SHOWBOAT INC, DEF 14A, 1994-04-15

SHOWBOAT INC
DEF 14A, 1994-04-15
MISCELLANEOUS AMUSEMENT & RECREATION

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CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934

Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

Showboat, Inc.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)

Showboat, Inc.
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(Name of Person(s) Filing Proxy Statement)

Payment of filing fee (Check the Appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price of other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:

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(4) Proposed maximum aggregate value of transaction:

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/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.

(1) Amount previously paid:

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(2) Form, schedule or registration statement no.:

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(3) Filing party:

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(4) Date filed:

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SHOWBOAT, INC.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

MAY 25, 1994

To the Shareholders of Showboat, Inc.

The Annual Meeting of the Shareholders of Showboat, Inc., a Nevada
corporation ("Company"), will be held at the Mardi Gras Room, Showboat Casino
Hotel, 801 Boardwalk, Atlantic City, New Jersey 08401, on Wednesday,
May 25, 1994, at 10:00 a.m., Eastern Daylight Time, for the following purposes:

(1) To elect four (4) directors each to serve a three (3) year term;

(2) To approve a proposal to amend the Company's Articles of Incorporation
to increase the authorized shares of Common Stock from 20,000,000
shares to 50,000,000 shares;

(3) To approve and ratify the adoption of an executive officers' stock
option plan;

(4) To ratify the Board's selection of KPMG Peat Marwick as independent
public accountants to examine and report on the Company's financial
statements for the year ending December 31, 1994; and

(5) To transact such other business as may properly come before the
meeting.

Only shareholders of record at the close of business on March 28, 1994
are entitled to notice of and to vote at the Annual Meeting. The stock
transfer books will not be closed.

Shareholders are cordially invited to attend the meeting in person.
SHAREHOLDERS DESIRING TO VOTE IN PERSON MUST REGISTER AT THE MEETING WITH THE
INSPECTOR OF ELECTIONS PRIOR TO THE FIRST VOTE BEING TAKEN AT THE MEETING.
IF YOU WILL NOT BE ABLE TO ATTEND THE MEETING IN PERSON, YOU ARE REQUESTED TO
COMPLETE, SIGN AND DATE THE ENCLOSED FORM OF PROXY AND TO RETURN IT WITHOUT
DELAY IN THE ENCLOSED POSTAGE PREPAID ENVELOPE SO THAT YOUR SHARES MAY BE
REGULARLY VOTED AT THE MEETING.

A copy of the 1993 Annual Report to Shareholders is enclosed.

By order of the Board of Directors,

H. GREGORY NASKY,
Secretary

Dated: April 16, 1994
(/r>
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SHOWBOAT, INC.
2800 FREMONT STREET
LAS VEGAS, NEVADA
89104

PROXY STATEMENT

This Proxy Statement is furnished to the shareholders of Showboat, Inc.
("Company") in connection with the annual meeting of the Company to be held
on May 25, 1994, and at any adjournment thereof, for the purposes indicated
and at the place and time specified in the accompanying Notice of Annual
Meeting of Shareholders.

At this annual meeting, the shareholders will have the opportunity to
elect four directors each to serve a three year term; to approve a proposal
to amend the Company's Articles of Incorporation to increase the authorized
shares of Common Stock from 20,000,000 shares to 50,000,000 shares; to
approve and ratify the adoption of an executive officers' stock option plan;
to ratify the Board of Directors' selection of KPMG Peat Marwick as the
Company's independent public accountants for the year ending December 31,
1994; and to transact such other business as may properly come before the
meeting.

THE ACCOMPANYING PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE
COMPANY. This Proxy Statement and the accompanying form of proxy are being
mailed to shareholders on or about April 16, 1994. Any shareholder giving a
proxy has the power to revoke it prospectively by giving written notice to
the Company, addressed to H. Gregory Nasky, Secretary, at the Company's
principal address before the meeting, by delivering to the Company a duly
executed proxy bearing a later date, or by notifying the Company at the
annual meeting before any vote is taken.

We hope all the Company's shareholders will attend the annual meeting.
Regardless of whether you plan to attend, the Company does request that you
sign and date the enclosed proxy and return it promptly to the Company in the
enclosed postage prepaid envelope. The shares represented by the enclosed
proxy will be voted if the proxy is properly executed and received by the
Company prior to the date of the meeting, or any adjournment thereof.

VOTING SECURITIES

The close of business on March 28, 1994 was fixed by the Board of
Directors as the record date for determination of the

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shareholders entitled to vote at the meeting. The securities entitled to
vote at the annual meeting consist of shares of $1.00 par value common stock
("Common Stock") of the Company, with each share entitling its owner to one
vote. Common Stock is presently the only class of voting securities which is
outstanding. At the close of business on March 28, 1994, there were
outstanding 14,992,195 shares of Common Stock.

SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN OTHER BENEFICIAL OWNERS

The following table sets forth the number of shares of Common Stock and
the number of shares of Common Stock subject to options held by the Company's
directors and those executive officers named in the Summary Compensation
Table (See, page 11), by all directors and executive officers as a group, and
by persons beneficially owning more than 5% of the outstanding Common Stock
at the close of business on February 28, 1994. The address for all directors
and executive officers of the Company is: Showboat, Inc., 2800 Fremont
Street, Las Vegas, Nevada 89104. Security ownership was verified with
filings with the Securities and Exchange Commission received by the Company,
and according to individual verification as of February 28, 1994, which the
Company solicited and received from the beneficial owners listed in the
following table:

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<TABLE>
<CAPTION>
Name Amount and Nature of Beneficial Ownership
- -------------------------------------------------------------------------------
Number of Shares
Beneficially Number of Shares
Owned Subject to Total Number
Excluding Shares Options of Shares
Subject Beneficially Beneficially
to Option(1) Owned(2) Owned Percent
------------------------------------------------------------
<S> <C> <C> <C> <C>
J.K. Houssels(3). . . . . . 1,179,208(4) 20,000 1,199,208 8.0
William C. Richardson . . . 5,000 9,000 14,000 *
John D. Gaughan . . . . . . 174,824(5) 9,000 183,824 1.2
Jeanne S. Stewart . . . . . 406,686 9,000 415,686 2.8
Frank A. Modica . . . . . . 71,169(6) 32,000 103,169 *
H. Gregory Nasky. . . . . . 7,209(7) 9,000 16,209 *
J. Kell Houssels, III(8). . 81,017 32,000 113,017 *
George A. Zettler . . . . . 1,955 9,000 10,955 *
Carolyn M. Sparks . . . . . 350,058(9) 7,000 357,058 2.4
R. Craig Bird(10) . . . . . 10,000 10,000 20,000 *
Mark J. Miller(11). . . . . 5,200 10,000 15,200 *
All Directors and
Executive Officers
as a Group
(13 persons) . . . . . . . 2,318,993 186,000 2,504,993 16.5
FMR Corp. . . . . . . . . . 1,237,350(12) 0 1,237,350 8.3
State of Wisconsin
Investment Board 757,000(13) 0 757,000 5.1

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<FN>
* Beneficial ownership does not exceed 1% of the outstanding Common Stock.

(1)Unless otherwise specifically stated herein, each person has sole voting power and
sole investment power as to the identified Common Stock ownership.

(2)Shares subject to currently exercisable options or otherwise subject to issuance
within 60 days of February 28, 1994, pursuant to either the 1989 Executive Long-Term
Incentive Plan or the 1989 Directors' Stock Option Plan.

(3)Mr. Houssels may be deemed to be a control person. Mr. Houssels is the Chairman of
the Board, President and Chief Executive Officer of the Company.

(4)Mr. Houssels' shareholdings include 11,450 shares held in his individual retirement
account and 35,700 shares as a trustee of the J.K. Houssels, Jr., 1976 Trust Agreement. He
disclaims beneficial ownership of 7,800 shares owned by his wife and such shares are
excluded from this table.

(5)Mr. Gaughan's shareholdings include 86,000 shares held by Exber, Inc., a Nevada
corporation controlled by Mr. Gaughan, and 69,674 shares over which he shares voting power
and investment power with his wife.
</TABLE>
3

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<TABLE>
<S> <C>
<FN>
(6)Mr. Modica is the Executive Vice President and Chief Operating Officer of the
Company. Mr. Modica's shareholdings include 2,600 shares over which he shares voting power
and investment power with his wife.

