FORM 10-Q

                          SECURITIES AND EXCHANGE COMMISSION

                                  Washington, D.C. 20549
      (Mark One)

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

      For the quarterly period ended        December 31, 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                0-9624                       

                       International Thoroughbred Breeders, Inc.           
                                                                          
                 (Exact name of registrant as specified in its charter)

                Delaware                      22-2332039                
      (State or other jurisdiction of      (I.R.S. Employer              
      incorporation or organization)      Identification No.) 


                 P.O. Box 1232, Cherry Hill, New Jersey  08034               
                                                                         
                   (Address of principal executive offices)
                                   (Zip Code)

                            (609) 488-3838                             
          (Registrant's telephone number, including area code)

                                                                       
  (Former name, former address and former fiscal year, if changed since last
      report.)

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

                       APPLICABLE ONLY TO CORPORATE ISSUERS:

        Indicate the number of shares outstanding of each of the issuer's
  classes of common stock, as of the close of the latest practicable date.

               Class                       Outstanding at February 7, 1997
    Common Stock, $ 2.00 par value                11,651,518  Shares 


<PAGE>
                  INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                            AND SUBSIDIARIES
    
                       CONSOLIDATED BALANCE SHEETS
                 AS OF DECEMBER 31, 1996 AND JUNE 30, 1996
    
                                 ASSETS
      
                                                 December 31,
                                                     1996        June 30,
                                                 (UNAUDITED)       1996
    CURRENT ASSETS:
      Cash                                     $   2,762,697 $   1,069,282
      Short-Term Investments                       2,279,957     3,147,074
         TOTAL CASH AND CASH EQUIVALENTS           5,042,654     4,216,356
    
      Restricted Cash and Investments              1,552,732     2,971,538
      Accounts Receivable - Net                    3,188,321     1,892,941
      Prepaid Expenses                               944,791     1,205,951
      Other Current Assets                           157,208       366,656
         TOTAL CURRENT ASSETS                     10,885,706    10,653,442
    
    LAND, BUILDINGS, EQUIPMENT AND LIVESTOCK:
      Land and Buildings                          69,180,316    69,093,719
      Construction In Progress                    50,421,254    48,736,200
      Equipment                                    5,492,971     4,356,202
      Livestock                                        8,373        20,687
         TOTAL LAND, BUILDINGS, EQUIPMENT
           AND LIVESTOCK                         125,102,914   122,206,808
    LESS: Accumulated Depreciation                 3,584,417     2,858,439
         TOTAL LAND, BUILDINGS, EQUIPMENT
             AND LIVESTOCK  - NET                121,518,497   119,348,369
    
    LAND AND IMPROVEMENTS HELD FOR SALE - NET      6,751,603     6,719,327
    
    OTHER ASSETS:
      Deposits and Other Assets                      314,590       340,507
      Financing Costs - Net                        4,272,837     4,667,415
      Goodwill - Net                               3,096,576     3,151,872
        TOTAL OTHER ASSETS                         7,684,003     8,159,794
    
    
    TOTAL ASSETS                               $ 146,839,809 $ 144,880,933
    
<PAGE>    
                     INTERNATIONAL THOROUGHBRED BREEDERS, INC
                                AND SUBSIDIARIES

                       LIABILITIES AND SHAREHOLDERS' EQUITY
    
                                                 December 31,
                                                     1996        June 30,
                                                 (UNAUDITED)       1996
    CURRENT LIABILITIES:

      Accounts Payable and
      Accrued Expenses                         $   9,968,811 $   9,804,641
      Notes and Mortgages Payable-
      Current Portion                              3,816,413     3,214,100
      State Income Taxes Payable                      95,634        30,284
         TOTAL CURRENT LIABILITIES                13,880,858    13,049,025
    
    DEFERRED INCOME                                1,479,924     1,499,449
    
    LONG-TERM LIABILITIES:
      Notes Payable - Long Term Portion           55,420,708    50,992,702
      Deferred State Income Taxes Payable             21,652        21,652
         TOTAL LONG-TERM LIABILITIES              55,442,360    51,014,354
    
    COMMITMENTS AND CONTINGENCIES (5)                      0             0
    
    SHAREHOLDERS' EQUITY:
    Series A (Convertible) Preferred Stock
      $100.00 Par Value,
      Authorized 500,000 Shares,
      Issued and Outstanding, 362,465 and
      362,462 Shares, Respectively                36,246,475    36,246,175
    Common Stock $2.00 Par Value,
      Authorized 25,000,000 Shares,
      Issued and Outstanding, 11,651,518
      and 11,651,487 Shares, Respectiveley        23,303,035    23,302,973
    Capital in Excess of Par                      17,109,207    16,111,652
    Retained Earnings (subsequent to
      June 30, 1993, date of quasi-
      reorganization)                                205,027     3,829,336
         TOTAL                                    76,863,744    79,490,136
    LESS: Deferred Compensation - Net (6-A)          827,077       172,031
         TOTAL SHAREHOLDERS' EQUITY               76,036,667    79,318,105
    
    
    TOTAL LIABILITIES & SHAREHOLDERS' EQUITY   $ 146,839,809 $ 144,880,933
    
    See Notes to Financial Statements.

<PAGE>

                       INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                  AND SUBSIDIARIES

    
                   CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                     FOR THE SIX MONTHS ENDED DECEMBER 31, 1996
                                     (UNAUDITED)
    
    
                                              Preferred
                                              Number of
                                                Shares       Amount
    BALANCE - JUNE 30, 1996                      362,462 $ 36,246,175
    
    Options Issued for Financing Cost            ---          ---
    Deferred Compensation for Options
     Granted to Employees                        ---          ---
    Shares Issued for Fractional
     Exchanges With Respect to the
     One-for-twenty Reverse Stock Split
     effected on March 13, 1992                        3          300
    Amortization of Deferred
     Compensation Costs                          ---          ---
    Forfeiture of Options                        ---          ---
    Net (Loss) for the Six Months Ended
     December 31, 1996                           ---          ---
    
    BALANCE - DECEMBER 31, 1996                  362,465 $ 36,246,475
    
<PAGE>    
                                                Common
                                              Number of
                                                Shares       Amount
    BALANCE - JUNE 30, 1996                   11,651,487 $ 23,302,973
    
    Options Issued for Financing Cost            ---          ---
    Deferred Compensation for Options
     Granted to Employees                        ---          ---
    Shares Issued for Fractional
     Exchanges With Respect to the
     One-for-twenty Reverse Stock Split
     effected on March 13, 1992                       31           62
    Amortization of Deferred
     Compensation Costs                          ---          ---
    Forfeiture of Options                        ---          ---
    Net (Loss) for the Six Months Ended
     December 31, 1996                           ---          ---
    
    BALANCE - DECEMBER 31, 1996               11,651,518 $ 23,303,035

<PAGE>    
    
                                               Capital
                                              in Excess     Deferred
                                                of Par    Compensation
    BALANCE - JUNE 30, 1996                 $ 16,111,652 $   (172,031)
    
    Options Issued for Financing Cost            324,000      ---
    Deferred Compensation for Options
     Granted to Employees                        794,750     (794,750)
    Shares Issued for Fractional
     Exchanges With Respect to the
     One-for-twenty Reverse Stock Split
     effected on March 13, 1992                     (362)     ---
    Amortization of Deferred
     Compensation Costs                          ---           18,871
    Forfeiture of Options                       (120,833)     120,833
    Net (Loss) for the Six Months Ended
     December 31, 1996                           ---          ---
    
    BALANCE - DECEMBER 31, 1996             $ 17,109,207 $   (827,077)

<PAGE>    
    
                                               Retained
                                               Earnings      Total
    BALANCE - JUNE 30, 1996                 $  3,829,336 $ 79,318,105
    
    Options Issued for Financing Cost            ---          324,000
    Deferred Compensation for Options
     Granted to Employees                        ---                0
    Shares Issued for Fractional
     Exchanges With Respect to the
     One-for-twenty Reverse Stock Split
     effected on March 13, 1992                  ---          ---
    Amortization of Deferred
     Compensation Costs                          ---           18,871
    Forfeiture of Options                        ---               (0)
    Net (Loss) for the Six Months Ended
     December 31, 1996                        (3,624,309)  (3,624,309)
    
    BALANCE - DECEMBER 31, 1996             $    205,027 $ 76,036,667
    
    See Notes to Financial Statements.

<PAGE>
                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
    
                      CONSOLIDATED STATEMENTS OF OPERATIONS
           FOR THE THREE AND SIX MONTHS ENDED DECEMBER 30, 1996 AND 1995
                                  (UNAUDITED)    
    
    
                                                  Three Months End
                                                     December 31,
                                                  1996            1995
    REVENUES:
      Revenue from Operations             $    19,928,131 $    20,586,034
      Investment Income                            45,358         (88,735)
         TOTAL REVENUES                        19,973,489      20,497,299
    
    EXPENSES:
      Cost of Revenues                          7,502,892       7,529,308
      Operating Expenses                        9,240,609       9,502,444
      Depreciation & Amortization                 409,638         375,641
      General & Administrative Expenses         2,411,009       1,707,781
      Financing Cost from Options Granted               0               0
      Amortization of Financing Costs             241,803               0
      Write Off of Deposits                     2,585,000               0
      Interest Expense                            618,759         283,234
         TOTAL EXPENSES                        23,009,710      19,398,408
    
    
    (LOSS) INCOME FROM OPERATIONS
      BEFORE TAXES                             (3,036,221)      1,098,891
    
      Income Tax Expense                           57,600          91,475
    
    NET (LOSS) INCOME                     $    (3,093,821)$     1,007,416
    
    NET (LOSS) INCOME PER SHARE           $         (0.27)$          0.10

<PAGE>
    
                                                   Six Months Ended
                                                     December 31,
                                                 1996            1995
    REVENUES:
      Revenue from Operations             $    34,175,076 $    34,148,787
      Investment Income                           129,376         103,630
         TOTAL REVENUES                        34,304,452      34,252,417
    
    EXPENSES:
      Cost of Revenues                         11,407,265      11,208,117
      Operating Expenses                       16,887,763      16,957,041
      Depreciation & Amortization                 801,894         730,256
      General & Administrative Expenses         4,490,858       3,809,075
      Financing Cost from Options Granted         324,000               0
      Amortization of Financing Costs             479,382               0
      Write-Off of Deposits                     2,585,000               0
      Interest Expense                            855,789         568,653
         TOTAL EXPENSES                        37,831,951      33,273,142
    
    
    (LOSS) INCOME FROM OPERATIONS
      BEFORE TAXES                             (3,527,499)        979,275
    
      Income Tax Expense                           96,810         122,275
    
    NET (LOSS) INCOME                     $    (3,624,309)$       857,000
    
    NET (LOSS) INCOME PER SHARE           $         (0.31)$          0.09
    
    
    See Notes to Financial Statements.

