FORM 10-QSB










October 31, 2004

















000-20685





AMERICAN WAGERING, INC.







Nevada   88-0344658










675 Grier Drive, Las Vegas, Nevada 89119


(Address of principal executive offices)





702-735-0101


(Issuers telephone number)





























1





AMERICAN WAGERING, INC. AND SUBSIDIARIES


TABLE OF CONTENTS














PART I - FINANICAL INFORMATION







































PART II - OTHER INFORMATION



























2




PART I - FINANCIAL INFORMATION (1)







Item 1.  Financial Statements (2)





AMERICAN WAGERING, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS











**October 31,                January 31,**
**2004****2004****ASSETS**CURRENT ASSETSCash and equivalents
$
3,121,416

$
4,113,196Restricted cash

1,187,235


1,060,869Accounts receivable, net of allowances

164,445


294,538Inventories

481,805


957,174Deferred tax asset, net of allowances

440,481


440,481Note receivable (3)

620,000


--Prepaid expenses and other

408,752


336,4916,424,134


7,202,749PROPERTY AND EQUIPMENT, net

3,629,265


3,255,629GOODWILL

103,725


103,725OTHER ASSETS

227,024


337,816$
10,384,148

$
10,899,919**LIABILITIES AND STOCKHOLDERS EQUITY**CURRENT LIABILITIESCurrent portion of long-term debt
$
68,613

$
131,834Accounts payable

894,275


448,331Accrued expenses

660,617


504,306Unpaid winning tickets

1,191,727


687,073Customer deposits and other

776,783


1,621,9563,592,015


3,393,500LIABILITIES AND REDEEMABLE PREFERRED STOCK OBLIGATION SUBJECT TO COMPROMISE (4)Accounts payable

277,178


169,940Accrued expenses

456,822


382,331Litigation payable, including accrued interest

3,100,310


3,100,310Redeemable Series A preferred stock obligation - 3,238 shares

323,800


323,8004,158,110


3,976,381LONG-TERM DEBT, less current portion

1,523,559


1,567,226OTHER LONG-TERM LIABILITIES

45,033


25,0001,568,592


1,592,2269,318,717


8,962,107STOCKHOLDERS EQUITYSeries A preferred stock - 10% cumulative; $.01 par value; authorized:
25,000,000 shares; issued and outstanding: 10,924 shares

1,092,400


1,092,400Common stock - $.01 par value; authorized: 25,000,000 shares;
issued: 7,897,946 shares

78,979


78,979Additional paid-in capital

12,738,889


12,738,889Deficit

(12,517,344
)

(11,644,963)Less 61,100 common shares in treasury, at cost

(327,493
)

(327,493)1,065,431


1,937,812$
10,384,148

$
10,899,919


See notes to consolidated financial statements.


3




AMERICAN WAGERING, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF OPERATIONS


FOR THE THREE MONTHS ENDED OCTOBER 31


(UNAUDITED)





**2004****2003**REVENUES****Wagering
$
1,365,363

$
1,661,359Systems sales and service

1,014,779


1,075,9032,380,142


2,737,262OPERATING COSTS AND EXPENSES****Direct costs:****Wagering****

1,525,334


1,394,187****System**s**

543,896


574,0072,069,230


1,968,194****Research and development

241,495


246,305****Selling, general and administrative

556,548


503,703****Depreciation and amortization

95,846


85,9632,963,119


2,804,165OPERATING LOSS

(582,977
)

(66,903)OTHER INCOME (EXPENSE)Interest income

1,107


4,374Interest expense

(33,458
)

(36,449)Reorganization (5)

(147,724
)

(1,188)Other, net

22,660


22,611(157,415
)

(10,652)NET LOSS
$
(740,392
)
$
(77,555)BASIC LOSS PER SHARE (7)
$
(0.09
)
$
(0.01)


See notes to consolidated financial statements.


