SHOWBOAT INC, DEF 14A, 1997-04-21

SHOWBOAT INC
DEF 14A, 1997-04-21
MISCELLANEOUS AMUSEMENT & RECREATION

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SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. ___)

Filed by the Registrant [X]

Filed by a Party other than the Registrant

Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))

[X] Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12

SHOWBOAT, INC.
(Name of Registrant as Specified In Its Charter)

Not Applicable
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

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:

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

<PAGE>

(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the amount
on which the filing fee is calculated and state how it was
determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

Fee paid previously with preliminary materials.

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:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:

<PAGE>

Showboat, Inc.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 29, 1997

To the Shareholders of Showboat, Inc.:

The Annual Meeting of Shareholders of Showboat, Inc.
("Company") will be held at the Memphis Room, Showboat Hotel,
Casino and Bowling Center, 2800 Fremont Street, Las Vegas, Nevada
89104, on Thursday, May 29, 1997, at 10:00 a.m., local time, for
the following purposes:

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

(2) To approve the Showboat, Inc. 1996 Stock Appreciation
Rights Plan;

(3) 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 fiscal year
ending December 31, 1997; and

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

Only shareholders of record at the close of business on
March 31, 1997 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 1996 Annual Report to Shareholders is enclosed.

By order of the Board of Directors,

/s/ H. Gregory Nasky
H. GREGORY NASKY,
Secretary

DATED: April 18, 1997

<PAGE>

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 29, 1997, 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 the Showboat, Inc. 1996 Stock Appreciation
Rights 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, 1997; 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 18,
1997. 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
written notice of revocation or an 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 31, 1997 was fixed by the Board
of Directors as the record date for determination of the
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 31, 1997, there were outstanding
16,255,620 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
beneficially owned by the Company's directors and those executive
officers named in the Summary Compensation Table (see page 12),
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 March 31, 1997. 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 March 31, 1997, which the Company
solicited and received from certain beneficial owners listed in
the following table:

<PAGE>

<TABLE>

Name Amount and Nature of Beneficial Ownership
Number of Shares
Beneficially Owned Number of Shares Total Number
Excluding Shares Subject to Options of Shares
Subject to Options<F1> Beneficially Owned<F2> Beneficially Owned Percent
<S> <C> <C> <C> <C>
J.K. Houssels<F3> 1,178,357<F4> 44,000 1,222,357 7.5
William C. Richardson 6,000 12,000 18,000 *
John D. Gaughan 174,824<F5> 12,000 186,824 1.2
Jeanne S. Stewart 377,686 12,000 389,686 2.4
Frank A. Modica 71,169<F6> 6,000 77,169 *
H. Gregory Nasky 15,827<F7> 27,000 42,827 *
J. Kell Houssels, III 130,717<F8> 56,000 186,717 1.2
George A. Zettler 3,405 10,000 13,405 *
Carolyn M. Sparks 203,208<F9> 5,000 208,208 1.3
Donald L. Tatzin<F10> 0 12,000 12,000 *
Herbert R. Wolfe<F11> 4,550 10,000 14,550 *
J. Keith Wallace<F12> 7,500 22,800 30,300 *
All directors and executive
officers as a group
(20 persons) 2,240,293 337,440 2,577,733 15.6
Massachusetts Financial
Services Company 1,608,200<F13> 0 1,608,200 10.0
Bankers Trust New York
Corporation 1,442,300<F14> 0 1,442,300 8.9
Neuberger & Berman, LLC 1,214,500<F15> 0 1,214,500 7.5

<FN>

*Beneficial ownership does not exceed 1% of the outstanding
Common Stock.
<F1>Unless otherwise specifically stated herein, each person
has sole voting power and sole investment power as to the
identified Common Stock ownership.
<F2>Shares subject to currently exercisable options or
otherwise subject to issuance within 60 days of March 31, 1997,
pursuant to either the 1989 Directors' Stock Option Plan, the
1989 Executive Long Term Incentive Plan, or the 1994 Executive
Long Term Incentive Plan.
<F3>Mr. Houssels may be deemed to be a control person.
Mr. Houssels is the Chairman of the Board of the Company.
<F4>Mr. Houssels' shareholdings include 11,450 shares held in
his individual retirement account and 1,122,207 shares as a
trustee of the J.K. and Nancy Houssels 1992 Trust No. 1. He
disclaims beneficial ownership of 7,000 shares owned by his wife
and such shares are excluded from this table.
<F5>Mr. Gaughan's shareholdings include 86,000 shares held by
Exber, Inc., a Nevada corporation controlled by Mr. Gaughan.
<F6>Mr. Modica's shareholdings include 71,169 shares
beneficially owned by him as trustee of the Frank A. Modica
Revocable Family Trust.
<F7>Mr. Nasky is an Executive Vice President and Secretary of
the Company. Mr. Nasky's shareholdings include 1,302 shares
owned by Mr. Nasky's wife over which he does not have voting or
investment power.
<F8>Mr. Houssels, III is the President and Chief Executive
Officer of the Company. Mr. Houssels, III's shareholdings
include 35,700 shares beneficially owned by him as trustee of the
J.K. Houssels, Jr. 1976 Trust Agreement.
<F9>Mrs. Sparks' shareholdings include 126,958 shares
beneficially owned by her as co-trustee of the Fred L. Morledge
and Malvina W. Morledge Family Trust and 76,250 shares
beneficially owned by her as co-trustee of the Sparks Family
Trust.
<F10>Mr. Tatzin is an Executive Vice President of the Company.
<F11>Mr. Wolfe is the President and Chief Executive Officer of
Atlantic City Showboat, Inc.
<F12>Mr. Wallace is the President and Chief Executive Officer
of Showboat Marina Casino Partnership and Showboat Indiana, Inc.
<F13>Massachusetts Financial Services Company ("MFSC") reported
on a Schedule 13G filed on February 11, 1997, that it has sole
investment power with respect to all of such shares and sole
voting power with respect to 1,607,500 of such shares. MFSC's
address is 500 Boylston Street, Boston, Massachusetts 02116.
<F14>Bankers Trust New York Corporation ("BTNYC"), the parent
holding company of Bankers Trust Company and indirect parent
holding company of BT Australia Limited, reported on a Schedule
13G filed on February 14, 1997, that it has sole investment
power with respect to all of such shares and sole voting power
with respect to 1,265,000 of such shares. BTNYC's address is
280 Park Avenue, New York, New York 10017.
<F15>Neuberger & Berman, LLC ("Neuberger") reported on a
Schedule 13G filed on February 13, 1997, that it has sole
voting power as to 43,000 of the 1,214,500 shares beneficially
owned by it and Neuberger disclaims beneficial ownership as to
2,500 shares owned by principals of Neuberger and such shares
are excluded from this table. Neuberger's address is 605 Third
Avenue, New York, New York 10158-3698.

</FN>

</TABLE>

<PAGE>

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 each. Four directors' terms expire at this
meeting; three in 1998; and two in 1999. 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 to serve as a director by the gaming regulatory
authorities in jurisdictions in which the Company does
business. All present directors of the Company who were
required to be found suitable or qualified have been found
suitable or qualified by the applicable gaming regulatory
authority. Should any director no longer be found suitable or
qualified by any gaming regulatory authority having
jurisdiction over the Company, that director 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, each for a three-year term 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 J.K. Houssels and
Jeanne S. Stewart formerly were married and are the parents of
J. Kell Houssels, III.

<PAGE>

Identification of Directors and Nominees

<TABLE>

Director
Name and Position with the Company<F1> Age Since Background Information<F1>

<S> <C> <C> <C>
J.K. HOUSSELS 74 1960 Until May 1994, President and
(Term expires in 1998) Chief Executive Officer of the
Chairman of the Board of the Company, Company; since November 1974,
Showboat Operating Company and Ocean Vice Chairman of the Board of
Showboat, Inc.; Director of the Directors of Union Plaza Hotel
Company and all subsidiaries. and Casino, Inc., Las Vegas,
Nevada.

WILLIAM C. RICHARDSON 70 1972 Independent financial consultant,
(Term expires in 1998) Los Angeles, California; since
Director of the Company and Ocean California; since January 1986,
Showboat, Inc. arbitrator and mediator for
the American Arbitration
Association and self regulatory
organizations.

JOHN D. GAUGHAN 76 1978 Since November 1974, Chairman of
(Nominee for term expiring in 2000) the Board and President of
Director of the Company and all Exber, Inc., doing business as
subsidiaries. the El Cortez Hotel and the
Western Hotel and Casino, Las
Vegas, Nevada; since 1986,
Chairman of the Board of Union
Plaza Hotel and Casino, Inc.,
Las Vegas, Nevada.<F2>

JEANNE S. STEWART 74 1979 Retired attorney, Las Vegas,
(Term expires in 1998) Nevada.
Director of the Company and Ocean
Showboat, Inc.

FRANK A. MODICA 69 1980 Until May 1995, Chairman of the
(Nominee for term expiring in 2000) Board of Atlantic City Showboat,
Director of the Company and all Inc.; until February 1995,
subsidiaries. Executive Vice President and
Chief Operating Officer of the
Company and President and Chief
Executive Officer of Showboat
Operating Company; since January
1995 Director Emeritus of First
Security Bank, Las Vegas,
Nevada; until December 1994
Director of First Security Bank;
and Director of the Professional
Bowlers Association since June
1996.

