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**U.S.SECURITIES AND EXCHANGE COMMISSION****Washington, D.C. 20549**

**FORM10-QSB**

**(MarkOne)**
| XXX    | **QUARTERLY REPORT  UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**  |
|--------|-----------------------------------------------------------------------------------------|
|   |                                                                                    |
|   | **FOR  THE QUARTERLY PERIOD ENDED JUNE 30, 2001.**                                      |
|   |                                                                                    |
|   |                                                                                    |
|   | **TRANSITION REPORT  UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|        |                                                                                    |
|   | **FOR  THE TRANSITION PERIOD FROM _________ TO __________.**                            |

**Commission File Number 0-24554**

** **

| **Canterbury Park Holding Corporation**                      |
|--------------------------------------------------------------|
|                                                              |
| (Exact name of  business issuer as specified in its charter) |

 
| **Minnesota**                                                    |   | **41-1775532**                     |
|------------------------------------------------------------------|--------|------------------------------------|
|                                                                  |   |                                    |
| (State or other  jurisdiction of  incorporation or organization) |   | (IRS Employer  Identification No.) |
|                                                             |   |                               |
| **1100  Canterbury Road, Shakopee, Minnesota**                   |   | **55379**                          |
|                                                                  |   |                                    |
| (Address of principal  executive offices)                        |   | (Zip Code)                         |

 

| **(612) 445-7223**                |
|-----------------------------------|
|                                   |
| (Issuer’s  Telephone Number) |

Check whether the issuer (1) filed allreports required to be filed by Section 13 or 15(d) of the Exchange Act duringthe past 12 months (or for such shorter period that the registrant was requiredto file such report), and (2) has been subject to such filing requirements forthe past 90 days.   YES  __X__  NO  ____ 

The Company had 3,489,332 shares ofcommon stock, $.01 par value per share, outstanding as of August 8, 2001.

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CanterburyPark Holding Corporation

INDEX

| PART  1. | FINANCIAL  INFORMATION                                                              |
|----------|-------------------------------------------------------------------------------------|
|     |                                                                                |
|     | Item  1.                                                                            | Financial  Statements |
|     |
|     | Consolidated  Balance Sheets as of June 30, 2001 and December 31, 2000              |
|     |
|     | Consolidated  Statements of Operations for the periods ended June 30, 2001 and 2000 |
|     |
|     | Consolidated  Statements of Cash Flows for the periods ended June 30, 2001 and 2000 |
|     |
|     | Notes  to Consolidated Financial Statements                                         |
|     |
|     | Item  2.                                                                            | Management’s  Discussion and Analysis |
|     |
| PART II. | OTHER INFORMATION                                                                   |
|     |
|     | Signatures                                                                          |

**CANTERBURYPARK HOLDING CORPORATION AND SUBSIDIARY**

**CONSOLIDATED BALANCE SHEETSJUNE 30, 2001 AND DECEMBER 31, 2000**

----

|                                                                                                                                           | **June 30,****2001**                                                                                                               |           | **December 31,  2000** |      |
|------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------|----------------|------------------------|-----------|
| **ASSETS**                                                                                                                                     |                                                                                                                               |           |                   |      |
|                                                                                                                                           |                                                                                                                               |           |                   |      |
| CURRENT ASSETS                                                                                                                                 |                                                                                                                               |           |                   |      |
|                                                                                                                                           | Cash                                                                                                                               | $              | 2,410,870              |      | $ | 1,198,849 |   |
|                                                                                                                                           | Accounts receivable                                                                                                                | 286,230        |                   | 306,852   |   |
|                                                                                                                                           | Inventory                                                                                                                          | 169,248        |                   | 106,381   |   |
|                                                                                                                                           | Deposits                                                                                                                           | 20,000         |                   | 24,500    |   |
|                                                                                                                                           | Prepaid expenses                                                                                                                   | 354,619        |                   | 267,425   |   |
|                                                                                                                                           | Income tax refund  receivable                                                                                                      | 303,220        |                   |      |   |
|                                                                                                                                           |                                                                                                                               |                |                   |           |   |
|                                                                                                                                           | Total current assets                                                                                                               | 3,544,187      |                   | 1,904,007 |   |
|                                                                                                                                           |                                                                                                                               |           |                   |      |
| PROPERTY AND  EQUIPMENT, net of accumulated depreciation of $5,849,832 and         $5,361,567, respectively | 12,653,697                                                                                                                         |      | 11,334,404             |      |
|                                                                                                                                           |                                                                                                                               |           |                   |      |
| DEFERRED TAX ASSET                                                                                                                             |                                                                                                                               |           | 79,100                 |      |
|                                                                                                                                           |                                                                                                                                    |           |                        |      |
|                                                                                                                                           | $                                                                                                                                  | 16,197,884     |                   | $         | 13,317,511 |   |
|                                                                                                                                           |                                                                                                                                    |           |                        |      |
|                                                                                                                                           |                                                                                                                               |           |                   |      |
| **LIABILITIES AND STOCKHOLDERS’  EQUITY**                                                                                                 |                                                                                                                               |           |                   |      |
|                                                                                                                                           |                                                                                                                               |           |                   |      |
| CURRENT LIABILITIES                                                                                                                            |                                                                                                                               |           |                   |      |
|                                                                                                                                           | Accounts payable                                                                                                                   | $              | 2,781,393              |      | $ | 930,597 |   |
|                                                                                                                                           | Card club accruals                                                                                                                 | 793,846        |                   | 817,812   |   |
|                                                                                                                                           | Accrued wages and  payroll taxes                                                                                                   | 945,177        |                   | 666,495   |   |
|                                                                                                                                           | Accrued interest                                                                                                                   | 24,155         |                   | 11,705    |   |
|                                                                                                                                           | Advance from MHBPA                                                                                                                 | 371,304        |                   | 423,055   |   |
|                                                                                                                                           | Accrued property taxes                                                                                                             | 265,165        |                   | 292,546   |   |
|                                                                                                                                           | Income taxes payable                                                                                                               |           |                   | 204,840   |   |
|                                                                                                                                           | Payable to horsepersons                                                                                                            | 189,728        |                   | 207,818   |   |
|                                                                                                                                           | Deferred tax liability                                                                                                             | 122,000        |                   |      |   |
|                                                                                                                                           |                                                                                                                               |                |                   |           |   |
|                                                                                                                                           | Total current  liabilities                                                                                                         | 5,492,768      |                   | $         | 3,554,868 |   |
|                                                                                                                                           |                                                                                                                               |           |                   |      |
| COMMITMENTS AND  CONTINGENCIES (Note 4)                                                                                                        |                                                                                                                               |           |                   |      |
|                                                                                                                                           |                                                                                                                               |           |                   |      |
| STOCKHOLDERS’ EQUITY                                                                                                                      |                                                                                                                               |           |                   |      |
|                                                                                                                                           | Common stock, $.01 par  value, 10,000,000 shares authorized, 3,489,332 and 3,473,832, respectively,  shares issued and outstanding | 34,893         |              | 34,738    |      |
|                                                                                                                                           | Additional paid-in  capital                                                                                                        | 10,050,665     |                   | 9,965,017 |   |
|                                                                                                                                           | Accumulated earnings  (deficit)                                                                                                    | 619,558        |                   | (237,112  | ) |
|                                                                                                                                           |                                                                                                                               |                |                   |           |   |
|                                                                                                                                           | Total stockholders’  equity                                                                                                   | 10,705,116     |                   | 9,762,643 |   |
|                                                                                                                                           |                                                                                                                               |                |                   |           |   |
|                                                                                                                                           | $                                                                                                                                  | 16,197,884     |                   | $         | 13,317,511 |   |
|                                                                                                                                           |                                                                                                                                    |           |                        |      |
|                                                                                                                                                |                                                                                                                                    |                |                        |           |  |  |  |  |

