10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

 x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 30, 2009

OR

  o TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from: to

Commission file number: 000-30375

Las Vegas Gaming, Inc.
(Exact name of registrant as specified in its charter)
Nevada		88-0392994
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
3980 Howard Hughes Pkwy., Suite 450, Las Vegas, Nevada 89169
(Address of principal executive offices)
(702) 871-7111
(Issuer’s telephone number)
(Former name, former address and former fiscal year, if changed since last report)
Check whether the issuer (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  o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o  No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer  o                                                                                                             Accelerated filer  o   Non-accelerated filer    o    (do not check if smaller reporting company)                            Smaller reporting company  x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o   No   x
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest
practicable date:	15,081,846 shares of Common Stock Series A, $.001 par value, as of June 30, 2009

LAS VEGAS GAMING, INC.

FORM 10-Q

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	2
	Consolidated Balance Sheets	2
	Consolidated Statements of Operations	3
	Consolidated Statements of  Stockholders’ Equity	5
	Consolidated Statements of Cash Flows	7
	Notes to Unaudited Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4T.	Controls and Procedures	25
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities	26
Item 3.	Defaults Upon Senior Securities	26
Item 4.	Submission of Matters to a Vote of Security Holders	26
Item 5.	Other Information	27
Item 6.	Exhibits	27

______________

PlayerVision, RoutePromo, NumberVision, WagerVision, AdVision, Nevada Numbers, The Million Dollar Ticket, and Nevada Keno are our trademarks.  This report may contain trademarks and trade names of other parties, corporations, and organizations.

- i - -

PART I – FINANCIAL INFORMATION

Item 1.        Financial Statements.

LAS VEGAS GAMING, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	December 31, 2008			June 30, 2009
ASSETS				(unaudited)
Current assets
Cash	$	497,529
Investment in marketable securities		5,068
Accounts receivable, net of allowance of $578 and $31,560		576,847		$	273,173
Inventories		454,026			493,571
Prepaid expenses, deposits and other		79,881			159,765
Jackpot reserve deposits		1,230,761			201,541
		2,844,112			1,128,050
Equipment, net of accumulated depreciation of $1,238,739 and $1,336,364		924,256			756,732
Other assets
Goodwill		2,371,178			2,371,178
Trademarks, copyrights, patents, software, and other identifiable intangibles, net of accumulated amortization of $1,165,742 and $1,296,843		278,330			781,067
Other long term assets		56,451			70,151
	$	6,474,327		$	5,107,178
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities
Advances from stockholders	$	600,000		$	1,710,000
Accounts payable and accrued expenses		1,624,740			2,524,024
Current portion of long-term debt		11,957			10,914
Current portion of progressive jackpot liability		1,555,360			1,495,665
		3,792,057			5,740,603
Long-term debt		23,119			18,795
Conditionally redeemable equity
Series B convertible preferred stock, $.001 par, 50,000 shares issued and outstanding		250,000			250,000
Stockholders' equity (deficiency)
Convertible preferred stock, $.001 par, 10,000,000 shares authorized:
Series E:  810,800 shares authorized, 810,800 shares issued and outstanding		811			811
Series F: 200,000 shares authorized, 200,000  and 0 shares issued and outstanding, respectively		200			-
Series G: 150,000 shares authorized, 150,000 shares issued and outstanding		150			150
Series H: 98,500 shares authorized, 98,500 shares issued and outstanding		99			99
Series I:  4,693,878 shares authorized, 4,693,878 shares issued and outstanding		4,694			4,694
Common stock (including Series A): $.001 par, 90,000,000 shares authorized, 14,849,690 and 15,081,846 shares issued and outstanding		14,850			15,082
Additional paid-in capital		44,160,702			44,119,795
Less stock subscriptions due from officers and principal stockholders		(188,245	)		(182,245	)
Deficit		(41,584,110	)		(44,860,606	)
		2,409,151			(902,220	)
	$	6,474,327		$	5,107,178
The accompanying notes are an integral part of these consolidated financial statements.

- 2 - -

LAS VEGAS GAMING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2008 AND 2009 (UNAUDITED)

	2008			2009
Revenues
Casino games	$	616,412		$	426,658
Product sales		349,356			251,475
Other		205,870			301,518
		1,171,638			979,651
Costs and expenses
Casino games		551,810			404,184
Product costs		165,577			133,885
Other		241,518			211,990
		958,905			750,059
Gross operating income		212,733			229,592
Other operating expenses
Selling, general, and administrative		1,767,938			1,282,587
Research and development		397,321			162,725
Depreciation and amortization		211,313			134,387
		2,376,572			1,579,699
Operating loss		(2,163,839	)		(1,350,107	)
Other income (expense)
Finance costs		(580,391	)		(2,794	)
Interest income and other		(71,318	)		(25,287	)
Net loss		(2,815,548	)		(1,378,188	)
Preferred stock dividends		-			(214,062	)
Net loss attributed to common stockholders	$	(2,815,548	)	$	(1,592,250	)
Net loss per share attributed to common stockholders	$	(0.21	)	$	(0.11	)
Weighted average shares outstanding		13,363,193			15,095,057
The accompanying notes are an integral part of these consolidated financial statements.

- 3 - -

LAS VEGAS GAMING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

SIX MONTHS ENDED JUNE 30, 2008 AND 2009 (UNAUDITED)

	2008			2009
Revenues
Casino games	$	1,159,507		$	984,565
Product sales		673,369			531,349
Other		477,890			588,050
		2,310,766			2,103,964
Costs and expenses
Casino games		1,320,829			911,901
Product costs		318,198			271,050
Other		583,726			492,040
		2,222,753			1,674,991
Gross operating income		88,013			428,973
Other operating expenses
Selling, general, and administrative		3,362,027			2,771,726
Research and development		698,540			183,183
Depreciation and amortization		428,709			270,330
		4,489,276			3,225,239
Operating loss		(4,401,263	)		(2,796,266	)
Other income (expense)
Finance costs		(1,122,462	)		(14,335	)
Interest income and other		(91,389	)		(27,902	)
Net loss		(5,615,114	)		(2,838,503	)
Preferred stock dividends		-			(437,993	)
Net loss attributed to common stockholders	$	(5,615,114	)	$	(3,276,496	)
Net loss per share attributed to common stockholders	$	(0.43	)	$	(0.22	)
Weighted average shares outstanding		13,045,254			15,054,185
The accompanying notes are an integral part of these consolidated financial statements.

- 4 - -

LAS VEGAS GAMING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIENCY)

SIX MONTHS ENDED JUNE 30, 2008 AND 2009 (UNAUDITED)

	Series A Convertible Preferred Stock		Series C Convertible Preferred Stock		Series D Convertible Preferred Stock		Series E Convertible Preferred Stock		Series F Convertible Preferred Stock		Series G Convertible Preferred Stock		Series H Convertible Preferred Stock		Series I Convertible Preferred Stock		Common Stock (Including Series A)		Additional Paid-In Capital		Less Due From Officers and Stockholders			Deficit
Balances, January 1, 2008	$	-	$	35	$	125	$	744		-		-		-		-	$	12,563	$	26,497,097	$	(235,414	)	$	(28,562,419	)
Net loss																									(5,615,114	)
Exercise of warrants and options																		93		108,706		(8,412	)
Issuance of warrants																				238,682
Other Stock based compensation																		238		476,096		52,000
Cash received from employees and stockholders																						6,000
Conversion of Series B Convertible Preferred Stock to Common Stock Series A																		131		130,370
Sale of Series E Convertible Preferred Stock								67												334,933
Sale of Series F Convertible Preferred Stock										200										639,872
Sale of Series G Convertible Preferred Stock												150								479,904
Sale of Series H Convertible Preferred Stock														99						492,402
Sale of Common Stock Series A to Employees																		55		110,667
Sale of Common Stock Series A																		500		629,374
Balances, June 30, 2008	$	-	$	35	$	125	$	811	$	200	$	150	$	99	$	-	$	13,580	$	30,138,101	$	(185,826	)	$	(34,177,533	)

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

- 5 - -

	Series A Convertible Preferred Stock		Series C Convertible Preferred Stock		Series D Convertible Preferred Stock		Series E Convertible Preferred Stock		Series F Convertible Preferred Stock			Series G Convertible Preferred Stock		Series H Convertible Preferred Stock		Series I Convertible Preferred Stock		Common Stock (Including Series A)			Additional Paid-In Capital			Less Due From Officers and Stockholders			Deficit
Balances, January 1, 2009	$	-	$	-	$	-	$	811	$	200		$	150	$	99		4,694	$	14,850		$	44,160,702		$	(188,245	)	$	(41,584,110	)
Net loss																												(2,838,503	)
Dividends payable Preferred Stock Series F, G and I																												(437,993	)
Issuance of warrants for services																						378,735
Issuance of common stock to reimburse legal expenses																			27			17,863
Cancellation of common stock																			(20	)		20
Cancellation of Series F Preferred Stock										(400	)											(1,999,600	)
Re-issuance of Series F Preferred Stock										200												999,800
Cash received from employees and stockholders																									6,000
Sale of Common Stock Series A																			225			562,275
Balances, June 30, 2009	$	-	$	-	$	-	$	811	$	-		$	150	$	99	$	4,694	$	15,082		$	44,119,795		$	(182,245	)	$	(44,860,606	)

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

- 6 - -

LAS VEGAS GAMING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOW

SIX MONTHS ENDED JUNE 30, 2008 AND 2009 (UNAUDITED)

	2008			2009
Operating activities
Net loss	$	(5,615,114	)	$	(2,838,503	)
Marketable security received for licensing fee		36,001			5,068
Depreciation and amortization of equipment		257,946			164,675
Amortization of debt issuance costs and intangibles		1,178,205			131,100
Fair market value adjustment of debt derivative liability		(83,995	)		-
Stock-based compensation to employees and consultants		557,319			386,625
Bad debts		1,377			30,982
Changes in operating assets and liabilities:
Accounts receivable		145,750			272,692
Inventories		18,960			40,455
Prepaid expenses, deposits and other		10,240			(79,885	)
Other		(958	)		(13,701	)
Accounts payable and accrued expenses		944,610			504,170
Progressive jackpot liability		470,631			(59,695	)
Net cash (used in) operating activities		(2,079,028	)		(1,456,017	)
Investing activities
Purchase of property, equipment, and software		(77,970	)		(85,239	)
Proceeds from sale of equipment		55,250			6,150
Capitalize PlayerVision 3 engineering costs		-			(631,899	)
Jackpot reserve deposits		(1,001,072	)		1,029,220
Net cash provided by (used in) investing activities		(1,023,792	)		318,232
Financing activities
Dividend payments on Series F Preferred Stock		-			(32,877	)
Redemption of Series F Preferred Stock		-			(2,000,000	)
Re-issuance of Series F Preferred Stock		-			1,000,000
Redemption of Series B Preferred Stock		(137,500	)
Repayment of debt		(43,552	)		(5,367	)
Sale of Series E Convertible Preferred Stock		335,000			-
Sale of Series F Convertible Preferred Stock		640,072
Sale of Series G Convertible Preferred Stock		480,054
Sale of Series H Convertible Preferred Stock		492,501
Advances from principal stockholders		-			1,720,000
Repayment of advances from principal stockholders		-			(610,000	)
Exercise of warrants and options for common stock		100,387			-
Collection of stock subscription receivables		6,000			6,000
Sale of common stock		740,596			562,500
Net cash provided by financing activities		2,613,558			640,256
Net decrease in cash		(489,262	)		(497,529	)
Cash, beginning of period		489,262			497,529
Cash, end of period	$	-		$	-
Non-cash investing and financing activities
Conversion of Series B Convertible Preferred Stock to Common Stock Series A	$	130,500		$	-
Exercise of stock warrants and options increasing subscriptions receivable		8,412			-
Equipment acquired directly with proceeds of new borrowing		34,025			-
Debt retired through issuance of Common Stock Series A		107,500			-
Prepayment of lease costs through issuance of Common Stock Series A		106,000			-
Interest added to face amount of note due to debt modification		801,250			-
Dividends declared, but unpaid on Series F, G and I Preferred Stock		-			437,993
Dividend paid in Common Stock Series A on Series F Preferred Stock					(10,000	)
The accompanying notes are an integral part of these consolidated financial statements.

