(PAGE)1
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-Q

(Mark One)

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

              FOR  THE  QUARTERLY  PERIOD  ENDED  SEPTEMBER 30, 1996,  OR

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

              FOR THE TRANSITION PERIOD FROM  __________TO___________

                       Commission file number 000-25306

                           EQUUS GAMING COMPANY L.P.
          ----------------------------------------------------------
            (Exact name of registrant as specified in its charter)

                     Virginia                         52-1846102
           -------------------------------      --------------------
           (State or other jurisdiction of      (I.R.S. Employer
           incorporation or organization)       Identification No.)

                         222 Smallwood Village Center
                         St. Charles, Maryland   20602
                   ----------------------------------------
             (Address of Principal Executive Offices and Zip Code)

                                (301) 843-8600
             -----------------------------------------------------
             (Registrant's telephone number, including area code)

                                Not Applicable
           ------------------------------------------------------- 
            (Former name, former address and former fiscal year, if
                          changed since last report)

      Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report(s), and (2) has been subject to
such filing requirements for the past 90 days.   Yes  X   No      

      Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.  6,333,617 Class A
Units


(PAGE)2
                           EQUUS GAMING COMPANY L.P.
                                   FORM 10 Q

                                     INDEX

                                                                     Page
PART I - FINANCIAL INFORMATION                                      Number

  Item 1 - Financial Statements                                    

     Equus Gaming Company L.P. (the "Company")

        Consolidated Statements of Income (Loss) for the Nine
        Months Ended September 30, 1996 and 1995 (Unaudited)           1

        Consolidated Statements of Income (Loss) for the Three
        Months Ended September 30, 1996 and 1995 (Unaudited)           2
   
        Consolidated Balance Sheets at September 30, 1996 (Unaudited)
        and December 31, 1995 (Audited)                                3
  
        Consolidated Statement of Changes in Partners' Deficit
        for the Nine and the Three Months Ended September 30, 1996
        (Unaudited)                                                    5

        Consolidated Statements of Cash Flows for the Nine Months 
        Ended September 30, 1996 and 1995  (Unaudited)                 6

        Consolidated Statements of Cash Flows for the Three Months 
        Ended September 30, 1996 and 1995  (Unaudited)                 8

        Notes to Consolidated Financial Statements                    10

     El Comandante Operating Company, Inc.:

        Statements of Revenues and Expenses for the Nine Months
        Ended September 30, 1996 and 1995 (Unaudited)                 28

        Statements of Revenues and Expenses for the Three Months 
        Ended September 30, 1996 and 1995 (Unaudited)                 29

        Statements of Net Assets (Liabilities) at September 30,
        1996 (Unaudited) and December 31, 1995 (Audited)              30

        Statement of Changes in Net Assets (Liabilities) for the
        Nine and the Three Months Ended September 30, 1996
        (Unaudited)                                                   32

        Statements of Cash Flows for the Nine Months Ended         
        September 30, 1996 and 1995  (Unaudited)                      33

        Statements of Cash Flows for the Three Months Ended        
        September 30, 1996 and 1995  (Unaudited)                      35
(PAGE)3                    EQUUS GAMING COMPANY L.P.
                                   FORM 10 Q

                                     INDEX
                                                                    Page
                                                                   Number

        Notes to Financial Statements                                 37

     Equus Management Company:
     
        Balance Sheet at September 30, 1996 (Unaudited)               47

        Notes to Balance Sheet                                        48

  Item 2 -- Management's Discussion and Analysis of Financial 
            Condition and Results of Operations                       50
     
        The Company's Results of Operations for the Nine Months 
        Ended September 30, 1996 and 1995                             51

        The Company's Results of Operations for the Three Months
        Ended September 30, 1996 and 1995                             53

        Liquidity and Capital Resources of the Company                56

        Liquidity and Capital Resources of Housing Development
        Associates S.E.                                               57

        The Company's Proforma Results of Operations for the Nine
        Months Ended September 30, 1996 and 1995                      61


PART II - OTHER INFORMATION

  Item 1 -  Legal Proceedings                                         66

  Item 2 -  Material Modifications of Rights of Registrant's 
             Securities                                               66

  Item 3 -  Default upon Senior Securities                            66

  Item 4 -  Submission of Matters to a Vote of Security Holders       66

  Item 5 -  Other Information                                         66

  Item 6 -  Exhibits and Reports on Form 8-K                          66

  Signatures                                                          67





(PAGE)4                    EQUUS GAMING COMPANY L.P.
                   CONSOLIDATED STATEMENTS OF INCOME (LOSS)
                    FOR THE NINE MONTHS ENDED SEPTEMBER 30,
                                  (Unaudited)
                                                    1996         1995
                                                 -----------  ----------
REVENUES:
  Rental income from El Comandante Race Track    $10,746,502  $7,658,961
  Cash distribution from Housing Development
     Associates S.E.("HDA")                            -         134,000
  Dominican Republic racing-
     Commissions on wagering                       3,299,481   1,632,204
     Other revenues                                  337,601     256,749
  Television Stations                              1,676,046     733,380
  Gain from sale of 50% interest in
     Television Stations                             581,120       -
  Interest income                                    141,109      53,545
                                                 -----------  ----------
     Total revenues                               16,781,859  10,468,839
                                                 -----------  ----------
EXPENSES:
  Financial                                        6,695,587   5,070,137
  Depreciation                                     1,846,792   1,209,755
  General and administrative                       1,399,427     928,977
  Operating costs of Dominican Republic racing     4,490,492   2,556,676
  Operating costs of Television Stations           1,461,312   1,407,398
                                                 -----------  ----------
     Total expenses                               15,893,610  11,172,943
                                                 -----------  ----------
INCOME (LOSS) BEFORE INCOME TAXES 
  AND MINORITY INTERESTS                             888,249    (704,104)

PROVISION (CREDIT) FOR INCOME TAXES:
  Current                                            157,628     221,207
  Deferred                                           461,128     (12,642)
                                                 -----------  ----------
LOSS BEFORE MINORITY INTERESTS                       269,493    (912,669)

MINORITY INTERESTS                                   (91,682)   (411,401)
                                                 -----------  ----------
NET INCOME (LOSS)                                $   361,175  $ (501,268)
                                                 ===========  ==========
ALLOCATION OF NET INCOME (LOSS):
  General Partners                               $     3,612  $  (76,347)
  Limited Partners                                   357,563    (424,921)
                                                 -----------  ----------
                                                 $   361,175  $ (501,268)
                                                 ===========  ==========
NET INCOME (LOSS) PER UNIT                       $      .06   $    (0.07)
                                                 ===========  ==========
WEIGHTED AVERAGE UNITS OUTSTANDING                6,333,617    6,180,408
                                                 ===========  ==========
                  The accompanying notes are an integral part
                       of these consolidated statements.
(PAGE)5                    EQUUS GAMING COMPANY L.P.
                   CONSOLIDATED STATEMENTS OF INCOME (LOSS)
                   FOR THE THREE MONTHS ENDED SEPTEMBER 30,
                                  (Unaudited)
                                                    1996         1995
                                                 ----------   ----------
REVENUES:
  Rental income from El Comandante Race Track    $3,327,988   $3,201,827
  Dominican Republic racing-
     Commissions on wagering                      1,038,277      917,031
     Other revenues                                  47,212      171,874
  Television Stations                               510,937      369,994
  Gain from sale of 50% interest in
     Television Stations                            581,120        -
  Interest income                                    60,959       10,518
                                                 ----------   ----------
     Total revenues                               5,566,493    4,671,244
                                                 ----------   ----------
EXPENSES:
  Financial                                       2,257,520    2,251,692
  Depreciation                                      605,885      602,308
  General and administrative                        386,684      365,285
  Operating costs of Dominican Republic racing    1,380,658    1,504,140
  Operating costs of Television Stations            378,064      847,875
                                                 ----------   ----------
     Total expenses                               5,008,811    5,571,300
                                                 ----------   ----------
INCOME (LOSS) BEFORE INCOME TAXES 
  AND MINORITY INTERESTS                            557,682     (900,056)

PROVISION (CREDIT) FOR INCOME TAXES:
  Current                                            82,451       50,470
  Deferred                                          193,802      (64,363)
                                                 ----------   ----------
INCOME (LOSS) BEFORE MINORITY INTERESTS             281,429     (886,163)

MINORITY INTERESTS                                  (32,785)    (339,771)
                                                 ----------   ----------
NET INCOME (LOSS)                                $  314,214   $ (546,392)
                                                 ==========   ==========
ALLOCATION OF NET INCOME (LOSS):
  General Partners                               $    3,142   $   (5,464)
  Limited Partners                                  311,072     (540,928)
                                                 ----------   ----------
                                                 $  314,214   $ (546,392)
                                                 ==========   ==========
NET INCOME (LOSS) PER UNIT                       $      .05   $    (0.09)
                                                 ==========   ==========
WEIGHTED AVERAGE UNITS OUTSTANDING                6,333,617    6,333,617
                                                 ==========   ==========

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

(PAGE)6                    EQUUS GAMING COMPANY L.P.
                          CONSOLIDATED BALANCE SHEETS

                                    ASSETS

                                                 September 30,  December 31,
                                                    1996            1995
                                                 -----------    ------------
                                                 (Unaudited)      (Audited)

CASH AND CASH EQUIVALENTS                        $ 7,183,103    $   814,292
                                                 -----------    ------------

ASSETS RELATED TO RACE TRACKS:
  Property and equipment-
     Land                                          7,128,858      7,128,858
     Building and improvements                    48,095,964     48,105,723
     Equipment                                     2,623,652      2,389,924
                                                 -----------    ------------
                                                  57,848,474     57,624,505
     Less accumulated depreciation               (11,424,005)    (9,733,479)
                                                 -----------    ------------
                                                  46,424,469     47,891,026
  Receivables from El Comandante
     Operating Company, Inc. ("ECOC")              1,682,772      1,816,310
  Deferred costs-
     Financing                                     4,183,794      4,388,926
     Organizational and other                        383,457        470,286
  Other                                              917,504        580,288
                                                 -----------    ------------
                                                  53,591,996     55,146,836
                                                 -----------    ------------

ASSETS RELATED TO TELEVISION STATIONS:
  TV Licenses                                          -          1,061,290
  Property and equipment                               -          2,413,983
                                                 -----------    ------------
                                                       -          3,475,273
  Less accumulated depreciation and
     amortization                                      -           (137,620)
                                                 -----------    ------------
                                                       -          3,337,653
  Investment in S & E Network Inc.                 1,887,891          -
  Deferred costs                                       -          1,158,668
  Other                                              253,863        365,765
                                                 -----------    ------------
                                                   2,141,754      4,862,086
                                                 -----------    ------------
                                                 $62,916,853    $60,823,214
                                                 ===========    ============




(PAGE)7                    EQUUS GAMING COMPANY L.P.
                          CONSOLIDATED BALANCE SHEETS
                                  (continued)
                       LIABILITIES AND PARTNERS' DEFICIT

                                                 September 30,    December 31,
                                                    1996            1995
                                                 -----------    ------------
                                                 (Unaudited)      (Audited)
LIABILITIES RELATED TO RACE TRACKS:
  First Mortgage Notes-
     Principal, net of bond discount of
       $1,680,634 and $1,760,161, respectively   $66,361,366    $66,239,879
     Accrued interest                              2,330,417        332,918
  Minority interest in Galapagos                     255,361        816,216
  Notes payable                                      543,560        523,562
  Accounts payable and accrued liabilities         2,148,226      1,092,765
  Accrued income taxes                               656,425        231,980
                                                 -----------    ------------
                                                  72,295,355     69,237,320
                                                 -----------    ------------

LIABILITIES RELATED TO TELEVISION STATIONS:
  Note payable                                         -          1,365,848
  Obligations under TV Purchase Agreements           420,695        474,661
  Accounts payable and accrued liabilities             -            464,414
                                                 -----------    ------------
                                                     420,695      2,304,923
                                                 -----------    ------------

OTHER LIABILITIES:
  Unsecured partner's loans                          463,831        211,629
  Notes payable and accrued interest                 600,000        566,885
  Accounts payable and accrued liabilities           272,093        226,710
  Minority interest in HDA                           442,566         63,559
                                                 -----------    ------------
                                                   1,778,490      1,068,783
                                                 -----------    ------------

PARTNERS' DEFICIT:
  General Partners                                  (438,374)      (760,803)
  Limited Partners                               (11,139,313)   (11,027,009)
                                                 -----------    ------------
                                                 (11,577,687)   (11,787,812)
                                                 -----------    ------------
                                                 $62,916,853    $60,823,214
                                                 ===========    ============


                  The accompanying notes are an integral part
                     of these consolidated balance sheets.



(PAGE)8                    EQUUS GAMING COMPANY L.P.
            CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
          FOR THE NINE AND THE THREE MONTHS ENDED SEPTEMBER 30, 1996
                                  (Unaudited)


                                       General      Limited
                                       Partners     Partners      Total
                                      -----------  ------------  ------------

BALANCES, December 31, 1995(audited)  $  (760,803) $(11,027,009) $(11,787,812)

  Net income for the period                46,491           470        46,961

  Currency translation 
    adjustments                           (99,693)       (1,007)     (100,700)

  Effect of currency
    fluctuations on long-
      term intercompany
        transactions                       65,703           663        66,366

  Cash distributions to
    partners                                -           (65,880)      (65,880)
                                      -----------  ------------  ------------
BALANCES, June 30, 1996                  (748,302)  (11,092,763)  (11,841,065)

  Net income for the period               311,072         3,142       314,214

  Currency translation 
    adjustments                            64,558           652        65,210

  Effect of currency
    fluctuations on long-
      term intercompany
        transactions                      (65,702)         (664)      (66,366)

  Cash distributions to
    partners                                -           (49,680)      (49,680)
                                      -----------  ------------  ------------
BALANCES, September 30, 1996             (438,374)  (11,139,313)  (11,577,687)
                                      ===========  ============  ============







                  The accompanying notes are an integral part
                        of this consolidated statement.



(PAGE)9                    EQUUS GAMING COMPANY L.P.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                    FOR THE NINE MONTHS ENDED SEPTEMBER 30,
                                  (Unaudited)
                                                    1996         1995
                                                 -----------  -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                              $   361,175  $  (501,268)
                                                 -----------  -----------
  Adjustments to reconcile net income (loss) to 
    net cash provided by operating 
    activities-
      Gain from sale of 50% interest in
        Television Stations                         (581,120)       -
      Equity in earnings                              (6,588)       -
      Depreciation                                 1,846,792    1,209,755
      Amortization                                   663,703      466,930
      Deferred income tax provision                  461,128      (12,642)
      Currency translation adjustments               (35,490)       -
      Forgiveness of interest                       (173,754)       -
      (Increase) decrease in assets-
        Rent receivable from ECOC                    (13,169)    (499,730)
        Deferred costs                               (97,596)     104,097
        Other                                       (518,391)    (513,261)
      Increase (decrease) in liabilities-
        Accrued interest                           2,064,202      609,846
        Accounts payable and accrued liabilities   1,014,822     (220,940)
        Accrued income taxes                         (36,683)     134,207
      Minority interests                             (91,682)    (411,401)
                                                 -----------  -----------
        Total adjustments                          4,496,174      866,861
                                                 -----------  -----------
        Net cash provided by operating
          activities                               4,857,349      365,593
                                                 -----------  -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                              (361,468)  (1,731,114)
  Collection of note from ECOC                       128,814    1,000,000
  Effect of deconsolidation of S&E                  (129,948)       -
  Sale of 50% interest in Television Stations
     Proceeds                                      4,000,000        -
     Costs                                          (418,950)       -
  Effect of consolidation of HDA cash accounts         -        3,429,221
                                                 -----------  -----------
        Net cash provided by investing
          activities                               3,218,448      698,107
                                                 -----------  -----------







(PAGE)10                   EQUUS GAMING COMPANY L.P.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                    FOR THE NINE MONTHS ENDED SEPTEMBER 30,
                                  (Unaudited)

                                  (continued)

                                                    1996         1995
                                                 -----------  ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Payment of obligations under TV
    Purchase Agreements                              (53,966)    (106,980)
  Loans from minority stockholders                     -          675,000
  Loans from (payments to) general partner, net      252,202     (130,867)
  Loans from financial institutions                  356,168    2,698,000
  Payments on notes payable                       (1,652,019)    (215,091)
  Increase in deferred costs                        (493,811)    (968,784)
  Cash distributions to partners                    (115,560)    (388,345)
                                                 -----------  -----------
        Net cash (used in) provided by 
          financing activities                    (1,706,986)   1,562,933
                                                 -----------  -----------

NET INCREASE IN CASH AND CASH EQUIVALENTS          6,368,811     2,626,633

CASH AND CASH EQUIVALENTS, beginning of year         814,292         -
                                                 -----------  ------------
CASH AND CASH EQUIVALENTS, end of period         $ 7,183,103  $  2,626,633
                                                 ===========  ============

SUPPLEMENTAL INFORMATION:
  Interest paid                                  $ 4,237,627  $  4,024,250
  Income taxes paid                                  194,310        87,000

NONCASH TRANSACTIONS:
  Effect of consolidation of HDA's
     non cash accounts                                 -       (19,269,865)
  Step-up in value of assets related to
     race tracks                                       -         5,650,000










