<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  October  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  December  16,  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 - October 31, 2002
          (Unaudited) and January 31, 2002                                    3

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

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

          Consolidated Statements of Cash Flows -Nine Months
          Ended October 31, 2002 and 2001 (Unaudited)                         6

          Notes to Consolidated Financial Statements (Unaudited)           7-10

Item 2.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations                                       11-14

Item 3.   Controls and Procedures                                            14


PART II               OTHER INFORMATION

Item 1.   Legal Proceedings                                               15-16

Item 2.   Changes in Securities and Use of Proceeds                          16

Item 3.   Defaults upon Senior Securities                                    16

Item 4.   Submission of Matters to a Vote of Security Holders                16

Item 5.   Other Information                                                  16

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


                                       2


<PAGE>

PART I          FINANCIAL INFORMATION

Item 1.     Financial Statements


                              AMERICAN WAGERING, INC.
                           CONSOLIDATED BALANCE SHEETS


                                                    October 31,    January 31,
                                                        2002           2002
                                                     (Unaudited)
                                                    -------------  -------------
ASSETS
 CURRENT ASSETS
   Cash                                             $  2,861,377   $  3,756,113
   Restricted deposits                                    65,397        168,200
   Accounts receivable, net of allowance for
    doubtful accounts of $13,870 and $14,910             557,397        657,422
   Inventories                                           583,131        450,590
   Deferred tax assets, net                              272,000        272,000
   Prepaid expenses and other current assets             188,511        234,879
                                                     -------------  ------------
     Total Current Assets                              4,527,813      5,539,204
 PROPERTY AND EQUIPMENT, net                           3,038,055      3,280,757
 NOTE RECEIVABLE, net of discount of $781,150            624,600             --
 GOODWILL                                                103,725        103,725
 OTHER INTANGIBLES                                        90,688        367,135
 OTHER ASSETS                                            160,201        230,996
                                                    -------------  -------------
     Total Assets                                   $  8,545,082   $  9,521,817
                                                    =============  =============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
 Current portion of long-term debt                  $    111,749   $     90,586
 Accounts payable                                        363,507        263,565
 Accrued expenses                                        517,169        724,053
 Litigation payable                                    2,183,762        521,167
 Unpaid winning tickets                                  699,572      1,109,674
 Customer deposits and other current liabilities         823,376        784,061
                                                    -------------  -------------
     Total Current Liabilities                         4,699,135      3,493,106
LONG-TERM DEBT, less current portion                   1,702,539      1,720,340
OTHER LONG TERM LIABILITIES                               25,000             --
                                                    -------------  -------------
     Total Liabilities                                 6,426,674      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: 10,924 and 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                           12,738,889     14,382,515
 Deficit                                             (11,788,167)   (11,291,830)
 Less 61,100 common shares in treasury, at cost         (327,493)      (327,493)
                                                    -------------  -------------
     Total Stockholders' Equity                        1,794,608      4,034,571
                                                    -------------  -------------

     Total Liabilities and Stockholders' Equity     $  8,545,082   $  9,521,817
                                                    =============  =============


See  notes  to  consolidated  financial  statements.


                                       3


<PAGE>

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


                                                       2002         2001
                                                    -----------  -----------
REVENUES
  Wagering                                          $1,541,027   $1,821,194
  Systems                                              950,778    1,310,321
                                                    -----------  -----------
       Total Revenues                                2,491,805    3,131,515
                                                    -----------  -----------

OPERATING COSTS AND EXPENSES
  Direct Costs
    Wagering                                         1,388,593    1,062,123
    Systems                                            469,898      542,938
                                                    -----------  -----------
       Total Direct Costs                            1,858,491    1,605,061
  Research and development                             225,678      211,048
  Selling, general and administrative                  553,870      528,866
  Depreciation and amortization                         88,957      150,637
                                                    -----------  -----------
       Total Operating Costs and Expenses            2,726,996    2,495,612
                                                    -----------  -----------

OPERATING INCOME (LOSS)                               (235,191)     635,903
                                                    -----------  -----------

OTHER INCOME (EXPENSE)
  Litigation judgment                                   (6,970)          --
  Interest income                                        9,543       12,505
  Interest expense                                     (39,230)     (39,639)
  Other, net                                            31,787       (9,832)
                                                    -----------  -----------
       Total Other Expense                              (4,870)     (36,966)
                                                    -----------  -----------

