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  September 30, 1997
                                                        
                                    OR

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

For the transition period from          to 
                                     
       Commission file 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 May 15, 1998

Common Stock, $ 2.00 par value               13,978,095 Shares



                 INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                             AND SUBSIDIARIES

                        CONSOLIDATED BALANCE SHEETS
                AS OF SEPTEMBER 30, 1997 AND JUNE 30, 1997

                                  ASSETS

<TABLE>
<S><C>                               <C><C>       <C><C>
                                       September 30, 
                                          1997        June 30,
                                       (UNAUDITED)      1997

CURRENT ASSETS:                                      

   Cash and Cash Equivalents         $   3,789,692  $ 3,784,895
   Restricted Cash and                               
     Investments                         4,099,583    3,730,323
   Reserve Escrow Deposits              15,168,872   16,773,824            
   Accounts Receivable                   2,382,042    1,497,254
   Prepaid Expenses                      1,176,091    1,396,766
   Other Current Assets                    701,146      664,226
   Land and Improvements                             
      Held for Sale, Net                 6,767,715    6,762,809

        TOTAL CURRENT ASSETS            34,085,141   34,610,097


LAND, BUILDINGS AND EQUIPMENT:                       

   Land and Buildings                   69,365,953   69,255,937
   Construction In Progress             50,677,472   50,624,333
   Equipment                             5,426,526    5,261,367

                                       125,469,951  125,141,637

   LESS: Accumulated Depreciation                                 
          and Amortization               4,666,444    4,278,754
                                                     

        TOTAL LAND, BUILDINGS                        
          AND EQUIPMENT, NET           120,803,507  120,862,883
                                                     

OTHER ASSETS:                                        

   Deposits and Other Assets               905,994      272,337
   Deferred Financing                                
    Costs, Net                           5,176,765    5,907,432
   Goodwill, Net                         3,013,632    3,041,280

        TOTAL OTHER ASSETS               9,096,391    9,221,049

TOTAL ASSETS                         $ 163,985,039 $164,694,029

See Notes to Consolidated Financial Statements.     
</TABLE>


                 INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                             AND SUBSIDIARIES

                        CONSOLIDATED BALANCE SHEETS
                AS OF SEPTEMBER 30, 1997 AND JUNE 30, 1997

                   LIABILITIES AND STOCKHOLDERS' EQUITY


<TABLE>
<S><C>                               <C><C>         <C><C>
                                        September 30,  
                                            1997        June 30,
                                        (UNAUDITED)       1997

CURRENT LIABILITIES:                                   

  Accounts Payable                   $     3,901,720  $  3,984,638
  Accrued Expenses                         6,184,107     5,228,655
  Purses Payable                           2,105,500     1,984,050
  Current Maturities                                   
    of Long-Term Debt                     62,459,901    62,963,178
  Deferred Revenue                         2,933,241     1,750,572

   TOTAL CURRENT LIABILITIES              77,584,469    75,911,093

LONG-TERM DEBT,                                        
  Net of Current Portion                  12,994,132    13,131,003

COMMITMENTS AND CONTINGENCIES                -              -

STOCKHOLDERS' EQUITY:                                  

  Series A Preferred Stock,                             
    $100.00 Par Value,                                   
    Authorized 500,000 Shares,                         
    Issued and Outstanding,                            
    362,473 and 362,470 Shares,                        
    Respectively                          36,247,275    36,246,975

  Common Stock $2.00 Par Value,                        
    Authorized 25,000,000 Shares,                      
    Issued and Outstanding,                             
    13,978,077 and 13,978,060                          
    Shares, Respectively                  27,956,153    27,956,119

  Capital in Excess of Par                25,845,555    25,048,752
    (Deficit)(subsequent to
    June 30, 1993,                       
    date of quasi-reorganization)       (16,602,128)   (13,558,246)

