<PAGE>

             U.S. SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549
                                
                           FORM 10-QSB

(Mark One)
[X]  QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15  (D)  OF  THE
     SECURITIES EXCHANGE ACT OF 1934

     For the quarterly period ended:        March 31, 1999
                                      --------------------------
                               OR
                                
[ ]  TRANSITION  REPORT  PURSUANT SECTION  13  OR  15(D)  OF  THE
     SECURITIES EXCHANGE ACT OF 1934

     For the transition period from:              to
                                      ----------     -----------

Commission file number:                 000-25855
                         ---------------------------------------

                   CASINOVATIONS INCORPORATED
-----------------------------------------------------------------
             (Exact name of small business issuer as
                    specified in its charter)

             Nevada                            91-1696010
---------------------------------       ------------------------
  (State or other jurisdiction              (I.R.S. Employer
of incorporation or organization)         Identification No.)
                                
                                
        6744 S. Spencer Street, Las Vegas, Nevada  89119
----------------------------------------------------------------
            (Address of principal executive offices)
                                
                                
                         (702) 733-7195
----------------------------------------------------------------
                  (Issuer's telephone number)
                                
                                
----------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
                       since last report)

      Check whether the issuer (1) filed all reports required  to
be  filed  by Section 13 or 15(d) of the Exchange Act during  the
past  12  months (or for such shorter period that the  registrant
was  required to file such reports), and (2) has been subject  to
such filing requirements for the past 90 days.

     YES       NO  X
        -----    -----

        APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                                
           PROCEEDINGS DURING THE PRECEDING FIVE YEARS
     Check whether the registrant filed all documents and reports
required  to be filed by Section 12, 13 or 15(d) of the  Exchange
Act  after  the distribution of securities under a plan confirmed
by court.

     YES         NO
          -----     -----

              APPLICABLE ONLY TO CORPORATE ISSUERS
                                
      State  the  number of shares outstanding  of  each  of  the
issuer's  classes of common equity, as of the latest  practicable
date:

    7,094,687 shares of common stock, $.001 par value, as of
                         March 31, 1999
-----------------------------------------------------------------
     Transitional Small Business Disclosure Format (check one);

     YES         NO   X
          -----     -----

<PAGE>
                                
                           FORM 10-QSB
                                
                        TABLE OF CONTENTS

                                                            PAGE
                                                           NUMBER
                                                           ------
PART I.   FINANCIAL INFORMATION

     Item 1. Financial Statements                             3

             Balance Sheet                                    3

             Statement of Operations                          4

             Statement of Cash Flows                          5

             Notes to Financial Statements                    6

     Item 2. Management's Discussion and Analysis or Plan
             of Operations                                    7

PART II.  OTHER INFORMATION

     Item 1. Legal Proceedings                               15

     Item 2. Changes in Securities                           15

     Item 3. Defaults Upon Senior Securities                 15

     Item 4. Submission of Matters to a Vote of Security
             Holders                                         15

     Item 5. Other Information                               15

     Item 6. Exhibits and Reports on Form 8-K                16

SIGNATURE                                                    16

EXHIBIT INDEX                                                17

                                2
                                
<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.
     
<TABLE>
<CAPTION>
     
                   CASINOVATIONS INCORPORATED
                  (A Development Stage Company)
                          BALANCE SHEET
                           (UNAUDITED)
                                                                March 31, 1999    December 31, 1998
                                                               ----------------   -----------------
                              ASSETS                                                                 
<S>                                                            <C>                <C> 
Current assets:                                                                        
  Cash                                                         $     1,299,589    $       200,749
  Accounts receivable, trade                                            44,382              2,810
  Accounts receivable - employees                                       31,520             11,347
  Inventories                                                        1,111,406            756,662
  Prepaid expenses                                                      42,052             38,896
                                                               ----------------   ----------------
    Total current assets                                             2,528,949          1,010,464
                                                                                                    
Property and equipment, at cost, net of                                                        
  accumulated depreciation of $164,817 and $125,380                    522,903            350,772
                                                                                                    
Intangible assets, at cost, net of                                                             
  accumulated amortization of $42,458 and $37,369                      156,376            157,916
Deferred interest                                                      203,414            238,590
Deposits                                                               164,572            142,821
                                                               ----------------   ----------------
                                                               $     3,576,214    $     1,900,563
                                                               ================   ================
                                                                                                    
               LIABILITIES AND STOCKHOLDERS' EQUITY                                                 
                                                                                                    
Current liabilities:                                                                           
  Note payable - bank                                          $       197,383    $       197,383
  Current portion of leases payable                                    592,970            219,758
  Current portion of long term debt                                     13,805              3,232
  Accounts payable                                                     946,528            810,349
  Accrued expenses                                                      31,563             40,576
  Accrued interest - stockholder loans                                 115,862             59,561
  Current portion of stockholder loans                                 310,037            295,755
  Customer deposits                                                     27,688             15,874
                                                               ----------------   ----------------
    Total current liabilities                                  $     2,235,836    $     1,642,488
                                                                                                    
Other long term debt                                                         -             13,948
Leases payable                                                         630,024                  -
Convertible debt                                                     1,900,000            813,138
Stockholder loans                                                      924,963          1,089,245
                                                               ----------------   ----------------
    Total liabilities                                          $     5,690,823    $     3,558,819
                                                                                                    
Stockholders' equity:                                                                          
  Common stock, $.001 par value,                                                                 
    40,000,000 shares authorized, 7,094,687 shares and                                            
    6,767,106 shares issued and outstanding, respectively                7,094              6,767
   Additional paid-in capital                                        7,441,624          6,676,430
   Unpaid subscriptions to common stock                               (125,000)          (125,000)
   Deficit accumulated during development stage                     (9,438,327)        (8,216,453)
                                                               ----------------   ----------------
                                                                    (2,114,609)        (1,658,256)
                                                               ----------------   ----------------
                                                               $     3,576,214    $     1,900,563
                                                               ================   ================
                                
</TABLE>

    See accompanying notes to unaudited financial statements.
                                
