<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)

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

         For the quarterly period ended: June 30, 1999
                                         ------------------------------------

                                      OR

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

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

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

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

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

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

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

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

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

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

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

<PAGE>

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                           YES  X      NO
                                               ---        ---

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

                          ALADDIN GAMING HOLDINGS, LLC

                                 Not applicable

                           ALADDIN CAPITAL CORPORATION

       2,500 shares of common stock, no par value as of June 30, 1999.

                                      ii
<PAGE>

                          ALADDIN GAMING HOLDINGS, LLC
                                AND SUBSIDIARIES

                          (A DEVELOPMENT STAGE COMPANY)

                                      INDEX

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

   Item 1.    Financial Statements

              Consolidated Balance Sheets
                June 30, 1999 and December 31, 1998..................................       1

              Consolidated Statements of Operations
                For the three and six months ended June 30, 1999 and 1998 and for
                the period from inception (December 1, 1997) through June 30, 1999...           2

              Consolidated Statements of Members' Equity
                For the period from inception (December 1, 1997) through June 30,
                1999.................................................................     3-5

              Consolidated Statements of Cash Flows
                For the six months ended June 30, 1999 and 1998 and for
                the period from inception (December 1, 1997) through June 30, 1999...     6-7

              Notes to the Consolidated Financial Statements.........................    8-11

              Management's Discussion and Analysis of Financial Condition and
   Item 2.      Results of Operations................................................   12-18

   Item 3.    Quantitative and Qualitative Disclosures About Market Risk.............      19

PART II       OTHER INFORMATION

   Item 6.    Exhibits and Reports on Form 8-K.......................................      20

Signatures    .......................................................................      21

Exhibit Index .......................................................................      22
</TABLE>

                                      iii
<PAGE>


PART I.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS


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

                        CONSOLIDATED BALANCE SHEETS
                 AS OF JUNE 30, 1999 AND DECEMBER 31, 1998
                               (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                          JUNE 30, 1999          DECEMBER 31, 1998
                                                          -------------          -----------------
                                                           (unaudited)
<S>                                                       <C>                    <C>
                  ASSETS
Current assets:
  Cash                                                     $  1,771                  $  1,248
  Restricted land                                             6,842                     6,842
  Other current assets                                        1,536                     1,021
                                                           --------                  --------
         Total current assets                                10,149                     9,111
                                                           --------                  --------

Property and equipment:
  Land                                                       33,407                    33,407
  Furniture and equipment                                       440                       272
  Construction in progress                                  171,266                    86,557
  Capitalized interest                                       19,198                     8,213
                                                           --------                  --------
                                                            224,311                   128,449
  Less accumulated depreciation                                  67                        17
                                                           --------                  --------
                                                            224,244                   128,432
Other assets
  Restricted cash                                           177,202                   227,983
  Other assets                                                3,270                     2,920
  Debt issuance costs, net of accumulated
    amortization of $4,601 and $2,831                        32,545                    34,315
                                                           --------                  --------
         Total other assets                                 213,017                   265,218
                                                           --------                  --------

                                                           $447,410                  $402,761
                                                           --------                  --------
                                                           --------                  --------

        LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
  Accounts payable                                         $  2,835                  $  3,394
  Construction payable                                       21,376                    12,063
  Obligation to transfer land                                 6,842                     6,842
  Accrued expenses                                            2,384                     1,847
                                                           --------                  --------
         Total current liabilities                           33,437                    24,146
                                                           --------                  --------

Long-term debt, net of discount                             397,835                   388,353

Related party payables and other liabilities                  5,331                     4,122

Members' equity:
  Preferred membership interest - Series A                   40,058                      ---
  Preferred membership interest - Series B                     ---                       ---
  Common membership interest                                 28,608                    28,608
  Deficit accumulated during the development stage          (57,859)                  (42,468)
                                                           --------                  --------
         Total members' equity                               10,807                   (13,860)
                                                           --------                  --------

                                                           $447,410                  $402,761
                                                           --------                  --------
                                                           --------                  --------
</TABLE>

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


                                       1
<PAGE>


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

                    CONSOLIDATED STATEMENTS OF OPERATIONS
          FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998
             AND FOR THE PERIOD FROM INCEPTION (DECEMBER 1, 1997)
                            THROUGH JUNE 30, 1999
                               (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                                                      FOR THE PERIOD
                                                              FOR THE                                               DECEMBER 1, 1997
                                      FOR THE THREE      THREE MONTHS           FOR THE SIX         FOR THE SIX          (INCEPTION)
                                       MONTHS ENDED        ENDED JUNE          MONTHS ENDED        MONTHS ENDED              THROUGH
                                      JUNE 30, 1999          30, 1998         JUNE 30, 1999       JUNE 30, 1998        JUNE 30, 1999
                                        (UNAUDITED)       (UNAUDITED)           (UNAUDITED)         (UNAUDITED)          (UNAUDITED)
                                     ---------------    --------------     -----------------    ----------------    ---------------
<S>                                  <C>                <C>                <C>                  <C>                 <C>
Pre-opening costs                       $ 2,544             $ 2,821             $  4,841             $14,284             $ 29,578

Other (income) expense:
  Interest income                        (2,345)             (4,053)              (4,893)             (5,637)             (17,365)
  Interest expense                       12,706              11,072               25,597              15,459               64,013
  Less:  Interest capitalized            (6,220)             (1,870)             (10,984)             (2,414)             (19,197)
                                        -------             -------             --------             -------             --------
     Total other (income) expense         4,141               5,149                9,720               7,408               27,451
                                        -------             -------             --------             -------             --------
Net loss accumulated during the
 development stage                      $ 6,685             $ 7,970             $ 14,561             $21,692             $ 57,029
                                        -------             -------             --------             -------             --------
                                        -------             -------             --------             -------             --------
</TABLE>