Seenotes to consolidated financial statements.

**CANTERBURYPARK HOLDING CORPORATION AND SUBSIDIARY**

**CONSOLIDATED STATEMENTS OF OPERATIONSPERIODS ENDED JUNE 30, 2001 AND 2000**

----

|                                                      | Three Months Ended  June 30        |      | Six Months Ended June  30 |      |
|-----------------------------------------------------------|------------------------------------|-----------|---------------------------|-----------|
|                                                      |                                    |      |                           |      |
|                                                      | 2001                               |      | 2000                      |      | 2001 |   | 2000 |   |
|                                                      |                                    |      |                           |      |  |   |  |   |
| OPERATING REVENUES:                                       |                               |      |                      |      |   |   |   |   |
|                                                      | Pari-mutuel                        | $         | 4,808,598                 |      | $ | 4,527,572 |   | $ | 7,874,036 |   | $ | 7,570,711 |   |
|                                                      | Card Club                          | 4,054,922 |                      | 3,481,078 |   | 8,028,325 |   | 3,481,078 |   |
|                                                      | Concessions                        | 1,236,489 |                      | 1,141,962 |   | 1,929,727 |   | 1,535,040 |   |
|                                                      | Admissions and parking             | 219,734   |                      | 185,019   |   | 255,567 |   | 191,259 |   |
|                                                      | Programs and racing  forms         | 210,392   |                      | 189,247   |   | 337,175 |   | 317,235 |   |
|                                                      | Other operating  revenue           | 164,415   |                      | 129,374   |   | 303,966 |   | 318,267 |   |
|                                                      |                                    |      |                           |      |  |   |  |   |
|                                                      | 10,694,550                         |      | 9,654,252                 |      | 18,728,796 |   | 13,413,590 |   |
|                                                      |                               |      |                      |      |   |   |   |   |
| OPERATING EXPENSES:                                       |                               |      |                      |      |   |   |   |   |
|                                                      | Pari-mutuel expenses               |      |                      |      |   |   |   |   |   |
|                                                      | Statutory purses                   | 1,915,621 |                      | 1,760,990 |   | 2,641,283 |   | 2,054,822 |   |
|                                                      | Host track fees                    | 559,018   |                      | 551,758   |   | 1,047,746 |   | 1,050,014 |   |
|                                                      | Pari-mutuel taxes                  | 58,822    |                      | 39,645    |   | 95,298 |   | 74,306 |   |
|                                                      | Minnesota breeders’  fund     | 283,637   |                      | 268,650   |   | 493,192 |   | 429,030 |   |
|                                                      | Salaries and benefits              | 4,109,399 |                      | 3,761,225 |   | 7,415,655 |   | 4,817,192 |   |
|                                                      | Cost of concession  sales          | 497,142   |                      | 453,641   |   | 837,352 |   | 561,991 |   |
|                                                      | Cost of publication  sales         | 276,710   |                      | 247,181   |   | 421,859 |   | 391,767 |   |
|                                                      | Depreciation and  amortization     | 257,361   |                      | 261,241   |   | 488,265 |   | 436,384 |   |
|                                                      | Utilities                          | 241,007   |                      | 279,956   |   | 534,812 |   | 457,413 |   |
|                                                      | Repairs, maintenance  and supplies | 534,121   |                      | 546,053   |   | 696,764 |   | 675,002 |   |
|                                                      | Property taxes                     | 37,868    |                      | 64,532    |   | 91,511 |   | 131,932 |   |
|                                                      | Advertising and  marketing         | 678,039   |                      | 756,005   |   | 901,552 |   | 912,309 |   |
|                                                      | Other operating  expenses          | 1,020,411 |                      | 1,072,085 |   | 1,596,769 |   | 1,527,014 |   |
|                                                      |                                    |      |                           |      |  |   |  |   |
|                                                      | 10,469,156                         |      | 10,062,962                |      | 17,262,059 |   | 13,519,176 |   |
|                                                      |                               |      |                      |      |   |   |   |   |
| NONOPERATING  (EXPENSES) REVENUES:                        |                               |      |                      |      |   |   |   |   |
|                                                      | Interest expense                   | (6,190    | )                         | (25,053   | ) | (12,450 | ) | (34,383 | ) |
|                                                      | Other, net                         | 21,596    |                      | 22,875    |   | 40,133 |   | 42,848 |   |
|                                                      |                                    |      |                           |      |  |   |  |   |
|                                                      | 15,406                             |      | (2,178                    | )         | 27,683 |   | 8,465 |   |
|                                                      |                                    |      |                           |      |  |   |  |   |
| INCOME (LOSS) BEFORE  INCOME TAX                          | 240,800                            |      | (410,888                  | )         | 1,494,420 |   | (97,121 | ) |
|                                                      |                               |      |                      |      |   |   |   |   |
| INCOME TAX (EXPENSE)  BENEFIT (Note 1)                    | (107,750                           | )         | 159,000                   |      | (637,750 | ) | 23,000 |   |
|                                                      |                                    |      |                           |      |  |   |  |   |
|                                                      |                               |      |                      |      |   |   |   |   |
| NET INCOME (LOSS)                                         | $                                  | 133,050   |                      | $         | (251,888 | ) | $ | 856,670 |   | $ | (74,121 | ) |
|                                                      |                                    |      |                           |      |  |   |  |   |
| BASIC NET INCOME  (LOSS) PER  COMMON SHARE  (Note 1) | $                                  | .04       |                      | $         | (.07 |  ) | $ | .25 |   | $ | (.02 |   |
|                                                      | )                                  |
|                                                      |                                    |      |                           |      |  |   |  |   |
| DILUTED NET INCOME  (LOSS) PER  COMMON SHARE (Note 1)     | $                                  | .04       |                      | $         | (.07 |  ) | $ | .23 |   | $ | (.02 |  ) |
|                                                      |                                    |      |                           |      |  |   |  |   |
|                                                           |                                    |           |                           |           |  |  |  |  |  |  |  |  |  |  |