<PAGE>
                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                               AND SUBSIDIARIES
    
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 AND 1995
                                 (UNAUDITED)
    
                                                  Six Months   Six Months
                                                    Ended        Ended 
                                                  December 31, December 31
                                                     1996         1995
  CASH FLOWS FROM OPERATING ACTIVITIES:
    NET (LOSS) INCOME                           $ (3,624,309)$    857,000
    Adjustments to reconcile net (loss)
    income to net cash provided by operating
     activities:
       Depreciation and Amortization               1,281,276      730,256
       Financing Cost from Options Granted           324,000            0
       (Gain) on Sale of Livestock and
       Fixed Assets                                        0       (5,000)
       Write-Off of Deposits                       2,585,000            0
       Changes in Assets and Liabilities -
         (Increase) Decrease in Restricted
         Cash & Investments                        1,418,806    1,734,274
         (Increase) Decrease in
         Accounts Receivable                      (1,295,380)    (415,413)
         (Increase) Decrease in Other Assets         209,448        2,698
         (Increase) Decrease in Prepaid Expense      261,160      625,448
          Increase (Decrease) in Account Payable
          and Accrued Expenses                       229,520      422,876
          Increase (Decrease) in Deferred Income     (19,525)      68,110
      NET CASH PROVIDED BY OPERATING ACTIVITIES    1,369,996    4,020,249
    
  CASH FLOWS FROM INVESTING ACTIVITIES:
      Proceeds from Sale of Equipment
      and Livestock                                        0        5,000
      Deposits on Purchase of Additional
      Land in Las Vegas                           (2,115,000)           0
      Casino Development Costs                    (1,142,394)           0
      Capital Expenditures at Racetracks            (960,543)  (1,793,677)
      (Increase) Decrease in Other
      Investment Activity                             25,917       (7,314)
      NET CASH (USED) BY INVESTING ACTIVITIES     (4,192,020)  (1,795,991)
    
  CASH FLOWS FROM FINANCING ACTIVITIES:
      Sale of Common Stock                                 0    5,438,162
      Proceeds from issuance of Long Term Notes      827,891            0
      Proceeds from Line of Credit                 5,263,650            0
      Principal Payments on Short Term Notes        (627,466)           0
      Principal Payments on Long Term Notes       (1,815,753)    (365,945)
      NET CASH PROVIDED BY FINANCING ACTIVITIES    3,648,322    5,072,217
    
  NET INCREASE IN CASH AND CASH EQUIVALENTS          826,298    7,296,475
    
      CASH AND CASH EQUIVALENTS AT
      BEGINNING OF YEAR                            4,216,356   11,801,294
    
      CASH AND CASH EQUIVALENTS
      AT END OF PERIOD                          $  5,042,654 $ 19,097,769
    
      Supplemental Disclosures of Cash Flow
      Information:
        Cash paid during the period for:
        Interest (Net of Interest Capitalized)  $    153,364 $    166,233
        Income Taxes                            $     31,460 $    131,116
    
    Supplemental Schedule of Non-Cash Investing and
    Financing Activities:
     During the six months ended December 31, 1996, the
     Company recorded an unrealized gain of 45,000
     on trading securities.
     During the six months ended December 31, 1996, the
     Company issued 200,000 warrants in connection with
     financing cost of $324,000.
     During the six months ended December 31, 1996, the
     Company increased notes payable by $1,295,132
     for interest which was capitalized.
    
  See Notes to Financial Statements.


<PAGE>                 

                      INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                 AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS 


                                             
(1)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     (A) Nature of Operations - International Thoroughbred Breeders,
Inc. and subsidiaries, collectively the Company, conducts live race 
meetings for Thoroughbred and Harness (Standardbred) horses and 
participates in intrastate and interstate simulcast wagering as a host 
track and as a receiving track in Cherry Hill and Freehold, New Jersey. 
The Company s racetrack operations are dependent upon continued governmental 
acceptance of racing as a form oflegalized gambling.  The Company has to 
compete for gaming revenue not only with other racetracks, but also 
with other forms of gaming activities, such as, off-track betting parlors, 
telephone wagering, casino gambling (in Atlantic City), slot machines at 
racetracks, and various state lotteries, both from within the State of New 
Jersey and from neighboring states (Pennsylvania and Delaware in particular).  
From time to time, legislation has been introduced in New Jersey and 
neighboring states which would further expand gambling opportunities and 
increase competition.  Severe inclement weather, which can affect the 
northeastern portion of the United States in the winter months, can also
adversely affect operations.  The Company is required to annually renew its 
racing permits with the New Jersey Racing Commission in order to operate.

     During the year ended June 30, 1996, the Company, under one of its
subsidiaries, purchased property for the purpose of commencing casino gaming
upon the opening of a proposed casino project in Las Vegas, Nevada.

     (B) Principles of Consolidation -   The accounts of all wholly owned
subsidiaries are included in the consolidated financial statements. All
material intercompany transactions have been eliminated.

     (C)  Classifications - Certain prior year amounts have been reclassified
to conform with the current year's presentation.  The operating section of the
Statements of Cash Flows for the six months ended December 31, 1995 have been
reclassified from the direct to the indirect method to conform with the 1996
presentation.

     (D) Allowance for Bad Debts - The Company recognizes bad debts on the
allowance method. Bad debt allowance at December 31, 1996 and 1995 was
$20,000.

     (E) Construction in Progress - Construction in progress includes
development costs in conjunction with the acquisition of the El Rancho Hotel
and Casino which the Company has capitalized.  These costs include land and
building acquisitions costs, interest, legal, consulting and other
professional fees, other development and carrying costs in connection with the
future development of the casino project.  Such costs totaling approximately
$50,400,000,  include real property acquisition costs in the amount of
approximately $43,500,000, development and carrying costs of approximately
$5,600,000 and capitalized interest of $1,295,132 through December 31, 1996. 

     (F) Goodwill - Goodwill is the excess of the cost of acquired Freehold
Raceway net assets over their fair value and is being amortized over 30 years
under the straight line method.  Accumulated amortization at December 31, 1996
was $501,053. 

     Management of the Company evaluates the periods of goodwill amortization
to determine whether later events and circumstances warrant revised estimates 
of useful lives.  Management also evaluates whether the carrying 
value of goodwill has become impaired.  This evaluation is done by analyzing
the projected undiscounted cash flow from related operations.

     (G) Financing Costs - Deferred financing costs includes costs of
$2,567,950 associated with the debt incurred to fund the purchase of the El
Rancho property and $1,704,888 associated with warrants issued in connection
whith the purchase and financing of the casino project, net of amortization of
$286,357 and $193,025, respectively, as of December 30, 1996.  These costs of
$4,272,837, net of amortization of $479,382, are being expensed over the five
year lives of the loan and the warrants.   

     (H) Revenue Recognition - The Company recognizes the revenues associated
with horse racing at Garden State Park and Freehold Raceway as they are
earned.  Costs and expenses associated with horse racing revenues are charged
against income in those periods in which the horse racing revenues are
recognized.  Other costs and expenses, including advertising, are recognized
as they actually occur throughout the year.  Deferred income primarily
consists of prepaid purse income recorded during simulcasting.  

     (I) Deferred Income Taxes - Deferred income taxes reflect the tax
consequences on future years of differences between the tax bases of assets
and liabilities and their financial reporting amounts.

     (J) Cash and Cash Equivalents - The Company considers all highly liquid
debt instruments purchased with a maturity of three months or less to be cash
equivalents.

     (K) Concentrations of Credit Risk - As of December 31, 1996, financial
instruments which potentially subject the Company to concentrations of credit
risk are cash and cash equivalents and receivables arising primarily from
event planning customers whose credit is routinely evaluated.  The Company
places its cash investments with high credit quality financial institutions
and currently invests primarily in U.S. government obligations that have
maturities of less than 3 months.  The amount on deposit in any one
institution that exceeds federally insured limits is subject to credit risk. 
At December 31, 1996, the Company had approximately $4,000,000 on deposit in 5
institutions with an average of $800,000 at each institution that was subject
to such risk. In addition, repurchase agreements of approximately $1,000,000
which are classified as restricted investments are not insured.  The Company
does not require collateral for its financial instruments.

(2)   OPINION OF MANAGEMENT

     The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10Q and Rule
10-01 of Regulation S-X.  Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.  In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included.  Operating results for the three and
six months ended December 31, 1996 are not necessarily indicative of the
results that may be expected for the year ended June 30, 1997.  The unaudited
consolidated financial statements should be read in conjunction with the
consolidated financial statements and footnotes thereto included in the
Company's Form 10-K for the year ended June 30, 1996.

