mississippi Regulations, or  (ii)
for  any  other  reasonable cause.  If an employee  is  denied  a
license, the Company must terminate his or her employment.

The   Mississippi  Commission  has  the  power  to  deny,  limit,
condition, revoke and suspend any license, finding of suitability
or  registration, or fine any person, as it deems reasonable  and
in the public interest, subject to any opportunity for a hearing.
The  Mississippi Commission may fine any licensee or  person  who
was  found  suitable  up to $100,000 for each  violation  of  the
Mississippi  Act  or the Mississippi Regulations,  which  is  the
subject of an initial complaint, and up to $250,000 for each such
violation  which is the subject of any subsequent complaint.  The
Mississippi  Act  provides  for  judicial  review  of  any  final
decision  of  the  Mississippi  Commission  by  petition   to   a
Mississippi Circuit Court, but filing of such petition  does  not
necessarily stay any action by the Mississippi Commission pending
a decision by the Circuit Court.

Each  gaming  licensee must pay a license fee  to  the  State  of
Mississippi  based upon "gaming receipts" (generally  defined  as
gross  receipts  less  payouts to customers  as  winnings).   The
license fee equals four percent of gaming receipts of $50,000  or
less  per month, six percent of gaming receipts over $50,000  and
up  to  $134,000  per month and eight percent of gaming  receipts
over  $134,000 per month.  The foregoing license fees are allowed
as  a  credit against any Mississippi State income tax  liability
for  the year paid.  An additional license fee, equal to $100 for
each  table  game  conducted or planned to be  conducted  on  the
gaming  premises,  is payable to the State annually  in  advance.
Municipal  and  county fees may also be assessed  and  vary  from
jurisdiction  to jurisdiction.  All taxes and fees must  be  paid
timely  in  order to retain a gaming license.The Mississippi  Act
also   imposes  certain  audit  and  record  keeping   laws   and
regulations, primarily to ensure compliance with the  Mississippi
Act,  including  compliance with the provisions relating  to  the
payment of license fees.

Under  the  Mississippi Regulations, a gaming licensee cannot  be
publicly  held, although an affiliated corporation, such  as  the
Company,  may  be publicly held so long as the Company  registers
with  and  gets  the approval of the Mississippi Commission.   In
addition,  approval  of any subsequent public  offerings  of  the
securities  of the Company must be obtained from the  Mississippi
Commission  if  any part of the proceeds from that  offering  are
intended to be used to pay for or reduce debt used to pay for the
construction, acquisition or operation of any gaming facility  in
Mississippi.

Under  the  Mississippi Regulations, a person is prohibited  from
acquiring control of a licensee without the prior approval of the
Mississippi  Commission.  Any person who, directly or indirectly,
or  in association with others, acquires beneficial ownership  of
more  than five percent of a licensee must notify the Mississippi
Commission  of this acquisition.  The Mississippi Commission  may
require  that  a  person be found suitable if that  person  holds
between  a  five percent and ten percent ownership  position  and
must  require that a person be found suitable if that person owns
more than ten percent of a licensee.  Furthermore, regardless  of
the  amount  of  ownership, any person  who  acquires  beneficial
ownership may be required to be found suitable if the Mississippi
Commission  has  reason to believe that the acquisition  of  such
ownership  would  be  inconsistent with the  declared  policy  of
Mississippi. Any person who is required to be found suitable must
apply   for   a  finding  of  suitability  from  the  Mississippi
Commission  within 30 days after being requested to  do  so,  and
must  deposit with the State Tax Commission a sum of money  which
is adequate to pay the anticipated investigatory costs associated
with such finding.  Any person who is found not to be suitable by
the  Mississippi Commission shall not be permitted  to  have  any
direct or indirect ownership in the licensee.  Any person who  is
required  to apply for a finding of suitability and fails  to  do
so,  or  who  fails  to  dispose of his or her  interest  in  the
licensee if found unsuitable, is guilty of a misdemeanor.   If  a
finding  of suitability with respect to any person is not applied
for  where  required,  or  if it is  denied  or  revoked  by  the
Mississippi Commission, the licensee is not permitted to pay such
person  for  services rendered, or to employ or  enter  into  any
contract with such person.

Dockside  casinos may be required to be moved to a "safe  harbor"
in  the  event of a threatened hurricane.  The appropriate county
civil  defense  director will determine  when  such  movement  is
required.  In general, it is anticipated that casino vessels will
have  to  be  moved in the event of a Class III  or  more  severe
hurricane  warning, where there is the possibility of  125  miles
per  hour  wind speeds.  The movement of a casino barge will  not
necessarily insure protection against damage or destruction by  a
hurricane.   Furthermore, the removal  of  a  casino  barge  will
generally require several days, and as a consequence, the  casino
barge  will be out of business during that movement, even  if  no
hurricane strikes the casino site.

Any  permanently  moored vessel used for casino  operations  must
meet  the fire safety standard of the Mississippi Fire Prevention
Code, the Life Safety Code and the Standards for the Construction
and  Fire Protection of Marine Terminals, Piers and Wharfs of the
National   Fire   Protection  Association.    Additionally,   any
establishment to be constructed for dockside gaming must meet the
Southern  Standard Building Code or the local building  code,  if
such  a  local building code has been implemented at the casino's
site.

While  unpowered and permanently moored vessels  do  not  require
certification  by the United States Coast Guard, the  Mississippi
Commission  has  engaged  the American  Bureau  of  Shipping,  an
independent consulting agency, which will inspect and certify all
casino  barges  with respect to stability and single  compartment
flooding integrity, in accordance with Mississippi Regulations.

The  laws  and  regulations permitting and governing  Mississippi
casino  gaming were adopted during 1990 and 1991, and  the  first
casinos  opened in August 1992.  Consequently, the interpretation
and  application  of Mississippi law and regulations  may  evolve
over  time,  and any such changes may have an adverse  effect  on
Mississippi licensees.

Additional Jurisdictions.  The Company, in the ordinary course of
its  business,  routinely  considers  business  opportunities  to
expand its gaming operations into additional jurisdictions.   Any
such  expansion would subject the Company and, possibly, some  or
all  of  its officers, directors, employees and stockholders,  to
regulatory  requirements in addition to  those  with  which  such
parties are presently obligated to comply.

As  previously  noted,  the Company is  currently  attempting  to
acquire  Bally Gaming, International, Inc. which is  licensed  in
many  states as a manufacturer of gaming devices.  If the Company
is  successful in its attempted acquisition, the Company will  be
required to be licensed in each of these states.

Federal  Registration.  The operating subsidiaries of the Company
that  are  involved  in gaming activities are  required  to  file
annually  with  the  Attorney General of  the  United  States  in
connection  with  the sale, distribution or operation  of  gaming
devices.  All currently required filings have been made.

ITEM 2.   PROPERTIES

The   following  table  sets  forth  information  regarding   the
Company's  leased  properties  (exclusive  of  space  leases   in
connection  with its gaming device routes) as of June  30,  1995,
all of which are fully utilized unless otherwise noted:


                                                                          Annual
                                                          Building        Rental
 Location              Use                             Square Feet      Payments
                                                                       (In 000s)

Las Vegas, Nv.       Executive offices, route               72,000        $  486
                      operations and manufacturing
Washington, D.C.     Administrative offices                    400            31
New York, N.Y.       Executive offices                       4,650           279
Vicksburg, Ms.       Casino administration offices           2,000            15
Las Vegas, Nv.       Subleased office space                  9,500            58
Reno/Sparks, Nv.     Route operations                        2,100            71
Carson City, Nv.     Route operations                        2,500             8
Fallon, Nv.          Route operations                          900             5
Elko, Nv.            Route operations                        1,000             8
Las Vegas, Nv.       Route location                          8,000           419
Tonopah, Nv.         Casino Hotel                           10,000           210
Las Vegas, Nv. (1)   Casino                                 24,700           494
Las Vegas, Nv.       Tavern                                  7,000           122
Las Vegas, Nv.       Tavern                                  4,864            96
Las Vegas, Nv. (1)   Tavern                                  4,300            81
Las Vegas, Nv.       Tavern                                  3,500            88
Las Vegas, Nv.                                               4,200            54
Las Vegas, Nv.       Tavern                                  4,225            80
Las Vegas, Nv. (2)   Ground Lease                                            320
Sparks, Nv. (3)      Ground Lease                                              4
New Orleans, La.     Administrative offices & route          6,000            53
                      operations

(1)  See  discussion  in  Item  7.  Management's  Discussion  and
     Analysis  of  Financial Condition for changes in utilization
     of these properties.
(2)  Lease  consists of ground lease for parking at  the  Trolley
     Stop.
(3)  Lease consists of long-term land lease for parking  at  the
     Plantation.

In addition, the Company leases approximately 16 properties which
have  been subleased in connection with its gaming device routes.
The properties range in size from approximately 1,750 square feet
to  7,700  square feet.  The remaining terms of the leases  range
from  5  months  to 14 years with monthly payments  ranging  from
approximately  $1,500  to  $8,100.   See  Note  10  of  Notes  to
Consolidated  Financial  Statements for  information  as  to  the
Company's lease commitments with respect to the foregoing  rental
properties.  The Company believes its facilities are suitable for
its  needs  and  the Company has no future expansion  plans  that
would make these properties inadequate.

The  following table sets forth information regarding  properties
owned  by the Company as of June 30, 1995, all of which are fully
utilized unless otherwise noted:

                                 Building
    Location                        Use                     Square Feet (1)
                                 (In 000s)
Reno/Sparks, Nv.                  Casino                         35,000
Vicksburg, Mississippi            Casino                         24,000
Las Vegas, Nv. (1)                Vacant - Casino/Tavern          7,700
Las Vegas, Nv.                    Tavern/Land                     5,000
North Las Vegas, Nv.              Parking                          ---

(1)  See discussion in Item 7. Management's Discussion  and
     Analysis  of  Financial Condition for changes in utilization
     of these properties.


ITEM 3.   LEGAL PROCEEDINGS

On  June  19,  1995, the Company publicly proposed  a  negotiated
acquisition  of  Bally Gaming International,  Inc.  ("BGII")  for
$12.50  per  share of BGII common stock.  Prior  to  making  this
offer,  the Company had acquired 500,000 shares of BGII stock  on
the  open  market  and  at June 30, 1995  held  1,000,000  shares
(approximately 9.3% of BGII's total outstanding shares, based  on
BGII's  most  recent  public filings) which  it  acquired  at  an
average  cost  of  approximately $10.41  per  share.   Under  the
proposed terms of the offer, approximately 60% of BGII shares not
held by the Company would be acquired for cash with the remainder
exchanged  for shares of the Company's common stock.   The  offer
was  contingent  upon satisfactory due diligence, regulatory  and
stockholder approval and reasonable financing.  At the  time  the
offer  was  made  public,  the Company  requested  expedited  due
diligence,  subject  to a confidentiality  agreement.   BGII  had
previously  announced a planned merger with WMS Industries,  Inc.
("WMS")  which included an exclusive period for WMS to  negotiate
the  terms  of that proposed merger. WMS's exclusive  negotiating
period  had  expired several weeks before the Company's  proposal
was  made without announcement or action on the part of  BGII  or
WMS.   On July 25, 1995, after being refused due diligence access
and the announcement by BGII that a definitive agreement had been
reached  to merge with WMS, the Company announced its  intent  to
make  a  tender offer for BGII.  The tender offer was on  largely
the  same terms as the originally proposed acquisition.   On  the
same  date,  the  Company announced it had  filed  litigation  in
Delaware Chancery Court requesting that the court require BGII to
grant  the  Company  due  diligence  access,  enjoin  BGII   from
proceeding  with  the WMS merger (including a  provision  therein
requiring  the sale of BGII's German operations) and declare  the
breakup  fee  provided for in the WMS merger to be invalid.   The
Company  indicated that it would increase the price per share  of
BGII  stock  to $13.00 per share if the breakup fee was  declared
invalid.  The tender offer was conditioned upon the Company being
validly tendered a number of shares of BGII stock, which combined
with  its  own holdings of such stock, would give the  Company  a
majority   of  BGII's  outstanding  shares.   The  tender   offer
commenced  on July 28, 1995. Subsequently, the Company  announced
its  intention to proceed with a consent solicitation to elect  a
majority of independent directors to the BGII Board of Directors.
On  August  14, 1995, the Company, BGII and WMS jointly announced
an  agreement  whereby  the parties would hold  in  abeyance  all
activities related to pending litigation until September 1, 1995,
refrain from commencing new litigation until that same date, BGII
would  schedule its annual shareholder meeting for  consideration
of  the  proposed  WMS merger and the election  of  directors  on
October  30,  1995, and the Company would extend  the  expiration
date  of  the  tender offer until September 12, 1995 and  refrain
from soliciting proxies until September 1, 1995.  On September 1,
1995,  the  Company disclosed that it had obtained firm financing
commitments  to  fund the tender offer and that such  commitments
were not conditioned on due diligence of BGII.  Accordingly,  the
Company  extended  the expiration date of  its  tender  offer  to
September  29,  1995.   BGII and WMS filed lawsuits  against  the
Company alleging numerous public misrepresentations had been made
by  the  Company  with  regards to the  WMS-BGII  agreement,  the
Company's  tender  offer and the level of cooperation  of  BGII's
board of directors.

The  Company  and  its directors are currently  defendants  in  a
lawsuit  filed  by a stockholder.  This suit seeks  class  action
status  and  alleges several breaches of fiduciary  duty  by  the
Company's  current  and former directors.  The  Company  believes
this  lawsuit  was filed to thwart its attempted  acquisition  of
BGII,  the  allegations contained therein are without  merit  and
intends to vigorously defend itself against such claims.  In  the
initial ruling on this case, the plaintiff's motion for expedited
discovery  was denied by the U.S. District Court of Nevada.   The
District Court also stated that it is unlikely that the plaintiff
in  the case would be able to represent other shareholders fairly
and adequately as defined by law.

The  Company  is  also  a party to various lawsuits  relating  to
routine matters incidental to its business.  Management does  not
believe  that  the  outcome  of such  litigation,  including  the
matters  above,  in the aggregate, will have a  material  adverse
effect on the Company.


ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the fourth quarter of the fiscal year ended June 30, 1995,
no  matter was submitted to a vote of the Company's stockholders,
through the solicitation of proxies or otherwise.

                            PART II

ITEM  5.   MARKET  FOR REGISTRANT'S COMMON  EQUITY  AND
                 RELATED SHAREHOLDER MATTERS

The  Common  Stock is traded on the Nasdaq National Market  under
the  symbol "ALLY".  The following table sets forth the high  and
low  closing  sales  prices of the Common Stock  as  reported  by
Nasdaq for the periods indicated.

                                                 Price Range of
                                                  Common Stock
                                                High        Low

     Fiscal Year Ended June 30, 1994
          1st Quarter                         $ 9.88      $6.75
          2nd Quarter                          11.88       7.75
          3rd Quarter                          10.13       6.75
          4th Quarter                           7.25       5.13

     Fiscal Year Ended June 30, 1995
          1st Quarter                         $ 8.50      $5.13
          2nd Quarter                           7.88       5.13
          3rd Quarter                           8.00       5.38
          4th Quarter                           6.50       4.25

As  of  September  25,  1995 the Company had approximately  1,674
holders of record of its Common Stock.

The  Company  has  never declared or paid cash dividends  on  its
Common  Stock.   The  Company  intends  to  follow  a  policy  of
retaining earnings, if any, to finance growth of its business and
does  not anticipate paying any cash dividends in the foreseeable
future.  The declaration and payment of future dividends  on  the
Common  Stock  will be at the sole discretion  of  the  Board  of
Directors  and  will  depend  on  the  Company's  profitably  and
financial   condition,   capital  requirements,   statutory   and
contractual  restrictions,  future prospects  and  other  factors
deemed relevant.

