<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q


(Mark one)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) 
     OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997

                                       OR

[ ]  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 1-2500

                               BALLY'S GRAND, INC.
             (Exact name of registrant as specified in its charter)

         DELAWARE                                       13-0980760
(State or other jurisdiction of                       (I.R.S.Employer
 incorporation or organization)                      Identification No.)

            3645 LAS VEGAS BOULEVARD SOUTH, LAS VEGAS, NEVADA  89109
          (Address of principal executive offices)           (Zip code)
                                 (702) 739-4111
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding twelve 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   X     No 
    -----      -----

Indicate by check mark whether the registrant has filed all documents and 
reports required to be filed by Section 12, 13 or 15(d) of the Securities 
Exchange Act of 1934 subsequent to the distribution of securities under a 
plan confirmed by a court.
Yes   X     No 
    -----      -----

Indicate the number of shares outstanding of each of the issuer's classes of 
common stock, as of October 31, 1997 -- Common Stock, $.01 par value -- 
7,668,568 shares.

<PAGE>


PART I      FINANCIAL INFORMATION

Company or group of companies for which report is filed:

               BALLY'S GRAND, INC.

ITEM 1.     FINANCIAL STATEMENTS


CONSOLIDATED STATEMENTS OF INCOME
(dollars in millions, except per share amounts)

<TABLE>
<CAPTION>

                                           Three months ended        Nine months ended
                                              September 30,             September 30,
                                             1997        1996         1997         1996
---------------------------------------------------------------    --------------------
<S>                                      <C>            <C>         <C>        <C>
Revenue   Casino                         $   33.3        37.3        118.5      116.2 
          Rooms                              15.0        14.8         48.9       48.3 
          Food and beverage                  10.4        10.4         32.8       33.5 
          Other                              12.7        10.2         32.4       32.5 
          -----------------------------------------------------    --------------------
                                             71.4        72.7        232.6      230.5 
---------------------------------------------------------------    --------------------
Expenses  Casino                             19.6        18.8         63.0       59.8 
          Rooms                               4.8         4.9         14.4       14.7 
          Food and beverage                   9.0         9.4         28.1       29.0 
          Other expenses                     26.8        28.5         80.3       83.3 
          -----------------------------------------------------    --------------------
                                             60.2        61.6        185.8      186.8 
---------------------------------------------------------------    --------------------
Operating income                             11.2        11.1         46.8       43.7 

          Interest and dividend income        1.4         2.0          4.9        4.0 
          Interest expense                   (8.4)       (8.4)       (25.2)     (25.2)
---------------------------------------------------------------    --------------------
Income before income taxes                    4.2         4.7         26.5       22.5 

          Provision for income taxes          1.5          .8          9.3        7.1 
---------------------------------------------------------------    --------------------
Net income                               $    2.7         3.9         17.2       15.4 
---------------------------------------------------------------    --------------------
---------------------------------------------------------------    --------------------
Net income per share                     $    .34         .44         1.96       1.73 
---------------------------------------------------------------    --------------------
---------------------------------------------------------------    --------------------
Average number                                                             
of shares                               7,934,380   9,006,915    8,799,405  8,925,539 
---------------------------------------------------------------  ----------------------
---------------------------------------------------------------  ----------------------

</TABLE>

                                       1

<PAGE>

BALLY'S GRAND, INC.
CONSOLIDATED BALANCE SHEETS
(in millions)

<TABLE>
<CAPTION>

                                                              September 30,   December 31,
                                                                      1997           1996
------------------------------------------------------------------------------------------
<S>               <C>                                         <C>             <C>
Assets            Current assets
                    Cash and equivalents                           $  92.5          115.9
                    Marketable securities, at fair value
                      (Hilton Hotels Corporation common stock)        49.1           38.1 
                    Receivables, less allowances of $4.6
                      and $4.9, respectively                          12.6           17.4 
                    Inventories                                        2.0            1.8 
                    Deferred income taxes                              6.4            7.1 
                    Other current assets                               4.8            3.8 
                  ------------------------------------------------------------------------
                  Total current assets                               167.4          184.1 
                  Property and equipment, net                        367.6          376.5 
                  Other assets                                        13.3           16.6 
                  ------------------------------------------------------------------------
                  Total assets                                     $ 548.3          577.2 
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------

Liabilities and   Current liabilities
stockholders' 
equity              Accounts payable                               $  10.3           13.2 
                    Income taxes payable                               8.5            8.8 
                    Accrued liabilities                               38.0           31.1 
                  ------------------------------------------------------------------------
                  Total current liabilities                           56.8           53.1 
                  Long-term debt                                     315.0          315.0 
                  Deferred income taxes and other liabilities         89.2           90.5 
                  Stockholders' equity                                87.3          118.6 
                  ------------------------------------------------------------------------
                  Total liabilities and stockholders' equity      $  548.3          577.2 
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------