Seenotes to consolidated financial statements.

**CANTERBURYPARK HOLDING CORPORATION AND SUBSIDIARY**

**CONSOLIDATED STATEMENTS OF CASHFLOWSPERIODS ENDED JUNE 30, 2001 AND 2000**

----

|                                   | **Six Months  Ended  June 30, 2001**                                            |       | **Six Months  Ended  June 30, 2000** |       |
|----------------------------------------|---------------------------------------------------------------------------------|------------|--------------------------------------|------------|
| CASH FLOWS FROM  OPERATING ACTIVITIES: |                                                                            |       |                                 |       |
|                                   | Net Income (Loss)                                                               | $          | 856,670                              |       | $ | (74,121 | ) |
|                                   | Adjustments to  reconcile net income (loss) to net cash provided by operations: |       |                                 |       |   |
|                                   | Depreciation and  amortization                                                  | 488,265    |                                 | 436,384    |   |
|                                   | Decrease (increase) in  accounts receivable                                     | 20,622     |                                 | (12,596    | ) |
|                                   | Increase in other  current assets                                               | (145,561   | )                                    | (424,975   | ) |
|                                   | Decrease in income  taxes payable                                               | (508,060   | )                                    | (70,000    | ) |
|                                   | Increase in accounts  payable and accrued expenses                              | 2,105,512  |                                 | 1,968,574  |   |
|                                   | (Decrease) increase in  payable to horsepersons                                 | (18,090    | )                                    | 27,295     |   |
|                                   | Increase in accrued  interest                                                   | 12,450     |                                 | 6,757      |   |
|                                   | Decrease in deferred  tax asset                                                 | 216,310    |                                 | 40,000     |   |
|                                   | (Decrease) increase in  accrued property taxes                                  | (27,381    | )                                    | 1,434      |   |
|                                   |                                                                            |            |                                 |            |   |
|                                   | Net cash provided by  operations                                                | 3,000,737  |                                 | 1,818,752  |   |
|                                   |                                                                            |       |                                 |       |
| CASH FLOWS FROM  INVESTING ACTIVITIES: |                                                                            |       |                                 |       |
|                                   | Additions to property  and equipment                                            | (1,807,558 | )                                    | (3,051,245 | ) |
|                                   |                                                                                 |       |                                      |       |
| CASH FLOWS FROM  FINANCING ACTIVITIES: |                                                                            |       |                                 |       |
|                                   | Proceeds from issuance  of common stock                                         | 70,593     |                                 | 331,575    |   |
|                                   | Payment on advance  from MHBPA, net                                             | (51,751    | )                                    | (62,005    | ) |
|                                   | Proceeds from  construction loan                                                |       |                                 | 1,064,169  |   |
|                                   |                                                                            |            |                                 |            |   |
|                                   | Net cash provided by  financing activities                                      | 18,842     |                                 | 1,333,739  |   |
|                                   |                                                                            |       |                                 |       |
| NET INCREASE IN CASH                   | 1,212,021                                                                       |       | 101,246                              |       |
|                                   |                                                                            |       |                                 |       |
| CASH AT BEGINNING OF  PERIOD           | 1,198,849                                                                       |       | 1,350,052                            |       |
|                                   |                                                                                 |       |                                      |       |
| CASH AT END OF PERIOD                  | $                                                                               | 2,410,870  |                                 | $          | 1,451,298 |   |
|                                   |                                                                                 |       |                                      |       |
|                                        |                                                                                 |            |                                      |            |  |  |  |  |  |

See notes to consolidated financialstatements.

