---

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, 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 March 31, 2001

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

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

Nevada(State or other jurisdiction of
incorporation or organization)

88-0379607(I.R.S. Employer Identification No.)3667 Las Vegas Boulevard South,
Las Vegas, Nevada(Address of principal executive offices)

89109(Zip Code)


(702) 785-5555(Registrant's telephone number, including area code)

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

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Nevada(State or other jurisdiction of
incorporation or organization)

88-0379606(I.R.S. Employer Identification No.)3667 Las Vegas Boulevard South,
Las Vegas, Nevada(Address of principal executive offices)

89109(Zip Code)


(702) 785-5555(Registrant's telephone number, including area code)

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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, LLCNot applicable Aladdin Capital Corp.2,500 shares of common stock, no par value as of March 31,
2001.

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ALADDIN GAMING HOLDINGS, LLC  AND SUBSIDIARIES

INDEX

|           |  |                                                                                                              |  | Page No.
|---------- |  | ------------------------------------------------------------------------------------------------------------ |  | --------
|Part I     |  | FINANCIAL INFORMATION                                                                                        |  |         
|Item 1.    |  | Financial Statements                                                                                         |  | 1       
|           |  | Condensed Consolidated Balance Sheets March 31, 2001 and
December 31, 2000                                   |  | 1       
|           |  | Condensed Consolidated Statements of Operations for the three months ended March 31, 2001 and March 31, 2000 |  | 2       
|           |  | Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2001 and March 31, 2000 |  | 3,4     
|           |  | Notes to the Condensed Consolidated Financial Statements                                                     |  | 5       
|Item 2.    |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                        |  | 12      
|Item 3.    |  | Quantitative and Qualitative Disclosures About Market Risk                                                   |  | 17      
|Part II    |  | OTHER INFORMATION                                                                                            |  | 18      
|Signatures |  | 19                                                                                                          

i

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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements

ALADDIN GAMING HOLDINGS, LLC  AND SUBSIDIARIES  CONDENSED CONSOLIDATED BALANCE SHEETS  AS OF MARCH 31, 2001 AND DECEMBER 31, 2000(In Thousands)

|                                             |                                                                                                                                                                                        | March 31, 2001                                                                                                                             |         | December 31, 2000 |        
|-------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------ | ------- | ----------------- | -------
|
|ASSETS                                       |                                                                                                                                                                                        |                                                                                                                                            |         |                   |        
|Current assets:                              |                                                                                                                                                                                        |                                                                                                                                            |         |                   |        
|                                             |                                                                                                                                                                                        | Cash and cash equivalents                                                                                                                  |         | $                 | 25,540 
|                                             |                                                                                                                                                                                        | Restricted cash and cash equivalents                                                                                                       |         |                   | 17,579 
|                                             |                                                                                                                                                                                        | Receivables, related parties                                                                                                               |         |                   | 1,022  
|                                             |                                                                                                                                                                                        | Accounts receivables, net of allowance for doubtful accounts of $6,622 and $6,483 as of March 31, 2001 and December 31, 2000, respectively |         |                   | 18,492 
|                                             |                                                                                                                                                                                        | Inventory                                                                                                                                  |         |                   | 3,594  
|                                             |                                                                                                                                                                                        | Prepaid assets                                                                                                                             |         |                   | 6,375  
|                                             |                                                                                                                                                                                        |                                                                                                                                            |         |                   |        
|Total current assets                         |                                                                                                                                                                                        |                                                                                                                                            | 72,602  |                   |        
|                                             |                                                                                                                                                                                        |                                                                                                                                            |         |                   |        
|Property, plant and equipment, net           |                                                                                                                                                                                        |                                                                                                                                            | 647,535 |                   |        
|                                             |                                                                                                                                                                                        |                                                                                                                                            |         |                   |        
|Other assets:                                |                                                                                                                                                                                        |                                                                                                                                            |         |                   |        
|                                             |                                                                                                                                                                                        | Other assets, net of accumulated amortization of $852 and $650 as of March 31, 2001 and December 31, 2000, respectively                    |         |                   | 1,169  
|                                             |                                                                                                                                                                                        | Debt issuance costs, net of accumulated amortization of $12,850 and $11,212 as of March 31, 2001 and December 31, 2000, respectively       |         |                   | 30,757 
|                                             |                                                                                                                                                                                        |                                                                                                                                            |         |                   |        
|                                             |                                                                                                                                                                                        | Total other assets                                                                                                                         |         |                   | 31,926 
|                                             |                                                                                                                                                                                        |                                                                                                                                            |         |                   |        
|                                             |                                                                                                                                                                                        | Total assets                                                                                                                               |         | $                 | 752,063
|                                             |                                                                                                                                                                                        |                                                                                                                                            |         |                   |        
|LIABILITIES AND MEMBERS' EQUITY              |                                                                                                                                                                                        |                                                                                                                                            |         |                  
|Current liabilities:                         |                                                                                                                                                                                        |                                                                                                                                            |         |                   |        
|                                             | Current portion of long-term debt                                                                                                                                                      |                                                                                                                                            | $       | 25,000            |        
|                                             | Current portion of energy service obligation                                                                                                                                           |                                                                                                                                            |         | 555               |        
|                                             | Accounts payable-trade                                                                                                                                                                 |                                                                                                                                            |         | 6,510             |        
|                                             | Construction payable                                                                                                                                                                   |                                                                                                                                            |         | 11,558            |        
|                                             | Accrued payroll and related expenses                                                                                                                                                   |                                                                                                                                            |         | 9,547             |        
|                                             | Accrued interest                                                                                                                                                                       |                                                                                                                                            |         | 7,510             |        
|                                             | Other accrued expenses                                                                                                                                                                 |                                                                                                                                            |         | 26,441            |        
|                                             |                                                                                                                                                                                        |                                                                                                                                            |         |                   |        
|Total current liabilities                    |                                                                                                                                                                                        |                                                                                                                                            | 87,121  |                   |        
|                                             |                                                                                                                                                                                        |                                                                                                                                            |         |                   |        
|Long-term debt, net of discount              |                                                                                                                                                                                        |                                                                                                                                            | 601,622 |                   |        
|Interest rate collar payable                 |                                                                                                                                                                                        |                                                                                                                                            | 19,247  |                   |        
|Energy service obligation                    |                                                                                                                                                                                        |                                                                                                                                            | 35,981  |                   |        
|Related party payables and other liabilities |                                                                                                                                                                                        |                                                                                                                                            | 12,448  |                   |        
|Advances to purchase membership interests    |                                                                                                                                                                                        |                                                                                                                                            | 2       |                   |        
|                                             |                                                                                                                                                                                        |                                                                                                                                            |         |                   |        
|Total long-term liabilities                  |                                                                                                                                                                                        |                                                                                                                                            | 669,300 |                   |        
|                                             |                                                                                                                                                                                        |                                                                                                                                            |         |                   |        
|Total liabilities                            |                                                                                                                                                                                        |                                                                                                                                            | 756,421 |                   |        
|Commitments and contingencies                |                                                                                                                                                                                        |                                                                                                                                            |         |                   |        
|Members' equity:                             |                                                                                                                                                                                        |                                                                                                                                            |         |                   |        
|                                             | Preferred membership interest                                                                                                                                                          |                                                                                                                                            |         | 180,264           |        
|                                             | Common membership interest, 10,000,000 common membership interests authorized; 1,000,000 common membership interests issued and outstanding as of March 31, 2001 and December 31, 2000 |                                                                                                                                            |         | 58,608            |        
|                                             | Accumulated deficit                                                                                                                                                                    |                                                                                                                                            |         | (243,230          | )      
|                                             |                                                                                                                                                                                        |                                                                                                                                            |         |                   |        
|Total members' equity                        |                                                                                                                                                                                        |                                                                                                                                            | (4,358  | )                 |        
|                                             |                                                                                                                                                                                        |                                                                                                                                            |         |                   |        
|Total liabilities and members' equity        |                                                                                                                                                                                        | $                                                                                                                                          | 752,063 |                   | $      
|                                             |                                                                                                                                                                                        |                                                                                                                                            |         |                   |        

