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                      U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, D.C.  20549

                                    FORM 10-KSB

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                        THE SECURITIES EXCHANGE ACT OF 1934
                    FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1997

Commission File Number 1-12780
                                 BOARDWALK CASINO, INC.
                    -------------------------------------------
                   (Name of small business issuer in its charter)
     Nevada                                            88-0304201
-------------------------------          ---------------------------------------
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
incorporation or organization)

3750 Las Vegas Blvd. South
     Las Vegas, Nevada                                              89109
---------------------------------                              ----------------
(Address of principal executive offices)                          (Zip Code)

Issuer's telephone number:   (702) 735-2400

Securities registered under Section 12(b) of the Exchange Act:

          Title of each class        Name of each exchange on which registered
          -------------------        -----------------------------------------
     Common Stock, $.001 Par Value           Pacific Stock Exchange
     Common Stock Purchase Warrants          Pacific Stock Exchange

Securities registered under Section 12(g) of the Exchange Act:

                           Common Stock, $.001 Par Value
                           -----------------------------
                                  (Title of Class)
                           Common Stock Purchase Warrants
                           ------------------------------
                                  (Title of Class)

Check whether the issuer (1) filed all reports required to be filed by section
13 or 15(d) of the Exchange Act 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
                                  ---                      ---

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of 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.  [X]

State issuer's revenues for its most recent fiscal year:  $41,700,045.

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates of the Registrant:  As of January 7, 1998: $15,244,000 (*)

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: $.001 Par Value Common
Stock--7,179,429 shares as of January 7, 1998.

Transitional Small Business Disclosure Format:    Yes    ; No  X
                                                      ---     ---



---------------------
* The aggregate market value was determined by multiplying the number of
outstanding shares (excluding those shares held of record by officers, directors
and greater than five percent shareholders) by $4.625, the last sales price of
the Registrant's common stock as of January 7, 1998, such date being within 60
days prior to the date of filing.


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                                       PART I

     The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements.  Certain information included in this
Form 10-KSB and other materials filed or to be filed by the Company with the
Securities and Exchange Commission (as well as information included in oral
statements or other written statements made or to be made by the Company)
contains statements that are forward-looking, such as statements relating to
plans for future expansion and other business development activities as well as
other capital spending, financing sources and the effects of regulation
(including gaming and tax regulation) and competition.  Such forward-looking
information involves important risks and uncertainties that could significantly
affect anticipated results in the future and, accordingly, such results may
differ from those expressed in any forward-looking statements made by or on
behalf of the Company. These risks and uncertainties include, but are not
limited to, those relating to development and construction activities,
dependence on existing management, debt service (including sensitivity to
fluctuations in interest rates), domestic or global economic conditions, changes
in federal or state tax laws or the administration of such laws and changes in
gaming laws or regulations (including the legalization of gaming in certain
jurisdictions).

ITEM 1.  DESCRIPTION OF BUSINESS.

GENERAL

     Boardwalk Casino, Inc. (the "Company") is a Nevada corporation that owns
and operates the Holiday Inn-Registered Trademark- Casino Boardwalk in Las
Vegas, Nevada and leases the 1.07 acre shopping center next to the hotel-casino.
The Holiday Inn-Registered Trademark- Casino Boardwalk is situated on a 7.8-acre
site on the Las Vegas Strip between Flamingo Road and Tropicana Avenue.  It
includes 653 hotel rooms, approximately 33,000 square feet of casino space, a
coffee shop, a full-service restaurant, a snack bar, an entertainment lounge,
two bars, two outdoor swimming pools and 1,125 garage and surface parking spaces
(including those spaces acquired with the shopping center lease).  It also
contains a small gift shop under lease to Holiday Gifts, Inc. ("HGI"), a Nevada
corporation owned by Avis P. Jansen, the Chairman of the Board of Directors and
a principal shareholder of the Company.  The Company has recently completed a
substantial hotel and casino renovation and expansion program.

     Boardwalk Casino, Inc. was incorporated under the laws of the State of
Nevada on July 27, 1993; Holiday gifts, Inc. was incorporated under the laws of
the State of Nevada on December 23, 1971.  The Company's principal executive
office is located at 3750 Las Vegas Boulevard South, Las Vegas, Nevada 89109 and
its telephone number is (702) 735-2400.

AGREEMENT AND PLAN OF MERGER

     On December 22, 1997 the Company and Mirage Resorts, Incorporated
("Mirage") entered into an agreement whereby a subsidiary of Mirage will merge
with the Company. See "Plan of Merger" for a further description of the
agreement.

LOCATION

     The Holiday Inn-Registered Trademark- Casino Boardwalk is strategically
located to take advantage of  adjacent mega-hotel/casino projects.  Las Vegas
Boulevard, more commonly known as "The Strip," is currently the center of
gambling activity in Las Vegas.  There are other concentrations of casinos
located in downtown Las Vegas and suburban locations.  The Las Vegas Strip has
the highest concentration of casino space and hotel rooms in Southern Nevada and
it is the location of substantially all of the premier Las Vegas hotels.

     The Company believes that its highly visible and accessible location is an
important factor in attracting visitors as gaming customers.

BACKGROUND

     The Company was granted a Holiday Inn ten-year franchise license on June
16, 1994 upon completing the renovation of its existing hotel.  In September
1995, the Company substantially completed a renovation of the casino by
expanding the casino floor space by 18,000 square feet and remodeling the front
facade of the property.  In May 1996, the Company substantially completed the
development and construction of a new 16-story 451-room hotel tower on its
property in addition to the existing four- and six-story towers.  As a result of
these expansions and other incremental additions, the Holiday Inn-Registered
Trademark- Casino Boardwalk currently consists of a 653-room hotel and a casino
of approximately 33,000 square feet with 661 slot machines, 20 table games and a
full-service race and sports book.


<PAGE>

BUSINESS STRATEGY

     Management believes that the following key principles have been and will
continue to be integral to its success as a gaming operator.

   TARGETED CUSTOMER BASE

     The Company's business strategy emphasizes attracting and retaining
customers from two primary market segments, tourism and local patronage.  As the
Company's property has developed by the increase of its room base from 202 rooms
to 653 rooms and the completion of its buffet and meeting rooms, the Company has
focused its emphasis on marketing a larger room base and capturing the added
traffic generated by the development of the mega resorts surrounding the
Boardwalk Casino.  The Boardwalk Casino is disproportionately large in relation
to its room count, thus allowing for the increase in pedestrian traffic
generated by the room base of surrounding mega resorts and new mega resorts
under construction.  The Company believes that its visitor patrons are
discerning customers who enjoy the Company's hotel and casino as an alternate to
the larger surrounding attractions on the Las Vegas Strip.

   FOCUS ON REPEAT CUSTOMERS

     Generating customer satisfaction and loyalty is a critical component of the
Company's business strategy.  The Company attracts customers from both the
tourist and local markets by offering significant value in its dining
experiences and its promotional programs.  The Company markets its rooms through
the Holiday Inn reservation system and its internal group tour, meeting and
travel department.  The Company believes the local market is primarily
influenced by the actual value of its food operations coupled with specific
promotions.  Although perceived value attracts customers to the Holiday
Inn-Registered Trademark- Casino Boardwalk initially, actual value generates
customer loyalty and satisfaction.  Management believes that actual value
becomes apparent during the customer's visit through an enjoyable and high
quality entertainment experience.

   AFFORDABLE QUALITY

     Because the Company targets the frequent repeat customer, management is
committed to providing a quality entertainment experience for its customers at
an affordable price.  Dining is a  primary motivation for a majority of all
casino visits by both tourists and local residents, and management believes that
the value offered by the Company's restaurants, snack bar, and ice cream parlor
is a major factor in attracting its customers.  The Company offers generous
portions of high quality food at reasonable prices.  In addition, the Company
provides a high level of value to its hotel guests by offering moderately priced
rooms which are well-appointed relative to comparably priced Las Vegas hotels.
Management believes that providing affordable quality to customers contributes
significantly to casino patronage.

   STRATEGIC LOCATION

     Management believes that the location of the Holiday Inn-Registered
Trademark- Casino Boardwalk provides the Company with a significant competitive
advantage.  With 436 feet of frontage on The Strip, the Company is able to offer
inviting opportunities for the pedestrian traffic generated by the surrounding
mega resorts.  The 3,000-room Monte Carlo Hotel and Casino immediately south of
the Company, the January 1997 opening of the 2,200-room New York-New York Hotel
and Casino, and the 2,000-room addition to the Luxor Hotel and Casino have
significantly increased the pedestrian traffic on the boardwalk. Mirage Resort's
"Bellagio" (expected to open in October 1998) is also expected to increase
pedestrian traffic.

   EMPHASIS ON SLOT PLAY

     An integral part of the Company's business strategy is an emphasis on slot
machine play.  The Company's target market consists of frequent gaming patrons
who seek not only a friendly atmosphere and convenience, but also
higher-than-average payout rates.  Accordingly, the Company's slot machine play
provides players with payout rates that are higher than the Las Vegas Strip
average payout rates.








<PAGE>


EXPANSION MASTER PLAN

     Currently, the Holiday Inn-Registered Trademark- Casino Boardwalk consists
of a 33,000 square feet casino and a hotel containing a total of 653 rooms
within a four-story, a six-story and a 16-story building located on the property
site.  The Company's master expansion plan for the Holiday Inn-Registered
Trademark- Casino Boardwalk consisted of three phases: (i) the renovation and
refurbishment of the original hotel rooms, which was completed in May 1994, (ii)
the expansion of the casino, which was substantially completed in September
1995, and (iii) the development and construction of a 16-story, 451-room hotel
tower, a parking garage and surface parking (accommodating 1,125 cars) and the
completion of the 27,000 square foot second floor of the casino.  The
development and construction of the 16-story, 451-room hotel tower was
substantially completed in May 1996.  The Company opened its new buffet in March
1997 and completed the construction of its meeting rooms in June 1997. The
buffet and the meeting rooms are located on the second floor of the casino.

     The Company has expanded the casino floor space from 15,000 square feet to
33,000 square feet and increased the number of slot machines from 212 to 661 and
the number of table games from six to 20.  In addition, the casino also features
a full-service race and sports book.  As part of the casino expansion project,
the Company relocated and increased the seating capacities of its restaurant and
its new coffee shop.  Management believes that this expansion was necessary to
respond to its expanding customer base and target markets.

     As part of its expansion master plan, the Company remodeled the front
facade of the Holiday Inn-Registered Trademark- Casino Boardwalk to present a
"Coney Island Amusement Park" theme conforming to the historical character and
general architecture of Coney Island, New York's famous amusement park.  The
casino has been combined with the new construction, creating a new exterior with
436 feet of horizontal frontage and an estimated height of 53 feet.  The
"boardwalk" consists of amusement games and specialty food and/or gift shops.
New state-of-the-art outdoor signage has completed the design renovation and
casino expansion.

     The boardwalk consists of a total of 6,000 square feet of retail space,
including shops, amusement games and food services.  Each of the shops along the
boardwalk offers access into the casino. The facade features a full-size model
roller coaster rising 90 feet above the boardwalk. A rotating ferris wheel,
complete with mannequins, is in place on the facade above the boardwalk, as is a
parachute drop with mannequins. The facade features the Company's logo, Jocko
the Clown, whose face stands approximately 45 feet high and whose likeness is
reproduced on  certain of the retail merchandise which is sold by the Company's
retail shops.

     In May 1996, the Company substantially completed the development and
construction of a new 16-story 451-room hotel tower on its property in addition
to the existing four- and six-story towers.  The new 27,000 square foot second
level of the existing casino provides a 370-seat buffet area and additional
meeting rooms.

     On December 16, 1993, the Company entered into a license agreement with
Holiday Inns Franchising, Inc. to operate a "Holiday Inn-Registered Trademark-"
hotel at its location.  The agreement, as amended, required the Company to
perform certain construction and renovation work and to open 200 rooms as a
Holiday Inn by May 1, 1994 and a minimum of 300 additional rooms as a Holiday
Inn by April 1, 1996.  Thereafter, the Company may open a maximum of 1,000 rooms
as a Holiday Inn by October 1998.  The agreement provides that the Company will
pay (i) a monthly royalty of 5% of the gross rooms revenues; (ii) a "marketing
contribution" of 1.5% of the gross rooms revenues; (iii) a "reservation
contribution" of 1.0% of the gross rooms revenues; and (iv) a monthly Holidex
fee of $6.43 for each guest room on the Holidex reservation system.  The license
granted under the agreement expires ten years from the date of the opening of
the hotel under the "Holiday Inn" system (June 16, 1994), subject to earlier
termination as set forth therein.

$40 MILLION FIRST MORTGAGE NOTE OFFERING

     On April 12, 1995, the Company completed the private sale of a $40 Million
16.5% First Mortgage Note due 2005 (the "Note").  The Note was issued under the
Indenture between Boardwalk Casino, Inc., Issuer and Shawmut Bank, N.A., Trustee
for $40,000,000 16.5% First Mortgage Notes Due March 31, 2005, Dated as of April
7, 1995 (the "Indenture").  During fiscal 1997, the Note was sold by the 
holder to Mirage.

     The Note is a senior secured obligation of the Company, limited in 
aggregate principal amount to $40,000,000, secured by all of the current 
property and assets of the Company.  The Note bears interest at the rate of 
16.5% per annum, payable in cash semi-annually on March 31 and September 30 
of each year, commencing on September 30, 1995.  Interest will be paid to the 
holder of the Note at the close of business on the March 15 or the September 
15, as the case may be, immediately preceding the respective interest payment 
date, or if no interest has yet been paid, on the date of original issue.

<PAGE>

     The Company may not redeem or prepay the Note without penalty prior to the
date of its Stated Maturity.  Commencing on September 30, 2001, the Company may
redeem the Note in whole but not in part at a redemption price equal to (i) the
remaining principal amount thereof, plus (ii) accrued interest to the date of
redemption, plus (iii) a premium equal to the Yield Maintenance Premium.  The
Indenture contains certain covenants of the Company, including limitations on
use of proceeds, limitations on restricted payments, limitations on incurrence
of additional indebtedness, limitations on restrictions on distributions from
Restricted Subsidiaries, limitations on capital stock of Restricted
Subsidiaries, limitations on transactions with Affiliates, limitations on Liens,
limitations on activities, limitations on sales of assets, limitation on merger,
sale or consolidation and maintenance of consolidated net worth.

     The foregoing summary of the Note and the Indenture does not purport to be
complete and is subject to, and is qualified in its entirety by, reference to
all of the provisions of the Note and the Indenture, including the definitions
contained therein of certain terms and those terms made part of the Indenture by
reference to the Trust Indenture Act of 1939 as in effect on the date of the
Indenture.  Capitalized terms used herein and not otherwise defined have the
meanings ascribed to them in the Indenture.

     As part of the private sale of the Note, the Company issued to the Note
purchaser 1,281,869 common stock purchase warrants exercisable to purchase
1,281,869 shares of Common Stock at $6.00 per share anytime before April 11,
2005.  Further, in connection with the private placement and sale of the Note,
the Company issued to the Placement Agent and Financial Advisor (and its
affiliates) an aggregate of 626,823 common stock purchase warrants exercisable
to purchase 626,823 shares of Common Stock at $6.00 per share anytime before
April 11, 2000.

     The proceeds of the Note were applied to (i) finance approximately $29.6
million of construction costs for the 16-story 451-room hotel tower, parking
facility, 27,000 square foot second level addition to the existing casino and
related improvements; (ii) finance the retirement of approximately $5.9 million
of existing indebtedness; (iii) pay approximately $1.5 million of fees and
expenses incurred in connection with the offering and sale of the Note; and (iv)
provide approximately $3.0 million for working capital and other corporate
purposes.

PRIVATE FINANCING WITH DIVERSIFIED OPPORTUNITIES GROUP LTD.

     On September 25, 1996, the Company completed a private transaction (the
"Transaction") entered into by and among Diversified Opportunities Group Ltd.,
an Ohio limited liability company ("Diversified"), the Company, and Norbert W.
Jansen, individually and as trustee under an agreement dated July 14, 1993
("Jansen").  Pursuant to the terms of a Purchase Agreement dated as of September
24, 1996 (the "Purchase Agreement") among Diversified, the Company and Jansen,
the first phase of the Transaction was consummated on September 25, 1996.  In
the first phase of the Transaction, the Company sold to Diversified 571,429
shares of common stock (the "Shares") at a price of $7.00 per share for a total
purchase price of $4,000,000 and issued to Diversified a convertible
subordinated note (the "Note") in the principal amount of $5,000,000. In the
first phase, Jansen also sold to Diversified 182,411 Shares pursuant to the
terms of an Option and Proxy Agreement (the "Option Agreement").  In addition,
as of September 24, 1996, the Company and Diversified also executed a
Registration Agreement (the "Registration Agreement").

     The following is a summary of certain terms of the Purchase Agreement, the
Note, the Option Agreement and the Registration Agreement (collectively, "the
Transaction Documents").  This summary of the Transaction Documents is qualified
in its entirety by reference to the Transaction Documents, copies of which have
been  previously filed with the Commission.

     The principal business of Diversified is developing and acquiring
investments in the gaming industry and managing, supervising, selling or
otherwise disposing of such investments and engaging in activities incidental or
ancillary thereto.  There are two members of Diversified, (i) Gary L. Bryenton
and Jeffrey P. Jacobs, as trustees under the Opportunities Trust Agreement dated
February 1, 1996 (the "Trust") and (ii) Jacobs Entertainment Ltd., an Ohio
limited liability company ("Entertainment").  Entertainment is the Manager of
Diversified.  Jeffrey P. Jacobs ("Jacobs") and Jacobs Entertainment Inc. (a
corporation in which Jacobs owns 100% of the outstanding capital stock) are the
members of Entertainment and Jacobs is the manager of Entertainment.  Both the
Trust and Entertainment were formed primarily to hold their interest in
Diversified.