**CANTERBURYPARK HOLDING CORPORATION AND SUBSIDIARY**

**NOTES TO CONSOLIDATED FINANCIALSTATEMENTSPERIODS ENDED JUNE 30, 2001 AND 2000**

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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 1.     | SUMMARY  OF SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | The  summary of significant accounting policies is included in the notes to  consolidated financial statements in the 2000 Annual Report on form 10-KSB.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | *Income  Taxes*- Income tax expense  is computed by applying the estimated annual effective tax rate to the  year-to-date income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | *Unaudited  Financial Statements* - The consolidated  balance sheet as of June 30, 2001, the consolidated statements of operations  for the three and six months ended June 30, 2001 and 2000, the consolidated  statements of cash flows for the six months ended June 30, 2001 and 2000, and  the related information contained in these notes have been prepared by  management without audit.  In the  opinion of management, all accruals (consisting of normal recurring accruals)  which are necessary for a fair presentation of financial position and results  of operations for such periods have been made.  Results for an interim period should not be considered as  indicative of results for a full year.                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | *Net  Income Per Share*– Basic net income per  common share is based on the weighted average number of common shares  outstanding during each year.  The  weighted average number of common shares outstanding for the three and six  month periods ended June 30, 2001 were 3,483,742 and 3,481,624,  respectively.  The weighted average  number of common shares outstanding for the three and six month periods ended  June 30, 2000 were 3,456,059 and 3,438,884, respectively.  Diluted net income per common share takes  into effect the dilutive effect of potential common shares outstanding.  The Company’s only potential common shares  outstanding are stock options.  After  considering the dilutive effect of stock options outstanding, the weighted  average shares used to calculate diluted earnings per share for the three and  six month periods ended June 30, 2001 were 3,744,614 and 3,734,871,  respectively.  The weighted average  shares used to calculate diluted earnings per share for the three and six  month periods ended June 30, 2000 were 3,728,658 and 3,693,094, respectively. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 2.     | BANK  BORROWINGS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | The  Company has a general credit and security agreement with Bremer Bank,  including a commercial revolving credit line which provides for maximum  advances of $2,250,000 with interest at the prime rate.  The Company had no borrowings under this  credit line at June 30, 2001.  The  Company also entered into a construction loan agreement with Bremer Bank on  April 20, 2000.  The construction loan  was converted into a five year installment loan in August 2000 at the maximum  principal amount of the loan of $1,587,000.   The loan was paid off in December 2000.  Advances on this construction loan totaled $1,064,169 at June  30, 2000.  The credit agreement  contains certain covenants requiring the Company to maintain certain  financial ratios.  The Company was in  compliance with these requirements as of June 30, 2001.  Management believes that funds available  under this credit and security agreement, along with funds generated from  simulcast and card club operations, will be sufficient to satisfy its  liquidity and capital resource requirements during 2001.          |

 

|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |
|--------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| 3.                                         | OPERATING  SEGMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |
|                                       | During  the first six months of 2001 and 2000, the Company had three reportable  operating segments:  horse racing,  card club and concessions.  The card  club segment includes operations of the Canterbury Card Club.  The horse racing segment includes  simulcast and live horse racing operations, and the concessions segment  provides concessions during simulcast and live racing, in the card club, and  during special events.  The Company’s  reportable operating segments are strategic business units that offer  different products and services.  They  are managed separately because the segments differ in the nature of the  products and services provided as well as processes to produce those products  and services.  The horse racing and  card club segments are regulated by the State of Minnesota Racing Commission. |   |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |
|                                       | The  accounting policies of the operating segments are the same as those described  in the summary of significant accounting policies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |
|                                       | Depreciation,  interest expense and income taxes are allocated to the segments but no  allocation is made to concessions for shared facilities.  However, the concessions segment pays  approximately 25% of gross revenues to the horse racing segment for use of  the facilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |
|                                       | The  following tables provide information about the Company’s operating segments  (in 000’s):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |
|                                       | Six  Months Ended June 30, 2001                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
|                                       | Horse  Racing                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | Card  Club |   | Concessions |   | Total |   |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |  |   |  |   |  |   |
| Revenues from external  customers          | $                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 8,752  |   | $ | 8,028 |   | $ | 1,949 |   | $ | 18,729 |   |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |
| Intersegment revenues                      | 306                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   | 619 |   | 925 |   |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |
| Net interest expense                       | (28                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | )      |   |   |   |   | (28 | ) |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |
| Depreciation and  amortization             | 275                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | 213 |   |   |   | 488 |   |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |
| Segment income (loss)  before income taxes | 4                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | 1,490 |   | 73 |   | 1,567 |   |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |
| Segment Assets                             | $                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 11,580 |   | $ | 4,516 |   | $ | 686 |   | $ | 16,782 |   |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |  |   |  |   |  |   |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |
|                                       | Six  Months Ended June 30, 2001                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
|                                       | Horse  Racing                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | Card  Club |   | Concessions |   | Total |   |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |  |   |  |   |  |   |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |
| Revenues from external  customers          | $                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 8,322  |   | $ | 3,539 |   | $ | 1,553 |   | $ | 13,414 |   |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |
| Intersegment revenues                      | 306                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   | 265 |   | 571 |   |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |
| Net interest expense                       | (24                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | )      | 15 |   |   |   | (9 | ) |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |
| Depreciation and  amortization             | 354                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | 82 |   |   |   | 436 |   |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |
| Segment income (loss)  before income taxes | 200                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | (297 | ) | (83 | ) | (180 | ) |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |
| Segment Assets                             | $                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 10,917 |   | $ | 2,434 |   | $ | 576 |   | $ | 13,927 |   |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |  |   |  |   |  |   |
|                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |        |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

