<PAGE>

                                                   UNITED STATES
                                        SECURITIES AND EXCHANGE COMMISSION
                                              WASHINGTON, D.C. 20549

                                                     FORM 10-Q

(Mark One)

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

     For the quarterly period ended:    September 30, 1998
                                        ------------------

                                       OR

( )  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     For the transition period from:                     to
                                     ------------------      ------------------


Commission file number:                333-49717 and 333-49717-01
                        -------------------------------------------------------

                          ALADDIN GAMING HOLDINGS, LLC
-------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

            NEVADA                                      88-0379607
---------------------------------       ---------------------------------------
  (State or other jurisdiction            (I.R.S. Employer Identification No.)
of incorporation or organization)

831 Pilot Road, Las Vegas, Nevada                           89119
-------------------------------------------------------------------------------
(Address of principal executive offices)                  (Zip Code)

                              (702) 736-7114
-------------------------------------------------------------------------------
            (Registrant's telephone number, including area code)

                             ALADDIN CAPITAL CORP.
-------------------------------------------------------------------------------
           (Exact name of registrant as specified in its charter)

           NEVADA                                       88-0379606
---------------------------------          ------------------------------------
  (State or other jurisdiction             (I.R.S. Employer Identification No.)
of incorporation or organization)

831 Pilot Road, Las Vegas, Nevada                        89119
-------------------------------------------------------------------------------
(Address of principal executive offices)               (Zip Code)

                            (702) 736-7114
-------------------------------------------------------------------------------
            (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 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.

                                                  YES    X      NO
                                                     ---------     ---------

Indicate the number of shares outstanding of the issuer's classes of common
stock, as of the latest practicable date.

<PAGE>

                          ALADDIN GAMING HOLDINGS, LLC

                                 Not applicable

                              ALADDIN CAPITAL CORP.

         2,500 shares of common stock, no par value as of October 31, 1998.


<PAGE>

                          ALADDIN GAMING HOLDINGS, LLC
                                 AND SUBSIDIARIES

                         (A DEVELOPMENT STAGE COMPANY)

                                     INDEX

<TABLE>
<CAPTION>

                                                                                                     PAGE NO.
                                                                                                   ------------
<S>                <C>                                                                             <C>
PART I             FINANCIAL INFORMATION

   Item 1.         Financial Statements

                   Consolidated Balance Sheets -
                     September 30, 1998 and December 31, 1997......................................       1

                   Consolidated Statements of Operations -
                     For the three and nine months ended September 30, 1998 and for the
                     period from inception (December 1, 1997) through September 30, 1998...........       2

                   Consolidated Statement of Members' Equity 
                     For the period from inception (December 1, 1997) through
                     September 30, 1998............................................................       3

                   Consolidated Statements of Cash Flows -
                     For the nine months ended September 30, 1998 and for the period
                     from inception (December 1, 1997) through September 30, 1998..................       4

                   Notes to the Consolidated Financial Statements..................................     5 - 9

   Item 2.         Management's Discussion and Analysis of Financial Condition and
                     Results of Operations.........................................................    10 - 15

   Item 3.         Quantitative and Qualitative Disclosures About Market Risk......................      15

PART II            OTHER INFORMATION

   Item 1.         Legal Proceedings...............................................................      16

   Item 2.         Changes in Securities and Use of Proceeds.......................................      16

   Item 3.         Defaults upon Senior Securities.................................................      16

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

   Item 5.         Other Information...............................................................      16

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

Signatures         ................................................................................      17

Exhibit Index      ................................................................................      18

</TABLE>


<PAGE>

PART I.  Financial Information

ITEM 1.  FINANCIAL STATEMENTS

                    ALADDIN GAMING HOLDINGS, LLC
                          AND SUBSIDIARIES
                    (A DEVELOPMENT STAGE COMPANY)

                     CONSOLIDATED BALANCE SHEET
           AS OF SEPTEMBER 30, 1998 AND DECEMBER 31, 1997


<TABLE>
<CAPTION>
                                                                September 30, 1998           December 31, 1997
                                                                ------------------           -----------------
                                                                    (unaudited)
<S>                                                          <C>                        <C>
               ASSETS
Current assets:
      Cash                                                   $              2,175,116    $                 6,895
      Other current assets                                                    717,426                         --
                                                             -------------------------   ------------------------
          Total current assets                                              2,892,542                      6,895
                                                             -------------------------   ------------------------
Property and equipment:
      Land                                                                 33,407,500                         --
      Furniture and equipment                                                  79,452                         --
      Construction in progress                                             60,229,365                         --
      Capitalized interest                                                  4,940,752                         --
                                                             -------------------------    -----------------------
                                                                           98,657,069                         --
      Less accumulated depreciation                                             4,637                         --
                                                             -------------------------    -----------------------
                                                                           98,652,432                         --
                                                             -------------------------    -----------------------

Other assets:
      Restricted cash                                                     255,255,113                         --
      Restricted land                                                       6,842,500                         --
      Other assets                                                          2,057,905                         --
      Debt issuance costs, net of accumulated
          amortization of $1,967,676 as of 
          September 30, 1998                                               35,177,917                         --
                                                             -------------------------    -----------------------
          Total other assets                                              299,333,435                         --
                                                             -------------------------    -----------------------
                                                             $            400,878,409     $                6,895
                                                             -------------------------    -----------------------
                                                             -------------------------    -----------------------
      LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
      Accounts payable                                                      8,702,628                         --
      Payable to related parties                                            2,503,574                      1,245
      Obligation to transfer land                                           6,842,500                         --
      Accrued expenses                                                      3,217,902                         --
                                                             -------------------------    -----------------------
          Total current liabilities                                        21,266,604                      1,245
                                                             -------------------------    -----------------------

Long-term debt:                                                           383,857,381                         --

Advances to purchase membership interests                                       2,850                      2,850

Members' equity:
      Common membership interest                                           28,607,979                      2,800
      Deficit Accumulated during the development stage                   (32,856,405)                         --
                                                             -------------------------     ----------------------
          Total members' equity                                            (4,248,426)                     2,800
                                                             -------------------------     ----------------------
                                                             $            400,878,409      $               6,895
                                                             -------------------------     ----------------------
                                                             -------------------------     ----------------------
</TABLE>

    The accompanying notes are an integral part of this financial statement.