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



(PAGE)11                   EQUUS GAMING COMPANY L.P.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                   FOR THE THREE MONTHS ENDED SEPTEMBER 30,
                                  (Unaudited)
                                                    1996         1995
                                                 -----------  -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                              $   314,214  $  (546,392)
                                                 -----------  -----------
  Adjustments to reconcile net income (loss) to
    net cash provided by operating activities-
      Gain from sale of 50% interest in
        Television Stations                         (581,120)       -
      Equity in earnings                              (6,588)       -
      Depreciation                                   605,885      602,308
      Amortization                                   194,457      251,016
      Deferred income tax provision                  193,802      (64,363)
      Currency translation adjustments                (1,156)       -
      Forgiveness of interest                          -            -
      (Increase) decrease in assets-
        Rent receivable from ECOC                   (127,989)    (499,730)
        Deferred costs                              (206,121)   1,051,842
        Other                                       (663,115)    (254,793)
      Increase (decrease) in liabilities-
        Accrued interest                           1,955,060    2,026,079
        Accounts payable and accrued liabilities     586,825     (364,173)
        Accrued income taxes                          82,451       50,471
      Minority interests                             (32,785)    (339,771)
                                                 -----------  -----------
        Total adjustments                          2,039,606    2,458,886
                                                 -----------  -----------
        Net cash provided by operating
          activities                               2,353,820    1,912,494
                                                 -----------  -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                              (212,652)    (742,792)
  Collection of note from ECOC                        77,657   (1,000,000)
  Effect of deconsolidation of S&E                  (129,948)       -
  Sale of 50% interest in Television Stations
     Proceeds                                      4,000,000        -
     Costs                                          (418,950)       -
                                                 -----------  -----------
        Net cash provided by (used in)
          investing activities                     3,316,107   (1,742,792)
                                                 -----------  -----------




 




(PAGE)12                   EQUUS GAMING COMPANY L.P.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                   FOR THE THREE MONTHS ENDED SEPTEMBER 30,
                                  (Unaudited)

                                  (continued)

                                                    1996         1995
                                                 -----------  ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Payment of obligations under TV
    Purchase Agreements                              (21,297)     (71,439)
  Loans from minority stockholders                     -          225,000
  Loans from general partner, net                      3,607        -
  Loans from financial institutions                    -        1,848,000
  Payments on notes payable                       (1,420,601)    (115,091)
  Increase in deferred costs                         576,500     (834,991)
  Cash distributions to partners                     (49,680)     (36,000)
                                                 -----------  -----------
        Net cash (used in) provided by
          financing activities                      (911,471)   1,015,479
                                                 -----------  -----------

NET INCREASE IN CASH AND CASH EQUIVALENTS          4,758,456     1,185,181

CASH AND CASH EQUIVALENTS, beginning of period     2,424,647     1,441,452
                                                 -----------  ------------
CASH AND CASH EQUIVALENTS, end of period         $ 7,183,103  $  2,626,633
                                                 ===========  ============

SUPPLEMENTAL INFORMATION:
  Interest paid                                  $    73,874  $      9,197
  Income taxes paid                                    -             -
















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



(PAGE)13                   EQUUS GAMING COMPANY L.P.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.  BASIS OF PRESENTATION:

     Equus Gaming Company L.P. (the "Company") was formed initially on
September 17, 1993 as a general partnership between Interstate General Company
L.P. ("IGC") and one of its general partners, Interstate  Business Corporation
("IBC").  Through a series of transactions completed on August 2, 1994, the
Company was restructured as a Virginia limited partnership between IGC and its
wholly owned subsidiary, Equus Management Company ("EMC"), for the purpose of
succeeding to substantially all of  IGC's ownership interest in real estate
assets employed in thoroughbred racing and related wagering businesses.  In
connection with the restructuring, the Company became the owner of a 67%
profits interest in Housing Development Associates S.E. ("HDA").  On February
6, 1995, IGC distributed to its unitholders 5,128,372 Class A Units ("Units")
representing in the aggregate beneficial assignment of a 99% Class A limited
partnership interest in the Company (the "Distribution").  The Units are
listed for trading on the Nasdaq National Market System under the symbol
"EQUUS".  On March 8, 1995 an additional 1,205,245 Units were issued by the
Company to HDA Management Corporation ("HDAMC")  in exchange for a 15% 
interest in HDA.  On April 6, 1995, the Company filed a Registration Statement
on Form S-11 with the Securities and Exchange Commission with respect to the
1,204,245 Units and 50,000 Units related to warrants issued to Oppenheimer &
Co., Inc. The Registration Statement has not yet been declared effective.  EMC
serves as managing partner of the Company and IGC and EMC together hold a 1%
general partnership interest in the Company.

     The Company's principal income producing asset is an 82% interest in HDA
in which it is a co-managing partner.  HDA owns El Comandante Race Track ("El
Comandante"), the only licensed thoroughbred racing facility in Puerto Rico,
located in a 257 acres of land, which it leases to El Comandante Operating
Company, Inc., a Puerto Rico nonstock corporation ("ECOC").  HDA also owns 55%
of the capital stock of Galapagos, S.A. ("Galapagos"), a corporation that
leases and operates a race track in the Dominican Republic.  On August 30,
1996, HDA closed the sale to Paxson Communications of San Juan, Inc.
("Paxson") of a 50% interest in its wholly owned subsidiary, S & E Network
Inc. ("S&E"), a Puerto Rico corporation that owns and operates since 1995
three UHF television stations in Puerto Rico (the "Television Stations"). 
Paxson assumed responsibility for managing the Television Stations after the
closing of the sale.  On November 12, 1996, HDA entered into an agreement to
sell to Paxson its remaining 50% interest in S&E, subject to receiving
approval of the Federal Communications Commission ("FCC").

     The Company also owns Virginia Jockey Club, Inc. ("VJC"), an unsuccessful
applicant for licenses to own and operate Virginia's first thoroughbred racing
and pari-mutuel wagering facility, which is now inactive.

     The accompanying consolidated financial statements include the accounts
of the Company and its consolidated subsidiaries, HDA and VJC, after
(PAGE)14
eliminating all inter-company transactions.  The accounts of HDA and its
subsidiaries have been consolidated since March 8, 1995 (see Note 4),   
Accordingly, the consolidated statement of loss for the nine months ended
September 30, 1995 only includes results of operations of HDA and its
subsidiaries for the period from March 8 to September 30, 1995.  Since HDA's
ownership interest in S&E was reduced to 50% on August 30, 1996 and Paxson now
manages the Television Stations, commencing September 1, 1996 the accounts of
S&E are not consolidated into the financial statements of HDA or the Company.

     HDA had an accumulated deficit of $818,750 at December 31, 1994 which
resulted principally from an extraordinary item in 1993 related to financing. 
HDA is a limited liability partnership and the partners do not have any legal
obligation to fund any portion of such deficit.  Accordingly, generally
accepted accounting principles did not permit the Company to record any
minority partners' interest in HDA's accumulated deficit, nor did they permit
the recognition of the minority partners' 18% share of HDA's net income until
the accumulated deficit was eliminated by earnings.  As of September 30, 1995
the accumulated deficit had been eliminated and a minority interest of $22,600
was recorded for the nine months ended September 30, 1995 representing the
minority partners' 18% interest in HDA's net income in excess of the December
31, 1994 accumulated deficit of $818,750.  For the nine months ended September
30, 1996 a minority interest of $379,000 was recorded representing the
minority partners' 18% interest in HDA's net income for the period.  A
minority interest of $471,000 and $434,000 was also recorded related to the
minority stockholders' interest in the net losses of Galapagos for the nine
months ended September 30, 1996 and 1995, respectively.

     Net income (loss) per Unit is calculated based on weighted average of
Units outstanding since the Distribution on February 6, 1995.  Outstanding
options and warrants to purchase Units do not have a material dilutive effect
on the calculation of earnings per Unit.

     Interim Financial Statements

     The consolidated financial statements as of September 30, 1996 and for
the nine and the three month periods ended September 30, 1996 and 1995 are
unaudited but include all adjustments (consisting of normal recurring
adjustments) which management considers necessary for a fair presentation of
the results of operations of the interim periods.  The operating results for
the nine months ended September 30, 1996 are not necessarily indicative of the
results that may be expected for the year.

     Outstanding Warrants and Options

     In connection with the Distribution, the Company agreed to make available
to IGC for no consideration up to 100,000 additional Units for distribution by
IGC to a limited number of employees upon the exercise of certain options and
appreciation rights, and to Oppenheimer & Co., Inc. upon the exercise of
certain warrants. The additional Units available to IGC have "piggyback"
registration rights exercisable, at IGC's expense, in the event the Company
undertakes a registered offering of Units within three years following the
(PAGE)15
Distribution.  The 50,000 Units issuable upon exercise of the Oppenheimer
warrants were included in the S-11 Registration Statement filed on April 6,
1995, which has not yet been declared effective.  


2.  BACKGROUND INFORMATION:

     El Comandante Lease and the Operating License

     HDA leases El Comandante to ECOC under a lease agreement (El "Comandante
Lease") that expires on December 14, 2004 (See Note 9).  ECOC operates El
Comandante and pays rent to HDA based upon 25% of ECOC's share of wagering
revenues.

     On December 15, 1989, the Puerto Rico Racing Board  (the "Racing Board")
granted a license to ECOC to operate El Comandante, which will expire on
December 14, 2004 (the "Operating License").  The Operating License provided
ECOC with:  (1) the exclusive right to operate a race track in the area of
Puerto Rico known as the San Juan Region, which approximates the northern half
of Puerto Rico, as delineated in maps produced by the Puerto Rico Planning
Board and Government Development Administration; (2) the exclusive right to
conduct all types of authorized betting, both at El Comandante and off-track,
anywhere in Puerto Rico, based on races held at El Comandante; and (3) the
right to hold a minimum of 180 day or night race days per year. The Operating
License requires payment by ECOC of an annual license fee, currently $250,000.

     HDA has the primary obligation to ensure that ECOC complies with all
terms and provisions of the Operating License and applicable regulations and
orders of the Racing Board.

     El Comandante Capital Corp., HDAMC and Private Offering

     In 1993 HDA organized El Comandante Capital Corp. ("ECCC") as a wholly-
owned subsidiary to facilitate the issuance and sale of debt securities for
the benefit of HDA,  with the primary purpose to repay debt incurred in
connection with  the acquisition of El Comandante.  On December 15, 1993, ECCC
and HDA, together with HDAMC, completed the sale (the "Private Offering") of
68,000 units, each unit consisting of $1,000 principal amount of ECCC's
11-3/4% First Mortgage Notes due 2003, payment of which is unconditionally
guaranteed by HDA (the "First Mortgage Notes") and a warrant to purchase one
share of Class A Common Stock of HDAMC (the "Warrants").  ECCC loaned the
entire  proceeds  from the  sale of  the  First Mortgage  Notes  to  HDA  and 
HDAMC  contributed the proceeds from the sale of the Warrants to HDA in
exchange for the right to receive a 15% interest in HDA, subject to the
approval of the Racing Board.  The approval was granted on July 21, 1994 and
HDAMC was admitted as a partner in HDA with a 15% partnership interest.  On
March 8, 1995 the Company issued 1,205,245 Units to HDAMC in exchange for a
15% interest in HDA.



(PAGE)16
     S & E Network Inc., Television Stations and Agreements with Paxson

     On November 17, 1994 S&E acquired the assets and broadcast licenses (the
"TV Licenses") of three dormant Television Stations under certain agreements
(the "TV Purchase Agreements") that required total payments and assumption of
rescheduled debts of approximately $2 million, a portion of which were non-
interest bearing obligations.  Based on a 12% discount rate, the present value
of the total purchase price obligations under the TV Purchase Agreements was
$1,736,000.  This amount and acquisition costs totalling approximately
$202,000 were assigned to the tangible and intangible assets acquired by S&E
based on their estimated relative fair market values.

     S&E commenced broadcasting six hours a day in January 1995 on a test
basis and increased the testing to eighteen hours a day in April 1995.  It
officially launched the television network under the trade name of TELENET on
June 26, 1995.

     On August 30, 1996 HDA closed the sale to Paxson of a 50% interest in
S&E, at which time HDA received $4 million and assumed approximately $1.7
million of S&E debt, payable in monthly installments over six years (see Note
7).  Upon closing, Paxson assumed responsibility for managing the Television
Stations.  HDA funded approximately $1 million in transaction costs in
connection with the sale including capital expenditures, employee severance
costs and payment of certain liabilities of S&E.  The sale was made pursuant
to certain agreements effective February 1996 one of which required Paxson to
pay fees of $23,333 monthly to S&E and to provide programming (mainly
infomercials) and certain other services to S&E until closing.  Paxson was
also entitled to 50% of S&E's operating cash flow generated during that
period.  Paxson has also been responsible since February 1996 to make loans to
S&E for any cash operating losses; no loans were outstanding at September 30,
1996.  Commencing September 1996, HDA is accounting for its investment in S&E
under the equity method of accounting.

     On November 12, 1996, HDA entered into an agreement to sell to Paxson its
remaining 50% interest in S&E, subject to receiving FCC approval.


     Galapagos, S.A. and V Centenario Race Track

     HDA has a 55% ownership interest in Galapagos, a Dominican Republic
corporation selected by the Dominican Republic Racing Commission to operate
and manage the V Centenario Race Track ("V Centenario"), a government owned
horse race track in Santo Domingo, Dominican Republic.  The remaining 45%
interest in Galapagos is owned by residents of the Dominican Republic
("Minority Stockholders").

     Galapagos began simulcasting El Comandante races on February 27, 1995
through independently-owned sports betting agencies in the Dominican Republic.

Racing operations at V Centenario commenced on April 29, 1995.

(PAGE)17
3.  SUMMARY OF ACCOUNTING POLICIES:

     Principles of Consolidation

     The Company consolidates in its financial statements the accounts of
entities in which it has a controlling interest in excess of 50% (see Note 4).

     Pervasiveness of Estimates

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

     New Pronouncements

     In 1995, the Company implemented Statement of Financial Accounting
Standards ("SFAS") No. 107, "Disclosures about Fair Value of Financial
Instruments", which requires disclosure of the fair value of certain financial
instruments (see Note 15).

     In 1996, the Company implemented SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of".
SFAS No. 121 establishes standards for identifying impairment for long-lived
assets and certain identifiable intangibles to be held and used by an entity. 
Generally, if the sum of the expected future cash flows (undiscounted and
without interest charges) is less than the carrying amount of the asset, an
impairment loss is assumed to have occurred.  An adjustment to reflect this
impairment would be recorded to the extent that an asset's market value was
less than its carrying value.  As of September 30, 1996, no adjustment has
been recorded under SFAS No. 121.

     Rental Income from El Comandante Race Track

     Rental income represents rent earned under the El Comandante Lease (see
Note 9).  Basic Rent, as defined in Note 9, is recognized when wagering
commissions are earned by ECOC.  Fixed Rent, as defined in Note 9, was
recognized in 1995 in equal monthly installments.

     Revenues from Dominican Republic Racing

     Commissions on wagering represent income earned by Galapagos on El
Comandante races simulcasted into the Dominican Republic and on races held at
V Centenario (see Note 10).  Other revenues include income earned on the
Jockey Club and food services operations.

     Revenues from Television Stations

     Revenues from Television Stations primarily represent income earned by
(PAGE)18
S&E until August 1996 while HDA consolidated the accounts of S&E into its
financial statements from (i) contracts for the production and broadcasting of
television programs which is recognized when the programs have been completed
and delivered, and (ii) advertising income from sale of air time, recognized
at the time of broadcast.  Revenues from Television Stations included income
earned from a contract with ECOC (see Note 11) of $452,000 for the eight
months ended August 31, 1996 and of $379,000 for the nine months ended
September 30, 1995.  During the 1996 period, revenues from Television Stations
also included HDA's $7,000 share of S&E's net income for September, recognized
under the equity method of accounting for investments.

     Cash Equivalents

     The Company considers as cash equivalents certificates of deposit with an
issuance to maturity term of six months or less.  Management intends to hold
these certificates until maturity.

     Property and Equipment of the Race Tracks

     Land, buildings and improvements, and equipment are stated at cost plus a
step-up of $5,650,000 of El Comandante assets on March 8, 1995 resulting from
the issuance of Units of the Company to HDAMC for a 15% profits interest in
HDA.  Composite depreciation is calculated for the property related to El
Comandante, using the straight-line method, over the estimated useful lives of
the building and equipment; five to seven years for  machinery  and 
equipment,  35  years   for  buildings  and   10  to  15  years  for  land 
improvements.  Under the composite depreciation method, any gain or loss of
property retired or sold is charged against accumulated depreciation, unless
the amount involved is material.  Depreciation, using the straight-line
method, commenced May 1, 1995 for the property and equipment related to V
Centenario where racing commenced on April 29, 1995. 

     TV Licenses and Property and Equipment of the Television Stations 

     The TV Licenses and land and equipment used in the operation of the
Television Stations at December 31, 1995 are stated at cost.  Depreciation and
amortization of S&E was included in the accompanying consolidated financial
statements through August 1996 when HDA sold a 50% interest in S&E and no
longer consolidates the accounts of S&E in its financial statements. 
Composite depreciation was calculated for the property and equipment acquired
under the TV Purchase Agreements.  All property and equipment was depreciated
using the straight-line method over their estimated useful lives, ranging from
5 to 10 years.  The TV Licenses were amortized using the straight-line method
over a period of 20 years.  Depreciation and amortization commenced July 1,
1995.

     Deferred Costs

     Deferred financing costs are being amortized over the life of the First
Mortgage Notes using the interest method for a period of 10 years ending
December 15, 2003.  Organizational and other costs related to El Comandante
(PAGE)19
are being amortized using the straight-line method over a period of 5 to 15
years that commenced on December 15, 1989.  Organizational and other costs
related to V Centenario are being amortized using the straight-line method
over a period of five years ending May 1, 2000.  

     Deferred costs related to Television Stations at December 31, 1995
included a noncompetition agreement entered into in connection with the
acquisition of the Television Stations and certain organizational, start-up
and other costs which were amortized, using the straight-line method, over a
period of 3 to 10 years that commenced July 1, 1995.  Deferred costs also
included broadcast contract rights for agreements that had been executed by
S&E, except for contracts amounting to approximately $208,000 which did not
meet certain conditions prescribed in accounting literature for their
recognition.  Broadcast contract rights were amortized based, in general
terms, on the estimated number of times the program could be telecasted.  Upon
the closing of the sale to Paxson on August 30, 1996, S&E wrote-off
approximately $1 million of deferred costs and broadcast contract rights which
do not have any future benefit to S&E under Paxson's management of the
Television Stations.  The write-off has been included in the accompanying
consolidated financial statements as a reduction of the gain fron the sale of
the 50% interest in the Television Stations.