(7)Mr. Nasky is the Secretary of the Company. Mr. Nasky's shareholdings include 1,000
shares owned by Mr. Nasky's wife over which he does not have voting power or investment
power.

(8)Mr. Houssels, III is the Vice President of the Company. Mr. Houssels, III is also
the President and Chief Executive Officer of Atlantic City Showboat, Inc., a subsidiary of
the Company.

(9)Mrs. Sparks' shareholdings include 227,000 shares beneficially owned by her as a
co-trustee of the Fred L. Morledge Family Trust and 123,058 shares beneficially owned by her
as a co-trustee of The Sparks Family Trust.

(10)Mr. Bird is the Vice President-Financial Administration of the Company and Executive Vice President and Chief
Operating Officer of Showboat Development Company.

(11)Mr. Miller is the Executive Vice President and Chief Operating Officer of Atlantic City
Showboat, Inc., a subsidiary of the Company.

(12)FMR Corp. ("FMR"), the parent holding company of Fidelity Management & Research
Company, reported on a Schedule 13G, dated February 11, 1994, that it has sole investment
discretion with respect to all of such shares and sole voting discretion with respect to
51,706 of such shares. With respect to such shares, FMR beneficially owns 880,650 shares or
5.9% of the total outstanding Common Stock at December 31, 1993, on behalf of Fidelity
Magellan Fund, an investment company registered under the Investment Company Act of 1940.
FMR's address is 82 Devonshire Street, Boston, MA 02109.

(13)State of Wisconsin Investment Board ("Investment Board"), a Wisconsin State
Agency, reported on a Schedule 13G, dated February 8, 1994, that it has sole voting and
investment discretion to all such shares. The Investment Board's address is P.O. Box 7842,
Madison, Wisconsin 53707.
</TABLE>

ELECTION OF DIRECTORS

The Bylaws of the Company provide for a Board of Directors consisting of
nine persons who are elected for staggered terms of three years. Four
directors' terms expire at this meeting; three in 1995; and two in 1996.
Directors are to serve until their successors are elected and have been
qualified.

Each Company director may be required to be found suitable or qualified,
as applicable, by the Nevada Gaming Commission, the Louisiana Riverboat
Commission, or the New Jersey Casino Control Commission to serve as a
director of the Company. All present directors of the Company who were
required to be found suitable by the Nevada Gaming Commission or the
Louisiana Riverboat Commission have been found suitable. Similar
qualification of each present director by the New Jersey Casino Control
Commission has been completed, and each director has been qualified to be a
director subject to, at the discretion of the New Jersey Casino Control
Commission, either biennial or annual renewal. Such license renewal by the
New Jersey Casino Control Commission entails

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extensive updating of background information and possible additional
investigation and hearings as to each director's qualifications. Should any
director no longer be found suitable by the Nevada Gaming Commission or the
Louisiana Riverboat Commission or no longer be qualified by the New Jersey
Casino Control Commission, that individual shall become ineligible to
continue to serve on the Board of Directors and a majority of the remaining
directors may appoint a qualified replacement to serve as a director until
the next annual meeting of shareholders.

If the enclosed proxy is duly executed and received in time for the
meeting, and if no contrary specification is made as provided therein, the
proxy will be voted in favor of electing the nominees, John D. Gaughan, Frank
A. Modica, H. Gregory Nasky, and J. Kell Houssels, III, for three-year terms
of office. All of the nominees have consented to serve if elected and the
Board of Directors presently has no knowledge or reason to believe that any
of the nominees will be unable to serve. If any such nominee shall decline
or be unable to serve, the proxy will be voted for such person as shall be
designated by the Board of Directors to replace any such nominee. Any
vacancies on the Board of Directors which occur during the year will be
filled, if at all, by the Board of Directors through an appointment of an
individual to serve only until the next annual meeting of shareholders.
There will not be cumulative voting for the election of directors.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THE
ELECTION OF MESSRS. GAUGHAN, MODICA, NASKY AND HOUSSELS, III.

INFORMATION CONCERNING BOARD OF DIRECTORS, NOMINEES THERETO
AND EXECUTIVE OFFICERS

The following information is furnished with respect to each member of
the Board of Directors or nominee thereto, each of whom, unless otherwise
indicated, has served as a director continuously since the year shown
opposite his or her name. Similar information is presented for the executive
officers who are not directors. There are no family relationships between or
among any of the Company's directors, nominees to the Board of Directors or
executive officers, except: (a) J.K. Houssels and Jeanne S. Stewart formerly
were married and are the parents of J. Kell Houssels, III; and (b) Carolyn M.
Sparks is the daughter of Fred L. Morledge who was a director from 1960 until
July 1990, and Mr. Morledge currently holds the title of Director Emeritus of
the Company.

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IDENTIFICATION OF DIRECTORS AND NOMINEES
Director
Name and Position with the Company(1) Age Since Background Information(1)

<S> <C> <C> <C>
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- ------------------------------------------------------------------------------------------------------------------------------------

J.K. HOUSSELS 71 1960 Vice President of the Board of Directors of
(Term expires in 1995) Union Plaza Hotel and Casino, Inc., Las
Chairman of the Board, Director, President and Vegas, Nevada; until July 25, 1991, Director
Chief Executive Officer of the Company; Director of First Western Financial Corporation
of Atlantic City Showboat, Inc.; Chairman of the (savings and loan association), Las Vegas,
Board and Director of Showboat Operating Company, Nevada.
Showboat Development Company, Ocean Showboat,
Inc., Ocean Showboat Finance Corporation,
Showboat Louisiana, Inc., Lake Pontchartrain
Showboat, Inc., Showboat Indiana, Inc., Showboat
Mohawk, Inc. and Showboat Australia Pty Limited

WILLIAM C. RICHARDSON 67 1972 Independent financial consultant, Los
(Term expires in 1995) Angeles, California; since April 1, 1991,
Director of the Company and Ocean Showboat, arbitrator and mediator for the American
Inc. Arbitration Association; until March 30,
1991, President, Chief Executive Officer and
Vice Chairman of Western Capital Financial
Group, Los Angeles, California.

JOHN D. GAUGHAN 73 1978 Chairman of the Board and President of
(Nominee for term expiring 1997) Exber, Inc., doing business as the El Cortez
Director of the Company, Atlantic City Hotel and the Western Hotel and Casino, Las
Showboat, Inc., Showboat Operating Company, Vegas, Nevada; Chairman of the Board of
Showboat Development Company, Ocean Showboat, Union Plaza Hotel and Casino, Inc., Las
Inc., Ocean Showboat Finance Corporation, Vegas, Nevada.(2)
Showboat Louisiana, Inc., Lake Pontchartrain
Showboat, Inc., Showboat Indiana, Inc., Showboat
Mohawk, Inc. and Showboat Australia Pty Limited

</TABLE>
6

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Director
Name and Position with the Company(1) Age Since Background Information(1)

JEANNE S. STEWART 71 1979 Retired attorney, Las Vegas, Nevada.
(Term expires in 1995)
Director of the Company and Ocean Showboat,
Inc.

FRANK A. MODICA 66 1980 Until December 31, 1989, President and Chief
(Nominee for term expiring 1997) Executive Officer of Atlantic City Showboat,
Chief Operating Officer, Executive Vice President Inc.; Director of First Security Bank (formerly
and Director of the Company; Director, President Continental National Bank), Las Vegas, Nevada.
and Chief Executive Officer of Showboat Operating
Company; Director of Showboat Development
Company; Director, President and Chief Executive
Officer of Ocean Showboat, Inc.; Director and
President of Ocean Showboat Finance Corporation;
Chairman of the Board of Atlantic City Showboat,
Inc.; Director, President and Chief Executive
Officer of Showboat Louisiana, Inc., Lake
Pontchartrain Showboat, Inc.; Director and Vice
Chairman of Showboat Indiana, Inc., and Showboat
Mohawk, Inc.; Director of Showboat Australia Pty
Limited

H. GREGORY NASKY 51 1983 Of counsel to the law firm of Kummer Kaempfer
(Nominee for term expiring 1997) Bonner & Renshaw, Las Vegas, Nevada, general
Secretary and Director of the Company and counsel to the Company, since March 1, 1994. Until
all subsidiaries; Chief Executive Officer March 1, 1994, member of the law firm of Vargas &
and Managing Director of Showboat Australia Bartlett, Las Vegas and Reno, Nevada, previous
Showboat Australia Pty Limited general counsel to the Company.