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


                                     2

<PAGE>


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

                  CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY
               FOR THE PERIOD FROM INCEPTION (DECEMBER 1, 1997)
                            THROUGH JUNE 30, 1999
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                         SOMMER ENTERPRISES, LLC                       ALADDIN GAMING ENTERPRISES, LLC
                                ------------------------------------------      --------------------------------------------
                                                                  DEFICIT                                           DEFICIT
                                                              ACCUMULATED                                       ACCUMULATED
                                    COMMON      PREFERRED      DURING THE           COMMON        PREFERRED      DURING THE
                                MEMBERSHIP     MEMBERSHIP     DEVELOPMENT       MEMBERSHIP       MEMBERSHIP     DEVELOPMENT
                                  INTEREST       INTEREST           STAGE         INTEREST         INTEREST           STAGE
                                -----------    ----------     -----------       ----------       ----------     -----------
<S>                             <C>            <C>            <C>               <C>              <C>            <C>
Balance, December 1, 1997                -              -               -                -                -               -

Member Contributions                     1              -               -                -                -               -
                                -----------    ----------     -----------       ----------       ----------     -----------

Balance, December 31, 1997               1              -               -                -                -               -

Net loss for the period                  -              -         (19,960)               -                -         (10,617)

Member Contributions               (47,317)             -               -           28,247                -               -

Members' equity costs               (1,093)             -               -             (581)               -               -
                                -----------    ----------     -----------       ----------       ----------     -----------

Balance, December 31, 1998         (48,409)             -         (19,960)          27,666                -         (10,617)

Net loss for the period                  -              -          (6,844)               -                -          (3,640)

Member Contributions                     -         29,421               -                -                -               -

Preferred return                         -            622            (390)               -                -            (208)
                                -----------    ----------     -----------       ----------       ----------     -----------

Balance, June 30, 1999             (48,409)        30,043         (27,194)          27,666                -         (14,465)
                                -----------    ----------     -----------       ----------       ----------     -----------
</TABLE>


                                       3
<PAGE>


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

                  CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY
               FOR THE PERIOD FROM INCEPTION (DECEMBER 1, 1997)
                            THROUGH JUNE 30, 1999
                                (IN THOUSANDS)
                                  (UNAUDITED)
                                  (continued)

<TABLE>
<CAPTION>
                                          LONDON CLUBS NEVADA, INC.                               GAI, LLC
                                  ------------------------------------------     -----------------------------------------
                                                                     DEFICIT                                       DEFICIT
                                                                 ACCUMULATED                                   ACCUMULATED
                                      COMMON      PREFERRED       DURING THE         COMMON      PREFERRED      DURING THE
                                  MEMBERSHIP     MEMBERSHIP      DEVELOPMENT     MEMBERSHIP     MEMBERSHIP     DEVELOPMENT
                                    INTEREST       INTEREST            STAGE       INTEREST       INTEREST           STAGE
                                  -----------    ----------      -----------     ----------     ----------     -----------
<S>                               <C>            <C>             <C>             <C>            <C>            <C>
Balance, December 1, 1997                  -              -                -              -              -               -

Member Contributions                       -              -                -              2              -               -
                                  -----------    ----------      -----------     ----------     ----------     -----------

Balance, December 31, 1997                 -              -                -              2              -               -

Net loss for the period                    -              -          (10,617)             -                         (1,274)

Member Contributions                  50,000              -                -              -              -               -

Members' equity costs                   (581)             -                -            (70)             -               -
                                  -----------    ----------      -----------     ----------     ----------     -----------

Balance, December 31, 1998            49,419              -          (10,617)           (68)             -           (1,274)

Net loss for the period                    -              -           (3,640)             -              -             (437)

Member Contributions                       -          9,807                -              -              -                -

Preferred return                           -            208             (208)             -              -              (24)
                                  -----------    ----------      -----------     ----------     ----------     -----------

Balance, June 30, 1999                49,419         10,015          (14,465)           (68)             -           (1,735)
                                  -----------    ----------      -----------     ----------     ----------     -----------
</TABLE>

                                       4

<PAGE>


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

                  CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY
               FOR THE PERIOD FROM INCEPTION (DECEMBER 1, 1997)
                            THROUGH JUNE 30, 1999
                                (IN THOUSANDS)
                                  (UNAUDITED)
                                  (continued)

<TABLE>
<CAPTION>
                                                        TOTAL
                                    ----------------------------------------------
                                                                          DEFICIT
                                                                      ACCUMULATED
                                        COMMON           PREFERRED     DURING THE
                                    MEMBERSHIP          MEMBERSHIP    DEVELOPMENT
                                      INTEREST            INTEREST          STAGE
                                    -----------         ----------    -----------
<S>                                 <C>                 <C>           <C>
Balance, December 1, 1997                    -                   -              -

Member Contributions                         3                   -              -
                                    -----------         ----------    -----------

Balance, December 31, 1997                   3                   -              -

Net loss for the period                      -                   -        (42,468)

Member Contributions                    30,930                   -              -

Members' equity costs                   (2,325)                  -              -
                                    -----------         ----------    -----------

Balance, December 31, 1998              28,608                   -        (42,468)

Net loss for the period                      -                   -        (14,561)

Member Contributions                         -              39,228              -

Preferred return                             -                 830           (830)
                                    -----------         ----------    -----------

Balance, June 30, 1999                  28,608              40,058        (57,859)
                                    -----------         ----------    -----------
</TABLE>

