<PAGE>
               SECURITIES AND EXCHANGE COMMISSION

                    WASHINGTON, D. C.  20549

                            FORM 10-K


(Mark One)

[X]  ANNUAL  REPORT  PURSUANT  TO SECTION  13  OR  15(d)  OF  THE
     SECURITIES EXCHANGE ACT OF 1934

     For the fiscal year ended            May 31, 1999
                                ---------------------------------

[ ]  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          0-23588
                              ---------------------

                   PAUL-SON GAMING CORPORATION
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     (Exact name of registrant as specified in its charter)

            NEVADA                             88-0310433
-------------------------------         -------------------------
(State or other jurisdiction of             (I.R.S. Employer
incorporation or organization)             Identification No.)

 1700 South Industrial Road, Las Vegas, Nevada        89102
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   (Address of principal executive offices)        (Zip Code)

                         (702)  384-2425
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      (Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

                                      NAME OF EACH EXCHANGE
      TITLE OF EACH CLASS              ON WHICH REGISTERED

        Not Applicable                    Not Applicable
-----------------------------------------------------------------

Securities registered pursuant to Section 12(g) of the Act:

                  COMMON STOCK, $ .01 PAR VALUE
-----------------------------------------------------------------
                        (Title of class)

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     Indicate by check mark whether the registrant (1) has  filed
all  reports required to be filed by Sections 13 or 15(d) of  the
Securities  Exchange Act of 1934 during the preceding  12  months
(or  for such shorter period that the registrant was required  to
file  such  reports),  and (2) has been subject  to  such  filing
requirements for the past 90 days.   [X] Yes [ ] No

     Indicate  by  check mark if disclosure of delinquent  filers
pursuant  to Item 405 of Regulation S-K is not contained  herein,
and  will  not  be  contained, to the best  of  the  registrant's
knowledge,   in   definitive  proxy  or  information   statements
incorporated by reference in Part III of this Form  10-K  or  any
amendment to this Form 10-K.       [ ]

     The  aggregate  market value of voting stock  held  by  non-
affiliates of the registrant as of August 23, 1999, based on  the
closing price as reported on the Nasdaq National Market of  $9.00
per share, was approximately $15,194,610.

     Indicate  the number of shares outstanding of  each  of  the
registrant's classes of common stock, as of August 23, 1999.

     Common Stock, $.01 par value, 3,455,757 shares.


               DOCUMENTS INCORPORATED BY REFERENCE
               -----------------------------------

     The  information  required by Part III  of  this  Report  is
incorporated  by  reference from the Paul-Son Gaming  Corporation
Proxy  Statement to be filed with the Commission not  later  than
120 days after the end of the fiscal year covered by this Report.

                                2

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PART I

ITEM 1.   BUSINESS
          --------

     Paul-Son  Gaming  Corporation,  a  Nevada  Corporation  (the
"Company" or "Paul-Son"), is a leading manufacturer and  supplier
of  casino  table  game  equipment in  the  United  States.   The
Company's  products  include casino chips,  table  game  layouts,
playing  cards,  dice, gaming furniture and  miscellaneous  table
accessories  such  as chip trays, drop boxes and  dealing  shoes,
which  are  used in conjunction with casino table games  such  as
blackjack,  poker, baccarat, craps and roulette.  The Company  is
headquartered   in   Las   Vegas,  Nevada,   with   its   primary
manufacturing  facilities located in San Luis, Mexico  and  sales
offices  in  Las Vegas; Reno, Nevada; Atlantic City, New  Jersey;
Gulfport, Mississippi; Ft. Lauderdale, Florida; Portland, Oregon;
and  Ontario,  Canada.  The Company sells its products  in  every
state in which casinos operate in the United States.

     The Company also has retail sales outlets mostly within many
of its branch sales offices which provide casino-quality products
for  personal use, including poker chips, "Fantasy Casino" chips,
dice, playing cards and gift items made with Paul-Son components.
Further,  scaled-down gaming furniture and accessories  are  also
offered  for  personal use.  The Company opened  a  retail  sales
outlet  on  the Las Vegas Strip during fiscal 1998 through  which
sales  are made to the general public of its table game products,
some of which are factory overruns, returns or excess items.   In
fiscal 1998, the Company announced that it intends to offer  many
of its products to the non-gaming and specialty markets, although
this has not yet become a significant business for the Company.

     The  Company  was  founded in 1963 by its  former  Chairman,
Paul  S.  Endy, Jr., and initially manufactured and sold dice  to
casinos  in  Las  Vegas.  In the more than  35  years  since  its
founding, the Company has expanded its product offerings and,  as
the  industry has expanded and gaming has been legalized in other
jurisdictions, its customer and geographic base.  As a result  of
this  growth,  the Company now offers a full line of  table  game
products.

     As  a  full-service supplier, Paul-Son manufactures products
to  meet  particular customer and industry specifications,  which
may include a range of shapes and sizes, varied color schemes and
other graphics, and security and anti-counterfeit features.   The
useful  lives  of  the  Company's products typically  range  from
several  hours in the case of playing cards and dice, to  several
months  in the case of layouts, and several years in the case  of
casino  chips and gaming furniture.  As such, the Company's  core
business is the ongoing replacement sale of these products.  When
a  new  casino opens, the Company strives to supply most  of  the
products required to operate the casino's table games, frequently
on   a  sole-supplier  basis.   When  successful,  revenues   are
generated both from the initial sale to the new casino and  on  a
continuing basis as the new casino becomes part of the  Company's
core customer base.

BUSINESS STRATEGY

     During  its  more  than  35 years of operations,  management
believes the Company has established an excellent reputation  for
product  quality, reliability, customer service  and  value.   In
addition,  the  Company  has developed an extensive  distribution
network and is licensed or

                                3

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authorized  to  supply gaming equipment in  every  state  in  the
United  States in which such licenses are required.  The  Company
is  also licensed or authorized to supply gaming equipment  on  a
number  of  Native  American lands; in  Victoria,  Australia;  in
Ontario,  Quebec and British Columbia, Canada; and in  Mpumalanga
and  Gauteng,  South Africa.  The Company's current strategy  for
growth is to:  (i) capitalize upon its competitive advantages  to
maintain its market position for those products in which it has a
dominant  share  and thereby benefit from the expected  continued
growth  in  the  United States casino market;  (ii)  improve  its
manufacturing processes and aggressively pursue market share  for
products,  such as playing cards, in which the Company  does  not
have  a  leading market share; (iii) expand internationally  into
growing  casino  markets, including those in  Canada,  Australia,
Europe,  South  America, Central America, Asia,  Africa  and  the
Caribbean; (iv) develop or acquire new products which the Company
can  sell  through  its existing distribution  network;  and  (v)
market  and  sell variations of its gaming products to non-gaming
markets.

PRODUCTS

  CASINO CHIPS

     Paul-Son  designs and manufactures casino chips  to  meet  a
variety  of  customer  preferences and specifications,  including
size, weight, ability to stack, ease of handling, texture, color,
graphics, durability, and security and anti-counterfeit features.
Casino  chips are manufactured from a proprietary formulation  of
approximately  ten  raw  materials using  a  compression  molding
system  that management believes is unique to the industry.   The
Company  has  developed  the ability to  mold  detailed  graphics
bearing casino logos or other designs onto both sides of a  chip.
In  addition,  customized security and identifying  features  are
incorporated into a chip.

     A  casino  will generally order all of its chips,  including
replacement  chips after wear and usage, from a single  supplier.
Accordingly,  Paul-Son  strives  to  become  the  original   chip
supplier  to a casino upon its opening.  A new casino order  will
typically  include approximately five distinct  chip  colors  and
styles,  ranging  in  denominations  from  $1  to  $1,000.    The
Company's  selling price is generally between $.60 and  $.80  per
chip,  depending upon the specification, quantities,  design  and
security  features.  Given this relatively low cost and a  chip's
expected lifespan of five or more years, management believes that
competition is generally based upon factors other than price.

     To  protect  its market position and satisfy the demands  of
its  customers,  the Company continuously seeks  to  improve  the
quality  and  features  of its chips.  During  the  past  several
years,  the  Company  has  introduced improved  formulations  and
additional  security  features  which  are  incorporated  in  the
manufacture of its casino chips.

     The  Company manufactures all of its chips at its facilities
in  San  Luis, Mexico.  The Company's production capacity at  its
Mexico facilities is approximately 50 million chips (based on two
production  shifts and increased labor availability).  Management
believes that given its current production level of approximately
11  million  chips  per  year, the Company will  have  sufficient
manufacturing  capacity  to meet potential  increases  in  future
demand.

                                4

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     Since  1994,  Paul-Son  has  marketed  commemorative  chips.
Management  of Paul-Son and its casino customers determined  that
casino  patrons  often retained casino chips  which  commemorated
certain types of events such as title boxing matches, significant
anniversaries, and premier entertainment events.  Casinos benefit
to  the  extent  that casino chips purchased  are  not  redeemed,
thereby  resulting in added cash flow to the casino.  The Company
is  also  pursuing  opportunities  to  sell  commemorative  chips
outside of the gaming industry.

  TABLE LAYOUTS

     Every gaming table is covered with a layout containing silk-
screened  patterns particular to each specific game, as  well  as
multi-colored  logos and other markings according  to  individual
casino  preferences.  Paul-Son is a leading manufacturer of  felt
layouts  in  the  United States, utilizing high  quality  cloths,
enhanced   graphics,  and  proprietary  dye  formulations   which
management  believes result in the widest variety  of  customized
colors.   The  Company has introduced its own line  of  synthetic
layouts  which  management believes are more  durable  than  felt
layouts.

     Layouts  are typically installed by Paul-Son on  new  gaming
tables  prior  to  delivery to a casino.  The  layouts  are  then
regularly  replaced by the casinos to maintain their  appearance,
generally  within 60 to 150 days.  Layouts typically  sell  in  a
range  of  approximately $65 to $325, depending on  the  type  of
table,  the  complexity  of  the patterns  and  the  variety  and
difficulty of color combinations.

     The   Company  manufactures  its  layouts  in   its   Mexico
facilities.   The   Company's  layout  production   capacity   is
approximately  50,000  "steam" layouts and  approximately  25,000
"hand-painted"  layouts per year.  In fiscal  1999,  the  Company
produced  approximately 37,000 layouts.  Management believes  the
capacity of its layout production facilities in Mexico will allow
the Company to increase layout production as needed.

  PLAYING CARDS

     The  Company  manufactures and sells its own line  of  paper
casino playing cards.  A deck of cards typically sells to casinos
for  between  approximately $.75 and $1.50 and, based  on  casino
industry  practices, is generally replaced every eight  hours  or
less.   A casino typically enters into a one or two year purchase
commitment  with  a  supplier  to supply  its  cards  at  regular
intervals,  generally  monthly.   Casinos  occasionally  purchase
cards from more than one supplier, as casino floor managers often
have preferences for a particular type of card.

     The  Company  believes that it is the third  largest  casino
card  manufacturer  in the United States.   Given  the  Company's
relatively low market share, its established distribution  system
for   table   game  supplies  and  its  low  cost   manufacturing
facilities,  management believes that playing cards  represent  a
significant growth opportunity for the Company.

     The  Company produces all of its playing cards in its Mexico
facilities.    The   Company  purchased  and  leased   additional
equipment  in fiscal 1999 to increase its production capacity  to
approximately 25 million decks per year (based on two  production
shifts),   up  from  the  Company's  previous  annual  production
capacity  of  approximately 13 million decks.   Expanded  playing
card  production capacity will permit management to  aggressively
seek new playing card

                                5

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business  from  its  existing casino customer  base,  from  other
casinos  and  from customers outside of the casino industry.   In
fiscal 1999, the Company produced approximately 7.5 million decks
of playing cards.

     The Company also distributes plastic playing cards which are
used  predominately in California card clubs. Traditionally,  the
plastic  playing cards are preferred by the California card  room
market  while  the  paper cards are generally  preferred  by  the
traditional hotel-casino markets.

  GAMING FURNITURE

     The  Company  sells  a variety of casino  gaming  furniture,
including  tables,  seating  and roulette  and  Big  Six  wheels.
Tables  range in price from approximately $1,000 for a  blackjack
table  to  approximately $15,000 for a double roulette table  and
wheel.  The  Company offers a "Premier" line of gaming  furniture
which  has  been the staple of the Company, and a  "Select"  line
which  was developed in response to the industry's demand  for  a
lower  priced,  quality  line  of blackjack  tables.   Management
believes  that the "Select" line enables the Company  to  compete
with  the  price  structure of its competitors while  maintaining
Company  quality standards.  Paul-Son vigorously  pursues  gaming
table  sales  because the sale of a gaming table  will  generally
bolster  its ability to sell consumable products such as layouts,
dice,   chips,  cards,  and  other  accessories  to   the   table
purchasers.  The Company buys its tables in unassembled form from
quality wood shops.  Tables are then assembled by the Company and
completed by adding the felt layout, drop boxes, trays and  other
accessories.   Table  game seating is produced  by  nonaffiliated
manufacturers  and distributed by the Company.  In January  1996,
the  Company commenced manufacturing its own roulette and Big Six
wheels.   By  manufacturing the wheels, management  believes  the
Company  has  better control over the quality of  the  wheels  it
offers to its customers.

  DICE

     Paul-Son  manufactures  dice at its Mexico  facilities  from
cellulose acetate specifically formulated to provide the required
clarity, hardness and dimensional stability.  The Company  offers
a  variety of spot designs, which are inserted in the body of the
dice and machined flat to the surface.  A casino may request  the
imprinting of its name and logo (in a variety and combination  of
colors), the insertion of a security "key" onto the reverse  side
of a particular spot, the addition of a security "glow" spot, the
serialization of the dice, or all or a combination of the above.

     Paul-Son  dice  are  manufactured  in  conformity  with  the
strictest standards of gaming regulators, which require that each
die  be  within  3/10,000th of an inch of a  perfect  cube.   The
typical  sales  price  of  casino dice currently  ranges  between
approximately $2.50 and $3.00 per pair.  Generally, a set of dice
(two  and  one-half pair) does not remain in play for  more  than
eight  hours  in  a busy casino.  The Company currently  has  the
capacity to produce approximately 800,000 pairs of dice per  year
(based  upon one production shift).  In fiscal 1999, the  Company
produced approximately 600,000 pairs of dice.

                                6

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  TABLE ACCESSORIES AND OTHER PRODUCTS

     In  order  to offer its customers a full product  line,  the
Company  sells  a number of ancillary casino table game  products
which  it typically does not manufacture.  These include  plastic
money  paddles, discard holders, drop boxes, dealing shoes, trays
and  covers,  dice sticks and on/off pucks.  These  products  are
generally sold in conjunction with the sale of gaming tables  and
tend  to have long useful lives.  The Company generally maintains
two suppliers for each of these products.

     In  order  to  compete with the increasing competition  from
manufacturers of these products who sell direct to the  Company's
casino  customers, the Company began manufacturing, in May  1997,
certain of its own plastic products in limited quantities.

SALES, ADVERTISING AND PROMOTION

     The  Company generally distributes its products through  its
approximately  17  person  sales force,  which  operates  out  of
regional  offices in Las Vegas and Reno, Nevada;  Atlantic  City,
New  Jersey;  Gulfport,  Mississippi;  Ft.  Lauderdale,  Florida;
Ontario, Canada; and Portland, Oregon.  Additionally, the Company
has  a  sales representative in Lima, Peru.  Management  believes
that  the  long-standing customer relationships which  have  been
developed over the years by its individual sales representatives,
as  well as the Company's reputation for quality and reliability,
are  key factors upon which the Company successfully competes  in
the  market  place.   From time to time the Company  enters  into
agreements  for the distribution of its products on an  exclusive
and non-exclusive basis.

     The  Company's experience has been that once a  casino  buys
from  a  table  game  supplier, it tends to purchase  replacement
products  from the same supplier, provided quality,  service  and
competitive  pricing are maintained.  As a result, the  Company's
sales  efforts are primarily focused on selling a full  range  of
table   gaming  products  to  casinos  while  they  are  in   the
development  and  licensing stage.  By thereafter  maintaining  a
frequent contact program, the Company seeks to realize a steadily
increasing  base of core sales while capturing incremental  sales
to new casinos.

     The  Company  advertises in trade publications,  produces  a
complete  sales catalogue for the retail market, and participates
in  major casino industry trade shows.  The Company keeps abreast
of  new  casino  openings through personal  contact  with  casino
management,  legislative and trade publications and wire  service
press   releases.   When  new  casinos  are  identified,  Company
representatives  make personal contact with appropriate  officers
and/or  purchasing agents in order to solicit  the  sale  of  the
Company's products to such potential new customers.

MATERIALS AND SUPPLIES

     For certain of its products, the Company is dependent upon a
limited  number  of  suppliers to provide the  Company  with  raw
materials  for manufacturing and finished goods for distribution.
The Company's policy is to maintain two or more suppliers of such
raw materials and finished goods whenever possible.

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COMPETITION

     There  are  a  number  of companies that  compete  with  the
Company in the sale of each of its product lines:

     CASINO  CHIPS.  The casino chip product line has  in  recent
years  become  an  increasingly competitive area  of  the  gaming
supply business.  Currently, the Company's major competitors  are
Chipco  International  Ltd. ("Chipco") and Nevada  Dice  Company,
d/b/a  The Bud Jones Company ("Bud Jones").  The Company believes
key  competitive  factors for casino chip sales  are  durability,
graphics, ease of handling and security.