<PAGE>

Director
Name and Position with the Company<F1> Age Since Background Information<F1>
<S> <C> <C> <C>
H. GREGORY NASKY 54 1983 From October 1993 to February
(Nominee for term expiring in 2000) 1995, Managing Director and
Executive Vice President of the Chief Executive Officer of
Company; President and Chief Showboat Australia Pty Limited;
Executive Officer of Showboat from March 1994 to February
Development Company; Secretary and 1995, Chief Executive Officer
Director of the Company and all and Managing Director of Sydney
subsidiaries. Harbour Casino; since March
1994, of counsel to the law firm
Kummer Kaempfer Bonner &
Renshaw, Las Vegas, Nevada,
outside legal counsel to the
Company; until February 1994,
member of the law firm of Vargas
& Bartlett, Las Vegas and Reno,
Nevada, previous general counsel
to the Company.

J. KELL HOUSSELS, III 47 1983 From May 1993 to May 1995,
(Nominee for term expiring in 2000) President and Chief Executive
President and Chief Executive Officer Officer of Showboat Development
of the Company and Ocean Showboat, Company; from May 1993 to June
Inc.; Vice Chairman of Showboat 1994, President and Chief
Operating Company; Director of Executive Officer of Atlantic
Showboat, Inc. and all subsidiaries; City Showboat, Inc.; from
Chairman of the Board of Atlantic January 1990 to May 1994, Vice
City Showboat, Inc., Showboat President of the Company; from
Development Company and Showboat November 1990 to May 1995,
Marina Finance Corporation;<F3> Executive Vice President of
Chairman of the Executive Committee Ocean Showboat, Inc.; from
of Showboat Marina Partnership.<F3> January 1990 to May 1993,
President and Chief Operating
Officer of Atlantic City
Showboat, Inc.

GEORGE A. ZETTLER 69 1986 Since February 1994, President
(Term expires in 1999) of Zimex, Redondo Beach,
Director of the Company and Ocean California; until January 1994,
Showboat, Inc. President World Trade Services
Group, Long Beach, California.

CAROLYN M. SPARKS 55 1991 Co-owner of International
(Term expires in 1999) Insurance Services, Las Vegas,
Director of the Company and Ocean Nevada; since 1988, Director of
Showboat, Inc. Southwest Gas Corporation; from
1988 to July 1996, Director of
PriMerit Bank - Federal Savings
Bank, Las Vegas, Nevada; from
1984 to December 1996, Regent,
University and Community College
System of Nevada.

<FN>
_______________
<F1>Positions held with the Company and any other business
experience since 1992 and other directorships in companies with a
class of securities registered under Section 12 of the Securities
Exchange Act of 1934, as amended ("Exchange Act") or subject to
the requirements of Section 15(d) of the Exchange Act and in
companies registered under the Investment Company Act of 1940.
<F2>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.
<F3>Showboat Marina Casino Partnership and Showboat Marina
Finance Corporation, each an affiliate of the Company, have a
class of securities registered under Section 12 of the Exchange
Act.

</FN>

</TABLE>

<PAGE>

Non-Director Executive Officers

R. Craig Bird, 50, has been the Chief Financial Officer of the
Company since January 1996; the Executive Vice President-Finance
and Administration of the Company since June 1994; Executive Vice
President-Finance and Administration and Chief Financial Officer
of Showboat Development Company since October 1993; and Executive
Vice President-Finance, Treasurer and Chief Financial Officer of
Showboat Operating Company and Vice President-Financial
Administration of Ocean Showboat, Inc. since May 1996. 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.

Mark J. Miller, 40, has been Executive Vice President-
Operations of the Company since June 1995; Vice President-Finance
of Ocean Showboat, Inc. since April 1988; Vice President-Finance
and Chief Financial Officer of Ocean Showboat, Inc. since April
1991; Executive Vice President-Operations of Showboat Operating
Company since May 1996. Mr. Miller has also been a member of the
Executive Committee of Showboat Marina Casino Partnership<F> and
a director and the Treasurer of Showboat Marina Finance
Corporation<1> since March 1996. From July 1994 to June 1995,
Mr. Miller served as President and Chief Executive Officer of
Atlantic City Showboat, Inc. From October 1993 to July 1994,
Mr. Miller served as Executive Vice President and Chief Operating
Officer of Atlantic City Showboat, Inc. and he was 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.

Donald L. Tatzin, 44, has been an Executive Vice President of
the Company since March 1995 and the Executive Vice President of
Showboat Development Company since April 1993. From May 1996 to
October 1996, Mr. Tatzin served as a director of Sydney Harbour
Casino Holdings Limited and from March 1996 to October 1996,
Mr. Tatzin served as acting Managing Director of Showboat
Australia Pty Limited. From May 1995 to October 1996, Mr. Tatzin
served as Chairman of, and from March 1996 to October 1996 acting
Managing Director of, Sydney Casino Management Pty Limited.
Mr. Tatzin has been a consultant with Arthur D. Little, Inc., San
Francisco, California since June 1976. He serves at the pleasure
of the respective boards of directors.

Paul S. Harris, 60, has been Executive Vice President-Human
Resources of the Company since May 1995; Executive Vice
President-Human Resources of Showboat Operating Company since May
1996; and Senior Vice President-Human Resources of the Company
from June 1994 to May 1995. Mr. Harris served as Vice President-
Organization and Development of Atlantic City Showboat, Inc. from
July 1988 to June 1994. He serves at the pleasure of the
respective boards of directors.

Herbert R. Wolfe, 56, has been President and Chief Executive
Officer of Atlantic City Showboat, Inc. since June 1995;
Executive Vice President and Chief Operating Officer of Atlantic
City Showboat, Inc. from July 1994 to May 1995; Senior Vice
President of Marketing of Atlantic City Showboat, Inc. from April
1991 to July 1994; Vice President of Marketing of Atlantic City
Showboat, Inc. from January 1989 to April 1991; and Director of
Marketing of Atlantic City Showboat, Inc. from March 1988 to
January 1989. He serves at the pleasure of the board of
directors of Atlantic City Showboat, Inc.

J. Keith Wallace, 55, has been President, Chief Executive
Officer and Director of the Executive Committee of Showboat
Marina Casino Partnership<1> since March 1996, and Showboat
Indiana, Inc. since January 1996; and Director of Showboat Marina
Finance Corporation<1> since March 1996. From February 1995 to
January 1996, Mr. Wallace was the President and Chief Executive
Officer of Showboat Operating Company. From May 1993 to February
1995, he was the President and Chief Executive Officer of Lake
Pontchartrain Showboat, Inc. and Showboat Louisiana, Inc. From
June 1993 to February 1995, Mr. Wallace served as Executive Vice
President and Chief Operating Officer of Showboat Louisiana, Inc.
and Lake Pontchartrain Showboat, Inc., respectively. From August
1990 to April 1993, Mr. Wallace was the Vice President and
General Manager of Showboat Operating Company. He serves at the
pleasure of the respective boards of directors.

Carlton L. Geer, 42, has been President and Chief Executive
Officer of the Las Vegas Showboat since August 1996. From
December 1983 to April 1996, Mr. Geer held various positions with
Peppermill Hotel Casino, Reno, Nevada, including General Manager
from June 1993 to April 1996 and Executive Vice President of
Hospitality Operations from September 1989 to June 1993. He
serves at the pleasure of the board of directors of Showboat
Operating Company.
__________

<1>Showboat Marina Casino Partnership and Showboat Marina
Finance Corporation, each an affiliate of the Company, have a
class of securities registered pursuant to Section 12 of the
Exchange Act.

<PAGE>

Mark A. Clayton, 31, has been Vice President and General
Counsel of the Company and Assistant Secretary of the Company and
its subsidiaries since July 1995 and the Assistant Secretary of
Showboat Marina Finance Corporation<1> since March 1996. Since
June 1996, Mr. Clayton has served as a member of the Silicon
Gaming, Inc. Compliance Committee. Mr. Clayton served as Chief
of Corporate Securities Division of the Nevada State Gaming
Control Board from October 1993 to June 1995; and as Deputy Chief
from May 1993 to October 1993. From October 1990 to April 1993,
Mr. Clayton was an associate of the law firm of Vargas &
Bartlett, the previous general counsel to the Company. He serves
at the pleasure of the respective boards of directors.

M. Brad Straub, 42, has been Vice President-Finance and
Treasurer of the Company since January 1996 and Vice President-
Finance of Showboat Development and Management Services Division
for Showboat Operating Company since November 1993. Mr. Straub
served as Director of Financial Administration of the Atlantic
City Showboat from April 1993 to November 1993. From May 1989 to
April 1993, Mr. Straub served as Director of Internal Audit of
the Atlantic City Showboat. He serves at the pleasure of the
respective boards of directors.

Randy L. Taylor, 34, has been Vice President-Taxation and
Assistant Treasurer of the Company since January 1996.
Mr. Taylor served as Director of Corporate Taxation of the
Company from October 1994 to January 1996. From July 1984 to
September 1994, Mr. Taylor held various positions with KPMG Peat
Marwick, the Company's independent public accountant, including
Senior Tax Manager from July 1991 to September 1994. He serves
at the pleasure of the respective boards of directors.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company's
directors and executive officers, and persons who own more than
ten percent of the Common Stock, to file with the United States
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 United
States 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 on 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, 1996, all Section 16(a) filing
requirements were complied with, except that report of ownership
for three transactions, reporting an exercise of an option and
sale of 11,000 shares, was inadvertently filed late by Herbert R.
Wolfe.

Information Concerning Board and Committee Meetings

The entire Board of Directors met eight times during the year
ended December 31, 1996 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. Messrs. Houssels,
Houssels, III and Nasky are the only directors who are employees
of the Company.

The Nominating Committee met one time during the twelve months
ended December 31, 1996. The Nominating Committee's
responsibilities include: making recommendations regarding the
size and composition of the Board of Directors; 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. During 1996, the Nominating Committee
consisted of two individuals: Mrs. Stewart served as Chair; and
Mr. Zettler served as a member.