INCOME (LOSS) FROM CONTINUING OPERATIONS
 BEFORE INCOME TAX                                    (240,061)     598,937

INCOME TAX                                                  --       12,972
                                                    -----------  -----------

INCOME (LOSS) FROM CONTINUING OPERATIONS              (240,061)     585,965
                                                    -----------  -----------

DISCONTINUED OPERATIONS
  Loss from operations of discontinued segments             --     (471,123)
  Gain on disposal of discontinued operations              (89)          --
                                                    -----------  -----------
       Total Discontinued Operations                       (89)    (471,123)
                                                    -----------  -----------

NET INCOME (LOSS)                                   $ (240,150)  $  114,842
                                                    ===========  ===========


BASIC AND DILUTED INCOME (LOSS) PER SHARE
  Continuing operations                             $    (0.04)  $     0.07
                                                    ===========  ===========
  Discontinued operations                           $     0.00   $    (0.06)
                                                    ===========  ===========
     Net income (loss)                              $    (0.04)  $     0.01
                                                    ===========  ===========




See  notes  to  consolidated  financial  statements.


                                       4

<PAGE>


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



                                                        2002          2001
                                                        ----          ----
REVENUES
  Wagering                                           $3,571,510   $4,494,775
  Systems                                             3,123,116    3,986,378
                                                     -----------  -----------
       Total Revenues                                 6,694,626    8,481,153
                                                     -----------  -----------

OPERATING COSTS AND EXPENSES
  Direct Costs
    Wagering                                          3,243,357    2,985,523
    Systems                                           1,452,009    1,688,144
                                                     -----------  -----------
       Total Direct Costs                             4,695,366    4,673,667
    Research and development                            685,478      612,545
    Selling, general and administrative               1,555,651    1,579,715
    Depreciation and amortization                       298,461      419,280
                                                     -----------  -----------
       Total Operating Costs and Expenses             7,234,956    7,285,207
                                                     -----------  -----------

OPERATING INCOME (LOSS)                                (540,330)   1,195,946
                                                     -----------  -----------

OTHER INCOME (EXPENSE)
  Litigation judgment                                  (271,502)          --
  Interest income                                        38,393       49,026
  Interest expense                                     (117,993)    (119,135)
  Other, net                                             89,880       80,242
                                                     -----------  -----------
       Total Other Income (Expense)                    (261,222)      10,133
                                                     -----------  -----------

INCOME (LOSS) FROM CONTINUING OPERATIONS
 BEFORE INCOME TAX                                     (801,552)   1,206,079

INCOME TAX                                                   --       12,972
                                                     -----------  -----------
INCOME (LOSS) FROM CONTINUING OPERATIONS               (801,552)   1,193,107

DISCONTINUED OPERATIONS
  Loss from operations of discontinued segments        (216,142)    (958,111)
  Gain on disposal of discontinued operations           630,557           --
                                                     -----------  -----------
       Total Discontinued Operations                    414,415     (958,111)
                                                     -----------  -----------

NET INCOME (LOSS)                                    $ (387,137)  $  234,996
                                                     ===========  ===========

BASIC AND DILUTED INCOME (LOSS) PER SHARE
 BASIC
  Continuing operations                              $    (0.12)  $     0.14
                                                     ===========  ===========
  Discontinued operations                            $     0.05   $    (0.12)
                                                     ===========  ===========
     Net income (loss)                               $    (0.06)  $     0.02
                                                     ===========  ===========



See  notes  to  consolidated  financial  statements.


                                       5


<PAGE>

                             AMERICAN WAGERING, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                       FOR THE NINE MONTHS ENDED OCTOBER 31,


                                                         2002         2001
                                                     -----------  -----------

OPERATING ACTIVITIES
  Net cash provided by (used in)
   operating activities                              $ (669,962)  $   71,720
                                                     -----------  -----------

INVESTING ACTIVITIES
  Investment in restricted deposits                     (50,429)      (4,902)
  Withdrawals of restricted deposits                    153,232           --
  Retirement of assets                                       --       41,797
  Purchase of property and equipment                   (267,531)    (339,442)
  Deposits and other assets                              70,794       48,040
                                                     -----------  -----------
  Net cash used in investing activities                 (93,934)    (254,507)
                                                     -----------  -----------