     Currencies

     HDA consolidates its accounts with Galapagos whose functional currency is
Dominican Republic pesos ("RD$"), although United States dollars ("US$") are
also a recording currency.  US$ are exchanged into RD$ and vice versa through
commercial banks and/or the Central Bank of the Dominican Republic.  Galapagos
remeasures its monetary assets and liabilities recorded in US$ into RD$ using
the exchange rate in effect at the balance sheet date (the "current rate") and
all other assets and liabilities and capital accounts, at the historical
rates.  Galapagos then translates its financial statements from RD$ into US$
using the current rate, for all assets and liabilities, and the average
exchange rate prevailing during the year for results of operations.  Net
exchange gains or losses resulting from remeasurement of accounts, together
with gains or losses from foreign currency transactions are included in
operating costs of Dominican Republic racing.  For the nine months ended
September 30, 1996 and 1995, a net loss of $36,400 and a net gain of $20,280,
respectively, was recognized by Galapagos.  Also, the following accumulated
net losses from changes in exchange rates are included in the partners'
deficit:

                                           September 30,   December 31,
                                           1996            1995
                                           ------------    ------------
   Translation of assets and
     liabilities                           $    128,800    $     26,700
   Unsettled intercompany transactions
     of a long term nature                        -              66,600
                                           ------------    ------------
                                           $    128,800    $     93,300
                                           ============    ============

(PAGE)20
     The exchange rate as of September 30, 1996 and December 31, 1995 was
US$1.00 to RD$13.81 and US$1.00 to RD$13.46, respectively and the average
exchange rate prevailing during the nine months ended September 30, 1996 was
US$1.00 to RD$13.77.

4.  INVESTMENT IN HDA:

     In August 1994 IBC and a consolidated subsidiary of IGC together
transferred a 67% interest in the profits and 26.35% interest in the capital
of HDA to the Company as  capital contributions, which transfers were
accounted for at book value.  On March 8, 1995, HDAMC transferred an
additional 15% interest in the profits and a portion of its capital interest
of HDA to the Company in exchange for 1,205,245 Units which were valued at
$5,650,000, resulting in a  step-up of the cost of El Comandante assets by
that amount.  In connection with these transactions,  (i) HDAMC agreed to
transfer to the Company its remaining capital interest for no additional
consideration, and (ii) the consolidated subsidiary of IGC agreed to transfer
to the Company all but 1% of its profits and capital interest, as capital
contributions.  These transfers occurred on February 7, 1996 and  the Company
now holds an 82% interest in both the profits and capital of HDA.

     Prior to March 8, 1995, the Company accounted for its investment in HDA
under the equity method of accounting.  Because HDA is a limited liability
partnership, the original partners of HDA only recorded equity in losses of
HDA until their investments in HDA were reduced to zero.  HDA had an
accumulated deficit at the time the partners transferred their interests in
HDA to the Company in August 1994.  Since the Company received its interest in
HDA as capital contributions from related parties whose investments in HDA
were zero, the Company did not record any investment in HDA and adopted the
same accounting treatment of not recognizing equity in earnings of HDA until
HDA's accumulated deficit was eliminated.  The Company did, however, recognize
revenues of $134,000 in the nine months ended September 30, 1995 from cash
distributions that were received from HDA prior to consolidation of HDA's
accounts in the Company's financial statements effective March 8, 1995.

     Prior to March 8, 1995 generally accepted accounting principles did not
permit the Company to consolidate the accounts of HDA in the Company's
financial statements because HDAMC had the right to approve any sale or
disposition of HDA's assets in excess of $500,000 and the incurrence of any
debt in excess of $1 million.  On March 8, 1995, HDA's partnership agreement
was amended to eliminate these approval rights of HDAMC, and commencing as of
March 8, 1995 the accounts of HDA have been consolidated with the Company's
accounts.


5.  RECEIVABLES FROM EL COMANDANTE OPERATING COMPANY, INC.:

     Receivables from ECOC as of September 30, 1996 and December 31, 1995
consist of (i) a note receivable and accrued interest of $873,457 and
(PAGE)21
$1,020,164, respectively, and (ii) unpaid rent under the El Comandante Lease
of $809,315 and $796,146, respectively.  The note accrues interest at 5.75%
and is due in monthly installments of $30,309, including interest, over a
three year period that commenced May 1, 1996.




6.  LIABILITIES RELATED TO RACE TRACKS:

     First Mortgage Notes

     Pursuant to the Private Offering, ECCC issued First Mortgage Notes in the
aggregate principal amount of $68 million under an indenture dated
December 15, 1993 (the "Indenture") between ECCC, HDA and  Banco Popular de
Puerto Rico, as  trustee  (the  "Trustee"), and HDAMC issued Warrants to
purchase 68,000 shares of Class A Common Stock of HDAMC. As a result of the
Distribution, in March 1995 the Warrants automatically became exercisable to
purchase Units of the Company from  HDAMC.  Upon issuance of the Warrants,
HDAMC and HDA recorded additional equity of $1,912,800, equal to the fair
value of the Warrants of $2,040,000, less offering costs of $127,200, and
recorded debt discount of $2,040,000. Such debt discount is being amortized
using the interest method over the term of the First Mortgage Notes.  The
First Mortgage Notes mature on December 15, 2003 and bear interest at 11.75%
from December 15, 1993, payable semiannually. 

     Payment of the First Mortgage Notes is guaranteed by HDA and the First
Mortgage Notes are secured by a first mortgage on El Comandante and by certain
other security which together encompass a lien on (i) the fee interests of HDA
in the land and fixtures comprising El Comandante, (ii) all property rights of
HDA in and to all related equipment, structures, machinery and other property,
including intangible property, ancillary to the operations of El Comandante,
(iii) substantially all of the other assets and property of HDA and ECOC,
including the capital stock of ECCC owned by HDA and (iv) the Rent Escrow as
defined in Note 9.

     ECCC is required to redeem First Mortgage Notes in the principal amount
of $6,800,000 on December 15, 2000, $10,200,000 on December 15, 2001 and 2002,
and the balance at maturity.  ECCC and HDA may redeem First Mortgage Notes on
or after December 15, 1998 at the following redemption prices (expressed as
percentages of principal amount):  if redeemed during the 12-month period
beginning December 15 of years 1998 at 104.125%, 1999 at 102.75%, 2000 at
101.5%, and 2001 and thereafter at 100% of principal amount, in each case
together with accrued and unpaid interest.  Any such redemptions would offset
the mandatory redemptions due December 15, 2000, 2001 and 2002. 

     ECCC also may redeem up to one-third of the principal amount of the First
Mortgage Notes from net proceeds of an equity offering by HDA at any time on
or before December 15, 1996 at a redemption price of 110% of the principal
amount.  ECCC is required to offer to purchase First Mortgage Notes, at face
value,  to the extent that HDA has accumulated excess cash flow, asset sales
(PAGE)22
with net proceeds in excess of $5 million, or a total taking or casualty, or
in the event of a change of control of HDA.  If the sale of the remaining 50%
interest in S&E is closed, HDA will be required to make an offer within 360
days of the closing to purchase First Mortgage Notes, at par, with net
proceeds of the sale to the extent the net proceeds are not invested in a
gaming related business within the 360 day period.

     The Indenture contains certain covenants, one of which restricts the
amount of distributions to HDA's partners, including the Company.  Permitted
distributions include amounts intended to be sufficient to provide funds for
HDA's partners to pay income taxes on their allocable share of HDA's taxable
income ("Tax Distributions").  Tax Distributions are equal to the higher of
(i) 8.4% plus the higher of the then applicable federal personal or corporate
income tax rate or (ii) the higher of the then applicable Puerto Rico personal
or corporate income tax rate, multiplied by HDA's consolidated net income. 
HDA is permitted to make additional cash distributions to partners and other
Restricted Payments, as defined under the Indenture, equal to 44.25% of the
excess of HDA's cumulative consolidated net income after December 31, 1993
over the cumulative amount of the Tax Distributions, provided that HDA meets
certain minimum debt coverage ratios.  HDA does not yet meet the debt coverage
ratios.

     Minority Interest in Galapagos

     A founders' agreement between HDA and the Minority Stockholders of
Galapagos (the "Founders Agreement") gives HDA the right to make calls for
stockholder loans, up to a maximum  of $3,516,000,  to be provided in
accordance with ownership interests.  As of December 31, 1995, HDA had made
loans of $1,842,500, which were eliminated in the accompanying consolidated
financial statements, and the Minority Stockholders had made loans of
$1,507,750.  These loans bore interest at a rate equal to 2% over prime rate,
which at December 31, 1995 was 10.5%.  Effective June 30, 1996, HDA and the
Minority Stockholders contributed these loans to the capital of Galapagos and
forgave accrued interest thereon.

     The minority interest in Galapagos represents the Minority Stockholders'
investment (loans and capital), net of their share of Galapagos' accumulated
losses.

     Notes Payable

     Galapagos has obtained a $1.1 million line of credit from a financial
institution for the acquisition of wagering equipment for off-track betting
agencies in the Dominican Republic.  As of December 31, 1995, Galapagos has
borrowed $549,500 under the line of credit and in May 1996 borrowed an
additional $106,100.  The notes are payable in monthly installments, including
interest at 10.75%, of $4,759, $11,525 and $2,612, for a period ending July
1998, July 1999 and December 1999, respectively.  The loans are guaranteed by
HDA and collateralized by wagering equipment.


(PAGE)23
7.  LIABILITIES RELATED TO TELEVISION STATIONS:

     In connection with the sale to Paxson of a 50% interest in S&E, HDA
assumed on August 30, 1996 a note payable and the obligations under TV
Purchase Agreements.

     The note payable consisted of a $1.4 million loan that was obtained in
September 22, 1995 for the financing of equipment of the Television Stations. 
The note was payable in monthly installments of $23,788, including interest at
10.75%, for a period of 7 years.  In September 1996, HDA prepaid the
$1,270,700 balance of the note.

     The obligation under TV Purchase Agreements consists of a non-interest
bearing debt assumed in connection with the acquisition of the Television
Stations, payable in monthly installments of $9,357, including imputed
interest at 12%, through October 2001.


8.  OTHER LIABILITIES:

     Notes Payable

     During 1995 the Company borrowed $850,000 from a bank.  The loan was
payable in quarterly installments of $100,000 commencing May 31, 1995 and the
Company assigned to the bank the first $100,000 of quarterly distributions
from HDA.  As of December 31, 1995 the loan balance was $550,000 and in May
1996 it was increased to $700,000, also payable in quarterly installments of
$100,000 commencing August 31, 1996 and a final payment of $200,000 in
November 1997.  As of September 30, 1996 the loan balance was $600,000.  The
interest is payable monthly based on the Citibank prime rate plus 2%, which
was 10.25% at September 30, 1996 and 10.5% at December 31, 1995.

     Unsecured Partner's Loans

     During 1995 the Company received advances from IGC for principal payments
on a bank loan and other purposes, including VJC appeal costs and
investigating business opportunities.  IGC also provides services to the
Company pursuant to the IGC Support Agreement.  The outstanding payables to
IGC were $442,566 and $211,629 at September 30, 1996 and December 31, 1995,
respectively.


9.  LEASE OF EL COMANDANTE:

     El Comandante is operated by ECOC pursuant to the Operating License, a
15-year exclusive franchise ending December 2004 covering the San Juan Region
of Puerto Rico, which approximates the northern half of Puerto Rico, as
delineated in maps produced by the Puerto Rico Planning Board and Government
Development Administration (see Note 2). 


(PAGE)24
     The El Comandante Lease with ECOC expires December 14, 2004.  The El
Comandante Lease provides for payment of rent consisting of 25% ("Basic Rent")
of the annual commissions earned by ECOC ("ECOC Commissions"), but in no event
less than $7,500,000 ("Minimum Basic Rent") adjusted annually with a base year
of 1989 by the percentage increase in the Consumer Price Index ("CPI") for the
calendar year over the CPI for the previous calendar year.  ECOC Commissions
consist of all payments received by ECOC on all monies wagered with respect to
horse racing occurring at El Comandante, whether wagered at El Comandante or
at other betting facilities in Puerto Rico or any other country.  The El
Comandante Lease also obligated ECOC to pay additional annual fixed rent
("Fixed Rent") of $150,000 in 1994 and $400,000 in 1995.  An amendment to the
El Comandante Lease eliminated Fixed Rent effective January 1, 1996.

     The El Comandante Lease also requires ECOC to establish and fund with
certain excess cash flow a rent escrow (the "Rent Escrow") until the Rent
Escrow equals one half of the Minimum Basic Rent for that year.  For purposes
of determining the required deposits to the Rent Escrow, excess cash flow
means, after ECOC has a cash balance of $700,000 for working capital
(excluding restricted cash and payables to winning bettors) all cash flow of
ECOC in excess of $300,000 per year, provided that the $300,000 threshold
shall be increased by $100,000 for each $1 million by which the Rent Escrow
exceeds $3 million.  Funds held in the Rent Escrow may be released to make up
any difference between rent payments made by ECOC and the rent due and payable
under the El Comandante Lease.  After deposits into the Rent Escrow, payments
of Fixed Rent and donations in accordance with ECOC's certificate of
incorporation aggregating $3 million have been made, additional deposits to
the Rent Escrow are subordinated to ECOC's obligations to a former owner of
ECOC and Interstate General Properties Limited Partnership S.E. ("IGP"), a
subsidiary of IGC.  As of September 30, 1996, no deposits have been made into
the Rent Escrow.

     The El Comandante Lease provides for ECOC to pay all El Comandante
expenses except that, effective January 1, 1996, the amendment to the El
Comandante Lease requires HDA to pay real property taxes on El Comandante. 
The El Comandante Lease also contains certain covenants of ECOC including
maintenance obligations; financial reporting requirements; insurance
requirements; compliance with laws; limitations on indebtedness; limitations
on liens; limitations on other activities; limitations on affiliate
transactions; acceptance of IGP consulting services; and acceptance of
amendments necessary to maintain HDA's tax status.  ECOC granted a security
interest in substantially all of its assets (excluding cash, but including the
Rent Escrow) to HDA to secure ECOC's obligations under the El Comandante
Lease, which security interest was then assigned to the Trustee as additional
security for HDA's obligations under the First Mortgage Notes.  If the El
Comandante Lease is terminated prior to December 2004, ECOC will assign the
Operating License to HDA to the extent permitted by law and sell at book value
its equipment to HDA.  Also, HDA will be required to assume up to $1.9 million
of ECOC's obligations under the agreements with a former owner of ECOC.

     The El Comandante Lease provides for renegotiation of the Basic Rent,
Fixed Rent and the Rent Escrow provisions with the results of such
renegotiations to be effective on January 1, 1998. 
(PAGE)25

10.  DOMINICAN REPUBLIC RACING:

     On September 28, 1994, Galapagos entered into an agreement with the
Dominican Republic Government pursuant to which Galapagos leases and operates
V Centenario (the "V Centenario Lease") for an initial term of 10 years which
commenced April 1995.  The V Centenario Lease also provides Galapagos with the
right to develop off-track betting in the Dominican Republic and the exclusive
right to simulcast horse races, including El Comandante races, into the
Dominican Republic.  The V Centenario Lease may be renewed for additional ten
year periods by mutual agreement of the parties.  A portion of wagering in the
Dominican Republic is set aside and reserved for covering losses from currency
fluctuations and for other purposes approved by the Dominican Republic Racing
Commission.

     The V Centenario Lease provides for payments of rent to the Dominican
Republic Government based on a percentage of the annual wagering on races run
at V Centenario ("V Centenario Wagering").  Galapagos' rent is .25% of the
first RD$240 million (approximately US$18.5 million under current official
exchange rates) of V Centenario Wagering during the year, .5% of the next
RD$240 million, .75% of the next RD$240 million and 1% of V Centenario
Wagering over RD$720 million (approximately US$55 million under current
official exchange rates).  Racing operations at V Centenario commenced on
April 29, 1995.  

     Galapagos has an agreement with Dominican Republic horseowners whereby
they receive 50% of Galapagos' commissions on V Centenario Wagering and 50% of
commissions earned by Galapagos on El Comandante's simulcasted races, after
deducting payments to ECOC for its commissions on simulcasted races.

     Galapagos receives wagering services, software and equipment under a
service agreement for a ten year period ending March 15, 2005.  Service fees
during 1995 are .65% (.0065) of total wagering and thereafter are the greater
of (a) .65% of total wagering or (b) $150,000 in 1996, $175,000 in 1997 and 
thereafter $200,000 annually.

     As required under the Founders Agreement, ECOC provides executive
management services to Galapagos pursuant to a management agreement for the
term of the V Centenario Lease ("ECOC Management Agreement").  Fees to ECOC
under the ECOC Management Agreement are payable monthly and consist of 1% of
wagering on simulcasted races and on V Centenario Wagering, with a maximum
amount of $250,000 annually, adjusted by CPI commencing January 1996.   During
the nine months ended September 30, 1996 and 1995, Galapagos incurred fees of
$175,219 and $80,395, respectively.  Galapagos also reimburses ECOC for out-
of-pocket expenses related to Galapagos.

     Assets and liabilities related to Dominican Republic racing amounted to
$2,224,000 and $2,286,000, respectively, as of September 30, 1996 and to
$3,125,000 and $2,985,000, respectively, as of December 31, 1995.