                                3
                                
<PAGE>

<TABLE>
<CAPTION>
                   CASINOVATIONS INCORPORATED
                  (A Development Stage Company)
                     STATEMENT OF OPERATIONS
           THREE MONTHS ENDED MARCH 31, 1999 AND 1998
                           (UNAUDITED)
                                
                                                 Three Months Ended
                                         ---------------------------------
                                            March 31,          March 31,
                                               1999              1998
                                         --------------      -------------
<S>                                      <C>                 <C>
Sales                                    $      17,705       $        345
Rental income                                   46,520                  -         
Interest income                                  4,849                  3
                                         --------------      -------------
                                                69,074                348
Other costs and expenses:                                                  
  Cost of sales                                  5,745                  -
  General and administrative                 1,086,838            355,787
  Research and development                      69,661            102,333
                                         --------------      -------------
                                             1,162,244            458,120
                                         --------------      -------------
(Loss) from operations                      (1,093,170)          (457,772)
                                                                                   
  Interest expense                              78,448             37,528
  Interest expense - related parties            45,262             24,880
                                         --------------      -------------
                                               123,710             62,408
                                         --------------      -------------
(Loss) before income taxes                  (1,216,880)          (520,180)
Provision for income taxes                           -                  -
                                         --------------      -------------
                                                                                   
Net income (loss)                        $  (1,216,880)      $   (520,180)
                                         ==============      =============
                                                                                   
Basic and diluted (loss) per share       $       (0.17)      $      (0.08)
                                         ==============      =============
                                                                                   
Weighted average shares outstanding          7,253,547          6,179,638
                                         ==============      =============
                                
</TABLE>

    See accompanying notes to unaudited financial statements.
                                
                                4
                                
<PAGE>
     
<TABLE>
<CAPTION>

                   CASINOVATIONS INCORPORATED
                  (A Development Stage Company)
                    STATEMENTS OF CASH FLOWS
           THREE MONTHS ENDED MARCH 31, 1999 AND 1998
                           (UNAUDITED)
                                
                                           
                                                            Three Months Ended
                                                    ----------------------------------
                                                    March 31, 1999     March 31, 1998
                                                   ----------------    ---------------
<S>                                                <C>                 <C>
Net (loss)                                         $    (1,216,880)    $     (520,180)
 Adjustments to reconcile net income (loss) to
  net cash provided by operating activities:                                               
  Depreciation and amortization                             44,527             16,965
  Stock and options issued for services                          -             33,000
  Amortization of deferred interest                         35,176                  -
Changes in assets and liabilities:                                                  
  (Increase) decrease in accounts receivable               (61,744)           (25,400)
  (Increase) decrease in inventory                        (354,743)           (46,956)
  (Increase) decrease in prepaid expenses                    5,543              3,375
  (Increase) decrease in other assets                      (30,451)              (712)
  Increase (decrease) in accounts payable                 (297,975)           (46,243)
  Increase (decrease) in accrued expenses                   47,288              3,854
                                                   ----------------    ---------------
          Total adjustments                               (612,379)           (62,117)
                                                   ----------------    ---------------
Net cash (used in) operating activities                 (1,829,259)          (582,297)
                                                   ----------------    ---------------
Cash flows from investing activities:                                                
 Acquisition of plant and equipment                       (211,569)            (8,376)
 Increase in patents and trademarks                         (3,550)            (3,368)
                                                   ----------------    ---------------
Net cash (used in) investing activities                   (215,119)           (11,744)
                                                   ----------------    ---------------
Cash flows from financing activities:                                                
 Common stock sold for cash                              1,210,523                  -
 Proceeds from long-term debt                                    -            250,000
 Proceeds of shareholder loans                                   -            290,000
 Repayment of shareholder loans                           (150,000)           (27,245)
 Proceeds from leases payable                              295,182                  -
 Repayment of leases payable                              (109,111)           (36,400)
 Proceeds from convertible debentures                    1,900,000                  -
 Repayment of notes payable                                 (3,375)                 -
                                                   ----------------    ---------------
Net cash provided by financing activities                3,143,219            476,355
                                                   ----------------    ---------------
Increase (decrease) in cash                              1,098,841           (117,686)
Cash and cash equivalents,                                                           
 beginning of period                                       200,749            119,389
                                                   ----------------    ---------------
Cash and cash equivalents,                                                 
 end of period                                     $     1,299,590     $        1,703
                                                   ================    ===============
                                                                                     
</TABLE>

    See accompanying notes to unaudited financial statements.
                                
                                5
                                
<PAGE>

                   CASINOVATIONS INCORPORATED
                  (A Development Stage Company)
                  Notes to Financial Statements
                           (Unaudited)
                                
NOTE 1 - BASIS OF PRESENTATION.

The   accompanying  unaudited  financial  statements  have   been
prepared   in  accordance  with  generally  accepted   accounting
principles  for  interim  financial  information  and  with   the
instructions  incorporated in Regulation 10-SB of the  Securities
and Exchange Commission.  Accordingly, they do not include all of
the  information  and  footnotes required by  generally  accepted
accounting principles for complete financial statements.  In  the
opinion  of  management, all adjustments  (consisting  of  normal
recurring  adjustments and accruals) considered necessary  for  a
fair presentation have been included.