                                       1
<PAGE>



                         ALADDIN GAMING HOLDINGS, LLC
                               AND SUBSIDIARIES
                         (A DEVELOPMENT STAGE COMPANY)

                     CONSOLIDATED STATEMENTS OF OPERATIONS
    FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND FOR THE
   PERIOD FROM INCEPTION (DECEMBER 1, 1997) THROUGH SEPTEMBER 30, 1998

<TABLE>
<CAPTION>
                                                                                                          For the period
                                                   For the three months       For the nine months        December 1, 1997
                                                    ended September 30,       ended September 30,       (inception) through
                                                           1998                      1998               September 30, 1998
                                                        (Unaudited)               (Unaudited)               (Unaudited)
                                                   ----------------------    ----------------------    ----------------------
<S>                                                <C>                       <C>                       <C>
Pre-opening costs                                  $           6,140,992     $          20,425,197     $          20,425,197

Other (income) expense:
       Interest income                                        (3,664,361)               (9,302,066)               (9,302,066)
       Interest expense                                       11,214,823                26,674,026                26,674,026
       Less:  Interest capitalized                            (2,526,823)               (4,940,752)               (4,940,752)
                                                   ----------------------    ----------------------    ----------------------
             Total other (income) expense                      5,023,639                12,431,208                12,431,208
                                                   ----------------------    ----------------------    ----------------------

Net loss accumulated during the
    development stage                              $          11,164,631     $          32,856,405     $          32,856,405
                                                   ----------------------    ----------------------    ----------------------
                                                   ----------------------    ----------------------    ----------------------
</TABLE>


    The accompanying notes are an integral part of this financial statement.

                                       2
<PAGE>

                        ALADDIN GAMING HOLDINGS, LLC
                              AND SUBSIDIARIES
                        (A DEVELOPMENT STAGE COMPANY)

                 CONSOLIDATED STATEMENT OF MEMBERS' EQUITY
              FOR THE PERIOD FROM INCEPTION (DECEMBER 1, 1997)
                         THROUGH SEPTEMBER 30, 1998
                                 (UNAUDITED)

<TABLE>
<CAPTION>
                                        Sommer                                                                                      
                                     Enterprises,       Aladdin Gaming        London Clubs                                          
                                          LLC          Enterprises, LLC       Nevada, Inc.           GAI, LLC             Total     
                                   ----------------   -----------------   -------------------   ------------------   ---------------
<S>                                <C>                <C>                 <C>                   <C>                  <C>            
BALANCE, DECEMBER 1, 1997          $            --    $             --    $               --    $              --    $           -- 
                                                                                                                                    
Members' contribution                          669                 331                    --                1,800             2,800 
                                   ----------------   -----------------   -------------------   ------------------   ---------------
BALANCE, DECEMBER 31, 1997                     669                 331                    --                1,800             2,800 
                                                                                                                                    
Net loss accumulated during the                                                                                                     
    development stage                  (15,442,511)         (8,214,101)           (8,214,101)            (985,692)      (32,856,405)
                                                                                                                                    
Members' contributions                 (47,317,023)         28,247,202            50,000,000                   --        30,930,179 
                                                                                                                                    
Members' equity costs                   (1,092,750)           (581,250)             (581,250)             (69,750)       (2,325,000)
                                   ----------------   -----------------   --------------------  ------------------   ---------------
BALANCE, SEPTEMBER 30, 1998        $   (63,851,615)   $     19,452,182    $       41,204,649    $      (1,053,642)   $   (4,248,426)
                                   ----------------   -----------------   --------------------  ------------------   ---------------
                                   ----------------   -----------------   --------------------  ------------------   ---------------
</TABLE>

    The accompanying notes are an integral part of this financial statement.

                                       3
<PAGE>


                       ALADDIN GAMING HOLDINGS, LLC
                       (A DEVELOPMENT STAGE COMPANY)

                   CONSOLIDATED STATEMENTS OF CASH FLOWS
      FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND FOR THE PERIOD
       FROM INCEPTION (DECEMBER 1, 1997) THROUGH SEPTEMBER 30, 1998

<TABLE>
<CAPTION>
                                                                                                     For the period December 1,
                                                                      For the nine months ended       1997 (inception) through
                                                                         September 30, 1998               September 30, 1998
                                                                             (Unaudited)                    (Unaudited)
                                                                    ------------------------------   ---------------------------
<S>                                                                 <C>                              <C>
Cash Flows used for investing activities:

     Cash used in operating activities                              $                 (14,382,461)    $             (14,382,461)
                                                                    ------------------------------   ---------------------------
Cash flows from investing activities:
     Payments for construction in progress, furniture,
            equipment and capitalized interest                                        (52,746,414)                  (52,746,414)
     Increase in restricted cash                                                     (255,255,113)                 (255,255,113)
                                                                    ------------------------------   ---------------------------
Net cash used in investing activities                                                (308,001,527)                 (308,001,527)
                                                                    ------------------------------   ---------------------------
Cash flows from financing activities:
     Proceeds from issuance of notes                                                  100,047,100                   100,047,100
     Proceeds from long-term debt                                                     274,000,000                   274,000,000
     Repayment of long-term debt                                                         (546,976)                     (546,976)
     Debt issuance costs                                                              (37,145,594)                  (37,145,594)
     Members' contributions                                                            65,000,000                    65,002,800
     Payment of debt on contributed land                                              (74,477,321)                  (74,477,321)
     Members' equity costs                                                             (2,325,000)                   (2,325,000)
     Payable to related parties                                                                --                         1,245
     Advances to purchase membership interests                                                 --                         2,850
                                                                    ------------------------------   ---------------------------
Net cash provided by financing activities                                             324,552,209                   324,559,104
                                                                    ------------------------------   ---------------------------

Net increase in cash                                                                    2,168,221                     2,175,116

Cash at the beginning of the period                                                         6,895                            --
                                                                    ------------------------------   ---------------------------
Cash at the end of the period                                       $                   2,175,116    $                2,175,116
                                                                    ------------------------------   ---------------------------
                                                                    ------------------------------   ---------------------------

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid for interest, net of amount capitalized                   $                   8,228,185    $                8,228,185

Non-cash investing and financing activities:
     Members' contributions -- book value
            Land                                                                       33,407,500                    33,407,500
            Construction in progress                                                    7,000,000                     7,000,000
     Equipment acquired equal to assumption of debt                                       546,976                       546,976
     Increase in construction payables                                                  4,956,180                     4,956,180
</TABLE>


    The accompanying notes are an integral part of this financial statement.

