LADY LUCK GAMING FINANCE CORP, 10-Q, 1996-08-13

LADY LUCK GAMING FINANCE CORP
10-Q, 1996-08-13
MEMBERSHIP SPORTS & RECREATION CLUBS

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<TABLE>
FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 1996
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 0-22436
<CAPTION>

<S> <C> <C>
Delaware Lady Luck Gaming Corporation 88-0295602
-------- ---------------------------- ----------
(State or other jurisdiction of (Exact name of Registrant as specified in its charter) (I.R.S. employer
incorporation or organization) identification number)

Delaware Lady Luck Gaming Finance Corporation 88-0295603
-------- ------------------------------------ ----------
(State or other jurisdiction of (Exact name of Registrant as specified in its charter) (I.R.S. employer
incorporation or organization) identification number)

Mississippi Lady Luck Tunica, Inc. 88-0289742
----------- ---------------------- ----------
(State or other jurisdiction of (Exact name of Registrant as specified in its charter) (I.R.S. employer
incorporation or organization) identification number)

Mississippi Lady Luck Biloxi, Inc. 88-0285242
----------- ---------------------- ----------
(State or other jurisdiction of (Exact name of Registrant as specified in its charter) (I.R.S. employer
incorporation or organization) identification number)

Delaware Gold Coin Incorporated 88-1223906
-------- ---------------------- ----------
(State or other jurisdiction of (Exact name of Registrant as specified in its charter) (I.R.S. employer
incorporation or organization) identification number)

Mississippi Magnolia Lady, Inc. 88-0301634
----------- ------------------- ----------
(State or other jurisdiction of (Exact name of Registrant as specified in its charter) (I.R.S. employer
incorporation or organization) identification number)

Mississippi Old River Development, Inc. 64-0837159
----------- --------------------------- ----------
(State or other jurisdiction of (Exact name of Registrant as specified in its charter) (I.R.S. employer
incorporation or organization) identification number)

Missouri Lady Luck Kimmswick, Inc. 43-1653661
-------- ------------------------- ----------
(State or other jurisdiction of (Exact name of Registrant as specified in its charter) (I.R.S. employer
incorporation or organization) identification number)

Iowa Lady Luck Quad Cities, Inc. 42-1426966
---- --------------------------- ----------
(State or other jurisdiction of (Exact name of Registrant as specified in its charter) (I.R.S. employer
incorporation or organization) identification number)

Mississippi Lady Luck Mississippi, Inc. 88-0277687
----------- --------------------------- ----------
(State or other jurisdiction of (Exact name of Registrant as specified in its charter) (I.R.S. employer
incorporation or organization) identification number)

Mississippi Lady Luck Vicksburg, Inc. 88-0284406
----------- ------------------------- ----------
(State or other jurisdiction of (Exact name of Registrant as specified in its charter) (I.R.S. employer
incorporation or organization) identification number)
<PAGE>

Mississippi Lady Luck Gulfport, Inc. 88-0289741
----------- ------------------------ ----------
(State or other jurisdiction of (Exact name of Registrant as specified in its charter) (I.R.S. employer
incorporation or organization) identification number)
</TABLE>

206 North Third Street, Las Vegas, Nevada 89101
(Address of principal executive offices)(Zip code)
Registrant's telephone number, including area code: (702) 477-3000

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes X No

Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date. As of August 9,
1996, there were 29,285,698 shares of common stock, $.001 par value per share,
outstanding.

<PAGE>

PART I FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

<TABLE>

LADY LUCK GAMING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)

ASSETS
<CAPTION>
<S> <C> <C>

June 30, 1996 December 31, 1995
------------- ------------------
Current assets:
Cash and cash equivalents................................ $ 18,466 $ 22,148
Restricted cash.......................................... - 8,858
Accounts receivable, net................................. 1,560 597
Inventories.............................................. 1,046 885
Prepaid expenses......................................... 2,732 2,731
--------- ---------
Total current assets................................. 23,804 35,219
--------- ---------

Property and equipment, net of accumulated depreciation and
amortization of $22,954 and $17,611 as of June 30, 1996
and December 31, 1995, respectively...................... 174,540 155,664

Other assets:
Pre-opening costs........................................ 1,304 1,100
Deferred financing fees and costs, net of
accumulated amortization of $2,039 and
$1,607 as of June 30, 1996 and
December 31, 1995, respectively...................... 4,037 4,470
Investment in unconsolidated affiliates, net............. 20,290 17,619
Other.................................................... 3,822 3,209
--------- ---------
29,453 26,398
--------- ---------
TOTAL ASSETS.................................................. $ 227,797 $ 217,281
========= =========

</TABLE>

The accompanying notes are an integral part of these
condensed consolidated balance sheets.

<PAGE>

<TABLE>

LADY LUCK GAMING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
(in thousands)
(Unaudited)

LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
<S> <C> <C>

June 30, 1996 December 31, 1995
------------- -----------------

Current liabilities:
Current portion of long-term debt........................ $ 3,616 $ 5,624
Accrued interest......................................... 1,434 2,326
Accounts payable......................................... 5,101 3,240
Construction and retention payables...................... 3,916 3,126
Income taxes payable..................................... 215 195
Other accrued liabilities................................ 8,499 9,191
--------- ---------
Total current liabilities............................ 22,781 23,702
--------- ---------

Long-term debt:
Mortgage notes payable................................... 173,500 173,500
Other long-term debt..................................... 8,785 3,473
--------- ---------
Total long-term debt................................. 182,285 176,973
--------- ---------

Total liabilities............................... 205,066 200,675
--------- ---------

Commitments and contingencies (Notes 7, 8, 9 and 11)

Series A mandatory cumulative redeemable preferred stock,
$35.80 and $33.83, as of June 30, 1996 and
December 31, 1995, respectively per share liquidation
value, 1,800,000 shares authorized, 433,638 shares
issued and outstanding................................... 15,525 14,669
--------- ---------

Stockholders' equity:
Common stock, $.001 par value, 75,000,000
shares authorized, 29,285,698 shares issued
and outstanding ..................................... 29 29
Additional paid-in capital............................... 31,382 31,382
Accumulated deficit...................................... (24,205) (29,474)
--------- ---------
Total stockholders' equity........................... 7,206 1,937
--------- ---------

TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY..................................... $ 227,797 $ 217,281
========= =========

</TABLE>

The accompanying notes are an integral part of these
condensed consolidated balance sheets.

<PAGE>

<TABLE>

LADY LUCK GAMING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
(Unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Casino.......................................... $ 36,623 $ 34,515 $ 71,345 $ 66,518
Food and beverage............................... 3,968 3,557 7,812 7,015
Hotel........................................... 1,055 507 1,580 1,525
Equity in net income (loss) of affiliates....... 1,523 (1,041) 2,661 (1,041)
Other........................................... 1,158 1,146 2,324 1,440
-------- -------- -------- --------
Gross revenues.............................. 44,327 38,684 85,722 75,457
Less: Promotional allowances................ (2,828) (2,170) (5,55) (4,296)
-------- -------- -------- --------
Net revenues................................ 41,499 36,514 80,163 71,161

Costs and expenses:
Casino.......................................... 13,496 12,024 26,794 23,409
Food and beverage............................... 1,717 2,103 3,383 4,112
Hotel........................................... 430 309 715 1,035
Other........................................... 71 70 143 147
Selling, general and
administrative.............................. 14,122 12,819 26,150 25,253
Related party management/license fees........... 515 1,369 1,043 2,539
Depreciation and amortization................... 2,646 2,317 5,393 4,621
Pre-opening expenses............................ 247 - 247 -
-------- -------- -------- --------
Total costs and expenses.................... 33,244 31,011 63,868 61,116
-------- -------- -------- --------

Operating income .................................... 8,255 5,503 16,295 10,045

Other income (expense):
Interest income................................. 319 265 638 568
Interest expense................................ (5,341) (5,046) (10,661) (9,674)
Other........................................... 44 12 97 (399)
-------- -------- -------- --------

Income before income tax
provision and extraordinary item................ 3,277 734 6,369 540
-------- -------- -------- --------

</TABLE>

The accompanying notes are an integral part of these
condensed consolidated statements.

<PAGE>

<TABLE>

LADY LUCK GAMING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (continued)
(in thousands, except share and per share amounts)
(Unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>

Income before income tax
provision and extraordinary item................ 3,277 734 6,369 540

Income tax provision................................. 120 - 244 -
--------- --------- --------- ---------

Income before extraordinary
item............................................ 3,157 734 6,125 540
Extraordinary gain on early
extinguishment of debt.......................... - - - 2,257
--------- --------- --------- ---------

NET INCOME........................................... 3,157 734 6,125 2,797

Preferred stock dividends............................ 434 387 856 764
--------- --------- --------- ---------
Income applicable to
common stockholders............................. $ 2,723 $ 347 $ 5,269 $ 2,033
========= ========= ========= =========

NET INCOME PER SHARE

Before extraordinary item....................... $ 0.11 $ 0.03 $ 0.21 $ 0.02
========= ========= ========= =========
Extraordinary item.............................. $ - $ - $ - $ 0.08
========= ========= ========= =========
Applicable to common stockholders............... $ 0.09 $ 0.01 $ 0.18 $ 0.07
========= ========= ========= =========

Weighted average number of common
shares outstanding.............................. 29,285,698 29,285,698 29,285,698 28,619,031
========== ========== ========== ==========

</TABLE>

The accompanying notes are an integral part of these
condensed consolidated statements.

<PAGE>

<TABLE>

LADY LUCK GAMING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
<CAPTION>

Six Months Ended
June 30,
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income................................... 6,125 2,797
Adjustments to reconcile net
income to net cash provided by
(used in) operating activities:
Depreciation and amortization.............. 5,393 4,621
Amortization of bond offering
fees and costs........................... 432 439
Loss on disposition of assets............ - 481
Gain on early extinguishment
of debt.................................. - (2,257)
Equity in net (income) loss of
unconsolidated affiliates.................. (2,661) 1,041
(Increase) decrease in assets:
Accounts receivable........................ (963) 408
Inventories................................ (161) (8)
Prepaid expenses........................... (1) 256
Increase (decrease) in liabilities:
Accounts payable........................... 1,861 (1,154)
Accrued interest........................... (893) (133)
Other accrued liabilities.................. (701) 1,411
Federal income taxes payable............... 20 -
-------- --------
Net cash provided by (used in)
operating activities......................... 8,451 7,902
-------- --------

Cash flows from investing activities:
Purchase of property and equipment........... (17,502) (8,321)
Construction and retention payables.......... 790 (5,770)
Pre-opening costs............................ (204) (227)
Investments in unconsolidated affiliates..... - (2,426)
Restricted cash.............................. 8,858 (29)
Other assets................................. (613) (296)
-------- --------
Net cash provided by (used in) investing
activities................................... (8,671) (17,069)
-------- --------
</TABLE>

The accompanying notes are an integral part of these
condensed consolidated statements.

<PAGE>

<TABLE>

LADY LUCK GAMING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(in thousands, except supplemental schedule)
(Unaudited)

Six Months Ended
June 30,
1996 1995
---- ----
<S> <C> <C>

Cash flows from financing activities:
Issuance of notes payable.................... 40 219
Payments on debt and slot contracts.......... (3,502) (3,578)
-------- --------

Net cash provided by (used in) financing
activities................................... (3,462) (1,359)
-------- --------

Net increase (decrease) in cash and cash
equivalents.................................. (3,682 (10,526)
Cash and cash equivalents,
beginning of period.......................... 22,148 28,914
-------- --------
Cash and cash equivalents, end of period $ 18,466 $ 18,388
======== ========

Supplemental disclosures of cash flow
information :
Cash paid during the period for:
Interest (net of amount capitalized
of $514 and $519 for the six months
ended June 30, 1996 and 1995,
respectively) ......................... $ 11,121 $ 9,187
-------- --------
Income taxes paid........................ $ 225 $ -
-------- --------

</TABLE>

Supplemental Schedule of Non-Cash Investing and Financing Activities:

The liquidation value of the Series A mandatory cumulative redeemable preferred
stock increased by approximately $856,000 and $764,000 for the periods ended
June 30, 1996 and 1995, respectively.

On April 15, 1995, Lady Luck Mississippi acquired the River Park Hotel for
approximately $4,000,000, including approximately $1,000,000 cash and a mortgage
note for the balance.

During the second quarter of 1996, certain subsidiaries acquired slot machines
in exchange for approximately $3,800,000 of indebtedness.

In February 1995, 2,000,000 shares of common stock were issued upon the
conversion of $6,500,000 of the 2001 Notes.

On March 31, 1995, the Company contributed net assets totaling approximately
$16,100,000 to the Bally's Joint Venture.

In addition to net cash investments in and cash payments on behalf of the
Bettendorf Joint Venture during 1995 of approximately $2,100,000, the Company
contributed non-cash assets of approximately $837,000.

The accompanying notes an integral part of these
condensed consolidated statements.

<PAGE>

LADY LUCK GAMING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. The Company and Basis of Presentation

Certain notes and other information have been condensed or omitted from the
interim financial statements presented in this Quarterly Report on Form 10-Q.
Therefore, these financial statements should be read in conjunction with the
Company's 1995 Annual Report on Form 10-K. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered necessary
for a fair presentation have been included. The results for the first and second
quarters of 1996 are not necessarily indicative of future financial results. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from these estimates. Among the estimates made by
management is the evaluation of the recoverability of the carrying values of the
land held for development and the projects under development by Lady Luck
Vicksburg, Inc. and Lady Luck Kimmswick, Inc. The Company has made certain
reclassifications for the three and six months ended June 30, 1995 in order to
present comparable amounts.

The consolidated financial statements of Lady Luck Gaming Corporation
("LLGC"), a Delaware corporation, include the accounts of LLGC and its
subsidiaries (collectively "the Company"). The Company's operations primarily
include those of LLGC, Lady Luck Gaming Finance Corporation ("LLGFC"), a
Delaware corporation; Lady Luck Mississippi, Inc. ("LLM"), Lady Luck Biloxi,
Inc. ("LLB"), Lady Luck Gulfport, Inc. ("LLG"), Lady Luck Vicksburg, Inc.("LLV")
and Lady Luck Tunica, Inc. ("LLT"), each a Mississippi corporation (collectively
the "Mississippi Companies"); Gold Coin Incorporated ("GCI"), a Delaware
corporation; Lady Luck Kimmswick, Inc. ("LLK") a 93% owned Missouri corporation;
Magnolia Lady, Inc. ("MLI"), a Mississippi corporation; Lady Luck Quad Cities,
Inc. ("LLQC") a Delaware corporation; and Old River Development, Inc. ("ORD"), a
Mississippi corporation. The Company also owns investments in joint ventures
with BRDC and Bally's (see Note 4) which are accounted for under the equity
method. LLGC and its subsidiaries were organized to develop and operate gaming
and hotel properties in emerging jurisdictions.

