JUBILEE GAMING ENTERPRISES INC, SB-2/A, 1997-07-16

JUBILEE GAMING ENTERPRISES INC
SB-2/A, 1997-07-16
MISCELLANEOUS AMUSEMENT & RECREATION

Previous: SPECIALTY CARE NETWORK INC, 8-K, 1997-07-16

Next: HEALTHCARE CAPITAL CORP, 424B3, 1997-07-16

<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 16, 1997

REGISTRATION NO. 333-20035

================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

PRE-EFFECTIVE AMENDMENT NO. 1

FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

JUBILEE GAMING ENTERPRISES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
MINNESOTA 7993 41-1822296
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>

9855 WEST 78TH STREET, SUITE 220
MINNEAPOLIS, MINNESOTA 55344
(612) 944-5700
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER OF REGISTRANT'S PRINCIPAL
EXECUTIVE OFFICES AND PRINCIPAL PLACE OF BUSINESS)
------------------------

CRAIG H. FORSMAN, CHIEF EXECUTIVE OFFICER
JUBILEE GAMING ENTERPRISES, INC.
9855 WEST 78TH STREET, SUITE 220
MINNEAPOLIS, MINNESOTA 55344
(612) 944-5700
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER OF AGENT FOR SERVICE)

COPIES TO:

<TABLE>
<C> <C>
AVRON L. GORDON, ESQ. KENNETH S. ROSE, ESQ.
JEFFREY L. COTTER, ESQ. MORSE, ZELNICK, ROSE & LANDER, LLP
BRIGGS AND MORGAN, 450 PARK AVENUE
PROFESSIONAL ASSOCIATION NEW YORK, NEW YORK 10022-2606
2400 IDS CENTER (212) 838-5030
MINNEAPOLIS, MINNESOTA 55402
(612) 334-8400
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
------------------------

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [X]

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
========================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) UNIT(2) PRICE(2) REGISTRATION FEE(3)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Units, each consisting of one share of
Common Stock and one Redeemable
Common Stock Purchase Warrant........ 1,840,000 $5.00 $9,200,000 $2,788
- ------------------------------------------------------------------------------------------------------------------------
Common Stock Underlying Redeemable
Common Stock Purchase Warrants(4).... 1,840,000 $6.50 $11,960,000 $3,625
- ------------------------------------------------------------------------------------------------------------------------
Units Underlying Representative's
Warrant.............................. 160,000 $6.00 $960,000 $291
- ------------------------------------------------------------------------------------------------------------------------
Common Stock Underlying Redeemable
Common Stock Purchase Warrants
Included in Representative's
Warrant.............................. 160,000 $6.50 $1,040,000 $316
- ------------------------------------------------------------------------------------------------------------------------
Total.................................. -- -- $23,160,000 $7,020
========================================================================================================================
</TABLE>

(1) Includes 240,000 Units which may be sold pursuant to the underwriters'
overallotment option.

(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(a).

(3) In connection with the initial filing of this registration statement, $5,493
of this amount was wire-transferred to the Securities and Exchange
Commission's account at Mellon Bank in January 1997.

(4) Pursuant to Rule 416, this registration statement includes an indeterminate
number of additional shares of Common Stock which may be issuable upon the
exercise of the Redeemable Common Stock Purchase Warrants.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A)
MAY DETERMINE.
================================================================================
<PAGE> 2

JUBILEE GAMING ENTERPRISES, INC.

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

CROSS-REFERENCE SHEET SHOWING LOCATION IN THE
PROSPECTUS OF INFORMATION REQUIRED BY
ITEMS OF FORM SB-2

<TABLE>
<CAPTION>
ITEM NUMBER AND CAPTION LOCATION IN PROSPECTUS
----------------------- ----------------------
<C> <S> <C>
1. Front of Registration Statement and Outside Front
Cover of Prospectus................................. Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus.......................................... Outside Front Cover Page; Prospectus
Summary; Inside Front Cover Page; Risk
Factors; Outside Back Cover Page
3. Summary Information and Risk Factors................ Outside Front Cover Page; Prospectus
Summary; Underwriting; Dilution
4. Use of Proceeds..................................... Use of Proceeds
5. Determination of Offering Price..................... Prospectus Cover Page; Underwriting
6. Dilution............................................ Dilution
7. Selling Security Holders............................ *
8. Plan of Distribution................................ Outside Cover Page; Underwriting
9. Legal Proceedings................................... Risk Factors; Business
10. Directors, Executive Officers, Promoters and Control
Persons............................................. Management; Principal Shareholders
11. Security Ownership of Certain Beneficial Owners and
Management.......................................... Risk Factors; Management; Principal
Shareholders
12. Description of Securities........................... Description of Capital Stock
13. Interest of Named Experts and Counsel............... Experts
14. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities...................... Management
15. Organization Within Last Five Years................. Certain Transactions
16. Description of Business............................. Business
17. Management's Discussion and Analysis or Plan of
Operation........................................... Management's Discussion and Analysis of
Financial Condition and Results of
Operation
18. Description of Property............................. Business
19. Certain Relationships and Related Transactions...... Management
20. Market for Common Equity and Related Stockholder
Matters............................................. Price Range of Common Stock; Dividend
Policy; Shares Eligible for Future Sale
21. Executive Compensation.............................. Management
22. Financial Statements................................ Financial Statements
23. Changes In and Disagreements With Accountants on
Accounting and Financial Disclosure................. *
</TABLE>

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

* Omitted from Prospectus because item is inapplicable or answer is in the
negative.
<PAGE> 3

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED JULY 16, 1997
PROSPECTUS
1,600,000 UNITS

JUBILEE GAMING ENTERPRISES, INC.
EACH UNIT CONSISTING OF ONE SHARE OF COMMON STOCK AND
ONE REDEEMABLE COMMON STOCK PURCHASE WARRANT

Jubilee Gaming Enterprises, Inc. (the "Company") is offering hereby
1,600,000 Units, each consisting of one share of the Company's common stock, no
par value (the "Common Stock"), and one Redeemable Common Stock Purchase Warrant
(a "Redeemable Warrant"). The Common Stock and the Redeemable Warrants are
immediately detachable and separately transferable. Each Redeemable Warrant
entitles the holder to purchase at any time until five years following the date
of this Prospectus, one share of Common Stock, at an exercise price of $6.50 per
share. The Redeemable Warrants are subject to redemption by the Company for $.01
per warrant at any time on or after 90 days after the effective date of this
Prospectus, on 30 days' prior written notice, provided that the closing bid
price of the Common Stock exceeds $10.00 for any 20 consecutive trading days
prior to such notice. See "Description of Units."

Prior to this offering, there has been no market for the Company's
securities, and there can be no assurance that such a market will develop. The
initial public offering price of the Units is $5.00 per Unit (the "Price to
Public"). The offering price of the Units has been determined by negotiation
between the Company and H. J. Meyers & Co., Inc. (the "Representative"), and is
not necessarily related to the Company's net asset value or any other
established criteria of value. See "Underwriting" for information relating to
the factors considered in determining the Price to Public. The Company has
applied for listing of the Common Stock and Redeemable Warrants on the Nasdaq
SmallCap Market under the symbols JUBE and JUBEW, respectively.

AN INVESTMENT IN THE SECURITIES OFFERED HEREBY IS SPECULATIVE AND INVOLVES
A HIGH DEGREE OF RISK AND SUBSTANTIAL DILUTION. SEE "RISK FACTORS" BEGINNING ON
PAGE 7 HEREIN AND "DILUTION."
------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

THE COLORADO LIMITED GAMING CONTROL COMMISSION HAS NOT PASSED ON THE ACCURACY,
ADEQUACY OR INVESTMENT MERIT OF THE SECURITIES DESCRIBED HEREIN. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

================================================================================

<TABLE>
<CAPTION>
PRICE UNDERWRITING DISCOUNT PROCEEDS TO
TO PUBLIC AND COMMISSIONS(1) COMPANY(2)
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
Per Unit............................... $5.00 $.50 $4.50
- ------------------------------------------------------------------------------------------------------------------
Total(3)............................... $8,000,000 $800,000 $7,200,000
</TABLE>

================================================================================

(1) Does not include additional compensation to be received by the
Representative in the form of (i) a nonaccountable expense allowance of
$240,000 (or $276,000 if the underwriters' overallotment option described in
footnote (3) is exercised in full), (ii) a warrant to purchase up to 160,000
Units at $6.00 per Unit exercisable over a period of five years, commencing
one year following the date of this Prospectus (the "Representative's
Warrant"); and (iii) a consulting agreement for $72,000. In addition, the
Company has agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."

(2) Before deducting expenses payable by the Company, estimated at $500,000
(including the Representative's nonaccountable expense allowance referenced
in Note 1 above).

(3) The Company has granted the underwriters an overallotment option (the
"Overallotment Option") exercisable within 45 days of the date of this
Prospectus to purchase up to 240,000 additional Units on the same terms and
conditions set forth above. If such option is exercised in full, the total
price to public will be $9,200,000, the total underwriting discount and
commissions will be $920,000 and the total proceeds to the Company will be
$8,280,000. To the extent the Overallotment Option is exercised, the first
$391,500 of the net proceeds thereof will be used by the Company to redeem
90,000 shares of Common Stock of the Company owned by the Company's parent,
National Lodging Companies, Inc. ("National Lodging") at $4.35 per share.
See "Underwriting."

The Units are offered on a "firm commitment" basis by the Underwriters (as
defined herein) when, as and if delivered to and accepted by the underwriters,
and subject to prior sale, withdrawal, or cancellation of the offer without
notice. It is expected that delivery of the certificates representing these
securities will be made at the offices of H. J. Meyers & Co., Inc., 1895 Mt.
Hope Avenue, Rochester, NY 15620 on or about , 1997.

H.J. MEYERS & CO., INC.

THE DATE OF THIS PROSPECTUS IS , 1997
<PAGE> 4

Artist's rendition of the expanded Jubilee Casino and adjoining proposed hotel
in Cripple Creek, Colorado.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ SMALLCAP MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

2
<PAGE> 5

THE UNITS OFFERED BY THE UNDERWRITERS ARE SUBJECT TO PRIOR SALE. THE
UNDERWRITERS RESERVE THE RIGHT TO WITHDRAW, CANCEL OR MODIFY SUCH OFFER (WHICH
MAY BE DONE ONLY BY FILING AN AMENDMENT TO THE REGISTRATION STATEMENT) AND TO
REJECT ORDERS IN WHOLE OR IN PART FOR THE PURCHASE OF ANY OF THE UNITS AND TO
CANCEL ANY SALE EVEN AFTER THE PURCHASE PRICE HAS BEEN PAID IF SUCH SALE, IN THE
OPINION OF THE UNDERWRITERS, WOULD VIOLATE FEDERAL OR STATE SECURITIES LAWS OR A
RULE OR POLICY OF THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.

A SIGNIFICANT NUMBER OF THE UNITS MAY BE SOLD TO CUSTOMERS OF THE
UNDERWRITERS. THOSE CUSTOMERS SUBSEQUENTLY MAY ENGAGE IN TRANSACTIONS FOR THE
SALE OR PURCHASE OF SUCH UNITS THROUGH OR WITH THE UNDERWRITERS. ALTHOUGH THEY
HAVE NO LEGAL OBLIGATION TO DO SO, THE UNDERWRITERS MAY BECOME MARKET MAKERS AND
OTHERWISE EFFECT TRANSACTIONS IN THE COMMON STOCK AND REDEEMABLE WARRANTS OF THE
COMPANY. THE UNDERWRITERS, IF THEY PARTICIPATE IN THE MARKET, MAY BE A
DOMINATING INFLUENCE IN THE MARKET FOR THESE SECURITIES. THE PRICES AND
LIQUIDITY OF THESE SECURITIES MAY BE SIGNIFICANTLY AFFECTED BY THE DEGREE, IF
ANY, OF THE UNDERWRITERS' PARTICIPATION IN SUCH MARKET.

NOTICE TO CALIFORNIA RESIDENTS: SECURITIES SOLD PURSUANT TO THIS OFFERING
MAY ONLY BE SOLD TO INDIVIDUALS WHO (1) HAVE A GROSS ANNUAL INCOME, DURING 1996
AND ESTIMATED FOR 1997, OF $65,000 OR MORE FROM ALL SOURCES PLUS A LIQUID NET
WORTH (EXCLUDING HOME, FURNISHINGS AND AUTOMOBILES) OF $250,000 OR MORE, OR (2)
HAVE A LIQUID NET WORTH (EXCLUDING HOME, FURNISHINGS AND AUTOMOBILES) OF
$500,000 OR MORE. EACH CALIFORNIA RESIDENT PURCHASING UNITS OFFERED HEREBY WILL
BE REQUIRED TO EXECUTE A REPRESENTATION THAT IT COMES WITHIN ONE OF THE
AFOREMENTIONED CATEGORIES.

3
<PAGE> 6

PROSPECTUS SUMMARY

The following summary is qualified by the more detailed information and
consolidated financial statements appearing elsewhere in this Prospectus. All
information concerning the Company's authorized, issued and outstanding Common
Stock and all financial information presented on a per share basis reflects a 1
for 3.8125 share combination effective October 11, 1996. Unless otherwise
indicated, information in this Prospectus assumes no exercise of (a) the
Redeemable Warrants for the purchase of 1,600,000 shares of Common Stock sold as
a part of the Units, (b) the Overallotment Option, (c) the Representative's
Warrant, or (d) outstanding warrants and options to purchase 88,132 and 100,000
shares of Common Stock, respectively. See "Underwriting."

THE COMPANY

Jubilee Gaming Enterprises, Inc. (the "Company") operates the Jubilee
Casino (the "Jubilee" or the "Casino") in Cripple Creek, Colorado ("Cripple
Creek"), one of three cities in Colorado permitted to have limited stakes
gaming, which limits the types of games to slot machines, poker and blackjack
and limits to $5 the amount of a single bet. In April 1996, the Company acquired
the Jubilee by purchasing substantially all of the interests in the 353 Myers
Avenue Limited Partnership (the "Partnership"), which owned and operated the
Jubilee. The Company's management has experience in planning and financing
gaming operations, and its major shareholder, National Lodging Companies, Inc.
("National Lodging"), is a hotel development and management company. Over the
past five years annual adjusted gross proceeds ("AGP") attributable to gaming in
Cripple Creek has more than doubled from $45.5 million (in 1991-1992) to $102.9
million (in 1995-1996). The Company plans to position itself to capitalize on
this growth. The Company's business strategy is to substantially enlarge the
Casino and build an adjoining hotel to create a resort type gaming destination.
The Company has acquired real estate in order to expand the Casino's gaming
floor, add a restaurant, a 120-room hotel (the "Hotel") and additional
convenient parking.

The Jubilee is located on Myers Avenue, between Fourth and Fifth Streets,
and is one block south of Bennett Avenue, Cripple Creek's main artery. The
planned expansion of the Casino will establish the Jubilee as the second largest
casino in Cripple Creek and one of only two casinos in Cripple Creek with a
large hotel facility. It is the Company's intention to become a franchisee in a
national hotel chain which will provide a toll-free reservation system. The
Company is in the process of making its final determination as to the franchise
it will select. The Company believes that the hotel rooms will significantly
improve the Casino's gaming volume, by attracting patrons from a greater
distance for longer periods of time. The Company believes that the planned
addition of the Hotel and expansion of the Casino, the increased parking
capacity and the recent opening of the Double Eagle Casino and Hotel (the
"Double Eagle") in Cripple Creek will shift more of the gaming activity to the
eastern edge of the city from its present concentration along Bennett Avenue,
thereby improving the attractiveness of the Jubilee as a gaming destination. The
Company also intends to enhance access to the Casino by constructing an elevated
walkway to connect the Casino with Bennett Avenue. The Hotel is planned on seven
lots owned by the Company east of the Casino, which will also permit expansion
of the Casino to approximately 25,000 square feet of gaming space with capacity
for up to 800 slot machines, a separate children's entertainment area and
expanded restaurant facilities. The Jubilee is the only casino in Cripple Creek
that has a separate floor devoted to children's activities. Recently, a new law
prohibiting minors from gaming areas became effective in Colorado. The Company
believes that the passage of this law will attract even more family business to
the Casino. With this in mind, the Company intends to expand its children's
area.

The closest major urban center to Cripple Creek is Colorado Springs,
Colorado, which is located approximately 45 miles east of Cripple Creek. The
Colorado Springs metro area had a 1995 estimated population of approximately
474,000 people, and is projected to continue to grow. The other two gaming
communities in Colorado, Blackhawk and Central City, are located approximately
25 miles west of Denver, which serves as their primary market. Cripple Creek
also draws patrons to a limited extent from the Denver area as well as from
Pueblo and southern Colorado, and northern New Mexico. The Company believes that
the Hotel will expand the Casino's market area and attractiveness to patrons by
increasing the gaming floor space and providing needed lodging for customers
desiring more than a day trip.

The Jubilee was constructed and opened in July 1992 and currently operates
178 slot machines and 6 table games (blackjack and poker). The Casino consists
of two stories with a total of approximately 15,100 square feet, including a
50-seat restaurant, a seven-seat bar and a children's entertainment area.
Attached to the Casino is a historic building owned by the Company, known as the
Homestead, a bordello during the gold rush days which is currently operated as a
museum.

4
<PAGE> 7

The Company was incorporated under the laws of the State of Minnesota under
the name National Gaming Companies, Inc. on August 29, 1995. The Company
commenced operation of the Casino on April 23, 1996, following approval of its
gaming license by the Colorado Limited Gaming Control Commission (the "Gaming
Commission").

While the Company intends to focus its short term efforts on the
development and operation of the Jubilee, upon the completion of this offering,
the Company intends to identify and pursue opportunities to acquire or manage
other casinos. The Company anticipates that it will pursue such opportunities
based upon a variety of factors, including, but not limited to, the following:
(i) casino site suitability; (ii) competitive factors; (iii) regulatory
considerations; (iv) favorable financial projections; (v) availability of
financing; and (vi) quality and availability of management. The Company
anticipates that it will pursue opportunities both within and outside Colorado.
As of the date of this Prospectus, the Company has not identified any specific
casino acquisition targets. Further, it is likely that any acquisition would
require the Company to obtain additional financing to fund the acquisition. See
"Use of Proceeds."

Unless otherwise indicated, all references herein to the Company include
the Company's predecessors, its wholly-owned subsidiaries, Regent Gaming
Enterprises, Inc. and Cripple Creek Corporation, and the Partnership. The
Company maintains operating offices at the Jubilee, 351 Myers Avenue, P.O. Box
610, Cripple Creek, Colorado 80813. The Company's principal executive offices
are located at 9855 West 78th Street, Suite 220, Minneapolis, Minnesota 55344
and its telephone number is (612) 944-5700.

THE OFFERING

<TABLE>
<S> <C>
Securities Offered..................... 1,600,000 Units. Each Unit offered hereby consists of one
share of Common Stock and one Redeemable Warrant. Each
Redeemable Warrant is immediately exercisable and
separately transferable from the Common Stock. Each
Redeemable Warrant entitles the holder to purchase at any
time until five years after the date of this Prospectus,
one share of Common Stock at an exercise price of $6.50,
subject to adjustment in certain circumstances. The
Redeemable Warrants are subject to redemption by the
Company, at a price of $.01 per warrant, at any time on or
after 90 days after the date of this Prospectus, on 30
days' written notice, provided that the closing bid price
of Common Stock exceeds $10.00 per share (subject to
adjustment) for any 20 consecutive trading days prior to
such notice. Holders of Redeemable Warrants may exercise
their rights until the close of business on the date fixed
for redemption, unless extended by the Company. See
"Description of Units."
Common Stock Outstanding:
Before this Offering................. 1,623,611 shares*
After this Offering.................. 3,223,611 shares*
Use of Proceeds........................ Casino expansion and Hotel development, repayment of
amounts due National Lodging, repayment of working capital
loan, and working capital. See "Use of Proceeds."
Risk Factors........................... An investment in the Units is speculative and involves a
high degree of risk and substantial dilution. See "Risk
Factors" and "Dilution."
Proposed Nasdaq SmallCap Market
Symbols:
Common Stock......................... JUBE
Warrants............................. JUBEW
</TABLE>

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

* Assumes no exercise of (i) outstanding warrants and options to purchase 88,132
and 100,000 shares of Common Stock, respectively, (ii) the Overallotment
Option, (iii) the Representative's Warrant to purchase up to 160,000 Units, or
(iv) the Redeemable Warrants for the purchase of 1,600,000 shares of Common
Stock sold as part of the Units. See "Description of Capital Stock" and
"Underwriting."

5
<PAGE> 8

SUMMARY FINANCIAL AND OPERATING DATA

<TABLE>
<CAPTION>
353 MYERS (PREDECESSOR)
-------------------------------------------
JANUARY 1,
1996 THREE MONTHS
YEAR ENDED THROUGH ENDED
DECEMBER 31, APRIL 22, MARCH 31,
1995 1996 1996
------------ ---------- ------------
(UNAUDITED)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue........................ $ 3,013,786 $ 885,891 $ 695,729
----------- ---------- -----------
Costs and expenses:
Operating departments........ 1,737,777 467,802 370,406
General and administrative... 1,075,503 347,814 265,047
Interest..................... 667,775 101,915 85,537
Depreciation and
amortization............... 413,595 124,460 99,827
Impairment loss.............. 523,000
----------- ---------- -----------
4,417,650 1,041,991 820,817
----------- ---------- -----------
Loss before extraordinary
gain......................... (1,403,864) (156,100) (125,088)
Extraordinary gain(3)..........
Net loss....................... $(1,403,864) $ (156,100) $ (125,088)
=========== ========== ===========
Loss per common share..........
Loss before extraordinary
item.........................
Extraordinary item.............
Net loss per common share......
Weighted average shares
outstanding..................

<CAPTION>
JUBILEE GAMING ENTERPRISES, INC.
----------------------------------------------------------------------

(PRO FORMA) THREE MONTHS ENDED
YEAR ENDED YEAR ENDED YEAR ENDED MARCH 31,
DECEMBER 31, DECEMBER 31, DECEMBER 31, -------------------------
1995 1996 1996(1) 1996 1997
------------ ------------ ------------ ---- ----
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue........................ $ 14,978 $2,262,304 $ 3,131,795 $ 12,300 $ 644,702
----------- ---------- ----------- ---------- ----------
Costs and expenses:
Operating departments........ 1,387,814 388,176 388,176
General and administrative... 410,365 1,163,767 1,511,581 132,205 265,413
Interest..................... 30,749 329,474 395,180 29,047 115,899
Depreciation and
amortization............... 2,056 299,441 423,901 3,176 102,002
Impairment loss..............
----------- ---------- ----------- ---------- ----------
443,170 3,180,496 4,169,878 164,428 871,490
----------- ---------- ----------- ---------- ----------
Loss before extraordinary
gain......................... (428,192) (918,192) (1,038,083) (152,128) (226,788)
Extraordinary gain(3).......... 378,213 378,213
Net loss....................... $ (428,192) $ (539,979) $ (659,870) $ (152,128) $ (226,788)
=========== ========== =========== ========== ==========
Loss per common share..........
Loss before extraordinary
item......................... $ (.26) $ (.56) $ (.63) $ (.09) $ (.14)
Extraordinary item............. .23 .23
----------- ---------- ----------- ---------- ----------
Net loss per common share...... $ (.26) $ (.33) $ (.40) $ (.09) $ (.14)
=========== ========== =========== ========== ==========
Weighted average shares
outstanding.................. 1,643,376 1,643,376 1,643,376 1,643,376 1,647,310
</TABLE>

<TABLE>
<CAPTION>
JUBILEE GAMING
ENTERPRISES, INC.
---------------------------
MARCH 31, 1997
---------------------------
AS
ACTUAL ADJUSTED(2)
------------- -----------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital................ $ (941,180) $1,318,820
Non-current assets............. $ 7,217,019 $11,657,019
Total assets................... $ 7,821,845 $14,113,832
Current liabilities............ $ 1,546,006 $1,137,993
Long-term liabilities, net of
current maturities........... $ 4,694,044 $4,694,044
Shareholders' equity........... $ 1,581,795 $8,281,795
</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED
FOR THE YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------------- ---------------------------
1994 1995 1996 1997 1996
------------ ------------ ------------ ---- ----
<S> <C> <C> <C> <C> <C>
INDUSTRY INFORMATION:
Adjusted Gross Proceeds:
State of Colorado(4)............................ $325,684,649 $384,342,947 $411,666,501 $103,128,601 $ 95,607,779
Cripple Creek(4)................................ $ 82,279,672 $ 94,018,958 $102,915,426 23,751,214 22,296,845
Jubilee Casino.................................. $ 3,750,665 $ 2,826,063 $ 2,795,486 593,714 634,804
</TABLE>

- ---------------
(1) On April 22, 1996, the Company acquired substantially all interests in the
Partnership which operates the Jubilee. The pro forma statements of
operations data is presented as if the acquisition occurred on January 1,
1996 and as if all related party debt from the sellers of the limited
partnership had been contributed to equity on that date. See Financial
Statements.

(2) Gives effect to receipt of the estimated net proceeds from this offering of
$6,700,000, but assumes no exercise of (i) outstanding warrants and options
to purchase 88,132 and 100,000 shares of Common Stock, respectively, (ii)
the Overallotment Option, (iii) the Representative's Warrant to purchase up
to 160,000 Units, or (iv) the Redeemable Warrants for the purchase of
1,600,000 shares of Common Stock sold as part of the Units. See
"Capitalization," "Recent Financing" and "Underwriting."

(3) Includes $309,399 related to termination of a gaming equipment lease and
$68,814 related to forgiveness of principal and interest on long-term debt.

(4) Source: the Colorado Division of Gaming.

6
<PAGE> 9

RISK FACTORS

In addition to the other information in this Prospectus, the following risk
factors should be considered carefully by prospective investors in evaluating
the Company and its business operations and prospects before purchasing the
Units offered by this Prospectus.

SPECIFIC RISKS RELATED TO COMPANY

History of Losses; Going Concern Uncertainty. The Company has operated the
Jubilee since April 23, 1996. The Company had a net loss of $428,192 and
$539,979 for the years ended December 31, 1995 and 1996, respectively, and
$226,788 for the three months ended March 31, 1997. In addition, the
Partnership, which operated the Jubilee prior to April 23, 1996, had a net loss
of $1,403,864 for the year ended December 31, 1995, and $156,100 for the period
ended April 22, 1996. The report of the Company's independent auditor concerning
the Company's financial statements as of the years ended December 31, 1995 and
1996, contains an explanatory paragraph which states that the Company's
deficiency in working capital and limited capital resources raise substantial
doubt about its ability to continue as a going concern. There can be no
assurance that the Company will achieve profitable operations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Financial Statements."

Prior Defaults. Prior to its acquisition by the Company, the Casino had
acquired $1,706,435 of gaming equipment under capital lease agreements. During
1995 and 1996, the Casino was delinquent with respect to payments required under
these lease agreements and was subject to the default provisions of the
agreements, including a significant portion of the remaining balance being due
on demand and the repossession of the gaming equipment. In November 1996, these
leases were terminated and all unpaid principal and interest were forgiven. In
conjunction with the termination, approximately 40% of the original gaming
equipment was returned to the lessor and a purchase agreement was signed on
November 18, 1996, for the remaining gaming equipment. At March 31, 1997,
approximately $870,000 remained outstanding under this purchase agreement.

The Casino accounted for the gaming equipment returned as a termination of
a capital lease. As a result, the difference between the allocated debt forgiven
and the net book value of the related gaming equipment is recorded as an
extraordinary gain of $309,399 in the Company's statement of operations for the
year ended December 31, 1996.

The Casino accounted for the gaming equipment retained as a purchase of a
leased asset by the lessee during the lease term. As a result, the difference
between the allocated debt forgiven and the net book value of the retained
gaming equipment was recorded as a reduction of $503,523 in the purchase price
of the gaming equipment acquired under the new agreement. The debt obligation
under the new agreement is included in long-term debt on the Company's balance
sheet.

Location off Bennett Avenue. The Jubilee, which is located on the eastern
edge of Cripple Creek, is also located one block south of Bennett Avenue,
Cripple Creek's main street, along which most other casinos in Cripple Creek are
located. There can be no assurance that the Casino's location off Bennett Avenue
will ultimately permit it to gain sufficient customer acceptance to enable the
Casino and the planned Hotel to attain profitability. See "Business -- Jubilee
Casino."

Dependence on Key Personnel. The success of the Company is largely
dependent on the continued efforts and skills of its current management who have
experience in the gaming and hospitality industries, including the development
and management of hotels. The loss of the services of members of this management
group could have a material adverse effect on the Company. The Company has
obtained key-person life insurance in the amount of $1.0 million on the life of
Mr. Craig Forsman, the Company's Chief Executive Officer, with the proceeds of
such insurance to be payable to the Company. In addition, the expansion of the
Company's business may require additional managers with gaming industry
experience, as well as other skilled employees. A shortage of skilled management
personnel exists in the gaming industry, which may make it difficult for the
Company to attract and retain qualified managers and employees. A failure to
attract and retain qualified managers and employees could have a material
adverse effect on the Company's

7
<PAGE> 10

expansion plans. With the exception of its Vice President of Gaming Operations,
the Company has not entered into employment agreements with any of its
employees. See "Management."

Proceeds from Offering Inadequate to Fund Business Plan; Need for
Additional Financing. The Company must obtain additional financing to complete
the development of the Hotel and expansion of the Casino. The Company's
construction budget for the Hotel requires it to obtain at least an additional
$15.0 million of construction financing in order to complete the project. The
Company has applied for a 12-month, $15.0 million construction loan which, by
its terms, automatically will convert into a 10-year interest bearing mortgage
upon completion of the project. As a condition to closing this offering, the
Company must close on this loan and have available to it the proceeds from which
it will be able to draw upon to fund the Hotel development and Casino expansion
project. Similarly, a condition to the closing of the construction loan will be
the closing of this offering. Thus, the Company anticipates that the closing on
the construction loan and this offering will occur simultaneously. While the
Company believes that $15.0 million will be sufficient to enable it to complete
the Casino expansion and Hotel development project, there can be no assurance
that the project will not suffer unforeseen risks which will make such financing
inadequate to complete the project. See "-- Construction Risks" and "Business --
Project Costs."

Also, in order to raise capital, the Company may also be forced to sell all
or a partial interest in one or more of its undeveloped properties. Moreover, if
the Company encounters difficulty in obtaining additional financing, unfavorable
arrangements might have to be made which could significantly dilute
shareholders' interests. See "Business -- Jubilee Hotel and Casino Expansion"
and "Business -- Project Costs."

Substantial Leverage. As of March 31, 1997, the Company had long-term
indebtedness totaling approximately $3.56 million secured by a first deed of
trust against all of the Company's real estate, other than the Casino and four
lots, and an approximately $500,000 note secured by a first deed of trust
against the Casino and the four parcels not secured by the long-term
indebtedness discussed above. The Company will incur an additional $15.0 million
of construction financing to complete the Hotel and Casino expansion. Such
indebtedness may have substantial consequences for holders of the Company's
securities, including, but not limited, to the following: (i) a substantial
portion of the Company's cash flow from operations will be required to pay
principal and interest on the Company's long-term obligations (estimated at
approximately $2.5 million per year through 2000), including monthly payments on
the mortgage on the land on which the Casino is located; (ii) the Company's high
leverage may make it vulnerable if Casino and Hotel revenues fail to meet
expectations or if economic downturns should occur, and limit its ability to
respond to changing competitive and economic conditions; and (iii) limiting the
Company's ability to further expand in Cripple Creek or elsewhere when expansion
opportunities are presented. There can be no assurance that the Company will be
able to repay or refinance such long-term indebtedness when due, or that the
Company would be able to sell all or any portion of its assets or raise
additional capital to make required payments on maturing indebtedness. An
inability to make payments when due or to comply with covenants and restrictions
associated with such indebtedness could give a lender the right to foreclose on
properties securing payment obligations, which would have a material adverse
effect upon the Company. See "Business -- Project Costs."

Access to Cripple Creek. Cripple Creek is located in a mountainous region
and for approximately the last nine miles is primarily serviced by a winding
two-lane state highway. Weather can adversely affect access to Cripple Creek, as
ice and snow can render highways hazardous. In addition, concerns about the
overall availability of convenient parking in Cripple Creek may discourage
potential customers.

Environmental Risks. Ownership or operation of real estate exposes the
Company to the related risks of compliance with environmental laws, and clean-up
costs and related expenses (which would not be covered by insurance
reimbursement) in the event of environmental contamination, even if such
contamination was not caused by or known to the Company. In addition, the
discovery of such contamination could cause the Company to decline to proceed
with development of a proposed project or could expose the Company to
substantial costs for remediation of the contamination. The Company has had
Phase I environmental studies performed on the real estate owned by it in
Cripple Creek. Based on such studies, the Company believes that none of its real
estate in Cripple Creek has any environmental contamination.

8
<PAGE> 11

A portion of one of the parcels of real estate owned by the Company in
Cripple Creek is subject to federal environmental regulations relating to
wetlands. The Army Corps of Engineers has issued a Cease and Desist Order with
respect to a portion of the 15 lot parcel owned by the Company across Myers
Avenue from the Casino. This order relates to the prior owner of the land using
it in such a way so as to actually divert the flow of the Cripple Creek. This
Order affected all individuals who own land effected by the diversion of the
creek, and was issued against the City of Cripple Creek. The Company has entered
into a settlement agreement with the other affected landowners and, together
with such landowners and the City of Cripple Creek, has submitted a proposal for
settlement to the Army Corps. Pursuant to the terms of this settlement proposal,
the Company would be required to pay approximately $270,000 to the Army Corps in
the event that it ever developed the land. The above regulations, and this
order, could limit the amount of such parcel which could be paved and used by
the Company for parking.

Seasonality. Generally, the highest levels of the Company's business
activity occur during the tourist season, i.e., May through October. While the
Company's base business level, i.e., November through April, is somewhat
constant, weather conditions during this period have a significant impact on
economic activity in Cripple Creek. Snow can render the mountainous roads that
provide access to and from Cripple Creek hazardous, and patronage at the Casino
is noticeably smaller when a snowfall occurs. See "Business -- Seasonality."

SPECIFIC RISKS RELATED TO OWNERSHIP AND OPERATION OF THE CASINO

New Industry With Intense Competition. Limited stakes gaming did not
commence in Colorado until October 1991. There is, as a result, only six years
of experience in Colorado against which to evaluate the likelihood of the
success of the Company's gaming operations in the state. Results to date may
reflect the novelty of limited stakes gaming. Consequently, the Company's casino
operations in Colorado are subject to the numerous risks inherent in the
establishment of a new business. Further, there can be no assurance that the
initial success of limited stakes gaming in Colorado will not decrease as the
novelty wears off. There is intense competition in the limited stakes gaming
industry and in Cripple Creek in particular, where the Company competes with
approximately 25 gaming establishments. The Company competes with many
established companies, some of which have greater financial resources,
experience and expertise than the Company. Because of the intense nature of this
competition, there can be no assurance that the Company's activities will be
profitable.