                                       4

<PAGE>



                          ALADDIN GAMING HOLDINGS, LLC
                                AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1998

1.       ORGANIZATION AND BUSINESS

         Aladdin Gaming Holdings, LLC, a Nevada limited liability company 
("Gaming Holdings"), was established on December 1, 1997. Gaming Holdings was 
initially owned by Aladdin Gaming Enterprises, Inc., a Nevada corporation, 
(25%); Sommer Enterprises, LLC, a Nevada limited liability company, (72%); 
and GAI, LLC, a Nevada limited liability company, (3%). On February 26, 1998, 
London Clubs International plc, through its subsidiary London Clubs Nevada, 
Inc. ("LCNI"), contributed $50.0 million for a 25% interest of Gaming 
Holdings common membership interests. Sommer Enterprises, LLC contributed a 
portion of land for common membership interests in Gaming Holdings. Aladdin 
Gaming Enterprises, Inc. ("Gaming Enterprises") contributed a portion of 
land, $7.0 million of predevelopment costs and $15.0 million in cash for 
common membership interests in Gaming Holdings. After the additional 
contributions, Sommer Enterprises, LLC owns 47% of Gaming Holdings, LCNI owns 
25% of Gaming Holdings, Gaming Enterprises owns 25% of Gaming Holdings and 
GAI, LLC owns 3% of Gaming Holdings.

         Aladdin Holdings, LLC, a Delaware limited liability company 
("Holdings"), indirectly holds a majority interest in Gaming Holdings. The 
members of Holdings are the Trust Under Article Sixth u/w/o Sigmund Sommer 
(the "Sommer Trust") which holds a 95% interest in Holdings, and GW Vegas, 
LLC, a Nevada limited liability company ("GW"), a wholly owned subsidiary of 
Trust Company of the West ("TCW") which holds a 5% interest in Holdings.

         Distributions shall be made in accordance with the respective 
ownership interests subject to the Company's operating agreement.

         Gaming Holdings, through its subsidiaries, plans to develop, 
construct and operate a new hotel and casino, the Aladdin Hotel and Casino 
(the "Aladdin"), as the centerpiece of an approximately 35 acre world-class 
resort, casino and entertainment complex in Las Vegas, Nevada. The resort 
will be located at the center of Las Vegas Boulevard. Gaming Holdings, 
through its subsidiaries, also owns 100% of Aladdin Music, LLC ("Aladdin 
Music"). Aladdin Music intends to construct a second hotel and casino with a 
music and entertainment theme ("Aladdin Music Project") on the southeast 
corner of the 35-acre parcel. Aladdin Music is currently seeking a joint 
venture partner for the Aladdin Music Project.

2.       PRINCIPLES OF CONSOLIDATION AND PRESENTATION

         The consolidated financial statements include the accounts of Gaming 
Holdings and its subsidiaries. All significant intercompany accounts and 
transactions are eliminated in consolidation.

         Gaming Holding's wholly owned subsidiaries are Aladdin Capital 
Corp., a Nevada corporation, Aladdin Gaming, LLC, a Nevada limited liability 
company ("Gaming"), Aladdin Music Holdings, LLC, a Nevada limited liability 
company, and Aladdin Music, LLC, a Nevada limited liability company.

         The accompanying unaudited consolidated financial statements contain 
all adjustments which, in the opinion of management, are necessary for a fair 
statement of the results of the interim period. The results of operations for 
the interim periods are not indicative of results of operations for an entire 
year. Certain prior period balances have been reclassified to conform to the 
current period's presentation.

                                       5
<PAGE>

3.       PRE-OPENING COSTS

         Pre-opening costs are expensed in the period during which they are 
incurred. Pre-opening costs include, but are not limited to, salary related 
expenses for new employees and management opening team, travel and lodging 
expenses, training costs, advertising and marketing, organization costs and 
all temporary facilities costs (i.e. rent, insurance, utilities, etc.).

4.       INCOME TAXES

         The Company will file federal information tax returns only. Each 
member reports taxable income or loss on their respective tax returns.

5.       PURCHASE OF RESTRICTED MEMBERSHIP INTERESTS

         Certain members of Gaming Holdings' executive management have 
purchased unvested restricted membership interests, in aggregate, of 4.75% of 
Gaming Holdings. These membership interests will vest 25% on the opening of 
the Aladdin and 25% on each successive annual anniversary. As of September 
30, 1998, none of these membership interests had vested.

6.       PRIVATE OFFERING

         On February 26, 1998, Gaming Holdings, Aladdin Capital Corp. 
("Capital," and together with Gaming Holdings, "Issuers") and Gaming 
Enterprises consummated a private offering ("Offering") under Rule 144A of 
the Securities Act of 1933. The Offering consisted of 221,500 units 
("Units"), each Unit consisting of (i) $1,000 principal amount of maturity of 
13 1/2% Senior Discount Notes due 2010 ("Notes") of Gaming Holdings and 
Capital; and (ii) 10 Warrants ("Warrants") to purchase 10 shares of Class B 
non-voting Common Stock, no par value, of Gaming Enterprises. The Notes and 
the Warrants became separately transferable on July 23, 1998. The Warrants 
became exercisable on July 23, 1998, and will expire on March 1, 2010.

         On August 26, 1998, Gaming Holdings and Capital completed an 
exchange offer for 100% of the $221.5 million aggregate principal amount of 
their 13 1/2% Senior Discount Notes due 2010 ("Notes"), pursuant to a 
registration statement dated July 23, 1998. The Notes were exchanged for 
notes with substantially the same terms issued in a private placement on 
February 26, 1998.