4




AMERICAN WAGERING, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF OPERATIONS


FOR THE NINE MONTHS ENDED OCTOBER 31,


(UNAUDITED)





**2004****2003**REVENUES****Wagering
$
4,306,424

$
4,222,135Systems sales and service

3,619,543


3,220,8207,925,967


7,442,955OPERATING COSTS AND EXPENSES****Direct costs:****Wagering****

3,859,918


3,526,958****System**s**

1,764,671


1,549,5795,624,589


5,076,537****Research and development

704,100


714,885****Selling, general and administrative

1,607,566


1,474,490****Depreciation and amortization

276,317


313,0368,212,572


7,578,948OPERATING LOSS

(286,605
)

(135,993)OTHER INCOME (EXPENSE)Interest income

9,690


17,702Interest expense

(103,049
)

(111,798)Litigation judgment

--


(800,465)Reorganization

(455,019
)

(1,188)Other, net

70,391


97,858(477,987
)

(797,891)LOSS BEFORE INCOME TAX

(764,592
)

(933,884)INCOME TAX

3,000


--NET LOSS
$
(761,592
)
$
(933,884)BASIC LOSS PER SHARE
$
(0.11
)
$
(0.13)


See notes to consolidated financial statements.


5




AMERICAN WAGERING, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH FLOWS


FOR THE NINE MONTHS ENDED OCTOBER 31,


(UNAUDITED)





**2004****2003**OPERATING ACTIVITIESNet cash provided by operating activities
$
501,554

$
122,149INVESTING ACTIVITIESInvestment in restricted cash

(106,333
)

(1,000,222)Withdrawals of restricted cash

--


120,173Note receivable

(620,000
)

--Purchase of property and equipment

(660,112
)

(226,122)Net cash used in investing activities

(1,386,445
)

(1,106,171)FINANCING ACTIVITIESRepayment of borrowings

(106,889
)

(85,185)Dividends paid

--


(107,395)Other

--


100Net cash used in financing activities

(106,889
)

(192,480)NET DECREASE IN CASH AND CASH EQUIVALENTS

(991,780
)

(1,176,502)CASH AND CASH EQUIVALENTS
BEGINNING OF PERIOD

4,113,196


4,329,654END OF PERIOD
$
3,121,416

$
3,153,152





See notes to consolidated financial statements.
   6  AMERICAN WAGERING, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(UNAUDITED)









1. Basis of Presentation















2. Chapter 11 Filing
























7
























































8


























**3.Notes receivable**









a.     In the event the Bankruptcy Court approves the Restated Amended Plan, LVGI shall receive a lump-sum payment from American Wagering, Inc.
 (AWI) on the Effective
 9  Date in the amount of $320,000. LVGI shall repay the loan to CBS within 24 hours of receipt of good funds from AWI.
  b.     In the event the Bankruptcy Court does not allow AWI to make a lump-sum payment to LVGI in the amount of $320,000 on the Effective Dateand
 CBS is successful in completing a refinancing of the CBS building, then AWI shall pay LVGI a minimum of $200,000 from the proceeds of the
 building refinance, which amount shall be used by LVGI to pay CBS the amount of $200,000 within 24 hours of receipt of good funds from AWI.
 The balance of the loan shall be due and payable in 24 equal monthly installments.
   c.     In the event the Bankruptcy Court does not allow AWI to make a lump-sum payment to LVGI in the amount of $320,000 on the Effective Dateand
 CBS is successful in completing a sale of the CBS building, then AWI shall pay LVGI $340,000 from the proceeds of the building sale, which amount
 shall be used by LVGI to pay CBS the amount of $320,000 within 24 hours of receipt of good funds from AWI.
  d.     In the event the Bankruptcy Court does not allow AWI to make a lump-sum payment to LVGI in the amount of $320,000 on the Effective Dateand
 CBS is not successful in completing a refinance or sale of the CBS building, then LVGI shall repay the loan to CBS in 36 equal monthly installments.
   e.     The loan to LVGI doesnotaccrue interest.
  f.     In the event that Racusin is successful in his legal appeal (in a matter unrelated to the Company), these funds will be returned to the Company in full. In
 the event that Racusin is partially successful in his legal appeal, any unused funds will be returned to the Company.
 g.     In the event that the Company must pay the Racusin Claim in the form of cash (rather than stock pursuant to the Section 510(b) appeal), any funds
 advanced but not returned (as noted above) will be deducted from the cash due to Racusin.
   h.     In the event that the Company must pay the Racusin Claim in the form of stock, any funds advanced but not returned (as noted above) will be written-
 off provided, however, that Racusin must vote his claim in favor of the Restated Amended Plan. In the event that Racusin does not vote his claim in
 favor of the Restated Amended Plan, then any funds advanced but not returned must be reimbursed by Racusin.
   i.      The loan to Racusin doesnotaccrue interest.
 10  **4. Liabilities and redeemable preferred stock obligations subject to compromise as of October 31, 2004**