ITEM 6.   SELECTED FINANCIAL DATA

The  following  selected consolidated financial  data  have  been
derived from the audited financial statements of the Company  for
the  years  ended June 30, 1991, 1992, 1993, 1994 and 1995.   The
table should be read in conjunction with "Management's Discussion
and  Analysis  of Financial Condition and Results of  Operations"
and the Consolidated Financial Statements and Notes thereto.
<TABLE>
<CAPTION>
                                                    Fiscal Years Ended June 30
                                           1991      1992      1993      1994      1995
                                             (In Thousands, Except Per Share Amounts)
Statements of Operations Data
<S>                                    <C>        <C>       <C>       <C>       <C>
Revenues:
   Gaming
     Routes                             $ 77,150  $ 77,940  $ 96,282  $102,830   $106,827
     Casinos and taverns                  11,281    11,560    12,526    15,679     21,287
   Food and beverage sales                 3,120     3,376     4,184     4,480      3,847
   Net equipment sales  (1)                  214       379        99        65         27
                                          91,765    93,255   113,091   123,054   131,988
Costs and expenses:
   Cost of gaming
     Routes                               58,299    58,585    72,614    76,332    79,875
     Casinos and taverns                   8,528     8,459     8,667    11,871    11,436
   Cost of food and beverage               2,249     2,367     2,876     3,084     2,795
   Cost of equipment sales                   151       284        49        20        12
   Selling, general & administrative       8,059     8,950    12,667    13,555    14,633
   Business development costs                ---       ---       900     1,192     7,843
   Corporate administrative expenses       7,567     5,290     6,191     7,882     9,735
   Bad debt expense                        4,845       539       461       705       400
   Write-off of inventory, intangibles
       and other assets                    4,982       ---       ---       ---       ---
   Loss on abandoned casinos               7,847     2,307       ---     3,713       ---
   Loss on abandoned taverns                 ---       ---       ---     2,638       ---
   Depreciation and amortization           7,092     7,355     8,718     9,530     9,520
        Total costs and expenses         109,619    94,136   113,143   130,522   136,249
Operating loss                           (17,854)     (881)      (52)   (7,468)   (4,261)

Other income (expense)
     Interest income                       1,750     1,324       998     2,084     2,798
     Interest expense                     (4,663)   (4,505)   (5,046)   (6,830)   (8,133)
     Other, net                           (1,007)     (618)      450      (673)     (890)
Loss before taxes                        (21,774)   (4,680)   (3,650)  (12,887)  (10,486)
Income tax (expense) benefit               5,958       ---       ---      (241)     (265)
      Net loss                         $ (15,816) $ (4,680) $ (3,650) $(13,128) $(10,751)

Net loss per common share               $  (1.73) $  (0.51) $  (0.38) $  (1.28) $  (0.95)
</TABLE>


ITEM 6.   SELECTED FINANCIAL DATA (continued)

<TABLE>
<CAPTION>
                                                                   As of June 30
                                            1991           1992         1993           1994           1995
Balance Sheet Data
<S>                                      <C>            <C>           <C>           <C>            <C>
Cash and cash equivalents                $  5,774       $ 10,239      $ 9,580       $ 37,085       $ 13,734
Securities available for sale                 ---            ---          ---         12,489         23,680
Net working capital                        10,450         11,557        7,991         50,926         31,552
Total assets                               79,024         75,594       73,768        119,416        126,348
Total long term debt,
    including current maturities           44,450         43,282       44,798         90,726        101,397
Total stockholders' equity                 27,008         23,660       22,665         15,099          9,985
</TABLE>
(1)  Includes  sales to related parties of $86 (1991), $236  (1992),
     $2 (1993), $6 (1994) and $0 (1995).

ITEM 7.   MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF   FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS

Liquidity and Capital Resources

At   June   30,  1995,  the  Company  had  working   capital   of
approximately    $31,552,000,   a   decrease   of   approximately
$19,374,000 from June 30, 1994.  The decrease in working  capital
is primarily in cash and cash equivalents which were used to fund
activities in connection with the Company's growth strategy.   As
of  June  30, 1995, the Company had approximately $37,414,000  in
cash, cash equivalents and securities available for sale.

During fiscal 1995, the Company incurred approximately $7,843,000
in  expenses  associated with pursuit of the  Company's  business
strategy.  The  Company's  strategy is to  use  its  strengthened
management  team, diversified gaming expertise and  business  and
investment  community relationships to develop new  opportunities
in the operation of land-based (including Native American owned),
dockside and riverboat casinos, gaming systems and technology and
the supply and management of gaming devices.

On  July  16,  1994 the Rainbow Casino in Vicksburg,  Mississippi
permanently  opened  for  business.   In  connection   with   the
completion of the casino and the acquisition of its original  45%
limited  partnership interest, through a wholly-owned subsidiary,
the  Company  funded a $3,250,000 advance to The  Rainbow  Casino
Corporation  ("RCC")  on the same terms as RCC's  financing  from
Hospitality Franchise Systems, Inc. ("HFS").  On March 29,  1995,
the  Company consummated certain transactions whereby the Company
acquired from RCC the controlling general partnership interest in
RCVP and increased its partnership interest. In exchange for  the
assumption  by  National  Gaming  Mississippi,  Inc.  ("NGM"),  a
subsidiary  of  National  Gaming  Corporation,  of  approximately
$1,140,000 of liabilities (plus a financing fee payable  to  HFS)
related to the completion of certain incomplete elements  of  the
project  which survived the opening of the casino (for which  RCC
was  to  have been responsible, but failed to satisfy), a related
$652,000  cash  payment by the Company to NGM and commitments  by
the  Company  and  NGM to fund additional financing  required  to
complete the project: (i) a subsidiary of the Company became  the
general  partner and RCC became the limited partner and (ii)  the
respective  partnership interests were adjusted. As a  result  of
these  transactions, RCVP assumed $1,304,000 of new debt of which
50%  was  payable to the Company. Under the adjusted  partnership
interests,  RCC is entitled to receive 10% of the  net  available
cash flows after debt service and other items, as defined, (which
amount  shall  increase to 20% of cash above  $35,000,000  (i.e.,
only on such incremental amount)), for a period of 15 years, such
period  being  subject to one year extensions for  each  year  in
which  a minimum payment of $50,000 is not made. In addition,  if
during any continuous 12-month period until December 31, 1999 the
casino  achieves  earnings from the project  of  at  least  $10.5
million,  before  deducting depreciation,  amortization,  certain
debt  payments and substantially all taxes, then the Company will
be  obligated  to  pay  to  certain principals  of  the  original
partnership an amount aggregating $1 million in cash or shares of
the Company's Common Stock.

The  Company  and Casino Magic Corporation, through wholly  owned
subsidiaries,  are  members  in Kansas  Gaming  Partners,  L.L.C.
("KGP')  and  Kansas  Financial Partners,  L.L.C.  ("KFP"),  both
Kansas  limited  liability companies. Under an  option  agreement
(the  "Option  Agreement") granted to KGP by  Camptown  Greyhound
Racing,  Inc. ("Camptown") and The Racing Association of  Kansas-
Southeast  ("TRAK Southeast"), KGP has been granted the exclusive
right,  which  right expires on September 13,  2013,  to  operate
gaming  devices  and/or casino-type gaming at  Camptown's  racing
facility  in  Frontenac,  Kansas  if  and  when  such  gaming  is
permitted  in  Kansas.  In  December 1994,  Camptown  received  a
$3,205,000 loan from Boatmen's Bank which was guaranteed by  KFP.
The Company and Casino Magic Corporation each invested $1,580,000
in  KFP  which was used to purchase a certificate of  deposit  to
collateralize  its  guaranty. Construction of  Camptown's  racing
facility  has been completed and the facility opened for business
in  May  1995.  The  racing facility was  temporarily  closed  on
November  5,  1995 due to poor financial results. Camptown  filed
for  reorganization under Chapter 11 of the U.S. Bankruptcy  Code
in  January  1996  and  has  stated an intention  to  reopen  for
business  following  bankruptcy  reorganization.  Boatmen's  Bank
demanded payment of the Camptown loan from KFP under the terms of
the guaranty. KFP paid the loan and Boatmen's Bank returned KFP's
certificate of deposit and KFP assumed Boatmen's Bank's  position
in  the loan to Camptown which is secured by a second mortgage on
Camptown's  greyhound racing facility in Frontenac, Kansas.  TRAK
Southeast  and  Camptown  continue to  be  bound  by  the  Option
Agreement. KFP intends to vigorously pursue all of its rights and
remedies which may include, among other things, seeking authority
from  the  bankruptcy court to commence a foreclosure action.  In
the case of a foreclosure action, KFP would be required to assume
or pay the existing first mortgage of approximately $2,000,000 if
KFP  becomes the purchaser at any such sale. The Company  intends
to  continue  to  monitor  its investment  in  KFP.  The  Company
believes  that the Kansas legislature may consider at  least  two
gaming bills this session. One bill, if approved by two thirds of
both  houses of the Kansas legislature, would call for  a  public
vote  to amend the Kansas constitution to allow slot machines  at
up to two gaming locations in each legislative district, with one
location being reserved for any licensed pari-mutuel location  in
the  district. The second bill, if passed by a majority  of  both
houses of  the Kansas legislature, would allow, subject to  local
option  election of the citizens in the county, slot machines  at
licensed pari-mutuel race tracks.

Cash   provided   by   operations  for  fiscal   1995   decreased
approximately $8,105,000 from amounts reported for  fiscal  1994.
Included in the prior year's cash flows from operations was a non-
recurring  gain of $3,600,000 associated with the termination  of
the Company's letter agreement with Capital Gaming International,
Inc.  and $6,351,000 of charges related to the Company's decision
to  exit the downtown Las Vegas gaming market and dispose of  its
tavern   operations.   Exclusive  of  these  prior  year   items,
expenditures   related  to  supporting  the  Company's   bisiness
strategy  increased approximately $3,051,000.  Long-term  accrued
expenses  decreased by approximately $1,031,000  as  the  Company
paid rent and other exit expenses against the amounts accrued  in
fiscal  1994  as  noted above.  The remaining change  in  accrued
expenses accounted for a use of cash in the amount of $4,710,000.
These  uses of cash were partially offset by an increase in  cash
flows  from  operations  of  approximately  $2,666,000  from  the
Company's  ongoing  business operations  and  an  operating  cash
contribution of approximately $3,089,000 from the first  year  of
operations  by  the Rainbow Casino.  Significant  non-cash  items
added  back  to  cash  flows  from operations  for  1995  include
$1,313,000   in  non-cash  compensation  expense  and  $1,075,000
related to certain service contracts and termination costs.

Cash  flows  used  for investing activities in fiscal  year  1995
decreased  by $5,651,000 from the prior year. Net collections  on
receivables  improved by $2,605,000 compared to  fiscal  1994  as
receivable activity returned to historical norms. In fiscal 1994,
the  Company funded approximately $7,250,000 in loans to  Capital
Gaming  International Inc. and the original  general  partner  in
RCVP   which   additions  were  partially  offset  by   increased
collections of receivables related primarily to the collection of
the Capital Gaming loan in fiscal 1994.

Cash flows from financing activities in fiscal year 1995 declined
$48,402,000  from  fiscal 1994.  In the prior year,  the  Company
completed   the   private  placement  of  $85,000,000   aggregate
principal  amount of its 7.5% Convertible Subordinated Debentures
due  2003  ("Debentures").  Concurrent with the  closing  of  the
issuance   of  the  Debentures,  Kirkland  Ft.  Worth  Investment
Partners,  L.P.  ("KFW") invested $5,000,000 in  the  Company  in
exchange for 1,333,333 shares of the Company's Non-Voting  Junior
Convertible  Special  Stock  and  warrants  to  purchase  up   to
2,750,000  shares of Common Stock, subject to certain conditions.
A portion of the net proceeds from these transactions was used to
repay   previously   existing  debt  and  accrued   interest   of
approximately $38,245,000.

Earnings  before interest, taxes, depreciation, and  amortization
("EBITDA")  as  a  percent of the related  revenues  changed  for
Nevada  gaming machine management operations from 15.3% in fiscal
1994  to  16.7%  in fiscal 1995 and for Louisiana gaming  machine
management  operations from 18.9% to 21.5% for the same  periods.
EBITDA  as  a  percent  of  revenues for  the  casino  operations
(excluding  discontinued operations) excluding  certain  one-time
charges,  was  18.2%  in fiscal 1994 and 23.3%  in  fiscal  1995.
EBITDA should not be construed as an alternative to net income or
any  other  GAAP measure of performance as an indicator  of  cash
flows  or  as  a  measure of liquidity. Management believes  that
EBITDA  is  a  useful  adjunct  to  net  income  and  other  GAAP
measurements and is a conventionally used financial indicator.

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


Results of Operations:

Fiscal 1995 Compared with Fiscal 1994

Revenues

Total  revenues  for  the fiscal year ended June  30,  1995  were
approximately $131,988,000, an increase of $8,934,000 (7.3%) over
those for fiscal 1994.  Revenues from all gaming route operations
increased  $3,997,000  (3.9%)  to approximately  $106,827,000  in
fiscal  1995.   Revenues from route operations in  the  state  of
Louisiana  declined $1,796,000 (10.3%) primarily as a  result  of
increased  competition from riverboat operations as well  as  the
opening  of  a  land based casino in New Orleans.   Revenue  from
Nevada route operations increased approximately $5,739,000 (6.7%)
over  those for the same period last year.  The increase  in  the
Nevada gaming route revenues was attributable to a $2.15 increase
in  the average net win per gaming device per day in fiscal  1995
compared   to   fiscal  1994  (accounting  for  an  increase   of
approximately $4,042,000 of such increase) and an increase in the
weighted  average  number of gaming devices  on  location  during
fiscal  1995  as  compared  to fiscal  1994  (accounting  for  an
increase of approximately $1,751,000).  Revenues from casino  and
tavern  operations, including food and beverage sales,  increased
approximately $4,975,000 (24.6%) during fiscal 1995  as  compared
to  those  for  the  prior year as revenues recognized  from  the
Rainbow Casino, which were consolidated beginning March 29, 1995,
exceeded  the  revenues lost with the closing  of  the  Company's
properties  in  downtown  Las Vegas and the  termination  of  the
Company's lease at the Royal Casino.


Costs and Expenses

Costs of Revenues

Cost of gaming route revenues for the fiscal year ended June  30,
1995  increased  $3,543,000 (4.6%) over  that  for  fiscal  1994.
Costs  of  revenues  for route operations in Louisiana  decreased
$1,199,000  (a  decrease  of 10.7% from last  year)  as  revenues
declined primarily as a result of increased competition  in  that
market.  As a percent of related revenues, Louisiana route  costs
of   revenues  remained  relatively  constant.   Cost  of  gaming
revenues  for  Nevada gaming route revenues increased  $4,742,000
(7.3%) as compared to the prior year and increased slightly as  a
percent  of  Nevada  gaming  route  revenues  due  primarily   to
increased  costs  associated with additional  and  renewed  space
lease  contracts.   Cost of route revenues includes  rents  under
both  space lease and revenue sharing arrangements, gaming  taxes
and direct labor, including related taxes and benefits.  The cost
of  casino  and tavern revenues, including the cost of  food  and
beverage sales, decreased $724,000 (4.8%) compared to fiscal 1994
primarily  due  to  the  closing of the Company's  properties  in
downtown Las Vegas and the termination of the Company's lease  at
the  Royal  Casino.   These decreases were  partially  offset  by
Rainbow   Casino  costs  of  revenues  which  were   consolidated
beginning  in  March  1995.  Cost of casino and  tavern  revenues
includes cost of goods sold, gaming taxes, rent and direct  labor
expenses,  including  taxes  and benefits.   Although  the  gross
margin  percentage for Nevada operations declined slightly during
fiscal 1995, the decline was completely offset by the addition of
the Rainbow Casino and a small improvement in the Louisiana gross
margin percentage.  As a result, the total cost of revenues as  a
percentage of total revenues declined by 2.9% compared to  fiscal
1994.

Expenses

For   fiscal   1995,  the  Company  incurred  development   costs
associated with pursuing the Company's long term growth  strategy
of   approximately  $7,843,000,  an  increase  of   approximately
$6,651,000 (558.0%) from fiscal 1994. Included in the development
costs  for  fiscal 1995 was $1,669,000 of costs  related  to  the
merger  with  Bally  Gaming International, Inc.  Included  as  an
offset  to  development costs for fiscal 1994 was a non-recurring
gain  of  $3,600,000 related to the Company's effort  to  acquire
Capital Gaming International, Inc.  Prior year development  costs
also  include  certain significant expenses associated  with  the
Company's  purchase of NAI.  Development costs  include  salaries
and  wages, related taxes and benefits, professional fees, travel
expenses,  payments  to  third parties for  business  development
options  and  other  expenses  associated  with  supporting   the
Company's  long-term growth strategy. With the exception  of  the
significant costs expected to be incurred in conjunction with the
merger  with Bally Gaming International, Inc. The Company expects
to  continue  to  incur a significant level of development  costs
although at a reduced level compared to fiscal 1995.

Corporate   administrative  expenses   for   fiscal   1995   were
approximately $9,735,000, an increase of $1,853,000 over the same
amounts for fiscal 1994.  The primary cause for the increase  was
$1,331,000  in compensation expense recognized upon the  issuance
of  250,000  shares  of  Common Stock to  Steve  Greathouse,  the
Company's President, Chief Executive Officer and Chairman of  the
Board,  in  connection  with  his  employment  agreement.    Also
contributing to the increase in corporate administrative expenses
are $485,000 of expenses related to certain service contracts and
termination  costs.   Corporate administrative  expenses  include
salaries and wages, related taxes and benefits, professional fees
and  other  expenses  associated with maintaining  the  corporate
office  and  providing  centralized corporate  services  for  the
Company.