         The initial accreted value of the Notes was $519.40 per $1,000 
principal amount at maturity of the Notes. The Notes will mature on March 1, 
2010. The Notes will accrete at 13 1/2% (computed on a semi-annual bond 
equivalent basis) based on the initial accreted value, calculated from 
February 26, 1998. Cash interest on the Notes will not accrue prior to March 
1, 2003. Thereafter, cash interest on the Notes will accrue at the rate of 13 
1/2% per annum based on the accreted value at maturity of the Notes and will 
be payable semi-annually in arrears on March 1 and September 1 of each year, 
commencing on September 1, 2003.

         The Notes are secured by a first priority pledge of all the issued 
and outstanding Series A Preferred Interests of Aladdin Gaming, LLC held by 
Gaming Holdings. The Indenture to the Notes contains certain covenants that 
(subject to certain exceptions) restrict the ability of the Issuers and 
certain of their subsidiaries to, among other things: (i) make restricted 
payments; (ii) incur additional indebtedness and issue preferred stock; (iii) 
incur liens; (iv) pay dividends or make other distributions; (v) enter into 
mergers or consolidations; (vi) enter into certain transactions with 
affiliates; or (vii) enter into new lines of business.

                                       6
<PAGE>

7.       LONG-TERM DEBT

         On February 26, 1998, Aladdin Gaming, LLC entered into a $410.0 
million Credit Agreement ("Bank Credit Facility" or "Credit Agreement") with 
various financial institutions and the Bank of Nova Scotia as the 
administrative agent for the lenders. The Credit Agreement consists of three 
separate term loans. Term A Loan comprises a term loan of $136.0 million and 
matures seven years after the initial borrowing date. Term B Loan comprises a 
term loan of $114.0 million and matures eight and one-half years after the 
initial borrowing date. Term C Loan comprises a term loan of $160.0 million 
and matures ten years after the borrowing date. The Term B Loan and the Term 
C Loan were funded by the lenders on February 26, 1998 and the funds are held 
by Gaming in the cash collateral account for the future development of the 
Aladdin. The Term B Loan and the Term C Loan proceeds could not be utilized 
until the proceeds from the Notes were completely exhausted. As of September 
30, 1998, 100% of the Notes proceeds, approximately $10.2 million of the Term 
B loan and $8.7 million of the Term C loan had been utilized to develop and 
construct the Aladdin. The Term A loan has not been funded.

         The Company pays interest on the term loans as follows: Term A Loan, 
LIBOR plus 300 basis points until the Aladdin commences operations, then 
LIBOR plus an amount between 150 basis points and 275 basis points depending 
upon the Company's EBITDA results; Term B Loan, LIBOR plus 200 basis points 
while the funds are held in the cash collateral account and LIBOR plus 350 
basis points once the funds are utilized for the construction of the Aladdin; 
and Term C Loan, LIBOR plus 200 basis points while the funds are held in the 
cash collateral account and LIBOR plus 400 basis points once the funds are 
utilized for the construction of the Aladdin. The Company has entered into 
various interest rate swaps to manage interest expense, which is subject to 
fluctuations due to the variable nature of LIBOR. The Company has interest 
rate swap agreements under which it pays a fixed interest rate and receives a 
variable interst rate. The interest rate swaps effectively convert the LIBOR 
into fixed rates of interest as follows: (a) until Aladdin commences 
operation, for the Term A Loan and the Term B Loan LIBOR is fixed at 5.883% 
and for the Term C Loan LIBOR is fixed at 6.485%; and (b) once the Aladdin 
has commenced operations, for the Term A Loan and Term B Loan, the maximum 
LIBOR is 7.00% and the minimum is 5.65%, and for the Term C Loan, the LIBOR 
has been fixed at 6.485%. The rate swaps for the Term A Loan and Term B Loan 
are in place until the respective loan maturity date and for the Term C Loan 
the hedge arrangements are cancelable at the call date of March 2003. No 
principal repayments are required prior to the opening of the Aladdin.

         The Company is exposed to credit loss in the event of nonperformance 
by the other parties to the interest rate swap agreements. However, the 
Company considers the risk of nonperformance by the counterparties to be 
minimal because the parties to the swap are predominantely members of the 
Company's bank group.

                                       7
<PAGE>

         Under the Credit Agreement, $25 million of the contingency funds is 
made available to the Company as a function of the project's percentage of 
construction complete. However, to enhance the quality of the project, the 
Company has committed to changes in the plans and specifications early in the 
project while the percentage of completion is low. In addition, the Company 
revised certain items of the project budget and adjusted the budget 
accordingly, including an increase to pre-opening costs. Thus, because 
financial commitments were made when the contingency funds were not yet 
available to pay for such changes, an out-of-balance of approximately $6.5 
million ("Out-of-Balance") was created. While the Out-of-Balance is due to a 
timing difference that the Company believes will be resolved over time, the 
Credit Agreement nonetheless requires that Gaming fund such Out-of-Balance. 
London Clubs and the Sommer Trust are negotiating to post a letter of credit 
to fund such Out-of-Balance, which would require an amendment to the Credit 
Agreement. Management believes such amendment will be approved by the 
Lenders. As the Out-of-Balance is reduced, the amount of the letter of credit 
would be correspondingly reduced. In addition to amending other technical 
provisions of the Credit Agreement, the amendment would also revise the net 
worth requirement to reflect the accounting treatment requiring certain costs 
to be expensed rather than capitalized. If the Lenders do not approve a 
letter of credit to fund the Out-of-Balance and the other proposed 
amendments, or if Gaming, London Clubs and/or the Sommer Trust do not 
otherwise fund the Out-of-Balance, the Lenders will not disburse funds under 
the Credit Agreement. Any delay in the disbursement of funds under the Credit 
Agreement could result in delays to the project, which would materially and 
adversely impact the Company. 