FINANCING ACTIVITIES
  Repayment of borrowings                               (72,132)     (63,213)
  Proceeds from borrowings                              100,493       68,157
  Redemption of preferred stock                         (50,000)          --
  Dividends                                            (109,201)    (111,188)
                                                     -----------  -----------
  Net cash used in financing activities                (130,840)    (106,244)
                                                     -----------  -----------


NET DECREASE IN CASH                                   (894,736)    (289,031)
CASH AT BEGINNING OF PERIOD                           3,756,113   $2,200,759
                                                     -----------  -----------
CASH AT END OF PERIOD                                $2,861,377   $1,911,728
                                                     ===========  ===========





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.  Going Concern

     As  shown in the accompanying financial statements, as of October 31, 2002,
the  Company's  total  current  liabilities exceeded its total current assets by
$171,322.  These conditions create an uncertainty as to the Company's ability to
continue as a going concern.  At the present time, management is considering its
options  to  increase  its  ability to meet current demands on the Company.  The
consolidated  financial  statements do not include any adjustments that might be
necessary if the Company is unable to continue operating, as it currently is, as
a  going  concern.

3.  Divestiture of Internet Wagering

     On  June  18,  2002,  the  Company  entered  into an 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.  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  its  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  were  made  in  the  previous quarterly report on Form 10QSB.


                                       7

<PAGE>


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:


                                            Three months ended October 31,
                                                  2002         2001
                                                  ----         ----

Income (loss)  from continuing operations     $ (240,061)  $  585,965
Preferred stock dividends                        (36,191)     (37,470)
                                              -----------  -----------
Net income (loss), as adjusted                $ (276,252)  $  548,495
                                              ===========  ===========

Loss from discontinued operations             $      (89)  $ (471,123)
                                              ===========  ===========

Net income (loss)                             $ (240,150)  $  114,842
Preferred stock dividends                        (36,191)     (37,470)
                                              -----------  -----------
Net income (loss), as adjusted                $ (276,341)  $   77,372
                                              ===========  ===========

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

Diluted weighted average shares outstanding    8,152,807    8,076,665
                                              ===========  ===========



                                            Nine months ended October 31,
                                                  2002         2001
                                                  ----         ----
Income (loss) from continuing operations      $ (801,552)  $1,193,107
Preferred stock dividends                       (109,201)    (111,188)
                                              -----------  -----------
Net income (loss), as adjusted                $ (910,753)  $1,081,919
                                              ===========  ===========

Gain from discontinued operations             $  414,415   $ (958,111)
                                              ===========  ===========

Net income (loss)                             $ (387,137)  $  234,996
Preferred stock dividends                       (109,201)    (111,188)
                                              -----------  -----------
Net income (loss), as adjusted                $ (496,338)  $  123,808
                                              ===========  ===========

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

Diluted weighted average shares outstanding    8,150,891    8,076,665
                                              ===========  ===========



5.  Business Segments

     The  Company  conducts  business  with  customers  through its Wagering and
Systems  segments.   The  Wagering  segment  operated  46  race and sports books
throughout Nevada as of October 31, 2002.  The Systems segment designs, markets,
installs  and  maintains  sports  and  race book wagering systems for the sports
betting industry.  In 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.


                                       8

<PAGE>

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


                                      Three months ended October 31,
Continuing Operations                      2002            2001
---------------------                      ----            ----
Operating income (loss)
  Wagering                            $    98,574    $   660,948
  Systems                                 113,581        398,935
  SG&A                                   (447,346)      (423,980)
                                      ------------   ------------
                                      $  (235,191)   $   635,903
                                      ============   ============

                                        Nine months ended October 31,
Continuing Operations                      2002            2001
---------------------                      ----            ----
Operating income (loss)
  Wagering                            $   202,831    $ 1,327,105
  Systems                                 477,871      1,109,650
  SG&A                                 (1,221,032)    (1,240,810)
                                      ------------   ------------
                                      $  (540,330)   $ 1,195,945
                                      ============   ============

                                      Three months ended October 31,
Discontinued Operations                    2002            2001
-----------------------                    ----            ----
Operating loss:
  Mega$ports Australia                $      (879)   $  (329,295)
  Keno                                        790       (141,828)
                                      ------------   ------------
                                      $       (89)   $  (471,123)
                                      ============   ============