</TABLE>

<PAGE>

Director
Name and Position with the Company(1) Age Since Background Information(1)

J. KELL HOUSSELS, III 44 1983 Until January 1, 1990, Senior Vice President
(Nominee for term expiring 1997) and Chief Operating Officer of Atlantic City
Director and Vice President of the Company; Showboat, Inc.; November 1985 until January
Director of Ocean Showboat, Inc.; Ocean Showboat 1, 1989, Assistant to the President of
Finance Corporation, Showboat Operating Company, Atlantic City Showboat, Inc.
Showboat Development Company, Showboat Louisiana,
Inc., and Lake Pontchartrain Showboat, Inc.,
Executive Vice President of Ocean Showboat,Inc.;
President and Chief Executive Officer of
Atlantic City Showboat, Inc., Showboat
Development Company, Showboat Mohawk, Inc. and
Showboat Indiana, Inc.

GEORGE A. ZETTLER 66 1986 Since January 1, 1991, President World Trade
(Term expires 1996) Services Group, Long Beach, California;
Director of the Company and Ocean Showboat, Inc. until January 1, 1991, President, United
Export Trading Company, Los Angeles,
California.

CAROLYN M. SPARKS 52 1991 Co-owner of International Insurance
(Term expires 1996) Services, Las Vegas, Nevada; until January
Director of the Company and Ocean Showboat, Inc. 1991 Vice President, Secretary and Treasurer
of International Insurance Services, Ltd.;
until December 31, 1990, claims
administrator for International Insurance
Services, Ltd.; Director of Southwest Gas
Corporation; Director of PriMerit Bank -
Federal Savings Bank, Las Vegas, Nevada;
Regent, University of Nevada System.

<FN>

_______________

(1) Positions held with the Company and any other business experience
since 1989 and other directorships in companies with a class of
securities registered under Section 12 of the Securities Exchange Act
of 1934 ("Exchange Act") or subject to the requirements of
Section 15(d) of the Exchange Act and companies registered under the
Investment Company Act of 1940.

(2) Mr. Gaughan also owns the Nevada Hotel and Casino, the Gold Spike Inn
and Casino, and a controlling interest in the Las Vegas Club Hotel &
Casino, each of which is located in Las Vegas, Nevada.

</TABLE>

NON-DIRECTOR EXECUTIVE OFFICERS

G. Clifford Taylor, Jr., 48, has been Executive Vice President
and Chief Operating Officer of the Company's Nevada subsidiaries since
December 1, 1988. He has served as Assistant Secretary of the Company since May
1990. He has also served as Treasurer of the Company and Showboat Operating
Company since February 1981, and Showboat Development Company since June 1983.
He has been Treasurer of Ocean Showboat, Inc. since December 1983, Atlantic City
Showboat, Inc. since June 1984 and Ocean Showboat Finance Corporation since
December 1986. He serves at the pleasure of the respective boards of directors.

R. Craig Bird, 47, has been Vice President-Financial
Administration of the Company since February 1988 and the Executive Vice Presi-
dent and Chief Operating Officer of Showboat Development Company since October
1993. Mr. Bird was Vice President-Financial Administration of Atlantic City
Showboat, Inc. from March 1990 to October 1993. He serves at the pleasure of
the respective boards of directors.

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Leann K. Schneider, 40, has been Vice President-Finance and
Chief Financial Officer of the Company; Vice President-Finance and Chief
Financial Officer of Showboat Operating Company since May 1990; Chief Financial
Officer and Treasurer of Showboat Development Company since May 1993; and
Treasurer of Showboat Mohawk, Inc.and Showboat Louisiana, Inc. since
July 1993. From December 1989 until May 1990, she served as Vice President-
Financial Relations and Chief Financial Officer of the Company. From December
1988 until December 1989, she served as Vice President-Financial Relations
and Acting Chief Financial Officer of the Company. She serves at the pleasure
of the respective boards of directors.

Mark J. Miller, 37, has served as Executive Vice President and
Chief Operating Officer of Atlantic City Showboat, Inc. since October 1993;
Vice President-Finance of Ocean Showboat, Inc. since April 1988; and Vice
President-Finance and Chief Financial Officer of Ocean Showboat Finance
Corporation since April 1991. He served as Vice President-Finance and Chief
Financial Officer of Atlantic City Showboat, Inc. from December 1988 to October
1993. He serves at the pleasure of the respective boards of directors.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of the Common Stock, to file with the Securities and Exchange Commission
and the New York Stock Exchange initial reports of ownership and reports of
changes in ownership of Common Stock. Directors, executive officers and greater
than ten percent shareholders are required by Securities and Exchange Commission
regulation to furnish the Company with copies of all Section 16(a) forms they
file.

To the Company's knowledge, based solely upon review of the
copies of such reports furnished to the Company and written representations
that no other reports were required, during the fiscal year ended December 31,
1993, all Section 16(a) filing requirements were complied with except that one
report of ownership for one transaction, covering an aggregate of 500 shares,
was filed late by J.K. Houssels, and one report of ownership for one
transaction, covering an aggregate of three shares, was filed late by George A.
Zettler. Mr. Houssels' late filing disclosed a disposition by gift of 500
shares which was inadvertently not timely reported on Mr. Houssels' Forms 4,
and Mr. Zettler's late filing disclosed a purchase of Common Stock due to a
dividend reinvestment which also was inadvertently not timely reported on Mr.
Zettler's Forms 4.

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INFORMATION CONCERNING BOARD OF DIRECTORS AND COMMITTEE MEETINGS

The entire Board of Directors met eleven times during the year
ended December 31, 1993 and each incumbent director attended at least 75% of the
board meetings held and committee meetings held for committees of which each was
a member. Mr. Houssels, Mr. Modica, Mr. Houssels, III and Mr. Nasky are the
only directors who are employees of the Company.

The NOMINATING COMMITTEE did not meet during the twelve months
ended December 31, 1993. The Nominating Committee's responsibilities include:
interviewing potential nominees to the Board of Directors; recommending to the
Board of Directors qualified nominees to fill Board of Directors vacancies;
developing procedures to identify potential nominees to the Board of Directors;
and developing criteria for Board of Directors membership. The Nominating
Committee consists of Mrs. Stewart and Mr. Zettler.

The Nominating Committee will consider nominees to the Board of
Directors submitted in writing by shareholders to the Secretary of the Company
at least seventy-five days prior to the initiation of solicitation of the
shareholders for the election of directors in the event of an election other
than at an annual meeting; and seventy-five days before the corresponding date
that had been the record date for the previous year's annual meeting or seventy-
five days before the date of the next annual meeting of shareholders announced
in the previous year's proxy materials in the event of an election at an annual
meeting. Such shareholder's written notice to the Secretary shall set forth:
(a) as to each person whom the shareholder proposes to nominate for election or
re-election as a director (i) the name, age, business address, and residence
address of the person, (ii) the principal occupation or employment of the
person, (iii) the class and number of shares of capital stock of the Company
beneficially owned by the person, (iv) a description of all arrangements or
understandings between the shareholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations have to be made by the shareholder, (v) any other information
relating to the person that is required to be disclosed in solicitations for
proxies for election of directors pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended, and (vi) the consent of such
nominee to serve as a director; and (b) as to the shareholder giving the notice,
(i) the name and record address of such shareholder, and (ii) the class and
number of shares of capital stock of the Company which are beneficially owned by
the shareholder.

The COMPENSATION COMMITTEE met eight times during the twelve
months ended December 31, 1993. Responsibilities include reviewing the
performance of the Company's officers and recommending to the Board of Directors
remuneration arrangements and compensation plans

<PAGE>

involving the Company's directors, executive officers, and key employees,
including, but not limited to, the incentive bonus plans for the Company's Las
Vegas and Atlantic City operations. The Compensation Committee also serves as
the administrators of the 1989 Executive Long-Term Incentive Plan ("Incentive
Plan"). Pursuant to the Incentive Plan, the Compensation Committee makes
recommendations to the Board of Directors respecting the grant of options or
awards of restricted stock and construes and interprets the Incentive Plan.
During 1993, the Compensation Committee consisted of Mr. Zettler and Mr. Nasky
until November 1993, when Mr. Nasky was appointed Chief Executive Officer and
Managing Director of Showboat Australia Pty Limited, a subsidiary of the
Company. In January 1994, the Compensation Committee was reconstituted to
consist of Messrs. Zettler and Richardson.