(PAGE)26
11.  S&E AND THE TELEVISION STATIONS:

     Pursuant to an agreement with ECOC which was effective January 1995, S&E
was producing and broadcasting a four-hour television program for all races
run at El Comandante for a maximum of 208 race days per year (the "Television
Contract").  The Television Contract was originally for ten  years to December
2004 but was replaced by a new agreement effective February 1, 1996 (the "New
Contract").  The Television Contract required fixed monthly payments of
$56,000 to S&E.  S&E was responsible for producing the broadcasts and was
entitled to revenues from sales of advertising time.  ECOC agreed to pay up to
$150,000 for certain improvements to provide facilities at El Comandante for
S&E's television studio, production and administration space at no cost to S&E
as long as S&E broadcasts the television program for ECOC.
     The New Contract was negotiated in connection with the sale of 50%
interest in S&E to Paxson.  Pursuant to the New Contract, ECOC purchases a
minimum of 910 hours of television time annually from S&E at $725 per hour
(minimum annual amount of $659,750), adjusted annually by CPI.  If ECOC needs
television time after 7:00 PM, the cost per hour is $900, also subject to CPI
adjustments.  ECOC is now responsible for producing and directing the
broadcasts and is entitled to the revenues from its sales of advertising time
during the broadcasts of the racing program.  The term of the New Contract
expires January 31, 2000, but is renewable for successive one year terms at
ECOC's option.  


12.  MANAGEMENT AGREEMENTS:

     The Company does not have any employees.  The Company's activities are
presently managed by one of its general partners, EMC, pursuant to the
partnership agreement, without compensation.  EMC is reimbursed for its
independent directors' fees and expenses and reasonable out-of-pocket third
party costs incurred in connection with the management of the Company, to the
extent that such expenses exceed EMC's share of the Company's cash
distributions.  IGC provides certain support services to EMC and the Company
pursuant to a three-year support agreement effective as of February 6, 1995
("IGC Support Agreement") and the Company reimburses IGC for expenses incurred
in providing such services.  Commencing August 1996 two employees of IGC were
transferred to EMC and the scope of the services rendered by IGC were reduced;
EMC is now providing the administrative services to the Company.  

     HDA does not have any employees.  HDA's activities were managed by IGP
pursuant to a management agreement (the "Management Agreement") until August
1996 when IGP assigned the agreement to EMC.  The Management Agreement has a
term of 15 years ending December 31, 2004.  Management fees, effective
December 15, 1993, are $250,000 per annum payable monthly in equal
installments, with annual CPI adjustments after 1993.  





(PAGE)27
13.  INCOME TAXES:

     Federal Income Taxes

     The Company and HDA have been organized as partnerships, which are not
taxable entities for federal income tax purposes and incur no federal income
tax liability.  Instead, each partner is required to take into account in
computing its income tax liability such partner's allocable share of the
Company's and HDA's income.  VJC and ECCC are corporations subject to federal
income tax on their taxable income and a current provision for ECCC income
taxes of $4,960 and $4,000 has been provided for the nine months ended
September 30, 1996 and 1995, respectively.

     Puerto Rico Income Taxes

     HDA, a partnership organized under the laws of the Commonwealth of Puerto
Rico, received a ruling from the Puerto Rico Treasury Department approving its
special partnership status effective January 1, 1993.  As a special
partnership, HDA is not a taxable entity in Puerto Rico.  Instead, HDA's
partners are taxed on their distributive share of HDA's taxable income.  As a
result of its investment in HDA, the Company is subject to Puerto Rico income
tax as a foreign corporation.  As such, it pays Puerto Rico income tax on its
Puerto Rico source income, which is its distributable share of HDA's net
taxable income.  Residents of the United States who are unitholders in the
Company are generally entitled to a federal tax credit for their prorata share
of Puerto Rico income taxes paid by the Company.  Under the Puerto Rico
Internal Revenue Code of 1994, effective for taxable years commencing after
June 30, 1995, (i) the Company is not considered to be engaged in a Puerto
Rico trade or business solely by reason of being a partner in HDA, (ii) the
Company's distributive share of HDA's taxable income is taxed at a 29% tax
rate and, (iii) distributions by the Company to residents of the United States
are not subject to income and withholding taxes.  A current provision for
income taxes of $152,700 and $217,200 for the nine months ended September 30,
1996 and 1995, respectively, has been provided in the accompanying
consolidated financial statements as a result of the Company's tax liability
for its distributable share of HDA's net taxable income.  The deferred income
tax provision for the nine months ended September 30, 1996 and 1995 includes a
provision of $480,300 and a credit of $12,642, respectively, related to the
difference between the tax basis of the Company's investment in HDA and the
amount reported in the financial statements.

     S&E is a corporation organized under the laws of the Commonwealth of
Puerto Rico and is subject to Puerto Rico income tax.  Since S&E was
accumulated net operating losses, no provision for Puerto Rico income tax was
recorded.

     Dominican Republic Income Tax

     Galapagos is a Dominican Republic corporation subject to income taxes on
taxable income generated in the Dominican Republic.  Since Galapagos has
accumulated net operating losses, no provision for Dominican Republic income
(PAGE)28
tax has been recorded.  However, HDA was subject to withholding taxes in
Dominican Republic upon interest collected from Galapagos on its stockholder
loans, which loans and interest were eliminated in the accompanying
consolidated financial statements.  These loans were contributed to the
capital of Galapagos and accrued interest forgiven in 1996 before any interest
had been collected.  The deferred income tax provision for the nine months
ended September 30, 1996 includes a credit of $19,161 for the reversal of
prior year's taxes on interest that was forgiven.

     Net Operating Losses

     S&E and Galapagos have adopted the provisions of SFAS No. 109,
"Accounting for Income Taxes".  This standard required S&E and Galapagos to
recognize deferred income tax benefits for losses carryforwards and the tax
benefits recognized must be reduced by a valuation allowance in certain
circumstances.  S&E and Galapagos have established a valuation allowance for
the total amount of tax benefits related to the net operating loss
carryforwards available to offset future taxable income.
14.  RELATED PARTY TRANSACTIONS:

     During the nine months ended September 30, 1996 and 1995, the Company
received services from IGC and incurred $110,000 and $150,000, respectively,
pursuant to the IGC Support Agreement and incurred costs of $67,700 and
$26,600, respectively, for directors' meeting fees and expenses of EMC. 
During the period from March 8 to September 30, 1995, HDA paid $5,500 to
reimburse HDA's managing partners for directors' meeting fees and expenses and
incurred fees of $149,457 pursuant to the Management Agreement with IGP. 
During the nine months ended September 30, 1996, management fees were $202,830
of which $33,800 were paid to EMC and $169,030 to IGP.

     As discussed in Note 1, the Company agreed to make available to IGC for
no consideration up to 50,000 additional Units for distribution by IGC to a
limited number of employees upon the exercise of certain options and
appreciation rights.


15.  DISCLOSURE OF FAIR VALUE OF FINANCIAL INSTRUMENTS:

     SFAS No. 107 requires disclosure of the fair value of certain financial
instruments, including cash, evidence of ownership interests in other entities
and contracts that impose either and obligation to deliver a financial
instrument or cash such as loans or notes payable, or a right to receive a
financial instrument or cash such as loans or notes receivable.  The estimated
fair values of the Company's financial instruments are as follows:







(PAGE)29                        September 30, 1996      December 31, 1995
                             ------------------------ ------------------------
                                          Carrying                  Carrying
                             Fair Value   Value       Fair Value    Value
                             -----------  ----------- -----------   ----------

Cash and cash equivalents    $ 7,183,103  $ 7,183,103 $   814,292   $  814,292
Receivables from ECOC-
  Note and accrued interest      920,000      873,457     940,000    1,020,164
First Mortgage Notes          64,600,000   66,361,366  58,000,000   66,239,879
Payable to stockholders            -            -       1,597,916    1,597,916
Notes payable                  1,143,560    1,143,560   2,439,410    2,439,410
Obligations under TV
  Purchase Agreements            420,695      420,695     474,661      474,661


     The carrying value of cash and cash equivalents approximates fair value
because of the liquid nature of these assets.  The note receivable from ECOC
bears interest at a rate lower than prime rate and accordingly, was discounted
based on the expected collection date assuming a  rate of 10.5%. The fair
value of the First Mortgage Notes was based on the quoted market prices for
this investment, as reported by the brokerage firms handling the trading.  The
carrying value of notes payable and obligations under TV Purchase Agreements
approximates fair value because these obligations bear interest at market.    


16.  UNAUDITED PROFORMA CONSOLIDATED STATEMENTS OF INCOME (LOSS):

     The Company acquired a 67% interest in profits of HDA in August 1994 and
increased its interest in profits to 82% on March 8, 1995.  The following
unaudited proforma consolidated statement of income(loss) for the nine months
ended September 30, 1995 is based upon the historical consolidated statement
of the Company and VJC, and HDA and subsidiaries, and were prepared as if the
acquisition by the Company of its 82% interest in HDA's profits, the
elimination of certain approval rights of HDAMC, the Distribution, and the
issuance of 1,205,245 Units to HDAMC had all occurred on January 1, 1995.  The
unaudited proforma consolidated statement is not necessarily indicative of
what the actual results of operations of the Company would have been assuming
such transactions had been completed as of January 1, 1995, and does not
purport to represent the results of operations for future periods.  In
Management's opinion, all adjustments necessary to reflect the effects of
these transactions have been made.










(PAGE)30
16. UNAUDITED PROFORMA CONSOLIDATED STATEMENTS OF INCOME (LOSS) (continued):

                    FOR THE NINE MONTHS ENDED SEPTEMBER 30,
                    (In thousands except per unit amounts)
                                  (Unaudited)

                                                    1996         1995
                                                 ----------   ----------
                                                 Historical    Proforma
REVENUES:
  Rental income from El Comandante               $   10,747   $   10,563
  Dominican Republic racing-
     Commissions on wagering                          3,299        1,638
     Other revenues                                     338          262
  Television Stations                                 1,676          900
  Gain from sale of 50% interest in
     Television Stations                                581        -
  Interest income                                       141           76
                                                 ----------   ----------
     Total revenues                                  16,782       13,439
                                                 ----------   ----------
EXPENSES:
  Financial                                           6,696        6,674
  Depreciation                                        1,847        1,544
  General and administrative                          1,400        1,041
  Operating costs of Dominican Republic racing        4,490        2,628
  Operating costs of Television Stations              1,461        1,752
  Other Costs                                         -              131
                                                 ----------   ----------
     Total expenses                                  15,894       13,770
                                                 ----------   ----------
INCOME (LOSS) BEFORE INCOME TAXES AND 
  MINORITY INTERESTS                                    888         (331)

PROVISION FOR INCOME TAXES                              619          354

MINORITY INTERESTS                                      (92)        (460)
                                                 ----------   ----------
NET INCOME (LOSS)                                $      361   $     (225)
                                                 ==========   ==========
ALLOCATION OF NET INCOME (LOSS):
  General Partners                               $        4   $       (2)
  Limited Partners                                      357         (223)
                                                 ----------   ----------
                                                 $      361   $     (225)
                                                 ==========   ==========
NET INCOME (LOSS) PER UNIT                       $      .06   $    (0.04)
                                                 ==========   ==========
WEIGHTED AVERAGE UNITS OUTSTANDING                    6,334        6,334
                                                 ==========   ==========

(PAGE)31             EL COMANDANTE OPERATING COMPANY, INC.
                      STATEMENTS OF REVENUES AND EXPENSES
                    FOR THE NINE MONTHS ENDED SEPTEMBER 30,
                                  (Unaudited)
                                                    1996          1995
                                                -----------   -----------
REVENUES:
  Commissions on wagering                       $42,989,361   $41,052,371
  Other                                           2,060,785     1,728,251
                                                -----------   -----------
     Total revenues                              45,050,146    42,780,622
                                                -----------   -----------
EXPENSES:
  Payments to horse owners and horse owners'
     association                                 21,431,724    20,537,085
  Track rent                                     10,746,502    10,563,092
  Salaries, wages and employee benefits           5,291,011     5,135,620
  Operating expenses                              3,942,872     4,301,120
  General and administrative                      1,978,845     2,209,503
  Marketing and satellite transmission costs      1,806,368     1,582,516
                                                -----------   -----------
     Total expenses                              45,197,322    44,328,936
                                                -----------   -----------
LOSS BEFORE INCOME TAXES                           (147,176)   (1,548,314)

CREDIT FOR DEFERRED INCOME TAXES                    (53,182)      (45,450)
                                                -----------   -----------
NET LOSS                                        $   (93,994)  $(1,502,864)
                                                ===========   ===========





















                    The accompanying notes are an integral
                           part of these statements.
(PAGE)32             EL COMANDANTE OPERATING COMPANY, INC.
                      STATEMENTS OF REVENUES AND EXPENSES
                   FOR THE THREE MONTHS ENDED SEPTEMBER 30,
                                  (Unaudited)
                                                    1996          1995
                                                -----------   -----------
REVENUES:
  Commissions on wagering                       $13,315,305   $12,407,310
  Other                                             710,551       528,786
                                                -----------   -----------
     Total revenues                              14,025,856    12,936,096
                                                -----------   -----------
EXPENSES:
  Payments to horse owners and horse owners'
     association                                  6,646,175     6,201,690
  Track rent                                      3,327,988     3,201,827
  Salaries, wages and employee benefits           1,776,654     1,768,352
  Operating expenses                              1,315,179     1,412,600
  General and administrative                        628,010       691,267
  Marketing and satellite transmission costs        614,388       462,291
                                                -----------   -----------
     Total expenses                              14,308,394    13,738,027
                                                -----------   -----------
LOSS BEFORE INCOME TAXES                           (282,538)     (801,931)

CREDIT FOR DEFERRED INCOME TAXES                    (38,312)     (133,022)
                                                -----------   -----------
NET LOSS                                        $  (244,226)  $  (668,909)
                                                ===========   ===========




















                    The accompanying notes are an integral
                           part of these statements.

(PAGE)33             EL COMANDANTE OPERATING COMPANY, INC.

                    STATEMENTS OF NET ASSETS (LIABILITIES)


                                                September 30,December 31,
                                                   1996          1995
                                                -----------  -----------
                                                (Unaudited)    (Audited)

ASSETS:
  CURRENT ASSETS:
    Cash, including restricted cash of
      $984,024 and $903,562, respectively       $ 1,112,883  $ 2,883,447
    Accounts receivable, net                      1,269,742      954,809
    Prepayments and supplies inventory              423,850      291,717
    Notes receivable                                418,112      310,944 
                                                -----------  -----------
       Total current assets                       3,224,587    4,440,917
                                                -----------  -----------
  DEFERRED COSTS, net:
    Organizational costs                             30,100       36,355
    Deferred tax asset                              611,319      558,137
    Telecommunication installation costs            205,249      257,829
    Noncompetition agreement                        208,333      395,833
                                                -----------  -----------
      Total deferred costs                        1,055,001    1,248,154
                                                -----------  -----------
  FURNITURE AND EQUIPMENT, net                    3,800,197    3,469,371
                                                -----------  -----------
      Total assets                              $ 8,079,785  $ 9,158,442
                                                -----------  -----------




















(PAGE)34             EL COMANDANTE OPERATING COMPANY, INC.

                    STATEMENTS OF NET ASSETS (LIABILITIES)

                                  (continued)

                                                September 30,December 31,
                                                   1996          1995
                                                -----------  -----------
                                                (Unaudited)    (Audited)

LIABILITIES:
  CURRENT LIABILITIES:
    Current portion of capital lease
      obligations                               $   680,156  $   560,128
    Accounts payable and accrued liabilities      2,441,589    2,911,948
    Outstanding winning tickets and refunds       1,661,069    2,095,794
                                                -----------  -----------
      Total current liabilities                   4,782,814    5,567,870
                                                -----------  -----------
  CAPITAL LEASE OBLIGATIONS                       1,237,797    1,318,962
                                                -----------  -----------
  PAYABLE TO HOUSING DEVELOPMENT 
    ASSOCIATES S.E.:
      Rent                                          809,315      796,145
      Note payable and accrued interest             873,457    1,020,164
                                                -----------  -----------
                                                  1,682,772    1,816,310
                                                -----------  -----------
  OTHER LIABILITIES:
    Notes                                         2,450,000    2,450,000
    Accrued interest                                139,998      124,902
                                                -----------  -----------
                                                  2,589,998    2,574,902
                                                -----------  -----------
      Total liabilities                          10,293,381   11,278,044
                                                -----------  -----------
NET ASSETS (LIABILITIES)                        $(2,213,596) $(2,119,602)
                                                ===========  ===========










                  The accompanying notes are an integral part
                             of these statements.

(PAGE)35             EL COMANDANTE OPERATING COMPANY, INC.

               STATEMENT OF CHANGES IN NET ASSETS (LIABILITIES)

          FOR THE NINE AND THE THREE MONTHS ENDED SEPTEMBER 30, 1996

                                  (Unaudited)

                                                   Amount
                                                -------------

BALANCES, December 31, 1995 (audited)           $ (2,119,602)

  Net income for the period                          150,232
                                                -------------
BALANCES, June 30, 1996                           (1,969,370)

  Net loss for the period                           (244,226)
                                                -------------
BALANCES, September 30, 1996                    $ (2,213,596)
                                                =============




























                  The accompanying notes are an integral part
                              of this statement.

