<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

      For the quarterly period ended:               June 30, 2000
                                       ----------------------------------------

                                      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 of           (I.R.S. Employer Identification No.)
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 of           (I.R.S. Employer Identification No.)
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.


                     ALADDIN GAMING HOLDINGS, LLC

                           Not applicable

                     ALADDIN CAPITAL CORPORATION

    2,500 shares of common stock, no par value as of June 30, 2000.

<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
                      June 30, 2000 and December 31, 1999...............................................1

                    Consolidated Statements of Operations for the three and six
                      months ended June 30, 2000 and 1999 and for the period
                      from inception (December 1, 1997) through June 30, 2000...........................2

                    Consolidated Statements of Members' Equity
                      For the period from inception (December 1, 1997) through June 30, 2000............3

                    Consolidated Statements of Cash Flows for the six months
                      ended June 30, 2000 and 1999 and for the period from
                      inception (December 1, 1997) through June 30, 2000................................6

                    Notes to the Consolidated Financial Statements......................................8

   Item 2.          Management's Discussion and Analysis of Financial Condition and
                      Results of Operations.............................................................11

   Item 3.          Quantitative and Qualitative Disclosures About Market Risk..........................17

PART II             OTHER INFORMATION

   Item 6.          Exhibits and Reports on Form 8-K....................................................18

Signatures          ....................................................................................19

Exhibit Index       ....................................................................................20
</TABLE>

<PAGE>

PART I           FINANCIAL INFORMATION
Item 1.          Financial Statements


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

                                            CONSOLIDATED BALANCE SHEETS
                                     AS OF JUNE 30, 2000 AND DECEMBER 31, 1999
                                                  (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                          JUNE 30, 2000      DECEMBER 31, 1999
                                                                          -------------      -----------------
                                                                           (unaudited)
<S>                                                                         <C>                 <C>
                             ASSETS
Current assets:
       Cash                                                                 $   9,518            $   1,669
       Restricted land                                                          6,842                6,842
       Other current assets                                                     2,667                  610
                                                                          -----------         ------------
              Total current assets                                             19,027                9,121
                                                                          -----------         ------------
Property and equipment:
       Land                                                                    33,407               33,407
       Furniture and equipment                                                  1,373                  950
       Construction in progress                                               459,555              274,398
       Capitalized interest                                                    65,810               37,758
                                                                          -----------         ------------
                                                                              560,145              346,513
       Less accumulated depreciation                                             (354)               (176)
                                                                          -----------         ------------
                                                                              559,791              346,337
Other assets
       Restricted cash                                                          2,566               80,471
       Other assets                                                             2,217                2,067
       Debt issuance costs, net of accumulated amortization of
       $8,357 and $6,442, respectively                                         28,789               30,704
                                                                          -----------         ------------
              Total other assets                                               33,572              113,242
                                                                          -----------         ------------
                                                                            $ 612,390           $  468,700
                                                                          ===========         ============

                LIABILITIES AND MEMBERS' EQUITY

Current liabilities:
       Accounts payable                                                     $   1,840           $    2,752
       Construction payable                                                    44,137               12,193
       Obligation to transfer land                                              6,842                6,842
       Accrued expenses                                                         5,828                4,251
       Current maturities of long-term debt                                     4,700                4,700
              Total current liabilities                                   -----------         ------------
                                                                               63,347               30,738
                                                                          -----------         ------------

Long-term debt, net of discount                                               445,505              403,393

Related party payables and other liabilities                                    9,314                7,333

Members' equity:
       Preferred membership interest                                          136,305               75,044
       Common membership interest                                              58,608               28,608
       Deficit accumulated during the development stage                      (100,689)             (76,416)
                                                                          -----------         -------------
              Total members' equity                                            94,224               27,236
                                                                          -----------         -------------
                                                                             $612,390           $  468,700
                                                                          ===========         =============
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                                1

<PAGE>

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

                               CONSOLIDATED STATEMENTS OF OPERATIONS
                      FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999
                                 AND FOR THE PERIOD FROM INCEPTION
                            (DECEMBER 1, 1997) THROUGH JUNE 30, 2000
                                         (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                          For the three       For the three          For the six
                                                           months ended        months ended         months ended
                                                          June 30, 2000       June 30, 1999        June 30, 2000
                                                            (unaudited)         (unaudited)          (unaudited)
                                                         --------------      --------------        -------------
<S>                                                         <C>                  <C>                <C>
Pre-opening costs                                           $ 8,118              $ 2,544            $ 12,419

Other (income) expense:
       Interest income                                         (346)              (2,345)             (1,384)
       Interest expense                                      15,386               12,706              29,390
       Less:  Interest capitalized                          (15,386)              (6,220)            (28,052)
                                                           --------             --------            --------
              Total other (income) expense                     (346)               4,141                 (46)
                                                           --------             --------            --------

Net loss accumulated during the development stage
                                                            $ 7,772              $ 6,685            $ 12,373
                                                           ========             ========            =========
</TABLE>

<TABLE>
<CAPTION>
                                                                              For the period
                                                                                 December 1,
                                                                                        1997
                                                           For the six           (inception)
                                                          months ended               through
                                                         June 30, 1999         June 30, 2000
                                                           (unaudited)           (unaudited)
                                                        --------------       --------------
<S>                                                         <C>                  <C>
Pre-opening costs                                           $ 4,841              $48,891

Other (income) expense:
       Interest income                                       (4,893)             (22,136)
       Interest expense                                      25,597              120,008
       Less:  Interest capitalized                          (10,984)             (65,810)
                                                           --------             --------
              Total other (income) expense                    9,720               32,062
                                                           --------             --------

Net loss accumulated during the development stage
                                                            $14,561              $80,953
                                                          =========             ========
</TABLE>


                                               2




The accompanying notes are an integral part of these financial statements.