Possible Adverse Effects of Expansion of Gaming. State and local public
initiatives regarding expansion of limited stakes gaming to other Colorado
localities have been actively pursued by many persons. In 1994, three proposed
gaming initiatives were filed with the Colorado Secretary of State. One sought
to allow limited stakes gaming in Manitou Springs, Colorado (adjacent to
Colorado Springs and approximately 40 miles from Cripple Creek), and to allow
slot machines in all public airports in Colorado. A second sought permission for
limited stakes gaming in Trinidad, Colorado (located approximately 120 miles
south of Colorado Springs). The third requested authority to establish limited
stakes gaming in Antonito, Colorado (located approximately 180 miles southeast
of Colorado Springs). In the November 1994 general election, only the Manitou
initiative qualified for the ballot and it was defeated. The Trinidad initiative
appeared on the November 1996 general election ballot and was defeated. The
Antonito initiative did not gain sufficient support to qualify for inclusion on
the ballot. There can be no assurance, however, that limited stakes gaming will
not be approved in these or other Colorado communities in the future. Any
additional legalization of gaming closer to Colorado Springs could have a
material adverse affect on the Company's operations in Cripple Creek. See
"Business -- Competition."

In addition to the possible adverse effects of the expansion of gaming in
Colorado, the expansion or legalization of gaming in states neighboring Colorado
could adversely affect the Casino's business. In particular, the legalization of
gaming in New Mexico could reduce the number of visitors from New Mexico who
patronize Colorado casinos. Gaming on New Mexico Native American land has
evolved from high stakes bingo operations to casino gaming. Presently, there are
14 casinos of various sizes operating throughout New Mexico. Slot machines are
not permitted in New Mexico and table games are restricted to blackjack and
poker. Further, New Mexico casinos are permitted to be open 24 hours a day. In
1995, the State of New Mexico negotiated compacts with eight Native American
tribes allowing them to operate casinos there. These compacts were subsequently
overturned by the New Mexico Supreme Court in July 1995. New Mexico's

9
<PAGE> 12

governor ordered the casinos closed, and then granted a grace period until the
Native American tribes' appeal of the New Mexico Supreme Court decision is
heard. Currently, all casinos operating in New Mexico are doing so without
approved compacts. If the dispute which has arisen around the casino issue in
New Mexico is resolved in favor of the Native American tribes in question,
gaming in New Mexico could be expanded. The Company cannot predict the effect
the resolution will have upon the operations of casinos in Cripple Creek, but
the legal availability of casino gaming in New Mexico will likely have the
affect of substantially reducing the number of visitors from New Mexico who
patronize Colorado casinos. See "Business -- Gaming in Colorado."

Recent Gaming Failures; Competition; Related Factors. A number of casinos
located in Colorado have ceased operations since limited stakes gaming was
commenced in October 1991, and others have filed for protection under Chapter 11
of the United States Bankruptcy Code. In addition, others have closed
temporarily or reduced staffing, and many casinos are not operating profitably.
Additionally, future initiatives could expand limited stakes gaming in Colorado
to other locations. In addition to competing with other casinos in Black Hawk,
Central City and Cripple Creek, Colorado, the Casino may compete for customers
with two casinos located on Native American land in Colorado and with casinos in
Las Vegas and other gaming venues. National, regional, state and local
competition for the gaming market is likely to increase as gaming activities
expand in traditional gambling cities and in new jurisdictions, a number of
which have adopted or are considering gambling legislation. Many of the
Company's competitors have established positions in more locations, have greater
financial resources, and have more experience and expertise than the Company.
The successful commercial operation of the Company's Casino is subject to many
conditions beyond the Company's control, including, but not limited to: (a) the
total number of visitors to the Cripple Creek area; (b) winter (typically,
November to April) weather conditions and other natural calamities; (c) the
vagaries of the local, state or national economies; (d) the promotion and appeal
of competing gaming enterprises locally, statewide and nationally; and (e) the
actions of local and state gaming governmental authorities.

Declining Casino Revenues. The Jubilee has, until recently, experienced
declining revenues. In 1995 and 1996, the Casino's average slot revenue per
machine was more than $20 below the Cripple Creek average. In 1994, the Casino
experienced a shortage of cash, was put up for sale, and marketing efforts were
greatly reduced. Total AGP at the Jubilee in 1996 decreased by 1.1% over 1995,
while Cripple Creek's total AGP increased by 9.5% during this period. See
"Business -- Gaming in Colorado."

Taxes and Government Regulation. The State of Colorado and Cripple Creek
taxing authorities have imposed substantial annual device fees of $1,200 and
$75, respectively, for each gaming device installed on gaming premises. In
addition, the State of Colorado has promulgated an annual gross gaming revenue
tax with incremental rates ranging from 2% of gross gaming revenues to 20% of
gross gaming revenues exceeding $10.0 million. Under the Colorado Constitution,
the Gaming Commission is required to set the gaming tax rate annually and could
increase this tax to as much as 40%, which could materially and adversely affect
the economic viability of limited stakes gaming in Colorado. In addition, the
gaming industry in the United States faces the possibility of a national gaming
tax as Congress and the executive branch may look for sources to reduce tax
burdens on some taxpayers, as well as new sources of revenue to fund policies
and programs. Efforts to impose a federal tax on gaming were defeated in the
104th Congress, but a new effort to impose a so-called "sin tax" on gaming could
be launched concurrent with the creation of a national gambling study
commission. See "Business -- Regulatory Matters."

Gaming licenses and related approvals are deemed to be privileges under
Colorado law, and no assurance can be given that any new licenses, permits, or
approvals that may be required in the future will be given or that existing ones
will be renewed or will not be revoked. Regulatory changes or increases in
applicable taxes or fees in Colorado could have a material adverse effect on the
Company. Colorado has only recently allowed for limited stakes gaming, and its
gaming laws have been modified several times since adoption. Additional
modifications of Colorado's gaming laws may occur in the future. Any expansion
of the Company's activities into other jurisdictions would require additional
approvals of various gaming authorities. The Gaming Commission's rules and
regulations are extensive and any violations thereof could subject the Company's
operations to monetary penalties or other materially adverse consequences. The
Company and its key

10
<PAGE> 13

personnel are required to hold various gaming licenses; failure on the part of
these individuals to retain such licenses could have a material adverse effect
on the Company. In addition, the Company's operations are, in part, dependent
upon its ability to obtain, renew and maintain an alcoholic beverage license. In
order to do so, the Company must strictly adhere to all state and local rules
and regulations regarding the sale and consumption of alcohol. The loss of its
alcoholic beverage license is possible in the event of regulatory violations by
the Company. The loss of the Company's alcoholic beverage license could have a
material adverse impact on its gaming activities. See "Business -- Regulatory
Matters."

Restrictions on Ownership of Securities; Mandatory Redemption. Any
beneficial holder of the Common Stock may be subject to investigation by gaming
authorities in Colorado if such authorities have reason to believe that
ownership may be inconsistent with the state's gaming policies. Persons who
acquire beneficial ownership of more than certain designated percentages of the
Common Stock may be subject to certain reporting and qualification procedures.
The Company's Articles of Incorporation, as amended and restated, provide that
certain transfers of voting securities are subject to Colorado laws and
regulations applicable to holders of gaming licenses and provide for a mandatory
repurchase of Common Stock if a shareholder is found unsuitable. It is possible
that the Company may be required to redeem the stock of an unsuitable person at
a time when its capital resources are limited, or its capital is allocated for
other purposes. Therefore, such a required redemption could have a material
adverse effect on the Company's financial condition. In lieu of redeeming
securities held by an unsuitable person, such securities could be transferred to
a person deemed suitable by the Gaming Commission, thereby obviating the need of
the Company to redeem such securities. In addition, changes in control of the
Company and certain other corporate transactions may not be effected without the
prior approval of the Gaming Commission. Such laws and regulations could
materially and adversely affect the marketability of the Common Stock or prevent
certain corporate transactions, including mergers or other business
combinations. See "Business -- Regulatory Matters."

Potential "Dram Shop" Liability. Restaurants in most states, including
Colorado, are subject to "dram shop" laws and regulations, which impose
liability on licensed alcoholic beverage servers for injuries or damages caused
by their negligent service of alcoholic beverages to a visibly intoxicated
person or to a minor, if such service is the proximate cause of the injury or
damage and such injury or damage is reasonably foreseeable. While the Company
maintains liquor liability insurance as part of its comprehensive general
liability insurance, which management believes is adequate to protect against
such liability, there can be no assurance that the Company will not be subject
to a judgment in excess of such insurance coverage or that it will be able to
continue to maintain such insurance coverage at reasonable costs, or at all. The
imposition of a judgment substantially in excess of the Company's insurance
coverage would have a material adverse effect on the Company. The failure of the
Company to obtain and maintain insurance coverage could materially and adversely
affect the Company.

Adequacy of Municipal Services. Cripple Creek has experienced unanticipated
demands upon its municipal systems, including water and sewage treatment
facilities. Increased levels of activity in the Cripple Creek area may burden
existing systems and pose new municipal and environmental problems, the costs of
which could be imposed on the gaming industry, or inhibit such industry's
ability to attract customers to casinos in Cripple Creek.

SPECIFIC RISKS RELATED TO CASINO AND HOTEL EXPANSION

Construction Risks. Real estate development and construction involve
significant special risks. Completion of the Hotel and expansion of the Casino
may be affected by factors both within and beyond the control of the Company.
Such factors include, among others, the performance of the general contractor
and subcontractors, unforeseen construction costs not covered by the contract,
adverse weather, strikes, local laws and regulations, inflation and other
unknown contingencies. In addition, the planned Hotel and expansion of the
Casino could be subject to cost overruns from presently unforeseen difficulties
or as the result of delays or cost increases, financial problems of a general
contractor, or other events not within the Company's control. The Company has
entered into a contract with a general contractor based in Colorado Springs to
complete the expansion of the Casino and development of the Hotel. The Company's
agreement with this general contractor includes a maximum price guarantee. This
guarantee does not include cost overruns due to acts beyond the

11
<PAGE> 14

control of the general contractor, e.g., material shortages, strikes and acts of
God. There can be no assurance, as a result, that the project will be completed
on budget, or that if such construction problems arise, the Company will have
sufficient financial resources to complete the project. See "Business -- Jubilee
Hotel and Casino Expansion."

Risks Related to Construction. The Company anticipates that the Casino
expansion and Hotel development project will be completed in June 1998. The
Company expects that construction drawings for the planned addition to and
expansion of the Jubilee and the Hotel will be completed by August 1997, at
which time it intends to apply for a building permit. The Company has received a
Conditional Certificate of Appropriateness from the Cripple Creek City Council
which passed upon such things as the appearance, materials and height of the
proposed project. The Company believes that the Cripple Creek City Council will
finalize this Certificate upon its review of the construction drawings. The
Company expects to apply for its construction permit in August 1997. Generally,
the highest levels of the Company's business occur during the period of May
through October. As a result, to the extent that the Company fails to complete
the project on time, particularly if the Company fails to open the expanded
Casino by the project completion date set forth above, the Company would not be
able to capitalize on these increased levels of business. See "-- Seasonality."

General Risks. The Company's operation and expansion of the Casino and the
planned Hotel development represent a high-risk investment involving many
factors beyond the control of the Company. Such factors could adversely affect
the operation and value of the Jubilee to extents not currently ascertainable
and, consequently, the value of the Company's securities. Such factors include,
but are not limited to, changes in general or local economic conditions,
including changes in interest rates; changes in the demand for use of the Casino
and the Hotel as a result of competition; adjacent land utilization; demographic
trends; increases in real estate taxes; changes in the state or federal gaming
laws (which could be applied retroactively); geographic expansion of areas in
Colorado where gaming is permitted; local, state and federal environmental and
other regulations; possible restrictive changes in the uses applicable to real
estate, zoning and similar land use and environmental laws and regulations; and
acts of God. Furthermore, expenditures associated with equity investments in
real estate (principally mortgage payments and real estate taxes) are not
normally decreased by events adversely affecting the revenue generated by the
real property. In order to make required payments and pay anticipated operating
expenses, it will be necessary to maintain high occupancy levels at the Hotel.
If payments are not made by the Company on its financing obligations when due,
the loans may be foreclosed and the Company will lose its interests in such
properties.

GENERAL RISKS

Insider Control; Absence of Independent Directors. National Lodging and the
officers and directors of the Company currently beneficially own approximately
90% of the outstanding voting stock of the Company. Upon completion of this
offering, such persons will beneficially own approximately 45% of the
outstanding voting stock of the Company and, therefore, will continue to be in
effective control of the Company's affairs, including, without limitation, the
sale of equity or debt securities of the Company, the appointment of officers,
the determination of officers' compensation and the determination of who will
serve on the Company's Board of Directors. In addition, the Company's principal
shareholders are parties to a Shareholder Voting and Control Agreement which
controls certain matters relating to the election of the Board of Directors of
the Company. As of the date of this prospectus, the Company has no independent,
outside directors. However, the Company has agreed that for a period of three
years following the closing of this offering, the Representative shall be
entitled to designate one individual as a nominee for election to the Company's
Board of Directors. Messrs. Klinkhammer and Forsman have agreed to vote shares
of Common Stock owned by them in favor of such individual. Should the
Representative not elect to nominate an individual for election to the Company's
Board of Directors, the Company has agreed to allow the Representative to act as
an observer of all meetings of the Company's Board of Directors for such period
of time. Also, immediately after the closing of this offering, and subject to
investigation and approval of the Gaming Commission, the Company intends to
appoint two independent directors to serve on its Board of Directors. See
"Principal Shareholders," "Description of Securities," "Certain Transactions --
Shareholders' Voting and Control Agreement" and "Management."

12
<PAGE> 15

Portion of Proceeds to Repay Existing Debt to National Lodging and Accrued
Salaries of Executive Officers. Approximately $484,000 was advanced by National
Lodging to Regent Gaming Enterprises, Inc., a subsidiary of the Company, and the
Company between March 1994 and March 1997. These funds were used for general
working capital purposes and costs associated with the acquisition of the
Jubilee. Through March 31, 1997, the Company had repaid approximately $245,000
of these advances. Approximately $187,000, or 3% of the net proceeds of this
offering, are intended to be used by the Company to repay a portion of the
unpaid advances made by National Lodging. The Company anticipates that
approximately $105,000 or 2% of the net proceeds of this offering, will be used
to pay accrued salaries of the Company's executive officers. See "Use of
Proceeds" and "Certain Transactions."

Related Party Transactions; Potential Conflicts of Interest. The Company
anticipates paying National Lodging an amount equal to 1%, not to exceed
$140,000, of the total Casino expansion and Hotel development project cost for
overseeing the development, construction and planning of the project. The
Company also anticipates that it will enter into an agreement for the management
of the Hotel with National Lodging. Payments under such agreement are projected
to equal 4% of room sales. Given the management overlap between the Company and
National Lodging, and the fact that Messrs. DeRoche and Klinkhammer are
directors of both National Lodging and the Company, there exists the potential
for conflicts of interest. For example, Messrs. DeRoche and Klinkhammer may be
forced to make decisions as directors of either National Lodging or the Company
which may have disadvantageous effects on the other corporation. See "Use of
Proceeds" and "Certain Transactions."

Dilution to New Investor in Excess of 50%. Purchasers of the Units offered
hereby will incur an immediate substantial dilution, in terms of book value, of
approximately $2.55, or approximately 51%, per share of Common Stock from the
public offering price. See "Dilution."

Arbitrary Offering Price of the Company's Securities. Prior to this
offering, there has been no public market for the securities of the Company. The
initial offering price of the Units has been determined by negotiations between
the Company and the Representative, with consideration being given to the
current status of the Company's business, the value of its properties, its
financial condition, its present and prospective operations, the general status
of the securities market and the market conditions for new offerings of
securities. The initial offering price of the Units bears no relationship to the
assets, net worth, book value, recent sales, price of shares issued to principal
shareholders or any other ordinary criteria of value. See "Underwriting."

No Prior Market for Company's Securities. Prior to this offering, there has
been no public market for the Company's securities, and there can be no
assurance that an active trading market will develop after this offering or, if
developed, that it will be sustained. The Company has made application to have
its securities quoted on the Nasdaq SmallCap Market. While the Company's
securities are expected to be initially included on the Nasdaq SmallCap Market,
their listing and continued inclusion on the Nasdaq SmallCap Market will depend
on the Company's ability to continue to meet certain eligibility requirements
established for that market. Loss of listing on the Nasdaq SmallCap Market could
result, for example, if the Company sustains continued material operating losses
or if the market price of its Common Stock falls below certain specified levels.
If the Common Stock becomes ineligible for trading on the Nasdaq SmallCap
Market, such securities may be subject to a rule under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), that imposes additional stringent
sales practice requirements on broker-dealers who sell the Common Stock. Those
sales practice requirements, if imposed, would adversely affect the ability of
broker-dealers to sell the Common Stock, and consequently would adversely affect
the public market for and the trading price of the Common Stock. See
"Description of Capital Stock."

Risk of Low-Priced Securities. The Securities and Exchange Commission (the
"Commission") has adopted regulations which generally define a "penny stock" to
be any equity security that has a market price (as defined) of less than $5.00
per share or an exercise price of less than $5.00 per share, subject to certain
exceptions, including an exception for any equity security that is quoted on The
Nasdaq Stock Market. If the shares of Common Stock or Redeemable Warrants
offered hereby are not included on or are removed or delisted from the Nasdaq
SmallCap Market, the securities may become subject to rules that impose
additional sales practice requirements on broker-dealers who sell such
securities. For transactions covered by these rules,

13
<PAGE> 16

the broker-dealer must make a special suitability determination for the
purchaser of such securities and have received the purchaser's written consent
to the transaction prior to the purchase. Additionally, for any transaction
involving a penny stock, unless exempt, the rules require the delivery, prior to
the transaction, of a disclosure schedule prepared by the Commission relating to
the penny stock market. The broker-dealer also must disclose the commissions
payable to both the broker-dealer and the registered representative, current
quotations for the securities and, if the broker-dealer is the sole
market-maker, the broker-dealer must disclose this fact and the broker-dealer's
presumed control over the market. Finally, among other requirements, monthly
statements must be sent disclosing recent price information for the penny stock
held in the account and information on the limited market in penny stocks.
Consequently, the "penny stock" rules may restrict the ability of purchasers in
this offering to sell the Redeemable Warrants and the Common Stock offered
hereby in the secondary market. See "-- No Prior Market for Company's
Securities."

Exercise of Warrants; Possible Redemption of Warrants. Investors purchasing
Units in this offering will not be able to exercise the Redeemable Warrants
unless at the time of exercise, this prospectus is current or a post-effective
amendment or new registration statement registering the Common Stock issuable
upon exercise of the Redeemable Warrants is effective, and qualified or deemed
to be exempt under the securities laws of the state of residence of the holder
of the Redeemable Warrants. The Company has agreed to maintain a current
prospectus relating thereto until the expiration of the Redeemable Warrants.
While the Company has undertaken to maintain a current prospectus relating to
the Redeemable Warrants in the Underwriting Agreement between the Company and
the Representative (the "Underwriting Agreement"), there is no assurance that it
will be able to do so. The Redeemable Warrants are subject to redemption by the
Company on 30 days' prior written notice under certain conditions. If the
Redeemable Warrants are redeemed, holders thereof will lose their right to
exercise the Redeemable Warrants except during such 30 day redemption period.
See "Description of Units -- Redeemable Warrants."

Non-Registration in Certain Jurisdictions of Shares Underlying the
Redeemable Warrants. The Redeemable Warrants will be immediately detachable and
separately transferable from the Common Stock, and, therefore, the Common Stock
and Redeemable Warrants will be quoted and traded separately. Although the
Redeemable Warrants will not knowingly be sold to purchasers in jurisdictions in
which the Units are not registered or otherwise qualified for sale, purchasers
may buy Redeemable Warrants in the aftermarket or may move to jurisdictions in
which the shares underlying the Redeemable Warrants are not so registered or
qualified during the period that the Redeemable Warrants are exercisable. In
this event, the Company would be unable to issue shares to those persons
desiring to exercise their Redeemable Warrants unless and until the shares of
Common Stock could be registered or qualified for sale in the jurisdiction in
which such person resides, or an exemption to such qualification exists in such
jurisdiction. Although the Company has agreed to use its best efforts to
register or qualify the shares of Common Stock for sale upon the exercise of the
Redeemable Warrants in any jurisdiction where the registered holders of 5% or
more of the Redeemable Warrants reside, there can be no assurance that the
Company will be able to effect any such registration or qualification. Further,
the Company may determine not to register or qualify the shares of Common Stock
issuable upon the exercise of the Redeemable Warrants in jurisdictions where
holders of less than 5% of the Redeemable Warrants reside and where the time and
expense do not justify such registration or qualification. In the event that for
any reason the shares of Common Stock are not registered or qualified in
particular jurisdictions, persons holding Redeemable Warrants in such
jurisdictions would either have to sell their Redeemable Warrants to persons in
states where the Redeemable Warrants may be exercised, or allow them to expire
unexercised. See "Description of Units -- Redeemable Warrants."

Market Making Activities During Redeemable Warrant Solicitation. If the
Representative elects, commencing any time 12 months after the effective date of
this prospectus, to solicit the exercise of the Redeemable Warrants, the Company
will pay to the Representative a soliciting fee of 7% of the exercise price of
the Redeemable Warrants. Unless granted an exemption under Regulation M
promulgated by the Commission under the Exchange Act, the Representative and any
soliciting broker-dealers may be prohibited from engaging in any market making
activities with regard to the Company's securities during the period from one to
five business days prior to any solicitation of the exercise of the Redeemable
Warrants until the latter of the termination of such solicitation activity or
the termination (by waiver or otherwise) of any right that the

14
<PAGE> 17

Representative and soliciting broker-dealers may have to receive a fee for the
exercise of the Redeemable Warrants following such solicitation. As a result,
the Representative and soliciting broker-dealers may be unable to continue to
provide a market for the Company's securities during certain periods while the
Redeemable Warrants are exercisable. Since the Representative and soliciting
broker-dealers may be the principal market makers for the Company's securities,
the liquidity of the Company's securities may be adversely affected during such
periods. See "Underwriting -- Warrant Solicitation Fees."

Shares Eligible for Future Sale. The availability for sale of certain
shares of Common Stock held by existing shareholders of the Company after this
offering could adversely affect the market price of the Common Stock. Of the
3,223,611 shares of Common Stock to be outstanding following this offering,
excluding any shares which may be issued pursuant to exercise of the Redeemable
Warrants and any previously issued warrants, 1,623,611 shares were sold to the
Company's existing shareholders in private transactions in reliance upon
exemptions from registration under the Securities Act of 1933, as amended (the
"Act") and are, therefore, "restricted securities" under the Act, which may not
be sold publicly unless the shares are registered under the Act or are sold
under Rules 144 or 144A promulgated by the Commission under the Act after
expiration of applicable holding periods. In connection with this offering, all
executive officers, directors and certain other shareholders of the Company have
agreed not to offer, sell or otherwise dispose of a total of 1,477,248 shares
held by them for a period of 18 months after the effective date of this
offering, without the prior written consent of the Representative. Sales of
substantial amounts of the Company's currently outstanding shares or exercise of
outstanding warrants could adversely affect prevailing market prices of the
Company's securities and the Company's ability to raise additional capital by
occurring at a time when it would be advantageous for the Company to sell
securities. See "Description of Capital Stock," "Shares Eligible for Future
Sale" and "Underwriting."

Undesignated Preferred Stock. The authorized and unissued capital stock of
the Company includes undesignated shares of preferred stock. The Company's Board
of Directors, without any action by the Company's shareholders, is authorized to
designate and issue the undesignated preferred stock in such classes or series
as it deems appropriate, and to establish the rights, preferences and privileges
of such shares, including dividend, liquidation and voting rights. No shares of
preferred stock or other senior equity securities are currently designated, and
there is no current plan to designate or issue any such securities. In addition,
the Company must obtain the written consent of the Representative prior to the
issuance of any shares of preferred stock. However, the ability of the Company's
Board of Directors to designate and issue any such undesignated shares, could
impede or deter an unsolicited tender offer or takeover proposal regarding the
Company, and the issuance of additional shares having preferential rights could
adversely effect the voting power and other rights of holders of Common Stock.
See "Description of Capital Stock."

Limitations on Director Liability. The Company's Articles of Incorporation,
as amended and restated, limit the liability of directors of the Company in
their capacity as directors to the Company or its shareholders to the fullest
extent permitted by Minnesota law. The Company's Articles provide that a
director shall not be personally liable to the Company or its shareholders for
monetary damages for breach of fiduciary duty as a director, except (i) for any
breach of the director's duty of loyalty to the Company or its shareholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) for dividends, stock repurchases
and other distributions made in violation of Minnesota law or for violations of
federal or state securities laws, (iv) for any transaction from which the
director derived an improper personal benefit, or (v) for any act or omission
occurring prior to the effective date of the provision in the Articles limiting
such liability. These provisions do not affect the availability of equitable
remedies, such as an action to enjoin or rescind a transaction involving a
breach of fiduciary duty, although, as a practical matter, equitable relief may
not be available. See "Management -- Director Liability."

Representative's Influence on the Market. A significant amount of the Units
offered hereby may be sold to customers of the underwriters. These customers
subsequently may engage in transactions for the sale or purchase of the Units
through or with the underwriters. The Representative has advised the Company
that it intends to make a market in the Common Stock after the offering and may
otherwise effect transactions in the Common Stock and the Redeemable Warrants.
This market-making activity may terminate at any time. If they participate in
the market, the underwriters may exert a dominating influence on the market for
the

15
<PAGE> 18

Common Stock. The price and liquidity of the Redeemable Warrants may be
significantly affected by the degree, if any, of the underwriters' participation
in such market. See "Underwriting."

No Dividends. No dividends have been paid on the shares of Common Stock.
The Company does not intend to pay cash dividends on its Common Stock in the
foreseeable future, and anticipates that profits, if any, received from
operations will be devoted to the Company's future operations. Any decision to
pay dividends will depend upon the Company's profitability at the time, cash
available therefor and other relevant factors. See "Dividend Policy."

USE OF PROCEEDS

The net proceeds to the Company from this offering, after the deduction of
offering expenses, are estimated to be $6,700,000. If the Overallotment Option
is exercised in full, the estimated net proceeds to the Company will be
approximately $7,700,000. The Company believes that the estimated net proceeds
from this offering will be sufficient to sustain its operations through the 12
month period following this offering. The Company currently intends to use the
net proceeds approximately as follows:

<TABLE>
<CAPTION>
DOLLARS PERCENTAGE
------- ----------
<S> <C> <C>
Casino expansion and hotel development......... $3,990,000 60%
Bennett Avenue connection...................... 450,000 7%
Repayment of amounts due National Lodging...... 187,000 3%
Repayment of working capital loan.............. 125,000 1%
Working capital................................ 1,948,000 29%
---------- ----
Total................................ $6,700,000 100%
========== ====
</TABLE>

Casino Expansion and Hotel Development. The Company estimates that
approximately $3,990,000, or 60% of the estimated net proceeds of the offering,
will be applied toward the expansion of the Casino and construction of the
Hotel. This amount includes a fee payable to National Lodging for overseeing the
development, construction and planning of the Hotel project which will be 1% of
the project cost, not to exceed $140,000. The Company will require $15.0 million
of additional financing to complete the Hotel. The Company has made application
for a $15.0 million, 12-month construction loan, which, by its terms,
automatically will convert into a 10-year interest bearing mortgage upon
completion of the Hotel development and Casino expansion project. It is a
condition precedent to the closing of this offering that the Company close on
this construction loan. Similarly, a condition to the closing of the
construction financing will be the closing of this offering. Thus, the Company
anticipates that the closing of the construction loan and this offering will
occur simultaneously. See "Business -- Jubilee Casino -- Jubilee Hotel and
Casino Expansion -- Project Costs" and "Risk Factors -- Proceeds from Offering
May be Inadequate to Fund Business Plan; Need for Additional Financing."

Bennett Avenue Connection. The Company intends to use approximately
$450,000, or 7% of the estimated net proceeds of this offering, to enhance
access to the Casino by constructing an elevated walkway to connect the Casino
with Bennett Avenue. See "Business -- Jubilee Hotel and Casino Expansion."

Payment of Amounts Due National Lodging. Approximately $484,000 was
advanced by National Lodging to Regent Gaming Enterprises, Inc. (a subsidiary of
the Company) and the Company between March 1994 and March 1997 and was used for
general working capital purposes and costs associated with the acquisition of
the Jubilee. Through March 31, 1997, the Company had repaid approximately
$245,000 of these advances. Approximately $187,000, or 3% of the estimated net
proceeds of this offering, will be used to repay a portion of the unpaid
advances made by National Lodging. This portion of the advances is due upon
completion of this offering and is non-interest bearing. The Company intends to
repay the balance of the amounts due National Lodging out of available working
capital funds upon the completion of the Hotel development and Casino expansion
project.

Repayment of Working Capital Loan. Approximately $125,000, or 1% of the net
estimated proceeds of this offering, will be used by the Company to repay a
revolving line of credit from Riverside Bank made to the

16
<PAGE> 19

Company in February 1997. The line of credit is unsecured, bears interest at the
rate of the prime rate plus three-quarters of a percent per annum, has been
personally guaranteed by the Company's officers and directors was originally due
on June 6, 1997, has been extended to September 6, 1997.

Working Capital. Approximately $1,948,000, or 29% of the net proceeds of
this offering, will be used by the Company for general working capital purposes,
including, but not limited to, the payment of $105,000 of salaries accrued from
October 1 through December 31, 1995, payment of operating expenses for sales and
marketing and general administrative activities, and $72,000 payable to the
Representative at the closing of this offering pursuant to a financial
consulting agreement between the Representative and the Company. In addition,
the Company anticipates using a portion of the net proceeds of this offering
allocated to working capital to acquire one or more gaming venues, although the
Company has not identified any such acquisition possibility as of the date of
this Prospectus. See "Business -- Potential Casino Acquisition."

Net proceeds of up to $391,500 from the sale of additional Units pursuant
to any exercise of the Overallotment Option will be used by the Company first to
redeem up to 90,000 shares of Common Stock owned by National Lodging at $4.35
per share. Any remaining proceeds from exercise of the Overallotment Option will
be used by the Company for general working capital purposes. See "Recent
Financing" and "Underwriting."

Pending application of the net proceeds described above, the Company
intends to invest such funds in interest bearing money market funds, short term
certificates of deposit or United States government obligations. The described
use of proceeds is based upon management's assumptions concerning certain
marketing, selling, development, financial and other matters which may affect
the Company. If the development of the Company's business varies materially from
these assumptions, the Company may reallocate the use of proceeds in such a
manner as it deems appropriate under the circumstances.

17
<PAGE> 20

DIVIDEND POLICY

Jubilee Gaming Enterprises, Inc. has never paid or declared any cash
dividends on its Common Stock and does not intend to pay dividends on its Common
Stock in the foreseeable future. The Company presently expects to retain its
earnings to finance the development or operation of its business. The payment by
the Company of dividends, if any, on its Common Stock in the future is subject
to the discretion of the Company's Board of Directors and will depend on the
Company's earnings, financial condition, capital requirements and other relevant
factors.

CAPITALIZATION

The following table sets forth the actual current liabilities and
capitalization of the Company (a) as of March 31, 1997; and (b) as adjusted to
reflect the sale of the 1,600,000 Units offered hereby at an offering price of
$5.00 per Unit and the application of the estimated net proceeds from this
offering.

<TABLE>
<CAPTION>
MARCH 31, 1997
-----------------------------
ACTUAL AS ADJUSTED(1)
----------- --------------
<S> <C> <C>
Current liabilities:
Note payable, bank........................................ $ 116,013 $ 0
Current portion of long-term debt:
Notes payable, shareholders............................ $ 18,000 $ 18,000
Real estate and other debt............................. 244,366 244,366
Due to National Lodging Companies, Inc. .................. 238,640(2) 51,640
Accounts payable.......................................... 49,582 49,582
Accrued expenses.......................................... 879,405 774,405
----------- -----------
Total current liabilities......................... $ 1,546,006 $ 1,137,993
=========== ===========
Long-term debt, net of current portion:
Real estate and other debt................................ $ 4,694,044 $ 4,694,044
----------- -----------
Shareholders' equity:
Preferred stock; no par value, authorized 5,000,000
shares; no shares outstanding.......................... --
Common stock; no par value, authorized 45,000,000 shares,
issued and outstanding 1,623,611 shares at March 31,
1997, 3,223,611 shares,
as adjusted............................................ $ 2,776,754 $ 9,476,754
Deficit................................................... (1,194,959) (1,194,959)
----------- -----------
Total shareholders' equity........................ $ 1,581,795 $ 8,281,795
=========== ===========
</TABLE>

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

(1) Gives effect to receipt of the net proceeds from this offering estimated at
$6,700,000, but without specific application thereof, but assumes no
exercise of (i) outstanding warrants and options to purchase 88,132 and
100,000 shares of Common Stock, respectively, (ii) the Overallotment Option,
(iii) the Representative's Warrant to purchase up to 160,000 Units, or (iv)
the Redeemable Warrants for the purchase of 1,600,000 shares of Common Stock
sold as part of the Units. See "Underwriting."

(2) The Company has been advanced a total of approximately $484,000 by National
Lodging. Through March 31, 1997, the Company has repaid approximately
$245,000 of these advances.

RECENT FINANCING

On October 18, 1996, the Company obtained a $3,564,000 loan (the "MS
Financing") from Miller & Schroeder Investments Corporation ("MSIC") secured by
a deed of trust and related security agreement and assignment of rents, revenues
and income against the Jubilee and other real estate owned by the Company in
Cripple Creek. The loan is evidenced by a promissory note which matures on May
1, 1998 and bears interest at a rate equal to 225 basis points above the base
rate announced from time to time by Norwest Bank Minnesota, National
Association, Minneapolis, Minnesota. The Company has the right to extend the
maturity

18
<PAGE> 21

date of the note for an additional term expiring on November 1, 1999, if (a) it
is not in default under the note or there has been no event of default
thereunder, (b) the Company pays an extension fee equal to one-half of one
percent of the principal balance of the note, (c) the Company meets certain cash
flow requirements, and (d) the Company prepays $250,000 of the principal balance
upon extension and an additional $250,000 during the ninth month of the
extension period of the loan, in addition to other customary terms. The Company
may prepay the loan without penalty. The note, trust deed and other security
documents contain other terms and conditions customary in similar loan
transactions. The loan is jointly and severally guaranteed by Robert Swenson,
Stephen Sherf, Craig Forsman, Terrance DeRoche, John Klinkhammer, 353 Myers
Avenue Limited Partnership and National Lodging Companies, Inc. The Company
intends to repay the MS Financing with the proceeds of the $15.0 million
construction financing to be obtained by the Company. See "Business -- Project
Costs."