- 7 - -

LAS VEGAS GAMING, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.  Nature of operations:

           Our current principal business is the delivery of new, linked-progressive, mega jackpot games to the worldwide gaming industry.  Our offering of these types of games has included Nevada Numbers, Super Bonanza Bingo, Million Dollar Ticket and Gamblers Bonus Million Dollar Ticket.  During the second quarter of 2008, we launched Gamblers Bonus Million Dollar Ticket in cooperation with one of the larger slot route operators in Nevada.  We subsequently shut this game down on January 31, 2009.  On March 31, 2009, the Company shut down Nevada Numbers and Million Dollar Ticket.

           Although we have focused our business on the development of our proprietary multimedia delivery system, known as PlayerVision, PlayerVision has not had a significant revenue effect on our financial statements to date.  We continue to provide equipment, supplies and casino games for use by our customers in the keno and bingo segments of the gaming industry.  (See Note 8a).

2.  Basis of Presentation and Accounting:

The accompanying consolidated financial statements have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission, or the SEC, relating to interim financial statements. Accordingly, certain information normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. For further information, please refer to our annual financial statements and the related notes included within our Annual Report on Form 10-K for the year ended December 31, 2008, previously filed with the SEC, from which the information as of that date is derived.

            The consolidated financial statements include the accounts of our wholly-owned subsidiaries and an inactive and immaterial 85%-owned subsidiary. All significant intercompany transactions and balances have been eliminated in consolidation.

            The unaudited interim consolidated financial statements included herein reflect all adjustments that are, in the opinion of management, necessary to present fairly the financial position and results of operations for the interim periods presented.  Events through the date the consolidated financial statements were issued, August 19, 2009, were evaluated by management to determine if adjustments to or disclosure in these interim consolidated financial statements were necessary.  The results of operations for the three and six months ended June 30, 2009, are not necessarily indicative of results to be expected for the year.

3.  Jackpot Reserve Deposits:

            At December 31, 2008 and June 30, 2009, as required by gaming regulators, we had deposit cash amounts of $1,230,761 and $201,604, respectively, which are restricted for funding our various jackpot-oriented games.

- 8 - -

LAS VEGAS GAMING, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

4. Equipment:

Equipment (Note 8a) consists of the following:

	December 31, 2008		June 30, 2009 (Unaudited)
Production equipment	$	1,561,513	$	1,478,147
Equipment, furniture, and fixtures		557,855		571,322
Leasehold improvements		43,627		43,627
		2,162,995		2,093,096
Less accumulated depreciation and   amortization		1,238,739		1,336,364
	$	924,256	$	756,732

5.  Other Intangible Assets:

Other intangible assets (Note 8a) consist of the following:

	December 31, 2008		June 30, 2009 (Unaudited)
Capitalized PlayerVision engineering costs			$	651,899
PlayerVision technology patents	$	1,016,236		996,236
Software		427,836		429,775
		1,444,072		2,077,910
Less accumulated amortization		1,165,742		1,296,843
	$	278,330	$	781,067

The intangible assets are amortized over their estimated useful lives, which are currently 5 years with the exception of software which is amortized over three years.  We have not begun amortizing PlayerVision costs as yet and will begin when we get our product to market. Total amortization for other intangible assets amounted to $266,944 and $131,100, respectively, for the six months ended June 30, 2008 and 2009.  The estimated aggregate amortization for the remaining six months of calendar 2009 and the next five years is as follows (if we begin deployment of PlayerVision 3 as planned in November 2009):

2009	$             153,941
2010	236,925
2011	214,512
2012	175,689
2013	-
2014	-
	$            781,067

- 9 - -

LAS VEGAS GAMING, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

6.  Debt:

Long term debt is as follows:

	December 31, 2008		June 30, 2009
Other notes payable	$	35,076	$	29,709
Less amounts due within one year		11,957		10,914
	$	23,119	$	18,795

The $600,000 advance from a stockholder at December 31, 2008 was paid back in January 2009.  An additional $1,720,000 was advanced from three stockholders including $1.5 million from IGT (see below).  Of this amount, $10,000 was paid back in June 2009.

On February 13, 2009, we signed a binding term sheet (“Term Sheet”) with IGT whereby IGT advanced $1.5 million (“the Advance”) to the Company.  We are presently in negotiations with IGT to extend the term of the $1.5 million advance beyond August 15, 2009 and make it a longer term, interest only note payable with a 10% interest rate.  Although the term has expired, negotiations are continuing.  We expect the note to be extended to at least January 31, 2010.  We granted a security interest in all of our present and future assets as security for such obligation.

 The Company and IGT also agreed to amend the License and Application Support Agreement dated September 30, 2008 between the Company and IGT (the “LASA”), and the Intellectual Property Access Agreement dated September 30, 2008 between the Company and IGT (the “IPAA”). The amendments to the LASA include: (i) a requirement that the Company use its best efforts to utilize IGT’s sb (server based) Media Manager as the default infrastructure for the delivery of the Company’s PlayerVision® applications, where feasible, (ii) a requirement that the Company provide development support for IGT sb (server based) applications requested by IGT, (iii) an amendment to the amount of distribution fees, (iv) a granting to IGT of a “most favored distributor” status so that IGT is granted the most favorable terms on the Company’s software distributor rates for its server-based applications,  and (v) a requirement that the Company escrow the source code for the applications that connect to IGT systems. IGT will have the right to access the source code only if the Company becomes insolvent, and IGT’s rights to utilize such software (if released) will be unlimited. The amendments to the IPAA include the Company’s agreement that IGT will have the right to initiate, coordinate, finance and assist in the prosecution, defense and enforcement of all Company owned intellectual property to which the Company has granted a right of first refusal to IGT.

7.  Stockholders' Equity:

From  time to time, the Company issues shares of common stock and preferred stock through transactions that are exempt from registration under the Securities Act of 1933 (Securities Act), either pursuant to Section 4(2) of the Securities Act and/or Rule 506 of Regulation D.  For the six months ended June 30, 2008, we issued 92,659 shares of Common Stock Series A as a result of the exercise of options and warrants.  Additionally, we issued 130,500 shares of Common Stock Series A pursuant to the conversion of 26,100 shares of Series B Convertible Preferred Stock.  During the six months ended June 30, 2008, we also issued 295,528 shares of Common Stock Series A for salaries, bonuses, services, and board of director fees and 500,000 shares of Common Stock Series A as part of our sale of Series F and Series G Convertible Preferred Stock.

During the six months ended June 30, 2009, we issued 229,000 shares of Common Stock Series A to an investor in return for cash used for working capital (this is the same investor who invested $1,000,000 in Series E Convertible Preferred Stock, $1,000,000 in Series F Convertible Preferred Stock, and $750,000 in Series G Convertible Preferred Stock).

- 10 - -

LAS VEGAS GAMING, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

In February 2008, we received an advance from a stockholder of $250,000. In May 2008, this same stockholder purchased 200,000 shares of Series F Convertible Preferred Stock for $5 per share and 150,000 shares of Series G Convertible Preferred Stock for $5 per share for an aggregate purchase price of $1,750,000.  Both Series F and Series G Convertible Preferred Stock are convertible into Common Stock Series A at the lower of $3.50 or 30% off the IPO price, where “IPO price” means the per share price to the public of any common shares offered by us that in the aggregate results in capital in excess of $10.0 million being raised and the shares of a class of our common stock being listed and traded on a national stock exchange.  The proceeds of the Series F Convertible Preferred Stock were used to fund the $1,000,000 jackpot bankroll for our Gamblers Bonus Million Dollar Ticket game which launched on April 14, 2008. The proceeds of Series G Convertible Preferred Stock were used for general operating purposes, and the advance of $250,000 was offset against the Series G purchase price. As an incentive to do these transactions, the same stockholder was issued 500,000 shares of Common Stock Series A.  Additionally, if our Common Stock Series A, as a result of a qualified financing, commences trading at less than $5 per share, the stockholder will receive additional shares of Common Stock Series A prorated for the percentage shortfall from $5 per share measured against the 500,000 shares, where a “qualified financing” is a capital raise of $10 million or more or a transaction at less than $5 per share resulting in a change in control of the Company.  In addition, the Series F Convertible Preferred Stock stockholder was granted a security interest and other additional rights in connection with our separate account (and related insurance policy), and $1 million was set aside  solely to satisfy our jackpot security requirements relating to the Gamblers Bonus Million Dollar Ticket game.

In the first quarter of 2009, we closed the Gamblers Bonus Million Dollar game due to a lack of ticket sales.  Accordingly, we redeemed the $1,000,000 of Series F Preferred Stock from our investor. We closed our Million Dollar Ticket Game as well for the same reason.  We also temporarily suspended our Nevada Numbers game to change the draw to hourly rather than daily.  We restarted the Nevada Numbers game on March 1, 2009 but again suspended it on March 31, 2009 due to a lack of funds to meet our Nevada Gaming bankroll requirements.  This suspension resulted from the change in ownership at Treasure Island and the new ownership’s decision to not continue bankrolling our game.  The game will remain suspended until we can find approximately $4 million for the bankroll.  When we restarted Nevada Numbers on March 1, 2009, we restored Series F Convertible Preferred Stock for $1,000,000 to be used as additional bankroll needed for Nevada Numbers. Due to the March 31 shutdown, the Nevada Numbers bankroll funds associated with Series F Convertible Preferred Stock were no longer needed.  Therefore, in April 2009 we again redeemed the Series F Convertible Preferred Stock and the $1,000,000 was returned to the investor.  In addition, in April 2009, he received another 7,156 shares of Common Stock Series A.  These shares were awarded in lieu of cash dividends and as a reimbursement of legal fees for the restoration of Series F Convertible Preferred Stock for $1,000,000 to support the restarting of Nevada Numbers.

Series B Convertible Preferred Stock.  Each share of Series B Convertible Preferred Stock is convertible at any time into Common Stock Series A at the election of the holders of the Series B Convertible Preferred Stock on a one-to-five basis.

A certain portion of the proceeds derived from the sale of Series B Convertible Preferred Stock provided jackpot security for two of our game products, Nevada Numbers and The Million Dollar Ticket. The terms of Series B Convertible Preferred Stock provide that if at any time we determine that these proceeds are no longer used by us to provide jackpot security for either our Nevada Numbers or Million Dollar Ticket game then, in each case, each holder of Series B Convertible Preferred Stock will have the option, for 90 calendar days from the date the holders of Series B Convertible Preferred Stock are noticed that such funds are no longer being so used, to put to us up to 50% of such holder's Series B Convertible Preferred Stock for $5.00 per share or convert on a one-to-five basis for Common Stock Series A.