<PAGE>

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

                            CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY
                         FOR THE PERIOD FROM INCEPTION (DECEMBER 1, 1997)
                                       THROUGH JUNE 30, 2000
                                         (IN THOUSANDS)
                                           (UNAUDITED)
<TABLE>
<CAPTION>
                                    Sommer Enterprises, LLC                  Aladdin Gaming Enterprises, LLC
                          -------------------------------------------- -------------------------------------------
                                                               Deficit                                    Deficit
                                                           Accumulated                                Accumulated
                                Common       Preferred      During the       Common      Preferred     During the
                            Membership      Membership     Development   Membership     Membership    Development
                              Interest        Interest           Stage     Interest       Interest          Stage
                          --------------- -------------- -------------- ------------- -------------- -------------
<S>                       <C>             <C>             <C>           <C>           <C>             <C>
Balance, December 1, 1997 $          -    $          -    $          -  $         -   $          -    $         -
                          ------------    ------------   -------------  -----------   ------------   ------------
Member Contributions                 1               -               -            -              -              -
                          ------------    ------------   -------------  -----------   ------------   ------------
Balance, December 31,
1997                                 1               -               -            -              -              -
                          ------------    ------------   -------------  -----------   ------------   ------------
Net loss for the period              -               -         (19,960)           -              -        (10,617)
Member Contributions           (47,317)              -               -       28,247              -              -
Members' equity costs           (1,093)              -               -         (581)             -              -
                          ------------    ------------   -------------  -----------   ------------   ------------
Balance, December 31,
1998                           (48,409)              -         (19,960)      27,666                       (10,617)
                          ------------    ------------   -------------  -----------   ------------   ------------
Net loss for the period              -               -         (12,273)           -              -         (6,528)
Member Contributions                 -          34,613               -            -              -              -
Restatement of Preferred
    Interests                        -         (30,280)              -            -              -              -
Preferred Return                     -           1,944          (2,637)           -              -         (1,402)
Restatement of Preferred
    Return                           -          (1,069)         (1,046)           -              -           (557)
                          ------------    ------------   -------------  -----------   ------------   ------------
Balance, December 31,
1999                           (48,409)          5,208         (35,916)      27,666              -        (19,104)
                          ------------    ------------   -------------  -----------   ------------   ------------
Net Loss for the Period              -              -           (2,162)           -              -         (1,150)
Member Contribution                  -              -                -            -              -              -
Preferred Return                     -            363           (2,315)           -              -         (1,232)
                          ------------    ------------   -------------  -----------   ------------   ------------
Balance, March 31, 2000        (48,409)         5,571          (40,393)      27,666              -        (21,486)
                          ------------    ------------   -------------  -----------   ------------   ------------
Net Loss for the Period              -              -           (2,836)           -              -         (1,943)
Conversion of Series C
    Preferred                        -              -                -            -              -              -
Member Contribution                  -              -                -            -              -              -
Preferred Return                     -            415           (2,626)           -              -         (1,743)
                          ------------    ------------   -------------  -----------   ------------   ------------
Balance, June 30, 2000    $    (48,409)   $     5,986    $     (45,855) $    27,666   $          -   $    (25,172)
                          ------------    ------------   -------------  -----------   ------------   ------------
</TABLE>

                                                                   3

<PAGE>

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

                      CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY
        FOR THE PERIOD FROM INCEPTION (DECEMBER 1, 1997) THROUGH JUNE 30, 2000
                                   (IN THOUSANDS)
                               (unaudited) (continued)
<TABLE>
<CAPTION>
                                   London Clubs Nevada, Inc.                           GAI, LLC
                          -------------------------------------------- -------------------------------------------
                                                               Deficit                                    Deficit
                                                           Accumulated                                Accumulated
                                Common       Preferred      During the       Common      Preferred     During the
                            Membership      Membership     Development   Membership     Membership    Development
                              Interest        Interest           Stage     Interest       Interest          Stage
                          --------------- -------------- -------------- ------------- -------------- -------------
<S>                       <C>             <C>             <C>           <C>           <C>            <C>
Balance, December 1, 1997 $          -    $          -    $          -  $         -   $          -   $          -
                          ------------    ------------   -------------  -----------   ------------   ------------
Member Contributions                 -               -               -            2              -              -
                          ------------    ------------   -------------  -----------   ------------   ------------
Balance, December 31,
1997                                 -               -               -            2              -              -
                          ------------    ------------   -------------  -----------   ------------   ------------
Net loss for the period              -               -         (10,617)           -              -         (1,274)
Member Contributions            50,000               -               -            -              -              -
Members' equity costs             (581)              -               -          (70)             -              -
                          ------------    ------------   -------------  -----------   ------------   ------------
Balance, December 31,
1998                            49,419               -         (10,617)         (68)             -         (1,274)
                          ------------    ------------   -------------  -----------   ------------   ------------
Net loss for the period              -               -          (6,528)           -              -           (783)
Member Contributions                 -          32,595               -            -              -              -
Restatement of Preferred
    Interests                        -          30,280               -            -              -              -
Preferred Return                     -           3,665          (1,402)           -              -           (168)
Restatement of Preferred
    Return                           -           3,296            (557)           -              -            (67)
                          ------------    ------------   -------------  -----------   ------------   ------------
Balance, December 31,
1999                            49,419          69,836         (19,104)         (68)             -         (2,292)
                          ------------    ------------   -------------  -----------   ------------   ------------
Net Loss for the Period              -               -          (1,150)           -              -           (139)
Member Contribution                  -          20,614               -            -              -              -
Preferred Return                     -           4,563          (1,232)           -              -           (147)
                          ------------    ------------   -------------  -----------   ------------   ------------
Balance, March 31, 2000         49,419          95,013         (21,486)         (68)             -         (2,578)
                          ------------    ------------   -------------  -----------   ------------   ------------
Net Loss for the Period              -               -          (2,760)           -              -           (233)
Member Contribution                  -          58,747               -            -              -              -
Conversion of Series C
    Preferred                   30,000         (30,000)              -            -              -              -
Preferred Return                     -           6,559          (2,396)           -              -           (209)
                          ------------    ------------   -------------  -----------   ------------   ------------
Balance, June 30, 2000    $     79,419    $    130,319   $     (26,642) $       (68)  $          -   $     (3,020)
                          ------------    ------------   -------------  -----------   ------------   ------------
</TABLE>

                                                              4

<PAGE>

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

                                  CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY
                               FOR THE PERIOD FROM INCEPTION (DECEMBER 1, 1997)
                                             THROUGH JUNE 30, 2000
                                                (IN THOUSANDS)
                                            (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>