     The first phase of the Transaction closed on September 25, 1996.  At such
time, Boardwalk sold to Diversified 571,429 Shares. Pursuant to the Option
Agreement, Jansen sold to Diversified 182,411 Shares.  In addition, Boardwalk
issued the Note to Diversified.  Diversified has the right, at its option, to
convert the Note into Shares at any time following its receipt of all necessary
licensing approvals from the Nevada State Gaming Control Board (the "Gaming
Board"), the Nevada Gaming Commission (the "Commission") and local licensing
authorities.  The Note is convertible into a number of Shares determined by
dividing the then unpaid principal balance of the Note by $7.50.


<PAGE>

The Note provides for a variable interest rate of LIBOR plus 2% and interest
thereon is payable on a quarterly basis.  The principal of the Note is due and
payable in September 1998.

     On November 25, 1996, Diversified was advised by the Gaming Board that the
second phase of the Transaction will not result in a change in control of the
Company pursuant to the regulations of the Gaming Board and the Commission.  On
December 2, 1996, phase two of the Transaction was consummated.  In phase two,
Diversified purchased an additional 317,589 Shares from Jansen pursuant to the
Option Agreement, and the Company's Board of Directors (the "Board") was
expanded to six directors, with Jacobs being appointed as the sixth director.

     The final phase of the Transaction provides Diversified the option to
acquire an additional 1,000,000 shares from Jansen pursuant to the Option
Agreement.  The exercise of this option is subject to Diversified obtaining all
necessary licensing approvals from the Gaming Board, the Commission and the
Nevada local licensing authorities.  At such time as Diversified acquires a
total of 1,000,000 shares from Jansen pursuant to the Option Agreement, the
Company's Board will be expanded to seven directors with the additional director
being designated by Diversified.

     The Option Agreement further provides for the refusal and first offer
rights for Diversified on Shares to be sold by Jansen, his estate and family.
The Option Agreement requires that Jansen vote all of his Shares and any other
securities of the Company over which he has control and that he take all
necessary or desirable actions within his control so that: (i) the Board is
established at six directors; (ii) Jacobs is elected to the Board as one of the
six directors; and (iii) once Diversified acquires 1,000,000 or more shares from
Jansen pursuant to the Option Agreement, the Board is expanded to seven
directors with the additional director to be designated by Diversified.
Diversified is also granted an irrevocable proxy to vote Jansen's shares if
Jansen fails to comply with the terms of the Option Agreement relating to the
Board, or any restrictive covenants imposed on the Company pursuant to the Note.

     The Registration Agreement gives Diversified certain rights with respect to
registering for sale under the Securities Act of 1933, as amended (the "Act"),
and applicable state laws the Shares that it may acquire pursuant to the
Transaction.  The Registration Agreement gives Diversified the right, through
September 24, 2001, to demand that the Company effect up to three registrations
(two of which are to be paid by the Company and one of which will be paid by
Diversified) of such Shares subject to the conditions set forth in the
Registration Agreement. In addition, Diversified has the right to have such
Shares included in certain registrations under the Act that the Company may
effect other than pursuant to such demand, subject to the conditions set forth
in the Registration Agreement.

MEMORANDUM OF UNDERSTANDING

     Effective October 29, 1997, the Company entered into a Memorandum of
Understanding with ("Diversified"), Jacobs Entertainment Nevada, Inc. ("Jacobs")
and Avis P. Jansen ("Jansen") pursuant to which the Company issued, and Jacobs
and Jansen purchased, at a price of $1,000 per share 2,650 shares and 600 shares
of 6% Non-voting Cumulative Preferred Shares, respectively. The proceeds from 
the sale of the Preferred Shares were used to retire debt and for general 
working capital purposes.

     In addition, the Company granted to Jacobs an option to acquire up to an
additional 15,000 Preferred Shares at a purchase price of $1,000 per share for a
period of two years. Further, under certain terms and conditions, Jacobs was
granted a purchase option and a development right to a parcel of property
controlled by the Company.

PLAN OF MERGER

     On December 22, 1997 the Company and Mirage entered into an agreement 
(the "Acquisition Agreement") whereby a subsidiary of Mirage will merge with 
the Company. Mirage has simultaneously entered into separate agreements with 
the Jansen Family Trust and Diversified (the "Stockholder Agreements") to 
acquire their common and preferred stock in the Company, a subordinated note 
issued by the Company, an adjacent parcel of land leased by the Company, and 
certain other rights. The Company's shareholders will receive $5 per share in 
cash pursuant to the merger. The merger is contingent upon several approvals, 
including shareholder approval, expiration of the waiting period under the 
Hart-Scott-Rodino Act, and the approval of gaming authorities, and is to be 
completed by no later than June 30, 1998 or the Plan of Merger is subject to 
termination and the Company will become liable to Mirage for $1,000,000.

     Based on representations made in their respective Stockholder Agreements,
as further described below, the Jansen Family Trust and Diversified beneficially
own, and have agreed to sell under the Stockholder Agreements, an aggregate of
3,821,429 shares of Common Stock, or approximately 53.2% of the total
outstanding shares of Common Stock, based on the total number of shares of
Common Stock represented by the Company in the Merger Agreement to have been
outstanding as of December 22, 1997.


<PAGE>

     Pursuant to the agreements with the Jansen Family Trust, Mirage has agreed
to purchase 2,750,000 share of Common Stock for $5.00 per share in cash and 600
shares of Preferred Stock for a purchase price of $600,000, plus any accumulated
but unpaid dividends on the Preferred Stock as of the date of payment. Mirage
has also agreed to purchase a parcel of land located at 3734 Las Vegas Boulevard
South owned by Jansen and leased to the Company.

     Pursuant to the agreement with Diversified, Mirage has agreed to
purchase 1,071,429 shares of Common Stock for $5.00 per share in cash, a
$5,000,000 Subordinated Note and 2,650 shares of Preferred Stock for a purchase
price of $2,650,000, plus any accumulated but unpaid interest and dividends on
the Subordinated Note and Preferred Stock, respectively, as of the date of
payment.

MARKETING

     The Holiday Inn-Registered Trademark- Casino Boardwalk has historically
relied upon limited casino and other promotions designed to appeal to local
residents.  With the completion of the expansion of the casino and the hotel,
the Company has implemented an aggressive marketing plan to promote the hotel
and the casino.  The Company believes that the "Coney Island" theme exterior
facade will enhance its ability to attract pedestrian traffic currently
generated by the existing mega resorts as well as those mega resorts under
construction and in the planning phase which surround the Holiday Inn-Registered
Trademark- Casino Boardwalk. With its oversized casino in relation to its room
inventory, the "Coney Island" facade, and the Company's inexpensive dining value
offerings, the Company believes that it is positioned to attract the mega resort
customer as an addition to its established local and hotel customer bases.


CURRENT OPERATIONS

     GAMING.  Historically, the casino has accounted for approximately 40% of
the net revenues of the Holiday Inn-Registered Trademark- Casino Boardwalk.
These revenues were primarily derived from the 212 slot machines and four table
games.  With the  expanded casino, it is anticipated that the gaming revenue
provided by slot machines will continue to be the primary component of the
Company's gaming revenues and income from operations.  Currently, the Holiday
Inn-Registered Trademark- Casino Boardwalk has 661 slot machines and 20 table
games on its casino floor and operates a full-service race and sports book.  On
average, the preponderance of the weekly gaming net revenues are generated on
weekends.  The gaming revenues are provided by a broad base of customers and are
not dependent on high-stakes players.

     In connection with its gaming activities, the Company follows a policy of
stringent controls in compliance with the standards set by the Nevada Gaming
Authorities.  As a matter of policy, the Company does not extend credit to its
gaming customers.

     NON-GAMING.  The Holiday Inn-Registered Trademark- Casino Boardwalk has 653
rooms, two outdoor pools and a retail gift shop leased to HGI.  The Company
offers its hotel rooms at modest prices (as of September 30, 1997, the average
room rate was approximately $61.00).  For fiscal year 1996, the Holiday
Inn-Registered Trademark- Casino Boardwalk's average occupancy was approximately
76.4%. For the fiscal year ended September 30, 1997, the average occupancy was
approximately 81.6%.  See "Item 6.  Management's Discussion and Analysis or Plan
of Operation" for more information regarding the Company's gaming and non-gaming
operations and revenues.

     The Company offers a full service coffee shop, a buffet, a snack bar, an
entertainment lounge and two bars for its casino and restaurant patrons.  As
with its hotel accommodations, the Company's food and beverage services are
moderately priced.

COMPETITION

     There is intense competition among companies in the gaming industry, many
of which have significantly greater financial resources than the Company.  The
Holiday Inn-Registered Trademark- Casino Boardwalk faces competition from all
other casinos and hotels in the Las Vegas areas.  The Holiday Inn-Registered
Trademark- Casino Boardwalk competes directly with a number of other operations
targeted to local residents.  Indirectly and to a lesser extent, its operations
compete generally with gaming operations in other parts of the State of Nevada,
such as Reno, Laughlin and Lake Tahoe, with facilities in Atlantic City, New
Jersey and other parts of the world and with state-sponsored lotteries, on- and
off-track wagering, card parlors, riverboat and Native American gaming ventures
and other forms of legalized gambling.  Certain states have recently legalized,
and several other states are currently considering legalizing, casino gaming in
designated areas.  Legalized casino gaming in other states and on Native
American reservations represents additional competition to the Company and could
adversely affect the Company's operations, particularly if such gaming were to
occur in areas close to the Company's operations.

<PAGE>

EMPLOYEES

     As of September 30, 1997, the Company employed 650 full-time employees,
including its two executive officers, 43 managers and supervisors, 170 casino
personnel, 245 food and beverage personnel, 165 hotel personnel and 25
administrative personnel. The Company occasionally employs part-time workers as
needed. None of the Company's employees is covered by a collective bargaining
agreement. The Company believes that its relationship with its employees is
excellent.


REGULATION AND LICENSING

     The ownership and operation of casino gaming facilities in Nevada are
subject to (i) the Nevada Gaming Control Act and the regulations promulgated
thereunder (the "Nevada Act") and (ii) various local regulations.  The Company's
gaming operations are subject to the licensing and regulatory control of the
Nevada Gaming Commission (the "Nevada Commission"), the Nevada State Gaming
Control Board (the "Nevada Board") and the Clark County Liquor and Gaming
Licensing Board (the "CCB"). The Nevada Commission, the Nevada Board and the CCB
are collectively referred to as the "Nevada Gaming Authorities."

     The laws, regulations and supervisory procedures of the Nevada Gaming
Authorities are based upon declarations of public policy that are concerned
with, among other things: (i) the prevention of unsavory or unsuitable persons
from having a direct or indirect involvement with gaming at any time or in any
capacity; (ii) the establishment and maintenance of responsible accounting
practices and procedures; (iii) the maintenance of effective controls over the
financial practices of licensees, including the establishment of minimum
procedures for internal fiscal affairs and the safeguarding of assets and
revenues, providing reliable record keeping and requiring the filing of periodic
reports with the Nevada Gaming Authorities; (iv) the prevention of cheating and
fraudulent practices; and (v) providing a source of state and local revenues
through taxation and licensing fees. Change in such laws, regulations and
procedures could have an adverse effect on the Company's gaming operations.

     The Company is required to be licensed by the Nevada Gaming Authorities.
The gaming licenses require the periodic payment of fees and taxes and are not
transferable.  The Company is also required to be registered by the Nevada
Commission as a publicly traded corporation ("Registered Corporation") and as
such, it is required periodically to submit detailed financial and operating
reports to the Nevada Commission and furnish any other information that the
Nevada Commission may require.

     The Nevada Gaming Authorities may investigate any individual who has a
material relationship to, or material involvement with, the Company in order to
determine whether such individual is suitable or should be licensed as a
business associate of a gaming licensee.  Officers, directors and certain key
employees of the Company must 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 which they deem reasonable.  A finding of suitability is
comparable to licensing, and both require submission of detailed personal and
financial information followed by a thorough investigation.  An applicant for
licensing or an applicant for a finding of suitability must pay all costs of the
investigation.  Changes in licensed positions must be reported to the Nevada
Gaming Authorities and in addition to their authority to deny an application for
a finding of suitability or licensing, the Nevada Gaming Authorities have the
jurisdiction to disapprove a change in a 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 the Company, the Company would have to sever all relationships
with such person.  In addition, the Nevada Commission may require the Company to
terminate the employment of any person who refused to file appropriate
applications.  Determinations of suitability or questions pertaining to
licensing are not subject to judicial review in Nevada.

     The Company is required to submit detailed financial and operating reports
to the Nevada Commission.  Substantially all material loans, leases, sales of
securities and similar financing transactions of the Company must be reported
to, or approved by, the Nevada Commission.

     If it were determined that the Nevada Act was violated by the Company, the
gaming licenses it holds could be limited, conditioned, suspended or revoked,
subject to compliance with certain statutory and regulatory procedures.  In
addition, the Company and the persons involved could be subject to substantial
fines for each separate violation of the Nevada Act at the discretion of the
Nevada Commission.  Further, a supervisor could be appointed by the Nevada


<PAGE>

Commission to operate the Company's gaming property and, under certain
circumstances, earnings generated during the supervisor's appointment (except
for the reasonable rental value of the gaming property) could be forfeited to
the State of Nevada.  Limitation, conditioning or suspension of any gaming
license of the Company or the appointment of a supervisor could (and revocation
of any gaming license would) have a material adverse effect on the Company's
gaming operations.

     Any beneficial holder of Common Stock or any other voting security of the
Company ("Company Voting Securities") regardless of the number of shares owned,
may be required to file an application, be investigated, and have such person's
suitability as a beneficial holder of Company Voting Securities determined if
the Nevada Commission has 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 the investigation incurred by the Nevada Gaming
Authorities in conducting any such investigation.

     The Nevada Act requires any person who acquires beneficial ownership of
more than 5% of Company Voting Securities to report the acquisition to the
Nevada Commission.  The Nevada Act requires that beneficial owners of more than
10% of Company Voting Securities apply to the Nevada Commission for a finding of
suitability within thirty days after the Chairman of the Nevada Board mails the
written notice requiring such filing.  Under certain circumstances, an
"institutional investor," as defined in the Nevada Act, which acquires
beneficial ownership of more than 10%, but not more than 15%, of Company Voting
Securities may apply to the Nevada Commission for a waiver of such finding of
suitability if such institutional investor holds Company Voting Securities for
investment purposes only.  An institutional investor shall not be deemed to hold
Company Voting Securities for investments purposes unless Company Voting
Securities were acquired and are held in the ordinary course of business as an
institutional investor and not for the purpose of causing, directly or
indirectly, the election of a majority of the members of the Board of Directors
of the Company, any change in the Company's corporate charter, bylaws,
management, policies or operations of the Company, or any other action which the
Nevada Commission finds to be inconsistent with holding Company Voting
Securities for investment purposes only.  Activities which are not deemed to be
inconsistent with holding voting securities for investment purposes only
include: (i) voting on all matters voted on by stockholders; (ii) 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 operation; and (iii) such other activities as the Nevada
Commission may determine to be consistent with such investment intent.  If the
beneficial holder of voting securities who must be found suitable is a
corporation, partnership, limited partnership, limited liability company 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.  Avis P. Jansen, the Company's largest stockholder, has been
found suitable as a controlling stockholder of the Company.

     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 Commission or
by the Chairman of the Nevada 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 found unsuitable and who
holds, directly or indirectly, any beneficial ownership of Company Voting
Securities beyond such period of time as may be prescribed by the Nevada
Commission may be guilty of a criminal offense.  The Company is 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 Company, the Company
(i) pays that person any dividend or interest upon any Company Voting
Securities; (ii) allows that person to exercise, directly or indirectly, any
voting right conferred through securities held by that person; (iii) pays
remuneration in any form to that person for services rendered or otherwise; or
(iv) fails to pursue all lawful efforts to require such unsuitable person to
relinquish the voting securities for cash at fair market value. Additionally,
the CCB has the authority to approve all persons owning or controlling the stock
of any corporation controlling a gaming licensee.

     The Nevada Commission may, in its discretion, require the holder of any
debt security of a Registered Corporation to file applications, be investigated
and be found suitable to own such debt security of a Registered Corporation.  If
the Nevada Commission determines that a person is unsuitable to own such
security, then pursuant to the Nevada Act, the Registered Corporation can be
sanctioned, including the loss of its approvals, if without the prior approval
of the Nevada Commission, it (i) pays to the unsuitable person any dividend,
interest or any distribution whatsoever; (ii) recognizes any voting right by
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.

     The Company is required to maintain a current stock ledger in Nevada which
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 holder 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 holder unsuitable.  The Company is also required to render


<PAGE>

maximum assistance in determining the identity of the beneficial owner of any
Company Voting Securities.  The Nevada Commission has the power to require the
Company's stock certificates to bear a legend indicating that the securities are
subject to the Nevada Act.  However, to date, the Nevada Commission has not
imposed such a requirement on the Company.

     The Company may not make a public offering of its securities without the
prior approval of the Nevada Commission if the securities or the proceeds
therefrom are intended to be used to construct, acquire or finance gaming
facilities in Nevada, or to retire or extend obligations incurred for such
purposes.  Any approval, if granted, does not constitute a finding,
recommendation or approval of the Nevada Gaming Authorities as to the accuracy
or adequacy of the prospectus or the investment merits of the securities offered
thereby.  Any representation to the contrary is unlawful.

     Changes in control of the Company through merger, consolidation, stock or
asset acquisitions, management or consulting agreements, or any act or conduct
by a person whereby such person obtains control, may not occur without the prior
approval of the Nevada Commission.  Entities seeking to acquire control of a
Registered Corporation must satisfy the Nevada Board and Nevada Commission in a
variety of stringent standards prior to assuming control of such Registered
Corporation.  The Nevada Commission may also require controlling stockholders,
officers, directors and other persons having a material relationship or
involvement with the entity proposing to acquire control, to be investigated and
licensed as part of the approval process relating to the transaction.

