EXHIBIT (10)(d)(3)



                         NONQUALIFIED STOCK OPTION AGREEMENT
                                   PURSUANT TO THE
                         GRIFFIN GAMING & ENTERTAINMENT, INC.
                                1994 STOCK OPTION PLAN


               THIS STOCK OPTION AGREEMENT (this "Agreement") is made as of
          August  1,  1994  (the "Effective Date") between Griffin Gaming &
          Entertainment,  Inc., a Delaware corporation (the "Company"), and
          Matthew B. Kearney  (the "Executive").



                                   R E C I T A L S


               A.   The Company has adopted the 1994 Stock Option Plan (the
          "Plan"), a copy of which is annexed hereto as Exhibit 1.

               B.   T h e  Company  desires  to  grant  the  Executive  the
          opportunity  to  acquire a proprietary interest in the Company in
          consideration  of the Executive's contribution to the success and
          progress of the Company.

               C.   In  accordance with the Plan, the Committee (as defined
          in  the  Plan)  has  as  of  the  Effective  Date  granted to the
          Executive  an  option (the "Option") to purchase shares of common
          stock,  par  value $.01 per share, of the Company (the "Shares"),
          subject  to  the  terms  and  conditions  of  the  Plan  and this
          Agreement.



                                      AGREEMENTS


               1.   Definitions.    Capitalized  terms  not  defined herein
          shall have the meanings set forth in the Plan.

               2.   Grant  of  Option.  The Company grants to the Executive
          the  right and option to purchase all or any part of an aggregate
          of    40,000  Shares (the "Option Shares"), at the purchase price
          of  $5.15625  per  share,  on  the terms and conditions set forth
          herein.   This Option is not intended to qualify for treatment as
          an  Incentive  Stock Option within the meaning of Section 422A of
          the Internal Revenue Code of 1986, as amended (the "Code").






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               3.   Exercisability.  The Option shall become exercisable to
          the extent of one-fourth of the number of Option Shares on August
          1,  1995,  one-fourth  on August 1, 1996, one-fourth on August 1,
          1997 and one-fourth on August 1, 1998, on a cumulative basis.  In
          the  event  of  (1) the termination of the Executive's employment
          due  to death, disability or retirement, (2) there is a Change of
          Control  (as  defined  in  Section  12  below), (3) the Executive
          terminates  his employment following a material diminution in his
          duties  and  responsibilities,  and (4) the Company terminates or
          elects  not  to  renew,  other  than  for  cause, the Executive's
          employment through August 1, 1998, all of the Executive's options
          become exercisable.  During the period the Option is exercisable,
          it  may be exercised by the Executive as to the whole or any part
          thereof at any time or from time to time.

               4.   Expiration.   The Option shall expire upon the earliest
          to occur of:

                    (a)  the tenth anniversary of the Effective Date;

                    (b)  in  the  event  the  Executive  ceases  to  be  an
          employee   of  the  Company,  other  than  due  to  circumstances
          described  in  paragraph  (c)  or  (d),  three  months  after the
          Executive ceases to be an employee of the Company;

                    (c)  the termination of the Executive's employment with
          the  Company  if such termination is a termination by the Company
          for  cause,  in which case all rights of the Executive under this
          Agreement  shall  be  immediately  forfeited, except as to Option
          Shares already purchased;

                    (d)  the  first  anniversary  of the termination of the
          Executive's  employment  if the termination is by reason of death
          or disability.

                    For purposes of this Section 4:

                         (i)  during   the  period,  if  any,  following  a
          termination  of  the  Executive's  employment  and  prior  to the
          expiration of the Option, the Option shall be exercisable only to
          the extent exercisable on the date of such termination; and

                         (ii) employment   by  the  Company  shall  include
          employment by any subsidiary of the Company.

               5.   Assignment  or  Transfer.    The  Option  shall  not be
          assignable or transferable by the Executive other than by will or
          by  the  laws  of  descent  and  distribution,  or  pursuant to a
          qualified  domestic  relations  order  as  defined  in  the Code.
          During   the  lifetime  of  an  optionee,  the  Option  shall  be
          exercisable  only  by  the optionee or the optionee's guardian or
          legal representative.