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

__________
<1>Showboat Marina Casino Partnership and Showboat Marina
Finance Corporation, each an affiliate of the Company, have a
class of securities registered pursuant to Section 12 of the
Exchange Act.

<PAGE>

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
Exchange Act, 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 nine times during the twelve
months ended December 31, 1996. Responsibilities include
reviewing the performance of the Company's officers and
recommending to the Board of Directors remuneration arrangements
and compensation plans 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 and the 1994 Executive Long Term Incentive Plan
(collectively, the "Incentive Plans"), and adopted and
administers the Showboat, Inc. 1996 Stock Appreciation Rights
Plan, which is subject to shareholder approval at the annual
meeting. Pursuant to the Incentive Plans, 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 Plans. During 1996, the
Compensation Committee consisted of two individuals:
Mr. Richardson served as a member and Mr. Zettler served as
Chairman.

The Audit Committee met seven times during the twelve months
ended December 31, 1996. 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 1996, the Audit Committee consisted of three individuals:
Mr. Gaughan served as a member; Mr. Zettler served as Chairman;
and Mrs. Sparks served as a member.

<PAGE>

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 Exchange Act 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 15 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") reviews the performance of the
Company's officers and recommends to the Board of Directors the
executive compensation programs. The Compensation Committee
presently consists of Mr. Richardson and Mr. Zettler.

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

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

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

The Company's compensation policy is structured so that each
executive officer is rewarded for achieving his or her operating
objectives identified in a business plan, which objectives
include, among other things, operating profit performance.

Compensation Programs. The Company's compensation programs
consist of base salary, an annual incentive bonus, awards of
restricted stock, stock options and/or, if approved by the
shareholders at the annual meeting, stock appreciation rights.
Base salary levels are targeted to fairly recognize each
executive officer's market value and historical contributions to
the success of the Company in light of the median salary in the
relevant market for the equivalent position. 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 profit
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 approved by the Company's
Compensation Committee. 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 periodic 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 and to
enhance the value of the shares they are awarded. 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. The Company's key executives also participate in
a non-qualified supplemental executive retirement plan which is
designed to provide a supplemental level of retirement income,
taking into account all other sources of income from the Company.

On September 3, 1996, subject to shareholder approval, the
Compensation Committee adopted a 1996 Stock Appreciation Rights
Plan (the "Rights Plan") for key executive employees with respect
to 800,000 Rights of which 640,000 were awarded to key employees.
The Committee recognized the current pattern of consolidation in
the gaming industry. The primary purpose of the Rights Plan is
to induce key employees to remain with the Company and to
compensate them reasonably in the event that a change of control
transaction involving the Company should occur. In order to be
eligible, the key employee must be in the employ of the Company
at the time of the closing of the change of control transaction,
with limited exceptions in the case of death, disability and
termination without cause. The Rights Plan provides for the
award to key employees of stock appreciation rights which upon
exercise following a change in control would require the Company
to make a cash payment equal to the difference between the grant
price, $24.58 with respect to initial grants and thereafter

<PAGE>

115% of the fair market value on the date of such grant, and the
fair market value of stock on the date of the closing of such
change of control transaction.

The Committee granted awards to certain key executives after
considering a number of factors, including the level of
compensation and equity participation of such key employees and
the level of compensation and equity participation of key
executives of other companies in the gaming industry. The
Committee also determined that no key executive would receive as
a result of a change of control transaction severance payments
under the Plan or other compensation aggregating in excess of
2.99 times the five-year average compensation for such executive.
Effectively, this would limit the amount of compensation the key
executive would receive in the event of a such a transaction and,
subject to the satisfaction of other requirements, is intended to
qualify such payments for a federal income tax deduction by the
Company.

J. Kell Houssels, III, President and Chief Executive Officer,
was granted 113,446 Rights under the Rights Plan. Based upon
information available to the Committee, there was recognition
that his overall compensation was significantly less than
compensation of chief executive officer of other comparable
gaming companies.

None of the other long-term compensation or bonus arrangements
were changed.

Chief Executive Officer. The base salary of J. Kell Houssels,
III, the Company's 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. Mr. Houssels, III's salary
was increased from $327,640 to $350,000 for the 1996 fiscal year
based upon a review of compensation of similarly sized gaming
companies. Mr. Houssels' 1996 salary was significantly below the
median level for comparable positions in the industry.
Mr. Houssels, III's 1996 annual incentive award was based on pre-
established management objectives which included both financial
and non-financial objectives. Mr. Houssels, III's financial
objectives included a corporate net income objective.
Mr. Houssels, III's non-financial objectives included: (i)
continual improvement of customer experience and employee
satisfaction at all Showboat properties; (ii) identifying
development projects and negotiating and signing of definitive
documents relating to such development projects all within
specified budget criteria; (iii) opening development projects on
time and within budget; and (iv) providing value to the corporate
organization and creating systems for the development and
training of executives. Additionally, Mr. Houssels, III is
included in the supplemental executive retirement plan.

March 7, 1997 COMPENSATION COMMITTEE

William C. Richardson
George A. Zettler,
Chairman

<PAGE>

The following tables set forth compensation received by J. Kell
Houssels, III, the Company's President and 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, 1996 for services rendered
in all capacities to the Company and its subsidiaries:

Summary Compensation Table

<TABLE>

Long-Term Compensation
Awards
Other Annual Restricted Securities
Annual Compensation Compensation Stock Underlying
Name and Principal Position Year Salary($) Bonus($) ($) Awards($)<F2> Options/SARs(#)<F3>
<S> <C> <C> <C> <C> <C>
J. Kell Houssels, III 1996 350,000 160,449 0 0 0/113,446
President and Chief Executive 1995 327,640 239,891 0 0 0/0
Officer 1994 291,808 235,494 0 167,500 40,000/0

H. Gregory Nasky 1996 325,000 92,564 0 0 0/73,315
Executive Vice President 1995 325,000 174,875 0 0 0/0
1994 325,000 191,718 109,142<F7> 125,625 30,000/0

Donald L. Tatzin 1996 342,600 0 0 0 0/54,734
Executive Vice President 1995 385,933 0 0 0 0/0
1994 396,631 0 0 0 20,000/0

Herbert R. Wolfe 1996 263,035 199,086 0 0 0/0
President and Chief Executive 1995 244,536 224,712 0 0 20,000/0
Officer of Atlantic City 1994 215,749 94,877 0 125,625 10,000/0
Showboat, Inc.

J. Keith Wallace 1996 226,604 150,000 86,429<F13> 0 0/48,546
President and Chief Executive 1995 222,212 111,973 0 0 10,000/0
Officer of Showboat Marina 1994 156,750 112,093 0 125,625 20,000/0
Casino Partnership and
Showboat Indiana, Inc.

SUMMARY COMPENSATION TABLE (CONTINUED)

</TABLE>
<TABLE>

Long-Term Compensation
Payouts<F1>
Long-Term All Other
Incentive Compensation
Name and Principal Position Payouts($) ($)
<S> <C> <C>
J. Kell Houssels, III 49,000<F4> 21,160<F6>
President and Chief Executive 30,000<F4> 20,860
Officer 109,600<F5> 25,290

H. Gregory Nasky 36,750<F8> 21,657<F9>
Executive Vice President 22,500<F8> 24,575
0 13,640

Donald L. Tatzin 0 5,704<F10>
Executive Vice President 0 0
0 0

Herbert R. Wolfe 36,750<F8> 23,341<F12>
President and Chief Executive 22,500<F8> 16,077
Officer of Atlantic City 68,500<F11> 7,151
Showboat, Inc.

J. Keith Wallace 36,750<F8> 8,368<F14>
President and Chief Executive 22,500<F8> 6,559
Officer of Showboat Marina 0 0
Casino Partnership and
Showboat Indiana, Inc.

<FN>

<F1>Amounts represented in this column were received by the
named individuals under either the Company's 1989 Executive Long
Term Incentive Plan ("1989 Plan") or the Company's 1994 Executive
Long Term Incentive Plan ("1994 Plan"). The restricted shares
granted under the 1989 Plan vested over a five-year period, with
the last of the restricted shares of Common Stock vesting in
March 1994. The restricted shares granted under the 1994 Plan
vest over a five-year period, with the last of the restricted
shares of Common Stock vesting in March 1999; provided, however,
that vesting on all such restricted shares will accelerate to the
date of any change in control of the Company.
<F2>Amounts represented in this column equal the number of
restricted shares of Common Stock granted to the named
individuals under the 1994 Plan, multiplied by the closing bid
price of the Company's Common Stock on the New York Stock
Exchange on the date of grant, or $16.750 per share. The number
and dollar value of unvested restricted shares held on
December 31, 1996, based on the closing bid price of the
Company's Common Stock of $17 1/4 per share on December 31, 1996,
the last trading day in 1996, was: J. Kell Houssels, III - 6,000
shares ($103,500); H. Gregory Nasky - 4,500 shares ($77,625);
Herbert R. Wolfe - 4,500 shares ($77,625); and J. Keith Wallace -
4,500 shares ($77,625). This valuation does not take into
account the diminution in value attributable to the restrictions
applicable to the restricted shares. Dividends are paid on all
restricted shares at the same rate as on unrestricted shares.
<F3>Amounts represented in this column equal the number of
shares of Common Stock underlying the stock options and stock
appreciation rights granted to the named individuals under the
1994 Plan and the Showboat, Inc. 1996 Stock Appreciation Rights
Plan, respectively.
<F4>This amount represents the vesting of 2,000 shares under
the 1994 Plan.
<F5>This amount represents the vesting of 6,400 shares under
the 1989 Plan.
<F6>Of this amount, $6,587 represents excess coverage life
insurance and medical reimbursement costs and $14,573 represents
the Company's contribution to Mr. Houssels, III's 401(k) and
Restoration Plan account.
<F7>This amount represents the purchase of 77,000 shares of the
capital stock of Sydney Harbour Casino, including a gross-up for
taxes incurred, paid to Mr. Nasky as a one-time overseas premium
for his work in Sydney, Australia.
<F8>This amount represents the vesting of 1,500 shares under
the 1994 Plan.
<F9>Of this amount, $7,591 represents excess coverage life
insurance and medical reimbursement costs and $14,066 represents
the Company's contribution to Mr. Nasky's 401(k) and Restoration
Plan account.
<F10>Of this amount, $3,129 represents excess coverage life
insurance and medical reimbursement costs and $2,575 represents
the Company's contribution to Mr. Tatzin's 401(k) account.
<F11>This amount represents the vesting of 4,000 shares under
the 1989 Plan.
<F12>Of this amount, $9,000 represents excess coverage life
insurance and $14,341 represents the Company's contribution to
Mr. Wolfe's 401(k) and Restoration Plan account.
<F13>Of this amount, $37,281 represents a gross-up for state
income taxes incurred, $20,000 represents moving expenses and
$29,148 represents a housing allowance.
<F14>Of this amount, $4,036 represents excess coverage life
insurance and $4,332 represents the Company's contribution to
Mr. Wallace's 401(k) account.

