UNITED STATES
                SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C.,  20549
                     
                            FORM 10-Q
(Mark One)
[X]  Quarterly  report  pursuant  to  Section  13 or 15(d) of
     the Securities  Exchange  Act  of 1934 for the quarterly
     period ended JUNE 30, 1997 or

[ ]  Transition report pursuant  to  Section  13 or 15(d) of
     the Securities  Exchange  Act of 1934 for the transition
     period from ______________ to _______________.

Commission File No. 1-4385

                     DUNES HOTELS AND CASINOS INC.
      (Exact name of registrant as specified in its charter)

          NEW YORK                              11-1687244
(State or other jurisdiction of             (I.R.S. Employer
incorporation or organization)             Identification No.)

4600 Northgate Boulevard, Suite 130, Sacramento, California  95834
(Address of principal executive offices)                   (Zip Code)

Registrant's telephone number, including area code (916) 929-2295

4045 South Spencer, Suite 206, Las Vegas, Nevada  89119
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  period that the registrant was required to
file such reports), and  (2)  has  been  subject  to  such filing
requirements for the past 90 days.

                         YES [X]    NO [ ]
                                 
               Applicable Only to Corporate Issuers
                                 
     Indicate  the  number of shares outstanding of each  of  the
issuer's classes of common  stock,  as  of the latest practicable
date.

                                                 Outstanding at
       Class                                     August 1, 1997
Common Stock, $.50 par value                     6,375,096 shares

<PAGE>

          DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

                  QUARTERLY REPORT ON FORM 10-Q

                FOR THE PERIOD ENDED JUNE 30, 1997

                              INDEX


                                                            Page
Part I.  Financial Information

         Item 1.  Financial Statements

         Consolidated Condensed Balance Sheets
          June 30, 1997 and December 31, 1996                 3

         Consolidated Condensed Statements of Income
          (Loss) for the three months ended June 30,
          1997 and 1996                                       5
         Consolidated Condensed Statements of Income
          (Loss) for the six months ended June 30,
          1997 and 1996                                       7

         Consolidated Condensed Statements of Cash Flows
           for the six months ended June 30, 1997
          and 1996                                            9

          Notes to Consolidated Condensed Financial
          Statements, June 30, 1997 and 1996                 10

         Item 2.  Management's Discussion and Analysis of
          Financial Condition and Results of Operations      20

Part II. Other Information

         Item 1.  Legal Proceedings                          27

         Item 3.  Defaults Upon Senior Securities            27

         Item 5.  Other Events                               27

         Item 6.  Exhibits and Reports on Form 8-K           27

         Signatures                                          28

                                  2

<PAGE>

<TABLE>
<CAPTION>

               DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

                    CONSOLIDATED CONDENSED BALANCE SHEETS

                     JUNE 30, 1997 AND DECEMBER 31, 1996


                                       ASSETS

                                                            June          December
                                                          30, 1997        31, 1996
                                                        (Unaudited)
                                                          (Dollars in thousands)
                                               
<S>                                                   <C>             <C>
Cash and cash equivalents                             $        679    $      1,283
                                            
Marketable securities                                          843             527

Receivables
  Trade, less allowance 1997, $91; 1996, $141                  111             133
  Related party, less allowance of $2,049 in
  1997 and 1996                                                185             397
  Real estate sales, less allowance of $64 in 1997             515             928
  Other                                                         20              47

Inventory of real estate held for sale                      10,511          10,919

Inventory, other                                                38              38

Prepaid expenses                                                42             116

Property and equipment, less accumulated depreciation
         and amortization,  1997, $484; 1996, $424           2,467           1,678

Investments                                                  1,049           1,049

Deferred costs and other                                         2              11


                                                      $     16,462    $     17,126

</TABLE>
                                               (continued)

                                                    3
<PAGE>

<TABLE>
<CAPTION>

                DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

               CONSOLIDATED CONDENSED BALANCE SHEETS (CONTINUED)
                                                     
                      JUNE 30, 1997 AND DECEMBER 31, 1996


                     LIABILITIES AND SHAREHOLDERS' EQUITY

                                                                 June           December
                                                               30, 1997         31, 1996
                                                             (Unaudited)
                                                               (Dollars in thousands)

<S>                                                          <C>             <C>
Accounts payable                                             $        598    $         98

Accrued expenses                                                      219             246

Deferred income                                                        29              70

Income taxes                                                          307             247

Short-term debt                                                                        69

Long-term debt and capitalized lease obligations                    1,642           1,955

Accrued preferred stock dividends                                   1,137           1,101

           Total liabilities                                        3,932           3,786

Minority interest                                                   2,982           2,897

Shareholders' equity
  Preferred stock - authorized 10,750,000 shares ($.50 par);
           issued 10,512 shares Series B $7.50 cumulative
           preferred stock, outstanding 9,250 shares in 1997
           and 1996, aggrerate liquidation value $2,337
           including dividends in arrears                               5               5

  Common stock - authorized 25,000,000 shares ($.50 par);
           issued 7,799,780 shares, outstanding 6,375,096
           shares in 1997 and 1996                                  3,900           3,900

  Capital in excess of par                                         25,881          25,881

  Deficit                                                         (18,238)        (17,343)
                                                                   11,548          12,443
  Treasury stock at cost; Preferred - Series B, 902 shares
           Common 1,424,684 shares in 1997 and 1996                 2,000           2,000
           Total shareholders' equity                               9,548          10,443

                                                             $     16,462    $     17,126

          The accompanying notes are an intergal part of these consolidated
                             condensed financial statements
</TABLE>

                                              4
<PAGE>

<TABLE>
<CAPTION>

               DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

             CONSOLIDATED CONDENSED STATEMENTS OF INCOME (LOSS)

                  THREE MONTHS ENDED JUNE 30, 1997 AND 1996

                                   UNAUDITED

                                                       1997              1996
                                                    (Dollars in thousands, except
                                                              per share)

<S>                                                <C>                <C>
Operating revenues:

  Sales of real estate                             $      264         $     229
  Cost of real estate sold                                257               284
                                                            7               (55)

  Rental income - agricultural properties                 195               114
  Cost and expense of rental income                        36               134
                                                          159               (20)

  Rice drying and storage revenues                         35                35
  Cost of rice drying and storage                          87               102
                                                          (52)              (67)

  Miscellaneous income - net                               24

                                                          138              (142)
Operating expenses:
  Selling, administrative and general
    Corporate                                             288               234
    Real estate operations                                 39                49
  Bad debts, net of recoveries                              1               (11)
  Loss on real estate investments                                           290
  Depreciation                                             18                25
                                                          346               587

Loss before other credits (charges) and
  minority interest                                      (208)             (729)

Other credits (charges):
  Interest and dividend income                             66                80
  Interest expense                                        (40)              (26)
  Partnership income (loss)                                                 (64)
  Securities gains (losses), net                           23
  Other                                                   (29)               85

                                                           20                75

</TABLE>
                                        (continued)

                                             5
<PAGE>

<TABLE>
<CAPTION>

               DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

       CONSOLIDATED CONDENSED STATEMENTS OF INCOME (LOSS)(CONTINUED)