</TABLE>

                                       2

<PAGE>

BALLY'S GRAND, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)

<TABLE>
<CAPTION>

                                                               Nine months ended
                                                                  September 30,
                                                                1997       1996
------------------------------------------------------------------------------------
<S>          <C>                                              <C>         <C>
Operating 
activities   Net income                                       $ 17.2        15.4 
             Adjustments to reconcile net income to net
               cash provided by operating activities:
               Depreciation and amortization                    19.7        20.0 
               Amortization of debt issue costs                   .7          .7 
               Change in working capital components:
                 Receivables                                     4.5        (4.2)
                 Other current assets                            4.8         (.3)
                 Accounts payable and accrued liabilities        1.9         9.9 
                 Income taxes payable                            (.3)        3.7 
               Change in deferred income taxes                  (2.4)       (1.4)
               Other                                            (1.0)        (.8)
             -----------------------------------------------------------------------
             Net cash provided by operating activities          45.1        43.0 
------------------------------------------------------------------------------------
Investing 
activities   Proceeds from sale of subsidiary to BEC            -          17.5 
             Capital expenditures                             (10.8)      (13.6)
             Increase (decrease) in construction-related 
              liabilities                                       1.1        (2.1)
             Other, net                                        (2.6)        1.7 
             -----------------------------------------------------------------------
             Net cash (used in) provided by investing 
             activities                                       (12.3)        3.5 
------------------------------------------------------------------------------------
Financing 
activities   Purchases of common stock for treasury           (57.1)       (1.2)
             Proceeds from exercise of warrants                  .9           - 
             -----------------------------------------------------------------------
             Net cash used in financing activities            (56.2)       (1.2)
------------------------------------------------------------------------------------
(Decrease) increase in cash and equivalents                   (23.4)       45.3 
Cash and equivalents at beginning of year                     115.9        64.7 
------------------------------------------------------------------------------------
Cash and equivalents at end of period                       $  92.5       110.0 
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------

</TABLE>

<TABLE>
<CAPTION>

                                                           Nine months ended
                                                              September 30,
SUPPLEMENTAL CASH FLOW INFORMATION:  (in millions)          1997        1996 
---------------------------------------------------------------------------------
<S>                                                        <C>         <C>
Cash paid during the period for the following:
             Interest, net of amounts capitalized           16.3        16.3 
             Income taxes                                   12.0         4.9 

</TABLE>

                                       3

<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1:  BASIS OF PRESENTATION

The accompanying consolidated financial statements include the accounts of 
Bally's Grand, Inc., a Delaware corporation (the Company) and its 
subsidiaries. The Company owns and operates the casino hotel resort in Las 
Vegas, Nevada known as "Bally's Las Vegas."  The Company operates in one 
industry segment and all significant revenues arise from its casino and 
supporting hotel operations. Unless otherwise specified in the text, 
references to the Company include the Company and its subsidiaries.  These 
consolidated financial statements should be read in conjunction with the 
consolidated financial statements included in the Company's Annual Report on 
Form 10-K for the year ended December 31, 1996.

Effective December 18, 1996, Hilton Hotels Corporation (HHC) completed the 
merger of Bally Entertainment Corporation (BEC) with and into HHC pursuant to 
an agreement dated June 6, 1996 (the Merger).  As a result, a wholly owned 
subsidiary of BEC which owned shares of the Company's common stock became a 
wholly owned subsidiary of HHC.  As of September 30, 1997, this wholly owned 
subsidiary of HHC owned approximately 95% (89% on a fully diluted basis) of 
the outstanding common stock of the Company.  

All adjustments have been recorded which are, in the opinion of management, 
necessary for a fair presentation of the consolidated balance sheet of the 
Company at September 30, 1997, its consolidated statements of income for the 
three and nine months ended September 30, 1997 and 1996 and its consolidated 
statement of cash flows for the nine months ended September 30, 1997 and 
1996. All such adjustments were of a normal recurring nature.

The accompanying consolidated financial statements have been prepared in 
conformity with generally accepted accounting principles which require the 
Company's management to make estimates and assumptions that affect the 
amounts reported therein.  Actual results could vary from such estimates.  In 
addition, certain reclassifications, which have no effect on net income, have 
been made to prior years' financial statements to conform with the 1997 
presentation.  