         On June 30, 1998, the Company entered into FF&E financing which 
provides for operating lease financing of up to $60.0 million and term loan 
facility of $20.0 million to obtain gaming equipment and other specified 
equipment. Funding under the FF&E financing is available beginning six months 
prior to the construction completion date of the Aladdin. Repayment of 
principal and interest is due in quarterly installments upon the construction 
completion date of the Aladdin. The term of the operating lease financing is 
36 months (with the Company having two, one year options to renew) and the 
term of the loan facility is five years. The interest rate from the funding 
date until the construction of the Aladdin is completed is either 30-day 
LIBOR plus 478 basis points or Prime Rate plus 275 basis points. After the 
construction completion date, the interest rate shall be the 90-day LIBOR 
plus 478 basis points.

         The amendments to the Credit Agreement discussed above are also 
required for the Company's FF&E financing.

8.       RESTRICTED LAND

         Approximately 12.4 acres of land was deeded to Aladdin Gaming, LLC 
on February 26, 1998, with an obligation to transfer such land to Aladdin 
Bazaar, LLC at a future date. Aladdin Bazaar, LLC intends to construct and 
operate a themed entertainment shopping mall and a 4,800-space car parking 
facility (the "Mall Project"). The Mall Project is expected to be an integral 
part of the Aladdin entertainment complex.

9.       IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

         In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive 
Income." SFAS No. 130 requires companies to classify items of other 
comprehensive income by their nature in a financial statement and display the 
accumulated balance of other comprehensive income separately from retained 
earnings and additional paid-in capital in the equity sections of a statement 
of financial position, and is

                                       8
<PAGE>

effective for financial statements issued for fiscal years beginning after 
December 15, 1997. The Company has adopted SFAS No. 130, during the 
three-month period ended March 31,1998 and has determined that such adoption 
will not result in comprehensive income different from net income as reported 
in the accompanying financial statements.

         In June 1997, the FASB issued SFAS No. 131, "Disclosure about 
Segments of an Enterprise and Related Information." SFAS No. 131 establishes 
additional standards for segment reporting in financial statements and is 
effective for fiscal years beginning after December 15, 1997. The Company 
currently operates as one segment.



















                                       9
<PAGE>


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

         The following discussion should be read in conjunction with, and is 
qualified in its entirety by, the various other reports which have been 
previously filed with the United States Securities and Exchange Commission 
("SEC"), which may be inspected, without charge, at the Public Reference 
Section of the SEC located at 450 Fifth Street, NW, Washington, D.C. 20549 or 
at the SEC internet site address, http://www.sec.gov.

DEVELOPMENT ACTIVITIES

         Aladdin Gaming Holdings, LLC, a Nevada limited liability company 
("Gaming Holdings"), was established on December 1, 1997. Gaming Holdings was 
initially owned by Aladdin Gaming Enterprises, Inc., a Nevada corporation 
(25%), Sommer Enterprises, LLC, a Nevada limited liability company (72%), and 
GAI, LLC, a Nevada limited liability company (3%). On February 26, 1998, 
London Clubs International plc ("London Clubs"), through its subsidiary 
London Clubs Nevada, Inc. ("LCNI"), contributed $50.0 million for a 25% 
interest of Gaming Holdings common membership interests. Sommer Enterprises, 
LLC contributed a portion of land for common membership interests in Gaming 
Holdings. Aladdin Gaming Enterprises, Inc. ("Gaming Enterprises") contributed 
a portion of land, $7.0 million of predevelopment costs and $15.0 million in 
cash for common membership interests in Gaming Holdings. After the additional 
contributions, Sommer Enterprises, LLC owns 47% of Gaming Holdings, LCNI owns 
25% of Gaming Holdings, Gaming Enterprises owns 25% of Gaming Holdings and 
GAI, LLC owns 3% of Gaming Holdings.

         Aladdin Holdings, LLC, a Delaware limited liability company 
("Holdings"), indirectly holds a majority interest in Gaming Holdings. The 
members of Holdings are the Trust Under Article Sixth u/w/o Sigmund Sommer 
("Sommer Trust") which holds a 95% interest in Holdings, and GW Vegas, LLC, a 
Nevada limited liability company ("GW"), a wholly owned subsidiary of Trust 
Company of the West ("TCW") which holds a 5% interest in Holdings.

         Gaming Holdings is a holding company, the material assets of which 
are 100% of the outstanding common membership interests and 100% of the 
outstanding Series A preferred interests of Aladdin Gaming, LLC ("Gaming"). 
Aladdin Capital Corp. ("Capital") is a wholly owned subsidiary of Gaming 
Holdings and was incorporated solely for the purpose of serving as a 
co-issuer of the 13 1/2% Senior Discount Notes ("Notes"). Capital will not 
have any material operations or assets and will not have any revenues. Gaming 
Holdings, through its subsidiaries, also owns 100% of Aladdin Music, LLC 
("Aladdin Music").

         The operations of Gaming Holdings and its subsidiaries, collectively 
known as "the Company," have been primarily limited to the design, development, 
financing and construction of a new hotel and casino ("Aladdin"). The Aladdin 
will be the centerpiece of an approximately 35 acre world-class resort, 
casino and entertainment complex ("Complex") located on the site of the 
former Aladdin hotel and casino in Las Vegas, Nevada, a premier location at 
the center of the Las Vegas Boulevard ("Strip"). The Aladdin has been 
designed to include a luxury themed hotel of approximately 2,600 rooms, an 
approximately 116,000 square foot casino, an approximately 1,400-seat 
production showroom and seven restaurants. The casino's main gaming area will 
contain approximately 2,800 slot machines, 87 table games, keno and a race 
and sports book facility. Included on a separate level of the casino will be 
a 15,000 square foot luxurious gaming section that is expected to contain an 
additional 20 to 30 high denomination table games and approximately 100 high 
denomination slot machines. The Complex, which has been designed to promote 
casino traffic and to provide customers with a wide variety of entertainment 
alternatives, will comprise: (i) the Aladdin; (ii) the themed entertainment 
shopping mall with approximately 522,000 square feet of retail space ("Desert 
Passage"); (iii) a second hotel and casino with a music and entertainment 
theme ("Aladdin Music Project"); (iv) the newly renovated 7,000-seat Theater 
of the

                                       10
<PAGE>


Performing Arts ("Theater"); and (v) the approximately 4,800-space car 
parking facility ("Carpark" and, together with the Desert Passage, 
hereinafter, "Mall Project"). The Mall Project will be separately owned by an 
affiliate of the Company and Aladdin Music is currently seeking a joint 
venture partner for the Aladdin Music Project. The grand opening date for the 
Aladdin and the Mall Project is currently anticipated to occur during the 
spring of the year 2000, with the opening of the Aladdin Music Project 
expected to occur within six months after the opening of the Aladdin assuming 
project financing and a joint venture partner are secured by the end of the 
first quarter 1999.