Exclusive of the development and corporate expenses noted  above,
selling,  general  and administrative expenses  for  fiscal  1995
increased  $1,078,000  (7.9%)  from  the  prior  year.   Selling,
general  and  administrative expenses  related  to  gaming  route
operations   decreased  $1,340,000  (13.8%)  from  fiscal   1994.
Selling, general and administrative expenses for Louisiana  route
operations  declined  approximately  $660,000  (23.8%)  as  staff
reductions  and  cost  containment measures were  implemented  to
counter increased competition in that market.  The same costs for
Nevada  route operations decreased $680,000 (9.8%) as the benefit
of  staff reductions and cost controls taken in late fiscal  1994
was   realized.    Selling,  general  and  administrative   costs
increased for casino and tavern operations by $1,595,000  (44.0%)
from  the  prior  year.  The acquisition of the  Rainbow  Casino,
which  contributed  $1,984,000 to  the  increase,  was  partially
offset  by  the  closing  of  the Company's  downtown  Las  Vegas
properties  and the termination of the lease at the Royal  Hotel.
Also  contributing  to  the  increase  in  selling,  general  and
administrative  expenses were $478,000  of  expenses  related  to
certain   service  contracts  and  termination  costs.   Selling,
general  and  administrative expenses may be subject  to  further
increases.

In  fiscal  1994,  due  to  continuing  losses  from  operations,
negative cash flows and incompatibility with the Company's  long-
term  growth strategy, the Company's Board of Directors  resolved
to 1) exit the downtown Las Vegas gaming market and 2) dispose of
the  currently  operated  small  independent  tavern  operations.
Based  on  these decisions, the Company recognized total expenses
of  approximately $5,883,500 in fiscal 1994.  As a result of  the
decision  to  exit  the  downtown Las  Vegas  gaming  market,  in
September  1994, the Company substantially reduced operations  at
both  the  Trolley Stop Casino and Miss Lucy's  Gambling  Hall  &
Saloon.  Included in the 1994 statements of operations are  total
expenses  of  approximately $3,246,000 related to these  actions.
The  total charge included approximately $488,000 related to  the
write-down  of  assets and approximately $2,758,000  representing
primarily the present value of the future lease payments  net  of
estimated future sublease income.  The decision to withdraw  from
the   tavern  business  resulted  in  expenses  of  approximately
$2,638,000   being  recognized  in  fiscal  1994.   Approximately
$1,813,000 of the total amount was related to the write  down  of
assets  while  approximately $825,000 represented  primarily  the
present  value  of  the future lease payments  net  of  estimated
future sublease income.

On  December  17, 1993, the Company incurred a fire loss  at  the
Fairgrounds  Race  Course  in New Orleans,  Louisiana  where  the
Company  operated 199 gaming devices prior to the fire (of  which
193   were   destroyed  by  the  fire)  through  its   controlled
subsidiary,  Video Services, Inc.  The Company was fully  insured
for  all  equipment,  leasehold improvements,  other  assets  and
business  income with the exception of approximately  $46,000  in
deductibles.    During   fiscal  1995,   the   Company   recorded
approximately  $247,000  of  income  from  business  interruption
insurance proceeds compared to $241,000 of such proceeds  in  the
prior  year.  The Company is discussing settlement of  additional
business  interruption  claims with the insurance  carrier.   The
Company  has  also  received  insurance  proceeds  based  on  the
replacement  value  of  the assets destroyed  in  the  fire  and,
therefore, recognized a gain of approximately $156,000  which  is
included in other income in fiscal 1994.

Fiscal 1994 Compared with Fiscal 1993

Revenues

Total  revenues  for  the fiscal year ended June  30,  1994  were
approximately  $123,054,000  for  fiscal  1994  an  increase   of
$9,963,000 (8.8%) over those for fiscal 1993.  Revenues from  all
gaming   route   operations  increased   $6,548,000   (6.8%)   to
approximately  $102,830,000 in fiscal 1994.  Route operations  in
the  state  of Louisiana contributed $5,222,000 (an  increase  of
42.9%)  to the overall increase in route revenues as the  Company
continued  to  experience increasing demand  in  that  relatively
young  market.   Revenue from Nevada route  operations  increased
approximately  $1,326,000 (1.6%) over those for the  same  period
last year.  The increase in the Nevada gaming route revenues  was
attributable  to  a  $1.30 increase in the average  net  win  per
gaming  device  per day in fiscal 1994 compared  to  fiscal  1993
(accounting for an increase of approximately $2,608,000  of  such
increase)  which  was  partially offset  by  a  decrease  in  the
weighted  average  number of gaming devices  on  location  during
fiscal 1994 as compared to fiscal 1993 (accounting for a decrease
of  approximately $1,282,000).  Revenues from casino and  taverns
increased approximately $3,449,000 (20.6%) during fiscal 1994  as
compared  to  those  for  the prior year  due  to  the  continued
expansion of casino operations and operating additional  troubled
tavern locations.


Costs and Expenses

Costs of Revenues

Cost of gaming route revenues for the fiscal year ended June  30,
1994  increased  $3,718,000 (5.1%) over  that  for  fiscal  1993.
Route operations in Louisiana contributed $2,854,000 (an increase
of 40.6% from last year) to the overall increase.  Cost of gaming
revenues  for  Nevada  gaming route revenues  increased  $864,000
(1.3%)  as compared to the prior year.  The increase to  cost  of
Nevada  route  revenues  was primarily  due  to  an  increase  in
location  operators' share of gaming revenues caused by replacing
a  large  space lease contract with revenue-sharing arrangements.
Cost of route revenues includes rents under both space lease  and
revenue  sharing  arrangements, gaming taxes  and  direct  labor,
including  related taxes and benefits.  The cost  of  casino  and
tavern  revenue increased $3,412,000 (29.6%) compared  to  fiscal
1993  primarily due to the first full year of operations  of  two
small casinos and the first full year of operating the hotel  and
food  and  beverage  operations at the Mizpah Hotel  and  Casino.
Previously,  the  Company had operated only  the  casino  at  the
Mizpah,  but in January, 1993 began operating the entire facility
including food and beverage operations to insure its availability
for the casino.  Cost of casino and tavern revenues includes cost
of  goods  sold,  gaming taxes, rent and direct  labor  expenses,
including   taxes  and  benefits.   Although  the  gross   margin
percentage  from Nevada operations declined during  fiscal  1994,
the  decline  was offset by increases in the Louisiana  operating
margin  percentage.   As a result, the combined  cost  of  gaming
revenues  as a percentage of gaming revenues remained  relatively
constant from fiscal 1993 to fiscal 1994.


Expenses

In  August  1994,  due  to  continuing  losses  from  operations,
negative cash flows and incompatibility with the Company's  long-
term  growth strategy, the Company's Board of Directors  resolved
to 1) exit the downtown Las Vegas gaming market and 2) dispose of
the  currently  operated  small  independent  tavern  operations.
Based  on  these decisions, the Company recognized total expenses
of  approximately $5,883,500 in fiscal 1994.  As a result of  the
decision  to  exit  the  downtown Las  Vegas  gaming  market,  in
September  1994, the Company substantially reduced operations  at
both  the  Trolley Stop Casino and Miss Lucy's  Gambling  Hall  &
Saloon.  Included in the 1994 statements of operations are  total
expenses  of  approximately $3,246,000 related to these  actions.
The  total charge included approximately $488,000 related to  the
write-down  of  assets and approximately $2,758,000  representing
primarily the present value of the future lease payments  net  of
estimated future sublease income.  The decision to withdraw  from
the   tavern  business  resulted  in  expenses  of  approximately
$2,638,000   being  recognized  in  fiscal  1994.   Approximately
$1,813,000 of the total amount was related to the write  down  of
assets  while  approximately $825,000 represented  primarily  the
present  value  of  the future lease payments  net  of  estimated
future sublease income.

The Company's lease at the Mizpah Hotel and Casino ("Mizpah") has
a  remaining lease term of approximately 8.5 years with an option
on the Company's behalf to terminate the lease arrangement at any
time  after December 31, 1995 with 120 days notice.  In September
1994,  the  Company notified the landlord of the  Mizpah  of  its
intent  to  exercise the termination clause of its lease  at  the
earliest  possible  date of January 1, 1996  and  give  120  days
notice  at that time.  As a result of this decision, the  Company
recognized additional charges of $467,500 in fiscal 1994.

Also included in selling, general and administrative expenses for
fiscal  1994  are development costs associated with pursuing  the
Company's  long term growth strategy of approximately $1,192,000.
These  developmental  costs include approximately  $4,792,000  in
legal  fees,  travel expenses and other expenses associated  with
supporting   the  Company's  long-term  growth  strategy,   which
expenses  are partially offset by the $3,600,000 recovered  under
the  Capital Gaming termination agreement.  Fiscal 1994  was  the
first year in which significant funds were expended in pursuit of
this strategy.

Exclusive  of the reserves, write downs and development  expenses
noted  above,  selling, general and administrative  expenses  for
fiscal 1994 increased $1,679,000 (8.5%) from the prior year.  The
primary  causes for the increase include a $400,000  fiscal  1994
bonus granted to Shannon L. Bybee as part of the restructuring of
his  employment with the Company, $350,000 in fees incurred under
the  one  year  consulting contract with Carole  A.  Carter,  the
former  President  and Chief Operating Officer  of  the  Company,
continued  expansion  of  the Louisiana  route  operations  which
contributed  approximately $546,000 to the overall  increase  and
$274,000  of  overall increases in Nevada route operations.   The
general  and  administrative costs for casinos and  taverns  were
$3,622,000  or  18.0%  of related revenues  for  fiscal  1994  as
compared to $3,511,000 or 21.0% for fiscal 1993.  The same  costs
for  gaming  device route operations were $9,736,000 or  9.5%  of
revenues  for fiscal 1994 and $8,916,000 or 9.3% of revenues  for
fiscal 1993.

Bad  debt expense in fiscal 1994 increased 52.9% to approximately
$705,000  as  compared to the 1993 year expense of  $461,000  due
primarily to the financial difficulties of a particular  customer
in Northern Nevada.

On  December  17, 1993, the Company incurred a fire loss  at  the
Fairgrounds  Race  Course  in New Orleans,  Louisiana  where  the
Company  operated 199 gaming devices prior to the fire (of  which
193   were   destroyed  by  the  fire)  through  its   controlled
subsidiary,  Video Services, Inc.  The Company is  fully  insured
for  all  equipment,  leasehold improvements,  other  assets  and
business  income with the exception of approximately  $46,000  in
deductibles.   Through  June 30, 1994, the Company  had  recorded
approximately  $241,000  of  income  from  business  interruption
insurance  proceeds.   The  Company  will  continue  to   receive
proceeds  under this policy while the Fairgrounds Race Course  is
rebuilt.  The Company has also received insurance proceeds  based
on the replacement value of the assets destroyed in the fire and,
therefore, recognized a gain of approximately $156,000  which  is
included in other income in fiscal 1994.


ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The  Company's  Consolidated Financial Statements, including  the
notes thereto, and supplementary financial information are listed
in  Part  IV,  Item  14,  of this Report and included  after  the
signature page beginning at page F-1.


ITEM  9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
            ON ACCOUNTING AND  FINANCIAL DISCLOSURE

Not applicable.
                            PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The   information   required   by   this   item   regarding   the
identification  and  background of  the  Company's  directors  is
incorporated  by reference to the Proxy Statement which  will  be
filed with the Securities and Exchange Commission within 120 days
of the end of the Company's fiscal year covered by this report.

As  to those executive officers and significant employees of  the
Company  and its subsidiaries at June 30, 1995 and the subsequent
dates  noted,  who,  except as noted, are not directors,  of  the
Company, the following information is provided:
     Name             Age                      Position

Steven Greathouse      44         Chairman of the Board, President and
                                     Chief Executive Officer

Shannon L. Bybee       56         Executive Vice President - Government Affairs

Anthony L. DiCesare    33         Executive Vice President - Development

John W. Alderfer       51         Sr.Vice President -Finance and Administration,
                                     Cheif Financial Officer and Treasurer

David D. Johnson       44         Sr.Vice President - Law and Government,
                                     Secretary and Corporate Legal Counsel

Robert L. Miodunski    44         Sr.Vice President - Nevada Route Group

Robert L. Saxton       41         Vice President - Casino Group

Robert M. Hester       39         Vice President - Human Resources and 
                                     Administration

Robert A. Woodson      45         Vice President - Regulatory Compliance

Johnann F. McIlwain    48         Vice President - Marketing


Steve  Greathouse  joined  the Company  as  President  and  Chief
Executive Officer in August 1994 and was elected Chairman of  the
Board  of Directors in March 1995.  Mr. Greathouse, who has  held
various  positions  in  the  gaming  industry  since  1974,  most
recently  served  as  the  president of  Harrah's  Casino  Hotels
Division  of  the  Promus  Companies.   In  this  position,   Mr.
Greathouse had responsibility for Harrah's resorts in Las  Vegas,
Laughlin, Reno, Lake Tahoe and Atlantic City.  From July 1991  to
September  1993  Mr.  Greathouse served as  president  and  chief
operating  officer  of Harrah's Southern Nevada,  overseeing  the
operations of Harrah's Las Vegas and Harrah's Laughlin, then  the
two  largest hotel-casinos in the Harrah's chain.  Mr. Greathouse
is  an  active member and has served as the Chairman of the Board
of  the  Nevada  Resort  Association  and  is  on  the  Executive
Committee of United Way.  He has also served as a member  of  the
Board  of  Directors  of  the Las Vegas Convention  and  Visitors
Authority   and  on  the  Executive  Committee  of   the   Nevada
Development  Authority.  Mr. Greathouse  is  a  graduate  of  the
University of Missouri.

Mr.  Bybee joined the Company in July 1993 as President and Chief
Operating Officer.  In July 1994, Mr. Bybee assumed the roles  of
Executive Vice President - Government Affairs and Special Advisor
to  the  Board  of  Directors. Additionally,  Mr.  Bybee  took  a
position   with   the  William  F.  Harrah   College   of   Hotel
Administration and the UNLV International Gaming Institute at the
University of Nevada, Las Vegas.  Mr. Bybee also currently serves
as  a member of the board of directors of The Claridge Hotel  and
Casino  Corporation, a position he has held  since  August  1988.
Prior  to his association with the Company, Mr. Bybee had  served
as  Chief  Executive  Officer of The Claridge  Hotel  and  Casino
Corporation  since  August 1989.  From 1983  to  1987  Mr.  Bybee
served  as  Senior Vice President and from 1978 to 1981  as  Vice
President  of  Golden  Nugget, Inc. (now Mirage  Resorts,  Inc.),
which  operated the Golden Nugget Casino-Hotel in  Atlantic  City
and operates the Mirage Casino and the Golden Nugget Casino-Hotel
in  Las  Vegas, Nevada.  From 1981 to 1983, Mr. Bybee  served  as
President  of  GNAC Corporation which operated the Golden  Nugget
Casino-Hotel  in Atlantic City.  Prior to joining Golden  Nugget,
Inc. in 1978, Mr. Bybee practiced law for over three years in the
Las  Vegas  firm of Hilbrecht, Jones, Schreck and  Bybee.   Prior
thereto, Mr. Bybee served on the Nevada Gaming Control Board  for
four  and  one-half  years commencing in 1971.   Mr.   Bybee  has
served  as Chairman of the Gaming Law Committee, General Practice
Section,  of  the American Bar Association.  He is a founder  and
past   President  of  the  International  Association  of  Gaming
Attorneys  ("IAGA")  and is currently a director  of  IAGA.   Mr.
Bybee  was Chairman of the Atlantic City Convention and  Visitors
Bureau  from 1983 to 1987.  He received a Bachelor of Arts degree
from  the  University of Nevada, Reno in 1966, and  obtained  his
Juris  Doctorate in 1969 from the University of Utah  College  of
Law, where he was Managing Editor of the Utah Law Review.

Anthony  L. DiCesare was employed by KIC from April 1991 to  July
1994  and  joined Alliance in July 1994.  Prior to that time  and
since  he graduated from business school in 1989, he was employed
as  an  associate at Wasserstein, Perella & Co., Inc.,  where  he
worked  in  the  Mergers and Acquisitions  group.   Mr.  DiCesare
graduated from Harvard College, with an A.B. degree in economics,
in  1985  and  from the Harvard Business School,  from  which  he
obtained an M.B.A. degree, in 1989.

John  W.  Alderfer joined the Company in September 1990  as  Vice
President,  Chief Financial Officer and Treasurer.  Mr.  Alderfer
was  subsequently promoted to Senior Vice President  in  December
1993.   Prior to joining the Company, Mr. Alderfer had  been  the
Chief  Financial  Officer of The Bicycle Club,  which  is  a  Los
Angeles-based  card casino, since February 1989.   From  1971  to
1988 Mr. Alderfer served in various financial capacities with the
Summa  Corporation, the Howard R. Hughes Estate Businesses, which
operated  numerous gaming establishments in Las Vegas  and  Reno.
From  1966  to  1971  he  was  employed  as  a  certified  public
accountant by Deloitte & Touche (then known as Haskins &  Sells).
Mr.  Alderfer  received  his  Bachelor  of  Science  in  Business
Administration   with  an  accounting  major  from   Texas   Tech
University in 1966 and is a certified public accountant.