                                                             TOTAL
                                     ------------------------------------------------------------
                                            Common           Preferred    Deficit Accumulated
                                        Membership          Membership            During the
                                          Interest            Interest    Development  Stage
                                     -------------       -------------    --------------------
<S>                                  <C>                  <C>                 <C>
Balance, December 1, 1997            $           -        $          -        $           -
                                     -------------       -------------         ------------
Member Contributions                             3                   -                    -
                                     -------------       -------------         ------------
Balance, December 31, 1997                       3                   -                    -
                                     -------------       -------------         ------------
Net loss for the period                          -                   -              (42,468)
Member Contributions                        30,930                   -                    -
Members' equity costs                       (2,325)                  -                    -
                                     -------------       -------------         ------------
Balance, December 31, 1998                  28,608                   -              (42,468)
Net loss for the period                          -                   -              (26,112)
Member Contributions                             -              67,208                    -
Restatement of Preferred Interests
                                                 -                   -                    -
Preferred Return                                 -               5,609               (5,609)
Restatement of Preferred Return                  -               2,227               (2,227)
                                     -------------       -------------        -------------
Balance, December 31, 1999                  28,608              75,044              (76,416)
                                     -------------       -------------        -------------
Net Loss for the Period                          -                   -               (4,601)
Member Contribution                              -              20,614                    -
Preferred Return                                 -               4,926               (4,926)
                                     -------------       -------------        -------------
Balance, March 31, 2000                     28,608             100,584              (85,943)
                                     -------------       -------------        -------------
Net Loss for the Period                          -                   -               (7,772)
Member Contribution                              -              58,747                    -
Conversion of Series C Preferred
                                            30,000             (30,000)                   -
Preferred Return                                 -               6,974               (6,974)
                                     -------------       -------------        -------------
Balance, June 30, 2000               $      58,608       $     136,305        $    (100,689)
                                     -------------       -------------        -------------
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                                        5

<PAGE>

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

                        CONSOLIDATED STATEMENTS OF CASH FLOWS
        FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999 AND FOR THE PERIOD FROM
                 INCEPTION (DECEMBER 1, 1997) THROUGH JUNE 30, 2000
                                  (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                                    For the period
                                                                                                   December 1, 1997
                                                    For the six              For the six              (inception)
                                                    months ended             Months ended          through June 30,
                                                   June 30, 2000            June 30, 1999                2000
                                                    (unaudited)              (unaudited)              (unaudited)
                                                 -------------------    ----------------------    --------------------
<S>                                                 <C>                       <C>                    <C>
Cash used in operating activities                   $    1,257               $   (2,937)             $   (15,767)
                                                  ------------             ------------             ------------

Cash flows from investing activities:
     Payments for construction in progress,
       furniture, equipment and capitalized
       interest                                       (181,687)                  (86,549)               (474,290)
     Decrease (increase) in restricted cash             77,905                    50,782                  (2,566)
                                                  ------------              ------------            ------------
Net cash used in investing activities                 (103,782)                  (35,767)               (476,856)
                                                  ------------              ------------            ------------

Cash flows from financing activities:
       Proceeds from issuance of notes                       -                         -                 100,047
       Proceeds from long-term debt                     31,015                         -                 305,015
       Repayment of long-term debt                           -                         -                    (547)
       Debt issuance costs                                   -                         -                 (37,146)
       Members' contributions                           79,361                    39,228                 211,572
       Payment of debt on contributed land
                                                             -                         -                 (74,477)
       Members' equity costs                                 -                         -                  (2,325)
       Payable to related parties                           (2)                       (1)                     (1)
       Advances to purchase membership
         interests                                           -                         -                       3
                                                  ------------              ------------            ------------
Net cash provided by financing activities              110,374                    39,227                 502,141
                                                  ------------              ------------            ------------

Net increase in cash                                     7,849                       523                   9,518
Cash and cash equivalents at the beginning
   of the period                                         1,669                     1,248                       -
                                                  ============              ============            ============
Cash and cash equivalents at the end of the
   period                                               $9,518                    $1,771                  $9,518
                                                  ============              ============            ============
</TABLE>


The accompanying notes are an integral part of these financial statements.

                                                                 6

<PAGE>

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

                         CONSOLIDATED STATEMENTS OF CASH FLOWS
       FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999 AND FOR THE PERIOD FROM
                    INCEPTION (DECEMBER 1, 1997) THROUGH JUNE 30, 2000
                                      (continued)

<TABLE>
<CAPTION>
                                                                                                    For the period
                                                                                                   December 1, 1997
                                                    For the six                                       (inception)
                                                    months ended          For the six months       through June 30,
                                                    June 30, 2000         ended June 30, 1999             2000
                                                    (unaudited)              (unaudited)              (unaudited)
                                                 -----------------       -------------------       ----------------
<S>                                               <C>                     <C>                       <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION:

Cash paid for interest, net of amount
   capitalized                                    $  (13,898)               $    1,892               $    (7,684)
Non-cash investing and financing activities:
   Members' contributions - book value
       Land                                                -                         -                    33,407
       Construction in progress                            -                         -                     7,000
   Equipment acquired equal to assumption
     of debt                                               -                         -                       547
   Increase in construction payables                  31,944                     9,313                    44,137
   Preferred Dividends                                11,900                         -                    19,736
</TABLE>


The accompanying notes are an integral part of these financial statements.

                                                                     7

<PAGE>



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

          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         JUNE 30, 2000

1.       BUSINESS DESCRIPTION AND BASIS OF PRESENTATION

         Aladdin Gaming Holdings, LLC, a Nevada limited liability company
("Gaming Holdings"), through its wholly-owned subsidiary Aladdin Gaming, LLC
("Gaming"), is developing, constructing and will operate a new hotel and casino,
the Aladdin Resort and Casino ("Aladdin"), as the centerpiece of an
approximately 35-acre resort, casino and entertainment complex in Las Vegas,
Nevada. Gaming Holdings, through its subsidiaries, also owns 100% of Aladdin
Music, LLC ("Aladdin Music"). Aladdin Music plans 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 and financing for the Aladdin Music Project.

         The consolidated financial statements include the accounts of Gaming
Holdings and all of its subsidiaries. This information should be read in
conjunction with the financial statements set forth in Gaming Holdings' Annual
Report on Form 10-K for the year ended December 31, 1999 and the Form 10-Q for
the quarter ended March 31, 2000.