(3)   NOTES AND MORTGAGES PAYABLE

Notes and Mortgages Payable are summarized below:

                                                   December 31, 1996

                             Interest %         Current          Long-Term

ITB:
Foothill Mortgage (A)          Prime plus
                                    2.75%
                            (current rate
                                     11%) $      1,500,000  $      12,500,000

Foothill  Line of Credit       Prime plus
(A)                                 2.75%
                            (current rate
                                    11%)           800,000         12,200,000

Las Vegas Entertainment
Network, Inc. Mortgage                 8%              -0-         10,500,000

Notes -Insurance                  Various           66,779                -0-
      Contracts

ITG:

Notes -Insurance                  Various           89,951                -0-
Contracts

Freehold  Raceway:

Seller s Mortgage            80% of Prime
                                  (not to
                               exceed 6%)
                            (current rate          625,000         11,250,000
                                      6%)

Seller s Mortgage            80% of Prime
                            (current rate
                                    6.6%)          225,000          1,928,299

Note - Parking Lot                     8%          191,667            191,667

Notes - Telephone (B)             Various            3,521             43,958

Garden State Park:

Mortgage Note Payable                 10%              -0-          3,000,000
Note Payable                         10%               -0-          3,000,000

Notes-Insurance Contracts         Various           81,334               -0- 

Notes - Telephone (B)             Various           28,354             72,891

Notes - Equipment (C)             Various          204,807            733,893

    Totals                                $      3,816,413  $      55,420,708

Prime Rate at December 31, 1996 was 8.25%  
The weighted average interest rate on short-term borrowings outstanding as of
December 30, 1996 was 9.67%.



     (A) On March 20, 1996, the Company and Foothill Capital Corporation of
Los Angeles, California, signed a Letter of Intent for a proposed borrowing of
$30,000,000.  Closing on the financing contract took place on June 4, 1996. 
The financing arrangement, secured by among other things, a mortgage on the El
Rancho property, Garden State Park and a second mortgage on Freehold Raceway
is for a $16,000,000 revolving credit line and a $14,000,000 Time Loan
Mortgage.  At December 31, 1996 the unused line of credit was approximately
$3,000,000, however, this amount was restricted until such time as an approved
settlement agreement was reached concerning the shares of Common Stock
currently owned by Robert E. Brennan, the Company's former chairman.   On
February 7, 1997 the restriction was released following the approved sale of
Mr. Brennan s shares on January 15, 1997. (See Note 11-B)

    The revolving credit line requires the Company to make quarterly
principal payments of $400,000 beginning July 1, 1997.  The loans mature in
five years.  Interest on the outstanding balance will be paid monthly starting
July 1, 1996 at a rate of 2.75% above the current published prime lending rate
per annum. The Time Loan Mortgage requires that the Company make equal monthly
principal payments of $250,000 plus interest beginning July 1, 1997.  Interest
on the outstanding balance was paid monthly starting July 1, 1996 at a rate of
2.75% above the current published prime lending rate per annum.  

     The Company is required to maintain not more than one to one ratio of
total liabilities to tangible net worth with a minimum tangible net worth of
$70,000,000.  In the event of default of the terms of the agreement, the
amounts due would be payable in full at that time and the Company would be
required to pay a 2% premium of $600,000 calculated on the maximum amount of
the financing.  The financing agreement also provides for the lender to
receive 200,000 shares of the Company's Common Stock,  a monthly service fee
of $5,000, a .5% monthly fee on the unused portion of the line of credit, and
an annual facility fee of $300,000.

     The total principal balance of the Revolving Credit Line and the Time
Loan Mortgage as of December 31, 1996 was $27,000,000.  For the six month
period ended December 31, 1996, interest of $1,295,132 associated with the
Foothill mortgage and revolving line of credit was capitalized and will be
expensed (over the estimated benefit period) upon the opening of a casino on
the El Rancho property.

     (B) On September 17, 1996, the Company entered into a lease agreement
with Siemens Credit Corporation that provides for eighteen monthly lease
payments of $293 and an end buyout of approximately $42,000 for a new
telephone system at Freehold Raceway.  On December 16, 1996, the Company
entered into a lease agreement with Siemens Credit Corporation that provides
for eighteen monthly lease payments of $2,363 and an end buyout of
approximately $66,000 for a new telephone system at Garden State Park. The
Company recorded these transactions as capital leases.   At December 31, 1996,
$31,875 was classified as short term and $116,849 was classified as long term
on these leases.

    (C) In July, 1996, the Company entered into an agreement with GE Capital
Corporation with respect to financing $827,891 at an interest rate of 9.3% for
the purchase of 2 new natural gas powered air conditioners at Garden State
Park.  The contract provides for sixty consecutive monthly installments of
principal and interest of $17,067 beginning August 25, 1996.  At December 31,
1996, $204,807 was classified as short term and $733,893 was classified as
long term.  Interest expense on the note for the six month period ended
December 31, 1996 was $16,346.

    (D) On August 20, 1996, the Company made a final principal payment of
$1,405,000 on a note previously executed by Freehold Raceway.

(4)   INCOME TAX EXPENSE

     Effective July 1, 1993, the Company adopted the provisions of Statement
of Financial Standards (SFAS) No. 109, Accounting for Income Taxes.  This
Statement requires that deferred income taxes reflect the tax consequences on
future years of differences between the tax bases of assets and liabilities
and their financial reporting amounts.  The effect of adoption of this
Statement on current and prior financial statements is immaterial.
          
     When the Company incurs income taxes in the future, any future income
tax benefits resulting from the utilization of net operating losses and other
carryforwards existing at June 30, 1993 to the extent resulting from a quasi-
reorganization of the Company s assets effective June 30, 1993, will be
excluded from the results of operations and credited to paid in capital. 

     Freehold Raceway incurred a state income tax liability for the three and
six months ended December 31, 1996 and does not have the benefit of any state
income tax loss carryforwards to offset this liability.  A provision of
$57,600 and $96,810 was made for the respective three and six month periods
for this liability.

     A reconciliation of income tax expense at the Federal statutory rate to 
income
tax expense at the Company's effective rate is as follows:

<TABLE>
                               
                                        Three Months ended        Six Months ended 
                                          December 31,              December 31,
<CAPTION>
                                                                

   <S>                          <C>   <C>      <C>    <C>       <C>  <C>      <C>   <C>
                                       1996            1995          1996            1995

   Income Taxes at the Federal
       Statutory Rate           $         -0-  $       373,623  $       -0-   $      332,953 
   Utilization of Tax                     -0-         (373,623)         -0-         (332,953)
   Depreciation

   State Income Tax - Net of
       Federal Tax Benefit             57,600           91,475       96,810          122,275 

                                                             
   Provisions for Income Taxes  $      57,600  $        91,475  $    96,810   $      122,275 
</TABLE>

                                                    
     At June 30, 1993, the Company effected a quasi-reorganization in
accordance with generally accepted accounting principles.  The effect of the
quasi-reorganization was to decrease asset values for financial reporting, but
not for Federal income tax purposes.  Accordingly, depreciation expense for
Federal income tax purposes continues to be based on amounts that do not
reflect the accounting quasi-reorganization.


     The Company has a net operating loss carryforward of approximately
$170,000,000 at December 31, 1995, expiring in the years after June 30, 2001
through June 30, 2009.  SFAS No. 109 requires the establishment of a deferred
tax asset for all deductible temporary differences and operating loss
carryforwards.  Because of the uncertainty that the Company will generate
income in the future sufficient to fully or partially utilize these
carryforwards, however, any deferred tax asset of approximately $53,000,000 is
offset by an allowance of the same amount pursuant to SFAS No. 109 
Accordingly, no deferred tax asset is reflected in these financial statements.
                  

(5)   COMMITMENTS AND CONTINGENCIES

    The Company's wholly owned subsidiary, International Thoroughbred Gaming
Development Corp ("ITG" ), is responsible for implementing the development of
casino gaming business opportunities.  In January 1996, the Company purchased
the El Rancho Hotel and Casino property from an unrelated party, Las Vegas
Entertainment Network, Inc. ("LVEN").  The Company plans to develop the site
through Orion Casino Corporation.  The acquisition of the twenty-one acre El
Rancho property, located on the Las Vegas strip, was purchased for $43.5
million in cash and notes, plus contingent consideration of up to $160 million
(but not as a part of the purchase price), which is dependent on future
adjusted cash flows  as contractually defined,  to LVEN for the development
of the property by Orion.  The purchase price of $43,500,000 consisted of
approximately $12.5 million paid in cash (exclusive of final adjustments) with
the balance financed by:  1) a $6.5 million unsecured mortgage note at an 8%
interest rate which was refinanced in fiscal 1996;  2) assumption of a $14
million first mortgage note due on December 20, 1996, which was also
refinanced in fiscal 1996, secured by the land and building at a 13% interest
rate; and 3) a $10.5 million second mortgage note, at an 8% interest rate,
which is payable only to the extent that certain contingent events occur. The
purchase agreement for the El Rancho property provided that if, by October 25,
1996, the Company had not arranged for the necessary commitments to develop
the  Starship Orion project or a more modest project by the same date, and if
the seller, LVEN, (i) arranged for the Refinance Loan (as defined therein),
and (ii) paid all associated costs and deposits into an escrow account for a
minimum of six (6) month s interest on the refinanced or replaced Refinance
Loan and up to a minimum of  six (6) month s carrying costs for El Rancho,
then LVEN may have had the non-exclusive right for up to one year (the  Option
Period ) to appoint (during the last quarter of the Option Period) an
authorized licensed commercial real estate broker to arrange for the sale of
the property or obtain a minimum of $55 million in financing to develop the
property.  During the Option Period, the Company would have continued to have
the right to arrange for the financing to develop the El Rancho property.  If
such financing was arranged, LVEN's rights (if any) with respect to arranging
for the appointment of an authorized licensed commercial real estate broker or
refinancing would have terminated, as would any requirement to obtain LVEN's
consent before the sale by the Company of the site.  On October 25, 1996, LVEN
advised the Company that it was asserting its rights afforded during the
Option Period by arranging the prescribed escrow account.  On October 28, 1996
the Company announced that LVEN forfeited its rights with respect to the
purchase agreement because it failed to satisfy certain contractual pre-
conditions.  LVEN advised that it contested the Company's position.  On
February 4, 1997, the Company announced that all prior disagreements with LVEN
regarding their development of the El Rancho property have been resolved and
that preliminary construction is underway on a more modest project with a
country and western theme to be known as "Countryland USA".   Subject to the
completion of the financing arrangements, it is expected that a casino opening
will occur some time during the third quarter of fiscal 1998.  To date the
Company has not engaged any partners for its "Starship Orion" theme
development. The Company has not abandoned the "Starship Orion" concept as 
of this date and is evaluating its use at this or another location to be 
determined.