The  results  of  operations for the periods  presented  are  not
necessarily indicative of the results to be expected for the full
year.  The  accompanying financial statements should be  read  in
conjunction  with the Company's audited financial statements  for
the  year  ended December 31, 1998 as included in  the  Company's
Annual  Report  on Form 10-KSB as filed with the  Securities  and
Exchange Commission on March 26, 1999.

Basic  loss  per  share was computed using the  weighted  average
number of common shares outstanding.

NOTE 2 - STATEMENT REGARDING COMPUTATION OF LOSS PER SHARE.

Fully  diluted  loss per share excludes any dilutive  effects  of
options, warrants and convertible securities.  Fully diluted loss
per  share  is  not presented because the effect would  be  anti-
dilutive.

NOTE 3 - SUBSEQUENT EVENT.

On  April  30,  1999, the Company completed the rescission  of  a
stock  subscription agreement with an unaffiliated  third  party,
paying $450,000 cash to the former stockholder.  As of said date,
the  Company  canceled  the  200,000 shares  returned  under  the
rescinded subscription agreement.

                                6
                                
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
          
STATEMENT ON FORWARD-LOOKING INFORMATION

     Certain information included herein contains statements that
may  be  considered forward-looking statements within the meaning
of  Section  27A  of the Securities Act and Section  21E  of  the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
such  as  statements  relating  to plans  for  future  expansion,
capital  spending, future operations, sources  of  liquidity  and
financing  sources.   Such forward-looking  information  involves
important risks and uncertainties that could significantly affect
anticipated results in the future and, accordingly, such  results
may differ from those expressed in any forward-looking statements
made herein.  These risks and uncertainties include, but are  not
limited  to,  those  relating to liquidity requirements  for  the
Company, the continued growth of the gaming industry, the success
of  the  Company's  product-development and marketing  and  sales
activities,   vigorous  competition  in  the   gaming   industry,
dependence  on  existing management, relocation of  manufacturing
facilities,  gaming  regulations  (including  actions   affecting
licensing  and  product  approvals), leverage  and  debt  service
(including sensitivity to fluctuations in interest rates), issues
related  to the Year 2000, domestic or global economic conditions
and changes in federal or state tax laws or the administration of
such laws.

OVERVIEW

       The   Company's  primary  business  is  the   development,
manufacturing  and  marketing  of  various  gaming  concepts  and
products that increase the security, productivity and profits for
the global gaming industry.

      From  inception through December 31, 1998, the Company  has
been  a  "Development  Stage  Company"  performing  research  and
development,  product  prototyping, field  testing  of  products,
development  of manufacturing capabilities, acquiring  inventory,
development  of  distribution channels, staffing  (including  the
four  top sales executives from a major shuffler competitor)  and
obtaining  a  building with sufficient capacity to  house  future
growth.   Beginning  January 1999, the  Company  has  experienced
modest sales development and revenue growth.

     The following discussion summarizes the Company's results of
operations for the three months ended March 31, 1999 and 1998 and
the Company's liquidity and capital resources.

RESULTS OF OPERATIONS

  YEARS ENDED MARCH 31, 1999 AND 1998
  
      REVENUES.  For the three months ended March 31,  1999,  the
Company generated total revenues of $69,074 compared to $348  for
the  three  months  ended March 31, 1998.  The revenues  for  the
three  months  ended March 31, 1999 consisted of Random  Ejection
Shuffler  (the "Shuffler") rentals of $18,523, Shuffler sales  of
$15,500,  table  game  (the  "Fun  Pit  Collection")  rentals  of
$27,997, other sales of $2,205 and interest income of $4,849.

      SELLING,  GENERAL  AND ADMINISTRATIVE EXPENSES.    For  the
three   months  ended  March  31,  1999,  selling,  general   and
administrative  expenses  increased  approximately  $731,051,  or
205%,  to  $1,086,838 compared to $355,787 for the  three  months
ended  March  31, 1998.  This increase was primarily attributable
to  costs  associated with the development and marketing  of  the
Company's products and the expansion of the Company's operations.
For  the three months ended March 31, 1999, selling, general  and
administrative expenses included:  salaries and related costs  of
$549,600;  consulting  services of $4,829; gaming  industry  show
costs  of  $77,277;  travel and entertainment costs  of  $71,899;
printing and office

                                7
                                
<PAGE>

expense,  including  rent, of $155,188;  and  legal  expenses  of
$67,837.    In   addition,  the  Company  had  depreciation   and
amortization of $44,527 compared to $16,965 for the three  months
ended March 31, 1999 and 1998, respectively.

      INTEREST  EXPENSE.  For the three months  ended  March  31,
1999, the Company incurred interest expenses of $123,710 compared
to  $62,408  for  the three months ended March  31,  1998.   This
increase  was primarily attributable to the increased  borrowings
by the Company.

      NET  INCOME (LOSS).  For the three months ended  March  31,
1999, the Company had a net loss of $1,216,880, compared to a net
loss of $520,180 for the three months ended March 31, 1998.   The
increase  in  net loss was primarily due to continued development
of  the  Company's  products and the expansion of  the  Company's
operations.  Basic loss per share was $0.17 for the three  months
ended March 31, 1999 compared to $0.08 for the three months ended
March 31, 1998.

LIQUIDITY AND CAPITAL RESOURCES

      OVERVIEW.  The Company has continued to focus on sales  and
marketing  efforts  for  its  Shuffler  and  has  begun  to  make
significant  placements  of Shufflers  in  a  variety  of  gaming
facilities.  As a result, Shuffler leases in Nevada and sales  in
other jurisdictions are beginning to generate cash flow which  is
expected to continue to build through the rest of the year.   The
Company  is  continuing to expend cash to develop its  SecureDrop
system,  and  these  costs,  together  with  product  improvement
expenses,  related marketing and regulatory costs and  litigation
and  legal  expenses, are consuming cash resources.  The  Company
has  begun  to  obtain  sales orders from  a  variety  of  gaming
customers  for  the  SecureDrop product.  To  ramp  up  increased
product  production for both the Shuffler and the new  production
line  for  the  SecureDrop system, the Company will  continue  to
expend  cash  for which there will not be cash revenue  generated
until  later in the year.  As a result, the Company has  expended
most of the proceeds from both the common stock Offering and  the
convertible note placement.  Although the Company has third party
lease  financing available, the cost of such funds  is high,  and
management  believes that it will be advantageous to the  Company
to explore other cash sources.