         Accounting policies utilized in the preparation of the financial
information herein presented are the same as set forth in Gaming Holdings'
annual financial statements except as modified for interim accounting
policies. The interim consolidated financial information is unaudited. In the
opinion of management, all adjustments (consisting only of normal recurring
adjustments necessary for a fair presentation of the results for the interim
periods) have been included. Interim results of operations are not
necessarily indicative of the results of operations for the full year.

         Certain prior period amounts have been reclassified to conform with the
current period's presentation.

2.       CLASSES OF INTEREST

Gaming Holdings has Preferred Membership Interests comprised of the following:

<TABLE>
<CAPTION>
                                                                 London             Sommer
                                                                  Clubs        ENTERPRISES,
                                                             Nevada, Inc.              LLC       TOTAL
                                                             -----------      ------------       -----
                                                                           (IN THOUSANDS)
<S>                                                           <C>             <C>              <C>
Series A................................................      $119,447        $        -       $119,447
Series CC...............................................         3,209                 -          3,209
Series D................................................         7,663                 -          7,663
Series E................................................             -             5,986          5,986
                                                         --------------------------------------------------
TOTAL...................................................      $130,319        $    5,986       $136,305
                                                         ==================================================
</TABLE>

                                                         8

<PAGE>

         Prior to April 25, 2000, there was outstanding $30 million in the
aggregate Series C Convertible Preferred Membership Interests which earned a
return equal to twenty percent (20%) per annum, cumulative and compounded
semi-annually from October 1, 1999. On April 25, 2000, London Clubs
International, plc ("London Clubs"), through its subsidiary London Clubs
Nevada, Inc. ("LCNI"), converted all of the Series C Convertible Preferred
Membership Interests into fifteen percent (15%) of the Gaming Holdings Common
Membership Interests. After such conversion, LCNI owns 40% of the Gaming
Holdings Common Membership Interests, Sommer Enterprises owns 32% of the
Gaming Holdings Common Membership Interests, Gaming Enterprises owns 25% of
the Gaming Holdings Common Membership Interests and GAI owns 3% of the Gaming
Holdings Common Membership Interests. The Series CC Preferred Membership
Interests earn a return equal to twenty percent (20%) per annum, cumulative
and compounded semi-annually. The Series A Preferred Membership Interests
earn a return equal to twelve percent (12%) per annum, cumulative and
compounded semi-annually. The Series E Preferred Membership Interests earn a
return equal to thirty percent (30%) per annum, cumulative and compounded
semi-annually. Pursuant to a Letter Agreement between the Sommer Trust and
London Clubs, dated February 23, 2000, the Series D Preferred Membership
Interests and the Series A Preferred Membership Interests earn a combined
preferred return equal to the return earned on the Series E Preferred
Membership Interests (i.e., thirty percent (30%) per annum, cumulative and
compounded semi-annually). With respect to the allocation of Profits and
Losses and Distributions (including distributions in liquidation), the
following is the order of priority of the Preferred Shares: Series A
Preferred Membership Interests, Series D Preferred Membership Interests, and
Series CC Preferred Membership Interests, and collectively (pari passu)
Series E and B Preferred Membership Interests.

         Series B Preferred Membership Interests would be issued to LCNI in the
event of and in exchange for any payment required by London Clubs to repay in
part Gaming's Bank Credit Facility pursuant to Section 13 of the Keep-Well
Agreement. As of June 30, 2000, there are no Series B Preferred Membership
Interests outstanding. If issued, the Series B Preferred Shares will earn a
return equal to the weighted average interest costs related to the bank credit
facility.

3.       INCOME TAXES

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

4.       IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

         In June 1998, the Financial  Accounting  Standards Board ("FASB")
issued Statement of Financial Accounting Standards  ("SFAS")  No. 133,
"Accounting  for  Derivative  Instruments  and  Hedging  Activities."  SFAS
No. 133 requires that entities record all derivatives as assets or
liabilities  measured at fair value,  with the change in fair value
recognized in earnings or in other  comprehensive  income,  depending on the
use of the  derivative and whether it qualifies for hedge accounting.  SFAS
133 amends or supercedes  several current  accounting  statements. In July,
1999,  the FASB issued SFAS No. 137 which delays the effective date of SFAS
No. 133 from fiscal year 2000 to  fiscal  year  2001.  Gaming  Holdings  is
in the  process  of  analyzing  SFAS No.  133 and the  impact  on its
consolidated financial position and results of operations.

                               9

<PAGE>

5.       RELATED PARTY TRANSACTIONS

         Since January 1, 2000, London Clubs has funded approximately $725,000
of deposits relating to the payment for certain furniture, fixtures and
equipment that will be leased under Gaming's operating lease facility with
General Electric Capital Corporation. The deposits will be refunded directly to
London Clubs by the lessors and therefore such amount has not been reflected in
the accompanying financial statements. As of July 21, 2000, $161,252.43 has been
refunded directly to London Clubs.

6.       LONG-TERM DEBT

         On June 1, 2000, the Credit Agreement was amended ("Third Amendment
to Credit Agreement") to provide for: (a) the creation of wholly-owned
subsidiaries of Gaming; (b) the creation of certain operating bank accounts
prior to the opening of the Aladdin; (c) the increase of the annual amount of
permitted operating leases prior to opening of the Aladdin and to change the
date by which such amount of permitted operating leases can be increased
after the opening of the Aladdin; (d) the increase of Gaming's cash
management account to $10 million; and (e) the transfer, for value received,
of certain collateral under the Bank Credit Facility to the FF&E Financing.

7.       SUBSEQUENT EVENT

         During June and July 2000, The Bank of Nova Scotia, as Administrative
Agent under the Gaming's Bank Credit Facility, drew down all of the
approximately $47.3 million letter of credit previously issued for the account
of London Clubs, which London Clubs posted pursuant to the Completion Guaranty.
The proceeds of the drawing under the letter of credit were used to fund various
construction and pre-opening costs.

         As a result of the Company's on-going review of the anticipated
construction and pre-opening costs for the Aladdin Resort & Casino, the Company
has increased its main project budget by approximately $50 million, from
approximately $973 million to approximately $1.023 billion.