        On January 18, 2008, because Treasure Island began maintaining the required base jackpot bankroll for The Million Dollar Ticket, the holders of Series B Convertible Preferred Stock were notified pursuant to the terms and conditions of our Series B Convertible Preferred Stock of the ability to exercise the above options.  The holders of Series B Convertible Preferred Stock had until April 17, 2008 to make their decision.  At March 31, 2008 holders of

- 11 - -

LAS VEGAS GAMING, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

183,690 shares of Series B Convertible Preferred Stock had converted their shares on a one-to-five basis for 918,450 shares of Common Stock Series A.  We also redeemed 35,900 shares of Series B Convertible Preferred Stock at $5 per share for a total redemption of $179,500 through March 31, 2008.  In the second quarter of 2008, we redeemed 27,900 shares of Series B Convertible Preferred Stock, and holders of 98,650 shares of Series B Convertible Preferred Stock elected to convert on a one-to-five basis into 493,250 shares of Common Stock Series A.  As of June 30, 2009, there were 50,000 outstanding shares of Series B Convertible Preferred Stock.

Series E Convertible Preferred Stock.  Holders of Series E Convertible Preferred Stock are entitled to receive $5 per share as a liquidation preference after payment of all existing and future indebtedness and the liquidation preference of Series I and B Convertible Preferred Stock. Series E and Series G Convertible Preferred Stock are pari passu in liquidation preference. Series E Convertible Preferred Stock has a liquidation preference over Series H Convertible Preferred Stock.  During the year ended December 31, 2008, we issued 67,000 shares of our Series E Convertible Preferred Stock raising $335,000.  In February 2008, we closed our Series E Convertible Preferred Stock offering with a total of 810,800 shares issued and $4,054,000 raised.

Series G Convertible Preferred Stock.  The holder of Series G Convertible Preferred Stock is entitled to receive $5 per share as a liquidation preference pari passu with the liquidation preference of Series E Convertible Preferred Stock and after payment of all existing and future indebtedness and the liquidation preference of Series I and B Convertible Preferred Stock.  Series G Convertible Preferred Stock has a liquidation preference over Series H Convertible Preferred Stock.  On May 9, 2008, we issued 150,000 shares of Series G Convertible Preferred Stock which carries a cumulative 12% dividend rate payable on January 1, 2010 immediately after paying IGT their 6.5% dividend on Series I Preferred Stock.  Series G Convertible Preferred stock is convertible into Common Stock Series A at the lower of $3.50 or 30% off of the IPO price, where “IPO price” means the per share price to the public of any common shares offered by us that in the aggregate results in capital in excess of $10.0 million being raised and the shares of a class of our common stock being listed and traded on a national stock exchange.

Series H Convertible Preferred Stock.  The holders of Series H Convertible Preferred Stock are entitled to receive $5 per share as a liquidation preference after payment of all existing and future indebtedness and the liquidation preference of Series I, Series B, Series E, and Series G Convertible Preferred Stock.  During the year ended December 31, 2008, we issued 98,500 shares of Series H Convertible Preferred Stock at a price of $5 per share for a total capital raise of $492,500.  The Series H Convertible Preferred offering closed June 21, 2008.  Series H Convertible Preferred stock is convertible into Common Stock Series A at the lower of $2.50 or 30% off of the IPO price, where “IPO price” means the per share price to the public of any common shares offered by us that in the aggregate results in capital in excess of $10.0 million being raised and the shares of a class of our common stock being listed and traded on a national stock exchange.

Series I Preferred Stock.  On October 1, 2008, IGT signed an investment agreement as of September 30, 2008, with us for 4,693,878 shares of our Series I Preferred Stock at $2.45 per share, or a total investment of $11.5 million.  The Series I Preferred Stock is convertible into shares of Common Stock Series A on a one-for-one basis. The transaction closed on October 24, 2008.  IGT had previously advanced $1.5 million of this total investment pursuant to an agreement dated July 17, 2008, as amended, so the net proceeds received by the Company on October 24, 2008 was $10 million.  IGT also received a warrant to purchase 1.5 million shares of Common Stock Series A at an exercise price of $2.45 per share.  The warrant has a three-year term and is fully vested.  The shares of Series I Preferred Stock carry a dividend rate of 6.5% payable initially on January 1, 2010 and vote on an as converted basis, on all matters submitted to the Company’s stockholders.  Based on the fully diluted outstanding shares of the Company, IGT is entitled to two seats on the Company’s Board of Directors, which to date they have not chosen to fill.  In addition, IGT forgave a receivable from the Company from a prior legal settlement for $614,027.  Also on October 1, 2008, we signed three agreements with IGT which became part of the legal settlement with IGT: 1) the Retrofit License Agreement, 2) the License and Application Support Agreement and 3) the Intellectual Property Access Agreement.  On October 14, 2008, the legal case with IGT was dismissed by the Court with prejudice.

- 12 - -

LAS VEGAS GAMING, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

With the additional $10 million of funding from IGT, we paid in full the CAMOFI note for $6,051,250, together with accrued interest and a payment penalty amounting to $1,567,272.  We were released from any and all liens and claims that CAMOFI may have against us and the Registration Rights Agreement was terminated.  CAMOFI has 2,675,000 warrants, with “piggy back” registration rights for its 300,000 shares of our common stock and underlying shares of common stock underlying its warrants, which registration rights are junior to the registration rights granted to IGT as part of the Series I Preferred Stock transaction.

In connection with the IGT transaction, we filed Amended and Restated Certificates of Designation with the Nevada Secretary of State with respect to our Series B, Series E, Series F, Series G and Series H Convertible Preferred Stock on October 22, 2008.  We also filed Certificates of Withdrawal of Certificate of Designation with the Nevada Secretary of State with respect to our Series A, Series C, and Series D Convertible Preferred Stock on October 3, 2008, as no shares of such series were then issued or outstanding.

        Stock Warrants and Options. Our 2009 Stock Option Plan (2009 Plan), adopted by our Board of Directors and approved by our stockholders, allows for the issuance of both qualified and non-qualified options. The Stock Option Committee of our Board of Directors administers the 2009 Plan. The 2009 Plan succeeds the 2000 Stock Option Plan (2000 Plan) that will expire later this year except as to options outstanding under the 2000 Plan. As of June 30, 2009, there were 885,387 qualified and 24,000 non-qualified options outstanding under the 2009 Plan.  As of June 30, 2008 and 2009, respectively, there were 1,978,900 and 2,645,900 options outstanding under the 2000 Plan.  As of June 30, 2008 and 2009, respectively, there were 425,000 and 650,000 non-qualified options outstanding that were issued outside of the plans.  The exercise price of options issued pursuant to either plan cannot be less than the fair market value at the time of the grant and vesting is at the discretion of the Stock Option Committee, though limited to ten years. Only employees, directors and consultants are qualified to receive options.  The stock subject to the 2000 Plan is limited to 2,500,000 shares of Common Stock Series A. The stock subject to the 2009 Plan is limited to 20% of the sum of the currently outstanding shares of Common Stock Series A and the outstanding shares of our preferred stock convertible into Common Stock Series A as of beginning of the period under consideration.

        We have, from time to time, granted common stock, warrants and options to employees and others as employment incentives, in return for successful capital-raising efforts or as an inducement to invest in our common or preferred securities, in return for other services, and in conjunction with the initial capitalization of our company and business acquisitions.  Warrants and options to purchase 870,000 and 931,387 shares of Common Stock Series A were issued to officers, directors and employees during the six months ended June 30, 2008 and 2009, respectively. Total compensation cost recognized in operations from grants of options and warrants amounted to $557,319 and $378,735 for the six months ended June 30, 2008 and June 30, 2009, respectively.  Unrecognized costs related to employee stock options and warrants outstanding at June 30, 2009 totaled $879,536 and are expected to be amortized over a weighted average period of three years.

- 13 - -

LAS VEGAS GAMING, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

The weighted average exercise price of our outstanding options and warrants at June 30, 2009, was $2.48. The following table summarizes our stock option and warrant activity followed by the applicable weighted average prices during the quarter ended June 30, 2009:

	Options/Warrants			Weighted  Average Price
Balance, January 1, 2009		8,656,209		$	2.46
Granted		931,387			2.50
Exercised		-			-
Forfeited		(100,000	)		1.00
Balance, June 30, 2009		9,487,596		$	2.48

As of June 30, 2009, 1,697,790 options and warrants are outstanding, but have not vested. The aggregate intrinsic value of options and warrants at June 30, 2009 is $879,536.

	Non-vested Options			Weighted  Average Price
Balance, January 1, 2009		1,393,210		$	3.45
Granted		580,790			2.50
Vested		(378,960	)		(3.79	)
Forfeited		-			-
Balance, June 30, 2009		1,595,040		$	3.02

	Non-vested Warrants			Weighted  Average Price
Balance, January 1, 2009		110,417		$	2.52
Granted		9,000			2.50
Vested		(16,667	)		(2.63	)
Forfeited		-			-
Balance, June 30, 2009		102,750		$	2.50

- 14 - -

LAS VEGAS GAMING, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

The following table summarizes stock options and warrants outstanding at June 30, 2009, as to number exercisable and average remaining life in years:

					Weighted Average				Weighted Average
	Exercise		Number		Remaining		Number		Remaining
	Price		Outstanding		Life in years		Exercisable		Life in years
Options	$	1.00		270,000		0.50		270,000		0.50
	$	2.00		460,000		3.79		310,000		3.79
	$	2.50		1,576,387		4.51		495,347		4.54
	$	3.00		100,900		0.67		100,900		0.67
	$	4.55		25,000		0.50		25,000		0.50
	$	5.00		1,123,000		3.22		759,000		3.16
Warrants	$	1.00		267,500		1.31		267,500		1.31
	$	1.48		2,675,000		1.82		2,675,000		1.82
	$	1.50		30,000		3.85		30,000		3.85
	$	2.00		185,000		1.15		185,000		1.15
	$	2.10		23,809		1.38		23,809		1.38
	$	2.45		1,500,000		2.31		1,500,000		2.31
	$	2.50		147,000		4.21		44,250		4.29
	$	3.00		854,000		1.56		854,000		1.56
	$	4.00		100,000		0.62		100,000		0.62
	$	5.00		150,000		1.78		150,000		1.78
				9,487,596		2.53		7,789,806		2.17

There are 1,697,790 options and warrants that have been issued but not vested.  Of these options and warrants 247,800 will vest during the remainder of 2009, 778,496 in 2010, 478,497 in 2011 and 192,997 in 2012.

8.  Contingencies:

                 a.     Economic conditions and related risks and uncertainties. The United States is currently experiencing a widespread recession accompanied by, among other things, weakness in the commercial and investment banking systems resulting in reduced credit and capital financing availability, and highly curtailed gaming, other recreational activities and general discretionary consumer spending, and is also engaged in war, all of which are likely to continue to have far-reaching effects on economic conditions in the country for an indeterminate period.  The effects and duration of these developments and related risks and uncertainties on our future operations and cash flows, including our access to capital or credit financing, cannot be estimated at this time but have been and may continue to be significant.  We are presently unable to satisfy our obligations as they come due and do not have enough cash to sustain our expected working capital requirements for the remainder of 2009.  Accordingly, unless we obtain third-party debt or equity financing or otherwise raise capital, for example, through the possible sale of assets, in the near future, we will not be able to continue as a going concern.  