      In  May  1999,  the Company contacted the  holders  of  the
Company's convertible notes and Class E Warrants and proposed the
following:  (1) accelerated conversion right for the  convertible
notes  from  August  1999  to May 1999, (2)  accelerated  warrant
exercise  right from August 1999 to May 1999, and (3) in exchange
for  cash exercises, issuance of additional warrants at $3.00 per
share  to  such persons on a warrant for warrant basis  for  each
warrant  exercised.  This proposal was subject  to  exercise  and
payment  by  the end of May 1999.  The Company believes that most
holders  will accept the foregoing, and as a result, the  Company
expects to receive a maximum of $1,499,373 and issue a maximum of
1,230,552 shares of common stock.

      Management  believes  that the above transaction,  assuming
that  all holders convert their debt and exercise their warrants,
will  benefit  the Company as follows:  (1) cash on  hand  should
cover the Company's expected cash requirements through the middle
of  the  third  quarter  of  1999,  by  which  time  the  Company
anticipates  cash  flows  from  Shuffler  leases  and  sales  and
SecureDrop  sales  will  begin to meet  the  Company's  liquidity
requirements,  (2) up to $1,900,000 in debt would be removed from
the balance sheet to become stockholder equity, (3) cash interest
costs   on  convertible  debt  would  be  eliminated,   and   (4)
management would be able to focus on operations during  the  next
quarter, not on sources of funds.  Although there is no assurance
that  all  of the convertible note holders will participate,  the
Company  believes  most will.  The Company  believes  that  as  a
result  of  this  transaction, short-term liquidity  requirements
will be met.

                                8
                                
<PAGE>

      WORKING CAPITAL.  At March 31, 1999, the Company had  cash,
cash equivalents and investments of $1,299,589 compared to $1,703
at  March  31,  1998.  At March 31, 1999, the  Company's  working
capital was $293,113 compared to a deficit of $1,645,859 at March
31,  1998.  At March 31, 1999, the Company's current ratio,  I.E.
the  ratio  of current assets to current liabilities, was  1.13:1
compared  to  0.62:1 at December 31, 1998.  Until  the  Company's
normalized sales levels are achieved, the Company will be relying
upon  proceeds from the placement of convertible  debentures  and
other  private  and  institutional sources  of  debt  and  equity
capital for working capital purposes.

      CASH FLOW.  For the three months ended March 31, 1999,  net
cash  used  in  operating activities was $1,829,259  compared  to
$582,297 for the three months ended March 31, 1998.  Cash used in
operating  activities is net of depreciation and amortization  of
$44,527, compared to $16,965 for the three months ended March 31,
1998;  increases  in accounts receivable of $61,744  compared  to
$25,400  for the three months ended March 31, 1998; increases  in
inventory  of  $354,743 compared to $46,956 for the three  months
ended  March  31, 1998; decreases in prepaid expenses  of  $5,543
compared  to  $3,375 for the three months ended March  31,  1998;
increases  in  other assets of $30,451 compared to $712  for  the
three  months ended March 31, 1998; decreases in accounts payable
of $297,975 compared  to $46,243 for the three months ended March
31, 1998; and increases in accrued expenses of  $47,288  compared
to $3,854 for the three months  ended  December 31, 1998.

     For the three months ended March 31, 1999, net cash provided
by  financing activities was $3,143,219 compared to $476,355  for
the three months ended March 31, 1998.  The increase is primarily
attributable to the proceeds received from the Offering  and  the
placement  of  convertible debentures.  The cash  from  financing
activities consisted of $1,210,523 from the sale of common stock,
proceeds   of   $1,900,000  from  the  placement  of  convertible
debentures  and proceeds of $295,182 from leases payable  reduced
by repayment of notes and leases payable of $262,486.

     OFFERING.  From April 1998 through January 1999, the Company
conducted  a public offering for 1,500,000 shares of  its  common
stock  at  $2.50  per share (the "Offering").  In  addition,  the
Company registered 2,107,973 shares of common stock on behalf  of
certain  selling shareholders and 200,000 shares of common  stock
underlying  its  Class  A Warrants.  The  Company  completed  the
Offering on January 30, 1999.  As a result of the sale of  shares
pursuant to the Offering, the Company received gross proceeds  of
$3,794,360.  The Company used the proceeds from the Offering  for
the payment of operating expenses, funding of working capital and
the  reduction of debt.  On April 30, 1999, through an  agreement
dated  March 24, 1999, the Company rescinded the sale of  200,000
shares  issued  in  the  Offering and returned  $450,000  to  the
stockholder.

      CONVERTIBLE  DEBT.   The Company has received  proceeds  of
$1,900,000  from the placement of convertible debt in  the  first
quarter of 1999.  The debt accrues interest at 9.5% per annum and
is  convertible into restricted shares of common stock after  six
months  at $2.60 per share.  Each purchaser of a $50,000 unit  of
convertible debt also received warrants for the purchase of 9,100
shares of common stock at $3.00 per share.  The convertible  debt
issue was completed in March 1999.  See, "Overview" above.

      LEASE  FINANCING.    As  of March  31,  1999,  the  Company
received proceeds of $295,182 from lease financing with unrelated
leasing companies whereby the Company sold and leased back all of
its  furniture,  equipment  and tooling,  and  70  units  of  the
Shuffler.