     TABLE  LAYOUTS.   The Company's two primary competitors  for
casino  table layouts are Bud Jones and Midwest Game  Supply  Co.
("Midwest").  Management believes the key competitive factors for
felt  table  layout  sales are cloth quality, enhanced  graphics,
designs, clarity and range of colors.

     PLAYING  CARDS.   The  Company's major  competitors  in  the
domestic  playing  card  market are The U.S.  Playing  Card  Co.,
Gemaco  Playing Card Co. and Hoyle Products.  Management believes
the primary competitive factors for playing cards are price, ease
of   handling,   durability,  brand   name   identification   and
reputation.

     GAMING  FURNITURE.  The Company's principal competitors  for
casino  gaming furniture are Bud Jones and smaller regional  wood
shops  in  certain  geographic areas.  Competition  is  based  on
quality, price and durability.

     DICE.   The Company's principal competitors for casino  dice
sales   are  Bud  Jones,  T.K.  Specialty  Company  and  Midwest.
Management  believes  the primary competitive  factors  for  dice
sales  are  quality  and  pricing.   In  addition,  casino  shift
managers  typically prefer that casinos purchase dice  from  more
than one supplier due to industry superstition that dice from one
of its suppliers may run "cold" for the house from time to time.

     TABLE   ACCESSORIES  AND  OTHER  PRODUCTS.   The   Company's
principal  competitors  for distributing  table  accessories  and
other  products,  which  include plastic money  paddles,  discard
holders, drop boxes, dealing shoes, trays and covers, dice sticks
and  on/off  pucks,  are  Bud Jones  and  Midwest.   The  Company
believes that key competitive factors for these products are  the
ability  to  be  a  single  source supplier,  price  and  product
quality.

EMPLOYEES

     At  August 20, 1999, the Company employed approximately  525
persons.  Approximately 450 of the employees are located  at  the
Company's Mexico facilities and the remainder are located in  Las
Vegas and in other regional, domestic sales offices.  None of the
Company's   employees   is  covered  by   collective   bargaining
agreements.

REGULATION AND LICENSING

     NEVADA.    The  manufacture  and  distribution   of   gaming
equipment  in  Nevada are subject to extensive  state  and  local
regulation.   The  Company's  operations  are  subject   to   the
licensing and

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regulatory  control of the Nevada Gaming Commission (the  "Nevada
Commission"), the Nevada State Gaming Control Board (the  "Nevada
Board") and various local regulatory agencies (collectively  with
the  Nevada  Commission and the Nevada Board, the "Nevada  Gaming
Authorities").

     The  laws,  regulations and supervisory  procedures  of  the
Nevada  Gaming  Authorities  seek  to  (i)  prevent  unsavory  or
unsuitable  persons from having a direct or indirect  involvement
with  gaming  at any time or in any capacity, (ii) establish  and
maintain   responsible  accounting  practices   and   procedures,
(iii) maintain effective control over the financial practices  of
licensees, including establishing minimum procedures for internal
fiscal  affairs  and  the safeguarding of  assets  and  revenues,
providing  reliable record keeping and requiring  the  filing  of
periodic reports with the Nevada Gaming Authorities, (iv) prevent
cheating  and  fraudulent practices, and (v) provide  sources  of
state  and  local  revenues through taxation and licensing  fees.
Changes  in such laws, regulations and procedures could  have  an
adverse effect on the Company's operations.

     Paul-Son  Gaming  Supplies, Inc. ("Paul-Son Supplies"),  the
Company's   wholly-owned   subsidiary  which   manufactures   and
distributes  casino  table  game equipment  used  in  Nevada,  is
required  to  be licensed by the Nevada Gaming Authorities.   The
gaming   license  is  not  transferable  and  must   be   renewed
periodically.   The  Company is registered as a  publicly  traded
corporation   by   the  Nevada  Commission,   and   is   required
periodically  to submit detailed financial and operating  reports
to  the Nevada Commission and furnish any other information which
the  Nevada  Commission  may require.  No  person  may  become  a
stockholder of, or receive any percentage of profits from,  Paul-
Son  Supplies without first obtaining licenses and approvals from
the Nevada Gaming Authorities.  The Company and Paul-Son Supplies
have  obtained  from  the Nevada Gaming Authorities  the  various
approvals,  permits and licenses required in order to  engage  in
its manufacturing, distribution and sales activities in Nevada.

     The Nevada Gaming Authorities may investigate any individual
who has a material relationship to, or material involvement with,
the  Company or Paul-Son Supplies, in order to determine  whether
such  individual is suitable or should be licensed as a  business
associate of a gaming licensee.  Officers, directors and  certain
key  employees  of Paul-Son Supplies must file applications  with
the  Nevada Gaming Authorities and may be required to be licensed
or  found  suitable by the Nevada Gaming Authorities.   Officers,
directors  and key employees of the Company who are actively  and
directly  involved  in  manufacturing,  distribution  and   sales
activities of Paul-Son Supplies may be required to be licensed or
found  suitable  by  the Nevada Gaming Authorities.   The  Nevada
Gaming Authorities may deny an application for licensing for  any
cause  which  they deem reasonable.  A finding of suitability  is
comparable to licensing, and both require submission of  detailed
personal   and  financial  information  followed  by  a  thorough
investigation.   The  applicant for licensing  or  a  finding  of
suitability must pay all the costs of the investigation.  Changes
in  licensed  positions must be reported  to  the  Nevada  Gaming
Authorities  and  in  addition to  their  authority  to  deny  an
application for a finding of suitability or licensure, the Nevada
Gaming Authorities have jurisdiction to disapprove a change in  a
corporate position.

     If  the  Nevada Gaming Authorities were to find an  officer,
director  or key employee unsuitable for licensing or  unsuitable
to  continue  having a relationship with the Company or  Paul-Son
Supplies,  the  companies  involved  would  have  to  sever   all
relationships with such

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person.   In  addition,  the Nevada Commission  may  require  the
Company or Paul-Son Supplies to terminate the employment  of  any
person    who   refuses   to   file   appropriate   applications.
Determinations  of  suitability or  of  questions  pertaining  to
licensing are not subject to judicial review in Nevada.

     The  Nevada  Commission may also require the holder  of  any
equity  of  a  corporation  registered under  the  Nevada  Gaming
Control Act (the "Nevada Act"), regardless of the amount held, to
file  applications, be investigated and be found suitable to  own
the  equity security of a registered corporation.  If the  Nevada
Commission  determines that a person is unsuitable  to  own  such
equity  security, then pursuant to the regulations of the  Nevada
Commission,   the  registered  corporation  can  be   sanctioned,
including  the  loss  of  its approvals,  if  without  the  prior
approval  of  the Nevada Commission and following a determination
of  unsuitability,  it  (i)  pays to the  unsuitable  person  any
dividend,    interest    or    any    distribution    whatsoever,
(ii)  recognizes  any voting right by such unsuitable  person  in
connection with such securities, (iii) pays the unsuitable person
remuneration  in  any  form, or (iv) makes  any  payment  to  the
unsuitable  person  by way of principal, redemption,  conversion,
exchange,  liquidation,  or similar transaction.   The  applicant
must pay all costs of investigation incurred by the Nevada Gaming
Authorities in conducting any such investigation.  If a  security
holder  is  found  unsuitable, the Company may  itself  be  found
unsuitable  if it fails to pursue all lawful efforts  to  require
such   unsuitable  person  to  relinquish  such  holder's  voting
securities for cash at fair market value.  The Company's Articles
of  Incorporation require a person found unsuitable to relinquish
such person's voting securities upon demand of the Company.

     The  Nevada Gaming Authorities have the power to investigate
at  any  time any record or beneficial stockholder of a  publicly
traded  corporation registered under the Nevada Act.  Nevada  law
requires  any  person who acquires more than 5% of the  Company's
voting  securities  to  report  the  acquisition  to  the  Nevada
Commission and such person may be required to be found  suitable.
Also, any person who becomes a beneficial owner of more than  10%
of  the  voting  securities  of  a  publicly  traded  corporation
registered  under  the Nevada Act must apply  for  a  finding  of
suitability  by the Nevada Commission upon notice to  do  so  and
must  pay  the  costs and fees incurred by the  Nevada  Board  in
connection  with the investigation.  Under certain  circumstances
an  institutional  investor,  as such  term  is  defined  in  the
regulations  of  the  Nevada  Commission  and  the  Nevada  Board
("Nevada Gaming Regulations"), which acquires more than 10%,  but
not  more than 15%, of the Company's voting securities, may apply
to  the  Nevada  Commission  for a  waiver  of  such  finding  of
suitability requirement if such institutional investor holds  the
voting securities for investment purposes only.  An institutional
investor  shall  not  be  deemed to hold  voting  securities  for
investment  purposes unless the voting securities  were  acquired
and   are  held  in  the  ordinary  course  of  business  as   an
institutional  investor  and  not for  the  purpose  of  causing,
directly or indirectly, the election of a majority of the members
of  the  board  of directors of the Company, any  change  in  the
Company's  corporate  charter, bylaws,  management,  policies  or
operations  of  the Company, or any of its gaming affiliates,  or
any  other  action  which  the  Nevada  Commission  finds  to  be
inconsistent  with  holding the Company's voting  securities  for
investment purposes only.  Activities which are not deemed to  be
inconsistent  with  holding  voting  securities  for   investment
purposes  only include:  (i) voting on all matters  voted  on  by
stockholders;  (ii)  making  financial  and  other  inquiries  of
management  of the type normally made by securities analysts  for
informational  purposes  and  not  to  cause  a  change  in   its
management,  policies  or  operations;  and  (iii)   such   other
activities as the Nevada Commission may determine to

                               10

<PAGE>

be  consistent  with such investment intent.  If  the  beneficial
stockholder   who  must  be  found  suitable  is  a  corporation,
partnership  or  trust,  it  must submit  detailed  business  and
financial information including a list of beneficial owners.  The
applicant is required to pay all costs of investigation  incurred
by the Nevada Authorities in conducting any such investigation.

     Any  person  who fails or refuses to apply for a finding  of
suitability or a license within 30 days after being ordered to do
so  by  the Nevada Commission or the Chairman of the Nevada Board
may be found unsuitable.  The same restrictions apply to a record
owner  if the record owner, after request, fails to identify  the
beneficial  owner.   Any  stockholder found  unsuitable  and  who
holds,  directly or indirectly, any beneficial ownership  of  the
common stock of the Company beyond such period of time as may  be
prescribed  by  the Nevada Commission may be guilty  of  a  gross
misdemeanor.

     The  Company  and Paul-Son Supplies are required  to  submit
detailed   financial  and  operating  reports   to   the   Nevada
Commission.  Substantially all material loans, leases,  sales  of
securities   and  similar  financing  transactions  by   Paul-Son
Supplies  must  be  reported  to,  or  approved  by,  the  Nevada
Commission.

     If  it  were  determined that gaming laws were  violated  by
Paul-Son Supplies, the gaming licenses it holds could be limited,
conditioned,   suspended  or  revoked.   In  addition,   Paul-Son
Supplies, the Company and the persons involved, could be  subject
to  substantial fines for each separate violation of  the  gaming
laws.   A  supervisor could be appointed by the Nevada Commission
to   oversee   the  Company's  operations  and,   under   certain
circumstances,   earnings  generated  during   the   supervisor's
appointment   could  be  forfeited  to  the  State   of   Nevada.
Limitation, conditioning or suspension of any gaming  license  or
the  appointment  of a supervisor could, and  revocation  of  any
gaming  license  would,  materially  and  adversely  affect   the
Company's operations.

     In  July  1996, the Nevada Board approved a detailed  gaming
compliance plan (the "Compliance Plan") prepared by the  Company,
the  objective of which was to formulate a comprehensive  set  of
internal  review and control policies and procedures  to  monitor
and  strengthen the Company's commitment to compliance  with  all
gaming laws and regulations in all gaming jurisdictions including
Nevada.  Major  provisions  of the Compliance  Plan  include  the
formation  by  the Board of Directors of a Compliance  Committee,
the  creation of a position in the Company of Compliance Officer,
and the review of sales transactions by the Compliance Officer.

     The  Company is required to maintain a current stock  ledger
in  Nevada which may be examined by the Nevada Gaming Authorities
at  any time.  If any securities are held in trust by an agent or
by  a nominee, the record holder may be required to disclose  the
identity   of   the  beneficial  owner  to  the   Nevada   Gaming
Authorities.   A failure to make such disclosure may  be  grounds
for  finding the record holder unsuitable.  The Company  is  also
required to render maximum assistance in determining the identity
of  the beneficial owner.  The Nevada Commission has the power at
any  time to require the Company's stock certificates to  bear  a
legend  indicating that the securities are subject to the  Nevada
Act  and  the  Nevada  Gaming Regulations.  However,  the  Nevada
Commission has not imposed such a requirement to date.

                               11

<PAGE>

     The Company may not make a public offering of its securities
without the approval of the Nevada Commission.  Such approval, if
given,  does not constitute a recommendation or approval  of  the
investment merits of the securities.

     Changes   in   control  of  the  Company   through   merger,
consolidation,  acquisition of assets, management  or  consulting
agreements or any form of takeover cannot occur without the prior
investigation  of  the Nevada Board and approval  of  the  Nevada
Commission.    The  Nevada  Commission  may  require  controlling
stockholders,  officers, directors and  other  persons  having  a
material relationship or involvement to be licensed.

     The  Nevada  legislature has declared  that  some  corporate
acquisitions  opposed  by  management,  repurchases   of   voting
securities  and  other  corporate  defense  tactics  that  affect
corporate  gaming  licensees in Nevada,  and  corporations  whose
stock   is   publicly-traded  that  are  affiliated  with   those
operations,  may be injurious to stable and productive  corporate
gaming.   The  Nevada  Commission has  established  a  regulatory
scheme  to  ameliorate the potentially adverse effects  of  these
business  practices upon Nevada's gaming industry and to  further
Nevada's  policy  to  (i)  assure  the  financial  stability   of
corporate  gaming operators and their affiliates;  (ii)  preserve
the  beneficial aspects of conducting business in  the  corporate
form;  and (iii) promote a neutral environmental for the  orderly
governance  of  corporate  affairs.  Approvals  are,  in  certain
circumstances,  required from the Nevada  Commission  before  the
Company  can  make  exceptional repurchases of voting  securities
above  the current market price thereof (commonly referred to  as
"greenmail")  and  before  a  corporate  acquisition  opposed  by
management can be consummated.  Nevada's Gaming Regulations  also
require  prior approval by the Nevada Commission if  the  Company
were  to  adopt  a  plan  of  recapitalization  proposed  by  the
Company's Board of Directors in opposition to a tender offer made
directly to its stockholders for the purpose of acquiring control
of the Company.

     NEW  JERSEY.   The  Company,  its  officers  and  directors,
certain of its employees and stockholders, Paul-Son Supplies, and
Mexicana, S.A. de C.V. (99% owned by Paul-Son Supplies and 1%  by
the  Company) ("Paul-Son Mexicana") are currently required to  be
licensed under the New Jersey Casino Control Act (the "New Jersey
Act")  as a casino service industry qualified to sell it products
to  casinos  in  New Jersey.  The terms of agreements  which  the
Company  enters into with Atlantic City casinos may  require  the
prior  approval of the New Jersey Casino Control Commission  (the
"New Jersey Commission").

     The sale of gaming-related devices and systems to casinos in
New  Jersey  is  also  subject to the  New  Jersey  Act  and  the
regulations  promulgated thereunder by the New Jersey Commission.
The  New  Jersey Commission has broad discretion in  promulgating
and   interpreting  regulations  under  the   New   Jersey   Act.
Amendments and supplements to the New Jersey Act, if any, may  be
of  a material nature and, accordingly, may adversely affect  the
ability  of  the Company or its employees to obtain any  required
licenses, permits and approvals from the New Jersey Commission or
any renewals thereof.

     The   current  regulations  govern  licensing  requirements,
standards  for  qualification, persons required to be  qualified,
disqualification   criteria,   competition,   investigation    of
supplementary information, duration of licenses, record  keeping,
causes  for  suspension, standards for renewals or revocation  of
licenses, equal employment opportunity requirements,

                               12

<PAGE>

fees  and  exemptions.  In deciding to grant a license,  the  New
Jersey Commission may consider, among other things, the financial
stability,  integrity, responsibility, good character, reputation
for  honesty, business ability and experience of the Company  and
its  directors,  officers, management and supervisory  personnel,
principal  employees and stockholders as well as the adequacy  of
the financial resources of the Company.

     New  Jersey licenses are granted for a period of one or  two
years,  depending  on  the  length of time  a  company  has  been
licensed,  and  are  renewable.  The New  Jersey  Commission  may
impose  such  conditions upon licensing as it deems  appropriate.
These include the ability of the New Jersey Commission to require
the  Company  to  report the names of all of its stockholders  as
well  as  the  ability to require any stockholders whom  the  New
Jersey  Commission finds not qualified to dispose of  the  stock,
not  receive dividends, not exercise any rights conferred by  the
shares,  nor  receive  any  remuneration  from  the  Company  for
services  rendered or otherwise.  Failure of such stockholder  to
dispose  of such stockholder's stock could result in the loss  of
the  Company's license.  Licenses are also subject to suspension,
revocation  or  refusal  for  sufficient  cause,  including   the
violation of any law.  In addition, licensees are also subject to
monetary  penalties for violations of the New Jersey Act  or  the
regulations of the New Jersey Commission.