    It was estimated that the total cost of completion of the "Starship Orion"
project would be approximately  $1 billion dollars and that the
Company intended to develop the property with up to as many as six partners.
The Company engaged certain professional, legal, architectural 
and consulting services in connection with its development.  Capitalized costs
of $55,055,991 as of December 31, 1996 are costs required for the casino
development project.

     The Company is committed to yearly minimum carrying costs of the El
Rancho property of approximately $8,000,000 per year for interest, bank loan
fees, real estate taxes, security, maintenance, legal, professional,
consulting and other related costs.  Various demolition and construction
contracts of approximately $1,100,000 have been executed subsequent to
December 1996 for renovating a portion of the existing structures.   These
costs will increase substantially if the Company is successful in obtaining
financing it is seeking in order to complete the project.

    The Company made non-refundable deposits of $2,350,000 through the
second quarter of fiscal 1997 for a proposed purchase of a parcel of land
associated with the gaming development project.  On October 21, 1996, the
Company amended its agreement to extend the closing from on or before November
29, 1996 to and including December 27, 1996 under certain terms and conditions
which included a provision that the Company be required to make an escrow
deposit of $235,000 on or before October 31, 1996.  On October 30, 1996, the
Company perfected its election to extend the closing date with a deposit of
the required funds. This deposit was fully earned by the seller on December
27, 1996.  The purchase of the property would have allowed expanded frontage
and room for future expansion and increased parking.  The Company was unable
to procure the additional financing in order to finalize the purchase. 
According to the contract, if the Company failed to secure adequate financing
by a settlement date of December 27, 1996, deposits of $2,350,000 made to date
in addition to the extension deposit of $235,000 would be forfeited. On
January 9, 1997, the Company announced that it decided not to close on the
property.  Therefore, the Company  expensed deposits of $2,585,000 for the six
months ended December 31, 1996. (See Note 11-A)

    In connection with the purchase of the El Rancho project, and once the
project has been developed, completed and opened, LVEN, the seller of the
property, will retain the exclusive right to manage all aspects of Orion or
any other themed casino's entertainment activities subject to meeting certain
profitability criteria.  This would include; (i) responsibility for management
and oversight of booking all acts, performers, entertainers, movies,  rides
and other non-gaming attractions of any kind or nature at the property site,
(ii) arranging all advertising needs, and (iii) managing all other
entertainment venues.  The term of the agreement is for ten (10) years
commencing on the date which is six (6) months prior to the projected opening
date of the property, and LVEN shall have the option to renew the agreement
for two (2) consecutive five year terms.  The agreement provides LVEN with an
annual fee of $800,000 subject to annual increases.  LVEN will also receive an
additional; (i) twenty-five percent (25%) of profits from entertainment
activities, (ii) ten percent (10%) of the cost of all advertising placed by
Orion, and (iii) booking fees equal to ten percent (10%) of gross compensation
paid to talent. 

     In December 1995, Garden State Race Track, Inc. entered into an
agreement with an unaffiliated party, The Four B's of Vineland, New Jersey, to
sell a 56 acre parking lot tract at the Garden State Park which is presently
unused for racing purposes.  The contract calls for a purchase price of $11
million for the property, subject to normal closing adjustments.  The
agreement provided for a closing on or before December 15, 1996 (which date
was extended until June 15, 1997 following a deposit of $100,000 that was made
on December 15, 1996)  and is subject to standard real estate contingencies
including the receipt of all necessary governmental approvals to construct a
retail shopping center of approximately 300,000 square feet on the site, also
providing the purchaser a period of time to evaluate the feasibility of the
project.  On January 31,1997, the purchase agreement was amended to reflect a
new purchase price of $9,000,000 and if certain government approvals are
subsequently obtained the purchase price could increase by $2,000,000.  The
amended contract calls for the sale to close on or before  May 5, 1997 and the
purchaser has deposited in escrow an irrevocable Letter of Credit in the
amount of $375,000 in addition to the initial deposit previously made of
$25,000 on December 15,1995 and the deposit of $100,000 made on December 15,
1996.  The Company anticipates that the net proceeds from the sale will be
approximately $2,300,000 after the $6,000,000 in foreign notes are paid.  (See
Notes 3 and 11-F)

     On November 2, 1995, Robert E. Brennan resigned as Director, as Chairman
of the Board and as Chief Executive Officer of the Company.  Mr. Brennan
resigned these positions at the urging of the Company's Board of Directors
based on actions taken by New Jersey regulatory authorities which oversee the
casino and horse racing industries in the state.  The New Jersey Division of
Gaming Enforcement ("Division") filed a complaint with the New Jersey Casino
Control Commission ("Commission") seeking to prohibit the Company's two
racetracks, Garden State Park ("Garden State") and Freehold Raceway
("Freehold") from conducting industry business with any casino licensees. 
Garden State and Freehold currently receive revenues from parimutuel wagering
on races, including their own, simulcast to certain of the Atlantic City
casinos.  The Division based its complaint on the fact that Mr. Brennan, who
is also a principal shareholder of the Company, had been found in a June 1995
decision by Judge Richard Owen of the United States District Court for the
Southern District of New York in a civil action to be  liable for violating
federal securities laws in the years 1982 to 1985.   None of the alleged
securities law violations involved the Company, its securities, or its
operations.  The Division claims that Mr. Brennan s participation in the
Company's racetrack subsidiaries  would be inimical to the policies of the
Casino Control Act  and according to the Division, this would disqualify him
and the Company s two New Jersey racetracks from continued licensure with the
Commission.  Mr. Brennan has denied committing any violations of the federal
securities laws and  appealed Judge Owen s decision. On December 10, 1997, the
ruling against Mr. Brennan's was upheld by a federal appellate court. 

     The Division subsequently indicated a willingness to seek to resolve the
complaint provided that Mr. Brennan resign as Chairman of the Board, a
director of the Company and as an officer of any of the Company's subsidiaries
and provided further that Mr. Brennan enter into an agreement which would
place his approximately 2,900,000 shares of the Company s Common Stock into an
irrevocable dispositive trust, which would provide for the liquidation of all
his shares. On November 6, 1996, the Commission, over Mr. Brennan's
objections, accepted a proposed stipulation of settlement between Mr. Brennan
and the Division requiring Mr. Brennan to place his shares into a liquidating
trust contingent upon the approval, within sixty days thereafter,  of the
bankruptcy court overseeing Mr. Brennan's personal Chapter 11 bankruptcy
proceeding.  The liquidating trustee was to hold the shares in escrow and vote
the shares in the same proportion as the other stockholders of the Company. 
The agreement  required that the liquidating trustee dispose of the shares no
later than October 19, 1997 in the absence of  the occurrence of certain
events.  On January 8, 1997, the Company was advised that the federal
bankruptcy court approved the sale of Mr. Brennan s shares to NPD, Inc. 
Closing on the sale of the shares was completed on January 15, 1997. (See Note
11-B)

     The Company was also advised by the New Jersey Racing Commission, which
annually grants permits for the conduct of parimutuel racing at Garden State
and Freehold, that the Racing Commission was considering the issuance of a
Notice of Intention to suspend or revoke the permits held by Garden State and
Freehold based on Judge Owen's decision.  At a subsequent meeting, a
representative of the Racing Commission indicated that the previously 
described settlement to be considered by the Commission regarding Mr. Brennan
would be presented to the Racing Commission for its consideration.  The Racing
Commission was apprised of the settlement by the Casino Control Commission and
stated that it considered it a resolution of its concerns. 

     On March 20, 1996, the Company and Foothill Capital Corporation
("Foothill") of Los Angeles, California, signed a Letter of Intent for a
proposed borrowing of $30,000,000.  Closing on the financing contract took
place on June 4, 1996.  The financing arrangement, secured by among other
things, a mortgage on the El Rancho property, Garden State Park and a second
mortgage on Freehold Raceway is for a $16,000,000 revolving credit line and a
$14,000,000 Time Loan Mortgage, used at settlement to pay off the $14,000,000
mortgage note referred above due on December 20, 1996.   The maximum line of
credit balance is restricted by $3,000,000 until such time that an approved
settlement agreement has been reached concerning the shares of Common Stock
currently owned by Robert E. Brennan, the Company's former chairman.  The
Company anticipates that the restriction will be released following the
approved sale of Mr. Brennan's shares on January 15, 1997. (See Note 11-B) 
The revolving credit line requires that the Company make quarterly principal
payments of $400,000 beginning July 1, 1997.  Interest on the  outstanding
balance will be paid monthly starting July 1, 1996 at a rate of 2.75% above
the current published prime lending rate per annum. The Time Loan Mortgage
requires that the Company make equal monthly principal payments of $250,000
plus interest beginning July 1, 1997.  Interest on the outstanding balance
will be paid monthly starting July 1, 1996 at a rate of 2.75% above the
current published prime lending rate per annum.  The credit facility contains
financial and other covenants that  require the Company to maintain certain 
standards with respect to: (i) minimum tangible net worth of $70,000,000 (as
of December 31, 1996, the Company's tangible net worth was $72,940,091);  and
(ii) liabilities to tangible net worth ratio of not more than one to one (as
of December 31, 1996, the Company's liability to tangible net worth ratio was
 .971 to 1.0).  The covenants also require that (iii) that additional purchase
money financing and/or capital leases cannot exceed an aggregate $3,000,000. 
(See Notes 11-D & 11-J)

    The Company is a defendant in various lawsuits incident to the ordinary
course of business.  It is not possible to determine with any precision the
probable outcome or the amount of liability, if any, under these lawsuits:
however, in the opinion of the Company and its counsel, the disposition of
these lawsuits will not have a material adverse effect on the Company's
financial position, results of operations, or cash flows.