LLGC and LLGFC were formed in February 1993, pursuant to an Investment
Agreement dated October 20, 1992 between Andrew Tompkins, certain affiliates of
Mr. Tompkins and certain holders of equity and debt securities of GCI (the
"Investment Agreement"). Pursuant to the Investment Agreement, Mr. Tompkins
indirectly contributed all outstanding common stock of the Mississippi Companies
to LLGFC in exchange for 550,000 shares of LLGC Class B Common Stock and 216,819
shares of LLGC Series A Mandatory Cumulative Redeemable Preferred Stock ("Series
A"), liquidation value of $5,420,000. In connection with the contribution of the
stock of the Mississippi Companies, Mr. Tompkins received $3,734,000 which
represented the historical carrying value of the net assets of $13,400,000 in
excess of the capital contribution required by the Investment Agreement. LLM
began dockside casino operations on February 26, 1993 in Natchez, Mississippi.
GCI reopened on May 28, 1993; LLT began dockside casino operations on September
18, 1993 in Southern Tunica County, Mississippi and ceased operations on April
24, 1994, LLB began dockside casino operations on December 13, 1993 in Biloxi,
Mississippi, and MLI, which does business as Lady Luck Rhythm & Blues, commenced
dockside gaming operations of Lady Luck Rhythm & Blues on June 27, 1994 in
Coahoma County, Mississippi, commenced operation of a 173-room hotel on August
16, 1994, and commenced gaming operations of Country Casino, as defined below,
on May 21, 1996. ORD commenced operation of a 240-room hotel on August 24, 1994.
All of the other Mississippi Companies and LLK are in various stages of
development and have no operating history.

2. Certain Risks and Uncertainties Applicable to Gaming Industry Licensing and
Concentration of Risk

The Company's operations in Mississippi, Iowa and Colorado are dependent on
the continued licensability or qualifications of the Company and its
subsidiaries that hold the gaming licenses in these jurisdictions. Such
licensing and qualifications are reviewed periodically by the gaming authorities
in these states.

<PAGE>

LADY LUCK GAMING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

enabling casino gaming in Arkansas could adversely effect these casinos' future
operating results. Four initiatives to legalize certain forms of gaming, and one
to prohibit all forms of gaming (including pari-mutuel wagering) were submitted
to the Arkansas Secretary of State for inclusion on the November 1996 general
election ballot. If the authors of such initiatives obtain the statutorily
required signatures, then such initiatives will be placed before the voters in
November 1996. If gaming were legalized in certain areas of Arkansas, such
legalization could have a material adverse effect on the Company.

3. Net Income Per Share

Net income per share is computed using the weighted average number of common
shares and common stock equivalents, if dilutive, actually outstanding during
the year. Common stock equivalents represent the shares that would be
outstanding assuming exercise of dilutive stock options. No common stock
equivalents are included in the computation for the three and six month periods
ended June 30, 1996 and 1995, as the effect would be anti-dilutive or would
dilute earnings per share by less than one percent.

4. Investment in Unconsolidated Affiliates

The Company's investments in joint ventures with Bettendorf Riverfront
Development Company ("BRDC") and Bally's Entertainment Corporation ("Bally's")
are accounted for under the equity method and the Company's portion of income or
loss from the joint ventures is included in Equity in Net Income (Loss) of
Unconsolidated Affiliates in the accompanying Condensed Consolidated Statements
of Operations for the three and six month periods ended June 30, 1996 and 1995.

In December 1994, the Company entered into certain agreements (the "Joint
Venture Agreement") to form a joint venture (the "Bettendorf Joint Venture")
with BRDC to complete and operate a gaming vessel and associated land-side
development in Bettendorf, Iowa ("Lady Luck Bettendorf"). The Joint Venture
Agreement required that the Company and BRDC each contribute cash to the
Bettendorf Joint Venture of $3.0 million in return for a 50% ownership interest.
In addition, BRDC is leasing certain real property to the Bettendorf Joint
Venture at a lease rate equal to its appraised fair market rental value which is
$187,500 per month (which has been abated by $37,500 per month). The Company is
leasing a gaming vessel to the Bettendorf Joint Venture for approximately
$200,000 per month, which amount was determined based upon arms-length
negotiations between the Company and BRDC. Due to delays in completing the
Missouri Project (as defined below), the gaming vessel being leased is the
gaming vessel which had originally been intended for the Missouri Project. In
addition, the Company is leasing certain gaming equipment to the Bettendorf
Joint Venture, as discussed below, for approximately $122,000 per month, its
fair market rental value.

Lady Luck Bettendorf commenced operations in April 1995. All net profits and
losses from all operations of Lady Luck Bettendorf are allocated equally between
the Company and BRDC. The Company's portion of net income of the Bettendorf
Joint Venture is included in equity in net income of unconsolidated affiliates
in the accompanying Condensed Consolidated Statements of Operations for the
three and six month periods ended June 30, 1996 and 1995. The Company has also
been granted the right to manage Lady Luck Bettendorf for a management fee of 2%
of annual gross revenue generated by the Bettendorf Joint Venture plus 7% of
EBITDA, provided in no event that such fee shall exceed 4% of annual gross
revenues (the fee for which has been abated by approximately $37,500 per month).

LADY LUCK GAMING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Summarized balance sheet information for the Bettendorf Joint Venture as of
June 30, 1996 and December 31, 1995 is as follows (in thousands):
<CAPTION>
<S> <C> <C>
June 30, 1996 December 31, 1995

Current assets $ 4,152 $ 3,142
Property and equipment, net 11,979 11,435
Other assets 13 -
----------- -----------
Total assets $ 16,144 $ 14,577
=========== ===========

Current liabilities $ 3,137 $ 7,108
Long-term liabilities 4,169 1,880
Members' equity 8,838 5,589
----------- -----------
Total liabilities and
members' equity $ 16,144 $ 14,577
=========== ===========
</TABLE>
<TABLE>
<CAPTION>

The Bettendorf Joint Venture's net income for 1995 includes pre-opening
expenses of $2.2 million. Summarized results of operations for the Bettendorf
Joint Venture for the three and six month periods ended June 30, 1996 and 1995
are as follows (in thousands):

Three Months Ended Six Months Ended
June 30, June 30,
<S> <C> <C> <C> <C>
1996 1995 1996 1995
---- ---- ---- ----

Net revenues $ 16,622 $ 10,128 $ 31,677 $ 10,128
Costs and expenses 14,772 11,893 28,428 11,893
-------- -------- -------- --------
Net income $ 1,850 $ (1,765) $ 3,249 $ 1,765)
======== ======== ======== ========

</TABLE>

In March 1995, the Company formed a joint venture with affiliates of Bally's
to complete a casino/hotel project in Northern Tunica County, Mississippi (the
"Bally's Joint Venture"). Upon formation of the Bally's Joint Venture, the
Company's subsidiary, ORD, contributed its existing 240-room hotel in Northern
Tunica County, as well as other related assets and liabilities, with a total net
cost of $16.1 million, to the joint venture. Bally's contributed a dockside
casino (the "Dockside Casino") and certain other assets to the joint venture. A
Bally's entity manages and controls the Bally's Joint Venture. The Bally's Joint
Venture is owned 58% by Bally's, 35% by ORD and 7% by D.J. Brata, a former 11%
minority shareholder of ORD. The Company is currently negotiating with Bally's
the final amount of the Company's initial capital contribution to be credited to
its partners' capital account and other matters in accordance with the joint
venture agreement and, in 1995, provided a reserve of $350,000 relating to any
unfavorable resolution of these matters. Hotel operations of the Bally's Joint
Venture commenced in April 1995 and casino operations commenced in December
1995.

LADY LUCK GAMING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Summarized balance sheet information for the Bally's Joint Venture as of June
30, 1996 and December 31, 1995 is as follows (in thousands):
<CAPTION>
June 30, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>

Current assets $ 10,188 $ 10,110
Property and equipment, net 52,017 51,511
Other assets 1,357 4,329
----------- -----------
Total assets $ 63,562 $ 65,950
=========== ===========

Current liabilities $ 14,433 $ 6,148
Long-term liabilities 348 485
Partners' capital 48,781 59,317
----------- -----------
Total liabilities and
partners' capital $ 63,562 $ 65,950
=========== ===========
</TABLE>
<TABLE>

Summarized results of operations for the Bally's Joint Venture for the three
and six month periods ended June 30, 1996 and 1995 are as follows (in
thousands):

<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenues $ 18,808 $ 522 $ 39,237 $ 522
Costs and expenses 17,098 973 36,274 973
-------- -------- -------- --------
Net income $ 1,710 $ (451) $ 2,963 $ (451)
======== ======== ======== ========

</TABLE>

Net income of the Bally's Joint Venture for the three and six months ended
June 30, 1996 reflects pre-opening expenses of $1.3 million and $3.3 million,
respectively.

LADY LUCK GAMING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

5. Long-Term Debt

At June 30, 1996 and December 31, 1995, long-term debt consisted of the
following (in thousands):
<CAPTION>

<S> <C> <C>
June 30, 1996 December 31, 1995
11 7/8% First Mortgage Notes; generally quarterly
payments of interest only; due March 2001;
collateralized by substantially all assets of the
Company (the "2001 Notes").......................... $ 173,500 $ 173,500
Note payable to a corporation; monthly payments of
interest only at 10%; principal due July 2001,
collateralized by a deed of trust................... 2,750 3,000
Note payable to a corporation; annual payments of
principal of $119,000 plus accrued interest at
8%; due June 2003; collateralized by a land
deed of trust....................................... 833 952
Notes payable to a corporation; non-interest bearing
through December 1996; thereafter at prime
plus 7%; secured by the equipment................... 1,098 1,574
Notes payable to a corporation; monthly payments
of principal and interest at 13 1/4%; due
February 1997; secured by the equipment............. 326 552
Note payable to a corporation; payment of principal
and accrued interest at 14%; due March 1996;
secured by a gaming vessel.......................... - 2,219
Note payable to a corporation; payment of principal
and accrued interest at 13 1/4%; due January
1997; secured by the equipment...................... 193 294
Note payable to a corporation; non-interest bearing
through June 1997; thereafter at prime plus
3%; secured by the equipment........................ 522 -
Note payable to a corporation; non-interest bearing
through May 1997; thereafter at prime plus
7%; secured by the equipment........................ 3,376 -
Mortgage note payable to a corporation; quarterly
payments of principal and interest at prime plus
11/2% through April 2006 based on a 20 year 3,000 -
amortization; collateralized by a deed of trust.....
Other..................................................... 303 506
------------- -------------
185,901 182,597
Less current portion...................................... (3,616) (5,624)
------------- -------------
Total long-term debt................................ $ 182,285 $ 176,973
============= =============
</TABLE>

On February 17, 1994, the Company, through LLGFC, issued the 2001 Notes.
The Indenture covering the 2001 Notes, as supplemented, (the "Indenture")
provides for, among other things, restrictions on the Company's and certain of
its subsidiaries' abilities (a) to pay dividends or other distributions on its
capital stock, (b) to incur additional indebtedness, (c) to make asset sales (d)
to engage in other lines of business and (e) to maintain a minimum consolidated
net worth. The Company believes it is in compliance with the Indenture as
supplemented.

6. Expansion Project and Hotel Acquisition

Country Casino and Pavilion

MLI, in response to insufficient capacity at peak times at Lady Luck
Rhythm & Blues, expanded its facilities. The expansion project (the "Expansion")
includes a new casino adjacent to Lady Luck Rhythm & Blues known as "Country
Casino" and an entertainment facility known as the "Pavilion." The cost of the
Expansion will not exceed $25 million which includes approximately $4.0 million
of equipment and barges which the Company had previously acquired and not
utilized for another development, and excludes the cost of approximately 175
slot machines and certain other gaming equipment transferred from Lady Luck
Rhythm & Blues. Country Casino includes approximately 33,000 square feet of
casino space, approximately 650 slot machines, 24 table games, five poker tables
and a food court. The Pavilion includes approximately 25,000 square feet of
entertainment and event space and two movie theaters. In addition, the Expansion
includes an additional 650 parking spaces. The Company funded the Expansion with
cash except for financing certain gaming equipment, primarily additional slot
machines.

River Park Hotel

On April 15, 1996, LLM purchased from River Park Hotel Group, Inc. (the
"Seller") the Best Western River Park Hotel (the "River Park"), a 148-room hotel
in Natchez, Mississippi. The Company purchased the River Park for $4.0 million,
with $1.0 million paid in cash at closing together with a non-recourse
promissory note on the unpaid balance at the prime rate plus 1.5% with equal
quarterly installments (based on a twenty year amortization schedule) and a
balloon payment due on the tenth anniversary date of such note. The River Park
was purchased subject to an existing lien for an outstanding note on the
property which was retained by the Seller upon purchase. In accordance with the
purchase agreement, the Seller must apply the Company's quarterly installments
to pay down the existing $900,000 note. Upon final payment of the outstanding
note, the pre-existing lien will be removed.

7. Employment Agreements

On October 24, 1994, LLGC entered Letter Agreements with Alain J. Uboldi,
LLGC's President, Chief Operating Officer and Director, and Rory J. Reid, LLGC's
Senior Vice-President, General Counsel, Secretary and Director (the
"Agreements"). The Agreements provide that in the event of a Change of Control,
as defined in the Agreements, and the subsequent termination of the employment
of either Mr. Uboldi or Mr. Reid, under certain circumstances, LLGC would be
required to pay to Mr. Uboldi and Mr. Reid a lump sum severance payment equal to
2.99 times the sum of their respective annual base salary plus the amount of any
bonus paid in the year preceding such termination. In the event of such
termination, Mr. Uboldi and Mr. Reid would also receive in cash an amount equal
to the product of the difference between subtracting the exercise price of each
option held by Mr. Uboldi or Mr. Reid (whether or not fully exercisable) from
the current price of LLGC's common stock, as defined. Further, in connection
with the Agreements, Mr. Uboldi and Mr. Reid would receive life, disability,
accident and health insurance benefits substantially similar to those they are
receiving immediately prior to their termination for a 36-month period after
such termination.

8. Litigation

From time to time the Company is a party to legal proceedings arising in
the ordinary course of business such as described below. Due to the uncertainty
of the ultimate outcome of materiality of these matters, no accrual for any of
these matters has been made as of June 30, 1996.

<PAGE>

LADY LUCK GAMING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Shareholder Class Action Lawsuits

The Company has been named as a defendant in a purported shareholder class
action lawsuit alleging violations by the Company of the Securities Act of 1933
and 1934 for alleged material misrepresentations and omissions in connection
with the Company's 1993 prospectus and initial public offering of Common Stock.
The complaint seeks, inter alia, injunctive relief, rescission and unspecified
compensatory damages. In addition to the Company, the complaint also names as
defendants Andrew H. Tompkins, Chairman and Chief Executive Officer of LLGC,
Alain Uboldi, Director and Chief Operating Officer of LLGC, Michael Hlavsa, the
former Chief Financial Officer of LLGC, Bear Stearns & Co., Inc. and Oppenheimer
& Co., Inc., who acted as lead underwriters for the initial public offering. The
Company has retained outside counsel to respond to the complaint and while the
outcome of this matter cannot presently be determined, the Company believes
based in part on advice of counsel, that it has meritorious defenses.

