<PAGE>



                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549


                                   FORM 10-QSB
                                   -----------

[X]     Quarterly  Report  pursuant  to  Section  13  or 15(d) of the Securities
        Exchange  Act  of  1934

For  the  quarterly  period  ended  July  31,  2002

[ ]     Transition  Report  pursuant  to Section 13 or 15(d) of the Securities
        Exchange  Act  of  1934

        For  the  transition  period  from  __________  to  __________

        Commission  File  Number  000-20685

                             AMERICAN WAGERING, INC.
                             -----------------------
        (Exact name of Small Business Issuer as specified in its charter)

Nevada                                              88-0344658
--------------------------------                    ----------
(State or other jurisdiction of                     (IRS Employer
incorporation)                                      Identification No.)

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

                                  702-735-0101
                                  ------------
                           (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  Securities  Exchange Act of 1934 during the preceding 12
months  (or  for  such  shorter period that the issuer was required to file such
reports),  and  (2) has been subject to such filing requirements for the past 90
days  [X]  Yes    [ ]  No

State the number of shares outstanding of each of the issuer's classes of common
equity,  as of the latest practicable date:  7,836,846 shares of Common Stock as
of  August  1,  2002.

Transitional  Small  Business  Disclosure Format (check one):  Yes [  ]   No [X]


<PAGE>


                    AMERICAN WAGERING, INC. AND SUBSIDIARIES

                                      INDEX



PART  I          FINANCIAL  INFORMATION

Item  1.     Financial Statements:                                          Page
             Consolidated Balance Sheets - July 31, 2002 (Unaudited)
             and January 31, 2002                                              3


             Consolidated Statements of Operations - Three Months Ended
             July 31, 2002 and 2001 (Unaudited)                                4

             Consolidated Statements of Operations - Six Months Ended
             July 31, 2002 and 2001 (Unaudited)                                5

             Consolidated Statements of Cash Flows - Six Months Ended
             April 30, 2002 and 2001 (Unaudited)                               6

             Notes to Consolidated Financial Statements (Unaudited)         7-12

Item  2.     Management's Discussion and Analysis of Financial
             Condition and Results of Operations                           13-17


PART  II               OTHER  INFORMATION

Item 1.      Legal Proceedings                                             18-19

Item 2.      Changes in Securities and Use of Proceeds                        19

Item 3.      Defaults upon Senior Securities                                  19


Item 4.      Submission of Matters to a Vote of Security Holders              19

Item 5.      Other Information                                                19

Item 6.      Exhibits and Reports on Form 8-K                                 19


                                       2

<PAGE>

PART  I          FINANCIAL INFORMATION

Item  1.     Financial Statements

<TABLE>
<CAPTION>
                            AMERICAN  WAGERING,  INC.
                          CONSOLIDATED  BALANCE  SHEETS

                                                         July 31,   January 31,
                                                            2002       2002
                                                         (Unaudited)
<S>                                                    <C>          <C>

ASSETS
  CURRENT ASSETS
    Cash                                              $ 2,155,675   $ 3,756,113
    Restricted deposits                                    68,939       168,200
    Accounts receivable, net of allowance for
     doubtful accounts of $25,798 and $14,910             762,299       657,422
    Inventories                                           556,493       450,590
    Deferred tax asset, net                               272,000       272,000
    Prepaid expenses and other current assets             170,927       234,879
                                                      ------------  ------------
      Total Current Assets                              3,986,333     5,539,204
  PROPERTY AND EQUIPMENT, net                           2,921,440     3,280,757
  NOTE RECEIVABLE, net of discount of $781,150            624,600            --
  GOODWILL                                                103,725       103,725
  OTHER INTANGIBLES                                        98,660       367,135
  OTHER ASSETS                                            192,384       230,996
                                                      ------------  ------------
      Total Assets                                    $ 7,927,142   $ 9,521,817
                                                      ============  ============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
  Current portion of long-term debt                   $   102,899   $    90,586
  Accounts payable                                        215,227       263,565
  Accrued expenses                                      1,099,596     1,245,220
  Unpaid winning tickets                                  343,181     1,109,674
  Customer deposits and other current liabilities         397,841       784,061
                                                      ------------  ------------
      Total Current Liabilities                         2,158,744     3,493,106
LONG-TERM DEBT, less current portion                    1,705,023     1,720,340
OTHER LONG TERM LIABILITIES                                25,000            --
                                                      ------------  ------------
      Total Liabilities                                 3,888,767     5,213,446
                                                      ------------  ------------

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

STOCKHOLDERS' EQUITY
  Series A preferred stock - 10% cumulative;
   $.01 par value;
    Authorized: 25,000,000 shares; issued and
     outstanding: 11,924 shares                         1,092,400     1,192,400
  Common stock - $.01 par value; authorized:
   25,000,000 shares;
    Issued: 7,897,946 shares                               78,979        78,979
  Additional paid-in capital                           14,382,515    14,382,515
  Accumulated deficit                                 (11,511,826)  (11,291,830)
  Less 61,100 common shares in treasury, at cost         (327,493)     (327,493)
                                                      ------------  ------------
      Total Stockholders' Equity                        3,714,575     4,034,571
                                                      ------------  ------------

        Total Liabilities and Stockholders' Equity    $ 7,927,142   $ 9,521,817
                                                      ============  ============
</TABLE>

See notes to consolidated financial statements.