                  THREE MONTHS ENDED JUNE 30, 1997 AND 1996

                                   UNAUDITED


                                                        1997        1996
                                                      (Dollars in thousands,
                                                           per share)

<S>                                                <C>           <C>
Loss before minority interest                          (188)           (654)


Minority interest in income of the White Ranch          (70)


Net income (loss)                                  $   (258)     $     (654)


Income (loss) per common share:                    $  (0.04)     $    (0.10)


         The accompanying notes are an intergal part of these consolidated
                          condensed financial statements
</TABLE>

                                             6
<PAGE>

<TABLE>
<CAPTION>

               DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

             CONSOLIDATED CONDENSED STATEMENTS OF INCOME (LOSS)

                  SIX MONTHS ENDED JUNE 30, 1997 AND 1996

                                 UNAUDITED

                                                       1997         1996
                                                 (Dollars in thousands, except
                                                           per share)

<S>                                                <C>             <C>
Operating revenues:

  Sales of real estate                             $      447      $      443
  Cost of real estate sold                                428             476
                                                           19             (33)

  Rental income - agricultural properties                 305             323
  Cost and expense of rental income                        83             235
                                                          222              88

  Rice drying and storage revenues                         70              70
  Cost of rice drying and storage                         191             228
                                                         (121)           (158)

  Miscellaneous income - net                               37              45

                                                          157             (58)
Operating expenses:
  Selling, administrative and general
      Corporate                                           558             565
      Real estate operations                               93              95
  Bad debts, net of recoveries                            124             (45)
  Loss on real estate investments                                         290
  Depreciation                                             35              48
                                                          810             953

Loss before other credits (charges), income taxes
  and minority interest                                  (653)         (1,011)

Other credits (charges):
  Interest and dividend income                            116             162
  Interest expense                                        (86)            (85)
  Partnership income (loss)                                              (149)
  Securities gains (losses), net                           16
  Other                                                  (113)             15

                                                          (67)            (57)
</TABLE>
                                          (continued)

                                                7
<PAGE>

<TABLE>
<CAPTION>
               DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

        CONSOLIDATED CONDENSED STATEMENTS OF INCOME (LOSS) (CONTINUED)

                   SIX MONTHS ENDED JUNE 30, 1997 AND 1996

                                   UNAUDITED

                                                       1997           1996
                                                   (Dollars in thousands, except
                                                              per share)

<S>                                                <C>           <C>  
Loss before income taxes and minority interest          (720)        (1,068)

Income taxes                                             (53)

Loss before minority interest                           (773)        (1,068)

Minority interest in income of the White Ranch           (85)

Net income (loss)                                  $    (858)    $   (1,068)


Income (loss) per common share:                    $   (0.13)    $    (0.16)


      The accompanying notes are an intergal part of these consolidated
                        condensed financial statements
</TABLE>

                                                 8
<PAGE>

<TABLE>
<CAPTION>

              DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

             CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

                SIX MONTHS ENDED JUNE 30, 1997 AND 1996

                               UNAUDITED


                                                         1997              1996
                                                          (Dollars in thousands)

<S>                                                     <C>            <C>
Cash flows from operating activities:
  Net cash provided by (used in) operating activities   $    60        $    (4)

Cash flows from investing activities:
  Decrease (increase) in investments                       (316)           495
  Decrease (increase) in notes receivable                   324            (51)
  Purchase of equipment                                    (290)            (2)
                                                           (282)           442

Cash flows from financing activities:
  Decrease in long-term debt                               (313)          (377)
  Decrease in short-term debt                               (69)           (75)
                                                           (382)          (452)

Increase (decrease) in cash and cash equivalents           (604)           (14)

Cash and cash equivalents, beginning of period            1,283            495


Cash and cash equivalents, end of period                $   679        $   481


        The accompanying notes are an intergal part of these consolidated
                           condensed financial statements
</TABLE>

                                    9
<PAGE>

        DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

     NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                    JUNE 30, 1997 AND 1996

                           UNAUDITED


1. Summary of significant accounting policies:

     Consolidation:

     The accompanying consolidated condensed financial statements
     include the accounts of  the  Company  and  its wholly-owned
     subsidiaries      Continental     California     Corporation
     (Continental), M&R  Corporation  (MRC), and MRC's subsidiary
     M&R Investment Company, Inc. (MRI)  and  MRI's  subsidiaries
     SHF  Acquisition Corporation (SHF) and Southlake Acquisition
     Corporation (Southlake).

     Description of business:

     The Company  operates  in  two  principal business segments:
     Real estate investments (development and sale of residential
     lots and rental of agricultural land) and agricultural (rice
     drying and storage).

     The   Company's   real   estate  segment   sells   completed
     residential lots primarily  to  builders of custom homes and
     to  the general public located in  and  around  the  greater
     Sacramento,  California  area.   The agricultural properties
     are  leased to farmers in the area  where  the  agricultural
     properties are located.

     The agricultural  segment  dries  harvested  rice over a two
     month period (approximately September 15 to November 15) and
     stores, for a fee, the dried rice (or other grains) until it
     is removed by the owner.  The Company dries and  stores rice
     principally  for  one  customer,  Farmers  Rice Co-operative
     (Farmers).  Farmers accounts for approximately  98%  of  the
     Company's  rice drying and storage revenues.  If the Company
     were to lose Farmers as a customer, it would have a material
     adverse  effect   on   the   Company's  drying  and  storage
     operation.  (See Note 5 of Notes  to  Consolidated Condensed
     Financial Statements)

     Basis of presentation:

     The  financial  information  included herein  is  unaudited;
     however,   such   information   reflects   all   adjustments
     (consisting  solely of normal recurring  adjustments)  which
     are, in the opinion  of  management,  necessary  for  a fair
     statement   of   results   for  the  interim  periods.   The
     Consolidated Condensed Financial  Statements  should be read
     in conjunction with the Company's Annual Report on Form 10-K
     for the year ended December 31, 1996.

                                 10
<PAGE>

        DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

     NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                    JUNE 30, 1997 AND 1996

                           UNAUDITED

1.   Summary of significant accounting policies (continued):

     The results of operations for the six months  ended June 30,
     1997, are not necessarily indicative  of the  results  to be
     expected for the full year.

     Capitalized interest:

     The Company follows the policy of capitalizing interest as a
     component of the cost of  property and equipment constructed
     for its own use.  For the six  months  ended  June 30, 1997,
     the Company did not incur any interest expense in connection
     with  the  construction  of  the  rice drying facility  (the
     Drying Facility).  The capitalization rate that will be used
     to   determine   the   amount  of  interest   eligible   for
     capitalization will be 12%  which  is the rate applicable to
     the debt related to the construction of the Drying Facility.

     Earnings per share:

     In February 1997, the Financial Accounting  Standards  Board
     issued  Statement of Financial Accounting Standards No. 128,
     "Earnings  Per Share" (SFAS No. 128) which establishes a new
     accounting standard for the computation and reporting on net
     income (loss)  per  share.   SFAS  NO.  128 is effective for
     financial   statements  issued  for  periods  ending   after
     December 15,  1997,  and  early adoption is prohibited.  The
     Company expects that there  will  be no material effect upon
     implementing  SFAS 128 on its net income  (loss)  per  share
     computations.