Greek Lawsuits

Additionally, a lawyer and a consultant which were allegedly retained by
the Company in connection with the Company's bid for a gaming license in Greece
recently threatened litigation against the Company. The Company has retained
outside counsel to evaluate the allegations made by such individuals. The
Company believes, based in part on advice of counsel, that it has meritorious
defenses if such litigation is actually filed against the Company.

Also, a Greek architect filed an action against the Company alleging that
he was retained by the Company to provide professional services with respect to
a casino in Loutraki, Greece. The plaintiff in such action sought damages of
approximately $800,000. On July 29, 1996, the Company's Greek counsel was served
with a decision by the Athens Court of First Instance in such matter. The Greek
Court entered a judgement against the Company in the amount of approximately
$375,000.00. The Company intends to appeal the Court's decision and has been
informed by its Greek counsel that it has meritorious grounds to prosecute such
appeal.

Other Matters

On or about September 23, 1993, Superior Boat Works, Inc.,
debtor-in-possession ("Superior"), filed an adversary proceeding in the United
States Bankruptcy Court in Mississippi against, among others, LLM. Superior had
previously done construction work for LLM on its Natchez barge ("Lady Luck
Natchez"), as well as some minor preparatory work on one other barge of the
Company. Such proceeding alleges damages of approximately $47,000,000, of which
approximately $3,400,000 is alleged for additional construction work on Lady
Luck Natchez and the remaining amount is alleged for unjust enrichment, for
causing the bankruptcy of Superior and for future work Superior expected to
perform for the Company. In related proceedings, certain subcontractors of
Superior who previously asserted maritime and materialman's liens have settled
all such claims with the Company. The Company, based in part on the advice of
its counsel, does not believe that these proceedings will have a material
adverse effect on the Company's financial condition or results of operations.

<PAGE>

LADY LUCK GAMING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

9. Commitments and Contingencies

Lease Commitments

MLI leases approximately 1,000 acres of land surrounding the Helena Bridge
which connects Mississippi to Arkansas. The MLI lease provides that the monthly
lease payment would increase by $150,000 per month beginning July 1, 1995 until
an additional casino either north or south of the Lady Luck Rhythm & Blues
property commences operation. In accordance with the lease agreement, this
additional rent was paid by the Company. With the opening of the Country Casino
on May 21, 1996, this provision was satisfied and the rental payment reverted to
a percentage basis.

LLGC on its own or through its operating subsidiaries, has entered into a
series of leases and options to lease in various locations where it is operating
or intends to develop and operate dockside or riverboat casinos. The leases are
primarily for a term of 40 years from the date of execution and are cancelable
at the option of LLGC with a maximum period of notice of 60 days with the
exception of certain leases entered by LLB and LLG which are cancelable upon six
months notice on the fifth anniversary of the commencement date of such leases
and upon six months notice on any fifth anniversary date thereafter. In
addition, LLGC, on its own or through its operating subsidiaries, has entered
into certain options to either lease or purchase additional property in other
states. Most of the leases are contingent upon regulatory approval of the lease
and all leases contain certain periodic rent adjustments.

Prior to suspending development of a planned casino in Gulfport,
Mississippi, the Company entered into three leases for real property. The leases
currently require annual payments of approximately $920,000 and provide for
future increases based on the Consumer Price Index. The Company is seeking joint
venture partners to assume the leases or to invest in the proposed casino
project. The principal lease (the "Gulfport Lease") is terminable by LLG in
November 1998 and requires an annual lease payment of approximately $550,000 per
year through such date. The Company was required to prepay the lease payments
for the twelve months ending November 1998. The Company was required to make
improvements to the leased property of at least $1.0 million on or before May 8,
1995 (the "Improvement Requirement"). While the Company has spent in excess of
$1.0 million on its Gulfport project, the landlord, while not now claiming that
the Company is in default, has reserved the right to claim that LLG has not
satisfied the Improvement Requirement. The Company has been in discussions with
third parties, including joint venture partners, regarding an assumption of the
Gulfport Lease. There can be no assurance that such negotiations or discussions
will be successful. Because the Company has suspended development of its
Gulfport project and in order to conserve its funds, the Company may not make
the required monthly lease payments in the future. Accordingly, a reserve of
approximately $600,000 was provided as of December 31, 1995 to fully reserve the
prepaid lease payment for the twelve months ending November 1998.

Construction Commitment

The Company has entered into an agreement for the construction of a
cruising gaming vessel in the amount of $16.0 million and as of June 30, 1996,
approximately $6.0 million has been expended under this contract, with an
additional $1.9 million included in construction payables. It is anticipated
that this vessel will be utilized by LLK and, therefore, the Missouri Project
(as hereinafter defined) will be responsible for payment of the remaining
amounts under the contract. However, if the Missouri Project is not consummated,
the Company may be responsible for the then outstanding obligations.

Development Stage Projects

In addition to its operating casinos, the Company has dockside or
riverboat casino projects in various stages of development, in Kimmswick,
Missouri and Vicksburg, Mississippi (the "Development Stage Projects"). The
current status of each of these development stage projects is described below.

<PAGE>

LADY LUCK GAMING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Kimmswick, Missouri

The Company and a local investor had intended to develop a theme hotel and
entertainment center, including a casino on a cruising vessel (the "Missouri
Project"), in Jefferson County, Missouri, located just outside the city of
Kimmswick and approximately 20 miles south of St. Louis. The Company has an
option to lease an approximately 46 acre site (the "Kimmswick Site") for a term
of 50 years.

Through June 30, 1996, the Company had expended cash of approximately
$8.4 million in the Missouri Project. Such investment consists of approximately
$6.0 million for construction of a partially finished cruising vessel (see
Construction Commitment above) and approximately $2.4 million in other costs
associated with the development of the project. This investment excludes the
cost of the cruising vessel which had initially been intended for use by the
Missouri Project, which is now being leased to the Bettendorf Joint Venture.

On November 30, 1995, the Company entered into a partnership agreement
(the "Kimmswick Agreement") with Davis Gaming Company II ("Davis") to form a
joint venture (the "Kimmswick Joint Venture") to construct and operate a hotel
and casino on the Kimmswick Site. Pursuant to the Kimmswick Agreement, the
Company will contribute certain assets with a book value of approximately $8
million to the Kimmswick Joint Venture for a 40% interest in the Kimmswick Joint
Venture (if the assets contributed by LLK are determined to have a value of less
than $8 million, LLK will be required to contribute additional cash or assets in
the amount of such shortfall or its interest in the Kimmswick Joint Venture will
be proportionately reduced) and Davis will contribute $15 million in cash for a
60% interest in the Kimmswick Joint Venture. Generally, LLK's interest in the
Kimmswick Joint Venture will not be reduced below 20%. In addition, Davis will
agree either to obtain financing on behalf of the Kimmswick Joint Venture or
provide additional capital to the Kimmswick Joint Venture in amounts aggregating
an additional $57 million. Such additional capital contributions by Davis would
be, depending upon the circumstances under which such contributions are made,
either treated as preferred capital contributions or result in Davis receiving
an increased interest in the Kimmswick Joint Venture. In the event that the
costs of completing the first two phases of the Missouri Project exceed $80
million, LLK and Davis will have the right, but not the obligation, to make an
additional capital contribution to the Kimmswick Joint Venture based upon their
pro rata share of the additional amount of required funding. If only one of such
partners elects to contribute additional capital, the contributing partner may
elect to withdraw such contribution, to advance the non-contributing partners'
share and have the entire contribution treated as a loan to the joint venture or
to advance the non-contributing partners' share and have the entire contribution
treated as an additional capital contribution (which will result in a
proportionate adjustment of the partners' respective interests in the joint
venture). The partners will have no other right or obligation to make additional
capital contributions to the joint venture.

The obligations of Davis to contribute capital or provide financing to the
Kimmswick Joint Venture are subject to satisfaction of numerous conditions,
including that there shall be no governmental regulation that is likely to
increase the cost of, or diminish the EBITDA to be generated by, the project in
amounts exceeding certain thresholds and that a gaming license shall have been
obtained from the Missouri Gaming Commission. There can be no assurance that any
of such conditions will be satisfied and, therefore, there can be no assurance
that the Kimmswick Joint Venture will be funded.

Development of the Missouri Project is subject to approval by gaming
authorities in the State of Missouri. The Company has filed an application
seeking such approval. The State of Missouri investigates applicants at its
discretion and there can be no assurance that the Company's application will be
actively reviewed in the next twelve months. In addition, a person owning real
property adjacent to the site of the Kimmswick Project is seeking to overturn
decisions by the Jefferson County Commission with respect to the zoning of such
site. A trial was conducted in April 1996 and the court has taken the matter
under advisement. The Company is defending this lawsuit and believes it has
meritorious defenses. However, if the zoning decisions are overturned, the
Company would be required to seek new zoning approval and there can be no
assurance that such approval would be obtained.

Beginning with the first quarter in which the joint venture has operating
income, the joint venture will distribute 80% of its available funds (as
defined) in each of the first three fiscal quarters of each fiscal year to the
partners and, at the end

<PAGE>

LADY LUCK GAMING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

of each fiscal year, the joint venture will distribute an amount which, together
with all other amounts previously distributed during such fiscal year, equals
90% of available funds for such fiscal year. All distributions of available
funds shall be made first to Davis to the extent of its priority or preferred
interest and then to the partners in proportion to their respective interests in
the joint venture. The Company will also be entitled to certain additional
distributions to the extent that its tax liability in respect of the joint
venture exceeds the amount otherwise distributed to it.

The Agreement provides that the Company will manage the Kimmswick Joint
Venture for a five-year term. The Company will be paid a management fee equal to
2% of gross revenues plus 7% of earnings before interest, taxes, depreciation
and amortization, but such management fee will in no event exceed 4% of the
joint venture's gross revenues and the aggregate management fee in any year plus
the amount of all distributions to the Company in such year generally will not
exceed the amount of distributions to Davis in such year. The Company's
continued engagement as manager will be dependent upon, among other things, the
achievement of certain performance standards. In addition, upon meeting certain
other performance criteria, Lady Luck Kimmswick will have the unilateral right
to manage the Kimmswick Joint Venture for an additional five years.

The Company has provided no reserve for the assets designated for the
Kimmswick Joint Venture. Management believes that the project is viable and that
the assets as of June 30, 1996 are stated at estimated net realizable value.
This assumption is based upon expected future economic, market and gaming
regulatory conditions. Changes in these assumptions could result in changes in
the estimated net realizable value of the property.

Vicksburg, Mississippi

The Company's planned casino project in Vicksburg, Mississippi (the
"Vicksburg Project") is expected to be located on approximately 23.9 acres of
land owned by the Company immediately south of the I-20 bridge along the
Mississippi River, with access to Washington Street (the "Vicksburg Site"). The
Vicksburg Project is expected to have a "Monte Carlo" theme and is expected to
consist of a 32,000 square foot dockside casino, a 250-room hotel, 934 parking
spaces, restaurant facilities and an arcade. A gaming license was granted to LLV
on August 18, 1994. As of June 30, 1996, approximately $14.1 million has been
spent by the Company to develop the Vicksburg Project (including approximately
$7.0 million to acquire the land). Reserves of $3.8 million were provided in
1994 to reduce the carrying value of the Vicksburg Project assets to estimated
net realizable value. The Company currently estimates that it will cost an
additional $48.2 million to complete construction and commence operations of
LLV. The Company has ceased committing material amounts of capital to the
Vicksburg Project and is considering alternatives to provide a return on its
investment in the Vicksburg Project, either through formation of a joint venture
to complete and operate the project, or through the sale of certain assets.
Pursuant to certain requirements, the Company is proceeding with the demolition
of certain structures at the site. The cost of such demolition is estimated to
be less than $0.2 million.

Management's calculation of net realizable value is based upon assumptions
regarding future economic, market and gaming regulatory conditions including the
viability of the Vicksburg site for the development of a casino project. Changes
in these assumptions could result in changes in the estimated net realizable
value of the property.

Environmental Matters

The Company's operational and development activities are subject to
federal, state and local laws and various governmental regulations that require
the Company to protect the environment. Failure to comply with the applicable
laws and regulations can result in delays in operational and development
activities, injunctive actions and damages as well as civil and criminal
penalties. To the extent that planned development of its properties is delayed,
interrupted or discontinued because of regulation or the economics of the
properties, future earnings of the Company could be adversely affected. The
Company believes its operations are presently in substantial compliance with
applicable air and water quality laws and regulations. The laws and regulations
governing environmental compliance are continually changing and generally are
becoming more obstructive.

<PAGE>

LADY LUCK GAMING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The Company's Gold Coin casino is located generally within the Central
City/Clear Creek Superfund site as designated by the Environmental Protection
Agency ("EPA"). The Superfund site includes numerous specifically identified
areas of mine tailings and other waste piles of former gold mine operations that
are subject to ongoing investigations and cleanup by the EPA and other
governmental agencies. Generally, the EPA can require potentially responsible
parties ("PRP's") to cleanup or contribute to the cleanup of the Superfund site.
GCI is not included within any of the specific areas within the Superfund site
currently identified for investigation or remediation. The Company and the
predecessor owners of the GCI site have conducted investigations at the site in
accordance with the requirements of governmental authorities as a prerequisite
to obtaining development permits. Nonetheless, the EPA or other governmental
agencies could broaden their investigations and identify additional areas,
including the GCI site, for cleanup. No other Company sites have been designated
as Superfund sites.

The Vicksburg Site had been used as a bulk petroleum storage facility
since the early 1950's, and contained aboveground storage tanks and barge and
truck loading docks associated with that operation. Known releases of petroleum
products from three of the seven tanks have occurred since 1986, along with
other small releases at various locations on site. The Subsurface Assessment of
the environmental condition of the site by an outside environmental consultant
indicated that certain of the soils at the site were contaminated with petroleum
hydrocarbons and associated volatile organic compounds, and that such
contamination was present in significant concentrations in some locations on
site.

Remediation efforts at the Vicksburg Site are complete. Under the terms of
the acquisition of the Vicksburg Site, the purchase price for the Vicksburg Site
of $4.5 million was placed in an escrow account, with all costs required to
remediate environmental conditions on site paid out of such escrow account (with
any funds remaining after remediation going to the seller of the Vicksburg
Site). The Mississippi Department of Environmental Quality has determined that
the environmental remediation conducted by the seller meets all federal and
state standards, and has stated that no further action is required.

For properties currently in operation or under development, the Company
has taken extra precautions to minimize the possibility of environmental
contamination. The Company does not believe that any significant capital
expenditures to monitor or reduce hazardous substances or other environmental
impacts are currently required. As a result, near term reclamation obligations
are not expected to have a significant impact on the Company's liquidity.