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

1

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ALADDIN GAMING HOLDINGS, LLC  AND SUBSIDIARIES  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND MARCH 31, 2000(In Thousands)

|                                                     |                                     | For the three months ended March 31, |        
|---------------------------------------------------- | ----------------------------------- | ------------------------------------ | -------
|
|
|Revenues:                                            |                                     |                                      |        
|                                                     | Casino                              |                                      | $      
|                                                     | Hotel                               |                                      |        
|                                                     | Food and beverage                   |                                      |        
|                                                     | Entertainment and other income      |                                      |        
|                                                     |                                     |                                      |        
|Gross revenues                                       |                                     |                                      | 82,521 
|                                                     | Less: promotional allowances        |                                      |        
|                                                     |                                     |                                      |        
|Net revenues                                         |                                     |                                      | 73,695 
|                                                     |                                     |                                      |        
|Costs and expenses:                                  |                                     |                                      |        
|                                                     | Casino                              |                                      |        
|                                                     | Hotel                               |                                      |        
|                                                     | Food and beverage                   |                                      |        
|                                                     | Other operating expenses            |                                      |        
|                                                     | Selling, general and administrative |                                      |        
|                                                     | Pre-opening expenses                |                                      |        
|                                                     | Depreciation and amortization       |                                      |        
|                                                     |                                     |                                      |        
|Total costs and expenses                             |                                     |                                      | 79,342 
|                                                     |                                     |                                      |        
|Loss from operations                                 |                                     |                                      | (5,647 
|                                                     |                                     |                                      |        
|Other income (expense):                              |                                     |                                      |        
|                                                     | Interest income                     |                                      |        
|                                                     | Interest expense                    |                                      |        
|                                                     | Interest rate collar expense        |                                      |        
|                                                     | Capitalized interest                |                                      |        
|                                                     |                                     |                                      |        
|Total other expense, net                             |                                     |                                      | (30,824
|                                                     |                                     |                                      |        
|Accumulated effect of change in accounting principle |                                     |                                      | (10,709
|                                                     |                                     |                                      |        
|Net loss                                             |                                     | $                                    | (47,180
|                                                     |                                     |                                      |        

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

2

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ALADDIN GAMING HOLDINGS, LLC  AND SUBSIDIARIES  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND MARCH 31, 2000(In Thousands)

|                                                                                            |                                          | For the three months ended March 31, |       
|------------------------------------------------------------------------------------------- | ---------------------------------------- | ------------------------------------ | ------
|
|
|Cash flows from operating activities:                                                       |                                          |                                      |       
|                                                                                            | Net loss                                 |                                      | $     
|Adjustments to reconcile net income to net cash provided by (used in) operating activities: |                                          |                                      |       
|                                                                                            | Depreciation and amortization            |                                      |       
|                                                                                            | Amortization of debt costs               |                                      |       
|                                                                                            | Amortization of lease costs              |                                      |       
|                                                                                            | Amortization of original issue discount  |                                      |       
|                                                                                            | Interest rate collar payable             |                                      |       
|Changes in operating assets and liabilities:                                                |                                          |                                      |       
|                                                                                            | Interest receivable                      |                                      |       
|                                                                                            | Inventory                                |                                      |       
|                                                                                            | Prepaid expense                          |                                      |       
|                                                                                            | Receivables, net                         |                                      |       
|                                                                                            | Other assets                             |                                      |       
|                                                                                            | Accounts payable-trade                   |                                      |       
|                                                                                            | Accrued payroll and related expenses     |                                      |       
|                                                                                            | Other accrued expenses                   |                                      |       
|                                                                                            | Accrued interest                         |                                      |       
|                                                                                            | Related party payable                    |                                      |       
|                                                                                            |                                          |                                      |       
|Net cash provided by operating activities                                                   |                                          | $                                    | 1,052 
|                                                                                            |                                          |                                      |       
|Cash flows from investing activities:                                                       |                                          |                                      |       
|                                                                                            | Payments for construction in progress    |                                      | $     
|                                                                                            | Payments for furniture and equipment     |                                      |       
|                                                                                            | (Increase) decrease in restricted cash   |                                      |       
|                                                                                            |                                          |                                      |       
|Net cash used in investing activities                                                       |                                          |                                      | (77   
|                                                                                            |                                          |                                      |       
|Cash flows from financing activities:                                                       |                                          |                                      |       
|                                                                                            | Proceeds from issuance of notes          |                                      |       
|                                                                                            | Proceeds from issuance of long-term debt |                                      |       
|                                                                                            | Repayment of long-term debt              |                                      |       
|                                                                                            | Debt issuance costs                      |                                      |       
|                                                                                            | Members' contributions                   |                                      |       
|                                                                                            | Members' equity costs                    |                                      |       
|                                                                                            | Payment of debt on contributed land      |                                      |       
|                                                                                            |                                          |                                      |       
|Net cash used by financing activities                                                       |                                          |                                      | 4,356 
|                                                                                            |                                          |                                      |       
|Net increase (decrease) in cash                                                             |                                          |                                      | 5,331 
|Cash and cash equivalents at beginning of period                                            |                                          |                                      | 20,209
|                                                                                            |                                          |                                      |       
|Cash and cash equivalents at end of period                                                  |                                          | $                                    | 25,540
|                                                                                            |                                          |                                      |       