    On August 19, 1996, the Company and its financial advisor, Standard
Capital Group Inc. ("Standard Capital"), agreed to terminate their contractual
relationship.  In consideration of the agreement, the Company agreed to pay
Standard Capital all outstanding fees and expenses totaling $120,000 as of
August 14, 1996.  The Company, which had previously agreed to provide Standard
Capital with 250,000 five year warrants, each exercisable to purchase one
share of ITB Common Stock at an exercise price of $5.00, agreed to provide
Standard Capital with an additional 200,000 warrants, each identical to the
initial warrants. Financing costs of $334,000 have been accounted for and
expensed during the first half of fiscal 1997 for these warrants. (See Note
11-E)

    On September 17, 1996, the Company entered into a lease agreement with
Siemens Credit Corporation that provides for eighteen monthly lease payments
of $293 and an end buyout of approximately $42,000 for a new telephone system
at Freehold Raceway.  On December 16, 1996, the Company entered into a lease
agreement with Siemens Credit Corporation that provides for eighteen monthly
lease payments of $2,363 and an end buyout of approximately $66,000 for a new
telephone system at Garden State Park. The Company recorded these transactions
as capital leases.

    On September 26, 1996 the Board of Directors approved a three-year
employment contract for Joel H. Sterns, Chairman of the Board.  The contract
provided for Mr. Sterns to serve on a full-time basis through the period
ending on June 30, 1997 for an annual compensation of $384,000.  The contract
also provided that upon a  Termination Event , Mr. Sterns may be entitled to
receive certain amounts.  The removal of Mr. Sterns on November 4, 1996 prior
to the expiration of his term was deemed a  Termination Event  which, based on
his employment contract, exposed the Company to a future potential liability
and expense.  On January 15, 1997, a settlement agreement was approved whereby
Mr. Sterns would accept $252,000 in full and final settlement of all salary,
reimbursable expenses and termination payments to which he may be entitled. 
Payments are scheduled to include: 1) $75,000 in January 1997; 2) $15,000 per
month from February 1997 until December 1997; and 3) a  payment of $12,000 in
June 1997.  (See Note 11-C)

     On November 3, 1996 a group ("the Group") of shareholders, representing
approximately 56% (of which Robert E. Brennan represented 25%) of the
Company's outstanding Common Stock, filed a consent in accordance with Section
228 of the Delaware General Corporation law to remove certain directors and to
elect four new directors to the board of the Company.  Those immediately
removed as directors were Joel Sterns, Chairman of the Board, Roger Bodman,
Clifford Goldman, Steve Norton, Robert Peloquin and Arthur Winkler.  Those
elected as directors of the Company to fill the vacancies on the Board of
Directors, each to serve until the next annual meeting of stockholders or
until his successor is duly elected and qualified are: Frank A. Leo, John U.
Mariucci, James J. Murray and Frank Koenemund.  At a meeting of the Board of
Directors on November 5, 1996, Frank A. Leo was named Chairman of the Board.

     On December 5, 1996, NPD, Inc. ("NPD") entered into an agreement with
Robert E. Brennan to purchase 2,904,016, or 24.9%,  of the Company's Common
Stock owned by Mr. Brennan. Following the purchase on January 15, 1997,
the current directors of the Company other than Frank A. Leo, Robert J. 
Quigley, Charles R. Dees, Jr. and Francis W. Murray resigned
and Nunzio P. DeSantis, Anthony Coelho, Michael C. Abraham, Kenneth Scholl and
Joseph Zappala were appointed directors to serve until the next annual meeting
of stockholders of the Company and until their successors are duly elected. 
Mr. Zappala's term did not commence until January 25, 1997. Mr. Coelho will
serve as the Company's Chairman and Mr. DeSantis will be the Company s Chief
Executive Officer. (See Note 11-B) 

     On January 15, 1997 the Company obtained a commitment for a revolving 
$5,000,000 line of credit which may be call upon by the Company's Board of
Directors, subject to the approval of Foothill.  The Company is currently
negotiating with Foothill for said approval.  (See Note 11-D)

(6)   STOCK OPTIONS AND WARRANTS
      
     (A)   EMPLOYEE AND DIRECTORS STOCK OPTIONS

     On December 20, 1996, the Company granted 425,000 options to certain
employees and directors.  On November 3, 1996, 200,000 stock options
previously issued to two former directors, Mr. Peloquin and Mr. Goldman were
forfeited as a result of their removal from the board of directors.  (See Note
5)  At December 31, 1996, total employee options outstanding were 1,500,000. 
Total compensation cost recognized against income for stock-based employee
compensation awards was $18,871 and $-0- for the six months ended December 31,
1996 and 1995, respectively.  On January 20, 1997, the Company granted 450,000
options to certain employees and directors.  (See Note 11-E)

      (B)   NON-EMPLOYEE WARRANTS   

     The Company issued 200,000 warrants in connection with the financing of
the El Rancho property. Financing costs of $324,000 have been accounted for
and expensed during the first half of fiscal 1997 for these warrants.  At
December 31, 1996, total non-employee options outstanding were 1,125,000. 
Total compensation cost recognized against income for stock-based non-employee
compensation awards was $203,525 and $-0- for the six months ended December
31, 1996 and 1995, respectively.

     As of December 31, 1996 and 1995 , outstanding warrants and stock
options were as follows:

                                             December 31,
                                    1996                      1995

                             Related                   Related
   Expiration   Per Share    Parties       Others      Parties       Others

     Date        Price$      (000's)       (000's)     (000's)       (000's)

 Term of
 Employment(1)      5.875          325          -0-          325        -0-

 3/14/01 (2)         5.00          -0-          400          -0-        -0-
 6/4/01 (3)          5.00          -0-          250          -0-        -0-

 1/24/06 (4)         4.00          325          -0-          -0-        -0-

 4/23/06 (5)         4.00          -0-          275          -0-        -0-

 4/23/06 (6)        4.625          225          -0-          -0-        -0-    
                                                                                
 5/14/06 (7)         4.00          200          -0-          -0-        -0-

 8/14/01 (8)         5.00          -0-          200          -0-        -0-

 12/20/06 (9)        4.00          400          -0-          -0-        -0-

 12/20/01 (10)       4.00           25          -0-          -0-        -0-

                   Totals        1,500        1,125          325        -0-    
                                                                                

(1)   For a five year period between 12/20/94 to 12/20/99 for (4) employees, 
      if employed. (See Note 11-H)
(2)   Issued to two foreign banks in connection with two $3 million notes.
(3)   Issued to Standard Capital in connection with the Foothill financing 
      agreement. 
(4)   25,000 options each issued to three directors, namely Mr. Bodman, Mr.
      Dees, and Mr. Quigley and two former directors namely,
      Mr. Fisher and Mr. Fitzpatrick and 200,000 options issued to Mr.        
      Winkler, a former director and officer of the Company. 
      (See Note 11-H)
(5)   275,000 options issued to George E. Norcross III or his designee as a
      fee in connection with the El Rancho property.
(6)   Issued 75,000 options each to three directors namely, Mr. Quigley (also  
      an officer), Mr. Bodman and Mr. Dees.  
(7)   Issued 200,000 options to Mr. Joel Sterns, the Company's former
      chairman. 
(8)   Issued to Standard Capital in connection with the financing costs. 
(9)   Issued 200,000 options to Francis W. Murray, a director, and 200,000
      options to Mr. Leo, the Company's chairman.
(10)  Issued 25,000 options to Francis X. Murray, an employee, if employed.

      See subsequent event footnote 11-E for additional information .

                                              
(7)   INVESTMENTS
            
     Short term investments, classified as cash equivalents, consist of
trading securities, and interest bearing certificates of deposit and  money
market accounts whose cost approximates fair value due to the short period to
maturity.  Investment income consists of interest income and realized and
unrealized gains on trading securities.  In computing the realized gain, cost
was determined under the specific identification method.

     Short-term investments, classified as current assets on the balance
sheet, include the following captions:

                                                        December 31,         
                                                 1996                   1995
            Trading                       $    120,000             $   60,000
            Available For Sale               2,159,957              5,699,747
                  Totals                  $  2,279,957            $15,759,747 

     Management determines the appropriate classification of its investments
in debt and equity securities at the time of purchase and reevaluates such
determination at each balance sheet date.  Trading securities are securities
bought and held principally for the purpose of selling them in the near term
and are reported at fair value, with unrealized gains and losses included in
operations for the current year.  Any material unrealized gain and or loss
from available for sale securities would be reported as a separate component
of stockholders equity.

      At December 31, 1996, the Company held approximately $1,552,732, which
was classified as restricted cash and  investments.  These funds are primarily
cash received from horsemen for nomination and entry fees to be applied to
upcoming racing meets, purse winnings held in trust for horsemen and unclaimed
ticketholder winnings, all of which are classified as accounts payable. 

      Investment income for the three and six months ended December 31, 1996
includes unrealized gains of $5,000 and $40,000, respectively.  Investment
loss for the three months ended December 31, 1995 includes an unrealized
holding loss of $230,000 on trading securities.  Investment income for the six
months ended December 31, 1995 includes the unrealized holding loss of
$230,000 recognized during the second quarter of fiscal 1996 offset by an
unrealized holding gain of $50,000  on trading securities recognized during
the first quarter of fiscal 1996.  For the three and six months ended December
30, 1996, the were no realized gains resulting from the sale of trading
securities.  Realized gains resulting from the sale of trading securities for
the three and six months ended December 31, 1995 were $-0-, $7,500,
respectively.  Interest income for the three and six months ended December 31,
1996 was $40,358 and $89,376, respectively, and $141,265 and $283,630 for the
respective three and six month period in fiscal 1995.

      (8)   WRITE-OFF OF DEPOSITS

      The Company made non-refundable deposits of $2,350,000 through the
second quarter of fiscal 1997 for a proposed purchase of a parcel of land
associated with the gaming development project. (See Note 5)  On October 21,
1996, the Company amended its agreement to extend the closing from on or
before November 29, 1996 to and including December 27, 1996 under certain
terms and conditions which included a provision that the Company be required
to make an escrow deposit of $235,000 on or before October 31, 1996.  On
October 30, 1996, the Company perfected its election to extend the closing
date with a deposit of the required funds. This deposit was fully earned by
the seller on December 27, 1996.  The purchase of the property would have
allowed expanded frontage and room for future expansion and increased parking. 
The Company was unable to procure the additional financing in order to
finalize the purchase.  According to the contract, if the Company failed to
secure adequate financing by a settlement date of December 27, 1996, deposits
of $2,350,000 made to date in addition to the extension deposit of 
$235,000 would be forfeited.  On January 9, 1997, the Company announced that
it decided not to close on the property.  Therefore, the Company has expensed
deposits of $2,585,000 during the six months ended December 31, 1996.