NOTE 2:  SEASONAL FACTORS

The Company's operations are somewhat seasonal and, therefore, the results of 
operations for the three and nine months ended September 30, 1997 and 1996 
are not necessarily indicative of the results of operations for the full year.

NOTE 3:  EARNINGS PER SHARE

Earnings per share is computed by dividing net income by the weighted average 
number of shares of common stock and common stock equivalents outstanding 
during each period.  Common stock equivalents, which represent the dilutive 
effect of the assumed exercise of outstanding warrants, increased the 
weighted average number of shares outstanding by 333,451 shares and 565,536 
shares for the three months ended September 30, 1997 and 1996, respectively, 
and by 304,676 shares and 484,635 shares for the nine months ended September 
30, 1997 and 1996, respectively.  The sum of net income per share for the 
three quarters differs from the net income per share for the nine-month periods
due to the required method of computing weighted average number of shares 
in the respective periods.

NOTE 4:  INCOME TAXES

For the period from January 1, 1996 to December 18, 1996, taxable income or 
loss of the Company is included in the consolidated Federal income tax return 
of BEC. For periods subsequent to December 18, 1996, taxable income or loss 
of the Company is included in the consolidated Federal income tax return of 
HHC.  Under a tax sharing arrangement between BEC, and now HHC, and the 
Company, income taxes 

                                       4

<PAGE>

are allocated to the Company based on amounts the Company would pay or 
receive if it filed a separate consolidated federal income tax return.  
Payments to BEC or HHC for tax liabilities are due at such time and in such 
amounts as payments would be required to be made to the Internal Revenue 
Service.  Payments from BEC or HHC for tax benefits are due at the time BEC 
or HHC files the applicable consolidated Federal income tax return.  

NOTE 5:  LONG-TERM DEBT

In October 1996, HHC announced an offer to purchase for cash (the Tender 
Offer) any and all of the Company's 10 3/8% First Mortgage Notes due 2003 (the 
Notes) and a solicitation of consents to proposed amendments to the indenture 
for the Notes (the Consent Solicitation).  In connection therewith, HHC 
purchased $312,219,000 principal amount of the Notes in December 1996 at a 
premium of 12.4% (10.4% for the Tender Offer and 2% for the Consent 
Solicitation).  Because HHC received consents for at least a majority of the 
principal amount of the Notes, certain restrictive covenants and events of 
default and related provisions contained in the indenture governing the Notes 
were eliminated.  

NOTE 6: TRANSACTIONS WITH BEC/HHC

In August 1993, the Company, BEC and Bally's Grand Management Co., Inc. 
(BGM), a Nevada corporation and, at that time, a wholly owned subsidiary of 
BEC, entered into a management agreement (the Management Agreement) whereby 
BGM provides management services to the Company and BEC licensed, and now HHC 
licenses, the use of the "Bally" name and certain computer software to the 
Company for a $3 million annual management fee.  Pursuant to the Management 
Agreement, management fees for each of the three and nine month periods ended 
September 30, 1997 and 1996 were $750,000 and $2,250,000, respectively.  In 
addition, certain of the Company's insurance coverages were obtained by BEC 
(and are currently obtained by HHC) pursuant to corporate-wide programs.  In 
these circumstances, BEC or HHC charged the Company its proportionate share 
of the respective insurance premiums.  

In August 1996, the Company sold Paris Casino Corp., an indirect wholly owned 
subsidiary that owns 24 acres of land next to Bally's Las Vegas upon which 
the Paris Casino-Resort is planned to be developed, to BEC for consideration 
having an aggregate value of approximately $57.5 million ($17.5 million in 
cash and 1,457,195 shares of BEC common stock which were converted into 
1,457,195 shares of HHC common stock in the Merger).  In addition, BEC 
reimbursed the Company for Paris Casino-Resort development costs incurred to 
date and certain transaction-related costs, and granted the Company certain 
operating considerations pursuant to a shared facilities agreement.  The 
transaction was negotiated and approved by an independent Special Committee 
of the Board of Directors of the Company. The Special Committee retained 
independent legal counsel and financial advisors in connection with the 
evaluation and negotiation of the transaction.  For financial accounting 
purposes, because BEC owned approximately 85% of the outstanding common stock 
of the Company at that time, the excess of the sales price over the 
historical net book value of Paris Casino Corp. (net of income taxes of 
$10,593,000) was accounted for as an increase to stockholders' equity. 