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

3

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ALADDIN GAMING HOLDINGS, LLC  AND SUBSIDIARIES  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND MARCH 31, 2000  (CONTINUED)(In
Thousands)

For the three months
ended March 31,2001

2001(unaudited)

(unaudited)SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION AND NON-CASH INVESTING AND FINANCING ACTIVITIES:Cash paid for interest, net of amount capitalized

$
14,320

$
(6,003
)Members' contributions-book value
Land





Construction in progress





Equipment acquired equal to assumption of debt





Non-cash investing and financing activities:Increase in construction payables


2,134


17,219Preferred dividends


10,822


4,926


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

4

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ALADDIN GAMING HOLDINGS, LLC  AND SUBSIDIARIES  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  March 31, 2001

1.  Nature of Business and Summary of Significant Accounting Policies

The Company

The accompanying condensed consolidated financial statements present the financial position, results of operations and cash flows of Aladdin Gaming Holdings,
LLC ("Gaming Holdings") and its wholly-owned subsidiaries, Aladdin Gaming, LLC ("Gaming") Aladdin Capital Corp., and Aladdin Music Holdings, LLC (collectively, "Company"). The Company commenced
operations on August 18, 2000.

Principles of Presentation

The condensed consolidated financial statements have been prepared in accordance with the accounting policies described in the Company's 2000 Annual Report on
Form 10-K. Although the Company believes that the disclosures are adequate to make the information presented not misleading, it is suggested that these financials be read in
conjunction with the Notes to Consolidated Financial Statements which appear in that report. 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 condensed consolidated financial information is unaudited.

In
the opinion of management, the accompanying financial statements include all adjustments (of a normal recurring nature) which are necessary for a fair presentation of the results
for the interim periods presented. Certain information and footnote disclosures normally included in financial
statements have been condensed or omitted pursuant to such rules and regulations of the Securities and Exchange Commission.

Reclassification

Certain amounts in the 2000 Condensed Consolidated Financial Statements have been reclassified to conform with the presentation for the year 2001. These
reclassifications had no effect on the Company's net income.

Promotional Allowances

Promotional allowances represent goods and services given to customers as inducements to gamble which, if sold, would be accounted for as revenue. Examples of
promotional allowances include rooms, food, beverages and entertainment. The cost of providing promotional allowances is included in costs and expenses.

Revenues and Expenses

Casino revenue is the net win from gaming activities (the difference between gaming wins and losses). Casino revenues are net of incentive discounts to casino
patrons, players' club point accruals and accruals for anticipated payouts of progressive and certain other slot machine jackpots. Revenues include the retail value of rooms, food and beverage, and
other items provided to customers on a complimentary basis. A corresponding amount is deducted as promotional allowances. The costs of such complimentaries are included in hotel, food and beverage
expenses in the accompanying Condensed Consolidated Statements of Operations.

5

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Property and Equipment

Property and equipment are stated at cost, except in the case of capitalized lease assets, which are stated at the lower of the present value of the future
minimum lease payments or fair market value at the inception of the lease. Expenditures for additions, renewals, and improvements are capitalized. Costs of repairs and maintenance are expensed when
incurred.

Depreciation
and amortization of property and equipment is computed using the straight-line method over the following estimated useful lives:

Building and Leasehold Improvements

39 yearsFurniture and Equipment

5 yearsEnergy Service Asset

17-20 years


2.  Business Description and Basis of Presentation

Gaming Holdings through its wholly-owned subsidiary, Gaming developed, constructed and began operating a new hotel and casino on August 18, 2000, 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"). Gaming is evaluating its options in connection with an approximately 5-acre parcel of land which evaluation includes
selling the parcel. There can be no assurances that Gaming can reach a definitive agreement for the sale of the parcel.

3.  Classes of Interest

As of March 31, 2001, Gaming Holdings Common Membership Interests were held: 39.953125% by London Clubs of Nevada Inc., a subsidiary of London Clubs;
31.859375% by Sommer Enterprises, LLC ("Sommer Enterprises"), an entity controlled by the Sommer Trust; 25.0% by Aladdin Gaming Enterprises, Inc., an entity owned by Sommer Enterprises; 3.0% by GAI,
LLC, an entity owned by Richard J. Goeglein, the Company's Chief Executive Officer; and 0.1875% by Jose Rueda, a former executive of the Company.

As
of March 31, 2001, Gaming Holdings has Preferred Membership Interests comprised of the following:

London Clubs
Nevada, Inc.

Sommer Enterprises, LLC

Total(In Thousands)Series A

$
136,468

$
6,482

$
142,950Series CC


3,698





3,698Series D


26,260





26,260Series E





7,356


7,356TOTAL

$
166,426

$
13,838

$
180,264


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. The Series CC Preferred Membership Interests shall 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

6

---

(12%) 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 shall 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). The Series E Preferred Membership Interests earn a return equal to 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, Series C Convertible Membership Interests, and Series
CC
Preferred Membership Interests, and collectively (pari passu) Series E and B Preferred Membership Interests.