David D. Johnson joined the Company as Senior Vice President  and
General Counsel in March 1995.  Previously, Mr. Johnson developed
extensive gaming industry experience representing a diverse group
of  casino  clients  as  a  Senior  Partner  at  Schreck,  Jones,
Bernhard,  Woloson & Godfrey, one of Nevada's leading law  firms.
Prior  to  joining Schreck, Jones, et al, Mr. Johnson  served  as
Chief  Deputy  Attorney General for the gaming  division  of  the
Nevada  Attorney General's office.  Mr. Johnson  serves  as  Vice
Chairman  of  the Executive Committee of the Nevada  State  Bar's
Gaming  Law Section and is an officer and founding member of  the
Nevada Gaming Attorneys Association.  He is also a member of IAGA
and  has  served  as Editor of The Gaming Lawyer,  the  quarterly
newsletter of IAGA and the Gaming Law Section of the American Bar
Association.   Mr  Johnson holds a Bachelor  of  Arts  degree  in
Political Science from the University of Nevada at Las Vegas  and
earned  his  Doctor  of Law degree from Creighton  University  in
1978.

Robert L. Miodunski joined the Company as Senior Vice President -
Nevada  Route  Group in March 1994.  From January 1991  to  March
1994, Mr. Miodunski was President of Mulholland-Harper Company, a
sign  manufacturing and service company.  From 1984 through 1990,
Mr. Miodunski held various positions with Federal Signal Company,
the  most recent being Vice President and General Manager of  the
Midwest  Region  of  the  Sign Group. He  received  his  B.S.  in
Mechanical  Engineering from the University of  Missouri  and  an
M.B.A. from the University of Dallas.

Robert  L.  Saxton  joined  the  Company  in  1982  as  Corporate
Controller  and  was elected a Vice President in  December  1993.
Since joining the Company, Mr. Saxton has held various management
positions   with  the  Nevada  Route  Group  and   is   currently
responsible  for casino operations.  He also serves as  President
of the Company's Louisiana subsidiaries.  Mr. Saxton received his
B.S.  from the University of Nevada, Las Vegas and is a certified
public accountant.

Robert  M. Hester joined the Company in October 1993 as  Director
of  Human  Resources and was promoted to Vice President  -  Human
Resources  and  Administration in December 1993.   From  1989  to
1993,  Mr. Hester was Director of Human Resources for Sam's  Town
Hotel  & Casino in Las Vegas.  From 1987 to 1989, he was Director
of  Human Resources for the Showboat Hotel & Casino in Las Vegas.
Mr.  Hester received his B.S. from the University of Nevada,  Las
Vegas.

Robert  A.  Woodson  joined the Company in 1988  as  Director  of
Gaming Compliance and was promoted to Vice President - Regulatory
Compliance in September 1993.  Prior to joining the Company,  Mr.
Woodson  was  with the Investigation Division  of  the  State  of
Nevada  Gaming Control Board for 10 years.  Mr. Woodson  received
his B.S. from California State University, Fullerton.

Johnann  F.  McIlwain joined the Company in  June  1994  as  Vice
President - Marketing.  From 1991 to 1992, Ms. McIlwain was  Vice
President  of Marketing for Greenwood, Inc., a Philadelphia-based
gaming  and  entertainment company.  From 1989 to 1991,  she  was
Director of Marketing Services for Hospitality Franchise Systems,
Inc.  in  Parsippany,  New Jersey.  Prior to joining  Hospitality
Franchise Systems, Ms. McIlwain served as Director of Advertising
for  the  Resorts International Casino Hotel and  the  Trump  Taj
Mahal  Casino  Hotel.  Ms. McIlwain received her  B.A.  from  the
University  of  Miami  in  1969 and an M.B.A.  from  the  Florida
Atlantic University in 1976.

The  information required by this item related to  the  Company's
directors who are not also employees is incorporated by reference
from  the Proxy Statement which will be filed with the Securities
and  Exchange  Commission within 120  days  of  the  end  of  the
Company's fiscal year covered by this report.


ITEM 11.  EXECUTIVE COMPENSATION

The  information  required  by  this  item  is  incorporated   by
reference from the Proxy Statement which will be filed  with  the
Securities and Exchange Commission within 120 days of the end  of
the Company's fiscal year covered by this report.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT

The  information  required  by  this  item  is  incorporated   by
reference from the Proxy Statement which will be filed  with  the
Securities and Exchange Commission within 120 days of the end  of
the Company's fiscal year covered by this report.



ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The  information  required  by  this  item  is  incorporated   by
reference from the Proxy Statement which will be filed  with  the
Securities and Exchange Commission within 120 days of the end  of
the Company's fiscal year covered by this report.
                            PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS  ON
          FORM 8-K

(a)  Documents filed as part of report:                                    Page

1.   Financial Statements:

     Independent  Auditors' Report                                          F-1

     Consolidated Balance Sheets as of June 30, 1994 and 1995               F-2

     Consolidated Statements of Operations for the  Years ended
          June 30, 1993, 1994 and 1995                                      F-4

     Consolidated Statements of Cash Flows for the  Years  Ended
          June 30, 1993, 1994 and 1995                                      F-5

     Consolidated Statements of Stockholders' Equity
          for  the  Years  Ended June 30, 1993,  1994  and  1995            F-6

     Notes to Consolidated Financial Statements                             F-7

2.   Consolidated Supplemental Schedules:

     Not applicable.

3.   Exhibits:

Exhibit
Number    Description

2.1             Basic  Agreement, dated as of October  29,  1993,
          among   United   Gaming,  Inc.,  The   Rainbow   Casino
          Corporation,  John A. Barrett, Jr. and  Leigh  Seippel,
          and exhibits thereto. (12)

2.2             Letter  Agreement, dated as of November 5,  1993,
          among    United    Gaming,   Inc.,    Capital    Gaming
          International, Inc., I.G. Davis, Jr. and John E.  Dell,
          with exhibits thereto. (14)

2.3              Asset   purchase  agreement  between  Plantation
          Investments,  Inc.  and  Richards-Schnack   Development
          Corp. dated April 2, 1990. (1)

2.4             First Amendment to Agreement of purchase and sale
          between  Plantation  Investments,  Inc.  and  Richards-
          Schnack Development Corp. (1)


3.   Exhibits  (continued):

Exhibit
Number    Description

2.5             Bill of Sale between Plantation Investments, Inc.
          and Richards-Schnack Development, Corp. (1)

2.6             Consolidation  Agreement, dated  March  29,  1995
          among  the  Company, United Gaming Rainbow, Inc.,  RCC,
          RCVP,  NGM,  HFS, National Gaming Corporation,  Rainbow
          Development Corporation and Leigh Seippel and  John  A.
          Barrett, Jr. (23)

2.7             Offer  to Purchase common shares of Bally  Gaming
          International, Inc., dated July 28, 1995. (24)

3.1              Restated  Articles  of  Incorporation   of   the
          Registrant, as amended. (16)

3.2            Revised By-Laws of the Registrant. (20)

4.1             Common Stock Purchase Warrant issued to Alfred H.
          Wilms  upon execution of his loan commitment with Video
          Services, Inc. (6)

4.2              Certificate  of  Designations,  Preferences  and
          Relative,  Participating, Optional  and  other  Special
          rights of Special Stock and Qualifications, Limitations
          and   Restrictions   thereof   of   Non-Voting   Junior
          Convertible Special Stock of United Gaming, Inc. (8)

4.3             Form  of Certificate evidencing Non-Voting Junior
          Convertible Special Stock. (8)

4.4            Indenture, dated as of September 14, 1993, between
          United Gaming, Inc. and NationsBank of Texas, N.A.,  as
          Trustee  in respect of the Company's 7-1/2% Convertible
          Subordinated Debentures due 2003. (16)

4.5             Form of 7-1/2% Convertible Subordinated Debenture
          due 2003 (included in Exhibit 4.4, above).

4.6              Registration  Rights  Agreement,  dated  as   of
          September  21, 1993, by and among United Gaming,  Inc.,
          Donaldson  Lufkin  &  Jenrette Securities  Corporation,
          Oppenheimer  &  Co., Inc. and L.H. Friend,  Weinress  &
          Frankson, Inc. (16)

10              Loan  and Warrant Agreement dated March 24,  1992
          between  United Gaming, Inc., Video Services, Inc.  and
          Alfred H. Wilms. (6)

10.1            Lease, dated August 3, 1988, as amended April  6,
          1989,  from  Walter  Schwartz to the  Company  for  the
          Company's  Corporate  headquarters  building  at   4380
          Boulder Highway, Las Vegas, Nevada. (2)

10.5 *          Employment agreement between United Gaming,  Inc.
          and Ira S. Levine. (13)

10.5.1 *        Amendment to Employment agreement between  United
          Gaming, Inc. and Ira S. Levine. (21)



3.   Exhibits  (continued):

Exhibit
Number    Description

10.6 *          Employment agreement between United Gaming,  Inc.
          and John W. Alderfer. (13)

10.6.1 *        Amendment to Employment agreement between  United
          Gaming, Inc. and John W. Alderfer. (20)

10.7            Letter Agreement dated June 25, 1993 among United
          Gaming,  Inc., Kirkland-Ft. Worth Investment  Partners,
          L.P.,  Kirkland  Investment  Corporation  and,  as   to
          certain  provisions, Alfred H. Wilms, including Exhibit
          A  (form  of Securities Purchase Agreement), Exhibit  B
          (form  of  Stockholders Agreement), Exhibit C (form  of
          Certificate   of  Designations  of  Non-Voting   Junior
          Convertible Special Stock), Exhibit D (Form of  Warrant
          Agreement),  and  Exhibit  E (form  of  press  release)
          thereto. (7)

10.8            Advisory  Agreement, dated June  25,  1993  among
          United Gaming, Inc., Gaming Systems Advisors, L.P. and,
          as   to   certain  provisions,  Mr.  Alfred  H.  Wilms,
          including  Exhibit  A (form of Warrant  Agreement)  and
          Exhibit B (form of press release) thereto. (7)

10.9 *         United Gaming, Inc. 1991 Long-Term Incentive Stock
          Option Plan (10)

10.10 *         Gaming  and Technology, Inc. 1984 Employee  Stock
          Option Plan (11)

10.12           Agreement, dated as of September 14, 1993, by and
          among   United   Gaming,   Inc.,   Kirkland-Ft.   Worth
          Investment    Partners,   L.P.,   Kirkland   Investment
          Corporation, Gaming Systems Advisors, L.P.  and  Alfred
          H. Wilms. (8)

10.13          Warrant Agreement, dated as of September 21, 1993,
          by  and  between  United Gaming, Inc. and  Kirkland-Ft.
          Worth Investment Partners, L.P. relating to warrants to
          purchase 2.75 million shares of Common Stock. (8)

10.14          Warrant Agreement, dated as of September 21, 1993,
          by  and  between United Gaming, Inc. and Gaming Systems
          Advisors,  L.P. relating to warrants to  purchase  1.25
          million shares of Common Stock. (8)

10.15           Stockholders Agreement, dated as of September 21,
          1993,  by  and  among United Gaming, Inc., Kirkland-Ft.
          Worth  Investment  Partners, L.P., Kirkland  Investment
          Corporation, Gaming Systems Advisors, L.P.  and  Alfred
          H. Wilms. (8)

10.15.1         Amendment to Stockholders Agreement dated  as  of
          October 20, 1994 (16)

10.15.2         Selling Stockholder Letter Agreement dated as  of
          March 20, 1995 (22)

10.16            Securities  Purchase  Agreement,  dated  as   of
          September  21, 1993, by and among United Gaming,  Inc.,
          Kirkland-Ft.  Worth  Investment  Partners,   L.P.   and
          Kirkland Investment Corporation (8)



3.   Exhibits  (continued):

Exhibit
Number    Description

10.20 *         Confidential Separation and Consulting  Agreement
          with  Carole A. Carter (including mutual release) dated
          July 15, 1993. (9)

10.21 *         Executive  Severance Agreement  with  Shannon  L.
          Bybee dated July 15, 1993. (9)

10.21.1 * Amendment to Executive Severance Agreement with Shannon
          L. Bybee dated July 15, 1993. (20)

10.23           Secured Promissory Note, dated as of October  29,
          1993,  from  John A. Barrett, Jr. and Leigh Seippel  to
          United Gaming, Inc. (12)

10.24           Escrow  Agreement, dated as of October 29,  1993,
          among   United   Gaming,  Inc.,  The   Rainbow   Casino
          Corporation,  John A. Barrett, Jr., Leigh  Seippel  and
          Butler, Snow, O'Mara, Stevens & Cannada. (12)

10.25           Pledge  Agreement, dated as of October 29,  1993,
          among  United Gaming, Inc. (as secured party)  and  The
          Rainbow  Casino Corporation, John A. Barrett,  Jr.  and
          Leigh Seippel (as pledgors) (12)

10.26           Management  Agreement, dated as  of  October  29,
          1993, among Rainbow Casino-Vicksburg Partnership, L.P.,
          The   Rainbow   Casino  Corporation   and   Mississippi
          Ventures, Inc., as manager. (12)

10.28           Letter Agreement, dated as of December 10,  1993,
          among    United    Gaming,   Inc.,    Capital    Gaming
          International, Inc.and I.G. Davis, Jr. (15)

10.29          Loan and Security Agreement, dated as of August 2,
          1993, between United Gaming, Inc., Alfred H. Wilms  and
          Video Services, Inc. (16)

10.30           Warrant  Agreement, dated as of August  2,  1993,
          between United Gaming, Inc. and Alfred H. Wilms. (16)

10.31            Common  Stock  Purchase  Warrant,  dated  as  of
          September  21,  1993, between United Gaming,  Inc.  and
          Donaldson,  Lufkin  & Jenrette Securities  Corporation.
          (16)

10.32            Common  Stock  Purchase  Warrant,  dated  as  of
          September  21,  1993, between United Gaming,  Inc.  and
          Oppenheimer & Co. Inc. (16)

10.33            Common  Stock  Purchase  Warrant,  dated  as  of
          September  21,  1993, between United Gaming,  Inc.  and
          L.H. Friend, Weinress & Frankson, Inc. (16)

10.34            Common  Stock  Purchase  Warrant,  dated  as  of
          September  21,  1993, between United Gaming,  Inc.  and
          Donaldson,  Lufkin  & Jenrette Securities  Corporation.
          (16)



3.   Exhibits  (continued):

Exhibit
Number    Description

10.36           Consulting  Agreement, dated as  of  November  8,
          1993,  between  David A. Scheinman and  United  Gaming,
          Inc. (16)

10.37           Letter  Agreement, dated as of March 3, 1994,  by
          and  among  United  Native American Gaming,  Inc.,  USA
          Gaming  of Native America, Inc., USA Gaming,  Inc.  and
          others. (17)

10.38           Letter Agreement, dated as of February 25,  1994,
          among   United   Gaming,  Inc.,  The   Rainbow   Casino
          Corporation,  John A. Barrett, Jr. and  Leigh  Seippel.
          (18)

10.39          Letter Agreement, dated as of June 29, 1994, among
          United  Gaming,  Inc., The Rainbow Casino  Corporation,
          John A. Barrett, Jr. and Leigh Seippel, consented to by
          HFS Gaming Corporation. (19)

10.40          Letter Agreement, dated as of July 16, 1994, among
          United  Gaming,  Inc., The Rainbow Casino  Corporation,
          John A. Barrett, Jr. and Leigh Seippel, consented to by
          HFS Gaming Corporation. (19)

10.41           Second  Amendment to Casino Financing  Agreement,
          dated as of August 11, 1994, among United Gaming, Inc.,
          United  Gaming  Rainbow, Inc., Rainbow Casino-Vicksburg
          Partnership, L.P., The Rainbow Casino Corporation, John
          A.   Barrett,  Jr.,  Leigh  Seippel  and   HFS   Gaming
          Corporation. (19)

10.42           Partnership Agreement of Rainbow Casino-Vicksburg
          Partnership, L.P., dated as of July 8, 1994. (19)

10.42.1         Second  Amended and Restated Agreement of Limited
          Partnership,  dated  march  29,  1995,  between  United
          Gaming Rainbow and RCC. (23)

10.43           Promissory Note, dated as of July 16, 1994,  from
          United  Gaming  Rainbow, Inc.  to  The  Rainbow  Casino
          Corporation. (19)

10.44           Pledge Agreement, dated as of July 16, 1994, from
          United  Gaming  Rainbow, Inc.  to  The  Rainbow  Casino
          Corporation. (19)

10.45           Promissory Note, dated as of July 16, 1994,  from
          John  A.  Barrett,  Jr.  and Leigh  Seippel  to  United
          Gaming, Inc. (19)