       TOTAL                              73,446,855    75,693,600

  LESS: Deferred Compensation, Net            40,417        41,667

    TOTAL STOCKHOLDERS' EQUITY            73,406,438    75,651,933

TOTAL LIABILITIES AND                                  
 STOCKHOLDERS' EQUITY                $   163,985,039  $164,694,029


See Notes to Consolidated Financial Statements.        
</TABLE>

                 INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                             AND SUBSIDIARIES

              CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
               FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997
                             (UNAUDITED)

<TABLE>
<S>                                  <C><C>        <C><C>
                                         Preferred    
                                         Number of    
                                          Shares         Amount

BALANCE - JUNE 30, 1997                     362,470  $  36,246,975

   Compensation for Options                           
     Granted to Non-Employees               ---           ---

   Shares Issued for Fractional                       
     Exchanges With Respect to the                    
     One-for-twenty Reserve Stock
     Split effected on March 13, 1992             3            300

   Amortization of Deferred                           
      Compensation Costs                    ---           ---

   Net (Loss) for the Three Months                    
     Ended September 30, 1997               ---           ---

BALANCE - SEPTEMBER 30, 1997                362,473  $  36,247,275
                                                      

                                          Common      
                                         Number of    
                                          Shares         Amount

BALANCE - JUNE 30, 1997                  13,978,060  $   27,956,119

   Compensation for Options                           
     Granted to Non-Employees               ---           ---

   Shares Issued for Fractional                       
     Exchanges With Respect to the                    
      One-for-twenty Reverse Stock                    
      Split effected on March 13, 1992           17             34

   Amortization of Deferred                           
      Compensation Costs                    ---           ---

   Net (Loss) for the Three Months                    
     Ended September 30, 1997               ---           ---

BALANCE - SEPTEMBER 30, 1997             13,978,077  $  27,956,153
                                                      

                                          Capital     
                                         in Excess      
                                          of Par        (Deficit)

BALANCE - JUNE 30, 1997                $ 25,048,752  $(13,558,246)

   Compensation for Options                           
     Granted to Non-Employees               797,138       ---

   Shares Issued for Fractional                       
     Exchanges With Respect to the                    
      One-for-twenty Reverse Stock                    
      Split effected on March 13, 1992        (334)       ---

   Amortization of Deferred                           
      Compensation Costs                    ---           ---

   Net (Loss) for the Three Months                    
     Ended September 30, 1997               ---        (3,043,882)

BALANCE - SEPTEMBER 30, 1997           $ 25,845,555  $(16,602,128)
                                                      

                                         Deferred     
                                        Compensation     Total

BALANCE - JUNE 30, 1997                $   (41,667)  $  75,651,933

   Compensation for Options                           
     Granted to Non-Employees               ---            797,138

   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                      1,250          1,250

   Net (Loss) for the Three Months                    
     Ended September 30, 1997               ---        (3,043,882)

BALANCE - SEPTEMBER 30, 1997           $   (40,417)  $  73,406,438

See Notes to Consolidated Financial Statements.       
</TABLE>

                 INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                             AND SUBSIDIARIES

                   CONSOLIDATED STATEMENTS OF OPERATIONS
          FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
                            (UNAUDITED)


<TABLE>
<S><C>                                <C><C>        <C><C>
                                            Three Months Ended 
                                               September 30, 
                                            1997          1996

REVENUES:                                             

  Revenue from Operations              $  14,497,732 $  14,246,944
  Investment Income                           52,068        84,018

     TOTAL REVENUES                       14,549,800    14,330,962

EXPENSES:                                             

  Cost of Revenues:                                   
    Purses                                 4,061,104     3,904,373
    Operating Expenses                     6,907,354     7,647,154
    Depreciation &                                    
     Amortization                            429,604       392,256
  General & Administrative                            
     Expenses                              2,412,211     2,403,849
  Non-Employee Option Costs                  797,138        28,350
  El Rancho Property                                  
    Development Carrying Costs               372,494       393,125