                 Based on circumstances described inthe foregoing paragraph, and the related uncertainties as to the success of management’s plans to continue as a going concern, we are unable to make cash flow forecasts based on reasonably objective assumptions. Accordingly, as of June 30, 2009, impairment evaluations relative to these assets were based on our expectation of recoverability of at least their carrying values through a possible sale thereof using fair value estimates that are based on Level 3 inputs, as defined in Statement of Financial Accounting Standards No. 157, Fair Value Measurements. However, except as discussed in Note 12 to our consolidated financial statements, no such asset sales are presently expected and, therefore, no assets are currently classified as held for sale. It is possible based on future developments, even in the near term, that asset impairment writedowns may become necessary and that they may be significant.

     To address the going concern uncertainty, we are in discussions to engage an investment banking firm to assist us in raising capital and are presently in due diligence with possible strategic partners in the gaming industry for an equity investment.  We are also creating a sales deployment pipeline which should provide momentum to our capital raising efforts.  We have also engaged in some cost cutting and are in the process of negotiating for the sale of our bingo and keno business. (See Note 12.)

- 15 - -

LAS VEGAS GAMING, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

We often carry cash and cash equivalents, including jackpot reserves, on deposit with financial institutions substantially in excess of federally-insured limits, and the risk of losses related to such concentrations may be increasing as a result of recent economic developments and uncertainties discussed in the foregoing paragraph.  The extent of a future loss as a result of uninsured deposits in the event of a future failure of a bank or other financial institution, if any, is not subject to estimation at this time.

Though the two progressive jackpot games are currently shut down, we may still become liable for the unpaid progressive portion of each game.  That possible liability is currently $218,604 and is provided for with a deposit in one of our brokerage accounts.

         b.    Legal Matter. A lawsuit is pending against LVGI and certain other defendants concerning their provisional patent for “Slot Lottery.”  Management is unable to estimate minimum costs, if any, to be incurred by the Company upon the ultimate disposition of this matter and, accordingly, no provision has been made, but management believes the case is without merit and will vigorously defend the Company.  No assurance can be given that the Company will be successful with respect to this matter.

         c.    Gaming Regulation and Licensing.  We are licensed with the State of Nevada as an operator of inter-casino-linked systems, supplier and distributor of keno and bingo products, parts, and service, and as a keno route operator.  From time to time, we seek licensure in other gaming jurisdictions so that we may similarly participate in the gaming revenue produced by customers from our products in those jurisdictions.  Failure to comply with applicable gaming regulations, retain our Nevada licenses, or obtain and retain the necessary licenses in other jurisdictions, would likely have a material adverse effect on our future operations and cash flows.

         Adopted amendments to Regulation 5.115 of the Nevada Gaming Commission, as amended on November 18, 1999, allow licensees to use the “reserve method” to fund periodic payments of any game, including a race book or sports pool, tournament, contest, or promotional activity provided that the licensee complies with certain financial monitoring and reporting requirements as follows:  1) current ratio of 2:1 and 2) interest coverage ratio of 3:1.  We have frequently found it impossible, primarily due to the absence of earnings, to be in compliance with these ratios and in the past have been successful in presenting an alternative plan acceptable to the Nevada Gaming Commission to satisfactorily meet the objectives of the Regulation if not cure the situation prospectively through expected future raises of capital.  The Nevada Gaming Commission has the right to demand that a one-year letter of credit be posted when a licensee is not in compliance with the foregoing financial ratios but has not made any such demand on the Company to date.

         The foregoing notwithstanding, in July, 2008, we received two “Orders to Show Cause” from the Nevada Gaming Control Board (NGCB).  One order dealt with deficiencies in meeting the financial requirements of Regulation 5.115 as to 1) resources in restricted accounts; 2) current ratio or working capital; 3) interest coverage ratio or debt to EBITDA ratio; and 4) bankroll.  We have paid a fine of $10,000 in full settlement and satisfaction of the allegations in this matter.  The second order dealt with deficiencies in filing timely reports with the NGCB as to new hires and termination of personnel.  Our response set forth some remedial action taken by us, which was deemed adequate during the three months ended March 31, 2009, and to date, no further disciplinary action has been taken.

9.  Income Taxes:

         As of June 30, 2009, net operating loss carryforwards for federal income tax reporting purposes total approximately $40.0 million and expire between 2013 and 2028. However, because we have not as yet achieved profitable operations, realization of any future income tax benefit of the net operating loss carryforwards accumulated to date is not yet viewed by management at this time as more likely than not.  Therefore, the related deferred tax asset of $14.2 million has been effectively reduced by a 100% valuation allowance.  In addition, we may be limited in our ability to fully utilize our net operating loss carryforwards and realize any benefit therefrom in the event of any of certain ownership changes, if any, described in Internal Revenue Code Section 382.

- 16 - -

LAS VEGAS GAMING, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

10.  Financial Instruments:

                        The Company’s financial instruments consist of cash, jackpot reserve deposits, progressive jackpot liability, and debt.  The estimated fair values of these financial instruments are approximately equal to book value because of their short-term nature and/or interest rates approximating current market interest rates based on Level 2 inputs, as defined in Statement of Financial Accounting Standards No. 157, Fair Value Measurements, as amended.

11.  Segment Information:

We conduct our operations in three primary business segments: “Casino Games”, “Products” and “Other.”  The “Casino Games” segment generates income from four games which have been played in 25 casinos and 100 bars and convenience stores in Nevada and another 14 casinos outside Nevada.

Operating results, certain unallocated expenditures, and identifiable assets for these segments are set forth below.

	Six months ended June 30,
	2008			2009
Revenue
Casino Games	$	1,159,507		$	984,565
Product Sales		673,369			531,349
Other		477,890			588,050
	$	2,310,766		$	2,103,964
Operating income (loss)
Casino Games	$	(161,322	)	$	72,664
Product Sales		355,171			260,299
Other		(105,836	)		96,010
Unallocated		(4,489,276	)		(3,225,239	)
	$	(4,401,263	)	$	(2,796,266	)
Identifiable assets
Casino Games	$	3,802,910		$	1,591,825
Product Sales		332,849			240,765
Other		366,874			428,487
Unallocated		2,275,926			2,846,101
		6,778,559		$	5,107,178

Identifiable assets of $5,107,178 at June 30, 2009, included recorded goodwill of $2,371,178 that relates to the Product Sales segment from prior acquisitions.

	Six months ended June 30,
Capital expenditures	2008		2009
Casino Games	$	31,177	$	16,050
Product Sales		-		-
Other		56,726		36,604
Unallocated		24,093		32,585
	$	111,996	$	85,239

- 17 - -

LAS VEGAS GAMING, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

12.  Subsequent Event:

We began a voluntary unpaid furlough of 15 PlayerVision division employees on August 1, 2009, which furlough is expected to continue until we raise additional capital and/or begin deploying our product.

On August 6, 2009, we signed a Technology Royalty Agreement with Perfect Storm Software, LLC, whose members include five of our engineers, one of whom is our Chief Technology Officer, who began employment in 2008 and brought preexisting technology with them which was used in the development of PlayerVision 3.  The Technology Royalty Agreement calls for (1) a  one-time royalty fee of $1,000 due and payable on the date of execution, (2) an annual license reissue fee in the amount of $20,000 due and payable on each anniversary of the Effective Date beginning on the first anniversary, (3) a royalty bonus equal to 5% of net PV 3 sales for software licensed products, (4) a royalty bonus equal to 5% of net sales for hardware utilized to operate software licensed products where the markup percentage of the hardware is greater than 20%, and (5) a royalty bonus of 750,000 shares of the our Common Stock Series A contingent upon any change in control of us.

We have been negotiating the sale of our bingo and keno businesses since June 2, 2009.  However, since approval by the board of directors of a formal plan for the sale did not take place until July 2009, there has been no  reclassification to discontinued operations.  Retroactive reclassification will be reflected in our consolidated financial statements beginning in the third quarter, 2009.  The sale would be an asset sale for $1.2 million and an assumption of approximately $200,000 in liabilities.  The sale of the bingo business for $1.1 million is expected to close by the end of August 2009, and the sale of the keno business for $100,000 is expected to close by the end of 2009, subject to the final approval of the Nevada Gaming Control Board.  The buyer of the bingo business has advanced $500,000 as a refundable deposit against the sale of the bingo business.

- 18 - -

Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read together with our unaudited consolidated financial statements and the accompanying notes.  This discussion contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, including statements regarding our expected realization of more significant revenue from PlayerVision during the fourth quarter of 2009 and our expected financial position, business and financing plans. Some of the forward-looking statements can be identified by the use of forward-looking terms such as “believes,” “expects,” “may,” “will,” “should,” “could,” “seek,” “intends,” “plans,” “estimates,” “anticipates,” or other comparable terms. Forward-looking statements involve inherent risks and uncertainties which could cause actual results to differ materially from those in the forward looking statements.  Such risks and uncertainties include any adverse judgment, ruling or order, lack of market acceptance of our PlayerVision system, our inability to secure additional third-party financing, the current economic recession, the lack of operating history of our PlayerVision system, the ability of our competitors to introduce products having advantages over our PlayerVision system, the failure to obtain regulatory approval for our PlayerVision modules, restrictions on our ability to install our PlayerVision system on existing gaming machines, our failure to protect our intellectual property rights and additional risks discussed herein and elsewhere in our Form 10-K for the year ended December 31, 2008.  We caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made.  These historical financial statements may not be indicative of our future performance.  (See “Liquidity and Capital Resources,” below.)

Overview

Historically, we have been one of the leading suppliers of keno and bingo games, systems, and supplies, a relatively small market associated with nominal growth and smaller companies.  Our current principal business is the delivery of new, linked-progressive, mega jackpot games to the worldwide gaming industry.  However, to date, we have devoted a significant portion of our resources toward the development, regulatory approval, and marketing of our PlayerVision system.  In comparison to the keno and bingo market, we believe that the potential market for our PlayerVision system, i.e., the gaming machine market is much larger and more dynamic.  While we continue to provide equipment, supplies and games for use by our customers in the keno and bingo segments of the gaming industry, subject to our ability to continue as a going concern, addressed below, we expect these revenues will continue to decline as we focus on the deployment of PlayerVision.  PlayerVision has not had a significant revenue effect on our financial statements to date.  Due primarily to our focus on the development of our PlayerVision system and other factors, we have incurred expenses in excess of our revenue and have generated losses to date.

In May 2009, we received approval for nine software applications on our more robust and scalable PlayerVision 3 platform from the Nevada Gaming Control Board laboratory.  These software applications include Beverage-on-Demand, ServiceVision, VoyeurVision, Live TV, AdVision, YouTube, CasinoTunes, ValetVision, and BurstVision.  We will submit these same applications for Gaming Laboratories International (GLI) approval, an independent accredited testing laboratory, in the second half of 2009.

Based on the foregoing, and other than the insignificant revenue realized from our early adoption agreements, and subject to economic uncertainties discussed herein, subject to our ability to continue as a going concern, as discussed below, we expect to begin to realize more significant revenue from our PlayerVision system during the fourth quarter of 2009.  This would mark a significant shift in the type of revenue recognized by us.  The anticipated revenue would be from the installation of our nine software applications on the PlayerVision 3 platform in the United States, primarily Nevada for now.  No assurance can be given, however, that we will begin installing our PlayerVision 3 applications or begin realizing revenue from our PlayerVision system during the fourth quarter of 2009 or at all.

- 19 - -

We expect to continue for the remainder of 2009 to incur expenses related to the development and regulatory approval for the remaining PlayerVision modules, and we expect to face competition from larger, more formidable competitors as we attempt to enter the gaming machine market.  Due to continuing expenses related to our PlayerVision system, in addition to any funds from operations, we plan to continue to rely on funds from third party financing sources, if available, in addition to funds from operations to sustain our operations in 2009 and 2010.  