                                       3

<PAGE>

<TABLE>
<CAPTION>

                           AMERICAN  WAGERING,  INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                       FOR THE THREE MONTHS ENDED JULY 31,
                                   (UNAUDITED)


                                                        2001         2002
                                                        ----         ----
<S>                                                 <C>          <C>
REVENUES
     Wagering                                       $  673,579   $1,160,133
     Systems                                         1,254,675    1,889,117
                                                    -----------  -----------
               Total Revenues                        1,928,254    3,049,250
                                                    -----------  -----------

OPERATING COSTS AND EXPENSES
     Direct Costs
          Wagering                                     912,097      920,709
          Systems                                      587,373      794,311
                                                    -----------  -----------
               Total Direct Costs                    1,499,470    1,715,020
     Research and development                          242,543      203,312
     Selling, general and administrative               573,834      567,621
     Depreciation and amortization                     101,203      152,521
                                                    -----------  -----------
               Total Operating Costs and Expenses    2,417,050    2,638,474
                                                    -----------  -----------

OPERATING INCOME (LOSS)                               (488,796)     410,776

OTHER INCOME (EXPENSE)
     Litigation judgment                              (252,532)          --
     Interest income                                    10,687       17,897
     Interest expense                                  (51,197)     (40,435)
     Other, net                                         27,141       52,211
                                                    -----------  -----------
               Total Other Income (Expense)           (265,901)      29,673
                                                    -----------  -----------

INCOME (LOSS) FROM CONTINUING OPERATIONS              (754,697)     440,449
                                                    -----------  -----------

DISCONTINUED OPERATIONS
     Loss from discontinued operations                (130,658)    (192,721)
     Gain on disposal of discontinued operations       631,436           --
                                                    -----------  -----------
               Total Discontinued Operations           500,778     (192,721)
                                                    -----------  -----------

NET INCOME (LOSS)                                   $ (253,919)  $  247,728
                                                    ===========  ===========

BASIC AND DILUTED INCOME (LOSS) PER SHARE
     Continuing operations                          $    (0.10)  $     0.05
                                                    ===========  ===========
     Discontinued operations                        $     0.06   $    (0.02)
                                                    ===========  ===========
     Net income (loss)                              $    (0.04)  $     0.03
                                                    ===========  ===========

</TABLE>

See notes to consolidated financial statements.


                                       4


<PAGE>

<TABLE>
<CAPTION>

                           AMERICAN  WAGERING,  INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                        FOR THE SIX MONTHS ENDED JULY 31,
                                   (UNAUDITED)

                                                        2002          2001
                                                        ----          ----
<S>                                                 <C>          <C>
REVENUES
     Wagering                                       $2,030,483   $2,673,581
     Systems                                         2,172,338    2,676,056
                                                    -----------  -----------
               Total Revenues                        4,202,821    5,349,637
                                                    -----------  -----------

OPERATING COSTS AND EXPENSES
     Direct Costs
          Wagering                                   1,854,765    1,923,400
          Systems                                      982,111    1,145,206
                                                    -----------  -----------
               Total Direct Costs                    2,836,876    3,068,606
     Research and development                          459,800      401,497
     Selling, general and administrative             1,001,781    1,050,848
     Depreciation and amortization                     209,504      268,643
                                                    -----------  -----------
               Total Operating Costs and Expenses    4,507,961    4,789,594
                                                    -----------  -----------

OPERATING INCOME (LOSS)                               (305,140)     560,043
                                                    -----------  -----------

OTHER INCOME (EXPENSE)
     Litigation judgment                              (252,532)          --
     Interest income                                    28,851       36,521
     Interest expense                                  (90,762)     (79,496)
     Other, net                                         58,093       90,074
                                                    -----------  -----------
               Total Other Income (Expense)           (256,350)      47,099
                                                    -----------  -----------

INCOME (LOSS) FROM CONTINUING OPERATIONS              (561,490)     607,142
                                                    -----------  -----------

DISCONTINUED OPERATIONS
     Loss from discontinued operations                (216,933)    (486,988)
     Gain on disposal of discontinued operations       631,436           --
                                                    -----------  -----------
               Total Discontinued Operations           414,503     (486,988)
                                                    -----------  -----------

NET INCOME (LOSS)                                   $ (146,987)  $  120,154
                                                    ===========  ===========

BASIC AND DILUTED INCOME (LOSS) PER SHARE
     Continuing operations                          $    (0.08)  $     0.07
                                                    ===========  ===========
     Discontinued operations                        $     0.05   $    (0.06)
                                                    ===========  ===========
     Net income (loss)                              $    (0.03)  $     0.01
                                                    ===========  ===========

</TABLE>

See notes to consolidated financial statements.


                                       5

<PAGE>

<TABLE>
<CAPTION>
                             AMERICAN  WAGERING,  INC.
                     CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS
                      FOR  THE  SIX  MONTHS  ENDED  JULY  31,



                                                             2002         2001
                                                       ------------  -----------
<S>                                                    <C>           <C>
OPERATING ACTIVITIES
    Net cash used in operating activities              $(1,567,367)  $ (437,936)
                                                       ------------  -----------

INVESTING ACTIVITIES
    Investment in restricted deposits                      (53,971)      (3,231)
    Withdrawals of restricted deposits                     153,232           --
    Retirement of assets                                        --       52,226
    Purchase of property and equipment                     (69,931)    (283,324)
    Deposits and other assets                               38,612       49,920
                                                       ------------  -----------
    Net cash provided by (used in) investing
      activities                                            67,942     (184,409)
                                                       ------------  -----------

FINANCING ACTIVITIES
    Repayment of borrowings                                (46,339)     (36,048)
    Proceeds from borrowings                                68,335       44,017
    Redemption of preferred stock                          (50,000)          --
    Dividends                                              (73,009)     (73,717)
                                                       ------------  -----------
    Net cash used in financing activities                 (101,013)     (65,748)
                                                       ------------  -----------


NET DECREASE IN CASH                                    (1,600,438)    (688,093)
CASH AT BEGINNING OF PERIOD                              3,756,113   $2,200,759
                                                       ------------  -----------
CASH AT END OF PERIOD                                  $ 2,155,675   $1,512,666
                                                       ============  ===========

</TABLE>


See notes to consolidated financial statements.