         On July 27, 2000, the Credit Agreement was amended ("Fourth
Amendment to Credit Agreement") to provide for: (a) a new Term D Loan in the
amount of $50 million, subject to reduction in certain events, with an
interest rate of approximately 11%; (b) extending the commencement of the
measuring date for certain financial covenants; and (c) other technical
amendments to the Credit Agreement. The Company will utilize the Term D Loan
proceeds to fund the budgetary increase. For further details on the Fourth
Amendment to Credit Agreement, see Exhibit 10.2 to the Company's Form 10-Q
for the period ended June 30, 2000. For further details on the Bank Credit
Facility, including the covenants, restrictions and limitations on Gaming
pursuant to the Bank Credit Facility, see Exhibit 10.7 to the Company's Form
10-K for the year ended December 31, 1999.

         Effective July 20, 2000, Gaming restructured its interest rate collar
arrangements in an effort to reduce future expenditures for interest. Gaming has
entered into these agreements to manage interest expense, which is subject to
fluctuations due to the variable nature of the London Interbank Offered Rate
("LIBOR"). Gaming has the following interest rate ceilings and floor caps, and
related notional amounts in effect: (i) an interest rate collar with a notional
amount of $245.7 million, a maximum and minimum interest rate of 8.00% and
6.25%, respectively, and a maturity date of June 30, 2005, (ii) an interest rate
collar with a notional amount of $159.2 million, a maximum rate of 8.00%, a
minimum rate of 6.25% and a maturity date of June 30, 2005; (iii) an interest
rate collar with a notional amount of $50 million, a maximum rate of 8.00%, a
minimum rate of 6.25%, and a maturity of June 30, 2005 All rates noted above are
LIBOR equivalents only and do not include the impact of the basis point
additions to LIBOR that are used in calculating interest expense on Gaming's
term loans. The notional amounts do not represent amounts exchanged by the
parties, and thus are not a measure of exposure of Gaming. The amounts exchanged
are normally based on the notional amounts and other terms of the swaps. The
variable rates are subject to change over time as LIBOR fluctuates. In exchange
for entering into the transaction, Gaming received $1,000,000 from the
counterparty in July, 2000.

         Neither Gaming nor the counterparty, which is a prominent financial
institution, is required to collateralize their respective obligations under
these swaps. Gaming is exposed to loss if the counterparty defaults. However,
the Company considers the risk of non-performance to be minimal as the
counterparty is a member of the Bank Credit Facility.

                                   10

<PAGE>

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

         The following discussion should be read in conjunction with 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, N.W., Washington, D.C. 20549 or the SEC internet site address:
http://www.sec.gov.

DEVELOPMENT ACTIVITIES

         Aladdin Gaming Holdings, LLC, a Nevada limited liability company
("Gaming Holdings"), was formed on December 1, 1997. Gaming Holdings was
initially owned by Aladdin Gaming Enterprises, Inc., a Nevada corporation
("Gaming Enterprises") (25%), Sommer Enterprises, LLC, a Nevada limited
liability company ("Sommer Enterprises") (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 25% of Gaming Holdings
common membership interests ("Gaming Holdings Common Membership Interests").
Sommer Enterprises contributed a portion of land for Gaming Holdings Common
Membership Interests. Gaming Enterprises, which is owned 100% by Sommer
Enterprises, contributed a portion of land, $7 million of predevelopment
costs and $15 million in cash for Gaming Holdings Common Membership
Interests. After the additional contributions, Sommer Enterprises, LLC owned
47% of the Gaming Holdings Common Membership Interests, LCNI owned 25% of the
Gaming Holdings Common Membership Interests, Gaming Enterprises owned 25% of
the Gaming Holdings Common Membership Interests and GAI, LLC owned 3% of the
Gaming Holdings Common Membership Interests. On November 30, 1998, the Trust
Under Article Sixth u/w/o Sigmund Sommer and its affiliates (including
entities through which such Trust indirectly owns its interest in Gaming
Holdings; together, "Sommer Trust") agreed to vote their respective Gaming
Holdings Common Membership Interests and cause Gaming Enterprises to vote its
Gaming Holdings Common Membership Interests so that (taking into account
Gaming Holdings Common Membership Interests held by London Clubs or its
affiliates) London Clubs controls fifty percent of the voting power of Gaming
Holdings.

         From February 26, 1998 to June 30, 2000, pursuant to the Completion
Guaranty, London Clubs and the Sommer Trust have made equity contributions to
Gaming Holdings in the amounts of approximately $142.2 million and $4.3 million,
respectively. On December 10, 1999, the Company, London Clubs and the Sommer
Trust entered into a Recapitalization Agreement ("Recapitalization Agreement"),
pursuant to which, among other matters, (a) the Company established new classes
of Preferred Membership Interests for such equity contributions; (b) the Company
issued to London Clubs Series C Convertible Preferred Membership Interests,
Series CC Preferred Membership Interests, Series A Preferred Membership
Interests and Series D Preferred Membership Interests for the equity
contributions which London Clubs had made to the Company; and (c) the Company
issued to the Sommer Trust Series E Preferred Membership Interests for the
equity contributions which the Sommer Trust had made to the Company.

         On April 25, 2000, LCNI converted its Series C Convertible Preferred
Membership Interests of Gaming Holdings for 15% of the Gaming Holdings Common
Membership Interests. After such conversion, LCNI owns 40% of the Gaming
Holdings Common Membership Interests, Sommer Enterprises owns 32% of the Gaming
Holdings Common Membership Interests, Gaming Enterprises owns 25% of the Gaming
Holdings Common Membership Interests and GAI owns 3% of the Gaming Holdings
Common Membership Interests.

                                    11

<PAGE>

         Aladdin Holdings, LLC, a Delaware limited liability company ("AHL"),
through Sommer Enterprises, holds a majority interest in Gaming Holdings. The
members of AHL are the Sommer Trust, which holds a 95% interest in AHL, 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
AHL.

         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 Gaming
Holdings 13 1/2% Senior Discount Notes ("Notes") issued by Gaming Holdings and
Capital in 1998. Capital does not have any material operations or assets and
does not have any revenues. Gaming Holdings, through its subsidiaries, also owns
100% of Aladdin Music, LLC, a Nevada limited liability company ("Aladdin
Music"). Except where the context otherwise requires, Gaming Holdings and its
subsidiaries are collectively referred to herein as "Company."