 

|   | The  following are reconciliations of reportable segment revenue, income before  income taxes, and assets, to the Company’s consolidated totals (in 000’s): |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|                                                           | Six Months  Ended  June 30,2001                       |   | Six Months  Ended  June 30,2000 |   |
|----------------------------------------------------------------|-------------------------------------------------------|--------|---------------------------------|--------|
|                                                           |                                                       |   |                                 |   |
| Revenues                                                       |                                                  |   |                            |   |
| Total revenue for  reportable segments                         | $                                                     | 19,654 |                            | $      | 13,985 |   |
| Elimination of  intersegment revenues                          | (925                                                  | )      | (571                            | )      |
|                                                           |                                                       |   |                                 |   |
|                                                           | Total consolidated  revenues                          | 18,729 |                            | 13,414 |   |
|                                                           |                                                  |        |                            |        |   |
|                                                           |                                                  |   |                            |   |
| Income  (loss) before income taxes                             |                                                  |   |                            |   |
| Total segment income  (loss before income taxes                | $                                                     | 1,567  |                            | $      | (180 | ) |
| Elimination of  intersegment (income) loss before income taxes | (73                                                   | )      | 83                              |   |
|                                                           |                                                       |   |                                 |   |
|                                                           | Total consolidated  income (loss) before income taxes | 1,494  |                            | (97    | ) |
|                                                           |                                                  |        |                            |        |   |
|                                                           |                                                  |   |                            |   |   |
|                                                           | June 30,  2001                                        |   | December 31,  2000              |   |
|                                                           |                                                       |   |                                 |   |
| Assets                                                         |                                                  |   |                            |   |
| Total assets for  reportable segments                          | $                                                     | 16,782 |                            | $      | 13,811 |   |
| Elimination of  intercompany receivables                       | (584                                                  | )      | (493                            | )      |
|                                                           |                                                       |   |                                 |   |
|                                                           | Total consolidated  assets                            | 16,198 |                            | 13,318 |   |
|                                                           |                                                  |        |                            |        |   |

 

| 4.     | CONTINGENCIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | In  accordance with an Earn Out Note, given to the prior owner of the racetrack  as part of the consideration paid by the Company to acquire the racetrack, if  (i) off-track betting becomes legally permissible in the State of Minnesota  and (ii) the Company begins to conduct off-track betting with respect to or  in connection with its operations, the Company will be required to pay to the  IMR Fund, L.P. the greater of $700,000 per operating year, as defined, or 20%  of the net pretax profit, as defined, for each of five operating years.  At the date (if any) that these two  conditions are met, the five minimum payments will be discounted back to  their present value and the sum of those discounted payments will be recorded  as an increase to the purchase price.   The purchase price will be further increased if payments become due  under the 20% of Net Pre-Tax Profit calculation.  The first payment is to be made 90 days after the end of the  third operating year in which off-track betting is conducted by the  Company.  Remaining payments would be  made within 90 days of the end of each of the next four operating years. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | *Litigation  –* The Company is  periodically involved in various legal actions arising in the normal course  of business.  At June 30, 2001,  management believes that the resolution of any legal actions outstanding will  not have a material impact on the consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

 

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| 5.     | CURRENT  ACCOUNTING PRONOUNCEMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |
|   | In  July 2001, the Financial Accounting Standards Board (FASB) issued Statement  of Financial Accounting Standards (SFAS) 141, *Business Combinations*, and SFAS 142, *Goodwill and Other Intangible Assets*.  Major provisions of these Statements are  as follows:  all business combinations  initiated after June 30, 2001 must use the purchase method of accounting; the  pooling of interest method of accounting is prohibited except for  transactions initiated before July 1, 2001; intangible assets acquired in a  business combination must be recorded separately from goodwill if they arise  from contractual or other legal rights or are separable from the acquired  entity and can be sold, transferred, licensed, rented or exchanged, either  individually or as part of a related contract, asset or liability; goodwill  and intangible assets with indefinite lives are not amortized but are tested  for impairment annually, except in certain circumstances, and whenever there  is an impairment indictor; all acquired goodwill must be assigned to  reporting units for purposes of impairment testing and segment reporting;  effective for fiscal years beginning after December 15, 2001, goodwill will  no longer be subject to amortization. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | Although  it is still reviewing the provisions of these Statements, management’s  preliminary assessment is that these statements will not have a material  impact on the Company’s financial position or results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |        |  |  |

**MANAGEMENT’S DISCUSSION AND ANALYSIS**

**General**

             CanterburyPark Holding Corporation (the “Company”) owns and operates Canterbury ParkRacetrack and Card Club in Shakopee, Minnesota.  The business of the Company includes pari-mutuel horse racing,unbanked card games, and food and beverage operations, as well as facilityrental for special events and vehicle storage. The Company’s revenues for the three and six month periods ended June30, 2001 and June 30, 2000 were derived primarily from card club activities andpari-mutuel take-out on horse races simulcast year-round to Canterbury Parkfrom racetracks throughout the country.

             TheRacetrack is the only pari-mutuel horse racing facility in the State ofMinnesota.  The Racetrack earns revenuesfrom pari-mutuel take-out on races simulcast year-round to Canterbury Park fromracetracks throughout the country and from live race meets featuringthoroughbred and quarter horse racing. Live race meets commence in the month of May and conclude inSeptember.  During live race meets, theCompany televises its races to out-of-state racetracks around the country andearns additional pari-mutuel revenue on wagers placed at out-of-stateracetracks.