     Reclassifications:

     For the six months  ended  June  30,  1996,  the Company has
     changed  the format of its Consolidated Condensed  Statement
     of  Income   (Loss)   to   conform  to  the  June  30,  1997
     presentation.   The  Company  believes  this  change  better
     reflects the revenues and expenses  of  the  segments within
     which the Company operates.

                                 11
<PAGE>

        DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

     NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                    JUNE 30, 1997 AND 1996

                           UNAUDITED

2.   Fair value of financial instruments:

     Estimated fair value of the Company's financial  instruments
     (all  of  which  are  held for non-trading purposes) are  as
     follows:

<TABLE>
<CAPTION>
                                               Carrying          Fair
                                                Amount          Value
                                               (Dollars in thousands)
     <S>                                       <C>          <C>                                        
     Cash and cash equivalents                 $   679      $  679 (a)
     Marketable securities                         843         843 (a)
     Notes receivable, real estate sales,
      net of allowance of $64                      515             (b)
     Note receivable, related party, net
      of allowance                                 185             (c)
     Solano County Option                        1,043       1,043 (d)
     Long-term debt                             (1,642)            (e)

</TABLE>

     (a)  The  carrying  amount  approximates fair value of cash,
          cash  equivalents  and  marketable   securities.    For
          marketable  securities, fair values are estimated based
          on quoted market prices as of June 30, 1997.

     (b)  The fair value  of  the  notes  receivable are based on
          their  outstanding  balances  (net  of   allowances  of
          $64,000),  interest rates and the fair value,  based on
          comparable  sales  in  the  area,  of the real property
          which serves as collateral for the note.   In the event
          any purchaser were to default on the real estate notes,
          the Company could institute foreclosure proceedings and
          reacquire  the  property which serves as the collateral
          for the note.

     (c)  It is not possible  to  determine the fair value of the
          Baby  Grand  Corp.  note (the  BGC  Note)  because  the
          Company is unable to  predict  whether Baby Grand Corp.
          will be able to pay it first lien note on its due date,
          which is the same date that the BGC Note payable to the
          Company  comes  due.  See  Footnote   6d  of  Notes  to
          Consolidated  Condensed Financial Statements.  The  BGC
          Note is more fully described in detail in the Company's
          Form 10-K for the  year  ended  December  31, 1996, see
          "Item 1.  Business - Other Activities - Certain Loans -
          Baby Grand Corp."; Form 8-K, "Item

                                 12
<PAGE>

        DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

     NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                    JUNE 30, 1997 AND 1996

                           UNAUDITED


2.   Fair value of financial instruments (continued):

          5.  Other  Events,"  dated February 4, 1997;  Form 8-K,
          "Item  5. Other Events,"  dated  March  26,  1997;  and
          Form 8- K, "Item 5. Other Events," dated July 8, 1997.

     (d)  The fair value of the Solano County Option is estimated
          based  on  an  appraisal  of  the  real  property,  and
          subsequent  discussions  with  local realtors, to which
          the option relates and the length  of the option period
          which enables the Company to have some  flexibility  as
          to  when  and  if  the option should be exercised.  The
          Company can only recover  the  fair value of the option
          (i) by exercising the option and  selling  the property
          or (ii) selling the option.  However, if the fair value
          of  the  real  property  should  drop  below the option
          purchase  price,  the  Company  would  not be  able  to
          recover  all  of  its  investment in the Solano  County
          Option.  The owner of the  property  under  option  has
          informed  the  Company  that  it  is  two  payments  in
          arrears,   which   approximates   $130,000,   including
          interest,  on  the  first  mortgage  lien  which  had a
          balance due of approximately  $1,356,000 as of December
          31,  1996. The  Company and the owner are continuing to
          attempt to negotiate a solution. If the Company and the
          owner are unable to arrive at a solution,  the  Company
          may  make the payments to  the mortgage  lien holder in
          order to protect its  investment  in  the Solano County
          Option.   The  Company  is  unable to  predict what the
          outcome  of  this  matter will be.  The  Solano  County
          Option is  more fully  described  in the Company's Form
          10-K for the year ended December 31, 1996, see "Item 1.
          Business - Real Estate Segment - Solano County Option."

     (e)  The  fair  value  of  long-term debt  is not subject to
          reasonable    estimation   because   the   debt   arose
          principally as a result of the settlement of a dispute.
          The settlement is described in detail in the  Company's
          Form  10-K for  the year  ended  December 31, 1996, see
          "Item 1. Business - Resolution of SASA Dispute."

                                 13
<PAGE>

        DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

     NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                    JUNE 30, 1997 AND 1996

                           UNAUDITED


3.   Inventory of real estate held for development and sale:

<TABLE>
<CAPTION>
                                                  1997       1996
                                              (Dollars in thousands)
     <S>                                        <C>        <C>
     The Fairways (a)                           $ 4,256    $ 4,664
     Residential lots, North Las Vegas (b)          469        469
     White Ranch (c)                              5,600      5,600
     Sam Hamburg Farm (d)                           146        146
     Other                                           40         40
                                                $10,511    $10,919
</TABLE>

     (a)  On  October  7,  1996,  the   Company  entered  into  a
          Purchase  and  Option  Agreement  regarding the sale of
          certain lots at  The Fairways.  The Purchase and Option
          Agreement is described in the Company's  report on Form
          10-K for the year  ended December  31, 1996, see  "Item
          1.  Business - Real  Estate  Segment  -  The Fairways."

     (b)  On July 3, 1997,  the Company completed the sale of the
          57  residential lots in North  Las  Vegas, Nevada.  Net
          proceeds to the Company  were approximately $573,000 of
          which $318,000 was paid to Beal  Bank, the purchaser of
          the   Company's  obligation  to  San   Antonio  Savings
          Association  (the SASA Obligation).   In  addition, the
          Company received a note and deed of trust in the amount
          of  $72,597  representing  reimbursement  of water fees
          previously paid.  The note was paid in full on July 21,
          1997.

     (c)  On July 15, 1997, the Company completed the sale of the
          White  Ranch.    Net   proceeds  from  the  sale   were
          approximately   $5,965,000   of   which   approximately
          $2,982,500 was paid to the Company.  The balance of the
          proceeds were paid to the other  50% owner of the White
          Ranch.

     (d)  See footnote  6b  of  Notes  to Consolidated Condensed
          Financial Statements regarding the chemical cleanup at
          Sam Hamburg Farm.

                                 14
<PAGE>

        DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

     NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                    JUNE 30, 1997 AND 1996

                           UNAUDITED


4.    Related party transactions:

      John B. Anderson, the Company's controlling stockholder and
      Chairman  of the Board of Directors  of  the  Company,  and
      entities owned or controlled by him (Anderson Entities) own
      approximately  67.2%  of  the  Company's common stock as of
      August 1, 1997, subject to the rights  and  claims  of  the
      Federal  Deposit  Insurance Corporation (the FDIC) to those
      shares  or approximately  47.1%  of  the  Company's  common
      stock.  See  footnote 6d of Notes to Consolidated Condensed
      Financial Statements.

