Florida Gaming Corp – ‘10QSB’ for 9/30/97

As of:  Friday, 11/14/97   ·   For:  9/30/97   ·   Accession #:  1047469-97-4746   ·   File #:  0-09099

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Quarterly Report — Small Business   —   Form 10-QSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10QSB       Quarterly Report -- Small Business                    25    158K 
 2: EX-27       Financial Data Schedule                                2      7K 

10QSB   —   Quarterly Report — Small Business
Document Table of Contents

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      UNITED STATES SECURITIES AND EXCHANGE COMMISSION

     WASHINGTON, DC  20549

      F O R M 10-QSB

     QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE

     SECURITIES EXCHANGE ACT OF 1934

     For the Quarterly Period Ended September 30, 1997

     Commission file number 0-9099

      FLORIDA GAMING CORPORATION
      ______________________________________________________
      (Exact name of registrant as specified in its charter)

DELAWARE                                   59-670533
    ______________________                    ________________________
(State or other Jurisdiction of                   (IRS Employer       
Incorporation or Organization)                Identification No.)   

3500  NW 37TH AVENUE, MIAMI, FLORIDA                33142-0000    
_______________________________________________________________________ 
(Address of principal executive offices)             (Zip code)     

Registrant's telephone number, including area code  (305) 633-6400
                                                     _______________

Former name, former address and former fiscal year, if changed since last report
     _____________________________________________

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

YES      X               NO 
                      ___________                _____________

5,586,940   shares of the issuer's Common Stock were outstanding as of the      
     latest practicable date,   NOVEMBER 14, 1997.

    Transitional Small Business Disclosure Format:

YES                NO      X    
           ______________      _______________

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    FLORIDA GAMING
     CORPORATION

      INDEX TO FORM 10-QSB

                                                             PAGE NUMBER
                                                             ___________

PART I.  FINANCIAL INFORMATION                                                  

Item 1. Financial Statements                                                    

Balance Sheets as of September 30, 1997 (unaudited) and                         
December 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . .   3   

Statements of Operations (unaudited) Three & Nine Months ended                  
September 30, 1997 and 1996 . . . . . . . . . . . . . . . . . . .   5   

Statements of Cash Flows (unaudited) Nine Months ended                          
September 30, 1997 and 1996 . . . . . . . . . . . . . . . . . . .   6   

Notes to Financial Statements (unaudited) . . . . . . . . . . . . . .   7       

Item 2. Management's Discussion and Analysis of                                 
Financial Condition and Results of Operations . . . . . . . . . .  16   

PART II.  OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . .  23       

SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  25       

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PART I.  FINANCIAL INFORMATION                                                  

ITEM 1.                                                                         

      FLORIDA GAMING CORPORATION
     CONSOLIDATED BALANCE SHEETS
     (UNAUDITED)

ASSETS                                                                          
                                                SEPTEMBER 30,     DECEMBER 30,
                                                 1997               1996
                                                _____________     ____________
CURRENT ASSETS:                                                                 
Cash & cash equivalents  (Note 2) . . . . . .     $803,025          $907,527
Accounts receivable & current portion                                       
  of notes receivable (Note 6). . . . . . . .    3,428,574         2,100,259
Inventory (Note 2)  . . . . . . . . . . . . .       92,907           169,419
Prepaid expense and other . . . . . . . . . .      472,673           103,200
                                                ----------        ----------

    Total current assets                         4,797,179         3,280,405

PROPERTY AND EQUIPMENT:                                                         

Land (Notes 2 and 8). . . . . . . . . . . . .   11,647,485        11,457,495
Building & Improvements (Notes 2 and 8) . . .   11,714,405         9,747,978
Furniture, fixtures and equipment                                           
  (Notes 2 and 8) . . . . . . . . . . . . . .    2,188,785         1,717,520
                                                ----------        ----------
                                                25,550,675        22,922,993
 Less accumulated depreciation . . . . . . . .     (974,612)         (528,700)
                                                ----------        ----------
                                                24,576,063        22,394,293
                                                ----------        ----------
GAMING  VENTURE  INVESTMENTS  . . . . . . . . .      340,000           340,000  
RESERVE GAMING  V ENTURE  LOAN  (Note 9). . . .     (340,000)          (30,000) 
OTHER ASSETS. . . . . . . . . . . . . . . . . .      606,953           320,351  
                                                ----------        ----------

                                               $29,980,195       $26,305,049
                                                ==========        ==========

continued                                                                       

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FLORIDA  GAMING CORPORATION                                                     
CONSOLIDATED BALANCE SHEETS  (continued)                                        

LIABILITIES AND STOCKHOLDERS' EQUITY                                            

                                                        [Enlarge/Download Table]


                                                                             SEPTEMBER 30,  1997  DECEMBER 30,  1996
                                                                                                                    
CURRENT LIABILITIES                                                                                                 
     Accounts payable (Note 2)............................................       $  5,133,176         $  3,124,426  
     Other accrued expenses...............................................          1,377,465            1,180,123  
     Short-term borrowing and current portion of long-term debt...........          5,834,808            1,423,703  
                                                                                 ------------         ------------- 
            Total current liabilities......................................        12,345,449            5,728,252  

LONG-TERM LIABILITIES                                                                                               
     Long-term portion note payable (Note 2)..............................          3,443,818            7,095,289  

STOCKHOLDER'S EQUITY (See Notes 2,4,5, and 7):                                                                      
     Class A convertible preferred stock, convertible to common stock;                                              
      $.10 par value, 1,200,000 shares authorized,  34,435 shares                                                   
      issued and outstanding at September 30, 1997, and December 31, 1996.              3,443                3,443  

     Class B  convertible preferred stock;  convertible to common stock,                                            
      5,000 shares authorized;   545 and 1,990 shares issued and                                                    
      outstanding at September 30, 1997 and December 31, 1996,                                                      
      respectively......................................................                   54                  199  

     Class C  8% cumulative convertible preferred stock, convertible                                                
      to common stock, 5,000 shares authorized; 250 shares issued and                                               
      outstanding at September 30, 1997 and December 31,1996.............                  25                   55  

     Class D  8% cumulative convertible preferred stock,  5,000 shares                                              
      authorized; 25 shares issued and outstanding at September 30, 1997                                            
      and  December 31,  1996.............................................                  3                   65  

     Class E  8% cumulative convertible preferred stock,  5,000 shares                                              
      authorized; 2000 shares issued and outstanding at                                                             
      September 30, 1997 .................................................                200                  ---  

     Common stock, $.10 par value, authorized 15,000,000 shares,  5,538,130                                         
      issued and outstanding at September 30, 1997, and 4,340,626 shares                                            
      issued and outstanding at December 31, 1996.........................             553,813              434,063 

     Capital in excess of par value.......................................          36,498,920           35,276,095 

     Accumulated deficit.................................................          (22,865,530)         (22,232,412)
                                                                                  -------------        -------------
              Total stockholders equity..................................           14,190,928           13,481,508 
                                                                                  -------------        -------------
              Total liabilities and stockholders equity..................          $29,980,195          $26,305,049 
                                                                                  =============        =============


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

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    FLORIDA GAMING CORPORATION
           STATEMENTS OF OPERATION
     (UNAUDITED)

                                                        [Enlarge/Download Table]

                                                    FOR THE THREE MONTHS ENDED        FOR THE NINE MONTHS ENDED     

                                                  September 30,     September 30,   September 30,    September 30,  
                                                      1997              1996            1997             1996       
                                                  -------------     -------------  ---------------   -------------  
                                                                                                                    
HANDLE:                                                                                                             
Jai-Alai.                                          $  6,070,069      $      ---     $ 60,484,796       $  3,665,582 
Inter- Track Wagering (ITW)                          13,713,488       5,389,831       42,690,426         16,883,401 
                                                   -------------     -----------   -------------       -------------
       Total Pari-Mutuel Handle                      19,783,557       5,389,831      103,175,222         20,548,983 
                                                   -------------     -----------   -------------       -------------
REVENUE:                                                                                                            
On Site Mutuel Revenue, Net of                                                                                      
Pari-Mutuel taxes to State of Florida                $1,211,417             ---     $ 10,190,036        $   807,805 
Inter-Track Mutuel Commissions                        1,220,115      $  490,704        3,859,616          1,631,305 
                                                   -------------     -----------   -------------       -------------
       Net Pari-Mutuel Revenue                        2,431,532         490,704       14,049,652          2,439,110 

Cardroom Income                                         206,292             ---          305,941                --- 
Admissions Income,  Net of state taxes                   86,800          26,779          412,399            104,113 
Programs, Food, Beverage and Other Income               826,130         106,502        3,113,007            603,067 
                                                   -------------     -----------   -------------       -------------
       Total Operating Revenue                        3,550,754      $  623,985     $ 17,880,999         $3,146,290 
                                                   ============      ===========    ============       =============
COSTS AND EXPENSE:                                                                                                  
Operating                                          $  2,920,009      $  495,970     $ 12,863,964         $2,635,327 

General and Administrative                            1,852,863         489,425        6,645,907          1,403,336 
Depreciation & Amortization                             191,269          48,600          482,991            145,800 
Summer Jai-Alai                                          31,912             ---           54,247                --- 
                                                   -------------     -----------   -------------       -------------
     Total Costs and Expense                          4,996,053       1,033,995       20,047,109          4,184,463 
                                                   -------------     -----------   -------------       -------------
      Net Income (Loss) From Operations             ($1,445,299)      ($410,010)     ($2,166,110)       ($1,038,173)
                                                   ============      ===========    ============       =============
OTHER INCOME (EXPENSES)                                                                                             
     Loss Reserve                                      (322,193)            ---         (322,193)               --- 
     Interest and Other Income                           55,517         535,536          267,078            640,441 
                                                   -------------     -----------   -------------       -------------
     Net Income (loss)                           $   (1,711,975)     $  125,526     $ (2,221,225)         $(397,732)
                                                   ============      ===========    ============       =============
Earnings (loss) per  Common Share                $        (0.32)     $     0.04     $      (0.45)          $  (0.12)
Earnings per  Common Share                                                                                          
 (fully diluted See Note 4)                                 N/A      $     0.02              N/A                N/A 
Weighted Avg. Common Shares Outstanding               5,369,594       3,585,808        4,918,200          3,370,115 

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


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    FLORIDA GAMING CORPORATION
     CONSOLIDATED STATEMENTS OF CASH FLOWS
     (Unaudited)

                                                        [Enlarge/Download Table]

                                                                                     FOR THE NINE MONTHS ENDED        
                                                                             SEPTEMBER 30, 1997     SEPTEMBER 30, 1996
                                                                                                                      