3.   Exhibits  (continued):

Exhibit
Number    Description

10.46           Escrow  Agreement, dated as of August  11,  1994,
          among  United Gaming Rainbow, Inc., The Rainbow  Casino
          Corporation,  John A. Barrett, Jr., Leigh  Seippel  and
          Butler, Snow, O'Mara, Stevens & Cannada, together  with
          Agreement dated February 7, 1994, as amended  July  11,
          1994 between Rainbow Casino-Vicksburg Partnership, L.P.
          and the City of Vicksburg, Mississippi (19)

10.47 *         Employment Agreement between United Gaming,  Inc.
          and Johnann McIlwain. (20)

10.48           Settlement Agreement, dated December 4, 1994,  by
          and  among  the Company, United Gaming of  Iowa,  Inc.,
          GDREC and Joseph and Paula Zwack (16)

10.49 *         Employment  Agreement,  dated  August  15,  1994,
          between the Company and Steven Greathouse (22)

10.50           Warrant Agreement, dated August 15, 1994, between
          the Company and Steven Greathouse (22)

10.51           Agreement,  dated September 1, 1994, between  the
          Company and Craig Fields (22)

10.52            Warrant  Agreement,  dated  September  1,  1994,
          between the Company and Craig Fields (22)

10.53           Agreement,  dated  March 20,  1995,  between  the
          Company and Joel Kirschbaum (22)

10.54           Letter  Agreement, dated March  29,  1995,  among
          United  Gaming  Rainbow, RCC, Leigh  Seippel,  John  A.
          Barrett,  Jr  and  Butler,  Snow,  O'Mara,  Stevens   &
          Cannada. (23)

10.55          Class A Note Payable, dated March 29, 1995, issued
          by RCVP to United Gaming Rainbow. (23)

10.56          Class B Note Payable, dated March 29, 1995, issued
          by RCVP to United Gaming Rainbow. (23)

10.57          Class B Note Payable, dated March 29, 1995, issued
          by RCVP to National Gaming Mississippi, Inc. (23)

10.58           Release,  dated March 29, 1995, by United  Gaming
          Rainbow  and the Company and their affiliates  of  RCC,
          Rainbow  Development Corporation, John A. Barrett,  Jr.
          and  Leigh  Seippel  and their affiliates  (other  than
          RCVP). (23)

10.59           Release,  dated March 29, 1995, by  RCC,  Rainbow
          Development Corporation, John A. Barrett, Jr. and Leigh
          Seippel  and  their  affiliates (other  than  RCVP)  of
          United  Gaming  Rainbow  and  the  Company  and   their
          affiliates. (23)

10.60          Letter Agreement, dated August 14, 1995, among the
          Company,  Bally  Gaming  International,  Inc.  and  WMS
          Industries, Inc. (24)


3.   Exhibits  (continued):

Exhibit
Number    Description

10.61           Commitment Letter, dated August 30, 1995, between
          Foothill Capital Corporation and the Company. (25)

10.62           Commitment Letter, dated August 30, 1995, between
          Canpartners Investments IV, LLC and Cerberus  Partners,
          L.P. and the Company. (25)

10.63           Fee Letter, dated August 30, 1995, between Canyon
          Capital Management, L.P. and the Company. (25)

10.64            Fee  Letter,  dated  August  30,  1995,  between
          Cerberus Partners, L.P. and the Company. (25)

10.65            Guarantee,  dated  August  30,  1995,  from  CPI
          Securities, L.P. and The Value Realization  Fund,  L.P.
          to the Company. (25)

10.66           Form of Stock Purchase Agreement, dated September
          15,  1995,  related to private placement of  Non-Voting
          Junior Convertible Special Stock, Series B.

21              Subsidiaries of the Registrant

23              Consent of KPMG Peat Marwick LLP

24              Power of Attorney

27              Financial Data Schedule

99              Complaint in Alliance Gaming Corporation v. Bally
          Gaming  International,  Inc.,  WMS  Industries,   Inc.,
          Richard  Gillman, Hans Kloss, Neil E. Jenkins,  Charles
          C. Carella, James J. Florio, Lewis Katz, and Kenneth D.
          McPherson  filed in the Chancery Court of Delaware  for
          New Castle County on July 25, 1995. (24)


          (1)  Incorporated by reference to the Registrant's Form
          8-K dated April 9, 1990 as amended.
          (2)  Incorporated by reference to the Registrant's Form
          10-K for the year ended June 30, 1989.
          (3)  Incorporated by reference to the Registrant's Form
          10-K for the year ended June 30, 1990.
          (4)  Incorporated by reference to the Registrant's Form
          10-Q for the quarter ended September 30, 1990.
          (5)  Incorporated by reference to the Registrant's Form
          10-K for the year ended June 30, 1991.
          (6)  Incorporated by reference to the Registrant's Form
          8-K dated March 31, 1992.
          (7)  Incorporated by reference to the Registrant's Form
          8-K dated June 25, 1993.
          (8)  Incorporated by reference to the Registrant's Form
          8-K dated September 21, 1993.
          (9)  Incorporated by reference to the Registrant's Form
          10-Q dated September 30, 1993.
          (10)  Incorporated  by reference  to  the  Registrant's
          Forms S-8 Reg. Nos. 33-45811 and 33-75308.
          (11) Incorporated by reference to the Registrant's Form
          S-8 Reg. No. 2-98777.
          (12) Incorporated by reference to the Registrant's Form
          8-K dated October 29, 1993.

3.   Exhibits  (continued):
          (13) Incorporated by reference to the Registrants's Form 10-
          Q for the quarter ended March 31, 1993.
          (14) Incorporated by reference to the Registrant's Form 8-K 
          dated November 5, 1993
          (15) Incorporated by reference to the Registrant's Form
          8-K dated December 10, 1993.
          (16) Incorporated by reference to the Registrant's Form
          S-2   Reg.   No.  33-72990  and  subsequent  amendments
          thereto.
          (17) Incorporated by reference to the Registrant's Form
          8-K dated March 7, 1994.
          (18) Incorporated by reference to the Registrant's Form
          8-K dated March 15, 1994.
          (19) Incorporated by reference to the Registrant's Form
          8-K dated August 11, 1994.
          (20) Incorporated by reference to the Registrant's Form
          10-K for the year ended June 30, 1994.
          (21) Incorporated by reference to the Registrant's Form
          10-Q for the quarter ended September 30, 1994.
          (22) Incorporated by reference to the Registrant's Form
          S-3 Reg. No. 33-58233.
          (23) Incorporated by reference to the Registrant's Form
          8-K dated March 29, 1995.
          (24)  Incorporated  by reference  to  the  Registrant's
          Schedule 14D-1 and Schedule 13D dated July 28, 1995.
          (25)  Incorporated  by reference  to  the  Registrant's
          amended  Schedule 14D-1 and amended Schedule 13D  dated
          September 1, 1995.

          *       Identifies   each   management   contract    or
          compensatory plan or arrangement required to  be  filed
          pursuant to Item 14(c) of this Report.


(b)  Reports on Form 8-K:

     There were no reports filed on Form 8-K for the three months
     ended June 30, 1995.

(c)  See Item 14(a)(3) above.

(d)  See Item 14(a)(2) above.

                           SIGNATURES

Pursuant  to  the  requirements of Section 13  or  15(d)  of  the
Securities  Exchange Act of 1934, the Registrant has duly  caused
this  report  to  be  signed on its behalf  by  the  undersigned,
thereunto duly authorized.

ALLIANCE GAMING CORPORATION                            DATED: March 4, 1996



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




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

Pursuant  to the requirements of the Securities Exchange  Act  of
1934,  this report has been signed below by the following persons
on  behalf  of the Registrant and in the capacities  and  on  the
dates indicated.

Name                       Title                             Date



/s/  Joel Kirschbaum       Director                          March 4, 1996
Joel Kirschbaum


/s/  Alfred H. Wilms       Director                          March 4, 1996
Alfred H. Wilms


/s/  Anthony DiCesare      Director                          March 4, 1996
Anthony DiCesare


/s/  Craig Fields          Vice Chairman of the Board        March 4, 1996
Dr. Craig Fields


/s/  David Robbins         Director                          March 4, 1996
David Robbins

                                                                 




                  INDEPENDENT AUDITORS' REPORT


The Board of Directors and Shareholders
Alliance Gaming Corporation

We  have  audited  the consolidated balance  sheets  of  Alliance
Gaming Corporation and subsidiaries as of June 30, 1995 and  1994
and   the   related   consolidated  statements   of   operations,
stockholders equity and cash flows for each of the years  in  the
three-year  period  ended  June  30,  1995.   These  consolidated
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 generally  accepted
auditing  standards.  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 consolidated financial statements referred to
above  present  fairly, in all material respects,  the  financial
position  of Alliance Gaming Corporation and subsidiaries  as  of
June  30, 1995 and 1994, and the results of their operations  and
their  cash flows for each of the years in the three-year  period
ended  June  30,  1995,  in  conformity with  generally  accepted
accounting principles.

As  discussed in Note 6 to the consolidated financial statements,
effective  July 1, 1993 Alliance Gaming Corporation  adopted  the
provisions of Financial Accounting Standards Board's Statement of
Financial  Accounting  Standard No. 109,  Accounting  for  Income
Taxes.



                                                     KPMG Peat Marwick LLP

Las Vegas, Nevada
September 1, 1995














                              F-1

<TABLE>
<CAPTION>
               ALLIANCE GAMING CORPORATION AND SUBSIDIARIES
                       CONSOLIDATED BALANCE SHEETS

                          June 30, 1994 and 1995

                                  ASSETS

                                                                1994            1995
                                                                   (In thousands)
<S>                                                          <C>             <C>
Current assets:
   Cash  and cash equivalents                                $  37,085       $ 13,734
   Securities available for sale                                12,489         23,680
   Receivables, net                                              5,924          3,316
   Inventories                                                     661            714
   Prepaid expenses                                              4,420          4,148
   Refundable income taxes                                         361            361
   Other                                                            30            156

     Total current assets                                       60,970         46,109

Property and equipment:
   Land and improvements                                         3,229         17,296
   Building and improvements                                     4,286          8,822
   Gaming equipment                                             30,395         36,396
   Furniture, fixtures and equipment                             9,632         11,582
   Leasehold improvements                                        5,222          5,372
   Construction in progress                                        212             30
                                                                52,976         79,498
   Less accumulated depreciation and amortization               24,293         29,146

     Property and equipment, net                                28,683         50,352

Other assets:
   Receivables, net                                              4,609          5,309
   Excess of costs over net assets of an acquired business,
     net of accumulated amortization of $295 (1994) and
     $585 (1995)                                                 3,789          3,842
   Intangible assets, net of accumulated amortization of
     $4,145 (1994) and $5,516 (1995)                            13,527         12,405
   Deferred tax assets                                           1,081          1,399
   Investment in minority owned subsidiary                       2,000          1,585
   Other                                                         4,757          5,347

     Total other assets                                         29,763         29,887

                                                              $119,416       $126,348
</TABLE>








       See accompanying notes to consolidated financial statements.

                                   F-2
<TABLE>
<CAPTION>
               ALLIANCE GAMING CORPORATION AND SUBSIDIARIES
                       CONSOLIDATED BALANCE SHEETS

                          June 30, 1994 and 1995

                   LIABILITIES AND STOCKHOLDERS' EQUITY

                                                            1994          1995
                                                 (In thousands, except per share amounts)
<S>                <C>                                 <C>             <C>
Current liabilities:
   Current maturities of long term debt                 $  1,504       $  3,995
   Accounts payable                                        1,661          1,758
   Accrued expenses, including related parties
       of $312 (1994) and $931 (1995)                      6,879          8,804

          Total current liabilities                       10,044         14,557

Long term debt, less current maturities                   89,222         97,402
Deferred tax liabilities                                   1,218          1,205
Other liabilities                                          3,587          2,556

          Total liabilities                              104,071        115,720

Commitments and contingencies

Minority interest                                            246            643

Stockholders' equity:
   Common stock, $.10 par value; authorized 
      175,000,000 shares; issued  10,505,928 shares 
      (1994)  and  11,654,150  shares   (1995)            1,051           1,165
   Special stock, $0.10 par value; authorized 
      10,000,000 shares; issued 1,333,333 
      (1994 and 1995)                                       133             133
   Paid-in capital                                       26,716          32,134
   Unrealized loss on securities available for sale        (421)           (316)
   Accumulated deficit                                  (12,380)        (23,131)

     Total stockholders' equity                          15,099           9,985

                                                       $119,416        $126,348
</TABLE>












       See accompanying notes to consolidated financial statements.


                                   F-3

<TABLE>
<CAPTION>
               ALLIANCE GAMING CORPORATION AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF OPERATIONS

                 Years Ended June 30 1993, 1994 and 1995

                                                         1993         1994         1995                  <S>  <C>
                                                   (In thousands, except per share amounts)
<S>                                                   <C>          <C>          <C>
Revenues:
     Gaming
         Routes                                       $ 96,282     $102,830     $106,827
         Casino  and  gaming arcades                    12,526       15,679       21,287
     Food and beverage sales                             4,184        4,480        3,847
     Net equipment sales                                    99           65           27

                                                       113,091      123,054      131,988
Costs and expenses:
     Cost of gaming:
         Routes                                         72,614       76,332       79,875
         Casino  and  taverns                            8,667       11,871       11,436
     Cost of food and beverage                           2,876        3,084        2,795
     Cost of equipment sales                                49           20           12
     Selling, general & administrative                  12,667       13,555       14,633
     Business  development  expenses                       900        1,192        7,843
     Corporate expenses                                  6,191        7,882        9,735
     Bad  debt  expense                                    461          705          400
     Loss on abandoned small casinos                       ---        3,713          ---
     Loss  on  abandoned  taverns                          ---        2,638          ---
     Depreciation and amortization                       8,718        9,530        9,520

                                                       113,143      130,522      136,249    

Operating  loss                                            (52)      (7,468)      (4,261)

Other income (expense):
     Interest  income                                      998        2,084        2,798
     Interest expense                                   (5,046)      (6,830)      (8,133)
     Minority  share  of  income                           ---         (506)        (397)
     Equity  in  income of  affiliate                      ---          ---           31
     Other,   net                                          450         (167)        (524)

Loss before income taxes                                (3,650)     (12,887)     (10,486)

Income tax expense                                         ---         (241)        (265)

Net loss                                              $ (3,650)    $(13,128)    $(10,751)

Net loss per common share                             $ ( 0.38)    $  (1.28)    $  (0.95)

Weighted  average common shares outstanding              9,696       10,251       11,300
</TABLE>






       See accompanying notes to consolidated financial statements.

