UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 FORM
10-KSB/A
 (Amendment
No.1)
 
 X
                  ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the fiscal year ended
                  December
      31, 2007TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the transition period from
                  
                  toCommission
      file number
                  000-30375Las
      Vegas Gaming, Inc.(Name
      of small business issuer in its charter)Nevada
                  
                  88-0392994(State
      or other jurisdiction of incorporation or organization)
                  
                  (I.R.S.
      Employer Identification No.)4000
      West Ali Baba Lane, Suite D, Las Vegas, Nevada
                  
                  89118(Address
      of principal executive offices)
                  
                  (Zip
      Code)Issuer’s
      telephone number:(702)
      871-7111Securities
      registered under Section 12(b) of the Exchange Act:Title
      of each class
                  
                  Name
      of each exchange on which registeredSecurities
      registered under Section 12(g) of the Exchange Act:Common
      Stock Series A, $.001 par value(Title
      of each class)(Title
      of each class)Check
      whether the issuer (1) filed all reports required to be filed by Section
      13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 
      oCheck
      if there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B is not contained in this form, and no disclosure will be
      contained, to the best of the registrant’s knowledge, in definitive proxy
      or information statements incorporated by reference in Part III of this
      Form 10-KSB or any amendment to this Form 10-KSB.  oIndicate
      by check mark whether the registrant is a shell company (as defined in
      Rule 12b-2 of the Exchange Act).  Yes  o No  xState
      issuer’s revenues for its most recent fiscal year:
                  $5,063,409State
      the aggregate market value of the voting and non-voting common equity held
      by non-affiliates computed by reference to the price at which the common
      equity was sold, or the average bid and asked price of such common equity,
      as of a specified date within the past 60 days.  Not
      applicable.State
      the number of shares outstanding of each of the issuer’s classes of common
      stock, as of the latest practicable date.Common
      Stock Series A, $.001 par value
                  
                  12,562,653
      shares as of December 31, 2007Documents
      Incorporated By Reference:   None.Transitional
      Small Business Disclosure Format (check one):  Yes o  No 
      x


EXPLANATORY
NOTE





This
Amendment No. 1 to the Annual Report on Form 10-KSB for Las Vegas Gaming, Inc.
(“Company”, “we”, “us”, or “our”) for the fiscal year ended December 31, 2007 is
being filed to revise Part I, Item 1 “Description of Business” regarding certain
disclosures relating to the WagerVision module of our PlayerVision system and
Part II, Item 8A “Controls and Procedures” regarding clarification of the status
of the implementation of one item of our remediation plan regarding our controls
and procedures.





As
required by Rule 12b-15 under the Securities Exchange Act of 1934, new
certifications of our principal executive officer and principal financial
officer are being filed as exhibits to this Amendment No. 1.   This Amendment No. 1
does not change any previously reported financial results, update disclosures
or reflect events occurring after the date of the filing of the Form
10-KSB, or, except for the changes described above, modify disclosures in
the previously filed Form 10-KSB.







2


PART
I




ITEM
1. DESCRIPTION
OF BUSINESS.




Overview




We are
now focusing our core business on our proprietary multimedia delivery system,
known as PlayerVision.  Through our PlayerVision system, we offer
gaming operators the ability to increase the productivity of their existing
gaming machines by delivering additional wagering opportunities, promotions,
games, and other content on the existing screens of their gaming machines, such
as slot machines, poker machines, and video lottery terminals.  Our
PlayerVision system is flexible and compatible with virtually all gaming
machines currently produced by all major manufacturers. As a result, we view
every gaming machine as a revenue opportunity for our PlayerVision system. Since
we plan to offer PlayerVision at no capital cost to most operators in exchange
for recurring fees for services, we can provide operators with an ability to
increase significantly the earning power and functionality of their gaming
machines with little or no financial risk.  In addition, we are a
leading supplier of keno and bingo games, systems, and supplies.




We have
completed the development of the first four modules of our PlayerVision system.
The PlayerVision system consists of proprietary software that runs our
multimedia hardware device, featuring on-board memory and expansion and
connectivity options. PlayerVision interfaces with the existing
video,  audio and, printing functions of the machine.  By
adding PlayerVision, a gaming machine is transformed from a single use, single
wager option display to a multimedia display that can deliver to the player
multiple wagering opportunities, live video, and targeted promotional content in
addition to traditional gaming activity found on the machine. The PlayerVision
system delivers content on the existing screen of the gaming machine. As a
result, the installation of PlayerVision eliminates the need for operators to
retrofit existing machines or purchase new machines with multiple video displays
in order to deliver multimedia content to their patrons.




Designed
as a multi-faceted delivery system, we currently offer four distinct
applications:




AdVision
            PlayerVision
      TV
            NumberVision
            WagerVisionWhat
      PlayerVision Delivers
            Advertisements
      or information through still images or full motion video
            Picture-in-picture
      on full screen television while playing slot machine
            Impulse
      gaming opportunity upon the decision to cash-out
            Remote
      ability to accept sports and race wageringHow
      Operators Benefit
            Advertisements
      or information delivered during idle time
            Patrons
      stay longer to play with ability to multi-task
            Additional
      wagering revenue opportunity
            Additional
      race and sports wagering revenue opportunityHow
      Patrons Benefit
            Information
      on promotions, entertainment, dining, and other events
            Ability
      to watch recently wagered sporting event or favorite
    program
            Opportunity
      to win substantial jackpot-style cash prizes
            Enhanced
      and more dynamic gaming environmentHow
      We Benefit
            Fee
      for providing ability to deliver advertising
            Fee
      for providing ability to deliver television
            Installation
      fees, activation fees, and share of revenue
            Fee
      for providing ability to deliver additional
  wagers





3





In
addition, we are continuing to develop new applications that will position
PlayerVision as a platform for a variety of new multimedia and gaming
functions.




In 2006,
we changed our business plan to focus on the development of the PlayerVision
system.  We have received final regulatory approval from Nevada and
Gaming Laboratories International (GLI), an independent accredited testing
laboratory, for two PlayerVision applications, AdVision and PlayerVision TV, on
IGT Game King, WMS and Aristocrat machines.  As of December 31, 2007,
we had installed PlayerVision with AdVision and/or PlayerVision TV on an early
adoption basis with five customers on approximately 150 machines, one-third of
which were with an affiliate.  See, Item 1. “Description of Business –
Marketing and Distribution” and Item 12. “Certain Relationships and Related
Transactions, and Director Independence.”  Although these installments
are on terms substantially less favorable than we ultimately expect to receive,
they provide us with early exposure for our PlayerVision system.  With
respect to the WagerVision and NumberVision applications for PlayerVision, we
anticipate receiving approval from the Nevada regulatory authorities and GLI
during the third quarter of 2008 and, thereafter, we will conduct a 30-day beta
test.  Upon final approval of these applications, we expect to launch
an aggressive sales campaign for our PlayerVision system.  No
assurance can be given, however, that the market will accept our PlayerVision
system or that we will be successful in our plans to install our PlayerVision
system in the timeframes we anticipate or on terms acceptable to
us.  In addition, we cannot assure you that our competitors will not
develop a new technology or product that will make our PlayerVision system
undesirable or obsolete.  We are also subject to substantial costs and
risks in defending our intellectual property rights.  On September 12,
2007, IGT filed a lawsuit against us alleging that our PlayerVision system
infringed on IGT’s Game King® gaming machines.  See, Item 3. “Legal
Proceedings” for a more detailed description of this
lawsuit.  Although the court in that matter, denied IGT’s motion for
preliminary injunction, discovery in the lawsuit is continuing and the costs of
defending this or other claims could have a material adverse effect on our
financial position and business operations.  We cannot assure you that
we will ultimately prevail in, or successfully resolve, our litigation with
IGT.  In addition, PlayerVision is a new sophisticated product and
will likely contain undetected errors or defects, especially when new modules or
applications are released, which could result in the rejection of our
PlayerVision system and jeopardize our relationship with
customers.  Because of our focus on developing the PlayerVision
system, we will continue to require substantial third-party financing, in
addition to any funds from operations, to pursue our business
plan.  The failure to obtain such financing will have a material
adverse effect upon our financial position and business
operations.  We cannot assure you that we will be successful in
obtaining any additional financing.