If
cash equity contributions are made to Gaming Holdings pursuant to the Keep-Well Agreement, Series A Preferred Membership Interests, or in the case of any payment
required by London Clubs to repay in part Gaming's Bank Credit Facility pursuant to Section 13 of the Keep-Well Agreement, Series B Preferred Membership Interests, shall be
issued in return for such cash equity contributions. As of March 31, 2001, 108,000 Series A and no Series B Preferred Membership Interests were issued pursuant to the
Keep-Well Agreement.

4.  Income Taxes

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

5.  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 delayed the effective date of SFAS No. 133 from fiscal year 2000 to fiscal year 2001. In June 2000, the FASB
issued SFAS 138 which amended certain sections of SFAS 133. During the quarter ended March 31, 2001, Gaming changed its method of accounting for interest rate collars to comply
with SFAS 133. Gaming's interest rate collars do not qualify for accounting hedges according to SFAS 133, and accordingly, changes to the fair value of the interest rate collars are recognized
in earnings. On January 1, 2001, Gaming recorded a liability of $10.7 million for the fair value of its interest rate collars at that date with a corresponding cumulative effect
adjustment in the Condensed Consolidated Statement of Operations. As of March 31, 2001, the fair value of Gaming's interest rate collars was a liability of $19.2 million, and Gaming
recorded the change in fair market value of $8.5 million to Interest Rate Collars Expense and corresponding liability in the Condensed Consolidated Financial Statements.

In
November 2000, the Emerging Issues Task Force ("EITF") of the FASB reached a consensus on EITF 00-14, "Accounting for Certain Sales Incentives." EITF 00-14 requires that discounts
which result in a reduction in or refund of the selling price of a product or service in a single exchange transaction be recorded as a reduction of revenues. The Company adopted EITF 00-14 in the
first quarter 2001. The amount of "free plays" and coupons to date has not been significant. The Company's accounting policy related to free or discounted rooms, food and beverage and other services
already complies with EITF 00-14.

7

---

In February 2001, the EITF reached a partial consensus on EITF 00-22, "Accounting for 'Points' and Certain Other Time-Based or Volume-Based Sales Incentive Offers, and Offers for Free
Products or Services to be Delivered in the Future." The consensus requires that vendors recognize the cash rebate or refund obligation association with time- or volume-based cash rebates as a
reduction of revenue based on a "systematic and rational allocation of the cost of honoring rebates or refunds earned and claimed to each of the underlying revenue transactions that result in progress
by the customer toward earning the rebate or refund." The liability for such obligations should be based on the estimate amount of rebates or refunds to be ultimately earned, including an estimation
of "breakage" if it can be reasonably estimated. The consensus is applicable beginning in the first quarter of 2001. The Company's players' club allows customers to earn certain complimentary services
and/or cash rebates based on the volume of the customers' gaming activity. The Company adopted EITF 00-22 in the first quarter 2001. The Company reduced casino revenues by $.8 million for the three
months ended March 31, 2001, which represented the estimated increase in value related to the slot club points to be ultimately earned.

6.  Related Party Transactions

Since January 1, 2000, LCNI has funded approximately $870,880 of deposits relating to the payment for certain furniture, fixtures and equipment that is
leased under Gaming's operating lease facility with General Electric Capital Corporation. The deposits will be refunded directly to LCNI by the lessors and therefore such amount has not been reflected
in the accompanying financial statements. As of March 31, 2001, $466,602 has been refunded directly to LCNI.

7.  Long-Term Debt Interest Rate Swaps

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. Effective July 20, 2000, Gaming restructured its interest rate derivative financial instruments. In July, 2000, Gaming
received $1 million from the counterparty related to the termination of the previous interest rate ceilings and floor caps.

Beginning
June 30, 1999, Gaming had 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. 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, went into effect and mature on
September 30, 2006; and (ii) 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.

Beginning
July 20, 2000, Gaming has the following interest rate derivative financial instruments in effect: (i) an interest rate collar with an amortizing notional amount of $245.7
million ($232.8 million at March 31, 2001), 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 an amortizing
notional amount of $159.2 million ($158.0 million at March 31, 2001), 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 the three-months 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.

8

---

The notional amounts do not represent amounts exchanged by the parties, and thus are not a measure of exposure of the Company. 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
the Company nor the counterparty, which is a prominent financial institution, is required to collateralize their respective obligations under these swaps. The Company 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. The Company does not
hold or issue rate agreements for trading purposes.

8.  Commitments and Contingencies

As of March 31, 2001, the Company had accrued approximately $11.6 million in construction payables. In May 2001, the Company paid $8.0 million of
such amount. The Company currently expects to finalize payments of the balance during the second quarter 2001.

In
December 2000, Aladdin Bazaar, LLC ("Bazaar") initiated an arbitration against Gaming alleging various defaults by Gaming under the respective agreements between the
parties. Gaming has filed its counter-claims against Bazaar. Such arbitration is continuing, with the parties currently developing a discovery plan and the arbitration hearings have been tentatively
set to commence in mid-January 2002.

In
December 2000, Korte-Bellew & Associates ("KBA") initiated in Nevada State District Court action seeking foreclosure on its mechanic's lien and payment of
approximately $7.8 million. Pursuant to the construction contract between Gaming and KBA, the matter has been removed from the District Court and the parties will attempt mediation, and if the
mediation does not result in agreement between the parties, the matter will be sent to binding arbitration to determine the disputes.