     TOTAL EXPENSES                       14,979,905    14,769,107

OPERATING (LOSS)                           (430,105)     (438,145)

OTHER EXPENSES:                                       

  Interest Expense                         1,802,458       693,838
  Amortization of                                     
   Financing Costs                           761,204       200,041

     TOTAL OTHER EXPENSES                  2,563,662       893,879

(LOSS) BEFORE INCOME TAXES               (2,993,767)   (1,332,024)

  Income Tax Expense                          50,115        39,210

NET (LOSS)                             $ (3,043,882) $ (1,371,234)

NET (LOSS) PER SHARE                   $      (0.22) $      (0.12)

WEIGHTED AVERAGE COMMON                               
 SHARES OUTSTANDING                       13,978,067    11,651,495

See Notes to Consolidated Financial Statements.       
</TABLE>

            INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                         AND SUBSIDIARIES

               CONSOLIDATED STATEMENTS OF CASH FLOWS
      FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
                         (UNAUDITED)

<TABLE>
<S><C><C>                           <C><C>         <C><C>
                                          Three Months Ended 
                                             September 30,  
                                          1997           1996

CASH FLOWS FROM OPERATING                            
ACTIVITIES:                                          

  NET (LOSS)                         $  (3,043,882) $ (1,371,234)

  Adjustments to reconcile net
   (loss) income to net cash                         
   provided by operating                            
   activities:                                      

     Depreciation and                                
      Amortization                        1,190,808       592,298
     Compensation for                                
      Options Granted                       797,138       352,350
     Changes in Assets and                           
      Liabilities -                                  
       (Increase) Decrease
       in Restricted                       
       Cash and Investments               (369,260)       404,929
       (Increase) in                                
         Accounts Receivable              (884,788)   (1,091,814)
       (Increase) Decrease                          
         in Other Assets                   (36,920)       209,472
       Decrease in Prepaid                          
         Expenses                           220,675       339,972
       Increase in Accounts and                     
         Purses Payable and                         
         Accrued Expenses                   993,984     1,289,882
       Increase in Deferred                         
          Revenue                         1,182,669       706,454

  NET CASH PROVIDED BY                               
    OPERATING ACTIVITIES                     50,424     1,432,309

CASH FLOWS FROM INVESTING                            
ACTIVITIES:                                          

   Development of                                    
     El Rancho Property                    (53,139)     (660,916)
   Deposits on                                       
     New Mexico
     Racetrack Options                    (600,000)             0
   Deposits on Purchase                              
     of Land                                      0   (1,880,000)
   Capital Expenditures                              
     at Racetracks                        (302,090)     (702,851)
   (Increase) in                            
     Other Investments                     (33,657)      (42,428)

  NET CASH (USED IN)                                 
   INVESTING ACTIVITIES                   (988,886)   (3,286,195)

CASH FLOWS FROM FINANCING                            
ACTIVITIES:                                          

   Proceeds from issuance                            
     of Long Term Notes                           0       827,891
   Proceeds from Line of                             
     Credit - Foothill                            0     2,640,908
   Escrow Deposits Utilized               1,604,952             0
   Deferred Financing Costs                (21,545)      (82,376)
   Principal Payments on                             
     Short Term Notes                     (503,277)     (340,921)
   Principal Payments on                             
     Long Term Notes                      (136,871)   (1,727,051)

  NET CASH PROVIDED BY                               
   FINANCING ACTIVITIES                     943,259     1,318,451

NET INCREASE (DECREASE) IN                           
  CASH AND CASH EQUIVALENTS                   4,797     (535,435)

  CASH AND CASH EQUIVALENTS                          
   AT BEGINNING OF YEAR                   3,784,895     4,216,356

  CASH AND CASH EQUIVALENTS                          
    AT END OF PERIOD                 $    3,789,692 $   3,680,921
                                                     

  Supplemental Disclosures of Cash Flow Information: 

     Cash paid during the period for:                
     Interest                        $    1,297,820 $     735,917
     Income Taxes                    $            0 $         710
                                                     
  Supplemental Schedule of Non-Cash Investing and    
   Financing Activities:                             

  During the three months ended September 30, 1997 and 1996,
   the Company recorded unrealized gains of $-0- and $35,000, 
   respectively on trading securities.               