Industry
Overview




According
to Datamonitor, mechanical and video gaming machines represented the leading
segment of the overall global casino and gaming industry. In addition, the Profile of the American Casino
Gambler: Harrah’s Survey 2006prepared by Harrah’s Entertainment, Inc.
reports that over 70% of the persons surveyed stated that gaming machines, such
as slot machines and video poker machines, are their favorite casino
games.




PlayerVision
can be installed on most video gaming machines produced by major gaming
equipment manufacturers worldwide. As of 2007, we believe that there were
approximately 3.0 million gaming machines located worldwide, of which over
800,000 are located in the United States and over 200,000 are located in Nevada.
Of the number located in the United States, we believe that approximately 35%
are mechanical reel and approximately 65% are video reel machines.




We
believe that the global casino and gaming industry and the number of machines is
expected to grow as a result of the following trends:




4







·
            Increased popularity and
      social acceptance of gaming as a leisure activity.According to the
      2006 State of the
      States: The AGA Survey of Casino Entertainmentpresented by the
      American Gaming Association, nearly 80% of Americans believe that casino
      gaming is an acceptable activity for themselves or others. Recent shifts
      in public views of gaming have contributed to its legalization in a number
      of jurisdictions and to increased participation in gaming
      activities.




·
            Simplicity and instant appeal
      of gaming machines versus other games.Characterized by simplicity
      and informality, gaming machines have greater appeal to all eligible
      demographic segments of the population than any other gaming
      activity.




·
            Continuing evolution of gaming
      machines.The launch of cashless technology (ticket-in/ticket-out
      versus coins or tokens) in 2000, the introduction of new and more
      sophisticated and interactive theme-based games, and the increased
      replacement of mechanical reel gaming machines with video based machines
      have increased the entertainment value for players of gaming
      machines.




As the
gaming machine base continues to grow and the industry shifts from manual gaming
machines to video-based gaming machines, we believe that our target market will
continue to expand.  We believe that a consistent need for improvement
in gaming activities and demand for greater entertainment value for players will
give us the ability to market PlayerVision aggressively and to provide gaming
operators with a single solution to introduce additional functionality without a
wholesale replacement of their existing gaming machines.




Our
Strategy




Our
objective is to provide the premier enhancement system for the installed base of
gaming machines by delivering additional wagering opportunities, promotions,
games, and other content on the existing screens of gaming machines. In order to
achieve this objective, we intend to pursue the following
strategies:




·
            Increased Revenue Potential
      for Operators.We plan to stress the ability of our PlayerVision
      system to provide gaming operators with the opportunity to increase
      significantly the earning power and functionality of their gaming
      machines. Since our PlayerVision system directly interfaces with the
      existing video, audio, and printing functions of the machine, we are able
      to use the machine’s existing video screen to deliver games, promotions,
      additional wagering opportunities, and other content. Our kiosk driven
      ticket redemption system features its own accounting system separate and
      apart from the main slot accounting
system.




·
            Compelling Patron Experience.We plan to offer PlayerVision as a single multimedia delivery
      system for a wide range of content directly on the existing screens of
      gaming machines. By adding PlayerVision, a gaming machine is transformed
      from a single use, single wager option into a multimedia experience that
      can deliver to the player extra wagering opportunities and targeted,
      promotional content in addition to traditional slot play. Through
      PlayerVision, the operator can enhance the functionality of its existing
      machines and deliver targeted gaming opportunities and promotional content
      to players.  In exchange, the player receives an enhanced
      playing experience, information about promotions, entertainment, and
      dining opportunities, and the opportunity to win jackpots and other
      prizes.




5







·
            Leverage Industry Trend to
      Video Machines.We plan to take advantage of the accelerating
      industry movement from mechanical to video gaming machines through the
      ability of PlayerVision to interface with the existing video, audio and
      printing functions of gaming machines. In addition, we can adapt
      PlayerVision to mechanical gaming machines by adding the auxiliary screen
      or other hardware needed to deliver the same functionality. The solution
      for mechanical gaming machines will require additional capital and
      installation costs. By offering a gaming operator the ability to transform
      its entire floor of machines, the operator can have a single multimedia
      and game delivery system for its
machines.




·
            Low Operator Risk.We
      plan to offer gaming operators the ability to increase significantly the
      earning power and functionality of their existing gaming machines at
      little or no financial risk. This strategy involves installing
      PlayerVision at no capital cost to gaming operators in exchange for a
      share of revenue and recurring fees for services
  provided.




·
            New Applications.We
      plan to continue the development of innovative applications to be
      delivered through our PlayerVision system. To date, we have designed our
      PlayerVision system to deliver advertisements, promotional materials, and
      wagering opportunities.  Since PlayerVision engages the existing
      video, audio and printing functions of the gaming machine, and since our
      kiosk driven ticket redemption system features its own accounting system,
      we believe that our PlayerVision system can be used as a platform to
      deliver a wide array of multimedia or gaming content directly to
      patrons.




PlayerVision
is a single, flexible, and dynamic platform that can be used to deliver
multimedia or gaming content developed either by us or third parties. Because of
the integration of PlayerVision with all of the functions of the gaming machine,
PlayerVision can be used by gaming operators to control all aspects of their
gaming machines. By establishing our PlayerVision system as the premier
enhancement system for the installed base of gaming machines, we believe that we
will be able to establish a barrier to entry for our competitors.




PlayerVision
System




Designed
to increase the productivity of gaming machines, PlayerVision installs directly
in most gaming machine regardless of the manufacturer and interfaces with the
existing video, audio and printing functions of the machine.  We are
able to integrate fully the PlayerVision system with the gaming machines through
the interaction between our application software and our PlayerVision Control
Unit, or PCU. The PCU is our proprietary multimedia hardware device that
features on-board memory, external memory expansion capabilities, Internet
Protocol, and wireless connectivity options. Through video digital signal
processors and video compression algorithms, the PCU interfaces with the video
display, touch screen, printer, and our own slot accounting system. By using the
gaming machine’s current functionality, we expect to be able to provide
operators with the ability to enhance their equipment and increase their revenue
opportunities. In addition, we believe that gaming operators will be able to use
PlayerVision as a platform to download future applications and
capabilities.




We plan
to earn income from PlayerVision through revenue-sharing and recurring service
fees. We will seek to enter into multi-year contracts with operators. In
addition to the minimal cost to gaming operators, the installation of the PCU
will cause minimal downtime to the gaming machine and will not adversely impact
its operation. We have focused our efforts on developing four distinct
applications for the PlayerVision system: AdVision, PlayerVision TV,
NumberVision and WagerVision.




6







AdVision
and PlayerVision TV




Through
the existing video and audio capabilities of the gaming machine, we are able to
generate and display information, advertisements, and promotions through
AdVision and provide television programming using a picture-in-picture feed
through PlayerVision TV.  Since AdVision and PlayerVision TV use the
existing video and audio capabilities of the gaming machine, the gaming operator
can avoid the expense of replacing its equipment or purchasing additional video
screens for these types of advertisements and promotions.