In the course of conducting the environmental investigation at the
proposed site for Lady Luck Gulfport, the Company identified certain
contamination at the site. Pursuant to an administrative order issued by the
Mississippi Department of Environmental Quality, the Company undertook remedial
activities, including soil remediation and the installation of groundwater
monitoring wells. No additional remediation is currently required, although some
additional soil remediation may be required in the course of obtaining a
building permit. Although there can be no assurances, the Company believes,
based on the advice of a consultant, that the cost of such additional soil
remediation, if any, will not be material.

Although the Company knows no other pre-existing conditions at the
intended sites for its development or pre- development stage projects that will
result in any material environmental liability or delay, there can be no
assurance that pre-existing conditions will not be discovered and result in
material liability or delay to the Company.

Other than those described, the Company has not made and does not
anticipate making, material expenditures with respect to such environmental
protection, and health and safety laws and regulations; accordingly, no accrual
for any costs has been made. However, the compliance or cleanup costs associated
with such laws, regulations and ordinances may result in future additional costs
to the Company's operations.

10. Natchez Joint Venture

In February 1996, the Company executed a definitive joint venture
agreement (the "Natchez Agreement") to form a joint venture (the "Natchez Joint
Venture") with Holstar, Inc., a Virginia corporation ("Holstar") to own and
operate the dockside casino, currently operated by the Company in Natchez,
Mississippi, and the 125 room Eola Hotel, owned by Holstar, Inc. The Company

<PAGE>

LADY LUCK GAMING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

has elected to terminate the Natchez Agreement and not pursue formation of the
Natchez Joint Venture.

11. Subsequent Event

On July 3, 1996 MLI which operates Lady Luck Rhythm & Blues, Country
Casino and the Pavilion, acquired the Riverbluff Hotel in Helena, Arkansas. The
Riverbluff Hotel is located at the entrance to the bridge which crosses the
Mississippi River and provides immediate access to these Mississippi facilities.
The Riverbluff Hotel features 120 guest rooms, adding to the existing 173 guest
rooms at this Mississippi site. The Company purchased the Riverbluff for
approximately $1.0 million, comprised of cash of $0.4 million and a non-recourse
mortgage note for the balance.

12. Summarized Financial Information

Summarized balance sheet information of LLK, a partially owned subsidiary
of LLGC as of June 30, 1996 and December 31, 1995, for which assets of the
subsidiary collateralize the outstanding 2001 Notes, is as follows (in
thousands).
<TABLE>
<S> <C> <C>
June 30, 1996 December 31, 1995
------------- -----------------

Current assets $ 50 $ 50
Property and equipment 726 726
Other assets 1,354 1,150
--------- ---------
Total assets $ 2,130 $ 1,926
========= =========

Current liabilities $ - $ -
Long-term liabilities 2,380 2,176
Stockholders' deficit (250) (250)
--------- ---------
Total liabilities and
stockholders' deficit $ 2,130 $ 1,926
========= =========
</TABLE>

LLK had no operations for the three and six month periods ended June 30,
1996 and 1995.

The following subsidiaries of the Company are not guarantors of the 2001
Notes: LLDC, Lady Luck Cape Girardeau and Lady Luck Lawrenceburg. Each
subsidiary that is not a guarantor of the 2001 Notes is currently inactive. It
is the intent of the Company to wind down the operations of these subsidiaries
in the immediate future. Accordingly, no separate financial information is being
provided with respect to these non-guarantor subsidiaries.

<PAGE>

LADY LUCK GAMING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The following presents summarized consolidated balance sheets as of June
30, 1996 and December 31, 1995 and summarized consolidated statements of
operations for each of the three and six month periods ended June 30, 1996 and
1995, for Lady Luck Gaming Finance Corporation and subsidiaries.
<TABLE>
LADY LUCK GAMING FINANCE CORPORATION AND SUBSIDIARIES
BALANCE SHEETS
As of June 30, 1996 and December 31, 1995
(in thousands)

ASSETS
<CAPTION>

June 30, December 31,
1996 1995
<S> <C> <C>
Current assets:
Cash and cash equivalents................. $ 18,169 $ 22,146
Restricted cash........................... - 8,858
Accounts receivable....................... 1,140 396
Inventories............................... 1,046 885
Prepaid expenses.......................... 2,659 2,418
---------- ----------
Total current assets.................. 23,014 34,703
---------- ----------

Total property and equipment, net............. 174,086 154,954
---------- ----------

Other assets:
Pre-opening costs......................... 1,304 1,100
Deferred financing fees and costs, net 4,037 4,470
Investment in unconsolidated
affiliates, net....................... 20,290 17,619
Other..................................... 3,278 2,491
---------- -----------
28,909 25,680
---------- -----------

TOTAL ASSETS:................................. $ 226,009 $ 215,337
========== ===========
</TABLE>

<PAGE>

LADY LUCK GAMING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

<TABLE>

LADY LUCK GAMING FINANCE CORPORATION AND SUBSIDIARIES
BALANCE SHEETS
As of June 30, 1996 and December 31, 1995
(in thousands)

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
<CAPTION>

June 30, December 31,
1996 1995

<S> <C> <C>
Current liabilities:
Current portion of long-term debt......... $ 3,615 $ 5,622
Accrued interest.......................... 1,434 2,326
Accounts payable.......................... 5,039 2,234
Construction and retention payables....... 3,916 3,126
Other accrued liabilities................. 27,017 29,182
---------- ----------
Total current liabilities............. 41,021 42,490
---------- ----------

Mortgage notes payable.................... 173,500 173,500
Other long-term debt...................... 8,710 3,338
---------- ----------
Total liabilities................ 223,231 219,328
---------- ----------

Commitments and contingencies:

Stockholders' equity (deficit):
Retained earnings/(accumulated
deficit).............................. 2,778 (3,991)
---------- ----------
Total stockholders' equity (deficit)...... 2,778 (3,991)
---------- ----------

TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
(DEFICIT)................................. $ 226,009 $ 215,337
========== ==========
</TABLE>

<PAGE>

LADY LUCK GAMING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

<TABLE>

LADY LUCK GAMING FINANCE CORPORATION AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
(in thousands)
<CAPTION>

Three Months Ended June 30, Six Months Ended June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues:
Gross revenues........................ $ 44,327 $ 38,684 $ 85,722 $ 75,457
Less: Promotional allowances.......... (2,828) (2,170) (5,559) (4,296)
--------- ---------- ---------- ----------
Net revenues.......................... 41,499 36,514 80,163 71,161
--------- ---------- ---------- ----------

Expenses:
Operating department expenses......... 15,714 14,505 31,035 28,702
Selling, general and administrative 12,960 11,467 24,088 22,917
Related party management/license
fees............................. 1,389 1,369 2,758 2,539
Depreciation and amortization......... 2,617 2,290 5,336 4,568
Pre-opening expenses.................. 247 - 247 -
--------- ---------- ---------- ----------
Total costs and expenses......... 32,927 29,631 63,464 58,726
--------- ---------- ---------- ----------

Operating income...................... 8,572 6,883 16,699 12,435
--------- ---------- ---------- ----------

Other income (expense):
Interest income....................... 310 245 623 548
Interest expense...................... (5,339) (5,045) (10,657) (9,671)
Other................................. 45 (455) 104 (425)
--------- ---------- ---------- ----------
(4,984) (5,255) (9,930) (9,548)
--------- ---------- ---------- ----------

Income before extraordinary item.......... 3,588 1,628 6,769 2,887

Extraordinary gain on early
extinguishment of debt, net........... - - - 2,257
--------- ---------- ---------- ----------

NET INCOME................................ $ 3,588 $ 1,628 $ 6,769 $ 5,144
========= ========== ========== ==========
</TABLE>

<PAGE>

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

All statements contained herein that are not historical facts,
including but not limited to, statements regarding the Company's current
business strategy, the Company's prospective joint ventures, asset sales and
expansions of existing projects, and the Company's plans for future development
and operations, are based upon current expectations. These statements are
forward-looking in nature and involve a number of risks and uncertainties.
Actual results may differ materially. Among the factors that could cause actual
results to differ materially are the following: the availability of sufficient
capital to finance the Company's business plan on terms satisfactory to the
Company; competitive factors, such as legalization of gaming in jurisdictions
from which the Company draws significant numbers of patrons and an increase in
the number of casinos serving the markets in which the Company's casinos are
located; changes in labor, equipment and capital costs; the ability of the
Company to consummate its contemplated joint ventures on terms satisfactory to
the Company and to obtain necessary regulatory approvals therefore; changes in
regulations affecting the gaming industry; the ability of the Company to comply
with the Indenture, as revised by the Amendments and Waivers; future
acquisitions or strategic partnerships; general business and economic
conditions; and other factors described from time to time in the Company's
reports filed with the Securities and Exchange Commission. The Company wishes to
caution readers not to place undue reliance on any such forward-looking
statements, which statements are made pursuant to the Private Litigation Reform
Act of 1995 and, as such, speak only as of the date made.

Results of Operations

Three Months Ended June 30, 1996 Compared to the Three Months Ended June
30, 1995

The Company's gross revenues rose to $44.3 million in the second
quarter of 1996 from $38.7 million in the second quarter of 1995, an increase of
$5.6 million or 14%. The continued success of Lady Luck Rhythm & Blues in
Coahoma County, Mississippi, the opening of the casino at the Company's joint
venture with Bally's in Robinsonville, Mississippi, and the absence of current
period pre-opening costs and improvements in the operations of Lady Luck
Bettendorf in Bettendorf, Iowa, were primarily responsible for this increase in
the Company's 1996 second quarter revenues, and increases in net income and
earnings per share over the comparable prior-year period.

Lady Luck Rhythm & Blues generated $2.9 million of the Company's
overall $5.6 million increase in gross revenues. A 37% increase in the average
number of slot machines partially offset by a 16% decrease in the average daily
net win per slot machine was responsible for $2.4 million of Lady Luck Rhythm &
Blues' increase in gross revenues. These changes in slot machines were due
primarily to the May 21, 1996 opening of "Country Casino" which operates
approximately 650 machines including approximately 175 slot machines which were
relocated from the existing Rhythm & Blues casino. Increases in food and
beverage, hotel and other revenues offset partially by a 4% decrease in table
games and card games revenues accounted for the balance of the increase in gross
revenues at Lady Luck Rhythm & Blues.

The Bally's Joint Venture, which was formed March 31, 1995, included
only hotel operations until the December 18, 1995, opening of the casino. During
the quarter ended June 30, 1996, equity in net income of unconsolidated
affiliates from the Bally's Joint Venture was $0.6 million, net of the Company's
share of pre-opening expenses of $0.5 million, which were amortized over a six
month period beginning December 1995, a net increase of $0.8 million over the
$0.2 million equity in net loss of unconsolidated affiliates for the quarter
ended June 30, 1995.

During the 1996 second quarter, equity in net income of unconsolidated
affiliates from the Bettendorf Joint Venture was $0.9 million, an increase of
$1.8 million over the $0.9 million equity in net loss of unconsolidated
affiliates for the 1995 second quarter. The $0.9 million loss for 1995 is net of
pre-opening expenses of $1.1 million deducted upon commencement of operations on
April 21, 1995. These amounts do not include the gross revenues recognized by
the Company for the leasing of a gaming vessel and equipment to the Bettendorf
Joint Venture.

Casino operating expenses as a percentage of casino revenues increased
from 35% in second quarter 1995 to 37% in the second quarter of 1996, primarily
due to the following: (i) a 2% increase in cash incentives to slot machine
players in relation to slot machine net revenues, (ii) a 10% decrease in table
and card games net revenues without a corresponding decrease in expenses, and
(iii) an increase in the local gaming tax rate paid by LLM.

<PAGE>

Food and beverage revenues increased from $3.6 million in the second
quarter of 1995 to $4.0 million in the second quarter of 1996, an increase of
$0.4 million or 11%. This increase was due to increased customer counts at Lady
Luck Rhythm & Blues and improvements at Lady Luck Natchez offset partially by
changes in outlets at Lady Luck Biloxi. Food and beverage costs and expenses,
prior to reclassifying the cost of complementaries, as a percentage of related
revenues declined from 150% in the second quarter of 1995 to 87% in second
quarter 1996, continuing a trend of lowering cost of sales and labor expenses as
a percentage of food and beverage revenues partially offset by the costs
associated with changes in operations at Lady Luck Biloxi.

Hotel operations results between periods are not comparable because on
April 15, 1996, LLM purchased the River Park, a 148-room hotel in Natchez,
Mississippi.

Selling, general and administrative expenses as a percentage of gross
revenues for the second quarter of 1995 and the second quarter of 1996 were 33%
and 32%, respectively. This decrease was due to the following: (i) reduced
development costs pursuant to the Company's plan to focus development efforts,
and (ii) a reduction in fees and costs related to the solicitation of the
certain amendments to and waivers of continuing defaults under the Indenture
which was completed in March 1996, offset partially by the following: (i)
increased corporate overhead costs due to expenses in connection with, and,
effective January 1, 1996, rent, salary and marketing expenses incurred in
conjunction with changes to the Old Management Agreements, as defined below, and
(ii) marketing expenses incurred in the second quarter of 1996 related to the
opening of Country Casino and the Pavilion.

Related party management/license fees decreased from $1.4 million in
second quarter 1995 to $0.5 million in the second quarter of 1996, a decrease of
$0.9 million or 64%. This decrease was due to the Company entering into new
marketing agreements (the "New Marketing Agreements") which became effective
January 1, 1996 in replacement of its previous management agreements (the "Old
Management Agreements") with Lady Luck Casino, Inc. ("LLCI"). Under the New
Marketing Agreements, LLGC pays an annual licensing fee generally equal to 9% of
the Company's Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA") (calculated as EBITDA of LLGC and all its subsidiaries and joint
ventures (multiplied, in the case of the Bettendorf Joint Venture and its
Kimmswick, Missouri Joint Venture, by the interest owned by the Company in such
joint ventures), excluding, among other things, all revenues and expenses
arising from any casino or casino/hotel for which LLGC is not the operator and
which does not utilize LLCI's mailing list or the Lady Luck name and excluding
revenues from the lease of property and equipment owned by LLGC to third
parties). With respect to the Bettendorf Joint Venture, LLCI assigned to LLGC
its rights to receive a management fee and its obligation to pay part of that
fee to its joint venture partner. In addition, included in selling general and
administrative expense are items that were formerly included under the Old
Management Agreements. LLGC now pays a related party, Gemini, the sum of
$300,000 per year as adjusted based on the Consumer Price Index for corporate
office facilities and certain services with respect to such corporate office
facilities. The Company also now reimburses LLCI for certain marketing costs and
pays a salary to Andrew Tompkins, CEO and Chairman of the Board of the Company.

Operating income was $5.5 million and $8.3 million for the second
quarters of 1995 and 1996, respectively. Despite reductions in operating margins
at most wholly-owned properties, operating income increased because of increased
volume at those properties. In addition, equity in net income of affiliates
increased.