      CAPITAL EXPENDITURES.  In March 1999, the Company relocated
the  balance  of  its manufacturing operations to  its  principal
offices  in Las Vegas, Nevada at a cost of approximately  $5,000.
In  addition,  the  Company has planned  expenditures  of  up  to
$300,000 for additional tooling.  For the three months ended

                                9
                                
<PAGE>

March 31, 1999, the Company used net cash in investing activities
of $215,119 consisting of:  acquisition of plant and equipment of
$211,569;  and increased patents and trademarks by  $3,550.   For
the  three months ended March 31, 1998, the Company used net cash
in investing activities of $11,744 consisting of:  acquired plant
and  equipment  valued  at  $8,376;  and  increased  patents  and
trademarks by $3,368.

      RETIREMENT  OF  DEBT.  As part of a transaction  where  the
Company  repurchased  the  shares of common  stock,  among  other
things,  from  Steven L. Forte, a former employee,  director  and
shareholder  of  the Company, the Company executed  a  promissory
note  in  the  original  principal  amount  of  $2,351,705.   The
promissory  note dated December 3, 1998 had an interest  rate  of
6.5%  during  the first year and 8% thereafter and was  amortized
over  a  ten-year schedule with payments of interest only  during
the  first  year,  payable  on  the  six-month  and  twelve-month
anniversary of the promissory note and payments of principal  and
interest thereafter on a monthly basis.  Through a December  1998
letter agreement, the Company negotiated the cancellation of  the
promissory note, as well as the cancellation of the security  for
the   promissory  note  and  the  cancellation  of  an  unrelated
promissory  note in the original principal amount of $130,047.46,
in  exchange  for  three  payments in  the  aggregate  amount  of
$1,250,000:   $500,000 on December 7, 1998, $500,000 on  December
28,  1998 and $250,000 on January 15, 1999.  On January 15, 1999,
the  Company  made the last payment and cancelled the  promissory
note,  the  security for the promissory note  and  the  unrelated
promissory note.

OUTLOOK

      Based on presently known commitments and plans, the Company
believes  that  it  will  be  able to fund  1999  operations  and
required  expenditures through cash on hand, debt reduction  from
the  accelerated  conversion of convertible debt  and  cash  from
exercise  of  warrants,  cash  flow  from  operations  and  lease
financing   services.   In  the  event  that  such  sources   are
insufficient, the Company will need to seek cash from private  or
public  placements  of  debt or equity,  institutional  or  other
lending  sources  or change operating plans to  accommodate  such
liquidity  issues.  No assurances can be given that  the  Company
will successfully obtain necessary liquidity sources.

YEAR 2000

      During  1998,  the Company undertook an assessment  of  the
information  systems  and  software used  in  its  operations  to
determine  whether or not those systems were Year 2000 compliant,
and  assessed plans to upgrade systems and/or software  that  was
determined to not be Year 2000 compliant.  The Company has  begun
and  is  continuing  to assess potential issues  related  to  the
approach  of  the  Year  2000 other than those  relating  to  the
Company's internal information systems, such as critical supplier
readiness   and  potential  problems  associated  with   embedded
technologies, and will develop and implement plans to correct any
deficiencies found.

      Based  upon  the  Company's efforts to  date,  the  Company
believes  that  the costs of addressing the Company's  Year  2000
issues  have  not  been  and  are not currently  expected  to  be
material  to  the  Company's results of operations  or  financial
position;  however,  should  the  Company  and/or  its   critical
suppliers  fail  to  identify and/or correct material  Year  2000
issues,  such  failure  could impact  the  Company's  ability  to
operate as it did before the Year 2000, and subsequently  have  a
material  impact  on  the  Company's  results  of  operations  or
financial  position.  In such an event, the Company will  address
issues  as  they arise and strive to minimize any impact  on  the
Company's  operations.   The impact on  the  Company's  operating
results  of  such  failures and of any contingency  plans  to  be
designed  to  address such events cannot be  determined  at  this
time.

                               10
                                
<PAGE>

RISK FACTORS AND FORWARD LOOKING INFORMATION

      THIS  REPORT  CONTAINS  CERTAIN FORWARD-LOOKING  STATEMENTS
WITHIN  THE  MEANING  OF SECTION 27A OF THE  SECURITIES  ACT  AND
SECTION 21E OF THE EXCHANGE ACT.  SUCH STATEMENTS REFER TO EVENTS
THAT COULD OCCUR IN THE FUTURE OR MAY BE IDENTIFIED BY THE USE OF
WORDS SUCH AS "INTEND," "PLAN," "BELIEVE," CORRELATIVE WORDS, AND
OTHER EXPRESSIONS INDICATING THAT FUTURE EVENTS ARE CONTEMPLATED.
SUCH  STATEMENTS ARE SUBJECT TO INHERENT RISKS AND UNCERTAINTIES,
AND  ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE  PROJECTED
IN  THE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN OF  THE
RISK  FACTORS SET FORTH BELOW AND ELSEWHERE IN THIS  REPORT.   IN
ADDITION  TO  THE  OTHER INFORMATION CONTAINED HEREIN,  INVESTORS
SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS.

DEVELOPING  BUSINESS; LACK OF OPERATING RESULTS;  NO  INDEPENDENT
MARKET RESEARCH OF POTENTIAL DEMAND FOR CURRENT OPERATIONS.   The
Company  has been in the development stage and has only  recently
commenced sales and leases of its products.  Until recently,  the
Company's  activities have been limited to analyzing  the  gaming
industry,   consulting  with  persons  in  the  gaming  industry,
negotiating interim financing arrangements, developing  products,
establishing  a distribution network for its products,  marketing
its  products to the gaming industry, manufacturing its  products
and   commencing  product  sales.   Although  the   Company   has
experienced  modest sales development and revenue growth  in  the
first  quarter  of 1999, there is no guarantee that  the  Company
will  generate sufficient revenue to sustain its operations.   No
independent organization has conducted market research  providing
management  with  independent assurance from  which  to  estimate
potential demand for the Company's business operations.