RESULTS OF OPERATIONS

         The Company is in the development stage and has no significant 
operations to date. The Company has capitalized all qualifying construction 
costs except for a portion of the interest expense incurred during the 
period. Accordingly, the Company does not have any historical operating 
income. The capitalized costs consist primarily of land contributed by 
certain members of Gaming Holdings, design fees, financing and commitment 
fees, construction costs and interest on qualifying assets. Capitalized costs 
include approximately $1.7 million related to Aladdin Music for design and 
architectural fees. The Company's operating expenses primarily have consisted 
of interest, amortization costs and expenses related to the Notes and 
pre-opening costs.

         The Company anticipates that its results of operations from 
inception to the grand opening of the Aladdin will be adversely affected by 
the expensing of pre-opening costs and interest not qualifying for 
capitalization and should not be indicative of future operations. 
Accordingly, historical results will not be indicative of future operating 
results. Future operating results of the Company are subject to significant 
business, economic, regulatory and competitive uncertainties and 
contingencies, many of which are beyond the Company's control. While the 
Company believes that the Aladdin will be able to attract a sufficient number 
of patrons and achieve the level of activity necessary to permit the Company 
to meet its payment obligations, including the Notes and other indebtedness, 
there can be no assurance with respect thereto.

         The Company recorded a net loss of approximately $11.2 million for 
the three months ended September 30, 1998 and approximately $32.9 million for 
the nine months ended September 30, 1998. The loss was due to pre-opening 
costs, interest expense amortization costs and expenses related to the Notes. 
The pre-opening costs include approximately $.7 million related to Aladdin 
Music.

MATERIAL CHANGES IN FINANCIAL CONDITION

         Through September 30, 1998, approximately $181.5 million had been 
expended primarily on the development of the Aladdin, of which approximately 
$74.5 million had been expended on repayment of debt associated with the land 
contributed to the Company, approximately $53.2 million in construction, 
furniture, fixtures and equipment, and capitalized interest, approximately 
$39.5 million in debt issuance and member equity costs, and approximately 
$14.3 million in pre-opening costs, net interest expense, and other current 
assets.

LIQUIDITY AND CAPITAL RESOURCES

         On August 26, 1998, Gaming Holdings and Capital completed an 
exchange offer for 100% of the $221.5 million aggregate principal amount of 
their 13 1/2% Senior Discount Notes due 2010 ("Notes"), pursuant to a 
registration statement dated July 23, 1998. The Notes were exchanged for 
notes with substantially the same terms issued in a private placement on 
February 26, 1998. For further details on the Notes, please refer to "Note 
6-Private Offering" of the Notes to Consolidated Financial Statements.

         Gaming has a $410.0 million Credit Agreement ("Bank Credit Facility" 
or "Credit Agreement") with various financial institutions and the Bank of 
Nova Scotia as the administrative agent for the lenders. The Credit Agreement 
consists of three separate term loans. Term A Loan comprises a term loan of

                                       11
<PAGE>


$136.0 million and matures seven years after the initial borrowing date. 
Term B Loan comprises a term loan of $114.0 million and matures eight and 
one-half years after the initial borrowing date. Term C Loan comprises a term 
loan of $160.0 million and matures ten years after the borrowing date. As of 
September 30, 1998, approximately $10.2 million of the Term B Loan and 
approximately $8.7 million of the Term C Loan had been utilized to develop 
and construct the Aladdin. The Term A loan has not been funded. For further 
details on the Bank Credit Facility, please refer to "Note 7-Long Term Debt" 
of the Notes to Consolidated Financial Statements.

         The Company has operating lease financing of up to $60.0 million and 
term loan facility of $20.0 million to obtain gaming equipment and other 
specified equipment. For further details on the operating lease financing and 
term loan facility, please refer to "Note 7-Long Term Debt" of the Notes to 
Consolidated Financial Statements.

         London Clubs, the Sommer Trust, and Aladdin Bazaar Holdings, LLC 
("Bazaar Holdings"), a subsidiary of the Sommer Trust, have entered into a 
completion guaranty ("Bank Completion Guaranty") for the benefit of the 
lenders under the Bank Credit Facility, under which they have agreed to 
guarantee, among other things, the completion of the Aladdin. The Bank 
Completion Guaranty is not subject to any maximum dollar limitations. The 
holders of the Notes are not party to the Bank Completion Guaranty, however, 
London Clubs, the Sommer Trust and Bazaar Holdings have entered into a 
limited completion guarantee for the benefit of the Noteholders ("Noteholder 
Completion Guaranty"), under which they guarantee completion of the Aladdin, 
subject to certain important exceptions, limitations and qualifications. The 
Noteholder Completion Guaranty contains certain intercreditor provisions 
which significantly limit the rights of the Trustee under the Noteholder 
Completion Guaranty.

         London Clubs, Holdings and Bazaar Holdings have entered into the 
Keep-Well Agreement for the benefit of the lenders under the Bank Credit 
Facility. Pursuant to the Keep-Well Agreement, London Clubs, Holdings and 
Bazaar Holdings have agreed to contribute funds to the Company to ensure the 
Company's compliance with certain financial ratios and other requirements 
under the Bank Credit Facility for the period up to the earlier of the date 
on which the Company complies with all the financial covenants set forth in 
the Bank Credit Facility for six consecutive quarterly periods from and after 
the Conversion Date or the date on which the aggregate outstanding principal 
amounts of the Bank Credit Facility are reduced below certain amounts and 
prior to certain dates, subject to certain conditions.