                                        Nine months ended October 31,
                                           2002            2001
                                           ----            ----
Discontinued Operations
-----------------------
Operating loss:
  Mega$ports Australia                $   626,300    $  (545,913)
  Keno                                   (211,885)      (412,198)
                                      ------------   ------------
                                      $   414,415    $  (958,111)
                                      ============   ============


6.  Litigation

     Michael Racusin:   On November 14, 2002, the U.S. District Court of Nevada,
     ----------------
issued a verdict in favor of Michael Racusin ("Racusin") and against the Company
in  the  gross  amount  of  $2,160,000.  The Company, however, is contesting the
interest  Racusin  has  claimed  relating  to  this  judgment.  A  more complete
discussion  of  this  verdict  and the interest component is found in the "Legal
Proceedings" section of this 10QSB found in Part II under Item 1.  The estimated
range of possible loss to the Company for interest related to this litigation is
from  zero  to  $1,481,216  as of November 20, 2002.  The Company had previously
estimated  and  accrued  a  minimum interest cost of $328,624, which will not be
adjusted  until  the  final outcome is known.  The anticipated final judgment is
material  to the Company and, at the present time, management is considering the
options  available  to  the  Company,  including  the  filing  of  a  Chapter 11
bankruptcy.  The  Company  has  recorded  $1,643,625  against Additional Paid-in
Capital  in  this  quarter  ended  October  31,  2002.


                                       9

<PAGE>

     Imagineering Systems, Inc.:   The  Company has been involved in litigation
     ---------------------------
with  Imagineering  Systems,  Inc. since March 1998.  In October 2000, a verdict
was  rendered in favor of Imagineering in the  amount of approximately  $897,000
(prior to interest).  The Company has bonded an appeal, which should be heard by
the Nevada Supreme Court within the next 12 months, and believes, based upon the
advice  of  legal  counsel,  that  the  lower  end of the probable loss range is
substantially  less  than  the  judgment.

     Willow:  The  lawsuit between the Company and Willow International Ventures
     -------
regarding  the  "Mega$ports"  trademark  was  settled  on  August  28, 2002.  In
anticipation of the settlement, on July 22, 2002, the Company officially changed
the name of Mega$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  the  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.  A  more  complete  discussion  of this litigation is found in the "Legal
Proceedings"  section  of  this  10QSB  found  in  Part  II  under  Item  1.

     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  known  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.


                                       10

<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.

Liquidity and Capital Resources

The  Company  has  negative  cash flow exposures due to the litigation judgments
against the Company in two law suits referred herein as the Racusin case and the
Imagineering case.  Final judgment in the Imagineering case, if significantly in
excess  of  the  minimum  amount estimated and accrued, could have a significant
negative  impact  on  our  cash  balances  and  cash  flows.

On  November  14,  2002,  the U.S. District Court of Nevada, issued a verdict in
favor of Michael Racusin ("Racusin") and against the Company in the gross amount
of  $2,160,000.  The  Company,  however,  is contesting the interest Racusin has
claimed  relating  to this judgment.  A more complete discussion of this verdict
and  the  interest component is found in the "Legal Proceedings" section of this
10QSB  found  in Part II under Item 1. The range of possible loss to the Company
for  interest  related  to  this  litigation  is  from  zero to $1,481,216 as of
November  20,  2002;  the  Company had previously accrued $328,624 for interest,
which  will not be reduced until the final outcome is known.  The expected final
judgment  is  material to the viability of the Company and, at the present time,
management  is  considering  the options available to the Company, including the
filing of a Chapter 11 bankruptcy.   The Company has recorded $1,643,625 against
Additional  Paid-in  Capital  in  this  quarter  ended  October  31,  2002.

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.  Our
strategy  is  to  expand upon our current base of 46 book locations 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 first quarter of the fiscal year ending January 31,
2004.  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 first quarter of the fiscal year ending January 31, 2004.


                                       11

<PAGE>

In  preparation  for  the  kiosk  operations projected to begin during the first
quarter  of fiscal year ending January 31, 2004, 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.  Based  on  our  strategy, the number of sports and race
books  operated  by Leroy's may increase or decrease in the future due to either
the  closure  of unprofitable locations, or host properties, and closures due to
other  factors  beyond our control or the possible opening of new locations with
greater  potential  for  profitability.   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

Nine months ended October 31, 2002 and 2001.