AdVision
enables the operator to dynamically generate and display information,
advertisements, and promotions through the existing screen of a gaming
machine.  This content can be targeted to the person playing the
gaming machine or persons walking by the gaming machine. The timing and content
of the advertising is controlled by the operator to make productive use of the
machine’s idle time.  Through AdVision and its programmable features,
the gaming operator will have at its disposal a means of delivering dynamic
content to and interacting with individual patrons or the entire gaming
floor.




We
currently intend to charge gaming machine operators a per month, per machine fee
for AdVision and PlayerVision TV. We believe that AdVision and PlayerVision TV
are cost-effective means of enhancing an operator’s existing gaming machines
without any additional capital expense.




On March
23, 2007, we obtained regulatory approval of AdVision and PlayerVision TV in
Nevada as associated equipment.  With these approvals, we beta tested
AdVision and PlayerVision TV at Treasure Island Las Vegas in May
2007.  We received final approval of AdVision and PlayerVision TV on
IGT Game King Machines in November 2007, and began shipping our technology to
customers.  As of December 31, 2007, we installed AdVision and/or
PlayerVision TV on an early adoption basis with five customers on approximately
150 machines, one-third of which were installed with an
affiliate.  See, Item 12. “Certain Relationships and Related
Transactions, and Director Independence.”




NumberVision




NumberVision
will provide the player with an impulse opportunity to place an additional wager
or experience a different gaming opportunity that, in turn, provides gaming
machine operators with the opportunity to generate additional revenue. In
Nevada, the additional gaming opportunity initially will be the ability to
purchase a Nevada Numbers ticket. In jurisdictions other than Nevada, the
additional gaming opportunity can be the local lottery or other
games.




NumberVision
is designed to work in Nevada as follows:




·
            first,
      during the cash-out process, NumberVision takes control over the
      non-gaming functions of the gaming
machine;




·
            second,
      the player is offered an additional on-screen gaming opportunity;
      and




·
            third,
      if the player accepts the offer, the additional gaming opportunity is
      played and a cash voucher is issued for the remaining payout, if any; or,
      if the player declines the offer, a cash voucher is issued for the
      payout.




During
the initial launch of NumberVision in Nevada, we plan to install NumberVision at
no cost to operators in exchange for a share of the increased revenue generated
by NumberVision.  In other jurisdictions, we plan to charge
installation and activation fees to operators.




7







We
applied for approval of NumberVision from GLI during the third quarter of 2007
and expect that the review process will be completed during the second quarter
of 2008.  After approval, we will beta test WagerVision at Treasure
Island Las Vegas for 30 days.




WagerVision




WagerVision
will offer interactive casino sports and race betting to a player in a remote
location, whether through a gaming machine located in another portion of the
casino or a television set located in the player’s home.  From a slot
machine in a casino, WagerVision is designed to offer the same bets currently
available only in the race and sports book along with the ability to watch the
sporting event that was the subject of the wager from the slot machine through
PlayerVision.  In the home environment, WagerVision is designed to
offer proposition race and sports bets to players in real time. As a result of
regulatory factors, in Nevada, the application of WagerVision will be limited to
sports betting, and in all other states within the United States to race
betting.




Current
Nevada gaming rules and regulations allow sports betting from home (for Nevada
residents who establish accounts under regulatory guidelines) using several
alternative methods of communication, such as the telephone, facsimile machine,
and cable, but not through a television. WagerVision addresses this limitation
by installing and connecting PlayerVision to a telephone line and the
television. PlayerVision will then interact with the television, allowing the
player to place bets on various propositions related to the game or race in real
time, effectively recreating the sports book in the player’s home.




On June
27, 2006, we entered into a binding memorandum of understanding with
Computerized Bookmaking Systems, Inc. (CBS), a subsidiary of American Wagering,
Inc., whereby both parties agreed that mutually beneficial synergies existed in
utilizing our PlayerVision platform (then known as PortalVision) to expand the
approved electronic devices upon which a customer having a CBS wagering account
might use to (i) watch a live televised sports or horse race event, (ii) view
live odds for such an event posted by a customer of CBS, and (iii) place a wager
on such an event.  Pursuant to such binding memorandum, CBS developed, at
no charge to us, a race and sports book interface for WagerVision on our
PlayerVision system.  CBS owns all of the rights to this CBS race and
sports book interface protocol including the software, source code and
documentation. We own the WagerVision trademark and the platform on which the
source code was written.   It was the intent of both companies to share
equally in the net revenues generated from wagers on televised sports and horse
race events and other CBS wagering opportunities offered through this
WagerVision module.  Although the binding memorandum has expired, we are
negotiating the terms of a definitive agreement with CBS.  We
anticipate that the definitive agreement will clearly define the CBS
protocol and protocol interface as the portion of the total system owned by and
licensed from CBS and our PlayerVision code and modules running on our platform
that are owned and maintained by us.  This will significantly enhance our
ability to produce, deploy, and maintain this module and allow LVGI and CBS to
quickly adapt to technological, regulatory and social changes. If these
negotiations are unsuccessful, it would prevent or significantly delay
regulatory approval and market introduction of the WagerVision
module.




Solely
with respect to the casino slot machine use of WagerVision, we applied for
approval of WagerVision from Nevada and GLI during the third quarter of 2007 and
expect that the review process will be completed during the second quarter of
2008.  After approval, we will beta test WagerVision at Treasure
Island Las Vegas for 30 days.




8







Other
Applications




In
addition to AdVision, PlayerVision TV, NumberVision and WagerVision, we are in
the process of developing other applications for the PlayerVision
system.  We anticipate launching these other applications after the
initial deployment of our PlayerVision system.  As a result of the
flexibility of the PlayerVision system, we can install additional applications
in machines equipped with PlayerVision at no capital cost and with little
downtime.




RoutePromo




RoutePromo
is designed to deliver promotional tickets or vouchers to players upon the
occurrence of an event specified by the operator, such as hitting a
four-of-a-kind or better on a video poker machine. The key feature of RoutePromo
is its ability to recognize a specified event generated by the game played and
deliver the programmed response to the specified event.




RoutePromo
is designed to work as follows:




·
            first,
      the operator specifies the events that will trigger RoutePromo, such as a
      four-of-a-kind or better;




·
            second,
      upon the occurrence of the specified event, RoutePromo is activated and a
      message is sent to the gaming machine to issue a promotional ticket or
      voucher;




·
            third,
      the gaming machine alerts the player and prints the free promotional
      ticket or voucher; and




·
            fourth,
      the gaming machine returns to its original
  state.




We
currently intend to charge a fixed fee for each promotional ticket or voucher
issued through RoutePromo. In addition to the promotional functions of
RoutePromo, RoutePromo also provides operators with a system that records and
accounts for each event on the gaming machine. RoutePromo will provide
additional accounting functionality for operators and provide them with
additional information, such as the information necessary to identify the
payment of improper bonus points, tickets, or other promotional
items.




Through
our five-year agreement with United Coin Machine Company, the largest slot route
operator in Nevada, we developed a variation of The Million Dollar Ticket, known
as the Gamblers Bonus Million Dollar Ticket, to be used in conjunction with
RoutePromo. Gamblers Bonus Million Dollar Ticket is a free promotional game that
gives players the chance to win various prizes, including a $1.0 million grand
prize, by matching numbers on their promotional tickets with numbers picked in a
random weekly drawing. Under our agreement, we are obligated to provide
software, hardware, and support to United Coin for the game. In addition, we are
financially responsible for the payouts associated with the game. In return,
United Coin is obligated to pay us $1.25 for each ticket
distributed.  During the second quarter of 2008, we will role out the
Gamblers Bonus Million Dollar Ticket at approximately 100 United Coin route
locations.