Interest expense, net of capitalized interest, increased from $5.0
million in the second quarter of 1996 to $5.3 million in the second quarter of
1996. This $0.3 million increase is primarily attributable to a 1 3/8% increase
in the coupon rate on the 2001 Notes partially offset by a $0.3 million increase
in capitalized interest.

The net income applicable to common stockholders was $0.3 million or
$0.01 per share in the second quarter of 1995 compared with $2.7 million or
$0.09 per share for the second quarter of 1996. This increase was due to
increased operating income as described above offset partially by increases in
interest expense and provision for income taxes.

Six Months Ended June 30, 1996 Compared to the Six Months Ended June 30, 1995

The Company's gross revenues increased from $75.5 million in the first
six months of 1995 to $85.7 million during the first six months of 1996, an
increase of $10.2 million or 14%. The continued success of Lady Luck Rhythm &
Blues in Coahoma County, Mississippi, the opening of the casino at the Company's
joint venture with Bally's in Robinsonville,

<PAGE>

Mississippi, the absence of current period pre-opening costs and improvements in
the operations of Lady Luck Bettendorf in Bettendorf, Iowa, and income from
leasing a gaming vessel and certain equipment to Lady Luck Bettendorf were
primarily responsible for this increase in the Company's June 30, 1996
year-to-date gross revenues, and increases in net income and earnings per share
over the comparable prior-year period.

Lady Luck Rhythm & Blues generated $5.3 million of the Company's
overall $10.2 million increase in gross revenues. A 26% increase in the average
number of slot machines partially offset by a 9% decrease in the average daily
net win per slot machine resulted in $4.6 million of Lady Luck Rhythm & Blues'
increase in gross revenues. These changes, when analyzed quarterly, indicate,
for the first quarter of 1996, an approximately consistent average daily net win
per slot machine while the average number of slot machines in operation
increased by 14%, and for the second quarter of 1996, a 37% increase in the
average number of slot machines in operation partially offset by a 16% decrease
in the average daily net win per slot machine. The strong demand during the
first quarter of 1996 and the May 21, 1996 opening of "Country Casino" during
the second quarter of 1996 were primarily responsible for the changes noted.
Increases in food and beverage, hotel and other revenues offset partially by a
4% decrease in table and card games revenues accounted for the balance of the
increase in gross revenues at Lady Luck Rhythm & Blues.

The Bally's Joint Venture, which was formed March 31, 1995, included
only hotel operations until the December 18, 1995 opening of the casino. During
the six months ended June 30, 1996, equity in net income of unconsolidated
affiliates from the Bally's Joint Venture was $1.0 million, net of the Company's
share of pre-opening expenses of $1.1 million, a net increase of $1.2 million
over the $0.2 million equity in net loss of unconsolidated affiliates for the
six months ended June 30, 1995.

During the first half of 1996, equity in net income of unconsolidated
affiliates from the Bettendorf Joint Venture was $1.6 million, an increase of
$2.5 million over the $0.9 equity in net loss of unconsolidated affiliates for
the first half of 1995. The $0.9 loss for 1995 is net of pre-opening expenses of
$1.1 million deducted upon commencement of operations on April 21, 1995. In
addition, for the leasing of a gaming vessel and equipment to the Bettendorf
Joint Venture, the Company recognized revenue of $1.6 million, a $0.8 million
increase over the $0.8 million of revenue recognized during the period from
commencement of operations through June 30, 1995.

Casino operating expenses as a percentage of casino revenues increased
from 35% in the first half of 1995 to 38% in the first half of 1996, primarily
due to the following: (i) a 2% increase in cash incentives to slot machine
players in relation to slot machine net revenues, (ii) an 8% decrease in table
and card games net revenues and a 5% increase in related expenses, and (iii) an
increase in the local gaming tax rate paid by LLM.

Food and beverage revenues increased from $7.0 million in the first six
months of 1995 to $7.8 million in the first six months of 1996, an increase of
$0.8 million or 11%. This increase was due to increased customer counts at Lady
Luck Rhythm & Blues and improvements at Lady Luck Natchez offset partially by
changes in operations at Lady Luck Biloxi. Food and beverage costs and expenses,
prior to reclassifying the cost of complementaries, as a percentage or related
revenues declined from 105% for the six months ended June 30, 1995 to 89% for
the six months ended June 30, 1996, continuing a trend of lowering costs of
sales and labor expenses as a percentage of food and beverage revenues which was
partially offset by the costs associated with changes in operations at Lady Luck
Biloxi.

Hotel operating results between periods are not comparable because
ORD's hotel operations, which commenced August 25, 1994, were contributed to the
Bally's Joint Venture effective March 31, 1995, and because on April 15, 1996,
LLM purchased the River Park, a 148-room hotel in Natchez, Mississippi.

Selling, general and administrative expenses as a percentage of gross
revenues for the six months ended June 30, 1995 and 1996, were 33% and 31%,
respectively. This decrease was due to the following: (i) reduced development
costs pursuant to the Company's plan to focus development efforts, and (ii) a
reduction in fees and costs related to the solicitation of the certain
amendments to and waivers of continuing defaults under the Indenture which was
completed in March 1996, offset partially by the following: (i) increased
corporate overhead costs due to expenses in connection with, and, effective
January 1, 1996, rent, salary and marketing expenses incurred in conjunction
with changes to the Old Management

<PAGE>

Agreements, and (ii) marketing expenses incurred in the second quarter of 1996
related to the opening of Country Casino and the Pavilion.

Related party management/license fees decreased from $2.5 million
during the first half of 1995 to $1.0 during the first half of 1996, a decrease
of $1.5 million or 60%. This decrease was due to the Company entering into the
New Marketing Agreements in replacement of the Old Management Agreements as
described above.

For the first and second quarters, combined operating income was $10.0
million and $16.3 million, for 1995 and 1996, respectively. This increase is
primarily due to improvements in revenue recognized related to the Company's
joint ventures and reductions in corporate and development costs.

Interest expense, net of capitalized interest, increased from $9.7
million in the six months ended June 30, 1995 to $10.7 in the six months ended
June 30, 1996, an increase of $1.0 million or 10%. This increase is primarily
attributable to a 1 3/8% increase in the coupon rate on the 2001 Notes offset
partially by a $6.5 million higher balance outstanding of 2001 Notes for a
portion of the first half of 1995.

The net income applicable to common stockholders was $5.3 million or
$0.18 per share in the six months ended June 30, 1996 compared with net income
applicable to common stockholders of $2.0 million or $0.07 per share for the
comparable prior year period. This increase was due to increased operating
income as described above and lower non-operating expenses offset partially by
increases in interest expense, provision for income taxes and preferred stock
dividends. In addition, net income applicable to common stockholders for the six
months ended June 30, 1995 also included an extraordinary gain of $2.3 million
or $0.8 per share resulting from an exchange of common stock for indebtedness.

Certain Risks and Uncertainties Applicable to Gaming Industry Licensing and
Concentration of Risk

The Company's operations in Mississippi, Iowa and Colorado are
dependent on the continued licensability or qualification of the Company and its
subsidiaries that hold the gaming licenses in these jurisdictions. Such
licensing and qualifications are reviewed periodically by the gaming authorities
in those states.

A significant portion of the Company's consolidated revenues and
operating income are generated by the Company's Rhythm & Blues and Country
Casino gaming operations in Coahoma County. These casinos are highly dependent
on patronage by residents in Arkansas. A change in general economic conditions
or the extent and nature of regulations enabling casino gaming in Arkansas could
adversely effect these casinos' future operating results. Four initiatives to
legalize certain forms of gaming, and one to prohibit all forms of gaming
(including pari-mutuel wagering) were submitted to the Arkansas Secretary of
State for inclusion on the November 1996 general election ballot. If the authors
of such initiatives obtain the statutorily required signatures, then such
initiatives will be placed before the voters in November 1996. If gaming were
legalized in certain areas of Arkansas, such legalization could have a material
adverse effect on the Company.

<PAGE>

LADY LUCK GAMING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Operating Casinos

None of the Company's subsidiaries that are registrants hereunder,
other than the companies for which results of operations are set forth below,
currently has any operations. Amounts shown in the following tables are in
millions, except percentage amounts.

<TABLE>

Lady Luck Rhythm & Blues
<CAPTION>
% Increase % Increase
(Decrease) (Decrease)
Three months ended June 30, 1996 vs. Six months ended June 30, 1996 vs.
1996 1995 1995 1996 1995 1995
<S> <C> <C> <C> <C> <C> <C>
Gross revenues.................... $24.1 $21.2 14 $46.8 $41.5 13
Net revenues...................... 22.6 20.1 12 44.1 39.4 12
Management/license fee............ 0.8 0.7 14 1.6 1.4 14
Operating income.................. 6.0 6.9 (13) 12.7 13.2 (4)
Operating margin (a).............. 27% 34% (7)pts 29% 34% (5) pts
</TABLE>
- - --------------------

(a) Operating income divided by net revenues.

Three months ended June 30, 1996 versus three months ended June 30, 1995

MLI's gross revenues rose from $21.2 million during the quarter
ended June 30, 1995 to $24.1 million during the quarter ended June 30, 1996, an
increase of $2.9 million or 14%. Slot machines generated $2.4 million of this
increase due primarily to the May 21, 1996 opening of Country Casino which
operates approximately 650 machines including approximately 175 slot machines
which were relocated from the existing Rhythm & Blues casino. Increases in food
and beverage, hotel and other revenues offset partially by a 4% decrease in
table and card games revenues accounted for the balance of the increase in gross
revenues at MLI.

Comparatively, from the second quarter of 1995 to the second
quarter of 1996, there was a 37% increase in the average number of slot machines
partially offset by a 16% decrease in the average daily net win per slot
machine. During the quarter ended June 30, 1996, MLI operated an average number
of 1,056 slot machines, an increase of 287 over the 769 average number of slot
machines in operation during the second quarter of 1995. This increase was
partially offset by a $36 decrease in the average daily net win per slot machine
from $224 during the second quarter of 1995 to $188 during the quarter ended
June 30, 1996.

Despite the hold percentage remaining approximately constant and
an increase in the average number of tables in operation from 33 during the
quarter ended June 30, 1995 to 40 during the second quarter of 1996, table and
card games revenues decreased 4% primarily because the average daily net win per
table game decreased from $1,163 to $889, a decrease of $274 or 24%.

MLI's operating income decreased from $6.9 million to $6.0 million
during the quarters ended June 30, 1995 and 1996, respectively, a decrease of
$0.9 million or 13%. Operating income decreased contrary to the increase in
gross and net revenues due primarily to Country Casino which contributed to a
$1.8 million increase in selling, general and administrative expenses related to
casino marketing, facility disruption and rent expenses and $0.2 million of
other pre-opening expenses.

<PAGE>

LADY LUCK GAMING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Six months ended June 30, 1996 versus six months ended June 30, 1995

MLI's gross revenues rose from $41.5 million during the six months
ended June 30, 1995 to $46.8 million during the six months ended June 30, 1996,
an increase of $5.3 million or 13%. Slot machines generated $4.6 million of this
increase. Increases in food and beverage, hotel and other revenues offset
partially by a 4% decrease in table and card games revenues accounted for the
balance of the increase in gross revenues at MLI.

There was a 26% increase in the average number of slot machines
from the first half of 1995 to the first half of 1996 which was partially offset
by a 9% decrease in the average daily net win per slot machine. During the six
months ended June 30, 1996, MLI operated an average number of 951 slot machines,
an increase of 197 over the 754 average number of slot machines in operation
during the first half of 1995. This increase was partially offset by a $19
decrease in the average daily net win per slot machine from $222 during the
first half of 1995 to $203 during the six months ended June 30, 1996. This
decrease in the average daily net win per slot machine for the comparative six
month periods occurred during the second quarter as the average daily net win
per slot machine was approximately constant during the comparative first quarter
periods even though the average number of slot machines in operation during that
quarter increased 14%.

Likewise, the decrease in table games revenues occurred primarily
during the second quarter. Despite only a slight decrease in the hold percentage
and an increase in the average number of tables in operation from 33 during the
six months ended June 30, 1995 to 35 during the first half of 1996, table and
card games revenues decreased 4% primarily because the average daily net win per
table game decreased from $1,186 to $1,046, a decrease of $140 or 12%.

MLI's operating income decreased from $13.2 million to $12.7
million during the six months ended June 30, 1995 and 1996, respectively, a
decrease of $0.5 million or 4%. Operating income decreased even though gross and
net revenues increased due primarily to additional rent prior to the opening of
Country Casino, from disruption caused by construction and the commencement of
operations at Country Casino which contributed to a $2.4 million increase in
selling, general and administrative expenses including casino marketing, rent
and other expenses, and $0.2 million of other pre-opening expenses.

Other factors

Four initiatives to legalize certain forms of gaming and one to
prohibit all forms of gaming, including pari-mutuel wagering, were submitted to
the Arkansas Secretary of State for inclusion on the November 1996 general
election ballot. If the authors of such initiatives obtain the statutorily
required signatures, then such initiatives will be placed before the voters in
November 1996. If gaming were legalized in certain areas of Arkansas, such
legalization could have a material adverse effect on the Company.

<PAGE>

LADY LUCK GAMING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

<TABLE>

Lady Luck Natchez
<CAPTION>
% Increase %Increase
(Decrease) (Decrease)
Three months ended June 30, 1996 vs. Six months ended June 30, 1996 vs.
1996 1995 1995 1996 1995 1995
<S> <C> <C> <C> <C> <C> <C>
Gross revenues.................... $8.4 $7.8 8 $16.5 $15.1 9
Net revenues...................... 7.7 7.4 4 15.2 14.2 7
Management/license fee............ 0.3 0.3 - 0.6 0.5 20
Operating income.................. 1.4 1.6 (13) 3.2 2.9 10
Operating margin (a).............. 18% 22% (4)pts 21% 20% 1 pts
</TABLE>

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

(a) Operating income divided by net revenues.

Three months ended June 30, 1996 versus three months ended June 30, 1995

During the second quarter of 1996, LLM had operating income of $1.4 million
compared with operating income of $1.6 million for the prior year period, a $0.2
million decrease or 13%. This decrease is primarily due to increases in
operating expenses in table games, casino marketing and local gaming taxes which
were only partially offset by increased revenues, improved food and beverage
margins and the April 15, 1996 purchase of the Best Western River Park Hotel, a
148-room hotel in Natchez, Mississippi, the operating margin for which has been
positive.

LLM's gross revenues increased from $7.8 million to $8.4 million during the
quarters ended June 30, 1995 and 1996, respectively, an increase of $0.6 million
or 8%. The increase was from an increase in slot machines and the addition of
hotel revenue offset partially by a decrease in table games revenues. Slot
machine revenues increased during these comparative periods due to the average
number of slot machines in operation increasing from 531 to 584, an increase of
53 or 10%, which was partially offset by a decrease in average daily net win per
slot machine from $118 to $111, a decrease of $7 or 6%. The decrease in the
table games revenues for these comparative periods was due to average daily net
win per table game decreasing from $793 to $715, a decrease of $78 or 10%, and a
decrease in the average number of table games in operation during the second
quarters of 1995 and 1996 from 19 to 17, a decrease of 11%.