      From  time  to  time  the Company has made loans to various
      Anderson  Entities and to  directors and executive officers
      of  the Company, details of which are  more fully described
      in the Company's  Form 10-K for the year ended December 31,
      1996.

5.    Property and equipment:

      On May 29, 1997, SHF  signed  a  contract (the Contract) in
      the amount of $1,651,800 with Tolson  Construction  Company
      (the   Contractor)  for  the  construction  of  the  Drying
      Facility  adjacent  to  the  rice  storage facility in Yolo
      County, California.  The Contract does  not include certain
      costs such as permits, landscaping, paving,  utility lines,
      interest costs, etc.  These additional costs are  estimated
      to be between $200,000 and $250,000.  As of July 31,  1997,
      SHF has paid approximately  $980,000 of which approximately
      $946,000 has been paid  to the Contractor.   In  connection
      with  the  financing  of the Drying  Facility construction,
      SHF  has  entered into  the following  agreements with ICON
      Cash Flow Partners,  L.P.,  Series  E   (ICON, LP) and ICON
      Financial  Corp. (ICON):  (1)  A promissory note (the Note)
      dated  April  3,  1997,  between  ICON,  LP and  SHF in the
      principal  amount of  $1,150,000,  with interest thereon at
      the rate of 12% per annum. Interest is payable on the first
      day  of the month  following  the  first advance and on the
      first day of the month thereafter.  In the event the Drying
      Facility is not completed by December 31,1997, the Note will
      be payable on demand.  If the Drying Facility  is completed
      before December 31, 1997, advances made under the Note will
      be rolled into the equipment lease financing as of the Base
      Lease  Commencement  Date   (the  last  day  of  the  month
      following the date the Drying Facility is declared complete
      by both SHF and ICON, LP). As  of  July  31,  1997, SHF had
      drawn  approximately  $446,000  against the note.   (2)   A
      Master Equipment Lease (the Lease)  dated  April  3,  1997,
      between  ICON  and  SHF.   Beginning  with  the  Base Lease
      Commencement  Date,  ICON  will  lease  to  SHF  the Drying
      Facility  for  a  period of five years.  At the end of  the
      five year period, SHF  will  have the right to purchase not
      less than all of the Drying Facility

                                 15
<PAGE>

        DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

     NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                    JUNE 30, 1997 AND 1996

                           UNAUDITED


5.   Property and equipment (continued):

      for $1.00.  The monthly rental under  the   Lease  will  be
      approximately 2.202% of the funded  Drying  Facility   cost
      (estimated  to  be  approximately  $25,000  per month).  In
      addition to being collateralized by the Drying Facility, SHF
      has provided additional collateral in the form of a Deed of
      Trust on certain parcels  of property, including the parcel
      on which  the  storage facility is  located.  Both the Note
      and the Lease are guaranteed by  MRI and the  Company  (the
      Guarantors).  Before  the  Guarantors  are  liable  for any
      deficiency,  ICON  or  ICON,  LP must first proceed against
      the Drying Facility and the additional collateral. Both the
      Lease and the  Note contain certain events of defaults, one
      of  which  relates to  any  material  adverse change in the
      business or financial condition  of SHF or  the  Guarantors
      (defined  as a  reduction  of  Tangible Net Worth of 20% or
      more)  and  to the  loss of Farmers  as a customer.   These
      events of defaults only  apply  during  the period the Note
      remains  unpaid.    Because   construction  of  the  Drying
      Facility  commenced later than anticipated,  the Company is
      unable to predict if the Drying Facility will be  completed
      in  time  for  the  1997 rice  drying season (approximately
      September 15 to November 15).

6.   Contingencies:

     a.   As  of  June  30,  1997,  there were no material  legal
          proceedings pending against  the Company.  However, see
          footnote   6d   of  Notes  to  Consolidated   Condensed
          Financial Statements  regarding  legal proceedings, not
          involving the Company, that may have a material adverse
          effect on the Company.

     b.   SHF was advised of possible contamination  on two sites
          at  Sam  Hamburg  Farm,  a storage facility for  diesel
          fuels and an old airstrip  which  had been used for the
          loading  and fueling of aircraft applying  agricultural
          chemicals  to  the surrounding farm lands.  The Company
          has  completed  the  cleanup  relating  to  the  diesel
          storage tank at a cost of approximately $100,000.

          The Company has disposed  of  a  large  amount  of  the
          contaminated  earth at an approved site for the storage
          of  toxic  wastes.    However,  5,000  cubic  yards  of
          contaminated earth still remain to be disposed of.  The
          Company,  through  its  chemical   and  toxic  clean-up
          consultant, has been working with the  California State
          Environmental  Protection Agency, in seeking  alternate
          means to the disposal of the

                                 16
<PAGE>

        DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

     NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                    JUNE 30, 1997 AND 1996

                           UNAUDITED


6.   Contingencies (continued):

          contaminated earth  in  toxic dump sites. The State has
          participated in the funding  of  several  projects by a
          number  of chemical treatment firms in efforts  to  try
          other detoxification methods on the soil.

          Because of  the  ongoing  testing,  the  State  has not
          imposed  a  disposal  date  upon  the Company.  Cost of
          disposal is estimated at $100 per cubic yard.  However,
          if on-site remediation can be achieved, it is estimated
          that  the aggregate cost of disposal  will  be  between
          $90,000 and $115,000.  The Company is unable to predict
          when the  ongoing  testing will be complete or what the
          outcome of these tests will be.

          As of June 30, 1997, the Company has paid approximately
          $500,000,  including  the  $100,000  expended  for  the
          cleanup  relating  to  the  diesel  storage  tank,  and
          accrued an  estimated  $174,000 relating to the balance
          of  the  clean-up  of  the  contaminated  earth.   That
          estimate  could change as the  remediation  work  takes
          place.

     c.   The Company  received  a  notice  from  the  California
          Franchise Tax  Board (FTB) wherein the FTB alleges that
          one  of  the  Company's  subsidiaries  owes  California
          franchise tax, penalties and interest of  approximately
          $563,800.   The  tax  arose  out  of  a  gain  in  1988
          resulting  from  a  foreclosure  sale of  certain  real
          property owned by the  subsidiary.   The  FTB  contends
          that the gain is non-business  income to the subsidiary
          and  therefore  should be  allocated 100% to California
          without the  benefit   of  any  of  the  losses  of the
          Company.  The  Company has exhausted all of its appeals
          with  the  FTB  and  therefore   this  matter  has been
          referred to the California State  Board of Equalization
          (SBE).  On June 12, 1997, the  Company filed its  Reply
          Brief  with  the  SBE  wherein  the  Company requested,
          based on reasons stated in the  Reply  Brief,  that the
          SBE reverse the FTB's proposed  assessment and withdraw
          its  Notice   of  Proposed  Assessment.  Because of the
          likelihood of  either  litigation or a settlement,  the
          Company  has  provided  in  its  balance sheet $300,000
          relating to this matter.