(9)   NET INCOME PER SHARE

      Income per share for the three and six month periods ended December 31,
1996 and 1995 is computed on the weighted average number of shares
outstanding.  The Convertible Preferred Stock has not been included in the
computations because the conversion period has expired.  Outstanding Stock
Options of 2,425,000 which are considered common stock equivalents for fiscal
1997 were not included in the computation of average shares outstanding
because their inclusion would be anti-dilutive.  Fully diluted loss per share
has not been shown since such amount would not be dilutive.  The number of
shares used in the computations were 11,651,509 and 9,660,627 for the three
months ended December 31, 1996 and 1995, respectively and for the respective
six month periods were 11,651,501 and 9,603,043.

(10)  NEW AUTHORITATIVE PRONOUNCEMENTS
            
      The Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of in
March of 1995.  SFAS No. 121 establishes accounting standards for the
impairment of long-lived assets, certain identifiable intangibles, and
goodwill related to those assets to be held and used, and for long-lived 
assets and certain identifiable intangibles to be disposed of.   SFAS No. 121
is effective for financial statements issued for fiscal years beginning after
December 15, 1995. The Company adopted SFAS No. 121 on July 1, 1996.

      As more fully discussed in Notes 1-(E) & 5, the Company has incurred
approximately $52 million in construction and related costs associated with
its El Rancho/Orion project.  The Company is still in the process of obtaining
financing for this project.  While the Company intends to proceed with this
casino project, any significant reduction in financing will result in a more
modestly scaled project.  Application of SFAS No. 121 could prospectively
result in a write-down of costs incurred on the project if there is any
significant decrease in the market value of the property; any significant
adverse change in business climate; or any accumulation of costs significantly
in excess of amounts expected to complete the project.

     In October 1995, the Financial Accounting Standards Board issued SFAS
123,  Accounting for Stock Based Compensation,  which is effective for fiscal
years beginning after December 15, 1995.  Under SFAS 123, companies can elect,
but are not required, to recognize compensation expense for all stock-based
awards to employees, using a fair value methodology.  The Company implemented
on July 1, 1996 the disclosure only provisions of the fair value method, as
permitted by SFAS 123 for awards to employees.  The Company will continue to
account for stock-based awards to employees under the intrinsic value method in
accordance with Accounting Principles Board Opinion No. 25  Accounting for Stock
Issued to Employees.  SFAS 123 also applies to transactions in which an entity 
issues its equity instruments to acquire goods or services from non-employees. 
Those transactions must be accounted for based on the fair value of the
consideration received or the fair value of the equity instrument issued, 
whichever is more reliably measurable.  This requirement is effective for
transactions entered into after December 15, 1995.   The Company adopted the 
requirements of SFAS 123 for non-employee awards for the year ended June 30, 
1996.

      The FASB has also issued SFAS No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities".  SFAS No.
125 is effective for transfers and servicing of financial assets and
extinguishment of liabilities occurring after December 31, 1996.  Earlier
application is not allowed.  The provisions of SFAS No. 125 must be applied
prospectively; retroactive application is prohibited.  Adoption on January 1,
1997 is not expected to have a material impact on the Company.

(11)  SUBSEQUENT EVENTS

      (A) On January 9, 1997, the Company announced that it decided not to
close on the acquisition of a 15 acre supplemental, off-strip parcel adjacent
to its primary Las Vegas Strip property.    The Company reported an expense 
for the six months ended December 31, 1996 of $2,585,000 associated with this
decision. (See Note 8)

      (B) On January 15, 1997, NPD, Inc. completed a purchase, approved by the
federal bankruptcy court overseeing the assets of Robert E. Brennan, of
2,904,016 shares of the Company's Common Stock from Mr. Brennan, the Company's
former Chairman of the Board and Chief Executive Officer.  Following the 
purchase, the current directors of the Company other than Frank A. Leo,
Robert J. Quigley, Charles R. Dees, Jr. and Francis W. Murray resigned and
Nunzio P. DeSantis, Anthony Coelho, Michael C. Abraham, Kenneth Scholl and
Joseph Zappala were appointed directors to serve until the next annual meeting
of stockholders of the Company and until their successors are duly elected. 
Mr. Zappala s term did not commence until January 25, 1997. Mr. Coelho will
serve as the Company s Chairman and Mr. DeSantis will be the Company s Chief
Executive Officer. 

        (C) On January 15, 1997, a settlement agreement was approved whereby
Joel H. Sterns would accept $252,000 in full and final settlement of all
salary, reimbursable expenses and termination payments to which he may be
entitled as a result of the termination of his employment contract with the
Company effective November 2, 1997.  Payments are scheduled to include: 1)
$75,000 in January 1997; 2) $15,000 per month from February 1997 until
December 1997; and 3) a  payment of $12,000 in June 1997.  Costs of $252,000
related to this agreement have been expensed as of December 31, 1996.  (See
Note 5)

       (D) On January 15, 1997, the Company obtained a commitment for a
revolving $5,000,000 line of credit which may be called upon by the Company's
Board of Directors, subject to the approval of Foothill.  The Company is 
surrently negotiating with Foothill for said approval.

     (E)  On January 15, 1997 the Company granted 450,000 options to certain 
employees and directors.  The Company issued 300,000 options to purchase
300,000 shares of common stock at $5.00 per share to Francis W. Murray, a 
director, 50,000 options to purchase 50,000 shares of common stock at $5.00
per share to Edward Ryan, General Manager of Freehold Raceway, and 25,000
shares of common stock at $5.00 per share each to Francis X. Murray, a
director of Orion Casino Corp and to Frank Koenemund, John Mariucci and James
Murray, directors. (See Note 6).


     (F)  On January 27, 1997, the Company paid $250,000 to engage Standard
Capital Group to act as the Company's financial advisor and in order to render
certain financial advisory and investment banking services to the Company with
respect to potential transactions aimed at enabling the Company to capitalize
on its existing growth opportunities and to maximize shareholder value.

     (G) On January 31,1997, the purchase agreement between Garden State Race
Track, Inc. and the Four B's was amended to reflect a new purchase price of
$9,000,000, subject to obtaining certain government approvals which could
increase the purchase price by $2,000,000.  The amended contract calls for the
sale to close on or before  May 5, 1997 with the purchaser providing the
Company with an irrevocable Letter of Credit in the amount of $375,000 in
addition to the initial deposit previously made of $25,000 on December 15,
1995 and the deposit of $100,000 made on December 15, 1996 which extended the
closing until May 1997.  The Company anticipates that the net proceeds from
the sale will be approximately $2,300,000 after the two $3,000,000 foreign
notes are paid. (See Notes 3 and 5)

     (H) Effective February 1, 1997, the Company accepted the resignation of
Arthur Winkler, a Director and Executive Vice President of the Company and
President of the racetrack subsidiaries.  Mr. Winkler had been associated with
the Company for the past thirteen years.  As conditions of the termination of
his five year employment contract with the Company, Mr. Winkler will: 1) be
paid $200,000 over a twenty month period, $100,000 paid on the effective date
and $5,000 per month, commencing on February 1, 1997 until September 1, 1998;  
2) will surrender 125,000 stock options previously granted to him at an
exercise price of $5.87 per share; and  3) will retain 200,000 options
previously granted to him at an exercise price of $4.00 per share.  (See Note
6).  The Company will expense the entire compensation package of approximately
$200,000 during the third quarter of fiscal 1997.

     (I)  On February 4, 1997, the Company announced that all prior
disagreements with LVEN regarding their development of the El Rancho property
have been resolved and that preliminary construction is underway with an
expected casino opening under a country and western theme to be known as 
"Countryland USA" scheduled for some time during the third quarter of 
fiscal 1998.

     (J)  On February 7, 1997, Foothill released the restriction on the
$3,000,000 line of credit that was pending an approved settlement agreement 
concerning the shares of Common Stock owned as of December 31, 1996 (sold on
January 15, 1997) by Robert E. Brennan, the Company' s former chairman.  These
funds are expected to be drawn down in full during the fiscal year ended June
30, 1997. (See Note 3)

                                                    
                         INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                     AND SUBSIDIARIES

                    REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
                    FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 AND 1995




      An independent accountant has reviewed the financial information herein
in accordance with standards established by the American Institute of
Certified Public Accountants.  All adjustments and additional disclosures
proposed by said independent accountants have been reflected in the data
presented.


                    REVIEW REPORT OF INDEPENDENT ACCOUNTANTS

The Board of Directors and Shareholders
of International Thoroughbred Breeders, Inc.
      and Subsidiaries

      We have reviewed the accompanying consolidated balance sheet of
International Thoroughbred Breeders, Inc., and subsidiaries as of December 31,
1996, and the related consolidated statement of shareholders' equity for the
six month period then ended, the consolidated statements of operations for the
three and six month periods ended December 31, 1996 and 1995, and the
consolidated statement of cash flows for the six month periods ended December
31, 1996 and 1995.  These financial statements are the responsibility of the
company's management.

       We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants.  A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters.  It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.

       Based on our reviews, we are not aware of any material modifications
that should be made to the  consolidated financial statements referred to
above for them to be in conformity with generally accepted accounting
principles.