NOTE 7: LITIGATION

On June 13, 1997, the Company announced that it had reached an agreement to 
settle the IN RE:  BALLY'S GRAND, INC. SHAREHOLDERS LITIGATION presently 
pending in the Delaware Court of Chancery.  Prior to the settlement, HHC 
indirectly owned approximately 84% of the common stock of the Company.  Under 
the terms of the settlement, the Company has repurchased 966,747 shares of 
its common stock and 102,698 warrants to purchase shares of its common stock 
from certain plaintiffs at a price of $52.75 per share in cash for the common 
stock and $52.75 less the exercise price per warrant in cash for the 
warrants.  

On October 9, 1997, HHC received court approval of the settlement agreement.  
On October 28, 1997, a sole shareholder appealed the court approval of the 
settlement agreement.  On November 7, 1997, the 

                                       5

<PAGE>

Delaware Supreme Court granted HHC's motion for an expedited appeal.  Upon 
final resolution of the appeal, the Company would be merged with a subsidiary 
of HHC, and the remaining 408,862 outstanding shares of the Company's common 
stock not currently owned by HHC would be converted into the right to receive 
$52.75 (less certain attorneys' fees) per share in cash, and the 491,784 
outstanding warrants to purchase the Company's common stock not currently 
owned by HHC would be converted into the right to receive the difference 
between $52.75 (less certain attorneys' fees) and the exercise price per 
warrant in cash.  




                                       6

<PAGE>

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          AND RESULTS OF OPERATIONS


FINANCIAL CONDITION

LIQUIDITY AND CAPITAL SPENDING

The Company has no scheduled principal payments on its long-term debt until 
2003.  Management plans to make capital expenditures totaling approximately 
$24 million at Bally's Las Vegas during 1997 for various improvements, 
renovations and equipment to maintain the casino hotel resort in first-class 
condition.  The Company believes that during 1997 it will be able to satisfy 
its debt service requirements (interest on its public indebtedness is 
approximately $32.7 million per annum) and the aforementioned capital 
expenditures out of existing cash balances and cash flow from operations.  

RESULTS OF OPERATIONS

COMPARISON OF FISCAL QUARTERS ENDED SEPTEMBER 30, 1997 AND 1996

Revenues for the three months ended September 30, 1997 were $71.4 million 
compared to $72.7 million for the 1996 quarter, a decrease of $1.3 million 
(2%).  Casino revenues for the 1997 quarter were $33.3 million compared to 
$37.3 million for 1996, a decrease of $4.0 million (11%).  Table game 
revenues decreased $1.6 million (10%) due to a $3.6 million decrease in 
volume and a slightly lower hold percentage.  Slot revenues decreased $1.6 
million (9%) primarily attributable to a decrease in the win percentage.  
Rooms and food and beverage revenues remained consistent between periods.  

Management believes that the additional casino and hotel room capacity 
resulting from the opening of new casino-hotels may have a short-term 
negative impact on the Company, but that over the long term the Company 
benefits from the increase in the number of visitors to Las Vegas that these 
new properties attract.  To enhance its competitiveness in the Las Vegas 
market, Bally's Las Vegas has completed an extensive capital improvement 
program over the last three years including, among others, improvements to 
its frontage area along the Strip, a monorail system, the renovation of all 
of its hotel rooms, a new race and sports book room and a slot machine 
upgrade.  

                                       7

<PAGE>

Operating income for the three months ended September 30, 1997 was $11.2 
million compared to $11.1 million for the 1996 quarter, an increase of $.1 
million (1%). 

Interest and dividend income was $1.4 million for the 1997 third quarter 
versus $2.0 million in the prior year quarter, a decrease of $.6 million 
(30%) which resulted from lower average cash balances.  Interest expense, net 
of capitalized interest, was $8.4 million for both three-month periods ended 
September 30, 1997 and 1996.  

The provision for income taxes in the 1997 quarter totaled $1.5 million, a 
$.7 million increase over the prior year.  The 1996 period benefited from the 
elimination of a valuation allowance no longer required.

COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996

Revenues for the nine months ended September 30, 1997 were $232.6 million 
compared to $230.5 million for the 1996 period, an increase of $2.1 million 
(1%).  Casino revenues for the 1997 period were $118.5 million compared to 
$116.2 million for 1996, an increase of $2.3 million (2%).  Slot revenues 
increased $2.9 million (5%) primarily attributable to an increase of 11% in 
the slot handle (volume).  Table game revenues increased $1.6 million (3%) 
due to an increase in the hold percentage from 15.1% in the 1996 period to 
16.2% in 1997. Other casino revenues decreased $2.2 million due to a decrease 
in the sports book hold percentage.  Rooms and food and beverage revenues 
remained consistent between periods.  

Operating income for the nine months ended September 30, 1997 was $46.8 
million compared to $43.7 million for the 1996 period, an increase of $3.1 
million (7%). 