                                 17
<PAGE>

        DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

     NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                    JUNE 30, 1997 AND 1996

                           UNAUDITED


6.   Contingencies (continued):

     d.   John  B. Anderson, Edith Anderson,  Cedar   Development
          Co.,   J.A.   Inc.   and   J.B.A.   Investments,   Inc.
          (collectively  the  Anderson  Parties) are  involved in
          litigation   with   the   Federal   Deposit   Insurance
          Corporation  (the FDIC).  This  matter  is  more  fully
          described  in   the  Company's   Form 10-K for the year
          ended   December   31,  1996,  see   "Item   3.   Legal
          Proceedings - Federal  Deposit   Insurance  Corporation,
          et al v. John B. Anderson et al.";  Form  8-K, "Item 5.
          Other Events,"  dated February 4, 1997; Form 8-K, "Item
          5. Other Events," dated  March 26, 1997;  and Form 8-K,
          "Item  5.  Other  Events,"  dated  July 8, 1997.    Mr.
          Anderson, through his  ownership  of  Cedar Development
          Co. (Cedar), the parent  of Baby Grand  Corp. (BGC) and
          J.B.A. Investments,  Inc. (J.B.A.), owns  approximately
          4,280,756  shares  or  67.2% of the outstanding  common
          stock of  the Company.  Of  these shares (i)  3,000,000
          shares or 47.1% of the outstanding common  stock of the
          Company  (the  Pledged Dunes  Shares)  are  pledged  as
          collateral in favor of entities  of which the FDIC is a
          successor  and/or  assign  and (ii) 1,280,756 shares or
          20.1% of  the outstanding common  shares are pledged to
          MRI as collateral  for the BGC Note.   In  April  1997,
          the  Company  was  informed  that  the  FDIC  had filed
          applications with the Nevada Gaming Control  Board (the
          NGCB) and the Nevada Gaming  Commission (the  NGC)  for
          permission to enforce  the FDIC's security interest in,
          including  the  right  to  vote,  the  common  stock of
          Cedar,   BGC   and   other  entities.   The  successful
          enforcement of the  security  interests  by the FDIC in
          the  common  stock of the  foregoing  companies  would,
          among other things,  result  in  a change in control of
          such companies.  The NGCB referred  the  matter back to
          the  NGCB  staff for further  review.  As of  July  31,
          1997,  the   FDIC   has   not   received  the  specific
          permission of  the NGCB or the NGC  to vote the pledged
          shares.  On June 3, 1997,  the FDIC filed  a motion for
          a declaration that the FDIC has the  right to  exercise
          voting   rights  to  the   Pledged  Dunes  Shares,  and
          requiring   stockholders  meetings  be  held   for  the
          Company and certain  other entities.  On  July 8, 1997,
          the Nevada District Court  granted  the  FDIC's motion.
          In  August  1997, the  Anderson Parties  filed  in  the
          Nevada   District  Court  a  Motion  to  Clarify  Order
          Granting  Motion  of  FDIC  for a Declaration of Voting
          Rights Respecting the  Exercise  of Voting  for Certain
          Stock.   The  request is based  on the  fact  that  the
          Nevada District court order is silent  as to whether or
          not the FDIC is required to comply with certain

                                 18
<PAGE>

        DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

     NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                    JUNE 30, 1997 AND 1996

                           UNAUDITED


6.   Contingencies (continued):

          sections  of the Nevada  Gaming  Commission Regulations
          requiring prior  approval  of  the  NGCB and NGC before
          voting rights can be exercised by the FDIC.  On July 3,
          1997,  the  United  States  District Court, District of
          Nevada (the Nevada District Court)  approved the FDIC's
          proposed   plan   (the  Plan)  for  disposition  of the
          collateral which includes the Pledged Dunes Shares. The
          Plan requires, among  other  things,  that  the Special
          Master  gather  material  to be provided to prospective
          bidders, to review bids and negogiate  with prospective
          bidders, to submit qualified bids to the Nevada District
          Court  and  to obtain a hearing date at which time  the
          Nevada  District  Court   may   consider any  qualified
          overbids,  as well as credit bids  for  the  FDIC.  The
          proposed time schedule of the Plan is approximately 215
          days.   Any proceeds   from   the  disposition  of  the
          Company's common shares held by BGC, and pledged to MRI,
          would be payable to MRI.  The Company does  not know if
          the FDIC will attempt to exercise voting rights to  the
          Pledged  Dunes  Shares.   Should  the FDIC successfully
          assert  voting rights over, or dispose of,  the Pledged
          Dunes Shares, there  will be a change in control of the
          Company. Although the Company is  not a party to any of
          the above-referenced actions, a change in control of the
          Company  (including Cedar or BGC) may  adversely affect
          the Company's ability to collect on certain obligations
          owed to the Company  by the Anderson Parties, including
          the BGC Note in the approximate  amount  of  $2,083,735
          (including interest of approximately $167,000) from BGC.
          The Company cannot predict the outcome of the foregoing
          at this time.

7.   Loss per common share:

     Loss per common share has been computed  using the number of
     shares outstanding (6,375,096) at  June 30, 1997  and  1996.
     Dividends on the Company's non-convertible preferred  stock,
     Series B (Series B Preferred Stock), have been deducted from
     income or added to the  loss  applicable  to  common shares.
     Dividends on the Company's Series B Preferred Stock have not
     been paid since the first quarter of 1982. The Company is in
     arrears on such dividends in  the  amount  of  approximately
     $1,137,000 as of June 30, 1997.

                                 19
<PAGE>
                    DUNES HOTELS AND CASINOS INC.

                    QUARTERLY REPORT ON FORM 10-Q

                 FOR THE PERIOD ENDED JUNE 30, 1997

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

    Section 21E of the Securities Exchange Act of 1934 provides a
"safe   harbor"    for   forward-looking   statements.    Certain
information   included  herein   contains   statements  that  are
forward-looking,  such as anticipated liquidity  requirements for
the coming fiscal  year, anticipated sources of liquidity for the
coming  fiscal   year,  the  impact  of anticipated asset  sales,
proposed   facilities  construction  and   potential  changes  in
control  of   the  Company.   Such  forward-looking   information
involves   important    risks   and   uncertainties   that  could
significantly  affect  the  Company's   financial  condition  and
future  results  of  operations,  and,  accordingly, such  future
financial condition and results of  operations  may  differ  from
those  expressed in  any forward-looking statements made  herein.
These risks  and  uncertainties  include, but are not limited to,
those  risks relating  to  actual  costs  necessary  to  clean-up
certain    real    property    chemical   contamination,   actual
construction costs and  construction  contingencies in connection
with   construction  of  new   facilities,   real  estate  market
conditions   and  general economic conditions, the  abilities  of
certain third  parties  to obtain financing and otherwise perform
under  real  estate  purchase  agreements,  and  the  outcome  of
certain  litigation  and   other  risks.   The  Company  cautions
readers not  to place undue  reliance on any such forward-looking
statements, and, such statements speak only as of the date made.

OVERVIEW

    On July 3,  1997,  the  Company  completed the sale of its 57
residential lots in North  Las Vegas,  Nevada.   Net  proceeds to
the  Company  were  approximately $573,000 of which $318,000  was
paid  to Beal Bank,  the  purchaser  of  the SASA Obligation.  In
addition, the  Company received a note and  deed  of trust in the
amount  of   $72,597  representing  reimbursement  of water  fees
previously paid.  The note was paid in full on July 21, 1997.