The AUDIT COMMITTEE met eight times during the twelve months
ended December 31, 1993. The Audit Committee's responsibilities and functions
include: review of reports of independent public accountants to the Company;
review of the Company's financial practices, internal controls and policies with
officers and key personnel; review of such matters with the Company's
independent public accountants to determine the scope of compliance and any
deficiencies; select and recommend to the Board of Directors a firm of
independent public accountants to audit annually the books and records of the
Company; review and discuss the scope of such audit; report periodically on such
matters to the Board of Directors; and perform such other functions as the Board
of Directors from time to time shall delegate to said committee. During 1993,
the Audit Committee consisted of Mr. Gaughan, Mr. Zettler and Mrs. Sparks.

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EXECUTIVE COMPENSATION

NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FUTURE FILINGS,
INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING COMPENSATION
COMMITTEE REPORT ON EXECUTIVE COMPENSATION AND THE PERFORMANCE GRAPH ON PAGE
12 SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION.

OVERVIEW. The Compensation Committee of the Board of Directors
("Compensation Committee") administers the Company's executive compensation
programs. The Compensation Committee presently consists of two non-employee
directors, Messrs. Zettler and Richardson.

The compensation philosophy of the Company is based on two
central objectives:

- To provide competitive executive compensation opportunities
to attract, motivate and retain qualified and motivated
executive officers; and

- To align the Company's financial results and the
compensation paid to the Company's executive officers with
the enhancement of shareholder value.

The Company's compensation policy is structured so that executive
officers' compensation is dependent, in one part, on the degree to which the
Company achieves its current year business plan objectives, and in another part,
on the increase of shareholder value.

COMPENSATION PROGRAMS. The Company's compensation programs
consist of a base salary, an annual incentive bonus, and an award of restricted
stock and/or stock options. The base salary is targeted to fairly recognize
each executive officer's unique value and historical contributions to the
success of the Company in light of the industry median salary for the equivalent
position in the relevant market. The annual incentive bonus is based on actual
performance compared to pre-established quantitative and qualitative performance
objectives which may include Company, operating subsidiary, and individual
components. The Company and operating subsidiary performance is generally
measured against the annual budgeted operating profits set forth at the
beginning of the year for the Company and/or the particular operating subsidiary
applicable to an individual. Individual goals are also set at the beginning of
the year for each executive officer, and are determined through a series of
meetings with the Company's

<PAGE>

Compensation Committee and outside compensation consultants. At the end of each
quarter, an evaluation of performance compared to all relevant objectives is
conducted in order to determine the incentive award amount earned. In no event
may an executive officer receive an annual incentive award if pre-established
threshold levels of performance are not achieved. The Company's long-term
incentive compensation consists of awards of restricted stock and stock options.
Awards of restricted stock, which are forfeited if the executive officer fails
to be continuously employed by the Company or one of its subsidiaries, provide
an incentive to the executive officer to remain in the employ of the Company.
Awards of stock options become exercisable over time and only have value if the
Company's Common Stock increases in value.

The Compensation Committee believes that it is important to
compensate executive officers on the basis of individual and Company financial
performance, including the enhancement of shareholder value. To this end, the
Compensation Committee actively uses the incentive-based compensation programs,
namely, annual incentive bonuses and awards of restricted stock and/or stock
options. For 1993, the bonus compensation paid to the Chief Executive Officer
and the four named executive officers represented incentive-based compensation.

CHIEF EXECUTIVE OFFICER. The base salary of J.K. Houssels, the
Company's Chairman, President and Chief Executive Officer, is targeted to fairly
recognize his leadership skills and management responsibilities in light of the
median level for chief executive officers of similar gaming companies
headquartered in Las Vegas, Nevada. Mr. Houssels received no increase in base
salary for the year 1994. Mr. Houssels' 1993 annual incentive award was based
on pre-established management objectives which included both financial and
non-financial objectives. Mr. Houssels' financial objectives included (i) a
comparison of actual earnings before interest, taxes, depreciation and
management fees ("EBITDM"), on both a consolidated basis and on an individual
basis for each of Showboat Operating Company and Atlantic City Showboat, Inc.,
to budgeted EBITDM; and (ii) the Company's consolidated return on capital.
Nonfinancial objectives included preparation and completion of surveys of
employees and customers of the Company to determine their respective
satisfactions with the product offered by the Company. For 1993, Mr. Houssels
received an annual incentive award, which was less than its potential amount,
based on those factors mentioned above, which award is disclosed in the Summary
Compensation Table, and a discretionary bonus for the year ended December 31,
1992 which was received in January 1993. Any discretionary bonus is awarded on
an infrequent basis. His discretionary bonus was based upon his exceptional
leadership in guiding the Company's 1992 results.

<PAGE>

February 17, 1994 COMPENSATION COMMITTEE

George A. Zettler, Chair
William C. Richardson

14
<PAGE>

The following tables set forth compensation received by J.K. Houssels, the
Company's Chief Executive Officer, and the four other highest paid executive
officers of the Company during the last fiscal year for each year of the three-
year period ended December 31, 1993 for services rendered in all capacities to
the Company and its subsidiaries:

<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Annual compensation Long term compensation
------------------------------------------------------------------------------------
Awards Payouts(1)
----------------------------------------
Securities Long-Term
Other Restricted Underlying Incentive All other
annual stock Options/ Plans compen-
Name and principal Year Salary ($) Bonus ($) compensa- awards(s) SARs (#) payouts sation ($)
position tion ($) ($) ($) ($)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
J.K. Houssels, . . . 1993 200,000.00 144,070.00 -0- -0- -0- -0- 8,994.00(3)
President and Chief 1992 200,000.00 128,718.00 36,096.00(2) -0- -0- -0- 8,728.00(3)
Executive Officer of 1991 200,000.00 -0- * -0- -0- -0- *
the Company
- ---------------------------------------------------------------------------------------------------------------------------------
Frank A. Modica, . . 1993 275,000.00 154,077.00 46,686.00(4) -0- -0- 110,400.00(5) -0-
Executive Vice 1992 275,000.00 152,232.00 -0- -0- -0- 95,606.63(6) -0-
President and Chief 1991 274,999.92 153,741.01 * -0- -0- 40,627.50(7) *
Operating Officer of
the Company
- ---------------------------------------------------------------------------------------------------------------------------------
J. Kell Houssels, 1993 275,000.00 164,174.00 -0- -0- -0- 110,400.00(5) 8,994.00(3)
III, . . . . . . . . 1992 275,000.00 164,660.00 -0- -0- -0- 45,412.13(8) 8,728.00(3)
Vice President of the 1991 259,211.54 141,891.28 * -0- -0- 25,005.00(9) *
Company; President
and Chief Executive
Officer of Atlantic
City Showboat, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
R. Craig Bird, . . . 1993 171,096.00 79,964.00 -0- -0- -0- 34,500.00(10) 8,994.00(3)
Vice President- 1992 146,462.00 78,300.00 -0- -0- -0- 6,813.00(11) 6,736.00(3)
Financial 1991 134,952.68 80,202.49 * -0- -0- 3,750.00(11) *
Administration of the
Company
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Annual compensation Long term compensation
------------------------------------------------------------------------------------
Awards Payouts(1)
----------------------------------------
Securities Long-Term
Other Restricted Underlying Incentive All other
annual stock Options/ Plans compen-
Name and principal Year Salary ($) Bonus ($) compensa- awards(s) SARs (#) payouts sation ($)
position tion ($) ($) ($) ($)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mark J. Miller, . . . 1993 165,499.00 81,515.00 -0- -0- -0- 34,500.00(10) 8,994.00(3)
Vice President- 1992 148,308.00 79,787.00 -0- -0- -0- 6,813.00(11) 6,843.00(3)
Finance of Ocean 1991 136,635.12 77,434.46 * -0- -0- 3,750.00(11) *
Showboat, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
<FN>

* Pursuant to the transitional provisions applicable to the revised rules on
executive officer and director compensation disclosure adopted by the Securities
and Exchange Commission, for the amounts of "Other Annual Compensation" and "All
Other Compensation" for fiscal years ended before December 15, 1992, no
disclosure is required.