     OTHER  JURISDICTIONS.   The Company  currently  operates  at
various  levels  in  Arizona, California, Colorado,  Connecticut,
Florida, Illinois, Indiana, Iowa, Louisiana, Michigan, Minnesota,
Mississippi,   Missouri,   New  York,   Oregon,   South   Dakota,
Washington, Wisconsin, the provinces of Ontario, Quebec,  British
Columbia   and  Saskatchewan,  Canada,  the  state  of  Victoria,
Australia,  and  Mpumalanga and Gauteng, South Africa.   Although
the  regulatory schemes in these jurisdictions are not identical,
their material attributes are substantially similar, as described
below.

     The manufacture, sale and distribution of gaming devices and
the   ownership  and  operation  of  gaming  facilities  in  each
jurisdiction  are  subject to various provincial,  state,  county
and/or  municipal  laws, regulations and  ordinances,  which  are
administered  by the relevant regulatory agency  or  agencies  in
that   jurisdiction  (the  "Gaming  Regulators").   These   laws,
regulations  and ordinances primarily concern the responsibility,
financial   stability   and   character   of   gaming   equipment
manufacturers,  distributors and operators, as  well  as  persons
financially   interested  or  involved  in   gaming   or   liquor
operations.

     In  many  jurisdictions, manufacturing  or  distributing  of
gaming  supplies may not be conducted unless proper licenses  are
obtained.   An  application for a license may be denied  for  any
cause  which the Gaming Regulators deem reasonable.  In order  to
ensure  the  integrity of manufacturers and suppliers  of  gaming
supplies,  most  jurisdictions  have  the  authority  to  conduct
background  investigations of the Company, its key personnel  and
significant stockholders.  The Gaming Regulators may at any  time
revoke,  suspend, condition, limit or restrict a license for  any
cause  deemed  reasonable by the Gaming  Regulators.   Fines  for
violation of gaming laws or regulations may be levied against the
holder  of a license and persons involved.  The Company  and  its
key  personnel  have  obtained all  licenses  necessary  for  the
conduct  of the Company's business in the jurisdictions in  which
it  manufactures  and  sells  its  casino  table  game  products.
Suspension  or revocation of such licenses could have a  material
adverse effect upon the Company's operations.

                               13

<PAGE>

     NATIVE   AMERICAN  GAMING  REGULATION.   Gaming  on   Native
American lands is extensively regulated under federal law, tribal-
state compacts and tribal law.  The Indian Gaming Regulatory  Act
of  1988  ("IGRA") provides the framework for federal  and  state
control  over all gaming on Native American land.  IGRA regulates
the  conduct of gaming on Native American lands and the terms and
conditions  of  contracts with third parties  for  management  of
gaming  operations.  IGRA is administered by the Bureau of Indian
Affairs and the National Indian Gaming Commission ("NIGC").

     IGRA  classifies  games  that may  be  conducted  on  Native
American  lands into three categories.  "Class I Gaming" includes
social  games solely for prizes of minimal value, or  traditional
forms of Native American gaming engaged in by individuals as part
of,  or  in  connection with, tribal ceremonies or  celebrations.
"Class  II Gaming" includes bingo, pulltabs, lotto, punch boards,
tip  jars,  instant bingo, and other games similar to  bingo,  if
those  games are played at the same location as bingo is  played.
"Class III Gaming" includes all other commercial forms of gaming,
such  as  table  games,  slots, video  casino  games,  and  other
commercial gaming (e.g. sports betting and pari-mutuel wagering).

     Class  I  Gaming  on  Native American lands  is  within  the
exclusive jurisdiction of the Native American tribes and  is  not
subject to the provisions of IGRA.

     Class  II  Gaming is permitted on Native American  lands  if
(i)  the  state  in which the Native American lands  are  located
permits  such  gaming for any purpose by any person, organization
or   entity;  (ii)  the  gaming  is  not  otherwise  specifically
prohibited  on  Native American lands by federal law;  (iii)  the
gaming  is  conducted  in accordance with a tribal  ordinance  or
resolution  which has been approved by the NIGC;  (iv)  a  Native
American  tribe  has sole proprietary interest and responsibility
for  the  conduct of gaming; (v) the primary management officials
and  key  employees are tribally licensed; and (vi) miscellaneous
other requirements are met.

     Class  III Gaming is permitted on Native American  lands  if
the  conditions  applicable to Class II Gaming are  met  and,  in
addition,  the gaming is conducted in conformance with the  terms
of  a  written  agreement  between a tribal  government  and  the
government of the state within whose boundaries the tribe's lands
are located (a "tribal-state compact").

     IGRA  requires states to negotiate in good faith with Native
American  tribes  that seek to enter into a tribal-state  compact
for  the  conduct of Class III gaming.  Such tribal-state compact
may  include provisions for the allocation of criminal and  civil
jurisdiction  between  the state and the  Native  American  tribe
necessary  for  the  enforcement of such  laws  and  regulations,
taxation by the Native American tribe of such activity in amounts
comparable  to those amounts assessed by the state for comparable
activities,  remedies for breach, standards for the operation  of
such  activity and maintenance of the gaming facility,  including
licensing,  and any other subjects that are directly  related  to
the  operation  of gaming activities.  The terms of  tribal-state
compacts vary from state to state.  Tribal-state compacts  within
one state tend to be substantially similar to each other. Tribal-
state  compacts  usually specify the types  of  permitted  games,
entitle   the  state  to  inspect  casinos,  require   background
investigations and licensing of casino employees, and may require
the   tribe  to  pay  a  portion  of  the  state's  expenses  for
establishing and maintaining regulatory agencies.

                               14

<PAGE>

     Pursuant to tribal-state compacts, agreements with tribes or
as  otherwise  allowed  by state law, the  Company  is  currently
qualified to distribute its gaming supplies to certain tribes  in
the   states   of   Arizona,   Florida,   Louisiana,   Minnesota,
Mississippi,  New York, North Dakota, Oregon, Iowa,  Connecticut,
Michigan,  South Dakota, Washington, Wisconsin and the  provinces
of Ontario and Saskatchewan, Canada.

     In  1996,  the  Nevada Gaming Authorities took the  position
that  any Native American tribe operating Class III gaming within
the state of California, absent a valid compact with the State of
California, was doing so illegally, causing the Company to  cease
all  sales  of products to Native American tribes conducting  any
form of Class III gaming in the state of California.

     UNITED  STATES - FEDERAL.  The Federal Gambling Devices  Act
of 1962 makes it unlawful for a person to manufacture, deliver or
receive   gaming  machines,  gaming  machine  type  devices   and
components thereof across interstate lines unless that person has
first  registered with the Department of Justice  of  the  United
States.

     LICENSING  OF  OFFICERS AND DIRECTORS.  In each jurisdiction
where  the  Company  is  presently  licensed,  the  officers  and
directors  who  are  required to be  licensed  have  either  been
approved  or  licensed or have applications for such licenses  or
approvals  pending.  As regulatory authorities require additional
persons  to be licensed or approved or when the Company seeks  to
enter   into  new  jurisdictions,  the  Company  promptly  causes
necessary applications to be filed.

     APPLICATION OF FUTURE OR ADDITIONAL REGULATORY REQUIREMENTS.
In  the  future,  the  Company  intends  to  seek  the  necessary
licenses, approvals and findings of suitability for the  Company,
its  products and its personnel in other jurisdictions throughout
the  world  where significant sales are anticipated to  be  made.
However,  there can be no assurance that such licenses, approvals
or  findings of suitability will be obtained and if obtained will
not be revoked, suspended or conditioned or that the Company will
be able to obtain the necessary approvals for its future products
as  they  are  developed in a timely manner, or  at  all.   If  a
license,  approval or finding of suitability  is  required  by  a
regulatory  authority and the Company fails to seek or  does  not
receive   the   necessary  license,  approval   or   finding   of
suitability,  the  Company  may be  prohibited  from  selling  it
products  for  use  in  the respective  jurisdiction  or  may  be
required to sell its products through other licensed entities  at
a reduced profit to the Company.

ITEM 2.   PROPERTIES
          ----------

     The  Company  is  based  and operates  domestically  from  a
Company-owned  facility  in  Las  Vegas,  Nevada  and   currently
assembles and manufactures its primary products at facilities  in
San Luis, Mexico.

     LAS  VEGAS.  The Company's Las Vegas headquarters (the  "Las
Vegas  Headquarters")  are  located in  an  approximately  62,000
square foot building. The Las Vegas Headquarters was purchased in
September  1995  and  houses  the  Las  Vegas  sales  office  and
corporate  offices, a centralized warehouse for  certain  of  its
finished   goods   inventory,  roulette  and  "Big   Six"   wheel
manufacturing  and a graphics art department.  In the  Las  Vegas
Headquarters,  the  Company also maintains certain  inventory  of
templates, graphic designs, logos, and tools and dies for  casino
customers'  gaming  equipment.  Maintaining  such  an   inventory
results in time and cost savings for

                               15

<PAGE>

product manufacture and delivery to the Company's customers.  The
Las  Vegas Headquarters secures a deed of trust issued under  the
Company's  bank line of credit and outstanding term  loans.   See
"Item  7.  Management's  Discussion  and  Analysis  of  Financial
Condition   and  Results  of  Operations-Liquidity  and   Capital
Resources."

     SAN  LUIS.   The Company manufactures casino chips,  playing
cards, dice, plastic products and layouts at three facilities  in
San  Luis, Mexico.  These facilities include a 34,000 square foot
leased  facility in which casino chips and dice are  manufactured
(the  "Main  Facility"), an adjacent 45,000 square foot  facility
purchased  by the Company in December 1994, in which the  layout,
machine  shop and plastic departments are currently located,  and
an   approximately  66,000  square  foot  facility  purchased  in
November   1997   (the   "New   San  Luis   Facility")   (located
approximately  400  yards  from  the  Company's  other  San  Luis
facilities) used for playing card production.  The Company leases
the  Main Facility pursuant to an eight year lease which  expires
in April 2001, with an option to extend the term an additional 12
years.

     FACILITY  CAPACITY.  With its current approximately  145,000
square feet of manufacturing facilities, management believes that
the   Company   has  sufficient  production  capacity   to   meet
anticipated future demand for all of its products.

     RETAIL  FACILITY.   The Company is leasing an  approximately
2,000 square foot retail store in a retail shopping center on the
Las  Vegas  Strip.  The lease term expires in December 1999,  and
the Company believes that the retail facility is adequate for its
current retail needs.

ITEM 3.   LEGAL PROCEEDINGS
          -----------------

     The Company is party to various claims arising in the normal
course  of business.  Management believes that these matters  are
expected  to be resolved with no material impact on the Company's
financial position, liquidity, or results of operations.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
          ---------------------------------------------------

     Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
        -------------------------------------------------
        STOCKHOLDER MATTERS
        -------------------

     (a)  Price Range of Common Stock

     The Company's common stock ("Common Stock") is traded on the
Nasdaq  National Market under the symbol "PSON."   The  following
table  sets  forth the high and low closing prices of the  Common
Stock,  as  reported  by the Nasdaq National Market,  during  the
periods indicated.

                               16

<PAGE>

<TABLE>
<CAPTION>

 Fiscal                                                 High         Low
  Year
--------                                              --------     --------
  <S>     <C>                                          <C>          <C>
  1998    First Quarter                                14 7/8       13
  1998    Second Quarter                               23 1/2       13 5/8
  1998    Third Quarter                                16 3/4       11 5/8
  1998    Fourth Quarter                               12 3/8        8
  1999    First Quarter                                 9 7/8        6 3/4
  1999    Second Quarter                                8 3/8        4
  1999    Third Quarter                                 9            5 5/8
  1999    Fourth Quarter                                9            5 1/2
  2000    First Quarter (through August 23, 1999)       9 1/2        5 3/4

</TABLE>

     The  last reported closing price of the Common Stock on  the
Nasdaq  National Market on August 23, 1999 was $9.00  per  share.
There  were  approximately 135 holders of record  of  the  Common
Stock as of August 23, 1999.

     (b)  Dividend Policy

     The  Company  has  never paid cash dividends.   Payments  of
dividends  are  within the discretion of the CompanyRs  Board  of
Directors and depend upon the earnings, capital requirements, and
operating  and  financial condition of the Company,  among  other
factors.  The Company currently expects to retain its earnings to
finance  the growth and development of its business and does  not
expect to pay cash dividends in the foreseeable future.

ITEM 6.   SELECTED CONSOLIDATED FINANCIAL DATA
          ------------------------------------

     The  selected  consolidated financial data included  in  the
following tables should be read in conjunction with the CompanyRs
Consolidated   Financial  Statements  and  related   notes,   and
"ManagementRs Discussion and Analysis of Financial Condition  and
Results  of Operations" appearing elsewhere herein.  The selected
consolidated  financial data for the years ended  May  31,  1999,
1998  and 1997 and as of May 31, 1999 and 1998 have been  derived
from the audited Consolidated Financial Statements of the Company
included  elsewhere herein.  The selected consolidated  financial
data for the years ended May 31, 1996 and 1995 and as of May  31,
1997,  1996 and 1995 have been derived from the CompanyRs audited
financial statements not included herein.

                               17

<PAGE>

<TABLE>
<CAPTION>
                                                   YEARS ENDED MAY 31,
                                   ---------------------------------------------------------------
                                      1999         1998          1997         1996         1995
                                   -----------  -----------   -----------  -----------  ----------
OPERATIONS STATEMENT DATA:                       (in thousands, except per share data)
<S>                                <C>          <C>           <C>          <C>          <C>
Revenues                             $23,914       $25,886       $24,914      $23,379     $24,595
Cost of revenues                      18,169        21,944        17,224       16,323      17,137
                                   ----------   -----------   -----------  -----------  ----------
Gross profit                           5,745         3,942         7,690        7,056       7,458
Selling, general and adminis-
  trative expenses                     6,904         7,146         5,968        6,577       7,739
                                   ----------   -----------   -----------  -----------  ----------
Operating income (loss)               (1,159)       (3,204)        1,722          479        (281)
Other income                             173            19           412           52         140
                                   ----------   -----------   -----------  -----------  ----------
Income (loss) before income tax
  (expense) benefit                     (986)       (3,185)        2,134          531        (141)
Income tax (expense) benefit             305           966         (762)         (194)          -
                                   ----------   -----------   -----------  -----------  ----------
Net income (loss)                      $(681)      $(2,219)       $1,372         $337       $(141)
                                   ==========   ===========   ===========  ===========  ==========

Earnings (loss) per share:
 Basic                                $(0.20)      $(0.65)        $0.41         $0.10       $(.04)
 Average shares outstanding        3,468,427    3,437,894     3,330,764     3,324,000   3,324,000
 Diluted                              $(0.20)      $(0.65)        $0.40         $0.10       $(.04)
 Diluted shares                    3,468,427    3,437,894     3,443,376     3,325,125   3,324,000

</TABLE>

<TABLE>
<CAPTION>
                                                          MAY 31,
                                 -----------------------------------------------------
                                   1999        1998       1997       1996       1995
                                 --------    --------   --------   --------   --------
<S>                               <C>         <C>         <C>        <C>       <C>
BALANCE SHEET DATA:                                   (in thousands)
Cash and cash equivalents           $656        $348      $2,753       $998    $1,254
Working capital                    6,753       7,106       9,308      7,601     9,832
Property and equipment, net        9,417       9,106       7,250      7,259     4,990
Total assets                      20,128      21,965      20,397     17,401    19,040
Current liabilities                3,008       4,871       3,234      2,071     3,729
Long-term debt, less current
  maturities                       2,564       1,770          67        471       788
Stockholders' equity              14,556      15,324      17,085     14,859    14,522


</TABLE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         -------------------------------------------------
         CONDITION AND RESULTS OF OPERATIONS
         -----------------------------------

     Paul-Son  provides  gaming equipment  and  supplies  to  new
casinos  and  consumable products to its existing customer  base.
The  principal  consumable products have  limited  useful  lives,
ranging from several hours in the case of playing cards and  dice
to  several months in the case of table game layouts and  several
years  in  the  case of casino chips and gaming  furniture.   The
majority  of  the Company's revenues are generated  by  sales  to
customers with which the

                               18

<PAGE>

Company  has  an  established relationship.  Complementing  these
revenues  is  the  significant  additional  revenue  the  Company
realizes  when providing a full range of products to  new  casino
openings.   The  Company  strives to  become  the  casino's  sole
supplier of table game equipment and supplies.

     During  the past decade, casino entities have expanded  from
land-based  resort  properties to riverboats, both  cruising  and
dockside,  and to Native American lands.  As a licensed supplier,
the Company has vigorously pursued table gaming opportunities  in
emerging   gaming  jurisdictions.   Because  of   the   Company's
production  capacity  and its experience  in  the  gaming  supply
industry,  management believes the Company is well positioned  to
capitalize  on  the combined growth of the gaming  industry  both
domestically and internationally.

     While  the  gaming industry has grown in recent  years,  the
growth  rate  of table games has not matched that of  the  gaming
industry  as a whole.  This trend is attributed to an  increasing
allocation  of total casino gaming space to slot machines  which,
in  certain  cases,  may reduce the allocation  of  total  casino
gaming  space to table games.  The number of new table  games  in
new jurisdictions typically follows this trend after a period  of
operation.