    On July 15, 1997, the Company completed the sale of the White
Ranch.  Net  proceeds from the sale were approximately $5,965,000
of which  approximately $2,985,500 was paid to the Company.   The
balance  of the proceeds were paid to the other 50% owner of the
White Ranch.

    On May  29, 1997, SHF signed a contract (the Contract) in the
amount  of  $1,651,800  with  Tolson  Construction  Company  (the
Contractor)    for   the  construction  of  the  Drying  Facility
adjacent  to   the  rice   storage   facility   in  Yolo  County,
California.  The  Contract does not include certain costs such as
permits,  landscaping,  paving,  utility  lines, interest  costs,
etc.    These  additional  costs  are  estimated  to  be  between
$200,000  and  $250,000.   As  of July 31,  1997,  SHF  has  paid
approximately $980,000 of  which  approximately $946,000 has been
paid to the Contractor.  In  connection with the financing of the
Drying Facility construction,  SHF has entered into the following
agreements

                                 20
<PAGE>

                    DUNES HOTELS AND CASINOS INC.

                    QUARTERLY REPORT ON FORM 10-Q

                 FOR THE PERIOD ENDED JUNE 30, 1997


with  ICON  Cash   Flow    Partners,   L.P.,  Series   E   (ICON,
LP) and ICON Financial Corp. (ICON):  (1)  A promissory note (the
Note)  dated  April  3,  1997, between  ICON, LP and SHF  in  the
principal amount of $1,150,000,  with   interest  thereon  at the
rate of 12% per annum.  Interest is  payable on the first day  of
the  month  following  the first  advance and on the first day of
the month thereafter.  In  the  event the  Drying Facility is not
completed  by December 31, 1997, the  Note  will  be  payable  on
demand.  If the Drying  Facility is completed before December 31,
1997, advances  made   under  the  Note  will  be rolled into the
equipment lease financing  as of the Base Lease Commencement Date
(the  last  day  of  the   month  following  the date the  Drying
Facility is declared complete  by both SHF and  ICON, LP).  As of
July 31, 1997, SHF has drawn  $446,000 against the  note.  (2)  A
Master Equipment Lease (the Lease)  dated April 3, 1997,  between
ICON and SHF.  Beginning with the  Base Lease Commencement  Date,
ICON  will lease to SHF the Drying  Facility for a period of five
years.   At  the  end of the five  year period, SHF will have the
right to purchase not  less  than  all of the Drying Facility for
$1.00.  The monthly rental under the  Lease will be approximately
2.202%  of the funded Drying  Facility  cost.  (estimated  to  be
approximately   $25,000   per   month).   In  addition  to  being
collateralized   by  the  Drying   Facility,   SHF  has  provided
additional collateral  in the form of  a Deed of Trust on certain
parcels of property, including  the parcel  on  which the storage
facility is located.  Both the  Note and the Lease are guaranteed
by MRI and the Company  (the Guarantors).  Before  the Guarantors
are  liable  for  any  deficiency,  ICON  or ICON, LP must  first
proceed   against  the   Drying  Facility  and   the   additional
collateral.  Both  the  Lease and the Note contain certain events
of defaults, one of which  relates to any material adverse change
in the business or  financial  condition of SHF or the Guarantors
(defined as a reduction  of Tangible  Net  Worth  of 20% or more)
and to the loss of Farmers  Rice Coop as a customer. These events
of  defaults  only   apply  during  the  period the Note  remains
unpaid.  Because construction  of the Drying  Facility  commenced
later than anticipated, the Company is  unable  to predict if the
Drying  Facility  will  be completed  in time for the  1997  rice
drying season (approximately September 15 to November 15).

John B. Anderson,  Edith  Anderson,  Cedar Development Co., J.A.
Inc.  and  J.B.A.  Investments, Inc. (collectively  the  Anderson
Parties)  are  involved  in  litigation  with the Federal Deposit
Insurance  Corporation (the  FDIC).  This matter  is  more  fully
described in the Company's  Form 10-K for the year ended December
31, 1996,  see  "Item  3.  Legal  Proceedings  -  Federal Deposit
Insurance  Corporation, et al v. John B. Anderson et  al.";  Form
8-K,  "Item  5.  Other Events," dated February 4, 1997; Form 8-K,
"Item 5. Other   Events",  dated  March  26,  1997; and Form 8-K,
"Item  5.  Other  Events,"  dated  July 8,  1997.  Mr.  Anderson,
through his ownership of Cedar  Development  Company  (Cedar) the
parent  of  Baby Grand Corp. (BGC)  and J.B.A. Investments,  Inc.
(J.B.A.),  owns  approximately  4,280,756  shares or 67,2% of the
outstanding  common stock of the Company.  Of  these  shares  (i)
3,000,000 shares  or 47.1% of the outstanding common stock of the
Company  (the  Pledged Dunes Shares) are pledged as collateral in
favor of  entities  of  which  the  FDIC  is  a successor and /or
assign   and  (ii)  1,280,756 shares or 20.1% of the  outstanding
common shares  are pledged to

                                 21
<PAGE>

                    DUNES HOTELS AND CASINOS INC.

                    QUARTERLY REPORT ON FORM 10-Q

                 FOR THE PERIOD ENDED JUNE 30, 1997


MRI as collateral for the BGC Note.  In  April 1997,  the Company
was informed that the FDIC had filed application with  the Nevada
Gaming  Control Board  (NGCB) and the  Nevada  Gaming  Commission
(NGC) for permission  to  enforce  the FDIC's security   interest
in,  including the right to vote, the common stock of  Cedar, BGC
and other  entities.   The successful enforcement of the security
interest  by the FDIC  in  the  common  stock  of  the  foregoing
companies  would,  among other things,  result  in  a  change  in
control of such  companies.   The  NGCB  referred the matter back
to  the NGCB  staff for further review.  As of  July 31,1997, the
FDIC  has  not  received  the  specific permission  of  the  NGCB
or the NGC to vote the pledged Shares.  On June 3, 1997, the FDIC
filed  a motion for a declaration that  the FDIC has the right to
excercise voting rights to the Pledged Dunes Shares, and requiring
that  stockholders meetings be held for  the Company  and certain
other entities.   On  July  8, 1997,  The  Nevada District  Court
granted the FDIC's motion.  In  August 1997, the Anderson Parties
filed in the Nevada District Court  a Motion  to   Clarify  Order
Granting  Motion  of  FDIC  for  a Declaration of  Voting  Rights
Respecting the Exercise of Voting for Certain Stock.  The request
for  clarification  is based on the fact that the Nevada District
Court's order  is  silent  as to  whether  or  not  the  FDIC  is
required  to  comply  with  certain sections of the Nevada Gaming
Commission  Regulations  requiring prior approval of the NGCB and
the  NGC before  voting rights  can be  exercised  by  the  FDIC.
On July 3, 1997, the United States  District Court,  District  of
Nevada  (the Nevada District Court) approved the FDIC's  proposed
plan (the Plan) for disposition of the collateral which  includes
the  Pledged  Dunes  Shares.   The  Plan  requires,  among  other
things,  that  the  Special Master gather material to be provided
to prospective  bidders, to review  bids   and  negogitate   with
prospective  bidders,  to  submit qualified  bids to  the  Nevada
District  Court  and  to obtain hearing date  at  which  time the
Nevada  District  Court  may  consider any qualified overbids, as
well as credit  bids from  the FDIC.  The  proposed time schedule
for the Plan  is  approximately 215 days.   Any proceeds from the
disposition of  the  Company's  common  shares  held by  BGC, and
pledged to MRI,  would be payable to  MRI. The Company  does  not
know  if  the  FDIC  will attempt to exercise voting right to the
Pledged Dunes Shares.  Should the FDIC successfully assert voting
rights over, or dispose  of, the Pledged Dunes Shares, there will
be a change  in control  of  the Company.   Although the  Company
is  not a party to any of the above-referenced  actions, a change
in control of the Company (including Cedar or BGC) may  adversely
affect  the Company's ability  to collect on  certain obligations
owed to the Company by  the Anderson  Parties, including  the BGC
Note in the  approximate amount of $2,083,735 (including interest
of approximately $167,000) from  BGC.  The Company cannot predict
the outcome of the foregoing at this time.