     The Nevada legislature has declared that some corporate acquisitions
opposed by management, repurchases of voting securities and corporate defense
tactics affecting Nevada gaming licensees, and Registered Corporations that are
affiliated with those operations, may be injurious to stable and productive
corporate gaming.  The Nevada Commission has established a regulatory scheme to
ameliorate the potentially adverse effects of these business practices upon
Nevada's gaming industry and to further Nevada's policy to: (i) assure the
financial stability of corporate gaming operators and their affiliates; (ii)
preserve the beneficial aspects of conducting business in the corporate form;
and (iii) promote a neutral environment for the orderly governance of corporate
affairs.  Approvals are, in certain circumstances, required from the Nevada
Commission before the Company can make exceptional repurchases of voting
securities above the current market price thereof and before a corporate
acquisition opposed by management can be consummated.  The Nevada Act also
requires prior approval of a plan of recapitalization proposed by the Company's
Board of Directors in response to a tender offer made directly to its
stockholders for the purpose of acquiring control of the Company.

     License fees and taxes, computed in various ways depending on the type of
gaming or activity involved, are payable to the State of Nevada and to the
counties and cities in which the Company's operations are conducted.  Depending
upon the particular fee or tax involved, these fees and taxes are payable either
monthly, quarterly or annually and are based upon either: (i) a percentage of
the gross revenues received; (ii) the number of gaming devices operated; or
(iii) the number of table games operated.  A casino entertainment tax is also
paid by casino operators where entertainment is furnished in connection with the
selling of food or refreshments.  Nevada Corporate Licensees that hold a license
as an operator of a slot route, or a manufacturer's or distributor's license
also pay certain fees and taxes to the State of Nevada.

     Any person who is licensed, required to be licensed, registered, required
to be registered, or is under common control with such persons (collectively,
"Licensees"), and who proposes to become involved in a gaming venture outside of
Nevada is required to deposit with the Nevada Board, and thereafter maintain, a
revolving fund in the amount of $10,000 to pay the expenses of investigation by
the Nevada Board of the Licensee's participation in such foreign gaming.  The
revolving fund is subject to increase or decrease in the discretion of the
Nevada Commission.  Thereafter, Licensees are required to comply with certain
reporting requirements imposed by the Nevada Act.  A Licensee is also subject to
disciplinary action by the Nevada Commission if it knowingly violates any laws
of the foreign jurisdiction pertaining to the foreign gaming operation, fails to
conduct the foreign gaming operations in accordance with the standards of
honesty and integrity required of Nevada gaming operations, engages in
activities that are harmful to the State of Nevada or its ability to collect
gaming taxes and fees, or employs a person in the foreign operation who has been
denied a license or finding of suitability in Nevada on the ground of personal
unsuitability.

     The sale of alcoholic beverages by the Company is subject to licensing,
control and regulation by applicable local regulatory agencies.  All licenses
are revocable and are not transferable.  The agencies involved have full power
to limit, condition, suspend or revoke any such license, and any such
disciplinary action could (and revocation would) have a material adverse effect
upon the operations of the Company.


<PAGE>


ITEM 2.  DESCRIPTION OF PROPERTY.

     See "Item 1.  Description of Business" for a complete description of the
Company's property.

     Effective October 1, 1996, in connection with the private transaction with
Diversified Opportunities Group Ltd., the Company entered into a lease agreement
(the "Lease Agreement") as the tenant with The Jansen Trust (as hereinafter
defined) as the landlord.  The Lease Agreement covers certain land to the north
of the hotel and casino (the "Property") which enables the Company to control
the use of the Property and provides the Company with an option to purchase the
Property for possible expansion of the hotel and casino.

     The Property consists of approximately 1.07 acres of land and has 150 feet
of frontage on the Strip.  It currently contains a two-story office building
which is leased to several retail and office tenants, including the executive
and administrative offices of the Company.  The Lease Agreement commenced
October 1, 1996 and has a term of 24 months, with an option to extend the lease
term for an additional five years and a second, successive, option to extend it
an additional 23 years.  The base rent of $70,000 per month ($840,000 per year)
is subject to adjustment after five years.  In addition, the Lease Agreement
grants the Company an option to purchase the Property under certain terms and
conditions.  The Company believes that the terms of the Lease Agreement are fair
and reasonable and on as beneficial terms as could be obtained from an
unaffiliated third party consistent with other rentals assessed in the market
area for similar facilities.

     Pursuant to the Memorandum of Understanding entered into on October 29,
1997, Diversified was granted, under certain conditions, a purchase option and a
development right to the 1.07 acres of land controlled by the Company.

     As part of the Stockholder Agreements (see Item 1 - "Plan of Merger")
Mirage will acquire the land parcel from the landlord and Diversified has agreed
to terminate its rights granted under the Memorandum of Understanding for
consideration of approximately $3,700,000 from Mirage.

     The Company does not invest in, and has not adopted any policy with respect
to investments in, real estate or interests in real estate, real estate
mortgages or securities of or interests in persons primarily engaged in real
estate activities.  It is not the Company's policy to acquire assets primarily
for possible capital gain or primarily for income.

ITEM 3.  LEGAL PROCEEDINGS.

     There are no material pending legal proceedings, other than routine
litigation incidental to the Company's business, to which the Company is a party
or of which any of its property is the subject.


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

     (a)  Annual meeting of shareholders held September 24, 1997.

     (b)  All five directors of the Company were nominated and elected September
          24, 1997 as follows:
          Avis Jansen, Louis J. Sposato, James Scibelli, Keven J. Picardo and
          Jeffrey P. Jacobs.

     (c)  Two matters were voted upon at the annual meeting as follows:

          Proposal 1:      Election of Directors

          A. Jansen                For:   5,632,417         Withhold:   23,244
          L. Sposato               For:   5,634,017         Withhold:   21,644
          J. Scibelli              For:   5,633,192         Withhold:   22,469
          K. Picardo               For:   5,634,017         Withhold:   20,944
          J. Jacobs                For:   5,633,617         Withhold:   22,044


     Proposal 2:    To ratify the appointment of Coopers & Lybrand L.L.P. as
                    independent accountants and auditors for the Corporation for
                    the year ending September 30, 1997.

                                   For:   5,645,417

<PAGE>


                                   Against:   10,144
                                   Abstain:      100
                                   Not Voted:    -0-

<PAGE>

                                      PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     (a)  The Common Stock is traded in the over-the-counter market and is
quoted on the Nasdaq SmallCap Market under the symbol "BWLK" and on the Pacific
Stock Exchange under the symbol "BWK".  For the past two fiscal years, the high
and low bid prices of the Common Stock as reported to the Company by the
National Association of Securities Dealers, Inc. were as follows:

     FYE 1997 QUARTER ENDED:       HIGH      LOW
     -----------------------       ----      ---
     December 31, 1996             7 1/8     4 3/8
     March 31, 1997                6 7/8     4 3/8
     June 30, 1997                 5 5/8     3 7/8
     September 30, 1997            5         3 1/2

     FYE 1996 QUARTER ENDED:       HIGH      LOW
     -----------------------       ----      ---
     December 31, 1995             6 5/8     5 1/4
     March 31, 1996                8 1/2     5 3/4
     June 30, 1996                 8 9/16    7 1/2
     September 30, 1996            6 5/8     5 3/4

     The over-the-counter quotations set forth herein reflect inter-dealer
prices, without retail mark-up, mark-down or commission and may not represent
actual transactions.

     The Warrants are traded in the over-the-counter market and are quoted on
the Nasdaq SmallCap Market under the symbol "BWLKW" and on the Pacific Stock
Exchange under the symbol "BWKW."

     (b)  On January 7, 1998, the last sale price of the Common Stock as
reported by Nasdaq was $4.625 per share.  As of January 7, 1998, there were at
least 1,900 record and beneficial holders of the Common Stock.

     (c)  The Company has not paid any dividends on its Common Stock and does
not presently anticipate paying dividends in the foreseeable future.  The
Company currently intends to retain all of its earnings from operations for use
in expanding and developing its business.  Any future decision as to the payment
of dividends will be at the discretion of the Company's Board of Directors and
will depend upon the Company's earnings, financial position, capital
requirements and such other factors as the Board of Directors deems relevant.
Further, the Indenture between the Company as Issuer and Shawmut Bank, N.A. as
Trustee for $40,000,000 16.5% First Mortgage Notes Due March 31, 2005, Dated as
of April 7, 1995 and the Note issued to Diversified Opportunities Group Ltd.
contain significant limitations on the Company's ability to pay dividends on its
capital stock.

     (d)  During the fiscal year ended September 30, 1997, the Company did not
sell any equity securities that were not registered under the Securities Act of
1933, as amended.

<PAGE>

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

GENERAL

     Boardwalk Casino, Inc. ("BCI" or the "Company") was formed in July 1993 for
the purpose of operating a casino and a hotel in Las Vegas, Nevada.  See "Notes
to Financial Statements".

                                                YEAR ENDED         YEAR ENDED
                                               SEPTEMBER 30,      SEPTEMBER 30,
                                                    1997              1996
                                              --------------     --------------
REVENUES:
   Casino. . . . . . . . . . . . . . . .      $   23,149,451     $   16,897,527
   Rooms . . . . . . . . . . . . . . . .          11,839,744          7,224,324
   Food and beverage . . . . . . . . . .           6,977,697          4,031,278
   Other . . . . . . . . . . . . . . . .           1,785,545            837,895
                                              --------------    ---------------
        Gross revenues . . . . . . . . .          43,752,437         28,991,024
   Promotional allowances. . . . . . . .          (2,052,392)        (1,079,467)
                                              --------------    ---------------
                                                  41,700,045         27,911,557
                                              --------------    ---------------
COSTS AND EXPENSES:
   Casino. . . . . . . . . . . . . . . .          14,160,946         10,787,868
   Rooms . . . . . . . . . . . . . . . .           5,192,093          3,460,334
   Food and beverage . . . . . . . . . .           7,131,585          4,168,259
   Other . . . . . . . . . . . . . . . .             230,862            173,138
   Selling, general and administrative .           7,480,641          5,174,502
   Depreciation and amortization . . . .           3,524,249          2,525,044
                                              --------------    ---------------
                                                  37,720,376         26,289,145
                                              --------------    ---------------

Income (loss) from operations. . . . . .           3,979,669          1,622,412
                                              --------------    ---------------

OTHER (INCOME) EXPENSE:
   Interest income . . . . . . . . . . .            (81,842)           (395,416)
   Interest expense. . . . . . . . . . .           8,054,164          7,874,115
   Interest capitalized. . . . . . . . .            (507,286)        (1,442,493)
                                              --------------    ---------------
                                                   7,465,036          6,036,206
                                              --------------    ---------------
Income (loss) before income taxes &
   extraordinary item. . . . . . . . . .      $   (3,485,367)   $    (4,413,794)
                                              --------------    ---------------

<PAGE>

RESULTS OF OPERATIONS

     In June of 1997 the Company completed the third phase of its three-phase
project to expand and renovate the former existing hotel and casino facilities
(the "Expansion").  Phase one of the Expansion was completed in May 1994 which
was the renovation of the original 202 existing hotel rooms.

     Phase two of the Expansion was completed in September 1995 with the
addition of a new casino facility that increased floor space from 15,000 square
feet to 33,000 square feet and the first of two parking garages consisting of
550 spaces was completed in December 1995.

     The third phase of  the Expansion  consisted of the development and
construction of a new 16-story (451 room) hotel tower completed in stages from
February 1996 to July 1996, the second garage, consisting of 440 spaces was
completed  in May 1996, the completion of the 27,000 square foot buffet and
meeting rooms on the second floor of the casino in March and June of 1997
respectively.

YEAR ENDED SEPTEMBER 30, 1997 COMPARED WITH YEAR ENDED SEPTEMBER 30, 1996

     The results of operations for the year ended September 30, 1997 reflect the
revenues and costs associated with the new casino facility  and the additional
451 rooms in the new tower which were open for the entire year.  The Company
incurred a net loss for the year ended September 30, 1997 of $3,485,367 compared
to a net loss of $4,413,794 in the prior year, a decrease in the net loss of
$928,427 (21%).  The reduction in loss was attributable to a $2,357,257 (145.3%)
increase in income from operations, from an operating profit of $1,622,412 in
1996 to an operating profit of $3,979,669 in 1997 which was offset by an
increase in net interest expense of $1,428,830.

     Net revenues at BCI increased $13,788,488 (49.4%), to $41,700,045 in 1997
from $27,911,557 in 1996.  The increase in revenues for fiscal 1997 was
attributable to the following: (i) an increase of $6,251,924 in casino revenues,
(ii) $4,615,420 in additional room revenue attributable to a completed new hotel
tower for the full fiscal year, (iii) an increase in food and beverage revenues
of $2,946,419 due to the opening of a new buffet during the year and a greater
number of hotel guests, (iv) an increase in other revenues by $947,650 with a
large portion of that increase generated from additional retail space and (v)
offset by an increase in promotional allowances of $972,925.  Operating
expenses, including depreciation and amortization, increased $11,431,231 (43.5%)
to $37,720,376 in 1997 from $26,289,145 in the prior


<PAGE>

year.  The increase in operating expenses was  primarily due to the addition of
a new casino facility and start-up and increased operating costs of the new
hotel tower for an entire year.

CASINO OPERATIONS

     For fiscal 1997, casino revenues increased $6,251,924 or 37% to
$23,149,451.  The increase is attributable to (i) a $2,163,548 increase in
revenue from the race and sports books to $9,314,035 in fiscal 1997 from
$7,150,487 for the same period in 1996, (ii) a $3,035,783 increase in slot
machine revenues to $10,437,652 in fiscal 1997 from $7,401,869 for the same
period in 1996 and (iii) a $1,052,593 increase in revenue from table games to
$3,397,764 in fiscal 1997 from $2,345,171 for the same period in 1996.

     Casino expenses increased $3,373,078 (31.3%) to $14,160,946 for fiscal 
year 1997 from $10,787,868 for the same period of 1996.  The increase in 
casino expenses was primarily due to: (i) increased revenue in the race and 
sports book resulting in related increases in race track and system operator 
fees of $1,326,066, (ii) additional staffing which resulted in higher payroll 
and employee benefit costs of $1,294,741 and (iii) increases in slot 
participation expenses, gaming tax and licenses of $662,372.

ROOM OPERATIONS

     Room revenues increased $4,615,420, or 63.9%, to $11,839,744 for fiscal
1997 from $7,224,324 for the comparable 1996 period.  The increase in room
revenues reflects an increase in room nights sold by 72,862 or 60%, to 194,248
for fiscal 1997 from 121,386 for the comparable 1996 period.  This increase was
enhanced by an increase in the average daily room rate by $1.43 to $60.95 for
fiscal 1997 from $59.52 for the same period of 1996.  Fiscal year 1997 had an
additional 79,133 room nights available for occupancy compared to fiscal year
1996.  The increased room availability during 1997 over 1996 was due to the
hotel tower being open for the entire fiscal year.  The 16th floor, which is
comprised of 11 suites, was available for occupancy by late July 1996.  During
the year the Company employed a professional sales department which had opened
several corporate accounts, including a national airline for its flight crews.
Despite the 79,133 additional room nights available, the hotel occupancy
percentage increased 5.2% to 81.6% for the fiscal year 1997 compared to 76.4%
for fiscal 1996.

     Rooms expense increased $1,731,759, or 50%, for fiscal 1997 to $5,192,093
from $3,460,334 for the same period in 1996.  This increase is primarily
attributable to (i) an increase in personnel to service the new hotel tower for
the entire year at an additional cost of $1,127,704, (ii) related franchise fees
and travel agent commissions on the additional revenues totaled $489,025, (iii)
additional uniforms, laundry and room supplies totaled $173,280 (iv) additional
credit card fees and equipment rental costs of $111,611. These expenses were
offset by decreases in legal fees, linen replacement, repairs and maintenance,
and miscellaneous expenses.

     The Company in the next fiscal year, has committed a block of rooms for
casino program patrons that are expected to increase the percentage of hotel
guests that play the Company's various gaming venues. The Company has an
arrangement, with an established program promoter, to fill the block of rooms
with qualified casino patrons.

FOOD AND BEVERAGE OPERATIONS

     Food and beverage revenues increased by $2,946,419 (73.1%), to $6,977,697
for fiscal 1997 from $4,031,278 for the comparable 1996 period.  The increase is
directly a result of  opening the new buffet for six months of operations during
fiscal 1997, as well as the new hotel tower which had a full year of operations
during fiscal 1997.

     Food and beverage expenses increased $2,963,326 (71.1%), to $7,131,585 for
fiscal 1997 from $4,168,259 for 1996 reflecting increases in food and beverage
costs associated with the increased sales.  Food and beverage expenses as a
percentage of gross food and beverage revenues decreased to 102.2% for fiscal
1997 from 103.4% for fiscal year 1996.  This decrease is a result of increased
casino promotional activity with an increase in food and beverage served on a
complimentary basis, which food and beverage costs are included in casino
expense.

     The opening of the buffet in March 1997 added capacity to the existing 
food facilities, which were operating close to maximum capacity. The initial 
opening and market positioning costs were heavy, but for the most part, under 
control by year end.  Higher operating costs associated with operating a 
second kitchen were reduced dramatically by year end.  Additionally, the 
coffee shop operation was negatively affected by the buffet opening.  
Management switched its marketing emphasis from utilizing the coffee shop as a 
loss leader to marketing the buffet effectively and repositioning the coffee 
shop as an inexpensive, cost effective, alternative for its guests.

<PAGE>

OTHER OPERATING REVENUES AND EXPENSES

     Other revenues increased by $947,650 (113.1%) to $1,785,545 for fiscal 1997
compared to $837,895 for 1996.  The increase was attributable to (i) an increase
of $555,290 in rental income derived from the new retail facilities, (ii) an
increase of $362,994 in telephone and movie revenues and (iii) the balance of
the increased revenues coming from arcade and vending facilities.

     The other costs increased $57,724 (33.3%) to $230,862 in fiscal 1997
compared to $173,138 in fiscal 1996.  The increase is primarily due to the cost
of movies purchased.