In February 1997, the Company received a revolving line of credit from
Riverside Bank, Minneapolis, Minnesota. This credit line is unsecured, bears
interest at the rate of the prime rate plus three-quarters of a percent and has
been personally guaranteed by Messrs. Forsman, Sherf, Klinkhammer and DeRoche.
This line of credit is due on September 6, 1997.

DILUTION

The net tangible book value of the Common Stock of the Company as of March
31, 1997 was $1,212,236, or $.75 per share. Assuming the sale of the 1,600,000
Units in this offering at an assumed offering price of $5.00 per Unit, and after
deduction of underwriting discounts, non-accountable expenses payable to the
Representative and other expenses estimated at $500,000 there will be issued and
outstanding 3,223,611 shares of Common Stock, having an aggregate net tangible
book value of approximately $7,912,236 or $2.45 per share. An increase of $1.70
per share in net tangible book value of shares owned by existing shareholders
would result due to the Units sold in this offering, and an immediate dilution
of $2.55, or approximately 51%, per share to new investors. The following table
illustrates such per share dilution:

<TABLE>
<S> <C> <C>
Public offering price....................................... $5.00
Net tangible book value per share at March 31, 1997(1)...... $ .75
Increase in net tangible book value per share attributable
to
sale of Units............................................. $1.70
Pro forma net tangible book value per share after
offering(1)............................................... 2.45
Dilution per share to new investors......................... $2.55
</TABLE>

The following table summarizes, as of March 31, 1997, the difference
between current shareholders and purchasers of the Common Stock offered hereby
with respect to the number of shares of Common Stock purchased from the Company,
the total consideration paid and the average consideration paid per share.

<TABLE>
<CAPTION>
SHARES PURCHASED(1) TOTAL CONSIDERATION(1)(2) AVERAGE
-------------------- -------------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ------------- --------- ---------
<S> <C> <C> <C> <C> <C>
Existing
Shareholders........ 1,623,611 50% $ 2,776,754 26% $1.70
New Investors......... 1,600,000 50% 8,000,000 74% $5.00
--------- --- ----------- ---
Total....... 3,223,611 100% $10,776,754 100%
========= === =========== ===
</TABLE>

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

(1) Assumes no exercise of: (i) outstanding warrants and options for the
purchase of 88,132 and 100,000 shares of Common Stock, respectively, or (ii)
the Overallotment Option, (iii) the Representative's Warrant to purchase up
to 160,000 Units, or (iv) the Redeemable Warrants for the purchase of
1,600,000 shares of Common Stock sold as part of the Units.

(2) Does not reflect the deduction of underwriting discounts or any other
expenses incurred in connection with this offering.

19
<PAGE> 22

SELECTED FINANCIAL DATA

The selected statement of operations data for the year ended December 31,
1995 for the Partnership and the selected statements of operations and balance
sheet data for the Company for the years ended December 31, 1995 and 1996, and
for the three months ended March 31, 1996 and 1997, are derived from the more
detailed financial statements for the Partnership and the consolidated financial
statements for the Company and the respective notes thereto. The financial
statements of the Partnership for the year ended December 31, 1995 and the
consolidated financial statements of the Company for the years ended December
31, 1995 and 1996 have been audited by Schechter Dokken Kanter Andrews & Selcer
Ltd, independent public accountants, and its reports on those financial
statements are located elsewhere in this Prospectus. The pro forma selected
statement of operations for the Company for the year ended December 31, 1996 has
not been audited and does not purport (1) to represent what the Company's
results of operations would have been had the acquisition occurred on January 1,
1996, or (2) to project the Company's results of operations for any future date
or period. The selected financial data should be read in conjunction with
respective financial statements of the Company and the Partnership, including
the notes thereto, and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
353 MYERS (PREDECESSOR)
-------------------------------------------
JANUARY 1, THREE MONTHS
YEAR ENDED 1996 THROUGH ENDED
DECEMBER 31, APRIL 22, MARCH 31,
1995 1996 1996
------------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenue.................. $ 3,013,786 $ 885,891 $ 695,729
----------- ----------- ----------
Costs and expenses:
Operating
departments.......... 1,737,777 467,802 370,406
General and
administrative....... 1,075,503 347,814 265,047
Interest............... 667,775 101,915 85,537
Depreciation and
amortization......... 413,595 124,460 99,827
Impairment loss........ 523,000
----------- ----------- ----------
4,417,650 1,041,991 820,817
----------- ----------- ----------
Loss before extraordinary
gain................... (1,403,864) (156,100) (125,088)
Extraordinary gain(2)....
Net loss................. $(1,403,864) $ (156,100) $ (125,088)
=========== =========== ==========
Net loss per common
share..................
Weighted average shares
outstanding............

<CAPTION>
JUBILEE GAMING ENTERPRISES, INC.
-----------------------------------------------------------------------
PRO FORMA THREE MONTHS ENDED
YEAR ENDED YEAR ENDED YEAR ENDED MARCH 31,
DECEMBER 31, DECEMBER 31, DECEMBER 31, -------------------------
1995 1996 1996(1) 1996 1997
------------ ------------- ------------ ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenue.................. $ 14,978 $2,262,304 $ 3,131,795 $ 12,300 $ 644,702
----------- ---------- ----------- ---------- ----------
Costs and expenses:
Operating
departments.......... 1,387,814 1,839,216 388,176
General and
administrative....... 410,365 1,163,767 1,511,581 132,205 265,413
Interest............... 30,749 329,474 395,180 29,047 115,899
Depreciation and
amortization......... 2,056 299,441 423,901 3,176 102,002
Impairment loss........
----------- ---------- ----------- ---------- ----------
443,170 3,180,496 4,169,878 164,428 871,490
----------- ---------- ----------- ---------- ----------
Loss before extraordinary
gain................... (918,192) (1,038,083) (152,128) (226,788)
Extraordinary gain(2).... 378,213 378,213
---------- -----------
Net loss................. $ (428,192) $ (539,979) $ (659,870) $ (152,128) $ (226,788)
=========== ========== =========== ========== ==========
Net loss per common
share.................. $ (.26) $ (.33) $ (.40) $ (.09) $ (.14)
=========== ========== =========== ========== ==========
Weighted average shares
outstanding............ 1,643,376 1,643,376 1,643,376 1,643,376 1,647,310
</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
DECEMBER 31, MARCH 31,
1996 1997
------------- ------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital.......... $(1,038,083) $ (941,180)
Non-current assets....... $ 7,038,367 $ 7,217,019
Total assets............. $ 7,888,404 $ 7,821,845
Current liabilities...... $ 1,339,619 $ 1,546,006
Long-term liabilities,
net of current
maturities............. $ 4,755,202 $ 4,694,044
Shareholders' equity..... $ 1,793,583 $ 1,581,795
</TABLE>

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

(1) On April 22, 1996, the Company acquired substantially all interests in the
Partnership which operates the Casino. The pro forma statements of
operations data is presented as if the acquisition occurred on January 1,
1996, and as if all related party debt from the sellers of the Partnership
had been contributed to equity on that date. See "Financial Statements."

(2) Includes $309,399 related to termination of a gaming equipment lease and
$68,814 related to forgiveness of principal and interest on long-term debt.

20
<PAGE> 23

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

The following discussion and analysis should be read in conjunction with
the Financial Statements and the related Notes.

The Company was formed to acquire and further develop the Jubilee, a casino
located in Cripple Creek, and to pursue other gaming opportunities. The Company
entered into an agreement to purchase the Jubilee in October 1995 and took over
management of the Casino on April 23, 1996, at which time the Company obtained
its gaming license. While the Company was not permitted to make management
decisions until it was licensed, it did begin to suggest some changes in floor
management and other aspects of the Casino's operations. These activities have
increased since management was assumed by the Company in April 1996. The
discussions of operations prior to April 1996 are based on information provided
by Casino staff who were employed during the previous years at the Casino.

The Company believes that the poor financial performance of the Casino in
recent years can be attributed, in part, to inexperienced management and its
attempts to attract business to the Jubilee, and the fact that it is one of only
a limited number of casinos in Cripple Creek not located on Bennett Avenue,
Cripple Creek's main artery. Prior management pursued aggressive coupon and
other discount programs, which in fiscal years 1993 and 1994, amounted to 9% and
13% of gaming revenues, respectively. The Casino also operated 353 machines on
two gaming floors throughout most of 1993, which resulted in high operating
costs. In 1994 it became evident that the costs associated with building the
gaming revenue in this manner exceeded the profits that could be generated,
particularly when the gaming tax on this revenue was considered. The Jubilee
continued to lose market share as the competing casinos became more adept at
marketing and operations. In April 1994 the Casino's marketing and promotion
expenses were cut nearly in half in an attempt to conserve cash. The Casino's
profitability began to improve during the summer of 1995, due to the
implementation of cost-control measures, the addition of the children's
entertainment area and changes on the gaming floor.

FIRST QUARTER 1997 COMPARED WITH FIRST QUARTER 1996

Gaming Revenues

Gaming receipts, net of gaming payouts, in the first quarter 1997 were
approximately $594,000, a decrease of approximately $49,000 from first quarter
1996 gaming receipts of approximately $643,000. This decline in gaming revenues
is principally attributed to the increased competition from the Double Eagle.

Food, Beverage and Other Revenues

Food, beverage and other revenues of approximately $51,000 for the first
quarter 1997 decreased approximately $2,000, or 4%, from first quarter 1996
revenues of approximately $53,000. Food and beverage revenues are shown net of
coupon and complimentary sales which increased in the first quarter 1997. The
children's entertainment area created approximately $20,000 of revenue during
the first quarter of both 1997 and 1996. Other income includes merchandise sales
and net parking revenue of approximately $5,000 in the first quarter 1997,
compared to approximately $4,000 in the first quarter 1996.

Costs and Expenses

Operating department expenses totalled approximately $388,000 for the first
quarter 1997, up approximately $18,000 from approximately $370,000 in the first
quarter 1996. Expenses in the gaming department remained constant while the food
and beverage department increased approximately $8,000. There were also payroll
increases in the children's entertainment area and the Casino gift shop.

General and administrative expenses were approximately $265,000 in the
first quarter of 1997. For the corresponding period in 1996 general and
administrative expenses totalled approximately $397,000. This

21
<PAGE> 24

decrease of 33% is due primarily to reductions in transportation costs,
administrative and casino payroll, rent, legal and accounting, repairs and
insurance expenses.

Loss From Operations

Loss from operations in the first quarter of 1997 was approximately
$227,000 compared to a first quarter 1996 loss of approximately $277,000 for the
Company and Casino combined. The reduced loss is primarily attributable to
reduced general and administrative costs.

Interest Expense

Interest expense for the first quarter 1997 was approximately $116,000
compared to approximately $115,000 in the first quarter 1996. On April 12, 1996,
the original owners of the Casino canceled the remaining portion of working
capital loans they had made to the Partnership, which reduced interest expense
in 1997. On the other hand, interest expense increased as a result of the MS
Financing.

Cash Flow

The Company experienced a net increase in cash of approximately $12,000 in
the first quarter of 1997, compared to a combined decrease of cash of
approximately $29,000 in the first quarter of 1996. The increase in cash was due
primarily to increased borrowings offset by reduced net investing activities.

CALENDAR YEAR 1996 COMPARED WITH CALENDAR YEAR 1995

Gaming Revenues

Gaming receipts, net of gaming payouts, in 1996 were approximately
$2,847,000 or an increase of approximately $16,000 from 1995 gaming receipts of
approximately $2,831,000.

Food, Beverage and Other Revenues

Food, beverage and other revenue for 1996 of approximately $285,000
increased approximately $87,000, or 44%, from 1995 revenues of approximately
$198,000. These revenues are shown net of coupon and complimentary sales. The
increase was due to increased revenues in the children's entertainment area and
increased sales of food and beverage. The childrens entertainment area created
approximately $141,000 of revenue in 1996, which increased by 83% from 1995
sales of approximately $77,000.

Costs and Expenses

Operating department expenses were approximately $1,839,000 for 1996, up
approximately $101,000 from approximately $1,738,000 in 1995. The increase in
expenses was primarily due to an increase in food and beverage expenses of
approximately $91,000, as well as increased gaming taxes.

General and administrative expenses in 1996 of approximately $1,512,000 by
approximately $26,000 from 1995 expenses of approximately $1,486,000.
Advertising and device fees increased in 1996, while supply, legal and
accounting, music and entertainment and bad debt expenses decreased.

Net Loss

The net loss in 1996 of approximately $696,000, decreased from a 1995 net
loss of approximately $1,832,000. The decrease of approximately $1,136,000 was
attributable to extraordinary gains of approximately $378,000 in 1996, and a
decrease in interest expense due to reduced related party debt and an impairment
loss of approximately $523,000 in 1995.

Interest Expense

Interest expense in 1996 of approximately $431,000 was approximately
$268,000 less than the 1995 amount of approximately $699,000. On April 12, 1996,
the partners canceled the remaining portion of working

22
<PAGE> 25

capital loans they had made to the Partnership, which was the primary reason for
reduced interest expense in 1996.

Cash Flow

In 1996 cash flow increased by approximately $81,000 compared to a net
increase in cash flow of approximately $10,000 in 1995. The improvement was due
primarily to an increase in cash from operations.

SEASONALITY

Business at the Jubilee is influenced by the same factors that influence
Cripple Creek, which is heavily affected by weather, holidays and tourist travel
patterns. Snow can render the mountainous roads that provide access to and from
Cripple Creek hazardous, and patronage is noticeably smaller when a snowfall
occurs. The months of January, February and March are the slowest months in
Cripple Creek with AGP's approximately 16% below the annual monthly average.
Tourism stimulates gaming activity in the community as tourists drive through
the mountains and visit the old goldmining towns. The three biggest months for
gaming in Cripple Creek are July, August and September, when AGP's generally
exceed the monthly average by 20%.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Cash flow from Casino operations in 1995 and 1996 was approximately
break-even. Management expects this trend to continue for the foreseeable future
until the Casino expansion and Hotel development are completed.

In November 1996, the Company completed the negotiations of a new lease
covering its slot machines, which, the Company believes, will result in lower
future interest charges and improved working capital. Previously, this entire
lease obligation was classified as a short-term liability. A significant portion
of the new lease is classified as a long-term liability, resulting in a net
increase in working capital of approximately $1,064,000.

Management expects to meet its future cash flow needs from the net proceeds
of this offering until the Casino expansion and Hotel development are completed.

Capital Resources

Casino

Capital expenditures for various Casino improvements and equipment in 1995
and 1996 were approximately $20,000 and approximately $8,000, respectively.
Management does not expect to expend significant amounts in the foreseeable
future on capital improvements and equipment, except for the planned Casino
expansion and Hotel development.

In 1995, the Company expended approximately $878,000 toward the acquisition
of the Casino and $658,000 for the purchase of land and building. Funds for
these expenditures were provided by loans from related parties and the sale of
Company stock. In 1996, the Company spent approximately $737,000 for land which
was funded primarily by loans from related parties, a bank and MSIC. In addition
to the cash expended during 1995 and 1996 for the acquisition of the Casino and
land purchases, the Company transferred stock of National Lodging valued at
approximately $1,575,000 and issued notes or Company stock to the sellers.

During 1995 and 1996 the Casino did not make most of its monthly payments
on the capital lease obligations for its slot machines. These capital lease
obligations were restructured in the fourth quarter of 1996 and payments under a
purchase agreement for the slot machines are being met by cash from operations.

In October 1996, the Company borrowed approximately $3,564,000 from MSIC
the proceeds of which were used to pay the notes due on several parcels of land,
repay loans or advances from National Lodging and

23
<PAGE> 26

other shareholders and to provide funds to begin development on the parking lots
and on the Casino expansion and Hotel project.

The Company projects that the cost of the planned casino expansion and
Hotel development will total approximately $15,680,000, approximately
$11,240,000 of which will be financed with anticipated construction financing
from a commercial lender, and approximately $4,440,000 of which will be financed
from the proceeds of this offering. See "Business -- Project Costs."

24
<PAGE> 27

BUSINESS

BACKGROUND AND BUSINESS STRATEGY

National Lodging, the Company's principal shareholder, began efforts to
acquire or develop a casino project in Colorado in 1994. National Lodging
identified the Jubilee and another casino project in Cripple Creek and expended
approximately $900,000 on related preliminary acquisition and development
efforts. National Lodging encouraged the formation of Regent, which commenced
activities in January 1995 to analyze potential gaming opportunities, negotiate
and plan for casino acquisitions and development, raise capital, and manage
gaming facilities. The founding shareholders of Regent were National Lodging,
Terrance P. DeRoche ("DeRoche"), Robert J. Swenson ("Swenson"), James Klas
("Klas") and Stephen W. Sherf ("Sherf"). Regent negotiated the acquisition of
the Jubilee and surrounding land parcels necessary for the Hotel and Casino
expansion project. In August 1995, the Company was formed to succeed Regent,
combine Regent's interests with those of National Lodging related to the
development of the Jubilee, and to consolidate the assets related to the Casino
in Cripple Creek for financing purposes. To accomplish the acquisition of the
Casino, National Lodging exchanged 393,750 shares of its common stock for the
interests in the Partnership which owned and operated the Casino.

Pursuant to an Agreement effective October 30, 1995, between the Company
and DeRoche, Swenson and Sherf, the Company acquired all of the interests of
DeRoche, Swenson and Sherf in Regent, in exchange for the issuance of Common
Stock to them in the following amounts: DeRoche (104,919 shares), Swenson
(148,197 shares), and Sherf (140,328 shares). DeRoche, Swenson and Sherf were,
as of such date, the sole shareholders of Regent. Prior to such transaction,
DeRoche acquired National Lodging's interest in Regent, Swenson acquired 52% of
Klas' interest in Regent, and Sherf acquired 48% of Klas' interest in Regent.
The Company also assumed Regent's indebtedness to DeRoche, Swenson and Sherf in
the following amounts: DeRoche ($65,000); Swenson ($7,604), and Sherf ($7,396),
and also assumed accrued compensation due to DeRoche, Swenson and Sherf in the
amount of $80,000. Messrs. DeRoche, Swenson, Sherf, Craig H. Forsman ("Forsman")
and National Lodging may be deemed promoters of the Company, and all are
existing shareholders of the Company. The cash investment in Regent of DeRoche,
Swenson and Sherf was $20,000, in the following amounts: DeRoche ($6,000);
Swenson ($7,292), and Sherf ($6,708). The foregoing transaction was effected for
the purpose of acquiring any and all interests of Regent in the gaming
opportunity in Cripple Creek which had been developed by Regent.

The Company began operating the Casino through the Partnership on April 23,
1996, following approval of the Company's gaming license by the Gaming
Commission. Cripple Creek is one of three communities in Colorado where limited
stakes gaming is allowed. The Company has acquired additional real estate
adjacent to or near the Jubilee to provide for expansion of the Casino,
construction of the Hotel, and for convenient patron parking. The Company
believes that the Cripple Creek gaming industry is currently hampered by a lack
of hotel rooms to accommodate visitors. As a result, the Company believes
Cripple Creek's market is restricted to patrons willing to drive relatively
short distances for day trips. Until recently, there were only approximately 200
hotel rooms in Cripple Creek. In August 1996, one of the Company's competitors
in Cripple Creek, the Double Eagle, opened with a 160-room hotel with suites,
800 gaming devices and valet parking for 500 to 600 cars, as well as a full
service restaurant. The Company's proposed Hotel project will include
approximately 120 rooms and an expanded Casino which will make it the second
largest casino and hotel in Cripple Creek. The Company believes that the
Casino's performance will be significantly enhanced by the addition of the Hotel
and related convenient parking for patrons. It is the Company's current
intention to focus on the operation of the Jubilee and the development of the
Hotel. The Company intends, however, to look for other opportunities in the
gaming industry in Colorado and in other states, although the Company has not
presently identified acquisition targets. See "-- Potential Casino Acquisition."

GAMING IN COLORADO

Gambling was prevalent in most frontier towns in the late 1800s. Subsequent
legal regulation accounted for the demise of casino gaming in virtually all
areas except the State of Nevada. Approximately 20 years ago, New Jersey adopted
a gaming law, and casino gaming activities have become prevalent in the Atlantic
City

25
<PAGE> 28

area. Thirty-three states, including Colorado, now have lottery-type games; 30
states, including Colorado, have legalized dog and horse track betting; 48
states, including Colorado, have charitable gambling, such as bingo, raffles,
and pulltabs; and many other forms of gambling are under consideration across
the nation. Economic depression coupled with taxing authorities' hunger for
additional revenues has resulted in a plethora of gambling legislation and
proposed legislation in several states, including Colorado. The Company believes
that limited stakes gaming and other gambling will be a growth industry in the
1990s.

In November 1990, Colorado voters approved limited stakes gambling (slot
machines, blackjack and poker, with a $5 per bet) in three historic mining
towns -- Central City, Black Hawk and Cripple Creek. Cripple Creek is located
about 45 miles west of Colorado Springs. There are 26 casinos and approximately
4,800 slot machines in operation in the Cripple Creek gaming market. For gaming
years 1993-1994 and 1994-1995, aggregate gaming proceeds for Cripple Creek
gaming establishments was $78.0 million and $90.9 million, respectively. As of
November 1, 1995, 39 gaming licenses were authorized for Cripple Creek. Of
these, at least 15 as of such date had closed or operated under more than one
license. The number of slot machines in Cripple Creek has increased each year,
from approximately 2,800 in 1992 to 4,700 at the end of 1996.

In 1995, the State of Colorado renegotiated compacts with two Native
American tribes in southwest Colorado to conduct casino-style gaming on their
land. The two tribes, the Ute Mountain Tribe and the Southern Ute Tribe, are not
subject to taxation and are not required to report their revenues to the state.
These tribes have agreed to conduct limited stakes gaming with the same $5 bet
limits to which other casinos in Colorado adhere, but a provision in their
compacts allows them to litigate for possible higher stakes and increased scope
of games. The tribal casinos can operate on a 24-hour schedule and may offer
live keno. The Ute Mountain Tribe was the first to open a Native American gaming
establishment in Colorado in September 1992. This casino is located in Towaoc,
10 miles south of Cortez, Colorado. The Southern Ute Tribe opened the Sky Ute
Casino and Lodge in Ignacio, 25 miles southeast of Durango, in September 1993.

Total gaming proceeds in Colorado have increased every year since the
inception of limited stakes gaming in the fall of 1991, according to information
provided by the Gaming Commission. Total AGP for the State of Colorado was more
than $411 million in 1996. The Cripple Creek market experienced an average
annual increase in AGP of approximately 20% between 1992 and 1996, as AGP
increased from approximately $49.2 million to approximately $102.9 million. AGP
at the Jubilee did not follow the city-wide trend, declining from $5.5 million
in 1993 to $2.8 million during 1996. In 1996, AGP at the Jubilee declined 1.1%
from 1995, compared to a 9.5% increase reported by the Cripple Creek market for
this period.

Between 1992 and 1996, the average number of slot machines licensed in
Cripple Creek increased from approximately 2,800 to 4,175. Average AGP per slot
machine per day provides a measure of productivity for a casino. The average AGP
per slot machine at the Jubilee was $43 in 1995, which was below both the
city-wide average of $63 and the state-wide average of $78. In 1996, the
Jubilee's average AGP per slot machine was $42 compared to $64 for Cripple Creek
and $77 for the State of Colorado.

26
<PAGE> 29

The following table sets forth certain information relating to the Casino,
the Cripple Creek market and the State of Colorado. There can be no assurance
that the Company will achieve average results set forth below or that the state
and local AGP or average per machine will not materially decrease. See "Risk
Factors."

GAMING STATISTICS

<TABLE>
<CAPTION>
AVERAGE AGP AVERAGE NUMBER
AGP(1) PER SLOT(2) OF SLOTS(3)
------------ ----------- --------------
<S> <C> <C> <C>
Jubilee Casino
1992* (5 months)................ $ 2,753,367 N/A N/A
1993............................ 5,530,266 $59 251
1994............................ 3,750,665 42 219
1995............................ 2,826,063 43 164
1996............................ 2,795,486 42 169

Cripple Creek
1992............................ 49,186,864 53 2,824
1993............................ 68,736,452 50 3,437
1994............................ 82,279,672 61 3,448
1995............................ 94,018,958 63 3,842
1996............................ 102,915,426 64 4,175

State of Colorado
1992............................ 179,984,012 61 7,624
1993............................ 259,899,684 63 10,340
1994............................ 325,684,649 73 10,491
1995............................ 384,342,947 78 12,480
1996............................ 411,666,501 77 13,661
</TABLE>

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

Source: Colorado Division of Gaming and Jubilee Casino

* Operations for August through December 1995

(1) "Adjusted Gross Proceeds" means the total gambling receipts less
jackpots/winnings, less restocking monies for slot machines, plus monies
collected from table games.

(2) Weighted average AGP of the various denomination slot machines on a per slot
machine per day basis.

(3) Represents the annual average of the number of slot machines reported at the
end of each month.

From April 23, 1996, the date current management took over the Jubilee's
operations, through December 31, 1996, the amount of coin-in rose more than 5%
over the same period in 1995. The AGP during this period, however, declined by
7.4% due to a reduction in the Casino's "hold percentage" and a general decline
in business in the fourth quarter of 1996. The term "hold percentage" refers to
the percentage of coin played retained by a slot machine.

JUBILEE CASINO

The Jubilee was constructed and opened in July 1992 in Cripple Creek with
approximately 364 machines and 11 table games. The Casino is two stories with a
total of approximately 15,100 square feet and includes a 50-seat restaurant, a
seven-seat bar and a children's entertainment area. The Casino currently
operates 178 machines and 6 table games (blackjack and poker). The Company
became licensed to operate the Jubilee in Colorado on April 19, 1996. Attached
to the Casino is a historic building owned by the Company known as the
Homestead, which was a bordello during the gold rush days and is currently a
museum. The Homestead contains much of its original furnishings which include
antiques from all over the world that were gifts given to the women who worked
there. As one of only a few such museums in the United States, it is a point of
interest for visitors to Cripple Creek and helps draw patrons to the Jubilee.

The Jubilee is located on Myers Avenue, between Fourth and Fifth Streets,
and is one block south of Bennett Avenue, the main street where Cripple Creek's
other casinos are located in the town's historic storefronts. This location,
although only one block from the main street, is thought to have contributed to
the Casino's relatively poor past performance. The Jubilee had AGP from gaming
activities of approximately $2.8 million for the years 1995 and 1996. In 1996,
the Casino's average slot revenue per machine was $42 per

27
<PAGE> 30

day, significantly below the Cripple Creek average of $64. Prior management at
the Jubilee initially "bought" considerable business through coupons, an active
busing program and other giveaways. As the concentration of casinos along
Bennett Avenue increased, this strategy was found to be unprofitable and
marketing expenditures were curtailed, resulting in lower revenues. In 1995, the
Casino experienced a shortage of cash, was put up for sale, and marketing
efforts were further reduced.

The Company entered into an agreement to acquire the Jubilee in October
1995 and became the operator of the Casino upon licensing in April 1996.
Advertising and marketing programs have been reinstituted and the Company
believes that management of the gaming floor has improved, because the Company
changed the location of popular slot machines, and decreased hold percentages to
improve play and attract customers. The hold percentage was reduced at the
Casino beginning in March 1996 in an effort to build patronage.

The Company owns the Casino and the land underlying the Casino, together
with one lot to the north which provides access to Bennett Avenue. The Company
has acquired additional real estate around the Jubilee that will allow for
expansion and additional parking, and now owns a total of 42 lots. In addition
to the Homestead and the lot on which it sits, the Company has acquired the
three lots immediately to the west of the Casino which are used for parking, and
the six lots immediately to the east of the Homestead which are also used for
parking. The Company also owns 28 lots diagonally across Myers Avenue which are
planned to be leveled, paved and have lighted parking. As 15 of these lots are
located in the gaming district, this parcel represents a future potential
casino/hotel site should the Company or another party seek to develop that site.
Each lot is 25 feet wide by 125 feet deep. There is a railroad easement over a
portion of three of the Company's lots which are located outside of the Cripple
Creek gaming district.

A new Colorado law forbids persons under age 21 from "lingering" on a
casino gaming floor. Under this law, which took effect on October 1, 1996,
minors may pass through a gaming floor only to get to a non-gaming area. The
Jubilee is the only casino in Cripple Creek to have a separate floor devoted to
children's activities. The Casino's mezzanine floor contains a children's
entertainment area with interactive games, video games and a soda fountain. This
area successfully attracted patrons with children throughout the 1996 spring and
summer seasons, as many of the casinos began to observe the regulation prior to
its effective date.

The Company intends to develop the Hotel around the Homestead on the seven
lots adjacent to the east of the Casino and expand the Casino into the first
floor of the Hotel, more than doubling its gaming floor space. The Hotel rooms,
supported by the food and beverage facilities in the Casino and convenient
parking across Myers Avenue, will result in the Jubilee being one of only two
integrated casino/lodging facilities in Cripple Creek, which the Company
believes is lacking in both lodging rooms and convenient parking to accommodate
its patrons.

JUBILEE HOTEL AND CASINO EXPANSION

The Company is proposing to construct the Hotel, enlarge the Casino and
develop paved parking lots in order to make the Jubilee more of a destination
for area gamblers, in contrast to the many small casinos that presently exist in
Cripple Creek which are patronized primarily by "day-trip" visitors. A 120-room,
six-story attached hotel is currently planned on the seven lots east of the
Casino, which will also permit expansion of the Casino to approximately 25,000
square feet of gaming and will accommodate up to 800 slot machines, an expanded
children's entertainment area, and expanded restaurant facilities. It is the
Company's intention to become a franchisee in a national hotel chain which will
provide a toll-free reservation system. The Company is in the process of making
its final determination as to the franchise it will select. The Company plans to
initially install and operate approximately 550 slot machines when the
additional gaming area is completed, gradually increasing this amount up to 800
machines as the volume of play warrants. The planned addition will make the
Jubilee the second largest casino-hotel in Cripple Creek. The Company estimates
a construction period of eleven months and, subject to obtaining requisite
financing for construction, expects to open the Casino expansion and Hotel to
the public in June 1998. The Company expects that construction drawings for the
planned addition to and expansion of the Jubilee and the Hotel will be completed
by August 1997, at which time it intends to apply for a building permit. The
Company has received a Conditional Certificate of Appropriateness from the
Cripple Creek City Council which passed upon such things as the appearance,

28
<PAGE> 31

materials and height of the proposed project. The Company believes that the
Cripple Creek City Council will finalize this Certificate upon its review of the
construction drawings. The Company expects to apply for its construction permit
in August 1997.

The Company has entered into a contract with a general contractor based in
Colorado Springs with respect to the expansion of the Casino and the
construction of the Hotel. The Company's agreement with this general contractor
contains a maximum guaranteed price clause. In addition, the Company has applied
for a construction loan and permanent financing with MSIC. This loan, if
obtained, will be a full recourse obligation of the Company and will be jointly
and severally guaranteed by National Lodging, Messrs. Forsman, Sherf and
DeRoche. See "Certain Transactions -- Miller and Schroeder Financing." There can
be no assurance that the Company will be successful in obtaining such financing.
See "-- Project Costs."

Subject to final plans and design changes and obtaining required
construction permits from the Cripple Creek City Council, the Hotel is planned
to have 120 rooms and a total of approximately 58,700 square feet. There will be
approximately 24 rooms off a double-loaded corridor on each of five floors.
Included in the room complement will be several Jacuzzi suits. A pool will be
constructed in the basement and meeting space will be added on the second floor
of the new structure. The expanded children's entertainment area will be placed
in the lower level of the new structure. The Jubilee is currently the only
casino in Cripple Creek that has a separate floor devoted to children's
activities. Recently, a new minors law became effective in Colorado. The Company
believes that the passage of this law, together with its children's
entertainment area, will enable it to receive even more family business, and is
planning the new children's area with this in mind. The Casino will be expanded
to occupy most of the site on the first floor, or approximately 17,500 square
feet. The existing restaurant will be remodeled to accommodate the anticipated
increase in business following the expansion of the Casino and development of
the Hotel. The Company anticipates that the second floor of the Casino will be
converted into meeting and banquet space. The Casino expansion will provide for
approximately 33,000 square feet of new gaming-related space, and the completed
project will have a total gaming-related area of approximately 47,000 square
feet.

As experienced in other gaming communities, the addition of hotel rooms is
expected to significantly improve the Casino's gaming volume because the Company
believes the Casino will attract patrons from greater distances for longer
periods of time and create a captive group of patrons. The rooms will allow the
Casino to expand beyond its current "day-trip" market and will be a key amenity
in its planned marketing programs. Coupons and other promotions will be used to
encourage Hotel guests to gamble at the Casino. During the slower winter months,
the Hotel will provide lodging for bus groups and other promotions conducted by
the Casino. Based upon the present lodging supply in Cripple Creek, the Company
projects that the Hotel can operate at a relatively high level of occupancy, due
to the year-round lodging demand that can be generated by the Jubilee and other
gaming establishments in Cripple Creek.

The Hotel is expected to result in an increase in business at the Casino.
The proximity of the Casino to the lodging rooms allows it to capture patrons as
they first begin their gaming entertainment and again as they return to their
rooms. The Company believes that convenient lodging will be attractive to Casino
patrons and other visitors. Industry analysts indicate that hotels in other
gaming venues typically generate $70 or more in additional gaming revenue per
occupied hotel room.

Room rates at existing hotels in Cripple Creek typically increase on
weekends and during the summer when tourist demand is at its peak. During August
and September 1996, room rates at the Double Eagle ranged from approximately $99
to $129 during the week and approximately $119 to $159 on weekends. Rates at the
Holiday Inn Express in Cripple Creek are approximately $94 on weekdays and $105
on weekends during this period. Subject to seasonal adjustments, the Company
expects that room rates for the Hotel will range from approximately $69 to $125
during the week and $79 to $150 on weekends.

The Hotel is expected to provide accommodations necessary to support an
active busing program and vacation packages that the Company intends to develop
to draw patrons to the Casino during the slower periods of the year. By
packaging transportation, lodging, food and gaming coupons, the Company believes
that an attractive mini-vacation package can be developed which draws patrons
to, and keep them at, the Jubilee.