                                       6

<PAGE>

                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.  Basis  of  Presentation

     The  accompanying  unaudited  consolidated  financial  statements have been
prepared  in  accordance  with  accounting  principles generally accepted in the
United  States  for  interim  financial information and the instructions to Form
10-QSB  and Item 310(b) of Regulation S-B.  Accordingly, they do not include all
of  the  information  and  disclosures required by generally accepted accounting
principles  for  annual financial statements.  In the opinion of management, all
adjustments  considered  necessary  for  a fair presentation have been included.
The  results  of operations for an interim period are not necessarily indicative
of  results  for  the  full  year.  For further information, please refer to the
consolidated  financial  statements  of American Wagering, Inc. (the "Company"),
and  the  related  notes,  included  within  the Company's Annual Report on Form
10-KSB  for  the  fiscal  year ended January 31, 2002, previously filed with the
Securities  and Exchange Commission from which the consolidated balance sheet at
January  31,  2002,  was  derived.  All  significant  inter-company accounts and
transactions  have  been  eliminated  in  the  consolidation.

     Certain  amounts  in the consolidated financial statements of prior periods
have  been  reclassified  to  conform  to  the  current  period  presentation.

2.  Divestiture  of  Internet  Wagering

     On  June  18,  2002  the  Company  entered into a Share Sale Agreement with
Euraust  Limited ("Euraust"), an Australian company, in which the Company agreed
to  sell  the  Mega$ports  (ACT) Pty. Ltd. ("Mega$ports") subsidiary to Euraust.
The  sale  of  Mega$ports  is  pursuant  to an agreement reached with the Nevada
Gaming  Commission in answer to a complaint.   The Share Sale Agreement provides
in  part  that:

1.   The  Company  will  sell  all  of the issued capital stock in Mega$ports to
     Euraust for $2,800,000 Australian dollars (AUD) less liabilities assumed of
     $282,000  AUD  or  $1,405,750  USD  net  without interest. In addition, the
     Company  will  assign  the  benefit  of  all  loans due to the Company from
     Mega$ports  to  Euraust  for  $1.00  AUD.

2.   The  Company  received  $18,000  AUD  on  August  6,  2002.

3.   The  Company will receive the balance in varying monthly installments based
     on  0.1667%  of  wagering handle commencing in March of 2003. After imputed
     interest  at  the  rate  of 12.0%, the Company has valued the receivable at
     $624,600  USD.

4.   In  the  event  that  Euraust defaults on any required payment and does not
     correct  such  default  within  60 days, the whole of the principal balance
     will  become  immediately  due  and  payable.

5.   Pursuant  to  a  separate  agreement,  the Company, through its subsidiary,
     Computerized  Bookmaking  Systems,  Inc.  ("CBS"),  will  provide Euraust a
     license  to  utilize  the  Mega$ports  sports  software on a non-exclusive,
     non-transferable basis, and a license to


                                       7

<PAGE>

     utilize  the  Mega$ports  name,  logo,  service  mark  and  domain  name in
     connection  with  Euraust's  operation.

6.   Pursuant  to  a  separate  agreement, the Company, through CBS will provide
     Euraust  with  software  support  for  the Mega$ports sports software for a
     period  of  24  months.

     Although  the  sale was consummated on July 1, 2002 and has been recognized
by  the  Australian government (thereby terminating the Company's involvement in
the  Mega$ports  operation),  the  sale is subject to the approval of the Nevada
Gaming  Commission.  The  Company  is  unable to provide any assurance that such
approval  will  be granted; if the required approval is not granted, the Company
estimates  its  ability  to  collect  it's  receivable  will be reduced to zero.

     In  accordance with the Financial Accounting Standards Board's Statement of
Financial  Accounting  Standards ("SFAS") No. 144, Accounting for the Impairment
or  Disposal  of  Long-lived  Assets,  the operations of Mega$ports (ACT) of the
prior  period  have  been  reclassified  as  discontinued  operations  and other
reclassifications  have  been  made  in  the  January 31, 2002, balance sheet to
conform  with  the  new  standard.

3.  Goodwill  and  Other  Intangible  Assets

     As  of  July  31,  2002,  goodwill  primarily consists of the excess of the
purchase  price  over  fair  value of net assets acquired in connection with the
acquisition  of CBS, the subsidiary that designs, sells, installs, and maintains
the  Company's  primary  computerized  race  and  sports  book  systems product.

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

     In July 2001, the Financial Accounting Standards Board issued SFAS No. 142,
Goodwill  and Other Intangibles.  Under SFAS No. 142, goodwill and certain other
intangibles are no longer subject to amortization over an estimated useful life.
Rather,  goodwill  and other indeterminate life intangible assets are subject to
at  least  an  annual  recoverability  test,  which  assesses  for  impairment.
Management  evaluated  goodwill and other intangible assets for impairment as of
July 31, 2002.  Such evaluation included, among other analysis, future cash flow
and profitability estimates.  There were no impairment provisions taken for, and
no  effect  of  the adoption of SFAS 142 on, the six months ended July 31, 2002.