9.  Liquidity

As of May 7, 2001, the Company had unrestricted funds available of approximately $9.0 million. The estimated principal and interest payments
pursuant to the Bank Credit Facility for the next twelve months are as follows:

Due Date

Form

Amount6/29/01

Principal

$4.8 million6/29/01

Interest

$0.1 million7/31/01

Interest

$8.8 million9/28/01

Principal

$5.8 million9/28/01

Interest

$0.1 million10/31/01

Interest

$8.8 million12/31/01

Principal

$5.8 million12/31/01

Interest

$0.1 million1/31/02

Interest

$8.5 million3/31/02

Principal

$5.8 million3/31/02

Interest

$0.1 million5/1/02

Interest

$8.3 millionTOTAL



$57.0 million


9

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The
estimated principal and interest payments pursuant to the FF&E Facility for the next twelve months are as follows:

Due Date

Form

Amount6/1/01

Principal

$.65 million6/1/01

Lease Payment

$3.35 million6/1/01

Interest

$.47 million9/3/01

Principal

$.65 million9/3/01

Lease Payment

$3.25 million9/3/01

Interest

$.42 million12/1/01

Principal

$.70 million12/1/01

Lease Payment

$3.24 million12/1/01

Interest

$.40 million3/1/02

Principal

$.70 million3/1/02

Lease Payment

$3.23 million3/1/02

Interest

$.38 millionTOTAL



$17.44 million


The Company estimates that unrestricted cash on hand and projected internally generated funds will be sufficient to fund the Company's current
operations, however, such amounts will not be sufficient to fund all the principal and interest payments on the Company's debt for the next twelve months. The Company and the Sponsors are seeking
alternatives to improve the Company's current liquidity, which may include incurring additional indebtedness, to the extent permitted under the Company's various credit facilities, sale of an adjacent
5-acre parcel of undeveloped land, reaching an agreement with the Company's creditors reducing the Company's liquidity needs and/or cash equity infusions. In order for the Company to fund
all the principal and interest payments, the Company will continue to rely on payments by the Sponsors pursuant to the Keep-Well Agreement. However, there can be no assurances that the
Company or the Sponsors will be able to improve the Company's current liquidity or that the Sponsors will continue to perform pursuant to the Keep-Well Agreement. In the event the
Company's
liquidity does not improve or that the Sponsors do not perform under the Keep-Well Agreement or that the Company is unable to reach agreements with its creditors reducing the Company's
liquidity needs, there would be serious doubt as to whether or not the Company will be able to continue as a going concern. The Company's auditors have included an explanatory paragraph in their
opinion for the year ended December 31, 2000, which expresses substantial doubt about the Company's ability to continue as a going concern.

On
March 30, 2001, Gaming and the various lenders under the Bank Credit Facility amended the Bank Credit Facility. This amendment provided: (a) a waiver of Gaming's compliance with
the Total Debt to EBITDA Ratio, the Interest Coverage Ratio and the EBITDA covenants required pursuant to the Bank Credit Facility for the fiscal quarters ending on or prior to March 31, 2001; (b) a
waiver until August 18, 2001 of the requirement to fund the FF&E Reserve, provided that Gaming cannot make certain Restricted Payments until the FF&E Reserve is funded as otherwise required by the
Bank Credit Facility; (c) a waiver of the default that otherwise would have occurred as a result of a "going concern" qualification to the Company's auditor's report in respect of the Company's
financial statements for the fiscal year ended December 31, 2000; (d) amendments to Gaming's following financial covenants (i) Total Debt to EBITDA Ratio: Quarter ended March 31, 2001, 6.4:1.0;
Quarter ended June 30, 2001, 6.0:1.0; Quarter ended September 30, 2001, 6.0:1.0; and Quarter ended December 31, 2001, 5.1:1.0; (ii) Interest Coverage Ratio: Quarter ended March 31, 2001, 1.6:1.0;
Quarter ended June 30, 2001, 1.6:1.0; Quarter ended September 30, 2001, 1.6:1.0; and Quarter ended December 31, 2001, 1.7:1.0; (iii) EBITDA: Quarter ended March 31, 2001, $75 million; Quarter ended
June 30, 2001, $80 million; Quarter ended September 30, 2001, $80 million; and Quarter ended December 31, 2001 $90 million; and (e) for certain other technical and/or definitional amendments to
further the above waivers and amendments. The foregoing is qualified in its entirety by the "Sixth Amendment to Credit Agreement," dated March 30, 2001. There can be no assurances that Gaming can
comply with the revised financial covenant levels. Absent an improvement in Gaming's operating results or cash equity

10

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contributions to Gaming pursuant to the Keep-Well Agreement, Gaming estimates that, based on its results year-to-date, it may not be in compliance with the revised financial covenant levels for the
quarter ended June 30, 2001.

London
Clubs International plc ("London Clubs"), the Sommer Trust, Aladdin Bazaar Holdings, LLC ("Bazaar Holdings"), which is indirectly owned 99% by the Sommer Trust, Jack Sommer,
the Company's Chairman of the Board, and his spouse Laura Sommer are guarantors under 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. For payments made pursuant
of the Bank Completion Guaranty, Gaming Holdings issues (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 entitled to the benefit of 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. There can be no assurance that the parties to either the Bank Completion Guaranty or the Noteholder Completion Guaranty will be able to make such payments to the Company if
required pursuant to these agreements.

AHL,
Bazaar Holdings and London Clubs entered into the Keep-Well Agreement ("Keep-Well Agreement") in favor of the lenders under the Bank Credit Facility. The
Sommer Trust joined and became a party to the Keep-Well Agreement in July, 2000 (collectively, AHL, Bazaar Holdings, London Clubs and the Sommer Trust, "Sponsors"). The
Keep-Well Agreement is the joint and several agreement of the Sponsors to make certain quarterly cash equity contributions to Gaming if Gaming fails to comply with the Minimum Fixed Charge
Coverage Ratio set forth in the Bank Credit Facility, but in no event shall the aggregate cash equity contributions required to be made in any fiscal year of Gaming exceed $30.0 million. Based
on Gaming's financial results for the quarter ended March 31, 2001, it is estimated that approximately $13.3 million will be due from the Sponsors under the Keep-Well
Agreement ("First Quarter 2001 Keep-Well Payment"). During May, 2001, the Sponsors partially funded the First Quarter 2001 Keep-Well Payment as follows: $1.9 million
Sommer Trust; and $1.5 million London Clubs and the Sponsors collectively had previously pre-funded $1.2 million on March 30, 2001. The $8.7 million remaining
balance of the First Quarter 2001 Keep-Well Payment is due on or before May 29, 2001. There can be no assurances that the Sponsors will, or will be able to, make further cash equity
contributions to Gaming if required pursuant to the Keep-Well Agreement.

