While the Parisians continue their preparations for a festival, the gypsies prepare to attend the festival in their hideout, the Court of Miracles (""Tanz auf dem Seil"" – "Balancing Act"). Their attention is taken by a newcomer, a young gypsy dancer named Esmeralda. Meanwhile, Phoebus of Frollo's guard arrives in Paris excited about his new promotion as its captain (""Ein bisschen Freude"" – "Rest and Recreation"). He flirts with a young girl but is suddenly interrupted by a fleeing gypsy accused of theft. The gypsy pleads innocence, but Frollo arrives and orders his soldiers to arrest the gypsy. Frollo tells Phoebus that the city has become overrun by gypsies and that he plans to find the Court of Miracles and eliminate them all.