         The operations of the Company have been primarily limited to the
design, development, financing and construction of a new Aladdin Resort and
Casino ("Aladdin"). The Aladdin will be the centerpiece of an approximately
35-acre resort, casino and entertainment complex ("Complex") located on the site
of the former Aladdin hotel and casino in Las Vegas, Nevada, at the center of
Las Vegas Boulevard. The Aladdin has been designed to include a luxury-themed
hotel of approximately 2,567 rooms ("Hotel"), an approximately 116,000 square
foot casino ("Casino"), an approximately 1,200 seat production showroom and six
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 ("The London Club at Aladdin") 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 496,000 square feet of retail space ("Desert Passage"); (iii) a
planned second hotel and casino with a music and entertainment theme ("Aladdin
Music Project"); (iv) the newly renovated 7,000-seat Theater of the 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 is separately owned in part by an affiliate of the Company and
Aladdin Music is currently seeking a joint venture partner and financing for the
Aladdin Music Project. The Company currently believes that the completion and
opening of the Aladdin will occur during August, 2000.

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. 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 debt incurred to finance construction and development of
Aladdin. Capitalized costs include approximately $2.2 million related to Aladdin
Music for necessary predevelopment costs and expenses of the Aladdin Music
Project. The Company's operating expenses primarily have consisted of interest,
amortization costs, expenses related to the Notes and pre-opening costs.

                                       12

<PAGE>

         The Company's results of operations from inception to the anticipated
opening of the Aladdin in August, 2000, have been 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 debt payment obligations, including
the Notes and other indebtedness, and its other obligations, there can be no
assurance with respect thereto.

         Pre-opening expenses for the three and six months ended June 30, 2000,
were $8.1 million and $12.4 million, respectively, compared to $2.5 million and
$4.8 million, respectively for the same periods of the prior year. Pre-opening
expenses were higher in the current year due to increased staffing to facilitate
the opening of the Aladdin.

         Interest expense for the three and six months ended June 30, 2000 was
$15.4 million and $29.4 million, respectively compared to $12.7 million and
$25.6 million, respectively, for the same periods of the prior year. Interest
expense increased in the current year due to higher funded debt levels as
construction has progressed on the project. The Company pays a higher interest
rate on its bank debt once the funds are utilized for construction compared to
the amount paid for interest when the funds are held in the cash collateral
account. Capitalized interest has also increased in the current year as
construction in progress has increased.

         Interest income has decreased in the current year compared to the prior
year as cash balances have been used to fund construction costs, pre-opening
expenses and interest expense.

         The Company recorded a net loss of approximately $7.8 million for the
three months ended June 30, 2000 as compared to a net loss of approximately $6.7
million for the three month period ended June 30, 1999. The Company recorded a
net loss of approximately $12.4 million for the six months ended June 30, 2000,
as compared to a net loss of approximately $14.6 million for the six month
period ended June 30, 1999. The cumulative loss for the period of inception
(December 1, 1997) to June 30, 2000 was approximately $81.0 million. The Company
had no operations for the period of inception (December 1, 1997) to June 30,
2000. The losses were due to the pre-opening costs, interest expense,
amortization costs and expenses related to the Notes.

MATERIAL CHANGES IN FINANCIAL CONDITION

         Through June 30, 2000, approximately $604.1 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
contribution to the Company, approximately $474.3 million in construction,
furniture, fixtures and equipment, and capitalized interest, approximately $39.5
million in debt issuance and member equity costs, and approximately $15.8
million in pre-opening costs, net interest expense, and other current assets.


                                13
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

         On February 26, 1998, Gaming Holdings and Capital issued $221.5 million
aggregate principal amount of their 13 1/2% Senior Discount Notes due 2010
("Notes"). The proceeds to the Company from the Notes were approximately $115.0
million and all the proceeds have been utilized by the Company for the
development and construction of the Aladdin. For further details on the Notes,
including the covenants, restrictions and limitations on the Company pursuant to
the Notes Indenture, see Exhibit 4.1 to the Company's Form 10-K for the year
ended December 31, 1999.

         Gaming has a credit facility ("Bank Credit Facility" or "Credit
Agreement") with various financial institutions and The Bank of Nova Scotia as
the administrative agent for the lenders (collectively, "Lenders"). The Credit
Agreement consists of four separate term loans. The Term A Loan comprises a term
loan of $129.7 million and matures five and one-half years after the initial
borrowing date. The Term B Loan comprises a term loan of $114 million and
matures eight and one-half years after the initial borrowing date. The Term C
Loan comprises a term loan of $160 million and matures ten years after the
initial borrowing date. The Term D Loan is comprised of a term loan of $50
million which matures six months after the Term C Loan matures. As of June 30,
2000, approximately $100.3 million of the Term A Loan proceeds is available. As
of June 30, 2000, Gaming had fully utilized the Term B and Term C Loan proceeds.
As of June 30, 2000, the Term D Loan was not in place. For further details on
the establishment of the Term D Loan, please see the discussion below. On June
1, 2000, the Credit Agreement was amended ("Third Amendment to Credit
Agreement") to provide for: (a) the creation of wholly-owned subsidiaries of
Gaming; (b) the creation of certain operating bank accounts prior to the opening
of the Aladdin; (c) the increase of the annual amount of permitted operating
leases prior to opening of the Aladdin and to change the date by which such
amount of permitted operating leases can be increased after the opening of the
Aladdin; (d) the increase of Gaming's cash management account to $10 million;
and (e) the transfer, for value received, of certain collateral under the Bank
Credit Facility to the FF&E Financing. For further details on the Third
Amendment to Credit Agreement, see Exhibit 10.1 to the Company's Form 10-Q for
the period ended June 30, 2000. On July 27, 2000, the Credit Agreement was
amended ("Fourth Amendment to Credit Agreement") to provide for: (a) a new Term
D Loan in the amount of $50 million, subject to reduction in certain events,
with an interest rate of approximately 11%; (b) extending the commencement of
measurement date for certain financial covenants; and (c) other technical
amendments to the Credit Agreement. As of August 7, 2000, none of the Term D
Loan had been utilized. For further details on the Fourth Amendment to Credit
Agreement, see Exhibit 10.2 to the Company's Form 10-Q for the period ended June
30, 2000. For further details on the Bank Credit Facility, including the
covenants, restrictions and limitations on Gaming pursuant to the Bank Credit
Facility, see Exhibit 10.7 to the Company's Form 10-K for the year ended
December 31, 1999.