10. Liquidity and Management's Plan

Absent an improvement in Gaming's operating results or further cash equity contributions to Gaming pursuant to the Keep-Well Agreement, Gaming
estimates that, based on its year-to-date financial results, it may not be in compliance with the quarter ended June 30, 2001, financial covenant levels contained in the
Bank Credit Facility and the FF&E Facility, as amended. The Company estimates that cash on hand and projected internally generated funds will be sufficient to fund the Company's current operations,
however, such amounts will not be sufficient to fund all the principal and interest payments on the Company's debt for the next twelve months.

In
order for the Company to fund all of its principal and interest payments, the Company will continue to rely on payments from its Sponsors, pursuant to the Keep-Well
Agreement. Further, the Company and the Sponsors are seeking alternatives to improve the Company's current liquidity, which alternatives may include incurring additional indebtedness, to the extent
permissible under the Company's various credit facilities, sale of an adjacent 5-acre parcel of undeveloped land, reaching an agreement with the Company's creditors reducing the Company's
liquidity needs and/or equity infusions from either a third party and/or the Sponsors.

11

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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.

General

Aladdin Gaming Holdings, LLC, a Nevada limited liability company ("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 131/2% Senior Discount Notes ("Notes"). Capital
does not have any material operations or assets and has no revenues.

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

As
of March 31, 2001, Gaming Holdings common membership interests ("Holdings Common Membership Interests") were held 39.953125% by London Clubs Nevada Inc ("LCNI"), a
subsidiary of London Clubs International plc ("London Clubs"); 31.859375% by Sommer Enterprises, LLC, a Nevada limited liability company ("Sommer Enterprises"), which is a subsidiary of AHL; 25.0% by
Aladdin Gaming Enterprises, Inc., a Nevada corporation ("Gaming Enterprises"), which is a subsidiary of Sommer Enterprises; 3.0% by GAI, LLC, a Nevada limited liability company, which is owned
by Richard J. Goeglein, the President and Chief Executive Officer of Gaming Holdings; and 0.1875% by Jose Rueda, a former executive of Gaming Holdings.

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, construction and, as of August 18, 2000, the operation of a new Aladdin Resort &
Casino ("Aladdin"). The Aladdin is the centerpiece of an approximately 35-acre world-class resort, casino and entertainment complex ("Complex"). The Aladdin includes a hotel which has
2,567 rooms ("Hotel"), an approximately 116,000 square foot Casino ("Casino"), five restaurants and one leased restaurant. The Casino's main gaming area contains approximately 2,165 slot machines, 68
table games, keno and a race and sports book facility. Included on a separate level of the Casino is an approximately 15,000 square foot luxurious gaming section ("The London Club at Aladdin") that
contains approximately 30 high denomination table games and approximately 85 high denomination slot machines. The Hotel will contain an approximately 32,000 square foot spa, which is currently being
constructed, and will be operated, by a subsidiary of Steiner Leisure Limited, and is expected to be completed in the fourth quarter, 2001. The Complex is comprised of: (i) the Aladdin;
(ii) a themed entertainment shopping mall with approximately 496,000 square feet of retail space ("Desert Passage"); (iii) the renovated 7,000 seat Theater for the Performing Arts
("Theater"); and (iv) an 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 Sommer Trust.

12

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Results of Operations

Three Months Ended March 31, 2001

Until August 18, 2000, the Company was in the development stage and did not have any historical operating income as there were no operating revenues.
Prior to August 18, 2000, the Company's operating expenses primarily consisted of interest, amortization costs, expenses related to the Notes and pre-opening costs. Due to the short
operating period, there will not be a comparative discussion of prior periods included in this Form 10-Q. Historical results may not be indicative of future operating results.

For
the quarter ended March 31, 2001, the Aladdin produced gross revenues of $82.5 million. Casino revenue (which includes both the main Casino and The London Club at
Aladdin) represented 40% of gross revenue, hotel 34% of gross revenue, food and beverage 22% of gross revenue, and entertainment and other revenue 4% of gross revenue. The net loss for the quarter was
$47.2 million including the recording of an Accumulated effect of change in accounting principle expense of $10.7 million and an Interest rate collar expense of $8.5 million
related to the adoption of SFAS No. 133.

Revenues

The Casino revenues (inclusive of The London Club at Aladdin) of $33.1 million were derived $15.8 million from slot operations,
$16.8 million from table games and $.5 million from other sources of gaming revenue. The London Club at Aladdin produced $7.3 million of Casino revenues, $6.7 million from
table games and $.6 million from slot operations.

The
overall table games gross win percentage was 14.5% for the quarter ended March 31, 2001, while the average daily win per table game was $2,115. The Company expects the
normal gross win percentage to be approximately 17.5% for table games. The overall average slot gross daily win per unit was $86 during the quarter ended March 31, 2001.

During
March 2001, the Company hired two new Casino marketing executives, who have been focused on slot and table games marketing. Casino marketing efforts have been focused on
enhancing the customer data base, implementing an aggressive direct mail program and increasing the number of entertainment events in the Theater for Performing Arts and Casino events and promotions.
The Company also completed a reconfiguration of the slot gaming floor. The Company believes such redesign has improved the competitiveness of the slot machine product and has enhanced customer traffic
flow. Currently, the Company operates approximately 2,250 slot machines and 98 table games. Slot gross daily win per unit improved during the quarter from $72 in January, 2001, to $101 in March, 2001.
The Company estimates the new programs and slot gaming floor reconfiguration will continue to improve Casino revenues during the second quarter 2001. There can be no assurances that such improvement
will be significant or that other negative factors could arise offsetting such improvement.