</FN>

</TABLE>

<PAGE>

SAR Grants in Last Fiscal Year

<TABLE>

INDIVIDUAL GRANTS
Number of
Securities Percent of Total
Underlying SARs Granted to Exercisable
SARs Granted Employees in or Base Price Expiration
Name (#)<F1> Fiscal Year (%) ($/SH)<F2> Date<F3>
<S> <C> <C> <C> <C>
J. Kell Houssels, III 113,446 17.7 24.58 09/03/2006
H. Gregory Nasky 73,315 11.5 24.58 09/03/2006
Donald L. Tatzin 54,734 8.6 24.58 09/03/2006
Herbert R. Wolfe 79,205 12.4 24.58 09/03/2006
J. Keith Wallace 48,546 7.6 24.58 09/03/2006

<FN>

<F1>The Compensation Committee of the Board of Directors of the
Company adopted the Showboat, Inc. 1996 Stock Appreciation Rights
Plan, subject to shareholder approval at the annual meeting. The
stock appreciation rights granted under the plan will be
exercisable at any time within 30 days after a change in control
of the Company.
<F2>The exercise price is greater than the closing price of the
Company's Common Stock on the New York Stock Exchange on the date
of grant of the stock appreciation rights.
<F3>Stock appreciation rights granted under the plan will
expire on the earlier of (i) September 3, 2006, (ii) 30 days
after a change in control of the Company, or (iii) upon the
termination of employment of the key employee with the Company
other than for certain reasons, such as death, disability,
retirement or good cause.
<F4>Based on the closing price of the Company's Common Stock of
$193/8 per share on September 3, 1996, the date of grant of the
stock appreciation rights.

</FN>

</TABLE>

SAR GRANTS IN LAST FISCAL YEAR (CONTINUED)

<TABLE>

POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK
PRICE APPRECIATION
FOR SAR TERM

Name 5% ($)<F4> 10% ($)<F4>
<S> <C> <C>
J. Kell Houssels, III 791,834 2,912,585
H. Gregory Nasky 511,726 1,882,272
Donald L. Tatzin 382,034 1,405,228
Herbert R. Wolfe 552,838 2,033,490
J. Keith Wallace 338,843 1,246,358

<FN>

</FN>

</TABLE>

Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End
Option/SAR Values

<TABLE>

Number of Securities
Underlying Unexercised
Options/SARs at
December 31, 1996(#)
Shares
Acquired on Value
Name Exercise(#) Realized($) Exercisable Unexercisable
<S> <C> <C> <C> <C>
J. Kell Houssels, III 0 0 48,000/0 24,000/113,446
H. Gregory Nasky 0 0 21,000/0 18,000/73,315
Donald L. Tatzin 0 0 8,000/0 12,000/54,734
Herbert R. Wolfe 8,000 95,736 4,000/0 18,000/79,205
J. Keith Wallace 0 0 16,800/0 18,000/48,546

<FN>

<F1>Based on the closing bid price of the Company's Common
Stock of $17 1/4 per share on December 31, 1996, the last trading
day in 1996, minus the exercise price of "in-the-money" options
and stock appreciation rights, respectively.

</FN>

</TABLE>

Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End
Option/SAR Values (CONTINUED)

<TABLE>

Value of Unexercised In-the-
Money Options/SARs at
December 31, 1996 ($)

Name Exercisable<F1> Unexercisable<F1>

<S> <C> <C>
J. Kell Houssels, III 308,000/0 0/0
H. Gregory Nasky 70,000/0 0/0
Donald L. Tatzin 0/0 0/0
Herbert R. Wolfe 11,000/0 18,000/0
J. Keith Wallace 57,200/0 18,000/0

<FN>

</FN>

</TABLE>

Pension Plan Table

The Company maintains the Supplemental Executive Retirement
Plan (the "SERP"), a nonqualified plan for highly compensated
employees whose retirement benefits are restricted by limitations
of the Internal Revenue Code of 1986, as amended (the "Code")
concerning qualified plans such as the 401(k) Plan. In general,
a participant will receive a retirement benefit under the SERP
equal to a percentage of his final average pay times such
participant's years of service up to 15 years, less any
benefits payable to such participant under the federal
Social Security Act, the 401(k) Plan, or under
any stock plan of the Company, with final average
compensation being the average of such participant's
annual compensation (base salary plus bonus) for
his last three consecutive years of service. A
participant becomes vested in his benefits under

<PAGE>

the SERP upon the participant's 65th birthday or upon the
participant's completion of 10 years of service if the
participant is at least 55 years of age.

The following table shows, as of December 31, 1996, the
approximate annual retirement benefits under the SERP to eligible
employees in specified compensation and years of service
categories, assuming retirement occurs at age 65 and that
benefits are payable only during the employee's lifetime. The
estimated retirement benefits provided in the table have not been
reduced by the amount of benefits payable to an individual
participant under the federal Social Security Act, the 401(k)
Plan, or any stock plan of the Company.

<TABLE>

3-Years Final Estimated Annual Benefit ($)
Average Compensation Years of Service at Age 65
10 15 20 25
<S> <C> <C> <C> <C>
125,000................ 41,667 62,500 62,500 62,500
150,000................ 50,000 75,000 75,000 75,000
175,000................ 58,333 87,500 87,500 87,500
200,000................ 66,667 100,000 100,000 100,000
225,000................ 75,000 112,500 112,500 112,500
250,000................ 83,333 125,000 125,000 125,000
300,000................ 100,000 150,000 150,000 150,000
400,000................ 133,333 200,000 200,000 200,000
450,000................ 150,000 225,000 225,000 225,000
500,000................ 166,667 250,000 250,000 250,000

</TABLE>

ANNUAL RETIREMENT BENEFITS (CONTINUED)

<TABLE>

Estimated Annual Benefit ($)
3-Years Final Years of Service at
Average Compensation Age 65
30 35
<S> <C> <C>
125,000.................... 62,500 62,500
150,000.................... 75,000 75,000
175,000.................... 87,500 87,500
200,000.................... 100,000 100,000
225,000.................... 112,500 112,500
250,000.................... 125,000 125,000
300,000.................... 150,000 150,000
400,000.................... 200,000 200,000
450,000.................... 225,000 225,000
500,000.................... 250,000 250,000

</TABLE>

The years of service for certain employees as of December 31,
1996, are as follows: Mr. Houssels III, 11 years; Mr. Nasky, 3
years; Mr. Wolfe, 8 years; Mr. Tatzin, 3 years; and Mr. Wallace,
6 years. No benefits have vested under the SERP with respect to
any of the five named executive officers.

Employment Agreements

The Company has Employment Agreements (the "Agreements") with
each of the five named executive officers and with eight
additional executive officers and other key employees
(collectively "employees" and individually "employee"). The
Agreements are renewed, unless terminated, on an annual basis.
The Agreements provide for severance benefits if the employee is
terminated by the Company (other than for cause or by reason of
the employee's retirement, death or disability) or by the
employee for Good Reason (as defined in the Agreements) within 24
months after a Change in Control (as defined in the Agreements)
or, in the case of Mr. Houssels, III, if Mr. Houssels, III's
employment is terminated for any reason within 12 months after a
Change in Control. Each Agreement provides that, in the event of
a Potential Change in Control (as defined in the Agreements), the
employee shall not voluntarily resign as an employee, subject to
certain conditions, for at least six months after the occurrence
of such Potential Change in Control.

The Agreements provide for: (i) a lump-sum payment equal to
200% of the employee's annual salary if his employment was
terminated by the Company or 100% of the employee's annual salary
if his employment was terminated by the employee for Good Reason
(or, in the case of Mr. Houssels, III, 300% of his annual
salary), plus 200% of the average bonuses awarded to the employee
for the three fiscal years preceding the employee's termination
if the employee's employment was terminated by the Company or
100% of the average bonuses awarded to employee for the three
fiscal years preceding employee's termination if the employee's
employment was terminated by the employee for Good Reason (or, in
the case of Mr. Houssels, III, 300% of his average bonus for the
three fiscal years preceding his termination) and (ii) the
reimbursement of legal fees and expenses incurred by the employee
in seeking to enforce employee's rights under the Agreement. In
addition, in the event that payments to the employee pursuant to
employee's Agreement would subject such employee to a tax imposed
by the Code, the employee may reduce his severance benefits to an
amount below the amount which would require the employee to pay
such tax. Certain provisions of the Agreement could have the
effect of delaying or preventing a Change in Control of the
Company. Based on compensation levels as of December 31, 1996,
assuming a Change in Control of the Company, each of Messrs.
Houssels, III, Nasky, Wolfe, Tatzin and Wallace would be entitled
to receive a maximum lump-sum payment of $1,685,834, $956,105,
$685,200, $818,419 and $702,585 respectively, under the
Agreements.