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


                                       5
<PAGE>


                           ALADDIN GAMING HOLDINGS, LLC
                                 AND SUBSIDIARIES

                          (A DEVELOPMENT STAGE COMPANY)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
              AND FOR THE PERIOD FROM INCEPTION (DECEMBER 1, 1997)
                               THROUGH JUNE 30, 1999
                                   (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                                    FOR THE PERIOD
                                                                                                   DECEMBER 1, 1997
                                                    FOR THE SIX              FOR THE SIX              (INCEPTION)
                                                    MONTHS ENDED             MONTHS ENDED          THROUGH JUNE 30,
                                                   JUNE 30, 1999            JUNE 30, 1998                1999
                                                    (UNAUDITED)              (UNAUDITED)              (UNAUDITED)
                                                 -------------------    ----------------------    --------------------
<S>                                              <C>                    <C>                       <C>
Cash used in operating activities                          $ (2,937)                 $ (9,434)              $ (23,596)
                                                 -------------------    ----------------------    --------------------

Cash flows from investing activities:
     Payments for construction in progress,
       furniture, equipment and capitalized
       interest                                             (86,549)                  (36,718)               (161,218)

     Decrease (increase) in restricted cash                  50,782                  (274,741)               (177,201)
                                                 -------------------    ----------------------    --------------------
Net cash used in investing activities                       (35,767)                 (311,459)               (338,419)
                                                 -------------------    ----------------------    --------------------

Cash flows from financing activities:
       Proceeds from issuance of notes                           --                   100,047                 100,047
       Proceeds from long-term debt                              --                   274,000                 274,000
       Repayment of long-term debt                               --                       (89)                   (547)
       Debt issuance costs                                       --                   (37,124)                (37,146)
       Members' contributions                                39,228                    65,000                 104,231
       Payment of debt on contributed land                       --                   (74,477)                (74,477)
       Members' equity costs                                     --                    (2,325)                 (2,325)
       Payable to related parties                               (1)                        --                      --
       Advances to purchase membership
         interests                                               --                        --                       3

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

Net cash provided by financing activities                    39,227                   325,032                 363,786
                                                 -------------------    ----------------------    --------------------

Net increase in cash                                            523                     4,139                   1,771
Cash and cash equivalents at the beginning
   of the period                                              1,248                         7                      --
                                                 -------------------    ----------------------    --------------------
Cash and cash equivalents at the end of the
   period                                                   $ 1,771                   $ 4,146                 $ 1,771
                                                 ===================    ======================    ====================
</TABLE>

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

                                       6
<PAGE>

                             ALADDIN GAMING HOLDINGS, LLC
                                   AND SUBSIDIARIES

                           (A DEVELOPMENT STAGE COMPANY)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
              AND FOR THE PERIOD FROM INCEPTION (DECEMBER 1, 1997)
                               THROUGH JUNE 30, 1999
                                     (continued)

<TABLE>

<S>                                                        <C>                       <C>                     <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION:

Cash paid for interest, net of amount
   capitalized                                               $1,892                   $ 3,936                 $13,224
Non-cash investing and financing activities:

   Members' contributions - book value
       Land                                                      --                    33,407                  33,407
       Construction in progress                                  --                     7,000                   7,000
   Equipment acquired equal to assumption
     of debt                                                     --                       547                     547
   Increase in construction payables                          9,313                        --                  21,376
</TABLE>

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

                                       7
<PAGE>


                        ALADDIN GAMING HOLDINGS, LLC
                             AND SUBSIDIARIES

                      (A DEVELOPMENT STAGE COMPANY)

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               JUNE 30, 1999

1.       BUSINESS DESCRIPTION AND BASIS OF PRESENTATION

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

         The consolidated financial statements include the accounts of Gaming
Holdings and all of its subsidiaries. This information should be read in
conjunction with the financial statements set forth in Gaming Holdings'
Annual Report on Form 10-K for the year ended December 31, 1998, the Form
8-K, dated April 27, 1999 and the Form 10-Q for the quarter ended March 31,
1999.

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

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

2.       CLASSES OF INTEREST

         Gaming Holdings has three classes of shares (which represent units
of membership interests in Gaming Holdings): Common Shares ("Gaming Holdings
Common Membership Interests"), Series A Preferred Shares ("Gaming Holdings
Series A Preferred Interests") and Series B Preferred Shares ("Gaming
Holdings Series B Preferred Interests" and together with the Gaming Holdings
Common Membership Interests and the Gaming Holdings Series A Preferred
Interests, the "Gaming Holdings Interests"). Gaming Holdings' authorized
capital stock consists of 10,000,000 Gaming Holdings Common Membership
Interests, 1,500,000 Gaming Holdings Series A Preferred Interests and
1,500,000 Gaming Holdings Series B Preferred Interests. As of June 30, 1999,
Gaming Holdings Common Membership Interests of 1,000,000 and Gaming Holdings
Series A Preferred Share Interests of 392,270 were issued and outstanding. No
Gaming Holdings Series B Preferred Share Interests have been issued as of
June 30, 1999.

                                       8
<PAGE>

         Gaming Holdings will periodically distribute cash, to the extent
available, to the holders of Gaming Holdings Common Membership Interests (or,
if any such holder is a pass-through entity, its equity interest holders) to
the extent of the increase in their cumulative United States federal, state
or local income tax liability in respect of their interests in Gaming
Holdings for such period and make any additional distributions of cash to
Gaming Holdings Members that may be necessary to cover United States federal,
state or local income taxes arising from the ownership of an interest in
Gaming Holdings. No other distributions shall be made to any Gaming Holdings
Interests until all distributions to cover tax liability in respect of any
Gaming Holdings Interests for such period have been made.