The
Company experienced hotel occupancy of 89.5% at an average daily rate of $139 during the quarter ended March 31, 2001. During the quarter ended March 31, 2001, the
Company completed organizational changes to its marketing and advertising functions with the implementation of new media and advertising campaigns. The Company increased occupancy from 78% in January,
2001, to 90% and 99% for February and March, 2001, respectively. Occupancy trends are expected to continue in the 95% range during the second quarter 2001.

Costs and Expenses

The Company continued its cost containment and profit enhancement programs during the quarter ended March 31, 2001. The programs primarily focused on
labor efficiency and procurement activities. The Company reduced its full time equivalent number of employees from approximately 4,500 upon

13

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opening of the Aladdin to approximately 3,050 as of May 7, 2001, which the Company believes will result in approximately $10.0 million of annual labor cost savings. There can be no
assurances that savings realized will be significant or that other negative factors could arise off setting such improvement.

Other Factors Affecting Earnings

On January 1, 2001, the Company adopted the SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities." The Company recorded a liability of
$19.2 million representing the fair market value of its interest rate collars at March 31, 2001. Corresponding to the adoption of SFAS No. 133, the Company recorded a
$10.7 million accumulated effect of change in accounting principle and $8.5 million interest rate collar expense on the Condensed Consolidated Statement of Operations for the Three
Months Ended March 31, 2001.

Liquidity and Capital Resources

During the quarter ended March 31, 2001, the Company generated net cash of approximately $1.1 million from operating activities and raised
$10.8 million from the Sponsors' contributions pursuant to the Keep-Well Agreement requirement related to the quarter ended December 31, 2000. The combined funds were utilized primarily
to fund principal payments of $5.6 million. The unrestricted cash balance during the period increased approximately $5.3 million to $25.5 million as of March 31, 2001 (see
the Condensed Consolidated Statement of Cash Flows for the Three Months Ended March 31, 2001, contained in this Form 10-Q). On May 3, 2001, the Company made its scheduled interest
payment of approximately $11.3 million related to the Bank Credit Facility.

As
of March 31, 2001, the Company estimated that remaining project construction payables were $11.6 million. During May, 2001, the Company utilized restricted funds to
pay approximately $8.0 million toward the project construction costs, The Company anticipates utilizing $3.6 million of restricted funds during the second quarter 2001 to satisfy all
remaining construction related payables.

As
of May 7, 2001, the Company had unrestricted funds available of approximately $9.0 million. The estimated principal and interest payments pursuant to the Bank Credit
Facility for the next twelve months are as follows:

Due Date

Form

Amount6/29/01

Principal

$4.8 million6/29/01

Interest

$0.1 million7/31/01

Interest

$8.8 million9/28/01

Principal

$5.8 million9/28/01

Interest

$0.1 million10/31/01

Interest

$8.8 million12/31/01

Principal

$5.8 million12/31/01

Interest

$0.1 million1/31/02

Interest

$8.5 million3/31/02

Principal

$5.8 million3/31/02

Interest

$0.1 million5/01/02

Interest

$8.3 millionTOTAL



$57.0 million


14

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The
estimated principal and interest payments pursuant to the FF&E Facility for the next twelve months are as follows:

Due Date

Form

Amount6/1/01

Principal

$.65 million6/1/01

Lease Payment

$3.35 million6/1/01

Interest

$.47 million9/3/01

Principal

$.65 million9/3/01

Lease Payment

$3.25 million9/3/01

Interest

$.42 million12/1/01

Principal

$.70 million12/1/01

Lease Payment

$3.24 million12/1/01

Interest

$.40 million3/1/02

Principal

$.70 million3/1/02

Lease Payment

$3.23 million3/1/02

Interest

$.38 millionTOTAL



$17.44 million


The
Company estimates that unrestricted cash on hand and projected internally generated funds will be sufficient to fund the Company's current operations, however, such amounts will
not be sufficient to fund all the principal and interest payments on the Company's debt for the next twelve months. The Company and the Sponsors are seeking alternatives to improve the Company's
current liquidity, which may include incurring additional indebtedness, to the extent permitted under the Company's various credit facilities, sale of an adjacent 5-acre parcel of
undeveloped land, reaching an agreement with the Company's creditors reducing the Company's liquidity needs and/or cash equity infusions. In order for the Company to fund all the principal and
interest payments, the Company will continue to rely on payments by the Sponsors pursuant to the Keep-Well Agreement. However, there can be no assurances that the Company or the Sponsors
will be able to improve the Company's current liquidity or that the Sponsors will continue to perform pursuant to the Keep-Well Agreement. In the event the Company's liquidity does not
improve or that the Sponsors do not perform under the Keep-Well Agreement or that the Company is unable to reach agreements with its creditors reducing the Company's liquidity needs, there
would be serious doubt as to whether or not the Company will be able to continue as a going concern. The Company's auditors have included an explanatory paragraph in their opinion for the year ended
December 31, 2000, which expresses substantial doubt about the Company's ability to continue as a going concern.

On
March 30, 2001, Gaming and the various lenders under the Bank Credit Facility amended the Bank Credit Facility. This amendment provided: (a) a waiver of Gaming's compliance with
the total debt to EBITDA ratio, the interest coverage ratio and the EBITDA covenants required pursuant to the Bank Credit Facility for the fiscal quarters ending on or prior to March 31, 2001; (b) a
waiver until August 18, 2001, of the requirement to fund the FF&E reserve, provided that Gaming cannot make certain restricted payments until the FF&E reserve is funded as otherwise required by the
Bank Credit Facility; (c) a waiver of the default that otherwise would have occurred as a result of a 'going concern' qualification to the Company's auditor's report in respect of the Company's
financial statements for the fiscal year ended December 31, 2000; (d) amendments to certain of Gaming's financial covenants. The foregoing is qualified in its entirety by the 'Sixth Amendment
to Credit Agreement,' dated March 30, 2001. There can be no assurances that Gaming can comply with the revised financial covenant levels. Absent an improvement in Gaming's operating results or cash
equity contributions to Gaming pursuant to the Keep-Well Agreement, as defined below, Gaming estimates that, based on its results year-to-date, it may not be in compliance with the revised financial
covenant levels for the quarter ended June 30, 2001. Corresponding amendments and waivers have been made to the FF&E Facility.