      We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet as of June 30, 1996, and
the related consolidated statements of operations, shareholders' equity, and
cash flows for the year then ended (not presented herein); and in our report
dated September 25, 1995, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth
in the accompanying consolidated balance sheet as of June  30, 1996, is fairly
stated, in all material respects, in relation to the consolidated balance
sheet from which it has been derived.
                                                    

                                              MOORE STEPHENS, P.C.
                                              Certified Public Accountants

      Cranford, NJ
      February 12, 1997



                                       
                            
                           MANAGEMENTS ANALYSIS OF FINANCIAL CONDITIONS
                                   AND RESULTS OF OPERATIONS
                          FOR THE QUARTER ENDED DECEMBER 31, 1996
                        AND FOR THE SIX MONTHS ENDED DECEMBER 31, 1996


OPERATIONS

      Total revenues for the three months ended December 31, 1996 and 1995
were $19,973,489 and $20,497,299 respectively.  Total revenues for the six
months ended December 31, 1996 and 1995 were $34,304,452 and $34,252,417
respectively.  The decrease of $523,810 for the three month periods is
primarily the net result of a decrease in revenues generated by Freehold
Raceway and Garden State Park.  Revenues for the comparable six month periods
are approximately the same primarily as a net result of a decrease in revenues
generated by Garden State Park offset by an increase in revenues generated by
Freehold Raceway for the comparable periods.
           
     The Company incurred a net loss from operations before taxes of
$3,036,221 and $3,527,499 for the respective three and six month periods ended
December 31, 1996 as compared to net income from operations before taxes of
$1,098,891 and $979,275 for the comparable periods in fiscal 1995.  The change
of $4,506,774 and $4,135,112 from net income to net loss before taxes for the
six and three month periods just ended primarily resulted from:  1) a write
off of $2,585,000 in deposits associated with the option to purchase a parcel
of land adjoining the El Rancho property in Las Vegas;    2) an increase in
corporate expenses primarily associated with the Company's involvement in
gaming development projects;  and 3) an increase in interest expense and
financing costs primarily resulting with the debts incurred to finance the
casino project and continuing operations.

      Depreciation and amortization expense for the six and three months ended
December 31, 1996 were $1,605,276 and $975,441 as compared to $730,256 and
$375,641 for the comparable periods in fiscal 1996 reflecting a $875,020 and
$599,800 increase primarily as a result of increased costs associated with
Company stock options granted during fiscal 1997.
Garden State Park:

      During the three and six months ended December 31, 1996, Garden State
Park realized income of $356,070 and $233,142, respectively before income tax
and interest due the parent company of $3,737,934 and $7,402,627 for the
respective three and six month periods. 

      Quarterly and year-to-date net income (loss) at Garden State Park for
the current fiscal year as compared to the net losses for last year are as
follows:

                          Net Income (Loss)                        Net

                        Fiscal 1997        Fiscal 1996      Increase (Decrease)

 1st Quarter      $       (122,928)     $      66,313     $       (189,241)
 2nd Quarter               356,070            187,723              168,347
                                                
 Year-to-Date     $        233,142      $     254,036     $        (20,894)


      During the three months ended December 31, 1996, Garden State Park's
revenue decreased $458,464 or 5% when compared to the same period last year,
primarily reflecting the net effect of:  1) decreased revenues generated by
simulcasting to and from the other racetracks;  and  2) decreased revenues
generated by live on-track racing. Expenses decreased $626,811 or 6% for the
three months ending December 31, 1996 when compared to the same period last
year primarily as a result of a decrease in general and administrative costs. 
The decrease in revenues and expenses primarily accounted for the racetrack
realizing net income from operations of $356,070 for the three months ended
December 31, 1996 as compared to income of $187,723 during the three months
ended December 31, 1995.

      During the six months ended December 31, 1996 Garden State's revenue
decreased $754,079 or 5% when compared to the same period last year, primarily
reflecting the net effect of the decreased revenues generated by simulcasting
and live on-track racing as discused above.  Expenses decreased $733,185 or 5%
for the six months ending December 31, 1995 when compared to the same period
last year primarily as a result of a decrease in general and administrative
costs.  As a result of decreased revenues and expenses, Garden State Park
realized income of $233,142 for the first half of fiscal 1997 as compared to
income of $254,036 for the first half of fiscal 1996.

      Garden State Park's 1996 Standardbred (Harness) Racing Meet began
September 6, 1996 and ran 55 dates on a four night per week basis until
December 14, 1996.

      ATTENDANCE AND HANDLES - The following summarizes average daily
attendance and wagering at Garden State Park as well as wagering on Garden
State Park races simulcast to other racing facilities and the Atlantic City
Casinos for the six month fiscal periods from July 1, 1996 thru December 31,
1996 and July 1, 1995 thru December 31, 1995:


                                    Approximate
                                    Commission 
                                    % of handle                DAILY AVERAGES

  HARNESS MEETS                                   Fiscal 1997      Fiscal 1996
                                                                               
  Attendance                                            2,206           2,434

        Live Handle                      13.4%    $   154,242     $   182,103

        Simulcast Sending Signal:

            New Jersey Tracks (Avg. %)    3.3%    $   338,424     $   391,232
                 Atlantic City Casinos    4.4%         29,309     $    36,553

                   Out-of-State Tracks    1.5%    $   888,891     $   929,190

        Combined Handles                          $ 1,410,867     $ 1,539,079

        Number of Live Race Days                           55              53


The following summarizes average handles experienced by Garden State Park in
connection with receiving simulcasts for the six month fiscal periods from
July 1, 1996 thru December 31, 1996 and July 1, 1995 thru December 31, 1995:

<TABLE>
                                                AVERAGE DAILY SIMULCAST HANDLES
 
                                          Fiscal 1997                 Fiscal 1996
 From Tracks *:                      # of days      ( $)        # of days       ( $)  
<CAPTION>
                                                                        

 <S>                       <C>              <C>   <C>                 <C>    <C>               
 New Jersey Tracks:

                 Monmouth  (T)              46        57,088           48        70,985

            Atlantic City  (T)              35        42,490           38        46,048
              Meadowlands  (T)              68        56,256           66        76,023
                 Freehold  (S)             101        24,242           99        29,426
              Meadowlands  (S)              34        54,149           36        76,122

 Out-of-State Tracks       (T,S)           184       223,570          182       229,560
     
  TOTAL RECEIVING HANDLE                          53,364,958                 57,608,093
</TABLE>

(T) = Thoroughbred, (S) = Standardbred    *The commission percentage of handle
averaged approximately 12% of total handles on simulcasting received during the
six months ended December 31, 1996.

     Garden State Park's 1997 Thoroughbred Meet began January 1, 1997 and is
scheduled to run through May 23, 1997.  Racing was conducted three times a
week during the month of January and is scheduled for Friday and Saturday
nights, and Sunday and holiday Monday afternoons during the remainder of the
meet, for a total of 63 racing dates.

     The Company has received approval from the New Jersey Racing Commission
to run a 51 night harness meet from September 6 through December 13, 1997.

      Freehold Raceway:

      The Company conducts Harness Racing through Freehold Racing
Association, Inc. ("FRA") and Atlantic City Harness, Inc. ("ACH"), the
operating companies of  Freehold Raceway.

      During the three and six months ended December 31, 1996, Freehold
Raceway realized income of $1,175,478 and $2,417,753, respectively before
income tax and interest due the parent company of $572,716 and $1,402,767 for
the respective three and six month periods. 

      Quarterly and year-to-date net income at Freehold Raceway for the
current fiscal year as compared to net income for last year are as follows:

                                           
                                            Net Income              Net

                        Fiscal 1997        Fiscal 1996      Increase (Decrease)

 1st Quarter      $      1,242,275      $     786,069     $        456,206

 2nd Quarter             1,175,478          1,744,847             (569,369)

 Year-to-Date     $      2,417,753      $   2,530,916     $       (113,163)

     During the three months ended December 31, 1996, Freehold Raceway's
revenue decreased $175,842 or 2% when compared to the same period last year,
primarily reflecting the net effect of:  1) a decrease in revenues generated
from the simulcasting of Freehold s races into other racetracks and a decrease
in revenues generated by live on-track racing;   2) a decrease in revenues
generated by simulcasting into Freehold from other New Jersey racetracks; 
partially offset by   3) an increase in revenues generated from the
simulcasting  into Freehold from out-of-state racetracks.  Expenses increased
$393,527 or 5% for the three months ending December 31, 1996 when compared to
the same period last year primarily as a result of an increase in operating
expenses.  The decrease in revenues and increase in expenses primarily
accounted for the racetrack realizing net income from operations of $1,175,478
for the three months ended December 31, 1996 as compared to income of
$1,744,847 during the three months ended December 31, 1995.

     During the six months ended December 31, 1996 Freehold Raceway's revenue
increased $841,558 or 5% when compared to the same period last year, primarily
reflecting the net effect of the decreased revenues generated by simulcasting
and live on-track racing as discused above offset by an increase in revenues
generated from the simulcasting into Freehold from out-of-state racetracks. 
Expenses increased $954,721 or 6% for the six months ending December 31, 1996
when compared to the same period last year primarily as a result of an
increase in operating expenses.   As a result of increased revenues and
expenses, Freehold Raceway realized income of $2,417,753 for the first half of
fiscal 1997 as compared to income of $2,530,916 for the first half of fiscal
1996.

     The Company has received approval from the New Jersey Racing Commission
to run a 99 day FRA harness meet from August 14 through December 31, 1997.

     During Fiscal 1997, Freehold Raceway will race under two separate
identities.  FRA raced 100 days from August 17, 1996 thru December 31, 1996. 
 ACH will race 106 days from January 1, 1997 through May 26, 1997.