ADDITIONAL  FINANCING MAY BE REQUIRED.  Based on presently  known
commitments and plans, the Company believes that it will be  able
to  fund  its  1999 operations and required expenditures  through
cash  on hand, debt reduction from the accelerated conversion  of
convertible  debt and cash from exercise of warrants,  cash  flow
from  operations, and lease financing sources.  In the event that
such sources are insufficient, the Company will need to seek cash
from   private   or   public  placements  of  debt   or   equity,
institutional or other lending sources or change operating  plans
to accommodate such liquidity issues.  No assurances can be given
that  the  Company  will successfully locate necessary  liquidity
sources.

REGULATION.   The gaming industry is a highly regulated  industry
and  is  subject  to  numerous statutes,  rules  and  regulations
administered  by  the  gaming commissions or  similar  regulatory
authorities  of  each jurisdiction.  Generally, the  Company  and
other  entities  which  seek  to  introduce  gaming  products  or
concepts  into  such  jurisdictions may  be  required  to  submit
applications relating to their activities or products  (including
detailed  background  information concerning controlling  persons
within  their organization) which are then reviewed for approval.
The  Company may incur significant expenses in seeking to  obtain
licenses  for its gaming products and concepts, and no  assurance
can be given that its products will be approved in any particular
jurisdiction.   The  failure  to  obtain  such  approval  in  any
jurisdiction  in  which  the Company may seek  to  introduce  its
products or concepts, could have a material adverse effect on the
Company's business.

INFLUENCE  ON  ELECTION OF DIRECTORS AND  ALL  OTHER  MATTERS  BY
CURRENT  OFFICERS AND DIRECTORS.  The officers and  directors  of
the  Company own approximately 57.6%  of the  outstanding  common
shares.   As a result, the officers and directors of the Company,
through their aggregate ownership of the Company's common  stock,
will be able to influence the election of directors and all other
matters submitted to a vote of the Company's stockholders.

UNCERTAINTY  OF MARKET FOR COMPANY'S PRODUCTS.  The  Company  has
various gaming products, such as the Shuffler and SecureDrop, and
variations of traditional games of Blackjack and Poker, that  are
ready  for  distribution.  Despite the additions to the Company's
product line, the Company has only recently

                               11
                                
<PAGE>

completed  the  development  process  for  some  of  its   gaming
products.   Although the market appears to be  receptive  to  the
Company's  products, there is no guarantee that the  market  will
remain  receptive and that the Company's future products will  be
received by the market in the same manner.

BENEFIT   TO  MANAGEMENT.   The  Company  may,  in  the   future,
compensate the Company's management with substantial salaries and
other   benefits.    The  payment  of  future  larger   salaries,
commissions  and the costs of these benefits may be a  burden  on
the  Company  and may be a factor in limiting or  preventing  the
Company  from  achieving  profitable operations  in  the  future.
However,  the Company would not continue to compensate management
with   such   substantial  salaries  and  other  benefits   under
circumstances  where  to  do so would have  a  material  negative
effect on the Company's financial condition.

NO  DIVERSIFICATION.   The  Company intends  to  manufacture  and
market  certain  gaming  products and concepts.   Therefore,  the
Company's  financial viability will depend almost exclusively  on
its  ability  to  generate revenues from its operations  and  the
Company will not have the benefit of reducing its financial risks
by relying on revenues derived from other operations.

STOCKHOLDERS  MAY BEAR RISK OF LOSS.  The capital  stock  of  the
Company  is  at risk of complete loss if the Company's operations
are unsuccessful.

FINANCIAL CONDITION.  There can be no assurance that the  Company
will have adequate funds to pay all of its operating expenses  or
that  the  Company  can  be  operated  in  a  profitable  manner.
Profitability depends upon many factors, including the success of
the Company's operations.

COMPETITION.   There  is significant competition  in  the  gaming
industry.   The  Company competes with established companies  and
other  entities  (many  of  which possess  substantially  greater
resources  than  the Company).  Almost all of the companies  with
which  the  Company competes are substantially larger, have  more
substantial  histories, backgrounds, experience  and  records  of
successful  operations, greater financial,  technical,  marketing
and other resources, more employees and more extensive facilities
than the Company now has, or will have in the foreseeable future.
It  is also likely that other competitors will emerge in the near
future.  There is no assurance that the Company will continue  to
compete   successfully  with  other  established  gaming  product
manufacturers.  The Company shall compete on the basis of quality
and  price.   Inability to compete successfully might  result  in
increased  costs,  reduced yields and  additional  risks  to  the
investors herein.