         The Gaming Holdings Series A Preferred Interests are issued to
London Clubs Nevada, Inc. ("LCNI"), a subsidiary of London Clubs
International, plc ("London Clubs"), or Sommer Enterprises, LLC ("Sommer
Enterprises") in consideration for any payment required pursuant to the Bank
Completion Guaranty, the Noteholder Completion Guaranty or the Keep-Well
Agreement which is made by Aladdin Holdings, LLC, LCNI or their respective
affiliates to Gaming where such payment is not required to be made to pay
down the Gaming's bank debt pursuant to Section 13 of the Keep-Well
Agreement. Except for distributions to cover any tax liability in respect of
any Gaming Holding Interests, the Gaming Holdings Series A Preferred
Interests will have a first priority in the allocation of profits and a
distribution, redemption and liquidation preference over all Gaming Holdings
Common Membership Interests and Gaming Holdings Series B Preferred Interests.
The capital account in respect of the Gaming Holdings Series A Preferred
Interests will cumulate and compound semi-annually at the rate of 12% per
annum on the capital account balance in respect thereof at the time of
compounding and, subject to the limitations on Restricted Payment set forth
in the Indenture, will be paid upon approval of a supermajority of the Gaming
Holdings Board of Managers.

         During the second quarter of 1999, a total of $39.2 million of
payments were made pursuant to the Bank Completion Guaranty in exchange for
Gaming Holdings Series A Preferred Interests.  As of June 30, 1999, $830,000
was accrued on the Series A Preferred Interest related to contributions made
in the second quarter of 1999.

         Gaming Holdings Series A Preferred Interests will be automatically
redeemed when distributions have been made to the extent of the capital
account balance in respect thereof. Should Gaming Holdings liquidate any time
prior to the redemption of the Gaming Holdings Series A Preferred Interests,
the Gaming Holdings Series A Preferred Interests will be entitled to a
distribution of cash, to the extent available, before any distributions are
made to the Gaming Holdings Series B Preferred Interests or Gaming Holdings
Common Membership Interests, in an amount equal to the capital account of the
Gaming Holdings Series A Preferred Interests.

         The Gaming Holdings Series B Preferred Interests will be issued to
LCNI in the event of and in exchange for a payment required by London Clubs
to pay down Gaming's bank debt pursuant to Section 13 of the Keep-Well
Agreement. Except for distributions to cover any tax liability in respect of
any Gaming Holdings Interests, the Gaming Holdings Series B Preferred
Interests will have a distribution, redemption and liquidation preference
over all Gaming Holdings Common Membership Interests. To the extent of any
net profits left to be allocated after special allocations (as defined in the
Operating Agreement) and allocations to Gaming Holdings Series A Preferred
Interests, the capital account in respect of Gaming Holdings Series B
Preferred Interests will cumulate and compound quarterly at a rate equal to
the rate on the bank debt of the Company which was paid down by the payment
required pursuant to the Keep-Well Agreement, such rate to be applied to the
capital account balance in respect of the Gaming Holdings Series B Preferred
Interests at the time of compounding and, subject to the limitations on
Restricted Payments set forth in the Indenture, will be paid upon approval of
a supermajority of the Gaming Holdings Board of Managers and after all Gaming
Holdings Series A Preferred Interests have been redeemed. Gaming Holdings
Series B Preferred Interests will be automatically redeemed when
distributions have been made to the extent of the capital account balance.
Should Gaming Holdings liquidate at any time prior to the redemption of the

                                       9
<PAGE>

Gaming Holdings Series B Preferred Interests, the Holdings Series B Preferred
Interests will be entitled to a distribution of cash, to the extent
available, before any distributions.

         Other than distributions to cover any tax liability in respect of
any Gaming Holdings Interests, the Gaming Holdings Common Membership
Interests will be entitled to distribution only after all discretionary and
mandatory distributions have been made to all other interests in Gaming
Holdings.

         Except for matters affecting rights of the holders of Gaming
Holdings Series A Preferred Interests and Gaming Holdings Series B Preferred
Interests to distributions, including upon redemption, (which may not be
diminished or affected without the vote of the holders of at least two-thirds
of the issued and outstanding shares of the affected class) and matters
affecting the anti-dilution protections and tag-along participation rights of
the holders of the Warrants and the Warrant Shares (which may not be amended
without the consent of Aladdin Gaming Enterprises, Inc.), all management and
voting rights will be vested in the Gaming Holdings Common Membership
Interests.

         The above summary should be read in conjunction with, and is
qualified in its entirety by, the Gaming Holdings Operating Agreement, see
Exhibit 3.5 to the Gaming Holdings Form 10-K for the fiscal year ended
December 31, 1998.

3.       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.

         Beginning June 30, 1999, Gaming has the following interest rate
swaps, interest rate ceilings and floor caps, and related notional amounts in
effect: (i) an interest rate swap with an original notional amount of $114
million increasing to a maximum of $222.5 million whereby interest is fixed
at 5.50% through March 31, 2000. After March 31, 2000, an interest rate
collar with a notional amount of $250 million, a maximum and minimum interest
rate of 7.5% and 5.15%, respectively, will go into effect and mature on
September 30, 2006; and (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. The
LIBOR applicable to these agreements is adjusted every three months and on
June 30, 1999 was set at 5.33%. The fair market value of the Company's
interest rate swaps, interest rate ceilings and floor caps as provided by the
counterparty to the swaps, is a net receivable of approximately $1 million at
July 21, 1999.

         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. The Company does not hold or issue rate agreements for
trading purposes.

4.       INCOME TAXES

                                      10
<PAGE>

         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 delays the effective date of SFAS No. 133 from fiscal year 2000
to fiscal year 2001. Gaming Holdings is in the process of analyzing SFAS No.
133 and the impact on its consolidated financial position and results of
operations.

