<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, 1998
                                    -----------------------------

                               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:                 333-31373                     
                       ------------------------------------------

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

        Washington                            91-1696010
---------------------------------    ----------------------------
  (State or other jurisdiction              (I.R.S. Employer
of incorporation or organization)          Identification No.)
    
3909 South Maryland Parkway, Suite 311, 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:

6,255,942 shares of Common Stock, $.001 par value, as of May 11, 1998
---------------------------------------------------------------------
     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 of
               Financial Condition and Results of Operations  7

PART II.  OTHER INFORMATION

     Item 1.   Legal Proceedings                              8

     Item 2.   Changes in Securities                          8

     Item 3.   Defaults Upon Senior Securities                8

     Item 4.   Submission of Matters to a Vote of Security
               Holders                                        8

     Item 5.   Other Information                              8

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

SIGNATURE                                                     9

EXHIBIT INDEX                                                10

                                2
                                
<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

<TABLE>
<CAPTION>

                   CASINOVATIONS INCORPORATED
                  (A Development Stage Company)
                          Balance Sheet
                         March 31, 1998
                                
                                                     March 31, 1998      
                                                       (Unaudited)        
                                                ------------------------
                             ASSETS
<S>                                                    <C>
Current assets:                                                 
 Cash                                                  $         1,703       
 Accounts receivable, trade                                         75       
 Accounts receivable - employees                                43,485       
 Inventories                                                   229,249       
 Prepared expenses                                              36,625
                                                ------------------------ 
   Total current assets                                        311,137       
                                                                     
Property and equipment, at cost, net of                           
 accumulated depreciation of $37,505                           280,830       
                                                                   
Intangible assets, at cost, net of                                
 accumulated amortization of $22,687                           156,943       
Deposits                                                        48,431
                                                ------------------------
                                                       $       797,341
                                                ========================
                                
              LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:                                            
 Note payable - bank                                   $       197,500      
 Notes payable - other                                         425,000      
 Current portion of leases payable                             149,616      
 Accounts payable                                              396,068      
 Accrued wages                                                  23,313      
 Accrued interest                                               44,418      
 Customer deposits                                              17,309      
 Shareholder loans                                             703,772
                                                ========================
   Total current liabilities                                 1,956,996      
                                                                     
Leases payable - non-current                                   261,084      
                                                                  
Stockholders' equity:                                             
 Common stock, $.001 par value,                                    
  20,000,000 shares authorized,                                     
  6,255,942 shares issued and outstanding                        6,180      
 Additional paid-in capital                                  3,970,070      
 Unpaid subscriptions to common stock                          (33,500)      
 Deficit accumulated during development stage               (5,363,489)
                                                ------------------------
                                                            (1,420,739)
                                                ------------------------
                                                       $       797,341
                                                ========================

</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, 1998 and 1997
                                
                                                          Three Months Ended
                                                -------------------------------------
                                                     March 31,         March 31,
                                                        1998              1997
                                                -----------------  ------------------
<S>                                             <C>                <C>
Sales                                           $         345      $        632
Interest income                                             3             6,174
Other income                                                -                 -
                                                -----------------  ------------------
                                                          348             6,806
Other costs and expenses:                                                 
 General and administrative                           355,787           321,027
 General and administrative - related parties               -                 -
 Research and development                             102,333            46,606
                                                -----------------  ------------------
                                                      458,120           367,633
                                                -----------------  ------------------                          
                                                                            
(Loss) from operations                               (457,772)         (360,827)
 Interest expense                                      37,528             2,812
 Interest expense - related parties                    24,880            19,179
                                                -----------------  ------------------
                                                       62,408            21,991
                                                                            
(Loss) before income taxes                           (520,180)         (382,818)
Provision for income taxes                                  -                 -
                                                -----------------  ------------------                          
Net income (loss)                               $    (520,180)     $   (382,818)
                                                =================  ==================                  
Earnings (loss) per common share:                                           
 Basic and diluted                              $       (0.08)     $      (0.07)
                                                =================  ==================                          
Number of common shares outstanding                 6,179,638         5,305,218
                                                =================  ==================

</TABLE>

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

                   CASINOVATIONS INCORPORATED
                  (A Development Stage Company)
                     Statement of Cash Flows
           Three Months Ended March 31, 1998 and 1997
                                
                                            
                                            
                                                                  Three Months Ended
                                                          ----------------------------------
                                                           March 31, 1998    March 31, 1997
                                                          ----------------  ----------------                       
<S>                                                        <C>               <C>  
Net (loss)                                                 $    (520,180)    $    (382,818)
 Adjustments to reconcile net income (loss) to net                                       
  cash provided by operating activities:                                                  
  Depreciation and amortization                                   16,965             4,396
  Stock and options issued for services                           33,000            82,122
  Compensation value of cash stock sales                               -                 -
  Stock and options issued for additional interest                     -                 -
  Equipment exchanged for services                                     -                 -
  Amortization of deferred interest                                    -                 -