(1) Amounts represented in this column were received by the named individuals
under either the Ocean Showboat, Inc. Stock Exchange Plan ("Stock Exchange
Plan") or the Company's 1989 Executive Long-Term Incentive Plan ("1989 Plan") or
both. Under the Stock Exchange Plan, the Company exchanged restricted shares of
Common Stock for shares of Ocean Showboat, Inc. common stock. The restricted
shares of Common Stock vested over a seven-year period, with the last of the
restricted shares of Common Stock vesting in March 1992. The 1989 Plan is a
Company-maintained incentive plan which provides for awards of restricted stock
and stock options to key executives of the Company's operating subsidiaries.

(2) This amount represents excess coverage life insurance costs.

(3) This amount represents the Company's contribution to the named individual's
401(K) Plan account.

(4) This amount includes $25,200 in costs for excess coverage life insurance and
a $16,176 automobile allowance.

(5) This amount represents the vesting of 4,800 shares under the 1989 Plan.

(6) Of this amount, $73,806.63 (5,417 shares) vested under the Stock Exchange
Plan and $21,800.00 (1,600 shares) vested under the 1989 Plan.

(7) This amount represents the vesting of 5,417 shares under the Stock Exchange
Plan.

(8) Of this amount, $23,612.13 (1,733 shares) vested under the Stock Exchange
Plan and $21,800.00 (1,600 shares) vested under the 1989 Plan.

</TABLE>

<PAGE>

(9) Of this amount, $13,005.00 (1,734 shares) vested under the Stock Exchange
Plan and $12,000.00 (1,600 shares) vested under the 1989 Plan.

(10) This amount represents the vesting of 1,500 shares under the 1989 Plan.

(11) This amount represents the vesting of 500 shares under the 1989 Plan.

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
- ---------------------------------------------------------------------------------------------------------------------------
Number of securities Value of unexercised in-
Shares underlying unexercised the-money options/SARs at
acquired on Value options/SARS at December 31, 1993 ($)
Name exercise (#) realized ($) December 31, 1993 (#)

Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
J.K. Houssels . . . . . . . -0- -0- 12,000 8,000 102,000 68,000
- ---------------------------------------------------------------------------------------------------------------------------
Frank A. Modica . . . . . . -0- -0- 16,000 16,000 136,000 136,000
- ---------------------------------------------------------------------------------------------------------------------------
J. Kell Houssels, III . . . -0- -0- 19,200 12,800 163,200 108,800
- ---------------------------------------------------------------------------------------------------------------------------
R. Craig Bird . . . . . . . -0- -0- 6,000 4,000 51,000 34,000
- ---------------------------------------------------------------------------------------------------------------------------
Mark J. Miller . . . . . . -0- -0- 6,000 4,000 51,000 34,000
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.

The Company's executive compensation is determined by the Compensation Committee
("Compensation Committee") of the Board of Directors. Until November 1993, the
Compensation Committee consisted of Messrs. Zettler and Nasky. In January 1994,
the Compensation Committee was reconstituted to consist of Messrs. Zettler and
Richardson.

At all times during 1993, H. Gregory Nasky was a director of the Company and the
Secretary of the Company and its subsidiaries. Mr. Nasky was appointed Chief
Executive Officer and Managing Director of Showboat Australia Pty Limited in
November 1993. Additionally, Mr. Nasky was a member of the law firm of Vargas &
Bartlett, previous general counsel to the Company. On March 1, 1994, Vargas &
Bartlett was reorganized from which the law firm of Kummer Kaempfer Bonner &
Renshaw was formed and proceeded as general counsel to the Company. Mr. Nasky
is of counsel to Kummer Kaempfer Bonner & Renshaw. During 1993, the law firm of
Vargas & Bartlett was paid $57,696.61 by the Company's Nevada gaming subsidiary,
$53,872.48 by the Company's New Jersey subsidiaries, $350,247.97 by Showboat
Development, $196,182.12 by the Company for its public bond offering, and
$122,288.25 by the Company for other parent company matters.

Performance Graph

The following graph compares the cumulative total shareholder return on the
Company's Common Stock for the last five years with the cumulative total return
on the Standard & Poors 500 Composite Stock Index and an industry peer group
index. (1) The graph assumes that $100.00 is invested in December 31, 1988 in
each of the Company's Common Stock, the S&P 500 Composite Stock Index and the
industry peer group index. The total return assumes the reinvestment of
dividends.

OMITTED PERFORMANCE GRAPH

- --------------------------------------------------------------------------------
1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C>
Showboat, Inc. 107.7 47.5 105.0 204.0 195.9
S&P 500 131.8 127.5 166.2 178.8 196.7
Industry Peer Group Index 159.7 136.7 164.8 246.8 265.5
- --------------------------------------------------------------------------------

</TABLE>
[FN]
1. The industry peer group index includes the following companies: Aztar
Corp., Bally Mfg. Corp., Caesar's World Inc., Cedar Fair L.P., Circus
Circus Enterprises, Disney (Walt) Company, Elsinore Corp., Gamma
International Corp., Grand Casinos Inc., Great American Recreation, Jackpot
Enterprises, Jillians Entertainment Corp., MGM Grand Inc., Mirage Resorts
Inc., Pratt Hotel Corp., Resorts International, Rio Hotel & Casino Inc., S-
K-I Ltd., Sahara Gaming Corporation, (2) Sands Regent, Showboat Inc. and
United Gaming Inc. These companies have the Standard Industrial Code 7990
- Miscellaneous Amusement & Recreation Services.

2. On September 30, 1993, Sahara Casino Partners, L.P. and Sahara Resorts
merged into Sahara Gaming Corporation.

<PAGE>

COMPENSATION OF DIRECTORS

REMUNERATION OF NON-EMPLOYEE DIRECTORS. For 1993, each non-employee
director received a retainer of $1,500.00 per quarter plus attendance fees of
$1,000.00 per meeting attended. Such fees are paid by the Company and Ocean
Showboat, Inc., as applicable. In addition, non-employee members of the
Compensation Committee and the Audit Committee are paid $850.00 for each
committee meeting attended. Only non-employee directors receive the retainer or
attendance fees. Reasonable out-of-pocket expenses incurred in attending
scheduled meetings are reimbursed as to all directors.

1989 DIRECTORS' STOCK OPTION PLAN. The Company maintains a director stock
option plan entitled the 1989 Directors' Stock Option Plan ("Option Plan"). The
Option Plan is designed to encourage non-employee directors to take a long-term
view of the affairs of the Company; to attract and retain new superior non-
employee directors; and to aid in compensating non-employee directors for their
services to the Company. The Company's non-employee directors are William C.
Richardson, John D. Gaughan, Jeanne S. Stewart, George A. Zettler and Carolyn M.
Sparks.

Stock options granted under the Option Plan are intended to be designated
non-qualified options or options not qualified as incentive stock options under
Section 422 of the Internal Revenue Code of 1986, as amended. Subject to
adjustment by reason of stock dividend or split or other similar capital
adjustments, an aggregate of 120,000 shares of Common Stock are reserved for
issuance under the Option Plan.

The administration of the Option Plan is carried out by a committee
("Committee") consisting of not less than two non-employee directors of the
Company selected by and serving at the pleasure of the Company's Board of
Directors. The Committee, unless permitted by holders of the majority of
outstanding Common Stock, shall not have any discretion to determine or vary any
matters which are fixed under the terms of the Option Plan. Fixed matters
include, but are not limited to, which non-employee directors shall receive
awards, the number of shares of the Common Stock subject to each option award,
the exercise price of any option, and the means of acceptable payment for the
exercise of the option. The Committee shall have the authority to otherwise
interpret the Option Plan and make all determinations necessary or advisable for
its administration. All decisions of the Committee are subject to approval of
the Company's Board of Directors. Current members of the Committee are Mr.
Zettler and Mr. Richardson.