             TheCanterbury Card Club (the “Card Club”) is the only facility in the State ofMinnesota given the legislative authority to host unbanked card games in whichplayers compete against each other and not against the house.  The Company receives a percentage of wagersfrom the players as compensation for providing the Card Club facility andservices.  Card Club operationscommenced on April 19,2000.  The CardClub is open twenty-four hours a day, seven days a week.

             TheCompany also generates revenues from admissions, parking, publication sales,advertising and other sources.

             TheMinnesota Racing Commission is authorized by Minnesota law to regulate CardClub operations.  The law requires thatup to 14% of the gross revenue generated by the Card Club be paid to theRacetrack’s purse fund and the State of Minnesota Breeders’ Fund.  The original 15,828 square foot Card Club,constructed within the Racetrack grandstand facility, was completed on schedulein mid-April 2000 and provided room for approximately 40 tables.  In May 2001, the Company completedconstruction of an expansion of the Card Club to create space for 50 tables,the maximum allowed by Minnesota law. The total cost of approximately $1.3 million for the expansion andrelated furniture, fixtures and equipment was funded with cash flows fromoperations.

**Results of Operations for the****SixMonths Ended June 30, 2001 and June 30, 2000**

             Totaloperating revenues increased approximately $5.3 million or 39.6% during the sixmonths ended June 30, 2001 compared to the six months ended June 30, 2000, andincreased approximately $1.0 million or 10.8% for the three months ended June30, 2001 compared to the three months ended June 30, 2000.

             Totalpari-mutuel revenues increased 4.0% in the six month period ended June 30, 2001compared to the same period in 2000, attributable to higher handle dueprimarily to two additional live race days in the 2001 six month period. Totalhandle for the six months ended June 30, 2001 is up $1.5 million or 3.8%compared to total handle during the six-month period in 2000. On-track livehandle increased $818,000 compared to the same period in 2000 due to the twoadditional live race days and an increase in the average daily on-track livehandle to approximately $261,000 per day from approximately $248,000 per day in2000.  Out-of-state live handleincreased $614,000 or 17.6% compared to the same period last year. Total handlewagered on simulcast races year-to-date in 2001 is up $72,000 or .2% comparedto year-to-date June 30, 2000.  See the“Summary of Operating Data” below

             **Summary of Operating Data:**

|                              | **Six Months  Ended  June 30, 2001** |       | **Six Months****Ended****June  30, 2000** |       |
|-----------------------------------|--------------------------------------|------------|-------------------------------------------|------------|
|                              |                                 |       |                                      |       |
| **Racing Days**                   |                                 |       |                                      |       |
|                              | Simulcast only days                  | 156        |                                      | 159        |   |
|                              | Live and simulcast  days             | 25         |                                      | 23         |   |
|                              |                                 |            |                                      |            |   |
|                              | Total Racing Days                    | 181        |                                      | 182        |   |
|                              |                                 | ** ** |                                      | ** ** |
| **On-Track Handle**               |                                 | ** ** |                                      | ** ** |
|                              | Simulcast only days                  | $          | 24,619,000                                |       | $ | 25,110,000 |   |
|                              | Live and simulcast days              |       | ** **                                |       | ** ** |
|                              | Live racing                          | 6,518,000  |                                      | 5,700,000  |   |
|                              | Simulcast racing                     | 5,899,000  |                                      | 5,336,000  |   |
| **Out-of-state Live Handle**      | 4,111,000                            |       | 3,497,000                                 |       |
|                              |                                      |       |                                           |       |
|                              | Total Handle                         | $          | 41,147,000                                |       | $ | 39,643,000 |   |
|                              |                                 | ** ** |                                      | ** ** |
| **On-Track Average Daily Handle** |                                 | ** ** |                                      | ** ** |
|                              | Simulcast only days                  | $          | 157,814                                   |       | $ | 157,925 |   |
|                              | Live and simulcast  days             | 496,680    |                                      | 479,826    |   |
|                              |                                 | ** ** |                                      | ** ** |
|                                   |                                      |            |                                           |            |  |  |  |  |  |  |

 

             CardClub revenues were $8.0 and $4.1 million for the six-month and three-monthperiods ended June 30, 2001, representing increases of 130.6% and 16.5%,respectively.  This represented 42.9%and 37.9% of total revenues for the six-month and three-month periods endedJune 30, 2001, respectively.  Theyear-to-date increase is primarily due to an increased number of days ofoperation in 2001, compared to 2000. The Card Club commenced operations on April 19, 2000, operating 73 daysin the second quarter of 2000, compared to 181 days in the first half of 2001.

             Concessionsales for the six-month and three-month periods ended June 30, 2001 increased25.7% and 8.3%, respectively, compared to the same periods in 2000 due to theadditional days of Card Club operations and two additional live race days inthe 2001 periods.

             Total operatingexpenses increased 27.7% during the six month period ended June 30, 2001compared to the six month period ended June 30, 2000, and 4.0% during the threemonths ended June 30, 2001 compared to the three month period ended June 30,2000.  The increases in the six-monthand three-month periods are due primarily to salaries and benefits andoperating costs of the Card Club, which opened April 19, 2000, and to higherpari-mutuel expenses attributable to higher handle and Card Club revenues.