We have
obtained regulatory approval for RoutePromo in Nevada.




9




Casino
Games




We
operate two games, Nevada Numbers and The Million Dollar Ticket, and collect
royalties on several other games. The revenue generated from our casino games is
primarily based on the royalties earned on games played in casinos.




Nevada
Numbers




Nevada
Numbers is a variation of classic keno which is currently played in many casinos
in Nevada. Keno is a game in which bets are made and recorded on a keno ticket.
This ticket contains 80 numbered squares that correspond exactly to 80 numbered
balls in a selection hopper. A player marks a ticket to play between two and 20
different numbers. The keno operator then draws 20 out of the 80 numbers and
displays the results throughout the casino. The more numbers that match, the
more money the player wins. Payout awards vary from casino to casino and depend
on the amounts wagered.




Nevada
Numbers differs from classic keno in that fewer numbers (five rather than 20)
are drawn and a “linked’’ or “progressive’’ component has been added. We have
linked together the play of Nevada Numbers at multiple casinos so that players
at several different locations all choose numbers that are matched to the same
five-number draw. In addition, Nevada Numbers features a starting jackpot of
$5.0 million that is progressive, in that it grows with the purchase of each
Nevada Numbers ticket and can be won at each draw.  Any winner of the
Nevada Numbers progressive jackpot will be paid the amount of the progressive
meter in equal installments over a period of 20 years.  At our sole
discretion, we may offer the winner an option to receive a discounted value
immediately.  The process of linking games and creating a progressive
jackpot provides an enticement to players because of the potential for a
life-changing event.




Although
Nevada Numbers has traditionally been limited to the keno lounges of casinos, we
are taking measures to expand the visibility of Nevada
Numbers.  First, we have incorporated Nevada Numbers as part of
NumberVision, although regulatory approval from Nevada has not yet been received
for its use.  Through NumberVision, we propose to position Nevada
Numbers as a dynamic game that will give slot machine players the opportunity to
win a progressive jackpot of at least $5.0 million. Second, subject to
regulatory approval of NumberVision, we will market the game to third-party race
and sports books for use on their existing wagering terminals.




The
Million Dollar Ticket




Based on
the classic keno game, The Million Dollar Ticket offers the chance to win $1.0
million and a progressive jackpot. In order to win the $1.0 million and the
progressive jackpot, the player must pick 10 numbers correctly out of 20 drawn
from a pool of 80. Although the distribution of The Million Dollar Ticket is
limited, we are anticipating growth in 2008 by making the game available in
third-party race and sports book locations.




Super
Bingo Games




Super
Bingo Games are odds-based bingo games with life-changing prizes that are
offered as side bets to existing bingo games.  We offer these games at
various jackpot levels-as high as $100,000 to $500,000 in many cases—and price
points to bingo operators based on appeal to players and maximizing
profitability for a particular bingo operation.  In most instances, we
insure the jackpot.  Since we are obligated to pay prize winners, the
bingo operator is guaranteed a profit for each wager made.  We have
placed Super Bingo Games in five Nevada casinos and fourteen non-Nevada
locations.  We expect to grow the Super Bingo Games segment in both
Nevada and non-Nevada locations in throughout 2008.






10







Keno
and Bingo Systems and Supplies




The
worldwide keno system market is limited and has been declining for several
years. We are attempting to invigorate the market and gain an additional share
of the market by enhancing our keno system through the addition of several new
games and features to the platform.




Keno and
bingo supplies sales contribute significantly to our revenue, but consist of low
margin items, including crayons, various paper products, and ink.




Other
Businesses




We also
generate revenue through the operation of a keno route, the maintenance of our
equipment under service contracts, and the distribution of bingo
electronics.




·
            Nevada Keno and Related
      Participation Agreements.Through agreements with participating
      casinos, we offer Nevada Keno, a “satellite-linked’’ traditional keno game
      played in multiple casinos.  Nevada Keno was temporarily
      discontinued on February 29, 2008 because one of the two participating
      casinos closed.  We are continuing to offer Nevada Keno and will
      re-commence operations upon obtaining agreements with two or more
      participating casinos.




·
            Service Contracts.Most
      of our customers that purchase keno and bingo equipment also purchase a
      service contract from us to provide routine maintenance for the
      equipment.  Service contracts involve low profit
      margins.




In 2006,
we were the distributor in Nevada for the largest electronic bingo manufacturer
in the United States.  This relationship however, was discontinued on
January 1, 2007, which resulted in a monthly loss of revenue of approximately
$35,000.




Manufacturing




We
outsource the manufacture of the PCU portion of our PlayerVision system to
Spectral Response, Inc., an ISO-9000 certified contract manufacturer. Delivery
on the first order of 2,500 units for use with NumberVision, WagerVision,
PlayerVision TV, and AdVision was taken in the second quarter of 2007. It
currently takes our contract manufacturer twelve to sixteen weeks from the date
of order to deliver the PCUs.




Marketing
and Distribution




PlayerVision




As part
of our objective to provide the leading single multimedia and game delivery
system, we have started to implement a plan that will market our PlayerVision
system to customers through direct and indirect channels. Our plan involves the
following steps:




·
            Direct Sales Efforts.Through the hiring of additional personnel to our sales and
      marketing staff, we will market PlayerVision to operators located
      primarily in North America and to Native American tribes. As part of our
      direct sales efforts, we will schedule follow-up communications and offer
      live product demonstrations.




11







·
            Strategic Partnerships.We will supplement our direct sales efforts by targeting
      third-party distributors and regional operators. By forming strategic
      relationships with these parties, we will gain access to smaller and more
      fragmented markets around the globe and secure the broadest placement for
      PlayerVision.




·
            Targeted Public Relations
      Campaign.In order to increase the recognition of our PlayerVision
      system, we have launched an aggressive public relations campaign that has
      included attending trade shows, speaking on technology and gaming panels,
      and distributing advertisements in trade periodicals and other
      venues.




In
November and December 2007, we installed AdVision and/or PlayerVision TV on an
early adoption basis with five customers on approximately 150 machines,
one-third of which were with an affiliate.  Although these
installments are on the terms substantially less favorable than we ultimately
expect to receive, they provide us with early exposure for our PlayerVision
system.  See, Item 12. “Certain Relationships and Related Transactions
and Director Independence.”  In addition, we have received many
non-binding verbal commitments from operators to install our PlayerVision system
pending the approval of WagerVision and NumberVision from the Nevada Gaming
Control Board and GLI.  Upon the approval of WagerVision and
NumberVision, and the completion of the 30-day beta test, we will attempt to
obtain commitments from those operators which have expressed an interest and we
anticipate launching an aggressive sales campaign; however, no assurance can be
given that we will be successful in our plans to install our PlayerVision system
in the timeframes we anticipate or on terms acceptable to us.




We plan
to conduct all of our sales and marketing efforts from our headquarters in Las
Vegas, Nevada. Although we do not have any current plans to open any sales
offices, we will review the need for such additional offices in response to the
needs of our customers and our strategic partners.




Casino
Games




We
license our games directly to casinos or slot route operators. We make initial
contacts through the mailing of marketing materials, referrals, or direct
solicitation by our employees and marketing agents. We promote licensed games to
the general public using various types of media, including billboards,
newspapers, magazines, radio, and television. Advertising within a particular
casino may include advertisement on strategically placed LCDs, table tents,
flyers, signs on the tops of gaming machines, and show cards to stimulate
curiosity and game play.




Keno
and Bingo Systems and Supplies.