Changes in assets and liabilities:                                                      
  (Increase) decrease in accounts receivable                    (25,400)          (31,539)
  (Increase) decrease in inventory                              (46,956)                 -
  (Increase) decrease in prepaid expenses                          3,375           (12,441)
  (Increase) decrease in other assets                              (712)             5,338
  Increase (decrease) in accounts payable                       (46,243)           (81,963)
  Increase (decrease) in accrued expenses                          3,854           (38,443)
                                                          ----------------  ----------------
   Total adjustments                                             (62,117)          (72,530)
                                                          ----------------  ----------------
Net cash (used in) operating activities                         (582,297)         (455,348)
                                                          ----------------  ---------------- 
Cash flows from investing activities:                              
 Acquisition of plant and equipment                               (8,376)           (5,409)
 Increase in patents and trademarks                               (3,368)          (12,230)
                                                          ----------------  ----------------
Net cash (used in) investing activities                          (11,744)          (17,639)                            
                                                          ----------------  ----------------                  
Cash flows from financing activities:                                                   
 Common stock sold for cash                                            -           355,001
 Capital contributions by partners                                     -                 -
 Proceeds from long-term debt                                    250,000                 -
 Proceeds of shareholder loans                                   290,000                 -
 Repayment of shareholder loans                                  (27,245)          (60,722)
 Repayment of leases payable                                     (36,400)                -
 Proceeds from notes payable                                           -                 -
                                                          ----------------  ----------------
Net cash provided by financing activities                        476,355           294,279
                                                          ----------------  ----------------
Increase (decrease) in cash                                     (117,686)         (178,708)
Cash and cash equivalents,                                                              
 beginning of period                                             119,389           552,878
Cash and cash equivalents,                                ----------------  ----------------                  
 end of period                                             $       1,703     $     374,170
                                                          ================  ================
</TABLE>
                                
    See accompanying notes to unaudited financial statements.
                                
                                5
                                
<PAGE>
                                
                   CASINOVATIONS INCORPORATED
                  (A Development Stage Company)
                  Notes to Financial Statements
                                

NOTE 1 - BASIS OF PRESENTATION.

      The consolidated balance sheet as of March 31, 1998 and the
related  consolidated statements of income for  the  three  month
periods ended March 31, 1998 and 1997 and consolidated statements
of  cash  flows for the three month periods ended March 31,  1998
and 1997 have been prepared in accordance with generally accepted
accounting principles for interim financial information and  with
the   instructions  incorporated  in  Regulation  10-QSB  of  the
Securities    and   Exchange   Commission   (the   "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 an interim period  are  not
necessarily  indicative of the results for the  full  year.   The
consolidated  financial statements should be read in  conjunction
with the consolidated financial statements and notes thereto  for
the  year  ended  December 31, 1997 contained  in  the  Company's
Registration  Statement on Form SB-2/A as  last  filed  with  the
Commission on April 13, 1998 (Commission File No. 333-31373).

      Certain  of  the shares issued to a consultant during  1997
were  for  future  services to be provided to the  Company.   The
amounts attributable to unearned services have been accounted for
as  unpaid  subscriptions  to common stock  in  the  accompanying
balance sheet.  The Company has amortized $33,000 of the unearned
services to general and administrative expenses during the  three
months ended March 31, 1998.

      During  January  1998, the Company received  proceeds  from
convertible debentures aggregating $400,000.  The debentures bear
interest  at  6% per annum and are due on or before  January  31,
1999.   The principal amount of the debentures is convertible  at
the holder's option into shares of the Company's common stock  at
a  conversion  price of $2.98 per share.  Of the  gross  proceeds
received  from the convertible debentures, $150,000 was  received
from the Company's principal stockholder and has been included in
shareholder   loans   in   the   accompanying   balance    sheet.
Additionally,  the  principal stockholder  made  working  capital
advances  to the Company during the quarter ended March 31,  1998
aggregating  $140,000.  The advances bear interest  at  9.5%  per
annum.

NOTE 2 - STATEMENT REGARDING COMPUTATION OF LOSS PER SHARE.

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

                                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 of 1933 and Section 21E of  the
Securities  Exchange Act of 1934, such as statements relating  to
plans  for  future  operations, capital  spending  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  adequate  sources  of   cash,
manufacturing  and supply issues, marketing of and acceptance  of
the Company's products, dependence on existing management, gaming
regulations (including actions affecting licensing), 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.