                                   F-4
<TABLE>
<CAPTION>
               ALLIANCE GAMING CORPORATION AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF CASH FLOWS

                 Years Ended June 30 1993, 1994 and 1995

                                                            1993          1994          1995
                                                                     (In thousands)
<S>                                                     <C>            <C>          <C>
Cash flows from operating activities:
     Net loss                                           $  (3,650)     $(13,128)    $(10,751)
     Adjustments to reconcile net loss
       to net cash provided by operating activities:
       Depreciation and amortization                        8,718         9,530        9,520
       Loss on  abandoned  casinos                            ---         3,713          ---
       Loss  on  abandoned  taverns                           ---         2,638          ---
       Write-off of other assets                              149         1,817        2,796
       Provision for losses on receivables                    461           705          400
       Amortization of debt discounts                         265           292          297
       Undistributed earnings of affiliate                    ---           ---          (31)
       Non-cash  stock  compensation  expense                 ---           ---        1,313
     Net change in operating assets and liabilities:
     (Increase) decrease in:
       Inventories                                           (233)           78          (40)
       Prepaid    expenses                                  1,475          (519)         381
       Refundable  income  taxes                              766          (361)         ---
       Other                                                  305           254         (126)
     Increase (decrease) in:
       Accounts and slot contracts payable                 (2,378)          269         (447)
       Accrued  and  deferred income  taxes                   ---           137         (137)
       Other liabilities, including minority interest        (153)          511          397
       Accrued   expenses                                     184         3,126       (2,615)
          Net cash provided by operating activities         5,909         9,062          957

Cash flows from investing activities:
     Additions to property and equipment                   (5,092)       (5,385)      (8,887)
     Proceeds  from  sale of property and  equipment          257         1,466          351
     Additions to receivables                              (8,715)      (18,801)      (8,970)
     Cash collections on receivables                        7,925        17,541       10,315
     Net cash provided by acquisition of business             ---           ---        2,481
     Acquisition of securities available for sale             ---       (12,910)     (11,086)
     Acquisition of partnership interests                     ---        (2,000)      (1,585)
     Additions to intangible assets                           (77)       (5,179)        (390)
     Additions to other long-term assets                   (3,296)       (2,031)      (3,877)
          Net cash used in investing activities            (8,998)      (27,299)     (21,648)

Cash flows from financing activities:
     Proceeds from long-term debt, net of expenses          1,941        81,984          ---
     Issuance  of  common stock  warrants                     559           116          ---
     Reduction of long-term debt                           (2,167)      (41,776)      (3,125)
     Issuance  of  special stock, net of  costs               ---         4,799          ---
     Issuance of common stock                               2,097           619          465
          Net cash provided by
             (used in) financing activities                 2,430        45,742       (2,660)

Cash and cash equivalents:
      (Decrease) increase for  year                          (659)       27,505      (23,351)
      Balance, beginning of year                           10,239         9,580       37,085
          Balance, end of year                           $  9,580      $ 37,085     $ 13,734
</TABLE>
       See accompanying notes to consolidated financial statements.
                                    F-5

<TABLE>
<CAPTION>
               ALLIANCE GAMING CORPORATION AND SUBSIDIARIES
             CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                 Years Ended June 30, 1993, 1994 and 1995

                              (In thousands)

                              Total                                                                Retained
                              Stock-                                                               Earnings      Unreal.
                              holders'      Common Stock          Special Stock        Paid-in     (Accum.       Loss on
                              Equity     Shares     Dollars     Shares     Dollars     Capital     Deficit)     Securities
<S>                          <C>       <C>         <C>           <C>         <C>       <C>        <C>              <C>
Balances, June 30, 1992      $23,661      9,409      $ 942         ---         ---     $18,320     $ 4,398            ---
  Net loss                    (3,650)       ---        ---         ---         ---         ---      (3,650)           ---
  Common stock                             
   warrants issued               559        ---        ---         ---         ---         559         ---            ---
  Shares issued upon                                                     
   exercise of options         2,096        591         59         ---         ---       2,038         ---            ---     
Balances, June 30, 1993       22,666     10,000      1,001         ---         ---      20,917         748            ---
  Net loss                   (13,128)       ---        ---         ---         ---         ---     (13,128)           ---     
  Shares issued for                                       
   acquisitions                  249        112         11         ---         ---         238         ---            --- 
  Common stock                                
   warrants issued               116        ---        ---         ---         ---         116         ---            ---  
  Cost of private                             
   placement                    (201)       ---        ---         ---         ---        (201)        ---            --- 
  Net change in                                                            
   unrealized loss on           (421)       ---        ---         ---         ---         ---         ---           (421) 
   securities available
   for sale
  Shares issued for                         
   capital infusion            4,999        ---        ---       1,333         133        4,866        ---            ---  
  Shares issued upon                                                    
   exercise of options           819        394         39         ---         ---          780        ---            ---
Balances, June 30, 1994       15,099     10,506      1,051       1,333         133       26,716    (12,380)          (421)
  Net loss                   (10,751)       ---        ---         ---         ---          ---    (10,751)           ---
  Shares issued for                                
   acquisitions                3,754       712          71         ---         ---        3,683        ---            ---  
  Compensatory stock                                
   issued                      1,313       250          25         ---         ---        1,288        ---            ---
  Net change in                                                         
   unrealized loss on                    
   securities available          105       ---         ---         ---         ---          ---        ---            105
   for sale
  Shares issued upon                                                    
   exercise of options           465       186          18         ---         ---          447        ---            ---
Balances, June 30, 1995      $ 9,985   $11,654     $ 1,165       1,333       $ 133      $32,134   $(23,131)        $ (316)
</TABLE>
              
                                         






        See accompanying notes to consolidated financial statements.

                                    F-6
               ALLIANCE GAMING CORPORATION AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 Years Ended June 30, 1993, 1994 and 1995

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS

     Description of business

     Alliance  Gaming  Corporation and its subsidiaries (collectively,  the
     "Company") are presently engaged in gaming device route operations  in
     Nevada  and  in  the  greater  New  Orleans,  Louisiana  area;  casino
     operations in Nevada and Mississippi; and the design, manufacture  and
     refurbishment of gaming devices.

     Principles of consolidation

     The   accompanying  consolidated  financial  statements  include   the
     accounts of Alliance Gaming Corporation, its wholly-owned subsidiaries
     and   indirect  subsidiaries  and  its  partially  owned,   controlled
     subsidiaries.   In  the  case  of Video Services,  Inc.  ("VSI"),  the
     Company  owns  490  shares of class B voting stock, which  constitutes
     100%  of  the voting stock, of VSI. The Company is entitled to receive
     71%  of  dividends  declared by VSI, if any, at such  time  that  such
     dividends  are  declared. In July 1994, the  Company  acquired  a  45%
     limited   partnership   interest  in  the   Rainbow   Casino-Vicksburg
     Partnership. Accordingly, the Company accounted for its investment  in
     this partnership under the equity method until March 29, 1995 at which
     time  the  Company increased its partnership interest and assumed  the
     general partnership position (see Note 11). Effective March 29,  1995,
     the results of operations of the Rainbow Casino have been included  in
     the  accompanying consolidated financial statements.  All  significant
     intercompany accounts and transactions have been eliminated.

     Revenue recognition

     In  accordance  with industry practice, the Company recognizes  gaming
     revenues  as  the  net win from route, casino and  tavern  operations,
     which  is,  for  gaming  devices, the  difference  between  coins  and
     currency deposited into the devices and payments to customers and, for
     other  games,  the  difference between gaming wins  and  losses.   The
     Company  recognizes total net win from gaming devices as revenues  for
     gaming  routes  which operate under revenue-sharing  arrangements  and
     revenue-sharing  payments  as a cost of gaming  routes.   The  Company
     recognizes   revenue  from  parts  and  equipment  sales  to   outside
     purchasers when the products are shipped.

     Location rent expense

     For  financial statement purposes, the Company recognizes expenses for
     fixed periodic rental payments (including scheduled increases) made in
     connection  with route operation space lease arrangements or  sublease
     agreements  on  a straight line basis over the term of  the  agreement
     including  any  extension periods which are expected to be  exercised.
     Contingent  periodic  rental  payments  are  expensed  in  the  period
     incurred.

     Cash and cash equivalents

     The  Company  considers  all highly liquid debt instruments  purchased
     with  an  original  maturity  of three  months  or  less  to  be  cash
     equivalents.   Such investments of $29,799,000 (1994)  and  $5,238,000
     (1995)  are  included in cash and cash equivalents and are carried  at
     cost, which approximates market value.

     Securities available for sale

     Effective  January  1, 1994, the Company adopted Financial  Accounting
     Standard No. 115.  For fiscal years beginning after December 15, 1993,
     Statement 115 requires that, except for debt securities classified  as
     "held-to-maturity"  securities,  investments  in   debt   and   equity
     securities  should be reported at fair market value.  The Company  has
     designated certain securities as being available for sale.  Securities
     are  designated  as available for sale at the time of their  purchase.
     The  Company  determines which securities are available  for  sale  by
     evaluating  whether  such securities would  be  sold  in  response  to
     liquidity   needs,  asset/liability  management  and  other   factors.
     Securities  available for sale are recorded at market value  with  the
     resulting unrealized gains and losses being recorded, net of tax, as a
     component  of  stockholders'  equity.   Gains  or  losses   on   these
     securities are determined using the specific identification method.

                                   F-7
               ALLIANCE GAMING CORPORATION AND SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                 Years Ended June 30, 1993, 1994 and 1995

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS
    (Continued)

     Inventories

     Inventories  are  stated  at  the lower of  cost  or  market  and  are
     determined by the first-in, first out method.

     Property and equipment

     Property  and  equipment are stated at cost and  are  depreciated  and
     amortized over their estimated useful lives or lease terms,  if  less,
     using the straight line method as follows:

                    Building and improvements               31-39 years
                    Gaming   equipment                        5-7 years
                    Furniture,  fixtures  and  equipment     3-10 years
                    Leasehold  improvements                  5-20 years

     Excess of costs over net assets of an acquired business

     Excess  of costs over net assets of an acquired business is the excess
     of  the  cost  over the value of net tangible assets  of  an  acquired
     business and is generally amortized on the straight-line method over a
     period  of  40  years.   In  the case of the Company's  majority-owned
     subsidiary,  Native  American  Investments,  Inc.,  where  the  assets
     acquired  are  largely intangible, the Company has elected  a  10-year
     amortization  period representing the estimated  life  of  the  rights
     acquired,  consisting  principally  of  contracts  to  conduct  gaming
     operations on Indian lands.

     At  each balance sheet date, management evaluates the realizability of
     goodwill  based  on  expectations of  non-discounted  cash  flows  and
     operating  income  for  each subsidiary having   a  material  goodwill
     balance. Based upon its most recent analysis, management believes that
     no material impairment of goodwill exists at June 30, 1995.

     Intangible assets

     Intangible  assets  consist  primarily of costs  associated  with  the
     acquisition  of  location leases which are capitalized  and  amortized
     using  the straight-line method over the terms of the leases,  ranging
     from  one to 40 years, with an average life of approximately 11 years.
     Intangible assets for fiscal 1995 includes approximately $4,547,000 of
     commissions,  discounts and other capitalized  costs  related  to  the
     issuance of the Company's 7.5% Convertible Subordinated Debentures due
     2003,  net of approximately $957,000 of accumulated amortization.   At
     June  30,  1994, intangible assets includes $4,993,000 of such  costs,
     net  of $405,000 of accumulated amortization.  Such amounts are  being
     amortized over the term of the debentures.

     The  carrying value of intangible assets is periodically  reviewed  by
     management and impairment losses are recognized when the expected non-
     discounted  future operating cash flows derived from  such  intangible
     assets are less than their carrying value.

     Other Assets

     Other  assets  includes assets held for sale, long-term  deposits  and
     other non-current assets.  In fiscal 1993, the Company paid to certain
     property  owners  a  $2,500,000 refundable deposit to  operate  gaming
     devices  at their location.  Additionally, other assets are  presented
     net  of  valuation allowances of $1,763,000 and $631,000 at  June  30,
     1994 and 1995, respectively.

     Loss per share of common stock

     Loss per share of common stock has been computed based on the weighted
     average  number of shares of common stock outstanding.  Fully  diluted
     earnings per share is not presented because the effect would be  anti-
     dilutive.


                                   F-8
               ALLIANCE GAMING CORPORATION AND SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                 Years Ended June 30, 1993, 1994 and 1995

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS
(Continued)

     Income taxes

     In  February  1992,  the Financial Accounting Standards  Board  issued
     Financial  Accounting Standard No. 109 Accounting  for  Income  Taxes.
     Under  the  asset and liability method of Statement 109, deferred  tax
     assets  and liabilities are recognized for the future tax consequences
     attributable  to differences between the financial statement  carrying
     amounts  of  assets  and liabilities and their respective  tax  bases.
     Deferred  tax  assets and liabilities are measured using  enacted  tax
     rates  expected  to apply to taxable income in the years  which  those
     temporary differences are expected to be recovered or settled.   Under
     Statement  109,  the effect on deferred assets and  liabilities  of  a
     change  in  tax  rates  is recognized in income  in  the  period  that
     includes  the  enactment date.  Effective July 1,  1993,  the  Company
     adopted  Statement  109.  The Company previously used  the  asset  and
     liability method under Statement 96.

     Reclassifications

     Certain  reclassifications  have been made  to  prior  year  financial
     statements to conform with the current year presentation.

2.   RECEIVABLES

     The Company's gaming route operations from time to time involve making
     loans  to location operators in order to participate in revenues  over
     extended  periods  of  time.  The loans, made for  build-outs,  tenant
     improvements and initial operating expenses are generally  secured  by
     the  personal  guarantees of the operators and the locations'  assets.
     The majority of the loans are interest bearing and are expected to  be
     repaid  over  a period of time not to exceed the life of  the  revenue
     sharing  arrangement.   The  loans have varying  payment  terms,  with
     weekly payment amounts ranging from $200 to $1,440 and monthly payment
     amounts  ranging from $200 to $18,780.  Interest rates  on  the  loans
     range  from  prime plus 1.50% to stated rates of 12% with various  due
     dates ranging from July 1995 to April 2007.  The loans are expected to
     be  repaid from the locations' cash flows or proceeds from the sale of
     the leaseholds.

     Receivables at June 30 consist of the following:                 
                                                   1994        1995
                                                    (In thousands)

     Notes receivable-location operators         $ 8,319     $ 7,760
     Other receivables                             2,214         865
                                                  10,533       8,625
     Less current amounts                         (5,924)     (3,316)
     Long-term receivables, excluding 
        current amounts                          $ 4,609     $ 5,309

     Receivables are presented net of an allowance for doubtful accounts of
     $1,389,000  and $1,659,000 as of June 30, 1994 and 1995, respectively.
     The  allowance is allocated between current and long-term  receivables
     on  a  pro  rata  basis  related  to notes  receivable  from  location
     operators.

     During  fiscal 1994, the Company cancelled certain sublease agreements
     as  a  result  of defaults by payors in making payments  and  acquired
     title  to  the assets and operating rights to the tavern locations  in
     exchange  for  releases of the customers' debt owed  to  the  Company.
     During  fiscal  1994,  interest income of  approximately  $48,000  was
     recognized  on these receivables.  Total interest income  of  $130,000
     would  have  been  recognized if the receivables had been  current  in
     accordance with their original terms.  The total initial investment in
     these  tavern locations of approximately $2,011,000 includes  the  net
     receivables of approximately $1,362,000 and other assets of  $649,000.
     No  such transactions were completed in fiscal 1995. Management of the
     Company  has  determined the fair value of the locations' assets  from
     knowledge of sales of comparable establishments and expertise acquired
     from  operating its gaming devices at similar locations.  Due  to  the
     Company's  decision  to  dispose  of  the  currently  operated   small
     independent tavern operations, certain reserves and write  downs  were
     recognized in fiscal 1994 results of operations.


                                    F-9

               ALLIANCE GAMING CORPORATION AND SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                 Years Ended June 30, 1993, 1994 and 1995

2.   RECEIVABLES (continued)

     Management believes properly managing the disposal of these operations
     will protect the Company's existing contractual arrangements from  the
     tavern  locations  as well as assure their continued  operation  while
     preserving the Company's investment.  Management cannot estimate  when
     or  how  many  of  these locations will be obtained  and  subsequently
     disposed.

3.   LOSS ON ABANDONMENT OF SMALL CASINOS AND TAVERNS

     In  fiscal  1994,  due to continuing losses from operations,  negative
     cash  flows  and  incompatibility with the Company's long-term  growth
     strategy,  the Company's Board of Directors resolved to  1)  exit  the
     downtown  Las  Vegas  gaming market and 2) dispose  of  the  currently
     operated small independent taverns on commercially reasonable terms as
     market conditions warrant.

     As  a  result  of the decision to exit the downtown Las  Vegas  gaming
     market,  the  Company  substantially reduced operations  at  both  the
     Trolley  Stop Casino and Miss Lucy's Gambling Hall & Saloon.  Included
     in   the   1994  statements  of  operations  are  total  expenses   of
     approximately $3,246,000 related to these actions.  The  total  charge
     included  approximately $488,000 related to the write-down  of  assets
     and  approximately $2,758,000 representing primarily the present value
     of the future lease payments net of estimated future sublease income.

     The decision to withdraw from the tavern business resulted in expenses
     of   approximately  $2,638,000  being  recognized  in   fiscal   1994.
     Approximately $1,813,000 of the total amount was related to the  write
     down of assets while approximately $825,000 represented primarily  the
     present  value  of  the future lease payments net of estimated  future
     sublease  income.  The Company has entered into an agreement  to  sell
     all  of its tavern locations to an unaffiliated third party.  The sale
     is  contingent upon, among other conditions, approval by Nevada gaming
     authorities.

     In  addition  to  the items noted above, the Company's  lease  on  the
     Mizpah  Hotel  and  Casino has a remaining term of  approximately  7.5
     years  with an option on the Company's behalf to terminate  the  lease
     arrangement  with 120 days written notice at any time  after  December
     31,  1995.  The Company has notified the landlord of the Mizpah of its
     intention  to  exercise the termination clause of the  lease  at  that
     time.  As a result of this decision, the Company recognized an expense
     of $467,500 in fiscal 1994.


4.   DEBT

     Long-term debt at June 30 consists of the following:

                                                              1994        1995
                                                                (In thousands)

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

     Due to stockholder, net of discount of $983,709 
         (1994) and $747,619   (1995),   secured   by  
         the   assets   of    VSI                             4,390       3,309

     Hospitality Franchise Systems, secured by the 
        assets of Rainbow                                       ---       9,065

     Other, secured by related equipment                      1,336       4,023
                                                             90,726     101,397
     Less current maturities                                  1,504       3,995

     Long-term debt, less current maturities                $89,222     $97,402

                                   F-10

               ALLIANCE GAMING CORPORATION AND SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                 Years Ended June 30, 1993, 1994 and 1995

4.   DEBT (continued)

     Accrued  interest  of approximately $1,893,000 (1994)  and  $1,991,000
     (1995)  is  included  in accrued expenses in the Consolidated  Balance
     Sheets.   Included  in these amounts are $30,343  (1994)  and  $27,813
     (1995) due to affiliates of Alfred H. Wilms, principal stockholder and
     member of the Board of Directors of the Company, related to funding of
     VSI's gaming device route operations.