We are
one of the world’s few keno equipment suppliers. Most sales in this area result
from unsolicited inquiries or direct solicitation of customers by our sales
staff. The marketplace for bingo equipment, electronic playing devices, and
supplies in Nevada is relatively small, consisting of approximately 40 potential
customers. However, we believe that the recent introduction of wireless gaming
devices into the marketplace in Nevada and other jurisdictions may increase the
potential market for bingo-related products. Direct sales to the casino are the
primary means of sale for these products. The marketplace for gaming supplies is
large and geographically dispersed. Our primary marketing tool is a catalog that
we periodically distribute to our customers and potential
customers.




12




Competition




PlayerVision
System




We
encounter significant competition in the market for innovative gaming
technologies that deliver interactive gaming, animated content, and
cross-promotional opportunities to gaming operators. The key competitive factors
are functionality, accuracy, reliability, and pricing. We believe that
PlayerVision is a single, integrated solution because of the
following:




·
            PlayerVision
      uses the existing primary screen of the gaming machine rather than a
      smaller secondary video screen;




·
            PlayerVision
      engages the existing video,  audio and printing functions of the
      gaming machine regardless of the
manufacturer;




·
            PlayerVision
      involves little or  no capital cost to gaming operators;
      and




·
            PlayerVision
      delivers a broad range of
functionalities.




We are
unaware of any other product that delivers multimedia and gaming content through
the existing primary screen of gaming machines. Although we face competition
from products that use smaller secondary video screens, such as iView developed
by Bally Systems and NexGen developed by International Game Technology, we are
able to deliver content directly to the patron through the existing 15x11-inch
screen rather than an auxiliary 2x6-inch screen. In terms of deployment, we
believe that there is no market leader for a content delivery system for
existing gaming machines.




Since we
are able to use the existing primary screen of a gaming machine, as well as its
existing video, audio and printing functions, we are able to offer to gaming
operators a solution that requires no capital cost, involves minimal
installation, and interfaces with almost any gaming machine. In addition,
although there are products that deliver advertising or promotional content
through secondary video screens installed onto gaming machines, we do not
believe that there are any products that can deliver the additional wagering
opportunities that PlayerVision can or any products that can provide an
expandable platform for additional content on the existing screens of gaming
machines.




Nevertheless,
there is no guarantee that PlayerVision will be accepted in the
marketplace.  Many of our potential competitors possess substantially
greater financial, technical, marketing, and other resources than we do, which
affords them competitive advantages over us. As a result, our competitors may
introduce products that have advantages over PlayerVision in terms of features,
functionality, ease of use, and revenue producing potential.  If we
are unable to compete effectively, or incur any delays, either regulatory or
otherwise, in our ability to fully introduce Playervision, our operations and
financial condition may be adversely affected.




Keno
and Bingo Systems and Supplies.




The keno
and bingo systems and supplies industry is characterized by limited competition.
We compete primarily with other companies that provide keno and bingo systems,
including electronic systems, keno, bingo supplies, and related services. In
addition, we compete with other similar forms of entertainment, including casino
gaming, other forms of Class II gaming, and lotteries. Our key competitor is
XpertX in the keno market. We have attempted to counter competitive factors by
providing superior service, new, innovative, and quality products; and software
improvements.




13







Research
and Development




Our
research and development efforts focus on the continuous innovation of our
products and services to increase the revenue for our customers. Our current
research and development efforts emphasize creating new applications for the
PlayerVision system and improving its functionality. In addition to our own
research and development staff, we plan to engage, from time to time,
independent consultants and advisors to assist us.




Intellectual
Property and Other Proprietary Rights




We hold
several patents, including a patent related to Nevada Numbers, our flagship
game.  We have been recently issued a patent for “closed loop,” a key
application in our PlayerVision technology.  In addition, we have
several patents pending with respect to the PlayerVision system and certain of
its various applications. We also hold several trademarks filed with the state
of Nevada and the U.S. Patent and Trademark Office, including trademark rights
to Nevada Numbers and The Million Dollar Ticket, and other intellectual property
that is protected by federal copyright and trade secret laws.  See,
Item 3. “Legal Proceedings.”




We rely
on the proprietary nature of our intellectual property, primarily in the form of
patent protection, for development of our products.  We believe that
our success depends in part on protecting our intellectual
property.  If we cannot protect our intellectual property against the
unauthorized use by others, our competitive position could be
harmed.




The risks
associated with our intellectual property, include the following:




·
            The
      inability of intellectual property laws to protect our intellectual
      property rights;


·
            Attempts
      by third parties to challenge, invalidate, or circumvent our intellectual
      property rights;


·
            The
      unauthorized use by third parties of information that we regard as
      proprietary despite our efforts to protect our proprietary
      rights;


·
            The
      independent development of similar technology;
  and


·
            The
      inability to protect our intellectual property rights in foreign
      jurisdictions.





We may
not be able to obtain effective patent, trademark, service mark, copyright, and
trade secret protection in every country in which our products are used. We may
find it necessary to take legal action to enforce or protect our intellectual
property rights or to defend against claims of infringement, and such actions
may be unsuccessful.  In addition, we may not be able to obtain a
favorable outcome in any intellectual property
litigation.  Significant amounts could be expended to defend and
protect our intellectual property.




Government
Regulation




We are
subject to regulation by governmental authorities in most jurisdictions in which
we operate. Gaming regulatory requirements vary from jurisdiction to
jurisdiction, and obtaining licenses and findings of suitability for our
officers, directors, and principal stockholders, registrations, and other
required approvals with respect to us, our personnel, and our products are time
consuming and expensive. Generally, gaming regulatory authorities have broad
discretionary powers and may deny




14







applications
for or revoke approvals on any basis they deem reasonable. We have approvals
that enable us to conduct our business in numerous jurisdictions, subject in
each case to the conditions of the particular approvals. These conditions may
include limitations as to the type of game or product we may sell or lease, as
well as limitations on the type of facility, such as riverboats, and the
territory within which we may operate, such as tribal nations.




Jurisdictions
in which we, and specific personnel, where required, have authorizations with
respect to some or all of our products and activities include New Jersey,
Nevada, Mississippi, Arizona, Nebraska, Oregon, Washington, and Montana. In
addition to these jurisdictions, we have authorizations with respect to certain
Native American tribes throughout the United States that have compacts with the
states in which their tribal dominions are located or operate or propose to
operate casinos. These tribes may require suppliers of gaming and gaming-related
equipment to obtain authorizations.  We have pending authorizations
with Iowa and Minnesota.




Overview




Gaming Devices and Equipment.We sell or lease products that are considered to be “gaming devices’’ or
“gaming equipment’’ in jurisdictions in which gaming has been legalized.
Although regulations vary among jurisdictions, each jurisdiction requires
various licenses, findings of suitability, registrations, approvals, or permits
for companies and their key personnel in connection with the manufacture and
distribution of gaming devices and equipment.




Associated Equipment.Some of
our products fall within the general classification of “associated equipment.’’
“Associated equipment’’ is equipment that is not classified as a “gaming
device,’’ but which has an integral relationship to the conduct of licensed
gaming. Regulatory authorities in some jurisdictions have the discretion to
require manufacturers and distributors to meet licensing or suitability
requirements prior to or concurrently with the use of associated equipment. In
other jurisdictions, the regulatory authorities must approve associated
equipment in advance of its use at licensed locations. We have obtained approval
of our associated equipment in each jurisdiction that requires such approval and
in which our products that are classified as associated equipment are sold or
used.