29
<PAGE> 32

An estimated 260 parking spaces will be provided by the three lots to the
west of the Casino and the 28 lots across Myers Avenue. The Company intends to
pave and light the two lots across Myers Avenue from the Casino in order to
enhance their visibility and attractiveness. There is a shortage of convenient
parking in Cripple Creek and the Company believes that the additional parking
will provide it with a competitive advantage over the casinos located on Bennett
Avenue. In addition, the Company intends to enhance access to the Casino by
constructing an elevated walkway to connect the Casino with Bennett Avenue. The
Company believes that the planned addition of the Hotel and expansion of the
Casino, the development of a concentration of parking spaces and the presence of
the Double Eagle will shift the center of the gaming activity to the eastern
edge of the city from the present main street concentration, thereby enhancing
the Jubilee's operations. As 15 of these 28 contiguous lots lie within the
gaming district in Cripple Creek, the Company believes that a second casino and
hotel can be developed on this parcel in the future. The Company does not,
however, have any plans to develop a second hotel or casino and no assurance can
be given that such a development project will ever be contemplated by the
Company. See "-- Potential Casino Acquisition."

RESTAURANT AND BAR FACILITIES

Upon expansion of the Casino, its present restaurant will be remodeled. The
restaurant, which will be open at all times the Casino is open, will have 60
seats and will provide high quality food items. This restaurant is expected to
service the needs of the hotel guests and will be incorporated in various
promotions conducted by the Casino. The Casino's main bar will be constructed in
the expanded Casino area.

PROJECT COSTS

All new construction within the historic gaming district must meet both
stringent building code requirements and historic review criteria. These
requirements result in construction costs that can be significantly higher than
those normally experienced. As an example, the planned Hotel will be a brick
exterior structure and designed to appear similar to structures that once
existed in Cripple Creek.

The estimated costs and sources of financing for the Hotel are as follows:

<TABLE>
Project Costs
- ---------------------------------------------------------------------
<S> <C>
Construction and development, including remodeling of
existing facility..................................... $13,950,000
Furniture, fixtures and equipment....................... 1,285,000
Existing land and buildings............................. 6,483,000
-----------
$21,718,000
===========
Sources of Funds
- ---------------------------------------------------------------------
Construction financing.................................. $15,000,000
Offering proceeds....................................... 3,990,000
Company equity.......................................... 2,728,000
-----------
$21,718,000
===========
</TABLE>

The Company expects that the construction of the Hotel and Casino expansion
will be funded by the proceeds from this offering, the proceeds from
construction financing and approximately $2.7 million in equity already invested
by the Company. The $2.7 million equity investment by the Company represents
shares of Common Stock issued by the Company to date. The Company must obtain
$15.0 million in construction financing in order to complete the Casino
expansion and Hotel development project. The Company has made application for a
$15.0 million, 12-month loan, which, by its terms, will automatically convert
into a 10-year interest bearing mortgage upon completion of the project. This
loan will be jointly and severally guaranteed by National Lodging and Messrs.
Forsman, Sherf and DeRoche. It is a condition to the closing of this offering
that the Company close on such financing and have available to it the proceeds
from which it can draw upon to fund the development project. Similarly, it is a
condition to the closing of the construction financing that the closing on this
offering occur. Thus, the closings on the construction financing and this
offering must occur

30
<PAGE> 33

simultaneously. See "Certain Transactions." The Company intends to repay the MS
Financing with the proceeds of such construction financing or permanent
financing which the Company intends to seek following the completion of the
project.

GAMING

The Jubilee Casino operates five blackjack tables and one poker table,
together with 178 machines. There are 39 nickel machines, 104 quarter machines,
8 fifty cent machines and 27 dollar machines. Included in the mix of gaming
machines are 46 poker machines, and a series of progressive payoffs on nickel,
quarter, and dollar slots. The Company believes the Casino has a suitable mix of
machines based on the popularity of the types of play which casinos have been
receiving in Cripple Creek. The Company has purchased gaming equipment under a
purchase agreement with International Game Technology ("IGT") pursuant to which
the Company will make payments on the equipment for 48 months of approximately
$24,000 per month, and IGT will transfer ownership of the equipment to the
Casino at termination of the agreement. All machines subject to the agreement
carry warranties and service backup. The Company has on-site personnel capable
of handling minor repairs to the equipment on the floor.

MARKETING AND SALES STRATEGY

The Company believes that effective marketing is a key to success in the
highly competitive casino gaming industry. The Company plans to increase its
marketing efforts directed toward developing and expanding a loyal customer
base. For example, the Company plans a number of special dinners which it will
market via direct mail to its data base of over 6,000 jackpot winners and other
regular patrons. The Company also plans to hold at least one special event in
each quarter, such as an outdoor barbecue, and quarterly slot and blackjack
tournaments to attract new patrons to the Casino. These events will be promoted
through radio, television and direct mail. The children's entertainment area
will be emphasized during the summer when tourism peaks. However, most of the
Company's marketing efforts will be focused on developing business during the
slower weekdays, rather on weekends or during the summer. In addition, the Hotel
will be used to provide lodging for vacation packages to draw new patrons to the
Casino. The Casino will also provide free, convenient parking to its patrons.
The Company anticipates that most of its marketing efforts will be concentrated
on the Colorado Springs and Pueblo markets.

OPERATIONS CONTROLS

The Gaming Commission has established strict rules with regard to the
supervision and control of all gaming activities in Colorado casinos, including
security and cash control systems. The Casino employs these controls and
paperwork systems to insure internal integrity and compliance with regulations.
The Casino is also required to obtain an annual audit report from an independent
certified public accounting firm, which in turn is required to make certain
unannounced inspections. There are 75 closed circuit cameras which have been
installed throughout the Jubilee with taping devices in place to record play at
all times. These tapes and live action are regularly monitored by Casino staff
and reviewed by Gaming Commission employees to insure the integrity of gaming
activities. The Casino employs a controller who is responsible for all internal
and external accounting matters.

EMPLOYEES

The Jubilee employs approximately 100 full-time persons including cashiers,
dealers, food and beverage service personnel, facilities maintenance,
accounting, marketing and personnel services. No labor unions represent any
employee group. With the exception of its vice president of Gaming Operations,
the Company has not entered into employment agreements with any of its
employees.

COMPETITION

Although limited stakes gaming in Colorado is relatively new, intense
competition exists in Cripple Creek. The Company competes directly with
approximately 25 licensed gaming establishments in Cripple Creek, a number of
which have more experience and greater financial resources than the Company. The

31
<PAGE> 34

games and related rules for the operation of casinos in Colorado are highly
regulated and standardized. As a result, casinos in Colorado must compete by
offering amenities and marketing programs in addition to the gaming experience.
Such amenities and marketing programs include lower hold percentages, quality
food and beverage availability and casino ambiance, including furnishings,
decor, lighting, activity and air quality. In addition, the availability of
lodging is a major factor in attracting patrons to a particular casino.
Currently, the Double Eagle, with 160 rooms, is the only casino in Cripple Creek
that is a major provider of lodging. The Company believes that the Jubilee's
courteous, well-trained employees, convenient parking, children's entertainment
area and proposed 120-room hotel, will enable the Jubilee to compete with other
casinos in Cripple Creek. The Company also intends to implement a player
tracking system at the Casino to provide it with the names of regular patrons
for future marketing efforts, as well as a busing program that it believes will
attract people to the Casino. In addition, proposed plans have been announced by
several companies for the development and operation of hotel and gaming
facilities which may be similar to those operated or planned by the Company. The
Company also competes for gaming patrons with approximately 35 casinos in Black
Hawk and Central City, and with Native American gaming in Towaoc and Cortez.
Because of the intense nature of this competition in Colorado and other
established gaming venues including Las Vegas, Reno, Atlantic City and Gulf
Coast cities such as Biloxi, Gulfport and New Orleans, there can be no assurance
the Company's Casino and proposed Hotel operations will be profitable.

In general, consolidation of some of the first casinos developed in Cripple
Creek is occurring as the young gaming market begins to mature, resulting in a
trend toward larger casinos. Although the number of casinos in Cripple Creek
peaked in 1992 at 31, and thereafter declined to 24 casinos in May 1997, the
average number of slot machines licensed in Cripple Creek has increased each
year. Currently, the Casino ranks 13th in size in Cripple Creek. There are four
casinos in Cripple Creek with 185 to 195 machines, four with 202 to 250
machines, three with 317 to 398 machines and one with 750 machines. The expanded
Jubilee, with approximately 800 slot machines, will be the second largest casino
in Cripple Creek.

As a result of many of the factors described above, particularly the
intense competition which exists in Cripple Creek, many Colorado casinos have
ceased operations. Other casinos in Colorado have filed for protection under
Chapter 11 of the United States Bankruptcy Code. Others have temporarily closed
or laid-off employees, or reduced the number of gaming devices, and many casinos
may not be operating profitably. Some of the failed casinos are smaller than
average, but the factors causing the "shakeout" which Colorado limited stakes
gaming is presently experiencing will affect all operators. The Company believes
the Hotel and the availability of convenient parking are important competitive
advantages. No assurance can be given that the Company or the Casino will
survive or prosper in this extremely difficult business environment.

Recent state and local public initiatives regarding limited stakes gaming
are being actively pursued by many persons. Interested parties in several widely
scattered Colorado cities were able to place limited stakes gaming initiatives
on the November 1992 statewide ballot. Although these initiatives failed, as did
one in 1994, it is possible that future initiatives could be introduced. An
initiative did pass in 1992 which requires local voter approval for any
expansion of limited stakes gaming. A measure to expand limited stakes gaming to
Trinidad, Colorado, was defeated in the November 1996 Colorado general election.
Any expansion of limited stakes gaming in Colorado which significantly expands
areas in which limited stakes gaming is permitted could adversely affect the
Company's prospects.

POSSIBLE CASINO ACQUISITION

Upon the completion of this offering, the Company intends to identify and
pursue opportunities to acquire or manage other casinos. The Company anticipates
that it will pursue such opportunities based upon a variety of factors,
including, but not limited to, the following: (i) casino site suitability; (ii)
competitive factors; (iii) regulatory considerations; (iv) favorable financial
projections; (v) availability of financing; and (vi) quality and availability of
management. The Company anticipates that it will pursue opportunities both
within and outside Colorado. As of the date of this prospectus, the Company has
not identified any specific casino acquisition targets. Further, it is likely
that any acquisition would require the Company to obtain additional financing to
fund the acquisition. See "Use of Proceeds."

32
<PAGE> 35

LITIGATION AND CLAIMS

The Company is not a party to, nor are any of its properties the subject
of, any material pending or threatened legal proceedings.

REGULATORY MATTERS

Colorado Gaming Laws and Regulations. The State of Colorado created the
Division of Gaming (the "Division") within the Department of Revenue to license,
implement, regulate and supervise the conduct of limited stakes gaming. The
Director of the Division, under the supervision of the five-member Gaming
Commission, has been granted broad power to ensure compliance with the gaming
laws and regulations adopted thereunder (the "Colorado Regulations"). The
Director may inspect, without notice, impound or remove any gaming device. The
Director may examine and copy any licensee's records, may investigate the
background and conduct of licensees and their employees, and may bring
disciplinary actions against licensees and their employees. The Director also
may conduct detailed background investigations of persons who loan money to
licensees.

The Gaming Commission is empowered to issue five types of gaming and
gaming-related licenses. The failure or inability of the Company, the Casino, or
persons associated with the Company to maintain necessary gaming licenses would
have a material adverse effect on the operations of the Company. All persons
employed by the Company, the Casino and involved, directly or indirectly, in the
Company's gaming operations in Colorado also are required to obtain a Colorado
gaming license. Casino licenses must be renewed annually, and key and support
employee licenses must be renewed semi-annually.

As a general rule, under the Colorado Regulations, it is a criminal
violation for any person to have a legal, beneficial, voting or equitable
interest, or the right to receive profits, in more than three retail gaming
licensees in Colorado. The Gaming Commission has ruled that a person does not
have an ownership interest in a licensee if: (i) such person has less than a 5%
interest in an institutional investor which has an ownership interest in a
publicly traded retail licensee (a "Licensee") or in a publicly traded company
affiliated with a Licensee (such as the Company); (ii) such person has a 5% or
more ownership interest in an institutional investor which has less than a 5%
ownership interest in a publicly traded Licensee or in a publicly traded company
affiliated with a Licensee; (iii) such person is an institutional investor which
has less than a 5% ownership interest in a publicly traded Licensee or in a
publicly traded company affiliated with a Licensee; (iv) such person is an
institutional investor which possesses voting securities of a publicly traded
Licensee or in a company affiliated with a Licensee in a fiduciary capacity and
not for its own account (unless such person exercises voting rights with respect
to 5% or more of such publicly traded company's outstanding voting securities);
(v) such person is a broker or dealer registered under the Exchange Act which
possesses voting securities of a publicly traded Licensee or of a publicly
traded company affiliated with a Licensee for the benefit of its customers and
not for such person's own account and which does not exercise voting rights with
respect to 5% or more of such publicly traded company's voting securities; (vi)
such person is a broker or dealer registered under the Exchange Act and has an
ownership interest in voting securities of a publicly traded Licensee or of a
publicly traded company affiliated with a Licensee as a market maker in such
voting securities (unless such person exercises voting rights with respect to 5%
or more of such outstanding voting securities); (vii) such person is an
underwriter of voting securities of a publicly traded Licensee or of a publicly
traded company affiliated with a Licensee and has an interest in such voting
securities during the course of an underwriting (unless such person exercises
voting rights with respect to 5% or more of such publicly traded company's
outstanding voting securities); provided, however, that such underwriter may not
possess such an interest in such voting securities longer than 90 days after the
beginning of such underwriting; or (viii) such person possess voting securities
of a publicly traded Licensee or of a publicly traded company affiliated with a
Licensee in such person's capacity as a book-entry transfer facility (unless
such person exercises voting rights with respect to 5% or more of such publicly
traded company's outstanding voting securities). For purposes of the above
discussion, a person is not be deemed to have an "ownership interest" in a
Licensee if such person's sole ownership interest in such Licensee is through
the ownership of less than 5% of the voting securities of (a) such Licensee, if
such Licensee's Securities are publicly traded, or (b) a publicly traded company
affiliated with such

33
<PAGE> 36

Licensee. The Company's and its shareholders' business opportunities in Colorado
are limited to such interests that comply with the Colorado Regulations and
Gaming Commission's rules.

In addition, pursuant to the Colorado Regulations, no manufacturer or
distributor of slot machines may have an interest in any casino operator, allow
any of its officers to have such an interest, employ any person if such person
is employed by a casino operator, or allow any casino operator or person with a
substantial interest therein to have an interest in a manufacturer's or
distributor's business. The Gaming Commission has ruled that a person does not
have a "substantial interest" in a manufacturer, distributor, operator or
retailer licensee if it directly or indirectly owns less than 5% of such voting
securities of a licensee.

Under the Colorado Regulations, any person or entity having any direct or
indirect interest in a gaming licensee or an applicant for a gaming license,
including, but not limited to, the Company and shareholders of the Company, may
be required to supply the Gaming Commission with substantial information,
including, but not limited to, personal, criminal and financial background
information, date of birth, source of funding information, a sworn statement
that such person or entity is not holding his or her interest for any other
party, fingerprints and a photograph. Such information, investigation and
licensing as an "associated person" automatically will be required of all
persons (other than certain institutional investors discussed below) which
directly or indirectly own 10% or more of a legal, beneficial or voting interest
in the Company. Such persons must report his or her interest and file
appropriate applications for a finding of suitability within 45 days after
acquiring such interest. Persons directly or indirectly having a 5% or more
interest in the Company must report his or her interest to the Gaming Commission
within 10 days after acquiring such interest, may be required to provide
additional information, and must be found suitable as required by the Division
or the Gaming Commission. If certain institutional investors provide certain
information to the Gaming Commission, such investors, at the Gaming Commission's
discretion, may be permitted to own up to 14.99% of the Casino, through their
ownership in the Company, before being required to be found suitable. All
licensing and investigation fees must be paid to the Division by the person or
entity in question.

The Gaming Commission also has the right to request information from any
person directly or indirectly interested in, or employed by, a licensee, and to
investigate the moral character, honesty, integrity, prior activities, criminal
record, reputation, habits and associations of (i) all persons licensed pursuant
to the Colorado Limited Gaming Act, (ii) all officers, directors and
shareholders of a licensed privately held corporation, (iii) all officers,
directors and shareholders holding either a 5% or greater interest or a
controlling interest in a licensed publicly traded corporation, (iv) all general
partners and all limited partners of a licensed partnership, (v) all persons
which have a relationship similar to that of an officer, director or shareholder
of a corporation (such as members and managers of a limited liability company),
(vi) all persons supplying financing or loaning money to any licensee connected
with the establishment or operation of a limited stakes gaming operation, (vii)
all persons having a contract, lease or ongoing financial or business
arrangement with any licensee, where such contract, lease or arrangement relates
to limited stakes gaming operations, equipment, devices or premises, (viii) all
persons who may influence the operation of a licensee in any material manner,
and (ix) all persons who may have access to gaming proceeds or the accounting or
reporting therefor.

In addition, under the Colorado Regulations, every person who is a party to
a "gaming contract" with an applicant for a license, or with a licensee, upon
the request of the Gaming Commission or the Director, promptly must provide to
the Gaming Commission or Director all written gaming contracts and summaries of
oral gaming contracts. Information which may be requested includes financial
history, financial holdings, real and personal property ownership, interest in
other companies, criminal history, personal history and associations, character,
reputation in the community, and all other information which might be relevant
to a determination whether such person would be suitable to be licensed by the
Gaming Commission. Failure to provide all information requested constitutes
sufficient grounds for the Director or the Gaming Commission to require a
licensee or applicant to terminate its "gaming contract" with any person who
failed to provide the information requested. In addition, the Director or the
Gaming Commission may require changes in "gaming contracts" before an
application is approved or participation in the contract is allowed. A "gaming
contract" is defined as an agreement in which a person does business with, or on
the premises of, a licensed entity.

34
<PAGE> 37

An application for licensure or suitability may be denied for any cause
deemed reasonable by the Gaming Commission or the Director, as appropriate.
Specifically, the Gaming Commission and the Director must deny a license to any
applicant who (i) fails to prove by clear and convincing evidence that he or she
is qualified; (ii) fails to provide information and documentation required by
law or requested by the Director or the Gaming Commission (iii) has been, or is
a director, officer, general partner, shareholder, limited partner or other
person who has a financial or equity interest in the applicant, and who has been
convicted of certain crimes, including gambling-related offenses, theft by
deception or crimes involving fraud or misrepresentation, is under current
prosecution for such crimes, has served a sentence for any felony or certain
misdemeanors in any correctional facility within the last 10 years, is a career
offender or a member or associate of a career offender cartel, or is a
professional gambler; or (iv) has refused to cooperate with any state or federal
body investigating organized crime, official corruption or gaming offenses. If
the Gaming Commission or the Director determines that a person or entity is
unsuitable to own interests in the Company, the Company and the Casino may be
sanctioned; such sanctions may include the loss by the Company and the Casino of
their respective approvals and licenses.

The Gaming Commission does not need to approve in advance a public offering
of securities, but rather requires a filing of notice and additional documents
with regard to such public offering. The Gaming Commission must receive notice
of a public offering to be registered with the Commission no later than 10
business days after the initial filing of the registration statement with the
Commission, or for any other type of public offering, 10 days prior to the
public use or distribution of any offering document if (i) the licensee is not a
publicly traded corporation, or (ii) the licensee is a publicly traded
corporation which intends to use the proceeds of the offering to pay for the
construction of Colorado gaming facilities, to acquire any interest in Colorado
gaming facilities, to finance operation of Colorado gaming facilities, or to
retire or extend obligations incurred for one or more purposes set forth above.
Under the Colorado Regulations, the Gaming Commission may, in its discretion,
require additional information and prior approval of such public offering. In
addition, the Colorado Regulations prohibit a licensee or affiliated company
thereof, such as the Company, from paying dividends, interest or other
remuneration to any unsuitable person, or recognizing the exercise of any voting
rights by any unsuitable person. Further, the Colorado Regulations require
anyone who has a material relationship to or a material involvement with a
licensee, including a director or officer of a corporation or any person who
exercises significant influence upon the management or affairs of a corporation,
such as the Company, to file for a finding of suitability if required by the
Gaming Commission.

In addition to its authority to deny an application for a license or
suitability, the Gaming Commission has jurisdiction to disapprove a change in
corporate ownership, including investors, lenders or anyone who may have an
interest in gaming proceeds of a licensee and may have such authority with
respect to any entity which is required to be found suitable by the Gaming
Commission. The Gaming Commission has the power to require the Company and the
Casino to suspend or dismiss managers, officers, directors and other key
employees or sever relationships with other persons who refuse to file
appropriate applications or whom the authorities find unsuitable to act in such
capacities, and may have such power with respect to any entity which is required
to be found suitable. A person or entity may not sell, lease, purchase, convey
or acquire a controlling interest in the Company without the prior approval of
the Gaming Commission. Except as otherwise provided in the definition of
"ownership interest," the Company may not sell any interest in the Company
without the prior approval of the Gaming Commission. Ongoing reporting to the
Gaming Commission is required. Each licensee must report, at least quarterly,
the names and addresses of any person, including a lending agency, who may share
in the revenues of limited stakes gaming, whether as owner, assignee, landlord
or otherwise. This requirement extends to anyone to whom an interest or share in
the profits of limited stakes gaming have been pledged or hypothecated as
security for a debt, the performance of an act, or a contract of sale. Licensees
are also required to notify the Director in writing of any criminal conviction
and any pending criminal charge, within 10 days of arrest, summons or
conviction. Licensees are also required to report any known or suspected
violations of Colorado's gaming laws to the Division. Failure to report any
required information may lead to revocation or summary suspension of the
licensee's license.

The Casino must meet certain architectural requirements, fire safety
standards and standards for access for disabled persons. The Jubilee also must
not exceed certain gaming square footage limits as a total of each

35
<PAGE> 38

floor and the entire building. The Jubilee may operate only between 8:00 a.m.
and 2:00 a.m., and may permit only individuals 21 years or older to gamble in
the Casino. It may permit slot machines, blackjack and poker, with a maximum
single bet of $5.00. The Casino may not provide credit to its gaming patrons and
no licensee may provide credit to any person for the purpose of gaming.

The Colorado Constitution permits a gaming tax of up to 40% on adjusted
gross gaming proceeds. The Gaming Commission has set a gaming tax rate of 2% on
adjusted gross gaming proceeds of up to and including $2.0 million, 4% over $2.0
million up to and including $4.0 million, 14% over $4.0 million up to and
including $5.0 million, 18% over $5.0 million up to and including $10.0 million,
and 20% in excess of $10.0 million. The Gaming Commission also has imposed an
annual device fee of $75 per gaming device. The Gaming Commission may revise the
gaming tax rate and device fee from time to time. Cripple Creek has imposed an
annual fee of $1,200 per gaming device and may revise the same from time to
time.

Federal Environmental Regulations. A portion of one of the parcels of real
estate owned by the Company in Cripple Creek is subject to federal environmental
regulations relating to wetlands. The Army Corps of Engineers has issued a Cease
and Desist Order (the "Order") with respect to a portion of the 15 lot parcel
owned by the Company across Myers Avenue from the Casino. The order relates to
the prior owner of the land using it in such a way so as to actually divert the
flow of the Cripple Creek. The Order affected all individuals who own land
effected by the diversion of the creek, and was issued against the City of
Cripple Creek.

The Company has entered into a settlement agreement with the other affected
landowners and, together with such landowners and the City of Cripple Creek, has
submitted a proposal for settlement to the Army Corps. Pursuant to the terms of
this settlement proposal, the Company would be required to pay approximately
$270,000 to the Army Corps in the event that it ever developed the land. The
Company currently has no plans to make use of these lots for other than parking.

Liquor Control Regulations. The sale of alcoholic beverages is subject to
licensing, control and regulation by the Colorado liquor agencies. All persons
who directly or indirectly own 10% or more of the Company, must file
applications and possibly be investigated by the Colorado liquor agencies. The
liquor agencies also may investigate those persons who, directly or indirectly,
loan money to or have any financial interest in liquor licensees. All liquor
licenses are revocable and not transferable. The liquor agencies have the full
power to limit, condition, suspend or revoke any such license and any such
disciplinary action could (and revocations would) have a material adverse effect
upon the operations of the Company.

Rather than a gaming tavern license, the Jubilee holds a hotel and
restaurant liquor license for casino, hotel and restaurant operations. No person
with an interest in the Company can have an interest in a Colorado liquor
licensee which holds anything other than a hotel and restaurant liquor license,
and such person specifically cannot have an interest in an entity which holds a
gaming tavern license.

Under the Colorado Regulations, the Company must repurchase the shares of
Common Stock held by anyone found unsuitable at the lesser of the cash
equivalent to the original investment in the Company or the current market
price. Under the Colorado Regulations, the Company cannot make any distribution,
pay any remuneration or recognize the vote of any unsuitable person. See
"Description of Capital Stock."

If, in the future, the Company operates licensed gaming businesses in other
jurisdictions which regulate the ownership of its securities, a finding of
unsuitability could require the Company to repurchase the securities of such
person. The Company has no present plans, however, to operate a gaming business
in any other jurisdiction.

SEASONALITY

Although the Company's business may not be seasonal in the conventional
sense, the highest levels of business activity occur in the tourist season, i.e.
from May through October. Its base level, i.e. November through April, is fairly
constant although weather conditions during this period can have a significant
impact on business levels in Cripple Creek. Snow can render the mountainous
roads that provide access to and from Cripple Creek hazardous, and patronage at
the Casino is noticeably smaller when a snowfall occurs. The months of January,
February and March are the slowest months in Cripple Creek.

36
<PAGE> 39

MANAGEMENT

DIRECTORS, EXECUTIVE OFFICER AND KEY EMPLOYEE

The directors, executive officers and key employees of the Company are as
follows:

<TABLE>
<CAPTION>
NAME AGE POSITION(S)
---- --- -----------
<S> <C> <C>
John H. Klinkhammer 60 Chairman and Director
Craig H. Forsman 49 Chief Executive Officer and Director
Stephen W. Sherf 49 Chief Financial Officer and Director
Ralf Hoehne 30 Vice President of Gaming Operations
Terrance P. DeRoche 50 Secretary and Director
</TABLE>

JOHN H. KLINKHAMMER. Mr. Klinkhammer is a founder of the Company and has
served as its Chairman and a director of the Company since October 1995. Mr.
Klinkhammer has served as Chairman and a Director of National Lodging since
1987. National Lodging is a hotel management and development company and is the
principal shareholder of the Company. National Lodging owns four hotels and owns
an interest in a fifth. National Lodging currently manages 14 hotels with
approximately 1,400 rooms and is pursuing the development and management of
additional hotels. Mr. Klinkhammer has been involved in hotel development for
more than 20 years.

CRAIG H. FORSMAN. Mr. Forsman has served as the Company's Chief Executive
Officer and a director of the Company since October 30, 1995. For more than
twelve years, Mr. Forsman has been involved in real estate acquisition, leasing
and finance. From February 1989 through July 1995, Mr. Forsman served as Chief
Executive Officer, President and a director of Sunrise Resources, Inc., an
equipment leasing and financial services company. Prior thereto, Mr. Forsman
served as Managing Director of Financial Services for Chrysler Systems Leasing,
Inc. between April 1986 and February 1989; as Corporate Counsel/Equity Placement
for DataServe Financial Services, Inc. between May 1985 and April 1986 and as
Regional Acquisitions Manager for The Griffin Companies, Inc. between July 1984
and May 1985. Prior thereto, Mr. Forsman served as First Assistant County
Attorney for Ramsey County, Minnesota, and as Special Assistant Attorney General
for the State of Minnesota.

STEPHEN W. SHERF. Mr. Sherf has served as the Company's Chief Financial
Officer and as a director of the Company since October 1995. Mr. Sherf, a
certified public accountant, has over 20 years of consulting experience in the
hospitality industry and also serves as Vice President -- Development for
National Lodging. Prior to joining National Lodging in November 1994, Mr. Sherf
headed the Hospitality Consulting Group of Marquette Advisors, a hotel and
gaming consulting firm for which he performed feasibility studies for hotels and
casinos throughout the country. Between December 1990 and March 1992, Mr. Sherf
was the executive vice president of Midwest Hospitality Advisors, which was
acquired by Marquette Advisors. Both firms engaged in rendering consulting
services for the hotel and gaming industries. Between July 1974 and November
1990 Mr. Sherf was affiliated with the accounting firm of Laventhol & Horwath.
Between February 1983 and November 1990, Mr. Sherf was a partner of Laventhol &
Horwath and was in charge of its upper midwest consulting practice.

RALF HOEHNE. Mr. Hoehne was appointed Vice President of Gaming Operations
of the Company in November 1996. Mr. Hoehne is the Company's casino manager and
is in charge of the day-to-day operations of the Casino under the supervision of
the Company's management. Mr. Hoehne has been involved in the Casino's
management since June 1993. Between June 1992 and May 1993, Mr. Hoehne was the
Casino's Transportation Coordinator. Between October 1990 and June 1992, Mr.
Hoehne was marketing and sales Representative and Transportation Director for
Vans to Vail, a transportation company located in Vail, Colorado.

TERRANCE P. DEROCHE. Mr. DeRoche has served as Secretary and a director of
the Company since October 1995. Mr. DeRoche also currently serves as President
of National Lodging with which he has been affiliated since July 1993. Between
June 1991 and July 1993, Mr. DeRoche served as a vice president of

37
<PAGE> 40

FAXX, Inc. Since 1977 Mr. DeRoche has also maintained a business consulting
practice. In August 1995, while serving as an officer and a director of Faxx
Foods, Inc. ("FFI"), FFI consented to the entry of a Consent Agreement with the
Securities Commissioner of North Dakota prohibiting FFI and its officers from
transacting any securities business or from employing persons as securities
salesmen in North Dakota, and paying $8,000 to the Commissioner for expenses in
the proceedings.

Immediately after the closing of this offering, and subject to
investigation and approval of the Gaming Commission, the Company intends to
appoint two independent directors to serve on its Board of Directors.

EXECUTIVE COMPENSATION

The following table provides certain summary information concerning the
compensation earned for services rendered in all capacities to the Company for
the fiscal years ended December 31, 1995 and 1996, by the Company's Chief
Executive Officer. No officer has been paid more than $100,000 by the Company
for the years presented.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL
COMPENSATION(1)
FISCAL ---------------
NAME AND PRINCIPAL POSITION YEAR SALARY/BONUS
--------------------------- ------ ---------------
<S> <C> <C>
Craig H. Forsman, Chief Executive Officer............. 1996 $75,000/$18,750
1995 $18,750/$18,750
</TABLE>

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

(1) Mr. Forsman has served as the Company's Chief Executive Officer since
October 30, 1995. Represents accrued salary and bonuses as of December 31,
1995 and 1996. Mr. Forsman was paid $6,250 during 1996.

Salaries for Messrs. Forsman, DeRoche and Sherf are paid at the monthly
rates of $6,250, $2,500 and $2,500, respectively, and bonuses for them have been
accrued in the amounts of $18,750, $7,500 and $7,500, respectively. Mr. Hoehne
is compensated at the base rate of $70,000 per annum. The Company has no
retirement, pension or profit-sharing plans for officers and employees, other
than an employee health insurance plan and an employee stock purchase plan.

DIRECTORS COMPENSATION

The Company intends to issue stock options to its non-employee directors
pursuant to its Director Stock Option Plan as discussed below.

EMPLOYMENT AGREEMENTS

The Company has entered into an employment agreement dated December 2,
1996, with Ralf Hoehne, the Company's Vice President of Gaming Operations, at an
annual salary of $70,000. Mr. Hoehne was also granted an option to purchase
20,000 shares of Common Stock at $4.35 per share. Mr. Hoehne's employment
agreement provides that in the event that Mr. Hoehne's employment is terminated
by the Company for any reason other than for cause, Mr. Hoehne shall receive a
payment equal to three months of his annual salary if he is terminated prior to
November 1, 1997, and a payment equal to four months of his annual salary if he
is terminated after November 1, 1997. This agreement governs the employment
relationship between Mr. Hoehne and the Company through October 1997, but
remains in effect until terminated or such time as a new agreement is entered
into between the parties.

1996 STOCK OPTION PLAN

The Company has adopted the Jubilee Gaming Enterprises, Inc. 1996 Stock
Option Plan (the "1996 Plan") which provides for the granting of options to
designated employees and non-employees, including consultants of the Company, to
purchase up to a maximum of 400,000 shares of Common Stock. To date the Company
has granted stock options to each of Messrs. Forsman and Sherf for 40,000 shares
of Common

38
<PAGE> 41

Stock and to Mr. Hoehne for 20,000 shares of Common Stock. The options granted
to Messrs. Forsman, Sherf and Hoehne are exercisable at $4.35 per share.

The 1996 Plan provides for the granting of both incentive stock options (as
defined in Section 422 of the Internal Revenue Code of 1986) and non-statutory
stock options (options which do not meet the requirements of Section 422). Under
the 1996 Plan, the exercise price may not be less than the fair market value of
the Common Stock on the date of the grant of the option.

The Compensation Committee of the Board of Directors (the "Committee")
administers and interprets the 1996 Plan and is authorized to grant options
thereunder to all eligible employees of the Company, including officers. The
Committee designates the optionees, the number of shares of Common stock subject
to such options and the terms and conditions of each option. Certain changes in
control of the Company will cause the options to vest immediately. Each option
granted under the 1996 Plan must be exercised, if at all, during a period
established in the grant which may not exceed 10 years from the date of grant.
An optionee may not transfer or assign any option granted and may not exercise
any options after a specified period subsequent to the termination of the
optionee's employment with the Company.

STOCK PURCHASE PLAN

In October 1996, the Company adopted the Jubilee Gaming Enterprises, Inc.
1996 Stock Purchase Plan (the "Stock Purchase Plan"). A total of 150,000 shares
of Common Stock have been reserved for issuance under the Stock Purchase Plan.
The Stock Purchase Plan, which is intended to qualify under Section 423 of the
Code, is administered by the Board of Directors of the Company or by a committee
appointed by the Board of Directors. Employees are eligible to participate after
a year of employment with the Company if they are employed for at least 20 hours
per week and more than five months per year. The Stock Purchase Plan permits
eligible employees to purchase Common Stock through payroll deductions, which
may not exceed 10% of an employee's compensation, at 85% of the lower of the
fair market value of the Common Stock on the offering date or at the end of each
six-month period following the offering date during the applicable offering
period. Employees may end their participation in the stock purchase plan at any
time during the offering period, and participation ends automatically on
termination of employment with the Company.