Revenues

Revenues for the nine months ended October 31, 2002 decreased $1,786,527 (21.1%)
to  $6,694,626  from  the  nine  months ended October 31, 2001.  The decrease in
revenues  is attributed to a decrease in Wagering revenues of $923,265 resulting
from  a  lower net win percentage (revenue divided by handle) during the current
period;  and  a  decrease  of  $863,262 in Systems revenues resulting from lower
equipment  sales  for  the  nine  months  ended  October  31,  2002.

     Wagering Operations
     -------------------
     Revenues  from  wagering  decreased  $818,436  (18.8%) to $3,528,368 in the
     first  nine  months  of 2002 as compared with the same nine-month period in
     2001.  The  decrease in revenue is primarily attributable to a reduction in
     the net win percentage. The net win percentage was 6.1% for the nine months
     ended  October  31, 2002 compared to 7.5% for the nine months ended October
     31, 2001. Pari-mutuel race revenue was $43,142 compared to $104,889 for the
     nine  months  ended  October  31, 2001. Handle was $57,832,174 for the nine
     months  ending  October  31,  2002,  $240,834 less than the same nine-month
     period  of 2001. 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 $890,092 (48.7%) from the
     same  period  in 2001 while the gross profit margin decreased from 46.6% in
     the  current  period  compared  to  56.6%  in the prior period. Maintenance
     revenues  increased  slightly  (1.4%) to $2,006,285 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


                                       12

<PAGE>

     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 nine months ended October 31,
2002  remained  relatively  constant  at  $7,234,956  for  the nine months ended
October 31, 2002 as compared to $7,285,207 for the nine months ended October 31,
2001.  This  figure  includes an increase of $72,933 in research and development
expenses and a $21,699 increase in direct costs and expenses offset by a $24,064
decrease  in selling general and administrative costs and a $120,819 decrease in
depreciation  and  amortization  primarily  due  to the decrease in amortization
expense  from  implementing  SFAS  No.  142,

     Direct Costs and Expenses
     -------------------------
     The  increase  in the direct costs and expenses for the Wagering segment of
     $257,834  (8.6%)  is  primarily  due  to  costs  associated  with increased
     location  base  and the addition of a football contest sponsored by Leroy's
     for  the  2002-2003  Football  Season.  Direct  costs  included  an $50,486
     increase in employee expenses, a $31,202 increase in advertising expense, a
     $52,934  increase  in communication expenses, a $80,938 increase in general
     supplies  and  other costs and an additional $85,232 in expenses associated
     with  the football contest. The increases were offset by a $25,903 decrease
     in  costs  associated with book and pari-mutuel race and a $17,055 decrease
     in  tax and license due to lower revenues. The decrease in the direct costs
     and  expenses  for the Systems segment of $236,135 (14.0%) is primarily due
     to a $286,905 decrease in cost of goods sold resulting from the decrease in
     equipment  sales  offset  by  a $50,770 (5.7%) increase in costs associated
     with  the  maintenance  of  systems.

     Research and Development
     ------------------------
     For  the nine months ended October 31, 2002, Research and Development costs
     increased  $72,933  (11.9%)  to $685,478 due primarily to a $76,954 (13.3%)
     increase  in  employee  expenses and expenditures on the self-service kiosk
     project.

     Selling, General and Administrative
     -----------------------------------
     For  the  nine  months  ended  October  31,  2002,  Selling,  General  and
     Administrative  costs  decreased  $24,064  (1.5%)  primarily  due  to  the
     Company's  focus  on  reducing  expenditures.

Operating Loss

The  operating  loss  for  the  nine  months  ended October 31, 2002 of $540,330
resulted  primarily from the reduction in revenues offset by operating costs and
expenses  which  remained  relatively the same for the nine months ended October
31,  2002  as  compared  to  the  nine  months  ended  October  31,  2001.

Discontinued Operations

The  discontinued  operations gain of $414,415 for the nine months ended October
31,  2002  is attributable to the sale of the Mega$ports (ACT) operation and the
closure  of  the  keno  operation.