We are presently unable to satisfy our obligations as they come due and do not have enough cash to sustain our anticipated working capital requirements for the remainder of 2009 and, unless we obtain third-party financing or otherwise raise capital through the sale of assets or otherwise in the near future, we will be unable to continue as a going concern.  See discussion in “Liquidity – Outlook” below.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. These estimates and assumptions provide a basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, and these differences may be material.

We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

Revenue Recognition

PlayerVision. Any revenue from PlayerVision will result from installation fees, activation fees, fees for services, and revenue sharing arrangements. We will recognize installation and activation fees for PlayerVision upon installation and recognize the costs associated with the installation (labor and supplies) at that time. We will recognize revenue from the revenue sharing arrangements as earned and recognize maintenance expenses as incurred against the corresponding revenue.  Manufacturing costs will be capitalized and depreciated over the life of the asset.

Casino Games. As wagers are made within our inter-linked systems, we recognize our share of each wager made as revenue. Based on the revenue proceeds, we purchase insurance to fund the base jackpot. We also estimate the cost for any uninsured base jackpot and the expense for any progressive jackpot and, accordingly, establish a liability on our balance sheet as a progressive jackpot liability. For our other casino games, we recognize our share of revenue upon the sale of each ticket. We have the discretion to purchase insurance to fund jackpots. We recognize costs associated with uninsured jackpots as each ticket is sold based on mathematical probabilities dictated by the odds of the game.

Products. We generally recognize sales of bingo and keno equipment when installed and sales of supplies when the products are shipped. Warranty costs and related liabilities associated with product sales have not been material. We recognize fees from equipment maintenance contracts sold separately (with no bundled deliverables) evenly over the term of the contract. Prior to shipment, we include equipment and supplies in inventories and stated at the lower of cost, as determined on a “first-in first-out’’ basis, or market.

Other. We include keno revenue from the operation of a keno route subject to multiple participation agreements in other revenue in an amount equal to the net win from such gaming activities, which is the difference between gaming handle and amounts paid to customers. We reflect amounts due to the owners of the facilities in which the keno games are conducted (effectively contingent rent) as an expense.

- 20 - -

Equipment, Goodwill and other Intangible Assets

We review the carrying values of equipment, goodwill and other intangible assets for impairment at least annually, and whenever events or circumstances indicate the carrying value may not be recoverable or warrant a revision to the estimated remaining useful life, in accordance with SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets, and SFAS 142, Goodwill and Other Intangible Assets.

             Based on circumstances described in “Liquidity and Capital Resources,” below, and the related uncertainties as to the success of management’s plans to continue as a going concern, we are unable to make cash flow forecasts based on reasonably objective assumptions. Accordingly, as of June 30, 2009, impairment evaluations relative to these assets were based on our expectation of recoverability of at least their carrying values through a possible sale thereof using fair value estimates that are based on Level 3 inputs, as defined in Statement of Financial Accounting Standards No. 157, Fair Value Measurements. However, except as discussed in Note 12 to our consolidated financial statements, no such asset sales are presently expected and, therefore, no assets are currently classified as held for sale. It is possible based on future developments, even in the near term, that asset impairment writedowns may become necessary and that they may be significant.

Factors used in our evaluations of potential impairment and estimated recoverable values require significant judgments about respective estimated useful lives, risk rates, forecasted growth rates, brand history, expected market growth, competitive environment, market share, future business prospects and success of our products, including with respect to goodwill, the identification of reporting units, allocation of related goodwill, assignment of corporate shared assets and liabilities to reporting units, and determination of the fair value of each reporting unit.  Changes in these estimates and assumptions could materially affect the determination of recoverability or fair value. While we believe that our estimates of recoverable values are reasonable, different assumptions could materially affect our assessment of useful lives, recoverability and fair values.  Based on the foregoing analysis, we recorded no goodwill or other impairment charges during the six months ended June 30, 2009.

           Our intangible assets consist of key patents with a five-year life and software with a three-year life.   PlayerVision 3 costs are being capitalized as we have proven technological feasibility and, subject to our ability to continue as a going concern, as discussed above and below, will be depreciated once our product is brought to market.

Income Taxes

We have effectively provided a full 100% valuation allowance for the deferred tax effects of our net operating losses at June 30, 2008 and 2009. We have effectively recorded a 100% valuation allowance to offset the deferred tax asset resulting from operating loss carryforwards arising in the current and prior periods that might otherwise have been recognized since, because of our history of operating losses, management is unable to conclude at this time that realization of such benefit is currently more likely than not.

Recent Accounting Pronouncements

There have been no recent accounting pronouncements or changes in accounting pronouncements issued, but not yet effective or early adopted, that are of significance, or potential significance to the Company.
 

Results of Operations

Three Months Ended June 30, 2009, Compared with Three Months Ended June 30, 2008.

Revenue.  Casino games revenue for the three months ended June 30, 2009, decreased $190,000 or 30.8%, compared to the three months ended June 30, 2008.  The lower casino games revenue principally resulted from a reduction of $121,000 of revenue for Gamblers Bonus Million Dollar Ticket which was not in existence in the second quarter of 2009 but was being played in the  second quarter of 2008, and Nevada Numbers and Million Dollar Ticket declined by $104,000 due to the discontinuance of the game on March 31, 2009 offset by higher revenue from Super Coverall Bingo of $35,000.

- 21 - -

Product sales for the three months ended June 30, 2009, decreased by $98,000 or 28.0% compared to the three months ended June 30, 2008. Keno equipment sales amounted to $17,000 for the three months ended June 30, 2009 compared to $86,000 during the three months ended June 30, 2008. This decrease in keno equipment sales was due to a delay by customers to buy new keno systems due to the state of the economy.  Bingo supplies sales also declined by $25,000 during the three months ended June 30, 2009 versus the same period in the prior year due to loss of market share.

            Other revenue for the three months ended June 30, 2009, increased by $96,000 or 46.5% compared to the three months ended June 30, 2008.  Revenue from Keno route and participation agreements increased by $93,000 for the three months ended June 30, 2009, compared to the three months ended June 30, 2008, due to two new route locations being open in Las Vegas during the three months ended June 30, 2009 versus none being open during the three months ended June 30, 2008.

Cost and Expenses. Cost and expenses of casino games for the three months ended June 30, 2009, decreased by $148,000 or 26.8% compared to the three months ended, June 30, 2008. The decrease resulted primarily from the discontinuance of the Nevada Numbers and Million Dollar Ticket games offset by the increase in Super Coverall Bingo as discussed previously.

Product cost and expenses for the three months ended June 30, 2009, decreased $32,000 or 19.1% compared to the three months ended June 30, 2008, consistent with the decline in Keno equipment sales.  Gross margin on product sales has declined from 52.6% to 46.8% as we have had to do more discounting on Keno equipment sales.

Other cost and expenses for the three months ended June 30, 2009, decreased $30,000 or 12.2% compared to the three months ended June 30, 2008 as we reduced salary expenses by $48,000 through headcount reductions in our Keno service staff.

Other Operating Expenses. Selling, general and administrative expenses for the three months ended June 30, 2009, decreased by $485,000 or 27.5%, as legal and consulting fees decreased by $488,000 during the three months ended June 30, 2009, compared to the same period in 2008 primarily as a result of a reduction in legal fees resulting from settlement of the IGT lawsuit in October 2008.

Research and development costs for the three months ended June 30, 2009, have decreased by $235,000 or 59.0% compared to the three months ended June 30, 2008, as we began capitalizing development costs of our PlayerVision 3 platform.

Depreciation and amortization for the three months ended June 30, 2009, decreased $77,000 or 36.4% compared to the three months ended June 30, 2008, as our asset base is older and more assets are becoming fully depreciated.

Finance Costs. Finance costs for the three months ended June 30, 2009, decreased $578,000 or 99.5% compared to the three months ended June 30, 2008, due to the payoff of our primary third party lender, CAMOFI, in October 2008 with proceeds from equity capital invested.

Interest and Other Income. Interest and other income for the three months ended June 30, 2009, increased by $46,000 or 64.5% compared to the three months ended June 30, 2008.  The increase was due to the decrease in the loss on the sale of equipment of $46,000 in the three months ended June 30, 2009 versus the comparable period in the prior year.

Results of Operations

Six Months Ended June 30, 2009, Compared with Six Months Ended June 30, 2008.

- 22 - -

Revenue.  Casino games revenue for the six months ended June 30, 2009, decreased $175,000 or 15.1%, compared to the six months ended June 30, 2008.  The lower casino games revenue principally resulted from a reduction of $104,000 of revenue for Gamblers Bonus Million Dollar Ticket which was not in existence in the second quarter of 2009 but was being played in the second quarter of 2008, and Nevada Numbers and Million Dollar Ticket declined by $153,000 due to the discontinuance of the game on March 31, 2009 offset by higher revenue from Super Coverall Bingo of $84,000.

Product sales for the six months ended June 30, 2009, decreased by $142,000 or 21.1% compared to the six months ended June 30, 2008. Keno equipment sales amounted to $68,000 for the six months ended June 30, 2009 compared to $182,000 during the six months ended June 30, 2008. This decrease in Keno equipment sales was due to a delay by customers to buy new keno systems due to the state of the economy.  Bingo supplies sales also declined by $33,000 during the six months ended June 30, 2009 versus the same period in the prior year due to loss of market share.

Other revenue for the six months ended June 30, 2009, increased by $110,000 or 23.1% compared to the six months ended June 30, 2008.  Revenue from Keno route and participation agreements increased  $102,000 for the six months ended June 30, 2009, compared to the six months ended June 30, 2008, due to two new route locations being open in Las Vegas for the entire six months ended June 30, 2009 versus two being opened for one month during the six months ended June 30, 2008.

Cost and Expenses.  Cost and expenses of Casino Games for the six months ended June 30, 2009, decreased by $409,000 or 30.9% compared to the six months ended June 30, 2008.  The decrease resulted primarily from the discontinuance of the Nevada Number and Million Dollar Ticket games offset by an increase in Super Coverall Bingo as previously discussed.

Product cost and expenses for the six months ended June 30, 2009, decreased $47,000 or 14.8% compared to the six months ended June 30, 2008, consistent with the decline in Keno equipment sales.   Gross margin on product sales has declined from 52.7% to 49.0% as we have had to do more discounting on Keno equipment sales.

Other cost and expenses for the six months ended June 30, 2009, decreased $92,000 or $15.7% compared to the six months ended June 30, 2008 as we reduced salary expenses by $103,000 through headcount reductions in our Keno service staff.

Other Operating Expenses.  Selling, general and administrative expenses for the six months ended June 30, 2009, decreased by $590,000 or 17.6%, as legal and consulting fees, decreased by $610,000 during the six months ended June 30, 2009, compared to the same period in 2008 primarily as a result of a reduction in legal fees resulting from settlement of the IGT lawsuit in October 2008.

Research and development costs for the six months ended June 30, 2009, have decreased by $515,000 or 73.8% compared to the six months ended June 30, 2008, as we began capitalizing development costs of our PlayerVision 3 platform.

Depreciation and amortization for the six months ended June 30, 2009, decreased $158,000 or 36.9% compared to the six months ended June 30, 2008, as our asset base is older and more assets are becoming fully depreciated.

Finance Costs. Finance costs for the six months ended June 30, 2009, decreased $1,108,000 or 98.7% compared to the six months ended June 30, 2008, due to the payoff of our primary third party lender, CAMOFI, in October 2008 with proceeds from equity capital invested.