Cash flows from operating activities:                                                                                 
Net Income(loss).........................................................      $  (2,221,225)            $(397,732)   
Adjustments to reconcile net income to net cash provided by                                                           
     (used in) operating activities:                                                                                  
        Depreciation and amortization....................................            482,991               145,800    
        Equity in earnings of Summer Jai-Alai............................             54,247                   ---    
        Accounts receivable, net.........................................           (406,244)             (542,135)   
        Prepaid expenses and other current assets........................           (369,474)              (35,131)   
        Other assets.....................................................            (67,932)              (12,229)   
        Inventories......................................................             76,511                 1,818    
        Due to Summer Jai-Alai...........................................              5,895                   ---    
        Accounts payable.................................................          2,008,750               (82,155)   
        Accrued expenses.................................................            197,342                46,700    
                                                                                  -----------            ----------   
                 Total adjustments.......................................          1,982,086              (477,332)   

        Net cash provided (used) by operating activities................           $(239,139)            $(875,064)   
                                                                                  -----------            ----------   
Investing activities:                                                                                                 
            Loan  to affiliated company..................................           (927,966)           (1,292,641)   
            Cash portion of WJA Note Purchase............................                ---            (1,980,889)   
            Capital Expenditures (Note 8)................................         (2,627,677)             (243,033)   
                                                                                  -----------            ----------   
            Net cash provided from (used in) investing activities........        $(3,555,643)          $(3,516,563)   
                                                                                  -----------            ----------   
Financing activities:                                                                                                 
 Net proceeds from borrowing/Repayment of Borrowings ....................           (440,366)             (128,653)   
               Convertible Bond Issue  (Guaranteed by Affiliated Company)                                             
                (Note 5)  ................................................         1,200,000                  ---     

               Stockholders Equity:                                                                                   
               Issuance of Common & Preferred Stock, net proceeds. (Note 5)        2,930,646             2,037,742    
                                                                                  -----------            ----------   
            Net cash provided (used) from financing activities...........         $3,690,280           $ 1,909,089    
                                                                                  -----------            ----------   
NET INCREASE (DECREASE) IN CASH..........................................         $ (104,502)          $(2,482,538)   

CASH AND EQUIVALENT AT BEGINNING OF YEAR.................................         $  907,527           $ 2,721,865    
                                                                                  -----------            ----------   
CASH AND CASH EQUIVALENTS AT END OF QUARTER..............................         $  803,025           $   239,327    
                                                                                  ===========          ============   
Supplemental disclosure of cash flow information:                                                                     
     Cash paid during the period for:                                                                                 
        Interest..........................................................           408,423               148,950    
        IncomeTaxes.......................................................                 0                     0    
        Non-cash  Items...................................................           322,193                74,151    


   The accompanying notes are an integral part of these financial statements

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FLORIDA GAMING CORPORATION                                                      
NOTES TO FINANCIAL STATEMENTS                                                   
September 30, 1997                                                              
(unaudited)                                                                     

(1)  BASIS OF PRESENTATION                                                      

The financial statements of Florida Gaming Corporation (the "Company") have     
been prepared without audit for filing with the Securities and Exchange         
Commission. The accompanying unaudited financial statements have been           
prepared in accordance with the rules and regulations of the Securities and     
Exchange Commission for interim financial information.  Accordingly, they do    
not include all the information and footnotes required by generally accepted    
accounting principles for complete financial statements.  Therefore, it is      
suggested that the accompanying financial statements be read in conjunction     
with the financial statements and notes thereto included in the Company's       
latest annual report on Form 10-KSB.                                            

Certain in formation and notes have been condensed or omitted pursuant to the   
rules and regulations of the Commission.  The financial information presented   
herein, while not necessarily indicative of results to be expected for the      
year, reflects all adjustments of a normal recurring and non-recurring          
nature, which, in the opinion of the Company, are necessary to a fair           
statement of the results for the periods indicated.                             

(2)   SIGNIFICANT ACCOUNTING POLICIES                                           

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

COMPANY BACKGROUND:  Florida Gaming Corporation (the Company) operates live     
Jai Alai games and Inter-Track Wagering ("ITW') on Jai-Alai,  horse racing      
and dog racing in Miami, Tampa, Ocala, and Ft. Pierce Florida.  The Company     
also operates card rooms at Miami and Tampa.                                    

Approximately 30% of the Company's common stock is controlled by the            
Company's Chairman either directly or beneficially through his ownership of     
Freedom Financial Corporation (Freedom) a closely held corporation.             

CASH AND CASH EQUIVALENTS:  The Company considers all highly liquid             
investments purchased with an original maturity of three months or less to be   
cash equivalents.                                                               

PROPERTY, PLANT AND EQUIPMENT:  Property, plant and equipment are stated at     
cost.  Depreciation is provided using the straight-line and accelerated         
methods over the estimated useful life of the related assets.                   

REAL ESTATE HELD FOR EXPANSION:  The Company's investment in undeveloped land   
($1,617,495 at September 30, 1997, December 31, 1996 and 1995, respectively)    
is carried at cost and is included with land under property, plant and          
equipment in the accompanying balance sheet.                                    

INVENTORY:  The Company's inventory, comprising food and beverage products      
and souvenirs, is stated at the lower of cost or market.                        

PARI-MUTUEL WAGERING:  Revenue is derived from acceptance of wagers under a     
pari-mutuel wagering system.  The Company accepts wagers on both on-site and    
off-site ITW events.  On-site live Jai-Alai wagers are accumulated in pools     
with a portion being returned to winning bettors, a portion paid to the State   
of Florida and a portion retained by the Company.  Off-site ITW wagers are      
also accepted and forwarded to the "host" facility after retention of the       
Company's commissions.  The Company's liability to host tracks for ITW          
collections totaled, $871,885 and $40,646 at September 30, 1997 and December    
31, 1996, respectively.  Unclaimed winnings totaled $552,341 and $930,017 at    
September 30, 1997 and December 31, 1996, respectively, including $851,163      
assumed in connection with the Company's purchase of three (3) Jai Alai         
facilities on December 31, 1996 (See Note 8).                                   

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INCOME TAXES:  In February 1992, the Financial Accounting Standards Board (FASB)
adopted Statement of Financial Accounting Standards (SFAS) No. 109 "Accounting  
for Income Taxes".  SFAS No. 109 was required to be implemented during the first
quarter of fiscal year 1994.  The Company adopted the standard as a cumulative  
change in accounting principle during 1994.  There was no material impact on the
Company's financial position or results of operations related to the            
implementation of the new standard.                                             

STOCK OPTIONS:  The Company accounts for stock-based employee compensation      
arrangements using the intrinsic value method provided in APB 25.  Under this   
method, the cost of compensation is measured by the excess of the quoted        
market price of the stock over the option price on the grant date               
(measurement date). The Company's stock option plans require the issuance of    
all options at a price equal to the market price of the stock on the grant      
date.  Stock options issued for non-compensation purposes are accounted for     
at fair value pursuant to FASB 123.                                             

RECLASSIFICATION:  Certain 1996  amounts have been reclassified to conform      
with their 1997 presentation.                                                   

(3)   INCOME TAXES                                                              

At December 31, 1996, the Company had tax net operating loss (NOL)              
carryforwards of approximately $11,752,000 available to offset future taxable   
income.  These NOL carryforwards expire fifteen years from the year in which    
the losses were incurred or at various intervals through fiscal year 2011.      
However, virtually all of the Company's NOL carryforwards which can be          
utilized to offset future taxable income are limited to approximately $95,000   
per fiscal year under Section 382 of the IRC because Freedom's stock purchase   
discussed in Note D was considered a change in ownership under the "deemed      
exercise rule" of IRC Section 382.  As a result, only the net operating         
losses attributable to the period after the "change in ownership"               
(approximately $1,381,000 are not subject to the Section 382 limitation).       

The Company has unused general business tax credits of approximately            
$137,000. These credits expire at various dates through the year 2001 to        
offset any future tax liabilities of the Company.                               

The provision for income taxes is based on income for financial statement       
purposes.  Deferred income taxes, which arise from timing differences between   
the period in which certain income and expenses are recognized for financial    
reporting purposes and the period in which they affect taxable income, are      
included in the amounts provided for income taxes.  Tax credits are recorded    
as a reduction in the provision for federal income taxes in the year the        
credits are utilized.                                                           

(4)  INCOME PER COMMON SHARE                                                    

The net income and losses and per common share was calculated based upon net    
loss and the weighted average number of outstanding common shares (5,369,594    
and 3,585,808 for the three months ended September 30, 1997, and 1996,          
respectively). Weighted average outstanding common shares for the nine months   
ended September 30, 1997, and 1996, were 4,918,200 and 3,370,115,               
respectively. Options and convertible securities were not included in the       
computations of loss per shares for these periods because their inclusion       
would be anti-dilutive. Options  and convertible securities were included in    
the computations of income per share on a fully diluted basis for the three     
month period ended September 30, 1996. Options and convertible securities       
were not included in the computations of loss per shares for all other          
periods presented, because their inclusion would be anti-dilutive.  Weighted    
average equivalent shares on a fully diluted basis for the three months ended   
September 30, 1996 were 6,196,500 shares, consisting of 74,250 options held     
by two former directors, 54,000 in options held by a Vice President of the      
Company, 7,815 shares of equivalent converted Preferred Class A Stock,          
494,627 shares of equivalent converted Preferred Class B Stock, 650,000 in      
options held by directors and an executive officer under  Qualified and         
Non-qualified Stock Option Plans, 1,330,000 in options held by Freedom          
Financial Corporation, and the 3,585,808 weighted average common shares.        
Refer to the Company's latest annual report on Form 10-KSB for more             
information on outstanding options, warrants, and conversion features of        
preferred stock.                                                                

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(5)    PREFERRED STOCK & CONVERTIBLE DEBENTURE                                  

The Company's Class A preferred stock provides annual dividends, at the rate    
of $.90 per share payable in cash, property or common stock, which are          
cumulative and have priority over dividends on the common stock.  Class A       
preferred stock dividends totaled $31,040 and $31,712 during 1996 and 1995      
respectively.  These dividends were paid by the issuance of 5,164 common        
shares and $49 cash in lieu of fractional shares in 1996 and 2,337 common       
shares and $83 cash in lieu of fractional shares in 1995.                       