RISKS OF PROPRIETARY PRODUCTS AND GAMES.  The Company places  its
proprietary  products  and games, except SecureDrop,  in  casinos
under   short-term   lease  arrangements,  making   these   games
susceptible  to  replacement  due to pressure  from  competitors,
changes  in  economic  conditions,  obsolescence,  and  declining
popularity.   The  Company  intends to maintain  and  expand  the
number  of  installed  proprietary  products  and  games  through
enhancement of existing products and games, introduction  of  new
products  and games, and customer service, but there  can  be  no
assurance that these efforts will be successful. Introduction  of
new  proprietary  products and games involves significant  risks,
including whether the Company will be able to place its  products
and  games with casinos, the economic terms on which casinos will
accept the products and games, the popularity of the products and
games  with  gaming  patrons, and whether a successful  game  can
maintain its popularity over the long term. If the Company is not
successful  in introducing new games, the effects on the  Company
could  be  adverse.  The Company has filed trademark  and  patent
applications  to  protect  its intellectual  property  rights  in
certain  of  its  trademarks and innovations on  certain  of  its
proprietary  games,  respectively. At  this  time,  however,  the
United States Patent and Trademark Office has not acted upon  all
of these applications. There can be no assurance that the pending
patent  or trademark applications will actually issue as  patents
or  trademark registrations or that any of these rights will  not
be  infringed  by others.  Certain of the Company's products  and
games may have independent protection of

                               12
                                
<PAGE>

the  game  itself,  and  it is possible  that  competitors  could
produce  a  similar product or game without violating  any  legal
rights   of   the  Company.   The  Company  intends  to   promote
aggressively  its  trademarks  to  build  goodwill  and  customer
loyalty.  In  addition, the Company intends to  improve  and  add
innovations  to  certain of its games, which may  be  subject  to
legal  protection. There can be no assurance, however,  that  the
Company  will  be  successful in these efforts, that  innovations
will be subject to legal protection, or that the innovations will
give a competitive advantage to the Company.

FORWARD-LOOKING  STATEMENTS  AND ASSOCIATED  RISK.   This  Report
contains    forward-looking   statements   including   statements
regarding, among other items, the Company's growth strategies and
anticipated  trends in the Company's business  and  demographics.
These  forward-looking  statements  are  based  largely  on   the
Company's  expectations and are subject to a number of risks  and
uncertainties, certain of which are beyond the Company's control.
Actual results could differ materially from these forward-looking
statements  as a result of the factors described in this  section
"Risk  Factors  and Forward Looking Statements," including  among
others,  regulatory or economic influences.  In  light  of  these
risks  and  uncertainties, there can be  no  assurance  that  the
forward-looking  information contained in  this  Report  will  be
accurate.

LACK OF DIVIDENDS.  There can be no assurance that the operations
of  the Company will become profitable.  At the present time, the
Company  intends  to use any earnings which may be  generated  to
finance the growth of the Company's business.

DEPENDENCE ON KEY INDIVIDUALS.  The future success of the Company
is  highly  dependent  upon  the management  skills  of  its  key
employees  and  the  Company's  ability  to  attract  and  retain
qualified  key  employees.  The inability to  obtain  and  employ
these  individuals would have a serious effect upon the  business
of   the   Company.  The  Company  has  entered  into  employment
agreements  with  certain employees.  There can be  no  assurance
that  the  Company  will  be  successful  in  retaining  its  key
employees or that it can attract or retain the additional skilled
personnel required.

DEPENDENCE ON CHAIRMAN OF THE BOARD AND OTHER DIRECTORS.   During
1998 and 1997, certain members of the Company's Board of Directors
made  significant loans  to  the  Company  to  provide  necessary
liquidity to the Company.  As of March 31, 1999, such outstanding
loans were $1,235,000. There is no obligation of any kind by such
persons to continue lending funds to the Company, and there is no
assurance whatsoever that such persons would be  willing or  able
to  make  such loans available in the future if the Company is in
need of funds.

VULNERABILITY  TO FLUCTUATIONS IN THE ECONOMY.   Demand  for  the
Company's  products is dependent on, among other things,  general
economic conditions and international currency fluctuations which
are  cyclical in nature.  Prolonged recessionary periods  may  be
damaging to the Company.

"PENNY"  STOCK  REGULATION  OF  BROKER-DEALER  SALES  OF  COMPANY
SECURITIES.   As the Nasdaq Stock Market has minimum quantitative
requirements  and  the OTC Bulleting does not, the  Company  will
attempt  to  lists  its common stock on the OTC  Bulletin  Board.
Until  the Company obtains a listing on the NASDAQ Stock  Market,
if at all, the Company's securities may be covered by a Rule 15g-
9  under  the Exchange Act that imposes additional sales practice
requirements  on  broker-dealers  who  sell  such  securities  to
persons   other  than  established  customers  and  institutional
accredited  investors  (generally  institutions  with  assets  in
excess  of $5,000,000 or individuals with net worth in excess  of
$1,000,000  or  annual  income  exceeding  $200,000  or  $300,000
jointly  with  their spouse).  For transactions  covered  by  the
rule,  the broker-dealer must furnish to all investors  in  penny
stocks, a risk disclosure document required by Rule 15g-9 of  the
Exchange  Act,  make a special suitability determination  of  the
purchaser and have received the purchaser's written agreement  to
the transaction prior to the sale.  In order to approve a

                               13
                                
<PAGE>

person's  account for transactions in penny stock, the broker  or
dealer  must  (i)  obtain  information  concerning  the  person's
financial   situation,  investment  experience   and   investment
objectives;  (ii) reasonably determine, based on the  information
required  by paragraph (i) that transactions in penny  stock  are
suitable  for  the  person  and that the  person  has  sufficient
knowledge  and  experience in financial matters that  the  person
reasonably may be expected to be capable of evaluating the rights
of transactions in penny stock; and (iii) deliver to the person a
written statement setting forth the basis on which the broker  or
dealer made the determination required by paragraph (ii) in  this
section, stating in a highlighted format that it is unlawful  for
the  broker  or  dealer to effect a transaction in  a  designated
security  subject  to the provisions of paragraph  (ii)  of  this
section  unless the broker or dealer has received, prior  to  the
transaction,  a  written agreement to the  transaction  from  the
person; and stating in a highlighted format immediately preceding
the customer signature line that the broker or dealer is required
to  provide the person with the written statement and the  person
should not sign and return the written statement to the broker or
dealer  if  it does not accurately reflect the person's financial
situation,  investment experience and investment  objectives  and
obtain  from the person a manually signed and dated copy  of  the
written statement.  A penny stock means any equity security other
than a security (i) registered, or approved for registration upon
notice  of issuance on a national securities exchange that  makes
transaction  reports available pursuant to 17  CFR  11Aa3-1  (ii)
authorized or approved for authorization upon notice of issuance,
for  quotation in the NASDAQ system; (iii) that has  a  price  of
five  dollars  or  more; or (iv) whose issuer  has  net  tangible
assets   in   excess  of  $2,000,000  demonstrated  by  financial
statements  dated  less than fifteen months previously  that  the
broker  or  dealer  has reviewed and has a  reasonable  basis  to
believe  are  true and complete in relation to the  date  of  the
transaction with the person.  Consequently, the rule  may  affect
the ability of broker-dealers to sell the Company's securities.