<PAGE>

Under the terms of the Option Plan, each option shall be exercisable in
full one year after the date of grant. Unless special circumstances exist, each
option shall expire on the later of the tenth anniversary of the date of its
grant or two years after the non-employee director retires. Each non-employee
director initially receives a one-time option to purchase 5,000 shares of Common
Stock following his or her election to the Board of Directors. Thereafter, each
non-employee director receives a grant to purchase 1,000 shares of Common Stock
each year, for five years following his or her election to the Board of
Directors.

The option exercise price is the greater of $7.625 or the fair market
value, as defined under the Option Plan, of the Common Stock on the date
such options are granted. The per share exercise price of options granted
during 1993 pursuant to the Option Plan was $18.00.

As of March 1, 1994, options representing 66,000 shares have been granted
to the current five non-employee directors and three former non-employee
directors and a director who has since become an employee. Of the outstanding
options, options representing 60,000 shares are currently exercisable. The
balance may not be exercised until April 27, 1994. As of December 31, 1993,
none of the options granted pursuant to the Option Plan have been exercised.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company made an unsecured loan to Frank A. Modica, Chief Operating
Officer, Executive Vice President and Director of the Company, in the amount of
$64,659.50 on September 30, 1993. Effective January 1, 1994, the loan was
reduced to $56,801.75. The loan is payable on demand, or if no demand is made,
on December 31, 1994, unless extended. The loan bears no interest, but
interest is inputed to Mr. Modica at a rate of 3.91% per annum, compounded
monthly.

The Company made an unsecured loan to R. Craig Bird, Vice President-
Financial Administration of the Company, and his spouse in the amount of
$20,400.69 on August 5, 1993. The loan is payable on demand, or if no demand is
made on August 4, 1994, unless extended. The loan bears no interest, but
interest is inputed to Mr. and Mrs. Bird at a rate of 3.85% per annum,
compounded monthly. The Company's subsidiary, Atlantic City Showboat, Inc.,
leases space at the Atlantic City Showboat to Mr. Bird for the operation of a
gift shop and certain vending machines. During 1993, Mr. Bird paid rent and
vending commissions to Atlantic City Showboat, Inc. in the amount of
$112,888.29 and $39,793.89, respectively.

The Company entered into a five-year lease agreement with Exber, Inc.
commencing on February 15, 1994, for land nearby the Las Vegas Showboat.
Exber, Inc., a Nevada corporation controlled by John D. Gaughan, a Director
of the Company, has rights to the land pursuant to a sublease agreement dated
November 5, 1966. The Comapny pays monthly rent of $13,095.80 and has an
option to purchase the land and all of Exber, Inc.'s rights thereto for the
purchase price of $1.4 million.

Carolyn M. Sparks, a Director of the Company, is a co-owner of
International Insurance Services, Ltd. The Company engaged

<PAGE>

International Insurance Services, Ltd. as its insurance adjuster for the
Company's Nevada subsidiaries. During 1993, the Company paid International
Insurance Services, Ltd. $115,858 for services rendered to the Company.

PROPOSED AMENDMENT TO THE ARTICLES OF INCORPORATION
TO INCREASE AUTHORIZED CAPITAL STOCK

Vote Necessary to Approve Amendment

Pursuant to Nevada law and the Company's Articles of Incorporation, the
affirmative vote necessary to approve an amendment to the Articles of
Incorporation is 66 2/3% of the outstanding Common Stock. Based upon
outstanding Common Stock of 14,992,195 shares as of March 28, 1994, it would
be necessary to obtain an affirmative vote of 9,994,797 shares to approve the
proposed amendment.

Proposal to Increase Authorized Common Stock to 50,000,000 Shares

The proposed amendment to the first paragraph of Article IV of the
Company's Articles of Incorporation would increase the authorized capital stock
of the Company from 20,000,000 shares of $1 par value Common Stock and 1,000,000
shares of $1.00 par value preferred stock to 50,000,000 shares of $1.00 par
value Common Stock and 1,000,000 shares of $1.00 par value preferred stock.
As of March 28, 1994, 14,992,195 shares of Common Stock and no shares of
preferred stock were issued and outstanding.

The proposed amendment will be submitted to the shareholders for approval
at the meeting in substantially the following form:

The amount of the total authorized capital stock of the
corporation is Fifty-One Million Dollars ($51,000,000.00)
consisting of Fifty Million (50,000,000) shares of common
stock of the par value of One Dollar ($1.00) per share
("Common Stock") and One Million (1,000,000) Shares of
preferred stock of the par value of One Dollar ($1.00) per
share ("Preferred Stock").

The Company has no present plans, understandings or agreements with respect
to additional issuances of its Common Stock. However, at this time
approximately 15,000,000 shares of Common Stock are outstanding. In the event
that the Company's shareholders approve the 1994 Long-Term Incentive Plan, which
reserves 2,000,000 shares for issuance under the Plan, together with the shares
of Common Stock reserved for issuance under the 1989 Long-Term Incentive Plan
(600,000 shares), the Directors' Stock Option Plan (120,000 shares), and the
Employee Stock Option Plan (1,000,000 shares),

<PAGE>

only 1,280,000 shares of Common Stock will remain available for issuance. The
Board of Directors believes that it would be desirable to have additional shares
of Common Stock that would be authorized by the proposed amendment available for
issuance to raise additional working capital. Having such additional authorized
shares available will give the Company greater flexibility by permitting such
shares to be issued without the expense or delay of a special meeting of the
shareholders. Shareholder approval is not necessary for issuance of shares of
the Company's Common Stock from the Company's authorized capital stock. The
Company's shareholders do not have preemptive rights with respect to the Common
Stock.

The increase in the number of authorized shares of Common Stock is not
designed to deter or prevent a change in control of the Company. However, under
certain circumstances the issuance of additional shares of Common Stock could be
used to make a change in control more difficult if the Board of Directors caused
such shares to be issued to holders who might side with the Board of Directors
in opposing a takeover bid that the Board of Directors determines is not in the
best interests of the Company and its shareholders. In addition, the
availability of the additional shares might theoretically discourage an attempt
by another person or entity to acquire control of the Company through the
acquisition of a substantial number of shares of Common Stock, since the
issuance of such shares could dilute the stock ownership of such person or
entity.

Wholly apart from this proposed amendment, the Board could issue a series
of preferred stock with rights and preferences that might similarly impede or
discourage proposed mergers, tender offers, or attempts to gain control of the
Company. In addition, the Articles of Incorporation contain a so-called "fair
price" provision and provide for a classified Board of Directors, each of which
could be viewed as discouraging some attempts to obtain control of the Company.
Under the "fair price" provision, an affirmative vote of 66 2/3% or more of the
Company's voting stock is required for business combinations between the Company
and an "interested shareholder" unless the business combination is approved by
the Board of Directors or a minimum price is received by all shareholders and
certain other conditions are met.

The Board of Directors has no present intention of issuing additional
shares of Common or Preferred Stock for any of the purposes described in the two
immediately preceding paragraphs.

The Board of Directors believes it to be in the best interests of the
Company to approve the proposed amendment since additional authorized Common
Stock will give the Company greater flexibility if it becomes appropriate in the
business judgment of the Board of Directors to issue shares to raise funds for
corporate purposes.

<PAGE>

The increase in authorized Common Stock will not have any immediate effect on
the rights of existing shareholders. The proposed amendment may be
disadvantageous to shareholders to the extent that an increase in the number of
shares outstanding will dilute the proportionate ownership represented by the
ownership stock.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THIS AMENDMENT.

APPROVAL AND RATIFICATION OF ADOPTION OF
1994 LONG TERM INCENTIVE PLAN

INTRODUCTION

The Board of Directors of the Company approved the 1994 Long Term Incentive
Plan ("1994 Plan") in January 1994. The 1994 Plan must also be approved by a
majority of the Company's shareholders at the Annual Meeting.

PURPOSE

The 1994 Plan is intended to promote the interests of the Company and its
operating subsidiaries by offering executive officers and key employees of the
Company or any operating subsidiary who are primarily responsible for the
management, growth and success of the business of the Company the opportunity to
participate in a long-term incentive plan designed to reward them for their
services and to encourage them to continue in the employ of the Company.
Additionally, the gaming industry is expanding throughout the United States of
America and the world. Such growth requires the Company to obtain gaming
executives from within and without the Company, both for the Company's existing
facilities as well as Company expansion opportunities. The Company believes
that the 1994 Plan will encourage existing executives to remain with the Company
and will attract additional executives to supplement the Company's existing
management.