     In  September  1993,  the Company completed the private  placement  of
     $85,000,000   aggregate  principal  amount  of  its  7.5%  Convertible
     Subordinated  Debentures due 2003.  The debentures pay interest  semi-
     annually   on  March  15  and  September  15.  These  debentures   are
     convertible at any time into shares of the Company's common stock at a
     conversion price of $10 per share (equivalent to a conversion rate  of
     100  shares  per  $1,000 principal amount of debentures),  subject  to
     adjustment.    Upon
     certain defined events, including a change of control, holders of  the
     debentures  have  the  right  to require the  Company  to  redeem  the
     debentures  for  cash  at the rate of 101% of  principal  amount  plus
     accrued  interest.   The  debentures are redeemable  at  predetermined
     redemption  prices, in whole or in part, at the option of the  Company
     for  cash  at any time on and after September 15, 1995 if  the  market
     price of the common stock exceeds 250% of the conversion price for  20
     out  of  any 30 consecutive trading days or at any time on  and  after
     September 15, 1996.

     In  March  1992,  Alfred H. Wilms, director and principal  stockholder
     (and  then  Chairman  of the Board of Directors  and  Chief  Executive
     Officer)  of  the  Company, committed to provide or  cause  others  to
     provide a $6,500,000 five year subordinated loan to VSI, the Company's
     controlled  subsidiary  which loan has been  funded  in  full  and  is
     secured by a subordinated interest in all of VSI's present and  future
     personal  property.   Until August 1993, the loan  required  quarterly
     payments of interest.  In August 1993, the loan agreement was  amended
     to extend the maturity of the loan to September 1, 1998 and to require
     quarterly  payments of principal and interest.  Interest on  the  loan
     accrues at the rate of 200 basis points above the 90-day London  Inter
     Bank  Offered Rate, adjusted quarterly.  At June 30, 1995 the interest
     rate for the note was 8.2275%.

     During  1995,  Hospitality Franchise Systems, Inc. ("HFS")  agreed  to
     loan  $7,750,000 to the Company's majority controlled subsidiary  RCVP
     in  connection with the construction of the Rainbow Casino.  The  loan
     amount  was  subsequently increased to $10,000,000.   The  note  bears
     interest  at 7.5% per annum and requires monthly payments of principal
     and  interest  over an 24 month period.  In exchange for funding  this
     loan,  HFS is also entitled to receive a monthly royalty fee equal  to
     12%  of  the  casino's gaming revenues.  Included in the  consolidated
     results  of  operations for fiscal 1995 are approximately $810,000  of
     such royalties.

     Maturities  of  long-term  debt for each  of  the  five  years  ending
     subsequent to June 30, 1995 are as follows:

                          1996                      $  3,995,000
                          1997                         3,927,000
                          1998                         2,825,000
                          1999                         1,670,000
                          2000                         1,723,000
                         Thereafter                   87,257,000












                                   F-11
               ALLIANCE GAMING CORPORATION AND SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                 Years Ended June 30, 1993, 1994 and 1995


5.   STOCKHOLDERS' EQUITY

     The  Company's Articles of Incorporation authorize the issuance of  up
     to  10,000,000  shares  of special stock, par  value  $.10  per  share
     ("Special  Stock").  Special Stock consists of non-voting stock  where
     no  holder  of  the Special Stock shall be entitled  to  vote  at  any
     meeting  of  stockholders or otherwise, except  as  otherwise  may  be
     specifically provided by law or as approved by the Board of  Directors
     in  certain  limited circumstances at the time of the stock  issuance.
     The  Special  Stock may be issued from time to time  in  one  or  more
     series,   each  series  having  such  designations,  preferences   and
     relative,   participating,   optional   or   other   special   rights,
     qualifications,  limitations or restrictions as shall  be  stated  and
     expressed  in  the  resolution providing for the issuance  of  Special
     Stock  or  any series thereof adopted by the Board of Directors.   The
     Board has designated an initial series of Special Stock as "Non-voting
     Junior  Convertible Special Stock" which consists of 1,333,333  shares
     (the  "Initial  Series").   The Company's  Articles  of  Incorporation
     provide that the Initial Series is intended to have the same rights as
     the  Common Stock except that the Initial Series has no voting  rights
     and  a $.01 per share liquidation preference.  At June 30, 1995,  only
     the  Initial  Series  of Special Stock was outstanding.   The  Initial
     Series is convertible on a share for share basis into shares of Common
     Stock of the Company.

     In  1984, the Company created an Employee Stock Option Plan (the "1984
     Plan")  that  provides for the issuance of up to 2,000,000  shares  of
     common  stock to Company employees and directors.  At June  30,  1995,
     there  were incentive stock options covering 207,000 shares  and  non-
     qualified  stock options covering 10,000 shares outstanding under  the
     1984 Plan.

     At  June  30, 1994 there were incentive stock options covering 376,000
     shares   and  non-qualified  stock  options  covering  15,000   shares
     outstanding  under the 1984 Plan.  Generally, options are  granted  at
     the fair market value of the Company's Common Stock at the date of the
     grant and become exercisable over five years.

     In  1992,  the Company created the 1991 Long Term Incentive Plan  (the
     "Incentive Plan") that, as amended, provides for the issuance of up to
     3,000,000  shares of common stock to Company employees and  directors.
     At June 30, 1995 there were incentive stock options covering 2,400,834
     shares  outstanding under the Incentive Plan.  At June 30, 1994  there
     were  incentive  stock options covering 1,099,500  shares  outstanding
     under the Incentive Plan.  Generally, options are granted at the  fair
     market  value of the Company's Common Stock at the date of  the  grant
     and become exercisable over five years.

     Transactions involving stock options are summarized as follows:

                                                         Options Outstanding
                                                       Shares     Exercise Price
               Balance, June 30, 1992               1,546,150      1.375-8.750
                    Granted                           300,000      5.875-8.750
                    Exercised                        (590,700)     1.375-4.875
                    Cancelled                          (3,600)           3.875

               Balance,  June  30,  1993            1,251,850      1.375-8.750
                    Granted                           690,500     6.500-10.125
                    Exercised                        (393,850)     1.625-4.000
                    Cancelled                         (58,000)     2.125-4.000

               Balance, June 30, 1994               1,490,500     1.375-10.125
                    Granted                         1,598,334      5.750-8.000
                    Exercised                        (186,000)     1.375-4.000
                    Cancelled                        (285,000)    3.500-10.000

               Balance, June 30, 1995               2,617,834      1.625-9.250

               Exercisable at June 30, 1995           825,600      1.625-9.250

                                   F-12
               ALLIANCE GAMING CORPORATION AND SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                 Years Ended June 30, 1993, 1994 and 1995

5.   STOCKHOLDERS' EQUITY (Continued)

     Also  at  June 30, 1995, Mr. Wilms held warrants to purchase 2,000,000
     shares  of  Common  Stock at $2.50 per share, subject  to  adjustment.
     These  warrants  were issued in connection with  the  funding  of  the
     $6,500,000 five year subordinated loan for VSI.

     Upon   closing  of  the  private  placement  of  the  Company's   7.5%
     Convertible   Subordinated  Debentures  and  the  $5  million   equity
     investment   by   Kirkland-Ft.   Worth   Investment   Partners,   L.P.
     ("Kirkland")  on  September 21, 1993, the Company issued  warrants  to
     purchase up to 2,750,000 shares of Common Stock at $1.50 per share  to
     Kirkland.   These  warrants are exercisable one year after  the  grant
     date  and  only  after  the market price of the Common  Stock  reaches
     certain  predetermined  levels.  Under the  same  terms,  the  Company
     issued  warrants  to purchase 1,250,000 and 30,000  shares  of  Common
     Stock  to  Gaming  Systems  Advisors, L.P. ("GSA")  and  L.H.  Friend,
     Weinress & Frankson, Inc. ("Friend"), respectively.  The Company  also
     issued warrants to purchase 500,000 and 250,000 shares of Common Stock
     at  $8.25  per  share  to the initial purchasers  of  the  Debentures,
     Donaldson,  Lufkin  &  Jenrette  Securities  Corporation  ("DLJ")  and
     Oppenheimer & Co., Inc. ("Oppenheimer"), respectively.  Under the same
     general  terms  and conditions, DLJ may earn warrants to  purchase  an
     additional  250,000 shares of the Company's Common Stock.   In  fiscal
     1995, in connection with the commencement of their employment with the
     Company,   Steve   Greathouse,   the   Company's   Chairman   of   the
     Board,President and Chief Executive Officer and Dr. Craig Fields, Vice
     Chairman  of the Board were each granted warrants to purchase  250,000
     shares  of  common  stock on the same terms as the  Kirkland  warrants
     described above.

     As  of  June 30, 1995, none of the warrants granted to Kirkland,  GSA,
     Friend, Greathouse or Fields are exercisable.


6.   INCOME TAXES

     The  Company generally accounts for income taxes and files its  income
     tax  returns  on  a consolidated basis.  However, VSI,  in  which  the
     Company  holds 100% of the voting interests, has previously filed  its
     income  tax  returns on a separate basis and was not consolidated  for
     tax purposes.  During the quarter ended December 31, 1994, the Company
     determined  that  VSI  can be consolidated for  tax  purposes.   As  a
     result,  the Company filed for and has received a refund of  estimated
     income taxes paid for fiscal year 1994.

     Effective  July  1,  1993,  the Company adopted  Financial  Accounting
     Standard  No.  109 Accounting for Income Taxes, prospectively.   Under
     the  asset and liability method of Statement 109, deferred tax  assets
     and  liabilities  are  recognized  for  the  future  tax  consequences
     attributable  to differences between the financial statement  carrying
     amounts  of  assets  and liabilities and their respective  tax  bases.
     Deferred  tax  assets and liabilities are measured using  enacted  tax
     rates  expected to apply to taxable income in the years in which those
     temporary differences are expected to be recovered or settled.   Under
     Statement 109, the effect on deferred tax assets and liabilities of  a
     change  in  tax  rates  is recognized in income  in  the  period  that
     includes the enactment date.















                                   F-13
               ALLIANCE GAMING CORPORATION AND SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                 Years Ended June 30, 1993, 1994 and 1995


6.   INCOME TAXES (continued)

     The federal and state income tax effects of temporary differences that
     give  rise  to  significant portions of the deferred  tax  assets  and
     liabilities at June 30, 1995 and 1994 are presented below.

                                                         1994            1995
                                                            (in thousands)
     Deferred Tax Assets:
          Net Operating Loss Carryforwards            $  8,495       $  12,470
          Inventory  Obsolescence  Reserve                 578             179
          Receivables,  Bad  Debt  Allowance               472             564
          Organization  and  Start-up  Costs               267             172
           Reserves  for  abandoned  projects            1,577           1,356
              Other                                        307             566
     Total gross deferred tax assets                    11,696          15,307
     Less:   Valuation allowance                       (10,615)        (13,908)
     Net deferred tax assets                          $  1,081        $  1,399

     Deferred tax liabilities:
          Property and equipment, principally due to
             depreciation differences                    1,218           1,399
     Total gross deferred tax liabilities (in 1995,
         $194 is included in accrued expenses)           1,218           1,399
     Net deferred tax assets (liabilities)            $   (137)       $    ---

     The  valuation allowance for deferred tax assets as of June  30,  1994
     was  $10,615,000.  The net change in the total valuation allowance for
     the twelve months ended June 30, 1995 was an increase of $3,293,000.

     At  June  30,  1995,  the  Company has estimated  net  operating  loss
     carryforwards   for  federal  income  tax  purposes  of  approximately
     $36,678,000  which  are  available to offset  future  federal  taxable
     income, if any, expiring in the years 2007 through 2010.


     A  reconciliation of the Company's provision for income tax expense as
     compared  to  the  tax  benefit calculated by applying  the  statutory
     federal tax rate to the loss before income taxes follows.

                                                         1994             1995
                                                             (in thousands)

               Statutory Rate                           $(4,202)        $(3,565)
               Meals, entertainment                           3              27
               State Income Taxes                            33              67
               Tax losses for which no
                   current benefit is recognized          4,385           3,736
               Alternative Minimum Tax                       22             ---
                                                        $   241         $   265






                                   F-14
               ALLIANCE GAMING CORPORATION AND SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                 Years Ended June 30, 1993, 1994 and 1995

6.   INCOME TAXES (continued)

     The  components of the Company's income tax expense for the year ended
     June 30, 1995 are:

                                               1994        1995
                                                (in thousands)

               Federal - current             $   73      $  ---
               State - current                   31         102
               Federal - deferred               118         163
               State  -  deferred                19         ---
                    Total                    $  241      $  265


7.   STATEMENTS OF CASH FLOWS

     The  following supplemental information is related to the Consolidated
     Statements  of  Cash Flows.  In fiscal 1995, the Company  reclassified
     approximately  $212,000  from receivables  to  intangible  assets  and
     reclassified other assets of approximately $1,099,000 to property  and
     equipment   ($1,074,000)  and  receivables  ($25,000).   Additionally,
     numerous  non-cash items related to the Company's acquisition  of  the
     general  partnership interest in RCVP impacted the statement  of  cash
     flows.  The most significant of these non-cash items included non-cash
     additions   to   property,  plant  and  equipment   of   approximately
     $23,400,000  and additions to total debt of approximately $13,839,000.
     See also Note 11.

     In  fiscal 1994, the Company reclassified approximately $1,445,000  of
     accounts receivable to intangible assets ($1,393,000) and property and
     equipment ($52,000) on a net basis.

     Payments   for   interest  expense  in  1993,  1994  and   1995   were
     approximately $4,408,000, $4,690,000 and $7,102,000 respectively.






                                   F-15
               ALLIANCE GAMING CORPORATION AND SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                 Years Ended June 30, 1993, 1994 and 1995

8.   INTERIM FINANCIAL INFORMATION (Unaudited)

     Following  is the unaudited quarterly results of the Company  for  the
     years  ended June 30, 1994 and 1995.  This information is not  covered
     by the Independent Auditors' Report.
                                                                     Primary
                                                     Net             Income
                                   Total            (Loss)         (Loss) Per
                                   Revenues         Income           Share(1)
                               (Dollars in thousands, except per  share amounts)
     1994

     First Quarter                $28,419          $ (1,376)         $ (.14)
     Second Quarter                30,566            (1,221)           (.12)
     Third   Quarter               31,807               847             .08
     Fourth Quarter                32,262           (11,378)          (1.09)

     1995

     First Quarter                $30,824          $ (1,926)         $ (.18)
     Second Quarter                31,514            (3,090)           (.28)
     Third Quarter                 31,439            (1,775)           (.16)
     Fourth Quarter                38,211            (3,960)           (.34)

     (1)  The  sum  of  the income (loss) per share for the four  quarters,
     which  are  based on average shares outstanding during  each  quarter,
     does not equal income (loss) per share for the year, which is based on
     average shares outstanding during the year.



9.   RELATED PARTY TRANSACTIONS

     The Company sold products to Seeben N.V., a company in which Alfred H.
     Wilms  is the brother of a member of the company's board of directors.
     Sales  to this company were approximately $2,000 (1993), $6,000 (1994)
     and  $0 (1995).  No accounts receivable were due from this company  at
     June  30, 1994 or June 30, 1995.  Sales prices and terms were  similar
     to those of non-affiliated persons.

     In  March  1992, Alfred H. Wilms, a director and principal stockholder
     (and  then  Chairman  and  Chief Executive Officer  of  the  Company),
     committed  to  provide or cause others to provide  a  $6,500,000  five
     year,  unsecured,  subordinated  loan to  VSI,  a  majority-controlled
     subsidiary  of  the Company engaged in the Company's Louisiana  gaming
     device  route  operations.  As consideration for this commitment,  the
     Company  issued  to Mr. Wilms five year warrants to  purchase  200,000
     shares  of  Common  Stock  at  $2.50  per  share  subject  to  certain
     adjustments,  and  agreed to issue an additional warrant  to  purchase
     1,800,000 shares of Common Stock at $2.50 per share subject to certain
     adjustments  upon  complete funding of the loan.   At  June  30,  1993
     approximately  $6,000,000 of the loan had been funded.  The  remaining
     $500,000  was funded in October 1993 at which time the Company  issued
     to  Mr.  Wilms the additional warrant for 1,800,000 shares  of  common
     stock.

     David  Robbins, a director appointed to the Board in July 1994,  as  a
     designee  of  Kirkland Investment Corporation ("KIC"), is employed  by
     the law firm of Kramer, Levin, Naftalis, Nessen, Kamin & Frankel which
     has  represented  the  Company  in  various  matters  related  to  the
     Company's growth strategy and its transactions with Kirkland and  KIC.
     The Company paid fees of approximately $1,046,000 and $493,000 to such
     firm in fiscal 1994 and fiscal 1995, respectively.