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               6.   Adjustments.    If the Company's outstanding Shares are
          increased  or  decreased  or  changed  into  or  exchanged  for a
          different  number  or kind of shares of stock or other securities
          o f   the  Company  or  another  corporation  by  reason  of  any
          consolidation,  merger, combination, liquidation, reorganization,
          recapitalization,  stock  dividend, stock split, split-up, split-
          off, spin-off, combination of shares, exchange of shares or other
          like  change  in  capital structure of the Company, the number of
          kind  of  shares  or interests subject to this Option and the per
          share  price  thereof shall be appropriately adjusted at the time
          of such event.  Any fractional shares or interests resulting from
          such adjustment shall be eliminated.

               7.   Exercise  of the Option.  A person electing to exercise
          this  Option  shall  deliver  to  the  Secretary of the Company a
          written  and  signed notice of such election and of the number of
          Shares  such person has elected to purchase and shall at the time
          of delivery of such notice pay for the full purchase price of the
          Shares  such  person  has  elected  to  purchase in United States
          dollars by personal check, bank draft or money order drawn to the
          order  of  the  Company (and, in any event, in an amount not less
          than  the  aggregate  par  value  of such Shares).  The Committee
          further  may,  in  its discretion, permit payment of the purchase
          price  in such form or in such manner as may be permissible under
          the Plan and under any applicable law.

               8.   Compliance with Legal Requirements.  No Shares shall be
          issued or transferred pursuant to this Agreement unless and until
          all  legal  requirements  applicable to such issuance or transfer
          have,  in  the opinion of counsel of the Company, been satisfied.
          Such  requirements  may include, but are not limited to, listing,
          registering  or  qualifying the Shares subject to the Option upon
          any  securities  exchange  or  under  any  state  or federal law,
          satisfying  any  applicable  law  relating  to  the  transfer  of
          unregistered  securities  or demonstrating the availability of an
          exemption from applicable laws, placing a legend on the shares to
          the  effect  that  they were issued in reliance upon an exemption
          from  registration  under  the Securities Act of 1933 (the "Act")
          and  may  not  transferred  other  than in reliance upon Rule 144
          promulgated   under  the  Act,  if  available,  or  upon  another
          exemption  from  the Act, or obtaining the consent or approval of
          any  governmental  regulatory  body.    The  Company  has filed a
          registration  statement  on  Form  S-8  under the Act in order to
          register Shares subject to the Plan.

                    In  connection  with  any such issuance or transfer, or
          registration,  the person acquiring Shares shall, if requested by
          the  Company,  provide information and assurances satisfactory to
          counsel  to  the  Company  with  respect  to  such matters as the
          Company   may  deem  desirable  to  assure  compliance  with  all
          applicable legal requirements.





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               9.   No  Interest  in Shares Subject to Option.  Neither the
          Executive  (individually  or  as  a  member  of  a group) nor any
          beneficiary  or  other  person  claiming  under  or  through  the
          Executive  shall have any right, title, interest, or privilege in
          or  to  any  Shares  allocated or reserved for the purpose of the
          Plan  or  subject  to this Agreement except as to such Shares, if
          any,  as  shall  have been issued to such person upon exercise of
          this Option or any part of it.

               10.  Plan  Controls.    The Option hereby granted is subject
          to,  and  the  Company and Executive agree to be bound by, all of
          the  terms and conditions of the Plan, as the same may be amended
          from  time  to  time in accordance with the terms thereof, but no
          such  amendment  shall  be effective as to the Option without the
          Executive's  consent  insofar  as  it  may  adversely  affect the
          Executive's  rights  under  this  Agreement.  The Committee shall
          h a ve  sole  discretion  to  determine  whether  the  events  or
          conditions described in this Agreement have been satisfied and to
          make  all other interpretations, constructions and determinations
          required  under  this Agreement (except those which the Executive
          is  expressly  permitted to make), and all such determinations by
          the Committee shall be conclusive.

               11.  Not  an  Employment  Contract.  Nothing in the Plan, in
          this  Agreement or any other instrument executed pursuant thereto
          shall  confer  upon  the  Executive  any right to continue in the
          employ of the Company or shall affect the right of the Company to
          terminate the employment of the Executive with or without cause.