4.  Net  Income  (Loss)  per  Share

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


                                       8

<PAGE>



                                             Three months ended July 31,
                                                 2002         2001
                                              -----------  -----------
Income (loss)  from continuing operations     $ (754,697)  $  440,449
Preferred stock dividends                        (36,761)     (36,248)
                                              -----------  -----------
Net income (loss), as adjusted                $ (791,458)  $  404,201
                                              ===========  ===========

Gain from discontinued operations             $  500,778   $ (192,721)
                                              ===========  ===========


Net income (loss)                             $ (253,919)  $  247,728
Preferred stock dividends                        (36,761)     (36,248)
                                              -----------  -----------
Net income (loss), as adjusted                $ (290,680)  $  211,480
                                              ===========  ===========

Basic weighted average shares outstanding      7,836,846    8,076,665
                                              ===========  ===========


Diluted weighted average shares outstanding    7,907,416    8,076,665
                                              ===========  ===========




                                              Six months ended July 31,
                                                 2002         2001
                                              -----------  -----------
Income (loss) from continuing operations      $ (561,490)  $  607,142
Preferred stock dividends                        (73,009)     (73,717)
                                              -----------  -----------
Net income (loss), as adjusted                $ (634,499)  $  533,425
                                              ===========  ===========

Gain from discontinued operations             $  414,503   $ (486,988)
                                              ===========  ===========


Net income (loss)                             $ (146,987)  $  120,154
Preferred stock dividends                        (73,009)     (73,717)
                                              -----------  -----------
Net income (loss), as adjusted                $ (219,996)  $   46,437
                                              ===========  ===========


Basic weighted average shares outstanding      7,836,846    8,076,665
                                              ===========  ===========


Diluted weighted average shares outstanding    8,038,478    8,076,665
                                              ===========  ===========




5.  Business  Segments

     The  Company  conducts  business  with  customers  through its Wagering and
Systems  segments.   The  Wagering  segment  operated  39  race and sports books
throughout  Nevada  as  of July 31, 2002.  The Systems segment designs, markets,
installs  and  maintains  sports  and  race book wagering systems for the sports
betting industry.  During the three months ended July 31, 2002, the Keno segment
was  discontinued  and Mega$ports Australia, previously included in the Wagering
segment,  was  sold.  Both  the  Keno  and  Australia operations are included in
discontinued  operations.



                                       9

<PAGE>

Amounts  presented  below for prior periods have been reclassified to conform to
the  current  period  presentation.



                           Three months ended July 31,
Continuing operations:        2002             2001
                              ----             ----
Operating income (loss)
  Wagering                 $  (310,410)    $  140,497
  Systems                      296,515        726,162
  SG&A                        (474,901)      (455,883)
                           ------------    -----------
                           $  (488,796)    $  410,776
                           ============    ===========



                            Six months ended July 31,
Continuing operations:          2002           2001
                                ----           ----
Operating income (loss)
  Wagering                 $    33,573     $  597,205
  Systems                      486,839        831,170
  SG&A                        (825,552)      (868,332)
                           ------------    -----------
                           $  (305,140)    $  560,043
                           ============    ===========



                          Three months ended July 31,
                                2002        2001
                                ----        ----
Discontinued operations:
Operating loss:
  Mega$ports Australia     $  (107,460)    $ (108,950)
  Keno                         (25,456)       (89,474)
                           ------------    -----------
                           $  (132,916)    $ (198,424)
                           ============    ===========



                           Six months ended July 31,
                                2002        2001
                                ----        ----
Discontinued operations:
Operating loss:
  Mega$ports Australia     $  (164,568)    $ (221,782)
  Keno                         (56,576)      (244,197)
                           ------------    -----------
                           $  (221,144)    $ (445,979)
                           ============    ===========



6.  Litigation

     Racusin:  The  Company  has  been  in  litigation  since  1995 with Michael
     --------
Racusin  who  introduced  certain underwriters to the Company in connection with
the Company's initial public offering.  The Company disputed Mr. Racusin's claim
for  compensation under agreements that the Company believed were unenforceable.
A  verdict  was rendered in favor of Mr. Racusin and a judgment was entered. The
terms of the judgment required the Company to issue him 239,819 common shares of
the  Company's  stock (337,500 shares awarded in the judgment less 97,681 shares
for a cash award previously paid); at January 31, 2000, the Company had reserved
the  shares  for  this  matter.  Mr.


                                       10

<PAGE>

Racusin  appealed the judgment claiming that only a cash remedy was appropriate.
The  appellate  court agreed and remanded the matter back to the trial court for
determination as to the cash value of the 337,500 shares. The initial trial date
of  September  16,  2002  has  been  postponed  until November 12, 2002 due to a
scheduling  conflict  with  the court. A number of yet-to-be adjudicated factors
might  impact  the  determination  and,  accordingly, the Company is not able to
fully  determine  the  economic impact of these events at this time but believes
based  upon  the  advice of counsel that an additional cash award may range from
approximately  $360,000  to  $1,700,000,  plus  accrued  interest.

     Imagineering  Systems,  Inc.:  The  Company has been involved in litigation
     -----------------------------
with  Imagineering  Systems,  Inc. since March 1998.  In October 2000, a verdict
was  rendered  and  later  a  judgment entered in favor of Imagineering totaling
$1,397,000;  Imagineering subsequently agreed to a Court directed alternative to
reduce  this amount to $897,000.  The Company has bonded an appeal and believes,
based  upon the advice of legal counsel, that the lower end of the probable loss
range  is  substantially  less than the reduced judgment.  It is anticipated the
Nevada  Supreme  Court  will  hear  this matter within the next 12 to 24 months.