                                       13

<PAGE>

Results  from  discontinued  operations  are  as  follows:


                            Three Months Ended      Nine Months Ended
                                October 31             October 31
                             2002        2001        2002        2001

Net Loss from Operations:
  Mega$ports ACT           $   (879)  $(329,295)  $(163,610)  $(545,194)
  Keno                          790    (141,828)    (52,532)   (412,917)
                           ---------  ----------  ----------  ----------
                                (89)   (471,123)   (216,142)   (958,111)
                           ---------  ----------  ----------  ----------
Gain (loss) on Disposal:
  Mega$ports ACT                 --          --     789,909          --
  Keno                           --          --    (159,352)         --
                           ---------  ----------  ----------  ----------
                                 --          --     630,557          --
                           ---------  ----------  ----------  ----------

                           $(    89)  $(471,123)  $ 414,415   $(958,111)
                           =========  ==========  ==========  ==========


Item 3.     Controls and Procedures

As  required  by  Rule 13a-15 under the Exchange Act, the Company carried out an
evaluation  of  the  effectiveness  of the design and operation of the Company's
disclosure  controls  and procedures within the 90 days prior to the filing date
of  this report.  This evaluation was carried out under the supervision and with
the  participation  of  the  Company's management, including the Company's Chief
Executive  Officer  and  Company's  Chief  Financial  Officer.  Based  upon that
evaluation,  the  Company's  Chief Executive Officer and Chief Financial Officer
concluded  that  the Company's disclosure controls and procedures are effective.
There  have been no significant changes in the Company's internal controls or in
other  factors, which could significantly affect internal controls subsequent to
the  date  the  Company  carried  out  its  evaluation.

Disclosure  controls  and  procedures are controls and other procedures that are
designed  to ensure that information required to be disclosed in Company reports
filed or submitted under the Exchange Act is recorded, processed, summarized and
reported,  within  the  time  periods  specified  in the Securities and Exchange
Commission's  rules  and  forms.  Disclosure  controls  and  procedures include,
without  limitation, controls and procedures designed to ensure that information
required  to  be  disclosed  in  Company reports filed under the Exchange Act is
accumulated  and  communicated  to  management,  including  the  Company's Chief
Executive  Officer  and  Chief  Financial  Officer,  to  allow  timely decisions
regarding  required  disclosure.




                                       14

<PAGE>

                           PART II - OTHER INFORMATION

Item 1.          Legal Proceedings

Racusin
-------
On  November  14,  2002,  the  U.S. District Court of Nevada issued a verdict in
favor of Michael Racusin ("Racusin") and against the Company in the gross amount
of  $2,160,000.  The  draft of the final judgment order received on November 20,
2002  from  Racusin's  legal  counsel  was  in  the  amount of $3,791,216, which
included the gross amount of $2,160,000, a cash award of $150,000 and $1,481,216
interest.  The  draft  of  the final judgment allows for the offset of $756,340,
representing  a  gross  amount  of $666,375 plus interest of $89,965 (the amount
previously  paid  by  the  Company  to  Racusin  pursuant  to the original trial
judgment  in September, 1997).  Upon the advice of legal counsel, the Company is
contesting  the  interest portion of the judgment ($1,481,216) due to the timely
payment  of  the original trial judgment by the Company in September, 1997.  The
range of possible loss to the Company for interest related to this litigation is
from  zero  to  $1,481,216  as of November 20, 2002.  The Company had previously
accrued  $328,624  for  interest,  which  will  not  be adjusted until the final
outcome  is known.  The anticipated final judgment, is material to the financial
viability of the Company and, at the present time, management is considering the
options  available  to  the  Company  including  the  filing  of  a  Chapter  11
bankruptcy.  The  Company  has  recorded  $1,643,625  against Additional Paid-in
Capital  in  this  quarter  ended  October  31,  2002.   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.

Imagineering  Systems,  Inc.
----------------------------
Since  1998,  the Company has 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).  The  Company  is  in  the  process of appealing 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 the Company 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.


                                       15

<PAGE>

Willow
------
On October 9, 2001, Willow International Ventures Corporation ("Willow") filed a
civil  complaint  against the Company concerning the "Mega$ports" trademark; the
Company  subsequently  filed numerous counterclaims.  On August 28, 2002, Willow
and  the Company settled both the lawsuit and the counterclaim.  In anticipation
of  the settlement, on July 22, 2002, the Company officially changed the name of
Mega$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  the  quarter  ended  July  31,  2002.

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.  AWI  Keno,  Inc.  was  subsequently  renamed  AWI  Manufacturing,  Inc.