Regulation of Officers, Directors,
and Stockholders.In many jurisdictions, any officer or director is
required to file an application for a license, finding of suitability, or other
approval and, in the process, subject himself or herself to an investigation by
those authorities. As for stockholders, any beneficial owner of our voting
securities or other securities may, at the discretion of the gaming regulatory
authorities, be required to file an application for a license, finding of
suitability, or other approval and, in the process, subject himself or herself
to an investigation by those authorities. The gaming laws and regulations of
most jurisdictions require beneficial owners of more than 5% of our outstanding
voting securities to file certain reports and may require our key employees or
other affiliated persons to undergo investigation for licensing or findings of
suitability.




In the
event a gaming jurisdiction determines that an officer, director, key employee,
stockholder, or other personnel of our company is unsuitable to act in such a
capacity, we will be required to terminate our relationship with such person or
lose our rights and privileges in that jurisdiction. This may have a materially
adverse effect on us. We may be unable to obtain all the necessary licenses and
approvals or ensure that our officers, directors, key employees, affiliates, and
certain other stockholders will satisfy the suitability requirements in each
jurisdiction in which our products are sold or used. The failure to obtain such
licenses and approvals in one jurisdiction may affect our licensure and
approvals in other jurisdictions. In addition, a significant delay in obtaining
such licenses and approvals could have a material adverse effect on our business
prospects.




15







Regulation
and Licensing – Nevada




The
manufacture, sale, and distribution of gaming devices for use or play in Nevada
or for distribution outside of Nevada, the manufacturing and distribution of
associated equipment for use in Nevada, and the operation of gaming machine
routes and inter-casino linked systems in Nevada are subject to the Nevada
Gaming Control Act and the regulations promulgated thereunder and various local
ordinances and regulations. These activities are subject to the licensing and
regulatory control of various Nevada gaming authorities, including the Nevada
Gaming Commission, the Nevada State Gaming Control Board, and various local,
city, and county regulatory agencies, collectively referred to as the Nevada
Gaming Authorities.




The laws,
regulations, and supervisory practices of the Nevada Gaming Authorities are
based upon declarations of public policy with the following
objectives:




·
            preventing
      any direct or indirect involvement of any unsavory or unsuitable persons
      in gaming or the manufacture or distribution of gaming devices at any time
      or in any capacity;




·
            strictly
      regulating all persons, locations, practices, and activities related to
      the operation  of licensed gaming establishments and the
      manufacturing or distribution of gaming devices and
    equipment;




·
            establishing
      and maintaining responsible accounting practices and
      procedures;




·
            maintaining
      effective controls over the financial practices of licensees, including
      requirements covering minimum procedures for internal fiscal controls and
      safeguarding assets and revenue, reliable recordkeeping, and periodic
      reports to be filed with the  Nevada Gaming
      Authorities;




·
            preventing
      cheating and fraudulent practices;
and




·
            providing
      and monitoring sources of state and local revenue based on taxation and
      licensing fees.




Change in
such laws, regulations, and procedures could have an adverse effect on our
operations.




We are
registered with the Nevada Gaming Commission as a publicly traded corporation,
or a Registered Corporation. We are also licensed in Nevada as a manufacturer
and distributor of gaming devices and as an operator of an inter-casino linked
system. We have obtained from the Nevada Gaming Authorities the various
authorizations they require to engage in manufacturing, distribution, and
inter-casino linked system activities in Nevada. The regulatory requirements set
forth below apply to us as a Registered Corporation and as a manufacturer,
distributor, and operator of an inter-casino linked system. Our gaming approvals
and licenses are also conditioned to allow the Chairman of the Nevada State
Gaming Control Board or his designee to order us to cease any gaming activities
if the Chairman determines that the minimum bankroll requirements set forth in
the Nevada Gaming Control Act are not being met.




16







All
gaming devices that are manufactured, sold, or distributed for use or play in
Nevada, or for distribution outside of Nevada, must be manufactured by licensed
manufacturers and distributed and sold by licensed distributors. The Nevada
Gaming Commission must approve all gaming devices manufactured for use or play
in Nevada before distribution or exposure for play.  The Chairman of
the Nevada State Gaming Control Board must administratively approve associated
equipment before it is distributed for use in Nevada. Inter-casino linked
systems must also be approved by the Nevada Gaming Commission. The approval
process for an inter-casino linked system includes rigorous testing by the
Nevada State Gaming Control Board, a field trial, and a determination as to
whether the inter-casino linked system meets standards that are set forth in the
regulations of the Nevada Gaming Commission. On November 19, 2001, we received
the final approval of the Nevada Gaming Commission for our inter-casino linked
system known as Nevada Numbers. In November 2007, we received final approval
from Nevada for our AdVision and PlayerVision TV software applications on IGT
Game King Machines. In addition, the Nevada Gaming Control Act requires any
person, such as our company as an operator of an inter-casino linked system,
that receives a share of gaming revenue from a gaming device operated on the
premises of a licensee, to remit and be liable to the licensee for that person’s
proportionate share of the license fees and tax paid by the licensee. The gross
revenue fees for non-restricted locations are 6.75% of gross revenue, which is
equal to the difference between amounts wagered by casino players and payments
made to casino players. Significant increases in the fixed fees or taxes
currently levied per machine or the fees currently levied on gross revenue could
have a material adverse effect on our operations.




As a
gaming licensee (a “Registered Corporation”), we are periodically required to
submit detailed financial and operating reports to the Nevada Gaming Commission
and furnish any other information the Nevada Gaming Commission may require. No
person may receive any percentage of gaming revenue from us without first
obtaining authorizations from the Nevada Gaming Authorities.




The
Nevada Gaming Authorities may investigate any individual who has a material
relationship to, or material involvement with, us in order to determine whether
such individual is suitable or should be licensed as a business associate of a
gaming licensee. Our officers, directors, and certain key employees are required
to file applications with the Nevada Gaming Authorities and may be required to
be licensed or found suitable by the Nevada Gaming Authorities. The Nevada
Gaming Authorities may deny an application for licensing for any cause that they
deem reasonable. A finding of suitability is comparable to licensing. Both
require submission of detailed personal and financial information, which is
followed by a thorough investigation. The applicant for licensing or a finding
of suitability must pay all the costs of the investigation. Changes in licensed
positions must be reported to the Nevada Gaming Authorities. In addition to
their authority to deny an application for a finding of suitability or
licensure, the Nevada Gaming Authorities have the power to disapprove a change
in corporate position.




If the
Nevada Gaming Authorities were to find an officer, director, or key employee
unsuitable for licensing or unsuitable to continue having a relationship with
us, we would have to sever all relationships with that person. In addition, the
Nevada Gaming Commission may require us to terminate the employment of any
person who refuses to file appropriate applications. Determinations of
suitability or of questions pertaining to licensing are not subject to judicial
review in Nevada.




We are
required to submit detailed financial and operating reports to the Nevada Gaming
Commission. In addition, we are required to report to or have approved by the
Nevada Gaming Commission substantially all material loans, leases, sales of
securities, and similar financing transactions.




17







Should we
be found to have violated the Nevada Gaming Control Act, the licenses we hold
could be limited, conditioned, suspended, or revoked. In addition, we and the
persons involved could be required to pay substantial fines, at the discretion
of the Nevada Gaming Commission, for each separate violation of the Nevada
Gaming Control Act. The limitation, conditioning, or suspension of any of our
licenses could, and revocation of any license would, materially adversely affect
our manufacturing, distribution, and inter-casino linked system
operations.




Regulation of Security Holders.Any beneficial holder of our voting securities, regardless of the number
of shares owned, may be required to file an application, be investigated, and
have his or her suitability as a beneficial holder of our voting securities
determined if the Nevada Gaming Commission finds reason to believe that such
ownership would otherwise be inconsistent with the declared policies of the
state of Nevada. The applicant must pay all costs of investigation incurred by
the Nevada Gaming Authorities in conducting any such investigation.