(PAGE)36             EL COMANDANTE OPERATING COMPANY, INC.
                           STATEMENTS OF CASH FLOWS
                    FOR THE NINE MONTHS ENDED SEPTEMBER 30,
                                  (Unaudited)
                                                    1996          1995
                                                 -----------   -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                       $   (93,994)  $(1,502,864)
                                                 -----------   -----------
  Adjustments to reconcile net loss to net 
    cash used in operating activities-
      Depreciation and amortization                  690,777       621,586
      Deferred tax credit                            (53,182)      (45,450)
      Provision for bad debts                         75,006       174,998
      (Increase) in current assets-
        Accounts receivable                         (389,939)     (183,712)
        Prepayments and supplies inventory          (132,133)     (239,411)
      Increase (decrease) in current liabilities-
        Accounts payable and accrued liabilities    (470,359)     (417,070)
        Outstanding winning tickets and refunds     (434,725)     (445,041)
        Accrued interest                              (2,798)       20,638
        Rent payable                                  13,170       499,730
                                                 -----------   -----------
           Total adjustments                        (704,183)      (13,732)
                                                 -----------   -----------
           Net cash used in operating activities    (798,177)   (1,516,596)
                                                 -----------   -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Increase in notes receivable                      (107,168)      (19,222)
  Capital expenditures                              (227,939)     (334,920)
  Payments of telecommunication installation
    costs                                                (61)      (17,374)
                                                 -----------   -----------
     Net cash used in investing activities          (335,168)     (371,516)
                                                 -----------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Payments of capital lease obligations             (508,405)     (301,140)
  Payments on notes payable                         (128,814)        -
  Cash contributions                                   -         1,000,000
                                                 -----------   -----------
     Net cash (used in) provided by in 
       financing activities                         (637,219)      698,860
                                                 -----------   -----------
NET DECREASE IN CASH                              (1,770,564)   (1,189,252)

CASH, beginning of year                            2,883,447     2,214,801
                                                 -----------   -----------
CASH, end of period                              $ 1,112,883   $ 1,025,549
                                                 ===========   ===========



(PAGE)37             EL COMANDANTE OPERATING COMPANY, INC.
                           STATEMENTS OF CASH FLOWS
                    FOR THE NINE MONTHS ENDED SEPTEMBER 30,
                                  (Unaudited)

                                  (continued)

                                                    1996          1995
                                                 -----------   ------------

SUPPLEMENTAL INFORMATION:
  Interest paid                                  $   278,039   $    197,862

NONCASH TRANSACTIONS:
  Equipment acquired through capital leases      $   547,269   $    275,976


































                  The accompanying notes are an integral part
                             of these statements.

(PAGE)38             EL COMANDANTE OPERATING COMPANY, INC.
                           STATEMENTS OF CASH FLOWS
                   FOR THE THREE MONTHS ENDED SEPTEMBER 30,
                                  (Unaudited)
                                                    1996          1995
                                                 -----------   -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                       $  (244,226)  $  (668,909)
                                                 -----------   -----------
  Adjustments to reconcile net loss to net
    cash provided by (used in) operating
    activities-
      Depreciation and amortization                  235,381       214,585
      Deferred tax provision (credit)                (38,312)     (133,022)
      Provision for bad debts                         25,002        50,000
      (Increase) decrease in current assets-
        Accounts receivable                           71,899        (6,994)
        Prepayments and supplies inventory           (53,435)     (182,636)
      Increase (decrease) in current liabilities-
        Accounts payable and accrued liabilities     (23,481)     (673,363)
        Outstanding winning tickets and refunds      775,038       201,754
        Accrued interest                               7,042         9,892
        Rent payable                                 127,990       499,730
                                                 -----------   -----------
           Total adjustments                       1,127,124       (20,054)
                                                 -----------   -----------
           Net cash provided by (used in)
             operating activities                    882,898      (688,963)
                                                 -----------   -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Decrease in notes receivable                         8,834        33,655
  Capital expenditures                               (14,918)      (60,592)
  Payments of telecommunication installation
    costs                                              -            (4,539)
                                                 -----------   -----------
     Net cash used in investing activities            (6,084)      (31,476)
                                                 -----------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Payments of capital lease obligations             (294,543)      (91,439)
  Payments on notes payable                          (77,657)
  Decrease in organizational costs                     -         1,000,000
                                                 -----------   -----------
     Net cash (used in) provided by financing
       activities                                   (372,200)      908,561
                                                 -----------   -----------
NET INCREASE IN CASH                                 504,614       188,122

CASH, beginning of period                            608,269       837,427
                                                 -----------   -----------
CASH, end of period                              $ 1,112,883   $ 1,025,549
                                                 ===========   ===========

(PAGE)39             EL COMANDANTE OPERATING COMPANY, INC.
                           STATEMENTS OF CASH FLOWS
                   FOR THE THREE MONTHS ENDED SEPTEMBER 30,
                                  (Unaudited)

                                  (continued)

                                                    1996          1995
                                                 -----------   ------------

SUPPLEMENTAL INFORMATION:
  Interest paid                                  $   164,253   $     81,631

NONCASH TRANSACTIONS:
  Equipment acquired through capital leases      $   148,504   $    184,113


































                  The accompanying notes are an integral part
                             of these statements.

(PAGE)40             EL COMANDANTE OPERATING COMPANY, INC.

                         NOTES TO FINANCIAL STATEMENTS


1.  BASIS OF PRESENTATION:

     El Comandante Operating Company ("ECOC") was created under Delaware law
as a 60% owned subsidiary of Housing Development Associates S.E. ("HDA"), a
Puerto Rico partnership, to operate El Comandante Race Track ("El
Comandante"), the only thoroughbred race track and off-track betting operation
in Puerto Rico.  El Comandante was acquired by HDA on December 14, 1989, and
ECOC leased El Comandante from HDA and started operations on that date. 

     On August 1, 1994, ECOC was reorganized by means of a merger into a
Puerto Rico nonstock corporation named El Comandante Operating Company, Inc.
(also referred to as "ECOC" or "New ECOC"), which became the surviving entity
(see Note 4).  An equity section is not presented in the financial statements
since New ECOC is a non-stock corporation.

     Interim Financial Statements

     The consolidated financial statements as of September 30, 1996 and for
the nine and the three month periods ended September 30, 1996 and 1995 are
unaudited but include all adjustments (consisting of normal recurring
adjustments) which management considers necessary for a fair presentation of
the results of operations of the interim periods.  The operating results for
the nine months ended September 30, 1996 are not necessarily indicative of the
results that may be expected for the year.



2.  SUMMARY OF ACCOUNTING POLICIES:

     Pervasiveness of Estimates

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

     New Pronouncements

     In 1995, ECOC implemented Statement of Financial Accounting Standards
("SFAS") No. 107, "Disclosures about Fair Value of Financial Instruments",
which requires disclosure of the fair value of certain financial instruments
(see Note 10).



(PAGE)41
     Commissions on Wagering

     ECOC earns commissions ("ECOC Commissions") on bets placed on El
Comandante's thoroughbred horse races through wagering facilities at El
Comandante and wagering facilities located at independently owned off-track
betting agencies throughout Puerto Rico, and from wagering on races
simulcasted outside Puerto Rico.  ECOC offers bettors win and place, daily
double, exacta, quiniela and pool wagering.  Commissions are based on
percentages of wagers established by law and vary for the different types of
wagers in Puerto Rico, as follows:  26% of daily double and pool wagers; 20%
of exacta and quiniela wagers; and 25% of losing wagers on win and place
wagers.  ECOC Commissions on wagers in Puerto Rico during the nine months
ended September 30, 1996 and 1995 averaged 21.23% and 20.42% , respectively. 
Commissions on simulcasted races are negotiated with wagering facilities
outside Puerto Rico.  ECOC Commissions on wagers on simulcasted races during
the nine months ended September 30, 1996 and 1995 averaged 6.16% and 6.42%,
respectively.

     Restricted Cash

     Restricted cash represents accumulated cash in the "Pool Pote" that is
paid out when there is a sole pool winner and a bonus amount which is added to
the pool payout on prizes of predetermined race days.   An amount is added to
the "Pool Pote" on every race day.  The corresponding payables are recorded as
part of the liability for outstanding winning tickets and refunds.

     Accounts Receivable

     Accounts receivable include balances from pool agents, simulcasting
commissions, fees earned under a management agreement described in Note 4 and
other miscellaneous amounts.  As of September 30, 1996 and December 31, 1995,
reserves for doubtful accounts amounted to $260,129 and $171,735,
respectively.

     Notes Receivable

     Notes receivable consist of unsecured short term loans to horse owners,
with interest of 2% over prime rate and with various maturity dates.  These
loans provide financing to horse owners to purchase horses as a means to
improve the quality of racing.  ECOC has advised the Confederacion Hipica de
Puerto Rico (the "Confederacion"), a horse owners' association, that its
credit line to all members of the Confederacion, as a group, will not exceed
$500,000 and it will not extend credit in excess of $50,000 to any single
owner, nor lend more than 80% of the purchase price of any horse. 

     Organizational Costs

     Legal fees and other costs incurred in the reorganization of ECOC into a
nonstock corporation were recorded as deferred costs and are amortized on a
straight-line basis over a period of five years that commenced on August 1,
1994.  Amortization expense for the nine months ended September 30, 1996 and
(PAGE)42
1995 was $6,255 in each period.

     Telecommunication Installation Costs

     These costs are related to the installation of telephone lines by Puerto
Rico Telephone Company ("PRTC") and to excise taxes on the off-track
telecommunication equipment.  The costs are amortized on a straight-line basis
over the remaining life of an agreement with PRTC expiring on April 1, 1999. 
Amortization expense for the nine months ended September 30, 1996 and 1995 was
$45,000 in each period.

     Noncompetition Agreement

     These costs are related to a Noncompetition Agreement entered into with
the majority owner of Supra and former President of ECOC which prohibits him
from investing or participating in horse racing operations anywhere in the
Caribbean for a period of three years from August 1, 1994.  The amount of
$750,000 payable under the agreement was recorded as a deferred cost and is
being amortized on a straight-line basis over the noncompete period. 
Amortization expense for the nine months ended September 30, 1996 and 1995 was
$187,500 in each period.

     Furniture and Equipment

     Furniture and equipment is stated at cost and depreciated on a
straight-line basis over their estimated useful lives, which range from 5 to
10 years.  Major replacements and improvements are capitalized and depreciated
over their estimated useful lives.
     
     Repairs and maintenance are charged to expense when incurred.  As of
September 30, 1996 and December 31, 1995, furniture and equipment was as
follows: 

                                           September 30,    December 31,
                                                1996            1995
                                             ----------     -----------
     Furniture                               $  379,938     $   338,314
     Equipment                                4,613,236       3,987,222
     Motor vehicles                             804,907         726,138
                                             ----------     -----------
                                              5,798,081       5,051,674
     Less - Accumulated depreciation          1,997,884       1,582,303
                                             ----------     -----------
                                             $3,800,197     $ 3,469,371
                                             ==========     ===========

     For information with respect to pledged assets, see Note 4.




(PAGE)43
3.  PENSION PLAN:

     ECOC has a non-contributory defined benefit pension plan covering
substantially all of its nonunion employees.  Benefits are based on the
employee's years of service and highest average earnings over five consecutive
years during the last 15 years of employment.  ECOC's policy is to fund an
amount not less than the ERISA minimum funding requirement or more than the
maximum deductible under the Puerto Rico tax law. 

     Actuarial reports are not prepared on an interim basis, therefore,
pension plan information for the interim periods is not available.


4.   THE OPERATING LICENSE, EL COMANDANTE LEASE AND OTHER COMMITMENTS:
     
     Operating License

     On December 15, 1989, the Puerto Rico Racing Board (the "Racing Board")
granted a license to ECOC to operate El Comandante, which will expire on
December 14, 2004 (the "Operating License").  The Operating License provides
ECOC with:  (1) the exclusive right to operate a race track in the area of
Puerto Rico known as the San Juan Region, which approximates the northern half
of Puerto Rico, as delineated in maps produced by the Puerto Rico Planning
Board and Government Development Administration; (2) the exclusive right to
conduct all types of authorized betting, both at El Comandante and off-track,
anywhere in Puerto Rico, based on races held at El Comandante; and (3) the
right to hold a minimum of 180 day or night race days per year.  The Operating
License requires payment by ECOC of an annual license fee, currently $250,000.

     Upon its expiration in December 2004, there can be no assurance that a
new Operating License will be issued to ECOC if ECOC's lease of El Comandante
is extended beyond that date.  However, ECOC and its predecessor, San Juan
Racing Association, Inc., have continuously operated the only thoroughbred
racing facility in Puerto Rico since 1957. 

     El Comandante's horse racing and pari-mutuel wagering operations are
subject to substantial government regulation.  Pursuant to the Puerto Rico
Horse Racing Industry and Sport Act (the "Racing Act"), the Racing Board and
the Puerto Rico Racing Administrator (the "Racing Administrator") exercise
significant regulatory control over ECOC's racing and wagering operations. 
For example, the Racing Administrator determines the monthly racing program
for El Comandante and approves the number of annual race days in excess of the
statutory minimum of 180.  The Racing Act also apportions payments of the
wagering handle, and thus, through legislation, the Racing Act could be
amended to reduce the share of monies wagered that would be available as ECOC
Commissions.  The Racing Board consists of three persons appointed to four-
year terms by the Governor of Puerto Rico.  The Racing Administrator is also
appointed by the Governor for a four-year term.
     


(PAGE)44
     El Comandante Lease

     HDA has leased El Comandante to ECOC under a lease agreement (the "El
Comandante Lease") for a term of 15 years ending December 14, 2004.  The El
Comandante Lease provides for payment of rent consisting of 25% of the annual
ECOC Commissions ("Basic Rent"), but in no event less than $7,500,000
("Minimum Basic Rent") adjusted annually with a base year of 1989 by the
percentage increase in the Consumer Price Index ("CPI") for the calendar year
over the CPI for the previous calendar year.  The El Comandante Lease also
obligated ECOC to pay additional annual fixed rent ("Fixed Rent") of $150,000
in 1994 and $400,000 in 1995.  An amendment to the El Comandante Lease
eliminated Fixed Rent effective January 1, 1996. 

     The El Comandante Lease also requires ECOC to establish and fund with
certain excess cash flow a rent escrow (the "Rent Escrow") until the Rent
Escrow equals one half of the Minimum Basic Rent for that year.  For purposes
of determining the required deposits to the Rent Escrow, excess cash flow
means, after ECOC has a cash balance of $700,000 for working capital
(excluding restricted cash and payables to winning bettors), all cash flow of
ECOC in excess of $300,000 per year, provided that the $300,000 threshold
shall be increased by $100,000 for each $1 million by which the Rent Escrow
exceeds $3 million.  Funds held in the Rent Escrow may be released to make up
any difference between rent payments made by ECOC and the rent due and payable
under the El Comandante Lease.  After deposits into the Rent Escrow, payments
of Fixed Rent and donations in accordance with New ECOC's certificate of
incorporation aggregating $3 million have been made, additional deposits to
the Rent Escrow are subordinated to the obligations to Supra, Supra's majority
owner and Interstate General Properties Limited Partnership S.E. ("IGP"), as
discussed below under "Reorganization of ECOC".  As of September 30, 1996, no
deposits have been made into the  Rent Escrow.

     The El Comandante Lease provides for ECOC to pay all El Comandante
expenses except that, effective January 1, 1996, the new amendment to the El
Comandante Lease requires HDA to pay real property taxes on El Comandante. 
The El Comandante Lease also contains certain covenants of ECOC including
obligations to spend not less than $500,000 per calendar year, adjusted from a
base year of 1993 according to the CPI, to repair and maintain El Comandante
and related facilities; financial reporting requirements; insurance
requirements; compliance with laws; limitations on indebtedness; limitations
on liens; limitations on other activities; limitations on affiliate
transactions; acceptance of IGP consulting services; and acceptance of
amendments necessary to maintain  HDA's tax status.  ECOC granted a security
interest in substantially all of its assets (excluding cash, but including the
Rent Escrow) to HDA to secure ECOC's obligations under the El Comandante
Lease, which security interest was then assigned as additional security for
first mortgage notes of HDA.  If the El Comandante Lease is terminated prior
to December 2004, ECOC will assign its Operating License to HDA to the extent
permitted by law and sell at book value its equipment to HDA.   

     The El Comandante Lease provides for renegotiation of the Basic Rent,
Fixed Rent and the Rent Escrow provisions with the results of such
(PAGE)45
renegotiation to be effective on January 1, 1998. 

     Reorganization of ECOC

     On December 13, 1993, ECOC entered into a series of agreements with Supra
and its majority owner ("Supra Agreements") incident to the reorganization of
ECOC as a Puerto Rico nonstock corporation (the "ECOC Reorganization").  The
Supra Agreements provide for ECOC to pay accrued interest and principal on an
outstanding note payable to Supra (see Note 7) in the principal amount of
$200,000, to purchase ECOC's stock owned by Supra for $1,000,000 and to pay
$500,000 to Supra and Supra's majority owner as compensation for past services
rendered in connection with management of ECOC.  On December 15, 1993, IGP
purchased from Supra an 80% interest in the $200,000 note.

     In addition, the majority owner of Supra and former President of ECOC
entered into a Noncompetition Agreement that became effective upon the ECOC
Reorganization and prohibits him from investing or participating in horse
racing operations anywhere in the Caribbean for a period of three years.  The
Noncompetition Agreement provides for payment of $750,000.  

     The obligations under the Supra Agreements and Noncompetition Agreement
are subordinated to ECOC's working capital cash balance of $700,000, excluding
restricted cash and payables to winning bettors, and to payments aggregating
$3 million for Fixed Rent payable to HDA, deposits into the Rent Escrow and
donations of $300,000 per year.  Thereafter, until the obligations are paid,
Supra and its majority owner will have priority on ECOC's Excess Cash Flow, as
defined in the Supra Agreements, after payment of the Basic Rent, provided
that ECOC has a working capital cash balance of at least $700,000.  No
payments of these obligations have been made as of September 30, 1996.
     
     On August 1, 1994, after HDA obtained the necessary approvals from the
Racing Board, the ECOC Reorganization was completed as follows:  (i) ECOC
assigned the rights under the Supra Agreements and Noncompetition Agreement to
a Puerto Rico nonstock corporation, El Comandante Operating Company, Inc.
("New ECOC"), which assumed the obligations to Supra and its majority owner
and became a 40% owner of ECOC; (ii) HDA contributed its 60% interest in ECOC
to ECOC's capital and consequently, New ECOC became the 100% owner of ECOC;
and (iii) ECOC was merged into New ECOC, which became the surviving entity and
continues the same business conducted by ECOC and assumed all of ECOC's
responsibilities under the El Comandante Lease and the Operating License.  At
the time of the ECOC Reorganization, ECOC recorded additional obligations of
$1,750,000 to Supra and its majority owner for the purchase price of ECOC's
stock owned by Supra and the amount payable under the Noncompetition
Agreement.  New ECOC's certificate of incorporation requires New ECOC to
distribute its net cash flow (after payment of rent and operating expenses,
taxes, certain obligations to Supra and funding of working capital) for
charitable, educational and other matters of public interest in Puerto Rico.