                               14
                                
<PAGE>

PART II - OTHER INFORMATION
     
ITEM 1.  LEGAL PROCEEDINGS.
     
      On  March 18, 1999, Shuffle Master, Inc. ("Shuffle Master")
filed a complaint (Case No. A400777) in the District Court, Clark
County,  State  of Nevada (the "District Court")  against  former
employees  of  Shuffle  Master (who  are  now  employees  of  the
Company)  and  the Company.  The complaint alleges,  among  other
things,  fraud, breach of contract and conversion against certain
of  these  former  employees of Shuffle Master and  violation  of
Nevada's   Trade   Secret  Act,  interference  with   contractual
relations, breach of contract, violations of the Lanham  Act  and
civil  conspiracy to commit fraud against certain of these former
employees of Shuffle Master and the Company.  On March 26,  1999,
the  Company  removed  the action to the United  States  District
Court, District of Nevada (the "Federal Court"), and, on April 7,
1999, the Company filed a motion to dismiss certain of the causes
of  action  alleged by  Shuffle Master in the complaint.   In May
1999, the Federal Court denied the Company's motion  to  dismiss,
denied  Shuffle  Master's Motion  to Remand to the District Court
the  allegations  regarding  violations  of  the  Lanham Act, and
remanded  the  allegations regarding fraud, civil  conspiracy  to
commit  fraud, breach of contract, and conversion to the District
Court.  Management  believes that the complaint is without  merit
and  intends  vigorously  to  defend  the  allegations  contained
therein.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

      The  Company placed $1,900,000 in convertible debt  in  the
first quarter of 1999.  The convertible debt accrues interest  at
9.5%  per  annum  and  is convertible into restricted  shares  of
common stock after six months at $2.60 per share.  Each purchaser
of  a $50,000 unit of convertible debt also received warrants for
the  purchase of 9,100 shares of common stock at $3.00 per share.
The  convertible  debt issue was completed in  March  1999.   The
Company's Board of Directors is considering acceleration  of  the
conversion date and the  warrant  exercise date.

      With respect to the convertible debt issued by the Company,
the  Company  relied upon Section 4(2) of the Securities  Act  of
1933, as amended (the "Securities Act") in that the purchasers of
the  convertible  debt were all accredited  investors  with  pre-
existing  relationships  with  the  Company.   Accordingly,   the
issuance of the convertible debt was exempt from the registration
requirements of Section 5 of the Securities Act.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.
     
     None.
     
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
     
     The Company held its Annual Meeting of Stockholders on March
29, 1999 (the "Annual Meeting").  With respect to the results  of
the  Annual  Report, the Company makes reference to  its  Current
Report  on  Form  8-K  dated March 29, 1999 and  filed  with  the
Securities and Exchange Commission on April 5, 1999.

ITEM 5.  OTHER INFORMATION.
     
      On  April  29, 1999, the Board expanded the  Board  by  two
seats,   appointing  Richard  Jaslow  and  Jill  Bayless  as  new
directors to fill the vacancies. Richard S. Huson stepped down as
Chairman of the Board due to health  reasons  but continues  as a
director; Bob L. Smith was appointed Chairman  of the  Board  and
Jill Bayless was appointed Vice Chairman of the Board.  The Board

                               15
                                
<PAGE>

also created an Executive Committee consisting of the Chairman of
the Board, the Vice Chairman of the Board and the Chief Executive
Officer.

      The  Board also appointed an Audit Committee consisting  of
Ronald Keil, Chairman, David Sampson and Jill Bayless.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.
     
       EXHIBITS.
       
     EXHIBIT NUMBER   DESCRIPTION
     --------------   -----------
     
          4.01        Form of 9.5% Convertible Note Due 2004
          4.02        Form of Warrant
          27.01       Financial Data Schedule


       REPORT ON FORM 8-K.
       
      During  the  three month period ended March 31,  1999,  the
Company filed a Form 8-K dated March 29, 1999 with the Securities
and  Exchange Commission on April 5, 1999 reporting, among  other
things,  the  results  of  the  Annual  Meeting which changed the
Company's state of incorporation to Nevada.


                            SIGNATURE
                                
     In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf  by  the
undersigned, thereunto duly authorized.

                                   CASINOVATIONS INCORPORATED
                               ---------------------------------
                                           (Registrant)
                                                 
                                                 
Date:  May 17, 1999      By: /s/ Steven J. Blad
                              -------------------------------------
                              Steven J. Blad
                         Its: President and Chief Executive Officer

                               16

<PAGE>
                          EXHIBIT INDEX

 EXHIBIT                                                  PAGE
 NUMBER                    DESCRIPTION                   NUMBER
---------  -------------------------------------------  --------
           
  4.01     Form of 9.5% Convertible Note Due 2004           18

  4.02     Form of Warrant                                  21

 27.01     Financial Data Schedule                         ___
                                                        

                               17