     Willow:  The  lawsuit between the Company and Willow International Ventures
     -------
regarding  the  "Mega$ports"  trademark  was  settled  on  August 28, 2002.  The
Settlement  Agreement  provides  in  part  that:

1.   Subject  to  the  Company's  existing  rights within Australia (licensed to
     Euraust  Limited  pursuant  to the provisions of the Share Sale Agreement),
     the  Company  shall  assign to Willow all of the Company's right, title and
     interest  in  and  to  the  trademarks.

2.   The  Company  retains  all right, title and interest presently held in: (i)
     the  domain  name  megasports.com.au: (ii) all intellectual property right,
     title and interest in and to the intangible assets, if any, emanating from,
     with  respect  to,  relating to or arising from this domain name; and (iii)
     the  disputed  Mega$ports trademarks to the extent such trademarks are used
     in  association with the provision of wagering services by Australian-based
     or  Australian-connected  operations.

3.   The  Company  will be unconditionally entitled to use the megasports.com.au
     domain  name  and  trademarks  in connection with the provision of wagering
     services  within  Australia.

4.   The  Company  shall  change  the  name  of  Mega$ports,  Inc.  (a  Nevada
     corporation)  to  a  name that is not identical, or confusingly similar to,
     the  trademarks. Such changed name shall not include the term "Mega$ports".

5.   The  Company  granted  to Willow an exclusive license to use the Australian
     trademarks in Australia in association with the products or services in any
     industry  other  than  the  business  of  providing  wagering  services.

6.   Willow  will  not  interfere  with the Company's rights with respect to the
     domain  megasports.com.au.


                                       11

<PAGE>

7.   The  Company  shall  dismiss its counterclaim against Willow with prejudice
     and  without  costs.

8.   Willow  shall  dismiss  its  lawsuit against the Company with prejudice and
     without  costs.

9.   Each  party  shall  be  responsible  for  its own costs and attorneys' fees
     incurred  in connection with the prosecution and defense of the lawsuit and
     of  the  counterclaim.

     In  anticipation  of the proposed settlement, on July 22, 2002, the Company
officially  changed the name of Mega$ports, Inc. to Contest Sports Systems, Inc.
Additionally,  as  a  result  of  the  settlement,  the  Company  wrote-off  the
Mega$ports  trademark  in  the amount of $252,532 in this quarter ended July 31,
2002.

     Jean Development Co., et.al.: The Company is a defendant in a claim brought
     -----------------------------
by  Jean Development Company, Jean Development West and Railroad Pass Investment
Group  alleging the nonpayment of fees associated with the operation of the keno
game  by  AWI  Keno,  Inc.  The Company is currently involved in discussions and
expects  this matter to be settled without material impact upon the Company.  In
the event a settlement cannot be reached, the Company believes the impact of the
lawsuit  will  be  immaterial  to  the  overall  operations  of  the  Company.

     Other:  The  Company  is involved in certain other legal matters arising in
     ------
the  ordinary  course  of  business.  In the opinion of management, based on the
advice  of  counsel,  the  outcome of the other actions will not have a material
effect  on  the  financial  position, results of operations or cash flows of the
Company.

     The  ultimate  disposition  of  certain  issues involved in the Racusin and
Imagineering  matters  cannot  be  determined  at this time.  In accordance with
Statement  of  Financial  Accounting  Standard  No.  5,  "Accounting  for
Contingencies,"  the Company has recorded an allowance for probable losses equal
to  the  lower end of the estimated probable loss range and periodically revises
these  estimates  as  facts  and  circumstances  change.

7.     Regulatory  Matters

The scope of the Company's licensed race and sports books operation in the State
of  Nevada  is  limited  by  regulation and statute (as well as certain federal,
county  and  local laws and ordinances).  The passage of legislation designed to
limit or prohibit race and/or sports wagering, at any level of government, would
likely  have  a  material adverse affect upon the Company's wagering operations.

     All  jurisdictions  that  have  legalized  gaming require various licenses,
permits  and  approvals for manufacturers and distributors of gaming devices and
equipment.  In  general, such requirements involve restrictions similar to those
of  Nevada.


                                       12

<PAGE>

Item  2.  Management's  Discussion  and  Analysis  and  Results  of  Operations

This  report  on  Form 10-QSB contains certain forward-looking statements within
the meaning of section 21(e) of the Securities Exchange Act of 1934, as amended,
and  other  applicable securities laws.  All statements other than statements of
historical  fact  are  "forward-looking  statements"  for  purposes  of  these
provisions,  including any projections of earnings, revenues, or other financial
items; any statements of the plans, strategies, and objectives of management for
future  operation; any statements concerning proposed new products, services, or
developments,  any  statements  regarding  future  economic  conditions  or
performance,  statements  of belief, and any statement of assumptions underlying
any  of  the foregoing.  Such forward-looking statements are subject to inherent
risks  and  uncertainties, and actual results could differ materially from those
anticipated  by  the  forward-looking  statements.