Each share of Class A preferred is convertible into .225 shares of common       
stock at the holder's option.  During the years ended December 31, 1996 and     
1995, 300 shares and 8,929 shares of Class A preferred stock were converted     
into 67 shares and 2,008 shares of common stock, respectively.   The Class A    
preferred is redeemable at the option to the Company at $10.60 per share.  In   
the event of dissolution, the holders of Class A preferred shall be entitled    
to receive $10.00 per share, plus accrued dividends, prior to any               
distribution to holders of common stock.                                        

The Company's Series B convertible preferred stock provides annual cumulative   
dividends at the rate of 8% to 10% of the consideration paid for the stock.     
Such dividends are payable in shares of the Company's common stock.  The        
consideration to be received by the Company upon initial issuance of each       
share of the Series B shares is $1,000.  Holders of Series B shares may         
convert all or any of such Series B shares to the Company's common stock        
using a ratio based on the consideration paid for the stock and 80% of the      
market value of the common stock.  On December 15, 1995, the Board of           
Directors reserved 600,000 shares of the Company's common stock for issuance    
upon conversion of the Series B preferred stock.  Upon liquidation, the         
holders of Series B preferred shares shall be entitled to be paid $1,000 per    
share plus 8% to 10% accrued dividends before any distribution to holders of    
common stock.  During the year ended December 31, 1995, 2,400 Series B          
preferred shares were issued for $2,400,000 to three unrelated parties.         
During 1996, the Company issued an additional 2,300 Series B shares at $925     
per share and 2,707.5 Series B shares were converted to 473,588 shares of       
common stock.  During the nine months ended September 30, 1997,  1,447.5        
Series B shares were converted to 262,834 shares of common stock.               

The Company is authorized to issue 5,000 shares of Series C 8% Cumulative       
Convertible Preferred Stock, $.10 par value (the "Series C Preferred Stock"),   
which provides annual dividends at the rate of 8% of the share's Stated         
Value. The Stated Value per share equals $1,000 (as adjusted for any stock      
dividends, combination or split).  At the discretion of the Company's Board     
of Directors, such dividends may be paid in shares of the Series C Preferred    
Stock.                                                                          

Holders of Series C Preferred Stock may convert all or any of such shares to    
the Company's Common Stock (the "Series C Conversion Shares") beginning 90      
days after the issuance of the Series C Preferred Stock.  If not converted      
earlier by the holder, the Series C Preferred Stock shall be converted          
automatically on December 31, 1998.  In general, the number of Series C         
Conversion Shares issuable on conversion of each share of Series C Preferred    
Stock shall equal the consideration paid for such share together with accrued   
and unpaid dividends on such share, if any, divided by the lesser of (i)        
$7.50 or (ii) 80% of the closing bid price of the Common Stock on the five      
trading days before conversion.  A holder of Series C Conversion Shares may     
not sell more than 33% of such shares between 90 and 120 days of his purchase   
of Series C Preferred Stock converted into such shares and 67% of such shares   
between 121 and 150 days of his purchase; a holder may generally sell all of    
his Series C Conversion Shares 151 days after his purchase.                     

All shares of Series C Preferred Stock have been sold pursuant to offshore      
transactions exempt from registration pursuant to Regulation S promulgated      
under the Securities Act.  The Series C Conversion Shares must be resold in     
transactions exempt under Regulation S or another applicable exemption under    
the Securities Act, or (if the exemption under Regulation S becomes             
unavailable at any time before the third anniversary of the purchase of the     
Series D Preferred Stock) pursuant to the registration of the Series C          
Conversion Shares by the Company.                                               

Upon liquidation, the holders of Series C Preferred Shares shall be entitled    
to be paid $1,000 per share plus 8% accrued dividends before any distribution   
to holders of Common Stock.  The Company has the right to redeem the shares     
of Series C Preferred Stock if a holder of such shares exercises his right of   
conversion at a time when the conversion price is below $5.00.  The             
redemption price to be paid by the Company is 125% of the Stated Value of       
such shares together with all accrued and unpaid dividends thereon.             

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During 1996, the Company issued 550 Series C shares at $1,000 per share.        
During the nine months ended September 30, 1997,  300   Series C shares were    
converted to 105,131 shares of common stock.                                    

The Company is also authorized to issue up to 5,000 shares of Series D 8%       
Cumulative Convertible Preferred Stock (the "Series D Preferred Stock"),        
which provides annual dividends at the rate of 8% of the shares' Stated         
Value.  The Stated Value per share equals $1,000 (as adjusted for any stock     
dividends, combination or split).  At the discretion of the Company's Board     
of Directors, such dividends may be paid in shares of the Series D Preferred    
Stock.                                                                          

Holders of Series D Preferred Stock may convert all or any of such shares to    
the Company's Common Stock beginning 90 days after the issuance of the Series   
D Preferred Stock.  If not converted earlier by the holder, the Series D        
Preferred Stock shall be converted automatically on December 31, 1998.  The     
Company is obligated to file a registration statement (the "Series D            
Registration Statement") covering the shares of Common Stock issuable on        
conversion of the Series D Preferred Stock (the "Series D Conversion Shares")   
and to use its best efforts to cause the Series D Registration Statement to     
become effective.  In general, the number of Series D Conversion Shares         
issuable on conversion of each share of Series D Preferred Stock shall equal    
the Stated Value together with accrued and unpaid dividends on such shares,     
if any, divided by the Conversion Price, which is defined as the lesser of      
(i) $7.50 or (ii) 80% of the closing bid price of the Common Stock on the       
five trading days before conversion.  If the Series D Registration Statement    
has not been declared effective within 120 days from December 31, 1996 (the     
"Initial Issuance Date"), the Conversion Price shall be reduced by an amount    
between 3% and 20% (resulting in the issuance of a larger number of Series D    
Conversion Shares) based on the extent of such delay. No Series D Conversion    
Shares may be sold before the earlier of March 13, 1997 or the date on which    
the Series D Registration Statement becomes effective. Notwithstanding the      
effectiveness of the Series D Registration Statement, generally a holder of     
Series D Conversion Shares may not sell more than 33% of such shares between    
March 13, 1997 and April 12, 1997, and 67% of such shares between April 13,     
1997 and May 22, 1997, a holder may generally sell all of the Series D          
Conversion Shares after May 13, 1997.                                           

If the Series D Registration Statement has not been declared effective within   
365 days of the Initial Issuance Date, a holder of Series D Preferred Stock     
shall receive a preferential dividend equal to 10% of the Stated Value on the   
Stated Value on the 366th day after the Initial Issuance Date and               
preferential dividends of either 3% or 10% of the Stated Value every 30 days    
thereafter until the 726th day after the Initial Issuance Date.                 

Upon liquidation, the holders of Series D Preferred Shares shall be entitled    
to be paid $1,000 per share plus 8% accrued dividends before any distribution   
to holders of Common Stock.  The Company has the right to redeem the shares     
of Series D Preferred Stock if a holder of such shares exercises his right of   
conversion at a time when the Conversion Price is below $5.00 or if the         
Series D Registration Statement has not become effective within 120 days of     
the Initial Issuance Date.  The redemption price to be paid by the Company is   
determined using a ratio based on the trading price of the Company's Common     
Stock and the Stated Value.                                                     

During 1996, the Company issued 650 Series D shares at $1,000 per share and     
on January 16, 1997 the Company issued another 525 shares . During the nine     
months ended September 30, 1997,  1,150 Series D shares were converted to       
372,539 shares of common stock. As of October 2, 1997, the last 25 shares of    
Series D shares were converted and presently no Series D shares are             
outstanding.                                                                    

The Company is authorized to issue 2,000 shares of Series E 8% Cumulative       
Convertible Preferred Stock, $.10 par value (the "Series E Preferred Stock"),   
which provides annual dividends at the rate of 8% of the share's Stated         
Value. The Stated Value per share equals $1,000 (as adjusted for any stock      
dividends, combination or split).  At the discretion of the Company's Board     
of Directors, such dividends may be paid in shares of the Series E Preferred    
Stock.                                                                          

Holders of Series E Preferred Stock may convert part of such shares to the      
Company's Common Stock (the "Series E Conversion Shares") beginning 120 days    
after the issuance of the Series E Preferred Stock and any or all such shares   
after 180 days.  If not converted earlier by the holder, the Series E           
Preferred Stock shall be converted automatically on April 4, 1999.  In          
general, the number of Series E Conversion Shares issuable on conversion of     
each share of Series E Preferred Stock shall equal the consideration paid for   
such share together with accrued and unpaid dividends on such share, if any,    
divided by the lesser of (i) $7.50 or (ii) 80% of the closing bid price of      
the Common Stock on the five trading days before conversion. The holder of      
the Series E Conversion Shares may sell all of his shares 151 days after his    
purchase.                                                                       

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All shares of Series E Preferred Stock have been sold pursuant to offshore      
transactions exempt from registration pursuant to Regulation S promulgated      
under the Securities Act.  The Series E Conversion Shares must be resold in     
transactions exempt under Regulation S or another applicable exemption under    
the Securities Act.                                                             

Upon liquidation, the holders of Series E Preferred Shares shall be entitled    
to be paid $1,000 per share plus 8% accrued dividends before any distribution   
to holders of Common Stock.                                                     

During 1997, the Company has issued 200 Series E shares at $1,000 per share.    

The Class A Convertible Preferred Stock, the Series B Preferred Stock, the      
Series C Preferred Stock, the Series D Preferred Stock and the Series E         
Preferred Stock are all equal in rank with respect to the payment of            
dividends and the distribution of assets upon liquidation of the Company.       

The Company filed a Form 8-K Current Report dated July 10, 1997,  reporting     
the issuance of a $1,200,000 5% Cumulative Convertible Debenture due December   
31, 1998.  The terms of the Debenture provide for interest at the rate of       
five percent (5.0%) per year payable until the Debenture has been converted.    
The holder, at its option, may convert the Debenture into Common Stock at       
$6.00 per share after December 31, 1997.  After December 31, 1997, if during    
any calendar month (the "Demand Month") the average Closing Bid Price of the    
Common Stock for any five consecutive trading day period is at or below $7.00   
per share, purchaser will have the option of demanding redemption (the          
"Demand Redemption') on part of the Debenture.  The principal amount  that      
the purchaser will be entitled to redeem will be a number up to 25% of the      
total amount of the debenture outstanding as of the close of business on        
December 31, 1997 (the "Monthly Maximum Demand Redemption Amount").  Any        
portion of this amount which is not requested to be redeemed by purchaser in    
a Demand Month will only be available for redemption in the fourth month        
following that specific Demand month in which it initially became available     
for redemption.  The Demand Redemption obligations are guaranteed by Freedom    
Financial Corporation pursuant to a Guaranty and Stock Pledge Agreement.        