               12.          Change  of  Control.   For the purposes of this
          Agreement,  "Change  of Control" shall mean the occurrence of any
          one of the following events:

                    (i)  any  "person",  as  such  term is used in Sections
          3(a)(9)  and  13(d) of the Securities Exchange Act of 1934, other
          than  Mr.  Merv  Griffin and his affiliates becomes a "beneficial
          owner", as such term is used in Rule 13d-3 promulgated under that
          Act,  of 50% or more of the Company's Voting Stock, provided that
          the foregoing reference to 50% shall become 35% whenever Mr. Merv
          Griffin  disposes  of  all  or substantially all of the Company's
          Voting Stock presently held by Mr. Griffin;

                    (ii)   the  Company  adopts  any  plan  of  liquidation
          providing for the distribution of all or substantially all of its
          assets;

                    (iii)  all  or substantially all of the business of the
          Company  is  disposed  of  pursuant to a merger, consolidation or
          other   transaction  (unless  the  shareholders  of  the  Company
          i m mediately  prior  to  such  merger,  consolidation  or  other
          t r a nsaction  beneficially  own,  directly  or  indirectly,  in
          substantially  the same proportion as they owned the Voting Stock
          of the Company, all of



                                       - 131 -<PAGE>



          the  Voting  Stock  or other ownership interests of the entity or
          entities, if any, that succeed to the business of the Company);

                    (iv)  the  Company combines with another company and is
          the surviving corporation but, immediately after the combination,
          the   shareholders  of  the  Company  immediately  prior  to  the
          combination  hold,  directly  or  indirectly,  50% or less of the
          Voting  Stock  of the combined company (there being excluded from
          the  number of shares held by such shareholders, but not from the
          Voting  Stock  of  the  combined  company, any shares received by
          "affiliates",  as  such  term  is  defined  in  the  rules of the
          Securities  and  Exchange  Commission,  of  such other company in
          exchange for stock of such other company); or

                    (v)  Merv Griffin is no longer Chairman of the Board of
          Directors of the Company.

                    For  the  purposes  of  this Section 12, "Voting Stock"
          shall  mean  capital stock of any class or classes having general
          voting  power  under  ordinary  circumstances  (not including the
          Class  B  stock of the Company), in the absence of contingencies,
          to elect the directors of a corporation.

               13.  Governing  Law.   All rights under this Agreement shall
          be  governed  by and construed in accordance with the laws of the
          State of Delaware.

               14.   Taxes. The Committee may, in its discretion, make such
          provisions  and  take  such  steps  as  it  may deem necessary or
          appropriate  for the withholding of all federal, state, local and
          other  taxes  required  by law to be withheld with respect to the
          issuance  or  exercise  of the Option, including, but not limited
          to,  deducting  the amount of any such withholding taxes from any
          other  amount  then  or  thereafter  payable to the Executive, or
          requiring the Executive to pay to the Company the amount required
          to  be  withheld  or  to  execute such documents as the Committee
          deems  necessary  or  desirable  to  enable  it  to  satisfy  its
          withholding obligations.

               15.  Notices.    All  notices,  requests,  demands and other
          communications pursuant to this Agreement shall be in writing and
          shall  be deemed to have been duly given if personally delivered,
          telexed  or  telecopied  to, or, if mailed, when received by, the
          other  party at the following addresses (or at such other address
          as shall be given in writing by either party to the other):
                    If to the Company, to:

                    Griffin Gaming & Entertainment, Inc.
                    1133 Boardwalk
                    Atlantic City, NJ  08404
                    Attention:  The Secretary





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                    If to the Executive, to the address set
                    forth next to his signature hereto.

               16.  Effective  Date.  By execution below, this Agreement is
          entered into as of the Effective Date.


                                      GRIFFIN GAMING & ENTERTAINMENT, INC.


                                      By:  /s/ Thomas E. Gallagher  
                                           Thomas E. Gallagher


                                      Its:                            
                                           President and 
                                           Chief Executive Officer




          Address for Notices:        AGREED TO AND ACCEPTED:


                              

                                      By:  /s/ Matthew B. Kearney   





























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