      ATTENDANCE AND HANDLES - The following summarizes average daily
attendance and wagering at Freehold Raceway as well as wagering on Freehold
Raceway races simulcast to other racing facilities and the Atlantic City
Casinos for the three month fiscal periods from July 1, 1996 thru December 31,
1996 and July 1, 1995 thru December 31, 1995:


                                    Approximate
                                    Commission                DAILY  AVERAGES
                                    % of handle
  FRA HARNESS MEETS                                     Fiscal         Fiscal
                                                         1997            1996

                                                 
  Attendance                                              2,286         2,161

  Live Handle                              9.3%  $      248,816  $    283,361
  Simulcast Sending Signal:

       New Jersey Tracks (Avg. %)          3.6%  $      166,714  $    170,226

            Atlantic City Casinos          4.4%  $       23,937  $     23,547

              Out-of-State Tracks          1.5%  $      347,626  $    392,705

  Combined Handles                               $      787,096  $    869,839

  Number of Live Race Days                                  100            99

      The following summarizes average handles experienced by Freehold Raceway
in connection with receiving simulcasts for the six month fiscal periods from
July 1, 1996 thru December 31, 1996 and July 1, 1995 thru December 31, 1995:

<TABLE>
                  AVERAGE DAILY SIMULCAST HANDLES

                                           Fiscal 1997                  Fiscal 1996
 From Tracks *:                      # of days        ( $)         # of days    ( $)  
<CAPTION>
 <S>                       <C>             <C>       <C>              <C>      <C>
 New Jersey Tracks:

        Garden State Park  (S)              55        71,393           53       80,887

              Meadowlands  (S)              34       119,360           35      148,714
              Meadowlands  (T)              68        42,204           66       51,717

            Atlantic City  (T)              35        24,970           38       37,932

 Out-of-State Tracks       (T,S)           182       244,918          169      216,299

 TOTAL RECEIVING HANDLE                              502,845                   535,543
</TABLE>

(T) = Thoroughbred, (S) = Standardbred   *The commission percentage of handle
averaged approximately 11.3% of total handles on simulcasting received during 
the six months ended December 31, 1996.


LIQUIDITY AND FINANCIAL RESOURCES

       The Company's working capital (deficit), on a consolidated basis, as of
December 31, 1996, was ($2,995,152) which represents a decrease of
approximately $16,000,000 from December 31, 1995.  This decrease in working
capital of approximately $16,000,000  is primarily the result of the following
factors: 1) the utilization of cash of approximately $12,600,000  for the
purchase of the El Rancho property and deposits of $2,585,000 made and
subsequently forfeited on December 27, 1997 for an adjoining piece of
property;   2) an increase in cash of approximately $34,000,000 generated from
debt financing offset by principal payments of  approximately $24,200,000;  3)
capitalized expenditures and improvements of  $8,400,000 associated with
future casino development and $2,200,000 for the two racetrack properties;  
5) $400,000 for the purchase of land for a parking lot at the Freehold
racetrack facility (previously leased by the Company);  and   6) cash of
approximately $1,370,000 provided by operating activities.
                                           
       The Company's cash flows provided by operations were $1,369,996 during
the first half of fiscal 1997 compared to cash provided from operations of
$4,020,249 for the comparable period in fiscal 1996.  The decrease of
$2,650,253 was primarily the result of the expense of writing off deposits of
$2,585,000 associated with the forfeited option to purchase additional land
adjoining the El Rancho project during the three months ended December 31,
1996.

       Cash used for investing activities was $4,192,020 during the first
half of fiscal 1997 compared to $1,795,991 for the comparable period in fiscal
1996.  The increase was primarily the result of expenditures for future casino
development of $1,142,394 in addition to $2,115,000 for deposits associated
with the forfeited option to purchase additional land adjoining the El Rancho
project partially offset by a decrease of $861,365 in cash used for
improvements at the two racetrack properties.

       Cash provided by financing activities was $3,648,322 for the first half
of fiscal 1997 compared to cash provided during the comparable period by
financing activities in fiscal 1996 of $5,072,217.  During the first six
months of fiscal 1996, the Company raised $5,438,162  through a Regulation S
offering of the Company's Common Stock. During the first six months of fiscal
1997, cash was generated from debt financing of $5,263,650 primarily
associated with the revolving credit line with Foothill Capital Corporation
and from note proceeds of $827,891 in borrowings in connection with new air
conditioning equipment at Garden State Park.  Also during fiscal 1997, there
was an increase in principal payments of  $2,443,219 primarily as a result of
a final payment of $1,405,000 on a note previously executed by Freehold
Raceway and $627,466 of principal payments made on short term financing. 

       Restricted Cash and Investments of $1,552,732 as of December 31, 1996
consisted of horsemen's deposits held by the racetrack for race nominations, 
purse winnings,  and funds held for uncashed mutuel ticket sales due to the
patrons or government authorities.  These balances are offset with the
Company's accounts payable.  As restricted cash these cash funds are not
available for Company operations.

       On March 20, 1996, the Company and Foothill Capital Corporation of Los
Angeles, California, signed a Letter of Intent for the proposed borrowing of
$30,000,000.  Closing on the financing contract took place on June 4, 1996. 
The financing arrangement, secured by, among other things, a mortgage on the
El Rancho property, Garden State Park, and a second mortgage on Freehold
Raceway, is for a $16,000,000 revolving credit line and a $14,000,000 Time
Loan Mortgage, used at settlement to pay off the $14,000,000 first mortgage
note referred to in Note 5 above due on December 20, 1996.  The revolving
credit line is restricted by $3,000,000 until such time that an approved
settlement agreement between the New Jersey Division of Gaming Enforcement,
the Company and Robert E. Brennan, the Company's former chairman, has been
approved by the Bankruptcy Court overseeing Mr. Brennan's personal Chapter 11
bankruptcy proceeding.  The revolving credit line requires that the Company
make quarterly principal payments of $400,000 beginning July 1, 1997. 
Interest on the outstanding balance will be paid monthly starting July 1, 1996
at a rate of 2.75% above the current published prime lending rate per annum. 
The Time Loan Mortgage requires that the Company make equal monthly principal
payments of $250,000 plus interest beginning July 1, 1997.  Interest on the
outstanding balance will be paid monthly starting July 1, 1996 at a rate of
2.75% above the current published prime lending rate per annum.   The
financing agreement also provides for the lender to receive a monthly service
fee of $5,000;  a .5% monthly fee on the unused portion of the line of credit; 
and an annual 1% lender's commitment fee.  The total principal balance of the
revolving credit line and the Time Loan Mortgage as of December 31, 1996 was
$27,000,000 leaving a balance to draw on at September 30, 1996 of $3,521,772,
before the release of the $3,000,000 restriction.  Subsequent to September 30,
1996 and as of November 10, 1996 the Company has drawn an additional $228,908,
leaving a balance of $3,000,000 to draw upon.   The credit facility contains
financial and other covenants that  require the Company to maintain certain 
standards with respect to: (i) minimum tangible net worth of $70,000,000 (as
of December 31, 1996, the Company's tangible net worth was $72,940,091);  and
(ii) liabilities to tangible net worth ratio of not more than one to one (as
of December 31, 1996, the Company's liability to tangible net worth ratio was
 .971 to 1.0).  The covenants also require that (iii) that additional purchase
money financing and/or capital leases cannot exceed an aggregate $3,000,000. 

        In June 1996 the Company entered into a purchase agreement with
Sheraton Gaming Corporation  to purchase a fifteen acre tract directly behind
its El Rancho property.  On October 30, 1996, the Company made a payment of
$235,000 to extend the original closing date of November 29, 1996 to December
27, 1996.  The Company made payments of $470,000 during fiscal 1996 and 
$1,880,000 during the first quarter of fiscal 1997.  During the current
quarter, the Company could not arrange the necessary financing to finalize the
purchase.  Payments totaling $2,585,000 were forfeited on December 27, 1996.

        In July 1996, the Company entered into an agreement with GE Capital
Corporation with respect to financing $827,891 at an interest rate of 9.3% for
the purchase of 2 new natural gas powered air conditioners at Garden State
Park.  The contract provides for sixty consecutive monthly installments of
principal and interest of $17,067 beginning August 25, 1996.      

       On September 17, 1996 the Company entered into a lease agreement with
Siemens Credit Corporation that provides for eighteen monthly lease payments
of $293 and an end buy out of approximately $42,000 for a new telephone system
at Freehold Raceway.    On December 16, 1996, the Company entered into a lease
agreement with Siemens Credit Corporation that provides for eighteen monthly
lease payments of $2,363 and an end buyout of approximately $66,000 for a new
telephone system at Garden State Park.
             
     On January 15, 1997, the Company obtained a commitment for a revolving
$5,000,000 line of credit which may be called upon by the Company's Board of 
Directors, subject to the approval of Foothill.  The Company is currently 
negotiating with Foothill for said approval.

Seasonality and Effect of Inclement Weather

       Horse racing is conducted outdoors, therefore a number of variables
contribute to the seasonality of the business, most importantly weather. 
Weather conditions, particularly during the winter months, sometimes cause
cancellation of races or severely curtail attendance, which reduces wagering
and live racing and simulcast wagering both on site and off site.  Attendance
and wagering may be adversely affected by major winter storms which affected
the entire Northeast part of the country during the 1995-96 winter season.

       In addition a disproportionate amount of ITB's revenue is received
during the period September through May of each year because Garden State Park
and Freehold Raceway only conduct simulcast receiving (not live racing) during
the summer months.  As a result, the Company s revenue and net income have
been greatest in the second and third quarters of the year.       


INFLATION

       To date, inflation has not had a material effect on the Company's
operations.

                                             
                                          PART II

                                     OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K

       During the quarter ended December 31, 1995, the registrant filed a
current report on Form 8-K dated November 4, 1996 reporting the following:

       Item 5.    Other Events

                  On November 4, 1996, the Company received consents from a
            group of its shareholders representing 6,519,747 shares of the
            Company's Common Stock which removed six members of the Board of
            Directors and elected four new directors. 

                  On November 4, 1996, United States Bankruptcy Court judge
            granted a temporary restraining order against the Company's Board
            of Directors from implementing a proposed Shareholders'  Rights
            Plan which the board had planned to consider on that date.

                  On November 6, 1996, the New Jersey Casino Control
            Commission accepted a proposed stipulation of settlement agreement
            between Mr. Brennan and the New Jersey Division of Gaming
            Enforcement.


  
                                        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.


                         INTERNATIONAL THOROUGHBRED BREEDERS, INC.


February 13, 1997                   /s/Robert J. Quigley                      
                                    Robert J. Quigley
                                    President and Director




February 13, 1997                   /s/William H. Warner                      
                                    William H. Warner
                                    Treasurer, Principal Financial            
                                    and Accounting Officer