(6)   RELATED PARTY TRANSACTIONS                                                

On August 26, 1994, Freedom Financial Corporation exercised its option in       
part to purchase 400,000 shares of the Company's common stock at an exercise    
price of $1.25 per share.  On October 12, 1994, Freedom exercised its option    
to acquire an additional 300,000 shares.  These purchases resulted in           
approximately $875,000 in additional equity capital for the Company.  Freedom   
retains an option to purchase 1,030,000 shares at an exercise price of $1.25    
per share.  On April 21, 1997, the independent Directors of the Company         
adopted a resolution extending Freedom's options to March 31, 2000.  On May     
1, 1997 Freedom exercised its option to acquire an additional 300,000 shares    
for $375,000. On August 1, 1997 Freedom exercised its option to acquire an      
additional 25,000 shares for $31,250. See also Note (7) Commitments and         
Contingencies - Casino America.                                                 

The Company has various non-qualified stock option plans and agreements which   
grant options with Board approval to employees, officers, and directors.        
Under each plan or agreement, the exercise price for each option granted must   
be at least 100% of the fair market value of the Company's common stock on      
the date the option is granted.                                                 

Under three separate agreements during fiscal 1993, prior to the transaction    
that resulted in current management assuming control of the Company, the        
Company entered into stock option agreements with an independent director and   
two former directors of the Company whereby the Company granted to these        
individuals non-qualified options to purchase an aggregate 84,250 shares of     
the Company's common stock at an exercise price of $2.50 per share.  These      
options are currently exercisable, expire December 31, 1997, and include        
certain registration rights for all shares issued upon exercise.                

On April 21, 1994, the Company adopted a new Non-qualified Stock Option Plan,   
subject to shareholder approval, under which options up to an amount equal to   
5% of the Company's issued and outstanding shares of Common Stock can be        
issued to the Company's non-director employees.  On April 21, 1994, pursuant    
to this plan options for 50,000 shares of Common                                

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Stock were granted to the Company's Executive Vice President (prior to his      
becoming a director) and options for 25,000 shares were granted to the          
Company's Chief Financial Officer, each with an exercise price per share of     
$7.50.                                                                          

During August, 1994, the Company initiated a new stock option plan for          
directors pursuant to which each current and future director will receive a     
one-time grant of options of 25,000 Common Shares.  Options for 150,000         
shares were granted under this plan in 1994.  The option prices for these       
shares are the market value at the respective dates of grant (range from        
$5.50 to $5.75 in 1994).  The options are not exercisable until one year from   
the date of election to the Board.                                              

On November 7, 1994, the Board of Directors granted the Company's Chief         
Financial Officer an option to purchase an additional 25,000 shares of common   
stock at an exercise price of $5.50 per share, exercisable one year from the    
date of grant.                                                                  

On  April 28, 1995, the Company granted a former Director an option to          
purchase 19,000 common shares at $5.19 per share.  The option was exercisable   
after October 29, 1995 and expires five years from date of grant.  On the       
same date the Company granted its Chairman an additional option to purchase     
300,000 common shares at $5.00 per share.  The option is exercisable after      
November 8, 1995 and also expires five years from date of grant.                

On February 26 and 27 of 1997 the Company granted  390,000 Non-qualified        
options to Chairman Collett and the other Directors pursuant to and             
consisting of 25,000 shares under the existing Directors Plan, 240,000 shares   
under newly adopted grants for Directors based on years of service to the       
Company, and additional grant of 125,000 shares for Chairman/CEO Collett.       
(See Exhibits  to this 10QSB listed in Item #6).                                

Under the Officer Non-qualified Stock Option plan (adopted in April 1994) the   
Company issued 25,000 in options exerciseable at $4.125 to two executive        
officers and 15,000 options at $4.125 to another officer.                       

Included in notes receivable is a line of credit granted to Freedom Financial   
Corporation in December of 1995.  The credit facility, which is secured by      
real property owned by Freedom, is due on demand and bears interest at 2%       
above prime.  Freedom Financial is owned substantially by the Company's         
Chairman..  As set forth  on its Current Report on  Form 8K dated September     
24, 1997, and subsequent amendment filed  October 10, 1997,  Florida Gaming     
has agreed to purchase  from Interstate Capital Corporation (a wholly owned     
subsidiary of Freedom Financial)  certain unimproved  properties and a          
residential real estate development called Tara Club Estates ( collectively,    
the "Properties" ) situated in Loganville, Walton County, Georgia. As           
consideration for the purchase,  Florida Gaming will pay Interstate the sum     
of $6,373,265  payable as follows (i)  the issuance of 2,084 shares of          
proposed Series F 8% Convertible Preferred Stock ( the "Series F Preferred      
Stock"),  (ii) the assumption by Florida Gaming of $1,081,102 of first          
mortgage promissory notes to certain lenders secured by the Properties, and     
(iii)  the cancellation of  $3,208,163 including accrued interest  owed by      
Freedom Financial  under the secured credit line. Florida Gaming has received   
an opinion from an investment banker that the consideration for the             
Properties is fair, from a financial point of view, to the public               
stockholders of Florida Gaming.  The Properties consist of  a residential and   
commercial development of over 100 fully developed,  and 150 partially          
developed single-family residential lots. About fifty homes have been           
constructed and sold at an average price of $250,000 each.                      

(7)   COMMITMENTS AND CONTINGENCIES                                             

On October 4, 1994, the Company entered into a letter of intent (the "Letter    
of Intent") with Casino America, Inc. ("Casino America") to form a joint        
venture (the "Joint Venture") to build and operate a casino at the Fort         
Pierce Fronton. Casino America owns and operates various casinos in the         
United States.  If the Joint Venture is formed before passage of an amendment   
to the Florida Constitution to permit casino gaming at the Company's Fronton    
in Fort Pierce, Florida, the Company will contribute its interest in the        
Fronton to the Joint Venture with a credit to its joint venture capital         
account of $5,000,000.  If the amendment does not pass, then in that event,     
the parties will form a joint venture to build a flea market on the Ft.         
Pierce property owned by the Company. Casino America will contribute up to      
$2,500,000, as needed, to construct a 100,000 square foot indoor facility       
suitable for a casino or flea market.  If casino gaming is not permitted in     
Florida by 2000, Casino America has a continuing option to convert the money    
contributed to the Joint Venture to a promissory  note from the Joint Venture   
payable in equal payments over a ten year period with interest at 8% per        
annum.  If casino gaming is permitted at the Fronton by 2000, the value of      
the assets to be contributed by the Company to the Joint Venture will be        
adjusted to increase the Company's capital account up to $22,500,000.  Casino   
America would fund its capital account on an as needed                          

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basis up to $22,500,000.  All profits and losses of either Joint Venture will   
be allocated between the partners based upon capital accounts.                  

The Letter of Intent provides that Casino America will be the manager of the    
casino and all casino-related improvements.  The Company will manage the        
operation of the jai-alai fronton, inter-track wagering and all other           
non-casino related activities.  Each corporation will receive a management      
fee based on costs.  The Letter of Intent provides that Casino America has      
the exclusive right to enter into a Joint Venture with the Company for six      
years and Casino America has a right of first refusal to enter into other       
potential gaming opportunities in Florida with the Company for such period      
and during the term of the Joint Venture.  The formation of the Joint Venture   
is subject to certain conditions, including the satisfactory completion of      
due diligence by Casino America, the receipt of all required regulatory         
approvals, the approval of each partner's board of directors, the execution     
of a definitive joint venture agreement, and the approval of the Company's      
stockholders, if required by law. Either party may terminate discussions in     
connection with the Joint Venture and neither party shall have any liability    
to the other, except as otherwise specified in the Letter of Intent.            

Freedom Financial Corporation ("Freedom") has informed the Company that         
Casino America has purchased 22,500 shares of Freedom's 7% Series AA            
Mandatory Redeemable Preferred Stock (the "Freedom Preferred Stock").  The      
Freedom Preferred Stock is convertible into shares of the Company's Common      
Stock owned by Freedom at prices ranging from $7.50 per share of Common Stock   
to $15.00 per share of Common Stock, depending upon the timing of the           
conversion and possible passage of an amendment to the Florida Constitution     
permitting casino gaming at the Fronton.  The Freedom Preferred Stock is        
convertible into a minimum of 150,000 shares and a maximum of 300,000 shares    
of the Common Stock.  Casino America is the sole holder of Freedom Preferred    
Stock.  On October 12, 1994, Freedom purchased 300,000 shares of Common Stock   
from the Company by partial exercise of its option to purchase up to            
1,630,000 shares (at that date) of the Company's Common Stock at an exercise    
price of $1.25 per share.  In addition to its remaining option to purchase      
1,030,000 shares of the Company's Common Stock, Freedom now owns directly       
1,649,480 shares of the Company's 4,948,121 shares of issued and outstanding    
Common Stock. On May 1, 1997 Freedom exercised its option to acquire an         
additional 300,000 shares for $375,000.                                         

REGISTRATION RIGHTS:  The Company has committed upon certain terms and          
conditions, to include certain shares held by other parties, in a future        
registration statement it files on its own behalf, allowing those shares to     
be publicly traded.                                                             

LEASES:  The Company rents totalizator (Autotote) and other equipment under     
leases which expire at various dates through 1999.  The totalizator leases      
require a minimum annual rental plus contingent rentals based on a percentage   
of the handle in excess of the minimum annual rental.                           

STOCK APPRECIATION GUARANTEES:  In connection with the purchase of certain      
real estate, the Company issued 47,336 shares of its $.10 par value stock       
having a quoted market value of $3.10 on the date of issue.  The real estate    
purchase agreement included the Company's guarantee of the appreciation in      
value of such stock as follows:                                                 

*  If the seller holds the stock for at least three years from the date of  
closing, (the "$10.00 Guaranty Date") the market value of the stock at the      
end of the three year period will be at least $10.00 per share.                 

*  If the Company or its successors or assigns or any entity in which the   
Company has an interest is approved as a casino permit holder within three      
years from the date of closing this transaction, and in fact does open a        
casino, then in that event the Company guarantees that the market value of      
the stock will be at least $20.00 per share, two years from the date that the   
Company or its successors or assigns or any entity in which the Company has     
an interest actually opens and is operating a casino, (the "$20.00 Guaranty     
Date").                                                                         

*  For the purpose of the agreement, the price per share on the $10.00      
Guaranty Date and the $20.00 Guaranty Date shall be the over the counter bid    
price, ("Market Value").  On the $10.00 and $20.00 Guaranty Date, Seller        
shall request in writing to the Company to reimburse Seller for the             
difference between the market value of the shares and the guaranteed price.     
Seller shall remit with said request evidence that Seller is still in           
ownership and possession of said stock.  The Company shall pay the difference   
to Seller within ninety (90) days from receipt of Seller's request.             

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In addition to the Company's guarantee, Freedom Financial Corporation           
provided a similar guarantee as a further inducement to the seller of the       
real estate. Based on the December 31, 1996 closing price of the Company's      
common stock ($5.31), a payment of $222,006, the equivalent of 41,809 shares    
would be due under the $10 guarantee and a payment of $695,366, the             
equivalent of 130,954 shares, would have had to be made at that date to         
satisfy the terms of the $20 guarantees.                                        

COLLECTIVE BARGAINING AGREEMENT:  The Company is a party to a collective        
bargaining agreement with the International Jai Alai Players Association        
U.A.W. Local 8868, AFL-CIO.  The agreement allows the Company to negotiate      
individual contracts with players and provides for minimum salaries and         
bonuses based on pari-mutuel handle, certain cesta allowances and retirement    
benefits.  The agreement continues from year to year unless timely notice of    
termination is given by either party to the agreement.                          