         In connection with the development of the Mall Project, Aladdin 
Bazaar, LLC, will only reimburse the Company approximately $14.2 million for 
the construction of certain areas shared by the Aladdin and the Mall Project 
and the facade to the Aladdin. Additionally, Aladdin Bazaar, LLC is obligated 
to spend no more than $36.0 million for the Carpark. Therefore, any cost 
overruns associated with these items will be borne by the Company. In 
addition, the Company is obligated to pay to Aladdin Bazaar, LLC (i) a $3.2 
million fee per year for a term of 99 years, which is adjusted annually 
pursuant to a consumer price index-based formula, for usage of the Carpark; 
and (ii) the Company's proportionate share of the operating costs associated 
therewith.

         The funds provided by the Notes, Credit Agreement and owner 
contributions (collectively, "Funding Transactions") are expected to be 
sufficient to develop, complete and commence operations of the Aladdin, 
assuming no delays or construction cost overruns, which are (i) not covered by 
the $31.8 million contingency or (ii) Fluor Corporation and/or its subsidiary 
Fluor Daniel, are not responsible for pursuant to the Fluor Guaranty and the 
Design/Build Contract, respectively. As of September 30, 1998, 
the Company has utilized approximately $5.3 million of the contingency. 
Subject to the discussion below regarding the Credit Agreement, it is not 
expected that additional external funding will need to be obtained in order 
to develop and commence the operations of the Aladdin. However, there can be 
no assurance that such funds will be sufficient for the development, 
construction and commencement of the Aladdin.

         Following the commencement of operations of the Aladdin, the Company 
expects to fund its operating, debt service and capital needs, as currently 
contemplated, with $15.0 million of working capital from the funding 
transactions and operating cash flows. In addition, upon the opening of the

                                       12
<PAGE>


Aladdin, the Company is expected to have an aggregate of $10.0 million 
available under a working capital facility. Although no additional financing 
is contemplated, the Company will seek, if necessary and to the extent 
permitted under the Notes Indenture and the terms of the Bank Credit 
Facility, additional financing through additional bank borrowings or debt or 
equity financings. There can be no assurance that additional financing, if 
needed, will be available to the Company, or that, if available, the 
financing will be on terms favorable to the Company. There can also be no 
assurance that estimates by the Company of its reasonably anticipated 
liquidity needs are accurate or that new business developments or other 
unforeseen events will not occur, resulting in the need to raise additional 
funds.

RECENT DEVELOPMENTS

         On November 11, 1998, the Company and Fluor Daniel, Inc. ("Fluor") 
entered into a letter of understanding ("Letter") whereby the parties agreed 
to negotiate the definitive terms of an amendment to the Design/Build 
Contract ("Contract") (which Contract is subject to price adjustments if the 
plans and specifications are changed) for the construction of the Aladdin. 
The Letter provides that such amendment would (i) convert the Contract from a 
$267 million guaranteed maximum price contract to a $265.29 million 
substantially lump sum price contract; (ii) increase Fluor's responsibilities 
for the project's scope within the lump sum amount and eliminate existing 
delay claims, estimated to be approximately $11 million in total; (iii) 
reaffirm the April 27, 2000 project completion date; (iv) permit Fluor to 
retain the previously paid $2 million advance bonus; (v) increase from 60% to 
100% the amount of the Contract savings to which Fluor would be entitled; 
(vi) reduce from $9 million to $3 million the maximum amount Fluor would pay 
as liquidated damages for late completion (due to delays caused by Fluor); 
and (vii) amend other technical provisions/matters of the Contract and the 
project. Any amendment to the Contract requires the approval of the Company's 
Lenders under the Bank Credit Facility, which approval has not yet been 
obtained. While the parties have agreed to negotiate definitive terms of the 
Contract amendment as expeditiously as possible, there can be no assurance 
that: (i) the Company and Fluor will enter into a definitive Contract 
amendment; (ii) the definitive Contract amendment will not differ materially 
from the Letter; and (iii) the Company's Lenders will approve the definitive 
Contract amendment. While Management believes that the changes to the 
Contract contemplated by the Letter will increase the likelihood that the 
project will be completed on time and within the budget, in the event a 
definitive Contract amendment is not reached or, if reached, differs 
materially from the Letter, Management believes that the project could still 
be completed on time and within the budget.

         Under the Credit Agreement, $25 million of the contingency funds is 
made available to the Company as a function of the project's percentage of 
construction complete. However, to enhance the quality of the project, the 
Company has committed to changes in the plans and specifications early in the 
project while the percentage of completion is low. In addition, the Company 
revised certain items of the project budget and adjusted the budget 
accordingly, including an increase to pre-opening costs. Thus, because 
financial commitments were made when the contingency funds were not yet 
available to pay for such changes, an out-of-balance of approximately $6.5 
million ("Out-of-Balance") was created. While the Out-of-Balance is due to a 
timing difference that the Company believes will be resolved over time, the 
Credit Agreement nonetheless requires that Gaming fund such Out-of-Balance. 
London Clubs and the Sommer Trust are negotiating to post a letter of credit 
to fund such Out-of-Balance, which would require an amendment to the Credit 
Agreement. Management believes such amendment will be approved by the 
Lenders. As the Out-of-Balance is reduced, the amount of the letter of credit 
would be correspondingly reduced. In addition to amending other technical 
provisions of the Credit Agreement, the amendment would also revise the net 
worth requirement to reflect the accounting treatment requiring certain costs 
to be expensed rather than capitalized. Management believes that the 
Out-of-Balance is a short-term timing issue and that as the percentage of 
construction complete is increased, the available contingency funds will 
exceed the amount of funds needed, thereby assuring that the project in total 
has sufficient funds for its completion. However, there can be no assurances 
that the Out-of-Balance will be reduced, that it will not increase as the 
project continues, or that there will be sufficient funds to complete the 
project. If the Lenders do not approve a

                                       13
<PAGE>


letter of credit to fund the Out-of-Balance and the other proposed 
amendments, or if Gaming, London Clubs, and/or the Sommer Trust do not 
otherwise fund the Out-of-Balance, the Lenders will not disburse funds under 
the Credit Agreement.  Any delay in the disbursement of funds under the 
Credit Agreement could result in delays to the project, which would 
materially and adversely impact the Company. While Management believes such 
amendments will be approved and the Out-of-Balance will be funded, and there 
will be no delays to the project due to the Out-of-Balance, there can be no 
assurances.