Interest and Other Income. Interest and other income for the six months ended June 30, 2009, increased by $63,000 or 69.5% compared to the six months ended June 30, 2008.  The increase was due to decrease in the loss on the sale of equipment of $46,000 in the six months ended June 30, 2009 versus the comparable period in the prior year and an additional loss in fair value incurred on or marketable securities of $31,000.

- 23 - -

Liquidity and Capital Resources

Cash Flows

Cash used in operating activities decreased by $623,000 for the six months ended June 30, 2009 primarily because of accounts receivable and inventory decreases of $148,000 offset by increases in accounts payable and accrued expenses of $971,000.  Investing activities consisted principally of net cash inflows in connection with the reduction in the jackpot reserve deposits of $1,029,000 because of the discontinuance of the Gamblers Bonus Million Dollar Ticket game in January 2009 offset by cash outflows for capital expenditures of $617,000.  Our cash inflows from financing activities of $640,000 in the six months ended June 30, 2009, consisted principally of $562,500 of new capital from the sale of Common Stock Series A and net proceeds from advances from stockholders of $1,110,000 offset by the redemption of Series F Convertible Preferred Stock following the shutdown of the Nevada Numbers game.

Capital Expenditures

Capital expenditures increased by $605,000 for the six months ended June 30, 2009 compared to the same period in the prior year as we began capitalizing our PlayerVision 3 engineering costs prior to the projected rollout to the marketplace of nine new software applications. For 2009, other than our obligation to pay any jackpots that may be won, we anticipate that our most significant capital resource requirement will relate to the purchase of approximately $10 million of PlayerVision control units for the rollout of our PlayerVision System.  

            No assurance can be given that we will be able purchase sufficient control units or that such control units will be available at an acceptable price, or at all.  No assurance can be given that we will be able to secure any third-party financing or that such financing will be available to us on acceptable terms.  As discussed further under the heading Outlook below, it may be difficult for us to secure additional third-party financing at this time.

Sources of Capital

We have traditionally relied on various forms of third party financing in order to sustain our operations.  On February 13, 2009, we signed a binding term sheet (“Term Sheet”) with IGT whereby IGT advanced $1.5 million (“the Advance”) to the Company.  We are presently in negotiations with IGT to extend the term of the $1.5 million advance beyond August 15, 2009 and make it a longer term, interest only note payable with a 10% interest rate.  Although the term has expired, negotiations are continuing.  We expect the note to be extended to at least January 31, 2010.  We granted a security interest in all of our present and future assets as security for such obligation.

Outlook

The United States has been experiencing a severe economic recession that, among other things, has curtailed casino gaming development, activity and profitability, both nationwide and particularly in our local market, and has resulted in highly reduced availability of credit and capital financing and heightened economic risks. The effects and duration of these developments and related uncertainties on the Company’s future operations and cash flows cannot be estimated at this time but likely will be significant.

We presently are unable to satisfy our obligations as they come due and do not have enough cash, inclusive of the possible sale of our bingo and keno business, to sustain our anticipated working capital requirements and our business expansion plans for the remainder of 2009.  Subject to unforeseen effects of the economic risks and uncertainties discussed in the foregoing paragraph and to our ability to raise working capital, we expect to continue for at least the calendar year 2009 and 2010 to incur expenses related to the development and regulatory approval for the remaining PlayerVision modules and additional modules presently in development.  The further delay of the rollout of our PlayerVision system, the failure to obtain additional third-party financing, and/or the failure to sell our bingo and keno business will have material adverse effects on our cash flow, results of operations and financial condition including significant uncertainty as to our ability to continue as a going concern for the remainder of 2009.  No assurance can be given that we will be able to secure any third party financing or that such financing will be

- 24 - -

available to us on acceptable terms. Given the current financial market disruptions, credit crisis and economic recession, including the current downturn in the gaming industry, it is difficult at this time to obtain any third-party financing on acceptable terms, whether public or private equity or debt, strategic relationships, capital leases or other arrangements.  In addition, we have significant restrictive covenants under our recent financing with IGT that may prohibit us, in certain circumstances, from obtaining third party financing without IGT’s prior written consent.  Furthermore, any additional equity financing may be dilutive to stockholders, and debt financing, if available, may involve restrictive covenants.  Strategic arrangements, if necessary to raise additional funds, may require that we relinquish rights to certain of our technologies or products or agree to other material obligations and covenants.

Although casino gaming development, activity and profitability for 2008 and the first six months of 2009 were down and are expected to remain down for the remainder of 2009, we believe that our PlayerVision system will provide casinos with an additional revenue sources or cost reductions attractive enough to appeal even in the current depressed gaming environment.  Other than the insignificant revenue realized from our early adoption agreements, we do not expect to begin to realize revenue from our PlayerVision system until the fourth quarter of 2009,  though we cannot provide assurance that the market will ever accept our PlayerVision system.  Any failure by us to install our PlayerVision system within our expected schedule or on terms acceptable to us will likely have a material adverse impact on our cash flow, results of operations and financial condition.  In addition, we expect to face competition from larger, more formidable competitors as we enter the gaming machine market.  An unexpected lack of market acceptance of our PlayerVision system, failure to obtain additional financing, or unforeseen adverse competitive, economic, or other factors may adversely impact our cash position, and thereby materially adversely affect our financial condition and business operations.

We presently do not use any derivative financial instruments to hedge our exposure to adverse fluctuations in interest rates, foreign exchange rates, fluctuations in commodity prices, or other market risks, nor do we invest in speculative financial instruments.

Off Balance Sheet Financing Arrangements

We have operating leases totaling $1,271,075 that have the following payment schedule by calendar year: $248,176 in 2009, $500,948 in 2010, $324,253 in 2011, $147,804 in 2012, and $49,894 in 2013.

Item 3.         Quantitative and Qualitative Disclosures About Market Risk.

Not required.

Item 4(T).    Controls and Procedures.

We evaluated the effectiveness of our disclosures controls and procedures as of the end of the period covered by this report.  This evaluation was carried out under the supervision, and with the participation, of Jon D. Berkley, our Chief Executive Officer, and Bruce A. Shepard, our Chief Financial Officer. Based on this evaluation, Mr. Berkley and Mr. Shepard concluded that our disclosure controls and procedures are effective to ensure the information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934, or the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.

Mr. Berkley and Mr. Shepard also concluded that there have been no significant changes in internal controls or in other factors that have materially affected, or would be reasonably likely to materially affected, our internal control over financial reporting during the quarter most recently ended.

- 25 - -

PART II – OTHER INFORMATION

Item 1.      Legal Proceedings.

         On September 15, 2008, Steven Brandstetter and J & S Gaming filed a lawsuit against us, among other defendants, in Department 11 of the Nevada Eighth Judicial District Court captioned Brandstetter, et al. v. Bally Gaming, Inc., et al., case no. 08-A-571641-C alleging against us claims of breach of contract, misrepresentation, breach of fiduciary duty and unjust enrichment regarding a non-disclosure agreement executed in May 2002 pertaining to the plaintiffs’ gaming concepts.  The plaintiffs are seeking monetary damages, including attorney’s fees and costs.   We filed an answer to the complaint on December 8, 2008 citing eighteen affirmative defenses.  Depositions have been scheduled for some of the executives of the larger company defendants.  No depositions have been requested of any of our executives. We are unable to estimate minimum costs, if any, to be incurred by us upon the ultimate disposition of this matter an accordingly, no provision has been made.

Item 1A.    Risk Factors.

Not required.

Item 2.      Unregistered Sales of Equity Securities.

During the three months ended June 30, 2009, we issued 7,156 shares of Common Stock Series A to our Series F Convertible Preferred Stock investor in lieu of legal fees incurred by him for the restoration of Series F Convertible Preferred Stock and for cash dividends on Series F Convertible Preferred Stock when it was redeemed in April 2009.  This issuance was deemed to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act in that the issuance did not involve a public offering.

During the three months ended June 30, 2009, we issued options and warrants to purchase a total of 697,359 shares of Common Stock Series A to our employees and members of our board of directors, all with an exercise price of $2.50 per share, primarily with a three-year vesting schedule and a five-year life.  These issuances were deemed to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act in that the issuance did not involve a public offering.

Item 3.     Defaults Upon Senior Securities.

None.

Item 4.    Submission of Matters to a Vote of Security Holders.

Our 2009 annual meeting of the stockholders was held on May 26, 2009.  Items of business set forth in our proxy statement dated April 24, 2009 that were voted on and approved at the annual meeting are as follows:

- 26 - -

(1)   Election of Directors to serve until our next annual meeting and until their successors are elected and qualified:

	Votes
Nominee	For	Withheld
Russell R. Roth	11,438,807	1,511,021
Jon D. Berkley	11,214,632	1,735,196
Richard H. Irvine	11,438,807	1,511,021
Kyleen E. Cane	11,438,807	1,511,021
Terry L. Caudill	11,438,807	1,511,021
Robert M. McMonigle	6,744,929	6,204,899
Harlan D. Braaten	11,438,807	1,511,021

(2)   Adoption of our 2009 Stock Option Plan:

For	Withheld	Abstain	Broker Non-vote
11,403,307	1,594,921	59,400	-

(3)   Ratification of Piercy Bowler Taylor & Kern as our Independent Registered Public Accounting Firm:

For	Withheld	Abstain	Broker Non-vote
12,936,628	2,200	-	-

Item 5.    Other Information.

On August 6, 2009, we signed a Technology Royalty Agreement with Perfect Storm Software, LLC, whose members include five of our engineers, one of whom is our Chief Technology Officer, who began employment in 2008 and brought preexisting technology with them which was used in the development of PlayerVision 3.  The Technology Royalty Agreement calls for (1) a one-time royalty fee of $1,000 due and payable on the date of execution, (2) an annual license reissue fee in the amount of $20,000 due and payable on each anniversary of the Effective Date beginning on the first anniversary, (3) a royalty bonus equal to 5% of net PV 3 sales for software licensed products, (4) a royalty bonus equal to 5% of net sales for hardware utilized to operate software licensed products where the markup percentage of the hardware is greater than 20%, and (5) a royalty bonus of 750,000 shares of our Common Stock Series A contingent upon any change in control of us.

Item 6.    Exhibits

10.1	Technology Royalty Agreement dated August 6, 2009 between the Company and Perfect Storm Software, LLC
31.1	Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

- 27 - -

SIGNATURE

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		Las Vegas Gaming, Inc.
		(Registrant)
Date:	August 19, 2009	By:	/s/ Jon D. Berkley
			Jon D. Berkley
		Its:	President and Chief Executive Officer
			(Principal Executive Officer)
Date:	August 19, 2009	By:	/s/ Bruce A. Shepard
			Bruce A. Shepard
		Its:	Chief Financial Officer
			(Principal Financial Officer)

- 28 - -

EXHIBIT INDEX

Exhibit	Document Description
10.1	Technology Royalty Agreement dated August 6, 2009 between the Company and Perfect Storm Software, LLC
31.1	Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

- 29 - -

EX-10.1

Technology Royalty Agreement                       Page 1 of 9

TECHNOLOGY ROYALTY AGREEMENT

This Agreement is between Perfect Storm Software, LLC (“The Developer”) whose address is 695 Kentons Run Avenue, Henderson, NV 89052 and Las Vegas Gaming, Inc. (“The Recipient”), a Nevada corporation having a principal place of business located at 3980 Howard Hughes Parkway, Suite 450, Las Vegas, NV 89169.