CONCENTRATION OF CREDIT:  The Company maintains significant cash balances       
with financial institutions in excess of the insurance provided by the          
Federal Deposit Insurance Corporation (FDIC).                                   

(8)   ACQUISITION OF WJA ASSETS                                                 

On September 12, 1996, the Company acquired notes (the "WJA Notes") of WJA      
Realty Limited Partnership ("WJA"), with balances aggregating about             
$20,000,000 from the Bank of Oklahoma, N.A., Tulsa, Oklahoma.  The WJA Notes    
were secured by, among other collateral, real estate and improvements           
consisting of three jai-alai and ITW facilities located in Miami, Tampa and     
Ocala, Florida (the "WJA Frontons").  Consideration for the WJA Notes was a     
combination of $2,000,000 in cash, a $6,000,000 promissory note bearing         
interest at the prime rate, 703,297 shares of the Company's Common Stock and    
a $1,000,000 non-interest bearing contingent note.                              

On November 25, 1996, the Company entered into an agreement with WJA and        
Florida Gaming Centers, Inc. a wholly-owned subsidiary of the Company (the      
"Subsidiary"), pursuant to which the Subsidiary agreed to acquire the WJA       
properties.  The acquisition was consummated as of December 31, 1996 for        
accounting purposes.  The WJA Frontons acquired were combined with the Fort     
Pierce Fronton into a new Subsidiary, Florida Gaming Centers, Inc.              

The consideration for the acquisition included (i) the cancellation of WJA      
Notes and related obligations acquired by the Company from the Bank of          
Oklahoma, NA, (ii) the retention by WJA of 200,000 shares of the Company's      
common stock owned by WJA, and (iii) a profit sharing arrangement described     
in more detail below. The Company also assumed the principal amount             
outstanding under a $500,000 promissory note owed to Wheeler-Phoenix, Inc.,     
with the terms amended to provide for repayment of principal over a ten year    
period following the closing in equal annual installments of $50,000 each and   
an annual interest rate of 6%.                                                  

The profit sharing arrangement is based on the Subsidiary's net profits from    
Jai Alai operations as defined, before income taxes.  The Company will pay      
WJA 20% of the defined cumulative net profits of the Subsidiary for each of     
the ten full calendar years 1997 through 2006, subject to a cumulative          
$1,000,000 per year cap described below.  The cumulative $1,000,000 cap is      
equal to the product of $1,000,000 multiplied by the number of years in the     
ten-year period completed, minus the sum of all amounts previously paid under   
the 20% profit sharing arrangement.  In addition, if the Subsidiary has net     
profits in any calendar year during the ten-year period in excess of            
$5,000,000, and WJA does not receive a 20% payment on the entire amount         
because of the cumulative $1,000,000 per year cap, the Subsidiary shall pay     
WJA 5% of the portion of the net profits on which the 20% payment is not        
made.  No net profit payments will be due after the ten year period.  If        
during the ten year period, the Subsidiary disposes of any of its significant   
assets or operations, then WJA would be entitled to receive an amount equal     
to ten percent of the Subsidiary's gain, if any, on the asset or operations     
disposition.                                                                    

Two principals of WJA, also entered into consulting arrangements with the       
Subsidiary.  One principal entered into a ten-year consulting agreement with    
the Subsidiary, with annual compensation of $100,000 during the first five      
years of the agreement and annual compensation of $50,000 during the second     
five years of the agreement.  The other principal entered into a five-year      
consulting agreement with the Subsidiary, with annual compensation of           
$240,000, plus certain benefits.  These two individuals were also granted       
stock options on the Company's stock with a fair value of $150,298.             

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A summary of the WJA assets acquired and consideration therefor is as follows:  

             ALLOCATED
ASSETS ACQUIRED                          AMOUNT                             
---------------                         ---------                           
Jai Alai Frontons in Miami, Tampa,                                          
and Ocala,                           $17,428,059                          
Cash                                      381,997                           
Notes receivable                          167,934                           
Inventory                                 134,974                           
Other assets                              308,279                           
           -----------
           $18,421,243
           ===========

Management allocated the purchase price to the basis of the assets acquired     
based on available appraisals or other fair value information.                  

CONSIDERATION PAID                           AMOUNT                             
------------------                           ------                             
Cancellation of notes and interest                                          
receivable from WJA at Company                                          
carrying value                        $14,692,298                       
Accounts payable and other accrued                                          
expenses assumed                        3,078,647                       
Assumption of Wheeler-Phoenix note          500,000                         
Fair value of stock options issued          150,298                         
             -----------
             $18,421,243
             ===========

(9)  GAMING VENTURE INVESTMENTS                                                 

During 1995, the Company entered into several arrangements with different       
Native American Tribes to explore possible opportunities for gaming ventures.   
The arrangements generally provide the Company the right to receive           
compensation from the Tribe's share of the potential gaming profits for         
supplying the management services and/or financing necessary for the            
construction and operation of the gaming facilities.  The Company's             
commitment to provide construction financing and working capital is             
contingent upon the Tribes' procurement of judicial or regulatory approval to   
operate a gaming venture.  At December 31, 1996, the Company's contingent       
commitment to provide financing to potential gaming ventures totaled            
$5,000,000.  Management expects the funds necessary to meet this commitment     
to be obtained through the issuance of additional debt or equity securities     
should the gaming operations materialize. The Company expended $21,000 and      
$729,347 during 1996 and 1995, respectively related to these gaming venture     
arrangements of which $-0- and $406,347 are included in Other Expense in the    
accompanying 1996 and 1995 Statements of Operations, respectively.  Funds       
expended in 1996 and 1995 in amounts of $21,000 and $323,000,  respectively,    
were made to one Tribe as working capital loans and are carried as an           
Investment on the accompanying Balance Sheets based on the Company's            
financing ("loan") agreement with the recipient Tribe.  Recovery of these       
funds under the "loan" agreement is contingent upon such agreement becoming     
effective after the Tribe receives judicial approval to establish the           
intended gaming operation.  The Tribe has not been able to obtain the           
necessary regulatory or judicial approval to operate the contemplated gaming    
ventures. The financing agreement which is carried as an investment on the      
accompanying balance sheet expired on June 30, 1997. Although discussions       
continued the agreement was not extended.  At December 31, 1996, management     
had reserved $30,000 as a loss contingency . At September 30, 1997 management   
has reserved $340,000,  although it believes the  company still has a valid     
claim with the tribe for the repayment of funds advanced.                       

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

GENERAL                                                                         

Florida Gaming Corporation (the "Company") currently owns and operates four     
jai-alai and inter-track pari-mutuel wagering facilities (each, a "Fronton,"    
and collectively, the "Frontons") located in South and Central Florida.  The    
Company's business  consists primarily of its operations at the Frontons,       
which include, among other things, live jai-alai, inter-track pari-mutuel       
wagering ("ITW") on jai-alai, thoroughbred racing, harness racing, and dog      
racing, poker, dominoes, and the sale of food and alcoholic beverages.          

The Company's Fort Pierce, Tampa and Ocala locations provide audio, video and   
Inter-Track Wagering ("ITW")  on live inter-track and interstate broadcasting   
of horse racing, dog racing and jai-alai from around the State  of Florida as   
well as the rest of the country.  The Miami location receives limited ITW       
broadcasts, but broadcasts its jai-alai performances to other gaming            
facilities in Florida, the rest of the United States, and Mexico.  ITW          
provides significant additional revenue as well as providing additional         
entertainment for customers.                                                    

The term "pari-mutuel wagering," which refers to the betting by members of      
the public against each other, as used in this report includes wagering on      
both live Jai-Alai performances and ITW.                                        

Since its inception, and before the acquisition of the Fort Pierce, Fronton     
in February 1994, the Company engaged in several other lines of business,       
none of which are currently in operation.  In March, 1993, the Company sold     
699,480 shares of common stock to Freedom Financial Corporation ("Freedom")     
and present management assumed operating control of the Company.                

The Company's principal place of business and executive offices are located     
at 3500 NW 37th Avenue, Miami, Florida 33142.  The Company changed its name     
from Lexicon Corporation to Florida Gaming Corporation on March 17, 1994.       
The Company was incorporated in Delaware in 1976.                               

ACQUISITION OF FRONTONS/DEVELOPMENT OF CARD ROOMS                               

ACQUISITION OF THE FT. PIERCE FRONTON.  The Company acquired the Ft. Pierce     
Fronton from WJA Realty Limited Partnership ("WJA") pursuant to an agreement    
with WJA dated October 6, 1993.  On February 1, 1994, the Company received      
approval from the Florida Department of Business and Professional Regulation,   
Division of Pari-Mutuel Wagering (the "DPMW") to transfer the pari-mutuel       
permit for the Ft. Pierce Fronton from WJA to the Company. The purchase         
transaction with WJA was also closed on that date.  Consideration for the       
acquisition consisted of 200,000 shares of Company Common Stock and             
$1,500,000 in cash at closing, plus $1,000,000  in the form of a ten-year 8%    
mortgage.                                                                       

ACQUISITION OF THE MIAMI, TAMPA AND OCALA FRONTONS.  On September 12, 1996,     
the Company acquired secured notes (the "WJA Notes") of WJA, with balances      
aggregating $20,000,000 from the Bank of Oklahoma, N.A., Tulsa, Oklahoma.       
The WJA Notes were secured by real estate and improvements consisting of        
three jai-alai and ITW facilities located in Miami, Tampa and Ocala, Florida    
(the "WJA Frontons") plus other collateral. Consideration for the WJA Notes     
was a combination of $2,000,000 in cash, a $6,000,000 promissory note bearing   
interest at the prime rate, 703,297 shares of the Company's Common Stock and    
a $1,000,000 non-interest bearing note.                                         

On November 25, 1996, the Company entered into an agreement with WJA and        
Florida Gaming Centers, Inc., a wholly-owned subsidiary of the Company (the     
"Subsidiary"), pursuant to which the Subsidiary agreed to acquire the WJA       
assets.  The acquisition was consummated as of January 1, 1997.  The WJA        
Frontons acquired were combined with the Fort Pierce Fronton into the           
Subsidiary.                                                                     

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The consideration for the acquisition included (i) the cancellation of WJA      
Notes and related obligations acquired by the Company from the Bank of          
Oklahoma, NA, (ii) the retention by WJA of 200,000 shares of the Company's      
common stock owned by WJA, and (iii) a profit sharing arrangement described     
in more detail below. The Company assumed all liabilities of WJA arising in     
the ordinary course of the business, subject to certain limitations and         
exceptions.  The Company also assumed the principal amount outstanding under    
a $500,000 promissory note owed to Wheeler-Phoenix, Inc., with the terms        
amended to provide for repayment of principal over a ten year period            
following the closing in equal annual installments of $50,000 and an annual     
interest rate of 6%.                                                            