The Company received a notice  from the California  Franchise Tax
Board (FTB) wherein  the  FTB  alleges that one of  the Company's
subsidiaries  owes   California  franchise   tax,  penalties  and
interest of  approximately $563,000.  The tax arose out of a gain
in  1988  resulting  form  a  foreclosure  sale of  certain  real
property owned by the  subsidiary.   The  FTB  contends  that the
gain  is  non-business  income  to  the  subsidiary and therefore
should be allocated 100% to California  without  benefit  of  any

                                 22
<PAGE>

                    DUNES HOTELS AND CASINOS INC.

                    QUARTERLY REPORT ON FORM 10-Q

                 FOR THE PERIOD ENDED JUNE 30, 1997


losses  of  the  Company.   The Company has exhausted  all of its
appeals with the FTB and therefore this  matter has been referred
to the California State  Board  of  Equalization  (SBE).  On June
12, 1997, the Company filed  its Reply Brief with the SBE wherein
the  Company  requested,  based  on reasons stated in  the  Reply
Brief, that the SBE reverse  the  FTB's  proposed  assessment and
withdraw  its  Notice of Proposed  Assessment.   Because  of  the
likelihood of either litigation or  a settlement, the Company has
provided in its balance sheet $300,000 relating to this matter.

    The Company has  no  present  intentions  to pay dividends on
either its common or preferred stock.

OPERATING RESULTS

   Results of operations for the six months  ended June 30, 1997,
were impacted by a write down of  approximately $157,000 relating
to real estate notes resulting  from sales at The Fairways.  This
was a result of two of the original  purchasers  of  lots  at The
Fairways  asking to have their loans  reduced so that their total
investment in their lots would be  closer to their current market
value.  Although  the  Company  could have foreclosed on the lots
and  resold them, it  was  management's  decision  to  grant  the
reduction   rather   than   go  through  a   lengthy  and  costly
foreclosure proceeding.

THREE MONTHS ENDED JUNE 30, 1997  VS.   THREE  MONTHS  ENDED JUNE
30, 1996

REAL ESTATE

    The increase in revenues from the sale of real estate for the
three  months  ended June 30, 1997 resulted  from   the  sale  of
higher priced  lots  sold  at  The Fairways  in the quarter ended
June 30, 1997 when compared with  the  quarter  ended  June  30,
1996.    Cost  of  real  estate sold decreased because of a write
down of the  carrying  value  of  the  Fairway  lots  in  a prior
period.

    Net rental  income from agricultural properties for the three
months  ended  June  30, 1997  increased by approximately $81,000
when compared with the  three  months  ended  June 30, 1996.  The
increase was due to the recognition of  rental  income  which had
been  deferred  from   prior  periods.  The decrease in cost  and
expenses of rental income  for the  three  months  ended June 30,
1997, was due to a decrease in water assessment fees.

AGRICULTURAL

    The loss from the rice drying and storage operations  for the
three  months  ended  June  30,  1997  decreased by $64,000 when
compared  with  the  three  months  ended June  30,  1996.   The
decrease was

                                 23
<PAGE>

                    DUNES HOTELS AND CASINOS INC.

                    QUARTERLY REPORT ON FORM 10-Q

                 FOR THE PERIOD ENDED JUNE 30, 1997


primarily attributable to  the  termination  of the lease of  the
West Sacramento rice dryer and the agreement to use the  Cal-Dehy
name,  which  also  included  a  covenant  not to compete.

GENERAL

    When  compared  with  the  three  months ended June 30, 1996,
corporate  selling, general and administrative expenses increased
by  approximately   $54,000;  loss  on  real  estate  investments
decreased   by   approximately   $290,000;   partnership   losses
decreased by approximately $64,000;  interest income decreased by
approximately  $22,000;  and  interest   expense   increased   by
approximately $14,000.

    The increase in corporate selling, general and administrative
expenses was due primarily  to an increase in salaries of $17,000
as  a  result of severance pay  paid to former employees  and  an
increase in property taxes of approximately $19,000.

   The loss  on  real  estate  investments  decreased because no
further  write  down of the carrying value of the  lots  at  The
Fairways was deemed necessary.

    The decrease in partnership losses was due to the termination
of the Pine Ridge  Joint Venture and  Steadfast Cattle Company in
1996.

    The decrease in interest  income and interest expense was due
to principal collections on notes  receivable  and a reduction in
the principal balance owing on the RTC note.

SIX MONTHS ENDED JUNE 30, 1997 VS. SIX MONTHS ENDED JUNE 30, 1996

REAL ESTATE

    Profit from the  sale of  real  estate  for  the  six  months
ended  June  30,  1997, increased by $52,000 when compared to the
six months ended  June  30,  1996.   This was a result of  higher
sales prices  and  a reduction of the  carrying value of the lots
taken in a prior period.

    Net rental from agricultural  properties for  the six  months
ended June 30, 1997, increased  by $134,000  when  compared  with
the  six months  ended  June 30, 1996.  This  was  due  primarily
to a reduction  in  water  assessment  fees and  a  reduction  in
the cost of toxic clean up at Sam Hamburg Farm.

                                 24
<PAGE>

                    DUNES HOTELS AND CASINOS INC.

                    QUARTERLY REPORT ON FORM 10-Q

                 FOR THE PERIOD ENDED JUNE 30, 1997


AGRICULTURAL

    Net loss from the rice drying and  storage operation  for the
six months ended June 30, 1997, decreased by approximately $37,000
when compared  with the  six  months  ended June  30,  1996.  The
decrease  was  primarily   attributable  to  the  termination  of
the  lease  of  the  West  Sacramento  drying  facility  and  the
agreement to use the Cal-Dehy name, which also included a covenant
not to compete.