     On  June  18,  2002  the  Company  entered into a Share Sale Agreement with
Euraust  Limited ("Euraust"), an Australian company, in which the Company agreed
to sell the Mega$ports (ACT) Pty. Ltd. ("Mega$ports) subsidiary to Euraust.  The
sale of Mega$ports Australia is pursuant to an agreement reached with the Nevada
Gaming  Commission in answer to a complaint.   The Share Sale Agreement provides
in  part  that:

1.   The  Company  will  sell  all  of the issued capital stock in Mega$ports to
     Euraust for $2,800,000 Australian dollars (AUD) less liabilities assumed of
     $282,000  AUD  or  $1,405,750  USD  net  without interest. In addition, the
     Company  will  assign  the  benefit  of  all  loans due to the Company from
     Mega$ports  to  Euraust  for  $1.00  AUD.

2.   The  Company  received  $18,000  AUD  on  August  6,  2002.

3.   The  Company will receive the balance in varying monthly installments based
     on  0.1667%  of  wagering handle commencing in March of 2003. After imputed
     interest  at  the  rate  of 12.0%, the Company has valued the receivable at
     $624,600  USD.

4.   In  the  event  that  Euraust defaults on any required payment and does not
     correct  such  default  within  60 days, the whole of the principal balance
     will  become  immediately  due  and  payable.

5.   Pursuant  to  a  separate  agreement,  the Company, through its subsidiary,
     Computerized  Bookmaking  Systems,  Inc.  ("CBS"),  will  provide Euraust a
     license  to  utilize  the  Mega$ports  sports  software on a non-exclusive,
     non-transferable basis, and a license to utilize the Mega$ports name, logo,
     service  mark  and  domain  name  in  connection  with Euraust's operation.

6.   Pursuant  to  a  separate  agreement, the Company, through CBS will provide
     Euraust  with  software  support  for  the Mega$ports sports software for a
     period  of  24  months.

     Although  the  sale of Mega$ports (ACT) was consummated on July 1, 2002 and
has  been  recognized  by  the  Australian  government  (thereby terminating the
Company's  involvement in Mega$ports (ACT)), the sale is subject to the approval
of the Nevada Gaming Commission.  The


                                       13

<PAGE>

Company  is  unable to provide any assurance that such approval will be granted;
if  the  required approval is not granted, the Company estimates the probability
of  collecting  the  remainder  due  on  the  sales price is extremely doubtful.

     Due  to  prohibitive costs, the Company discontinued its keno operations in
July  2002.  The  Company  has  no  plans  to  re-enter  the  keno  market.

     The Company's primary operating strategy for its continuing operations over
the  next  twelve  months  is  to  focus  on  its  core  businesses of operating
race/sports  books  (through  Leroy's)  and  developing/selling/maintaining
race/sports books systems (through CBS) in order to become more efficient and to
cut  costs.  In  Nevada,  our  strategy is to expand upon our current base of 39
books  and  sell  our  new T-3 terminals and related maintenance contracts.  The
Company  also  intends  to  devote  resources  towards developing a self-service
wagering  kiosk  that  we expect to complete in the fourth quarter of the fiscal
year  ending January 31, 2003.  This new self-service wagering kiosk would allow
patrons  to  place  wagers  on  their  own  without the assistance of employees.
Patrons  will  be  able  to  wager  24 hours a day on all available events.  The
self-service  sports  wagering  kiosk  would  allow  us to operate profitably in
smaller  casinos where labor costs have been prohibitive and to achieve improved
efficiency  at  larger  casinos.  The  Company  is  also developing a non-gaming
version  of the kiosk that it anticipates will be ready in the fourth quarter of
the  fiscal  year  ending  January  31,  2003.

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

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

RESULTS  OF  OPERATIONS

Six  months  ended  July  31,  2002  and  2001.

Revenues

Revenues  for the six months ended July 31, 2002 decreased $1,146,816 (21.4%) to
$4,202,821 from the six months ended July 31, 2001.  The decrease in revenues is
primarily  attributed  to  a decrease in Wagering revenues of $643,098 resulting
from  a  lower net win percentage (revenue divided by handle) during the current
period;  and  a  decrease  of  $503,719 in Systems revenues resulting from lower
equipment  sales  during  the  current  period.

Wagering  Operations
--------------------


                                       14

<PAGE>

Revenues from wagering decreased $643,098 (24.1%) to $2,030,483 in the first six
months of 2002 as compared with the same six-month period in 2001.  The decrease
in  revenue  is  attributable  to  a  reduction  in the net win percentage and a
decrease in revenues due to the closure of the Nevada pari-mutuel race location.
The  net win percentage was 6.0% for the six months ended July 31, 2002 compared
to  7.3% for the six months ended July 31, 2001.    Pari-mutuel race revenue was
$0  compared  to  $104,289  for  the six months ended July 31, 2001.  Handle was
$34,031,359  for  the  six months ending July 31, 2002, a decrease of $1,068,142
(3.0%)  as  compared  with  the  same six-month period of 2001.  The decrease in
wagering  handle is attributable to closed locations. There is no assurance that
our  handle  will  not  decrease  in  the  future.  Elimination  of unprofitable
locations,  closure  of  host  properties,  changes  in  state  and/or  federal
regulations, and other factors beyond our control may result in further declines
in  handle.  An  increase or decrease in handle is not necessarily indicative of
an  increase  or  decrease  in  net  win.

Systems  Operations
-------------------
Equipment and software license sales decreased by $608,770 (45.7%) from the same
period  in 2001 while the gross profit margin remained approximately the same at
54.7%  in the current period compared to 59.9% in the prior period.  Maintenance
revenues  increased  $93,647  (7.5%) to $1,341,599 from the same period in 2001.
CBS  equipment  sales are low volume, high dollar sales based on the need of the
market,  which  is  limited based on the number of casinos that operate race and
sports  books.  Equipment  sales are not recurring like the maintenance fees, as
the  impetus  for a sale is outdated or expired equipment at existing casinos or
the  opening  of  a  new  sports  book.