         Gaming has operating lease financing of up to $60 million and a term
loan facility of $20 million to obtain gaming equipment and other specified
equipment (collectively, "FF&E Financing"). For further details on the operating
lease financing and term loan facility, including the covenants, restrictions
and limitations on Gaming pursuant to the FF&E Financing, see Exhibit 10.35 to
the Company's Form 10-K for the year ended December 31, 1999.

                                  14

<PAGE>

         As a result of the Company's on-going review of the anticipated
construction and pre-opening costs for the Aladdin, in July, 2000, the Company
increased its main project budget by approximately $50 million, from
approximately $973 million to approximately $1.023 billion. The Company will
utilize the Term D Loan proceeds to fund this budgetary increase.

         During June and July 2000, The Bank of Nova Scotia, as Administrative
Agent under Gaming's Bank Credit Facility, drew down all of the approximately
$47.3 million letter of credit previously issued for the account of London
Clubs, which London Clubs posted pursuant to the Completion Guaranty. The
proceeds of the drawing under the letter of credit were used to fund various
construction and pre-opening costs.

         Upon the later of (a) the transfer of the real property under the Mall
Project by Gaming to Aladdin Bazaar, LLC ("Aladdin Bazaar") or (b) the
commencement of Aladdin's operations, Aladdin Bazaar will execute a promissory
note of approximately $16.7 million to Gaming. Principal and interest on the
note is payable by Aladdin Bazaar to Gaming in the amount of $2 million per
year. The required payments are subordinated to various restrictions under the
Aladdin Bazaar operating agreement. Due to the restrictions upon the payments,
there can be no assurances that Gaming will receive any payments under this
note.

         London Clubs, the Sommer Trust, and Aladdin Bazaar Holdings, LLC
("Bazaar Holdings"), which is owned 99% by 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. From January 1, 2000 to June 30,
2000, a total of approximately $79.4 million in payments has been made pursuant
to the Bank Completion Guaranty, which has been funded by London Clubs. Gaming
Holdings issued for these Bank Completion Guaranty payments (i) Series A
Preferred Shares in exchange for the contribution of such payments and (ii)
Series D Preferred Shares representing a profits-only interest in Gaming
Holdings. The holders of the Notes are not a party to the Bank Completion
Guaranty, however, London Clubs, the Sommer Trust and Bazaar Holdings have
entered into a limited completion guaranty 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.

         AHL, Bazaar Holdings and London Clubs have entered into the
Keep-Well Agreement in favor of the lenders under the Bank Credit Facility.
In connection with the Fourth Amendment to Credit Agreement, the Sommer Trust
became a party to the Keep-Well Agreement. The Keep-Well Agreement is the
joint and several agreement of the parties to make certain quarterly cash
equity contributions to the Company if the Company fails to comply with the
Minimum Fixed Charges Coverage Ratio set forth in the Bank Credit Facility,
but in no event shall the aggregate cash equity contribution required be made
in any fiscal year of the company exceed $30.0 million. In exchange for such
cash equity contributions, the Company will issue Series A or B Preferred
Membership Interests.

         In connection with the development of the Mall Project, Aladdin Bazaar
agreed to 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 and, as of June 30, 2000, Aladdin Bazaar has paid the Company

                                  15

<PAGE>

approximately $13.0 million of this amount. Additionally, Aladdin Bazaar is
obligated to spend no more than $36 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: (i) a $3.2 million fee per
year for a term of 99 years, which is adjusted every fifth year 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 with the Carpark
and other common areas.

         The Company believes that the funds provided by the Notes, Bank Credit
Facility, FF&E Financing, London Clubs' equity contribution and contributions
pursuant to the Bank Completion Guaranty (collectively, "Funding Transactions")
will be sufficient to develop, complete and commence operation of the Aladdin;
however, there can be no assurance that the Funding Transactions will be
sufficient for the development, construction and commencement of the Aladdin.

         Upon the commencement of operations of the Aladdin, the Company will
have approximately $17.0 million of working capital to fund its operations, debt
service and capital needs as currently anticipated. Based on the Company's
projection of operating revenues and expenses, required capital expenditures and
other expected expenditures, the Company believes that such working capital is
sufficient to address the Company's liquidity needs.

         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 and the FF&E Financing, 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.

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 United States Securities and
Exchange Commission (as well as information included in oral statements or other
written statements made, or to be made, by the Company) contain 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, without limitation, those relating to plans
for future operations, current construction and development activities
(including completion dates, budgets and cost estimates), 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 statements
made by, or on behalf of, the Company. These risks and uncertainties include,
but are not limited to, those relating to the current development and
construction activities and costs and timing thereof, the sources and extent of
financing for the project, 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

                                    16

<PAGE>

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

         Effective June 30, 1999, Gaming restructured its interest rate swap
arrangements in an effort to reduce future expenditures for interest. Gaming has
entered into these agreements to manage interest expense, which is subject to
fluctuations due to the variable nature of the London Interbank Offered Rate
("LIBOR"). In exchange for entering into the transaction, Gaming received
$500,000 from the counterparty in July, 1999.

         Beginning June 30, 1999, Gaming has the following interest rate swaps,
interest rate ceilings and floor caps, and related notional amounts in effect:
(i) an interest rate swap with an original notional amount of $114 million
increasing to a maximum of $222.5 million whereby interest is fixed at 5.50%
through March 31, 2000; (ii) after March 31, 2000, an interest rate collar with
a notional amount of $250 million, a maximum and minimum interest rate of 7.5%
and 5.15%, respectively, will go into effect and mature on September 30, 2006;
and (iii) an interest rate collar with a notional amount of $160 million, a
maximum rate of 8.00%, a minimum rate of 5.15% and a maturity date of March 31,
2003. All rates noted above are LIBOR equivalents only and do not include the
impact of the basis point additions to LIBOR that are used in calculating
interest expense on Gaming's term loans. The LIBOR applicable to these
agreements is adjusted every three months and on June 30, 2000 was set at 6.28%.
The fair market value of the Gaming's interest rate swaps, interest rate
ceilings and floor caps as provided by the counterparty, is a net receivable of
approximately $2.9 million at June 30, 2000.

         Effective July 20, 2000, Gaming restructured its interest rate collar
arrangements in an effort to reduce future expenditures for interest. Gaming has
entered into these agreements to manage interest expense, which is subject to
fluctuations due to the variable nature of the London Interbank Offered Rate
("LIBOR"). In exchange for entering into the transaction, Gaming received
$1,000,000 from the counterparty in July, 2000.