The profit sharing arrangement is based on the Subsidiary's net profits, as     
defined, before income taxes.  The Company will pay WJA 20% of the cumulative   
net profits of the Subsidiary for each of the ten full calendar years 1997      
through 2006, subject to a cumulative $1,000,000 per year cap described         
below. The cumulative $1,000,000 cap is equal to the product of $1,000,000      
multiplied by the number of years in the ten-year period completed, minus the   
sum of all amounts previously paid under the 20% profit sharing arrangement.    
In addition, if the Subsidiary has net profits in any calendar year during      
the ten-year period in excess of $5,000,000, but does not receive a 20%         
payment on the entire amount because of the cumulative $1,000,000 per year      
cap, the Subsidiary shall pay WJA 5% of the portion of the net profits on       
which the 20% payment is not made.  No net profit payments will be due after    
the ten year period.  If during the ten year period, the Subsidiary disposes    
of any of its significant assets or operations, then WJA would be entitled to   
receive an amount equal to ten percent of the Subsidiary's gain, if any, on     
the disposition.                                                                

Two principals of WJA, Roger M. Wheeler, Jr. and Richard P. Donovan, have       
entered into consulting arrangements with the Subsidiary.  Mr. Wheeler has      
entered into a ten-year consulting agreement with the Subsidiary, with annual   
compensation of $100,000 during the first five years of the agreement and       
annual compensation of $50,000 during the second five years of the agreement.   
Mr. Donovan has entered into a five-year consulting agreement with the        
Subsidiary, with annual compensation of $240,000, plus certain benefits.        

In 1980, WJA and three other pari-mutuel permit holders formed Summer           
Jai-Alai Partners ("SJA"), a Florida general partnership, to conduct            
pari-mutuel jai-alai operations at the Miami Fronton during the summer months   
("Summer Operations"). As part of the acquisition of the WJA assets, the        
Company acquired and currently owns a 21% interest in SJA.  Under the terms     
of the partnership agreement, certain of the Company's costs and expenses       
will be allocated to Summer Operations based upon specific formulas set forth   
in the agreement.  In addition, pursuant to a lease agreement which expires     
in the year 2004, SJA rents the Miami Fronton for the time in which the         
summer jai-alai season is conducted.  The rental is based upon 1% of  handle,   
plus applicable Florida sales tax.  The Company's 21% interest in SJA  is       
accounted for under the equity method.                                          

CARD ROOM DEVELOPMENT.  Florida House Bill No. 337 (now known as section        
849.086 of the Florida Statutes) became effective June 1, 1996.  This           
legislation authorized card rooms at licensed pari-mutuel facilities            
beginning in January, 1997.  The card  rooms are administered and regulated     
by the Florida Department of Pari-Mutuel Wagering ("DPMW").  Games are          
limited to non-banked poker games and dominoes.  Card room authorization is     
also subject to approval by the county commission in which the pari-mutuel      
facility is located.  This same bill also authorized full-card simulcasting     
of races from out of state tracks such as Belmont, Meadowlands, Philadelphia    
Park, and Santa Anita.  The Frontons in Fort Pierce, Tampa and Ocala are        
currently carrying several of these signals.  This legislation also reduced     
the pari-mutuel tax on handle from 5% to 4.25% at the Tampa, Fort Pierce, and   
Ocala frontons.  The pari-mutuel tax at Miami was reduced from 5% to 3.85%.     

In late 1996, the county governments of Dade County and Hillsborough County,    
Florida, passed legislation permitting card rooms to be operated by all         
pari-mutuel facilities located in those counties.  As a result, the Company     
opened card rooms in Miami (on June 19th with 40 tables initially) and Tampa    
(on May 22nd with 30 tables initially) during the second quarter of 1997.       
Pursuant to Florida Statute 849.086 the Miami and Tampa facilities conduct      
low stakes ($10 per hand) poker and dominoes at these facilities two hours      
prior to, during and two hours following live jai-alai performances.  A rake    
of $.25 per person is the pari-mutuel's revenue from each hand dealt.  Domino   
tables are rented at the rate of $1.50 per half hour per player.  Florida       
state taxes will be paid at 10% of this revenue and 4% of the revenues will     
be paid to the Jai-Alai players.                                                

The Jai-Alai industry generally has declined in the last several years due to   
an industry-wide strike by jai-alai players and the passage of legislation      
authorizing a state-wide lottery in 1987.  Average state-wide on-track handle   
per performance for the state of Florida fiscal years ended June 30, 1996 and   
1995 was approximately $79,004 and $87,512, respectively.  Aggregate            

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handle for the fiscal year ended June 30, 1996 decreased approximately $10      
million or 5%. There can be no assurance that the jai-alai industry will        
improve significantly, if at all, in the future.  Because the Company's         
jai-alai business is tied directly to many if not all of the factors which      
influence the jai-alai industry as a whole, another players strike or the       
enactment of unfavorable legislation could have an adverse impact on the        
Company's operations.                                                           

Inter-track wagering has grown significantly since its initiation in the        
State of Florida in August, 1990.  The State-wide ITW handle for the State of   
Florida's fiscal year ended June 30, 1991 was approximately $109 million.       
The state-wide ITW handle for the State of Florida's fiscal years ended June    
30, 1995 and 1996 increased to approximately $443 million and $480 million,     
respectively.  ITW handle at the Company's Frontons (including the newly        
acquired Miami, Tampa and Ocala facilities) have demonstrated similar growth    
in recent years, increasing from $46.8 million in the year ended December 31,   
1995 to approximately $50.3 million for the year ended December 31, 1996.       

RESULTS OF OPERATIONS - THREE AND NINE  MONTHS 1997 COMPARED WITH THREE AND     
NINE MONTHS 1996                                                                

During the quarter and nine months ended September 30, 1997, the Company's      
operations reflects nine months' operation of live Jai-Alai performances at     
the Miami and Tampa.  The Ft. Pierce Fronton conducted live jai-alai            
performances January through April. A full schedule of inter-track wagering     
was also conducted at all facilities with the exception of Miami, which         
offers limited ITW product due to blackouts imposed as a result of its close    
proximity to other South Florida pari-mutuels. The Miami facility, however,     
broadcasts its jai-alai performances to other gaming facilities in Florida,     
the rest of the United States, and Mexico. The Ocala Fronton only operated      
inter-track wagering during the first quarter and began its live season May     
25th and concluded its live season September 1st.                               

HANDLE ANALYSIS Total Handle (amount of money wagered) for the quarter ended    
September 30, 1997 was $19,783,557 of which $6,070,069 was from live and host   
jai-alai wagering and $13,713,488 was from inter-track guest wagering. Total    
handle for the nine months ended September 30, 1997 was $103,175,222, of        
which $60,484,796 was from live and host jai-alai  wagering and $42,690,426     
was from guest inter-track wagering.  These numbers do not include handle for   
the Miami facility for the period  from July 2, 1997 through September 30,      
1997,  since the facility is operated by the Summer Partnership during this     
time.                                                                           

Total handle for the quarter ended September 30, 1996 was $5,389,831 of which   
$0 was from live jai-alai wagering and $5,389,831 was from inter-track          
wagering. Total  handle for the nine months ended September 30, 1996 was        
$20,548,983, of which, $3,665,582 was from live jai-alai wagering and           
$16,883,401 was from inter-track wagering.                                      

HANDLE INCREASE Total handle for the quarter ended September 30, 1997 was       
$19,783,557, an increase of $14,393,726 over the same period in 1996. The       
increase consisted of an increase in live and host jai-alai handle of           
$6,070,069 and an increase of $8,323,657 in ITW handle.                         

Total handle for the nine months ended September 30, 1997 was $103,175,222,     
an increase over the same period in 1996 of $82,626,239. This increase was      
attributable to an increase in live and host jai-alai wagering handle of        
$56,819,214 and an increase in inter-track wagering handle of $25,807,025.      
These increases were primarily the result of the pari-mutuel operations         
acquired from World Jai-Alai as described above.                                

REVENUES Pari-mutuel revenues (net of state pari-mutuel taxes) for the          
quarter ended September 30, 1997 were $2,431,532, compared to pari-mutuel       
revenues of $490,704 for the same period in 1996. Pari-mutuel revenues for      
the nine months ended September 30, 1997 were $14,049,652 compared to           
pari-mutuel revenues of $2,439,110 for the same period in 1996. Revenues for    
the quarter ended September 30, 1997 ($2,431,532), consisting of $1,211,417     
from  live jai-alai wagering and $1,220,115 from inter-track wagering.          
Revenues for the quarter ended September 30, 1996 ($490,704) consisted of       
$-0- from live jai-alai wagering and $490,704 from inter-track wagering.        
Revenues for the nine months ended September 30, 1996 ($2,439,110) consisted    
of $807,805 from live jai-alai and $1,631,305 from inter-track wagering.        
These increases were primarily the result of the pari-mutuel operations         
acquired from World Jai-Alai as described above.                                

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The Company opened two card room facilities, one at Tampa on May 22nd  , and    
Miami opened their card room on June 19th.  Card room Revenue for the quarter   
ended September 30, 1997 was $206,292, and the nine month period ended          
September 30, 1997, was $305,941.   Revenues from the card room operations      
have not yet produced the results anticipated.                                  

Admissions income, net of state taxes, for the three and nine months periods    
ended September 30, 1997 were $86,800 and $412,399 respectively.  This          
compares to $26,779 and $104,113 for the three and nine month period ended      
September 30, 1996. Food, beverage and other income for the quarter and nine    
months ended September 30, 1997 were $826,130 and $3,113,007,  respectively.    
This compares to the three and nine month period ended September 30, 1996 of    
$106,502, and $603,067, respectively.  These increases were primarily the       
result of  the WJA asset acquisition. Attendance for live jai-alai              
performances and ITW performances was approximately 169,858 and 836,174 for     
the quarter and nine months ended September 30, 1997,  respectively.  This      
compares to 227,819 and 866,956 for the same periods in 1996.                   