      PLAN OF OPERATIONS.  The Company has completed its research
and  development  stage  of  the Random  Ejection  Shuffler  (the
"Shuffler") and has the first production units finished.   Demand
for  the Company's products will be dependent on general economic
conditions,  economic  conditions  in  the  gaming  industry  and
acceptance of new products in the market place.

      The  Company  is developing business plans, operations  and
sales  that will permit the Company to be self-supportive  within
the  first 3 to 4 months from the beginning of sales.  Should the
Company  be able to complete the successful offering of 1,500,000
shares of Common Stock presently pending pursuant to that certain
Registration Statement on Form SB-2/A (Commission File  No.  333-
31373)  (the "Offering"), the Shuffler and the Fantasy  21  table
game will be brought to market and the SecureDrop coin box system
development will be completed and brought to market as well.  The
ability  of the Company to obtain any necessary gaming  licenses,
authorizations  and approvals in certain key jurisdictions,  such
as  Nevada  and New Jersey, will materially impact the  Company's
ability to market the Shuffler.  Additional new products  are  in
conceptual design stages and, with adequate funding, are expected
to be brought to market within the next 12 months.

      The Company expects that the net proceeds from the Offering
and the cash flow from operations will be sufficient to allow the
Company to meet the expected growth in demand for its products.

      For the three months ended March 31, 1998, the Company  did
not  make  any  significant acquisitions of plant and  equipment.
Inventory for parts to assemble product increased $46,956.  There
are no expectations for the purchase of significant equipment  or
plant.   Management of the manufacturing process for the Shuffler
has  been brought in-house.  The Company's Manager of Engineering
is  directly supervising the assembling of the first thirty units
and  will determine the best combination of subcontract  and  in-
house production.

      For  the  three  months ended March 31, 1998,  the  Company
received   proceeds   aggregating   $400,000   from   convertible
debentures.   Of the gross proceeds received from the convertible
debentures, proceeds of $150,000 were received from the Company's
principal  stockholder  and have been  included  in  shareholders
loans.   Loans  from  shareholder  have  increased  a  total   of
$290,000.

     For the three months ended March 31, 1998, the Company has a
net   loss  of  $520,180.   The  Company  had  depreciation   and
amortization  of $16,965.  Accounts receivable increased  $25,400
and accounts payable decreased $46,243.

                                7
                                
<PAGE>

      For the three months ended March 31, 1998, the Company  had
general  and administrative expenses of $355,787.  These expenses
consisted  of salaries and related costs of $107,273,  consulting
services  of  $87,502, cost of gaming industry shows  of  $9,363,
travel  and  entertainment costs of $61,663, printing and  office
expense,  including  rent  of  $34,110,  and  legal  expenses  of
$14,585.

      RISK FACTORS THAT MAY AFFECT FUTURE RESULTS.  The   Company
operates in the highly  competitive gaming industry that involves
a  number  of  risks,  some  of  which  are  beyond the Company's
control.  For a complete  discussion  of  these  risks,  see  the 
section  entitled,  "Risk Factors,"  included  in  the  Company's
Registration Statement on Form  SB-2,  as  last  filed  with  the 
Commission  on  April 13, 1998  and  as declared effective by the
Commission on April 15, 1998 (Commission File No. 333-31373). 

PART II - OTHER INFORMATION
     
ITEM 1.   LEGAL PROCEEDINGS.
     
      On April 24, 1998, a complaint was filed in District Court,
Clark  County,  Nevada on behalf of the Company  against  Western
Electronics,  Inc.  ("Western") and its Chief Executive  Officer,
John  Wasden.  The Complaint alleges causes of action for  breach
of  contract, declaratory relief, unjust enrichment, interference
with  contractual  relations, conversion  and  fraud--intentional
misrepresentation, all stemming from purchase orders between  the
Company  and Western for the Shuffler.  The Complaint was  served
upon  Western on April 27, 1998, and service upon Mr.  Wasden  is
pending.   Through this litigation, the Company seeks to  recover
component parts purchased for the assembly of the Shuffler or  in
the alternative to recover the monies expended for their purchase
as  well  as other money damages.  An action against Western  for
claim  and  delivery of component parts for Fantasy  21  is  also
pending before the court in Boise, Idaho.

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.
     
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.
     
         (a) EXHIBITS.
             ---------

         EXHIBIT NUMBER   DESCRIPTION
         --------------   -----------
              27.01       Financial Data Schedule


         (b) REPORT ON FORM 8-K.
             -------------------
         None.
     
                                8
                                
<PAGE>

                            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 19, 1998     By:   /s/ Jay L. King
                               -------------------------------------
                               Jay L. King
                         Its:  Chief Financial Officer and Secretary
                               
                                9
                                
<PAGE>

                          EXHIBIT INDEX

EXHIBIT NUMBER              DESCRIPTION             PAGE NUMBER
--------------              -----------             -----------
     27.01            Financial Data Schedule            10