The
Nevada Gaming Control Act requires any person that acquires beneficial ownership
of more than 5% of a Registered Corporation’s voting securities to report the
acquisition to the Nevada Gaming Commission. It also requires beneficial owners
of more than 10% of a Registered Corporation’s voting securities to apply to the
Nevada Gaming Commission for a finding of suitability within 30 days after the
Chairman of the Nevada State Gaming Control Board mails a written notice
requiring such filing. Under certain circumstances, an “institutional
investor,’’ as defined in the Nevada Gaming Control Act, which acquires more
than 10%, but not more than 15%, of the Registered Corporation’s voting
securities may apply to the Nevada Gaming Commission for a waiver of such
finding of suitability if such institutional investor holds the voting
securities for investment purposes only. An institutional investor that has
obtained a waiver may, in certain circumstances, hold up to 19% of a Registered
Corporation’s voting securities for a limited period of time and maintain the
waiver.




An
institutional investor is deemed to hold voting securities for investment
purposes if the voting securities were acquired and are held in the ordinary
course of its business as an institutional investor and were not acquired and
are not held for the purpose of causing, directly or indirectly (1) the election
of a majority of the members of the board of directors of the Registered
Corporation; (2) any change in the Registered Corporation’s corporate charter,
bylaws, management, policies, or operations or those of any of its gaming
affiliates; or (3) any other action that the Nevada Gaming Commission finds to
be inconsistent with holding the Registered Corporation’s voting securities for
investment purposes only. Activities which are not deemed to be inconsistent
with holding voting securities for investment purposes only include (a) voting
on all matters voted on by stockholders; (b) making financial and other
inquiries of management of the type normally made by securities analysts for
informational purposes and not to cause a change in management, policies or
operations; and (c) other activities the Nevada Gaming Commission may determine
to be consistent with investment intent. If the beneficial holder of voting
securities that must be found suitable is a corporation, partnership, or trust,
it must submit detailed business and financial information, including a list of
beneficial owners. The applicant is required to pay all costs of
investigation.




Any
person who fails or refuses to apply for a finding of suitability or a license
within 30 days after being ordered to do so by the Nevada Gaming Commission or
the Chairman of the Nevada State Gaming Control Board may be found unsuitable.
The same restrictions apply to a record owner if the record owner, after
request, fails to identify the beneficial owner. Any stockholder of a Registered
Corporation found unsuitable and that holds, directly or indirectly, any
beneficial ownership in the voting securities beyond such period of time as the
Nevada Gaming Commission may specify for filing any required application may be
guilty of a criminal offense. Moreover, the Registered Corporation
will




18







be
subject to disciplinary action if, after it receives notice that a person is
unsuitable to be a stockholder or to have any other relationship with the
Registered Corporation, it (i) pays that person any dividend on its voting
securities; (ii) allows that person to exercise, directly or indirectly, any
voting right conferred through securities ownership; (iii) pays remuneration in
any form to that person for services rendered or otherwise; or (iv) fails to
pursue all lawful efforts (including, if necessary, the immediate purchase of
said voting securities for cash at fair value) to require such unsuitable person
to completely divest all voting securities held.




The
Nevada Gaming Commission, in its discretion, may require the holder of any debt
security of a Registered Corporation to file applications, be investigated, and
be found suitable to own the debt security of a Registered Corporation if the
Nevada Gaming Commission finds reason to believe that such ownership would
otherwise be inconsistent with the declared policies of the state of Nevada. If
the Nevada Gaming Commission determines that a person is unsuitable to own such
security, it may sanction the Registered Corporation, which sanctions may
include the loss of its approvals if, without the prior approval of the Nevada
Gaming Commission, it: (i) pays to the unsuitable person any dividend, interest,
or other distribution; (ii) recognizes any voting right of such unsuitable
person in connection with such securities; (iii) pays the unsuitable person
remuneration in any form; or (iv) makes any payment to the unsuitable person by
way of principal, redemption, conversion, exchange, liquidation, or similar
transaction.




Regulation of Capital Stock.We are required to maintain current stock ledgers in Nevada that may be
examined by the Nevada Gaming Authorities at any time. If any securities are
held in trust by an agent or by a nominee, the record owner may be required to
disclose the identity of the beneficial owner to the Nevada Gaming Authorities.
A failure to make such disclosure may be grounds for finding the record owner
unsuitable. We are also required to render maximum assistance in determining the
identity of the beneficial owners of our securities. The Nevada Gaming
Commission has the power to require us to imprint our stock certificates with a
legend stating that the securities are subject to the Nevada Gaming Control Act.
To date, the Nevada Gaming Commission has not imposed such a requirement on
us.




We may
not make a public offering of our securities without the prior approval of the
Nevada Gaming Commission if the securities or proceeds are to be used to
construct, acquire, or finance gaming facilities in Nevada or to retire or
extend obligations incurred for such purposes. Such approval, if given, does not
constitute a finding, recommendation, or approval by the Nevada Gaming
Commission or the Nevada State Gaming Control Board as to the accuracy or
adequacy of the prospectus or the investment merit of the offered securities,
and any representation to the contrary is unlawful. Any offer by us to sell
common stock will require the review of, and prior approval by, the Nevada
Gaming Commission.




Changes in Control.Changes
in control of a Registered Corporation through merger, consolidation, stock or
asset acquisitions, management or consulting agreements, or any act or conduct,
by which anyone obtains control, may not lawfully occur without the prior
approval of the Nevada Gaming Commission. Entities seeking to acquire control of
a Registered Corporation must meet the strict standards established by the
Nevada State Gaming Control Board and the Nevada Gaming Commission prior to
assuming control of a Registered Corporation. The Nevada Gaming Commission also
may require persons that intend to become controlling stockholders, officers, or
directors, and other persons who expect to have a material relationship or
involvement with the acquired company, to be investigated and licensed as part
of the approval process.




19







The
Nevada legislature has declared that some corporate acquisitions opposed by
management, repurchases of voting securities, and corporate defense tactics
affecting Nevada corporate gaming licensees, and Registered Corporations that
are affiliated with those operations, may be injurious to stable and productive
corporate gaming. The Nevada Gaming Commission has established a regulatory
scheme to minimize the potentially adverse effects of these business practices
upon Nevada’s gaming industry and to further Nevada’s policy to:




·
            assure
      the financial stability of corporate gaming licensees and their
      affiliates,




·
            preserve
      the beneficial aspects of conducting business in the corporate form,
      and




·
            promote
      a neutral environment for the orderly governance of corporate
      affairs.




In
certain circumstances, approvals are required from the Nevada Gaming Commission
before the Registered Corporation can make exceptional repurchases of voting
securities above market price and before a corporate acquisition opposed by
management can be consummated. The Nevada Gaming Control Act also requires prior
approval of a plan of recapitalization proposed by the Registered Corporation’s
board of directors in response to a tender offer made directly to the Registered
Corporation’s stockholders for the purpose of acquiring control of the
Registered Corporation.




License Fees and Taxes.License fees and taxes, computed in various ways depending on the type of
gaming or activity involved, must be paid to the state of Nevada and to the
counties and cities in which gaming operations are conducted. These fees and
taxes, depending upon their nature, are payable monthly, quarterly, or annually
and are based upon either a percentage of the gross revenue received or the
number of gaming devices operated. Annual fees are also payable to the state of
Nevada for renewal of licenses as an operator of a gaming machine route,
manufacturer, and/or distributor.