TABLE OF CONTENTS

RECITALS

1.   EFFECTIVE DATE

2.   DEFINITIONS

3.   WARRANTY, SUPERIOR RIGHTS AND REPRESENTATIONS

4.   LICENSE

5.   PAYMENTS AND REPORTS

6.   TERM AND TERMINATION

7.   ASSIGNMENT

8.   INDEMNIFICATION

9.   USE OF THE DEVELOPER’S AND MEMBERS’ NAMES

10. CONFIDENTIAL INFORMATION

11. ALTERNATE DISPUTE RESOLUTION

12. GENERAL

SIGNATURES

RECITALS

A.   The Developer owns certain Technology Rights related to Licensed Subject Matter which were developed prior to

       any member of The Developer being employed by The Recipient.

B.  Members of The Developer were subsequently employed by the Recipient and created LVGI Developed Subject

      Matter including Player Vision 3 which relies on the Licensed Subject Matter for commercialisation. Player Vision 3

      and all of its source code is a wholly owned asset of LVGI.

C.  The Developer and The Recipient desire to have the Licensed Subject Matter and LVGI Developed Subject Matter

      combined and used for the benefit of The Recipient and incorporated into any derivative works by The Recipient.

D.  The Recipient wishes to obtain a license from The Developer to practice Licensed Subject Matter in the derivative

      works.

NOW, THEREFORE, in consideration of the mutual covenants and premises herein contained, the parties agree as follows:

1. EFFECTIVE DATE

This Agreement is effective August 1, 2009 ("Effective Date").

2. DEFINITIONS

As used in this Agreement, the following terms have the meanings indicated:

Perfect Storm Software, LLC Initials ____________                                 Las Vegas Gaming, Inc. Initials ___________

Technology Royalty Agreement               Page 2 of 9

2.1 "Affiliate" means any business entity more than 50% owned by The Recipient, any business entity which owns more than 50% of The Recipient, or any business entity that is more than 50% owned by a business entity that owns more than 50% of The Recipient.

2.2 "Licensed Field" means the gaming (gambling) and/or hospitality industry whether land based, sea based, river based, or fully electronic such as internet based gaming (gambling) or any other method that allows a person to place a wager on an outcome with real or virtual currency.

2.3 "Licensed Product" means any product Sold by The Recipient comprising Licensed Subject Matter pursuant to this Agreement.

2.4 "Licensed Subject Matter" means inventions, discoveries, concepts, processes, technical architecture, source code, hardware designs, and algorithms considered to be proprietary know-how or Technology Rights which are within Licensed Field and were utilised in the creation of The Recipient’s products commercially referred to as PlayerVision and the PlayerVision family of products.  This includes, but is not limited to, the message passing architecture, persistent storage design, n-tier architecture, application definition language, and modular design which were conceived of and reached technical feasibility prior to March 10th, 2008.

2.5 "Licensed Territory" means worldwide.

2.6 "Net Sales" means the gross revenues received by The Recipient from the Sale of Licensed Products less sales and/or use taxes actually paid, import and/or export duties actually paid, outbound transportation prepaid or allowed, and amounts allowed or credited due to returns (not to exceed the original billing or invoice amount).

2.8 "Sale or Sold" means the transfer, use of, or disposition of a Licensed Product for value to a party other than The Recipient whether sold, licensed, rented, subscribed to, or utilised in any other manner.

2.9 "Technology Rights" means The Developer’s rights in technical information, know-how, processes, procedures, compositions, devices, methods, formulas, protocols, techniques, software, designs, drawings or data created by The Developer or its members which were conceived of and reached technical feasibility prior to March 10th, 2008..

2.10 "Markup Percentage" means the amount added to the purchase cost of an item to arrive at a selling price expressed as a percentage.

2.11 "Change In Control"  of The Recipient means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:

a. Any Exchange Act Person becomes the Owner, directly or indirectly, of securities of The Recipient representing more than fifty percent (50%) of the combined voting power of The Recipient’s then outstanding securities other than by virtue of a merger, consolidation or similar transaction.  Notwithstanding the foregoing, a Change in Control shall not be deemed to occur (a) on account of the acquisition of securities of The Recipient by an investor, any affiliate thereof or any other Exchange Act Person from The Recipient in a transaction or series of related transactions the primary purpose of which is to obtain financing for The Recipient through the issuance of equity securities or (b) solely because the level of Ownership held by any Exchange Act Person (the “Subject Person”) exceeds the designated percentage threshold of the outstanding voting securities as a result of a repurchase or other acquisition of voting securities by The Recipient reducing the number of shares outstanding, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of voting securities by The Recipient, and after such share acquisition, the Subject Person becomes the Owner of any additional voting securities that, assuming the repurchase or other acquisition had not occurred, increases the percentage of the then outstanding voting securities Owned by the Subject Person over the designated percentage threshold, then a Change in Control shall be deemed to occur;

Perfect Storm Software, LLC Initials ____________                                    Las Vegas Gaming, Inc. Initials ___________

Technology Royalty Agreement               Page 3 of 9

b. There is consummated a merger, consolidation or similar transaction involving (directly or indirectly) The Recipient and, immediately after the consummation of such merger, consolidation or similar transaction, the stockholders of The Recipient immediately prior thereto do not Own, directly or indirectly, either (a) outstanding voting securities representing more than fifty percent (50%) of the combined outstanding voting power of the surviving Entity in such merger, consolidation or similar transaction or (b) more than fifty percent (50%) of the combined outstanding voting power of the parent of the surviving Entity in such merger, consolidation or similar transaction, in each case in substantially the same proportions as their Ownership of the outstanding voting securities of The Recipient immediately prior to such transaction;

c. There is consummated a sale, lease, license or other disposition of all or substantially all of the consolidated assets of The Recipient and its subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of The Recipient and its subsidiaries to an Entity, more than fifty percent (50%) of the combined voting power of the voting securities of which are Owned by stockholders of The Recipient in substantially the same proportions as their Ownership of the outstanding voting securities of The Recipient immediately prior to such sale, lease, license or other disposition; or

d. Individuals who, on the date this Agreement is executed, are members of the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the members of the Board; provided, however, that if the appointment or election (or nomination for election) of any new Board member was approved or recommended by a majority vote of the members of the Incumbent Board then still in office, such new member shall be considered as a member of the Incumbent Board.

2.12 "Entity"  means a corporation, partnership or any other entity.

2.13 "Exchange Act"  means the Securities Exchange Act of 1934, as amended.

2.14 "Exchange Act Person" means any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person” shall not include (A) The Recipient or any subsidiary of The Recipient, (B) any employee benefit plan of The Recipient or any subsidiary of The Recipient or any trustee or other fiduciary holding securities under an employee benefit plan of The Recipient or any subsidiary of The Recipient, (C) an underwriter temporarily holding securities pursuant to an offering of such securities, or (D) an Entity Owned, directly or indirectly, by the stockholders of The Recipient in substantially the same proportions as their Ownership of stock of The Recipient.

2.15 “Own,” “Owned,” “Owner,” “Ownership” - A person or Entity shall be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired “Ownership” of securities if such person or Entity, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power, which includes the power to vote or to direct the voting, with respect to such securities.

2.16 “LVGI Developed Subject Matter” - - means inventions, discoveries, concepts, processes, technical architecture, source code, hardware designs, and algorithms which are a part of The Recipient’s products (including, but not limited to PlayerVision 3 products) which were developed after March 10th, 2008.

3. WARRANTY: SUPERIOR-RIGHTS

3.1 The Developer represents and warrants its belief that (i) it is the owner of the entire right, title, and interest in and to Licensed Subject Matter, (ii) it has the sole right to grant licenses thereunder, and (iii) it has not knowingly granted licenses thereunder to any other entity that would restrict rights granted to The Recipient.

Perfect Storm Software, LLC Initials ____________                                     Las Vegas Gaming, Inc. Initials ___________

Technology Royalty Agreement                Page 4 of 9

3.2 The Recipient understands and acknowledges that The Developer, by this Agreement, makes no representation as to the operability or fitness for any use, safety, efficacy, ability to obtain regulatory approval, and/or breadth of the Licensed Subject Matter.

3.3 The Recipient, by execution hereof, acknowledges, covenants and agrees that it has not been induced in any way by The Developer or its members to enter into this Agreement, and further warrants and represents that (i) it has conducted sufficient due diligence with respect to all items and issues pertaining to this Article 3 and all other matters pertaining to this Agreement; and (ii) The Recipient has adequate knowledge and expertise, or has utilised knowledgeable and expert consultants, to adequately conduct the due diligence, and agrees to accept all risks inherent herein.

4. LICENSE

4.1 The Developer hereby grants to The Recipient a royalty-bearing, exclusive license under Licensed Subject Matter to manufacture, have manufactured, and/or sell Licensed Products within the Licensed Territory for use within Licensed Field. This grant is subject to the payment by The Recipient to The Developer of all consideration as provided herein, and is further subject to rights retained by The Developer to:

a.   Create derivative works for products or services outside of the Licensed Field; and

b.   License Licensed Subject Matter to other parties for use outside of the Licensed Field.

4.2 The Recipient may extend the license granted herein to any Affiliate if the Affiliate consents to be bound by this Agreement to the same extent as The Recipient.

4.3 The Recipient may grant sub-licenses consistent with this Agreement if The Recipient is responsible for the operations of its sub-licensees relevant to this Agreement as if the operations were carried out by The Recipient, including the payment of royalties whether or not paid to The Recipient by a sub-licensee. The Recipient must deliver to The Developer a true and correct copy of each sub-license granted by The Recipient, and any modification or termination thereof, within 30 days after execution, modification, or termination.  Any such sub-license must meet the criteria of being an arms-length transaction between a willing buyer and a willing seller at fair market value.  When this Agreement is terminated, all existing sub-licenses granted by The Recipient must be assigned to The Developer.

4.3 The Developer acknowledges that all LVGI Developed Subject Matter created by members of The Developer as employees of The Recipient  is owned fully and without limitation by The Recipient.

5. PAYMENTS AND REPORTS

5.1 In consideration of rights granted by The Developer to The Recipient under this Agreement, The Recipient will pay The Developer the following:

a.   A one time royalty fee in the amount of $1,000.00 due and payable on the date when this Agreement is executed by The Recipient;

b.   An annual license reissue fee in the amount of $20,000.00 due and payable on each anniversary of the Effective Date beginning on the first anniversary;

c.   A running royalty bonus equal to 5% of Net Sales for software based Licensed Products.

d.   A running royalty bonus equal to 5% of Net Sales for hardware utilised to operate Licensed Products where the Markup Percentage of the hardware is greater than 20%.

5.2 In consideration of rights granted by The Developer to The Recipient under this Agreement, The Recipient further agrees to issue to The Developer a royalty bonus of 750,000 (seven hundred and fifty thousand) shares of The Recipient's common stock simultaneously with any Change In Control of The Recipient.

Perfect Storm Software, LLC Initials ____________                                          Las Vegas Gaming, Inc. Initials ___________

Technology Royalty Agreement             Page 5 of 9

5.3 During the Term of this Agreement and for 1 year thereafter, The Recipient agrees to keep complete and accurate records of its and its sub-licensees Sales and Net Sales of Licensed Products under the license granted in this Agreement in sufficient detail to enable the royalties payable here-under to be determined. The Recipient agrees to permit The Developer or its representatives, at The Developer’s expense, to periodically examine its books, ledgers, and records during regular business hours for the purpose of and to the extent necessary to verify any report required under this Agreement. If the amounts due to The Developer are determined to have been underpaid, The Recipient will pay the cost of the examination and accrued interest at the highest allowable rate.