         The amendments to the Credit Agreement discussed above are also 
required for the Company's operating lease financing and equipment term loan. 
While Management believes such amendment will be approved by this lender, 
there can be no assurances.

YEAR 2000

         The Company and its subsidiaries are development stage companies 
that are developing, constructing, and upon completion (currently anticipated 
to occur in the spring of the year 2000), will operate a hotel casino. The 
selection of software applications, hardware and other technology currently 
in use principally occurred within the last twelve months. The only computer 
systems in place at the current time are several financial applications, word 
processing and an internal e-mail system that are Year 2000 compliant. 
Accordingly, it is not expected that the Company will incur significant 
amounts, if any, to modify its systems for Year 2000 compliance.

         The Company has requested representations regarding Year 2000 
compliance from Fluor Corporation and/or its subsidiary Fluor Daniel, the 
design/builder for the Aladdin (the "Design/Builder"), and through 
Design/Builder will seek similar representations of the other contractors and 
subcontractors for the construction of the Aladdin (collectively, the 
"Contractors") to assess the impact of Year 2000 noncompliance on the 
construction of the Aladdin. Construction delays will have a significant 
impact on the financial results of the Company. There can be no assurance 
that the systems of the Contractors or other companies on which the Company 
may rely, such as vendors, will be properly converted before the Year 2000 
and that failure to convert by another company will not have an adverse 
effect on the Company's operations.

START-UP ACTIVITIES

         In April 1998, the Accounting Standards Executive Committee of the 
American Institute of Certified Public Accountants issued Statement of 
Position No. 98-5 REPORTING ON THE COSTS OF START-UP ACTIVITIES ("SOP 98-5"). 
The provisions of SOP 98-5 are effective for fiscal years beginning after 
December 15, 1998 and require that the costs associated with start-up 
activities (including pre-opening costs of casinos) be expensed as incurred. 
SOP 98-5 permits early adoption in fiscal years for which annual financial 
statements have not yet been issued.

         Effective January 1, 1998 the Company has adopted the provisions of 
SOP 98-5.

CERTAIN FORWARD LOOKING STATEMENTS

         Certain information included in this Form 10-Q and other materials 
filed or to be filed by the Company with the Securities and Exchange 
Commission (as well as information included in oral statements or other 
written statements made or to be made by the Company) contains statements 
that are forward-looking within the meaning of Section 27A of the Securities 
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 
1934, as amended. Such statements include those relating to the Design/Build 
Contract, the Credit Agreement and other agreements, plans for future 
operations, construction and development, other business development 
activities, capital spending, financing sources, the effect of regulation 
(including gaming and tax regulations) and competition. Such forward-looking 
information involves important risks and uncertainties that could 
significantly affect anticipated results in the future and, accordingly, such 
results may differ from those expressed in any forward-looking

                                       14
<PAGE>


statements made by or on behalf of the Company. These risks and uncertainties 
include, but are not limited to, those relating to whether various parties 
can reach agreement on amendments to and concerning the Design/Build 
Contract, the Credit Agreement and other agreements, development and 
construction activities, dependence on existing management, leverage and debt 
service (including sensitivity to fluctuations in interest rates), domestic 
or international economic conditions (including sensitivity to fluctuations 
in foreign currencies), changes in federal or state tax laws or the 
administration of such laws, changes in gaming laws or regulations (including 
the legalization of gaming in certain jurisdictions) and application for 
licenses and approvals under applicable jurisdictional laws and regulations 
(including gaming laws and regulations).

ITEM 3.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         As of September 30, 1998, the Company did not hold any investments 
in market risk sensitive instruments.

















                                       15
<PAGE>


PART II           Other Information

ITEM 1.           LEGAL PROCEEDINGS

         Not Applicable

ITEM 2.           CHANGES IN SECURITIES AND USE OF PROCEEDS

         Not applicable

ITEM 3.           DEFAULTS UPON SENIOR SECURITIES

         Not Applicable

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

         Not Applicable

ITEM 5.           OTHER INFORMATION

         Not Applicable

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K

         (a)       Exhibits

                   27    Financial Data Schedule.

         (b)       Reports on Form 8-K

                   The Company filed a Form 8-K with the Securities and 
                   Exchange Commission on or about September 17, 1998, 
                   disclosing that the Company had not yet concluded 
                   negotiations on a joint venture with Planet Hollywood 
                   International, Inc. and that the Company intends to pursue 
                   additional prospective joint venture partners for the 
                   development, construction and opening of a proposed hotel 
                   and casino with a music and entertainment theme.

                                       16
<PAGE>




                                                    SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.

                                        ALADDIN GAMING HOLDINGS, LLC

November 16, 1998                       By:   /s/ Richard J. Goeglein
                                        ----------------------------------
                                        Richard J. Goeglein, President and 
                                        Chief Executive Officer

November 16, 1998                       By:   /s/ Cornelius T. Klerk
                                        ----------------------------------
                                        Cornelius T. Klerk, 
                                        Senior Vice President and
                                        Chief Financial Officer

                                        ALADDIN CAPITAL CORP.

November 16, 1998                       By:   /s/ Richard J. Goeglein
                                        ----------------------------------
                                        Richard J. Goeglein, 
                                        Chief Executive Officer

November 16, 1998                       By:   /s/ Cornelius T. Klerk
                                        -----------------------------------
                                        Cornelius T. Klerk, 
                                        Senior Vice President and 
                                        Chief Financial Officer

                                       17

<PAGE>



                                        EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO.      DESCRIPTION
----------       -----------
<S>              <C>
27               Financial Data Schedule
</TABLE>
                                      18