     In  connection  with  the  agreements with KIC  (100%  owned  by  Joel
     Kirschbaum)  and its affiliates and related transactions, the  Company
     has  paid  to or on behalf of Kirkland and its affiliates a  total  of
     approximately  $346,000  in fiscal 1994 and $597,000  in  fiscal  1995
     primarily  for  reimbursement of expenses incurred on  behalf  of  the
     Company.

                                   F-16
               ALLIANCE GAMING CORPORATION AND SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                 Years Ended June 30, 1993, 1994 and 1995

9.   RELATED PARTY TRANSACTIONS (continued)

     In  1993 and 1994 the Company entered into employment agreements  with
     certain key employees.  These agreements range from one to three years
     in  length  and  cover  certain other terms  of  employment  including
     compensation.   As a condition of his employment, in  April  1995  the
     Company issued 250,000 shares of common stock to Steve Greathouse, the
     Company's   Chairman,  President  and  Chief  Executive  Officer   and
     recognized   a   non-cash  charge  of  $1,313,000  related   to   this
     transaction.


10.  COMMITMENTS AND CONTINGENCIES

     The  Company  leases  office space, equipment,  warehouse  and  repair
     facilities,  gaming route locations, casino and other locations  under
     non-cancelable operating leases.

     Future  minimum rentals under non-cancelable operating leases at  June
     30, 1995 are:

     Year                         Total                                    Net
     Ended                       Minimum            Sublease             Minimum
     June 30                     Rentals              Income             Rentals
                                                   (In thousands)

     1996                      $   8,828            $    921            $  7,907
     1997                          6,462                 842               5,620
     1998                          6,173                 809               5,364
     1999                          5,623                 758               4,865
     2000                          3,737                 598               3,139
        Thereafter                34,349               2,757              31,592
                                $ 65,172            $  6,685            $ 53,387

     Certain  gaming  route  location leases provide  only  for  contingent
     rentals  based upon a percentage of gaming revenue and are  cancelable
     at any time by either party.

     Operating  lease rental expense, including contingent  lease  rentals,
     for years ended June 30 was as follows:

                                          1993          1994          1995
                                                   (In thousands)
  
     Minimum rentals                    $11,727       $13,743        $9,704
     Contingent   rentals                49,621        55,910        58,113
                                         61,348        69,653        67,817
     Sublease rental income                (850)       (1,004)       (1,192)
                                       $ 60,498      $ 68,649      $ 66,625

     These  amounts  are  included in the cost of gaming  revenues  on  the
     accompanying Consolidated Statements of Operations.

     In April, 1990, the Company entered into a ten year lease to operate a
     non-restricted  gaming  location  in  Las  Vegas,  Nevada.  The  lease
     commencement date was scheduled to begin no later than 90  days  after
     the  construction had been finalized.  In January, 1991,  the  Company
     received  notice  that  the construction was complete;  however,  upon
     review  of the property, the Company did not believe that construction
     had  been completed.  In August, 1992, the lessor filed a suit against
     the  Company  seeking  compensatory and  exemplary  damages  totalling
     $18,700,000.  In fiscal 1992, the Company had accrued a


                                   F-17
               ALLIANCE GAMING CORPORATION AND SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                 Years Ended June 30, 1993, 1994 and 1995

10.  COMMITMENTS AND CONTINGENCIES (continued)

     $480,000  liability representing back rent owed  to  the  lessor.   In
     February,  1993  the  lawsuit was settled and  the  Company  paid  the
     liability  representing back rent owed to the  lessor.   In  February,
     1993  the lawsuit was settled and the Company paid the lessor $425,000
     in  return  for resolution of all prior and current disputes regarding
     the lease terms.  The lease calls for monthly rentals of approximately
     $31,000  and  provides for annual increases based on certain  indices.
     At  June  30,  1992,  the Company sublet the property  to  a  location
     operator  in exchange for the right to operate gaming devices  at  the
     property  under  a space lease arrangement for a period  of  10  years
     beginning December, 1992.

     The  Company  and  Casino  Magic  Corporation,  through  wholly  owned
     subsidiaries,  are members in Kansas Gaming Partners,  L.L.C.  ("KGP")
     and  Kansas  Financial Partners, L.L.C. ("KFP"), both  Kansas  limited
     liability   companies.   Under  an  option  agreement   (the   "Option
     Agreement")  granted  to  KGP  by  Camptown  Greyhound  Racing,   Inc.
     ("Camptown")  and  The  Racing Association of Kansas-Southeast  ("TRAK
     Southeast"),  KGP  has been granted the exclusive right,  which  right
     expires on September 13, 2013, to operate gaming devices and/or casino-
     type gaming at Camptown's racing facility in Frontenac, Kansas if  and
     when  such  gaming is permitted in Kansas. In December 1994,  Camptown
     received a $3,205,000 loan from Boatmen's Bank which was guaranteed by
     KFP. The Company and Casino Magic Corporation each invested $1,580,000
     in  KFP  which  was  used  to  purchase a certificate  of  deposit  to
     collateralize its guaranty. Construction of Camptown's racing facility
     has  been completed and the facility opened for business in May  1995.
     The racing facility was temporarily closed on November 5, 1995 due  to
     poor  financial  results.  Camptown  filed  for  reorganization  under
     Chapter 11 of the U.S. Bankruptcy Code in January 1996 and has  stated
     an   intention   to   reopen   for   business   following   bankruptcy
     reorganization. Boatmen's Bank demanded payment of the  Camptown  loan
     from  KFP  under  the terms of the guaranty. KFP  paid  the  loan  and
     Boatmen's  Bank returned KFP's certificate of deposit and KFP  assumed
     Boatmen's Bank's position in the loan to Camptown which is secured  by
     a   second  mortgage  on  Camptown's  greyhound  racing  facility   in
     Frontenac, Kansas. TRAK Southeast and Camptown continue to be bound by
     the  Option  Agreement. KFP intends to vigorously pursue  all  of  its
     rights  and  remedies which may include, among other  things,  seeking
     authority from the bankruptcy court to commence a foreclosure  action.
     In  the  case of a foreclosure action, KFP would be required to assume
     or  pay the existing first mortgage of approximately $2,000,000 if KFP
     becomes  the  purchaser  at  any such sale.  The  Company  intends  to
     continue  to monitor its investment in KFP. The Company believes  that
     the  Kansas  legislature may consider at least two gaming  bills  this
     session.  One  bill, if approved by two thirds of both houses  of  the
     Kansas  legislature, would call for a public vote to amend the  Kansas
     constitution  to allow slot machines at up to two gaming locations  in
     each  legislative district, with one location being reserved  for  any
     licensed  pari-mutuel location in the district. The  second  bill,  if
     passed by a majority of both houses of  the Kansas legislature,  would
     allow, subject to local option election of the citizens in the county,
     slot machines at licensed pari-mutuel race tracks.

     The  Company  is  also involved in various claims  and  legal  actions
     arising in the ordinary course of business.  Management of the Company
     believes  that the ultimate outcome of these matters will not  have  a
     material  adverse  effect  on  the  Company's  consolidated  financial
     statements taken as a whole.


11.  ACQUISITIONS

     On July 16, 1994, the Rainbow Casino located in Vicksburg, Mississippi
     permanently  opened for business.  Through a wholly-owned  subsidiary,
     the Company originally purchased a 45% limited partnership interest in
     RCVP,  a  Mississippi limited partnership which owns the  casino,  all
     assets (including the gaming equipment) associated with the casino and
     certain  adjacent  parcels  of land.  As  consideration  for  its  45%
     limited partnership interest, the Company paid $2,000,000 in cash  and
     issued  600,000  shares  of its common stock  to  The  Rainbow  Casino
     Corporation ("RCC"), an unaffiliated Mississippi corporation, and  its
     two  sole shareholders.  The 55% general partnership interest in  RCVP
     was  held by RCC. In connection with the completion of the casino, the
     Company funded a $3,250,000 advance to RCC on the same terms as  RCC's
     financing from Hospitality Franchise Systems, Inc. ("HFS") (other than
     the fact that such advance is subordinate to payments due to HFS).  On
     March  29, 1995, the Company consummated certain transactions  whereby
     the  Company  acquired  from RCC the controlling  general  partnership
     interest in RCVP and increased its partnership interest. In exchange


                                   F-18
               ALLIANCE GAMING CORPORATION AND SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                 Years Ended June 30, 1993, 1994 and 1995

11.  ACQUISITIONS (continued)

     for  the  assumption by National Gaming Mississippi, Inc.  ("NGM"),  a
     subsidiary of National Gaming Corporation, of approximately $1,140,000
     of  liabilities (plus a financing fee payable to HFS) related  to  the
     completion  of  certain  incomplete  elements  of  the  project  which
     survived  the  opening of the casino (for which RCC was to  have  been
     responsible,  but failed to satisfy), a related $652,000 cash  payment
     by  the Company to NGM and commitments by the Company and NGM to  fund
     additional  financing  required  to  complete  the  project:   (i)   a
     subsidiary  of the Company became the general partner and  RCC  became
     the limited partner and (ii) the respective partnership interests were
     adjusted.  As a result of these transactions, RCVP assumed  $1,304,000
     of  new  debt  of  which  50% was payable to the  Company.  Under  the
     adjusted partnership interests, RCC is entitled to receive 10% of  the
     net  available  cash  flows after debt service  and  other  items,  as
     defined, (which amount shall increase to 20% of cash above $35,000,000
     (i.e.,  only on such incremental amount)), for a period of  15  years,
     such  period  being subject to one year extensions for  each  year  in
     which  a minimum payment of $50,000 is not made. This transaction  was
     accounted   for   as   an  acquisition  using  the  purchase   method.
     Accordingly, the purchase price was allocated to assets acquired based
     on their estimated fair values.  This treatment resulted in no cost in
     excess  of  net  assets  acquired (goodwill)  being  recognized.   The
     Rainbow  Casino's  results of operations have  been  included  in  the
     consolidated results of operations since the date of acquisition.

     The  following  summarized, unaudited pro forma results of  operations
     for  the  fiscal  year  ended  June  30,  1995,  assume  the  complete
     acquisition of RCVP occurred on the date the casino permanently opened
     for business.

                                                           1995
          Revenues                                       $142,051
          Net loss                                        (10,862)
          Net loss per common share                    $    (0.96)


12.  RECENT DEVELOPMENTS (Unaudited)

     On   June  19,  1995,  the  Company  publicly  proposed  a  negotiated
     acquisition  of Bally Gaming International, Inc. ("BGII")  for  $12.50
     per  share  of  BGII common stock.  Prior to making  this  offer,  the
     Company  had acquired 500,000 shares of BGII stock on the open  market
     and  at  June  30, 1995 held 1,000,000 shares (approximately  9.3%  of
     BGII's  total  outstanding shares, based on BGII's most recent  public
     filings) which it acquired at an average cost of approximately  $10.41
     per  share.  Under the proposed terms of the offer, approximately  60%
     of BGII shares not held by the Company would be acquired for cash with
     the remainder exchanged for shares of the Company's common stock.  The
     offer  was contingent upon satisfactory due diligence, regulatory  and
     stockholder approval and reasonable financing.  At the time the  offer
     was  made  public,  the  Company requested  expedited  due  diligence,
     subject to a confidentiality agreement.  BGII had previously announced
     a  planned merger with WMS Industries, Inc. ("WMS") which included  an
     exclusive  period  for  WMS to negotiate the terms  of  that  proposed
     merger.  WMS's exclusive negotiating period had expired several  weeks
     before  the Company's proposal was made without announcement or action
     on the part of BGII or WMS.  On July 25, 1995, after being refused due
     diligence  access  and  the announcement by  BGII  that  a  definitive
     agreement  had  been reached to merge with WMS, the Company  announced
     its  intent to make a tender offer for BGII.  The tender offer was  on
     largely the same terms as the originally proposed acquisition.  On the
     same  date, the Company announced it had filed litigation in  Delaware
     Chancery  Court requesting that the court require BGII  to  grant  the
     Company due diligence access, enjoin BGII from proceeding with the WMS
     merger  (including a provision therein requiring the  sale  of  BGII's
     German operations) and declare the breakup fee provided for in the WMS
     merger  to  be invalid.  The Company indicated that it would  increase
     the  price per share of BGII stock to $13.00 per share if the  breakup
     fee  was declared invalid.  The tender offer was conditioned upon  the
     Company being validly tendered a number of shares of BGII stock, which
     combined with its own holdings of such stock, would give the Company a
     majority of BGII's outstanding shares.  The tender offer commenced  on
     July  28,  1995. Subsequently, the Company announced its intention  to
     proceed with a consent solicitation to elect a majority of independent
     directors to the
                                   F-19
               ALLIANCE GAMING CORPORATION AND SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                 Years Ended June 30, 1993, 1994 and 1995

12.  RECENT DEVELOPMENTS (continued)

     BGII  Board of Directors.  On August 14, 1995, the Company,  BGII  and
     WMS  jointly announced an agreement whereby the parties would hold  in
     abeyance  all activities related to pending litigation until September
     1,  1995, refrain from commencing new litigation until that same date,
     BGII wouldschedule its annual shareholder meeting for consideration of
     the  proposed WMS merger and the election of directors on October  30,
     1995,  and the Company would extend the expiration date of the  tender
     offer  until  September 12, 1995 and refrain from  soliciting  proxies
     until  September 1, 1995.  On September 1, 1995, the Company disclosed
     that  it  had obtained firm financing commitments to fund  the  tender
     offer  and that such commitments were not conditioned on due diligence
     of BGII.  Accordingly, the Company extended the expiration date of its
     tender  offer  to  September 29, 1995.  BGII and  WMS  filed  lawsuits
     against  the  Company alleging numerous public misrepresentations  had
     been  made  by the Company withregards to the WMS-BGII agreement,  the
     Company's tender offer and the level of cooperation of BGII's board of
     directors.















                                   F-20


EXHIBIT 21
                       ALLIANCE GAMING CORPORATION
                      SUBSIDIARIES OF THE REGISTRANT
                           AS OF JUNE 30, 1995


Subsidiary                                               State of Incorporation

Casino Electronics, Inc.                                            Nevada
BGII Acquisition Corporation                                        Delaware
APT  Games, Inc.                                                    Nevada
          United Coin Machine Company (1)                           Nevada
          APT Coin Machines, Inc. dba Miss Lucy's (1)               Nevada
          Slot Palace, Inc. dba Quality Inn Casino (1)              Nevada
          Trolley Stop, Inc. dba Trolley Stop Casino (1)            Nevada
          United Games, Inc. (6)                                    Nevada
          Mizpah Investments, Inc. dba Mizpah Casino (1)            Nevada
          Plantation Investments, Inc. dba Plantation Casino (1)    Nevada
          Double Eagle Hotel and Casino, Inc.  (1)                  Nevada
          WCAL, Inc. (1)                                            Nevada
               FCJI, Inc. (2)                                       Nevada
Foreign Gaming Ventures, Inc.                                       Nevada
          Oregon Ventures, Inc. (3)                                 Nevada
          Louisiana Ventures, Inc. (3)                              Nevada
               Video Services, Inc. (4)                             Louisiana
               Video Distributing Services, Inc. (4)                Louisiana
               Southern Video Services, Inc. (5)                    Louisiana
          Mississippi Ventures, Inc. (3)                            Nevada
          Mississippi      Ventures   II,  Inc.    (3)              Nevada
          United       Gaming      Rainbow, Inc.(3)                 Nevada
               Rainbow    Casino Vicksburg Partnership (7)          Mississippi
          United Native American, Inc. (3)                          Nevada
               Native American Investments, Inc.     (8)            Delaware
          Indiana Gaming Ventures, Inc. (3)                         Nevada
          United  Gaming of Iowa,  Inc. (3)                         Nevada
          Kansas  Gaming Ventures, Inc. (3)                         Nevada
               Kansas  Gaming Partners, LLC (9)                     Nevada
               Kansas Financial Partners, LLC (9)                   Nevada
          Vermont Financial  Ventures, Inc.       (3)               Nevada
          Missouri Ventures  II, Inc. (3)                           Nevada
          Alpine  Willow Investments, Inc. (3)                      California
          Pennsylvania Gaming Ventures I,     Inc.     (3)          Nevada



(1)  100% owned by APT Games, Inc.
(2)  100% owned by WCAL, Inc.
(3)  100% owned by Foreign Gaming Ventures, Inc.
(4)  71% owned by Louisiana Ventures, Inc.
(5)  60% owned by Louisiana Ventures, Inc.
(6)  60% owned by APT Games, Inc.
(7)  General partnership interest owned by United Gaming Rainbow, Inc.
(8)  90% owned by United Native American, Inc.
(9)  50% owned by Kansas Gaming Ventures, Inc.