DIRECTOR STOCK OPTION PLAN

The Company has not paid any cash compensation to a director in his
capacity as a director and has no present plan to pay directors' fees. In
October 1996, the Company adopted its 1996 Director Stock Option Plan (the
"DSOP"), subject to shareholder approval, pursuant to which up to 200,000 shares
of Common Stock are reserved for the grant of stock options to non-employee
("outside") directors. The definition of outside director contained in the DSOP
excludes employees of affiliates of the Company who own 10% or more of the
outstanding Common Stock of the Company. Under the DSOP, the Company will award
each outside director 5,000 shares of Common Stock for each year of service as a
director, not to exceed in the aggregate 25,000 shares per director. The term of
each option granted under the DSOP is five years and the exercise price per
share for stock granted under the DSOP is 100% of the fair market value per
share on the date on which the respective option was granted.

INDEMNIFICATION

Unless prohibited in a corporation's articles or bylaws, Minnesota Statutes
Section 302A.521 requires indemnification of officers, directors, employees and
agents, under certain circumstances, against judgments, penalties, fines,
settlements and reasonable expenses (including attorneys' fees and
disbursements) incurred by such persons in connection with the acts or omissions
of such person in their official capacities. The Company's Restated and Amended
Bylaws (the "Bylaws") provide for indemnification of officers and directors of
the Company and certain other persons to the fullest extent permitted by law.
Section 302A.521 of the Minnesota Business Corporation Act also provides that
the Company shall indemnify any director, officer, employee or agent of the
Company made or threatened to be made a party to a legal proceeding, by reason
of the former or present official capacity of the person, against judgements,
penalties, fines, settlements and

39
<PAGE> 42

reasonable expenses incurred by the person in connection with the proceeding if
certain statutory standards are met. Insofar as indemnification for liabilities
arising under the Act may be permitted to directors, officers and controlling
persons of the Company pursuant to the Minnesota Statutes and the foregoing
Bylaws' provision, or otherwise, the Company has been informed that in the
opinion of the Commission, such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.

DIRECTOR LIABILITY

The Company's Articles of Incorporation, as amended and restated (the
"Articles"), limit the liability of directors of the Company in their capacity
as directors to the Company or its shareholders to the fullest extent permitted
by Minnesota law. The Articles provide that a director shall not be personally
liable to the Company or its shareholders for monetary damages for breach of
fiduciary duty as a director, except (i) for any breach of the director's duty
of loyalty to the Company or its shareholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) for dividends, stock repurchases and other distributions made in
violation of Minnesota law or for violations of federal or state securities
laws, (iv) for any transaction from which the director derived an improper
personal benefit, or (v) for any act or omission occurring prior to the
effective date of the provision in the Articles limiting such liability. These
provisions do not affect the availability of equitable remedies, such as an
action to enjoin or rescind a transaction involving a breach of fiduciary duty,
although, as a practical matter, equitable relief may not be available.

CERTAIN TRANSACTIONS

REGENT GAMING ENTERPRISES TRANSACTION

Pursuant to an Agreement effective October 30, 1995, between the Company
and DeRoche, Swenson and Sherf, the Company acquired all of the interests of
DeRoche, Swenson and Sherf in Regent, in exchange for the issuance of Common
Stock to them in the following amounts: DeRoche (104,919 shares), Swenson
(148,197 shares), and Sherf (140,328 shares). DeRoche, Swenson and Sherf were,
as of such date, the sole shareholders of Regent. Regent was organized in 1994
for the purpose of raising capital, analyzing, negotiating and planning for the
acquisition of the Casino. The founding shareholders of Regent were National
Lodging, DeRoche, Swenson, Klas and Sherf. Prior to such transaction, DeRoche
acquired National Lodging's interest in Regent, Swenson acquired 52% of Klas'
interest in Regent, and Sherf acquired 48% of Klas' interest in Regent. The
Company also assumed Regent's indebtedness to DeRoche, Swenson and Sherf in the
following amounts: DeRoche ($65,000); Swenson ($7,604), and Sherf ($7,396), and
also assumed accrued compensation due to DeRoche, Swenson and Sherf in the
amount of $80,000. Messrs. DeRoche, Swenson, Sherf, Forsman and National Lodging
may be deemed promoters of the Company. The cash investment in Regent of
DeRoche, Swenson and Sherf was $20,000, in the following amounts: DeRoche
($6,000); Swenson ($7,292), and Sherf ($6,708). The foregoing transaction was
effected for the purpose of acquiring any and all interests of Regent in the
gaming opportunity in Cripple Creek which had been developed by Regent. Such
transaction was not, however, effected on an arm's-length basis, and there can
be no assurance that the transaction was equivalent to, or as fair to the
Company, as a comparable transaction concluded on a arms-length basis between
unrelated parties.

40
<PAGE> 43

NATIONAL LODGING COMPANIES TRANSACTIONS

Acquisition of Jubilee. National Lodging, as one of its activities, had
been actively seeking a project for development in Cripple Creek since early
1994. In 1995, Regent joined the search for a suitable project in Cripple Creek.
The 1995 financial statements of the Company present the combined results of the
Company, Regent and the acquisition activities of National Lodging related to
the Jubilee. Between March 1994 and October 1995, National Lodging had expended
approximately $884,000 to develop a project in Cripple Creek and to ultimately
acquire the Jubilee. In the process of combining the activities of the three
entities mentioned above as they relate to the Company, approximately $710,000
of the $884,000 has been capitalized by the Company. Such expenditures included
the following:

<TABLE>
<S> <C>
Miscellaneous expenditures, salaries and overhead......... $101,500
Legal and other professional fees......................... 63,856
Travel expenses........................................... 3,953
Printing expenses......................................... 1,005
Architect and engineering fees............................ 204,234
Real estate option payments............................... 10,000
Finder's fee (real estate)................................ 102,800
Miscellaneous costs and expenses.......................... 396,906
--------
Total........................................... $884,254
========
</TABLE>

On October 31, 1995, the Company and National Lodging, on the one hand, and
the Partnership and other selling parties (collectively, the "Sellers") on the
other hand entered into a Partnership Interest and Stock Acquisition Agreement
(the "Jubilee Agreement") pursuant to which the Company acquired the Sellers'
entire interest in the Partnership, including all of the outstanding capital
stock of the general partner of the Partnership, Cripple Creek Corporation, in
exchange for 393,750 shares of National Lodging common stock valued at $4.00 per
share. The per share value of the shares of National Lodging common stock was
determined through negotiations with the owners of the Partnership based upon
other transactions in such stock prior to 1995. The primary property owned by
the Partnership was the Casino. In exchange for National Lodging's interests in
the Casino project, and its issuance of 393,750 shares of its stock to acquire
the Jubilee and additional real estate to be used for future development of the
Hotel and related parking, the Company issued to National Lodging 1,022,951
shares of Common Stock. In January 1996, the Company, in connection with the
settlement of a lawsuit brought by National Lodging against Grand National Hotel
& Casino, Inc., Orr Properties, Inc., Ronald V. Ortner, Joan L. Ortner and
Michael R. Reeg paid $87,800 to acquire and develop land in the vicinity of the
Jubilee through a partnership. The Company subsequently acquired 28 lots that
had been controlled by such partnership. The Company and National Lodging agreed
that the expense relating to the settlement of such litigation was an expense
relating to the Casino acquisition and expansion contemplated by the Company and
that, accordingly, such expense should be borne by the Company, even though the
Company was not a named party.

Consulting and Management Services. From time to time, National Lodging has
provided services to the Company and is expected to provide services to the
Company in the future in connection with the development of the Hotel. Services
have been billed by National Lodging in agreed upon amounts through March 31,
1997 totalling approximately $57,000. The Company intends to negotiate directly
with National Lodging for future services on an as-needed basis at such rates as
may be customary or deemed reasonable by the Company. The Company also expects
that it will enter into an agreement for the management of the Hotel by National
Lodging upon completion of the expansion project. The Company anticipates that
payments to National Lodging under such agreement will be equal to 4% of room
sales. The Company has agreed that all fees payable to National Lodging for such
services and the terms of any management contract will be consistent with
industry standards and will be no less favorable to the Company than could be
obtained by the Company negotiating with an unrelated party on an arm's-length
basis. Arrangements for such services and payment therefor will be approved and
determined by a committee of disinterested directors or disinterested persons
who have no direct or indirect interest in National Lodging and have never been
employed by National Lodging. Until disinterested directors of the Company are
appointed or elected, a committee of

41
<PAGE> 44

disinterested persons will approve all contracts with, and expenditures relating
to, services rendered by National Lodging to the Company. The Company believes
that all services rendered by National Lodging as of the date of this prospectus
were on terms at least as favorable to the Company as could be obtained by the
Company negotiating with unrelated parties on an arm's-length basis.

Office and Administrative Support. National Lodging provides the Company
with offices, clerical, accounting and other support services for an agreed-upon
flat charge of $4,000 per month. Through March 31, 1997, an aggregate of $84,000
has accrued and is due and owing to National Lodging for such office services.
This arrangement is terminable at the will of the parties.

Advances. The Company is indebted to National Lodging for National
Lodging's non-interest bearing advances to or on the Company's behalf netting to
approximately $239,000 through March 31, 1997. Between March 1995 and March
1997, National Lodging loaned the Company an aggregate of $484,000. The Company
will pay from the net proceeds of this offering $187,000, representing a portion
of the balance of such advances. The Company intends to repay the balance of the
amounts due National Lodging out of available working capital funds upon the
completion of the Hotel development and Casino expansion project.

TRANSACTIONS WITH CHIEF EXECUTIVE OFFICER AND OTHERS

On October 31, 1995, the Company borrowed $500,000 from Craig H. Forsman,
the Company's Chief Executive Officer, evidenced by the Company's promissory
note in such amount bearing interest at the rate of 15% per annum for the first
six months after the date of the note and 20% per annum thereafter. The loan was
secured by deeds of trust in six lots purchased by the Company in Cripple Creek.
The note was extended by Mr. Forsman through February 28, 1997, but was repaid
from the proceeds of the MS Financing. In connection with the loan, the Company
issued to Mr. Forsman a warrant to purchase 70,820 shares of Common Stock
exercisable at $1.91 per share. Concurrent with the foregoing $500,000 loan
transaction, Mr. Forsman purchased an aggregate of 131,148 shares of Common
Stock from the Company for $80,000. On January 17, 1996, Mr. Forsman loaned the
Company an additional $45,000 on the same terms and conditions as the $500,000
loan, and was issued a warrant to purchase 7,082 shares of Common Stock
exercisable at $1.91 per share. Such loan has also been repaid.

REGISTRATION RIGHTS

Pursuant to the terms of the foregoing agreements among the Company and
Messrs. Swenson, Sherf and DeRoche, the Company and National Lodging and the
Company and Mr. Forsman, the Company has granted such parties rights to require
the registration under the Act of the shares of Common Stock issued to them
comparable to the registration rights granted to the Representative, subordinate
however, to prior rights of the Representative to sell its shares acquired upon
exercise of the Representative's Warrant. Such registrations would be at the
expense of the Company. Such registration rights have been waived by such
individuals with respect to this offering. See "Underwriting."

MILLER AND SCHROEDER FINANCING

The Company has applied to MSIC for a 12-month, $15.0 million construction
loan which, by its terms, will automatically convert into a 10-year interest
bearing mortgage upon completion of the Casino expansion and Hotel development
project. The closing of this loan and the closing of this offering are to occur
simultaneously. This loan will be jointly and severally guaranteed
(collectively, the "Guarantee") by National Lodging and Messrs. Forsman, Sherf
and DeRoche. National Lodging and Messrs. Forsman, Sherf and DeRoche intend to
enter into an agreement with respect to the Guarantee pursuant to which (i)
National Lodging will be solely responsible to make any required payments under
the Guarantee to the extent of all its available assets in the event the parties
are called-upon to make payments under the Guarantee; (ii) Messrs. Forsman,
Sherf and DeRoche will be secondarily responsible to provide all amounts due
under the Guarantee in the event that the parties are called upon to make
payments under the Guarantee and National Lodging, after exhausting all
available assets, is unable to make such payments; and (iii) National Lodging
and Messrs. Forsman, Sherf and DeRoche will be paid $75,000 annually for each
year the Guarantee

42
<PAGE> 45

remains effective, commencing upon the completion of the Hotel development and
Casino expansion project and subject to available cash flow. See "Business --
Project Costs."

The Guarantee, pursuant to the terms of the MISC financing, will lapse
after two years, provided that the Company is able to satisfy minimum
requirements provided for in such financing during such two-year period.

GUARANTEE BY CHIEF EXECUTIVE OFFICER AND OTHERS

SHAREHOLDERS' VOTING AND CONTROL AGREEMENT

In November 1996, the Company's shareholders entered into a Shareholder
Voting and Control Agreement (the "Shareholders' Agreement") for the purpose of
controlling certain aspects of the business and affairs of the Company relating
to the composition of its Board of Directors. The Shareholders' Agreement,
provides, among other things, that the Company's existing directors are divided
into two groups, the "Lodging Directors," consisting of John H. Klinkhammer and
DeRoche, and the "Gaming Directors," consisting of Messrs. Forsman and Sherf.
Under the Shareholders' Agreement, the Lodging Directors will have the right to
designate two members of the Company's Board of Directors and the Gaming
Directors will have the right to designate three members of the Company's Board
of Directors. Messrs. Forsman and Sherf have agreed to vote their shares of
Common Stock in favor of Directors designated by the Lodging Directors, and
Messrs. Klinkhammer and DeRoche have agreed to vote their shares of Common Stock
in favor of the election of persons designated by the Gaming Directors. In
addition, the parties to the Shareholders' Agreement have agreed that two
additional disinterested Directors shall be designated and elected to the Board
of Directors, subject to such persons being found suitable by the Gaming
Commission. Such disinterested Directors shall be persons designated by a
resolution of the Board of Directors in which Lodging Directors and a majority
of Gaming Directors shall have voted in favor of such independent director
nominees. Messrs. Forsman, Sherf, DeRoche and Klinkhammer have agreed to vote
their shares of Common Stock in favor of the election of designated Lodging and
Gaming Directors, and for independent directors designated by Lodging and a
majority of Messrs. DeRoche, Sherf, and Forsman. The Shareholders' Agreement
terminates on January 1, 2001, unless extended for up to one additional year by
written consent of Lodging and the holders of a majority of the shares of Common
Stock then owned by Messrs. DeRoche, Sherf and Forsman. Such parties may also
amend or terminate the Shareholders' Agreement. The Agreement also terminates at
such time as National Lodging owns 20% or less of the outstanding Common Stock.

43
<PAGE> 46

PRINCIPAL SHAREHOLDERS

The following table contains certain information as of March 31, 1997 as to
the number of shares of Common Stock beneficially owned by (i) each person known
by the Company to own beneficially more than 5% of the Common Stock, (ii) each
person who is a director of the Company, and (iii) all persons who are directors
and officers of the Company as a group, and as to the percentage of the
outstanding shares of Common Stock held by them on such date. Unless otherwise
noted, each person identified below possesses sole voting and investment power
with respect to such shares. Unless otherwise indicated, the address of the
following entity and individuals is 9855 West 78th Street, Suite 220,
Minneapolis, Minnesota 55344.

<TABLE>
<CAPTION>
PERCENTAGE OF
OUTSTANDING SHARES
NAME OF BENEFICIAL NUMBER OF SHARES ---------------------------------
OWNER OR GROUP BENEFICIALLY OWNED(1) BEFORE OFFERING AFTER OFFERING
------------------ --------------------- --------------- --------------
<S> <C> <C> <C>
National Lodging Companies, Inc....... 1,022,951 63% 32%
John H. Klinkhammer................... 1,022,951(2) 63 32
Craig H. Forsman...................... 219,050(3) 13 7
Stephen W. Sherf...................... 150,328(4) 9 5
Terrance P. DeRoche................... 104,919 6 3
Robert J. Swenson
3630 Knoll Ridge Drive
Eagan, Minnesota 55122.............. 148,197 9 5
All directors and officers as a group
(4 persons)......................... 1,497,248 87% 45%
</TABLE>

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

(1) The securities "beneficially owned" by a person are determined in accordance
with the definition of "beneficial ownership" set forth in the regulations
of the Securities and Exchange Commission and accordingly, may include
securities owned by or for, among others, the spouse, children or certain
other relatives of such person as well as other securities as to which the
person has or shares voting or investment power or has the right to acquire
within 60 days. The same shares may be beneficially owned by more than one
person.

(2) Includes 1,022,951 shares of Common Stock owned by National Lodging of which
Mr. Klinkhammer is the Chairman and principal shareholder.

(3) Includes 77,902 and 10,000 shares of Common Stock purchasable upon exercise
of stock purchase warrants and options, respectively.

(4) Includes 10,000 shares of Common Stock purchasable upon exercise of options.

DESCRIPTION OF UNITS
UNITS

Each Unit offered hereby consists of one share of Common Stock and one
Redeemable Warrant. The Redeemable Warrants are immediately exercisable and
separately transferable from the Common Stock. Each Redeemable Warrant entitles
the holder to purchase, at anytime until redemption or five years following the
date of this Prospectus, one share of Common Stock at an exercise price of
$6.50, subject to adjustment.

COMMON STOCK

A description of the Common Stock is set forth elsewhere in this
Prospectus. See "Description of Capital Stock -- Common Stock."

REDEEMABLE WARRANTS

The Redeemable Warrants included as part of the Units being offered hereby
will be issued under and governed by the provisions of a Warrant Agreement (the
"Warrant Agreement") between the Company and Norwest Bank Minnesota, National
Association, as Warrant Agent (the "Warrant Agent"). The following summary of
the Warrant Agreement is not complete and is qualified in its entirety by
reference to the Warrant

44
<PAGE> 47

Agreement, a copy of which has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part.

The shares of Common Stock and the Redeemable Warrants offered as part of
the Units are immediately detachable and separately transferable. One Redeemable
Warrant entitles the holder thereof ("Warrantholder") to purchase one share of
Common Stock during the five years following the date of this Prospectus
(subject to earlier redemption), provided that at such time a current prospectus
relating to the shares of Common Stock issuable upon exercise of the Redeemable
Warrants is in effect and the issuance of such shares is qualified for sale or
exempt from qualification under applicable state securities laws. Each
Redeemable Warrant will be exercisable at an exercise price of $6.50 per share,
subject to adjustment in certain events.

The Redeemable Warrants are subject to redemption by the Company beginning
90 days after the date of this Prospectus, on not less than 30 days' written
notice, at a price of $.01 per warrant at any time following a period of any 20
consecutive trading days on which the per share closing bid price of the Common
Stock exceeds $10.00 (subject to adjustment). For these purposes, the closing
bid price of the Common Stock shall be determined by the closing bid price as
reported by The Nasdaq Stock Market (so long as the Common Stock is quoted on
Nasdaq). Holders of Redeemable Warrants will automatically forfeit all rights
thereunder, except the right to receive the $.01 redemption price per warrant,
unless the Redeemable Warrants are exercised before they are redeemed.

The Warrantholders are not entitled to vote, receive dividends, or exercise
any of the rights of holders of shares of Common Stock for any purpose. The
Redeemable Warrants are in registered form and may be presented for transfer,
exchange or exercise at the office of the Warrant Agent. Although the Company
has applied for listing of the Redeemable Warrants on the Nasdaq SmallCap
Market, there is currently no established market for the Redeemable Warrants,
and there is no assurance that any such market will develop.

The Warrant Agreement provides for adjustment of the exercise price and the
number of shares of Common Stock purchasable upon exercise of the Redeemable
Warrants to protect Warrantholders against dilution in certain events, including
stock dividends, stock splits, reclassification, and any combination of Common
Stock, or the merger, consolidation or disposition of substantially all of the
assets of the Company.

The Redeemable Warrants may be exercised upon surrender of the certificate
therefor on or prior to the expiration date (or earlier redemption date) at the
offices of the Warrant Agent, with the form of "Election to Purchase" on the
reverse side of the certificate properly completed and executed as indicated,
accompanied by payment of the full exercise price (by certified or cashier's
check payable to the order of the Company) for the number of shares of Common
Stock being purchased.

The Company has sufficient shares of Common Stock authorized and reserved
for issuance upon exercise of the Redeemable Warrants, and such shares when
issued will be fully paid and nonassessable. Purchasers of Units will be able to
exercise the Redeemable Warrants only if a registration statement covering the
Common Stock underlying the Redeemable Warrants is then in effect under the Act
and only if such Common Stock is qualified for sale or exempt from qualification
under applicable securities laws of the states in which the holders of the
Redeemable Warrants reside. Although the Company will use its best efforts (i)
to maintain the effectiveness of a registration statement covering the Common
Stock underlying the Redeemable Warrants pursuant to the Act and (ii) to
maintain the registration of such Common Stock under the securities laws of the
states in which the Company initially qualifies the Units for sale in this
offering, there can be no assurance that the Company will be able to do so. The
Company will not be able to issue shares of Common Stock to those persons
desiring to exercise the Redeemable Warrants if a registration statement is not
kept effective under the Act or if the Common Stock underlying the Redeemable
Warrants is not qualified or exempt from qualification in the state where the
holders of the Redeemable Warrants reside. In such a case, the holders of the
Redeemable Warrants could lose the benefit of owning the Redeemable Warrants
unless they could resell the Redeemable Warrants.

For the period during which the Redeemable Warrants are exercisable, the
holder or holders thereof will have the opportunity to profit from the rise in
the market value of the Common Stock, with a resulting dilution

45
<PAGE> 48

in the interests of the other shareholders of the Company. The holder or holders
of the Redeemable Warrants can be expected to exercise them at a time when the
Company would, in all likelihood, be able to obtain any needed capital from an
offering of its unissued Common Stock on terms more favorable to the Company
than those provided for in the Redeemable Warrants. Such fact may adversely
affect the terms on which the Company can obtain additional financing.

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

The following is a general discussion of certain federal income tax
consequences relating to this offering of Units under presently existing
provision of the Internal Revenue Code of 1986, as amended (the "Code"), and
other applicable authority. The following statements may not be authoritative in
individual cases, and each investor should consult his or her own tax advisor
concerning this offering, including the tax consequences under state, local,
foreign and other tax laws.

A holder's basis in the shares of Common Stock and the Redeemable Warrant
purchased as a Unit generally will be determined by allocating the purchase
price of the Unit to the Common Stock and Redeemable Warrant comprising such
Unit on the basis of their respective fair market values. Upon a sale of Common
Stock or a Redeemable Warrant, the holder thereof will recognize long-term or
short-term capital gain or loss, depending upon whether the holding period is
more or less than one year, assuming such holder is not a dealer in the Common
Stock or Redeemable Warrants and the Common Stock is, or would be when acquired,
a capital asset in the hands of the holder. The amount of gain or loss will be
the difference between the amount realized and the tax basis, as adjusted, of
the Common Stock or Redeemable Warrant sold. The redemption of a Redeemable
Warrant may also be considered a sale or exchange so that any gain or loss
recognized as a result thereof may also be a capital gain or loss. Any loss
realized by a holder of a Redeemable Warrant due to the failure to exercise
prior to the expiration date will be treated as a capital loss.

Generally, a holder of Redeemable Warrants will not recognize any gain or
loss on the purchase of Common Stock for cash upon exercise of the Redeemable
Warrants. The tax basis of the Common Stock received will be equal to the tax
basis, as adjusted, in the Redeemable Warrants so exercised, plus the cash
exercise price. The holding period of the Common Stock received upon exercise of
a Redeemable Warrant for cash will not include the period during which the
Redeemable Warrant was held, but will commence only upon the exercise date of
the Redeemable Warrant.

Although an adjustment of the exercise price or number of shares of Common
Stock purchasable upon exercise of the Redeemable Warrants to protect
Warrantholders against dilution will generally not result in the recognition of
income, Section 305 of the Code and the applicable Treasury regulations
promulgated thereunder may result in a deemed dividend to holders of Redeemable
Warrants as a result of adjustments, or a failure to make adjustments, to the
exercise price of the Redeemable Warrants which may occur under certain
circumstances following the issuance thereof.

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 50,000,000 shares,
no par value, including 45,000,000 shares designated as Common Stock, and
5,000,000 shares of undesignated preferred stock. As of the date of this
Prospectus, nine persons held the 1,623,611 shares of Common Stock outstanding.

COMMON STOCK

The holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the Company's shareholders. There
is no cumulative voting for the election of directors, which means that the
holders of more than 50% of the outstanding Common Stock voting for the election
of directors could elect all of the directors of the Company to be elected, if
they so chose. Subject to preferences that may be applicable to any outstanding
preferred stock and to limitations on declaring dividends that may exist in loan
agreements between the Company and its creditors, holders of Common Stock are
entitled to receive ratably such dividends as may be declared by the Company's
Board of Directors out of funds legally

46
<PAGE> 49

available therefor and are entitled to share ratably in all assets of the
Company available for distribution to holders of the Common Stock upon
liquidation, dissolution or winding up of the affairs of the Company. None of
the loan or similar agreements to which the Company is a party currently
prohibit the Company from declaring dividends on shares of its Common Stock.
Holders of Common Stock have no preemptive, subscription or conversion rights
and there are no redemption or sinking fund provisions applicable thereto. The
outstanding shares of Common Stock are, and shares purchased in this offering
will be, fully paid and nonassessable.

PREFERRED STOCK

The Articles authorize the Board of Directors of the Company, without
further shareholder action (except for approval of holders of preferred stock,
if required), to issue up to 5,000,000 shares of preferred stock in one or more
series and to fix the voting rights, liquidation preferences, dividend rights,
repurchase rights, conversion rights, redemption rights and terms, including
sinking fund provisions, and certain other rights and preferences, of the
preferred stock. Although there is no current intention to do so, the Board of
Directors of the Company may, without shareholder approval (except for approval
of holders of preferred stock, if required), issue shares of a class or series
of preferred stock with voting and conversion rights which could adversely
affect the voting power or dividend rights of the holders of Common Stock and
may have the effect of delaying, deferring or preventing a change in control of
the Company or making removal of management more difficult.

OTHER WARRANTS

As of March 31, 1997, the Company had outstanding warrants to purchase an
aggregate of 88,132 shares of Common Stock of the Company at an exercise price
of $1.91 per share. Such warrants were issued in connection with prior financing
transactions by the Company. The holders of such warrants, as such, are not
entitled to vote, receive dividends or exercise any of the rights of holders of
shares of Common Stock for any purpose until such warrants have been duly
exercised and payment of the purchase price has been made. These warrants
contain customary anti-dilution provisions. See "Certain Transactions."

PROVISIONS OF THE COMPANY'S ARTICLES AND MINNESOTA BUSINESS CORPORATION ACT

The existence of authorized but unissued preferred stock described above,
and certain provisions of the Company's Articles and Minnesota law, described
below, could have an anti-takeover effect. These provisions are intended to
provide management flexibility, to enhance the likelihood of continuity and
stability in the composition of the Company's Board of Directors and in the
policies formulated by the Board, but could discourage an unsolicited takeover
of the Company if the Board determines that such a takeover is not in the best
interests of the Company and its shareholders. These provisions could have the
effect of discouraging some attempts to acquire the Company which could deprive
the Company's shareholders of opportunities to sell their shares of Common Stock
at prices higher than prevailing market prices.

Section 302A.671 of the Minnesota Statutes applies, with certain
exceptions, to any acquisition of voting stock of the Company (from a person
other than the Company, and other than in connection with certain mergers and
exchanges to which the Company is a party) resulting in the beneficial ownership
of 20% or more of the voting stock then outstanding. Section 302A.671 requires
approval of any such acquisitions by a majority vote of the shareholders of the
Company prior to its consummation. In general, shares acquired in the absence of
such approval are denied voting rights and are redeemable at their then fair
market value by the Company within 30 days after the acquiring person has failed
to give a timely information statement to the Company or the date the
shareholders voted not to grant voting rights to the acquiring person's shares.

Section 302A.673 of the Minnesota Statutes generally prohibits any business
combination by the Company, or any subsidiary of the Company, with any
shareholder which purchases 10% or more of the Company's voting shares (an
"interested shareholder") within four years following such interested
shareholder's share acquisition date, unless the business combination is
approved by a committee of all of the

47
<PAGE> 50

disinterested members of the Board of Directors of the Company before the
interested shareholder's share acquisition date.

RESTRICTIONS ON CAPITAL STOCK; COMPANY RIGHT TO REDEEM SECURITIES

Article 8 of the Articles provides that the Company may not issue any
voting securities or other voting interests except in accordance with the
provisions of the Colorado Limited Gaming Act and the regulations adopted
thereunder, or any other gaming laws or the regulations adopted thereunder to
which the Company may be subject. The certificates for the Common Stock and
Redeemable Warrants contain a legend which makes reference to restrictions of
such gaming laws and regulations.

If the Gaming Commission or any other state gaming authority at any time
determines that a holder of voting securities of the Company is unsuitable to
hold such securities, then the Company may within 60 days after the finding of
unsuitability purchase the voting securities at the lesser of (i) the cash
equivalent of such person's investment in the Company, or (ii) the current
market price as of the date of the finding of unsuitability, unless such voting
securities are transferred to a suitable person within 60 days after the finding
of unsuitability. Unsuitability includes prior convictions of various crimes,
association with organized crime, drunk driving convictions, failure to pay
taxes and other indicia of lack of moral character and financial integrity.

In addition, shares of Common Stock are subject to redemption by the
Company if in the judgment of the Board of Directors such action would be
necessary to obtain a license or franchise or to prevent the loss or secure the
reinstatement of any license or franchise of the Company from any governmental
agency, and the license or franchise is conditioned upon some or all of the
holders of the stock of the Company possessing prescribed qualifications. The
terms and conditions of the redemption are as follows:

The redemption price of the securities to be redeemed will be equal to the
fair market value (as defined below) of the shares. The redemption price may be
paid in cash, redemption securities (as defined below) or any combination
thereof. At least 30 days' written notice of the redemption date must be given
to the recordholders of the shares selected to be redeemed.

The term "fair market value" means the average closing price for the 45
most recent days on which shares of stock traded preceding the date on which
notice of a redemption is given. A "redemption security" means any debt or
equity security of the Company having such terms and conditions as are approved
by the Company's Board of Directors.

In the event the Company shall hold, or apply for, a gaming license or
permit in a jurisdiction other than, or in addition to, Colorado (an "Other
Jurisdiction"), the laws and regulations of the Other Jurisdiction shall also
govern the issuance of the securities of the Company and obligations of the
beneficial owners of its securities. The provisions of Article 8 of the Articles
shall be applicable, to the extent necessary for purposes of regulating the
issuance and ownership of the Company's securities and the obligations of the
beneficial owners of its securities under the laws and regulations of an Other
Jurisdiction and applied in a manner to enable the Company to obtain and
maintain a gaming license or permit in such Other Jurisdiction.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Units, Redeemable Warrants and
Common Stock of the Company is Norwest Bank Minnesota, National Association,
Saint Paul, Minnesota.

SHARES ELIGIBLE FOR FUTURE RESALE

As of the date of this prospectus, the Company has outstanding 1,623,611
shares of Common Stock and has 100,000 and 88,132 shares of Common Stock
reserved for issuance upon exercise of outstanding options and warrants,
respectively. Of the 3,223,611 shares to be outstanding after this offering, the
1,600,000 shares of Common Stock sold to the public as a part of the Units
offered hereby will be freely tradeable without restrictions or registration
under the Act. The remaining outstanding shares are restricted securities under
the

48
<PAGE> 51

Act and will become freely tradeable without restrictions or registration under
the Act, after expiration of applicable holding periods. In connection with this
offering, all executive officers, all directors and the principal shareholders
of the Company have agreed not to offer, sell or otherwise dispose of a total of
1,557,248 shares held by them for a period of 18 months after the effective date
of this offering, without the prior written consent of the Representative. Sales
of substantial amounts of the Company's securities, including the securities
offered hereby, could adversely affect prevailing market prices of the Company's
securities and the Company's ability to raise additional capital by occurring at
a time when it would be beneficial for the Company to sell securities.

In general, under Rule 144 a person (or persons whose sales are aggregated)
who beneficially owns shares last acquired privately from the Company or an
affiliate of the Company at least one year previously is entitled to sell within
any three-month period a number of shares that does not exceed the greater of 1%
of the then outstanding shares of Common Stock or the average weekly trading
volume in the Common Stock during the four calendar weeks preceding such sale.
Sales under Rule 144 are also subject to certain manner-of-sale provisions,
notice requirements and the availability of current public information about the
Company. A person who has not been an affiliate of the Company at any time
during the three months preceding a sale, and who beneficially owns shares last
acquired from the Company or an affiliate of the Company at least two years
previously is entitled to sell all such shares under Rule 144 without regard to
any of the limitations of the Rule.

In addition, Rule 144A promulgated under the Act, as currently in effect,
in general, permits unlimited resales of certain restricted securities of any
issuer provided that the purchaser is an institution that owns and invests on a
discretionary basis at least $100.0 million in securities or is a registered
broker-dealer that owns and invests $10.0 million in securities. Rule 144A
allows the existing shareholders of the Company to sell their shares to such
institutions and registered broker-dealers without regard to any volume or other
restrictions. Unlike under Rule 144, restricted securities sold under Rule 144A
to nonaffiliates do not lose their status as restricted securities.

49
<PAGE> 52

UNDERWRITING

The underwriters listed below (the "Underwriters") have severally agreed,
subject to the terms and conditions of the Underwriting Agreement, to purchase
from the Company the number of Units set forth opposite their names. The
Underwriting Agreement provides that the obligations of the Underwriters are
subject to certain conditions precedent and that the Underwriters shall be
obligated to purchase all of the Units if any of the Units are purchased.

<TABLE>
<CAPTION>
NUMBER OF
NAME OF UNDERWRITER UNITS
------------------- ---------
<S> <C>
H.J. Meyers & Co., Inc......................................

---------
Total............................................. 1,600,000
=========
</TABLE>

The Underwriters have advised the Company that they propose to offer the
Units to the public at an offering price of $5.00 per Unit and that Underwriters
may allow certain dealers who are members of the National Association of
Securities Dealers, Inc. ("NASD") a concession of not in excess of $
per Unit, no portion of which may be reallowed to certain other dealers. After
commencement of this offering, the public offering price and concession may be
changed.

The Underwriters have advised the Company that they do not intend to sell
any of the securities offered hereby to accounts for which they exercise
discretionary authority.

This Offering is subject to the Company's closing on a $15.0 million
construction loan, which loan will be used, in part, to finance the development
of the Hotel and expansion of the Casino. See "Risk Factors -- Proceeds from
Offering Inadequate to Fund Business Plan; Need for Additional Financing" and
"Business -- Project Costs."

The Company has granted to the Underwriters an option, exercisable during
the 45-day period from the date of this Prospectus, to purchase up to a maximum
of 240,000 additional Units on the same terms set forth above. The Underwriters
may exercise such right only to satisfy overallotments in the sale of the Units.
To the extent the Overallotment Option is exercised, the Underwriters and the
Company have agreed that the first $391,500 of the net proceeds thereof will be
used by the Company to redeem 90,000 shares of Common Stock owned by National
Lodging.