Description

AWI


Leroys


TotalAccounts payable
$
219,634

$
57,544

$
277,178Accrued expenses

371,209


85,613


456,822Judgment payable - Racusin

1,972,249


--


1,972,249Judgment payable - LVGI

1,128,061


--


1,128,061Redeemable Series A preferred stock
obligation

323,800


--


323,800$
4,014,953

$
143,157

$
4,158,110





5. Reorganization costs










6. Supplemental unaudited condensed financial statements of debtor-in-possession





**AWI****Leroys****Balance Sheets as of October 31, 2004**AssetsCash and equivalents
$
201,426

$
2,402,692Restricted cash and investments

--


1,177,552Deferred tax asset

440,481


--Prepaid expenses and other

87,606


255,730729,513


3,835,974Property and equipment, net

15,666


327,224Due from affiliates*

3,857,918


3,215,352Investment in subsidiaries*

1,553,007


--Other assets

436,034


1,200$
6,592,138

$
7,379,750Liabilities and EquityAccounts payable
$
558,680

$
152,982Accrued expenses

69,065


494,211Unpaid winning tickets

--


1,191,727Customer deposits and other

--


706,295627,745


2,545,215Due to affiliates, subject to compromise*

3,408,887


1,412,039Other liabilities subject to compromise

3,490,519


143,157Equity

(935,013
)

3,279,339$
6,592,138

$
7,379,750





**Statements of Operations**
**for the nine months ended October 31, 2004**

**AWI**


**Leroys**Revenues
$
1,792,456

$
4,306,424








11





Costs and expenses

1,326,669


5,123,181Income (loss) from operations

465,787


(816,757)Other income (expense)

(468,269
)

23,124Net loss
$
(2,482
)
$
(793,633)



















7. Net loss per share










**Three months ended October 31,****2004**


**2003**Net income (loss)
$
(740,392
)
$
(77,555)Preferred stock dividends

(36,192
)

(36,192Net income (loss), as adjusted
$
(776,584
)
$
(113,747)Basic weighted average shares outstanding

7,836,846


7,836,846








**Nine months ended October 31,****2004**

**2003**Net loss
$           (761,592)

$         (933,884)Preferred stock dividends
(107,789)

(107,395)Net loss, as adjusted
$           (869,381)

$      (1,041,279)Basic weighted average shares outstanding
7,836,846

7,836,846





8. Business segments







12









**Three months ended October 31,****2004**
**2003**Operating incomeWagering
$              (212,104)
$                  185,057Systems
65,232
131,853Unallocated
(436,105)
(383,460)$              (582,977)
$                 (66,550)**Nine months ended October 31,****2004**
**2003**Operating incomeWagering
$               373,858
$                 511,197Systems
717,526
524,056Unallocated
(1,377,989)
(1,171,246)$             (286,605)
$               (135,993)





9. Other litigation





Accounting for Contingencies,





10. Regulatory matters















13


14  Item 2.  Managements Discussion and Analysis of Financial Condition and Results of Operations





Forward Looking Statements









Overview










Liquidity and Capital Resources












15




















Critical Accounting Estimates





the


16


































RESULTS OF OPERATIONS -Nine months ended October 31, 2004 and 2003





Revenues










Wagering







17




















Systems







Operating Costs and Expenses










Direct Costs and Expenses







Selling, General and Administrative Expenses







Other Income and Expense







18  Item 3. Controls and Procedures












19




PART II - OTHER INFORMATION








Item 1. Legal Proceedings










Racusin












a.     Filed a Restated Amended Plan of Reorganization (the Restated Amended Plan) to conform the treatment of the Racusin Claim in accordance with
 the terms and conditions of the Settlement Agreement.
 b.      Bonded Racusins legal appeal in the amount of $300,000 in a matter unrelated to the Company.
   c.      Employed Racusin as a consultant to a wholly owned subsidiary of AWI.


th th th










Las Vegas Gaming, Inc. (successor-in-interest to Imagineering Systems, Inc.)







20  Other










Item 2. Unregistered Sales of Equity Securities and Use of Proceeds







Item 3. Defaults upon senior securities







Item 4. Submission of matters to a vote of security holders







Item 5. Other information







Item 6. Exhibits.





Exhibit Number
Description31.1
Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002








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SIGNATURE






















/s/ Timothy F. Lockinger








22