<PAGE>

Compensation Committee Interlocks and Insider Participation

The Company's executive compensation is generally determined by
the Board of Directors upon the recommendation of the
Compensation Committee. However, the Rights Plan was adopted by
the Compensation Committee and ratified by the Board of
Directors. No member of the Compensation Committee in 1996 was
an officer of the Company. Throughout 1996, the Compensation
Committee consisted of Mr. Richardson and Mr. Zettler.

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 & Poor's 500
Composite Stock Index and an Industry Peer Group Index.<F1> The
graph assumes that $100 is invested at December 31, 1991 in each
of the Company's Common Stock, the S&P 500 Index and the Industry
Peer Group Index. The total return assumes the reinvestment of
dividends.

[Original Proxy contains Performance Graph following
information below]

<TABLE>

Company/Index Name 1992 1993 1994 1995 1996

<S> <C> <C> <C> <C> <C>
Showboat, Inc. 194.30 186.61 168.90 308.80 202.86
S&P 500 Index 107.62 118.46 120.03 165.13 203.05
Industry Peer Group Index 149.93 161.43 158.58 208.65 249.70

<FN>

<F1>The Industry Peer Group Index includes the following
companies: Alliance Gaming Corp., American Gaming &
Entertainment Ltd., Aztar Corp., Bally Entertainment Corp.
(which was acquired by Hilton Hotels Corp.), Caesar's
World, Inc. (which was acquired by ITT Corporation), Cedar
Fair L.P., Circus Circus Enterprises, Inc., Disney (Walt)
Company, Elsinore Corp., Grand Casinos Inc., Greate Bay
Casino Corp. (f/k/a Pratt Hotel Corp.), Great American
Recreation, Inc., Griffin Gaming & Entertainment, Jackpot
Enterprises, Inc., Jillians Entertainment Corp., MGM Grand,
Inc., Mirage Resorts, Inc., Rio Hotel & Casino, Inc.,
S-K-I- Ltd. (acquired by American Skiing Company in August
1996), Sands Regent, Santa Fe Gaming Corp. (f/k/a Sahara
Gaming Corp.), and Showboat, Inc. These companies have the
Standard Industrial Code 7990 - Miscellaneous Amusement &
Recreation Services.

</FN>

</TABLE>

<PAGE>

COMPENSATION OF NON-EMPLOYEE DIRECTORS

Remuneration of Non-Employee Directors

For 1996, each non-employee director received a retainer of
$4,000 per quarter plus attendance fees of $3,500 per scheduled
meeting attended and $850 for a special meeting attended. Such
fees are paid by the Company and Ocean Showboat, Inc., as
applicable. In addition, non-employee members of each committee
are paid $850 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, Frank A. Modica,
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. Richardson
and Mr. Zettler.

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 or for those employee directors who became non-
employee directors upon retirement as an employee such one-time
option will be received at the next special or annual meeting,
even if the non-employee director is not then a candidate to re-
election to the Board of Directors. Thereafter, each non-
employee director receives a grant to purchase 1,000 shares of
Common Stock each year, until the shares reserved for the Option
Plan are exhausted or until the Option Plan otherwise expires.

The option exercise price is the greater of $75/8 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 1996 pursuant to the
Option Plan was $29.

As of December 31, 1996, options representing 87,000 shares of
Common Stock have been granted to the current six non-employee
directors and two former non-employee directors and a director
who has since become an employee. As of December 31, 1996,
21,000 options granted pursuant to the Option Plan had been
exercised. Of the outstanding options remaining, options
representing 51,000 shares of Common Stock are currently
exercisable. The balance may not be exercised until May 31,
1997.

Executive Medical Reimbursement Plan

The Company maintains a supplemental executive medical
reimbursement plan entitled the Executive Medical Reimbursement
Plan ("Reimbursement Plan"). Commencing in January 1997, the
Reimbursement Plan will provide non-employee directors up to
$5,000 in additional taxable health benefits for medical expenses
not otherwise covered under the Company's regular health plan.
Prior to January 1997, the Reimbursement Plan was only available
to employee directors of the Company.

<PAGE>

APPROVAL OF THE SHOWBOAT INC.
1996 STOCK APPRECIATION RIGHTS PLAN

Introduction

The Compensation Committee adopted and the Board of Directors
of the Company ratified the Showboat, Inc. 1996 Stock
Appreciation Rights Plan (the "Rights Plan"), subject to
shareholder approval at the annual meeting. The Rights Plan
provides for the granting of stock appreciation rights ("Rights")
to certain key employees of the Company and its subsidiaries. A
key employee granted Rights will be able to benefit in the
general appreciation, if any, of the fair market value (as
defined in the Rights Plan) of the Common Stock represented by
such Rights to the extent that the fair market value of the
Common Stock exceeds the exercise price of the Rights upon the
occurrence of certain events. Holders of Rights will be entitled
to receive from the Company cash in an amount equal to the
excess, if any, of the market price of the Common Stock on the
date of a Change in Control of the Company (as defined in the
Rights Plan) over the exercise price of the Rights. A copy of
the Rights Plan is attached to this Proxy Statement as an
Appendix. The following is a brief summary of the Rights Plan,
which is qualified in its entirety by reference to the Appendix.

Summary of the Rights Plan

Purpose. The primary purpose of the Rights Plan is to induce
key employees to remain with the Company and to compensate them
in the event that a change in control transaction involving the
Company should occur.

Administration and Eligibility. The Rights Plan shall be
administered by a committee consisting of at least two directors
appointed by the Board of Directors, each of whom is not an
employee of the Company or a subsidiary of the Company and
otherwise qualifies as an "outside director" under Section 162(m)
of the Internal Revenue Code of 1986, as amended (the "Code").
The Board of Directors appointed the Compensation Committee to
administer the Rights Plan. Subject to the express provisions of
the Rights Plan, the Compensation Committee has the sole
authority to determine the key employees to whom Rights will be
granted, the number of shares of Common Stock subject to Rights,
the period during which Rights will be exercisable and other
terms and conditions of the grant of such Rights. The
Compensation Committee also has the authority to interpret the
Rights Plan, to prescribe, amend and rescind the rules and
regulations relating to the Rights Plan and to make all other
determinations necessary for its administration. Only key
employees of the Company or any subsidiary of the Company
(whether or not directors) are eligible for participation in the
Rights Plan. As of March 31, 1997, the Company and its
subsidiaries had approximately nine key employees.

Effective Date. Rights may be granted under the Rights Plan
during its ten-year term, commencing on September 3, 1996 (the
"Effective Date").

Amount of Common Stock Subject to Rights. The Rights Plan
provides that the total number of shares of Common Stock subject
to Rights which may be issued pursuant to the Rights Plan will
not exceed 800,000, with no individual employee to receive more
than 120,000 Rights. The number of shares of Common Stock
subject to Rights is subject to adjustment for any merger,
consolidation, reorganization, recapitalization, stock dividends,
stock splits or any other similar change in the capital structure
of the Company.

Exercise Price. The exercise price of each Right will be
$24.58 in the case of the initial grant of Rights under the
Rights Plan (which is more than 100% of the fair market value per
share of Common Stock on the date of grant of such Right), and
the exercise price of each Right granted after such initial grant
will be equal to 115% of the fair market value per share of
Common Stock on the date of the grant of such Right. The closing
sale price of Common Stock on the New York Stock Exchange on
March 31, 1997 was $19 3/4 per share.

Exercise Period. Any Rights granted under the Rights Plan will
be exercisable at any time within 30 days after a Change in
Control of the Company, but in no event shall a Right be
exercisable after the expiration of ten years from the Effective
Date. Under the Rights Plan, a "Change in Control" occurs (i) if
any person or other entity, including any person as defined in
Section 13(d)(3) of the Exchange Act becomes the beneficial
owner, as defined in Rule 13d-3 of the Exchange Act, directly or
indirectly, of more than 50% of the total voting power of all
classes of capital stock of the Company entitled to vote for the
election of directors (the "Voting Stock"), (ii) upon the closing
of the sale of all or substantially all of the property or assets
of the Company, or (iii) upon the closing of a consolidation or
merger of the Company with another corporation, the consummation
of which results in the shareholders of the Company immediately
before the occurrence of the consolidation or merger owning, in
aggregate, less than 50% of the Voting Stock of the surviving
entity. Any Rights granted under the Rights Plan will be
exercisable upon such additional terms and conditions as may be
determined by the Compensation Committee.

<PAGE>

Non-Transferability of Rights. Rights granted under the Rights
Plan will not be transferable, other than by will or the laws of
descent and distribution, and, subject to certain conditions,
Rights are exercisable only by the key employee during the
lifetime of the key employee.

Termination of Rights. Rights granted under the Rights Plan
will expire on the earlier of (i) ten years after the Effective
Date, or (ii) 30 days after a Change of Control of the Company.
Unless otherwise provided by the Compensation Committee, Rights
will also expire upon the termination of employment of the key
employee with the Company or any of its subsidiaries; provided,
however, that if the employment of such key employee is
terminated (i) by reason of death or disability of the key
employee, such Rights will be exercisable for one year after the
date of such termination, or (ii) by reason of retirement of the
key employee, or by the key employee for good reason (as defined
in the Rights Plan), or by the Company other than for cause (as
defined in the Rights Plan), such Rights will be exercisable for
three months after the date of such termination. None of the
termination events described above shall extend the period of
exercisability of Rights beyond ten years from the Effective
Date.