Any
person who is licensed, required to be licensed, registered, required to be
registered, or who is under common control with any such persons, collectively,
“Licensees,’’ and who proposes to become involved in a gaming venture outside of
Nevada, is required to deposit with the Nevada State Gaming Control Board, and
thereafter maintain, a revolving fund in the amount of $10,000 to pay the
expenses of investigation by the Nevada State Gaming Control Board of his or her
participation outside of Nevada. The revolving fund is subject to increase or
decrease at the discretion of the Nevada Gaming Commission. Thereafter,
Licensees are required to comply with certain reporting requirements imposed by
the Nevada Gaming Control Act. Licensees also are subject to disciplinary action
by the Nevada Gaming Commission if they knowingly violate any laws of the
foreign jurisdiction pertaining to the non-Nevada gaming operations, fail to
conduct the foreign gaming operations in accordance with the standards of
honesty and integrity required of Nevada gaming operations, engage in activities
or enter into associations that are harmful to the state of Nevada or its
ability to collect gaming taxes and fees, or employ, contract with, or associate
with, a person in the non-Nevada operations who has been denied a license or
finding of suitability in Nevada on the ground of unsuitability.




Other
Jurisdictions




All other
jurisdictions that have legalized gaming require various licenses,
registrations, findings of suitability, permits, and approvals of manufacturers
and distributors of gaming devices and equipment as well as licensure provisions
related to changes in control. In general, such requirements involve
restrictions similar to those of Nevada.




20







For
gaming device and system approvals, most jurisdictions in the United States,
including most Native American tribes and state regulatory agencies, accept
testing results from GLI, a leading private gaming device and systems testing
laboratory. GLI also provides testing services for over 400 gaming regulatory
bodies worldwide. GLI has already approved AdVision and PlayerVision
TV.  We anticipate that the review process of GLI for WagerVision and
NumberVision should be completed during the second quarter of
2008.  If necessary, we also plan to apply directly for approvals from
those jurisdictions that do not accept GLI testing results for certain devices
and systems, such as New Jersey, Pennsylvania, and Montana.




Federal
Regulation




The
Federal Gambling Devices Act of 1962, or the Federal Act, makes it unlawful, in
general, for any person to manufacture, transport, or receive gaming machines,
gaming machine type devices, and components across state lines or to operate
gaming machines unless that person has first registered with the Attorney
General of the United States. We have registered and must renew our registration
annually. In addition, the Federal Act imposes various record keeping and
equipment identification requirements. Violation of the Federal Act may result
in seizure and forfeiture of the equipment, as well as other
penalties.




Application
of Future or Additional Regulatory Requirements




In the
future, we intend to seek the necessary registrations, licenses, approvals, and
findings of suitability for us, our products, and our personnel in other
jurisdictions throughout the world where significant sales of our products are
expected to be made. However, we may be unable to obtain these registrations,
licenses, approvals, or findings of suitability, which if obtained may be
revoked, suspended, or conditioned. In addition, we may be unable to obtain on a
timely basis, or to obtain at all, the necessary approvals of our future
products as they are developed, even in those jurisdictions in which we already
have existing products licensed or approved. If a registration, license,
approval or finding of suitability is required by a regulatory authority and we
fail to seek or do not receive the necessary registration, license, approval or
finding of suitability, we may be prohibited from selling our products for use
in that jurisdiction or may be required to sell our products through other
licensed entities at a reduced profit.




Employees




As of
December 31, 2007, we had 49 full-time employees, 20 of whom were involved in
keno and bingo, 7 of whom were involved in engineering and research and
development, 11 of whom were involved in sales, and 11 of whom were involved in
finance and administration. With the implementation of our new business focus on
our PlayerVision system, we anticipate an increase in management and sales and
marketing personnel and a decrease in the personnel for our traditional
business. Our employees are not subject to any collective bargaining agreement
with us. We have never experienced a work stoppage, and we believe our employee
relations to be good.




Corporate
History




We were
incorporated in the State of Nevada on April 28, 1998.




21


PART
II




ITEM
8A. CONTROLS AND PROCEDURES.




We
maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our reports under the Securities
Exchange Act of 1934, as amended (Exchange Act) is recorded, processed,
summarized and reported within the time period specified in the SEC’s rules and
forms and that such information is accumulated and communicated to our
management, including the Chief Executive Officer and the Chief Financial
Officer.




Our
management, including the Chief Executive Officer and the Chief Financial
Officer, has conducted an evaluation of the effectiveness of disclosure controls
and procedures pursuant to Exchange Act Rule 13a-15(c) as of December 31,
2007.  Based on that evaluation, the Chief Executive Officer and the
Chief Financial Officer concluded that the disclosure controls and procedures
were not effective given the material weaknesses in the internal control over
financial reporting discussed below and a late Form 8-K filed on January 24,
2008, which should have been filed in December 2007.




Management’s
Report on Internal Control over Financial Reporting




Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting. Our internal control system was designed to
provide reasonable assurance to our management and board of directors regarding
the preparation and fair presentation of published financial
statements.  The errors that occurred in our financial reporting and
in our accounting for certain complex accounting transactions in 2005, 2006 and
2007 are the result of material weaknesses in our accounting
controls.  In the past, we have not taken the time to complete an SEC
and GAAP disclosure checklist and we have had insufficient oversight of the
chief financial officer.  In addition, our equity shares in our
financial records for 2007 were not reconciled with our transfer agent’s share
ledger until the inconsistencies were detected in the audit
process.




Management
assessed the effectiveness of our internal control over financial reporting (as
defined in the Securities Exchange Act of 1934 Rules 13a-15(f) and 15d-15(f)) as
of December 31, 2007. In making this assessment, it used the criteria set forth
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)
in Internal Control—Integrated Framework.  As a result of the material
weaknesses described above, management believes that, as of December 31, 2007,
our internal control over financial reporting was not effective based on those
criteria.




This
annual report does not include an attestation report of our registered public
accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission that permit the Company to provide only management’s report in this
annual report.




Changes
in Internal Control over Financial Reporting




Management
believes that we have addressed these material weaknesses in internal control
over financial reporting with respect to future periods by hiring Bruce Shepard,
a former audit partner with PricewaterhouseCoopers LLP, as our chief financial
officer on August 1, 2006, by requiring the completion of a detailed SEC and
GAAP disclosure checklist in connection with our financial closing process at
the end of each quarter and at the end of the year, by holding an audit
committee meeting prior to each annual and quarterly report being filed with the
SEC, by having a detailed cold review of our financial statements and notes
thereto performed by another independent accounting firm prior to each annual
and quarterly report being filed with the SEC and reporting the results of that
cold review to




22







the audit
committee, by subscribing to an online accounting reference service, and by
assigning responsibility for regular reconciliation of our equity shares to the
transfer agent ledger to a full-time accounting staff person, all of which
procedures were implemented prior to the filing of this report, except for the
assignment of responsibility for regular reconciliation of our equity shares to
the transfer agent ledger which to date has not been reassigned to a full time
accounting staff person due to limited accounting resources.  With
respect to disclosure controls and procedures relating to timely filing of Form
8-Ks, management plans to train its compliance officer in, and assign him the
responsibility of identifying, the events requiring Form 8-K reports, and
develop procedures for communications on a timely basis between him and the
person in management with the information necessary to make these
determinations.




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SIGNATURES




In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.




Las
      Vegas Gaming, Inc. (Registrant)By:
            /s/
      Jon D. BerkleyJon
      D. Berkley
              President
      and Chief Executive Officer
              (Principal
      Executive Officer)Date:
            June
      6, 2008







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EXHIBIT
INDEX




Exhibit
            
            Document
      Description31.1
            
            Certification of Chief Executive Officer pursuant to
      Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant
      to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
            
            Certification of Chief Financial Officer pursuant to
      Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant
      to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
            
            Certification of Chief Executive Officer and Chief
      Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.




















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