DEPRECIATION AND AMORTIZATION

     Depreciation and amortization totaled $3,524,249 in 1997, reflecting a
$999,205 (39.6%) increase over the 1996 amount of $2,525,044. The increase was
due to the following: (i) a new casino facility was opened in September 1995 at
a cost of $10,897,881, (ii) a new hotel tower was placed in service May 1996 at
a cost of $19,893,988, (iii) two new parking facilities were completed during
the fiscal year at a cost of $6,268,874, (iv) a central plant was completed
September 1995 at a cost of $1,825,842 and (iv) additional gaming devices and
casino equipment at a cost of $3,321,176 were placed in service starting in
September 1995 through fiscal year 1997.

SELLING, GENERAL AND ADMINISTRATIVE

     Selling, general and administrative expenses increased $2,306,139 (44.6%)
to $7,480,641 in 1997 from $5,174,502 in 1996.  The increase in administrative
expenses was primarily due to (i) utilities and rent increased $995,704, (ii)
advertising and promotional expenses increased $759,673, (iii) increase in legal
and professional fees of $306,344, (iv) small equipment, supplies and
maintenance service contract costs increased $194,542.

OTHER (INCOME) EXPENSE AND EXTRAORDINARY ITEM

     In 1997, the Company received $81,842 in interest income as compared to
$395,416 in 1996.  The $313,574 (79.3%) decrease is attributable to the lower
invested balance of marketable securities in the 1997 period.

     Net interest costs increased to $7,546,878 in 1997 from $6,431,622 in 1996
(an increase of $1,115,256 or 17.3%).  Approximately $507,286 of interest was
capitalized in 1997 in connection with the Expansion compared to $1,442,493 of
interest that was capitalized in 1996.


<PAGE>

LIQUIDITY AND CAPITAL RESOURCES


     Although the net loss for the year ended September 30, 1997 was $3,485,000,
the Company's operations generated a positive cash flow of approximately 
$3,962,000, due primarily to the accruing of interest payable on September 30, 
1997 of $3,300,000 on the $40,000,000 BCI Notes, which was subsequently paid 
during fiscal year 1998.

     Investing activities for fiscal 1997 used approximately $4,483,000, which
were primarily comprised of approximately $4,273,000 expended for the
construction and furnishing of the new buffet and meeting rooms located on the
second floor above the casino.

     Financing activities provided approximately $600,000 from additional
borrowings. Such proceeds were offset by $2,615,000 of principal payments on
long-term debt notes payable and capital leases during fiscal 1997.

     The Company had unrestricted cash assets of $2,236,018 (3.5% of total
assets) at September 30, 1997 compared to $4,722,549 (7.6% of total assets) at
September 30, 1996.  The ratio of current assets to current liabilities was .08
to 1 at September 30, 1997 and .82 to 1 at September 30, 1996.  The Company's 
$40,000,000 BCI Notes are classified as a current liability at September 30, 
1997 (see "Notes to Financial Statements").

     On December 22, 1997, the Company entered into a merger and acquisition
agreement (the "Acquisition Agreement") with Mirage Resorts, Incorporated
("Mirage") where the Company agreed to be acquired by Mirage.  In connection 
with the Acquisition Agreement, Mirage has entered into separate purchase 
agreements (the "Stockholder Agreements") with certain selling shareholders of 
the Company to purchase their respective shares of common and preferred stock. 
The Stockholder Agreements, which are subject to regulatory approval, provide 
Mirage with an approximate 53% interest in the Company.  The Acquisition 
Agreement also authorizes Mirage to purchase all of the remaining outstanding 
shares (the remaining 47% interest) of the Company's common stock for $5.00 
per share (the closing price of the Company's common stock on the day prior to 
the execution of the Acquisition Agreement was $4.16). Completion of the 
Acquisition Agreement is subject to regulatory approval and approval of a 
majority of the Company's shareholders and is to be completed by no later than 
June 30, 1998 or the Acquisition Agreement is subject to termination and the 
Company will become liable to Mirage for $1,000,000. Under the terms of the 
Stockholder Agreements, the selling shareholders have agreed with Mirage to 
vote in favor of the Acquisition Agreement, should such vote take place prior 
to the closing of Stock Agreements.

As part of the Stockholders Agreements, Mirage (i) on January 5, 1998 purchased
from one of the selling shareholders the $5,000,000 note payable by the Company
which is due on September 30, 1998 (as more fully described in Note 6), and (ii)
will acquire a land parcel from one of the selling stockholders which is
adjacent to the Company's hotel-casino and currently under lease to the Company.
One of the selling shareholders has agreed to terminate rights granted under the
Memorandum of Understanding executed in October 1997, for consideration of
approximately $3,700,000 from Mirage.

During fiscal 1997, and prior to the execution of the Acquisition Agreement 
and the Stock Agreements, Mirage acquired the $40,000,000 BCI Notes from the 
previous noteholder.  In connection with the Acquisition Agreement, Mirage has 
agreed to defer the $3,300,000 March 31, 1998 interest payment on the BCI 
Notes until September 30, 1998, at the Company's option (the "Deferral 
Option").  Interest will accrue on the deferred interest at the same rate as 
the BCI Notes (16.5%) and will also be due and payable on September 30, 1998. 
Mirage also waived its redemption rights under the BCI Notes which becomes 
effective upon a change in control.

Notwithstanding the Deferral Option, management of the Company believes that the
combination of existing cash and cash flows from operations will not be
sufficient to meet the Company's obligations as they become due during fiscal
1998.  These obligations include scheduled interest payments on the BCI


<PAGE>

Notes (approximately $6,600,000 for the year) and the scheduled interest and
principal repayment on the $5,000,000 note payable due September 30, 1998.
Management expects that the need for cash will be significantly relieved upon
completion of the Acquisition Agreement and merger with Mirage.  Should the
Acquisition Agreement not be approved, or should the closing be delayed, the
Company would not have sufficient resources to pay interest and scheduled
principal of the indebtedness acquired by Mirage, without modification of the
terms of such indebtedness.

Although management believes that the necessary approvals required to complete 
the Acquisition Agreement will be received prior to June 30, 1998, there is no 
assurance that the Acquisition Agreement will be approved, that such approval 
would be received on a timely basis, nor that modifications to the terms of 
the indebtedness would be obtained, if necessary.  Should the Acquisition 
Agreement not be approved on a timely basis, management will investigate other 
options to remedy its financial obligations.  Accordingly, these matters raise 
substantial doubt about the ability of the Company to continue as a going 
concern.  The final outcome of these matters is not presently determinable and 
the September 30, 1997 financial statements of the Company do not include any 
adjustments that might result from the outcome of this uncertainty.

IMPACT OF THE YEAR 2000 ISSUE

The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions or engage in similar
normal business activities.

The Company determined that it will be required to modify or replace significant
portions of its software so that its computer systems will properly utilize
dates beyond December 31, 1999. The Company presently believes that with
modifications to existing software and conversions to new software, the Year
2000 Issue can be mitigated. However, if such modifications and conversions are
not made, or are not completed timely, the Year 2000 Issue could have a material
impact on the operations of the Company.

During fiscal 1998 the Company plans to initiate formal communications with all
of its significant suppliers and large customers to determine the extent to
which the Company is vulnerable to those third parties' failure to remediate
their own Year 2000 Issue. There can be no guarantee that the systems of other
companies on which the Company's systems rely will be timely converted, or that
a failure to convert by another company, or a conversion that is incompatible
with the Company's systems, would not have a material adverse effect on the
Company.

The Company will utilize both internal and external resources to reprogram, or
replace, and test the software for Year 2000 modifications as is deemed to be
necessary. However, as the Company has not completed a formal assessment of the
systems affected by the Year 2000 Issue, the Company does not have a reasonable
basis to conclude that the impacts of the Year 2000 Issue on its systems will
not materially affect future financial results, or cause reported financial
information not to be necessarily indicative of future operating results or
future financial condition.
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS.

                           INDEX TO FINANCIAL STATEMENTS

                      YEARS ENDED SEPTEMBER 30, 1997 AND 1996
                 
                                       ------
                                          
Report Of Independent Accountants

Financial Statements:

            Balance Sheets As Of September 30, 1997 And 1996

            Statements Of Income (Loss) For The Years Ended September 30, 1997 
            And 1996

            Statements Of Cash Flows For The Years Ended September 30, 1997 And
            1996

            Statements Of Shareholders' Equity For The Years Ended September 30,
            1997 And 1996

Notes To Financial Statements

<PAGE>

                         REPORT OF INDEPENDENT ACCOUNTANTS
                 
                                     ---------
                                          

Board of Directors
Boardwalk Casino, Inc.
Las Vegas, Nevada


We have audited the accompanying balance sheets of Boardwalk Casino, Inc. as of
September 30, 1997 and 1996, and the related statements of income (loss),
shareholders' equity and cash flows for the years ended September 30, 1997 and
1996.  These financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. 
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Boardwalk Casino, Inc. as of
September 30, 1997 and 1996, and the results of its operations and its cash
flows for the years ended September 30, 1997 and 1996 in conformity with
generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that Boardwalk
Casino, Inc. will continue as a going concern.  As more fully described in Note
2, the Company has entered into a merger and acquisition agreement (the
"Acquisition Agreement") with Mirage Resorts, Incorporated ("Mirage").  The
Acquisition Agreement is subject to certain conditions, including regulatory and
shareholder approvals.  Mirage is currently the holder of approximately $45
million principal amount of the Company's indebtedness.  Should the Acquisition
Agreement not be approved, or should the closing be delayed, the Company would
not have sufficient resources to pay interest and scheduled principal of the
indebtedness acquired by Mirage, without modification of the terms of such
indebtedness.  There is no assurance that the Acquisition Agreement will be
approved, that such approval would be received on a timely basis, nor that
modifications to the terms of the indebtedness would be obtained, if necessary. 
Accordingly, these matters raise substantial doubt about the ability of the
Company to continue as a going concern.  The final outcome of these matters is
not presently determinable and the September 30, 1997 financial statements of
the Company do not include any adjustment that might result from the outcome of
this uncertainty.




/s/ COOPERS & LYBRAND L.L.P.

COOPERS & LYBRAND L.L.P.

Las Vegas, Nevada
November 24, 1997 except for
Note 2 as to which the date
is January 5, 1998

<PAGE>

                                BOARDWALK CASINO, INC.
                                    BALANCE SHEETS
                             SEPTEMBER 30, 1997 AND 1996
                                       -------

 

<TABLE>
<CAPTION>

                                                                                                           1997              1996
                                                                                                           ----              ----
<S>                                                                                                    <C>              <C>
                                           A S S E T S:
 Current assets:
      Cash and cash equivalents                                                                         $2,236,018       $4,772,549
      Receivables, net of allowance for doubtful accounts of $8,276 (1997) and $17,105 (1996)            1,258,170          439,857
      Inventory                                                                                            130,436           73,719
      Prepaid expenses                                                                                     746,965          573,964
                                                                                                        ----------       ----------
      
           Total current assets                                                                          4,371,589        5,860,089
                                                                                                        ----------       ----------
      
 Property and equipment, net of accumulated depreciation of $8,885,392 (1997) and
      $5,705,685 (1996)                                                                                 57,305,457       55,486,285
                                                                                                        ----------       ----------
      
 Other assets:
      Deferred costs, net of accumulated amortization of $583,158 (1997) and $239,435 (1996)             1,416,761        1,645,090
      Restricted cash                                                                                      173,385           66,394
      Other                                                                                                100,969          113,091
                                                                                                        ----------       ----------
      
           Total other assets                                                                            1,691,115        1,824,575
                                                                                                        ----------       ----------

           Total assets                                                                                $63,368,161      $63,170,949
                                                                                                        ----------       ----------
                                                                                                        ----------       ----------

                              LIABILITIES AND SHAREHOLDERS' EQUITY:
 Current liabilities:
      Accounts payable                                                                                  $1,520,268       $1,281,657
      Construction accounts payable                                                                        461,126          171,283
      Accrued expenses                                                                                   3,224,525        2,497,615
      Accrued interest expense                                                                           3,426,870             -
      Related party payables                                                                               400,000           50,000
      Notes payable                                                                                        600,000             -
      Current portion of obligations under capital leases                                                2,517,920        3,115,522
      Term debt classified as current, net of original issue discount of $3,875,773
      (Notes 2 and 6)                                                                                   41,124,227             -
                                                                                                        ----------       ----------

           Total current liabilities                                                                    53,274,936        7,116,077
                                                                                                        ----------       ----------

 Term debt, net of original issue discount of $4,090,477                                                      -          40,909,523
 Obligations under capital leases, less current portion                                                  1,833,477        3,400,234
                                                                                                        ----------       ----------

           Total liabilities                                                                            55,108,413       51,425,834
                                                                                                        ----------       ----------
 Commitments and contingencies

 Shareholders' equity:
      Preferred stock, $.001 par value; 15,000,000 shares authorized; none issued and
      outstanding                                                                                            -                 -
      Common stock, $.001 par value; 50,000,000 shares authorized; 7,179,429 (1997 and 1996)
      shares issued and outstanding                                                                          7,179            7,179
      Additional paid-in capital                                                                        22,435,083       22,435,083
      Accumulated deficit                                                                              (14,182,514)     (10,697,147)
                                                                                                        ----------       ----------

           Total shareholders' equity                                                                    8,259,748       11,745,115
                                                                                                        ----------       ----------

           Total liabilities and shareholders' equity                                                  $63,368,161      $63,170,949
                                                                                                        ----------       ----------
                                                                                                        ----------       ----------

</TABLE>

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

<PAGE>

                                BOARDWALK CASINO, INC.
                             STATEMENTS OF INCOME (LOSS)
                   FOR THE YEARS ENDED SEPTEMBER 30, 1997 AND 1996
                                     --------

                                                         1997          1996
                                                         ----          ----
 Revenues:
      Casino                                          $23,149,451   $16,897,527
      Rooms                                            11,839,744     7,224,324
      Food and beverage                                 6,977,697     4,031,278
      Other                                             1,785,545       837,895
                                                       ----------    ----------
      
                       Gross revenues                  43,752,437    28,991,024
      
 Less promotional allowances                           (2,052,392)   (1,079,467)
                                                       ----------    ----------

                       Net revenues                    41,700,045    27,911,557
                                                       ----------    ----------

 Costs and expenses:
      Casino                                           14,160,946    10,787,868
      Rooms                                             5,192,093     3,460,334
      Food and beverage                                 7,131,585     4,168,259
      Other                                               230,862       173,138
      Selling, general and administrative               7,480,641     5,174,502
      Depreciation and amortization                     3,524,249     2,525,044
                                                       ----------    ----------
      
                                                       37,720,376    26,289,145
                                                       ----------    ----------

 Income from operations                                 3,979,669     1,622,412
                                                       ----------    ----------

 Other (income) expense:
      Interest income                                     (81,842)     (395,416)
      Interest expense                                  8,054,164     7,874,115
      Interest capitalized                               (507,286)   (1,442,493)
                                                       ----------    ----------
      
                                                        7,465,036     6,036,206
                                                       ----------    ----------

                       Net income (loss)              ($3,485,367)  ($4,413,794)
                                                       ----------    ----------
                                                       ----------    ----------
      
                       Net income (loss)
                       per share of common stock            ($.49)        ($.70)
                                                              ---           ---
                                                              ---           ---
      
                       Weighted average 
                       common shares outstanding        7,179,429     6,292,287
                                                       ----------    ----------
                                                       ----------    ----------
      




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

<PAGE>

                                BOARDWALK CASINO, INC.
                               STATEMENTS OF CASH FLOWS
                   FOR THE YEARS ENDED SEPTEMBER 30, 1997 AND 1996
                                      --------
 

<TABLE>
<CAPTION>
                                                                                                         1997               1996
                                                                                                         ----               ----
<S>                                                                                                  <C>                <C>
Cash flows from operating activities:
      Net income (loss)                                                                              ($3,485,367)       ($4,413,794)
                                                                                                       ---------          ---------
      Adjustments to reconcile net income (loss) to net cash provided by (used in)
         operating activities:
         Depreciation and amortization                                                                 3,524,249          2,525,044
         Provision for doubtful accounts                                                                   4,999             11,705
         Amortization of original issue discount                                                         214,704            462,472
         Changes in operating assets and liabilities:
           (Increase) in receivables                                                                    (809,484)          (420,475)
           (Increase) in inventory                                                                       (56,717)            (8,168)
           Increase in related party payables                                                            350,000             50,000
           (Increase) in prepaid expenses                                                               (173,001)          (197,331)
           Increase in accounts payable, net of amounts for capital expenditures                         238,611            130,827
           Increase in accrued expenses                                                                  726,910          1,732,181
           Increase (decrease) in accrued interest payable                                             3,426,870         (2,600,297)
                                                                                                       ---------          ---------
 
                Net cash provided by (used in) operating activities                                    3,961,774         (2,727,836)
                                                                                                       ---------         ----------
           
Cash flows from investing activities:
      Capital expenditures, net of amounts in accounts payable                                        (4,273,148)       (21,209,818)
      Net (additions) deductions to restricted cash equivalents in escrow accounts                      (106,991)        17,856,729
      (Increase) in deferred costs                                                                      (115,393)           (93,812)
      Decrease in other assets                                                                            12,122             21,920
                                                                                                       ---------          ---------
      
                Net cash used by investing activities                                                 (4,483,410)        (3,424,981)
                                                                                                       ---------          ---------
           
Cash flows from financing activities:
      Proceeds from notes payable borrowings                                                             600,000          3,429,611
      Principal payments of notes payable                                                                   -            (6,303,639)
      Proceeds from long-term debt borrowings, net of issuance costs                                        -             4,668,993
      Principal payments of capital lease obligations                                                 (2,614,895)        (1,062,235)
      Proceeds from issuance of common stock and warrants, net of issuance costs                            -             6,542,400
                                                                                                       ---------          ---------
           
                Net cash (used in) provided by financing activities                                   (2,014,895)         7,275,130
                                                                                                       ---------          ---------
           
                Net (decrease) increase in cash and cash equivalents                                  (2,536,531)         1,122,313
                                                                              