Six months ended June 30, 1996 versus six months ended June 30, 1995

During the first half of 1996, LLM had operating income of $3.2 million
compared with operating income of $2.9 million for the prior year period, a $0.3
million increase or 10%. This increase is due to an increase in operating income
during the first quarter of 1996 of $0.5 million. This first quarter comparative
increase was primarily due to operating expenses remaining approximately
constant while net revenues during the comparative first quarters increased 9%.
This first quarter increase was partially offset during the comparative second
quarters of 1995 and 1996 as described above.

LLM's gross revenues increased from $15.1 million to $16.5 million during
the six months ended June 30, 1995 and 1996, respectively, an increase of $1.4
million or 9%. The increase was from an increase in slot machines and the
addition of hotel revenue offset partially by a decrease in table games
revenues. During these comparative periods, the average number of slot machines
in operation increased from 535 to 569, an increase of 34, or 6%. The decrease
in the table games revenues was primarily due to the average number of table
games in operation during the second quarters of 1995 and 1996 decreasing from
19 to 17, a decrease of 11%.

<PAGE>

LADY LUCK GAMING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Other factors

The Company believes the purchase of the River Park will enhance casino
marketing efforts at Lady Luck Natchez by enabling it to offer casino customers
rooms at a Company operated hotel facility.

While other gaming projects have been announced in the Natchez market, none
are being developed at this time. If this or additional gaming projects were
developed in the Natchez market, LLM would be materially affected.

If the Company develops its Vicksburg Project, the Company believes that
the revenues of LLM would not be materially affected but, rather, the revenues
for the Vicksburg Project would be taken from the four existing Vicksburg
casinos.

<PAGE>

LADY LUCK GAMING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

<TABLE>
Lady Luck Bettendorf (a)

<CAPTION>
Three months ended June 30, Six months ended June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Gross revenues.................... $17.4 $10.3 $33.1 $10.3
Net revenues...................... 16.6 10.1 31.7 10.1
Management/license fee............ 0.5 0.2 0.9 0.2
Operating income.................. 1.9 (1.6) 3.4 (1.6)
Operating margin (b).............. 11% (16)% 11% (16)%
</TABLE>
- - --------------------

(a) Lady Luck Bettendorf commenced operations April 21, 1995; therefore,
1995 figures may lack comparability with 1996 amounts. Due to the lack
of comparability, changes between periods have not been presented.

(b) Operating income divided by net revenues.

The Bettendorf Joint Venture commenced operations April 21, 1995 and
has generated steadily increasing average daily net win per slot machine. During
the second quarter of 1995, the Bettendorf Joint Venture generated average daily
net win per slot machine of $130. By the first quarter of 1996, average daily
net win per slot machine had increased to $159. Moreover, the second quarter of
1996 generated average daily net win per slot machine of $179, a $49 increase or
38%, over the second quarter of 1995.

Average daily net win per table game has fluctuated since operations
commenced. Nevertheless, the average daily net win per table game from April 21,
1995 through June 30, 1995 was $808, and increased to $819 for the first half of
1996, an $11 increase or 1%.

Operating income for 1995 includes pre-opening expenses of $2.2
million. Lady Luck Bettendorf is 50% owned by LLQC. The Company includes 50% of
Lady Luck Bettendorf's net income as equity in net income of affiliates using
the equity method of accounting.

<PAGE>

LADY LUCK GAMING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

<TABLE>

Lady Luck Biloxi
<CAPTION>
% Increase % Increase
(Decrease) (Decrease)
Three months ended June 30, 1996 vs. Six months ended June 30, 1996 vs.
1996 1995 1995 1996 1995 1995
<S> <C> <C> <C> <C> <C> <C>
Gross revenues.................... $7.7 $8.1 (5) $14.8 $15.0 (1)
Net revenues...................... 7.2 7.6 (5) 13.5 13.9 (3)
Management/license fee............ 0.3 0.3 - 0.5 0.5 -
Operating (loss) income........... (0.1) 0.1 (200) (0.8) (0.8) -
Operating margin (a).............. (1)% 1% (2)pts (6)% (6)% - pts
</TABLE>

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

(a) Operating income divided by net revenues.

Three months ended June 30, 1996 versus three months ended June 30, 1995

LLB's operating income of $0.1 million during the quarter ended June 30,
1995 decreased to an operating loss of $0.1 million for the second quarter of
1996. This decrease in operating income was primarily due to an increase in
casino operating expenses, from increased cash incentives to slot machine
players, without a corresponding increase in total casino revenues.

During each of the quarters ended June 30, 1996 and 1995, total casino
revenues were $6.6 million. Slot machine revenues increased, however, the
increase was offset by a decrease in table games revenues. The average number of
slot machines in operation during these comparative quarters increased from 576
to 619, an increase of 43 or 7%. This increase was partially offset by a
decrease in the average daily net win per slot machine from $97 to $93, a
decrease of $4 or 4%. The decrease in table games revenues were primarily due to
a decrease in the average number of table games in operation from 26 during the
three months ended June 30, 1995 to 23 during the second quarter of 1996, a
decrease of 3 or 12%, while the average daily net win per table game remained
approximately constant.

Six months ended June 30, 1996 versus six months ended June 30, 1995

During each of the six months ended June 30, 1996 and 1995, LLB had an
operating loss of $0.8 million. This was due to a $0.1 million decrease in
operating loss during the first quarter of 1996 compared to the first quarter of
1995 offset by an increase in operating loss during the comparative second
quarter periods as described above. The decrease in operating loss during the
first quarter of 1996 from the first quarter of 1995 was primarily due to
decreases in selling, general and administrative expenses offset partially by
decreased operating margins in the casino department.

During the six months ended June 30, 1996 and 1995, total revenues
decreased from $15.0 million to $14.8 million. Slot machine revenues increased
$0.8 million, however, the increase was offset by a $0.5 million decrease in
table games revenues and a $0.4 decrease in food and beverage revenues. This
increase in slot revenues was due to an increase in the average number of slot
machines in operation during these comparative six months which increased from
587 to 610, an increase of 23 or 4% and an increase in the average daily net win
per slot machine from $83 to $88, an increase of $5 or 6%. The decrease in table
games revenues during these comparative periods was due to a decrease in the
average daily net win per table game from $641 to $591, a decrease of $50 or 8%,
and a decrease in the average number of table games in operation from 26 to 24,
a decrease of 2 or 8%. Food and beverage revenues decreased due to changes in
the outlets and a temporary closing of one outlet during remodeling.

<PAGE>

LADY LUCK GAMING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Other Factors

Subsequent to the first quarter of 1995, 900 new hotel rooms opened in
close proximity to LLB. In addition, 400 more rooms are currently being
constructed in close proximity to LLB. Due to these room additions, announced
closings or consolidation of existing competitors' gaming facilities, and future
project openings, the Company believes the Gulf Coast gaming market will remain
at least constant in the near term.

<PAGE>

LADY LUCK GAMING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

<TABLE>

Lady Luck Central City
<CAPTION>
% Increase % Increase
(Decrease) (Decrease)
Three months ended June 30, 1996 vs. Six months ended June 30, 1996 vs.
1996 1995 1995 1996 1995 1995
<S> <C> <C> <C> <C> <C> <C>
Gross revenues.................... $1.8 $1.8 - $3.3 $3.6 (8)
Net revenues...................... 1.7 1.7 - 3.1 3.4 (9)
Management/license fee............ 0.1 0.1 - 0.1 0.1 -
Operating loss.................... (0.2) (0.3) (33) (0.6) (0.4) (50)
Operating margin (a).............. (12)% (18)% 6 pts (19)% (12)% (7) pts
</TABLE>

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

(a) Operating income divided by net revenues.

Three months ended June 30, 1996 versus three months ended June 30, 1995

For the three months ended June 30, 1996, GCI generated an average
daily net win per slot machine of approximately $56 as compared with an average
daily net win per slot machine of approximately $43 for the three months ended
June 30, 1996, an increase of $13 daily per slot or 30%. This was offset by the
decrease in the average number of slot machines from 366 in the quarter ended
June 30, 1995, to 289 in the quarter ended June 30, 1996, a decrease of 77 slot
machines per day or 21%. Slot revenue was unchanged for the period due to the
increase in win per slot compensating for the decrease in the average number of
slot machines.

Six months ended June 30, 1996 versus six months ended June 30, 1995

GCI's gross revenues decreased from $3.6 million to $3.3 million during
the six months ended June 30, 1995 and 1996, respectively, a decrease of $0.3
million or 8%. The decrease was due to declines in slot revenues from decreasing
the average number of slot machines in operation from 383 to 289 for these
comparative periods. For the six months ended June 30, 1996, GCI generated an
average daily net win per slot machine of $50 as compared with an average daily
net win per slot machine of $42 for the six months ended June 30, 1995, an
increase of $8 or 19%. This increase in daily win per slot machine did not
offset the decrease in slot revenues arising from decreasing the average number
of slot machines in operation. These machines were relocated, primarily in June
1995, to other operating properties with higher average daily net wins per slot
machine or operating margins. The Company has implemented and has planned
additional actions designed to improve its future operating performance
including operating management personnel changes, and planned capital
expenditures to enhance the casino during the rest of the year.

Additional casinos developed in the Central City or competing Colorado
gaming markets or changes in the Colorado gaming legislation may have a material
effect on the net revenues and operating results of GCI.

<PAGE>

LADY LUCK GAMING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Liquidity and Capital Resources

During the first half of 1996, the Company's cash generated by operations
exceeded its uses of operating cash by $8.5 million. Additional sources of cash
were $8.9 million of restricted cash, and $3.0 million of cash and cash
equivalents related to the Greek Projects, which became available for specified
uses upon consent from a sufficient number of holders of the 2001 Notes. Excess
cash flow from operations, restricted cash and cash on hand at the beginning of
the year were the primary sources of cash during the six months ended June 30,
1996. The primary uses of cash and other resources during the first half of
1996, other than operating expenditures, include:

A. $17.5 million cash for property and equipment, primarily related to the
construction of Country Casino and the Pavilion, but also including
$4.0 million for the acquisition of the River Park Hotel comprising
$1.0 million cash and a mortgage note for the balance.

B. $3.5 million cash for payment of debt and slot contracts.

C. $3.8 million for the acquisition of slot machines by certain
subsidiaries in exchange for indebtedness.

LLB and GCI did not generate significant operating cash flow during the
first six months of 1996; this trend is expected to continue. Nevertheless, the
Company anticipates that cash generated by operations will continue to be
sufficient to fund operating cash requirements for the remainder of 1996.

Due to debt service requirements on an equipment note payable and a
mortgage note, GCI required cash infusions of $0.7 million during the first half
of 1996 and, during the remainder of 1996, is expected to require additional
cash infusions to cover up to $0.4 million of scheduled repayments on an
equipment note payable. Debt service requirements on the aforementioned mortgage
note to a corporation had included a $1.5 million scheduled principal repayment;
however, the Company has negotiated an amendment to such note and pursuant
thereto paid a reduced principal repayment of $0.3 million with the balance of
the originally scheduled repayment deferred for 5 years.

In February 1996, the Company executed a definitive joint venture to form a
joint venture with Holstar, Inc., a Virginia corporation to own and operate the
dockside casino, currently operated by the Company in Natchez, Mississippi, and
the 125 room Eola Hotel, owned by Holstar, Inc. The Company has elected to
terminate the Natchez Agreement and not pursue formation of a joint venture, the
consummation of which would have entitled the Company to receive between $4.0
million and $5.0 million from Holstar.

Various other amounts of cash and other resources may be used during the
remainder of 1996 for capital improvements, expansions or acquisitions which
cannot currently be estimated and may be contingent upon market conditions and
other factors. If significant cash or other resources become available, the
Company may make additional capital expenditures related to the Lady Luck Rhythm
& Blues, Lady Luck Natchez, Lady Luck Biloxi and other capital acquisitions,
improvements, or expansions which cannot currently be estimated and may be
contingent upon market conditions and the amount of excess cash or other
resources available, if any. Capital expenditures at Lady Luck Rhythm & Blues
could include additional hotel rooms and signage. Lady Luck Natchez capital
expenditures could include remodeling and refurbishment of the casino and
partial upgrading of the River Park Hotel. Capital expenditures at Lady Luck
Biloxi could include $2.0 million for additional parking. In any case, the
amount of such capital expenditures will be based upon cash available and market
conditions at the time any commitment is made.

<PAGE>

LADY LUCK GAMING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The Company may also repurchase 2001 Notes during 1996 in early
satisfaction of any repurchase expected pursuant to the Indenture, the amount
and timing of such repurchase cannot currently be estimated and is dependent on
excess cash flow and market conditions.

The Company has entered into an agreement for the construction of a
cruising gaming vessel in the amount of $16.0 million and as of June 30, 1996,
approximately $6.0 million has been expended under this contract, approximately
$1.9 million of which is included in construction payables at June 30, 1996. It
is anticipated that this vessel will be utilized by Lady Luck Kimmswick and,
therefore, the Missouri Project will be responsible for payment of the remaining
amounts under the contract. However, if the Missouri Project is never
consummated the Company may be responsible for the then outstanding obligations.

No further significant expenditures for the Development Stage Projects are
anticipated from existing cash or cash flow from operations. If the Company
determines it needs additional funds, there can be no assurance that such funds,
whether from equity or debt financing or other sources, will be available, or if
available, will be on terms satisfactory to the Company.

<PAGE>

LADY LUCK GAMING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

approximately $375,000.00. The Company intends to appeal the Court's decision
and has been informed by its Greek counsel that it has meritorious grounds to
prosecute such appeal.

The Company is subject to certain federal, state and local environmental
protection, health and safety laws, regulations and ordinances that apply to
non-gaming businesses generally. Pursuant to an administrative order issued by
the Mississippi Department of Environmental Quality, the Company undertook
remedial activities, including soil remediation and the installation of
groundwater monitoring wells. No additional remediation is currently required,
although some additional soil remediation may be required in the course of
obtaining a building permit. Although there can be no assurances, the Company
believes that the cost of such additional soil remediation, if any, will not be
material. Additionally, although the Company knows of no other pre-existing
conditions at its operating casinos or at the intended sites for Development
Stage Projects that will result in any material environmental liability or
delay, there can be no assurance that pre-existing conditions will not be
discovered and result in material liability or delay to the Company.

In the opinion of management, the Company should have sufficient cash flow
to meet its debt service and other cash outflow requirements and maintain
compliance with the revised covenants of the Indenture during 1996. There can be
no assurance, however, that the Company will in fact have sufficient cash
resources to meet its cash requirements under any circumstances.