             Pari-mutuelexpenses have increased 18.6% and 7.5%, respectively, during the six and threemonth periods of 2001 compared to 2000, due primarily to purse expenseattributable to the Card Club. Approximately 13.1% of the year-to-date increase and 2.9% of the quarterlyincrease is due to amounts payable to the horsemen and the Minnesota Breeders’Fund due to higher Card Club revenue in the 2001 period.  The remainder of the increases are due tohigher on-track live and simulcast handle in 2001 compared to 2000.

             UnderMinnesota law, the Company is required to pay 10% of the first $6 million ofgross Card Club revenues as purse monies. After meeting the $6,000,000 threshold, the Company must pay 14% ofgross Card Club revenues as purse monies. Each year the Company estimates an annual effective rate for purse moneypayments which is applied to gross Card Club revenues throughout the year.  Estimated revenues for 2001 are higher than2000 due to a full year of operation of the Card Club.  Therefore the overall effective rate in 2001is higher than during the year 2000.  Offunds allocated for purses, the Company pays 10% of the purse monies to theState of Minnesota Breeders’ Fund.  Theremaining 90% of the purse monies is divided between thoroughbred (90%),quarterhorse (9%) and standardbred (1%) purse funds.

             Salariesand benefit expenses increased by approximately $2.6 million or 53.9% for thesix-month period ended June 30, 2001 compared to the same period in 2000.  Salaries and benefit expenses increased byapproximately $348,000 or 9.3% for the three month period compared to2000.  The commencement of Card Cluboperations on April 19, 2000 is the primary reason for the increase in thesix-month period.  While significantlabor was required prior to the opening of the Card Club to hire and train over300 employees of the Card Club, the 2001 period includes 181 days of 24/7operation of the Card Club, while the 2000 period includes only 73 days ofoperation.  New employees hired in thesecond quarter of 2000 were generally not eligible for participation in benefitplans until the third quarter of 2000. Employees who qualify for benefit plans were fully participating duringthe six-month period ended June 30, 2001. Two additional live race days in 2001 also increased salaryexpense.  The increase in salary andbenefit expenses for the second quarter is attributable to the additional daysof 24/7 operation, two additional live race days and increased benefitexpenses.

             Nonoperatingrevenues increased during the six-month and three-month periods ended June 30,2001 compared to the same periods in 2000. Net interest income increased due to higher cash balances in bankdeposit accounts at the same time that interest expense decreased due to thepay off of a short-term construction loan in December 2000.  The Company paid interest on a short-termconstruction loan totaling approximately $15,000 during the six-month periodended June 30, 2000.

             Incomebefore income taxes was $1,494,420 for the six months ended June 30, 2001 comparedto a loss before income taxes of ($97,121) for the six months ended June 30,2000.  After income tax expense of$637,750 for the six months ended June 30, 2001, net income was $856,670 in2001 compared to a net loss of ($74,121) in 2000.  The income before income taxes for the quarter ended June 30,2001 was $240,800 compared to a loss before income taxes of ($410,888) for thequarter ended June 30, 2000.  Afterincome tax expense of $107,750 in the second quarter of 2001, net income was$133,050 compared to a net loss of ($251,888) for the second quarter of 2000.

**Liquidity and Capital Resources**

             Duringthe period January 1, 2001 through June 30, 2001, cash provided by operatingactivities was $3,000,737, which resulted principally from an increase inaccounts payable and accrued expenses of $2,105,512, net income of $856,670 anddepreciation and amortization of $488,265. These items were partially offset bya decrease in income taxes payable of $508,060, and an increase in othercurrent assets of $145,561.

             Theincrease in accounts payable and accrued expenses is due primarily to increasesin amounts payable related to the live race meet and to an increase in accruedsalaries and benefits of $279,000 attributable to the addition of seasonalstaff at June 30, 2000 for the live race meet.

             Netcash used in investing activities for the first six months of 2001 wasapproximately $1.8 million resulting primarily from the expansion to the CardClub, the acquisition of related furniture and equipment and improvements tothe grandstand building.  During thesix-month period ended June 30, 2000, investments in building improvements andequipment, primarily related to the original construction of the Card Clubfacility, were approximately $3.1 million.

             Duringthe period January 1, 2001 through June 30, 2001, cash provided by financingactivities was $18,842, representing $70,593 due to the exercise of stockoptions during 2001 partially offset by net payments on advances from the MHBPAof $51,751.  During the period January1, 2000 through June 30, 2000, cash provided by financing activities was$1,333,739, resulting primarily from proceeds from a construction loan fromBremer Bank of $1,064,169.  In addition,exercises of stock options during the first quarter of 2000 provided cash flowsfrom financing activities of $331,575, which were partially offset by netpayments on advances from the MHBPA of $62,005.

             TheCompany is required by statute to segregate purse funds received from wageringon simulcast races, live horse races and card playing for future payment aspurses for live horse races at the Racetrack or other uses of Minnesota’shorsepersons’ association.  Pursuant toan agreement with the Minnesota Horseman’s Benevolent and ProtectiveAssociation, Inc. (“MHBPA”), during the six months ended June 30, 2001 and2000, the Company transferred into a trust account or paid directly to theMHBPA approximately $2,300,000 and $1,900,000, respectively.  At June 30, 2001, the Company had anadditional $371,304 liability to the MHBPA which will be paid with interest in2001 in accordance with the agreement.

             TheCompany renewed its general credit and security agreement with Bremer Bank, afinancial institution located in South Saint Paul, Minnesota on April 30,2001.  The agreement continues toprovide the Company with a commercial revolving credit line with maximumadvances of $2,250,000 and interest at the prime rate until April 20,2003.  The Company had no borrowingsunder the line of credit at June 30, 2001 or December 31, 2000.