           
Cash and equivalents, beginning of period                                                              4,772,549          3,650,236
                                                                                                       ---------          ---------

Cash and equivalents, end of period                                                                   $2,236,018         $4,772,549
                                                                                                       ---------          ---------
                                                                                                       ---------          ---------

Supplemental cash flow information:
      Cash paid for interest                                                                          $4,627,294        $10,474,412
                                                                                                       ---------          ---------
                                                                                                       ---------          ---------
      
      Schedule of non-cash investing and financing activities:
      Property and equipment acquisitions included in accounts payable                                  $461,126           $171,283
                                                                                                         -------            -------
                                                                                                         -------            -------

      Capitalized lease obligations incurred                                                            $450,606         $5,242,336
                                                                                                         -------          ---------
                                                                                                         -------          ---------

</TABLE>
 

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


<PAGE>

 



                             BOARDWALK CASINO, INC.
                       STATEMENTS OF SHAREHOLDERS' EQUITY
                 FOR THE YEARS ENDED SEPTEMBER 30, 1997 AND 1996


<TABLE>
<CAPTION>
                                                         Common Stock
                                                   ------------------------         Additional
                                                   Shares                             Paid-In         Accumulated
                                                 Outstanding         Amount           Capital            Deficit            Total
                                                 -----------         ------           -------         -----------           -----
<S>                                              <C>                 <C>           <C>                <C>                <C>
Balances, September 30, 1995                       6,077,800         $6,078        $15,893,784        ($6,283,353)       $9,616,509
           
      Issuance of warrants to purchase
           common stock                                -               -                51,617               -               51,617
           
      Issuance of common stock, net of
           issuance costs                            721,429            721          4,639,107               -            4,639,828
           
      Exercises of warrants, net of
           issuance costs                            380,200            380          1,850,575               -            1,850,955
           
      Net loss                                          -              -                  -            (4,413,794)       (4,413,794)
                                                   ---------        -------         ----------        -----------        ---------- 
Balances, September 30, 1996                       7,179,429          7,179         22,435,083        (10,697,147)       11,745,115
           
      Net loss                                          -              -                  -            (3,485,367)       (3,485,367)
                                                   ---------        -------         ----------        -----------        ---------- 
           
Balances, September 30, 1997                       7,179,429         $7,179        $22,435,083       ($14,182,514)       $8,259,748
                                                   ---------          -----         ----------        -----------        ---------- 
                                                   ---------          -----         ----------        -----------        ---------- 

</TABLE>
 

The accompanying notes are an integral part of these financial statements.
                                       
<PAGE>
                                          
                                          
                                          
                                          
                                          
                               BOARDWALK CASINO, INC.
                           NOTES TO FINANCIAL STATEMENTS
                                      ---------      
               

1.   Summary Of Significant Accounting Policies:

     NATURE OF OPERATIONS
     
     Boardwalk Casino, Inc. ("BCI" or the "Company") is a Nevada corporation and
     was formed in July 1993 for the purpose of operating a casino and a hotel
     (collectively, the "Boardwalk Hotel and Casino") in Las Vegas, Nevada.
     
     CASINO REVENUE
     
     In accordance with industry practice, BCI recognizes as casino revenues the
     net win from gaming activities, which is the difference between gaming wins
     and losses.
     
     PROMOTIONAL ALLOWANCES
     
     The retail value of hotel accommodations, food and beverage provided to
     customers without charge is included in gross revenues and then deducted as
     promotional allowances to arrive at net revenues.  The estimated costs of
     providing such promotional allowances have been classified as casino
     expenses through interdepartmental allocations, as follows:
     
                                                   Year Ended September 30,
                                                   ------------------------
                                                      1997            1996 
                                                      ----            ---- 

          Hotel                                     $126,254        $79,615
          Food and beverage                        1,046,396        923,362
                                                   ---------      ---------
                                                  $1,172,650     $1,002,977
                                                   ---------      ---------
     
     CASH EQUIVALENTS, CONCENTRATION OF CREDIT RISK AND RESTRICTED CASH
     
     The Company considers all highly liquid investments with an original
     maturity of three months or less to be cash equivalents. At September 30,
     1997, the Company has approximately $913,400 on deposit with a single
     financial institution in excess of federally insured limits.  At September
     30, 1997 and 1996, the Company had $173,385 and $66,394, respectively on
     deposit as required by the Nevada Gaming Authorities which was restricted
     for use by the Company.
     
     INVENTORIES
     
     Inventories are stated at the lower of cost or market.  Cost is determined
     by the first-in, first-out (FIFO) method.
     
     PROPERTY AND EQUIPMENT
     
     Property and equipment are stated at cost.  Depreciation is computed using
     the straight-line method.  Estimated useful lives for property and
     equipment are 10 to 40 years for building and improvements and 5 to 7 years
     for furniture and equipment.  Accelerated depreciation methods are
     generally used for income tax purposes.  Repairs and maintenance are
     charged to expense when incurred.
     
     A gain or loss is recognized upon disposal of property and equipment, and
     the asset and related accumulated depreciation and amortization amounts are
     removed from the accounts.
     
     ADVERTISING COSTS
     
     Advertising costs are expensed as incurred and totaled $933,560 and
     $387,312 for the years ended September 30, 1997 and 1996, respectively.


<PAGE>

                               BOARDWALK CASINO, INC.
                      NOTES TO FINANCIAL STATEMENTS, CONTINUED
                                    ---------      
               
     
1.   Summary Of Significant Accounting Policies, Continued:
     
     PREOPENING COSTS
     
     Preopening costs associated with the expansion of the hotel-casino are
     expensed as incurred.
     
     DEFERRED COSTS
     
     Costs associated with the issuance of debt are deferred and amortized over
     the life of the related indebtedness using the effective interest method.
     
     INCOME TAXES
     
     The Company accounts for income taxes in accordance with Statement of
     Financial Accounting Standards No. 109, "Accounting for Income Taxes"
     ("SFAS 109").  Under SFAS 109, deferred tax assets and liabilities are
     recognized for the expected future tax consequences attributable to
     differences between the financial statement carrying amounts of existing
     assets and liabilities and their respective tax bases.  Deferred tax assets
     and liabilities are measured using enacted tax rates expected to apply to
     taxable income in the years in which those temporary differences are
     expected to be recovered or settled.  Under SFAS 109, the effect on
     deferred tax assets and liabilities of a change in tax rates is recognized
     in income in the period that includes the enactment date.
     
     EARNINGS PER SHARE
     
     Earnings per share is based on the weighted average number of shares of
     common stock outstanding during each period.  Warrants and options to
     purchase common stock which were issued in 1996, 1995 and 1994 were
     excluded form the calculation of earnings (loss) per share, as their
     inclusion would have been anti-dilutive (by reducing the loss per share).
     
     In February 1997, the Financial Accounting Standards Board issued
     Statements of Financial Accounting Standards No. 128, "Earnings Per Share"
     ("SFAS 128"). SFAS 128 is effective for periods ending after December 15,
     1997 and replaces currently reported earnings per share with "basic", or
     undiluted, earnings per share and "diluted" earnings per share.  Basic
     earnings per share is computed as detailed above while diluted earnings per
     share reflects the additional dilution for all potentially dilutive
     securities, such as stock options and warrants.
     
     The Company will adopt the provisions of SFAS 128 in its fiscal 1998
     financial statements and the Company will be required to retroactively
     adopt this standard when it reports its operating results for the quarters
     and year ended September 30, 1998.  When the Company presents this
     information, it expects to report the following restated amounts for 1997
     and 1996:

                                               September 30,  September 30,
                                                   1997           1996
                                                   ----           ----
Basic earnings per share:

  Income before extraordinary item                $(.49)         $(.70)

  Net income (loss)                                (.49)          (.70)

Diluted earnings per share:

  Income before extraordinary item                 (.49)          (.70)

  Net income (loss)                                (.49)          (.70)


<PAGE>

                               BOARDWALK CASINO, INC.
                      NOTES TO FINANCIAL STATEMENS, CONTINUED
                                    ---------    


1.   Summary Of Significant Accounting Policies, Continued:
     
     STOCK-BASED COMPENSATION
     
     In October 1995, the Financial Accounting Standards Board issued Statement
     of Financial Accounting Standards No. 123, "Accounting for Stock-Based
     Compensation", ("SFAS 123").  SFAS 123 established fair value-based
     financial accounting and reporting standards for all transactions in which
     a company acquires goods or services by issuing its equity instruments or
     by incurring a liability to its supplier in amounts based on the price of
     its common stock or other equity instruments.

     SFAS 123 provides that companies may continue to account for employee stock
     compensation plans using the accounting prescribed by Accounting Principles
     Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB
     25").  Companies that elect not to adopt the fair-value based accounting
     approach under SFAS 123 for employee stock compensation plans must
     nevertheless comply with certain disclosure requirements and disclose pro
     forma net income and earnings per share as if such approach under SFAS 123
     had been adopted.
     
     The disclosure requirements of SFAS 123 are effective for financial
     statements for fiscal years beginning after December 15, 1995 and the pro
     forma disclosure requirements are effective for stock awards granted in the
     first fiscal year beginning after December 15, 1994.
     
     The Company plans to utilize the disclosure option allowed by SFAS 123 and
     continue to account for stock-based compensation under APB 25.  The Company
     did not issue any stock as compensation to employees during fiscal years
     1997 and 1996.
     
     USE OF ESTIMATES
     
     The preparation of financial statements in conformity with generally
     accepted accounting principles requires management to make estimates and
     assumptions that affect the amounts reported in the financial statements
     and accompanying notes.  Actual results could differ from those estimates,
     particularly with respect to those matters discussed in Notes 2 and 6.
     
     ACCOUNTING PRONOUNCEMENT
     
     In June 1997, the Financial Accounting Standards Board issued Statement of
     Financial Accounting Standards No. 130, "Reporting Comprehensive Income"
     ("SFAS 130"), which establishes standards for reporting and display of
     comprehensive income and its components.  SFAS 130 requires a separate
     statement to report components of comprehensive income for each period
     presented.  The provisions of SFAS 130 are effective for fiscal years
     beginning after December 15, 1997.  Management believes that they currently
     do not have items that would require presentation in a separate statement
     of comprehensive income.
     
     RECLASSIFICATIONS
     
     Certain amounts in the 1996 financial statements have been reclassified to
     conform with the 1997 presentation.
     
2.   Subsequent Event - Acquisition Agreement and Going Concern
     
     On December 22, 1997, the Company entered into a merger and acquisition
     agreement (the "Acquisition Agreement") with Mirage Resorts, Incorporated
     ("Mirage") where the Company agreed to be acquired by Mirage.  In 
     connection with the Acquisition Agreement, Mirage has entered into 
     separate purchase agreements (the "Stock Agreements") with certain selling
     shareholders of the Company to purchase their respective shares of common 
     and preferred stock.  The preferred stock was issued by the Company in 
     October 1997, as more fully described in Note 10.  The Stock Agreements, 
     which are subject to regulatory approval, provide Mirage with an 
     approximate 53% interest in the Company.  The Acquisition Agreement also 
     authorizes Mirage to purchase all of the remaining outstanding shares (the
     remaining 47% interest) of the Company's common stock for $5.00 per share 
     (the closing price of the Company's common stock on the day

<PAGE>

                               BOARDWALK CASINO, INC.
                      NOTES TO FINANCIAL STATEMENS, CONTINUED
                                     ---------      
               

2.   Subsequent Event - Acquisition Agreement and Going Concern, Continued

     prior to the execution of the Acquisition Agreement was $4.16).  Completion
     of the Acquisition Agreement is subject to regulatory approval and approval
     of a majority of the Company's shareholders and is to be completed by no
     later than June 30, 1998 or the Acquisition Agreement is subject to
     termination and the Company will become liable to Mirage for $1,000,000. 
     Under the terms of the Stock Agreements, the selling shareholders have
     agreed with Mirage to vote in favor of the Acquisition Agreement, should
     such vote take place prior to the closing of Stock Agreements.
     
     Under the terms of the Acquisition Agreement, all issued and outstanding
     warrants and stock options (other than options issued under the Company's
     1994 Stock Compensation Plan or Outside Directors Stock Option Plan) will
     terminate or constitute only the right to receive the excess, if any, of
     the per share merger consideration ($5.00) over the per share exercise
     price of such warrant or option.  
     
     As part of the Stock Agreements, Mirage (i) on January 5, 1998 purchased
     from one of the selling shareholders the $5,000,000 note payable by the
     Company which is due on September 30, 1998 (as more fully described in Note
     6), and (ii) will acquire a land parcel from one of the selling
     stockholders which is adjacent to the Company's hotel-casino and currently
     under lease to the Company (as more fully described in Note 10).  One of
     the selling shareholders has agreed to terminate rights granted under the
     Memorandum of Understanding executed in October 1997, for consideration of
     approximately $3,700,000 from Mirage. 
     
     During fiscal 1997, and prior to the execution of the Acquisition Agreement
     and the Stock Agreements, Mirage acquired the $40,000,000 BCI Notes from 
     the previous noteholder in a private placement transaction.  In connection 
     with the Acquisition Agreement, Mirage has agreed to defer the $3,300,000 
     March 31, 1998 interest payment on the BCI Notes until September 30, 1998, 
     at the Company's option (the "Deferral Option").  Interest will accrue on 
     the deferred interest at the same rate as the BCI Notes (16.5%) and will 
     also be due and payable on September 30, 1998.  Mirage also waived its
     redemption rights under the BCI Notes which become effective upon a change
     in control. 
     
     Notwithstanding the Deferral Option, management of the Company believes
     that the combination of existing cash and cash flows from operations will
     not be sufficient to meet the Company's obligations as they become due
     during fiscal 1998.   These obligations include scheduled interest payments
     on the BCI Notes (approximately $6,600,000 for the year) and the scheduled
     interest and principal repayment on the $5,000,000 note payable due
     September 30, 1998.   Management expects that the need for cash will be
     significantly relieved upon completion of the Acquisition Agreement and
     merger with Mirage.  However, as more fully described above, the
     Acquisition Agreement is subject to certain conditions, including
     regulatory and shareholder approvals.  Should the Acquisition Agreement not
     be approved, or should the closing be delayed, the Company would not have
     sufficient resources to pay interest and scheduled principal of the
     indebtedness acquired by Mirage, without modification of the terms of such
     indebtedness.  
     
     There is no assurance that the Acquisition Agreement will be approved, that
     such approval would be received on a timely basis, nor that modifications
     to the terms of the indebtedness would be obtained, if necessary. 
     Accordingly, these matters raise substantial doubt about the ability of the
     Company to continue as a going concern.  The final outcome of these matters
     is not presently determinable and the September 30, 1997 financial
     statements of the Company do not include any adjustment that might result
     from the outcome of this uncertainty.
     

<PAGE>

                               BOARDWALK CASINO, INC.
                      NOTES TO FINANCIAL STATEMENS, CONTINUED
                                    ---------      
 

3.   Property And Equipment:
     
     Property and equipment consists of the following:

                                                      September 30,   
                                                 --------------------------
                                                 1997                1996  
                                                 ----                ----  

          Land and improvements              $3,218,499          $3,042,769
          Buildings and improvements         47,499,476          38,736,144
          Gaming equipment                    6,574,006           6,163,617
          Furniture and other equipment       8,790,209           8,077,178
                                             ----------          ----------
                                             66,082,190          56,019,708
                                                                           
          Less: accumulated depreciation     (8,885,392)         (5,705,685)
                                             ----------          ----------

                                             57,196,798          50,314,023
                                                                           
          Construction in progress              108,659           5,172,262
                                                -------           ---------

                                            $57,305,457         $55,486,285
                                             ----------          ----------

     Construction in progress at September 30, 1996 represents costs associated
     with an expansion of the second floor of the casino which included
     entertainment and meeting room space and a buffet facility. The second
     floor construction was substantially completed in June 1997 at a total cost
     of approximately $7,500,000.  Construction in progress at September 30,
     1997 represents architectural plans and construction costs related to the
     porte cochere and bridge between the parking garages and the casino.
     
4.   Notes Payable:

     In November 1995, the Company executed a $600,000, 10% uncollateralized
     promissory note with principal and interest due in May 1996.  The note was
     paid off with no gain or loss in September 1996 with proceeds from the
     $5,000,000 subordinated, convertible note payable executed in September
     1996 as more fully described in Note 6.
     
     In December 1995, the Company executed a $500,000, 12% uncollateralized
     promissory note to the Company's majority shareholder and CEO with
     principal and interest due in September 1996.  The note was paid off with
     no gain or loss in September 1996 with proceeds from the $5,000,000
     subordinated, convertible note payable executed in September 1996 as more
     fully described in Note 6.
     
     In March 1996, the Company executed a $500,000, 10% uncollateralized
     promissory note to a director of the Company with principal and interest
     due in September 1996.  The note was paid off with no gain or loss in
     September 1996 with proceeds from the $5,000,000 subordinated, convertible
     note payable executed in September 1996 as more fully described in Note 6.
     
     In March 1996, the Company executed a $750,000, 12% uncollateralized
     promissory note to the Company's majority shareholder and CEO with
     principal and interest due in September 1996.  The note was paid off with
     no gain or loss in September 1996 with proceeds from the $5,000,000
     subordinated convertible note payable executed in September 1996, as more
     fully described in Note 6.
     
     In March 1997, the Company issued a $600,000 short-term note with 13.5%
     annual interest payable monthly with the principal due September 25, 1997,
     to a private investor who has provided other short-term financing to the
     Company in the past. The note's principal and interest were paid in October
     1997, with the proceeds from sale of preferred shares as more fully
     described in Note 6. 
     
5.   Leases:

     The Company has entered into capital lease agreements whereby the Company
     leases various equipment under two-, three-, five-, seven-, and twenty-year
     leases which expire at various dates through 2015.