GENERAL

    When  compared  with  the  six  months  ended  June 30, 1996,
operating  expenses  decreased  by  approximately  $143,000.  The
decrease  consisted  of a  net  of a  reduction in loss  on  real
estate investments of  $290,000, an  increase in  bad  debts, net
of  recoveries,  of  $169,000  and  a  decrease  in  depreciation
expense.  The  loss  on real  estate  investments was a result of
the Company writing  down  the  carrying  value  of  the  Fairway
lots.    The   increase  in  bad  debt  expense  relates  to  the
reduction  of  certain  notes  receivable resulting from the sale
of   lots   at   The   Fairways  which   is   described    above.
Depreciation expense  decreased  because  the  Company  does  not
depreciate property and equipment held for sale.

    The decrease in interest and  dividend  income  for  the  six
months  ended  June  30,  1997, was  due  to a reduction  in  the
principal balance of various notes receivable.

    The  decrease  in   partnership   losses   was  due  to   the
termination  of  the  Pine  Ridge  Joint Venture  and   Steadfast
Cattle Company in 1996.

    Other   charges  increased  by  approximately  $128,000  when
compared  with  the   six   months  ended  June  30,  1996.   The
increase  was   due  primarily  to  the  settlement   of  certain
liabilities related to  the  Pine  Ridge  Joint  Venture  and  to
the reduction  of the  carrying  value of  equipment used in  the
Steadfast Cattle operation.

LIQUIDITY AND CAPITAL RESOURCES

    During  the  six  months  ended  June  30,  1997,  cash, cash
equivalents   and  marketable  securities  decreased  by $288,000
from $1,810,000 at  December  31,  1996, to  $1,522,000  at  June
30, 1997.  The most significant  source of  cash during  the  six
months ended June 30,  1997, was  the  collection of  loans  made
to others, including  related  parties,  of  $324,000.  The  most
significant  uses  of  cash  during the six   months  ended  June
30, 1997, consisted of payments  on  long-term  debt  ($313,000),
payments  on  short  term  debt ($42,000),  costs  paid  for  the
construction   of   the   Drying   Facility   ($290,000)  and  an
increase in investments of $316,000.

                                 25
<PAGE>

    The  Company  believes  that  its  primary  requirements  for
liquidity  in  the coming  fiscal  year will be to  fund  ongoing
expenses  at The Fairways,  which  include, among  other  things,
association  dues,  water  and  sewer  fees,  property  taxes and
the  final   payment  due  the  Rancho   Murieta  Association  on
December 31, 1997 for  unpaid  park  fees; to  fund the  required
payments on the note to  the  RTC;   to fund  a  portion  of  the
construction and  carrying  costs  of  the  new  rice  dryer;  to
fund costs that may be incurred  relating  to  the  toxic  clean-
up at Sam Hamburg  Farm;  to  fund  amounts, if any, that may  be
due  to   the  California  Franchise  Tax   Board;  and  to  fund
general  and   administrative   expenses.    In   addition,   the
Company  may  be  required  to  fund  certain  mortgage  payments
relating  to  the  Solano  County  Option if the current owner is
unable to do so.

    The Company believes that sources  of  required  liquidity in
addition  to  cash, cash  equivalents  and marketable  securities
at June 30, 1997, will be  cash  generated from  the rice  drying
and storage facilities,  collections  on loans  made  to  others,
including  related   parties,  anticipated   lots  sales  at  The
Fairways,   collections  of   notes   receivable  resulting  from
sales  at  The  Fairways,  proceeds from  the  sale  of the White
Ranch,  completed  on  July  15, 1997,  Success Payments  related
to the venture  with Murieta Investors and  the  sale  of the  57
lots in North Las  Vegas  completed  on  July  3, 1997.  Based on
known commitments,  the  Company  believe s that  the sources  of
cash  described  will  be  adequate  to   fund   known  liquidity
requirements.  However,  if  the sources  of  required  liquidity
prove  to   be  insufficient  to  cover  the   Company's  primary
liquidity requirements,  it will be  necessary  to  sell  some of
the Company's non-income producing assets.

                                 26
<PAGE>

                    DUNES HOTELS AND CASINOS INC.

                    QUARTERLY REPORT ON FORM 10-Q

                 FOR THE PERIOD ENDED JUNE 30, 1997


                   PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDING

    None, except for the discussion contained in "Part I, Item 2,
Management's Discussion and  Analysis  of Financial Condition and
Results of Operations."

ITEM 3.  DEFAULT UPON SENIOR SECURITIES

    Dividends  in arrears.  See Note 7 of Notes  to  Consolidated
Condensed Financial Statements.

ITEM 5.  OTHER EVENTS

    The  Company  moved  its  executive  offices  to  Sacramento,
California on May 31, 1997.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

   10.01   Construction  contract  dated  March 24, 1997, between
           SHF Acquisition Corporation  and  Tolson  Construction
           Co.   for  the  construction  of  a  new  rice  drying
           facility.

   10.02   Master  Equipment  Lease  dated April 3, 1997, between
           ICON Financial Corp. and SHF  Acquisition Corporation;
           Promissory Note dated April 3,  1997, in the principal
           amount of $1,150,000 between ICON  Cash Flow Partners,
           L.P., Series E; Guaranty by Dunes Hotels  and  Casinos
           Inc.  to  ICON  Financial  Corp.  dated  May 19, 1997;
           Guaranty  by  M & R Investment Company, Inc.  to  ICON
           Financial Corp. dated May 19, 1997; Short Form Deed of
           Trust and Assignment  of  Rents dated May 21, 1997, by
           SHF Acquisition Corporation in favor of ICON Cash Flow
           Partners, L.P., Series  E

   27.01   Financial Data Schedule

(b) Reports on Form 8-K

    Form 8-K, dated July 8, 1997, wherein  the  Company  reported
    that  the Nevada District Court granted the FDIC's motion  to
    allow it  to  vote  the shares of common stock of the Company
    that  the  FDIC  holds  as   collateral  for  Mr.  Anderson's
    obligation to the FDIC.

                                 27
<PAGE>

                    DUNES HOTELS AND CASINOS INC.

                    QUARTERLY REPORT ON FORM 10-Q

                 FOR THE PERIOD ENDED JUNE 30, 1997


                            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.



                               DUNES HOTELS AND CASINOS INC.
                                          Registrant



Date:                          By: /s/ James H. Dale
                                    James H. Dale
                                    Duly Authorized Officer and Chief
                                    Financial Officer


                                 28
<PAGE>

                          EXHIBIT INDEX


Item            Description                           Page No.

10.01           Construction   contract   dated  March  24,  1997
                between  SHF  Acquisition Corporation  and Tolson
                Construction Co.  for the construction  of a  new
                rice drying facility.

 10.02          Master  Equipment  Lease  dated  April  3,  1997,
                between ICON  Financial Corp. and SHF Acquisition
                Corporation; Promissory Note dated April 3, 1997,
                in the principal  amount  of  $1,150,000  between
                ICON Cash Flow Partners, L.P., Series E; Guaranty
                by   Dunes   Hotels  and  Casinos  Inc.  to  ICON
                Financial Corp. dated May 19, 1997; Guaranty by M
                & R Investment  Company,  Inc.  to ICON Financial
                Corp.  dated  May  19, 1997; Short Form  Deed  of
                Trust and Assignment of Rents dated May 21, 1997,
                by SHF Acquisition Corporation  in  favor of ICON
                Cash Flow Partners, L.P., Series E.

 27.01          Financial data schedule

                                 29