RESULTS OF OPERATIONS

     The  following  table  summarizes selected  items  from  the
Company's  Consolidated Statements of Operations as a  percentage
of revenues for the periods indicated:

<TABLE>
<CAPTION>
                                                                YEARS ENDED MAY 31,
                                                     ---------------------------------------
                                                        1999           1998          1997
                                                     ----------     ----------    ----------
<S>                                                    <C>            <C>           <C>
Revenues                                               100.0%         100.0%        100.0%
Cost of revenues                                        76.0%          84.8%         69.1%
Gross profit                                            24.0%          15.2%         30.9%
Selling, general and administrative expenses            28.9%          27.6%         24.0%
Operating income (loss)                                 (4.8)%        (12.4)%         6.9%
Interest expense                                         0.9%           0.5%          0.2%
Net income (loss)                                        (2.8)%        (8.6)%         5.5%

</TABLE>

     The   following  table  details  the  Company's   historical
revenues by product line:

<TABLE>
<CAPTION>
                                                               YEARS ENDED MAY 31,
                                                     ----------------------------------------
                                                        1999           1998           1997
                                                     ----------     ----------     ----------
<S>                                                   <C>            <C>            <C>
REVENUES:                                                         (IN THOUSANDS)
  Casino chips                                         $5,709         $5,174         $9,516
  Table layouts                                         3,518          3,202          3,205
  Playing cards                                         6,330          4,714          3,265
  Gaming furniture                                      4,427          9,085          4,970
  Dice                                                  1,698          1,395          1,576
  Table accessories and other products                  2,232          2,316          2,382
                                                     ----------     ----------     ----------
    Total                                             $23,914        $25,886        $24,914
                                                     ==========     ==========     ==========

</TABLE>

                               19

<PAGE>

COMPARISON  OF OPERATIONS FOR THE YEARS ENDED MAY  31,  1999  AND
MAY 31, 1998

       REVENUES.   For  the  fiscal  year  ended  May  31,  1999,
Paul-Son's  revenues totaled approximately  $23.9  million.   The
fiscal  1999  revenue figure represents a $2.0  million,  or  8%,
decrease  from  the $25.9 million in revenues which  the  Company
generated  during  the  previous fiscal year.   The  decrease  in
revenues for the 1999 period resulted principally from a decrease
in   gaming   furniture   and  accessory  sales   (products   not
manufactured  by  the  Company)  of  approximately  $4.7  million
offset,  in  part,  by  an  increase in  playing  card  sales  of
approximately $1.6 million, an increase in casino chip  sales  of
approximately   $535,000,  an  increase  in   layout   sales   of
approximately  $316,000,  and  an  increase  in  dice  sales   of
approximately  $303,000. Gaming furniture  and  accessory  sales,
which are products purchased from third party suppliers and  then
sold to the customer, decreased principally due to the absence of
significant  orders  from certain customers associated  with  new
openings  and  casino expansions which occurred in  the  previous
fiscal   year.  Partially  offsetting  the  decrease  in   gaming
furniture  and  accessory sales was an increase in  playing  card
sales  in  fiscal  1999 of approximately 34%  from  fiscal  1998.
Management  believes  its  ability  to  meet  customers'  quality
expectations, competitive pricing, and its aggressive pursuit  of
new  card  contracts have contributed to this  growth.  Sales  of
Company  manufactured products were approximately  73%  of  total
revenues  in fiscal 1999 compared to approximately 53% in  fiscal
1998.

      In fiscal 1999, sales of products to the Company's existing
customer base, excluding sales to newly opened casinos, decreased
to  $21.6  million  from  $22.7 million  in  fiscal  1998.   This
decrease  was  caused by a significant decline in  furniture  and
seating  sales  offset, in part, by increases  in  playing  card,
chip, dice and layout sales.

      COST  OF  REVENUES.  Cost of revenues, as a  percentage  of
sales, decreased to 76.0% for the fiscal year ended May 31, 1999,
as  compared  to 84.8% in the prior fiscal year. This improvement
in  gross  margins  was  principally caused  by  two  significant
factors:  (i)  the aforementioned change in the mix  of  products
sold from marginally profitable distributed items in fiscal 1998,
such  as  gaming  tables and seating furniture, to higher-margin,
Company-manufactured  products (casino  chips,  cards,  dice  and
layouts)  in  fiscal 1999 and (ii) the absence  of  certain  cost
inefficiencies in fiscal 1999 resulting from the final transition
of  certain manufacturing processes (i.e. playing cards, layouts,
and  certain plastic goods) from the Company's Las Vegas facility
to its Mexico facilities which occurred in late fiscal 1998.

      During certain previous reporting periods, the Company  had
experienced a positive impact from the decrease in the  value  of
the  Mexican peso. During the fiscal year ended May 31, 1999, the
value  of  the Mexican peso versus the U.S dollar again declined;
however,  the  decline  was  not significant  and  thus  did  not
significantly  impact the overall gross margins of  the  Company.
The  Company cannot predict what impact fluctuations between  the
Mexican  peso  and  the  U.S. dollar  will  have  on  the  future
operating results of the Company.

     GROSS PROFIT.  Gross profit increased in absolute dollars by
approximately  $1.8  million  to approximately  $5.7  million  as
compared to approximately $3.9 million in the prior fiscal  year.
This improvement in gross profit was a result of the decrease  in
cost of revenues as a percentage of sales from 84.8% to 76.0% due
to  the cost of revenue factors discussed above offset, in  part,
by decreased revenues in fiscal 1999.

                               20

<PAGE>

      SELLING,  GENERAL  AND ADMINISTRATIVE  EXPENSES.   Selling,
general and administrative ("SG&A") expenses for the fiscal  year
ended  May 31, 1999 decreased approximately $242,000, or  3%,  to
approximately  $6.9  million, or 28.9% of revenues,  compared  to
approximately $7.1 million, or 27.6% of revenues, in the previous
fiscal  year.  This  decrease  was primarily  attributable  to  a
reduction  in  payroll  related  expenses,  and  a  decrease   in
provisions  for  bad debts caused by lower sales  volume  in  the
current year and certain recoveries of previously written off bad
debts.   These  decreases were partially offset by  increases  in
depreciation   expense,  costs  associated  with  the   continued
development  and  formation of the Company's non-gaming  business
operations  and increased licensing and regulatory  investigative
costs related to the continued worldwide proliferation of gaming.

     INTEREST EXPENSE.  For the year ended May 31, 1999, interest
expense  increased approximately 73% to $222,000 as  compared  to
$128,000  in the prior fiscal year.  This increase was caused  by
(i)  increased average outstanding borrowings under the Company's
line  of  credit  during fiscal 1999, (ii) the acquisition  of  a
$500,000 note in October 1998 to finance additional playing  card
equipment,  and  (iii) the full year impact, in fiscal  1999,  of
$1.8  million of certain debt acquired to finance a new  building
and certain equipment in San Luis, Mexico in November 1997.

      OTHER  INCOME.   In  fiscal 1999, other  income,  including
interest  income, increased to approximately $395,000,  or  170%,
over  the  previous fiscal year.  This increase was  attributable
principally  to  a  gain  before income  taxes  of  approximately
$340,000  which resulted from the sale of certain real estate  in
fiscal 1999.

      NET  INCOME (LOSS).  For the year ended May 31,  1999,  the
Company  incurred  a  net  loss  of  approximately  $681,000,  an
improvement  of approximately $1.5 million from the net  loss  of
approximately  $2.2  million  in  the  prior  fiscal  year.  This
improvement was primarily due to the aforementioned increases  in
gross  profit, other income, and decreases to SG&A expenses  from
the  1998  period, offset, in part, by the decrease  in  revenues
from the prior fiscal year. Basic net loss per share was $.20 for
the  year ended May 31, 1999 as compared with basic net  loss  of
$.65 for the year ended May 31, 1998.

COMPARISON  OF OPERATIONS FOR THE YEARS ENDED MAY  31,  1998  AND
MAY 31, 1997

       REVENUES.   For  the  fiscal  year  ended  May  31,  1998,
Paul-Son's  revenues  reached  a  total  of  approximately  $25.9
million.   The  fiscal  1998  revenue figure  represents  a  $1.0
million, or 4%, increase from the $24.9 million in revenues which
the Company generated the previous fiscal year.  The increase  in
revenues  for  the  1998  period  resulted  principally  from  an
increase  in  gaming furniture and accessory sales (products  not
manufactured by the Company) of approximately $4.0 million and an
increase  in  playing  card sales of approximately  $1.4  million
offset,  in  part,  by  a  decrease  in  casino  chip  sales   of
approximately $4.3 million. Gaming furniture and accessory sales,
which are products purchased from third party suppliers and  then
sold  to  the  customer, increased principally due to significant
orders  from  certain customers associated with new openings  and
expansions and increased demand for these products.  Playing card
sales  in  fiscal  1998 increased nearly 45%  from  fiscal  1997.
Management  believes  its  ability  to  meet  customers'  quality
expectations, competitive pricing, and its aggressive pursuit  of
this   business   segment  have  contributed  to   this   growth.
Offsetting the increase in gaming furniture and playing

                               21

<PAGE>

card  sales  was a decrease in casino chip sales of approximately
45%,  or  approximately $4.3 million.  Management  believes  this
decrease  was  caused  by a decline in new  casino  openings  and
expansions in fiscal 1998 as compared to fiscal 1997  and  a  low
demand  for casino chips during fiscal 1998.  Since casino  chips
may  be  used  by  casinos for several years, related  sales  are
subject  to  varying replacement cycles. Sales of  other  Company
manufactured products (dice and table layouts) did not  fluctuate
significantly  between the two fiscal periods. Sales  of  Company
manufactured products were 53.2% of total revenues in fiscal 1998
compared to 68.1% in fiscal 1997.

     Sales of products to the Company's existing customer base in
fiscal   1998  were  approximately  $22.7  million  compared   to
approximately  $18.9  million  in fiscal  1997,  an  increase  of
approximately $3.8 million.  Such sales increased during the year
primarily  due  to  an  increase in gaming  furniture,  including
seating equipment, and playing card sales offset by a decline  in
casino chip and dice sales.

      COST  OF  REVENUES.  Cost of revenues, as a  percentage  of
sales, increased to 84.8% for the fiscal year ended May, 31 1998,
as  compared  to 69.1% in the prior fiscal year. This  percentage
increase was principally caused by three significant factors: (i)
the  aforementioned  change  in  the  mix  of products  sold from
higher-margin manufactured products (casino  chips,  cards,  dice
and layouts) to marginally profitable distributed items, such  as
gaming  tables and seating furniture, which caused an approximate
$1.7   million   deterioration  in  gross  margins,   (ii)    the
underabsorption  of  fixed manufacturing costs  due  to  the  low
production  volume of Company manufactured products during  1998,
and  (iii)  certain cost inefficiencies resulting from the  final
transition  of  certain  manufacturing  processes  (i.e.  playing
cards, layouts, and certain plastic goods) from the Company's Las
Vegas facility to its Mexico facilities.

      During certain previous reporting periods, the Company  has
experienced a positive impact from the decrease in the  value  of
the Mexican peso. During the fiscal year ended May 31, 1998,  the
value of the Mexican peso remained relatively stable. The Company
cannot predict what impact fluctuations between the Mexican  peso
and the U.S. dollar will have on the future operating results  of
the Company.

     GROSS PROFIT.  Gross profit decreased in absolute dollars by
approximately  $3.8  million  to approximately  $3.9  million  as
compared to approximately $7.7 million in the prior fiscal  year.
This decline in gross profit was a result of the increase in cost
of  revenues as a percentage of sales from 69.1% to 84.8% due  to
the  cost of revenue factors discussed above offset, in part,  by
slightly higher revenues in the fiscal 1998 period.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.  SG&A expenses
for  the  fiscal year ended May 31, 1998 increased  approximately
$1.2  million,  or  19.7%, to $7.1 million or 27.6%  of  revenues
compared  to $6.0 million, or 24.0% of revenues, in the  previous
fiscal  year. This increase was primarily attributable  to  sales
office   and   administrative  payroll   related   expenses   (an
approximately  $600,000  increase  over  fiscal  1997)  from  the
expansion  into  new and existing gaming markets, start-up  costs
involved  in  marketing  the Company's non-gaming  products  with
various  customers,  increased depreciation and  other  occupancy
costs  arising  from  property and equipment  purchases  and  the
opening  of  retail  outlets  and  newly  opened  sales  offices.
Additionally,  bad debt expense increased due to an  increase  in
accounts receivable amounts

                               22

<PAGE>

outstanding as compared to the prior year, the separation from  a
certain  Company distributor and a reevaluation of the  financial
condition of certain of the Company's significant debtors  during
fiscal 1998.

     INTEREST EXPENSE.  For the year ended May 31, 1998, interest
expense  increased approximately 200% to $128,000 as compared  to
$43,000  in  the  prior  fiscal year, as a  result  of  increased
average outstanding borrowings under the Company's line of credit
during  fiscal  1998 and the acquisition of $1.8 million  of  new
debt  to  finance a new building in San Luis, Mexico and  certain
equipment acquired in November 1997.

      OTHER  INCOME.   In  fiscal 1998, other  income,  including
interest  income, decreased $308,000, or 67.8%, over the previous
fiscal  year.   This decrease was attributable principally  to  a
gain before income taxes of approximately $326,000 which resulted
from the sale of certain real estate in fiscal 1997.

      NET  INCOME (LOSS).  For the year ended May 31,  1998,  the
Company  incurred  a net loss of approximately  $2.2  million,  a
decrease  of $3.6 million from the net income of $1.4 million  in
the  prior  fiscal year. This decrease was primarily due  to  the
aforementioned  decreases  in gross  profit,  other  income,  and
increases to SG&A expenses from the 1997 period, offset, in part,
by  a  slight  increase in revenues over the prior  fiscal  year.
Basic net loss per share was $.65 for the year ended May 31, 1998
as  compared with basic net income of $.41 for the year ended May
31, 1997.

LIQUIDITY AND CAPITAL RESOURCES

      OVERVIEW.  Management believes that the combination of  its
existing  cash balances and projected cash flows from  operations
will provide sufficient liquidity, both on a short-term and long-
term basis.

     WORKING CAPITAL.  Working capital totaled approximately $6.8
million  at  May 31, 1999, versus approximately $7.1  million  at
May  31,  1998.  Working capital decreased approximately $350,000
during  the  year  primarily due to the  Company's  reduction  of
outstanding short-term borrowings under its line of credit and  a
bank overdraft of approximately $1,080,000, and net cash invested
in  property,  plant  and  equipment  of  approximately  $400,000
offset,   in   part,  by  net  income  before   depreciation   of
approximately $400,000 and proceeds received from an  income  tax
refund of approximately $800,000.

      CASH  FLOW.  Cash provided by operating activities  totaled
approximately  $1.0 million during fiscal 1999 compared  to  cash
used  of  approximately $2.6 million in fiscal 1998.  The primary
contributing  factors to this improvement were  an  approximately
$2.0  million improvement in operating income, net reductions  of
accounts receivable of approximately $1.0 million and the receipt
of  an  approximately $800,000 federal income tax refund.   Other
significant  cash  activities during  fiscal  1999  included  the
receipt  of approximately $700,000 from the sale of certain  real
estate,  net  cash invested in property, plant and  equipment  of
approximately  $400,000 and reductions in debt  obligations  from
its  line  of credit and other credit facilities of approximately
$1.1 million.

                               23

<PAGE>

      LINE OF CREDIT. The Company maintains a line of credit (the
"Line of Credit") with  Norwest Bank of Nevada ("Norwest") which,
under the terms of the agreement, allows the Company to borrow up
to $1.0 million.  The Line of Credit matures on October 31, 1999.
As  of May 31, 1999, no advances were outstanding under the  Line
of  Credit.   The  Line of Credit is collateralized  by  a  first
priority security interest on the Las Vegas Headquarters  and  in
substantially all of Paul-Son Supplies' assets including accounts
receivable,  inventory, furniture, fixtures and  equipment.   The
Line  of  Credit bears interest at Norwest's prime rate (8.0%  at
May 31, 1999) plus 1%.

      Under  the Line of Credit and other credit facilities,  the
Company has agreed to comply with certain financial covenants and
ratios.  Specifically, the Company has agreed to maintain  a  net
tangible  net  worth  of  not less than $14.0  million,  a  total
liabilities to tangible net worth ratio of no greater than 0.5 to
1.0,   certain  minimum  cash  flow  amounts  and  an  annualized
profitability  of not less than $250,000 in net  income,  all  as
defined in the agreement. During the year ended May 31, 1999,  it
was  determined  the Company was in violation of certain  of  its
covenants.  As a result of the violations, the Company has agreed
to  surrender  its rights to borrow against the  line  of  credit
without  the  express  written consent of the  bank  through  the
maturity  date  of the line of credit.  Management  believes  the
Line of Credit will not be renewed when it matures on October 31,
1999  and  the Company is seeking another line of credit  from  a
different  lender.  However, no assurance can be given  that  the
Company  will be able to secure a new line of credit at rates  or
terms acceptable to the Company.  While management of the Company
believes  the absence of a line of credit would not significantly
impair  the  operations of the Company in the near term,  it  may
impair the Company's operations in future years and may limit the
Company's ability to expand operations.

     SECURED DEBT.  In November 1997, the Company obtained a $1.8
million  loan  (the  "$1.8  million  note")  from  Norwest.   The
proceeds  were  used in acquiring the New San Luis  Facility  and
certain  equipment  to  be  used  principally  in  the  Company's
manufacturing processes.  The $1.8 million note bears interest at
8.87%  per annum, with monthly payments of principal and interest
totaling  $18,118.   The  $1.8 million  note  calls  for  monthly
payments  through  November 2002, at  which  time  the  remaining
principal   balance  of  approximately  $1.5  million   is   due.
Additionally, in October 1998, the Company obtained an additional
$500,000 note (the "500,000 note") to acquire additional  playing
card  equipment. The $500,000 note bears interest  at  9.75%  per
annum, with monthly principal installments of $13,889 and a final
payment  of approximately $42,000 in August 2002.  Both of  these
notes  are  secured by a first deed of trust  on  the  Las  Vegas
Headquarters  and by a first security interest in  all  accounts,
inventory,  and general intangibles of Paul-Son Supplies.   These
notes  contain the same financial covenant and ratio requirements
as under the Line of Credit.  As of May 31, 1999, the Company was
in  violation of certain of its financial covenants; however, the
Company has obtained a formal waiver from Norwest through May 31,
2000.