<PAGE>


                               BOARDWALK CASINO, INC.
                      NOTES TO FINANCIAL STATEMENS, CONTINUED
                                     ---------      
               
     
5.   Leases, Continued:
     
     Capital lease obligations consist of the following:


                                                              September 30,
                                                          ---------------------
                                                            1997        1996
                                                            ----        ----
     Capital lease obligation, interest rate of                   
       prime plus 3%, monthly principal and interest                
       payments of $57,744 through August 1998,                     
       collateralized by slot equipment                   $599,661   $1,519,684
      
     Capital lease obligation, effective interest                 
       rate of 12.50%, due in monthly installments of               
       $41,817, including interest, through November                
       1998, collateralized by casino and hotel                     
       equipment                                           542,134      948,248
      
     Capital lease obligation, interest rate of 10%,              
       semi-annual principal and interest payments of               
       $20,721 through August 2015, uncollateralized       320,201      337,988
      
     Capital lease obligation, effective interest                 
       rate of 12.50%, due in monthly installments of               
       $23,418 through May 1999, collateralized by                  
       slot equipment                                      382,683      600,732
      
     Capital lease obligation, effective interest                 
       rate of 12.50%, due in monthly installments of               
       $61,794 through September 1999, collateralized               
       by hotel furniture, fixtures and equipment        1,315,172    1,822,938
      
     Capital lease obligations, effective interest                
       rates ranging from 9.36% to 12.90%, due in                   
       aggregate monthly installments of $7,619, and                
       ending at various times in 2001, collateralized              
       by phone equipment                                  286,053      346,070
      
     Capital lease obligation, effective interest                 
       rate of 12.50%, due in monthly installments of               
       $9,083 through October 2000, collateralized by               
       signage equipment                                   271,595      347,222
                                                      
     Other                                                 633,898      592,874
                                                         ---------    ---------
      
                                                         4,351,397    6,515,756
     Less amounts classified as current                 (2,517,920)  (3,115,522)
                                                         ---------    ---------
                                                        $1,833,477   $3,400,234
                                                         ---------    ---------

     Property and equipment include the following property leased under capital
     leases as of September 30, 1997 and 1996:
     
                                                           1997          1996  
                                                           ----          ----  

          Cost of equipment under capital leases       $7,125,873    $7,001,501
          
          Less, accumulated depreciation               (1,777,304)   (1,018,864)
                                                        ---------     ---------

                                                       $5,348,569    $5,982,637
                                                        ---------     ---------
     

<PAGE>

                               BOARDWALK CASINO, INC.
                      NOTES TO FINANCIAL STATEMENS, CONTINUED
                                     ---------      

5.   Leases, Continued:
     
     Future minimum lease payments, by year and in the aggregate, under capital
     leases with initial or remaining terms of one year or more consist of the
     following at September 30, 1997.

          1998                                                       $2,801,265
          1999                                                        1,341,589
          2000                                                          283,719
          2001                                                          102,388
          2002                                                           18,724
          Thereafter                                                    231,311
                                                                        -------
               Total minimum lease payments                           4,778,996
          Less amount representing interest                          (  427,599)
                                                                      ---------
               Present value of minimum lease payments                4,351,397
          Less current portion                                       (2,517,920)
                                                                      ---------
               Long-term obligations under capital leases            $1,833,477
                                                                      ---------

     Total aggregate rental expense under various operations leases, including
     the rental expense under the office building lease, as more fully described
     in Note 10, for the years ended September 30, 1997 and 1996 was $1,064,292
     and $366,780, respectively.
     
     The Company leases as lessor certain retail space in its casino facilities
     under operating lease agreements. Additionally, as more fully described in
     Note 10, in October 1997, the Company began subleasing (as lessor under 
     operating lease agreements) certain office and retail space in a building 
     it leases from its majority shareholder.  The leases are short-term and 
     renewable based upon mutual agreement between the Company and the lessee.  
     Rental income under these agreements totaled $807,169 and $230,566 for the 
     years ended September 30, 1997 and 1996, respectively.
                                          
     
6.   Term Debt:

     As more fully described in Note 2, management of the Company believes that
     the combination of existing cash and cash flows from operations will not be
     sufficient to meet the scheduled interest payments on the $40,000,000 First
     Mortgage Notes and the scheduled interest and principal repayment on the
     $5,000,000 shareholder note payable, which would cause the Company to
     violate the respective provisions of the note agreements and cause the debt
     to be immediately due and payable. Accordingly, the term debt has been
     classified as a current obligation as of September 30, 1997.
     
     Term debt consists of the following:
                                                             September 30,
                                                            --------------
                                                           1997         1996
                                                           ----         ----
     $40,000,000, 16.50% First Mortgage Notes due                  
        March 31, 2005 (the"BCI Notes") with interest                 
        payable semi-annually, net of unamortized                     
        original issue discount of $3,875,773 (1997)                  
        and $4,090,477 (1996) (a)                       $36,124,227  $35,909,523
      
     Eurodollar rate plus 2% convertible                           
        subordinated note payable to a shareholder,
        due September 30, 1998 with interest payable                      
        quarterly (b)                                     5,000,000    5,000,000
                                                         ----------   ----------
                                                                    
                                                        $41,124,227  $40,909,523
                                                         ----------   ----------

     (a)  On April 11, 1995, the Company completed a private placement of the 
          BCI Notes.  The offering generated net proceeds of approximately 
          $38,449,000 after deducting debt issuance costs. The BCI Notes are 
          collateralized by a first mortgage on substantially all of the 
          assets of the Company, including the expansion project.  The 
          Company recorded an original issue discount of $4,345,772 in 
          connection with the BCI Notes, related to the issuance of 1,908,692 
          warrants to purchase common stock (exercisable at $6.00 per share), 
          based on the estimated market value of the warrants at the date of 
          issuance.  Terms of the warrants are more fully described in Note 7.
<PAGE>


     
                               BOARDWALK CASINO, INC.
                      NOTES TO FINANCIAL STATEMENS, CONTINUED
                                      ---------      
               
     
6.   Term Debt, Continued:
     
          The Indenture governing the BCI Notes (the "Indenture") limited the 
          use of the net proceeds from the offering to fund the cost of a 
          hotel and casino expansion completed in 1996 (the "Expansion").  The 
          proceeds were placed in escrow with a trustee pending draw-downs for 
          qualifying project expenditures and were classified as restricted 
          cash equivalents. All of the proceeds from the BCI Notes were used 
          as of September 30, 1996.  The BCI Notes are not subject to 
          mandatory redemption, except upon a change of control, decline in 
          net worth, or certain asset sales, all as defined in the Indenture.  
          The Company has the option to redeem the BCI Notes, beginning after 
          September 2001 at a premium, as defined in the Indenture.
               
          The Indenture contains covenants that, among other things, limit the 
          ability of the Company to pay dividends or incur additional 
          indebtedness.  Additional indebtedness is limited to $5,000,000 of 
          additional uncollateralized debt issuances and $7,000,000 of 
          equipment leases of which the recourse portion cannot exceed 
          $2,000,000. The Indenture also requires the Company to maintain a 
          minimum net worth. The net worth can be no less than the sum of 
          $6,000,000 plus the proceeds from the sale of common stock and 50% 
          of the net income of the Company for all periods beginning after 
          April 1, 1995 (any net loss during that period may not be deducted 
          for purposes of the calculation).
     
          As of September 30, 1997, the Company was in default of certain debt
          covenants under the Indenture.  These covenant violations included:
          (i) the Company entered into recourse debt agreements totaling
          approximately $480,000 which were in excess of the $2,000,000 allowed
          by the Indenture; (ii) certain payable balances incurred in the
          ordinary course of business remained unpaid in excess of 60 days as of
          September 30, 1997; and (iii) in March 1997, the Company issued a
          $600,000 uncollateralized note payable to an unrelated third party
          which is in excess of the $5,000,000 of uncollateralized indebtedness
          allowed by the Indenture.  In addition to the above matters, the 
          Company made its September 30, 1997 interest payment related to the 
          BCI Notes on October 29, 1997 which was within a 30 day grace period 
          allowed for by the Indenture.
     
          During the first quarter of fiscal 1998, the Company cured the above
          defaults under the Indenture.  The terms of one of the recourse debt
          agreements was modified to state that the agreement was no longer with
          recourse and the unpaid principal balances of the other recourse debt
          agreements were paid by the Company with cash flows from operations. 
          The Company has also paid the certain payable balances incurred in the
          ordinary course of business which were in excess of  60 days past due
          with cash flows from operations.
     
          On October 29, 1997, the Company entered into a Memorandum of
          Understanding (the "Memorandum").  In connection with the Memorandum,
          and as more fully described in Note 10, the Company raised $3,250,000
          through the issuance of 3,250 shares of $.001 preferred stock at a
          price of $1,000 per share to certain related parties.  Proceeds from
          the preferred stock issuance were used to make the Company's September
          30, 1997 interest payment in relation to the BCI Notes and retire the
          $600,000 uncollateralized note payable described in item (iii) above.
          
     (b)  In September 1996, the Company executed a $5,000,000 subordinated,
          convertible promissory note collateralized by a second deed of trust
          on the assets of the Company.  Interest is payable quarterly at the
          applicable Eurodollar rate plus 2% with principal due September 23,
          1998 if not converted by the noteholder. In connection with the
          Memorandum, the conversion rights of the note were canceled by the
          Company with mutual agreement of the noteholder.
     
          The note agreement includes certain covenants that, among others
          things, limit the ability of the Company to pay dividends, sell
          certain assets or incur indebtedness not allowed by the Indenture.  As
          discussed above, the Company incurred additional indebtedness which
          was not allowed by the Indenture.  However, these defaults were cured
          during the first quarter of fiscal 1998.


<PAGE>


                               BOARDWALK CASINO, INC.
                      NOTES TO FINANCIAL STATEMENS, CONTINUED
                                      ---------      
          
6.   Term Debt, Continued:
     
          The weighted average interest rate on notes payable, term debt, and
          capital leases outstanding as of September 30, 1997 and 1996 was
          approximately 15%.
     
     
7.   Shareholders' Equity:

     A summary of the Company's equity transactions and issuances of warrants to
     purchase common stock are summarized in the following paragraphs.  At
     September 30, 1997, 1996 and 1995, the Company had the following warrants
     to purchase shares of common stock outstanding:
 
<TABLE>
<CAPTION>
                                                                             Warrants Issued In                      
                                                                               Connection With    Warrants Issued In    
                                         1994 Bridge     Warrants Issued In       Issuance          Connection With      
                                          Financing        Connection With         Of BCI          Private Placement      
                                         And IPO (a)      Notes Payable (b)       Notes (c)          Offering (d)        Total
                                         -----------     ------------------  -------------------  ------------------     ------
<S>                                      <C>             <C>                 <C>                  <C>                    <C>  
      Exercise price                            $5.00       $5.625, $6.00               $6.00               $7.50              
                                                                and $8.00
      
      Expiration date                       Feb. 1998        Mar. 1996 to       April 2000 to           June 2000               
                                                               Sept. 2000        Apr. 1, 2005                                    
      
 Balances, September 30, 1995               3,967,200             208,000           1,908,692                -            6,083,892

      Issued                                    -                    -                 -                   75,000            75,000
      
      Exercised                              (380,200)               -                 -                     -             (380,200)
                                           ----------          ------------       -----------             ----------      ---------
 Balances, September 30, 1996               3,587,000             208,000           1,908,692              75,000         5,778,692

      Issued                                     -                   -                 -                     -                -
      
      Exercised                                  -                   -                 -                     -                -
                                           ----------          ------------       -----------             ----------      ---------
 Balances, September 30, 1997               3,587,000             208,000           1,908,692              75,000         5,778,692
                                           ----------          ------------       -----------             ----------      ---------
                                           ----------          ------------       -----------             ----------      ---------
                                                                                                                  
                                                                                                                  

</TABLE>

 

<PAGE>

                               BOARDWALK CASINO, INC.
                      NOTES TO FINANCIAL STATEMENTS, CONTINUED
                                       ---------      
               


7.   Shareholders' Equity, Continued:
     
     (a)  1994 bridge financing, common stock offering and warrant exercises:
          
          In 1994, the Company issued 450,000 warrants to purchase its common
          stock in connection with a bridge financing (the "Bridge Warrants"). 
          Each Bridge Warrant entitles the holder thereof to purchase one share
          of common stock at an exercise price of $5.00 per share and expires in
          February 1998.  The Bridge Warrants contain provisions that protect
          the bridge warrantholders against dilution by adjustment of the
          exercise price in certain events including, but not limited to, stock
          dividends, stock splits, reorganizations or mergers.  Upon completion
          of the initial public offering of the Company's common stock in
          February 1994, the Bridge Warrants were automatically converted into
          warrants identical to the Offering Warrants (described below).  A
          bridge warrantholder does not possess any rights as a shareholder of
          the Company.
          
          The Company may redeem the Bridge Warrants at a price of $0.001 per
          Bridge Warrant upon 60 days' prior written notice if the closing bid
          quotation of the common stock has been at least $10.00 on all 20 of
          the trading days ending on the third day prior to the day on which
          notice of redemption is given.
          
          On February 11, 1994, the Company completed an initial public offering
          of its common stock.  The Company issued 1,840,000 shares of common
          stock at a selling price of $5.00 per share and issued 3,680,000
          warrants (the "Offering Warrants") at a selling price of $0.10 per
          warrant.  The Company received net proceeds of $7,706,109 for the
          stock and warrants, after deducting underwriters' commissions and
          offering expenses.
          
          Each Offering Warrant entitles the holder thereof to purchase one
          share of common stock at a price of $5.00 per share until February 11,
          1998, at which time the Offering Warrant expires.  The Offering
          Warrants contain provisions that protect the warrantholders against
          dilution by adjustment of the exercise price in certain events
          including, but not limited to, stock dividends, stock splits,
          reorganizations or mergers.  A warrantholder does not possess any
          rights as a shareholder of the Company.
          
          The Company may redeem the Offering Warrants at a price of $0.001 per
          Warrant upon 60 days' prior written notice if the closing bid
          quotation of the common stock has been at least $10.00 on all 20 of
          the trading days ending on the third day prior to the day on which
          notice of redemption is given.
          
          In connection with the offering, the Company also sold the
          underwriter, for $100, an option (the "Option") to purchase 160,000
          shares of common stock and 320,000 Warrants.  The Option has an
          exercise price of $7.00 per share of common stock and $0.14 per
          Warrant (140% of the respective original offering prices).  The Option
          is exercisable for a 36-month period, commencing on February 11, 1995
          and expiring on February 11, 1998.
          
          During 1996, 380,200 warrants to purchase the Company's common stock
          were exercised for an equal number of shares of the Company's common
          stock.  All of the warrants had an exercise price of $5.00, resulting
          in net proceeds to the Company of $1,850,955 after issuance costs.
          
     (b)  1995 bridge financing transactions:
     
          The Company issued 50,000 warrants to purchase its common stock in
          connection with $1,000,000 of bridge loans, which loans have been
          repaid.  Each warrant entitles the holder thereof to purchase one
          share of common stock at an exercise price of $6.00 per share.  The
          warrants expire in February 2000.  The warrants contain provisions
          that protect the warrantholders against dilution by adjustment of the
          exercise price in certain events including,

<PAGE>

                               BOARDWALK CASINO, INC.
                      NOTES TO FINANCIAL STATEMENTS, CONTINUED
                                     ---------      
                                          
7.   Shareholders' Equity, Continued:
          
          but not limited to, stock dividends, stock splits, reorganizations or
          mergers.  A warrantholder does not possess any rights as a shareholder
          of the Company.
          
          The Company issued 150,000 warrants to purchase its common stock in
          connection with a 10% note payable issued in 1995, which note has been
          repaid.  Each warrant entitles the holder thereof to purchase one
          share of common stock at an exercise price of $5.625 per share.  The
          warrants are exercisable between March 1996 and September 2000.  The
          warrants contain provisions that protect the warrantholders against
          dilution by adjustments of the exercise price in certain events
          including, but not limited to, stock dividends, stock splits,
          reorganizations or mergers.  A warrantholder does not possess any
          rights as a shareholder of the Company.
          
          The Company issued 8,000 warrants to purchase its common stock in
          connection with a $400,000, 12% note payable issued in 1995, which
          note has been repaid.  Each warrant entitles the holder thereof to
          purchase one share of common stock at an exercise price of $8.00 per
          share.  The warrants expire in September 2005.  A warrantholder does
          not possess any rights as a shareholder of the Company.
          
     (c)  BCI Notes offering:
     
          As discussed in Note 6, the Company issued 1,908,692 warrants to
          purchase its common stock in connection with the BCI Notes.  Each
          warrant entitles the holder thereof to purchase one share of common
          stock at an exercise price of $6.00 per share and 626,823 and
          1,281,869 of the warrants expire in April 2000 and April 2005,
          respectively.  The warrants contain provisions that protect the
          warrantholders against dilution by adjustment of the exercise price in
          certain events including, but not limited to, stock dividends, stock
          splits, reorganizations or mergers.  A warrantholder does not possess
          any rights as a shareholder of the Company.
          
     (d)  1996 private placement equity offering:
     
          During 1996, the Company completed a private placement offering in
          which it issued 150,000 shares of its common stock for $6.25 per
          share.  In connection with the issuance of the common stock, the
          Company also sold 75,000 warrants to purchase common stock for $.25
          per warrant.  Each warrant entitles the holder thereof to purchase one
          share of common stock at a price of $7.50 per share until June 2000,
          at which time the warrant expires.  The Company received net proceeds
          of $956,250 for the issuance of the stock and warrants.

     SEPTEMBER 1996 PRIVATE PLACEMENT EQUITY OFFERING
     
     In September 1996, the Company completed a private placement offering of
     571,429 shares of its common stock at a selling price of $7.00 per share. 
     The Company received net proceeds of $3,735,195 for the stock, after
     deducting offering expenses.
     
     INCREASE IN AUTHORIZED SHARES OF COMMON STOCK
     
     In December 1996, the Company's shareholders voted to amend the Company's
     articles of incorporation to increase the number of authorized shares of
     common stock from 15,000,000 to 50,000,000.
     