Operating  Costs  and  Expenses

Comparative  operating costs and expenses for the six months ended July 31, 2002
decreased $281,633 (5.9%) to $4,507,961 as compared to the six months ended July
31,  2001.  This  figure  includes  an  increase  of  $58,303  in  research  and
development  expenses  offset  by  a  $339,936  reduction  in  direct  costs and
expenses,  selling,  general  and  administrative  costs  and  depreciation  and
amortization.

Direct  Costs  and  Expenses
----------------------------
The  decrease  in  the  direct  costs  and  expenses for the Wagering segment of
$68,635  (3.6%)  is  due  to a $20,181 reduction in employee expenses, a $16,414
reduction  in  rent  expense, a $12,988 reduction in tax expenses, and a $40,451
decrease  in  supplies  offset  by a $21,399 increase in communication and other
expenses.   The  decrease  in  the  direct  costs  and  expenses for the Systems
segment  of  $163,095 (14.2%) is primarily due to a $196,676 decrease in cost of
goods  sold  resulting  from  the  decrease  in  equipment  sales  offset  by  a
$33,581(5.9%)  increase  in  costs  associated  with the maintenance of systems.

Research  and  Development
--------------------------
For the six months ended July 31, 2002, Research and Development costs increased
$58,303  (14.5%)  to  $459,800  due  primarily  to a $47,830 (12.2%) increase in
employee  expenses.


Selling,  General  and  Administrative
--------------------------------------


                                       15

<PAGE>

For  the  six  months  ended  July 31, 2002, Selling, General and Administrative
costs  decreased $49,067 (4.7%) primarily due to the Company's focus on reducing
expenditures.

Operating  Loss

The operating loss for the six months ended July 31, 2002 of ($305,140) resulted
primarily  from  the  reduction  in  revenues  offset  by the reduction in total
operating  costs  and  expenses.

Litigation  Judgment

On October 9, 2001, Willow International Ventures Corporation ("Willow") filed a
civil  complaint  against the Company concerning the "Mega$ports" trademark; the
Company  subsequently  filed numerous counterclaims.  On August 28, 2002, Willow
and  the  Company settled both the lawsuit and the counterclaim.  As a result of
the  settlement  the Company wrote off the Mega$ports trademark in the amount of
$252,532  in  this  quarter  ended  July  31,  2002

Discontinued  Operations

Discontinued  operations gain of $414,503 for the six months ended July 31, 2002
is attributable to the sale of the Mega$ports (ACT) operation and the closure of
the  keno  operation.

Results  from  discontinued  operations  are  as  follows:


                            Three Months Ended      Six Months Ended
                                 July  31                July  31
                             2002        2001        2002        2001
Net Loss from Operations:
  Mega$ports ACT          $(107,119)  $(104,799)  $(163,611)  $(216,618)
  Keno                      (23,539)    (87,922)    (53,322)   (270,370)
                          ----------  ----------  ----------  ----------
                           (130,658)   (192,721)   (216,933)   (486,988)
                          ----------  ----------  ----------  ----------
Gain (loss) on Disposal:
  Mega$ports ACT            790,789          --     790,789          --
  Keno                     (159,353)         --    (159,353)         --
                          ----------  ----------  ----------  ----------
                            631,436          --     631,436          --
                          ----------  ----------  ----------  ----------

                          $ 500,778   $(192,721)  $ 414,503   $(486,988)
                          ==========  ==========  ==========  ==========


Liquidity  and  Capital  Resources

Cash  used  in  operating  activities for the six months ended July 31, 2002 was
$1,567,367 compared to cash used in operating activities of $437,936 for the six
months  ended  July  31, 2001 primarily from the decrease in Wagering and System
sales  revenues.  Net  cash  provided by investing activities for the six months
ended July 31, 2002 was $67,942 as compared to cash used in investing activities
of $184,409 for the six months ended July 31, 2001.  Net cash used in  financing
activities  for  the  six months ended July 31, 2002 was $101,013 as compared to
net  cash  used in financing activities of $65,748 for the six months ended July
31,  2001.


                                       16

<PAGE>

We  have a working capital relationship of approximately 2 to 1 and believe that
we will be able to satisfy our operating cash requirements for at least the next
12  months  from  existing cash balances and anticipated cash flows.  We plan to
accumulate  cash  liquidity  in  through  the  end  of the year to fund possible
effects  of litigation, seasonality of wagering operations, and timing of system
sales.  We  have  possible  negative  cash  flow  exposures  due  to  potential
litigation  judgments  in  cases  where  we  are  the  named  defendants.  Final
judgments  significantly  in  excess of amounts accrued could have a significant
negative  impact  on  our  existing  cash  balances  and anticipated cash flows.



                                       17

<PAGE>

                           PART II - OTHER INFORMATION

Item  1.          Legal  Proceedings

Racusin
-------
Since  1995,  we have been in litigation with Mr. Michael Racusin who introduced
certain underwriters to us in connection with our initial public offering.  Upon
remand  for  the appellate court, a trial date of November 12, 2002 has been set
to  determine  a cash remedy for Mr. Racusin.  A number of yet-to-be adjudicated
factors  might  impact  the outcome of this litigation, and, accordingly, we are
not  able  to  fully determine the economic impact of these events at this time;
based  upon the advice of counsel, we believe an additional cash award may range
from  approximately  $360,000  to  $1,700,000,  plus  accrued  interest.