      SEASONALITY.   The  Company does not  typically  experience
seasonality relative to its operations.

     LAS VEGAS FACILITIES. In May 1997, the Company relocated its
corporate headquarters from its previous headquarters, which  was
sold  in  January  1999,  to  the  Las  Vegas  Headquarters,   an
approximately 62,000 square foot building purchased in  September
of 1995 for approximately

                               24

<PAGE>

$2,000,000.  The Las Vegas Headquarters secures a deed  of  trust
issued  under  the Line of Credit and the $1.8  million  and  $.5
million notes.

      SAN  LUIS FACILITIES.  The Company leases the 34,000 square
foot  Main Facility pursuant to an eight year lease which expires
in April 2001, with an option to extend the term an additional 12
years.   In  December  1994, the Company purchased  the  adjacent
45,000  square foot facility for approximately $1.5 million.   In
November  1997, the Company completed the purchase of the  66,000
square foot New San Luis Facility for approximately $1.1 million.

      CAPITAL  EXPENDITURES.  The Company does not have plans  to
purchase any significant capital equipment for the year ended May
31, 2000.

       STOCK  REPURCHASE  PROGRAM.  In  July  1998,  the  Company
announced that its Board of Directors authorized the open  market
repurchase  of up to 5% of the outstanding Common Stock.   As  of
August  20,  1999, the Company has purchased 2,000 shares  at  an
average  price of $4.75 per share.  The Company intends  to  fund
any future repurchases from cash on hand.

RECENTLY ISSUED ACCOUNTING STANDARDS
------------------------------------

      The  American  Institute of Certified  Public  Accountants'
Accounting  Standards  Executive Committee  issued  Statement  of
Position  98-5  "Reporting on the Costs of  Start-up  Activities"
("SOP  98-5").  This standard provides guidance on the  financial
reporting for start-up costs and organization costs and  requires
costs  of  start-up  activities  and  organization  costs  to  be
expensed  as  incurred.  This standard is  effective  for  fiscal
years  beginning after December 15, 1998, though earlier adoption
is  encouraged.  Management has determined that SOP 98-5 will not
have  a  material impact on the Company's consolidated  financial
statements.

      The  FASB  issued SFAS No. 133 "Accounting  for  Derivative
Instruments and Hedging Activities" in June 1998.  This statement
establishes  accounting  and reporting standards  for  derivative
instruments and hedging activities.  This statement is  effective
for  all  fiscal quarters of fiscal years which begin after  June
2000.    The   statement  requires  entities  to  recognize   all
derivatives  as either assets or liabilities in the statement  of
financial  position  and to measure instruments  at  fair  value.
Management  believes that SFAS No. 133 will not have  a  material
impact on its consolidated financial statements.

YEAR 2000 PROJECT
-----------------

      The  Company has conducted a review of its computer systems
to  identify  those  areas that could be affected  by  year  2000
issues and is nearing completion of updating many of its existing
systems   to   improve  overall  business  performance   and   to
accommodate  business  for  the year 2000.   However,  given  the
inherent  risks for this project and the resources required,  the
timing and costs involved may, although it is not anticipated to,
differ   materially  from  that  anticipated  by   the   Company.
Management believes that the Company's critical systems  will  be
remediated by December 31, 1999.  The Company's overall estimated
status  for the Company for the year 2000 issues at May 31,  1999
shows  identification  of  potential problems  at  95%  complete,
assessment  at  approximately 90% complete  and  testing  at  75%
complete.

                               25

<PAGE>

      The Company believes that there will be no material adverse
impact  on  its  production  capabilities,  processes  or   other
operational  departments  reliant on computer  systems  resulting
from  the year 2000 issues. The Company also believes that  there
will  be  no  material impact from the year 2000  issues  on  its
consolidated  financial position, results of operations  or  cash
flows.   However,  certain  risks  exist  relative  to  the  non-
compliance of third parties with operational significance to  the
Company, such as key suppliers to its manufacturing operations in
Mexico. Although management believes the conversion process  will
be completed by December 31, 1999, there can be no assurance that
the  conversion project will be completed on schedule,  and  that
the systems of other companies on which the Company may rely also
will  be  timely  converted or that such failure  to  convert  by
another company would not have an adverse impact on the Company's
systems.    The  Company continues to develop a contingency  plan
should planned corrections or third party compliance to year 2000
issues  prove  unsuccessful.  The Company's contingency  plan  is
expected to be developed by December 31, 1999.

      The  estimated costs directly or indirectly associated with
the  conversion  project is currently expected to  be  less  than
$100,000, a significant portion of which will be in the  form  of
capital  expenditures.   As  of May 31,  1999,  the  Company  has
incurred  approximately $40,000 of costs or capital  expenditures
as a result of the Year 2000 issue implementation.

STATEMENT ON FORWARD-LOOKING INFORMATION

     Certain information included herein contains statements that
may be considered forward-looking, such as statements relating to
anticipated performance, financing sources and the relocation  of
certain  operations.  Any forward-looking statement made  by  the
Company  necessarily  is  based upon a number  of  estimates  and
assumptions that, while considered reasonable by the Company,  is
inherently   subject  to  significant  business,   economic   and
competitive  uncertainties and contingencies, many of  which  are
beyond  the  control of the Company, and are subject  to  change.
Actual  results  of the Company's operations may vary  materially
from  any forward-looking statement made by or on behalf  of  the
Company.  Forward-looking statements should not be regarded as  a
representation  by  the  Company or any  other  person  that  the
forward-looking  statements  will be  achieved.   Undue  reliance
should not be placed on any forward-looking statements.  Some  of
the  contingencies and uncertainties to which any forward-looking
statement  contained  herein  is subject  include,  but  are  not
limited to, the following:

     RELIANCE ON EXPANSION OF CASINO INDUSTRY.  Nearly all of the
Company's  revenue  is  generated by  sales  relating  to  casino
openings  and  expansions.   Although  the  Company  is  pursuing
opportunities  to  sell  and market its  products  to  industries
outside  of the casino industry, the Company's future growth  may
be dependent on the continued emergence and growth of new markets
for  the  Company's  products, including new casino  openings  or
expansions  throughout the United States and other areas  of  the
world.  A reduction in the pace of new casino openings and casino
expansions   in   existing   and   emerging   legalized    gaming
jurisdictions  would  have a negative  effect  on  the  Company's
business.  Similarly, the restriction or abolishment of legalized
casino  gaming  in  jurisdictions in which the Company  currently
does business would have a negative impact on the Company.

                               26

<PAGE>

      GAMING  REGULATIONS.  The manufacture and  distribution  of
gaming  equipment and supplies are subject to extensive  federal,
state  and  local  regulation.  Although these  regulations  vary
among   jurisdictions,   virtually  all   jurisdictions   require
licenses, permits and approvals to be held by the Company and its
key personnel in connection with the manufacture and distribution
of  some  or all of the Company's products.  The failure  of  the
Company  or  its  key  personnel to  obtain  or  retain  required
licenses, permits or approvals in one or more jurisdictions could
have  an adverse effect on the Company and could adversely affect
the  ability  of the Company and its key personnel to  obtain  or
retain  licenses  in other jurisdictions.  No  assurance  can  be
given  that such licenses, permits or approvals will be obtained,
retained  or  renewed  in  the future  in  existing  or  emerging
jurisdictions.

      The  regulatory  environment in which the Company  operates
requires, among other things, that the Company develop and adhere
to  certain  internal "due diligence" procedures  to  ensure  its
gaming  regulatory licenses are not jeopardized relative  to  its
customer  base and business practices.  As such, the Company  may
require  information from, and perform inquiries into,  potential
customers  beyond what certain competitors may require  depending
on  the competitors' licensing status and procedural requirements
or  the  absence of such.  To the extent potential customers  are
adverse  to these procedures, the Company may be at a competitive
disadvantage relative to its competitors.

      Any beneficial holder of the Company's Common Stock may  be
subject to investigation by the gaming authorities in any or  all
of  the  jurisdictions  in  which the Company  operates  if  such
authorities  have  reason to believe that such ownership  may  be
inconsistent  with  such state's gaming  policies.   Persons  who
acquire  beneficial  ownership of more  than  certain  designated
percentages of Common Stock will be subject to certain  reporting
and  qualification procedures established by the Nevada and other
gaming   authorities,   as  well  as  certain   local   licensing
authorities.

      NEED  FOR TRIBAL-STATE COMPACTS.  The Company's ability  to
generate  greater revenues and earnings is dependent in  part  on
the  growth of Native American tribal casinos.  Under  IGRA,  the
operation  of  a  casino on Native American tribal  land  is  not
permitted until the Native American tribe and the state in  which
it   is   located  have  entered  into  a  tribal-state   compact
authorizing  gaming  on  the tribe's land and  such  tribal-state
compact  is  approved  by  the Secretary  of  the  Department  of
Interior.   Many states have resisted entering into  tribal-state
compacts,  which  has  resulted  in  litigation  challenging  the
constitutionality   of  IGRA.   If  IGRA   were   found   to   be
unconstitutional,  the  procedures  that  would  apply   to   the
initiation and operation of Native American tribal casinos  would
be  uncertain.  Such a finding could severely limit or delay  the
expansion of gaming in additional jurisdictions.  In addition,  a
recent  court ruling has placed limits on the ability  of  Native
American  tribes  to  force  states to  enter  into  tribal-state
compacts    and   several   states,   through   legislation    or
constitutional  amendment, have sought  to  limit  the  scope  of
Native American gaming under IGRA.

      VARIABILITY OF QUARTERLY OPERATING RESULTS.  The  Company's
financial  results are dependent in part upon  sales  to  new  or
expanding  casinos,  which may, in turn, be  dependent  upon  the
authorization of gaming in additional jurisdictions.  The  timing
of  these  events does not follow consistent patterns  throughout
any given year.  Given this uncertain timing and the large

                               27

<PAGE>

dollar  value  of  sales  to new casinos,  the  Company's  future
operating   results  may  be  subject  to  significant  quarterly
fluctuations.

     TABLE GAMES GROWTH RATE.  The Company's primary products are
sold  to  casinos with table games.  In recent years,  there  has
been  an  increasing allocation of total casino gaming  space  to
slot machines, and in certain cases, a resulting reduction in the
allocation  of total casino gaming space to table  games.   As  a
result,  the growth rate of table games has not matched  that  of
the   casino  industry  as  a  whole.   An  acceleration  of  the
aforementioned  trend  of allocating more gaming  space  to  slot
machines rather than table games could have a negative impact  on
the Company's rate of growth.

      DEPENDENCE ON KEY PERSONNEL.  The Company's success depends
to  a  significant  degree on the performance of  Eric  P.  Endy,
Chairman  of the Board and Chief Executive Officer.  The  Company
carries  key man life insurance on Eric P. Endy, and the loss  of
the  services of him could have a material adverse effect on  the
Company.

     The Company is also dependent upon the abilities and efforts
of  certain other management personnel, particularly in the sales
department.  The Company's sales department, in late fiscal  1998
and  early  fiscal  1999,  had two successive  senior  management
persons  depart, while at the same time it experienced relatively
flat sales and lower than historical gross margins.

      Management  anticipates that as the  Company  continues  to
expand into new gaming jurisdictions throughout the United States
and  internationally, its future success will depend in part upon
its ability to attract and retain qualified personnel to fill key
sales, administrative and management positions.  There can be  no
assurance that the Company will be able to locate and retain such
individuals.

     EXPANSION OF INTERNATIONAL SALES.  Although currently only a
small percentage of the Company's sales are to casinos located in
foreign countries, a component of the Company's business strategy
is  the expansion of its international sales.  To the extent  the
Company  is  successful in this endeavor, it will be increasingly
subject  to  the  customary risks of doing  business  in  foreign
countries.  These risks include fluctuations in foreign  currency
exchange  rates  and  controls, competitive  issues  relative  to
established businesses with significant current market share  and
business/customer   relationships,  nationalization   and   other
economic,  tax  and regulatory policies of local governments  and
the  possibility of trade embargoes, political instability or war
or  other  hostility,  as well as the laws and  policies  of  the
United States affecting foreign trade and investment.

      ABSENCE OF AVAILABLE CREDIT LINE.  As described above,  the
Company  may not currently obtain advances under its credit  line
and  as of the date hereof, the Company has not yet negotiated  a
new  credit  line.   Although the Company believes  that  it  has
adequate cash to fund operations, if an unanticipated need for  a
material amount of cash should arise, the Company may not be able
to  meet  such material cash demands if such cash demands  exceed
the Company's cash on hand and other liquid assets.

      COMPETITION.  There are significant competitors in each  of
the Company's major product lines.  With the continuing expansion
of gaming, it is possible that new competitors may be

                               28

<PAGE>

attracted to the table game supply business, some of which may be
in the business of selling gaming products, have licenses to sell
gaming  supplies  and have greater financial resources  than  the
Company.  The entry by such companies into the Company's  markets
could adversely impact the Company's business.

     CONTROL BY EXISTING STOCKHOLDER; ANTITAKEOVER EFFECTS.  Eric
P.  Endy  is  the beneficial owner of approximately  52%  of  the
outstanding Common Stock of the Company.  As a result,  Mr.  Endy
effectively  controls the election of all of the members  of  the
Board  of  Directors  of  the Company  and  effectively  controls
virtually  all matters requiring approval by the stockholders  of
the  Company.  Such ownership may discourage acquisition of large
blocks  of  the  Company's securities and  could  have  an  anti-
takeover  effect,  possibly depressing the price  of  the  Common
Stock.   In  addition, Nevada corporation law and  the  Company's
Articles of Incorporation and Bylaws contain provisions that  may
have the effect of delaying, deferring or preventing a change  in
control of the Company.

      RELIANCE  ON  SUPPLIERS.  For certain of its products,  the
Company  is  dependent  upon a limited  number  of  suppliers  to
provide  the  Company  with raw materials for  manufacturing  and
finished goods for distribution.  The failure of one or  more  of
these suppliers to meet the Company's performance specifications,
quality  standards or delivery schedules could  have  a  material
adverse effect on the Company.

ITEM 7A.  QUALITATIVE  AND QUANTITATIVE  DISCLOSURES ABOUT MARKET
          -------------------------------------------------------
          RISK
          ----

     Not applicable.

                               29

<PAGE>

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
          -------------------------------------------

     Independent Auditors' Report

     Consolidated Balance Sheets at May 31, 1999 and 1998

     Consolidated  Statements of Operations for the  Years  Ended
     May 31, 1999, 1998 and   1997

     Consolidated  Statements  of Stockholders'  Equity  for  the
     Years Ended May 31, 1999,     1998 and 1997

     Consolidated  Statements of Cash Flows for the  Years  Ended
     May 31, 1999, 1998 and   1997

     Notes to Consolidated Financial Statements

                               30

<PAGE>

                   PAUL-SON GAMING CORPORATION

                        AND SUBSIDIARIES

                  CONSOLIDATED FINANCIAL REPORT

                          MAY 31, 1999

                               31

<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Paul-Son Gaming Corporation
Las Vegas, Nevada

We  have audited the accompanying consolidated balance sheets  of
Paul-Son  Gaming Corporation and subsidiaries (the "Company")  as
of May 31, 1999 and 1998, and the related consolidated statements
of  operations, stockholders' equity, and cash flows for each  of
the  three  years  in  the  period ended  May  31,  1999.   These
financial  statements  are the responsibility  of  the  Company's
management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

We  conducted  our  audits in accordance with generally  accepted
auditing  standards.  Those standards require that  we  plan  and
perform  the  audit to obtain reasonable assurance about  whether
the  financial statements are free of material misstatement.   An
audit  includes  examining, on a test basis, evidence  supporting
the  amounts  and  disclosures in the financial  statements.   An
audit also includes assessing the accounting principles used  and
significant  estimates made by management, as well as  evaluating
the  overall  financial statement presentation.  We believe  that
our audits provide a reasonable basis for our opinion.

In  our  opinion, such consolidated financial statements  present
fairly, in all material respects, the financial position of Paul-
Son  Gaming Corporation and subsidiaries as of May 31,  1999  and
1998,  and  the results of their operations and their cash  flows
for each of the three years in the period ended May 31, 1999,  in
conformity with generally accepted accounting principles.