Seasonality and Weather

A flood or other severe weather condition could cause the Company to lose
the use of one or more dockside facilities for an extended period. The inability
to use a dockside facility during any period could have a material adverse
effect on the Company's financial results. In addition, a disproportionate
amount of GCI's revenues is received during the summer months. GCI is accessible
only via a narrow, winding mountain road and, accordingly, inclement weather may
have an adverse effect on revenues. While seasonal revenue fluctuations may
occur at the Company's existing and proposed casinos in Mississippi, Iowa and
Missouri, such seasonal fluctuations are expected to be less significant than
those experienced in Colorado.

<PAGE>

PART II OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

The Company and certain of its joint venture partners (the "Defendants")
have been named as defendants in two separate lawsuits brought by the country of
Greece and its Minister of Tourism before the Greek Multi-Member Court of First
Instance. Each action alleges that the Defendants failed to make certain
payments in connection with the gaming license bid process for Loutraki, Greece
and Patras, Greece. The Company has been informed by its Greek counsel that the
lawsuit regarding the gaming license bid process for Loutraki, Greece has been
dismissed. Accordingly, the payments the Company is alleged to have been
required to make aggregate approximately 2.1 billion drachmae (which was
approximately $8.9 million as of July 28, 1996 based upon published exchange
rates) related to Patras, Greece. Although it is difficult to determine the
damages being sought from the lawsuit, the action may seek damages up to such
aggregate amount. The Company's Greek counsel is defending the remaining lawsuit
and in management's opinion, the ultimate outcome of this matter is not
presently known. Additionally, a lawyer and a consultant which were allegedly
retained by the Company in connection with the Company's bid for a gaming
license in Greece recently threatened litigation against the Company. The
Company has retained outside counsel to evaluate the allegations made by such
individuals. The Company believes, based in part on advice of counsel, that it
has meritorious defenses if such litigation is actually filed against the
Company. Also, a Greek architect filed an action against the Company alleging
that he was retained by the Company to provide professional services with
respect to a casino in Loutraki, Greece. The plaintiff in such action sought
damages of approximately $800,000. On July 29, 1996, the Company's Greek counsel
was served with a decision by the Athens Court of First Instance in such matter.
The Greek Court entered a judgement against the Company in the amount of
approximately $375,000.00. The Company intends to appeal the Court's decision
and has been informed by its Greek counsel that it has meritorious grounds to
prosecute such appeal.

<PAGE>

Item 2. CHANGES IN SECURITIES

(a) None.

Item 3. DEFAULTS UPON SENIOR SECURITIES

(a) None.

(b) None.

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

(a) The Company's Annual Meeting of Stockholders was held
on June 26, 1996.

(b) At the Annual Meeting of Stockholders held on June
26, 1996, Andrew H. Tompkins was nominated as a Class
III director to serve immediately with a term
expiring at the 1999 annual meeting and Anthony J.
Drexel Biddle, III, was nominated as a Class III
director to serve immediately with a term expiring at
the 1999 annual meeting. The voting on such matters
was as follows:

For Withhold
Andrew H. Tompkins 21,764,675 36,771
Anthony J. Drexel, III 21,764,675 36,771

(c) At the Annual Meeting of Stockholders held on June
26, 1996, the adoption of a Director stock option
plan was approved. The voting was as follows:

For Against Abstain Not Voted
21,426,832 190,797 22,788 161,029

(d) Not applicable.

Item 5. OTHER INFORMATION

None.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits.

Exhibit
Number Description of Exhibits

3.1 Certificate of Incorporation of Lady Luck Gaming Corporation, as
amended. Incorporated by reference to Exhibit 3.1 to the Form S-1
Registration Statement filed by Lady Luck Gaming Corporation under the
Securities Act (No. 33-63930) (the "Form S-1").

3.2 By-Laws of Lady Luck Gaming Corporation, as amended. Incorporated by
reference to Exhibit 3.2 to the Form S- 1.

<PAGE>

3.3 Certificate of Incorporation of Lady Luck Gaming Finance Corporation,
as amended. Incorporated by reference to Exhibit 3.1 to the Form S-4
registration statement filed under the Securities Act (No. 33- 77184)
("the Form S-4, No. 77184").

3.4 By-Laws of Lady Luck Gaming Finance Corporation, as amended.
Incorporated by reference to Exhibit 3.2 to the Form S-4 Registration
Statement previously filed under the Securities Act (No. 33-65232)
(the "Form S-4, No. 65232").

3.5 Articles of Incorporation of Lady Luck Mississippi, Inc. Incorporated
by reference to Exhibit 3.5 to the Form S-4, No. 65232.

3.6 Bylaws of Lady Luck Mississippi, Inc. Incorporated by reference to
Exhibit 3.6 to the Form S-4, No. 65232.

3.7 Articles of Incorporation of Lady Luck Biloxi, Inc. Incorporated by
reference to Exhibit 3.7 to the Form S-4, No. 65232.

3.8 Bylaws of Lady Luck Biloxi, Inc. Incorporated by reference to Exhibit
3.8 to the Form S-4, No. 65232.

3.9 Articles of Incorporation of Lady Luck Tunica, Inc. Incorporated by
reference to Exhibit 3.9 to the Form S-4, No. 65232.

3.10 Bylaws of Lady Luck Tunica, Inc. Incorporated by reference to Exhibit
3.10 to the Form S-4, No. 65232.

3.11 Articles of Incorporation of Lady Luck Gulfport, Inc. Incorporated by
reference to Exhibits 3.11 to the Form S-4, No. 65232.

3.12 Bylaws of Lady Luck Gulfport, Inc. Incorporated by reference to
Exhibit 3.12 to the Form S-4, No. 65232.

3.13 Articles of Incorporation of Lady Luck Vicksburg, Inc. Incorporated by
reference to Exhibit 3.13 to the Form S-4, No. 65232.

3.14 Bylaws of Lady Luck Vicksburg, Inc. Incorporated by reference to
Exhibit 3.14 to the Form S-4, No. 65232.

3.15 Certificate of Incorporation of Gold Coin Incorporated, as amended.
Incorporated by reference to Exhibit 3.15 to the Form S-4, No. 77184.

3.16 Amended and Restated By-Laws of Gold Coin Incorporated. Incorporated
by reference to Exhibit 3.16 to the Form S-4, No. 65232.

3.17 Articles of Incorporation of Lady Luck Kimmswick, Inc. Incorporated by
reference to Exhibit 3.17 to the Form S-4, No. 65232.

3.18 By-Laws of Lady Luck Kimmswick, Inc. Incorporated by reference to
Exhibit 3.18 to the Form S-4, No. 65232.

3.19 Articles of Incorporation of Magnolia Lady, Inc. Incorporated by
reference to Exhibit 3.19 to the Form S-4, No. 65232.

3.20 Bylaws of Magnolia Lady, Inc. Incorporated by reference to Exhibit
3.20 to the Form S-4, No. 65232.

<PAGE>

3.21 Articles of Incorporation of Lady Luck Quad Cities, Inc. Incorporated
by reference to Exhibit 3.21 to the Form S-4 registration statement
filed under the Securities Act (No. 33-91616) (the "Form S-4, No. 33-
91616").

3.22 Bylaws of Lady Luck Quad Cities, Inc. Incorporated by reference to
Exhibit 3.22 to the Form S-4, No. 33-91616.

3.23 Articles of Incorporation of Old River Development, Inc. Incorporated
by reference to Exhibit 3.23 to the Form S-4, No. 33-91616.

3.24 Bylaws of Old River Development, Inc. Incorporated by reference to
Exhibit 3.24 to the Form S-4, No. 33-91616.

4.1 Indenture dated as of February 17, 1994 by and among Lady Luck Gaming
Finance Corporation, the Guarantors named therein and First Trust
National Association (the "Indenture"). Incorporated by reference to
Exhibit 4.1 to the Annual Report on Form 10-K for the fiscal year
ended December 31, 1993 by Lady Luck Gaming Corporation (the "Form
10-K").

4.2 Registration Rights Agreement dated as of February 17, 1994 by and
among Lady Luck Gaming Finance Corporation, the Guarantors named
therein and the Purchasers who were signatories thereto. Incorporated
by reference to Exhibit 4.2 to the Form 10-K.

4.3 Pledge Agreement dated as of February 17, 1994 from Lady Luck Gaming
Finance Corporation, as Pledgor to First Trust National Association,
as Trustee. Incorporated by reference to Exhibit 4.4 to the Form 10-K.

4.4 Pledge Agreement dated as of February 17, 1994 from Lady Luck Gaming
Finance Corporation, as Pledgor to First Trust National Association,
as Trustee. Incorporated by reference to Exhibit 4.4 to the Form 10-K.

4.5 Leasehold Deed of Trust, Assignment of Rents and Security Agreement
dated as of February 17, 1994 by and among Lady Luck Gulfport, Inc.,
as Trustor, Jim B. Tohill as Trustee, and First Trust National
Association, as Beneficiary. Incorporated by reference to National
Exhibit 4.5 to the Form 10-K.

4.6 Leasehold Deed of Trust, Assignment of Rents and Security Agreement
dated as of February 17, 1994 by and among Lady Luck Mississippi, Inc.
as Trustor, Jim B. Tohill, as Trustee, and First Trust National
Association, as Beneficiary. Incorporated by reference to Exhibit 4.6
to the Form 10-K.

4.7 Leasehold Deed of Trust, Assignment of Rents and Security Agreement
dated as of February 17, 1994 by and among Lady Luck Tunica, Inc., as
Trustor, Jim B. Tohill, as Trustee, and First Trust National
Association, as Beneficiary. Incorporated by reference to Exhibit 4.7
to the Form 10-K.

4.8 Leasehold Deed of Trust, Assignment of Rents and Security Agreement
dated as of February 17, 1994 by and among Lady Luck Biloxi, Inc., as
Trustor, Jim B. Tohill, as Trustee, and First Trust National
Association, as Beneficiary. Incorporated by reference to Exhibit 4.8
to the Form 10-K.

4.9 Leasehold Deed of Trust, Assignment of Rents and Security Agreement
dated as of February 17, 1994 by and among Magnolia Lady, Inc., as
Trustor, Jim B. Tohill, as Trustee, and First Trust National
Association, as Beneficiary. Incorporated by reference to Exhibit 4.9
to the Form 10-K.

4.10 Leasehold Deed of Trust, Assignment of Rents and Security Agreement
dated as of February 17, 1994 by and among Gold Coin Incorporated, as
Trustor, Jim B. Tohill, as Trustee, and First Trust National
Association, as Beneficiary. Incorporated by reference to Exhibit 4.10
to the Form 10-K.

<PAGE>

4.11 First Preferred Vessel Mortgage on the Whole of the Lady Luck I dated
as of February 17, 1994 from Lady Luck Mississippi, Inc. in favor of
First Trust National Association. Incorporated by reference to Exhibit
4.11 to the Form 10-K.

4.12 First Preferred Fleet Mortgage on the Whole of the Lady Luck Tunica I
and Lady Luck Tunica II dated as of February 17, 1994 from Lady Luck
Tunica, Inc. in favor of First Trust National Association.
Incorporated by reference to Exhibit 4.12 to the Form 10-K.

4.13 First Preferred Vessel Mortgage on the Whole of the Lady Luck Biloxi,
Inc. dated as of February 17, 1994 from Lady Luck Biloxi, Inc. in
favor of First Trust National Association. Incorporated by reference
to Exhibit 4.13 to the Form 10-K.

4.14 Security Agreement dated as of February 17, 1994 by and between Lady
Luck Kimmswick, Inc. and First Trust National Association.
Incorporated by reference to Exhibit 4.14 to the Form 10-K.

4.15 Security Agreement dated as of February 17, 1994 by and between Lady
Luck Vicksburg, Inc. and First Trust National Association.
Incorporated by reference to Exhibit 4.15 to the Form 10-K.

4.16 Deed of Trust, Assignment of Rents and Security Agreement dated as of
February 17, 1994 by and among Gold Coin Incorporated, the Public
Trustee of the County of Gilpin, State of Colorado and First Trust
National Association. Incorporated by reference to Exhibit 4.16 to the
Form 10-K.

4.17 Deed of Trust, Assignment of Rents and Security Agreement dated as of
February 17, 1994 by and among Lady Luck Biloxi, Inc., Jim B. Tohill
and First Trust National Association. Incorporated by reference to
Exhibit 4.17 to the Form 10-K.

4.18 Deed of Trust, Assignment of Rents and Security agreement dated as of
February 17, 1994 by and among Lady Luck Mississippi, Inc., Jim B.
Tohill and First Trust National Association. Incorporated by reference
to Exhibit 4.18 to the Form 10-K.

4.19 Assignment of Option dated as of February 17, 1994 by Lady Luck
Gulfport, Inc. in favor of First Trust National Association.
Incorporated by reference to Exhibit 4.19 to the Form 10-K.

4.20 Assignment of Option dated as of February 17, 1994 by Lady Luck
Kimmswick, Inc. in favor of First Trust National Association.
Incorporated by reference to Exhibit 4.20 to the Form 10-K.

4.21 Assignment of Option dated as of February 17, 1994 by Lady Luck
Vicksburg, Inc. in favor of First Trust National Association.
Incorporated by reference to Exhibit 4.21 to the Form 10-K.

4.22 Stockholders Agreement dated as of April 1, 1993 by and among the Lady
Luck Gaming Corporation, Andrew H. Tompkins and all current
stockholders and warrant holders of Lady Luck Gaming Corporation.
Incorporated by reference to Exhibit 4.14 to the Form S-1.

4.23 Cash Collateral and Disbursement Agreement dated February 17, 1994
among First Trust National Association. the Company and the Guarantors
named therein. Incorporated by reference to Exhibit 4.18 to the Form
10-K.

4.24 First Amendment to Stockholders Agreement dated as of June 9, 1993, by
and among Andrew H. Tompkins and the Stockholders named therein.
Incorporated by reference to Exhibit 4.24 to the Registration
Statement on Form S-4 (Registration No. 33- 91616)(the "Form S-4, No.
91616").

4.25 Second Supplemental Indenture dated as of March 17, 1995 by and among
Lady Luck Gaming Finance Corporation, the Guarantors named therein and
First Trust National Association. Incorporated by

<PAGE>

reference to Exhibit 4.25 to the Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 1995.

4.26 Third Supplemental Indenture by and among Lady Luck Gaming Finance
Corporation, Lady Luck Quad Cities, Inc. and First Trust National
Association. Incorporated by reference to Exhibit 4.26 to the 1995
Form 10-K.

4.27 Fourth Supplemental Indenture by and among Lady Luck Gaming Finance
Corporation, the Guarantors named therein and First Trust National
Association. Incorporated by reference to Exhibit 4.27 to the
Registrant's Form 10-K for the year 1995 (the "1995 Form 10-K").

4.28 Specimen Common Stock Certificate. Incorporated by reference to the
Form 10-K.

4.29 Security Agreement (Lady Luck Gaming Finance Corporation) by and
between Lady Luck Gaming Finance Corporation and First Trust National
Association. Incorporated by reference to Exhibit 4.29 to the 1995
Form 10-K.