                                      11

<PAGE>


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

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

DEVELOPMENT ACTIVITIES

         Aladdin Gaming Holdings, LLC, a Nevada limited liability company
("Gaming Holdings"), was formed on December 1, 1997. Gaming Holdings was
initially owned by Aladdin Gaming Enterprises, Inc., a Nevada corporation
(25%), Sommer Enterprises, LLC, a Nevada limited liability company (72%), and
GAI, LLC, a Nevada limited liability company (3%). On February 26, 1998,
London Clubs International, plc ("London Clubs"), through its subsidiary
London Clubs Nevada, Inc. ("LCNI"), contributed $50.0 million for a 25%
interest of Gaming Holdings common membership interests ("Gaming Holdings
Common Membership Interests"). Sommer Enterprises, LLC ("Sommer Enterprises")
contributed a portion of land for Gaming Holdings Common Membership
Interests. Aladdin Gaming Enterprises, Inc. ("Gaming Enterprises"), which is
owned 100% by Sommer Enterprises, contributed a portion of land, $7 million
of predevelopment costs and $15 million in cash for Gaming Holdings Common
Membership Interests. After the additional contributions, Sommer Enterprises,
LLC owns 47% of Gaming Holdings, LCNI owns 25% of Gaming Holdings, Gaming
Enterprises owns 25% of Gaming Holdings and GAI, LLC owns 3% of Gaming
Holdings. On November 30, 1998, the Trust Under Article Sixth u/w/o Sigmund
Sommer ("Sommer Trust") and its affiliates agreed that they shall vote their
respective Gaming Holdings Common Membership Interests and cause Gaming
Enterprises to vote its Gaming Holdings Common Membership Interests so that
(taking into account Gaming Holdings Common Membership Interests held by
London Clubs or its affiliates) London Clubs controls fifty percent of the
voting power of Gaming Holdings.

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

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

         The operations of the Company have been limited to the design,
development, financing and construction of a new Aladdin Resort and Casino
("Aladdin"). The Aladdin will be the centerpiece of an approximately 35-acre
world-class resort, casino and entertainment complex ("Complex") located on
the site of the former Aladdin hotel and casino in Las Vegas, Nevada, a
premier location on Las Vegas Boulevard. The Aladdin has been designed to
include a luxury themed hotel of approximately 2,600 rooms ("Hotel"), an
approximately 116,000 square foot casino ("Casino") and six restaurants. The
Casino's main gaming area will contain approximately 2,800 slot machines, 87
table games, and a race

                                      12
<PAGE>

and sports book facility. Included on a separate level of the Casino will be
a 15,000 square foot luxurious gaming section ("The London Club") that is
expected to contain an additional 20 to 30 high denomination table games and
approximately 100 high denomination slot machines. The Complex, which has
been designed to promote casino traffic and to provide customers with a wide
variety of entertainment alternatives, will comprise: (i) the Aladdin; (ii)
the themed entertainment shopping mall with approximately 496,000 square feet
of retail space ("Desert Passage"); (iii) a planned second hotel and casino
with a music and entertainment theme ("Aladdin Music Project"); (iv) the
newly renovated 7,000-seat Theater of the Performing Arts ("Theater"); and
(v) the approximately 4,800-space car parking facility ("Carpark" and,
together with the Desert Passage, hereinafter, "Mall Project"). The Mall
Project is separately owned in part by an affiliate of the Company and
Aladdin Music is currently seeking a joint venture partner and financing for
the Aladdin Music Project. The Company believes that the completion of the
Aladdin will occur during the second quarter of the year 2000.

RESULTS OF OPERATIONS

         The Company is in the development stage and has no significant
operations to date. The Company has capitalized all qualifying construction
costs. Accordingly, the Company does not have any historical operating
income. The capitalized costs consist primarily of land contributed by
certain members of Gaming Holdings, design fees, financing and commitment
fees, construction costs and interest on qualifying assets. Capitalized costs
include approximately $2.2 million related to the Aladdin Music Project for
necessary predevelopment costs and expenses of the Aladdin Music Project. The
Company's operating expenses primarily have consisted of interest,
amortization costs, expenses related to the Notes and pre-opening costs.

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

         Pre-opening expenses for the three and six months ended June 30,
1999 were $2.5 million and $4.8 million compared to $2.8 million and $14.3
million during the same periods of the prior year. Pre-opening expenses were
higher in the prior year due to organizational costs and expenses related to
arranging the financing of the Aladdin.

         Interest expense for the three and six months ended June 30, 1999
was $12.7 million and $25.6 million compared to $11.1 million and $15.5
million during the same periods of the prior year. Interest expense increased
in the current year due to higher funded debt levels as construction has
progressed on the project. The Company pays a higher interest rate on its
bank debt once the funds are utilized for construction compared to the amount
paid for interest when the funds are held in the cash collateral account.
Capitalized interest has also increased in the current year as construction
in progress has increased.

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

                                      13
<PAGE>

         The Company recorded a net loss of approximately $6.7 million for
the three months ended June 30, 1999 and approximately $14.6 million for the
six months ended June 30, 1999 as compared to a net loss of approximately $8
million for the three month period ended June 30, 1998 and approximately
$21.7 million for the six months ended June 30, 1998. The cumulative loss for
the period of inception (December 1, 1997) to June 30, 1999 was approximately
$57.0 million. The Company had no operations for the period of inception
(December 1, 1997) to June 30, 1999. The losses were due to the pre-opening
costs, interest expense, amortization costs and expenses related to the Notes.