/s/  Deloitte & Touche LLP

Las Vegas, Nevada
August 6, 1999

                               32

<PAGE>

<TABLE>
<CAPTION>

PAUL-SON GAMING CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
MAY 31, 1999 AND 1998

ASSETS                                                                       1999           1998
-----------------------------------------------------------------------------------------------------
<S>                                                                     <C>            <C>
Current Assets:
  Cash and cash equivalents                                             $     656,299  $     347,876
  Trade receivables, net                                                    3,909,732      5,147,819
  Income taxes receivable                                                         -          786,463
  Inventories, net                                                          4,788,382      5,171,402
  Prepaid expenses                                                            174,664        118,693
  Other current assets                                                        232,431        405,299
                                                                       ------------------------------
            TOTAL CURRENT ASSETS                                            9,761,508     11,977,552
                                                                       ------------------------------

Property and Equipment, net                                                 9,416,656      9,105,545
                                                                       ------------------------------

Deferred Tax Asset                                                            568,000        263,000
                                                                       ------------------------------

Other Assets:
  Note receivable                                                                 -          150,000
  Other assets                                                                382,153        469,229
                                                                       ------------------------------
            TOTAL OTHER ASSETS                                                382,153        619,229
                                                                       ------------------------------
TOTAL ASSETS                                                            $  20,128,317  $  21,965,326
                                                                       ==============================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Short-term borrowings                                                 $         -    $     850,000
  Current maturities of long-term debt                                        329,201         59,007
  Bank overdraft                                                                  -          431,380
  Accounts payable                                                          1,641,419      1,733,122
  Accrued expenses                                                            508,426      1,115,915
  Customer deposits                                                           479,936        681,825
  Income taxes payable                                                         49,298            -
                                                                       ------------------------------
            TOTAL CURRENT LIABILITIES                                       3,008,280      4,871,249
                                                                       ------------------------------


Long-Term Debt, less current maturities                                     2,564,244      1,769,722
                                                                       ------------------------------

Commitments and Contingencies

Stockholders' Equity:
  Preferred stock, authorized 10,000,000 shares, $.01 par value, none             -              -
    issued and outstanding
  Common stock, authorized 30,000,000 shares, $.01 par value, issued;
    3,477,050 and 3,465,750 shares in 1999 and 1998                            34,771         34,658
  Additional paid-in capital                                               13,652,936     13,566,800
  Treasury stock, at cost; 21,293 and 0 shares in 1999 and 1998              (173,505)           -
  Retained earnings                                                         1,041,591      1,722,897
                                                                       ------------------------------
            TOTAL STOCKHOLDERS' EQUITY                                     14,555,793     15,324,355
                                                                       ------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                              $  20,128,317  $  21,965,326
                                                                       ==============================

</TABLE>

         See Notes to Consolidated Financial Statements.

                               33

<PAGE>

<TABLE>
<CAPTION>

PAUL-SON GAMING CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED MAY 31, 1999, 1998 AND 1997

                                                      1999            1998           1997
-----------------------------------------------------------------------------------------------
<S>                                              <C>             <C>             <C>
Revenues                                         $ 23,914,408    $ 25,885,627    $ 24,913,706

Cost of revenues                                   18,169,433      21,943,781      17,223,759
                                                -----------------------------------------------

      GROSS PROFIT                                  5,744,975       3,941,846       7,689,947

Selling, general and administrative expenses        6,903,789       7,145,552       5,967,735
                                                -----------------------------------------------

      OPERATING INCOME (LOSS)                      (1,158,814)     (3,203,706)      1,722,212

Other income (expense)
  Interest income                                      19,330          92,096          82,066
  Interest expense                                   (222,486)       (127,597)        (42,700)
  Other                                               375,664          54,299         372,436
                                                -----------------------------------------------

      INCOME (LOSS) BEFORE INCOME TAXES              (986,306)     (3,184,908)      2,134,014

Income tax (expense) benefit                          305,000         966,266        (761,831)
                                                -----------------------------------------------

      NET INCOME (LOSS)                           $  (681,306)   $ (2,218,642)   $  1,372,183
                                                ===============================================

Earnings (loss) per share:
 Basic                                            $     (0.20)   $      (0.65)   $       0.41
                                                ===============================================
 Diluted                                          $     (0.20)   $      (0.65)   $       0.40
                                                ===============================================

</TABLE>

         See Notes to Consolidated Financial Statements.

                               34

<PAGE>

<TABLE>
<CAPTION>

PAUL-SON GAMING CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED MAY 31, 1999, 1998 AND 1997


                                                        Common Stock        Treasury Stock      Additional
                                                    -----------------------------------------    Paid-in    Retained
                                                     Shares     Dollars    Shares   Dollars      Capital    Earnings      Total

----------------------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>        <C>      <C>       <C>         <C>         <C>          <C>
Balance, June 1, 1996                               3,324,000  $33,240         -  $        -  $12,256,698  $2,569,356  $14,859,294

  Shares issued from the exercise of options           93,000      930         -           -      771,300           -      772,230

  Income tax benefit from exercise of options               -        -         -           -       81,000           -       81,000

  Net income                                                -        -         -           -            -   1,372,183    1,372,183

                                                    ------------------------------------------------------------------------------

Balance, May 31, 1997                               3,417,000   34,170         -           -   13,108,998   3,941,539   17,084,707

  Shares issued from the exercise of options           48,750      488         -           -      402,802           -      403,290

  Income tax benefit from exercise of options               -        -         -           -       55,000           -       55,000

  Net loss                                                  -        -         -           -            - (2,218,642)  (2,218,642)

                                                    ------------------------------------------------------------------------------

Balance, May 31, 1998                               3,465,750   34,658         -           -   13,566,800   1,722,897   15,324,355

  Shares issued from the exercise of options           11,300      113         -           -       86,136           -       86,249

  Treasury shares purchased and received in lieu of
  note receivable                                           -        -  (21,293)   (173,505)            -                (173,505)

  Net loss                                                  -        -         -           -            -   (681,306)    (681,306)
                                                    ------------------------------------------------------------------------------

Balance, May 31, 1999                               3,477,050  $34,771  (21,293)  $(173,505)  $13,652,936  $1,041,591  $14,555,793
                                                    ==============================================================================

</TABLE>

         See Notes to Consolidated Financial Statements.

                               35

<PAGE>

<TABLE>
<CAPTION>

PAUL-SON GAMING CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MAY 31, 1999, 1998 AND 1997

                                                                              1999           1998          1997
--------------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>            <C>             <C>
Cash Flows from Operating Activities
 Net income (loss)                                                      $  (681,306)   $ (2,218,642)   $ 1,372,183
 Adjustments to reconcile net income (loss) to net cash provided by
  (used in) operating activities:
   Depreciation and amortization                                          1,082,757         967,475        791,643
   Provision for doubtful accounts                                          130,000         213,938         96,000
   Provision for inventory obsolescence                                      40,000         200,000            -
   (Gain) loss on sale/disposal of assets                                  (346,094)          3,663       (326,439)
 Change in operating assets and liabilities:
   Accounts receivable                                                    1,094,082      (1,692,618)    (1,163,229)
   Income taxes receivable                                                  786,463        (731,463)           -
   Inventories                                                              343,020         (20,956)       254,184
   Prepaid expenses                                                         (55,971)         22,269         29,941
   Other assets                                                             234,642         208,485       (316,263)
   Deferred tax asset                                                      (305,000)       (263,000)           -
   Accounts payable and accrued expenses                                   (699,192)      1,537,629        246,260
   Bank overdraft                                                          (431,380)        431,380            -
   Deferred tax liability                                                       -           (11,060)        11,060
   Customer deposits                                                       (201,889)       (897,336)       713,723
   Income taxes payable                                                      49,298        (318,930)       345,760
                                                                       ---------------------------------------------
   NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                    1,039,430      (2,569,166)     2,054,823
                                                                       ---------------------------------------------
Cash Flows from Investing Activities

 Proceeds received on sale of property and equipment                        714,599           7,350        464,161
 Purchase of property and equipment                                        (947,071)     (2,834,003)      (919,972)
 Investment in note receivable                                                  -               -         (150,000)
                                                                       ---------------------------------------------
   NET CASH USED IN INVESTING ACTIVITIES                                   (232,472)     (2,826,653)      (605,811)
                                                                       ---------------------------------------------
Cash Flows from Financing Activities

 Payments on due to related party                                               -               -          (15,000)
 Proceeds from short-term borrowings                                            -           850,000        150,000
 Proceeds from long-term borrowings                                         500,000       1,800,000            -
 Principal payments on short-term borrowings                               (850,000)            -         (150,000)
 Principal payments on long-term borrowings                                (225,284)        (62,747)      (450,599)
 Payments for acquisition of treasury stock                                  (9,500)            -              -
 Proceeds from the exercise of stock options                                 86,249         403,290        772,230
                                                                       ---------------------------------------------
   NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                     (498,535)      2,990,543        306,631
                                                                       ---------------------------------------------
   NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                     308,423      (2,405,276)     1,755,643
Cash and cash equivalents, beginning of year                                347,876       2,753,152        997,509
                                                                       ---------------------------------------------
Cash and cash equivalents, end of year                                  $   656,299    $    347,876    $ 2,753,152
                                                                       =============================================

Supplemental cash flows information:
  Operating activities include cash payments for interest and income
   taxes as follows:
     Interest paid                                                      $   222,486    $    127,597    $    42,700
     Income taxes paid                                                  $   208,472    $    299,117    $   404,778

  Investing and financing activities exclude the following non-cash
   activity:
     Reduction of note and interest receivable in exchange for common   $   164,005             -              -
       stock placed into treasury
     Acquisition of capitalized lease equipment through lease           $   790,000             -              -
       arrangement

</TABLE>

         See Notes to Consolidated Financial Statements.

                               36

<PAGE>

PAUL-SON GAMING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------------------------

NOTE 1.   NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS
------------------

Paul-Son   Gaming   Corporation,   including   its   subsidiaries
(collectively  "Paul-Son"  or  the  "Company"),  is   a   leading
manufacturer and supplier of casino table game equipment  in  the
United  States.   The  Company's products include  casino  chips,
table  layouts, playing cards, dice, furniture, table accessories
and other products which are used with casino table games such as
blackjack,  poker,  baccarat, craps and  roulette.   The  Company
sells its products in every state in which casinos operate in the
United  States  and,  to a limited extent, in  various  countries
throughout the world.

BASIS OF CONSOLIDATION AND PRESENTATION
---------------------------------------

The  consolidated financial statements include  the  accounts  of
Paul-Son  and  its  wholly-owned  subsidiaries,  Paul-Son  Gaming
Supplies, Inc. ("Paul-Son Supplies"), Paul-Son Mexicana, S.A.  de
C.V.  ("Mexicana")  and Authentic Products,  Inc.   All  material
intercompany  balances and transactions have been  eliminated  in
consolidation.

A  summary  of  the  Company's  significant  accounting  policies
follows:

RECLASSIFICATION
----------------

Certain  amounts presented in prior years' consolidated financial
statements   have   been  reclassified  to   conform   with   the
presentation   of   the  May  31,  1999  consolidated   financial
statements.

CASH AND CASH EQUIVALENTS AND BANK OVERDRAFT
--------------------------------------------

The   Company   considers  all  highly  liquid  investments   and
repurchase agreements with original maturities of three months or
less to be cash and cash equivalents.

Bank  overdrafts represent outstanding checks drawn  against  the
Company's bank account which had not been presented to  the  bank
as of the balance sheet date.

ACCOUNTS RECEIVABLE AND CUSTOMER DEPOSITS
-----------------------------------------

The  Company performs ongoing credit evaluations of its customers
and  generally requires a fifty percent deposit for  manufactured
or  purchased  products at the discretion of  management.   These
customer  deposits are classified as a current liability  on  the
balance  sheet.  The Company maintains an allowance for  doubtful
accounts,  and  charges against the allowance  have  been  within
management's expectations (see Note 10).

INVENTORY
---------

Inventories are stated at the lower of cost or market.   Cost  is
determined using the first-in, first-out method.

                               37

<PAGE>

PAUL-SON GAMING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------------------------

PROPERTY AND EQUIPMENT
----------------------

Property  and  equipment are stated at cost, net of depreciation.
The  Company includes capitalized lease equipment in its property
and equipment for financial statement purposes.  Depreciation  is
computed  primarily  on the straight-line  method  for  financial
reporting purposes over the following estimated useful lives:

                                                    YEARS
                                                    -----
          Buildings and improvements                18-27
          Furniture and equipment                    5-10
          Vehicles                                   5-7


Normal  repairs  and  maintenance  are  chanrged  to  expense  as
incurred.  Expenditures  which  extend useful lives of assets are
typically capitalized.


GOODWILL
--------

Goodwill is amortized on a straight-line basis over 20 years.

DEBT
----

The  Company includes obligations from capitalized leases in  its
long   and  short-term  debt  captions  for  financial  statement
purposes.

REVENUE RECOGNITION
-------------------

Substantially all revenue is recognized when products are shipped
to  customers.   The  Company typically sells its  products  with
payment terms of net 30 days or less.

INCOME TAXES
------------

The  Company  uses  Statement of Financial  Accounting  Standards
("SFAS")  No.  109  for financial accounting  and  reporting  for
income taxes.  A current tax liability or asset is recognized for
the  estimated taxes payable or refundable on tax returns for the
current  year.   A deferred tax liability or asset is  recognized
for  the estimated future tax effects, based on provisions of the
enacted   law,   attributable   to  temporary   differences   and
carryforwards.

FOREIGN TRANSACTIONS
--------------------

Sales  outside  of  the  United States are  not  significant  and
substantially  all  sales transactions  occur  in  United  States
dollars.

EARNINGS PER SHARE
------------------

The  Company  presents basic net earnings (loss)  per  share  and
diluted net earnings (loss) per share for all periods in which  a
statement  of  operations  is  presented  in accordance with SFAS

                               38

<PAGE>

PAUL-SON GAMING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------------------------

No.  128,  "Earnings Per Share".  Basic net earnings  (loss)  per
share  is computed by dividing net earnings (loss) by the average
shares  outstanding  during the respective period.   Diluted  net
earnings  (loss) per share is computed by dividing  net  earnings
(loss)  by the average shares outstanding and the dilutive effect
of  common  share equivalents for the respective  period.   These
common  share  equivalents are options to purchase  common  stock
whose  exercise price is less than the average market price  (see
Note  9).  During the fiscal years ending May 31, 1999, 1998  and
1997,  the  average number of common shares outstanding  used  in
computing  basic  net  earnings (loss) per share  was  3,468,427,
3,437,894  and 3,330,764, respectively, and the weighted  average
number  of  common and common equivalent shares used in computing
diluted  net  earnings (loss) per share was 3,468,427,  3,437,894
and  3,443,376 for fiscal 1999, 1998, and 1997, respectively (see
Note 9).

ESTIMATES
---------

The  preparation  of  financial  statements  in  conformity  with
generally  accepted accounting principles requires management  to
make  estimates and assumptions that affect the reported  amounts
of assets and liabilities and disclosure of contingent assets and
liabilities  at  the  date of the financial  statements  and  the
reported  amounts of revenues and expenses during  the  reporting
period.   Estimates and assumptions have been made in determining
the  depreciable lives of assets, the recoverability of  deferred
tax  assets, the allowance for doubtful accounts receivable,  and
the  allowance  for obsolete or slow moving inventories.   Actual
results could differ from those estimates and assumptions.

RELIANCE ON SUPPLIERS
---------------------

For  certain  of  its products, the Company is dependent  upon  a
limited  number  of  suppliers to provide the  Company  with  raw
materials  for manufacturing and finished goods for distribution.
The  failure  of  one  or  more of these suppliers  to  meet  the
Company's   performance  specifications,  quality  standards   or
delivery  schedules could have a material adverse effect  on  the
Company.

STOCK OPTIONS
-------------

The Company has adopted the disclosure requirement under SFAS No.
123,  "Accounting for Stock-Based Compensation."   SFAS  No.  123
establishes accounting and disclosure requirements using  a  fair
value  based  method  of  accounting  for  stock  based  employee
compensation  plans.  Under SFAS No. 123 the Company  may  either
adopt the new fair value based accounting method or continue  the
intrinsic  value  based method under Accounting Principles  Board
("APB") Opinion No. 25 and provide pro forma disclosures  of  net
income  (loss) and earnings (loss) per share as if the accounting
provisions  of  SFAS No. 123 had been adopted.  The  Company  has
elected  to  account for its plans under APB Opinion No.  25  and
calculate  the  pro  forma disclosures of net income  (loss)  and
earnings   (loss) per  share  required  under  SFAS  No. 123 (see
Note 9).

                               39

<PAGE>

PAUL-SON GAMING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------------------------

FAIR VALUE OF FINANCIAL INSTRUMENTS
-----------------------------------

The  fair value of a financial instrument is the amount at  which
the  instrument  could  be  exchanged in  a  current  transaction
between  willing  parties,  other  than  in  a  forced  sale   or
liquidation.   The  carrying amounts at  May  31,  1999  for  the
Company's financial instruments approximate fair value.

RECOVERABILITY OF LONG-LIVED ASSETS
-----------------------------------

Management evaluates the carrying value of all long-lived  assets
to   determine  recoverability  based  on  an  analysis  of  non-
discounted future cash flows.  Based on its most recent analysis,
management believes that no material impairment in the  value  of
long-lived assets exists at May 31, 1999.

RECENTLY ISSUED ACCOUNTING STANDARDS
------------------------------------

The   American   Institute  of  Certified   Public   Accountants'
Accounting  Standards  Executive Committee  issued  Statement  of
Position  98-5  "Reporting on the Costs of  Start-up  Activities"
("SOP  98-5").  This standard provides guidance on the  financial
reporting for start-up costs and organization costs and  requires
costs  of  start-up  activities  and  organization  costs  to  be
expensed  as  incurred.  This standard is  effective  for  fiscal
years  beginning after December 15, 1998, though earlier adoption
is  encouraged.  Management has determined that SOP 98-5 will not
have  a  material impact on the Company's consolidated  financial
statements.

The   FASB   issued  SFAS  No.  133  "Accounting  for  Derivative
Instruments and Hedging Activities" in June 1998.  This statement
establishes  accounting  and reporting standards  for  derivative
instruments and hedging activities.  This statement is  effective
for  all  fiscal quarters of fiscal years which begin after  June
2000.    The   statement  requires  entities  to  recognize   all
derivatives  as either assets or liabilities in the statement  of
financial  position  and to measure instruments  at  fair  value.
Management  believes that SFAS No. 133 will not have  a  material
impact on its consolidated financial statements.