The Company has agreed to pay to the Representative a nonaccountable
expense allowance equal to 3% of the total proceeds of the offering, or $240,000
($276,000 if the Underwriters exercise the overallotment option in full), of
which $53,000 has already been paid. In addition to the Underwriters'
commissions and Representative's expense allowance, the Company is required to
pay the costs of qualifying the Units under federal and state securities laws,
together with legal and accounting fees, printing and other costs in connection
with this offering, estimated to total approximately $260,000.

At the closing of the offering, the Company will sell to the Representative
for $5.00, a warrant (the "Representative's Warrant") to purchase for investment
a maximum of 160,000 Units. The Units subject to the Representative's Warrant
will be identical to the Units sold to the public except for the purchase price
as provided below. The Representative's Warrant shall be non-exercisable and
transferable only to officers of the Representative for a period of 12 months
after the date of this Prospectus and shall be exercisable and transferable only
for a period of four years thereafter. The exercise price of the
Representative's Warrant is 120% of the public offering price per Unit, or
$6.00.

The Representative's Warrant will contain anti-dilution provisions
providing for adjustment in the event of any stock dividend, stock split,
recapitalization, reclassification or similar transaction. The Representative's
Warrant does not entitle the Representative to any rights as a shareholder of
the Company until such warrant is exercised and Units are purchased thereunder.

50
<PAGE> 53

The Representative's Warrant and the securities thereunder may not be
offered for sale except in compliance with the applicable provisions of the Act.
The Company has agreed that, upon written request by a holder or holders of 50%
or more of the Representative's Warrants which is made during the exercise
period of the Representative's Warrant, the Company will, on two separate
occasions, register the Representative's Warrant and any of the securities
issuable upon exercise thereof. The initial such registration will be at the
Company's expense and the second such registration will be at the expense of the
holder(s) of the Representative's Warrant.

For the period during which the Representative's Warrant is exercisable,
the holder or holders will have the opportunity to profit from the rise in the
market value of the Common Stock, with a resulting dilution in the interests of
the other shareholders of the Company. The holder or holders of the
Representative's Warrant can be expected to exercise it at a time when the
Company would, in all likelihood, be able to obtain any needed capital from an
offering of its unissued Common Stock on terms more favorable to the Company
than those provided for in the Representative's Warrant. Such fact may adversely
affect the terms on which the Company can obtain additional financing. To the
extent that the Representative realizes any gain from the resale of the
Representative's Warrant or the securities issuable thereunder, such gain may be
deemed additional underwriting compensation under the Act.

The Company has agreed to enter into a one-year consulting agreement with
the Representative, pursuant to which the Representative will act as a financial
consultant to the Company, commencing on the closing date of this offering.
Under the terms of this agreement, the Representative, to the extent reasonably
required in the conduct of the business of the Company, and at the prior written
request of the principal executive officer of the Company, has agreed to consult
with the Company relating to corporate financing and other financial service
matters. The Representative will make available qualified personnel for this
purpose. The consulting fee of $72,000 will be payable, in full, on the closing
date of this offering.

The Company has agreed that it will engage a public relations firm
acceptable to the Representative and the Company. The Company has also agreed to
maintain a relationship with such public relations firm for a minimum period of
24 months and on such other terms as are acceptable to the Representative.

Officers, directors and substantially all of the holders of 5% or more of
the Company's outstanding capital stock have agreed that they will not sell any
Common Stock owned by them (or subsequently acquired under any option, warrant
or convertible security owned prior to this offering) for 18 months following
the date of this prospectus, without the Representative's prior written consent.

The Company has agreed that for a period of 12 months from the date of this
prospectus, it will not sell any securities (with the exception of the shares of
Common Stock issuable upon exercise of currently outstanding options or
warrants) without the prior written consent of the Representative, which consent
shall not be unreasonably withheld. The Company has agreed that for a period of
24 months from the date of this Prospectus, it will not sell or issue any
securities pursuant to Regulations S or D promulgated under the Act without the
Representative's prior written consent.

The Company has agreed that, for a period of three years following the date
of this prospectus, the Representative shall be given the right to purchase for
its own account or sell for the account of the Company's officers, directors and
principal shareholders (persons owning 5% or more of the Company's outstanding
voting securities), any securities sold pursuant to the provisions of Rule 144
promulgated by the Commission under the Act.

The Company has also agreed that, for a period of two years from the date
of this Prospectus, if it participates in any merger, consolidation or other
transaction which the Representative has brought to the Company (including an
acquisition of assets or stock for which it pays, in whole or in part, with
shares of Common Stock or other securities) then it will pay for the
Representative's services an amount equal to 5% of the first $3,000,000 of value
paid or received in the transaction, 2 1/2% of any consideration paid over
$3,000,000 and not greater than $5,000,000 and 2% of all such value above
$5,000,000. The Company has also agreed that if, during this two-year period,
someone other than the Representative brings such a merger, consolidation or
other transaction to the Company, and the Representative renders advice in
connection therewith, then upon

51
<PAGE> 54

consummation of the transaction the Company will pay to the Representative as a
fee the appropriate amount as set forth above or as otherwise agreed to between
the Company and the Representative.

The Company has agreed that, for a period of three years after the date of
the closing of this offering, it will allow the Representative to designate one
individual as a nominee for election to the Company's Board of Directors.
Messrs. Klinkhammer and Forsman have agreed to vote shares of Common Stock owned
by them in favor of such nominee. Should the Representative elect not to
nominate an individual for election to the Company's Board of Directors, the
Company has agreed that the Representative shall be entitled to act as an
observer to attend all meetings of the Company's Board of Directors. The
observer will have no voting rights, shall be reimbursed for all out-of-pocket
expenses incurred in attending such meetings and shall be entitled to be
indemnified by the Company against any claims arising out of its participation
at such board meetings. The Company has agreed to hold at least four meetings of
its Board of Directors per year.

The Company has agreed to pay to the Representative a fee of 7% of the
exercise price for each Redeemable Warrant exercised more than 12 months after
the effective date of this prospectus; provided, however, that the
Representative will not be entitled to receive such compensation in Redeemable
Warrant exercise transactions in which (i) they do not provide bona fide
services; (ii) the market price of Common Stock at the time of the exercise is
lower than the exercise price of the Redeemable Warrant; (iii) the Redeemable
Warrants are held in any discretionary account; (iv) disclosure of compensation
arrangement is not made, in addition to the disclosure provided in this
prospectus, in documents provided to holders of Redeemable Warrants at the time
of exercise; (v) the exercise of the Redeemable Warrants is unsolicited; or (vi)
the transaction was in violation of Regulation M promulgated under the Exchange
Act. No Redeemable Warrant solicitation fee will be paid to any NASD member
unless such member has been designated in writing by the Warrantholder.

The Company has also agreed to obtain the written consent of the
Representative prior to issuing any shares of preferred stock.

The Company has agreed, pursuant to the terms of the Underwriting
Agreement, to indemnify and hold harmless the Underwriters, their officers,
directors, employees and agents, and each person, if any, that controls the
Underwriters against certain liabilities arising out of or which are based upon
any untrue statement or alleged untrue statement of a material fact contained in
or which arises out of (i) the registration statement, any preliminary
prospectus, this Prospectus, or any amendment thereof or supplement thereto,
(ii) any blue sky application or other written document executed by the Company
in connection with such documents, (iii) the omission or alleged omission to
state in the registration statement, any supplement thereto, or in any related
blue sky application, a material fact required to be stated therein or necessary
to make the statements therein not misleading, in light of the circumstances in
which they were made. The Company's obligation to indemnify the Underwriters
exists in addition to any other liability that the Company may have. In
addition, the Underwriters have agreed to indemnify and hold harmless the
Company, its directors, each nominee, if any, for a director named in this
Prospectus, each of its officers who have signed the registration statement of
which this Prospectus is a part, and each person, if any, who controls the
Company within the meaning of the Act from and against certain liabilities
arising out of or which are based upon any untrue statement or alleged untrue
statement of a material fact contained in or which arises out of (i) the
registration statement of which this Prospectus is a part, any preliminary
prospectus, this Prospectus, or any amendment thereof or supplement thereto,
(ii) which arise out of or are based upon the omission or the alleged untrue
statement or omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading. The
Underwriters' obligation to indemnify the Company exists in addition to any
other liability that the Underwriters may have.

Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Company pursuant
to the Underwriting Agreement, or otherwise, the Company has been advised that
in the opinion of the Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable.

Prior to this offering, there has been no public trading market for the
Units or the Redeemable Warrants. Consequently, the public offering price of the
Units and the exercise price of the Redeemable Warrants have

52
<PAGE> 55

been determined by negotiations between the Company and the Representative.
Among the factors considered in determining the offering price were the market
price of the Common Stock, the Company's financial condition and prospects,
market prices of similar securities of comparable publicly traded companies,
certain financial and operating information of companies engaged in activities
similar to those of the Company and general conditions of the securities
markets.

In connection with this offering, certain Underwriters and selling group
members and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market price of the Common Stock.
Such transactions may include stabilization transactions effected in accordance
with Rule 104 of Regulation M, pursuant to which such persons may bid for or
purchase Common Stock for the purpose of stabilizing its market price. The
Underwriters also may create a short position for the account of the
Underwriters by selling more Common Stock in connection with the offering than
they are committed to purchase from the Company, and in such case may purchase
Common Stock in the open market following completion of the offering to cover
all or a portion of such short position. The Underwriters may also cover all or
a portion of such short position by exercising the Overallotment Option referred
to above. In addition, the Representative may impose "penalty bids" under
contractual arrangements with the Underwriters whereby it may reclaim from an
Underwriter (or dealer participating in the offering) for the account of other
Underwriters, the selling concession with respect to Common Stock that is
distributed in the offering but subsequently purchased for the account of the
Underwriters in the open market. Any of the transactions described in this
paragraph may result in the maintenance of the price of the Common Stock at a
level above that which might otherwise prevail in the open market. None of the
transactions described in this paragraph is required, and, if they are
undertaken, they may be discontinued at any time.

The foregoing is a brief summary of certain provisions of the Underwriting
Agreement and does not purport to be a complete statement of its terms and
conditions. A copy of the Underwriting Agreement is on file with the Commission
as an exhibit to the registration statement of which this prospectus is a part.
See "Available Information."

LEGAL MATTERS

The validity of the Common Stock offered hereby was passed upon for the
Company by Briggs and Morgan, Professional Association, Minneapolis, Minnesota.
Matters pertaining to the regulation of the Company by the Gaming Commission and
the Division under the laws and regulations of the State of Colorado were passed
upon by Isaacson, Rosenbaum, Woods and Levy, P.C., Denver, Colorado. Certain
legal matters were passed upon for the underwriters by Morse, Zelnick, Rose &
Lander, LLP, New York City, New York.

EXPERTS

The consolidated balance sheets of Jubilee Gaming Enterprises, Inc. and
Subsidiaries as of December 31, 1995 and 1996 and the related consolidated
statements of operations, shareholders' equity and cash flows for the years then
ended included in this prospectus and elsewhere in the registration statement
have been audited by Schechter Dokken Kanter Andrews & Selcer, Ltd
("Schechter"), independent public accountants, as indicated in their report with
respect thereto, and are included herein in reliance upon the authority of said
firm as experts in giving said report. The balance sheet of 353 Myers Avenue
Limited Partnership as of December 31, 1995 and the related statements of
operations and partners' equity (deficit) and cash flows for the year then ended
and for the period January 1, 1996 through April 22, 1996 included in this
prospectus and elsewhere in the registration statement have been audited by
Schechter, as indicated in their report with respect thereto, and are included
herein in reliance upon the authority of said firm as experts in giving said
report.

53
<PAGE> 56

ADDITIONAL INFORMATION

The Company has filed with the Commission a Registration Statement on Form
SB-2 under the Act, with respect to the Units. For further information about the
Company and the Units, reference is made to the registration statement and to
the financial statements and exhibits filed as a part thereof. Statements
contained in this prospectus as to the contents of any contract or any other
document are not necessarily complete and in each instance reference is made to
the copy of such contract or document filed as an exhibit to the registration
statement, each such statement being qualified in all respects by such
reference. For further information with respect to the Company and the
securities offered hereby, reference is made to the registration statement,
including the exhibits filed or incorporated as part thereof, copies of which
can be inspected at and copied at the Public Reference Section of the Commission
at 450 Fifth Street, N.W., Room 1024, Washington D.C. 20459, and at the
Commission's regional offices at 74 Park Place, 14th Floor, New York, New York
10007 and Suite 1400, Northwestern Atrium Center, 500 West Madison Street,
Chicago, Illinois 60661. Copies of such materials can also be obtained at
prescribed rates by writing to the Public Reference Section of the Commission at
450 Fifth Street, N.W. Washington, D.C. 20549. The Commission also maintains a
World Wide Web site which provides on-line access to registration statements,
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission at the address
"http://www.sec.gov."

The Company will become a reporting company under the Exchange Act upon
completion of this offering, and intends to furnish to its shareholders annual
reports containing financial statements audited by independent accountants and
quarterly reports containing unaudited financial information for each of the
first three quarters of each year.

54
<PAGE> 57

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE NUMBER
-----------
<S> <C>
JUBILEE GAMING ENTERPRISES, INC. AND SUBSIDIARIES:
Independent Auditors' Report.............................. F-2
Consolidated Balance Sheets at December 31, 1995 and 1996
and March 31, 1997 (unaudited)......................... F-3
Consolidated Statements of Operations for the years ended
December 31, 1995 and 1996 and for the three months
ended March 31, 1996 and 1997 (unaudited).............. F-4
Consolidated Statements of Shareholders' Equity for the
years ended December 31, 1995 and 1996 and for the
three months ended March 31, 1997 (unaudited).......... F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1995 and 1996 and for the three months
ended March 31, 1996 and 1997 (unaudited).............. F-6
Notes to Consolidated Financial Statements................ F-8

353 MYERS AVENUE LIMITED PARTNERSHIP
Independent Auditors' Report.............................. F-17
Balance Sheet at December 31, 1995........................ F-18
Statements of Operations and Partners' Equity (Deficit)
for the year ended December 31, 1995, for the period
January 1, 1996, to April 22, 1996, and for the three
months ended March 31, 1996 (unaudited)................ F-19
Statements of Cash Flows for the year ended December 31,
1995, for the period January 1, 1996, to April 22,
1996, and for the three months ended March 31, 1996
(unaudited)............................................ F-20
Notes to Financial Statements............................. F-21

PRO FORMA FINANCIAL INFORMATION:
Pro Forma Financial Information........................... F-27
Pro Forma Consolidated Statement of Operations for the
year ended December 31, 1996 (unaudited)............... F-28
</TABLE>

F-1
<PAGE> 58

INDEPENDENT AUDITORS' REPORT

Board of Directors
Jubilee Gaming Enterprises, Inc.
and Subsidiaries
Minneapolis, Minnesota

We have audited the accompanying consolidated balance sheets of Jubilee Gaming
Enterprises, Inc. and Subsidiaries (formerly National Gaming Companies, Inc.) as
of December 31, 1995 and 1996, and the related consolidated statements of
operations, shareholders' equity and cash flows for the years then ended. 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Jubilee
Gaming Enterprises, Inc. and Subsidiaries as of December 31, 1995 and 1996, and
the consolidated results of its operations and cash flows for the years then
ended, in conformity with generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. The Company's deficiency in
working capital and limited capital resources raises substantial doubt about its
ability to continue as a going concern. Management's plans concerning these
matters are described in Note 11 to the consolidated financial statements. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

/S/ SCHECHTER DOKKEN KANTER

ANDREWS & SELCER LTD

Minneapolis, Minnesota

February 21, 1997,

June 6, 1997 for Note 4

F-2
<PAGE> 59

JUBILEE GAMING ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 1995 AND 1996

ASSETS

<TABLE>
<CAPTION>
MARCH 31,
1995 1996 1997
---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash.................................................. $ 1,794 $ 134,902 $ 147,112
Cash escrow........................................... 125,000 616,780 364,504
Receivables........................................... 15,003
Due from 353 Myers Avenue Limited Partnership......... 75,000
Prepaid expenses...................................... 98,355 93,210
---------- ---------- -----------
Total current assets.......................... 216,797 850,037 604,826
---------- ---------- -----------
Investments............................................. 2,224,525
----------
Property and equipment:
Land and improvements................................. 1,458,113 3,991,109 4,019,041
Buildings and improvements............................ 25,000 2,225,485 2,225,485
Equipment............................................. 75,000 551,967 556,319
Vehicles.............................................. 17,016 17,016
Gaming equipment...................................... 439,233 439,233
Costs of projects in progress......................... 282 146,943 317,594
---------- ---------- -----------
1,558,395 7,371,753 7,574,688
Less accumulated depreciation......................... 1,893 667,263 727,228
---------- ---------- -----------
1,556,502 6,704,490 6,847,460
---------- ---------- -----------
Deferred financing and licensing costs, net of
accumulated amortization of $62,314 and $107,852 for
1995 and 1996, respectively, and $149,889 at March 31,
1997.................................................. 9,641 233,877 201,840
Deferred offering costs................................. 100,000 167,719
---------- ---------- -----------
9,641 333,877 369,559
---------- ---------- -----------
$4,007,465 $7,888,404 $ 7,821,845
========== ========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Note payable, bank.................................... $ 116,013
Current portion of long-term debt:
Notes payable, shareholders........................ $ 10,000 $ 18,000 18,000
Real estate and other debt......................... 41,113 218,755 244,366
Notes payable, related parties........................ 575,000
Due to National Lodging Companies, Inc. .............. 260,000 195,542 238,640
Accounts payable...................................... 57,337 49,582
Accrued expenses...................................... 279,550 849,985 879,405
---------- ---------- -----------
Total current liabilities..................... 1,165,663 1,339,619 1,546,006
---------- ---------- -----------
Long-term debt, net of current portion:
Notes payable, shareholders........................... 90,000
Real estate and other debt............................ 555,740 4,755,202 4,694,044
---------- ---------- -----------
645,740 4,755,202 4,694,044
---------- ---------- -----------
Shareholders' equity:
Preferred stock; no par value, authorized 5,000,000
shares; no shares outstanding
Common stock; no par value, authorized 45,000,000
shares; issued and outstanding 1,573,773 and
1,619,676 shares at December 31, 1995 and 1996,
respectively, and 1,623,610 at March 31, 1997...... 2,624,254 2,761,754 2,776,754
Deficit............................................... (428,192) (968,171) (1,194,959)
---------- ---------- -----------
2,196,062 1,793,583 1,581,795
---------- ---------- -----------
$4,007,465 $7,888,404 $ 7,821,845
========== ========== ===========
</TABLE>

See notes to consolidated financial statements.

F-3
<PAGE> 60

JUBILEE GAMING ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
----------------------- -----------------------
1995 1996 1996 1997
---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenue:
Casino...................................... $2,028,484 $ 593,714
Food and beverage........................... 79,017 18,149
Arcade and carnival......................... 113,170 20,461
Other....................................... $ 14,978 41,633 $ 12,300 12,378
---------- ---------- ---------- ----------
Total revenue................................. 14,978 2,262,304 12,300 644,702
---------- ---------- ---------- ----------
Costs and expenses:
Operating departments:
Casino................................... 771,914 226,157
Food and beverage........................ 450,585 119,267
Arcade and carnival...................... 68,507 18,669
Other.................................... 96,808 24,083
General and administrative.................. 410,365 1,163,767 132,205 265,413
Interest.................................... 30,749 329,474 29,047 115,899
Depreciation and amortization............... 2,056 299,441 3,176 102,002
---------- ---------- ---------- ----------
Total costs and expenses...................... 443,170 3,180,496 164,428 871,490
---------- ---------- ---------- ----------
Loss before extraordinary item................ (428,192) (918,192) (152,128) (226,788)
Extraordinary item, gain on termination of
lease and extinguishment of debt............ 378,213
---------- ---------- ---------- ----------
Net loss...................................... $ (428,192) $ (539,979) $ (152,128) $ (226,788)
========== ========== ========== ==========
Loss per common share:
Loss before extraordinary item.............. $ (.26) $ (.56) $ (.09) $ (.14)
Extraordinary item.......................... .23
---------- ---------- ---------- ----------
Net loss per common share................... $ (.26) $ (.33) (.09) (.14)
========== ========== ========== ==========
Common shares outstanding..................... 1,643,376 1,643,376 1,643,376 1,647,310
========== ========== ========== ==========
</TABLE>

See notes to consolidated financial statements.

F-4
<PAGE> 61

JUBILEE GAMING ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK TOTAL
----------------------- SHAREHOLDERS'
SHARES AMOUNT DEFICIT EQUITY
--------- ---------- ----------- -------------
<S> <C> <C> <C> <C>
Issuance of stock for investment in casino
project and stock of National Lodging
Companies, Inc. (See Note 1) ($2.41 per
share)...................................... 1,022,951 $2,474,254 $2,474,254
Issuance of stock for stock of Regent Gaming
Enterprises (See Note 1) ($.05 per share)... 393,444 20,000 20,000
Issuance of stock for services ($1.91 per
share)...................................... 26,230 50,000 50,000
Sale of stock for cash ($.61 per share)....... 131,148 80,000 80,000
Net loss...................................... $ (428,192) (428,192)
--------- ---------- ----------- ----------
Balance, December 31, 1995.................... 1,573,773 2,624,254 (428,192) 2,196,062
Issuance of stock as partial payment on
purchase of land ($3.81 per share).......... 26,230 100,000 100,000
Issuance of stock for debt upon exercise of
warrants ($1.91 per share).................. 19,673 37,500 37,500
Net loss...................................... (539,979) (539,979)
--------- ---------- ----------- ----------
Balance, December 31, 1996.................... 1,619,676 2,761,754 (968,171) 1,793,583
Issuance of stock for services ($3.81 per
share) (unaudited).......................... 3,934 15,000 15,000
Net loss (unaudited).......................... (226,788) (226,788)
--------- ---------- ----------- ----------
Balance, March 31, 1997 (unaudited)........... 1,623,610 $2,776,754 $(1,194,959) $1,581,795
========= ========== =========== ==========
</TABLE>

See notes to consolidated financial statements.

F-5
<PAGE> 62

JUBILEE GAMING ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
-------------------------- ----------------------
1995 1996 1996 1997
----------- ----------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
Net loss..................................... $ (428,192) $ (539,979) $(152,128) $(226,788)
Adjustments to reconcile net loss to cash
provided by (used in) operating activities:
Depreciation and amortization.............. 2,056 299,441 3,176 102,002
Discount on note payable, shareholder...... 3,250
Extraordinary gain on termination of lease
and extinguishment of debt.............. (378,213)
Gain on disposal of assets................. (3,228)
Changes in operating assets and
liabilities:
Receivables............................. (15,003) 15,003 15,003
Prepaid expenses........................ 19,569 (1,581) 5,145
Accounts payable........................ (29,844) (7,755)
Accrued expenses........................ 279,550 555,794 144,732 29,420
----------- ----------- --------- ---------
Cash flows provided by (used in) operating
activities.............................. (158,339) (61,457) 9,202 (97,976)
----------- ----------- --------- ---------
Cash flows from investing activities:
Cash escrow:
Deposits................................ (400,000) (731,560) (127,568) (6,983)
Withdrawals............................. 275,000 239,780 259,259
Investments................................ (878,057)
Purchase of land and building.............. (658,113) (736,999) (202,935)
Payment of financing and licensing costs... (9,804) (231,531) (9,417) (10,000)
Deferred offering costs.................... (100,000) (67,719)
Cash of business acquired.................. 154,094
----------- ----------- --------- ---------
Net cash used in investing activities...... (1,670,974) (1,406,216) (136,985) (28,378)
----------- ----------- --------- ---------
Cash flows from financing activities:
Proceeds from:
Notes payable:
Related parties....................... $ 575,000 $ 110,000 $ 110,000
Banks................................. 415,000
Loan from National Lodging Companies,
Inc. ................................. 300,000 140,792 28,200 $ 43,098
Issuance of long-term debt.............. 80,000 3,564,000
Issuance of stock....................... 999,254 15,000 15,000
Line of credit.......................... 116,013
Payments on:
Notes payable:
Related parties....................... (662,500)
Banks................................. (415,000)
Long-term debt.......................... (8,147) (1,361,261) (9,973) (35,547)
Loan from National Lodging Companies,
Inc................................... (40,000) (205,250) (2,214)
Loan to 353 Myers Avenue Limited
Partnership from escrow................. (75,000)
----------- ----------- --------- ---------
Net cash provided by financing
activities.............................. 1,831,107 1,600,781 126,013 138,564
----------- ----------- --------- ---------
Net increase (decrease) in cash.............. 1,794 133,108 (1,770) 12,210
Cash, beginning of period.................... -0- 1,794 1,794 134,902
----------- ----------- --------- ---------
Cash, end of period.......................... $ 1,794 $ 134,902 $ 24 $ 147,112
=========== =========== ========= =========
Interest paid................................ $ 10,666 $ 317,332 $ 28,567 $ 102,041
=========== =========== ========= =========
</TABLE>

See notes to consolidated financial statements.

F-6
<PAGE> 63

JUBILEE GAMING ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
-------------------------- ----------------------
1995 1996 1996 1997
----------- ----------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
Supplemental disclosure of non-cash
transactions:
Stock of National Lodging Companies, Inc.
issued to sellers of a partnership and
land.................................... $ 1,575,000
===========
Stock issued for services.................. $ 50,000 $ 15,000
=========== =========
Note payable issued for services........... $ 25,000
===========
Contracts for deed/note payable issued to
acquire land............................ $ 600,000 $ 700,000
=========== ===========
Stock issued to acquire land............... $ 100,000
===========
Stock issued for cancellation of portion of
note payable, related party............. $ 22,500
===========
Forgiveness of principal and accrued
interest on payoff of long-term debt.... $ 68,814
===========
Capital lease termination:
Net reduction in net book value of
property and equipment and capital
lease obligation,
including accrued interest............ $ 309,399
===========
Capital lease restructure:
Purchase of leased and new gaming
equipment, and related debt
incurred.............................. $ 915,388
Reduction in carrying amount of
equipment acquired for the excess of
the lease obligation over the net book
value of the leased assets............ (503,523)
-----------
Carrying amount of gaming equipment
acquired.............................. $ 411,865
===========
Decrease in building costs due to write-off
of disputed payable..................... $ 30,384
===========
Acquisition of business:
Fair value of assets acquired.............. $ 3,902,311
Fair value of liabilities assumed.......... (2,246,561)
-----------
Purchase price, net of cash received....... $ 1,655,750
===========
</TABLE>

See notes to consolidated financial statements.

F-7
<PAGE> 64

JUBILEE GAMING ENTERPRISES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information with respect to the three

months ended March 31, 1996 and 1997, is unaudited)

1. Organization and nature of business:

Nature of business:
Jubilee Gaming Enterprises, Inc. (the Company), formerly National Gaming
Companies, Inc., was in the development stage through April 22, 1996. The
year ended December 31, 1996 is the first period in which the Company has
been an operating company. Its primary business is the development and
operation of casino and hotel properties including the Jubilee Casino in
Cripple Creek, Colorado.

Organization:
The 1995 financial statements present the combined results of the Company,
Regent Gaming Enterprises Inc. (Regent) and the acquisition activities,
related to Jubilee Casino, of National Lodging Companies, Inc. (NLC) as if
all interests had been combined on January 1, 1995. The transfer of assets
and exchange of stock as explained below have been treated in a manner
similar to a pooling of interests due to common ownership and control. Two
officers of NLC, including its President, became significant shareholders
of Regent when it was formed, and Regent worked in the offices of NLC.
Regent worked with NLC as NLC continued to expend resources in structuring
the acquisition activities of the Company and the purchase agreement for
Jubilee Casino in Colorado. Capitalized investment activities by NLC prior
to 1995 related to Jubilee Casino totaled $109,880. All intercompany
transactions have been eliminated.

Jubilee Gaming Enterprises, Inc.:
The Company was incorporated on August 29, 1995 to succeed to Regent and
to the interests of NLC related to the development of Jubilee Casino in
Colorado. Stock of the Company was initially issued on October 30, 1995
to an individual and as explained below to the shareholders of Regent
and to NLC.

Regent Gaming Enterprises Inc.:
Regent was incorporated in 1994 but did not commence business activities
until January 1995. Activities were limited to capital formation and
analyzing, negotiating and planning for the acquisition of Jubilee
Casino.

In October 1995 the shareholders of Regent exchanged all of their stock
for approximately 25% of the Company's common stock, and Regent thereby
became a subsidiary of the Company. The Company's stock issued has been
valued at $20,000 based on the capital contribution to Regent when it
was formed.

National Lodging Companies, Inc.:
Beginning in 1994, NLC was seeking a project for casino development
primarily in Colorado. Through October 1995, NLC had expended
approximately $900,000 related to the Jubilee Casino and adjacent
property for land option payments, environmental tests, preliminary
architectural drawings, construction plans, finder fees, legal costs,
salaries and travel expenses. NLC contributed its rights to the Jubilee
Casino, its rights to another project (see Note 3), and 393,750 shares
of its stock to the Company in exchange for 65% of the Company's common
stock. The Company has expensed, in 1995, $174,500 of the investment
related to recurring costs.

F-8
<PAGE> 65

JUBILEE GAMING ENTERPRISES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(Information with respect to the three

months ended March 31, 1996 and 1997, is unaudited)

2. Summary of significant accounting policies:

Principles of consolidation:
The consolidated financial statements for the year ended December 31, 1996
and the three months ended March 31, 1997, include the accounts of Jubilee
Gaming Enterprises, Inc. and its subsidiaries, 353 Myers Avenue Limited
Partnership, Regent Gaming Enterprises Inc. and Cripple Creek Corporation.
All intercompany transactions have been eliminated.

Cash:
Cash includes the amounts required for hopper inventories and amounts
necessary for exchanges with patrons.

Property and equipment:
Property and equipment are stated at cost. Depreciation is provided using
the straight-line method over the estimated useful lives of the assets.

Building.................................. 40 years
Furniture and equipment................... 5-7 years

Deferred financing and licensing costs:
Bank fees and other expenses associated with obtaining a bridge loan are
being amortized over the term of the loan.

Licensing costs are stated at cost and are being amortized over 60 months
using the straight-line method.

Deferred offering costs:
Underwriting, accounting and legal fees associated with the Company's
initial public offering will be offset against the net proceeds of the
offering upon completion.

Stock issued for services:
Common stock has been issued to an individual for services related to
locating the Jubilee Casino and was valued by the Company's board of
directors at the estimated fair value of services rendered.

Revenue recognition:
Revenue from casino operations is the net win from gaming activities, which
is the difference between gaming wins and losses.

Promotional allowances and advertising costs:
Revenue does not include the retail amount of food and beverage provided
gratuitously to customers, which was $235,000 and $247,000 in 1995 and
1996, respectively, and $44,000 in the three months ended March 31, 1997.

Advertising costs are expensed as incurred. Total advertising costs were
approximately $40,000 and $72,000 for 1995 and 1996, respectively, and
$10,100 in the three months ended March 31, 1997.

Loss per common share:
Pursuant to Securities and Exchange Commission Staff Accounting Bulletin
No. 83, stock issued by the Company at prices less than the initial
offering price during the twelve months immediately preceding the

F-9
<PAGE> 66

JUBILEE GAMING ENTERPRISES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(Information with respect to the three

months ended March 31, 1996 and 1997, is unaudited)

2. Summary of significant accounting policies (continued):

Loss per common share (continued):

initial public offering, plus common stock equivalents granted at exercise
prices less than the initial public offering price during the same period,
have been included in the determination of shares used in the calculation
of historical net loss per share as if they were outstanding for all
periods.

Interim financial information:

The accompanying financial statements as of March 31, 1997, and for the
three month periods ended March 31, 1997 and 1996 are unaudited, but, in
the opinion of management of the Company, reflect all adjustments
(consisting of normal and recurring accruals) necessary for a fair
presentation. The results of operations for the three month period ended
March 31, 1997 are not necessarily indicative of the results that may be
expected for the full year ending December 31, 1997.

Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Actual
results could differ from those estimates.

3. Investment and acquisitions:

Investments consist of the following at December 31, 1995:

<TABLE>
<S> <C>
353 Myers Avenue Limited Partnership:
Cash in escrow for seller........................ $ 100,000
NLC stock in escrow for seller................... 1,275,000
Capitalized costs................................ 434,844
----------
1,809,844
Capitalized costs in connection with land
acquisition...................................... 414,681
----------
$2,224,525
==========
</TABLE>

Acquisition of 353 Myers:
In December 1994, NLC sent an initial letter of intent to 353 Myers Avenue
Limited Partnership (353 Myers), the owner of the Jubilee Casino, stating
its intent to acquire the general and limited interests in the partnership.
Regent and NLC worked together in 1995 to finance the acquisition and
negotiate final terms.

On October 31, 1995, the Company entered into a binding purchase agreement
for the acquisition of 353 Myers for $1,375,000 by placing in escrow
$100,000 cash and 318,750 shares of NLC stock valued at $4 per share. The
per share value of NLC stock was determined through negotiations with the
owners of 353 Myers based upon other stock transactions of NLC prior to the
1994 letter of intent. The final closing, including transfer of title to
the NLC stock and the partnership interests, was contingent upon the
Company obtaining gaming regulatory approval from the Colorado Gaming
Division. The Company received Colorado approval on April 19, 1996 and the
acquisition was completed on April 22, 1996. The acquisition has been
accounted for by the purchase method of accounting and the purchase price
along with capitalized acquisition costs totalling $1,810,126 approximates
the fair value of the net assets

F-10
<PAGE> 67

JUBILEE GAMING ENTERPRISES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(Information with respect to the three

months ended March 31, 1996 and 1997, is unaudited)

3. Investment and acquisitions (continued):

Acquisition of 353 Myers (continued):

acquired. The operating results of this acquisition are included in the
Company's consolidated results of operations from the date of acquisition.

The following unaudited pro forma summary presents the consolidated results
of operations as if the acquisition had occurred at the beginning of
periods presented and do not purport to be indicative of what would have
occurred had the acquisition been made as of those dates or of results
which may occur in the future.

<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31, THREE MONTHS ENDED
------------------------- MARCH 31,
1995 1996 1996
----------- ----------- ------------------
<S> <C> <C> <C>
Revenue........................................... $ 2,995,923 $ 3,131,795 $ 708,029
=========== =========== =========
Loss before extraordinary item.................... $(1,360,157) $(1,038,083) $(277,216)
=========== =========== =========
Net loss.......................................... $(1,360,157) $ (659,870) $(277,216)
=========== =========== =========
Loss per common share:
Loss before extraordinary item.................. $ (.83) $ (.63) $ (.17)
Extraordinary item................................ .23
----------- ----------- ---------
Net loss.......................................... $ (.83) $ (.40) $ (.17)
=========== =========== =========
</TABLE>

Acquisitions of land:
On October 31, 1995, the Company acquired land and a building and its
contents (operated as a museum) adjacent to the Jubilee Casino in two
separate transactions totaling $1,550,000. The purchase price was paid with
$650,000 cash, $300,000 of NLC stock (75,000 shares valued at $4 per share)
and the issuance of two notes payable aggregating $600,000.