MATERIAL CHANGES IN FINANCIAL CONDITION

         Through June 30, 1999, approximately $298.8 million had been
expended primarily on the development of the Aladdin, of which approximately
$74.5 million had been expended on repayment of debt associated with the land
contribution to the Company, approximately $161.2 million in construction,
furniture, fixtures and equipment, and capitalized interest, approximately
$39.5 million in debt issuance and member equity costs, and approximately
$23.6 million in pre-opening costs, net interest expense, and other current
assets.

LIQUIDITY AND CAPITAL RESOURCES

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

         Gaming has a $410 million Credit Agreement ("Bank Credit Facility"
or "Credit Agreement") with various financial institutions and The Bank of
Nova Scotia as the administrative agent for the lenders (collectively,
"Lenders"). The Credit Agreement consists of three separate term loans. Term
A Loan comprises a term loan of $136 million and matures seven years after
the initial borrowing date. Term B Loan comprises a term loan of $114 million
and matures eight and one-half years after the initial borrowing date. Term C
Loan comprises a term loan of $160 million and matures ten years after the
initial borrowing date. As of June 30, 1999, approximately $57.8 million of
the Term B Loan proceeds, plus accrued interest, and approximately $103.8
million of the Term C Loan proceeds, plus accrued interest, is available. The
Term A Loan has not been funded. For further details on the Bank Credit
Facility, including the covenants, restrictions and limitations on Gaming
pursuant to the Bank Credit Facility, see Exhibit 10.7 to the Company's Form
10-K for the year ended December 31, 1998 and Exhibit 10.01 to the Company's
Form 8-K, dated April 27, 1999.

         On April 16, 1999, effective as of March 10, 1999, the Lenders
approved the Second Amendment to the Credit Agreement ("Second Amendment to
the Credit Agreement"). The Second Amendment to the Credit Agreement provides
or acknowledges: (i) the indebtedness incurred in connection with the Aladdin
Music Project has been paid by or on behalf of Aladdin Music and this event
of default has now been waived by the Lenders; (ii) a capital contribution in
the amount of approximately $18.5 million has been made to bring the Main
Project Budget "In Balance;" (iii) the approximately $6.5 million of letters
of credit, which had been previously posted by London Clubs and the Sommer
Trust to fund a prior increase in the Main Project Budget (and resulting
imbalance), have been drawn and the proceeds deposited in Gaming's

                                      14

<PAGE>

guaranty deposit account; (iv) amending certain definitions in the Credit
Agreement, including, "Available Funds," "Indebtedness," and "Realized
Savings;" (v) any costs in excess of $36 million for completing the Carpark
will be funded by the Sommer Trust and London Clubs; (vi) Gaming will be
required to maintain a minimum "Net Worth" at the close of each calendar
month, until the end of the fiscal quarter during which the Project opens
(and then reverting to the Credit Agreement's requirement to maintain the
minimum Net Worth on a fiscal quarterly basis thereafter), of not less than
$100 million plus 85% of positive Net Income (as defined in the Credit
Agreement); and (vi) for other technical amendments to the Credit Agreement.
The above summary should be read in conjunction with, and is qualified in its
entirety by, the Second Amendment to the Credit Agreement previously filed as
Exhibit 10.01 to the Company's Form 8-K, dated April 27, 1999. The Company
has been advised by its counsel that the Second Amendment to the Credit
Agreement did not require the approval of either the FF&E Financing (as
defined below) lenders or the holders of the Notes.

         Gaming has operating lease financing of up to $60 million and a term
loan facility of $20 million to obtain gaming equipment and other specified
equipment (collectively, "FF&E Financing"). For further details on the
operating lease financing and term loan facility, including the covenants,
restrictions and limitations on Gaming pursuant to the FF&E Financing, see
Exhibit 10.35 to the Company's Form 10-K for the year ended December 31, 1998.

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

         London Clubs, the Sommer Trust, and Aladdin Bazaar Holdings, LLC
("Bazaar Holdings"), which is owned 99% by the Sommer Trust, have entered
into a completion guaranty ("Bank Completion Guaranty") for the benefit of
the Lenders under the Bank Credit Facility, under which they have agreed to
guarantee, among other things, the completion of the Aladdin. On April 5,
1999, effective as of March 10, 1999, the Sommer Trust, London Clubs, Bazaar
Holdings and The Bank of Nova Scotia, as administrative agent for the
Lenders, entered into the First Amendment to the Bank Completion Guaranty,
which requires the Sommer Trust, London Clubs and Bazaar Holdings to
guarantee Gaming's minimum Net Worth as required by the Second Amendment to
the Credit Agreement discussed above. The Bank Completion Guaranty is not
subject to any maximum dollar limitations. The holders of the Notes are not a
party to the Bank Completion Guaranty, however, London Clubs, the Sommer
Trust and Bazaar Holdings have entered into a limited completion guaranty for
the benefit of the Noteholders ("Noteholder Completion Guaranty") under which
they guarantee completion of the Aladdin, subject to certain important
exceptions, limitations and qualifications. The Noteholder Completion
Guaranty contains certain intercreditor provisions which significantly limit
the rights of the Trustee under the Noteholder Completion Guaranty.

         In March, 1999, the Company increased the Main Project Budget (as
defined in the Credit Agreement) by approximately $18.5 million, which amount
reflected an increase in construction costs of approximately $9.5 million and
an increase in pre-opening costs of approximately $9 million. On April 2,
1999, pursuant to the Bank Completion Guaranty, which is a joint and several
obligation of the Sommer Trust and London Clubs, London Clubs funded to
Gaming all of the approximately $18.5 million March, 1999, increase in the
Main Project Budget.