NOTE 2.   INVENTORIES

<TABLE>
<CAPTION>

Inventories consist of the following at May 31:

                                            1999            1998
                                   ----------------------------------
          <S>                        <C>              <C>
          Raw materials              $     1,777,212  $     1,734,738
          Work in process                    346,761          333,182
          Finished goods                   2,989,409        3,303,482
                                   ----------------------------------
                                           5,113,382        5,371,402
          Less inventory reserves            325,000          200,000
                                   ----------------------------------
                                     $     4,788,382  $     5,171,402
                                   ==================================

</TABLE>

                               40

<PAGE>

PAUL-SON GAMING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------------------------

NOTE 3.   PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>

Property and equipment consist of the following at May 31:

                                                    1999              1998
                                            ----------------------------------
          <S>                               <C>                <C>
          Land                              $      663,970     $       804,370
          Buildings and improvements             6,491,881           7,354,821
          Furniture and equipment                6,301,425           4,682,806
          Vehicles                                 732,920             925,856
                                                ------------------------------
                                                14,190,196          13,767,853
          Less accumulated depreciation          4,773,540           4,662,308
                                                ------------------------------
                                            $    9,416,656     $     9,105,545
                                            ==================================

</TABLE>

Included  in  furniture and  equipment at May 31, 1999 is certain
capitalized lease equipment with an original cost of $790,000 and
a current net book value of approximately $770,000.

NOTE 4.   SHORT-TERM BORROWINGS

The  Company has a $1.0 million line of credit agreement  with  a
bank  which  matures  in October 1999.  Interest  on  outstanding
borrowings currently accrues at the bank's prime rate of interest
(8.0%  at  May 31, 1999).  This line of credit facility is  cross
collateralized  with  a $1.8 million note  and  a  $500,000  note
(collectively the "Facilities") (see Note 5).  The Facilities are
secured by a first deed of trust on certain real estate owned  by
Paul-Son  Supplies  and by a secured interest  in  all  accounts,
equipment,   inventory  and  general  intangibles   of   Paul-Son
Supplies.   The Company is also the guarantor of the  Facilities.
Borrowings under the line of credit at May 31, 1999 and 1998 were
$0   and   $850,000,   respectively.   The   Facilities   contain
restrictive  covenants,  generally  requiring  the   Company   to
maintain  certain financial ratios, as defined in the  agreement,
and to maintain net income annually of at least $250,000.  As  of
May  31,  1999 the Company was in violation of certain covenants.
As  a  result  of the violations, the Company and the  bank  have
reached an agreement whereby the Company has agreed to relinquish
its  rights  to  borrow  under the line of  credit,  without  the
express written consent of the bank, through the maturity date of
the  line  of credit.  The bank has granted the Company a  formal
waiver  of  default regarding the covenants associated  with  the
Facilities through the Company's fiscal year ending May 31, 2000.

                               41

<PAGE>

PAUL-SON GAMING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------------------------

NOTE 5.   LONG-TERM DEBT AND PLEDGED ASSETS

<TABLE>
<CAPTION>

Long-term debt consists of the following at May 31:

                                                   1999             1998
                                             ------------------------------
         <S>                                 <C>             <C>
         Note payable to bank in monthly
          installments of $18,118 including
          interest of 8.87% through October
          2002 with a balloon payment of
          approximately $1,500,000 due
          November 2002, secured by a first
          deed of trust on the Company's
          facility in Las Vegas, Nevada and
          a first security interest on all
          Company assets (see Note 4 for
          discussion of covenants)           $    1,709,443  $    1,771,076

         Note payable to bank in monthly
          principal  installments of $13,889
          plus interest of 9.75% through
          July 2001 with a balloon payment
          of approximately $42,000 due
          August 2002, secured by a first
          deed of trust on the Company's
          facility in Las Vegas, Nevada and
          a first security interest on all
          Company assets (see Note 4 for
          discussion of covenants)                  402,779              --

         Notes payable to mortgage company,
          collateralized by real estate,
          interest at 7.5%, with principal
          and interest payments of $898 due
          monthly through 2016                       11,563          57,653

         Capital lease obligation  payable
          for equipment, variable interest
          (approximately 8.5% at May 31,
          1999), payable in monthly
          installments of approximately
          $12,250 through March 2006,
          collateralized by a second
          security interest on principally
          all Company assets                        769,660              --
                                             ------------------------------
                                                  2,893,445       1,828,729
                    Less current portion            329,201          59,007
                                             ------------------------------
                                             $    2,564,244  $    1,769,722
                                             ==============================


</TABLE>

[CAPTION]
<TABLE>

Estimated  annual  principal maturities  of  long-term  debt  and
future  minimum  payments  under  capital  lease  obligations  at
May 31, 1999 are as follows:

                                                 Capital             Long-Term
                                                  Leases               Debt
                                              --------------      ---------------
         <S>                                  <C>                 <C>
         2000                                 $     147,048       $      240,521
         2001                                       147,048              247,266
         2002                                       147,048              151,713
         2003                                       147,048            1,484,285
         2004                                       147,048                   --
         Thereafter                                 258,096                   --
                                              --------------      ---------------
         Total                                      993,336            2,123,785
         Less amount representing interest          223,676                   --
                                             ---------------      ---------------
                                              $     769,660       $    2,123,785
                                             ===============      ===============

</TABLE>

                               42

<PAGE>

PAUL-SON GAMING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------------------------

NOTE 6.   RELATED PARTIES

The  following  amounts  were  paid for  legal,  accounting,  and
consulting  services  to  individuals who  were  members  of  the
Company's Board of Directors during the periods reported:

                              1999        1998          1997
                           --------------------------------------
   Laurence A. Speiser     $    -     $  108,000    $  134,317


Included in accounts receivable are amounts owed from an  officer
of  the  Company of approximately $52,000 and $30,000 at May  31,
1999 and 1998, respectively.

In  November  1996, the Company advanced to a former  director  a
$150,000 line of credit.  The line of credit was due in  full  on
December  1,  1998.  As a result of nonpayment of the  loan,  the
Company  enforced its rights under certain agreements,  including
foreclosure  of  the  Company's  common  stock  pledged  by   the
Company's  former  principal  stockholder,  and  cancellation  of
certain  stock  options  granted by the  Company  to  the  former
director.   As a result of the enforcement, the Company  received
19,293  shares  of common stock from the trust of  the  Company's
former principal stockholder to satisfy the unpaid obligation  of
the  former  director.  The Company recorded the receipt  of  the
shares into treasury based on their market value.

NOTE 7.   COMMITMENTS AND CONTINGENCIES

The  Company  leases land, manufacturing and office  space  under
operating leases with terms of between 3 to 8 years.  Approximate
minimum annual rental commitments, with remaining lease terms  of
greater than 1 year at May 31, 1999, are as follows:

                  2000        $      222,423
                  2001               210,558
                  2002                66,796
                  2003                60,000
                  2004                60,000
                  Thereafter         110,000
                                ------------
                              $      729,777
                                ============

The  Company has a twelve year option to extend the lease at  one
of its production facilities.  The annual rent during the first 8
year  term,  which  ends in April 2001, is  $142,380.   The  rent
payments during the option period will increase 5% annually.

Rent  expense  totaled $306,517, $264,154 and  $233,633  for  the
fiscal years ended May 31, 1999, 1998 and 1997, respectively.

The Company is party to various claims and commitments arising in
the  normal  course of business.  Management believes that  these
matters are expected to be resolved or fulfilled with no material
impact on the Company's financial position, liquidity, or results
of operations.

                               43

<PAGE>

PAUL-SON GAMING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------------------------

NOTE 8.   INCOME TAX MATTERS

<TABLE>
<CAPTION>

The   (expense)  benefit  for  income  taxes  reflected  in   the
Consolidated Statements of Operations for the years ended May 31,
1999, 1998 and 1997 consisted of:

                               1999             1998           1997
                         ----------------------------------------------
          <S>            <C>           <C>              <C>
          Current         $       --     $   678,805      $  (799,238)
          Deferred           305,000         278,461           37,407
                         ----------------------------------------------
                          $  305,000     $   966,266      $  (761,831)
                         ==============================================

</TABLE>

<TABLE>
<CAPTION>

A reconciliation of the Company's income tax (expense) benefit as
compared to the tax (expense) benefit calculated by applying  the
statutory  federal  tax rate (34%) to the  income  (loss)  before
income  taxes for the years ended May 31, 1999, 1998 and 1997  is
as follows:


                                            1999          1998          1997
                                          -----------------------------------------
          <S>                             <C>           <C>            <C>
          Computed expected income tax
           (expense) benefit at 34%       $335,344      $1,082,869     $(725,565)
          Adjustments:
          -----------
          State taxes                       11,250          32,503       (35,348)
          Meals and entertainment          (17,125)        (22,987)      (21,697)
          Prior year items and other       (24,469)       (126,119)       20,779
                                          -----------------------------------------
          Income tax (expense) benefit    $305,000      $966,266       $(761,831)
                                          =========================================

</TABLE>

The primary components of the deferred tax asset, the realization
of which is dependent upon future taxable income generated by the
Company, at May 31 were approximately as follows:

                                             1999         1998
                                        -------------------------
     Operating loss carryforwards          $300,000     $70,000
     Inventory and bad debt reserves        225,000     130,000
     Intangible assets                       35,000      40,000
     Other                                    8,000      23,000
                                        -------------------------
                                           $568,000    $263,000
                                        =========================

                               44

<PAGE>

PAUL-SON GAMING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------------------------

NOTE 9.   EARNINGS PER SHARE AND STOCK OPTION PROGRAMS

<TABLE>
<CAPTION>

The following table provides a reconciliation of basic and
diluted earnings (loss) per share as required by SFAS No. 128,
"Earnings Per Share":
                                                          Dilutive
                                                            Stock
                                          Basic            Options        Diluted
                                      -------------      -----------    ------------
For the year ended May 31, 1999
-------------------------------
<S>                                  <C>                   <C>          <C>
 Net loss                              $(681,306)                         $(681,306)
 Shares                                3,468,427                --        3,468,427
 Per Share Amount                          $(.20)                             $(.20)

For the year ended May 31, 1998
-------------------------------

 Net loss                            $(2,218,642)               --      $(2,218,642)
 Shares                                3,437,894                --        3,437,894
 Per Share Amount                      $(.65)                                 $(.65)

For the year ended May 31, 1997
-------------------------------

 Net income                           $1,372,183                --       $1,372,183
 Shares                                3,330,764           112,612        3,443,376
 Per Share Amount                          $0.41                              $0.40

</TABLE>

Dilutive stock options for the years ended May 31, 1999 (111,000)
and  1998 (861,250) have not been included in the computation  of
the  diluted net earnings (loss) per share as their effect  would
be antidilutive.

The  Company has granted certain stock options to purchase common
stock which had an exercise price greater than the average market
price.  These options have been excluded from the computation  of
diluted  earnings  (loss)  per share for  the  respective  fiscal
years.   These  outstanding antidilutive options  for  the  years
ended  May  31,  1999,  1998 and 1997, were 541,750,  4,000,  and
197,500, respectively.

The  Company has stock option programs which consist of the  1994
Long-Term  Incentive  Plan (the "Incentive Plan")  and  the  1994
Directors'  Stock  Option  Plan  (the  "Directors'  Plan").   The
Incentive  Plan  provides  for the  grant  of  stock  options  to
executive  officers,  key  employees,  outside  consultants   and
employee-directors.   On July 29, 1996, the  Board  of  Directors
amended  and  stockholders subsequently approved to increase  the
aggregate  shares   issuable   under   the   Incentive   Plan  to
1,000,000  from  500,000  shares.  The  options   granted   under
the  Incentive  Plan  expire    10    years    after   the   date
of   grant.   The    Directors'    Plan   provides    that   each
outside  director,  upon  joining  the   Board    of   Directors,
will  receive  an  option  to  purchase  3,000  shares  of common

                               45

<PAGE>

PAUL-SON GAMING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------------------------

stock.  The initial option grant vests over a 3 year period, with
one-third  of the option grant vesting at the end of  each  year.
At  the  beginning of the fourth year of service on the Board  of
Directors,  and  each year thereafter, each nonemployee  director
receives  an  annual  grant to purchase 1,000  shares  of  common
stock.   In  addition, each year each outside  director  receives
options  to purchase 1,000 shares of common stock for serving  on
the  following committees of the Board of Directors for at  least
six  months prior to the date of grant: the Audit Committee;  the
Compensation Committee; and the Compliance Committee.  No  option
is exercisable sooner than 6 months and one day after the date of
the  grant.  The options expire on the tenth anniversary  of  the
date  of grant, 9 months after retirement or 2 years after death.
Options  covering 7,000, 4,000 and 3,000 shares were  granted  to
outside  directors during the years ended May 31, 1999, 1998  and
1997 at $8.50, $10.56 and $8.06, respectively.

<TABLE>
<CAPTION>

The  following is a summary of option activity for  the  3  years
ended May 31, 1999:

                                                                                        Weighted
                                                          Options          Shares        Average
                                                         Available         Under         Exercise
                                                         for Grant          Plan          Price
                                                        -------------------------------------------
<S>                                                      <C>               <C>             <C>

Outstanding at June 1, 1996                               252,000           323,000        $8.71

  Additional shares reserved                              500,000               -              -
  Granted                                                (715,000)          715,000         8.95
  Canceled                                                 35,000           (35,000)        8.15

  Exercised                                                93,000           (93,000)        8.30
                                                        -------------------------------------------

Outstanding at May 31, 1997                               165,000           910,000         8.96


  Granted                                                 (14,000)           14,000        10.00
  Canceled                                                 10,000           (10,000)        8.75
  Exercised                                                48,750           (48,750)        8.27
                                                        -------------------------------------------

Outstanding at May 31, 1998                               209,750           865,250         9.02

  Granted                                                (112,000)          112,000         5.31
  Canceled                                                313,200          (313,200)        9.16
  Exercised                                                11,300           (11,300)        7.63
                                                        -------------------------------------------

Outstanding at May 31, 1999                               422,250           652,750        $8.34
                                                        ===========================================

                                                           1999               1998          1997
                                                          ------             ------        ------
The weighted average fair value of options granted        $2.46              $4.78         $4.27

</TABLE>

                               46

<PAGE>

PAUL-SON GAMING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------------------------

<TABLE>
<CAPTION>

The  following table summarizes information concerning  currently
outstanding and exercisable options:

                             Options Outstanding                Options Exercisable
                 ----------------------------------------------------------------------
                                   Weighted
                                    Average      Weighted                   Weighted
    Range of                       Remaining     Average                     Average
    Exercise         Number       Contractual    Exercise       Number      Exercise
     Prices        Outstanding       Life         Price      Exercisable      Price
---------------------------------------------------------------------------------------
<S>                 <C>              <C>          <C>          <C>            <C>
$ 5.00 to 8.25      323,750          7.93         $7.06        109,750        $7.96
$ 8.26 to 13.88     329,000          7.18         $9.62        206,750        $9.49
---------------------------------------------------------------------------------------
                    652,750                                    316,500
---------------------------------------------------------------------------------------

</TABLE>

<TABLE>
<CAPTION>

The  Company accounts for these plans under APB Opinion  No.  25,
under  which  no  compensation cost  has  been  recognized.   Had
compensation cost for these plans been determined consistent with
SFAS  No.  123,  "Accounting for Stock Based  Compensation",  the
Company's  net income (loss) and earnings (loss) per share  would
have been reduced to the following pro forma amounts.

                                                  1999             1998             1997
                                             --------------    -------------    -------------
<S>                         <C>               <C>               <C>               <C>
Net income (loss):          As reported:        $(681,306)      $(2,218,642)      $1,372,183

                            Pro forma:        $(1,123,435)      $(2,820,169)          11,115

Earnings (loss) per share:  As reported:
                             Basic                  $(.20)            $(.65)            $.41
                             Diluted                $(.20)            $(.65)            $.40

                            Pro forma:
                             Basic                  $(.32)            $(.82)            $.00
                             Diluted                $(.32)            $(.82)            $.00

</TABLE>

Pro  forma  earnings  (loss) reflect only  options  granted  from
fiscal  1997  to  fiscal 1999.  Therefore,  the  full  impact  of
calculating  compensation cost for stock options under  SFAS  No.
123  is  not  reflected  in pro forma net income  (loss)  because
compensation  costs are reflected over the option-vesting  period
and  compensation costs for options granted prior to fiscal  1997
are not considered.

The  fair value of each option is estimated on the date of  grant
using  the  Black-Scholes option pricing model with the following
assumptions  used  for  1998,  1997 and  1996  grants;  risk-free
interest  rate  at the date of grant which ranged  from  5.6%  to
6.7%;  expected dividend yield of 0.0%; expected life of 5 years;
and expected volatility of 43.79%.

                               47

<PAGE>

PAUL-SON GAMING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------------------------

As  of May 31, 1999 a maximum of 1,075,000 shares of common stock
have  been reserved for issuance under these plans.  None of  the
options can be granted at less than the fair market value of  the
Company's stock on the date of grant.