Beginning in 1994 and continuing through September 1995, NLC made
contributions to Grand National Casino and Hotel, Inc. (The Grand National)
in exchange for a one-third ownership in that entity. The Grand National
owned land in Cripple Creek, had options on contiguous land and was
planning to develop a casino and hotel on those properties. In late 1995,
NLC and the two-thirds owner of The Grand National began negotiations and
legal actions to settle differences over the proposed project. Contingent
upon settling these differences, NLC contributed to the Company its rights
to The Grand National as part of the consideration in exchange for 65% of
the Company's stock (See Note 1). In January 1996, the two parties agreed
to a settlement and the Company became the owner of the rights to land
which was subsequently purchased by the Company.

On March 1, 1996, the Company acquired a parcel of land in Cripple Creek,
Colorado. The purchase price was $175,000, with $10,000 paid on March 1 and
the remaining $165,000 paid at closing on July 10, 1996. Interest at 10% or
$1,375 per month was paid on the outstanding balance up to the closing.

On June 14, 1996, the Company acquired another parcel of land in Cripple
Creek, Colorado. The purchase price was $1,000,000, including $200,000 in
cash, 26,230 shares of the Company's stock valued at $3.81 per share, and a
note payable to the seller for $700,000. The terms of the 10-year note are
interest only for the first 12 months at 9% with the principal to be
amortized over the next nine years.

F-11
<PAGE> 68

JUBILEE GAMING ENTERPRISES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(Information with respect to the three

months ended March 31, 1996 and 1997, is unaudited)

3. Investment and acquisitions (continued):

Acquisitions of land (continued):

The above loans were retired in October 1996 with proceeds from the Miller
& Schroeder bridge loan. The holder of the $700,000 note payable forgave
$50,000 of principal and $18,814 of accrued interest resulting in an
extraordinary gain of $68,814.

4. Note payable, bank:

Note payable, bank, represents borrowings under a $125,000 line of credit.
This note, originally due June 6, 1997, has been extended to August 6, 1997
and requires monthly interest payments at the rate of .75% over prime (8.5%
at March 31, 1997). The borrowings are guaranteed by substantially all of
the Company's shareholders.

5. Long-term debt:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------- MARCH 31,
1995 1996 1997
-------- ---------- ----------
<S> <C> <C> <C>
Notes payable, shareholders, unsecured, with
interest-only monthly payments at 12% to January 25,
1997. ............................................... $ 80,000
Note payable, shareholder, with annual payments of
$10,000, interest imputed at 12%, to November 1,
1997, guaranteed by the Company's majority
shareholder. ........................................ 20,000 $ 18,000 $ 18,000
Contracts for deed, with monthly payments totaling
$7,281 including interest at 8% to November 1, 2005,
secured by land. .................................... 596,853
Bridge loan, promissory note payable with interest
payable monthly at 2.25 points over a prime lending
rate (rate was 10.75% at March 31, 1997), balance due
in full May 1, 1998, secured by senior and junior
positions on the Company's real property, guaranteed
by substantially all of the Company's shareholders
and the majority owner of NLC. The maturity date can
be extended to November 1, 1999 if certain repayments
and other conditions are met. ....................... 3,564,000 3,564,000
Real estate debt, promissory note payable in monthly
installments of $7,000 including interest at 12%
through December 2001 at which time remaining
principal is due. Secured by real property. ......... 504,860 500,938
Equipment loan, payable in monthly installments of
$24,106 including interest at 12% through November
2000. Secured by related equipment. ................. 900,436 870,083
Other.................................................. 4,661 3,389
-------- ---------- ----------
696,853 4,991,957 4,956,410
Less current portion................................... 51,113 236,755 262,366
-------- ---------- ----------
$645,740 $4,755,202 $4,694,044
======== ========== ==========
</TABLE>

F-12
<PAGE> 69

JUBILEE GAMING ENTERPRISES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(Information with respect to the three

months ended March 31, 1996 and 1997, is unaudited)

5. Long-term debt (continued):

Interest of $8,113, $69,808 and $22,748 was capitalized in 1995 and 1996
and the three months ended March 31, 1997, respectively, on certain land in
Colorado as the Company was performing activities necessary to get it ready
for planned expansion.

Principal amounts due in future years are as follows:

<TABLE>
<CAPTION>
YEAR AMOUNT
- ---- ----------
<S> <C>
1997............................................... $ 236,755
1998............................................... 3,807,423
1999............................................... 274,296
2000............................................... 284,978
2001............................................... 388,505
----------
$4,991,957
==========
</TABLE>

6. Capital lease restructure and termination:

Prior to its acquisition by Jubilee, 353 Myers had acquired $1,706,435 of
gaming equipment under capital lease agreements. During 1995 and 1996, 353
Myers was delinquent with respect to payments required under the lease
agreement and was subject to the default provisions of the agreement
including a significant portion of the remaining balance being due on
demand and the repossession of the gaming equipment. In November 1996,
these leases were terminated and all unpaid principal and interest were
forgiven. In conjunction with the termination, approximately 40% of the
original gaming equipment was returned to the lessor and a purchase
agreement was signed on November 18, 1996 for the remaining gaming
equipment.

353 Myers accounted for the gaming equipment returned as a termination of a
capital lease. As a result, the difference between the allocated debt
forgiven and the net book value of the related gaming equipment, is
recorded as an extraordinary gain of $309,399 in the statement of
operations for the year ended December 31, 1996.

353 Myers accounted for the gaming equipment retained as a purchase of a
leased asset by the lessee during the lease term. As a result, the
difference between the allocated debt forgiven and the net book value of
the retained gaming equipment was recorded as a reduction of $503,523 in
the purchase price of the gaming equipment acquired under the new
agreement. The debt obligation under the new agreement is included in
long-term debt on the balance sheet.

Amortization of $219,878 and $24,373 is included in depreciation expense
for 1996, and the three months ended March 31, 1997, respectively.

7. Related party transactions:

The Company borrowed $575,000 from a shareholder and another individual
during 1995. The notes were due November 1, 1996. Notes payable to a
shareholder totaled $500,000 with interest-only monthly payments of $6,250
at 15%, increasing to $8,333 at 20% on June 1, 1996. The Company issued
warrants to this shareholder allowing for the purchase of 70,820 shares of
the Company's common stock. Another note for $75,000 was due to an
individual and called for interest-only monthly payments of $938 at 15%,
increasing to $1,250 at 20% on June 1, 1996. The Company issued warrants to
this individual allowing for

F-13
<PAGE> 70

JUBILEE GAMING ENTERPRISES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(Information with respect to the three

months ended March 31, 1996 and 1997, is unaudited)

7. Related party transactions (continued):
the purchase of 19,673 shares of the Company's common stock. The warrants
issued in these transactions are exercisable at $1.91 per share at any time
through November 1, 2000. On September 15, 1996, this individual exercised
warrants for 19,673 shares of stock. These notes were secured by a deed of
trust on the land acquired by the Company on October 31, 1995. On January
17 and February 1, 1996, the Company borrowed $110,000 from a shareholder
and two other individuals. The loans bore interest at 20% and were due
January 17 and February 1, 1997. In conjunction with the loans, the Company
issued warrants for the purchase of 17,311 shares of the Company's common
stock at $1.91 per share. These loans were paid off from the proceeds of
the $3,564,000 Miller & Schroeder bridge loan. Interest expense on notes
payable to related parties was $14,375 and $96,082 for 1995 and 1996,
respectively.

The Company received cash advances from NLC totaling $300,000 in 1995, of
which $40,000 was repaid at December 31, 1995. The Company received
additional cash advances of $140,792 and $43,098 in 1996 and for the three
months ended March 31, 1997, respectively, with repayments of $205,250
during 1996. The advances are unsecured and are noninterest bearing.

The Company entered into a development agreement with NLC covering its
services from inception of the Company through the completion and opening
of the Jubilee Casino expansion. The agreement calls for a payment of one
percent of the casino expansion and hotel project cost, not to exceed
$140,000. Included in amounts due to NLC at December 31, 1996 and March 31,
1997 are $15,771 and $41,685, respectively, for development fees. Charges
for development fees for the year ended December 31, 1996 and the three
months ended March 31, 1997 were $30,603 and $25,914, respectively.

8. Income taxes:

The Company has net loss carryforwards of approximately $425,000 at
December 31, 1996 that expire in 2000 and 2001. The Company also has
temporary deductible differences of approximately $545,000 at December 31,
1996, relating primarily to accrued salaries not deductible for income tax
purposes until paid. Due to its accumulated net loss, the Company has a
deferred tax asset of $388,000. However, this deferred tax asset has been
reduced to zero through a valuation allowance.

9. Fair value of financial instruments:

The estimated fair values of the Company's financial instruments, which are
included in the balance sheet, are as follows:

<TABLE>
<CAPTION>
1995 1996
-------------------- ------------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Assets:
Cash......................................... $ 1,794 $ 1,794 $ 134,902 $ 134,902
Cash escrow.................................. 125,000 125,000 616,780 616,780
Liabilities:
Long-term debt:
Notes payable, shareholders.................. 100,000 100,000 18,000 18,000
Real estate and other debt................... 596,853 596,853 4,973,957 4,973,957
Notes payable, Related parties............... 575,000 575,000
</TABLE>

F-14
<PAGE> 71

JUBILEE GAMING ENTERPRISES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(Information with respect to the three

months ended March 31, 1996 and 1997, is unaudited)

9. Fair value of financial instruments (continued):

<TABLE>
<CAPTION>
MARCH 31, 1997
------------------------
CARRYING FAIR
AMOUNT VALUE
---------- ----------
<S> <C> <C>
Assets:
Cash...................................................... $ 147,112 $ 147,112
Cash escrow............................................... 364,504 364,504
Liabilities:
Notes payable, shareholders............................... 18,000 18,000
Real estate and other debt................................ 4,938,410 4,938,410
Notes payable, bank....................................... 116,013 116,013
</TABLE>

The estimated fair value of financial instruments has been determined by
the Company using certain valuation methods described below. Accordingly,
the estimates presented are not necessarily indicative of the amounts that
the Company could realize in a current market exchange or the value that
ultimately will be realized by the Company upon maturity or disposition.
Additionally, because of the variety of valuation techniques permitted
under SFAS No. 107, Disclosure About Fair Value of Financial Instruments,
comparability of fair values among entities may not be meaningful. The use
of different market assumptions and/or estimation methods may have a
material effect on the estimated fair value amounts.

The carrying amounts of the Company's financial instruments approximate
their fair values. The fair value of long-term debt and notes payable is
based on the current rates offered to the Company for debt of the same
maturities.

10. Stock and stock option plans:

In September 1996, the Company adopted the 1996 Stock Option Plan (the
"1996 Plan"), subject to shareholder approval. The 1996 Plan provides for
the granting of options to designated employees and non-employees,
including consultants to the Company, to purchase up to a maximum of
400,000 shares of common stock. In December 1996, the Company granted
options for 100,000 shares. The options vest 25 percent each year for four
years beginning April 23, 1996, and have an exercise price of $4.35 per
share.

The Company adopted an employee stock purchase plan ("the Stock Purchase
Plan") in September 1996, subject to shareholder approval. A total of
150,000 shares of common stock have been reserved for issuance under the
Plan. The Company has not issued any stock under the Stock Purchase Plan.

The Company also adopted the Director Stock Option Plan (the "DOP") in
September 1996, subject to shareholder approval. Up to 200,000 shares are
reserved for the grant of stock options to non-related directors. The
Company has not granted any stock options under the DOP.

On October 11, 1996, the Company declared a 1 for 3.8125 reverse stock
split, whereby each share of common stock outstanding and each share of
authorized but unissued stock existing as of October 11 was converted into
.26229508 of 1 share. The reverse stock split has been reflected in all
share and per share amounts as if the split had occurred on January 1,
1995.

F-15
<PAGE> 72

JUBILEE GAMING ENTERPRISES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(Information with respect to the three

months ended March 31, 1996 and 1997, is unaudited)

11. Financing and management plans:

The Company's consolidated financial statements for the year ended December
31, 1996 have been prepared on a going concern basis which contemplates the
realization of assets and the settlement of liabilities and commitments in
the normal course of business. However, the Company has incurred
substantial losses in the development stage and has a working capital
deficiency of approximately $490,000. The Jubilee Casino has experienced
recurring operating losses since it opened in 1992.

On October 22, 1996, the Company executed the $3,564,000 bridge loan with
Miller & Schroeder Financial, Inc. The loan requires monthly payment of
interest only at an interest rate of 2.25 points over a prime lending rate
and matures in 18 months. The loan is secured by senior and junior
positions on the Company's real property. The proceeds of the loan were
used to replace the seller financing on the Company's land, repay loans to
NLC and other shareholders, and provide funds to begin development on the
parking lots and on the casino expansion and hotel project. The loan
proceeds were reduced by an interest reserve of approximately $500,000
available to pay the interest on the loan. This reserve, along with a
development cost reserve, is shown as cash escrow on the balance sheet.

The Company is in discussions with the same lender for a $15 million
construction loan with which to fund the casino expansion and the hotel
development.

Management of the Company has filed with the Securities and Exchange
Commission a Form SB-2 Registration Statement for the sale of shares of its
common stock to raise additional capital, to retire debt and to expand the
casino and develop a 120-room hotel to be attached to the casino. The
Company has signed a letter of intent with an underwriter for an initial
public offering (IPO) on a firm commitment basis of 1,200,000 units to be
sold by the Company at $5.00 per share. The Company intends to increase the
number of units to be sold to 1,600,000. Each unit consists of one share of
common stock and one redeemable five-year warrant.

If the initial public offering is not successful, the Company will need to
seek additional debt or equity financing, refinance its current debt, or
enter into joint ventures or partnerships to enable it to complete the
casino expansion and the hotel construction. There is no assurance as to
the availability of any of these possible financing sources.

F-16
<PAGE> 73

INDEPENDENT AUDITORS' REPORT

To the Partners
353 Myers Avenue Limited Partnership
dba The Jubilee Casino

We have audited the accompanying balance sheet of 353 Myers Avenue Limited
Partnership dba The Jubilee Casino as of December 31, 1995, and the statements
of operations and partners' equity (deficit), and cash flows for the year then
ended and for the period from January 1, 1996 through April 22, 1996. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of 353 Myers Avenue Limited
Partnership dba The Jubilee Casino as of December 31, 1995, and the results of
its operations and its cash flows for the year then ended and for the period
from January 1, 1996 through April 22, 1996, in conformity with generally
accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 6 to the
financial statements, the Partnership's recurring losses from operations and
limited capital resources raise substantial doubt about its ability to continue
as a going concern. Management's plans in regard to these matters are also
described in Note 6. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

/S/ SCHECHTER DOKKEN KANTER

ANDREWS & SELCER LTD

Minneapolis, Minnesota
February 6, 1997

F-17
<PAGE> 74

353 MYERS AVENUE LIMITED PARTNERSHIP
DBA THE JUBILEE CASINO

BALANCE SHEET -- DECEMBER 31, 1995

ASSETS

<TABLE>
<CAPTION>
1995
----------
<S> <C>
Current assets:
Cash...................................................... $ 206,466
Inventories............................................... 56,203
Prepaid expenses.......................................... 24,491
----------
Total current assets.............................. 287,160
----------
Property and equipment:
Land and improvements..................................... 735,494
Buildings and improvements................................ 2,227,870
Furniture and equipment................................... 472,450
Vehicles.................................................. 17,016
Gaming equipment.......................................... 1,706,435
----------
5,159,265
Accumulated depreciation.................................. 1,287,439
----------
3,871,826
----------
Other assets, net of accumulated amortization of $62,314.... 33,770
----------
$4,192,756
==========
LIABILITIES AND PARTNERS' DEFICIT
Current liabilities:
Current maturities of long-term obligations:
Real estate and other debt............................. $ 30,426
Capital lease obligations.............................. 1,257,819
Due to Jubilee Gaming Enterprises, Inc.................... 75,000
Accounts payable.......................................... 130,633
Accrued liabilities....................................... 258,465
----------
Total current liabilities......................... 1,752,343
----------
Real estate and other debt, net of current maturities..... 510,678
----------
Notes payable, related parties............................ 2,161,130
----------
Partners' deficit......................................... (231,395)
----------
$4,192,756
==========
</TABLE>

See notes to financial statements.

F-18
<PAGE> 75

353 MYERS AVENUE LIMITED PARTNERSHIP
DBA THE JUBILEE CASINO

STATEMENTS OF OPERATIONS AND PARTNERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1, 1996 THREE MONTHS
YEAR ENDED THROUGH ENDED
DECEMBER 31, 1995 APRIL 22, 1996 MARCH 31, 1996
----------------- --------------- ------------------
(UNAUDITED)
<S> <C> <C> <C>
Revenue:
Casino...................................... $ 2,830,696 $ 818,472 $ 643,036
Food and beverage........................... 74,859 34,575 27,957
Arcade and carnival......................... 76,699 27,576 20,384
Other income................................ 31,532 5,268 4,352
----------- ---------- ---------
Total revenues.............................. 3,013,786 885,891 695,729
----------- ---------- ---------
Costs and expenses:
Operating departments:
Casino................................... 1,000,303 286,278 226,607
Food and beverage........................ 499,196 139,894 110,947
Arcade and carnival...................... 65,566 18,184 14,214
Other.................................... 172,712 23,446 18,638
General and administrative.................. 1,075,503 347,814 265,047
Interest.................................... 667,775 101,915 85,537
Depreciation and amortization............... 413,595 124,460 99,827
Impairment loss 523,000
----------- ---------- ---------
Total costs and expenses.................... 4,417,650 1,041,991 820,817
----------- ---------- ---------
Net loss...................................... (1,403,864) (156,100) (125,088)
Partners' deficit, beginning.................. (4,734,563) (231,395) (231,395)
Conversion of related party debt and accrued
interest to equity.......................... 5,907,032 2,197,339
----------- ---------- ---------
Partners' equity (deficit), ending............ $ (231,395) $1,809,844 $(356,483)
=========== ========== =========
</TABLE>

See notes to financial statements.

F-19
<PAGE> 76

353 MYERS AVENUE LIMITED PARTNERSHIP
DBA THE JUBILEE CASINO

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1, THREE MONTHS
YEAR ENDED 1996 THROUGH ENDED
DECEMBER 31, APRIL 22, MARCH 31,
1995 1996 1996
------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss.............................................. $(1,403,864) $ (156,100) $(125,088)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation....................................... 395,974 118,976 95,420
Amortization....................................... 17,619 5,484 4,407
Amortization of loan acquisition fees.............. 132,368
Impairment loss.................................... 523,000
Interest on related party notes converted to
equity........................................... 244,909 36,209 32,304
Changes in operating assets and liabilities:
Inventories, prepaid expenses and other assets..... (9,267) (40,480) (53,713)
Accounts payable................................... (66,967) (13,068) (15,761)
Accrued liabilities................................ 165,891 11,794 50,448
----------- ---------- ---------
Net cash used in operating activities................... (337) (37,185) (11,983)
----------- ---------- ---------
Cash flows used in investment activities, purchase of
property and equipment................................ (20,185)
----------- ---------
Cash flows from financing activities:
Payments on:
Real estate and other debt......................... (38,830) (15,186) (14,865)
Capital lease obligation........................... (7,404)
Advances from (payments to) related party............. 75,000
----------- ---------- ---------
Net cash provided by (used in) financing activities..... 28,766 (15,186) (14,865)
----------- ---------- ---------
Net increase (decrease) in cash......................... 8,244 (52,371) (26,848)
Cash, beginning......................................... 198,222 206,466 206,466
----------- ---------- ---------
Cash, ending............................................ $ 206,466 $ 154,095 $ 179,618
=========== ========== =========
Interest paid........................................... $ 143,752 $ 21,962 $ 19,594
=========== ========== =========
Supplemental disclosure of non-cash financing
activities:
Related party debt and interest converted to partners'
equity............................................. $ 5,907,032 $2,197,339
=========== ==========
</TABLE>

See notes to financial statements.

F-20
<PAGE> 77

353 MYERS AVENUE LIMITED PARTNERSHIP
DBA THE JUBILEE CASINO

NOTES TO FINANCIAL STATEMENTS

(INFORMATION WITH RESPECT TO THE THREE MONTHS ENDED

MARCH 31, 1996, IS UNAUDITED.)

1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES:

Nature of business:

353 Myers Avenue Limited Partnership dba The Jubilee Casino (the
Partnership) operates a casino located in Cripple Creek, Colorado. The
Partnership is subject to the licensing and regulatory requirements of the
Colorado Division of Gaming. The Partnership's gaming license is subject to
certain conditions and periodic renewal.

Cash:

Cash includes the amounts required for hopper inventories and amounts
necessary for exchanges with patrons.

Inventories:

Inventories, consisting principally of food, beverage, arcade prizes and
casino supplies, are stated at the lower of cost (first-in, first-out method) or
market.

Property and equipment:

Property and equipment are stated at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of the related assets:

<TABLE>
<S> <C>
Building.......................................... 40 years
Furniture and equipment........................... 5-7 years
</TABLE>

Revenue recognition:

Revenue from casino operations is the net win from gaming activities, which
is the difference between gaming wins and losses.

Promotional allowances and advertising costs:

Revenue does not include the retail amount of food and beverage provided
gratuitously to customers, which was $57,000 in the period from January 1, 1996
through April 22, 1996, $235,000 in 1995 and $51,000 in the three months ended
March 31, 1996.

Advertising costs are expensed as incurred. Total advertising costs were
$23,000 in the period from January 1, 1996 through April 22, 1996, $40,000 for
1995 and $21,000 in the three months ended March 31, 1996.

Provision for income taxes:

Income taxes on net earnings of the Partnership are payable by the partners
and, accordingly, are not reflected in the financial statements.

F-21
<PAGE> 78

353 MYERS AVENUE LIMITED PARTNERSHIP
DBA THE JUBILEE CASINO

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION WITH RESPECT TO THE THREE MONTHS ENDED

MARCH 31, 1996, IS UNAUDITED.)

1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)

Interim financial information:

The accompanying financial statements for the three month period ended
March 31, 1996 are unaudited, but, in the opinion of management of the
Partnership, reflect all adjustments (consisting of normal and recurring
accruals) necessary for a fair presentation. The results of operations for the
three month period ended March 31, 1996 are not necessarily indicative of the
results that may be expected for the full year ending December 31, 1996.

Accounting estimates:

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

Reclassifications:

Certain reclassifications have been made to the 1995 financial statements
to conform with the 1996 presentation.

2. RELATED PARTY TRANSACTIONS:

Conversion of debt to equity:

Prior to April 23, 1996, the general and substantially all limited partners
of the Partnership were members of one family or were entities controlled by all
or some of those family members (the Partners). Partners' equity (deficit) is
not allocated between the various classes of partners because of common control
and the sale of all Partnership interests to Jubilee Gaming Enterprises, Inc.

In periods prior to 1995, the Partners lent funds to the Partnership to be
repaid at various dates with interest at the prime rate. On June 8, 1995, the
Partners converted a portion of the loans owed to them to Partners' equity and
canceled all accrued interest on the loans. The total amount of loans and
interest converted to equity by the Partners was $5,907,032.

At December 31, 1995, the remaining portions of notes and accrued interest
not converted to equity was $2,161,130. On April 12, 1996, these notes plus
additional accrued interest were converted to equity.

During 1992, loan acquisition fees totaling $520,000 incurred in
conjunction with the issuance of a debt obligation to a related party were
capitalized and were charged to expense over 36 months, the term of the
obligation. The amount charged to expense totaled $132,368 for the year ended
December 31, 1995.

During the period from January 1, 1996 through April 22, 1996 and the year
ended December 31, 1995, total interest expense on notes to related parties was
$36,209 and $455,368, respectively and $32,304 for the three months ended March
31, 1996.

Jubilee Gaming Enterprises, Inc.:

Pursuant to a letter of intent dated December 30, 1994, the Partnership
entered into an escrow agreement with National Lodging Companies, Inc. (NLC)
dated January 17, 1995. The escrow agreement required

F-22
<PAGE> 79

353 MYERS AVENUE LIMITED PARTNERSHIP
DBA THE JUBILEE CASINO

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION WITH RESPECT TO THE THREE MONTHS ENDED

MARCH 31, 1996, IS UNAUDITED.)

2. RELATED PARTY TRANSACTIONS: (CONTINUED)
NLC to place into escrow $400,000 pending a definitive agreement to purchase the
Partnership. Per the agreement, $200,000 of the escrow is to be used to
subsidize the operating expenses of the Casino and $200,000 is to be used as
part of the acquisition price. At December 31, 1995, the Casino had drawn
$75,000 under the agreement for operations. On October 30, 1995, NLC contributed
its rights to the acquisition of the Partnership including the funds in escrow
along with other assets to Jubilee Gaming Enterprises, Inc. (Jubilee) (formerly
National Gaming Companies, Inc.) in exchange for 65% of its stock.

On October 31, 1995, the Partners agreed to sell all their interests in the
Partnership to Jubilee for $1,375,000. As part of the sale, the Partners agreed
to contribute to equity, at closing, all remaining notes due them and to cancel
all related accrued interest. Jubilee placed in escrow $100,000 cash and 318,750
shares of NLC stock valued at $4 per share. The per share value of NLC stock was
determined through negotiations with the Partners based upon other stock
transactions of NLC prior to the 1994 letter of intent. The final closing,
including transfer of title to the NLC stock and the Partnership's interest, was
contingent upon Jubilee obtaining gaming regulatory approval from the Colorado
Gaming Division. The necessary Colorado approvals were received on April 19,
1996 and the acquisition was completed on April 22, 1996.

Impairment loss:

In connection with the agreement to sell, property and equipment were
deemed to be impaired and were written down to their fair value. Fair value,
which was determined by reference to the sales price, was less than the carrying
value by $523,000. An impairment loss of that amount has been charged to
operations in 1995.

3. LONG-TERM DEBT:

Long-term debt consists of the following at December 31, 1995:

<TABLE>
<S> <C>
Real estate debt, promissory note payable in monthly
installments of $7,000 including interest at 12% through
December 2001 at which time remaining principal is due.
Secured by real property................................ $528,538
Other..................................................... 12,566
--------
541,104
Less current portion...................................... 30,426
--------
$510,678
========
</TABLE>

As of December 31, 1995, maturities of long-term debt are as follows:

<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31,
-------------------------
<S> <C>
1996................................................. $ 30,426
1997................................................. 28,391
1998................................................. 27,611
1999................................................. 31,113
2000................................................. 35,059
2001................................................. 388,504
--------
$541,104
========
</TABLE>

F-23
<PAGE> 80

353 MYERS AVENUE LIMITED PARTNERSHIP
DBA THE JUBILEE CASINO

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION WITH RESPECT TO THE THREE MONTHS ENDED

MARCH 31, 1996, IS UNAUDITED.)

4. CAPITAL LEASE RESTRUCTURE AND TERMINATION:

Included in property and equipment at December 31, 1995 is $1,706,435 of
gaming equipment the Partnership leased under capital lease agreements. Future
minimum lease payments under the agreements along with the present value of
minimum lease payments as of December 31, 1995 is as follows:

<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31,
-------------------------
<S> <C>
1996.......................................... $1,055,087
1997.......................................... 505,811
----------
Total minimum lease payments....................... 1,560,898
Less amount representing interest.................. 303,079
----------
$1,257,819
==========
</TABLE>

During 1995 and 1996, the Partnership was delinquent with respect to
payments required under the lease agreements and was subject to the default
provisions of the agreement including a significant portion of the remaining
balance being due on demand and the repossession of the gaming equipment.
Accordingly, the related obligations were included in current liabilities at
December 31, 1995.

During 1996, these leases were terminated and all unpaid principal and
interest was forgiven. In conjunction with the termination, approximately 40% of
the original gaming equipment was returned to the lessor and a purchase
agreement was signed on November 18, 1996 for the remaining gaming equipment.

The Partnership accounted for the gaming equipment returned as a
termination of a capital lease. As a result, the difference between the
allocated debt forgiven and the net book value of the returned gaming equipment,
will be recorded as an extraordinary gain of $309,399 in the statement of
operations for the year ended December 31, 1996.

The Partnership accounted for the gaming equipment retained as a purchase
of a leased asset by the lessee during the lease term. As a result, the
difference between the allocated debt forgiven and the net book value of the
retained gaming equipment will be recorded as a reduction of $503,523 in the
purchase price of the gaming equipment acquired under the new agreement.

Included in accumulated depreciation at December 31, 1995 is $777,489 of
amortization of the leased gaming equipment. Amortization included in
depreciation expense for the period from January 1, 1996 through April 22, 1996
and the year ended December 31, 1995, was $76,923 and $239,867, respectively and
$68,627 for the three months ended March 31, 1996.

F-24
<PAGE> 81

353 MYERS AVENUE LIMITED PARTNERSHIP
DBA THE JUBILEE CASINO

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION WITH RESPECT TO THE THREE MONTHS ENDED

MARCH 31, 1996, IS UNAUDITED.)

5. FAIR VALUE OF FINANCIAL INSTRUMENTS:

The estimated fair values of the Company's financial instruments, which are
included in the balance sheet, are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, 1995
------------------------
CARRYING FAIR
AMOUNT VALUE
---------- ----------
<S> <C> <C>
Assets:
Cash.................................. $ 206,466 $ 206,466
Liabilities:
Long-term debt:
Real estate and other debt......... 541,104 541,104
Capital lease obligations.......... 1,257,819 1,257,819
Notes payable, related parties..... 2,161,130 2,161,130
</TABLE>

The estimated fair value of financial instruments has been determined by
the Company using certain valuation methods described below. Accordingly, the
estimates presented are not necessarily indicative of the amounts that the
Company could realize in a current market exchange or the value that ultimately
will be realized by the Company upon maturity or disposition. Additionally,
because of the variety of valuation techniques permitted under SFAS No. 107,
Disclosure About Fair Value of Financial Instruments, comparability of fair
values among entities may not be meaningful. The use of different market
assumptions and/or estimation methods may have a material effect on the
estimated fair value amounts.

The following methods and assumptions were used by the Company to estimate
the fair value of each class of financial instruments at December 31, 1995:

Cash: The carrying amount of cash approximates the fair value.

Long-term debt, real estate and other debt: The carrying amount
approximates the fair value.

Long-term debt, capital lease obligations: The carrying amount
approximates the fair value.

Long-term debt, notes payable, related parties: The carrying amount
approximates the fair value.

6. REALIZATION OF ASSETS:

The Partnership's financial statements for the period from January 1, 1996
through April 22, 1996 and the year ended December 31, 1995, have been prepared
on a going concern basis which contemplates the realization of assets and the
settlement of liabilities and commitments in the normal course of business.
However, the Partnership has incurred substantial losses from operations since
inception and has a working capital deficiency. The termination and restructure
of the gaming equipment lease described in Note 4 had a positive impact on
working capital subsequent to the periods presented.

On October 22, 1996, Jubilee borrowed $3,564,000 pursuant to a bridge loan
agreement with a lender. The proceeds of the loan were used in part to begin
development on parking lots adjacent to the Casino and on the casino expansion
and a related hotel project.

Jubilee is in discussions with the same lender for a $15 million
construction loan with which to fund the casino expansion and the hotel
development.

F-25
<PAGE> 82

353 MYERS AVENUE LIMITED PARTNERSHIP
DBA THE JUBILEE CASINO

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION WITH RESPECT TO THE THREE MONTHS ENDED

MARCH 31, 1996, IS UNAUDITED.)

6. REALIZATION OF ASSETS (CONTINUED):

Management of Jubilee has filed with the Securities and Exchange Commission
a Form SB-2 Registration Statement for the sale of shares of its common stock to
raise additional capital, to retire debt and to expand the casino and develop a
120-room hotel to be attached to the casino. Jubilee has signed a letter of
intent with an underwriter for an initial public offering on a firm commitment
basis of 1,200,000 units to be sold by Jubilee at $5.00 per unit. Jubilee
intends to increase the number of units to be sold to 1,600,000. Each unit
consists of one share of common stock and one redeemable five-year warrant.

If the initial public offering is not successful, Jubilee may need to seek
additional debt or equity financing, refinance its current debt, or enter into
joint ventures or partnerships in order to provide capital for the Partnership.
There is no assurance as to the availability of any of these possible financing
sources.

F-26
<PAGE> 83

PRO FORMA FINANCIAL INFORMATION

The following unaudited pro forma consolidated statement of operations of
Jubilee Gaming Enterprises, Inc. and Subsidiaries (the "Company" or "Jubilee
Gaming") and of 353 Myers Avenue Limited Partnership (353 Myers) for the year
ended December 31, 1996 combine the results of operations assuming the
acquisition of 353 Myers was consummated on January 1, 1996 and all related
party debt from the sellers of 353 Myers had been contributed to equity on that
date. All significant intercompany accounts and transactions have been
eliminated.

The Pro Forma Statements do not purport (1) to represent what the Company's
results of operations would have been had the acquisition occurred on January 1,
1996 or (2) to project the Company's results of operations for any future date
or period.

The Pro Forma Statements and accompanying notes should be read in
conjunction with the respective historical consolidated financial statements of
the Company and 353 Myers, including the notes thereto.

F-27
<PAGE> 84

JUBILEE GAMING ENTERPRISES, INC. AND SUBSIDIARIES

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)

<TABLE>
<CAPTION>
(PERIOD FROM
JANUARY 1,
1996 THROUGH
JUBILEE APRIL 22, 1996) PRO FORMA
GAMING 353 MYERS ADJUSTMENTS PRO FORMA
---------- --------------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue:
Casino.................................. $2,028,484 $ 818,472 $ 2,846,956
Food and beverage....................... 79,017 34,575 113,592
Other................................... 154,803 32,844 $(16,400)(a) 171,247
---------- ---------- -------- -----------
Total revenue................... 2,262,304 885,891 (16,400) 3,131,795
---------- ---------- -------- -----------
Costs and expenses:
Operating departments................... 1,387,814 467,802 (16,400)(a) 1,839,216
General and administrative.............. 1,163,767 347,814 1,511,581
Interest................................ 329,474 101,915 (36,209)(b) 395,180
Depreciation and amortization........... 299,441 124,460 423,901
---------- ---------- -------- -----------
Total costs and expenses........ 3,180,496 1,041,991 (52,609) 4,169,878
---------- ---------- -------- -----------
Loss before extraordinary item............ (918,192) (156,100) 36,209 (1,038,083)
Extraordinary gain........................ 378,213 378,213
---------- ---------- -------- -----------
Net loss.................................. $ (539,979) $ (156,100) $ 36,209 $ (659,870)
========== ========== ======== ===========
Earnings per common share:
Loss before extraordinary item.......... $ (.56) $ (.63)
Extraordinary item...................... .23 .23
---------- -----------
Net loss.................................. $ (.33) $ (.40)
========== ===========
Common shares outstanding for the
period.................................. 1,643,376 1,643,376
========== ===========
</TABLE>

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

Pro Forma Adjustments:

(a) To eliminate rental income earned by the Company and rental expense paid by
353 Myers.