                                      15

<PAGE>

         In May and June, 1999, the Company increased the Main Project Budget
by approximately $11.4 million and $2.9 million, respectively. These amounts
reflected an increase in construction costs of approximately $13.8 million
and an increase in pre-opening costs of approximately $0.5 million. On June
15 and 18, 1999, pursuant to the Bank Completion Guaranty, London Clubs
funded to Gaming approximately $11.4 million to fund the May, 1999, Main
Project Budget increase and on July 19 and 27, 1999, also pursuant to the
Bank Completion Guaranty, London Clubs funded to Gaming approximately $2.9
million to fund the June, 1999, Main Project Budget increase.

         As required by the Company's Operating Agreement upon advances under
the Bank Completion Guaranty, the Company will issue, effective as of the
dates of the respective fundings, Series A Preferred Shares in the names of
Sommer Enterprises and London Clubs Nevada, Inc. in the amounts specified in
the Company's Operating Agreement. All said shares have been pledged in favor
of the Lenders, and, on a subordinated basis, the shares issued in the name
of Sommer Enterprises (as well as its Common Shares in Gaming Holdings)
have been pledged in favor of London Clubs.

         In connection with the development of the Mall Project, Aladdin
Bazaar will reimburse the Company approximately $14.2 million for the
construction of certain areas shared by the Aladdin and the Mall Project and
the facade to the Aladdin. Additionally, Aladdin Bazaar is obligated to spend
no more than $36 million for the Carpark. Therefore, any cost overruns
associated with these items will be borne by the Company. In addition, the
Company is obligated to pay to Aladdin Bazaar: (i) a $3.2 million fee per
year for a term of 99 years, which is adjusted every fifth year pursuant to a
consumer price index-based formula, for usage of the Carpark; and (ii) the
Company's proportionate share of the operating costs associated with the
Carpark and other common areas.

         It was anticipated that Aladdin Music would carry out the renovation
to the Theater. However, Gaming has an obligation to have the Theater
renovated and operational by the opening of the Aladdin and, because a joint
venture partner and financing have not been secured for the Aladdin Music
Project in time to meet this obligation, Gaming will renovate the Theater.
Under the Credit Agreement, $15.0 million of the approximately $21.3 million
which was designated for Gaming's investment in Aladdin Music will be
allocated to the Theater renovation, and the remaining $6.3 million will
reduce the Term A Loan. Notwithstanding the allocation of such funds to the
Theater renovation, the Company continues to seek a joint venture partner and
financing for the development of the Aladdin Music Project.

         The Company believes that the funds provided by the Notes, Bank
Credit Facility, FF&E Financing, London Clubs' equity contribution and
contributions pursuant to the Bank Completion Guaranty (collectively,
"Funding Transactions") will be sufficient to develop, complete and commence
operation of the Aladdin. As of June 30, 1999, the Company has utilized
approximately

                                      16
<PAGE>

$19.1 million of the $31.8 million contingency. However, there can be no
assurance that the Funding Transactions will be sufficient for the
development, construction and commencement of the Aladdin.

         Following the commencement of operations of the Aladdin, the Company
expects to fund its operating, debt service and capital needs, as currently
contemplated, with $15 million of working capital from the Funding
Transactions and operating cash flows. In addition, upon the opening of the
Aladdin, the Company is expected to have an aggregate of $10.0 million
available under a working capital facility; however, there can be no
assurance such facility will be available to the Company, or that, if
available, the facility will be on terms favorable to the Company. Although no
additional financing is contemplated, the Company will seek, if necessary and
to the extent permitted under the Notes Indenture and the terms of the Bank
Credit Facility and the FF&E Financing, additional financing through
additional bank borrowings or debt or equity financings. There can be no
assurance that additional financing, if needed, will be available to the
Company, or that, if available, the financing will be on terms favorable to
the Company. There can also be no assurance that estimates by the Company of
its reasonably anticipated liquidity needs are accurate or that new business
developments or other unforeseen events will not occur, resulting in the need
to raise additional funds.

YEAR 2000

         The Company and its subsidiaries are development stage companies
that are developing, constructing, and upon completion, will operate a hotel
casino. The selection of software applications, hardware and other technology
currently in use principally occurred within the last twelve months. The only
computer systems in place at the current time are several financial
applications, word processing and an internal email system that are Year 2000
compliant. Accordingly, it is not expected that the Company will incur
significant amounts, if any, to modify its systems for Year 2000 compliance.
Further, the Company has requested representation for software applications,
hardware or other technology regarding the Year 2000 compliance by the
vendors from whom the Company has purchased or will purchase such products.

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

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 SEC (as well as information
included in oral statements or other written statements made, or to be made,
by the Company) contain statements that are forward-looking within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Such statements
include, without limitation, those relating to plans for future operations,
current construction and development activities (including completion dates,
budgets and cost estimates), other business development activities, capital
spending, financing sources, the Year 2000 compliance, the effect of
regulation (including gaming and tax regulations) and competition. Such

                                      17
<PAGE>

forward-looking information involves important risks and uncertainties that
could significantly affect anticipated results in the future and,
accordingly, such results may differ from those expressed in any
forward-looking statements made by, or on behalf of, the Company. These risks
and uncertainties include, but are not limited to, those relating to the
current development and construction activities and costs and timing thereof,
the sources and extent of financing for the project, dependence on existing
management, leverage and debt service (including sensitivity to fluctuations
in interest rates), domestic or international economic conditions (including
sensitivity to fluctuations in foreign currencies), changes in federal or
state tax laws or the administration of such laws, changes in gaming laws or
regulations (including the legalization of gaming in certain jurisdictions)
and application for licenses and approvals under applicable jurisdictional
laws and regulations (including gaming laws and regulations).