     Consulting Agreement

     Pursuant to a consulting agreement between ECOC and IGP executed on
(PAGE)46
December 15, 1993 (the "Consulting Agreement") and as required under the El
Comandante Lease, ECOC retained as executive management three racing
consultants then employed by IGP.  Except for approximately 14% of the salary
and related payroll costs of one consultant, ECOC reimburses all of payroll,
bonus and fringe benefit costs with respects to the employment of the
consultants.  On April 22, 1996, IGP assigned its interest in the Consulting
Agreement to Equus Management Company ("EMC") and the three racing consultants
became employees of EMC.  Fees incurred by ECOC pursuant to the Consulting
Agreement during the nine months ended September 30, 1996 and 1995 were
$539,043 and $530,449, respectively.

     Horse Owners' Agreement and Service Agreement

     ECOC has an agreement with the Confederacion whereby 50% of wagering
commissions received by ECOC on races held at El Comandante are to be paid to
the Confederacion through April 1, 1998, plus a fixed amount of $50,000
annually from 1989 to 1992, and $55,000 from 1993 to 1998.  The Confederacion
also receives a minimum of $500 per race day for ECOC's wagering commissions
on El Comandante races simulcasted outside Puerto Rico ("Simulcasting
Commissions") and will commence to receive 50% of Simulcasting Commissions
when these commissions exceed simulcasting expenses plus $500.

     ECOC receives wagering services, software and equipment under a service
agreement effective through March 15, 2005.  The service agreement requires
minimum annual payments which consist of the greater of $800,800 annually or
 .65% (.0065) of total wagering.  The Confederacion agreed to reimburse ECOC an
amount equal to .325% (.00325) of wagering for each race day up to a maximum
of $3,461 per race day until April 1998 and subject to a maximum contribution
per annum.

     Management Services Agreement

     ECOC provides executive management services to Galapagos, S.A.
("Galapagos"), a subsidiary of HDA, pursuant to a management agreement
effective September 28, 1994.  Fees are the lesser of (i) 1% of amounts
wagered on races run at the government owned V Centenario Race Track in the
Dominican Republic which is operated by Galapagos, and on El Comandante races
simulcasted  in the Dominican Republic or (ii) $250,000 annually, adjusted by
CPI commencing January 1996.  During the nine months ended September 30, 1996
and 1995, ECOC earned fees of $175,219 and $80,395, respectively.  Galapagos
also reimburses ECOC for out-of-pocket expenses related to the services.

     Television Contracts

     Pursuant to an agreement between a subsidiary of HDA, S & E Network  Inc.
("S&E"), and ECOC effective January 1995, S&E was producing and broadcasting a
four-hour television program for all races run at El Comandante for a maximum
of 208 race days per year (the "Television Contract").  The Television
Contract was originally for ten years to December 2004, but was replaced by a
new agreement effective February 1, 1996 (the "New Contract").  The Television
Contract required fixed monthly payments by ECOC to S&E of $56,000.  S&E was
(PAGE)47
entitled to revenues from sales of advertising time.  ECOC agreed to pay up to
$150,000 for certain improvements to provide facilities at El Comandante for
S&E's television studio, production and administration space at no cost to S&E
as long as S&E broadcasts the television program for ECOC.

     Pursuant to the New Contract, ECOC purchases a minimum of 910 hours of
television time annually from S&E at $725 per hour (minimum annual amount of
$659,750), adjusted annually by CPI.  If ECOC needs television time after 7:00
PM, the cost per hour will be $900, also subject to CPI adjustments.  ECOC is
now responsible for producing and directing the broadcasts and is entitled to
the revenues from its sales of advertising time during the broadcasts of the
racing program.  The term of the New Contract expires January 31, 2000, but is
renewable for successive one year terms at ECOC's option.

     ECOC provides certain administrative, maintenance, security and utility
services for which S&E pays $2,000 per month, adjusted annually by CPI.



5.  CAPITAL LEASE OBLIGATIONS:

     ECOC has entered into certain equipment lease agreements during the
normal course of business which have been classified as capital leases.  The
present value of future minimum lease payments under capital leases is as
follows:

     Due during year
     ending September 30,

          1997...........................................$  680,156   
          1998...........................................   635,172
          1999...........................................   447,820
          2000...........................................   154,805
                                                         ----------
          Minimum lease payments......................... 1,917,953
          Less  - Current portion........................   680,156
                                                         ----------
                                                         $1,237,797
                                                         ==========

6.  PAYABLE TO HOUSING DEVELOPMENT ASSOCIATES S.E.:

     Payable to HDA as of September 30, 1996 and December 31, 1995 consists of
(i) a note payable and accrued interest of $873,457 and $1,020,164,
respectively, and (ii) unpaid rent under the El Comandante Lease.  The note
accrues interest at 5.75% and is payable in monthly installments of $30,309,
including interest, over a three year period that commenced May 1, 1996.




(PAGE)48
7.  OTHER LIABILITIES:

     Other liabilities consist of unsecured notes of $160,000 to IGP and
$40,000 to Supra, including accrued interest, and $500,000 of accrued past
service costs payable to Supra and Supra's majority owner under the Supra
Agreements.  They also include $1,750,000 payable to Supra and Supra's
majority owner for the purchase of ECOC's stock and for the amount payable
under the Noncompetition Agreement.  The unsecured notes bear interest at 2.5%
over the prime rate, without a stated maturity date.  The interest rate at
September 30, 1996 and December 31, 1995 was 10.50% and 11%, respectively.



8.  INCOME TAXES:

     As of January 1, 1993, ECOC adopted the provisions of SFAS No. 109,
"Accounting for Income Taxes", and recorded a deferred tax asset of $345,000,
net of a valuation allowance of $1,055,000.  This asset resulted from net
operating loss carryforwards ("NOL") which are available to offset future
taxable income and expire in various dates through 2001.

     Deferred tax assets of $611,319 and $558,137, net of valuation allowances
of $1,342,047 and $1,419,433, were recorded as of September 30, 1996 and
December 31, 1995, respectively.  These assets arise from the difference
between the tax basis of certain liabilities and their reported amounts in the
financial statements (which will result in deductible amounts in future years
when such liabilities are finally settled) and from the benefits of NOL.

     The deferred credit for income taxes for the nine months ended September
30, 1996 is net of a decrease in the valuation allowance of $77,386 and the
deferred credit for income taxes for the nine months ended September 30, 1995
is net of an increase in the valuation allowance of $175,440.

9.  LEGAL PROCEEDINGS:

     ECOC has been named as a defendant in various lawsuits arising out of its
normal business operations, including employment-related claims.  Based upon
facts available to date, management and legal counsel believe that none of
such actions will have a material adverse effect on ECOC's financial position
or results of operations.


10.  DISCLOSURE OF FAIR VALUE OF FINANCIAL INSTRUMENTS:

     SFAS No. 107 requires disclosure of the fair value of certain financial
instruments, including cash, evidence of ownership interests in other entities
and contracts that impose either  and obligation to deliver a financial
instrument or cash such as loans or notes payable, or a right to receive a
financial instrument or cash such as loans or notes receivable.  The estimated
fair values of ECOC's financial instruments are as follows:

(PAGE)49                        September 30, 1996      December 31, 1995
                             ------------------------ ------------------------
                                          Carrying                  Carrying
                             Fair Value   Value       Fair Value    Value
                             -----------  ----------- -----------   ----------

Cash                         $ 1,112,883  $ 1,112,883 $ 2,883,447   $2,883,447
Note receivable                  418,112      418,112     310,944      310,944
Capital lease obligations      1,917,953    1,917,953   1,879,090    1,879,090
Payable to HDA -
  Note and accrued interest      920,000      873,457     940,000    1,020,164
Other liabilities              2,589,998    2,589,998   2,574,902    2,574,902


     The carrying value of cash approximates fair value because of the liquid
nature of these assets.  The carrying value of the notes receivable
approximates fair value because these notes bear interest at a rate higher
than prime rate.  The carrying value of the capital lease obligations
approximates fair value because these obligations bear interest at market. 
The note payable to HDA bears interest at a rate lower than prime rate and
accordingly, was discounted based on the expected payment date assuming an
interest rate of 10.5%.  For other liabilities the carrying value approximates
fair value.





























(PAGE)50                   EQUUS MANAGEMENT COMPANY

                                 BALANCE SHEET

                              SEPTEMBER 30, 1996

                                  (unaudited)


                                    ASSETS

Cash                                                             $111,319 

Receivables                                                       278,893 

Other                                                               2,164 
                                                                ----------
                                                                 $394,376 
                                                                ==========


                     LIABILITIES AND STOCKHOLDER'S DEFICIT

Accounts payable and accrued liabilities                         $443,148 
                                                                ----------

Stockholder's deficit:
  Common stock, $.01 par value, 100 shares authorized,
    issued and outstanding                                              1 
  Additional paid-in capital                                           99 
  Distributions to stockholder                                    (29,818)
  Accumulated deficit                                             (19,054)
                                                                ----------
                                                                  (48,772)
                                                                ----------
                                                                 $394,376 
                                                                ==========














      The accompanying notes are an integral part of this balance sheet.
(PAGE)51                   EQUUS MANAGEMENT COMPANY

                            NOTES TO BALANCE SHEET
                              SEPTEMBER 30, 1996



1.   ORGANIZATION:

     Equus Management Company ("EMC") was organized on July 29, 1994 as a
Delaware corporation and a wholly owned subsidiary of Interstate General
Company L.P. ("IGC").


2.   INVESTMENT IN EQUUS GAMING COMPANY L.P.:

     Shortly after its organization, IGC transferred to EMC a 0.99% general
partnership interest and 0.01% limited partnership interest in Equus Gaming
Company L.P. (the "Company") as a capital contribution and EMC was admitted as
a general partner and a limited partner of the Company.  IGC retained a 98.99%
limited partnership interest in the Company.

     EMC distributed to IGC its 0.01% limited partnership interest, which
permitted IGC to distribute to its unitholders a 99% limited partnership
interest in the Company.

     Because EMC has a general partnership interest, it accounts for its
investment in the Company under the equity method of accounting.  Since the
investment in the Company has been written down below zero due to EMC's share
of the Company's losses and distributions received from the Company, the
negative investment account balance is classified as accrued liabilities in
the accompanying balance sheet.


3.  OPERATIONS

     EMC has full and exclusive responsibility and authority to manage the
business and operations of the Company except as otherwise provided in the
partnership agreement of the Company.  EMC is reimbursed for its independent
director's fees and expenses and reasonable out-of-pocket costs incurred to
third parties in connection with the management of the Company and for
administrative services that EMC renders to the Company to the extent that
such expenses exceed EMC's share in the Company's cash distributions.

     IGC provides certain support services to EMC and the Company pursuant to
a three-year support agreement effective as of February 6, 1996 and the
Company reimburses IGC for expenses incurred in providing such services. 
Commencing August 1996 the scope of the service rendered by IGC were reduced
when EMC employed two former executives of IGC and EMC is now providing
administrative services to the Company.  These executives also provide
services to a subsidiary of IGC and EMC is reimbursed for these costs.

(PAGE)52
     A subsidiary of IGC provided management services to Housing Development
Associates S.E. ("HDA"), an 82% owned subsidiary of the Company, pursuant to a
management agreement which was assigned to EMC effective August 1996.  The
management agreement ends on December 31, 2004 and provides for fees of
$250,000 per annum payable monthly in equal installements, with annual CPI
adjustments after 1993.

     Until April 1996, a subsidiary of IGC provided three racing consultants
as executive management to El Comandante Operating Company, Inc. ("ECOC")
which leases El Comandante Race Track from HDA.  The consulting services were
provided pursuant to a consulting agreement which the IGC subsidiary assigned
to EMC in April 1996, at which time the racing consultants became employees of
EMC.  The consulting agreement requires ECOC to reimburse to EMC all of EMC's
payroll costs, fringe benefits and out-of-pocket costs with respect to the
racing consultants, except for approximately 14% of the compensation of one of
the consultants which is paid by the Company.  The ECOC-HDA lease agreement
requires ECOC to retain the services of the racing consultants as set forth in
the consulting agreement.

































(PAGE)53
PART I -- ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS


INTRODUCTION

     Equus Gaming Company L.P. (the "Company") was formed initially on
September 17, 1993 as a general partnership between Interstate General Company
L.P. ("IGC") and one of its general partners, Interstate Business Corporation
("IBC").  Through a series of transactions completed on August 2, 1994, the
Company was restructured as a Virginia limited partnership between IGC and its
wholly owned subsidiary, Equus Management Company ("EMC"), for the purpose of
succeeding to substantially all of IGC's ownership interest in real estate
assets employed in thoroughbred racing and related wagering businesses.  In
connection with the restructuring, the Company became the owner of a 67%
profits interest in Housing Development Associates S.E. ("HDA").  On February
6, 1995, IGC distributed to its unitholders 5,128,372 Class A Units ("Units")
representing in the aggregate beneficial assignment of a 99% Class A limited
partnership interest in the Company (the "Distribution").   On March 8, 1995
an additional 1,205,245 Units were issued by the Company to HDA Management
Corporation ("HDAMC") in exchange for a 15% profits interest in HDA.

     The Company's principal income producing asset is an 82% interest in HDA
in which it is a co-managing partner.  HDA owns El Comandante Race Track ("El
Comandante"), the only licensed thoroughbred racing facility in Puerto Rico,
which it leases to El Comandante Operating Company, Inc., a Puerto Rico
nonstock corporation ("ECOC").  ECOC operates El Comandante at its expense and
pays rent to HDA based upon 25% of ECOC's share of wagering revenues.  The
lease agreement between ECOC and HDA (the "El Comandante Lease") expires on
December 14, 2004.  HDA also owns 55% of the capital stock of Galapagos, S.A.
("Galapagos"), a Dominican Republic corporation that leases and since April
29, 1995 operates V Centenario Race Track, a government-owned racing facility
in the Dominican Republic ("V Centenario").  On August 30, 1996 HDA closed the
sale to Paxson Communications of San Juan, Inc. ("Paxson") of a 50% interest
in its wholly owned subsidiary, S & E Network Inc. ("S&E"), a Puerto Rico
corporation that owns and operates since 1995 three 3 UHF television stations
in Puerto Rico (the "Television Stations").  On November 12, 1996, HDA entered
into an agreement to sell to Paxson its remaining 50% interest in S&E, subject
to receiving approval of the Federal Communications Commission ("FCC").  If
approved, the transaction is expected to close in late 1996 or early 1997.

     The Company also owns 100% of the issued and outstanding stock of
Virginia Jockey Club Inc., a Virginia corporation ("VJC"), which applied to
the Virginia Racing Commission for licenses to own and operate a thoroughbred
horse racing and wagering facility in Virginia.  On October 12, 1994, the
Virginia Racing Commission awarded the Virginia licenses to an applicant other
than VJC.  VJC appealed the decision of the Virginia Racing Commission to the
Circuit Court of Richmond which affirmed the award to the other applicant and
then to the Virginia Court of Appeals which, in April 1996, also affirmed the
(PAGE)54
award.  The Company does not intend to file any further appeals and VJC is now
an inactive company.

     The Company does not have any employees.  IGC provides support services
pursuant to a Master Support and Services Agreement ("Support Agreement"). 
Commencing August 1996 the scope of services rendered by IGC was reduced and
EMC now provides administrative support services and is reimbursed by the
Company for its costs in excess EMC's share of cash distributions that it
receives from the Company.

     Prior to March 8, 1995 generally accepted accounting principles did not
permit the Company to consolidate the accounts of HDA in the Company's
financial statements because HDAMC had the right to approve any sale or
disposition of HDA's assets in excess of $500,000 and the incurrence of any
debt in excess of $1 million.  On March 8, 1995, HDA's partnership agreement
was amended to eliminate these approval rights of HDAMC, and commencing as of
that date the accounts of HDA and its consolidated subsidiaries have been
consolidated with the Company's accounts.

     This section reflects Management's discussion and analysis of the
financial condition and results of operations of (i) the Company and its
consolidated subsidiaries, VJC and HDA, as of and for the nine and three month
periods ending September 30, 1996 and 1995 (HDA accounts were consolidated
with the Company's accounts for the period after March 8, 1995) and (ii) the
Company and its consolidated subsidiaries, VJC and HDA, based on proforma
statements of income for the nine month periods ended September 30, 1996
(historical) and 1995 (proforma) presented in Note 16 to the consolidated
financial statements of the Company.


The Company's Results of Operations

Nine Months Ended September 30, 1996 Compared to the Nine Months Ended
September 30, 1995

     The Company did not consolidate the accounts of HDA until March 8, 1995.
Accordingly, the Company's historical results of operations for the nine month
periods ended September 30, 1996 and 1995 are not readily comparable and the
discussion below is limited to a comparison of revenues and expenses of the
Company and VJC for these nine month periods.  More meaningful comparative
information for these nine month periods is included elsewhere in this report
in Management's Discussion of the Company's Proforma Results of Operations
since that discussion also includes results of operations of HDA for the nine
month periods ended September 30, 1996 and 1995. 

     Revenues.   With the exception of a cash distribution of $134,000
received from HDA in February 1995 and $2,500 of interest income in 1996, the
revenues of the Company in its consolidated statements of income for the nine
months ended September 30, 1996 and 1995 are entirely from the consolidation
of the accounts of HDA.  Because the Company had a zero investment in HDA when
the cash distribution of $134,000 was received in February 1995 and since the
(PAGE)55
distribution was received prior to the consolidation of HDA's accounts as of
March 8, 1995, the distribution represented revenue to the Company that was
not eliminated in the consolidated financial statements.