Amendment of the Rights Plan. The Compensation Committee may,
from time to time, amend the Rights Plan, but may not (except as
provided in the Rights Plan upon a change in the capital
structure of the Company), without the approval of the
shareholders of the Company, increase the total number of shares
of Common Stock subject to Rights which may be granted under the
Rights Plan or which may be granted to any individual employee
under the Rights Plan, reduce the exercise price of any Right
granted under the Rights Plan, modify the provisions of the
Rights Plan relating to eligibility or materially increase the
benefits accruing to participants under the Rights Plan. No
amendment of the Rights Plan may adversely affect any Rights
previously granted under the Rights Plan without the consent of
the holder of the Rights.

New Plan Benefits

The table below sets forth the number of Rights that will be
received by the five named executive officers, all executive
officers as a group, all directors who are not executive officers
as a group, and all employees, including all current officers who
are not executive officers, as a group, if the Rights Plan is
approved by the shareholders at the annual meeting.

<TABLE>

Number of
Securities
Underlying Exercisable or
Name and Rights Granted Base Price Expiration
Principal Position (#) ($/SH)<F1> Date<F2>
<S> <C> <C> <C>
J. Kell Houssels, III 113,446 24.58 09/03/2006
President and Chief
Executive Officer

H. Gregory Nasky 73,315 24.58 09/03/2006
Executive Vice
President

Donald L. Tatzin 54,734 24.58 09/03/2006
Executive Vice
President

Herbert R. Wolfe 79,205 24.58 09/03/2006
President and Chief
Executive Officer of
Atlantic City
Showboat, Inc.

J. Keith Wallace 48,546 24.58 09/03/2006
President and Chief
Executive Officer of
Showboat Marina
Casino Partnership

All executive 640,000 24.58 09/03/2006
officers as a group
(14 persons)

All directors who are 0 0 N/A
not officers as a
group (6 persons)

All employees, 0 0 N/A
including all
officers who are not
executive officers,
as a group
(approximately 4,800
persons)

<FN>

<F1>The exercise price is greater than the closing bid price of
the Company's Common Stock on the New York Stock Exchange on the
date of grant of the Rights.
<F2>Rights granted under the Rights Plan will expire on the
earlier of (i) September 3, 2006, (ii) 30 days after a Change in
Control of the Company, or (iii) upon the termination of
employment of the key employee with the Company other than for
certain reasons, such as death, disability, retirement or good
cause. None of the Rights are "in-the-money" since the Rights
are only exercisable in the event of a Change in Control.

</FN>

</TABLE>

<PAGE>

Certain Federal Income Tax Consequences

The statements in the following paragraphs of the principal
federal income tax consequences of the Rights Plan are based on
statutory authority and judicial and administrative
interpretations, as of the date of this Proxy Statement, which
are subject to change at any time (possibly with retroactive
effect). The law is technical and complex and the discussion
below represents only a general summary.

Rights. A key employee who receives a Right will not recognize
any taxable income upon the grant of such Right. However, the
employee generally will recognize ordinary income upon the
receipt of cash pursuant to the exercise of a Right in an amount
equal to the cash received.

A federal income tax deduction generally will be allowed to the
Company in an amount equal to the ordinary income included by the
individual with respect to his or her Right, provided that such
amount constitutes an ordinary and necessary business expense to
the Company and is reasonable and the limitations of Sections
280G and 162(m) of the Code do not apply.

Change in Control. In general, if the total amount of payments
to an individual that are contingent upon a "change of control"
of the Company (as defined in Section 280G of the Code),
including payments under the Rights that become exercisable upon
a "change in control," equals or exceeds three times the
individual's "base amount" (generally, such individual's average
annual compensation for the five calendar years preceding the
change in control), then, subject to certain exceptions, the
payments may be treated as "parachute payments" under the Code,
in which case a portion of such payments would be non-deductible
to the Company and the individual would be subject to a 20%
excise tax on such portion of the payments. In such event, the
Rights Payment will be reduced until no portion of the Rights
Payments (or other payments or benefits in connection with a
"change in control" of the Company) payable to such key employee
would be subject to the excise tax.

Certain Limitations on Deductibility of Executive Compensation.
With certain exceptions, Section 162(m) of the Code denies a
deduction to publicly held corporations for compensation paid to
certain executive officers in excess of $1 million per executive
per taxable year (including any deduction with respect to the
exercise of Rights). One such exception applies to certain
performance-based compensation, provided that such compensation
has been approved by shareholders in a separate vote and certain
other requirements are met. The Company believes that Rights
granted under the Rights Plan should qualify for the performance-
based compensation exception to Section 162(m).

Shareholder Vote Required

Approval of the Rights Plan requires the affirmative vote of at
least a majority of a quorum of shareholders present in person or
represented by proxy at the Annual Meeting.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE
APPROVAL OF THE SHOWBOAT, INC. 1996 STOCK APPRECIATION RIGHTS
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 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, 1997.

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

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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 Company pays monthly

<PAGE>

rent of $13,096 and has an option to purchase the land and all of
Exber, Inc.'s rights thereto for the purchase price of
$1,400,000.

The Company's subsidiary, Atlantic City Showboat, Inc., leases
space at the Atlantic City Showboat to R. Craig Bird, Executive
Vice President-Finance and Administration and Chief Financial
Officer of the Company, for the operation of a gift shop and
certain vending machines. During 1996, Mr. Bird paid rent and
vending commissions to Atlantic City Showboat, Inc. in the amount
of $104,986 and $41,267, respectively.

At all times during 1996, H. Gregory Nasky was a Director and
Executive Vice President of the Company and the Secretary of the
Company and its subsidiaries. Additionally, Mr. Nasky was of
counsel to the law firm of Kummer Kaempfer Bonner & Renshaw,
outside legal counsel to the Company. At all times during 1996,
John N. Brewer, a partner of the law firm of Kummer Kaempfer
Bonner & Renshaw, was an Assistant Secretary of the Company and
its subsidiaries. During 1996, the law firm of Kummer Kaempfer
Bonner & Renshaw was paid $185,706 by the Company's Nevada gaming
subsidiary, $11,559 by the Company's New Jersey subsidiaries,
$448,905 by the Company's Indiana subsidiaries (including for its
initial public securities offering) $38,681 by the Company's
Australia subsidiary, $8,451 by the Company's Louisiana
subsidiaries, $221,227 by the Company in connection with its
expansion opportunities and $105,881 by the Company for other
parent company matters.

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 of the Rights
Plan; and voting "For" the ratification of the selection of
independent public accountants, is sufficient to approve the
matters being voted on at the meeting. A quorum of shareholders
exists when 50% of the Company's issued and outstanding Common
Stock is present and represented at the meeting. Abstentions and
broker non-votes will be counted as shares that are present for
purposes of determining the presence of a quorum. Abstentions
and broker non-votes are treated as votes "Against" the election
of the nominees, the Rights Plan 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 Company will appoint an Independent Inspector of Elections
to tabulate the votes at the 1997 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 approval of the
Rights Plan; and (c) the number of "For" votes, "Against" votes
and "Abstain" votes for the ratification of the selection of the
Company's independent public accountants.

1998 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 28, 1998. 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 23, 1997. The
proposal must comply with Securities and Exchange Commission Rule
14a-8.

EXPENSES OF SOLICITATION OF PROXIES

The expenses of making the solicitation of proxies for the 1997
Annual Meeting of Shareholders 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. The Company has also retained Shareholder Communications
Corporation, a proxy soliciting firm, to assist in solicitation
of proxies at a fee estimated to be approximately $7,500, plus
reimbursement of certain out-of-pocket expenses. The foregoing
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 31, 1997. Shareholders who cannot be present
at the 1997 Annual Meeting of Shareholders are requested to fill
out, date, sign and promptly return the accompanying form of
proxy in the enclosed postage prepaid envelope.

By order of the Board of Directors,

/s/ H. Gregory Nasky
H. GREGORY NASKY,
Secretary

DATED: April 18, 1997

<PAGE>

APPENDIX

SHOWBOAT, INC.

1996 STOCK APPRECIATION RIGHTS PLAN

I. Purposes

Showboat, Inc. (the "Company") desires to afford certain of
its key employees and certain key employees of its
subsidiaries who are responsible for the continued growth of
the Company, an opportunity to participate in the growth of
the Company, and thus to create in such persons an increased
interest in and a greater concern for the welfare of the
Company and its subsidiaries.

The stock appreciation rights ("Rights") offered pursuant to
this 1996 Stock Appreciation Rights Plan (the "Plan") are a
matter of separate inducement and are not in lieu of any
salary or other compensation for the services of any key
employee.

II. Grant of Stock Appreciation Rights Pursuant to the Plan

The Company may, from time to time during the period
beginning on September 3, 1996 (the "Effective Date") and
ending on the tenth anniversary thereof grant Rights to
certain key employees of the Company, or certain key
employees of any subsidiary of the Company, under the terms
hereinafter set forth. The total number of shares of common
stock, $1.00 par value per share, of the Company ("Common
Stock") subject to Rights which may be issued pursuant to
this Plan shall not exceed 800,000, with no individual
employee to receive in excess of 120,000 Rights, in both
cases subject to adjustment in accordance with Article VIII
of the Plan.

III. Administration

The board of directors of the Company (the "Board of
Directors") shall designate from among its members a
committee (the "Committee") to administer the Plan. The
Committee shall consist of no less than two members of the
Board of Directors, each of whom shall be an "outside
director" within the meaning of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code") and
any regulations promulgated thereunder, and the Committee
shall administer the Plan so as to comply at all times with
Section 162(m) of the Code. A majority of the members of the
Committee shall constitute a quorum (or if the Committee
consists of only two members, then both members shall
constitute a quorum), and the acts of a majority of the
members present at any meeting at which a quorum is present,
or acts approved in writing by all members of the Committee,
shall be the acts of the Committee.