(b) To eliminate interest expense on debt contributed to equity.

F-28
<PAGE> 85

The Jubilee Casino and the Homestead as existing prior to the proposed Casino
expansion and Hotel development.

<PAGE> 86

============================================================
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITY. OTHER THAN THE SHARES OF COMMON STOCK OFFERED HEREBY, NOR DOES IT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF.
------------------
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................... 4
Risk Factors................................ 7
Use of Proceeds............................. 16
Dividend Policy............................. 18
Capitalization.............................. 18
Recent Financing............................ 18
Dilution.................................... 19
Selected Financial Data..................... 20
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................ 21
Business.................................... 25
Management.................................. 37
Certain Transactions........................ 40
Principal Shareholders...................... 44
Description of Units........................ 44
Description of Capital Stock................ 46
Shares Eligible for Future Resale........... 48
Underwriting................................ 50
Legal Matters............................... 53
Experts..................................... 53
Additional Information...................... 54
Index to Consolidated Financial
Statements................................ F-1
</TABLE>

------------------
UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
============================================================
============================================================

1,600,000 UNITS

JUBILEE GAMING
ENTERPRISES, INC.

THE JUBILEE CASINO LOGO

EACH UNIT CONSISTING OF
ONE SHARE OF COMMON STOCK
AND ONE REDEEMABLE WARRANT

---------------------
PROSPECTUS
---------------------
H.J. MEYERS & CO., INC.
, 1997
============================================================
<PAGE> 87

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Articles limit the liability of its directors to the full extent
permitted by the Minnesota Business Corporation Act. Specifically, directors of
the Company will not be personally liable for monetary damages for breach of
fiduciary duty as directors except liability for (i) any breach of the duty of
loyalty to the Company or its shareholders, (ii) acts or omissions not in good
faith or that involve intentional misconduct or a knowing violation of law,
(iii) dividends or other distributions of corporate assets that are in
contravention of certain statutory or contractual restrictions, (iv) violations
of certain Minnesota securities laws, or (v) any transaction from which the
director derives an improper personal benefit. Liability under federal
securities law is not limited by the Articles.

The Minnesota Business Corporation Act and the Bylaws require that the
Company indemnify any director or officer made or threatened to be made a party
to a proceeding, by reason of the former or present official capacity of the
person, against judgments, penalties, fines, settlements and reasonable expenses
incurred in connection with the proceeding if certain statutory standards are
met. "Proceeding" means a threatened, pending or completed civil, criminal,
administrative, arbitration or investigative proceeding, including a derivative
action in the name of the Company. Reference is made to the detailed terms of
the Minnesota indemnification statute (Minn. Stat. sec.302A.521) for a complete
statement of such indemnification rights. The Bylaws also require the Company to
provide indemnification to the fullest extent of the Minnesota indemnification
statute.

Pursuant to the terms of the Underwriting Agreement, to be filed as Exhibit
1.1, the directors and officers of the Company are indemnified against certain
civil liabilities that they may incur under the Securities Act of 1933 in
connection with this Registration Statement and the related Prospectus.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The Table below sets forth estimated expenses in connection with the
issuance and distribution of the Common Stock being offered:

<TABLE>
<S> <C>
SEC registration fee...................................... $ 7,020
NASD corporate finance review fee......................... 2,816
Nasdaq SmallCap Market qualification fee.................. 8,680
*Printing expenses........................................ 45,000
*Fees and expenses of counsel for the Company............. 90,000
*Fees and expenses of accountants for the Company......... 30,000
Underwriters' expense allowance........................... 240,000
*Transfer Agent and Registrar fees........................ 7,000
*Blue Sky expenses, including attorney's fees............. 45,000
*Miscellaneous............................................ 24,484
--------
Total................................................ $500,000
========
</TABLE>

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

*Estimated

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

The following transactions reflect the issuance during the previous three
years of securities not registered under the Securities Act of 1933, as amended
(the "Act"), giving retroactive effect to a 1 for 3.8125 share combination
effective October 11, 1996.

II-1
<PAGE> 88

1. Sale of Securities to Founders and Promoters. In October 1995 the
Company issued an aggregate of 1,547,543 shares to founders and promoters of the
Company in the following transactions: (a) 1,022,951 shares to National Lodging
Companies, Inc. in exchange for its contribution of gaming-related expenditures
and activities in the approximate amount of $884,000 and its contribution of
393,750 shares of common stock of National Lodging Companies, Inc. used to
acquire the Jubilee Casino and adjacent real estate; (b) 148,197 shares to
Robert J. Swenson, 104,919 shares to Terrance P. DeRoche and 140,328 shares to
Stephen W. Sherf in exchange for all of the outstanding common stock of Regent
Gaming Enterprises, Inc.; and (c) 131,148 shares to Craig H. Forsman in exchange
for $80,000.

2. Loan Transactions. In October 1995, the Company issued promissory notes
totalling $500,000 to Craig H. Forsman in consideration of loans made by him to
the Company and, as additional consideration to Mr. Forsman, the Company issued
to him a warrant for the purchase of 70,820 shares of common stock, exercisable
at $1.91 per share. On October 31, 1995, the Company issued a $75,000 promissory
note to Richard Stockness in exchange for the latter's loan to the Company, and
issued Mr. Stockness a warrant for the purchase of 19,672 shares exercisable at
$.1.91 per share. In January 1996, in consideration of loans in the amount of
$45,000 made by each of Craig H. Forsman and Jeffrey Robinson, the Company
issued to Mr. Forsman and Mr. Robinson promissory notes in the amount of $45,000
each, together with warrants to each for the purchase of 7,082 shares at an
exercise price of $1.91 per share. In February 1996, the Company issued a
$20,000 promissory note to David Sherf in consideration of a loan made by Mr.
Sherf to the Company, and issued Mr. Sherf a warrant for the purchase of 3,148
shares of common stock, exercisable at $1.91 per share.

3. Issuance of Debt Security and Stock upon Acquisition of Real Estate. In
June 1996 the Company issued a $700,000 promissory note to E. Wayne Moore and
Sara A. Moore in connection with the purchase from the Moores of certain real
estate located in Cripple Creek, Colorado. As additional consideration in such
transaction, the Company issued 26,230 shares to the Moores.

4. Issuance of Stock for Services. In November 1995, the Company issued
26,230 shares of common stock to Randall Otis in consideration of services
rendered by Mr. Otis.

5. Miller & Schroeder Transactions. In June 1996, the Company issued to
Miller & Schroeder Investments Corporation ("M&S") a promissory note in the
amount of $250,000 in consideration of M&S's loan in such principal amount. In
October 1996, the Company issued to M&S its promissory note in the amount of
$3,564,000. The loan is secured by substantially all of the Company's assets.

6. Warrant Exercise. In September 1996, the Company issued 19,673 shares of
common stock to Richard Stockness, in connection with the latter's exercise of a
stock purchase warrant described above.

7. Mithun Shares. In January 1997, the Company issued to Lewis Mithun 3,935
shares of its common stock as additional consideration in connection with the
acquisition of the Casino, which was completed in April 1996.

All of the above sales were made by the Company in reliance upon Section
4(2) of the Act as transactions not involving a public offering. None of the
transactions described above involved a general solicitation of securities. None
of the transactions described above involved an underwriter, except that the
transactions described in Item 5 above were with M&S, a registered
broker-dealer. M&S purchased the $3,564,000 note and is believed to have
received compensation from institutional lenders participating in the
transaction.

ITEM 27. EXHIBITS

<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION
-------- -----------
<C> <S>
</TABLE>

1.1* Proposed form of Underwriting Agreement
3.1* Articles of Incorporation, as amended and restated
3.2* Bylaws of the Company, as amended

II-2
<PAGE> 89

<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION
-------- -----------
<C> <S>
4.1* Form of Common Stock Certificate
4.2* Form of Warrant Agreement (including form of Redeemable
Warrant Certificate)
4.3* Articles of Incorporation, as amended and restated (see
Exhibit 3.1)
4.4* Bylaws, as amended (see Exhibit 3.2)
5.1 Opinion of Briggs and Morgan, P.A.
10.1* Jubilee Gaming Enterprises, Inc. 1996 Stock Option Plan
10.2* Jubilee Gaming Enterprises, Inc. 1996 Director Stock Option
Plan
10.3* Jubilee Gaming Enterprises, Inc. 1996 Employee Stock
Purchase Plan
10.4* $300,000 Promissory Note dated June 30, 1994 by Lewis M.
Mithun to Harold M. Hern and Leota M. Hern
10.5* Agreement dated October 31, 1995 between the Company and
Randall D. Otis
10.6* $25,000 Note dated October 31, 1995 by the Company to
Randall D. Otis
10.7* $450,000 Promissory Note dated October 31, 1995 by the
Company to Harold M. Hern and Leota M. Hern
10.8* $150,000 Promissory Note dated October 31, 1995 by the
Company to Harold M. Hern and Leota M. Hern
10.9* Deed of Trust dated October 31, 1995 between the Company and
Harold M. Hern, Leota M. Hern and Victor Heyliger
10.10* Warranty Deed dated October 31, 1995 from Harold M. Hern and
Leota M. Hern to the Company
10.11* Warranty Deed dated October 31, 1995 from Harold M. Hern,
Leota M. Hern and Victor Heyliger to the Company
10.12* Purchase Agreement dated October 31, 1995 between Harold M.
Hern, Leota M. Hern, Victor Heyliger and the Company and
National Lodging Companies, Inc.
10.13* Deed of Trust dated October 31, 1995 from the Company to
Harold M. Hern and Leota M. Hern
10.14* Purchase Agreement dated October 31, 1995 between Lewis M.
Mithun and the Company and National Lodging Companies, Inc.
10.15* Agreement dated October 30, 1995 between the Company and
National Lodging Companies, Inc.
10.16* Letter to the Company dated October 30, 1995 from Craig H.
Forsman
10.17* Agreement dated October 30, 1995 between the Company and
Terrance P. DeRoche, Robert J. Swenson and Stephen W. Sherf
10.18* Contract to Buy and Sell Commercial Real Estate dated May
16, 1996 between the Company and E. Wayne Moore and Sarah A.
Moore
10.19* $700,000 Promissory Note dated June 14, 1996 by the Company
to E. Wayne Moore and Sarah A. Moore
10.20* Deed of Trust dated June 14, 1996 by the Company to Public
Trustee of the County of Teller, Colorado, for the benefit
of E. Wayne and Sarah A. Moore
10.21* Assumption Agreement dated October 1, 1995 by the Company
assuming Regent Gaming Enterprises, Inc. Promissory Notes
aggregating $80,000
10.22* Agreement dated September 6, 1996 between the Company and
Richard Stockness
10.23* Employment agreement dated December 2, 1996 between the
Company and Mr. Ralf Hoehne
</TABLE>

II-3
<PAGE> 90

<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION
-------- -----------
<C> <S>
10.24* Sales Order Contract between the Company and IGT-Colorado
Corporation for Slot Machine Equipment
10.25* Sales Credit Memo from IGT-Colorado Corporation to the
Company for Sale of Slot Machine Equipment
10.26* $3,564,000 Promissory Note dated October 22, 1996 by the
Company to Miller & Schroeder Investments Corporation
10.27* Deed of Trust and Security Agreement and Fixture Filing and
Financing Statement dated October 22, 1996 by the Company to
Public Trustee of the County of Teller, Colorado, for the
benefit of Miller & Schroeder Investments Corporation
10.28* Assignment of Rents, Lease(s), Income and Revenues dated
October 22, 1996 by 353 Myers Avenue Limited Partnership and
the Company to Miller & Schroeder Investments Corporation
10.29* Deposit Agreement dated October 22, 1996 by the Company to
Miller & Schroeder Investments Corporation
10.30* Security Agreement dated October 22, 1996 by 353 Myers
Avenue Limited Partnership to Miller & Schroeder Investments
Corporation
10.31* Shareholder Voting and Control Agreement dated November 30,
1996 between Craig H. Forsman, Terrance P. DeRoche, Stephen
W. Sherf, Robert J. Swenson, Richard Stockness, Randall D.
Otis, E. Wayne Moore and Sara A. Moore and National Lodging
Companies, Inc.
10.32* Form of Warrant issued by the Company to various individuals
in connection with financing transactions
10.33* Form of Note, as amended, issued by the Company to various
individuals in connection with financing transactions
10.34* Form of Representative's Warrant Agreement
10.35 Promissory Note from Company to Riverside Bank, dated
February 12, 1997
16.1* Letter of change in Certifying Accountant
21.1* Subsidiaries of Registrant
23.1 Consent of Briggs and Morgan, P.A. (included in Exhibit 5.1)
23.2* Consent of Biggs, Kofford & Co., P.C. (included in Exhibit
16.1)
23.3 Consent of Schechter Dokken Kanter Andrews & Selcer Ltd
(regarding 353 Myers Ave Limited Partnership)
23.4 Consent of Schechter Dokken Kanter Andrews & Selcer Ltd
(regarding Jubilee Gaming Enterprises, Inc.)
23.5* Consent of Isaacson, Rosenbaum, Woods & Levy, P.C.
24.1* Powers of Attorney (included on signature page to
Registration Statement)
27.1 Financial Data Schedule
</TABLE>

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

* Previously filed.

ITEM 28. UNDERTAKINGS.

The undersigned Registrant hereby undertakes to:

(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:

(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) Reflect, in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information
in the registration statement; and notwithstanding the foregoing,

II-4
<PAGE> 91

any increase or decrease in volume of securities offered (if the total
dollar value of the securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Securities and Exchange Commission pursuant to Rule 424(b) of the
Securities Act of 1933 if in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the effective
registration statement; and

(iii) Include any additional or changed material information on the
plan of distribution.

(2) For purposes of determining liability, treat each post-effective
amendment as a new registration statement of the securities offered, and the
offering of the securities at that time to be the initial bona fide offering.

(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.

The undersigned Registrant hereby undertakes to provide to the underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.

(2) For purposes of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

II-5
<PAGE> 92

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has duly caused this Pre-Effective Amendment No. 1
to the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Minneapolis and State of Minnesota, on
July 16, 1997.

JUBILEE GAMING ENTERPRISES, INC.

By /s/ CRAIG H. FORSMAN

-----------------------------------
Craig H. Forsman
Chief Executive Officer

In accordance with the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement was signed by the following persons in
the capacities indicated and on the dates stated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <C> <C>

/s/ CRAIG H. FORSMAN Chief Executive Officer July 16, 1997
- --------------------------------------------------- and Director
Craig H. Forsman (Principal Executive Officer)

/s/ STEPHEN W. SHERF Chief Financial Officer July 16, 1997
- --------------------------------------------------- and Director
Stephen W. Sherf (Principal Accounting Officer)

* Director
- ---------------------------------------------------
John H. Klinkhammer

* Director
- ---------------------------------------------------
Terrance P. DeRoche

*By /s/ CRAIG H. FORSMAN July 16, 1997
----------------------------------------------
Craig H. Forsman
Attorney-In-Fact
</TABLE>

II-6
<PAGE> 93

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION
-------- -----------
<S> <C>

1.1* Proposed form of Underwriting Agreement
3.1* Articles of Incorporation, as amended and restated
3.2* Bylaws of the Company, as amended
4.1* Form of Common Stock Certificate
4.2* Form of Warrant Agreement (including form of Redeemable
Warrant Certificate)
4.3* Articles of Incorporation, as amended and restated (see
Exhibit 3.1)
4.4* Bylaws, as amended (see Exhibit 3.2)
5.1 Opinion of Briggs and Morgan, P.A.
10.1* Jubilee Gaming Enterprises, Inc. 1996 Stock Option Plan
10.2* Jubilee Gaming Enterprises, Inc. 1996 Director Stock Option
Plan
10.3* Jubilee Gaming Enterprises, Inc. 1996 Employee Stock
Purchase Plan
10.4* $300,000 Promissory Note dated June 30, 1994 by Lewis M.
Mithun to Harold M. Hern and Leota M. Hern
10.5* Agreement dated October 31, 1995 between the Company and
Randall D. Otis
10.6* $25,000 Note dated October 31, 1995 by the Company to
Randall D. Otis
10.7* $450,000 Promissory Note dated October 31, 1995 by the
Company to Harold M. Hern and Leota M. Hern
10.8* $150,000 Promissory Note dated October 31, 1995 by the
Company to Harold M. Hern and Leota M. Hern
10.9* Deed of Trust dated October 31, 1995 between the Company and
Harold M. Hern, Leota M. Hern and Victor Heyliger
10.10* Warranty Deed dated October 31, 1995 from Harold M. Hern and
Leota M. Hern to the Company
10.11* Warranty Deed dated October 31, 1995 from Harold M. Hern,
Leota M. Hern and Victor Heyliger to the Company
10.12* Purchase Agreement dated October 31, 1995 between Harold M.
Hern, Leote M. Hern, Victor Heyliger and the Company and
National Lodging Companies, Inc.
10.13* Deed of Trust dated October 31, 1995 from the Company to
Harold M. Hern and Leota M. Hern
10.14* Purchase Agreement dated October 31, 1995 between Lewis M.
Mithun and the Company and National Lodging Companies, Inc.
10.15* Agreement dated October 30, 1995 between the Company and
National Lodging Companies, Inc.
10.16* Letter to the Company dated October 30, 1995 from Craig H.
Forsman
10.17* Agreement dated October 30, 1995 between the Company and
Terrance P. DeRoche, Robert J. Swenson and Stephen W. Sherf
10.18* Contract to Buy and Sell Commercial Real Estate dated May
16, 1996 between the Company and E. Wayne Moore and Sarah A.
Moore
10.19* $700,000 Promissory Note dated June 14, 1996 by the Company
to E. Wayne Moore and Sarah A. Moore
10.20* Deed of Trust dated June 14, 1996 by the Company to Public
Trustee of the County of Teller, Colorado, for the benefit
of E. Wayne and Sarah A. Moore
</TABLE>

<PAGE> 94

<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION
-------- -----------
<S> <C>
10.21* Assumption Agreement dated October 1, 1995 by the Company
assuming Regent Gaming Enterprises, Inc. Promissory Notes
aggregating $80,000
10.22* Agreement dated September 6, 1996 between the Company and
Richard Stockness
10.23* Employment agreement dated December 2, 1996 between the
Company and Mr. Ralf Hoehne
10.24* Sales Order Contract between the Company and IGT-Colorado
Corporation for Slot Machine Equipment
10.25* Sales Credit Memo from IGT-Colorado Corporation to the
Company for Sale of Slot Machine Equipment
10.26* $3,564,000 Promissory Note dated October 22, 1996 by the
Company to Miller & Schroeder Investments Corporation
10.27* Deed of Trust and Security Agreement and Fixture Filing and
Financing Statement dated October 22, 1996 by the Company to
Public Trustee of the County of Teller, Colorado, for the
benefit of Miller & Schroeder Investments Corporation
10.28* Assignment of Rents, Lease(s), Income and Revenues dated
October 22, 1996 by 353 Myers Avenue Limited Partnership and
the Company to Miller & Schroeder Investments Corporation
10.29* Deposit Agreement dated October 22, 1996 by the Company to
Miller & Schroeder Investments Corporation
10.30* Security Agreement dated October 22, 1996 by 353 Myers
Avenue Limited Partnership to Miller & Schroeder Investments
Corporation
10.31* Shareholder Voting and Control Agreement dated November 30,
1996 between Craig H. Forsman, Terrance P. DeRoche, Stephen
W. Sherf, Robert J. Swenson, Richard Stockness, Randall D.
Otis, E. Wayne Moore and Sara A. Moore and National Lodging
Companies, Inc.
10.32* Form of Warrant issued by the Company to various individuals
in connection with financing transactions
10.33* Form of Note, as amended, issued by the Company to various
individuals in connection with financing transactions
10.34* Form of Representative's Warrant Agreement
10.35 Promissory Note from Company to Riverside Bank, dated
February 12, 1997
16.1* Letter of change in Certifying Accountant
21.1* Subsidiaries of Registrant
23.1 Consent of Briggs and Morgan, P.A. (included in Exhibit 5.1)
23.2* Consent of Biggs, Kofford & Co., P.C. (included in Exhibit
16.1)
23.3 Consent of Schechter Dokken Kanter Andrews & Selcer Ltd
(regarding 353 Myers Ave Limited Partnership)
23.4 Consent of Schechter Dokken Kanter Andrews & Selcer Ltd
(regarding Jubilee Gaming Enterprises, Inc.)
23.5* Consent of Isaacson, Rosenbaum, Woods & Levy, P.C.
24.1* Powers of Attorney (included on signature page to
Registration Statement)
27.1 Financial Data Schedule
</TABLE>

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

* Previously filed.

<PAGE> 1
EXHIBIT 5.1

BRIGGS AND MORGAN, PROFESSIONAL ASSOCIATION
2400 IDS CENTER
MINNEAPOLIS, MINNESOTA 55402
(612) 334-8400

July 16, 1997

Jubilee Gaming Enterprises, Inc.
9855 West 78th Street, Suite 220
Minneapolis, Minnesota 55344

Re: Registration Statement on Form SB-2

Gentlemen:

We have acted as counsel to Jubilee Gaming Enterprises, Inc., a
Minnesota corporation (the "Company"), in connection with a Registration
Statement on Form SB-2 (the "Registration Statement") relating to the sale by
the Company of up to 1,840,000 Units (including 240,000 Units to be subject to
the Underwriters' overallotment option) (the "Units"). Each Unit consists of
one share of common stock of the Company, no par value (the "Common Stock"),
and one redeemable warrant to purchase one share of Common Stock (individually,
a "Warrant").

We have examined such documents and have reviewed such
questions of law as we have considered necessary and appropriate for the
purposes of our opinions set forth below. In rendering our opinions set forth
below, we have assumed the authenticity of all documents submitted to us as
originals, the genuineness of all signatures and the conformity to authentic
originals of all documents submitted to us as copies. We have also assumed the
legal capacity for all purposes relevant hereto of all natural persons and,
with respect to all parties to agreements or instruments relevant hereto other
than the Company, that such parties had the requisite power and authority
(corporate or otherwise) to execute, deliver and perform such agreements or
instruments, that such agreements or instruments have been duly authorized by
all requisite action (corporate or otherwise), executed and delivered by such
parties and that such agreements or instruments have been duly authorized by
all requisite action (corporate or otherwise), executed and delivered by such
parties and that such agreements or instruments are the valid, binding and
enforceable obligations of such parties. As to questions of fact material to
our opinions, we have relied upon certificates

<PAGE> 2

Jubilee Gaming Enterprises, Inc.
July 16, 1997
Page 2

of officers of the Company and of public officials. We have also assumed that
the Units will be issued and sold as described in the Registration Statement.

Based on the foregoing, we are of the opinion that the Units, the
Warrants and the shares of Common Stock issued upon the exercise of Warrants,
have been duly authorized by all requisite corporate action and, upon issuance,
delivery and payment therefor as described in the Registration Statement, will
be validly issued, fully paid and nonassessable.

Our opinions expressed above are limited to the laws of the State of
Minnesota.

We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement, and to the reference to our firm under the heading
"Legal Matters" in the Prospectus constituting part of the Registration
Statement.

Very truly yours,

BRIGGS AND MORGAN,
Professional Association

By: /s/ Avron L. Gordon
---------------------
Avron L. Gordon

<PAGE> 1
EXHIBIT 10.35

PROMISSORY NOTE

<TABLE>
<CAPTION>
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRINCIPAL LOAN DATE MATURITY LOAN NO. CALL COLLATERAL ACCOUNT OFFICER INITIALS
$125,000.00 02-12-1997 04-06-1997 90485197 01 3000 123523 EAK
==================================================================================================================================
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular
loan or item.
==================================================================================================================================
BORROWER: JUBILEE GAMING ENTERPRISES, INC. LENDER: RIVERSIDE BANK
9855 WEST 78TH ST. MINNESOTA CENTER OFFICE
EDEN PRAIRIE, MN 55344 7750 FRANCE AVENUE SOUTH, SUITE 125
BLOOMINGTON, MN 55435

==================================================================================================================================

PRINCIPAL AMOUNT: $125,000.00 INITIAL RATE: 9.000% DATE OF NOTE: FEBRUARY 12, 1997
</TABLE>

PROMISE TO PAY. JUBILEE GAMING ENTERPRISES, INC. ("Borrower") promises to pay
to RIVERSIDE BANK ("Lender"), or order, in lawful money of the United States of
America, the principal amount of One Hundred Twenty Five Thousand & 00/100
Dollars ($125,000.00) or so much as may be outstanding, together with interest
on the unpaid outstanding principal balance of each advance. Interest shall be
calculated from the date of each advance until repayment of each advance.

PAYMENT. Borrower will pay this loan in one payment of all outstanding
principal plus all accrued unpaid interest on April 6, 1997. In addition,
Borrower will pay regular monthly payments of accrued unpaid interest beginning
March 6, 1997, and all subsequent interest payments are due on the same day of
each month after that. Interest on this Note is computed on a 365/360 simple
interest basis; that is, by applying the ratio of the annual interest rate over
a year of 360 days, multiplied by the outstanding principal balance, multiplied
by the actual number of days the principal balance is outstanding. Borrower
will pay Lender at Lender's address shown above or at such other place as
Lender may designate in writing. Unless otherwise agreed or required by
applicable law, payments will be applied first to accrued unpaid interest, then
to principal, and any remaining amount to any unpaid collection costs and late
charges.

VARIABLE INTEREST RATE. The interest rate on this Note is subject to change
from time to time based on changes in an independent index which is the FIRST
BANK NATIONAL ASSOCIATION REFERENCE RATE (the "Index"). The Index is not
necessarily the lowest rate charged by Lender on its loans. If the Index
becomes unavailable during the term of this loan, Lender may designate a
substitute index after notice to Borrower. Lender will tell Borrower the
current Index rate upon Borrower's request. Borrower understands that Lender
may make loans based on other rates as well. The interest rate change will not
occur more often than each DAY. The Index currently is 8.250% per annum. The
interest rate to be applied to the unpaid principal balance of this Note will be
at a rate of 0.750 percentage points over the Index, resulting in an initial
rate of 9.000% per annum. NOTICE: Under no circumstances will the interest
rate on this Note be more than the maximum rate allowed by applicable law.

PREPAYMENT. Borrower may pay without penalty all or a portion of the amount
owed earlier than it is due. Early payments will not, unless agreed to by
Lender in writing, relieve Borrower of Borrower's obligation to continue to make
payments of accrued unpaid interest. Rather, they will reduce the principal
balance due.

LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the regularly scheduled payment.

DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform
when due any other term, obligation, covenant, or condition contained in this
Note or any agreement related to this Note, or in any other agreement or loan
Borrower has with Lender. (c) Any representation or statement made or
furnished to Lender by Borrower or on Borrower's behalf is false or misleading
in any material respect either now or at the time made or furnished. (d)
Borrower becomes insolvent, a receiver is appointed for any part of Borrower's
property, Borrower makes an assignment for the benefit of creditors, or any
proceeding is commenced either by Borrower or against Borrower under any
bankruptcy or insolvency laws. (e) Any creditor tries to take any of
Borrower's property on or in which Lender has a lien or security interest.
This includes a garnishment of any of Borrower's accounts with Lender. (f) Any
guarantor dies or any of the other events described in this default section
occurs with respect to any guarantor of this Note. (g) A material adverse
change occurs in Borrower's financial condition, or Lender believes the
prospect of payment or performance of the indebtedness is impaired. (h) Lender
in good faith deems itself insecure.

If any default, other than a default in payment, is curable and if Borrower has
not been given a notice of a breach of the same provision of this Note within
the preceding twelve (12) months, it may be cured (and no event of default will
have occurred) if Borrower, after receiving written notice from Lender
demanding cure of such default: (a) cures the default within fifteen (15)
days; or (b) if the cure requires more than fifteen (15) days, immediately
initiates steps which Lender deems in Lender's sole discretion to be sufficient
to cure the default and thereafter continues and completes all reasonable and
necessary steps sufficient to produce compliance as soon as reasonably
practical.

LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Lender may hire or pay someone
else to help collect this Note if Borrower does not pay. Borrower also will
pay Lender that amount. This includes, subject to any limits under applicable
law, Lender's attorneys' fees and Lender's legal expenses whether or not there
is a lawsuit, including attorneys' fees and legal expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated post-judgment collection services.
If not prohibited by applicable law, Borrower also will pay any court costs,
in addition to all other sums provided by law. This Note has been delivered to
Lender and accepted by Lender in the State of Minnesota. If there is a
lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of
the courts of HENNEPIN County, the State of Minnesota. This Note shall be
governed by and construed in accordance with the laws of the State of Minnesota.

RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and Keogh accounts,
and all trust accounts for which the grant of a security interest would be
prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on this Note against any and
all such accounts.

COLLATERAL. This Note is secured by GUARANTEES OF CRAIG FORSMAN, JOHN
KLINKHAMMER, TERRANCE DEROCHE, AND STEPHEN SHERF DATED 02/12/97.

LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note may be requested either orally or in writing by Borrower or by and
authorized person. Lender may, but need not, require that all oral requests be
confirmed in writing. All communications, Instructions, or directions by
telephone or otherwise to Lender are to be directed to Lender's office shown
above. Borrower agrees to be liable for all sums either: (a) advanced in
accordance with the instructions of an authorized person or (b) credited to any
of Borrower's accounts with Lender. The unpaid principal balance owing on this
Note at any time may be evidenced by endorsements on this Note or by Lender's
internal records, including daily computer print-outs. Lender will have no
obligation to advance funds under this Note if: (a) Borrower or any guarantor
is in default under the terms of this Note or any agreement that Borrower or any
guarantor has with Lender, including any agreement made in connection with the
signing of this Note; (b) Borrower or any guarantor ceases doing business or is
insolvent; (c) any guarantor seeks, claims or otherwise attempt to limit, modify
or revoke such guarantor's guarantee of this Note or any other loan with Lender;
(d) Borrower has applied funds provided pursuant to this Note for purposes other
than those authorized by Lender; or (e) Lender in good faith deems itself
insecure under this Note or any other agreement between Lender and

<PAGE> 2
02-12-1997 PROMISSORY NOTE PAGE 2
LOAN NO 90485197 (CONTINUED
===============================================================================

Borrower.

PRIOR NOTE 90485197.

GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person
who signs, guarantees or endorses this Note, to the extent allowed by law,
waive presentment, demand for payment, protest and notice of dishonor. Upon
any change in the terms of this Note, and unless otherwise expressly stated in
writing, no party who signs this Note, whether as maker, guarantor,
accommodation maker or endorser, shall be released from liability. All such
parties agree that Lender may renew or extend (repeatedly and for any length of
time) this loan, or release any party or guarantor or collateral; or impair,
fail to realize upon or perfect Lender's security interest in the collateral;
and take any other action deemed necessary by Lender without the consent of or
notice to anyone. All such parties also agree that Lender may modify this loan
without the consent of or notice to anyone other than the party with whom the
modification is made.

SECTION DISCLOSURE. This loan is made under Minnesota Statutes, Section 47.59.

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.

BORROWER:

JUBILEE GAMING ENTERPRISES, INC.

By /s/ Craig H. Forsman
---------------------------------------
Craig H. Forsman, CEO

===============================================================================

<PAGE> 1
EXHIBIT 23.3

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT

We hereby consent to the use in this Registration Statement on Form SB-2 of our
report dated Feburary 6, 1997 relating to the financial statements of 353 Myers
Avenue Limited Partnership and to the reference to our Firm under the caption
"Experts" in the Prospectus.

Schechter Dokken Kanter
Andrews & Selcer Ltd

/s/ Schechter Dokken Kanter
Andrews & Selcer Ltd

Minneapolis, Minnesota
July 16, 1997

<PAGE> 1
Exhibit 23.4

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT

We hereby consent to the use in this Registration Statement on Form SB-2 of our
report dated February 21, 1997 (June 6, 1997 with respect to Note 4) relating to
the consolidated financial statements of Jubliee Gaming Enterprises, Inc. and
Subsidiaries and to the reference to our Firm under the caption "Experts" in
the Prospectus.

Schechter Dokken Kanter
Andrews & Selcer Ltd

/s/ Schechter Dokken Kanter
Andrews & Selcer Ltd

Minneapolis, Minnesota
July 16, 1997

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JUBILEE
GAMING ENTERPRISES, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEET AS OF
DECEMBER 31, 1995 AND CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDING
DECEMBER 31, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM
SB-2 JUBILEE GAMING ENTERPRISES, INC.
</LEGEND>

<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR 3-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1996 MAR-31-1997
<PERIOD-START> JAN-01-1995 JAN-01-1996 JAN-01-1997
<PERIOD-END> DEC-31-1995 DEC-31-1996 MAR-31-1997
<CASH> 126,394 751,682 511,616
<SECURITIES> 0 0 0
<RECEIVABLES> 90,003 0 0
<ALLOWANCES> 0 0 0
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 216,797 850,037 604,826
<PP&E> 3,792,501 7,371,753 7,574,688
<DEPRECIATION> (1,893) (667,263) (727,228)
<TOTAL-ASSETS> 4,007,465 7,888,404 7,821,845
<CURRENT-LIABILITIES> 1,165,663 1,339,619 1,546,006
<BONDS> 645,740 4,755,202 4,694,044
0 0 0
0 0 0
<COMMON> 2,624,254 2,761,754 2,776,754
<OTHER-SE> (428,192) (968,171) (1,194,959)
<TOTAL-LIABILITY-AND-EQUITY> 4,007,465 7,888,404 7,821,845
<SALES> 0 2,220,671 632,234
<TOTAL-REVENUES> 14,978 2,262,304 644,702
<CGS> 0 0 0
<TOTAL-COSTS> 410,365 2,551,581 653,589
<OTHER-EXPENSES> 2,056 299,441 102,002
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 30,749 329,474 115,899
<INCOME-PRETAX> (428,192) (918,192) (226,788)
<INCOME-TAX> 0 0 0
<INCOME-CONTINUING> (428,192) (918,192) (226,788)
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 378,213 0
<CHANGES> 0 0 0
<NET-INCOME> (428,192) (539,979) (226,788)
<EPS-PRIMARY> (.26) (.33) (.14)
<EPS-DILUTED> (.26) (.33) (.14)

</TABLE>