             OnApril 20, 2000, Bremer Bank provided the Company with commitments for twoinstallment loans to fund construction of the Card Club.  The first loan commitment was to providefunding for approximately 75% of the construction costs of the Card Club at afloating rate of prime plus .25%.  TheCompany made draws on the construction loan of $1,064,169 through June 30,2000.  The final draws on theconstruction loan occurred in August 2000, at which point the construction loanconverted to a conventional five year installment loan with a principal amountof $1,586,750.  The variable interestrate on this loan during the period of construction was prime plus .25% or9.75% at June 30, 2000.   The secondinstallment loan commitment was for $290,700 to fund approximately 50% of theacquisition costs of furniture, fixtures, and equipment related to the CardClub.  The Company used current cashflow to fund the acquisition costs of these assets and has elected to allow thecommitment to expire in August 2000. The credit agreement contains certain covenants requiring the Company tomaintain certain financial ratios.  TheCompany was in compliance with these requirements as of June 30, 2001.

             Cashat June 30, 2001 was $2,410,870 compared to $1,198,849 at December 31, 2000.TheCompany believes that the funds from operations together with funds availableunder its $2,250,000 line of credit with Bremer Bank will be sufficient tosatisfy its liquidity and capital resource requirements for the next twelvemonths.

**Operating Plan:**

             AtJune 30, 2001, the Company was in the middle of its 61-day 2001 live race meetfeaturing both thoroughbred and quarter horse racing.  The Company also plans to conduct two days of live harness racingon September 22nd and 23rd.

             TheCompany’s expansion of the Card Club in May 2001 nearly doubled the Company’scapacity for casino table games and the Company regularly assesses theintroduction of additional casino table games. The Company introduced “Casino War”, “Caribbean Stud”, and “Let It Ride”in 2001.  The Company began anaggressive marketing campaign in the third quarter of 2001 to promote its tablegames business.

**Factors Affecting Future Performance:**

                           Fromtime to time, in reports filed with the Securities and Exchange Commission, inpress releases, and in other communications to shareholders or the investingpublic, the Company may make forward-looking statements concerning possible oranticipated future financial performance, business activities or plans whichare typically preceded by the words “believes,” “expects,” “anticipates,”“intends” or similar expressions.  Forsuch forward-looking statements, the Company claims the protection of the safeharbor for forward-looking statements contained in federal securitieslaws.  Shareholders and the investingpublic should understand that such forward-looking statements are subject torisks and uncertainties which could cause actual performance, activities orplans to differ significantly from those indicated in the forward-looking statements.  Such risks and uncertainties include, butare not limited to: fluctuations in attendance at the Racetrack, changes in thelevel of wagering by patrons, continued interest in the unbanked card gamesoffered at the Card Club, legislative and regulatory changes, the impact ofwagering products and technologies introduced by competitors; upward pressureon salary and benefit expense due to the tight labor market; the general healthof the gaming sector; higher than expected expense related to new marketinginitiatives; and other factors discussed from time to time in the Company’sfilings with the Securities and Exchange Commission.

**PART II****OTHERINFORMATION**

| Item  1. | **Legal  Proceedings**                                                                                                                                                                                                                                                                                                                                                                                                                              |                 |
|----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------|
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                |                 |
|     | Not  Applicable                                                                                                                                                                                                                                                                                                                                                                                                                                     |                 |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                |                 |
| Item  2. | **Changes  in Securities**                                                                                                                                                                                                                                                                                                                                                                                                                          |                 |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                |                 |
|     | Not  Applicable                                                                                                                                                                                                                                                                                                                                                                                                                                     |                 |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                |                 |
| Item  3. | **Defaults  Upon Senior Securities**                                                                                                                                                                                                                                                                                                                                                                                                                |                 |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                |                 |
|     | Not  Applicable                                                                                                                                                                                                                                                                                                                                                                                                                                     |                 |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                |                 |
| Item  4. | **Submission  of Matters to a Vote of Security Holders**                                                                                                                                                                                                                                                                                                                                                                                            |                 |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                |                 |
|     | The  Company held its Annual Meeting of Shareholders on June 7, 2001.  Shareholders reelected the following  directors for a one year term:  Brian  C. Barenscheer, Gibson Carothers, Terence McWilliams, Carin Offerman, Curtis  A. Sampson, Randall D. Sampson, and Dale H. Schenian.  Not less than 3,131,302 shares were voted  in favor of the reelection of each of the directors (approximately 99.8% of  all shares voting). |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                |                 |
|     | In  addition, the shareholders approved by a vote of 3,093,197 in favor and  41,185 opposed an amendment to the Company’s Employee Stock Purchase Plan to  increase the number of shares available to be issued under the Plan from  100,000 shares to 250,000 shares.                                                                                                                                                                         |
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| Item  5. | **Other  Information**                                                                                                                                                                                                                                                                                                                                                                                                                              |                 |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                |                 |
|     | Not  Applicable                                                                                                                                                                                                                                                                                                                                                                                                                                     |                 |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                |                 |
| Item  6. | **Exhibits  and Reports on Form 8-K**                                                                                                                                                                                                                                                                                                                                                                                                               |                 |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                |                 |
|     | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Reports  on Form 8-K |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                |                 |
|     | None                                                                                                                                                                                                                                                                                                                                                                                                                                                |                 |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                      |  |  |

**SIGNATURES**

                                Pursuant to therequirements of the Securities Exchange Act of 1934, the Registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.

|                         | Canterbury  Park Holding Corporation                                   |
|------------------------------|------------------------------------------------------------------------|
|                         |                                                                   |
| Dated:  August 13, 2001 | /s/  Randall D. Sampson                                                |
|                         |                                                                        |
|                         | Randall  D. Sampson,  President, Chief Executive Officer and Treasurer |
|                         |                                                                   |