Any member of the Committee may be removed at any time with
or without cause by resolution adopted by the Board of
Directors and any vacancy on the Committee at any time may
be filled by resolution adopted by the Board of Directors.

Subject to and not inconsistent with the express provisions
of the Plan, the Committee shall have authority, in its sole
discretion, to:

a. determine the key employees to whom Rights shall be
granted, the time when such Rights shall be granted, the
number of shares of Common Stock subject to Rights, the
period(s) during which such Rights shall be exercisable
(whether in whole or in part), the restrictions to be
applicable to Rights and all other terms and provisions
thereof (which need not be identical);

b. require, as a condition to the granting of any Rights,
that the person receiving such Rights agree not to sell or
otherwise dispose of such Rights;

c. provide (in accordance with Article X hereof or
otherwise) the establishment of a procedure whereby the
necessary amounts may be withheld from the total payments
made to any person upon exercise of a Right to meet the
obligation of withholding for income, social security and
other taxes incurred by such person upon such exercise or
required to be withheld by the Company in connection with
such exercise;

d. prescribe, amend, modify and rescind rules and
regulations relating to the Plan;

A-1

<PAGE>

e. make all determinations permitted or deemed necessary,
appropriate or advisable for the administration of the Plan,
interpret any Plan or Rights provision, perform all other
acts, exercise all other powers, and establish any other
procedures determined by the Committee to be necessary,
appropriate or advisable in administering the Plan or for
the conduct of the Committee's business. Any act of the
Committee, including interpretations of the provisions of
the Plan or any Rights and determinations under the Plan or
any Rights shall be final, conclusive and binding on all
parties.

The Committee may employ attorneys, consultants,
accountants, or other persons as it may deem desirable for
the administration of the Plan and may rely upon the advice,
opinions or computations of any such persons. Expenses
incurred by the Committee in the engagement of such persons
shall be paid by the Company. No member or former member of
the Committee shall be personally liable for any action,
determination or interpretation made in good faith with
respect to the Plan or any Rights granted hereunder.

IV. Eligibility; Terms and Conditions of Stock Appreciation
Rights

Rights may be granted only to key employees of the Company
or any subsidiary of the Company. The Plan does not create a
right in any person to participate in, or be granted Rights
under, the Plan.

Any Rights granted hereunder shall, unless otherwise
provided in such Rights, vest immediately upon the grant of such
Rights.

The exercise price of a Right shall be $24.58 in the case of
the initial grant of any Rights hereunder (which shall not be
less than one hundred percent (100%) of the fair market value of
one share of Common Stock on the date of grant of such Right) and
the exercise price of a Right granted after such initial grant
shall be equal to one hundred and fifteen percent (115%) of the
fair market value of one share of Common Stock on the date of
grant of such Right.

Any Right granted hereunder shall be exercisable at any time
during a period of not more than thirty (30) days after the date
of a Change in Control of the Company (as hereinafter defined)
(the "Exercise Period"); provided, however, that Right shall not
be exercisable after the expiration of ten (10) years from the
Effective Date. Any Right remaining unexercised at the earlier of
(i) the expiration of ten (10) years from the Effective Date or
(ii) the close of business on the last day of the Exercise
Period, shall expire on such date.

Any Right shall be exercisable upon such additional terms
and conditions as may from time to time be prescribed by the
Committee.

The Committee shall have the right to accelerate, in whole
or in part, from time to time, conditionally or unconditionally,
rights to exercise any Right granted hereunder.

Except as otherwise provided below or in the terms of the
grant of any Right, the exercise of a Right, in the manner
described in Article V below, shall entitle the holder to receive
from the Company, cash, in an aggregate amount equal to the
excess, if any, of fair market value per share of Common Stock on
the date of the Change in Control of the Company over the
exercise price of the Right as specified in such Right.

For purposes of the Plan, "fair market value," with respect
to any date of determination, means:

(i) if the shares of Common Stock are listed or
admitted to trading on a national securities exchange in the
United States or reported through the NASDAQ Stock Market
("NASDAQ"), then the closing sale price on such exchange or
NASDAQ on such date or, if no trading occurred or quotations
were available on such date, then on the closest preceding
date on which the shares of Common Stock were traded or
quoted; or

(ii) if not so listed or reported but an active public
market for the shares of Common Stock exists (as determined
in the sole discretion of the Committee, whose decision
shall be conclusive and binding), then the average of the
closing bid and ask quotations per share of Common Stock in
the over-the-counter market for such shares of Common Stock
in the United States on such date or, if no such quotations
are available on such date, then on the closest date
preceding such date. For purposes of the foregoing, a market
in which trading is sporadic and the ask quotations
generally exceed the bid quotations by more than 15% shall
not be deemed to be an "active public market"; or

A-2

<PAGE>

(iii) in the case of a Change in Control of the
Company, (A) the highest price per share of Common Stock
paid by the "person" described in clause (a) of the
definition of "Change in Control of the Company", (B) the
fair market value per share of Common Stock (determined as
provided in (i) and (ii) above) on the date of a transaction
described in clause (b) of the definition of "Change in
Control of the Company" and (C) the amount of cash (or the
fair market value of other property, as determined by the
Committee in its sole discretion) paid per share of Common
Stock in the case of a transaction described in clause (c)
of the definition of "Change in Control of the Company".

If the Committee determines that an active public market
does not exist for the shares of Common Stock, or in the case of
a determination to be made by the Committee pursuant to (iii)
above, the Committee shall determine the fair market value of the
shares of Common Stock in its good faith judgment based on the
total number of shares of Common Stock then outstanding, taking
into account all outstanding options, warrants, rights or other
securities exercisable or exchangeable for, or convertible into,
shares of Common Stock.

For purposes of the Plan, a "Change in Control of the
Company" shall occur (a) if any person or other entity, including
any person as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") becomes the
beneficial owner, as defined in Rule 13d-3 of the Exchange Act,
directly or indirectly, of more than fifty percent (50%) of the
total combined voting power of all classes of capital stock of
the Company normally entitled to vote for the election of
directors of the Company (the "Voting Stock"), (b) upon the
closing of the sale of all or substantially all of the property
or assets of the Company or (c) upon the closing of a
consolidation or merger of the Company with another corporation,
the consummation of which results in the stockholders of the
Company immediately before the occurrence of the consolidation or
merger owning, in the aggregate, less than 50% of the Voting
Stock of the surviving entity.

In the event that any payment or benefit received or to be
received by a holder of a Right pursuant to the terms of this
Plan or the Rights (the "Rights Payments") or of any other plan,
arrangement or agreement of the Company (or any affiliate)
("Other Payments" and, together with the Rights Payments, the
"Payments") would, in the opinion of independent tax counsel
selected by the Company and reasonably acceptable to the employee
("Tax Counsel"), be subject to the excise tax (the "Excise Tax")
imposed by section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code") (in whole or in part), as determined as
provided below, the Rights Payments shall be reduced (but not
below zero) until no portion of the Payments would be subject to
the Excise Tax. For purposes of this limitation, (i) no portion
of the Payments the receipt or enjoyment of which the employee
shall have effectively waived in writing shall be taken into
account, (ii) only the portion of the Payments which in the
opinion of Tax Counsel constitute a "parachute payment" within
the meaning of Section 280G(b)(2) of the Code shall be taken into
account, (iii) the Payments shall be reduced only to the extent
necessary so that the Payments would not be subject to the Excise
Tax, in the opinion of Tax Counsel, and (iv) the value of any
noncash benefit or any deferred payment or benefit included in
such payments shall be determined in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code.

V. Exercise of Stock Appreciation Rights

A holder shall exercise a Right by submitting to the Company
at its principal office a written notice (the "Notice")
specifying the number of Rights being exercised and the
exercise price(s) of such Rights.

Except as otherwise provided herein, the exercise of a Right
shall entitle the holder to receive from the Company, within
ten (10) business days of the date of receipt of the Notice
by the Company at its principal office, an amount of cash
determined as set forth in Article IV hereof.

VI. Nontransferability of Stock Appreciation Rights

Any Right granted hereunder shall not be transferable, other
than by will or the laws of descent and distribution, and
any Right granted hereunder shall, subject to Article VIII
hereof, be exercisable, during the lifetime of the holder,
only by such holder.

VII. Termination of Employment

Upon termination of employment of any key employee with
the Company and all subsidiary corporations of the
Company, any Right previously granted to such employee,
unless otherwise specified by the Committee in

A-3

<PAGE>

the Right shall, to the extent not theretofore exercised,
terminate and become null and void; provided, however,
that:

A. if any key employee shall die while in the employ of
such corporation or during either the one (l) year or three
(3) month period, whichever is applicable, specified in
clauses (B) and (C) below, any Right granted hereunder,
unless otherwise specified by the Committee in the Right,
shall be exercisable by the legal representative of such
employee or such person who acquired such Right by bequest
or inheritance or by reason of the death of such employee,
at any time up to and including one (1) year after the date
of death;

B. if the employment of any key employee shall terminate
by reason of such employee's disability (as described in
Section 22(e)(3) of the Code), any Right granted hereunder,
unless otherwise specified by the Committee in the Right,
shall be exercisable at any time up to and including one (1)
year after the effective date of such termination of
employment;

C. if the employment of any key employee shall terminate
(i) by reason of the employee's retirement (at such age or
upon such conditions as shall be specified by the
Committee), (ii) by the key employee for "good reason" (as
defined below), or (iii) by the employer other than for
cause (as defined below), such Right, unless otherwise
specified by the Committee in the Right, shall be
exercisable at any time up to and including three (3) months
after the effective date of such termination of employment;
and

D. if the employment of any employee shall terminate by
any reason other than that provided for in clauses (A), (B)
or (C) above, such Right, unless otherwise specified by the
Committee in such Right shall, to the extent not theretofore
exercised, become null and void.