     Expenses, other than Income Taxes.  Substantially all of the expenses,
other than income taxes, in the consolidated statements of income of the
Company for the nine month periods ended September 30, 1996 and 1995 are HDA
expenses from January 1, 1996 to September 30, 1996 and from March 8, 1995 to
September 30, 1995.  

     Expenses of the Company and its subsidiary VJC during the nine month
periods ended September 30, 1996 and 1995, and excluding the expenses of HDA
and its subsidiaries, were as follows:

     a.  Interest and amortization of financing costs were $56,000 in the 1996

         period and $45,000 in the 1995 period related to a bank loan closed  

         March 1995 and renegotiated in May 1996;

     b.  Depreciation of $155,000 in the 1996 period and $117,000 in the 1995 

         period related to a step-up of $5,650,000 in El Comandante assets.   

         The step-up is the value assigned to HDAMC's interest in HDA which   

         was transferred to the Company in March 1995 in exchange for limited 

         partnership Units of the Company;

     c.  General and administrative expenses were $523,000 in the nine months 

         ended September 30, 1996 and $599,000 in the comparable period of    

         1995.  The decrease of $76,000 resulted primarily from reductions in 

         VJC appeal costs of $69,000, costs of IGC and EMC support services of

         $21,000 and $31,000 in costs of investigating new business           

         opportunities, partially offset by increases in legal, accounting and

         consulting fees of $45,000 and Directors' fees and expenses of       

         $22,000.

     Provision for Income Taxes.  The Company is subject to Puerto Rico income
tax at a 29% rate on its allocable share of HDA's taxable income and an HDA
subsidiary is subject to Federal income taxes.  HDA had previously provided
for deferred Dominican Republic income taxes on interest accrued on loans to
Galapagos.  The accrued interest was forgiven in 1996 and a tax credit was
(PAGE)56
recorded for reversal of the deferred tax provision applicable to the forgiven
interest.  The net provisions for income taxes of $619,000 and $209,000 in the
nine month periods ended September 30, 1996 and 1995 were as follows:

                                                      1996           1995
                                                     Period         Period
                                                  ------------   ------------

     Puerto Rico income taxes of the Company 
       Current                                    $    153,000   $    216,000
       Deferred                                        480,000        (12,000)
     Dominican Republic income tax credit of HDA       (19,000)          -
     Federal income taxes of HDA subsidiary              5,000          5,000
                                                  ------------   ------------
                                                  $    619,000   $    209,000
                                                  ============   ============
     Minority Interest.  Minority partners own 18% of HDA and minority
stockholders hold a 45% interest in Galapagos.  As explained in Note 1 to the
Company's consolidated financial statements, the Company did not recognize the
18% minority partners' share of HDA's net income until such time as the
accumulated deficit of HDA at December 31, 1994 was eliminated by earnings of
HDA in the nine months ended September 30, 1995.  The minority interest in the
nine month periods ended September 30, 1996 and 1995 is comprised of the
following:


                                              1996             1995
                                             Period           Period
                                          -------------    -------------
     Minority stockholders' share of
       losses of Galapagos                $(    471,000)   $(    483,000)
     Minority partners' share of 
       income of HDA after accumulated
       deficit was eliminated by
       HDA's earnings in the 1995 period        379,000           72,000
                                          -------------    -------------
                                          $(     92,000)   $(    411,000)
                                          =============    =============


Three Months Ended September 30, 1996 Compared to the Three Months Ended
September 30, 1995

     Revenues.   The revenues of the Company for the three months ended
September 30, 1996 and 1995, except for interest income of $1,500 and $1,000,
respectively, are entirely from the consolidation of the accounts of HDA in
the Company's financial statements.  Revenues increased $895,000 to $5,566,000
in the three months ended September 30, 1996 from $4,671,000 in the comparable
period in 1995.  The increase resulted primarily from a gain of $581,000 in
the 1996 period from the sale of 50% interest in S&E and increases in revenues
of $140,000 from the Television Stations and $126,000 from El Comandante
(PAGE)57
rental income. 

     Rental income from El Comandante.   Rental income from El Comandante
increased $126,000 to $3,328,000 in the three months ended September 30, 1996
from $3,202,000 in the comparable period of 1995.  Rental income in the 1996
quarter was based on 25% of ECOC's commissions of $13,315,000 from El
Comandante wagering on 65 racing days, whereas 1995 rental income was based on
25% of ECOC's commissions of $12,407,000 from wagering on 49 racing days, plus
fixed rent of $100,000.  In February 1996, ECOC commenced racing five days a
week by adding Thursday to its previous four-day race week.  Although the
average daily commissions earned by ECOC declined in the 1996 quarter, the
commissions earned on Thursday race days more than offset the decline in
average daily commissions.

     Due to a combination of unanticipated regulatory actions and weather
emergencies affecting Puerto Rico racing operations and wagering in 1995, ECOC
requested, and HDA granted, relief from payment of certain future lease
obligations.  As a result the El Comandante Lease was amended effective
January 1, 1996 to eliminate fixed rent after 1995 and HDA assumed
responsibility for paying El Comandante real property taxes due and payable
after December 31, 1995.

     Dominican Republic Racing Revenues.   Galapagos began simulcasting El
Comandante races on February 27, 1995 to several sports betting agencies in
the Dominican Republic, and earned commissions on wagering on El Comandante
races of $310,000 in the three months ended September 30, 1996 and $284,000 in
the comparable three months of 1995.  Galapagos commenced racing operations at
V Centenario in late April 1995 and earned commissions on V Centenario races
of $727,000 in the three months ended September 30, 1996 and $633,000 in the
comparable three months of 1995.  

     Revenues from Television Stations.   In August 1996 HDA closed a sale to
Paxson of a 50% interest in S&E (see "Introduction") and Paxson is now
responsible for managing the Television Stations.  Paxson and S&E previously
entered into a Time Brokerage Agreement which commenced February 1996 and
terminated upon the closing of the sale.  Pursuant to the terms of this
agreement, Paxson paid fees of $23,333 monthly to S&E from February through
August 1996, provided programming, including infomercials, and certain other
services to S&E and was entitled to 50% of S&E's operating cash flow from
February through August 1996.

     Commencing September 1996, the accounts of S&E are not included in HDA's
consolidated financial statements since its ownership interest in S&E is now
50% and Paxson manages the operations of S&E and is responsible for making
operating loans to S&E, if required.  Consequently, commencing September 1996
HDA accounts for its investment in S&E under the equity method and therefore
recognizes in its financial statements a 50% share in net income or loss of
S&E.

     S&E earned broadcasting fees and advertising revenues of $370,000 in the
three months ended September 30, 1995.  As a result of the changes in
(PAGE)58
broadcasting and programming formats pursuant to the Time Brokerage Agreement
with Paxson which commenced February 1996 and terminated August 1996, S&E
increased its revenues to $504,000 for the two months ended August 1996.  HDA
recognized revenues of $7,000 for its share of September 1996 earnings of S&E.

The revenues included fees of $118,000 in the two months ended August 1996 and
$168,000 in the three months ended September 1995 from ECOC for broadcasting a
four-hour program for races run at El Comandante and fees from Paxson of
$47,000 for July and August 1996 pursuant to the Time Brokerage Agreement.

     Interest Income.   Interest income was $61,000 in the three months ended
September 30, 1996, including interest income of $13,000 on its note
receivable from ECOC and $46,000 from short term investments; in the
comparable 1995 period interest income was $11,000, including interest of
$6,000 on the ECOC note receivable and $4,000 from short-term investments.

     Gain on Sale of 50% Interest in Television Stations.  On August 30, 1996
HDA closed the sale of 50% interest in S&E.  The sales price was $4 million,
and a gain of $581,000 was recorded for this sale in the three months ended
September 1996.  The costs of this sale included approximately $1.5 million
for employee severance payments, costs to cancel certain contracts, write-off
of deferred costs not recoverable under the revised broadcasting and
programming format, legal, accounting and investment bankers' fees, and
consent fees to holders of First Mortgage Notes for approving the transaction.

     Financial Expenses.   Financial expenses in the three months ended
September 30, 1996 increased to $2,258,000 from $2,252,000 in the three months
ended September 30, 1995.  The principal changes between periods were interest
expense in 1996 of $50,000 on capital leases of Galapagos and the Television
Stations versus interest expense of $11,000 in the 1995 period for the leases
which commenced in September 1995, and a decrease in interest expense of
$28,000 on loans from minority stockholders of Galapagos.  The stockholders of
Galapagos converted their loans to capital in 1996 and forgave accrued
interest on their loans.  The 1995 three-month period included interest
expense of $28,000 on the loans and no interest expense was recorded in the
1996 period.

     Depreciation.   There was no significant change in depreciation which was
$606,000 in the three months ended September 30, 1996  and $602,000 in the
comparable three months of 1995.

     General and Administrative Expenses.  General and administrative expenses
increased to $387,000 in the three months ended September 30, 1996 from
$365,000 in the comparable three months of 1995.  The increase was caused by
El Comandante property taxes of $158,000 in the 1996 period and none in the
1995 period, partially offset by decreases in investor relations expenses of
$28,000, VJC appeal costs of $43,000, IGC and EMC support services of $21,000
and costs of $32,000 of investigating new business opportunities.

     Operating Costs of Dominican Republic Racing.  A portion of the wagering
in the Dominican Republic is set aside and reserved to cover losses from
(PAGE)59
currency fluctuations and for other purposes approved by the Dominican
Republic Racing Commission ("Required Reserves").  Commencing April 1996, the
Dominican Republic approved the use of Required Reserves for certain marketing
costs and $183,000 of such reserves were used in the three months ended
September 30, 1996.  Operating costs of Dominican Republic racing were
$1,381,000 in the three months ended September 30, 1996, net of the $183,000
credit for marketing costs, and $1,504,000 in the three months ended September
30, 1995.

     Operating Costs of Television Stations.   Operating costs of the
Television Stations were $378,000 in the two months ended August 1996 (S&E's
accounts were not consolidated after August 1996) and $848,000 in the three
months ended September 30, 1995.  The change in the broadcasting and
programming format which commenced in February 1996 resulted in significant
reductions in operating costs.  As a result, there was only $6,000 of
production and programming costs in the 1996 two-month period, whereas the
1995 three-month period included $450,000 of such costs.

     Provision for Income Taxes.   HDA qualifies as a special partnership
under the Puerto Rico Internal Revenue Code and therefore is not subject to
taxation in Puerto Rico at the HDA level.  Instead, HDA's partners are taxed
on their allocable share of HDA's taxable income.  The Company is subject to
Puerto Rico taxes at a 29% rate on its share of HDA's taxable income.  An HDA
subsidiary is subject to federal income taxes.  The net provisions (credit)
for income taxes in the three month periods ended September 30, 1996 and 1995
were as follows:

                                             1996             1995
                                             Period           Period
                                             ------------     ------------
Puerto Rico income taxes of the Company -
     Current                                 $     81,000     $     47,000
     Deferred                                     194,000          (64,000)
Federal income taxes of HDA subsidiary              1,000            3,000
                                             ------------     ------------
                                             $    276,000     $    (14,000)
                                             ============     ============

     Minority Interest.    Minority partners own 18% of HDA and minority
stockholders hold a 45% interest in Galapagos.  The minority interest in the
three months ended September 30, 1996 was $33,000, comprised of minority
stockholders' $198,000 share of losses of Galapagos, less minority partners'
$165,000 share of income of HDA.  The minority interest in the three months
ended September 30, 1995 was $340,000, comprised of minority partners' $70,000
share of losses of HDA and minority stockholders' $270,000 share of losses of
Galapagos.


     Liquidity and Capital Resources of the Company

     This discussion relates solely to the liquidity and capital resources of
(PAGE)60
the Company and VJC.  Liquidity and capital resources of HDA and its
subsidiaries is discussed below under "Liquidity and Capital Resources of
HDA".  HDA is forecasting $5.4 million of cash flow in 1996 after
distributions to its partners.

     The Company's principal cash needs are income taxes, principal and
interest on a bank loan, and general and administrative expenses.  The
Company's 1996 cash requirement is estimated to be approximately $1.3 million
without considering any payments of loans from IGC, a general partner of the
Company, which amounted to $212,000 at December 31, 1995 and $464,000 at
September 30, 1996.
     
     The Company's principal sources of cash to meet its obligations have been
distributions related to its 82% interest in HDA, a bank loan discussed below
and loans from IGC.   Indenture restrictions presently limit HDA's ability to
make distributions ("Permitted Distributions") to its partners, including the
Company, to approximately 48% of HDA's cumulative consolidated net income
since January 1, 1994 (see Note 6 to the Company's Consolidated Financial
Statements). 


     The Company borrowed $850,000 in 1995 from a bank in Puerto Rico.  The
bank loan was payable in quarterly installments of $100,000 commencing May
1995, and the Company assigned to the bank the first $100,000 of quarterly
distributions it received from HDA.  In May 1996 the Company borrowed an
additional $250,000, thereby increasing the loan balance from $450,000 to
$700,000 with the bank taking the same assignment of $100,000 of quarterly
distributions for principal payments commencing August 31, 1996 and a final
payment of $200,000 in November 1997.

     During the nine months ended September 30, 1996 HDA made cash
distributions of $526,000 to the Company related to consolidated net income of
HDA for the fourth quarter of 1995 and first six months of 1996.  Based on
HDA's consolidated net income for the quarter ended September 30, 1996, the
Company's share of HDA's Permitted Distributions to be made in the fourth
quarter of 1996 is approximately $361,000.  These distributions, together with
December 31, 1995 cash balances of $56,000, net proceeds of approximately
$240,000 from the increase in the bank loan and 1996 loans of $252,000 from
IGC are expected to cover the Company's 1996 estimated cash requirements of
$1.3 million.

     Management does not anticipate any significant changes in expenses and
cash requirements of the Company in 1997, except for income taxes related to
the sale of S&E to Paxson and the payment of its debt to IGC which amounted to
$464,000 at September 30, 1996 and is not expected to change materially by
year-end.  As discussed previously, HDA anticipates that it will close the
sale to Paxson of its remaining 50% interest in S&E in late 1996 or early
1997.  Management expects that the net income of HDA in 1997, including a gain
on the sale to Paxson, will be sufficient to permit HDA to distribute
approximately $2.5 million to the Company as its 82% share of HDA's cash
distributions.  Consequently, management expects an improvement in the
(PAGE)61
Company's liquidity in 1997.


Liquidity and Capital Resources of HDA
 
     HDA's principal source of cash is rental income from the lease of El
Comandante to ECOC.  El Comandante commissions on wagering in 1995 were
approximately $2,800,000 less than commissions in 1994.  Also, ECOC incurred
higher costs in 1995 related to (i) costs of televising El Comandante races
resulting from a new contract effective January 1, 1995, (ii) early retirement
of approximately 25 employees under an incentive plan designed to reduce
payroll costs prospectively, and (iii) satellite costs for the simulcasting of
El Comandante races to the Dominican Republic.  As a result of reduced El
Comandante commissions and higher operating costs in 1995, ECOC had rent
payable to HDA of approximately $1,800,000 at December 31, 1995, including
$1,000,000 which was converted into a promissory note.  ECOC's business plan
is to increase revenue through growth in the core Puerto Rico market,
primarily by the increase in number of race days from four to five days a week
which commenced February 1, 1996, bring additional OTB agencies on line for
simulcasting in the Dominican Republic and expand simulcasting to other
Caribbean islands and Latin American countries.  As discussed previously, ECOC
achieved an increase of $1,937,000 in commission income for the nine months
ended September 30, 1996 as compared to the nine months ended September 30,
1995.

     At the beginning of the year ECOC's management forecasted that the 1996
El Comandante commissions would exceed 1995 commissions by $6 million, which
commissions include wagering on races simulcasted to the Dominican Republic,
but now forecasts the increase will be approximately $2.3 million.  The
principal reasons for the forecast of increased El Comandante commissions were
(i) increases in ECOC's race days from four to five days effective February 1,
1996 and (ii) increased simulcasting commissions from OTB agencies in
Dominican Republic, with an expected increase in agencies from 163 at the end
of 1995 to approximately 360 by the end of 1996.  Based on the revised
forecast ECOC expects to pay 1996 rent in full and reduce its 1995 debt to HDA
by approximately $200,000.  The forecast assumed no adverse regulatory
changes, continued availability of adequate horses and jockeys, and no
significant loss of revenues due to new forms of competing gambling, any
unusual number of pick-six jackpot winners or general economic decline. 

     ECOC's total revenues for the nine months ended September 30, 1996 were
$2,872,000 lower (6%) than forecasted.  While 1996 year-to-date wagering
commissions increased $1,937,000 over the comparable period of 1995, the 1996
commissions on El Comandante wagers were $2,394,000 below (5.3%) the forecast.

The Puerto Rico racing law was changed whereby OTB agents received 5% of win-
place wagers as commissions commencing August 1994 which reduced the pay-out
to bettors by the amount paid to agents.  The commissions were increased to
5.5% in January 1995 and 6% in July 1995, further reducing the pay-out to
bettors.  ECOC's management believes that the majority of the variance from
budget is caused by the effect on wagering caused by the reduced pay-outs to
(PAGE)62
bettors on win-place wagers and by over estimating the increase in weekly
wagering when ECOC increased the number of racing days from four to five days
a week in February 1996.  ECOC believes that other contributing factors for
the variance from the forecast were (1) the effect on wagering on the Pick-Six
Jackpot of more frequent Jackpot winners in 1996 which caused the Jackpot pay-
outs to bettors to be smaller and (2) an unusually active hurricane season in
1996 which typically affects wagering for a few days before and after
threatened or actual storms.  

     Wagering in the Dominican Republic on simulcasted El Comandante races has
also been less than forecasted which ECOC management attributes to (1) growth
of OTB agencies being slower than forecasted and (2) average wagering per OTB
agency being less that forecasted as a result of the Presidential elections in
the Dominican Republic which impacted economic activity (including wagering)
and, as discussed below, declines in wagering on horse races during the U.S.
major league baseball season.