Options and restricted stock are intended to be granted primarily to those
persons who possess the capacity to contribute significantly to the successful
performance of the Company. Because persons to whom grants of options and
restricted stock awards are to be made are to be determined from time to time by
the Board of Directors or a committee thereof, in its discretion, it is
impossible at this time to indicate the precise number, names or positions of
persons who will receive options or restricted stock awards or the number of
shares for which options or restricted stock awards will be granted to any such
employee. The Company anticipates that approximately 250 employees will
participate in the 1994 Plan.

<PAGE>

The 1994 Plan provides for the granting of nonqualified stock options,
incentive stock options, and restricted stock to certain executive officers, and
other key employees. Subject to adjustment by reason of stock splits or other
capital adjustments, an aggregate of 2,000,000 shares of Common Stock of the
Company is reserved for issuance in connection with the 1994 Plan. Unless the
context clearly indicates to the contrary, the term "option" used herein shall
mean either an incentive stock option or nonqualified stock option, and the term
"optionee" shall mean any person holding an option granted under the 1994 Plan.
The following summary of the principal features of the 1994 Plan is not intended
to be complete and is qualified in its entirety by reference to the 1994 Plan.
A copy of the 1994 Plan may be obtained from the Company upon the written
request of any shareholder received by the Company before the upcoming Annual
Meeting of Shareholders.

Approval of the 1994 Plan by the Company's shareholders is one of the
conditions of Rule 16b-3, a rule promulgated by the Securities and Exchange
Commission (the "SEC") that provides an exemption from the operation of the
"Short-swing profit" recovery provisions of Section 16(b) of the Securities
Exchange Act of 1934, as amended ("Exchange Act"), with respect to the
acquisition of options, the use of already owned Common Stock as payment of
the exercise price for options granted under the 1994 Plan and certain
transactions by officers and directors of the Company.

ADMINISTRATION AND ELIGIBILITY

The 1994 Plan is administered by the Company's Compensation Committee,
consisting of not less than two non-employee directors of the Company
selected by, and serving at, the pleasure of the Company's Board of Directors.
Based upon the recommendations from the operating subsidiaries, the Compensation
Committee recommends to the Company's Board the persons to whom awards shall be
granted ("Participants"), the number of shares to be awarded, when the awards
shall be granted, when the awards shall vest, and the terms and provisions of
the instruments evidencing the awards. The Compensation Committee shall also
interpret the 1994 Plan and make all determinations for its administration.
Only employees who serve as executives and other key employees of the Company or
its operating subsidiaries are eligible for selection as Participants in the
1994 Plan. Directors of the Company may be eligible to participate in the 1994
Plan only if they are employed by the Company or any operating subsidiary.

OPTION PRICE

Incentive stock options granted under the 1994 Plan must have an option
price equal to at least 100% of the fair market value, as defined in the 1994
Plan ("Fair Market Value") of the common stock of the Company on the date that
the option is granted, except that

<PAGE>

incentive stock options, if any, granted under the 1994 Plan to an optionee who
at the time owns stock possessing more than 10% of the total combined voting
power of all classes of the Company's stock must have an option price of at
least 110% of the Fair Market Value and a term of not more than five years.
Nonqualified stock options must have an exercise price equal to at least 85% of
the Fair Market Value of the Common Stock of the Company.

Options may be exercised by payment of the option price in full (i) in
cash, (ii) by surrender of Common Stock in the Company having a fair market
value equal to the option price of shares to be purchased, or (iii) a
combination of cash and Common Stock.

OPTION TERM

An option may be exercised only by the optionee during the optionee's
lifetime. An option may not be transferred or assigned other than by will or
the laws of descent and distribution.

Except in special circumstances, each option shall expire on the tenth
anniversary of the date of its grant and shall be exercisable according to a
vesting schedule to be determined by the Compensation Committee. The
Compensation Committee may include in any option instrument, initially or by
amendment at any time, a provision making any installment exercisable at such
earlier date, if the Compensation Committee deems such provision to be in the
interest of the Company or operating subsidiaries, or necessary to realize the
reasonable expectation of the optionee.

TERMINATION OF OPTION

If an optionee ceases to be employed by the Company or an operating
subsidiary, except by reason of death or retirement, the optionee must exercise
an option within the earlier of either the tenth anniversary after the date of
the grant, or one month after the day such optionee's employment ends. In the
event of termination of employment due to retirement, all options granted to
such optionee and exercisable on the date of the optionee's retirement shall
expire on the earlier of the tenth anniversary after the date of grant or the
day of third anniversary of such optionee's retirement. Any installment not
exercisable on the date of retirement shall expire and thenceforth be
unexercisable. In the event of termination of employment due to the death of
the optionee, the option may be exercised, to the extent of the number of shares
that the optionee could have exercised on the date of his death, by the
optionee's estate, personal representative or beneficiary who acquires the
option by will or by the laws of descent and distribution. Such exercise must
be made at any time prior to the earlier of the tenth anniversary after the date
of grant or the third anniversary of such optionee's death.

<PAGE>

FEDERAL TAX CONSEQUENCES

Holders of incentive stock options will not recognize taxable income as a
result of the grant or exercise of such options. If the optionee does not
dispose of the stock transferred to him within two years from the date of the
grant and within one year after the stock is transferred to him, then any gain
or loss recognized on the disposition of the stock will be a long-term capital
gain or loss equal to the difference between the amount realized by the optionee
and the option price. However, the difference between the option exercise price
and the fair market value of the shares on the option exercise date will be
treated as a tax preference item subject to alternative minimum tax. The
Company will not be entitled to any tax deduction in connection with the grant
or exercise of any incentive stock option. However, if stock acquired pursuant
to an incentive stock option is disposed of before the holding periods described
above expire, then the excess of the fair market value (but not in excess of the
sales proceeds) of such stock on the option exercise date over the option price
will be treated as compensation income to the optionee in the year in which such
disposition occurs and the Company will be entitled to a commensurate income tax
deduction. Any difference between the sales proceeds and the fair market value
of the stock on the option exercise date will be treated as long-term capital
gain or loss if the shares were held more than one year after the option
exercise date.

Except as provided in the next paragraph below, the holder of a
nonqualified stock option, upon exercise, must include in ordinary income
subject to federal taxation an amount equal to the excess of the fair market
value of the stock acquired at date of exercise over the aggregate price paid
pursuant to the option for such stock. Accordingly, the Company may, as a
condition to the exercise of a nonqualified stock option, deduct from payments
otherwise due to the optionee the amount of taxes to be withheld by virtue of
such exercise or require that the optionee pay such withholding to the Company
or make other arrangements satisfactory to the Company regarding the payment of
such taxes.

When an officer or director who is subject to Section 16(b) of the Exchange
Act exercises a nonqualified stock option, no income is recognized for federal
income tax purposes at the time of exercise unless the optionee makes an
appropriate election within 30 days after the date of exercise, in
which case the rules described in the preceding paragraph would apply. If such
an election is not made, the optionee will recognize ordinary income on the date
that is six months after the date of the exercise (generally, the first day
the sale of such shares would not create liability under Section 16(b) of the
1934 Act). The ordinary income recognized will be the excess, if any, of the
fair market value of the shares on such later date over the option exercise

<PAGE>

price, and the Company's tax deduction will also be deferred until such later
date. The effect of the alternative minimum tax may not be delayed for six (6)
months after exercise of incentive stock options by an officer or director
subject to Section 16 of the Exchange Act.

Optionees should consult their own tax counsel as to the consequences under
federal, state and local tax laws upon the grant and exercise of the options on
the subsequent sale of the stock.

RESTRICTED SHARE AWARDS

Under the 1994 Plan, the Compensation Committee may also award Participants
restricted shares of Common Stock which will vest over a minimum of a three-year
period. All restricted share awards and terms thereof are subject to approval
by the Company's Board of Directors.