15

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London Clubs International plc ("London Clubs"), the Sommer Trust, Aladdin Bazaar Holdings, LLC ("Bazaar Holdings"), which is indirectly owned 99% by the Sommer Trust, Jack Sommer,
the Company's Chairman of the Board, and his spouse Laura Sommer are guarantors under 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. For payments made pursuant
of the Bank Completion Guaranty, Gaming Holdings issues (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 entitled to the benefit of 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. There can be no assurance that the parties to either the Bank Completion Guaranty
or the Noteholder Completion Guaranty will be able to make such payments to the Company if required pursuant to these agreements.

AHL,
Bazaar Holdings and London Clubs entered into the Keep-Well Agreement ("Keep-Well Agreement") in favor of the lenders under the Bank Credit Facility. The
Sommer Trust joined and became a party to the Keep-Well Agreement in July, 2000 (collectively, AHL, Bazaar Holdings, London Clubs and the Sommer Trust, "Sponsors"). The
Keep-Well Agreement is the joint and several agreement of the Sponsors to make certain quarterly cash equity contributions to Gaming if Gaming fails to comply with the Minimum Fixed Charge
Coverage Ratio set forth in the Bank Credit Facility, but in no event shall the aggregate cash equity contributions required to be made in any fiscal year of Gaming exceed $30.0 million. Based
on Gaming's financial results for the quarter ended March 31, 2001, it is estimated that approximately $13.3 million will be due from the Sponsors under the Keep-Well
Agreement ("First Quarter 2001 Keep-Well Payment"). During May, 2001, the Sponsors partially funded the First Quarter 2001 Keep-Well Payment as follows: $1.9 million
Sommer Trust; and $1.5 million London Clubs and the Sponsors collectively pre-paid $1.2 million on March 30, 2001. The $8.7 million remaining balance of the
First Quarter 2001 Keep-Well Payment is due on or before May 29, 2001. There can be no assurances that the Sponsors will, or will be able to, make further cash equity contributions to Gaming if
required pursuant to the Keep-Well Agreement.

Market Risk

Beginning July 20, 2000, Gaming has the following interest rate derivative financial instruments in effect: (i) an interest rate collar with an amortizing
notional amount of $245.7 million ($232.8 million at March 31, 2001), 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 an amortizing notional amount of $159.2 million ($158.0 million at March 31, 2001), 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 the three-months 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 fair market value of Gaming's interest rate derivative
financial instruments as provided by the counterparty, is a net payable of approximately $19.2 million at March 31, 2001, which is included in the Company's Condensed Consolidated Financial
Statements.

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 based on the notional amounts and
other terms of the swaps. The variable rates are subject to change over time as LIBOR fluctuates.

16

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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.

Gaming
has a credit facility with various financial institutions which consists of four separate term loans. Gaming pays interest on each term loan at LIBOR plus between 150 and 300
basis points. Gaming has entered into the collar instruments discussed above to assist in managing interest variability on its long-term debt. If the notional amounts on the collar differs from the
long-term debt balances, Gaming may be exposed to additional interest rate variability. On the aforementioned collar instruments, Gaming will pay the hedge counterparty to the extent that the
three-month LIBOR drops below 6.25% and will receive payments from the hedge counterparty to the extent the three-month LIBOR exceeds 8.0% on the then outstanding notional amount of such instruments.

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 the Bank Credit Facility, FF&E Facility, the Keep-Well Agreement and other agreements, plans for future operations, current operations, other business development activities, capital
spending, financing sources and 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 operations, the Company's liquidity and the extent of the Company's alternatives thereto, the
sources and extent of the Sponsors' liquidity and the Sponsors' payments under the Keep-Well Agreement, dependence on existing management, leverage and debt service, domestic or
international economic conditions, 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 retention of licenses and approvals under applicable jurisdictional laws and regulations (including gaming laws and regulations).

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There is incorporated by reference the information appearing under the caption "Market Risk" in Item 2 of this Form 10-Q.

17

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Item 6.                      Exhibits and Reports on Form 8-K

(a)

Exhibits10.01

Sixth Amendment to Credit Agreement, dated as of March 30, 2001, between Aladdin Gaming, LLC and The Bank of Nova Scotia, as the Administrative Agent for Various Financial Institutions.10.02

First Amendment to Keep-Well Agreement, dated as of March 30, 2001, between London Clubs International plc, The Trust under Article Sixth under the will of Sigmund Sommer, Aladdin Bazaar Holdings, LLC, and Aladdin Holdings LLC and The Bank of
Nova Scotia, as the Administrative Agents for Various Financial Institutions.10.03

Agreement of Amendment No. 5, dated the 30th day of March, 2001 among General Electric Capital Corporation, for itself and as agent for certain participants, GMAC Commercial Mortgage Corporation and Aladdin Gaming, LLC.(b)

Reports on Form 8-K: None.


18

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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
|------------ |  | ----------------------------
|May 15, 2001 |  | By:                         
|May 15, 2001 |  | By:                         

|             |  | ALADDIN CAPITAL CORP.
|------------ |  | ---------------------
|May 15, 2001 |  | By:                  
|May 15, 2001 |  | By:                  

19

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EXHIBIT INDEX

|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                     
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.01       |  | Sixth Amendment to Credit Agreement, dated as of March 30, 2001, between Aladdin Gaming, LLC and The Bank of Nova Scotia, as the Administrative Agent for Various Financial Institutions.                                                                                                                                       
|10.02       |  | First Amendment to Keep-Well Agreement, dated as of March 30, 2001, between London Clubs International plc, The Trust under Article Sixth under the will of Sigmund Sommer, Aladdin Bazaar Holdings, LLC, and Aladdin
Holdings LLC and The Bank of Nova Scotia, as the Administrative Agents for Various Financial Institutions.
|10.03       |  | Agreement of Amendment No. 5, dated the 30th day of March, 2001 among General Electric Capital Corporation, for itself and as agent for certain participants, GMAC Commercial Mortgage Corporation and
Aladdin Gaming, LLC.                                                                                                     

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