Interest and dividend income was $4.9 million for the 1997 nine-month period 
versus $4.0 million in the prior year, an increase of $.9 million (23%) which 
resulted from higher average cash balances.  Interest expense, net of 
capitalized interest, was $25.2 million for both nine-month periods ended 
September 30, 1997 and 1996.

                                       8

<PAGE>

ACCOUNTING CHANGES 

In February 1997, the Financial Accounting Standards Board issued Statement 
of Financial Accounting Standard (SFAS) No. 128, "Earnings per Share."  This 
statement establishes standards for computing and presenting earnings per 
share. SFAS No. 128 is effective for financial statements issued for periods 
ending after December 15, 1997 and earlier application is not permitted.  The 
Company's adoption of SFAS No. 128 is not expected to have a material impact 
on its earnings per share presentation.

FORWARD-LOOKING STATEMENTS

Forward-looking statements in this report, including without limitation, 
statements relating to the Company's plans, strategies, objectives, 
expectations, intentions and adequacy of resources, are made pursuant to the 
safe harbor provisions of the Private Securities Litigation Reform Act of 
1995. These forward-looking statements reflect the Company's current views 
with respect to future events and financial performance, and are subject to 
certain risks and uncertainties which could cause actual results to differ 
materially from historical results or those anticipated.  Although the 
Company believes the expectations reflected in such forward-looking 
statements are based upon reasonable assumptions, it can give no assurance 
that its expectations will be attained.  The Company undertakes no obligation 
to publicly update or revise any forward-looking statements, whether as a 
result of new information, future events or otherwise.  

                                       9

<PAGE>

PART II      OTHER INFORMATION
                                                              
ITEM 1.      LEGAL PROCEEDINGS
                                                              
     As previously reported, two derivative actions purportedly brought on
     behalf of the Company against its directors and BEC, one commenced in
     October 1995 and the other in September 1996, have been consolidated under
     the caption IN RE: BALLY'S GRAND DERIVATIVE LITIGATION in the Court of
     Chancery of the State of Delaware, New Castle County.  BEC merged with and
     into HHC on December 18, 1996.  A third derivative action purportedly
     brought on behalf of the Company against its directors, BEC, Bally's Grand
     Management Co., Inc., a wholly-owned subsidiary of BEC, and HHC was
     commenced in November 1996 under the caption TOWER INVESTMENT GROUP, INC.,
     ET AL. V. BALLY'S GRAND, INC., ET AL. in the Court of Chancery of the State
     of Delaware, New Castle County.  This action was consolidated with the IN
     RE: BALLY'S GRAND DERIVATIVE LITIGATION action under the caption IN RE:
     BALLY'S GRAND, INC. SHAREHOLDERS LITIGATION.  
     
     On June 13, 1997, the Company announced that it had reached an agreement to
     settle the IN RE:  BALLY'S GRAND, INC. SHAREHOLDERS LITIGATION.  Prior to
     the settlement, HHC indirectly owned approximately 84% of the common stock
     of the Company.  Under the terms of the settlement, the Company has
     repurchased 966,747 shares of its common stock and 102,698 warrants to
     purchase shares of its common stock from certain plaintiffs at a price of
     $52.75 per share in cash for the common stock and $52.75 less the exercise
     price per warrant in cash for the warrants.
     
     On October 9, 1997, HHC received court approval of the settlement
     agreement.  On October 28, 1997, a sole shareholder appealed the court
     approval of the settlement agreement.  On November 7, 1997, the Delaware
     Supreme Court granted HHC's motion for an expedited appeal.  Upon final
     resolution of the appeal, the Company would be merged with a subsidiary of
     HHC, and the remaining 408,862 outstanding shares of the Company's common
     stock not currently owned by HHC would be converted into the right to
     receive $52.75 (less certain attorneys' fees) per share in cash, and the
     491,784 outstanding warrants to purchase the Company's common stock not
     currently owned by HHC would be converted into the right to receive the
     difference between $52.75 (less certain attorneys' fees) and the exercise
     price per warrant in cash.  
     
     
ITEM 6.      EXHIBITS AND REPORTS ON FORM 8-K

(a)     EXHIBITS

     27. Financial data schedule for the nine-month period ended September 
30, 1997.

                                      10

<PAGE>

                                  SIGNATURES

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.


                                         BALLY'S GRAND, INC.
                                            (Registrant)




Date:  November 14, 1997                 /s/ LEON H. FLINDERS
                                         ---------------------------------
                                         Leon H. Flinders
                                         Chief Financial Officer and
                                           Controller





                                      11