These numbers do not include revenues for the Miami facility for the period     
from July 2, 1997 through September 30,  1997,  since the facility is           
operated by the Summer Partnership during this time.  The Company recognizes    
income and losses on its 21% ownership in the Summer Partnership on the         
equity basis.                                                                   

GENERAL AND ADMINISTRATIVE EXPENSES                                             

The Company's general and administrative expenses were $1,852,863 and           
$6,645,907 for the three months and nine months  ended September 30, 1997,      
respectively. This compares to $489,425 and $1,403,336  for the three months    
and nine months ended September 30, 1996, respectively.  The increase of        
$1,363,438 for the quarter ended September 30, 1997, as compared to the same    
period in 1996 resulted from taking on the cost of administration for three     
additional Jai-Alai facilities in Miami, Tampa, and Ocala, Florida, net of      
staff reductions and consolidations.                                            

Significant categories of general and administrative expenses and their         
comparison to the third quarter last year are as follows. Executive salaries    
were $327,133 for the third quarter of 1997 compared $152,912 for the quarter   
ended September 30, 1996. Advertising increased $106,841 to $137,138.           
Professional fees were $131,257 compared to $48,516 for the same three month    
period in 1996.  Consulting fees increased from $6,500 to $86,200. Former       
executives of World Jai-Alai were paid $86,200, pursuant to the purchase        
agreement.  Travel and entertainment expense totaled $101,946 for the third     
quarter of 1997, compared to $23,341 for the third quarter of 1996. Another     
significant cost included is approximately $256,993 in payroll taxes.           
Employee benefits increased to $235,442.  Property and other taxes increased    
significantly to $161,559 as a result of the WJA purchase. Insurance also       
increased significantly to $188,589 as a result of the company's expanded       
operations.  Public company costs including shareholder relations/information   
and filing fees increased to $39,596 from $27,882. Interest expense totaled     
$166,430 and $65,184 for the three month period ended June 30, 1997 and June    
30, 1996, respectively.  The $101,246 increase in interest expense was          
primarily the result of the bank debt incurred which was related to the         
purchase of the WJA facilities described earlier.                               

Significant categories of general and administrative expenses and their         
comparison on a nine month period in 1997 versus 1996 are as follows.           
Executive salaries were $869,832 for the nine months ended September 30,        
1997, compared to $442,738 for 1996. Advertising increased  $841,634 to         
$997,860, with approximately $250,000 utilized in the promotion and             
introduction of the new card room facilities.  Professional fees were           
$281,987 compared to $139,271 for the same period in 1996.  Consulting fees     
increased from $27,407 to $260,300. Former executives of World Jai-Alai were    
paid $257,633, pursuant to the purchase agreement.  Travel and entertainment    
expense totaled $309,934 compared to $164,266 for the first nine months of      
1996. Another significant cost included is approximately $934,456 in payroll    
taxes.  Employee benefits increased to $617,326. Public relations expense       
increased to $233,912 as the result primarily of admission and other            
discounts at the expanded group of facilities. Property and other taxes         
increased significantly to $549,303 as a result of the company's expanded       
operations. Insurance also increased significantly to $427,832 as a result of   
the company's expanded operations. Public company costs including shareholder   
relations/information and filing fees increased to $121,067 from $85,973.       
Interest expense totaled $482,704 and $146,933 for the nine month period        
ended September 30, 1997 and June 30, 1996, respectively. The $335,771          
increase in interest expense was primarily the result of the bank debt          
incurred which was related to the purchase of the WJA facilities described      
earlier.                                                                        

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OPERATING EXPENSES 3RD QUARTER                                                  

The Company's operating expenses for the three months ended September 30,       
1997 and September 30, 1996  were $2,920,009 and $495,970, respectively.        
Depreciation and amortization expense for the three months ended September      
30, 1997 and September 30, 1996,  was $191,269 and $48,600, respectively.       
Player costs, which include salaries, benefits, and support staff, represent    
a significant portion of operational expenses.  Player costs for the quarter    
ending September 30, 1997 and September 30, 1996, were $1,632,556 and $-0-,     
respectively, reflecting the expanded operation of schedules in Miami, Tampa    
and Ocala compared to ITW operations only during this period in 1996 at the     
only fronton owned by the Company (at that time) at Ft. Pierce.  Rental and     
service costs for totalizator wagering equipment and satellite                  
receiving/television equipment also represent a significant portion of          
operating expenses.  These expenses totaled $270,643, for the three months      
ended September 30, 1997, compared to $49,851 for three months ended            
September 30, 1996.   The components of the 1997 total ($270,643) were          
$58,034 in ITW tote, interface, and telephone charges; $164,298 in              
totalizator equipment rental; and $48,311 in satellite charges and              
camera/television rental.  Utilities expense totaled $330,872 and $24,257       
respectively, for the three months periods ended September 30, 1997 and         
September 30, 1996. Program costs totaling $114,318 and $24,800,                
respectively, are also included in the total operating expenses for the three   
month periods ended September 30, 1997 and 1996. Operating expenses,            
including payroll costs for the bar, restaurant, souvenir and concessions       
costs were $398,826 and $34,215 for the three month periods which ended         
September 30, 1997 and September 30, 1996, respectively. Operating payrolls     
and contract costs totaled $1,049,775 and $199,202 for the three month          
periods ended September 30, 1997 and September 30, 1996, respectively,          
excluding player costs and payroll costs included in the bar, restaurant,       
souvenir and concessions areas.  Of the $1,049,775, $262,343 was mutuels        
payroll, $390,027 was maintenance and $302,982 was security. Maintenance and    
cleaning supply expenses for the three months ended September, 1997,  totaled   
$121,236. These increases were primarily the result of the expanded             
pari-mutuel operations due to acquisition of the assets of   World Jai-Alai.    

OPERATING EXPENSES NINE MONTHS                                                  

The Company's operating expenses for the nine months ended September 30, 1997   
and September 30, 1996  were $12,863,964 and $2,635,327, respectively.          
Depreciation and amortization expense for the nine month period ended           
September 30, 1997 and September 30, 1996,  was $482,991 and $145,800,          
respectively. Player costs, which include salaries, benefits, and support       
staff, which represents a significant portion of operational expenses.          
Player costs for the nine months ended September 30, 1997 and September 30,     
1996, were $4,943,119 and $670,838, respectively, reflecting the expanded       
operation of schedules in Miami, Tampa and  Ocala compared to only four         
months of jai-alai operation at only the Ft. Pierce fronton during this same    
period in 1996.  Rental and service costs for totalizator wagering equipment    
and satellite receiving/television equipment also represent a significant       
portion of operating expenses.  These expenses totaled $1,414,027, for the      
nine months ended September 30, 1997, compared to $266,908 for nine months      
ended September 30, 1996.   The components of the 1997 total were $210,311 in   
ITW tote, interface, and telephone charges; $615,929 in totalizator equipment   
rental; $286,893 in satellite charges and $300,893 in camera/television         
rental.  Utilities expense totaled $853,876 and $91,139 respectively, for the   
nine months periods ended September 30, 1997 and September 30, 1996. Program    
costs totaling $470,314 and $92,974, respectively, are also included in the     
total operating expenses for the nine month periods ended September 30, 1997    
and 1996. Operating expenses, including payroll costs for the bar,              
restaurant, souvenir and concessions costs were $1,875,315 and $279,638 for     
the nine month periods which ended September 30, 1997 and September 30, 1996,   
respectively.  Operating payrolls and contract costs totaled $3,576,806 and     
$775,108 for the nine month periods ended September 30, 1997 and September      
30, 1996, respectively, excluding player costs and payroll costs included in    
the bar, restaurant, souvenir and concessions areas.  Of the $3,576,806,        
$1,152,305 was mutuel  payroll, $1,085,890 was maintenance/janitorial and       
$923,605 was security. Maintenance and cleaning supply expenses for the nine    
months ended September 30, 1997,  totaled $428,265. These increases were        
primarily the result of the expanded pari-mutuel operations due to              
acquisition of the facilities of World Jai-Alai.                                

OTHER INCOME                                                                    

The Company had net interest and other income of $55,517 and $267,078 for the   
three and nine month period ended September 30, 1997, respectively, as          
compared to $535,536 and $640,441 for the three and nine month periods ended    
September 30, 1996.  The decreases of $480,019 for the quarter and $373,363     
for the nine months are due primarily to the cancellation of the WJA Note.      
For these same periods in 1996 and Company recorded $470,882 in interest        
income from this note. Approximately $58,000 in allocation income  related to   
the operation of the Summer Jai-Alai Partnership in Miami is included in the    
nine moths results.                                                             

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TAX LOSS CARRYFORWARDS                                                          

At December 31, 1996, the Company had approximately $11,752,000 in net          
operating loss carryforwards. However, because of IRC section 382 limitations   
due to the change of control that occurred in March, 1993, the bulk of these    
carryforwards are limited to approximately $95,000 per year. Operating losses   
of approximately $1,381,000 attributed to the period after the change of        
ownership are not subject to the Section 382 limitation.                        

SUMMARY OF OPERATIONS                                                           

The Company had a net loss of $1,711,975  or $0.32 per common share,  for the   
three months ended September 30, 1997, compared to a net income of $125,526     
or $.04 per common share for the three month period ended September 30, 1996.   
The Company had a net loss of $2,221,225  or $0.45 per common share,  for the   
nine months ended September 30, 1997, compared to a net loss of $397,732 or     
$.12 per common share for the three month period ended September 30, 1996.      
The increased loss for the quarter and nine ended September 30, 1997 was        
primarily caused by the factors discussed above.  The most dramatic being the   
business expansion due to the acquisition of the World Jai-Alai properties      
and costs associated with the card room introductions. The Company also         
recorded a non-recurring loan reserve totaling $322,193 related to an expired   
gaming contract with the Rincon Tribe of California.                            

The Company has expended approximately $2,628,000 for the period ended          
September 30, 1997 in capital improvements related primarily to the             
construction of Poker Room facilities at Miami and Tampa ($2.5 million).        