     HDA's management continues to forecast significantly improved cash flow
and liquidity in 1996 due primarily to 1996 rent payments by ECOC in excess of
1995 payments, net cash flow to HDA of approximately $1.6 million from the
Television Stations, as discussed below.

     At the beginning of the year management forecasted Dominican Republic
racing operations would generate approximately break-even cash flow in 1996
and consequently result in a significant improvement over 1995 results.  The
forecasted improved operating results were based primarily on (1) cash which
the Dominican Republic government would permit to be made available from
Required Reserves to promote racing in the Dominican Republic, including
payments of certain existing marketing costs that would otherwise be payable
from operating cash flow of Galapagos and (2) increased commissions from the
OTB agencies on wagering on V Centenario and El Comandante races due to the
planned expansion of the OTB network to 360 agencies in Dominican Republic by
December 31, 1996.  However, the planned expansion of the OTB network is
behind schedule and wagering for the nine months ended September 30, 1996 was
less than forecasted.  Most OTB agencies in the Dominican Republic accept
wagers on a number of sports.  Average daily betting in OTB agencies has
declined significantly from January through September 1996.  Management
believes the decline in average daily betting coincided with (1) the
uncertainty during the 1996 Presidential election process which had a negative
effect on the economy, and (2) a large shift in OTB wagering from horse racing
to baseball during the major league baseball season in the U.S.  Wagering is
expected to improve during the winter and spring months, and to offset the
effect on wagering when the U.S. baseball season begins in April 1997
management expects to have more OTB agencies on line through intensified
efforts to open new agencies and have other sources of revenue which are being
developed by Galapagos. 

     The sale of a 50% interest in S&E and the operations of the Television
Stations under Paxson's management have had a significant positive effect on
HDA's cash flow, resulting in an estimated $1.6 million of cash flow in 1996,
in contrast to a cash requirement of $3.9 million in 1995.  HDA's estimated
(PAGE)63
net cash flow of $1.6 million in 1996 is comprised of $4 million received from
Paxson upon closing of the S&E stock sale, less estimated net investments in
S&E of $2.4 million in 1996.  HDA's estimated investment of $2.4 million,
which is net of HDA's estimated $340,000 share of 1996 operating cash flow of
S&E, is primarily for capital improvements, employee severance costs, costs to
cancel certain S&E contracts and other transaction costs (including legal,
accounting and costs of approvals required from holders of the First Mortgage
Notes), and payments of $1,325,000 of the $1.7 million of S&E debt that HDA
assumed when the S&E stock sale closed.  The balance of the assumed debt is
payable in monthly installments over approximately five years; however, HDA
management may choose to prepay this debt from 1996 or 1997 cash flow.

     HDA had cash balances of $560,000 at December 31, 1995, and is
forecasting a cash balance of $5,960,000 at December 31, 1996, as follows,
under the assumption that the pending sale to Paxson of the remaining 50%
interest in S&E does not close until 1997:

                                              1996        Actual
                                            Forecast      9-30-96
                                          ------------  ------------
Cash receipts to HDA:
   El Comandante 1996 rent & collections
       of receivables from ECOC           $ 14,750,000  $ 10,862,000
   Sale of 50% interest in S&E               4,000,000     4,000,000
   Interest on investments                     175,000       110,000
                                          ------------  ------------
                                            18,925,000    14,972,000
Cash disbursements by HDA:
    Debt service on First Mortgage
      Notes                               (  7,990,000) (  3,995,000)
    Television Stations                   
      Net investment in S&E               (  1,060,000) (  1,197,000)
      Payment of S&E debt assumed by HDA  (  1,325,000) (  1,306,000)
    Administrative costs and costs of
      registration of the units of Equus  (    800,000) (    685,000)
    El Comandante property taxes and
      capital improvements                (  1,035,000) (    784,000)
    Cash distributions to partners        (  1,084,000) (    642,000)
Contingency reserve                       (    231,000)        -
                                          ------------- -------------
Net cash flow                                5,400,000     6,363,000
Cash balance, December 31, 1995                560,000       560,000
                                          ------------  ------------
Cash balance, end of period               $  5,960,000  $  6,923,000
                                          ============  ============

     In January 1996 ECOC requested and HDA approved a 1996 capital
improvement budget of $650,000 for El Comandante, which budget was increased
to $880,000 in the second quarter of 1996 for the estimated cost of an
additional closed circuit television tower.  ECOC's management also asked HDA
for additional barns with 100 horse stalls, at an estimated cost of $850,000,
(PAGE)64
which HDA's management expects will be approved in the 1997 budget.  Based on
the present status of the capital improvement program, ECOC management
estimates that cash requirements for the approved capital budget of $880,000
will not exceed $450,000 in 1996 and the balance will be needed in 1997.

     HDA is forecasting a cash balance of approximately $6 million at the end
of 1996 and HDA should have excellent liquidity in 1997.  The proceeds of the
sale to Paxson of the remaining 50% interest in S&E plus cash flow from 1997
operations of HDA are expected to provide an additional $10-11 million to HDA,
before distributions to partners.  If the sale to Paxson closes, as expected,
HDA will be required by the terms of the Indenture for the First Mortgage
Notes to use approximately $8 million in 1997 to purchase First Mortgage Notes
from noteholders to the extent such funds are not invested in assets to be
used in a gaming-related business.  Accordingly, HDA believes it will have $8-
9 million available in 1997 for cash distributions and other purposes.  As
previously disclosed the Indenture for the First Mortgage Notes presently
limits cash distributions to 48% of the consolidated net income of HDA.

The Company's Proforma Results of Operations

Nine Months Ended September 30, 1996 Compared to the Nine Months Ended
September 30, 1995

     As previously disclosed, the Company did not consolidate the accounts of 
HDA in the Company's historical financial statements until March 8, 1995. 
Note 16 to the Company's consolidated financial statements includes proforma
consolidated statements of income for the nine months ended September 30, 1996
(historical) and 1995 (proforma) based upon the consolidated statements of
income of the Company and VJC, and HDA and its subsidiaries, which were
prepared as if the acquisition by the Company of its 82% interest in HDA had
occurred on January 1, 1995.

     Revenues.   The Company and VJC did not have any revenues in the nine
months ended September 30, 1996 and 1995, except for minor amounts of interest
income.  Accordingly, all other revenues in these nine month periods relate to
HDA and its subsidiaries.  Revenues increased $3,343,000 to $16,782,000 in the
nine months ended September 30, 1996 from $13,439,000 in the comparable period
in 1995.

     Rental income from El Comandante.   Rental income from El Comandante
increased to $10,747,000 in the nine months ended September 30, 1996 from
$10,563,000 in the comparable period of 1995.  Rental income in the 1996
period was based on 25% of ECOC's commissions of $42,989,000 from El
Comandante wagering on 188 racing days, whereas 1995 rental income was based
on 25% of ECOC's commissions of $41,052,000 from wagering on 151 racing days,
plus fixed rent of $300,000 (as disclosed previously, fixed rent payments were
eliminated effective January 1, 1996).  In February 1996, ECOC commenced
racing five days a week by adding Thursday to its previous four-day race week.

Although the average daily commissions earned by ECOC declined in the 1996
period, the commissions earned on Thursday race days more than offset the
(PAGE)65
decline in average daily commissions.

     The effect of the additional race day is shown by (1) the comparison of 
January 1996 and 1995 commissions earned by ECOC before introduction of
Thursday racing, and (2) the comparison of February to September 1995
commissions earned before Thursday racing commenced with commissions earned in
February to September 1996 after Thursday racing commenced.  Whereas the
January 1996 commissions were $501,000 less than the January 1995 commissions,
the average monthly commissions in February through September 1996 exceeded by
$305,000 the average monthly commissions in the comparable months of 1995.

     Dominican Republic Racing Revenues.  Galapagos began simulcasting El
Comandante races on February 27, 1995 to several sports betting agencies in
the Dominican Republic, and earned commissions on wagering on El Comandante
races of $1,114,000 in the first nine months of 1996 and $623,000 in the
comparable 1995 period.  Galapagos commenced racing operations at V Centenario
in April 1995 and earned commissions on V Centenario races of $2,185,000 in
the nine months ended September 30, 1996 and $1,015,000 in the 1995 period. 
Galapagos also had revenues of $338,000 in the 1996 period and $262,000 in the
1995 period from Jockey Club and restaurant operations and other miscellaneous
sources.

     Revenues from Television Stations.   In August 1996 HDA  closed a sale to
Paxson of a 50% interest in S&E (see "Introduction") and commencing September
1996 Paxson is responsible for managing the Television Stations.  Paxson and
S&E previously entered into a Time Brokerage Agreement which commenced
February 1996 and terminated upon the closing of the sale.  Pursuant to the
terms of this agreement, Paxson paid fees of $23,333 monthly to S&E, provided
programming, including infomercials, and certain other services to S&E and was
entitled to 50% of S&E's operating cash flow from February through August
1996. 

     As discussed previously, the accounts of S&E were included in HDA's
consolidated financial statements through August 1996, and commencing
September 1996 HDA recognizes its 50% share of income or losses of S&E.  S&E
commenced television broadcasting in January 1995 on a test basis until June
26, 1995 and earned broadcasting fees and advertising revenues of $900,000 in
the nine months ended September 30, 1995.  As a result of the changes in
broadcasting and programming formats commencing February 1996 pursuant to
Paxson's Time Brokerage Agreement, S&E increased its revenues to $1,669,000 in
the eight months ended August 1996.  The revenues included fees of $452,000
and $504,000 in the nine months ended September 30, 1996 and 1995,
respectively, from ECOC for broadcasting a four-hour program for races run at
El Comandante, fees of $163,000 from Paxson in the 1996 period pursuant to the
Time Brokerage Agreement and $7,000 recognized by HDA for its share of
earnings of S&E for September 1996.

     Gain on Sale of 50% Interest in Television Stations.  On August 30, 1996,
HDA closed the sale of a 50% interest in S&E.  The sales price was $4 million,
and a gain of $581,000 was recorded for this sale in the nine months ended
September 1996.  The costs of this sale included approximately $1.5 million
(PAGE)66
for employee severance payments, costs to cancel certain contracts, write-off
of deferred costs not recoverable under the revised broadcasting and
programming format, legal, accounting and investment bankers' fees, and
consent fees to holders of First Mortgage Notes for approving the transaction.

     Interest Income.   Interest income increased $65,000 to $141,000 in the
nine months ended September 30, 1996 from $76,000 in the comparable 1995
period, caused primarily by increases in interest income of $35,000 on a note
receivable from ECOC and $28,000 from short-term investments.

     Financial Expenses.   Financial expenses in the nine months ended
September 30, 1996 increased to $6,696,000 from $6,674,000 in the nine months
ended September 30, 1995, summarized as follows:

                                                   1996              1995
                                                -----------      -----------
   Interest on First Mortgage Notes and
     amortization of related financing
     costs                                      $ 6,516,000      $ 6,498,000

   Interest on capital leases of
     Galapagos and S&E (leases commenced
     in third quarter of 1995)                      148,000           11,000

   Interest and financing costs on the
     Company's bank loan                             46,000           39,000

   Interest (interest credit) on Galapagos'
     minority stockholder loans                     (89,000)          59,000

   Other costs                                       75,000           67,000
                                                -----------      -----------
                                                $ 6,696,000      $ 6,674,000
                                                ===========      ===========

   As previously disclosed, the stockholders of Galapagos forgave accrued
interest in 1996 on their loans to Galapagos and accordingly the 1996 nine-
month period includes a credit of $89,000 for the reversal of interest accrued
in 1995 on minority stockholder loans.

   Depreciation.   Depreciation increased $303,000 in the nine months ended
September 30, 1996 to $1,847,000 from $1,544,000 in the comparable nine months
of 1995.  The increase is attributable to depreciation of $491,000 related to
assets of the Television Stations and Galapagos in the 1996 period, compared
to 1995 depreciation of $122,000 for Galapagos which commenced operations on
April 29, 1995 and $53,000 for the Television Stations.  The Television
Stations were operated on a test basis from January to June 26, 1995 and
depreciation was recognized commencing July 1995.

   General and Administrative Expenses.  General and administrative expenses
increased $358,000 to $1,399,000 in the nine months ended September 30, 1996
(PAGE)67
from $1,041,000 in the comparable period of 1995.  The major changes in
expenses are summarized as follows:

                                                  Increase
                                                 (Decrease)
                                                ____________

   El Comandante property taxes of $456,000 
     in 1996, and none in 1995                  $    456,000

   Legal, accounting and consulting fees              50,000

   Management fees and admistrative support
     services                                        (35,000)

   VJC appeal costs                                  (70,000)

   Costs of investigating new business
       opportunities                                 (31,000)

   Other, net                                        (12,000)
                                                _____________
                                                $    358,000
                                                =============

   Operating Costs of Dominican Republic Racing.  Galapagos began simulcasting
El Comandante races on February 27, 1995 and opened V Centenario in April
1995.  Costs incurred in connection with these operations were $2,628,000 in
the nine months ended September 30, 1995, net of certain costs which were
deferred as start-up costs prior to the opening of V Centenario in April 1995,
and $4,490,000 while under full operation during the nine months ended
September 1996.  Certain costs, such as horseowners' 50% share of commissions,
ECOC's management fee and fees paid to Autotote for providing the wagering
system, are directly related to the amount of wagering or to commissions
earned by Galapagos.  Such costs accounted for $958,000 of the 1996 increase
in costs.  The other increases in 1996 costs are largely attributable to the
additional months that V Centenario operated in 1996, offset in part by
credits of $343,000 for funds released for marketing costs from the Required
Reserves.

   Operating Costs of Television Stations.  S&E commenced television
broadcasting in January 1995 on a test basis which ended June 1995 and
incurred operating costs of $1,752,000 during the nine months ended September
30, 1995, net of certain costs which were deferred as start-up costs during
the test period.  Operating costs in the 1996 period were $1,461,000 for the
January to August period when S&E's accounts were consolidated in the
Company's financial statements.  The 1996 costs include fees of $272,000 to
Paxson pursuant to the Time Brokerage Agreement for the seven months from
February through August 1996.  Costs between periods are not readily
comparable because (1) certain costs were deferred during the 1995 test
period, (2) the change in the broadcasting and programming format which
(PAGE)68
commenced February 1996 resulted in significant reductions in production and
programming costs in 1996 and (3) fees to Paxson of $272,000 are included in
the 1996 period.

   Distribution of Units of the Company.   The legal, accounting and other
costs of the Distribution were $131,000 in the nine months ended September 30,
1995.  There were no similar costs in the comparable period of 1996.

   Provision for Income Taxes.  The Company is subject to Puerto Rico income
tax at a 29% rate on its allocable share of HDA's taxable income and an HDA
subsidiary is subject to Federal income taxes.  HDA had previously provided
for deferred Dominican Republic income taxes on accrued interest on loans to
Galapagos.  The accrued interest was forgiven in 1996 and a tax credit of
$19,000 was recorded for reversal of the deferred tax provision applicable to
the forgiven interest.  The net provision for income taxes of $619,000 and
$354,000 in the nine month periods ended September 30, 1996 and 1995 were as
follows: 

                                                    1996           1995
                                                   Period         Period
                                                ------------   ------------
     Puerto Rico income taxes of the Company -
       Current                                  $    153,000   $    217,000
       Deferred                                      480,000        132,000
     Dominican Republic income tax credit 
       of HDA                                        (19,000)          -
     Federal income taxes of HDA subsidiary            5,000          5,000
                                                ------------   ------------
                                                $    619,000   $    354,000
                                                ============   ============

     Minority Interest.  Minority partners own 18% of HDA and Dominican
Republic minority stockholders hold a 45% interest in Galapagos.  The
accumulated deficit of HDA was $818,750 at December 31, 1994 and, as explained
in Note 1 to the Company's consolidated financial statements, the Company did
not recognize the 18% minority partners' share of HDA's net income until such
time as the accumulated deficit of HDA was eliminated by earnings of HDA after
December 31, 1994.

     The minority interest of $92,000 and $460,000 in the nine month periods
ended September 30, 1996 and 1995, respectively, is comprised of the
following: 









(PAGE)69                                     1996             1995
                                            Period           Period
                                        -------------    -------------
     Minority stockholders' share of
        losses of Galapagos             $(   471,000)    $(   483,000)
     Minority partners' share of 
       income of HDA after accumulated
       deficit was eliminated by HDA's
       earnings in the 1995 period           379,000           23,000
                                        -------------    -------------
                                        $(    92,000)    $(   460,000)
                                        =============    =============








































(PAGE)70
PART II -- OTHER INFORMATION

ITEM 1 - 5

Not applicable.

ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits required by Securities and Exchange Commission Section 601 

          of Resolution S-K

          Exhibit
            No.             Descrption of Exhibit           Reference
         ---------       ---------------------------     ---------------
           10.1          Stock Purchase Agreement by
                         and between Housing Development
                         Associates S.E. and Paxson 
                         Communications of San Juan, Inc.
                         dated November 12, 1996          File herewith































(PAGE)71
                                  SIGNATURES

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


                                   Equus Gaming Company L.P.
                                   -----------------------------------
                                            (Registrant)

                                   By:  Equus Management Company
                                        Managing General Partner


November 14, 1996                    By: /s/ Donald G. Blakeman
-----------------                       ------------------------------
Date                                    Donald G. Blakeman
                                        President



November 14, 1996                    By: /s/ Gretchen Gronau
-----------------                       ----------------------
Date                                    Gretchen Gronau
                                        Vice President and
                                        Chief Financial Officer
























(PAGE)72                       INDEX TO EXHIBITS

EXHIBIT
NUMBER                                  EXHIBIT
-------                                 -------

10.1           Stock Purchase Agreement by and between Housing Development
               Associates S.E. and Paxson Communication of San Juan, Inc.
               dated November 12, 1996