     STOCK OPTION PLANS
     
     On April 26, 1994, the Board of Directors adopted (and on March 15, 1995
     the shareholders approved) the 1994 Stock Compensation Plan (the "1994
     Plan").  The 1994 Plan provides that incentive stock options and
     nonqualified stock options may be granted to certain officers, directors
     (other than Outside Directors), employees and advisors of the Company or
     its subsidiaries, if any, selected by the Compensation Committee.

<PAGE>


                               BOARDWALK CASINO, INC.
                      NOTES TO FINANCIAL STATEMENTS, CONTINUED
                                     ---------      
               

7.   Shareholders' Equity, Continued:
     
     The Company has granted a total of 745,000 options exercisable at prices
     ranging from $6.25 to $9.00 expiring between April 26, 1999 and September
     26, 2005.  The options were granted at exercise prices equal to the fair
     market value (or in the case of options granted to the president and
     majority shareholder at 110% of market value) as of the date of grant.  The
     options vest in 25% increments annually, subject to acceleration upon a
     change in control of the Company, as defined in the 1994 Plan agreement.
     
     The grants of 450,000 of the options described above were subject to
     shareholder approval of an increase in the authorized number of shares
     reserved for issuance under the 1994 Plan to 2,000,000 shares. Such
     approval was received during 1996.
     
     No options were granted in the years ended September 30, 1996 or 1997.
     
     OUTSIDE DIRECTORS STOCK OPTION PLAN
     
     On April 26, 1994, the Board of Directors adopted (and on March 15, 1995
     the shareholders approved) the Outside Directors Stock Option Plan (the
     "Plan").
     
     The Company has granted nonqualified options to three of its directors to
     purchase 100,000 shares of the Company's common stock.  The options are
     exercisable at prices of $6.75 and $6.25 expiring between April 26, 2004
     and April 26, 2005.  The foregoing options were granted at an exercise
     price equal to the fair market value of the common stock as of the date of
     grant.  The options vest in 25% increments annually, subject to
     acceleration upon a change in control of the Company, as defined in the
     Plan agreement.
     
     No options were granted in the years ended September 30, 1996 or 1997.

<PAGE>

                               BOARDWALK CASINO, INC.
                      NOTES TO FINANCIAL STATEMENTS, CONTINUED
                                      ---------      
               


8.   Income Taxes:

     For the fiscal years ended September 30, 1997 and 1996, the Company
     incurred net operating losses for federal income tax purposes, and
     accordingly, these financial statements do not include a provision for
     federal income taxes.
     
     The following is a reconciliation of income taxes at the Federal statutory
     rate with income taxes recorded by the Company:

 

<TABLE>
<CAPTION>
                                                                                                       1997                1996   
                                                                                                       ----                ----   
<S>                                                                                                <C>                 <C>        
     Tax benefit computed at federal statutory income tax rate (35%)                               ($1,220,000)        ($1,545,000)
     Unrecognized tax benefit from operating losses                                                  1,163,000           1,494,000
     Other, net                                                                                         57,000              51,000
                                                                                                     ---------           ---------

          Total income tax provision (benefit)                                                      $     -             $     -   
                                                                                                     ---------           ---------
                                                                                                     ---------           ---------

</TABLE>
 

     Deferred income taxes reflect the net effects of temporary differences
     between the carrying amounts of assets and liabilities for financial
     reporting purposes and the amounts used for income tax purposes.
     Significant components of the Company's deferred tax assets and liabilities
     consist of the following at September 30, 1997 and 1996:
 

<TABLE>
<CAPTION>
                                                                                                        1997                1996  
                                                                                                        ----                ----  
<S>                                                                                                <C>                 <C>        
     Deferred tax assets:                                                                                                         
     -------------------
          Federal net operating loss carryforward                                                   $5,008,000          $3,524,000
          Gaming tax assessment                                                                        194,000             175,000
          Other                                                                                         44,000              30,000
                                                                                                     ---------           ---------

                    Total deferred tax assets                                                        5,246,000           3,729,000
                                                                                                     ---------           ---------

     Deferred tax liabilities:
     -------------------------
          Depreciation                                                                                (882,000)           (674,000)
                                                                                                       -------             -------
                    Total deferred tax liabilities                                                    (882,000)           (674,000)
                                                                                                       -------             -------
     Valuation allowance                                                                            (4,364,000)         (3,055,000)
                                                                                                     ---------           ---------
                    Net deferred taxes                                                              $     -             $     -   
                                                                                                     ---------           ---------
                                                                                                     ---------           ---------

</TABLE>
 

     No income tax provision (benefit) has been recorded in the 1997 and 1996
     financial statements, and the Company operates wholly in Nevada and,
     therefore, has no state income tax liability.
     
     Management has considered certain tax planning strategies as permitted by
     SFAS 109.  However, management has determined that tax benefits associated
     with net recorded tax assets will most likely not be realized through
     future taxable income.  Accordingly, a full valuation allowance has been
     recorded against the net deferred tax assets of the Company.
     
     As of September 30, 1997, the Company had federal net operating loss
     carryforwards of approximately $14,307,000 which expire between 2009 and
     2012.
     

<PAGE>

                               BOARDWALK CASINO, INC.
                      NOTES TO FINANCIAL STATEMENTS, CONTINUED
                                     ---------      
     
9.   Commitments And Contingencies:

     The Company has pending certain legal actions and claims incurred in the
     normal course of business and is actively pursuing the defense thereof.  In
     the opinion of management, these actions and claims are either without
     merit or are covered by insurance and will not have a material adverse
     effect on the Company's financial position, results of operations or cash
     flows.

     HOLIDAY INN-REGISTERED TRADEMARK- FRANCHISE AGREEMENT
     
     The Company was granted a Holiday Inn-Registered Trademark- ten-year
     franchise license on June 16, 1994 after completing renovation of its
     existing hotel, consisting of 126 rooms in a high-rise tower and 75 annex
     rooms.  The agreement required an original application fee of $77,500 and a
     fee of $125,400  for an additional 451 rooms opened in the expansion (which
     is reflected in other assets and is being amortized over the life of the
     agreement).  The agreement provides that the Company will pay to Holiday
     Inn-Registered Trademark- (i) a monthly royalty of 5% of the gross rooms
     revenues; (ii) a "marketing contribution" of 1.5% of the gross rooms
     revenues; (iii) a "reservation contribution" of 1.0% of the gross rooms
     revenues; and (iv) a monthly Holidex fee of $6.43 for each guest room.  The
     license granted under the agreement expires ten years from the date of the
     opening of the hotel under the "Holiday Inn" system, subject to earlier
     termination as set forth therein.
     
     GAMING TAX ASSESSMENT
     
     As of September 30, 1997, based on the advice of legal counsel, the Company
     has accrued approximately $555,000 (which includes $64,000 of accrued
     interest) related to an anticipated gaming tax assessment from the Nevada
     Gaming Control Board ("NGCB").  The NGCB has audited the Company's gaming
     tax returns in 1996 and the Company believes it is probable that the NGCB
     will determine that the Company has improperly deducted certain promotional
     wagers by patrons in calculating gross revenue for gaming tax purposes. 
     The Company plans to appeal an assessment; however, the likelihood of a
     successful outcome cannot be determined.
     
10.  Related-Party Transactions:

     OFFICE SPACE LEASE
     
     During October 1997, the Company modified the existing lease agreement for
     office space and storage facilities for its corporate offices from its
     majority shareholders to increase the rent to $70,000 per month.  The
     modified lease term is for two years and allows the Company to use the
     facilities for any purpose.  The Company has options to extend the lease up
     to an additional 28 years.  Total aggregate rental expense related to the
     office space and storage facilities was $840,000 and $101,375 for the years
     ended September 30, 1997 and 1996, respectively.  The lease agreement
     entitles the Company to the rental income from the existing leases during
     the lease term.  The existing leases are on short-term, renewable leases
     with current rents totaling approximately $28,000 per month.
     
     The lease agreement also allowed the Company the first right of refusal to
     purchase the land and building at their fair value should the shareholder
     decide to sell them (the "First Refusal Right").
     
     The Company has accrued $350,000 of rental payments in relation to the
     office lease which is reflected as a current obligation as of September 30,
     1997.  Effective November 1, 1997, in connection with the Memorandum
     described below, the Company has the option to defer payment of up to
     $40,000 per month of the rent due under the office space lease until the
     earlier of November 1, 1998 or the date of a sale of the building and land.
     
     MEMORANDUM OF UNDERSTANDING
     
     On October 27, 1997, the Company entered a Memorandum of Understanding (the
     "Memorandum") with a shareholder of the Company.  Such shareholder had
     previously lent the Company $5,000,000 under a note payable due September
     23, 1998, as more fully described in Note 6. The Memorandum called for the
     Company to issue 3,250 shares of $.001 par value, 6% non-voting, cumulative
     preferred stock, series A 

<PAGE>

                               BOARDWALK CASINO, INC.
                      NOTES TO FINANCIAL STATEMENTS, CONTINUED
                                     ---------      
                

10.  Related-Party Transactions, Continued:
     
     ("Preferred Stock") at a price of $1,000 per share.  The offering generated
     proceeds of $3,250,000.   As more fully described in Note 6, proceeds from
     the preferred stock issuance were used to make the Company's September 30,
     1997 interest payment in relation to the BCI Notes and retire a $600,000
     uncollateralized note payable. The shareholder also acquired the First
     Refusal Right.
     
     The Preferred Stock has a liquidation preference over the Company's common
     stock in the event of liquidation.  The Company shall be permitted to
     redeem the Preferred Stock only upon the written request of any holder
     thereof on or after April 1, 2005 at a price of $1,000 per share, plus all
     accrued and unpaid dividends.
     
     The Memorandum includes an option issued to the purchasing shareholder to
     purchase up to an additional 15,000 shares of Preferred Stock at a purchase
     price of $1,000 per share.  The option expires on October 29, 1999.  The
     Memorandum also restricts the Company from modifying, extending or changing
     the strike price of the terms of any of the warrants to purchase common
     stock outstanding as of the date of the Memorandum.
     
     In connection with the Memorandum, the shareholder also agreed to undertake
     a feasibility study of a $20,000,000 development on the land (the
     "Project"), which includes a termination fee of $2,000,000 payable by the
     Company to the shareholder upon the occurrence of certain events which
     interfere with or negatively impact the Project including the sale of the
     land and building to another party.
     
     HOLIDAY GIFTS, INC.
     
     The Company leases retail space, as lessor, in the above-described
     facilities to Holiday Gifts, Inc. (HGI), a company affiliated through
     common ownership.  During the years ended September 30, 1997 and 1996,
     rental income from HGI was $62,000 and $11,000, respectively.  Rental
     income from HGI is based at $5,000 per month plus 10% of sales over the
     $5,000 base.

11.  Fair Value Of Financial Instruments:

     The estimated fair value of the Company's financial instruments has been
     determined by the Company using available market information and
     appropriate valuation methodologies.  The carrying amounts of cash and cash
     equivalents, accounts receivable, accounts payable, capital lease
     obligations and notes payable approximate their respective fair values due
     to the short-term maturities and approximate market interest rates of these
     instruments.  As of  September 30, 1997, the fair market value of the BCI
     Notes is estimated to be approximately $50,500,000. 


<PAGE>

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

     Not applicable.


                                       PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

DIRECTORS AND EXECUTIVE OFFICERS

     The following table sets forth the names and ages of the Company's
directors and executive officers and the positions they hold with the Company. 
All directors are elected at the annual meeting of stockholders to serve one
year or until their successors are elected and qualified.

NAME                          AGE         POSITION
----                          ---         ---------
Forrest J. Woodward, II       55          President and Chief Operating Officer

Avis P. Jansen                70          Chairman of the Board of Directors
                                                    and Vice President

Louis J. Sposato              47          Chief Financial Officer, Secretary,  
                                                    Treasurer and Director

James Scibelli  *             47          Director

Keven J. Picardo              41          Director

Jeffrey P. Jacobs             44          Director
________________


*    Mr. Scibelli resigned as a director of the Company effective October 31,
1997.

     FORREST J. WOODWARD, II serves as the President and Chief Operating 
Officer of the Company. .  From 1986 to 1988, Mr. Woodward served as 
executive vice president of the Dunes Hotel and Country Club, with 
responsibility for the management of the hotel and gaming areas.  During 
1990, he served as general manager of the Landmark Hotel and Casino, having 
been appointed by the Federal Bankruptcy Court to operate the property.  In 
addition, from 1987 to 1993, Mr. Woodward served as chairman, president and 
majority shareholder of Las Vegas Resorts Corporation, a public company 
engaged in land acquisitions related to casino hotels.  From 1992 to 1993, 
Mr. Woodward served as senior vice president - administration for the Stars' 
Desert Inn Hotel and Country Club.  Thereafter, from 1993 until joining the 
Company in August 1995, he served as senior vice president - administration 
for Sheraton Desert Inn.  His responsibilities at the Desert Inn included all 
domestic casino marketing, marketing and operations of gaming activities and 
operations of the country club, security and surveillance. Mr. Woodward 
received his Bachelor of Science degree from the University of Nevada at Las 
Vegas in 1968.

     AVIS P. JANSEN serves as the Chairman of the Board of Directors and Vice
President of the Company.  Since 1971, she has served as the president,
secretary and treasurer of Holiday Gifts, Inc., the former operator of the
Company's casino.  

<PAGE>


     LOUIS J. SPOSATO serves as the Chief Financial Officer, Secretary,
Treasurer and a director of the Company.  He received his Bachelor of Science
degree in accounting from Fordham University in 1972.  From 1983 to 1988, Mr.
Sposato served as comptroller of Union Plaza Hotel & Casino, Las Vegas, Nevada,
where he directed the hotel and casino's administrative functions and compliance
requirements, including Nevada Gaming Commission Regulation 6 (internal control
procedure for all licensees) and Regulation 6A (casino currency transaction
record keeping and reporting requirements).  From 1988 to 1989, Mr. Sposato
served as assistant controller for Electronic Data Technologies, Las Vegas,
Nevada, with responsibility for implementing their slot machine route accounting
system.  From 1989 to 1990, he served as assistant controller of Alexis Park
Resort Hotel, Las Vegas, Nevada, with responsibility for all accounting
functions.

     JAMES SCIBELLI served as a director of the Company until his resignation
effective October 31, 1997.  Since March 1986, Mr. Scibelli has served as
president of Roberts & Green, Inc., a New York investment banking firm offering
a variety of investment services.  Since August 1991, he has also been an
officer and director of SG Capital Corp., a financial consulting company.  Mr.
Scibelli serves as a director and a member of the compensation committee of
Acclaim Entertainment, Inc. and a director of B.U.M. International, Inc.

     KEVEN J. PICARDO serves as a director of the Company. From 1990 to 1994, he
served as an associate vice president of Kemper Securities, Inc. From 1994 until
October 1995, Mr. Picardo served as senior vice president of USA Capital
Management Group, Inc., Las Vegas, Nevada. From October 1995 to January 1997, he
served as senior financial consultant with Signal USA Securities, Inc., Las
Vegas, Nevada. From January 1997 to June 1997, Mr. Picardo served as senior
investment executive with RAF Financial Corporation, Las Vegas, Nevada. Since
June 1997, he serves as president of Wall Street Financial Services, Inc., Las
Vegas, Nevada. Mr. Picardo devotes such time as necessary to the affairs of the
Company.

     JEFFREY P. JACOBS serves as a director of the Company.  Beginning in 1984,
Mr. Jacobs developed the riverfront entertainment district, known as the
"Flats", in Cleveland, Ohio.  He also has developed, owns and manages several
apartment complexes in Cleveland and throughout Ohio.  In 1996, Mr. Jacobs
became the Chief Executive Officer and Co-Chairman of the Board of Directors of
BlackHawk Gaming & Development Co. ("BlackHawk"), a publicly traded gaming
company headquartered in Boulder, Colorado that is co-owner and manager of the
Gilpin Hotel & Casino in BlackHawk, Colorado. In 1996, Mr. Jacobs became the
Chief Executive Officer and Chairman of the Board of Directors of Colonial
Downs, which presently owns and operates two off-track betting parlors in the
State of Virginia. Mr. Jacobs received his Bachelor of Business Administration
degree from the University of Kentucky in 1975, his Masters of Business
Administration from Ohio State University in 1977 and his Masters of Urban
Planning from Cleveland State University in 1979.  He served as a member of the
Ohio House of Representatives from 1984 through 1986.  Mr. Jacobs devotes such
time as is necessary to the affairs of the Company.

SECTION 16(a)  BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company pursuant to Rule 16a-3(e) during its most recent fiscal
year and Forms 5 and amendments thereto furnished to the Company with respect to
its most recent fiscal year, and any written representation from the reporting
person (as hereinafter defined) that no Form 5 is required, the Company is not
aware of any person who, at any time during the fiscal year, was a director,
officer, beneficial owner of more than ten percent of any class of equity
securities of the Company registered pursuant to Section 12 of the Exchange Act
("reporting person"), that failed to file on a timely basis, as disclosed in the
above Forms, reports required by Section 16(a) of the Exchange Act during the
most recent fiscal year.

<PAGE>



COMMITTEES OF THE BOARD OF DIRECTORS

     The Board of Directors has not established any separate nominating
committee.  The Board has established a Compensation Committee which functions
are to review and approve annual salaries and bonuses for all executive
officers, review, approve and recommend to the Board of Directors the terms and
conditions of all employee benefits or changes thereto, and manage and
administer the Company's 1994 Stock Compensation Plan.

     The Board of Directors has established an Audit Committee which functions 
are to recommend annually to the Board of Directors the appointment of the
independent public accountants of the Company, discuss and review the scope and
the fees of the prospective annual audit and review the results thereof with the
independent public accountants, review and approve non-audit services of the
independent public accountants, review compliance with existing accounting and
financial policies of the Company, review the adequacy of the financial
organization of the Company and review management's procedures and policies
relative to the adequacy of the Company's internal accounting controls and
compliance with federal and state laws relating to financial reporting.

     The Board of Directors has also established a Stock Option Committee to
manage and administer the Company's Outside Directors Stock Option Plan.

ITEM 10.  EXECUTIVE COMPENSATION.