                                      18

<PAGE>

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

         Beginning June 30, 1999, Gaming has the following interest rate
swaps, interest rate ceilings and floor caps, and related notional amounts in
effect: (i) an interest rate swap with an original notional amount of $114
million increasing to a maximum of $222.5 million whereby interest is fixed
at 5.50% through March 31, 2000; (ii) after March 31, 2000, an interest rate
collar with a notional amount of $250 million, a maximum and minimum interest
rate of 7.5% and 5.15%, respectively, will go into effect and mature on
September 30, 2006; and (iii) an interest rate collar with a notional amount
of $160 million, a maximum rate of 8.00%, a minimum rate of 5.15% and a
maturity date of March 31, 2003. All rates noted above are LIBOR equivalents
only and do not include the impact of the basis point additions to LIBOR that
are used in calculating interest expense on Gaming's term loans. The LIBOR
applicable to these agreements is adjusted every three months and on June 30,
1999 was set at 5.33%. The fair market value of the Gaming's interest rate
swaps, interest rate ceilings and floor caps as provided by the counterparty,
is a net receivable of approximately $1 million at July 21, 1999.

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

         Neither Gaming nor the counterparty, which is a prominent financial
institution, is required to collateralize their respective obligations under
these swaps. Gaming is exposed to loss if the counterparty defaults. Gaming
does not hold or issue rate agreements for trading purposes.

                                      19

<PAGE>

PART II  OTHER INFORMATION

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

         10.01             Amendment and Agreement to the Energy Service
                           Agreement, dated September 25, 1998, between
                           Northwind Aladdin, LLC and Aladdin Gaming, LLC.

         10.02             Second Amendment and Agreement to the Energy Service
                           Agreement, dated May 28, 1999, between Northwind
                           Aladdin, LLC and Aladdin Gaming, LLC.

         10.03             Third Amendment and Agreement to the Energy Service
                           Agreement, dated May 28, 1999, between Northwind
                           Aladdin, LLC and Aladdin Gaming, LLC.

         10.04             Energy Services Coordination Agreement, dated May 28,
                           1999, between Aladdin Gaming, LLC and Aladdin Bazaar,
                           LLC.

         10.05             Consent and Ratification and Reaffirmation Agreement,
                           dated May 27, 1999, between The Bank of Nova Scotia
                           in its capacity as the Administrative Agent for the
                           Lenders and Aladdin Gaming, LLC.

         10.06             Subordination, Non-Disturbance and Attornment
                           Agreement and Consent, dated June 7, 1999, between
                           The Bank of Nova Scotia, as the administrative agent
                           for the Aladdin Lenders, Northwind Aladdin, LLC,
                           Aladdin Gaming, LLC and State Street Bank and Trust
                           Company, as collateral agent for the Northwind
                           Noteholders, Aladdin Music, LLC and Aladdin Music
                           Gaming Holdings, LLC.

         27.01             Financial Data Schedule

(b)      Reports on Form 8-K

         On April 28, 1999, the Company filed a Form 8-K, dated April 27,
1999, with the United States Securities and Exchange Commission. The Form 8-K
reported on certain amendments to the Company's credit agreement and attached
revised consolidated financial statements for Aladdin Gaming Holdings, LLC
and its subsidiaries.

                                      20

<PAGE>

                                  SIGNATURES

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

                            ALADDIN GAMING HOLDINGS, LLC

August 16, 1999             By: /s/ Richard J. Goeglein
                               ---------------------------------------------
                                Richard J. Goeglein, President and Chief
                                Executive Officer

August 16, 1999             By: /s/ Cornelius T. Klerk
                               ---------------------------------------------
                                Cornelius T. Klerk, Senior Vice President and
                                Chief Financial Officer


                            ALADDIN CAPITAL CORP.

August 16, 1999             By: /s/ Richard J. Goeglein
                               ---------------------------------------------
                                Richard J. Goeglein, Chief Executive Officer

August 16, 1999             By: /s/ Cornelius T. Klerk
                               ---------------------------------------------
                                Cornelius T. Klerk, Senior Vice President and
                                Chief Financial Officer

                                      21

<PAGE>


                                EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO.       DESCRIPTION                                                                                 PAGE NO.
<S>               <C>                                                                                         <C>
10.01             Amendment and  Agreement to the Energy  Service  Agreement,  dated  September 25,  1998,
                  between Northwind Aladdin, LLC and Aladdin Gaming, LLC.

10.02             Second Amendment and Agreement to the Energy Service Agreement, dated May 28, 1999,
                  between Northwind Aladdin, LLC and Aladdin Gaming, LLC.

10.03             Third Amendment and Agreement to the Energy Service Agreement, dated
                  May 28, 1999, between Northwind Aladdin, LLC and Aladdin Gaming, LLC.

10.04             Energy Services Coordination Agreement, dated May 28, 1999, between Aladdin Gaming, LLC
                  and Aladdin Bazaar, LLC.

10.05             Consent and Ratification and Reaffirmation Agreement, dated
                  May 27, 1999, between The Bank of Nova Scotia in its capacity
                  as the Administrative Agent for the Lenders and Aladdin Gaming, LLC.

10.06             Subordination, Non-Disturbance and Attornment Agreement and
                  Consent, dated June 7, 1999, between The Bank of Nova Scotia,
                  as the administrative agent for the Aladdin Lenders, Northwind
                  Aladdin, LLC, Aladdin Gaming, LLC and State Street Bank and
                  Trust Company, as collateral agent for the Northwind
                  Noteholders, Aladdin Music, LLC and Aladdin Music Gaming Holdings, LLC.

27.01             Financial Data Schedule
</TABLE>
                                      22