Imagineering Systems, Inc.
--------------------------
Since  1998, we have been in litigation with Imagineering Systems, Inc. ("ISI").
In October 2000, a verdict was rendered and later a judgment entered in favor of
ISI  in  the  amount  of  approximately  $897,000  (prior to interest).  We have
appealed  this  judgment to the Nevada Supreme Court and believe, based upon the
advice  of  legal  counsel,  that  the  lower  end of the probable loss range is
substantially  less  than  this  judgment.

Mega$ports (ACT)
----------------
In  December 1999, the Nevada Gaming Control Board filed a complaint against the
Company  alleging we accepted a series of wagers over the Internet from a patron
who was physically located in Las Vegas, Nevada and that such action violated of
both  federal  and  Nevada  law.  In July 2000, without admitting or denying the
allegations,  the  Company  entered  into  a  settlement  with the Nevada Gaming
Commission,  paid  a  $10,000  fine  and  agreed  to divest all interests in the
Internet  wagering  operation,  Mega$ports (ACT) Pty. Ltd.  On July 1, 2002, the
Company  completed a sale of Mega$ports (ACT) to Euraust Limited ("Euraust"), an
Australian  company.  The sale is subject to final approval by the Nevada Gaming
Commission;  the  Company  is unable to provide any assurance that such approval
will  be  granted.  In the event that any such required approval is not granted,
the  Company's  ability to collect the remainder of the sales price is extremely
doubtful.  The  Australian  Capital Territory government has recognized the sale
and,  accordingly,  the Company is no longer considered a gaming licensee in the
Australian  Capital  Territory.

Willow
------
     On  October  9,  2001, Willow International Ventures Corporation ("Willow")
filed  a  civil  complaint  against  the  Company  concerning  the  "Mega$ports"
trademark; the Company subsequently filed numerous counterclaims.  On August 28,
2002,  Willow and the Company settled both the lawsuit and the counterclaim.  In
anticipation  of  the  proposed  settlement,  on  July  22,  2002,  the  Company
officially  changed the name of Mega$ports, Inc. to Contest Sports Systems, Inc.
and as a result of the settlement the Company wrote off the Mega$ports trademark
in  the  amount  of  $252,532  in  this quarter ended July 31, 2002.  Due to the
nature  of the settlement, the previous closure of the Mega$ports U.S. operation
the  previous  divestiture  of  the  Mega$ports  Australian  operation,  and the
resulting $252,532 write down of the trademark asset, it is management's opinion
the  outcome of this settlement does not have a material effect on the Company's
financial  position,  results  of  operations  or  cash  flows.


                                       18

<PAGE>

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

The  ultimate  disposition  of  these  various  reported  legal issues cannot be
determined  at  this time.  In accordance with Statement of Financial Accounting
Standard  No.  5,  "Accounting for Contingencies," we have recorded an allowance
for  probable losses equal to the lower end of the estimated probable loss range
and  we  periodically  revise these estimates as facts and circumstances change.

Item 2.     Changes in Securities and Use of Proceeds

None

Item 3.     Defaults Upon Senior Securities

None

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

None

Item 5.     Other Information

None


                                       19

<PAGE>

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

a.)     Exhibits.

Exhibit Number     Description
---------------    -----------
10.1               Share Sale Agreement with Euraust (1) (2)
10.2               CBS Software Support Agreement (1) (2)
10.3               License Agreement (1) (2)
10.4               Settlement Agreement (1) (3)
99.1               Officers' Certification under Section 906 of the
                   Sarbanes-Oxley Act of 2002
--------------------------------------------------------------------------------
(1)  Incorporated  by  reference  to  10Q  for  the  period ended July 31, 2002.
(2)  Refer  to  Form  8-K  filed  on  June  18,  2002  for  exhibit.
(3)  Refer  to  Form  8-K  filed  on  August  28,  2002  for  exhibit.

b.)     Form  8-K
     A  report  on  Form 8K was filed on June 18, 2002 with respect to an Item 5
matter  (sale  of  Mega$ports  (ACT)  subsidiary).

     A  report on Form 8K was filed on August 28, 2002 with respect to an Item 5
matter  (settlement  of  Willow  lawsuit  and  counterclaims).



                                       20

<PAGE>

                                    SIGNATURE

Pursuant  to  the  requirements  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.

AMERICAN WAGERING, INC.

Dated  September 16, 2002


     /s/ Timothy F. Lockinger
By:  ________________________________________
     Timothy F. Lockinger
     Chief Financial Officer, Secretary and Treasurer
     (Principle Accounting Officer)



                                       21

<PAGE>

                  Certification of the Chief Executive Officer
                                   Pursuant to
                  Section 302 of the Sarbanes-Oxley Act of 2002


I,  Victor  Salerno,  certify  that:

1.   I  have  reviewed this quarterly report on Form 10QSB of American Wagering;

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

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



Date:  September 16, 2002


                                      By:     /s/ Victor Salerno
                                              ------------------------------

                                      Name:   Victor Salerno

                                      Title:  Chief Executive Officer


                                       22

<PAGE>

                  Certification of the Chief Financial Officer
                                   Pursuant to
                  Section 302 of the Sarbanes-Oxley Act of 2002


I,  Timothy  F.  Lockinger,  certify  that:

1.     I have reviewed this quarterly report on Form 10QSB of American Wagering;

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

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



Date:  September 16, 2002


                                     By:     /s/ Timothy F. Lockinger
                                             --------------------------------

                                     Name:   Timothy F. Lockinger

                                     Title:  Chief Financial Officer, Secretary
                                             and Treasurer



                                       23