4.30 Security Agreement (Lady Luck Gaming Corporation) by and between Lady
Luck Gaming Corporation and First Trust National Association.
Incorporated by reference to Exhibit 4.30 to the 1995 Form 10-K.

4.31 Pledge Agreement between Lady Luck Quad Cities, Inc. and First Trust
National Association. Incorporated by reference to Exhibit 4.31 to the
1995 Form 10-K.

10.1 Lease for parking lot in Biloxi, Mississippi dated May 28, 1993 by
and between John M. Mladnick and Lady Luck Biloxi, Inc. Incorporated
by reference to Exhibit 10.18 to the Form S-1.

10.2 Lease Agreement dated January 12, 1994 by and among Tyrone J. Gollott,
Gary F. Gollott, Thomas H. Gollott and Lady Luck Biloxi, Inc.
Incorporated by reference to Exhibit 10.10 to the Form 10-K.

10.3 Lease Agreement dated January 17, 1994 by and between Michael S.
Sinopoli and Lady Luck Biloxi, Inc. Incorporated by reference to
Exhibit 10.11 to the Form 10-K.

10.4 Lease for Parcel in Biloxi, Mississippi dated July 25, 1993 by and
among Lady Luck Biloxi, Inc. and Joe G., Jackie R. and John Brett
Aldrich. Incorporated by reference to Exhibit 10.12 to the Form S-1.

10.5 Lease for casino site in Tunica, Mississippi, dated March 18, 1993
between Lady Luck Tunica, Inc. and D.C. Parker and Richard B. Flowers.
Incorporated by reference to Exhibit 10.5 to the Form S-1.

10.6 Lease for casino site in Gulfport, Mississippi dated October 5, 1992
between Lady Luck Gulfport, Inc. and Mississippi Coast Marine Inc.
Incorporated by reference to Exhibit 10.6 to the Form S-1.

10.7 Lease in Gulfport, Mississippi dated October 1, 1993 by and between
Coast Materials Company and Lady Luck Gulfport, Inc. Incorporated by
reference to Exhibit 10.15 to the Form 10-K.

10.8 Agreement to Lease in Gulfport, Mississippi dated September 23, 1993
by and among Robert C. Fielding, Lady Luck Gulfport, Inc. and Lady
Luck Gaming Corporation. Incorporated by reference to Exhibit 10.16 to
the Form 10-K.

10.9 Leases of part of casino site in Natchez, Mississippi dated October
29, 1991 between Lady Luck Mississippi, Inc. and Silver Land, Inc.
Incorporated by reference to Exhibit 10.7 to the Form S-1.

10.10 Silver Land, Inc. Amended and Restated Lease Agreement dated December
31, 1992. Incorporated by reference to Exhibit 10.8 to the Form S-1.

<PAGE>

10.11 Lease for part of casino site in Natchez, Mississippi dated June 30,
1992 by and between Lady Luck Mississippi, Inc. and the City of
Natchez and amendment thereto dated October 27, 1992. Incorporated by
reference to Exhibit 10.9 to the Form S-1.

10.12 Lease for part of casino site in Natchez, Mississippi dated June 30,
1992 by and between Lady Luck Mississippi, Inc. and the City of
Natchez and amendment thereto dated October 27, 1992. Incorporated by
reference to Exhibit 10.10 to the Form S-1.

10.13 Sublease Contract dated August 13, 1993 by and between Callon
Petroleum Company and Lady Luck Mississippi, Inc. Incorporated by
reference to Exhibit 10.22 to the Form 10-K.

10.14 Lease for parking lot in Central City, Colorado dated June 1, 1993 by
and among Gold Coin Incorporated and J. Scott Bradley and Phyllis M.
Brown (Lots 1-12). Incorporated by reference to Exhibit 10.21 to the
Form S-4 Registration Statement previously filed under the Securities
Act (No. 33-65232) (the "Form S-4, No. 65232").

10.15 Lease for parking lot in Central City, Colorado dated June 1, 1993 by
and among J. Scott Bradley and Phyllis M. Brown and Gold Coin
Incorporated (Lots 13-21). Incorporated by reference to Exhibit 10.22
to the Form S-4, No. 65232.

10.16 Agreement of Option, Purchase and Sale and Joint Escrow Instructions
for Vicksburg, Mississippi casino site dated May 21, 1993 by and
between Lady Luck Vicksburg, Inc. and Vicksburg Terminal Company, Inc.
Incorporated by reference to Exhibit 10.11 to the Form S-1.

10.17 Option to purchase site in Jefferson County, Missouri dated July 8,
1993 by and between Lady Luck Kimmswick, Inc. and Donald J. Branch.
Incorporated by reference to Exhibit 10.17 to the Form S-1.

10.18 Lease in Coahoma, Mississippi dated November 30, 1993 (sic) by and
among Roger Allen Johnson, Jr., Charles Bryant Johnson and Magnolia
Lady, Inc. Incorporated by reference to Exhibit 10.28 to the Form
10-K.

10.19 Agreement dated March 19, 1994 by and among Lady Luck Gaming
Corporation, Old River Development, Inc. and D.J. Brata. Incorporated
by reference to Exhibit 10.29 to the Form 10-K.

10.20 Lady Luck Gaming Corporation Employee Stock Option Plan. Incorporated
by reference to Exhibit 10.31 to the Form 10-K.

10.21 Indemnification Agreement dated April 28, 1993 by and among Terry
Christensen, Barry Fink, Kimberly Harrison, Colorado Casino Properties
Investment L.P. and Lady Luck Gaming Corporation. Incorporated by
reference to Exhibit 10.13 to the Form S-1.

10.22 $2,300,000 Promissory Note of Gold Coin Incorporated dated April 28,
1993. Incorporated by reference to Exhibit 10.14 to the Form S-1.

10.23 Warrant Agreement dated April 1, 1993. Incorporated by reference to
Exhibit 10.15 to the Form S-1.

10.24 Amendment to Agreement dated March 19, 1994 (sic) by and among Lady
Luck Gaming Corporation, Old River Development, Inc. and D.J. Brata.
Incorporated by reference to Exhibit 10.32 to the Form S-4
registration statement filed under the Securities Act (No. 33-77184)
("the Form S-4, No. 77184").

10.25 Option Agreement dated April 28, 1994 by and between Seven-Thirty,
Inc. and Lady Luck Scott City. Inc. Incorporated by reference to
Exhibit 10.33 to the Form S-4, No. 77184.

<PAGE>

10.26 Lease dated September 13, 1993 by and between Nancy Harris Holmes,
James S. Williams, Tempe Kyser Adams and Ben C. Adams as Trustee under
the Trust Agreement dated September 9, 1993, as Lessor and D.J. Brata
as Lessee. Incorporated by reference to Exhibit 10.34 to the Form 10-Q
for the quarter ended June 30, 1994.

10.27 Assignment of Lease Agreement dated September 30, 1993 by and between
D.J. Brata, as assignor, and Old River Development, Inc., as assignee.
Incorporated by reference to Exhibit 10.35 to the Form 10-Q for the
quarter ended June 30, 1994.

10.28 Modification of Lease Agreement dated February 8, 1994 by and between
Old River Development, Inc., Lady Luck Tunica, Inc. and Nancy Harris
Holmes, James S. Williams, Tempe Kyser Adams and Ben C. Adams, Jr., as
Trustee under the Trust dated September 9, 1993. Incorporated by
reference to Exhibit 10.36 to the Form 10-Q for the quarter ended June
30, 1994.

10.29 Second Modification of Lease Agreement dated April 7, 1994 by and
between Old River Development, Inc., Lady Luck Gaming Corporation and
Nancy Harris Holmes, James S. Williams, Tempe Kyser Adams and Ben C.
Adams, Jr., as Trustee under the Trust Agreement dated September 9,
1993. Incorporated by reference to Exhibit 10.37 to the Form 10-Q for
the quarter ended June 30, 1994.

10.30 Escrow Agreement Concerning Agreement of Option and Purchase and Sale
of Property dated April 21, 1994 by and among Vicksburg Terminal
Company, Inc. and Lady Luck Vicksburg, Inc., including Exhibit A,
Agreement of Option, Purchase and Sale and Joint Escrow Instructions.
Incorporated by reference to Exhibit 10.38 to the Form 10-Q for the
quarter ended June 30, 1994.

10.31 Agreement dated July 18, 1994 by and among Green Bridge Company, an
Iowa corporation, Bettendorf Riverfront Development Company, L.C., an
Iowa limited liability company, Lady Luck Casino, Inc., a Nevada
corporation, and Lady Luck Gaming Corporation. Incorporated by
reference to Exhibit 10.40 to the Form 10-Q for the quarter ended June
30, 1994.

10.32 Management Agreement dated August 15, 1994 by and among the Pueblo of
Santa Ana, (the "Pueblo"), a federally recognized Indian Tribe, Santa
Ana Nonprofit Enterprise, an enterprise at the Pueblo, and Lady Luck
New Mexico, Inc., a New Mexico corporation. Incorporated by reference
to Exhibit 10.41 to the Form 10-Q for the quarter ended September 30,
1994.

10.33 Letter Agreement dated October 24, 1994 by and between Alain Uboldi
and Lady Luck Gaming Corporation. Incorporated by reference to Exhibit
10.41 to the Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 by Lady Luck Gaming Corporation (the "1994 Form
10-K").

10.34 Letter Agreement dated October 24, 1994 by and between Rory J. Reid
and Lady Luck Gaining Corporation. Incorporated by reference to
Exhibit 10.42 to the 1994 Form 10-K.

10.35 Amended and Restated Joint Venture Agreement by and among Old River
Development, Inc., D.J. Brata, Bally's Operator, Inc., a Delaware
corporation, Bally's Tunica, Inc., a Mississippi corporation and
Bally's Olympia Limited Partnership, a Delaware limited partnership
dated February 24, 1995. Incorporated by reference to Exhibit 2(a) to
the Form 8-K previously filed on February 28, 1995.

10.36 Stock Exchange Agreement dated December 30, 1994 by and between Grace
Brothers, Ltd. an Illinois limited partnership and Lady Luck Gaming
Corporation. Incorporated by reference to Exhibit 10.44 to the 1994
Form 10-K.

10.37 Stock Exchange Agreement dated February 17, 1995 by and between Grace
Brothers, Ltd. an Illinois limited partnership and Lady Luck Gaming
Corporation. Incorporated by reference to Exhibit 10.45 to the 1994
Form 10-K.

<PAGE>

10.38 Real Estate Lease dated January 12, 1995 by and among Greenbridge
Company, an Iowa corporation, Bettendorf Riverfront Development
Company, L.C., an Iowa limited liability company, Lady Luck
Bettendorf, L.C., an Iowa limited liability company and Lady Luck Quad
Cities, Inc., a Delaware corporation. Incorporated by reference to
Exhibit 10.46 to the 1994 Form 10-K.

10.39 Operating Agreement dated December 2, 1994 by and between Lady Luck
Quad Cities, Inc., a Delaware corporation and Bettendorf Riverfront
Development Company, L.C., an Iowa limited liability company.
Incorporated by reference to Exhibit 10.47 to the 1994 Form 10-K.

10.40 Charter Agreement dated December 9, 1994 by and among Lady Luck
Gaming Corporation, Lady Luck Kimmswick, Inc. and Lady Luck
Bettendorf, L.C., an Iowa limited liability company. Incorporated by
reference to Exhibit 10.48 to the 1994 Form 10-K.

10.41 Memorandum of Intent dated February 22, 1995 by and among C-A
International Associates, a Virginia limited partnership and Lady Luck
Mississippi, Inc. Incorporated by reference to Exhibit 10.50 to the
1994 Form 10-K.

10.42 Agreement of General Partnership dated as of November 30, 1995 by and
among Lady Luck Kimmswick, Inc., a Missouri corporation and Davis
Gaming Company II. Incorporated by reference to Exhibit 2 to the Form
8-K dated December 1, 1995.

10.43 Memorandum of Understanding between Lady Luck Biloxi, Inc., Lady Luck
Gaming Corporation and Algernon Blair, Inc. Incorporated by reference
to Exhibit 10.58 to the Form S-4, No. 91616.

10.44 Contribution and Sale Agreement dated February 5, 1996 between Lady
Luck Mississippi, Inc. and Holstar, Inc. Incorporated by reference to
Exhibit 2 to the Form 8-K dated February 5, 1996.

10.45 License Agreement dated as of January 1, 1996 among Lady Luck Casino,
Inc., Lady Luck Gaming Corporation and the other parties listed on the
signature pages thereto. Incorporated by reference to Exhibit 10.45 to
the 1995 Form 10-K.

10.46 Services Agreement dated as of January 1, 1996 among Lady Luck Gaming
Corporation and Marco Polo International Marketing, Inc. Incorporated
by reference to Exhibit 10.46 to the 1995 Form 10-K.

10.47 Office Lease dated as of January 1, 1996 among Lady Luck Gaming
Corporation and Gemini, Inc. Incorporated by reference to Exhibit
10.47 to the 1995 Form 10-K.

10.48 Assignment and Assumption Agreement dated as of January 1, 1996 among
Lady Luck Gaming Corporation and Lady Luck Casinos, Inc. Incorporated
by reference to Exhibit 10.48 to the 1995 Form 10-K.

10.49 Contract for the Purchase and Sale of Real Estate and Personal
Property dated as of April 12, 1996 by and between River Park Hotel
Group, Inc. and Lady Luck Mississippi, Inc.

21 Subsidiaries of Lady Luck Gaming Corporation. Incorporated by
reference to Exhibit 21 to the Form S-4, No. 91616.

27 Financial Data Schedule

(b) Reports on Form 8-K

None.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Lady Luck Gaming Corporation
Registrant

DATE: August 13, 1996

/s/James D. Bowen
James D. Bowen
Vice President Finance and
Principal Accounting Officer

WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Statement of Financial Condition at June 30, 1996
(Unaudited) and the Condensed Consolidated Statement of Income for the Six
Months Ended June 30, 1996 (Unaudited) and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000921178
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 18,466
<SECURITIES> 0
<RECEIVABLES> 2,464
<ALLOWANCES> 904
<INVENTORY> 1,046
<CURRENT-ASSETS> 23,804
<PP&E> 197,494
<DEPRECIATION> 22,954
<TOTAL-ASSETS> 227,797
<CURRENT-LIABILITIES> 22,781
<BONDS> 182,285
15,525
0
<COMMON> 29
<OTHER-SE> 7,177
<TOTAL-LIABILITY-AND-EQUITY> 227,797
<SALES> 80,163
<TOTAL-REVENUES> 85,722
<CGS> 31,035
<TOTAL-COSTS> 31,035
<OTHER-EXPENSES> 32,833
<LOSS-PROVISION> 97
<INTEREST-EXPENSE> 10,661
<INCOME-PRETAX> 6,369
<INCOME-TAX> 244
<INCOME-CONTINUING> 6,125
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,125
<EPS-PRIMARY> .18
<EPS-DILUTED> .18

</TABLE>