     The following table, and the accompanying explanatory footnotes, includes
annual and long-term compensation information on (i) the Company's Chief
Executive Officer for services rendered in all capacities during the fiscal
years ended September 30, 1997, 1996 and 1995 and (ii) each executive officer
who received total annual salary and bonus for the fiscal year ended September
30, 1997 in excess of $100,000.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
 

----------------------------------------------------------------------------------------------------------------------------------
                                                 ANNUAL COMPENSATION                                                  LONG TERM
                                                                                                                    COMPENSATION
----------------------------------------------------------------------------------------------------------------------------------
              NAME AND
              PRINCIPAL                   FISCAL                                             OTHER ANNUAL             OPTIONS
              POSITION                     YEAR            SALARY            BONUS           COMPENSATION             GRANTED
----------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>                  <C>                <C>             <C>                      <C>       
 Norbert W. Jansen, Chairman  of           1997           $68,750              0                   0                     0
 the Board of Directors and Chief    ---------------------------------------------------------------------------------------------
 Executive Officer (1)                     1996           238,000              0                   0                     0
                                     ---------------------------------------------------------------------------------------------
                                           1995           225,000              0                   0                  170,000
----------------------------------------------------------------------------------------------------------------------------------
 Steve Greathouse, Chief Executive
 Officer (2)                               1997           135,000              0                   0                     0
----------------------------------------------------------------------------------------------------------------------------------

 Forrest J. Woodward, Chief                1997           180,000              0                   0                     0
 Operating Officer                   ---------------------------------------------------------------------------------------------
                                           1996           180,000              0                   0                     0
                                     ---------------------------------------------------------------------------------------------
                                           1995            21,000             0                   0                     0
----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

(1) Mr. Jansen died on January 6, 1997.
(2) Mr. Greathouse served as CEO from March 19, 1997 until his resignation on
    August 12, 1997.

EMPLOYMENT AGREEMENTS

<PAGE>

     Effective as of January 1, 1995, the Company entered into a three-year 
employment agreement with Louis J. Sposato as Chief Financial Officer, 
Secretary and Treasurer of the Company which currently provides for an annual 
base salary of $95,000.  Effective as of August 15, 1995, the Company entered 
into a five-year employment agreement with Forrest J. Woodward, II as 
President and Chief Operating Officer of the Company which currently provides 
for an annual base salary of $180,000.

DIRECTORS' COMPENSATION

     Each non-employee director of the Company receives $1,000 for each 
meeting of the Board of Directors attended.  In addition, pursuant to the 
Outside Directors Stock Option Plan, outside directors may be granted options 
to purchase shares of Common Stock (subject to certain vesting requirements). 
See "- The Outside Directors Stock Option Plan."

THE 1994 STOCK COMPENSATION PLAN

     The Company and its shareholders have adopted and approved the 1994 
Stock Compensation Plan, as amended (the "1994 Plan"). Options granted 
pursuant to the 1994 Plan constitute either incentive stock options within 
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended 
(the "Code"), or options which constitute nonqualified options at the time of 
issuance of such options.  The 1994 Plan provides that incentive stock 
options and/or nonqualified stock options may be granted to certain officers, 
directors (other than Outside Directors), employees and advisors of the 
Company or its subsidiaries, if any, selected by the Compensation Committee.  
A total of 2,000,000 shares of Common Stock are authorized and reserved for 
issuance under the 1994 Plan, subject to adjustment to reflect changes in the 
Company's capitalization in the case of a stock split, stock dividend or 
similar event.  The 1994 Plan is administered by the Compensation Committee 
which has the sole authority to interpret the 1994 Plan and make all 
determinations necessary or advisable for administering the 1994 Plan.  The 
exercise price for any incentive option must be at least equal to the fair 
market value of the shares covered thereby as of the date of grant of such 
option.  Upon the exercise of the option, the exercise price thereof must be 
paid in full either in cash, shares of Common Stock of the Company or a 
combination thereof.  If and to the extent that any option to purchase 
reserved shares shall not be exercised by an optionee for any reason or if 
such option to purchase shall terminate as provided by the 1994 Plan, such 
shares which have not been so purchased thereunder shall again become 
available for the purposes of the 1994 Plan unless the 1994 Plan shall have 
been terminated.

     During the fiscal years ended September 30, 1996 and 1997, the Company
did not grant any options under the 1994 Plan.

THE OUTSIDE DIRECTORS STOCK OPTION PLAN

     The Company and its shareholders have adopted and approved the Outside 
Directors Stock Option Plan, as amended (the "Plan"). The Plan was adopted in 
order to enhance the Company's ability to secure and retain highly qualified 
and experienced individuals who are not regularly salaried employees of the 
Company to serve as directors of the Company.  The Plan provides generally 
that: (i) the purchase price of the Common Stock under each option granted 
shall not be less than the fair market value of the Common Stock on the date 
of grant; (ii) no director may be granted during any calendar year options to 
purchase more than 20,000 shares of Common Stock; (iii) no option may be 
granted for a period of greater than ten years from the date of grant; and 
(iv) a maximum of 400,000 shares of Common Stock have been authorized and 
reserved for issuance under the Plan.

During the fiscal years ended September 30, 1996 and 1997, the Company did not 
grant any options under the Plan.

<PAGE>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The following table sets forth certain information regarding beneficial 
ownership of the Common Stock as of January 7, 1998, by (i) all persons known 
by the Company to be the owner, of record or beneficially, of more than five 
percent of the outstanding Common Stock, (ii) each executive officer and 
director of the Company and (iii) all directors and executive officers as a 
group. Beneficial ownership is determined in accordance with the rules of the 
Securities and Exchange Commission and generally includes voting or 
investment power with respect to securities.  Shares of Common Stock subject 
to options currently exercisable or exercisable within 60 days of January 7, 
1998 are deemed outstanding for computing the percentage of the person 
holding such securities but are not outstanding for computing the percentage 
of any other person.

     As far as is known to management of the Company, no person owned 
beneficially more than five percent of the outstanding shares of Common Stock 
as of January 7, 1998 except as set forth below.

<TABLE>
<CAPTION>
 

                                                  SHARES BENEFICIALLY 
                  NAME                                   OWNED          PERCENT OF SHARES
                 ------                                 -------         -----------------
<S>                                               <C>                   <C>
Norbert W. Jansen and Avis Jansen,                     2,750,000              38.3
Trustees u/a/d 07/14/93 (1)

Avis P. Jansen (1)(2)                                  2,775,000 (3)          38.7 
                                                                                   
Forrest J. Woodward (9)                                   75,000 (4)           1.0 
                                                                                   
Louis J. Sposato (9)                                     112,500 (5)           1.5 
                                                                                   
James Scibelli (9)                                       430,000 (6)           5.7 
                                                                                   
Keven J. Picardo (9)                                      19,500 (7)            *  
                                                                                   
Jeffrey P. Jacobs (10)                                 1,071,429              14.9 
                                                       
Franklin Custodian Funds, Inc. - Income                1,281,869 (8)          15.1
Series (9)

Diversified Opportunities Group Ltd. (10)              1,071,429              14.9

All Executive Officers and Directors as a              4,053,429              54.8
group (7 persons)

</TABLE>
 

*    Represents beneficial ownership of less than 1% of the outstanding shares
     of Common Stock.

(1)   The business address of Norbert W. Jansen and Avis Jansen, Trustees 
      u/a/d 07/14/93 (the  "Jansen Trust") and Avis P. Jansen is 3750 Las 
      Vegas Boulevard South, Las Vegas, Nevada, 89109.  Such shares are held 
      of record and beneficially by The Jansen Trust but may be deemed to also 
      be beneficially owned by Mrs. Jansen (within the meaning of Rule 13d-3 
      under the Securities Exchange Act of 1934, as amended) since, as trustee 
      of The Jansen Trust, Mrs. Jansen has the power to direct the voting and 
      disposition of such shares.

(2)  Avis P. Jansen is deemed to beneficially own the

<PAGE>

     2,750,000 shares beneficially owned by the Jansen Trust.

(3)  Includes options currently exercisable to acquire 25,000 shares of Common
     Stock owned by Avis P. Jansen.
     
(4)  Includes options currently exercisable to acquire 65,000 shares of Common
     Stock.

(5)  Includes options currently exercisable to acquire 112,500 shares of Common
     Stock.

(6)  Includes options  currently  exercisable  to  acquire  25,000  shares of 
     Common Stock and 355,000 redeemable common stock purchase warrants sold by
     the Company in its initial public offering dated February 11, 1994 (the
     "Warrants").  Each Warrant entitles the holder thereof to purchase one
     share of Common Stock at $5.00 per share at any time until February 11,
     1998, subject to earlier redemption under certain circumstances.
     
(7)  Includes options currently exercisable to acquire 17,500 shares of Common
     Stock.

(8)  Represents warrants currently exercisable to acquire 1,281,869 shares of
     Common Stock.

(9)  The business address of Messrs. Woodward, Sposato, Scibelli and 
     Picardo is 3750 Las Vegas Boulevard South, Las Vegas, Nevada 89109. 
     The business address of Franklin Custodian Funds, Inc. - Income Series is
     777 Mariners Island Blvd., San Mateo, California 94404.

10)  The business address of Jeffrey P. Jacobs and Diversified Opportunities
     Group Ltd. ("Diversified") is c/o Jacobs Entertainment Ltd., 425 Lakeside
     Avenue, Cleveland, Ohio 44114.  Such shares are held of record and
     beneficially by Diversified but may be deemed to also be beneficially owned
     by Mr. Jacobs (within the meaning of Rule 13d-3 under the Securities
     Exchange Act of 1934, as amended) since Mr. Jacobs has the power to direct
     the voting and disposition of such shares.


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     In September 1996, the Company executed a $5,000,000 subordinated,
convertible promissory note collateralized by a second deed of trust on the
assets of the Company with Diversified Opportunities Group Ltd. ("Diversified").

     Effective October 1, 1996, in connection with the private transaction 
with Diversified, the Company entered into a lease agreement (the "Lease 
Agreement") as the tenant with The Jansen Trust as the landlord. The Lease 
Agreement covers certain land to the north of the hotel and casino (the 
"Property") which enables the Company to control the use of the Property and 
provided the Company with an option to purchase the Property for possible 
expansion of the hotel and casino. The Property consists of approximately 1.07 
acres of land and has 150 feet of frontage on the Strip.  It currently 
contains a two-story office building which is leased to several retail and 
office tenants, including the executive and administrative offices of the 
Company.  The Lease Agreement commenced October 1, 1996 and has a term of 24 
months, with an option to extend the lease term for an additional five years 
and a second, successive, option to extend it an additional 23 years.  The 
base rent of $70,000 per month ($840,000 per year) is subject to adjustment 
after five years. In addition, the Lease Agreement granted the Company an 
option to purchase the Property under certain terms and conditions (the "First 
Refusal Right").  The Company believes that the terms of the Lease Agreement 
are fair and reasonable and on as beneficial terms as could be obtained from 
an unaffiliated third party consistent with other rentals assessed in the 
market area for similar facilities. For the fiscal year ended September 30, 
1997, the Company paid $490,000 in rent, deferring the balance due of $350,000.

<PAGE>

     On October 27, 1997, the Company entered into a Memorandum of Understanding
(the "Memorandum") with a shareholder of the Company. Such shareholder had
previously lent the Company $5,000,000 under a note payable due September 23,
1998.  The Memorandum called for the Company to issue 3,250 shares of $.001 par
value, 6% non-voting, cumulative preferred stock, series A ("Preferred Stock")
at a price of $1,000 per share.  The offering generated proceeds of $3,250,000. 
Proceeds from the preferred stock issuance were used to make the Company's
September 30, 1997 interest payment in relation to the BCI Notes and retire a
$600,000 uncollateralized note payable.  The shareholder also acquired the First
Refusal Right.

     The Preferred Stock has a liquidation preference over the Company's common
stock in the event of liquidation.  The Company shall be permitted to redeem the
Preferred Stock only upon the written request of any holder thereof on or after
April 1, 2005 at a price of $1,000 per share, plus all accrued and unpaid
dividends.

     The Memorandum included an option issued to the purchasing shareholder to
purchase up to an additional 15,000 shares of Preferred Stock at a purchase
price of $1,000 per share.  The option expires on October 29, 1999.  The
Memorandum also restricts the Company from modifying, extending or changing the
strike price of the terms of any of the warrants to purchase common stock
outstanding as of the date of the Memorandum.

     In connection with the Memorandum, the shareholder also agreed to undertake
a feasibility study of a $20,000,000 development on the land (the "Project"),
with a termination fee of $2,000,000 payable by the Company to the shareholder
upon the occurrence of certain events which interfere with or negatively impact
the Project including the sale of the land and building to another party.

     As part of the Acquisition Agreement and Stockholder Agreements (see Item 
I - "Plan of Merger"), Mirage will acquire the land and building currently 
under lease to the Company.  The shareholder has agreed to terminate its 
rights granted under the Memorandum of Understanding for consideration of 
$3,700,000 from Mirage.

     In September 1996, the Company entered into a long term lease with Holiday
Gifts, Inc. ("HGI") with respect to the gift shop within the hotel-casino
covering approximately 1,000 square feet for an initial term of ten years, with
a 5-year option, at a base monthly lease payment of the greater of $5.00 per
square foot or 10% of the tenant's gross sales.  Prior to September 1996, the
Company leased to HGI a different and smaller store on its property as a gift
shop at a monthly rental of $1,000.

     The investment banking firm of Roberts & Green was engaged by the Company 
as its financial advisor in regard to the merger agreement with Mirage. 
James Scibelli, a former director of the Company, is the president of Roberts &
Green.

     All future transactions with affiliates will be on terms no less favorable
than could be obtained form unaffiliated parties.  Any loans to officers,
affiliates and/or shareholders of the Company are subject to the approval by a
majority of the disinterested directors of the Company.


ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K.

     (a)  EXHIBITS.

          3.1    Restated Articles of Incorporation of the Registrant.*

          3.2    Certificate of Amendment of Articles of Incorporation of the
                 Registrant.**

          3.3    Certificate of Amendment of Articles of Incorporation of the
                 Registrant.

<PAGE>

          3.4    Bylaws of the Registrant. *

          4.1    Form of Warrant Agreement. *

          4.2    Indenture between Boardwalk Casino, Inc., Issuer and 
                 Shawmut Bank, N.A., Trustee for $40,000,000 16.5% First
                 Mortgage Notes Due March 31, 2005, Dated as of April 7, 1995. *
                 
          10.1   Outside Directors Stock Option Plan of Boardwalk Casino, Inc.**

          10.2   1994 Stock Compensation Plan of Boardwalk Casino, Inc. **

          10.3   Employment Agreement between Boardwalk Casino, Inc. and 
                 Louis J.Sposato. **
          
          10.4   Employment Agreement between Boardwalk Casino, Inc. 
                 and Forrest J. Woodward, II. ***
          
          10.5   Holiday Inns Franchising, Inc. License Agreement with the
                 Company. *
          
          10.6   Purchase  Agreement dated as of September 24, 1996, by and
                 among Diversified, Jansen and the Company. ****
          
          10.7   Convertible Subordinated Note dated September 24, 1996, 
                 executed by the Company in favor of Diversified. ****
          
          10.8   Option and Proxy Agreement dated as of September 24, 
                 1996, by and among Diversified, Jansen and the Company. ****
          
          10.9   Registration Agreement dated as of September 24,
                 1996, by and between Diversified and the Company. ****
          
          10.10  Lease Agreement effective as of October 1, 1996, by and
                 between Jansen and the Company. ****
          
          10.11  Memorandum of Understanding by and among Diversified, Jansen
                 and the Company - incorporated by reference to the Report on
                 Form 8-K dated October 29, 1997, file number 1-12780.
          
          10.12  Agreement and Plan of Merger dated December 22, 1997 among
                 Mirage Resorts, Incorporated, Mirage Acquisition Sub, Inc. and
                 Boardwalk Casino, Inc.
          
          23.1   Consent of Coopers & Lybrand L.L.P., independent public
                 accountants, to the incorporation by reference in the
                 Registration Statements on Form S-8 (file numbers 333-05019
                 and 333-05021) of their report dated November 24, 1997,
                 included in the Registrant's Report on Form 10-KSB for the
                 fiscal year ended September 30, 1997.
                 
          27.1   Financial Data Schedule.


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

<PAGE>

          *  -   incorporated by reference to the Exhibits to the 
                 Registration Statement on Form SB-2and Post Effective
                 Amendments thereto, file number 33-71816-LA, declared
                 effective February 11, 1994, June 29, 1995 and February 6,
                 1996.
     
          **  -  incorporated by reference to the Report on Form 10-KSB 
                 for the fiscal year ended September 30, 1994, file number
                 1-12780.
          
          ***  - incorporated by reference to the Report on Form 10-KSB 
                 for the fiscal year ended September 30, 1995, file number
                 1-12780.
     
          **** - incorporated by reference to the Report on Form 10-KSB 
                 for the fiscal year ended September 30, 1996, file number
                 1-12780.
     
          (b)    REPORTS ON FORM 8-K.  The Company did not file any reports on
                 Form 8-K during the last quarter of the period covered by this
                 report.

<PAGE>

                                      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.

                              BOARDWALK CASINO, INC.   
                              -------------------------
                                        Registrant

Date:     1/13/98             By:/s/ FORREST J. WOODWARD
         --------               --------------------------------
                                  Forrest J. Woodward, President and
                                  Chief Operating Officer


     In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.

     NAME  TITLE DATE



/s/ AVIS P. JANSEN      Chairman of the Board of Directors      1/13/98 
---------------------                                           --------
Avis P. Jansen

/s/ LOUIS J. SPOSATO    Chief Financial Officer,                1/13/98
---------------------   Secretary, Treasurer and Director       --------
Louis J. Sposato      


/s/ KEVEN J. PICARDO    Director                                1/13/98
---------------------                                           --------
Keven J. Picardo


/s/ JEFFREY P. JACOBS   Director                                1/13/98
---------------------                                           --------
Jeffrey P. Jacobs