NOTE 10.  ALLOWANCE FOR DOUBTFUL ACCOUNTS AND INVENTORY VALUATION

The  Company  records,  based on periodic reviews  of  its  trade
receivables    and   inventories,   allowances   for    estimated
uncollectible  trade  accounts  receivable  and  slow-moving   or
obsolete inventories.  A summary of provisions for estimated  bad
debts  and  obsolete or slow-moving inventories and  the  related
charges  to  the allowances for doubtful accounts  and  inventory
valuation reserves are as follows:

[CAPTION]
<TABLE>

ACCOUNTS RECEIVABLE:

                               BEGINNING                   CHARGE-OFFS,       END
                                OF YEAR                       NET OF        OF YEAR
    Years Ended May 31,         BALANCE      PROVISIONS     RECOVERIES      BALANCE
    -------------------------------------------------------------------------------------
<S>                           <C>            <C>            <C>             <C>
       1999                   $  374,994     $  130,000     $ 104,994       $ 400,000
                             ============================================================

       1998                   $  269,140     $  213,938     $ 108,084       $ 374,994
                             ============================================================

       1997                   $  281,712     $   96,000     $ 108,572       $ 269,140
                             ============================================================

INVENTORIES:

                               BEGINNING                   CHARGE-OFFS/         END
                                OF YEAR                      RECLASSI-        OF YEAR
    Years Ended May 31,         BALANCE      PROVISIONS      FICATIONS        BALANCE
-----------------------------------------------------------------------------------------
       1999                   $  200,000     $   40,000     $ (85,000)      $ 325,000
                             ============================================================

       1998                   $     -        $  200,000     $     -         $  200,000
                             ============================================================

       1997                   $     -        $     -        $     -         $      -
                             ============================================================

</TABLE>

NOTE 11.  BUSINESS SEGMENTS

The  FASB issued SFAS No. 131, "Disclosures About Segments of  an
Enterprise  and  Related  Information"  effective  for  financial
statements for fiscal years beginning after December 1997.   This
statement,  which  supersedes SFAS No. 14, establishes  standards
for  reporting  information about operating  segments  in  annual
financial  statements.   The statement requires  public  business
enterprises  to  report  selected  reporting  information   about
operating  segments in annual financial statements  and  requires
public business enterprises to report selected information  about
operating  segments in interim financial reports.  The  Company's
reportable segments have been identified as follows:

                               48

<PAGE>

PAUL-SON GAMING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------------------------

    *  Sale  of  Gaming Supply Products to New Casino Openings --
       Significant  sales  of  products to casinos  which  opened
       during  the fiscal year, the majority of which  sales  are
       not replaced on a regular, recurring basis.

    *  Sale  of  Gaming Supply Products to Established Casinos --
       Sales  of  products to casino customers which  had  opened
       prior  to  the fiscal year and are principally  considered
       on-going, recurring sales.

The  accounting policies of the segments are the  same  as  those
described  in  the "Summary of Significant Accounting  Policies."
The  Company  evaluates  the  performance  of  each  segment   by
allocating  certain overhead expenses to the  segments  based  on
management's estimates.  The following information represents the
disclosure  requirements and information management  utilizes  in
measuring the profit or loss of each significant segment:

<TABLE>
<CAPTION>

The table below presents information about the reported operating
income of the Company for the years ended May 31, 1999, 1998  and
1997.   Asset  information by reportable segment is not  reported
since no segregation of assets exists between segments.

                              Product Sales --       Product Sales --
                            New Casino Openings     Established Casinos   Consolidated Totals
                          --------------------------------------------------------------------
<S>                         <C>                       <C>                    <C>
1999
----

Revenues                    $2,296,459                $21,617,949            $23,914,408
                          --------------------------------------------------------------------
Operating income (loss)      $(138,701)               $(1,020,113)           $(1,158,814)
                          --------------------------------------------------------------------
1998
----

Revenues                    $3,185,377                $22,700,250            $25,885,627
                          --------------------------------------------------------------------
Operating income (loss)      $(229,489)               $(2,974,217)           $(3,203,706)
                          --------------------------------------------------------------------

1997
----

Revenues                    $6,010,106                $18,903,600            $24,913,706
                          --------------------------------------------------------------------
Operating income (loss)     $1,258,323                   $463,889             $1,722,212
                          --------------------------------------------------------------------

</TABLE>

Corporate  expenses  and  certain  overhead  expenses  have  been
allocated to each segment based on management's estimate  of  the
segment's  utilization of the resources or expenses.  During  the
fiscal  years  ended  May  31, 1999, 1998  and  1997,  management
estimated  gross margins of the reportable segments to be  equal.
However,  management's estimation used in  the  operating  income
(loss) for the segments' overhead and corporate expenses was  90%
from  product  sales to established casinos and 10% from  product
sales to new casino openings.

                               49

<PAGE>

PAUL-SON GAMING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------------------------

<TABLE>
<CAPTION>

The  Company's  long-lived assets are  domiciled  in  the  United
States   and   Mexico.   The  table  below  presents  information
regarding the long-lived assets as of May 31:

MEXICO:                                  1999             1998             1997
                                  ---------------------------------------------------
<S>                                  <C>              <C>                <C>
  Property and equipment, cost       $9,248,820        $7,656,140        $5,050,289
  Less accumulated depreciation       2,887,990         2,169,682         1,597,696
                                  ---------------------------------------------------
  Net property and equipment         $6,360,830        $5,486,458        $3,452,593

UNITED STATES:

  Property and equipment, cost       $4,941,376        $6,111,713        $5,944,260
  Less accumulated depreciation       1,885,550         2,492,626         2,146,823
                                  ---------------------------------------------------
  Net property and equipment         $3,055,826        $3,619,087        $3,797,437
                                  ---------------------------------------------------

                                     $9,416,656       $9,105,545         $7,250,030
                                  ===================================================

</TABLE>

                               50

<PAGE>

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ------------------------------------------------
         ACCOUNTING AND FINANCIAL DISCLOSURE
         -----------------------------------

     None

PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
          --------------------------------------------------

      This  information  is incorporated by  reference  from  the
Company's  Proxy  Statement to be filed with the  Securities  and
Exchange  Commission  (the "Commission") in connection  with  the
Annual Meeting of Stockholders on November 9, 1999.

ITEM 11.  EXECUTIVE COMPENSATION
          ----------------------

      This  information  is incorporated by  reference  from  the
Company's  Proxy  Statement to be filed with  the  Commission  in
connection with the Annual Meeting of Stockholders on November 9,
1999.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          ---------------------------------------------------
          MANAGEMENT
          ----------

      This  information  is incorporated by  reference  from  the
Company's  Proxy  Statement to be filed with  the  Commission  in
connection with the Annual Meeting of Stockholders on November 9,
1999.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
          ----------------------------------------------

      This information is incorporated by reference the Company's
Proxy  Statement  to be filed with the Commission  in  connection
with the Annual Meeting of Stockholders on November 9, 1999.

PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
          -------------------------------------------------------
          FORM 8-K
          --------

  (a)  1.   FINANCIAL STATEMENTS
            --------------------

            Included in Part II of this report:

            Consolidated Balance Sheets at May 31, 1999 and 1998.

            Consolidated  Statements of  Operations for the Years
            Ended May 31, 1999, 1998 and 1997.

            Consolidated Statements of Stockholders' Equity for
            the Years Ended May 31, 1999, 1998  and 1997.

                               51

<PAGE>

            Consolidated Statements of  Cash  Flows for the Years
            Ended May 31, 1999, 1998 and 1997.

            Notes to Consolidated Financial Statements

       2.   FINANCIAL STATEMENT SCHEDULES
            -----------------------------

            All  required  schedules  are  omitted because of the
            absence of conditions under  which they are  required
            or because the  required information  is given in the
            financial  statements or notes thereto.

  (b)  REPORTS ON FORM 8-K
       -------------------

            None.

  (c)  EXHIBITS
       --------

       3.01      Articles  of  Incorporation of Paul-Son  Gaming
                 Corporation  and  Certificate of  Amendment  of
                 Articles  of  Incorporation of Paul-Son  Gaming
                 Corporation  incorporated herein  by  reference
                 from  the  Company's registration statement  on
                 Form S-1 (SEC No. 33-74758), Part II, Item  16,
                 Exhibit 3.01.

       3.02      Bylaws    of    Paul-Son   Gaming   Corporation
                 incorporated  herein  by  reference  from   the
                 Company's  registration statement on  Form  S-1
                 (SEC   No.  33-74758),   Part   II,   Item  16,
                 Exhibit 3.02.

       4.01      Specimen  Common  Stock  Certificate  for   the
                 Common  Stock  of  Paul-Son Gaming  Corporation
                 incorporated  herein  by  reference  from   the
                 Company's  registration statement on  Form  S-1
                 (SEC  No. 33-74758), Part II, Item 16,  Exhibit
                 4.01.

       10.01     Paul-Son  Gaming  Corporation  1994  Directors'
                 Stock  Option Plan (as amended July  29,  1996)
                 Paul-Son  Gaming  Corporation  1994  Directors'
                 Stock  Option Plan (as amended July  29,  1996)
                 incorporated  herein  by  reference  from   the
                 Company's  annual report on Form 10-K  for  the
                 year  ended May 31, 1996, Part IV, Item  14(c),
                 Exhibit 10.03.

       10.02     Paul-Son   Gaming  Corporation  1994  Long-Term
                 Incentive Plan (as amended July 29, 1996) Paul-
                 Son Gaming Corporation 1994 Long-Term Incentive
                 Plan  (as  amended July 29, 1996)  incorporated
                 herein  by reference from the Company's  annual
                 report on Form 10-K for the year ended May  31,
                 1996, Part IV, Item 14(c), Exhibit 10.04

       10.03     Lease  dated  May  17,  1993,  by  and  between
                 Paul-Son Mexicana S.A. de C.V., as lessee,  and
                 Coprodiedad   Arte   Y   Diseno,   as    lessor
                 incorporated  herein  by  reference  from   the
                 Company's  registration statement on  Form  S-1
                 (SEC  No. 33-74758), Part II, Item 16,  Exhibit
                 10.05.

                               52

<PAGE>

       10.04     Letter Loan Agreement dated November 14,  1997,
                 among    Norwest    Bank    Nevada,    National
                 Association, Paul-Son Gaming Supplies, Inc., as
                 borrower,  and Paul-Son Gaming Corporation,  as
                 guarantor; Guaranty dated November 14, 1997, by
                 Paul-Son Gaming Corporation in favor of Norwest
                 Bank  Nevada, National Association;  Term  Note
                 dated  November  14, 1997, by  Paul-Son  Gaming
                 Supplies, Inc., payable to Norwest Bank Nevada,
                 National  Association;  Promissory  Note  dated
                 November  14, 1997 by Paul-Son Gaming Supplies,
                 Inc.,  payable to Norwest Bank Nevada, National
                 Association; Continuing Credit Agreement  dated
                 November 14, 1997, by Paul-Son Gaming Supplies,
                 Inc.  in favor of Norwest Bank Nevada, National
                 Association;   Continuing  Security   Agreement
                 dated  November  14, 1997, by  Paul-Son  Gaming
                 Corporation  in favor of Norwest  Bank  Nevada,
                 National  Association; and Deed of Trust  dated
                 November   14,  1997,  among  Paul-Son   Gaming
                 Supplies,   Inc.,  as  grantor,  Norwest   Bank
                 Nevada,  National Association, as  beneficiary,
                 and  Americorp  Financial,  Inc.,  as  trustee,
                 incorporated  by reference from  the  Company's
                 quarterly  report on Form 10-Q for the  quarter
                 ended November 30, 1997, Item 6, Exhibit 10.01.

       10.05     Modification/Change  in Terms  Agreement  dated
                 October   23,  1998  between  Paul-Son   Gaming
                 Supplies,  Inc. and Norwest Bank Nevada,  N.A.;
                 Promissory   Note   made  by  Paul-Son   Gaming
                 Supplies,  Inc.,  in  favor  of  Norwest   Bank
                 Nevada, N.A., dated October 23, 1998; Change in
                 Terms Agreement dated October 23, 1998, between
                 Paul-Son Gaming Supplies, Inc. and Norwest Bank
                 Nevada,  N.A.,  incorporated by reference  from
                 the Company's quarterly report on Form 10-Q for
                 the quarter ended November 30, 1998.

       21.01     List   of   subsidiaries  of  Paul-Son   Gaming
                 Corporation.

       23.01     Consent of Deloitte & Touche LLP.

                               53

<PAGE>

                           SIGNATURES


      Pursuant to the requirements of Section 13 or 15(d) 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.

                      PAUL-SON GAMING CORPORATION


August 25, 1999       By  /s/ Eric P. Endy
                        -----------------------------------------
                          Eric P. Endy
                          Chairman  of  the Board, President  and
                          Chief Executive Officer
                          (Principal Executive Officer)


      Pursuant to the requirements of the Securities Exchange Act
of  1934,  this  report has been signed below  by  the  following
persons on behalf of the registrant and in the capacities and  on
the dates indicated.



August 25, 1999       By  /s/ Eric P. Endy
                        -----------------------------------------
                          Eric P. Endy
                          Chairman of the Board, President and
                          Chief Executive Officer



                      By /s/ John M. Garner
                        -----------------------------------------
                         John M. Garner, Chief Financial Officer
                           and Treasurer (Principal   Financial
                           and  Accounting Officer)



                      By /s/ Jerry G. West
                        -----------------------------------------
                         Jerry G. West, Director


                      By /s/ Richard W. Scott
                        -----------------------------------------
                         Richard W. Scott, Director

                               54

<PAGE>

<TABLE>
<CAPTION>

                          EXHIBIT INDEX


EXHIBIT NO.    DESCRIPTION                                     PAGE NO.
-----------    -----------                                     --------
<S>            <C>                                                <C>
3.01           Articles  of  Incorporation of Paul-Son  Gaming
               Corporation  and  Certificate of  Amendment  of
               Articles  of  Incorporation of Paul-Son  Gaming
               Corporation  incorporated herein  by  reference
               from  the  Company's registration statement  on
               Form S-1 (SEC No. 33-74758), Part II, Item  16,
               Exhibit 3.01.

3.02           Bylaws    of    Paul-Son   Gaming   Corporation
               incorporated  herein  by  reference  from   the
               Company's  registration statement on  Form  S-1
               (SEC  No. 33-74758), Part II, Item 16,  Exhibit
               3.02.

4.01           Specimen  Common  Stock  Certificate  for   the
               Common  Stock  of  Paul-Son Gaming  Corporation
               incorporated  herein  by  reference  from   the
               Company's  registration statement on  Form  S-1
               (SEC  No. 33-74758), Part II, Item 16,  Exhibit
               4.01.

10.01          Paul-Son  Gaming  Corporation  1994  Directors'
               Stock  Option Plan (as amended July  29,  1996)
               incorporated  herein  by  reference  from   the
               Company's  annual report on Form 10-K  for  the
               year  ended May 31, 1996, Part IV, Item  14(c),
               Exhibit 10.03.

10.02          Paul-Son   Gaming  Corporation  1994  Long-Term
               Incentive  Plan  (as  amended  July  29,  1996)
               incorporated  herein  by  reference  from   the
               Company's  annual report on Form 10-K  for  the
               year  ended May 31, 1996, Part IV, Item  14(c),
               Exhibit 10.04

10.03          Lease  dated  May  17,  1993,  by  and  between
               Paul-Son Mexicana S.A. de C.V., as lessee,  and
               Coprodiedad   Arte   Y   Diseno,   as    lessor
               incorporated  herein  by  reference  from   the
               Company's  registration statement on  Form  S-1
               (SEC  No. 33-74758), Part II, Item 16,  Exhibit
               10.05.

10.04          Letter Loan Agreement dated November 14,  1997,
               among    Norwest    Bank    Nevada,    National
               Association, Paul-Son Gaming Supplies, Inc., as
               borrower,  and Paul-Son Gaming Corporation,  as
               guarantor; Guaranty dated November 14, 1997, by
               Paul-Son Gaming Corporation in favor of Norwest
               Bank  Nevada, National Association;  Term  Note
               dated  November  14, 1997, by  Paul-Son  Gaming
               Supplies, Inc., payable to Norwest Bank Nevada,
               National  Association;  Promissory  Note  dated
               November  14, 1997 by Paul-Son Gaming Supplies,
               Inc.,  payable to Norwest Bank Nevada, National
               Association; Continuing Credit Agreement  dated
               November 14, 1997, by Paul-Son Gaming Supplies,
               Inc.  in favor of Norwest Bank Nevada, National
               Association;   Continuing  Security   Agreement
               dated  November  14, 1997, by  Paul-Son  Gaming
               Corporation   in    favor   of   Norwest   Bank
               Nevada,   National    Association;   and   Deed
               of  Trust  dated  November    14,  1997,  among
               Paul-Son   Gaming     Supplies,     Inc.,    as
               grantor,  Norwest  Bank  Nevada,

                               55

<PAGE>

               National   Association,  as  beneficiary,   and
               Americorp   Financial,   Inc.,   as    trustee,
               incorporated  by reference from  the  Company's
               quarterly  report on Form 10-Q for the  quarter
               ended November 30, 1997, Item 6, Exhibit 10.01.

10.05          Modification/Change  in Terms  Agreement  dated
               October   23,  1998  between  Paul-Son   Gaming
               Supplies,  Inc. and Norwest Bank Nevada,  N.A.;
               Promissory   Note   made  by  Paul-Son   Gaming
               Supplies,  Inc.,  in  favor  of  Norwest   Bank
               Nevada, N.A., dated October 23, 1998; Change in
               Terms Agreement dated October 23, 1998, between
               Paul-Son Gaming Supplies, Inc. and Norwest Bank
               Nevada,  N.A.,  incorporated by reference  from
               the Company's quarterly report on Form 10-Q for
               the quarter ended November 30, 1998.

21.01          List   of   subsidiaries  of  Paul-Son   Gaming    57
               Corporation.

23.01          Consent of Deloitte & Touche LLP.                  59

27.01          Financial Data Schedule.                           61

</TABLE>

                               56