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
--------------    -----------
     99.1         Chief Executive Officer's and Chief Financial Officer's
                  Certification under Section 906 of the Sarbanes-Oxley Act
                  of 2002

b.)     Form 8-K.

A  report  on Form 8-K was filed on November 15, 2002, with respect to an Item 5
matter,  the  judgment  in  Racusin  Case.


                                       16

<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  December 16, 2002


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



                                       17

<PAGE>

                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER

The  undersigned  chief  executive  officer,  individually,  certifies  that:

1.   I  have  reviewed this quarterly report on Form10-QSB of American Wagering,
     Inc.;

2.   Based  on  my  knowledge, this quarterly report does not contain any untrue
     statement  of a 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;

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;

4.   The  registrant's  other  certifying  officers  and  I  are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in  Exchange  Act  Rules  13a-14  and  15d-14) for the registrant and have:

     a)   designed  such  disclosure  controls  and  procedures  to  ensure that
          material  information  relating  to  the  registrant,  including  its
          consolidated  subsidiaries, is made known to us by others within those
          entities,  particularly  during  the  period  in  which this quarterly
          report  is  being  prepared;
     b)   evaluated  the  effectiveness  of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this  quarterly  report  (the  "Evaluation  Date");  and
     c)   presented  in  this  quarterly  report  our  conclusions  about  the
          effectiveness  of  the disclosure controls and procedures based on our
          evaluation  as  of  the  Evaluation  Date;

5.   The  registrant's  other certifying officers and I have disclosed, based on
     our  most  recent  evaluation,  to  the registrant's auditors and the audit
     committee  of  registrant's  board  of directors (or persons performing the
     equivalent  functions):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which  could  adversely  affect  the registrant's ability to
          record,  process,  summarize  and  report  financial  data  and  have
          identified  for  the  registrant's auditors any material weaknesses in
          internal  controls;  and
     b)   any  fraud, whether or not material, that involves management or other
          employees  who  have  a  significant role in the registrant's internal
          controls;  and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     quarterly  report whether or not there were significant changes in internal
     controls  or  in  other  facts  that  could  significantly  affect internal
     controls  subsequent  to  the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


     /s/ Victor Salerno
     ___________________________________
     Victor Salerno, Chief Executive Officer          Date:  December 16, 2002



                                       18

<PAGE>

                    CERTIFICATION OF CHIEF FINANCIAL OFFICER

The  undersigned  chief  financial  officer,  individually,  certifies  that:

1.   I  have  reviewed this quarterly report on Form10-QSB of American Wagering,
     Inc.;

2.   Based  on  my  knowledge, this quarterly report does not contain any untrue
     statement  of a 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;

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;

4.   The  registrant's  other  certifying  officers  and  I  are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in  Exchange  Act  Rules  13a-14  and  15d-14) for the registrant and have:

     a)   designed  such  disclosure  controls  and  procedures  to  ensure that
          material  information  relating  to  the  registrant,  including  its
          consolidated  subsidiaries, is made known to us by others within those
          entities,  particularly  during  the  period  in  which this quarterly
          report  is  being  prepared;
     b)   evaluated  the  effectiveness  of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this  quarterly  report  (the  "Evaluation  Date");  and
     c)   presented  in  this  quarterly  report  our  conclusions  about  the
          effectiveness  of  the disclosure controls and procedures based on our
          evaluation  as  of  the  Evaluation  Date;

5.   The  registrant's  other certifying officers and I have disclosed, based on
     our  most  recent  evaluation,  to  the registrant's auditors and the audit
     committee  of  registrant's  board  of directors (or persons performing the
     equivalent  functions):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which  could  adversely  affect  the registrant's ability to
          record,  process,  summarize  and  report  financial  data  and  have
          identified  for  the  registrant's auditors any material weaknesses in
          internal  controls;  and
     b)   any  fraud, whether or not material, that involves management or other
          employees  who  have  a  significant role in the registrant's internal
          controls;  and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     quarterly  report whether or not there were significant changes in internal
     controls  or  in  other  facts  that  could  significantly  affect internal
     controls  subsequent  to  the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


     /s/ Timothy F. Lockinger
     _____________________________________
     Timothy F. Lockinger, Chief Financial Officer      Date:  December 16, 2002


                                       19