LIQUIDITY AND CAPITAL RESOURCES                                                 

The balance of the Company's cash and cash equivalents at September 30, 1997    
was $803,025.  At September 30, 1997 the Company had a decrease in working      
capital of approximately $5,410,423 from December 31, 1996.  The decrease was   
primarily the result of the construction and pre-opening costs associated       
with the card rooms in Tampa and Miami (approximately $2.5 million), growth     
in accounts payable (approximately $2 million),  and a $4,411,000 increase in   
the current portion of long term debt maturing within one year ( primarily as   
the result of the Bank of Oklahoma's  ("BOK")  September 1998 balloon           
payment.  The decrease in liquidity is also net of $4,130,000 in additional     
funds received in connection with  Regulation D and Regulation S Convertible    
Preferred Stock  and Bond offerings.                                            

During the nine months ended September 30, 1997, net cash used by in the        
Company's operating activities was $ 239,139.  The Company's continuing         
operating expenses consisted principally of office expenses, general and        
administrative expenses, and costs associated with Fronton operations.          
Principal revenues were from net pari-mutuel wagering commissions on live       
jai-alai and ITW events.  The Company expects that net cash flows from the      
operation of current business activities will be adequate to meet operational   
needs.                                                                          

During the nine months ended September 30, 1997, cash flow used by investing    
activities was $3,555,643.  Of this $2,627,677 was the result of additions to   
plant and equipment, the bulk of which was attributable to  card room           
construction. During the fourth quarter of 1995, the Company lent an            
affiliated company (Freedom Financial) funds on a demand secured credit line,   
which bears interest at the prime rate plus 2% (10.50%).  Funds advanced        
during the nine months ended June 30, 1997 under this agreement totaled         
$927,966.  As set forth on its Current Report on  Form 8K dated September 24,   
1997, and subsequent amendment filed  October 10, 1997,  Florida Gaming has     
agreed to purchase  from Interstate Capital Corporation (a wholly owned         
subsidiary of Freedom Financial) certain unimproved  properties and a           
residential real estate development called Tara Club Estates (collectively,     
the "Properties")  situated in Loganville, Walton County, Georgia. As           
consideration for the purchase,  Florida Gaming will pay Interstate the sum     
of $6,373,265  payable as follows (i)  the issuance of 2,084 shares of          
proposed Series F 8% Convertible Preferred Stock (the "Series F Preferred       
Stock"),  (ii) the assumption by Florida Gaming of $1,081,102 of first          
mortgage promissory notes to certain lenders secured by the Properties, and     
(iii)  the cancellation of  $3,208,163 including accrued interest  owed by      
Freedom Financial  under the secured credit line. Florida Gaming has received   
an opinion from an investment banker that the consideration for the             
Properties is fair, from a financial point of view, to the public               
stockholders of Florida Gaming.  The Properties consist of  a residential and   
commercial development of over 100 fully developed,  and 150 partially          
developed single-family residential home sites, a swim and tennis club          
facility and 23 acres of commercial property. The company anticipates hiring    
a professional management company and that income generated from lot sales      
should augment cash flow given the large inventory of lots ready for sale.      

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During the nine months ended September 30, 1997, cash flow from financing       
activities was $3,690,280.  Cash flow from financing activities consisted of    
approximately $2,930,646 in net funds generated from the sale of convertible    
preferred stock; and including $531,250 generated when Freedom Financial        
exercised options for 425,000 common shares. The company had  a net reduction   
of $440,366 in borrowings for the nine months ended September 30, 1997.         
Subsequent to June 30, 1997, the Company raised another $1.2 million in funds   
via the sale of  convertible debenture  as described in its Current Report on   
Form 8K dated July 14, 1997.                                                    

The Company has terminated discussions the Rincon Luiseno Band of the Mission   
Indians in San Diego County, California.  Due to adverse decisions in other     
Courts in related cases in California and the opinion issued by the U.S.        
Supreme Court in the Seminole case and continuing delays in the opening of      
the Rincon Casino with gaming machines, both Florida Gaming and the Rincon      
tribe have requested arbitration relative to the Company's Loan Agreement.      
The outstanding balance on the loan to the Rincon tribe and costs totaling      
$322,193 was reserved for during the third quarter.                             

Additional capital  will be required for the recently announced expansion       
concerning the potential acquisition of a 200 room hotel and casino in Las      
Vegas, Nevada, as described in Exhibit 99.1 in Part II of the June 30, 1997,    
10QSB. Although the Company is in the process of due diligence and no           
definitive agreement has been reached , the casino bank and purchase price      
could require a much as $18 million in cash. Florida Gaming is in the process   
of trying to obtain approval for a card room at its Ft. Pierce facility. The    
company also has substantial  mortgage debt repayments of $5.8 million due      
over the next twelve months with $5.6 million of this due to the Bank of        
Oklahoma  as described in the opening paragraph of this section.                

In light of  items described in the preceding paragraph the Company is          
currently evaluating sources of funding including long-term equity and debt     
financing, including discussions with investment banking firms.  These          
include mortgage debt utilizing the values of the existing and recently         
acquired real estate (see Note 8 to the Financial Statements - Acquisition of   
WJA Assets),  recently appraised at $25,000,000. On May 1, 1997 Freedom         
exercised 300,000 of its options for $375,000, on August 1, 1997 Freedom        
exercised options for an additional 25,000 shares ($31,250) and on August 21,   
1997 Freedom exercised options for an additional 100,000 shares ($125,000).     
Additional equity funding may not be sold pursuant to the Securities Act of     
1933 or in the U.S. absent registration or applicable exemption. The company    
anticipates  using the proceeds of such funding to payoff the $1.2 million      
debenture issued in July on this year,  make additional improvements to         
jai-alai and ITW facilities and to augment working capital. The company         
believes that its current financial condition provides adequate capital         
reserves and liquidity and that this will be enhanced by the upcoming           
seasonal increases in handles and revenues at the Miami and Tampa frontons.     

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PART II - OTHER INFORMATION   

Item 1.   LEGAL PROCEEDINGS.                                                    

None.                                                       

Item 2.   CHANGES IN SECURITIES.                                                

(a)  Not applicable.                                        

(b)  Not applicable.                                        

   (c)  On July 1, 1997, the Company issued 3,631 shares of Common
          Stock upon the conversion of 12 shares of Series D Preferred
         Stock. On July 8, 1997, the Company issued 23,775 shares of
           Common Stock upon the conversion of an aggregate of 50 shares
          of Series C Preferred Stock and 25 shares Series D Preferred
          Stock. On July 21, 1997, the Company issued 34,404 shares of
        Common Stock upon the conversion of 100 shares of Series C
           Preferred Stock.  On July 22, 1997, the Company issued 26,258
        shares of Common Stock upon the conversion of 75 shares of
      Series D Preferred Stock.  On July 25, 1997, the Company
           issued 8,789 shares of Common Stock upon the conversion of 25
         shares of Series D Preferred Stock. On August 12, 1997, the
   Company issued 25,927 shares of Common Stock upon the
            conversion of 75 shares of Series C Preferred Stock. On August
        21, 1997, the Company issued 19,930 shares of Common Stock
           upon the conversion of 50 shares of Series D Preferred Stock.
        On September 12, 1997, the Company issued 10,369 shares of
       Common Stock upon the conversion of 25 shares of Series D
        Preferred Stock. On September 19, 1997, the Company issued
            10,873 shares of Common Stock upon the conversion of 25 shares
     of Series D Preferred Stock. On September 19, 1997, the
  Company issued 9,650 shares of Common Stock upon the
     conversion of 25 shares of Series D Preferred Stock. On
            September 25, 1997, the Company issued 28,950 shares of Common
          Stock upon the conversion of 75 shares of Series C Preferred
           Stock. On October 2, 1997, the Company issued 9,846 shares of
       Common Stock upon the conversion of 25 shares of Series D
     Preferred Stock. On October 2, 1997, the Company issued
            39,387 shares of Common Stock upon the conversion of 75 shares
            of Series C Preferred Stock.  No underwriters were used in any
         of these conversions.  The shares were issued in accordance
 with Section 3(a)(9) of the Securities Act of 1933.

        On August 1, 1997, the Company issued 25,000 shares of its
           common stock to Freedom Financial Corporation ("Freedom") for
            cash consideration of $31,250. On August 21, 1997, the Company
            issued 100,000 shares of its common stock to Freedom Financial
           Corporation ("Freedom") for consideration of $125,000.  These
           issuances were in connection with the exercise in part of the
      options previously issued to Freedom pursuant to a Stock
         Purchase Agreement dated March 31, 1993. Freedom retains an
      option to purchase  905,000 shares of common stock at an
           exercise price of $1.25 per share.  No underwriters were used
            in these transactions.  The shares of Common Stock were issued
           in transactions not involving a public offering in accordance
          with Section 4(2) of the Securities Act of 1933, as amended.

Item 3.   DEFAULTS UPON SENIOR SECURITIES.                                      

None.                                                       

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

None.                                                         

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Item 5.  OTHER INFORMATION.                                                     

None.                                                         

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K.                                      

(a)  LIST OF EXHIBITS FILED.                                  

Exhibit 27 - Financial Data Schedule.               

(b) REPORTS ON FORM 8-K.                                      

        During the quarter ended September 30, 1997, the Company filed
       (i) a Form 8-K Current Report dated July 10, 1997, concerning
      Item 9, SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S,
(reporting the issuance of a $1,200,000 5% Cumulative 
      Convertible Debenture due December 31, 1998) and (ii) a Form
  8-K Current Report dated September 24, 1997, as amended,
    concerning Item 5, OTHER EVENTS (reporting the Company has
   agreed to purchase from Interstate Capital Corporation, a
    subsidiary of Freedom, certain unimproved properties and a
       residential real estate development called Tara Club Estates,
 all of which are situated in Loganville, Walton County,
   Georgia). No financial statements were filed as a part of
these Form 8-K Current Reports.                       

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      FLORIDA GAMING CORPORATION

      SIGNATURES

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

                            FLORIDA GAMING CORPORATION
                                        (Registrant)

Date:  NOVEMBER 14, 1997                            By:  W. B. COLLETT          
                                               ---------------
                                               W.B. Collett,
                                         Chairman of the Board
                                          and  Executive Officer
                                                 (Principal Executive Officer)

Date:   NOVEMBER 14, 1997                           By:  TIMOTHY L. HENSLEY     
                                                   ---------------------
                                                    Timothy L. Hensley
                                                Executive Vice President
                                                   and Chief Financial Officer
                                                 (Principal Financial  and
                                           Accounting Officer)

25    

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10QSB’ Filing		Date		First		Last			Other Filings
		3/31/00		11					10KSB40/A,  10QSB
		4/4/99		10
		12/31/98		9		24			10KSB40
		12/31/97		11					10KSB40,  10KSB40/A
		11/19/97
Filed on:		11/14/97		1		25
		10/10/97		12		21			8-K/A
		10/2/97		10		23
For Period End:		9/30/97		1		24
		9/25/97		23
		9/24/97		12		24			8-K,  8-K/A
		9/19/97		23
		9/12/97		23
		8/21/97		22		23
		8/12/97		23
		8/1/97		11		23
		7/25/97		23
		7/22/97		23
		7/21/97		23
		7/14/97		22					8-K
		7/10/97		11		24			8-K
		7/8/97		23
		7/2/97		18		19
		7/1/97		23
		6/30/97		15		22			10QSB
		5/22/97		10
		5/13/97		10
		5/1/97		11		22			8-K
		4/21/97		11
		4/13/97		10
		4/12/97		10
		3/13/97		10
		1/16/97		10					8-K
		1/1/97		16
		12/31/96		2		21			10KSB40,  8-K,  8-K/A
		12/30/96		4					8-K
		11/25/96		14		16			8-K
		9/30/96		2		21			10-Q
		9/12/96		14		16			8-K
		6/30/96		17		19			10QSB
		6/1/96		17
		12/31/95		7		18			10KSB40
		12/15/95		9
		11/8/95		12
		10/29/95		12
		6/30/95		17		18			10-Q
		4/28/95		12
		11/7/94		12
		10/12/94		11		13
		10/4/94		12
		8/26/94		11
		4/21/94		11
		3/17/94		16
		2/1/94		16
		10/6/93		16
		3/31/93		23
									List all Filings