         Beginning July 20, 2000, Gaming has the following interest rate
ceilings and floor caps, and related notional amounts in effect: (i) an interest
rate collar with a notional amount of $245.7 million, a maximum and minimum
interest rate of 8.00% and 6.25%, respectively, and a maturity date of June 30,
2005, (ii) an interest rate collar with a notional amount of $159.2 million, a
maximum rate of 8.00%, a minimum rate of 6.25% and a maturity date of June 30,
2005; (iii) an interest rate collar with a notional amount of $50 million, a
maximum rate of 8.00%, a minimum rate of 6.25%, and a maturity of June 30, 2005
All rates noted above are LIBOR equivalents only and do not include the impact
of the basis point additions to LIBOR that are used in calculating interest
expense on Gaming's term loans.

         The notional amounts do not represent amounts exchanged by the parties,
and thus are not a measure of exposure of Gaming. The amounts exchanged are
normally based on the notional amounts and other terms of the swaps. The
variable rates are subject to change over time as LIBOR fluctuates.

         Neither Gaming nor the counterparty, which is a prominent financial
institution, is required to collateralize their respective obligations under
these swaps. Gaming is exposed to loss if the counterparty defaults. However,
the Company considers the risk of non-performance to be minimal as the
counterparty is a member of the Bank Credit Facility.

                                    17


<PAGE>

PART II  OTHER INFORMATION

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits



                  10.01    Third Amendment to Credit Agreement, dated as of
                           June 1, 2000, among Aladdin Gaming, LLC, Various
                           Financial Institutions, The Bank of Nova Scotia,
                           Merrill Lynch Capital Corporation and CIBC
                           Oppenheimer Corp.

                  10.02    Fourth Amendment to Credit Agreement, dated as of
                           July 27, 2000, among Aladdin Gaming, LLC, Various
                           Financial Institutions, The Bank of Nova Scotia,
                           Merrill Lynch Capital Corporation and CIBC
                           Oppenheimer Corp.

                  10.03    Agreement of  Amendment, dated as of June 2, 2000,
                           among General Electric Capital Corporation, GMAC
                           Commercial Mortgage Corporation and Aladdin Gaming,
                           LLC

                  10.04    Agreement of Amendment No. 3, dated as of July 27,
                           2000, among General Electric Capital Corporation,
                           GMAC Commercial Mortgage Corporation and Aladdin
                           Gaming, LLC

                  10.05    First Amendment to Deed of Trust, Assignment of Rents
                           and Leases, Fixture Filing and Security Agreement,
                           dated as of July 27, 2000, made by and between
                           Aladdin Gaming, LLC, as Trustee, and Stewart Title of
                           Nevada, as Trustee, for the benefit of The Bank of
                           Nova Scotia.

                  10.06    Amendment of Agreements, effective as of July 27,
                           2000, by and among Aladdin Gaming, LLC, the various
                           financial institutions and The Bank of Nova Scotia.

                  10.07    Amendment No. 1 to the Employment Agreement of
                           William  Timmins, dated as of May 26, 2000, between
                           Aladdin Gaming, LLC, Aladdin Gaming Holdings, LLC and
                           William Timmins

                  10.08    Employment Agreement of Patricia Becker, dated as of
                           July 27, 2000, between Aladdin Gaming, LLC, Aladdin
                           Gaming Holdings, LLC and Patricia Becker.

                  27.01    Financial Data Schedule

         (b)      Reports on Form 8-K

         None.

                                                   18

<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

August 14, 2000               By:   /s/ Richard J. Goeglein
                                    --------------------------------------------
                                    Richard J. Goeglein, President and Chief
                                    Executive Officer


August 14, 2000               By:   /s/ Thomas A. Lettero
                                    --------------------------------------------
                                    Thomas A. Lettero, Senior Vice President and
                                    Chief Financial Officer





                               ALADDIN CAPITAL CORP.


August 14, 2000                By:  /s/ Richard J. Goeglein
                                    --------------------------------------------
                                    Richard J. Goeglein, Chief Executive Officer


August 14, 2000                By:  /s/ Thomas A. Lettero
                                    --------------------------------------------
                                    Thomas A. Lettero, Senior Vice President and
                                    Chief Financial Officer

                                                     19

<PAGE>

                                                   EXHIBIT INDEX


<TABLE>
<CAPTION>

  EXHIBIT    DESCRIPTION                                                                   PAGE NO.
    NO.
<S>            <C>                                                                           <C>
   10.01       Third Amendment to Credit Agreement, dated as of June 1, 2000,
               among Aladdin Gaming, LLC, Various Financial Institutions, The
               Bank of Nova Scotia, Merrill Lynch Capital Corporation and CIBC
               Oppenheimer Corp.

   10.02       Fourth Amendment to Credit Agreement, dated as of July 27,
               2000, among Aladdin Gaming, LLC, Various Financial
               Institutions, The Bank of Nova Scotia, Merrill Lynch Capital
               Corporation and CIBC Oppenheimer Corp.

   10.03       Agreement  of  Amendment,  dated  as of June 2,  2000,  among
               General Electric  Capital Corporation, GMAC Commercial Mortgage
               Corporation and Aladdin Gaming, LLC

   10.04       Agreement of Amendment No. 3, dated as of July 27, 2000,  among
               General  Electric Capital Corporation, GMAC Commercial Mortgage
               Corporation and Aladdin Gaming, LLC

   10.05       First Amendment to Deed of Trust, Assignment of Rents and
               Leases, Fixture Filing and Security Agreement, dated as of July
               27, 2000, made by and between Aladdin Gaming, LLC, as Trustee,
               and Stewart Title of Nevada, as Trustee, for the benefit of The
               Bank of Nova Scotia.

   10.06       Amendment of Agreements, effective as of July 27, 2000, by and
               among Aladdin Gaming, LLC, the various financial institutions
               and The Bank of Nova Scotia.

   10.07       Amendment No. 1 to the Employment Agreement of William Timmins,
               dated as of May 26, 2000, between Aladdin Gaming, LLC, Aladdin
               Gaming Holdings, LLC and William Timmins.

   10.08       Employment Agreement of Patricia Becker, dated as of July 27,
               2000, between Aladdin Gaming, LLC, Aladdin Gaming Holdings, LLC
               and Patricia Becker.

   27.01       Financial Data Schedule
</TABLE>
                                               20