Under the 1994 Plan, all restricted shares will be forfeited to the Company
or the applicable operating subsidiary if a Participant fails to be continuously
employed with the Company or any operating subsidiary during the restriction or
vesting.

The restricted shares may not be sold, bequeathed, transferred, pledged, or
otherwise disposed of by a Participant.

The Compensation Committee may require a Participant to enter into an
escrow agreement in which the restricted shares are to remain in the physical
custody of the Company. Each restricted share certificate shall bear a legend
referring to such restrictions. The Committee has authority to make all
determinations necessary or advisable for its administration. All decisions of
the Committee are subject to approval of the Company's Board of Directors.

Notwithstanding the restrictions, a recipient of a restricted share award
will have all the rights of a shareholder of the Company including the right to
vote the restricted shares and the right to receive all dividends or other
distributions made with respect to the restricted shares.

The Board of Directors of the Company may, in their discretion, remove the
share restrictions in the event a Participant terminates employment due to
death, total and permanent disability, retirement or discharge other than
discharge for cause.

A Participant may, with the consent of the Compensation Committee,
designate a person or persons to receive, in the event of death of the
Participant, any vested restricted shares to which the Participant would then be
entitled.

<PAGE>

CHANGE IN CONTROL OF THE COMPANY

In the event of a change in control, as defined under the 1994 Plan, all
restrictions on restricted shares will lapse and vesting on all unexercised
stock options will accelerate to the change of control date.

AMENDMENTS

The Board of Directors may terminate or amend the 1994 Plan in any respect,
at any time, provided, however, without the approval of the holders of a
majority of the outstanding stock; the total number of shares that may be sold,
issued or transferred under the 1994 Plan may not be increased (except for
proportional adjustment for stock dividend or split, recapitalization, merger,
consolidation, spinoff, or other similar corporate changes); the eligibility
requirements for participation may not be modified; the exercise price of an
option cannot be reduced; and the termination date of the 1994 Plan may not be
extended.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE APPROVAL AND
RATIFICATION OF THE 1994 LONG TERM INCENTIVE PLAN.

RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS

The principal accountant nominated by the Audit Committee and selected by
the Board of Directors for the current year is KPMG Peat Marwick. KPMG Peat
Marwick and its predecessors have audited the Company's books since 1972. The
Board of Directors directed that its selection of KPMG Peat Marwick be submitted
to the shareholders for their approval. A representative of KPMG Peat Marwick
is expected to be present at the Annual Meeting to respond to appropriate
questions and to make a statement, if the representative deems it appropriate.
The Board of Directors recommends a vote in favor of the ratification of KPMG
Peat Marwick to be the Company's independent public accountant, to examine and
report on the Company's financial statements for the year ending December 31,
1994.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE RATIFICATION OF
THE SELECTION OF KPMG PEAT MARWICK.

VOTING PROCEDURES

A majority of a quorum of shareholders present in person or represented by
proxy voting "For" the election of the nominees to the Board of Directors;
voting "For" the approval and ratification of the 1994 Long Term Incentive Plan;
and voting "For" the ratification of the selection of independent public
accountants is sufficient to approve the matters being voted on at the
shareholders exists when 50% of the Company's issued and outstanding Common
Stock is present and represented at the meeting.

<PAGE>

Abstentions are treated as votes "Against" the election of the nominees or the
selection of the independent public accountants. Neither the Company's Articles
of Incorporation, Bylaws nor Nevada corporate statutes address the treatment and
effect of abstentions and broker non-votes. The rules of the New York Stock
Exchange provide, in certain situations, brokerage firms and member
organizations the discretion to vote the shares held of record by them if the
beneficial owner does not provide voting instructions for the shares within the
requisite time period. The proposed amendment to increase the authorized common
stock to 50,000,000 requires 66 % of the Company's issued and outstanding Common
Stock to vote "For" the amendment.

The Company will appoint an independent Inspector of Elections to tabulate
the votes at the Annual Meeting of Shareholders. The Inspector of Elections
shall then prepare a report indicating: (a) the number of "For" votes and
"Against" votes for each nominee to the Board of Directors; (b) the number
of "For" votes, "Against" votes and "Abstain" votes for the amendment to the
Company's Articles of Incorporation; (c) the number of "For" votes, "Against"
votes and "Abstain" votes for the adoption and ratification of the 1994 Long
Term Incentive Plan; and (d) the number of "For" votes, "Against" votes and
"Abstain" votes for the ratification of the selection of the Company's
independent public accountants.

1995 ANNUAL MEETING OF SHAREHOLDERS

According to the Company's Restated Bylaws, the next annual meeting of
shareholders is expected to be held on or about April 25, 1995. Shareholders
desiring to present proper proposals at that meeting and to have their proposals
included in the Company's proxy statement and form of proxy for that meeting
must submit the proposal to the Company, and it must be received by the Company
at its executive offices at 2800 Fremont Street, Las Vegas, Nevada 89104 no
later than December 17, 1994. The proposal must comply with Securities and
Exchange Commission Regulation 14a-8.

EXPENSES OF SOLICITATION OF PROXIES

The expenses of making the solicitation of proxies for the 1994 Annual
Meeting will consist of the costs of preparing, printing and mailing the proxies
and proxy statements and the charges and expenses of brokerage houses,
custodians, nominees or fiduciaries for forwarding documents to security owners.
These are the only contemplated expenses of solicitation and will be paid by the
Company.

<PAGE>

OTHER BUSINESS

The Board of Directors does not know of any other business which will be
presented for action by the shareholders at this annual meeting. However, if
any business other than that set forth in the Notice of Annual Meeting of
Shareholders should be presented at the meeting, the proxy committee named in
the enclosed proxy intends to take such action as will be in harmony with the
policies of the Board of Directors of the Company, and in that connection will
use their discretion and vote all proxies in accordance with their judgment.

The proxy materials and annual report are being mailed to shareholders of
the Company who were shareholders at the close of business on March 28, 1994.
Shareholders who cannot be present at the Annual Meeting of Shareholders are
requested to fill out, date, sign and promptly return the accompanying form of
proxy card in the enclosed postage pre-paid envelope.

By order of the Board of Directors,

H. GREGORY NASKY,
Secretary

DATED: April 16, 1994

31
<PAGE>
SHOWBOAT, INC.

PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, MAY 25, 1994
SOLICITED BY THE BOARD OF DIRECTORS

The undersigned shareholder of Showboat, Inc. ("Company")
hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders, Proxy Statement and the 1994 Annual Report of the
Company in connection with the annual meeting of shareholders of
the Company to be held at the Mardi Gras Room, Showboat Casino
Hotel, 801 Boardwalk, Atlantic City, New Jersey 08401, on
Wednesday, May 25, 1994, at 10:00 a.m., Eastern Time, and
hereby appoints J. K. Houssels, William C. Richardson, and
Jeanne S. Stewart, and each or any of them, proxies, with power
of substitution, to attend and to vote all shares the undersigned
would be entitled to vote if personally present at said annual
meeting and at any adjournment thereof. The proxies are instructed
to vote as follows:

(TO BE SIGNED ON REVERSE SIDE)

<PAGE>

X PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.

1. Election of FOR WITHHELD Nominees: John D. Gaughan
Directors Frank A. Modica
H. Gregory Nasky
___ ___ J. Kell Houssels, III

For, except vote withheld from the following nominees(s):

__________________________________________________________
2. Approval of the amendment to Articles of Incorporation to
increase the amount of authorized common stock.

FOR AGAINST ABSTAIN

___ ___ ___

3. Approval and ratification of adoption of the 1994
Executive Stock Option Plan.

FOR AGAINST ABSTAIN

___ ___ ___

4. Approval of KPMG Peat Marwick as Independent Public
Accountants.

FOR AGAINST ABSTAIN

___ ___ ___

This Proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. (If no direction
is made, this proxy will be voted for Proposals 1, 2, 3 and 4).

PLEASE MARK, DATE, SIGN AND RETURN THE PROXY CARD PROMPTLY,
USING THE ENCLOSED ENVELOPE.

SIGNATURE(S)___________________________ DATE_________________________

NOTE: Please sign exactly as name appears herein. Joint owners
should each sign. If shares are held in the name of two or more
persons, all must sign. When signing as attorney, executor,
administrator, trustee or guardian, or corporation, please give
full title as such.