5.4 Within 30 days after March 31st, June 30th, September 30th and December 31st, beginning immediately after the Effective Date, The Recipient must deliver to The Developer a true and accurate written report, even if no payments are due The Developer, giving the particulars of the business conducted by The Recipient and its sub-licensees, if any exist, during the preceding 3 calendar months under this Agreement as are pertinent to calculating payments here-under. This report will include at least:

a.   the quantities of Licensed Subject Matter that it has produced;

b.   the total Sales;

c.   the calculation of royalties thereon; and

d.   the total royalties computed and due The Developer.

Simultaneously with the delivery of each report, The Recipient must pay to The Developer the amount, if any, due for the period of each report.

5.5 On or before each anniversary of the Effective Date, irrespective of having a first Sale or offer for Sale, The Recipient must deliver to The Developer a written progress report as to The Recipient’s (and any sub-licensee of The Recipient) efforts and accomplishments during the preceding year in diligently commercialising Licensed Subject Matter in the Licensed Territory and The Recipient’s (and, if applicable, its sub-licensees’) commercialisation plans for the upcoming year.

5.6 All amounts payable here by The Recipient must be paid in US dollars without deductions for taxes, assessments, fees, or charges of any kind. Checks must be payable to The Developer.

6. TERM AND TERMINATION

6.1 The term of this Agreement is from the Effective Date for a period of 15 years.

6.2 Any time after 2 years from the Effective Date, The Developer has the right to terminate the exclusivity of this license in any gaming jurisdiction(s) and/or hospitality markets in the Licensed Territory if The Recipient, within 90 days after receiving written notice from The Developer of intended termination of exclusivity, fails to provide written evidence that The Recipient or its sub-licensees have in a commercially reasonable manner commercialised or are actively attempting to commercialise  the Licenses Subject Matter in such jurisdiction(s) and/or hospitality markets.

6.3 Any time after 3 years from the Effective Date, The Developer has the right to terminate this license in any gaming jurisdiction(s) and/or hospitality markets in the Licensed Territory if The Recipient, within 90 days after receiving written notice from The Developer of intended termination, fails to provide written evidence that The Recipient or its sub-licensees have in a commercially reasonable manner commercialised or are actively attempting to commercialise the Licensed Subject Matter in such jurisdiction(s) and/or hospitality markets.

6.4 The following definitions apply to Article 6: (i) "Commercialise" means having Sales of Licensed Products in such gaming jurisdiction and/or hospitality market; and (ii) "Active attempts to commercialise" means having Sales of Licensed Products or an effective, ongoing and active research, development, manufacturing, marketing or sales program as appropriate, directed toward obtaining regulatory approval, production or Sales of Licensed Products in any jurisdiction and/or hospitality market, and plans acceptable to The Developer, in its sole discretion, to commercialise licensed inventions in the jurisdiction(s) and/or hospitality markets that The Developer intends to terminate.

Perfect Storm Software, LLC Initials ____________                             Las Vegas Gaming, Inc. Initials ___________

Technology Royalty Agreement         Page 6 of 9

6.5 This Agreement will earlier terminate:

a.   automatically if The Recipient becomes bankrupt or insolvent and/or if the business of The Recipient is placed in the hands of a receiver, assignee, or trustee, whether by voluntary act of The Recipient or otherwise; or

b.   upon 30 days written notice from The Developer if The Recipient breaches or defaults on its obligation to make payments (if any are due) or reports, in accordance with the terms of Article 5, unless, before the end of the 30 day period, The Recipient has cured the default or breach and so notifies The Developer, stating the manner of the cure; or

c.   upon 90 days written notice if The Recipient breaches or defaults on any other obligation under this Agreement, unless, before the end of the 90 day period, The Recipient has cured the default or breach and so notifies The Developer, stating the manner of the cure; or

d.   at any time by mutual written agreement between The Recipient and The Developer, upon 180 days written notice to all parties and subject to any terms herein which survive termination; or

e.   under the provisions of Paragraphs 6.2 and 6.3 if invoked.

6.6 If this Agreement is terminated for any cause:

a.   nothing herein will be construed to release either party of any obligation matured prior to the effective date of the termination;

b.   after the effective date of the termination, The Recipient may sell all Licensed Products and parts it has on hand at the date of termination, if it pays earned royalties thereon according to the terms of Article 5; and

c.   The Recipient will be bound by the provisions of Articles 8 (Indemnification), 9 (Use of The Developer’s and any Members’ Names), and 10 (Confidential Information) of this Agreement.

7. ASSIGNMENT

Except in connection with the sale of substantially all of The Recipient’s assets to a third party, this Agreement may not be assigned by The Recipient without the prior written consent of The Developer, which will not be unreasonably withheld.

8. INDEMNIFICATION

The Recipient agrees to hold harmless and indemnify The Developer,  its Members, Regents, officers, employees and agents from and against any claims, demands, or causes of action whatsoever, including without limitation those arising on account of any injury or death of persons or damage to property caused by, or arising out of, or resulting from, the exercise or practice of the license granted here-under by The Recipient, its Affiliates or their officers, employees, agents or representatives.

9. USE OF THE DEVELOPER’S AND MEMBERS’ NAMES

The Recipient may not use the name of The Developer or its Members without express written consent.

10. CONFIDENTIAL INFORMATION AND PUBLICATION

10.1 The Developer and The Recipient each agree that all information contained in documents marked "confidential" and forwarded to one by the other (i) be received in strict confidence, (ii) be used only for the purposes of this Agreement, and (iii) not be disclosed by the recipient party, its agents or employees without the prior written consent of the other party, except to the extent that the recipient party can establish competent written proof that such information:

Perfect Storm Software, LLC Initials ____________                                      Las Vegas Gaming, Inc. Initials ___________

Technology Royalty Agreement            Page 7 of 9

a.     was in the public domain at the time of disclosure;

b.     later became part of the public domain through no act or omission of the recipient party, its employees, agents, successors or assigns;

c.     was lawfully disclosed to the recipient party by a third party having the right to disclose it;

d.     was already known by the recipient party at the time of disclosure;

e.     was independently developed by the recipient; or

f.     is required by law or regulation to be disclosed or

g.     where disclosure is required by the Security Exchange Commission in a regulatory filing.

10.2 Each party’s obligation of confidence here-under shall be fulfilled by using at least the same degree of care with the other party’s confidential information as it uses to protect its own confidential information. This obligation shall exist while this Agreement is in force and for a period of 3 years thereafter.

10.3 The Developer will submit its manuscript for any proposed publication of research related to Licensed Subject Matter to The Recipient at least 30 days before publication, and The Recipient shall have the right to review and comment upon the publication in order to protect The Recipient’s confidential information. Upon The Recipient’s request, publication will be delayed up to 60 additional days to enable The Recipient to secure adequate intellectual property protection of The Recipient’s property that would be affected by the publication.

11. ALTERNATE DISPUTE RESOLUTION

Any dispute or controversy arising out of or relating to this Agreement, its construction or its actual or alleged breach will be decided by mediation. If the mediation does not result in a resolution of such dispute or controversy, it will be finally decided by an appropriate method of alternate dispute resolution, including without limitation, arbitration, conducted in the city of Las Vegas, Nevada in accordance with the Commercial Dispute Resolution. The arbitration panel will include members knowledgeable in the evaluation of computer science technology. Judgement upon the award rendered may be entered in the highest court or forum having jurisdiction, state or federal. The provisions of this Article 11 will not apply to any dispute or controversy as to which any treaty or law prohibits such arbitration. The decision of the arbitration must be sanctioned by a court of law having jurisdiction to be binding upon and enforceable by the parties.

12. GENERAL

12.1 This Agreement constitutes the entire and only agreement between the parties for Licensed Subject Matter and all other prior negotiations, representations, agreements, and understandings are superseded hereby. No agreements altering or supplementing the terms hereof may be made except by a written document signed by both parties.

12.2 Any notice required by this Agreement must be given by prepaid, first class, certified mail, return receipt requested, addressed in the case of The Developer to:

Managing Member

Perfect Storm Software, LLC

695 Kentons Run Avenue

Henderson, NV 89052

With a copy e-mailed to:

legal@perfectstormsw.com

Perfect Storm Software, LLC Initials ____________                                 Las Vegas Gaming, Inc. Initials ___________

Technology Royalty Agreement           Page 8 of 9

or in the case of The Recipient to:

CEO

Las Vegas Gaming, Inc.

3980 Howard Hughes Parkway

Suite 450

Las Vegas, NV 89169

or other addresses as may be given from time to time under the terms of this notice provision.

12.3 The Recipient must comply with all applicable federal, state and local laws and regulations in connection with its activities pursuant to this Agreement.

12.4 This Agreement will be construed and enforced in accordance with the laws of the State of Nevada.

12.5 Failure of The Developer to enforce a right under this Agreement will not act as a waiver of that right or the ability to later assert that right relative to the particular situation involved.

12.6 Headings are included herein for convenience only and shall not be used to construe this Agreement.

12.7 If any part of this Agreement is for any reason found to be unenforceable, all other parts nevertheless remain enforceable.

Perfect Storm Software, LLC Initials ____________                                 Las Vegas Gaming, Inc. Initials ___________

Technology Royalty Agreement           Page 9 of 9

IN WITNESS WHEREOF, parties hereto have caused their duly authorised representatives to execute this Agreement.

Perfect Storm Software, LLC	Las Vegas Gaming, Inc.
Name: Rocco Bowling Title:   Managing Member Signature:  /s/ Rocco Bowling                          Date:          8/6/09	Name: Russ Roth Title: Chairman of the Board Signature:  /s/ Russell R. Roth                                Date:8/5/09
Name: Timothy P. Britt Title: Managing Member Signature:  /s/ Timothy P. Britt                         Date:_____8/6/09	Name: Jon Berkley Title: Chief Executive Officer Signature: /s/ Jon D. Berkley                                   Date:         8/5/09
Name: Chris Campbell Title: Managing Member Signature:  /s/ Chris P. Campbell                       Date:           8/6/09	Name: Bruce Shepard Title: Chief Financial Officer Signature: /s/ Bruce A. Shepard                               Date:          8/5/09
Name: Travis Endersby Title: Managing Member Signature:  /s/ Travis Endersby                         Date:          8/6/09
Name: Robert Perry Title: Managing Member Signature:  /s/ Robert Perry                                  Date:           8/6/09

Perfect Storm Software, LLC Initials ____________                        Las Vegas Gaming, Inc. Initials ___________

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Jon D. Berkley, certify that:

1.   I have reviewed this Quarterly Report on Form 10-Q of Las Vegas Gaming, Inc.;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  August 19, 2009	By:	/s/ Jon D. Berkley
		Jon D. Berkley, President and Chief Executive Officer (Principal Executive Officer)

EX-31.1

EXHIBIT 31.2

CERTIFICATIONS

I, Bruce A. Shepard, certify that:

1.   I have reviewed this Quarterly Report on Form 10-Q of Las Vegas Gaming, Inc;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in  Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  August 19, 2009	By:	/s/ Bruce A. Shepard
		Bruce A. Shepard, Chief Financial Officer (Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATIONS PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Las Vegas Gaming, Inc. (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2009, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Jon D. Berkley, Chief Executive Officer, and Bruce A. Shepard, Chief Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.   The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.   The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

By:	/s/ Jon D. Berkley	Dated:	August 19, 2009
	Jon D. Berkley
Title:	President and Chief Executive Officer (Principal Executive Officer)
By:	/s/ Bruce A. Shepard	Dated:	August 19, 2009
	Bruce A. Shepard
Title:	Chief Financial Officer (Principal Financial Officer)