None of the events described above shall extend the period
of exercisability of the Right beyond the expiration date
thereof.

If an Right granted hereunder shall be exercised by the
legal representative of a deceased grantee or by a person
who acquired an Right granted hereunder by bequest or
inheritance or by reason of the death of any employee or
former employee, written notice of such exercise shall be
accompanied by a certified copy of letters testamentary or
equivalent proof of the right of such legal representative
or other person to exercise such Right.

For purposes of the Plan, the term "for cause" shall mean
(a) with respect to an employee who is a party to a written
severance agreement with, or, alternatively, participates in
a compensation or benefit plan (other than the Plan) of, the
Company or a subsidiary corporation of the Company, which
agreement or plan contains a definition of "for cause" or
"cause" (or words of like import) for purposes of
termination of employment or services thereunder by the
Company or such subsidiary corporation of the Company, "for
cause" or "cause" as defined therein (if an employee is both
party to a severance agreement and participates in such a
plan, the definition contained in such agreement shall
control); or (b) in all other cases, as determined by the
Committee in its sole discretion, the willful and continued
misconduct of an employee or the willful and continued
failure of an employee to substantially perform the duties
of such employee to the Company or a subsidiary corporation
of the Company (other than due to physical or mental
illness), if such failure or misconduct is materially
damaging or materially detrimental to the business and
operations of the Company and has not been cured within
thirty (30) days after written notice thereof has been given
to the employee by the Committee.

For purposes at the Plan, the term "good reason" shall mean:

(i) the assignment to the employee of any duties
inconsistent with the position in the Company that the
employee held immediately prior to the Change in Control of
the Company, or a significant adverse alteration in the
nature or status of the responsibilities or the conditions
of employment of the employee from those in effect
immediately prior to such Change in Control of the Company;

(ii) a reduction by the Company in the annual base
salary of the employee as in effect immediately prior to the
Change in Control of the Company;

(iii) the relocation of the Company's offices at
which the employee is principally employed immediately
prior to the Change in Control of the Company to a
location more than 25 miles from such location or
the Company's requiring the employee to be based
anywhere other than the Company's offices

A-4

<PAGE>

at such location except for required travel on the
Company's business to an extent substantially
consistent with the employee's business travel
obligations prior to the Change in Control of the
Company;

(iv) the failure by the Company to pay to the employee
any portion of current compensation or to pay to the
employee any portion of an installment of deferred
compensation under any deferred compensation program of
the Company within seven (7) days of the date such
compensation is due;

(v) the failure by the Company to continue in effect
any material compensation or benefit plan in which the
employee participates immediately prior to the Change
in Control of the Company unless an equitable
arrangement (embodied in an on-going substitute or
alternative plan) has been made with respect to such
plan, or the failure by the Company to continue the
employee's participation therein (or in such substitute
or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits
provided and the level of the employee's participation
relative to other participants, as existed at the time
of the Change in Control of the Company;

(vi) the failure by the Company to continue to provide
the employee with benefits substantially similar to
those enjoyed by the employee under any of the
Company's life insurance, medical, health and accident,
or disability plan in which the employee participates
at the time of the Change in Control of the Company,
the taking of any action by the Company which would
directly or indirectly materially reduce any of such
benefits, or the failure by the Company to provide the
employee with the number of paid vacation days to which
the employee is entitled on the basis of years of
service with the Company in accordance with the
Company's normal vacation policy in effect at the time
of the Change in Control of the Company; or

(vii) any purported termination of employment that
is not effected in a manner satisfying the definition
of "for cause" hereunder.

For purposes of the Plan, an employment relationship shall
be deemed to exist between an individual and a corporation if, at
the time of determination, the individual was an "employee" of
such corporation for purposes of Section 422(a) of the Code, If
an individual is on leave of absence taken with the consent of
the corporation by which such individual was employed, or is on
active military service, and is determined to be an "employee"
for purposes of the exercise of Right, such individual shall not
be entitled to exercise such Right during such period and while
the employment is treated as continuing intact unless such
individual shall have contained the prior written consent of such
corporation, which consent shall be signed by the chairman of the
board of directors, the president, a senior vice-president or
other duly authorized officer of such corporation.

A termination of employment shall not be deemed to occur by
reason of (i) the transfer of an employee from employment by the
Company to employment by a subsidiary corporation of the Company
or (ii) the transfer of an employee from employment by a
subsidiary corporation of the Company to employment by the
Company or by another subsidiary corporation.

VIII. Adjustment of Shares; Effect of Certain
Transactions

Notwithstanding any other provision contained herein, in the
event of any change in the shares of Common Stock subject to the
Plan or to any Right granted under the Plan (through merger,
consolidation, reorganization, recapitalization, stock dividend,
stock split, split-up, split-off, spin-off, combination of
shares, exchange of shares, or other like change in the capital
structure of the Company), the Committee shall make any
appropriate adjustments to the total number of shares of Common
Stock which may be subject to Rights under the Plan, the maximum
number of shares of Common Stock for which Rights may be granted
to any employee and the number of shares of Common Stock and fair
market value per share of Common Stock subject to outstanding
Rights as shall be equitable to prevent dilution or enlargement
of rights under such Rights, and the determination of the
Committee as to these matters shall be conclusive and binding on
the holder.

IX. Right to Terminate Employment

The Plan shall not impose any obligation on the Company or
on any subsidiary corporation to continue the employment of
any holder of a Right and it shall not impose any obligation
on the part of any holder of a Right to remain in the employ
of the Company or of any subsidiary corporation.

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<PAGE>

X. Withholding Taxes

The Company shall have the right to withhold the amount of
any taxes required by any governmental authority to be
withheld or otherwise deducted and paid by the Company in
respect of any sums due or to become due from the Company to
the employee from such sums upon such terms and conditions
as the Committee shall prescribe. In lieu thereof, the
Company may require an employee exercising any Right to
reimburse the Company for such taxes.

XI. Amendment of the Plan

The Committee may, from time to time, amend the Plan,
provided that no amendment shall be made, without the
approval of the stockholders of the Company, that will (a)
increase the total number of shares of Common Stock subject
to Rights under the Plan or the maximum number of shares of
Common Stock for which Rights may be granted to any employee
(other than an increase resulting from an adjustment
provided for in Article VIII hereof), (b) reduce the
exercise price of any Right granted hereunder, (c) modify
the provisions of the Plan relating to eligibility, or (d)
materially increase the benefits accruing to participants
under the Plan. The Rights and obligations under any Rights
granted before amendment of the Plan or any unvested or
unexercised portion of such Rights shall not be adversely
affected by amendment of the Plan or the Rights without the
consent of the holder of the Rights.

XII. Termination or Suspension of the Plan

The Committee may at any time suspend or terminate the Plan.
Rights may not be granted while the Plan is suspended or
after it is terminated. Rights and obligations under any
Bights granted while the Plan is in effect shall not be
altered or impaired by suspension or termination of the
Plan, except upon the consent of the person to whom the
Rights were granted. The power of the Committee to construe
and administer any Rights granted prior to the termination
or suspension of the Plan under Article III nevertheless
shall continue after such termination or during such
suspension.

XIII. Governing Law

The Plan, such Rights as may be granted thereunder and all
related matters shall be governed by, and construed and
enforced in accordance with, the laws of the State of
Nevada.

XIV. Partial Invalidity

The invalidity or illegality of any provision herein shall
not be deemed to affect the validity of any other provision.

XV. Notices

All notices hereunder shall be sent by registered mail,
postage prepaid, to the Company at its principal place of
business, or to a holder of any Rights, or any permitted
transferee, at his last known address, or the address, if
any, appearing on the books of the Company.

XVI. Effective Date

The Plan shall become effective at 5:00 P.M., Las Vegas,
Nevada time, on the Effective Date; provided, however, that
if the Plan is not approved by a vote of the stockholders of
the Company at the first meeting of stockholders after such
date, the Plan and any Rights granted thereunder shall
terminate.

A-6

<PAGE>

SHOWBOAT, INC.

PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, MAY 29, 1997
SOLICITED BY THE BOARD OF DIRECTORS

The undersigned shareholder of Showboat, Inc. ("Company")
hereby acknowledges receipt of the Notice of Annual Meeting
of Shareholders, the Proxy Statement and the 1996 Annual
Report of the Company in connection with the annual meeting
of shareholders of the Company to be held at the Memphis
Room, Showboat Hotel, Casino and Bowling Center, 2800
Fremont Street, Las Vegas, Nevada 89104, on Thursday,
May 29, 1997, at 10:00 a.m., local time, and hereby appoints
William C. Richardson, George A. Zettler and Carolyn M.
Sparks, 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>

<TABLE>

[X] Please mark your
votes as in this
example
<S> <C> <C> <C>
1. Election of FOR WITHHELD Nominees: John D. Gaughan H. Gregory Nasky
Directors. [ ] [ ] Frank A. Modica J. Kell Houssels, III

For, except vote withheld from the following nominee(s)
____________________________________________________

2. Approval of Showboat, Inc. FOR AGAINST ABSTAIN
1996 Stock Appreciation Rights Plan. [ ] [ ] [ ]

3. Approval of KPMG Peat Marwick FOR AGAINST ABSTAIN
as Independent Public Accountants. [ ] [ ] [ ]

4. In their discretion, upon such other business
as may properly come before the annual meeting.

</TABLE>

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, and 3, and
in the discretion of the proxies on such other business that may
properly come before the meeting).

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, please give full title as
such. If signer is a corporation, sign full corporate name by
duly authorized officer.