  During the three months ended September 30, 1996 the
   Company issued warrants to purchase 200,000 shares Common Stock at
   a fair value of $324,000 in connection with financing
   agreements.  There were no warrants issued in the three months 
   ended September 30, 1997.                       

See Notes to Consolidated Financial Statements.      
</TABLE>


              INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                         AND SUBSIDIARIES

                   NOTES TO FINANCIAL STATEMENTS
                            (Unaudited)



(1)   BASIS OF PRESENTATION

      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 months
ended September 30, 1997 are not necessarily indicative of the results that may
be expected for the year ended June 30, 1998.  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, 1997.

      The accompanying consolidated financial statements have been prepared
assuming the Company will continue as a going concern.  As discussed in Note 6,
the Company is in violation of several non-financial loan covenants with its
major lender.  As a result of not obtaining waivers of these violations, its
$55 million credit facility has been classified as a current liability and
could be demanded immediately.  The Company is continuing discussions with this
lender as to the granting of waivers or other remedies that could be reached in
connection with the litigation settlement negotiations described below.  

      Additionally, the Company and certain of its directors and stockholders
are involved in various legal proceedings  as more fully described in Note 8. 
Several of these actions are at a standstill as the parties are in the final
stages of settlement negotiations.  Although the parties believe a settlement
is imminent, there can be no assurance that a settlement will be reached or as
to the terms thereof.  In the event a settlement cannot be reached, it is not
possible to determine with any precision the probable outcome or the amount of
liability, if any, and the resultant effects on the Company's financial
position, results of operations or cash flows.

      Additionally, the Company has sustained a net loss of approximately $17.4
million and $1.1 million during the fiscal years 1997 and 1996, respectively,
and a net loss of $3,043,882 through September 30, 1997.  While the Company
believes its projected cash flows will be sufficient to meet its operating
needs through March 1999, there
can be no assurances beyond that date.  These projections do not reflect the
impact of its default under the above mentioned credit facility or the effects
of the above mentioned litigation.

      While the Company is continuing to monitor and reduce its operating
expenses, including payroll, it is also considering the sale of certain assets
or operations, including the possible sale of the El Rancho property as part of
the litigation settlement negotiations described above and the possible sale of
all or some of its racing operations.

(2)   CONSTRUCTION IN PROGRESS

      Construction in progress includes the purchase price as well as
preliminary construction  costs in conjunction with the development of the El
Rancho property.  These costs include real property acquisition costs in the
amount of approximately $43,500,000, capitalized interest of $4,182,007 and
other development costs in addition to approximately $2.2 million in carrying
costs.  As of July 1997, development has been temporarily suspended as
additional funding is being secured.  Accordingly, capitalization of interest
costs have been suspended until the Company obtains additional financing and
resumes construction.


(3)   ACQUISITIONS AND DISPOSITIONS

      OPTION TO PURCHASE OPERATING LEASES

      On July 1, 1997, the Company made a non-refundable payment of $600,000 to
purchase an option to acquire the operating leases from D&C Gaming Corporation
("D&C"), a company owned equally by the Company's CEO and the President and
Chairman of Las Vegas Entertainment Network, Inc. ("LVEN"), to acquire
operating leases for two New Mexico racetracks.  The option agreement has been
terminated and D&C has agreed to repay the $600,000 deposit.

      LAND AND IMPROVEMENTS HELD FOR SALE - NET
                
      During the second quarter of fiscal 1998, the Company sold a parcel of
land contiguous to Garden State Park  for $9,000,000 exclusive of closing costs
of approximately $545,000.  The carrying value of such property at September
30, 1997 was $6,767,715.  From the sales proceeds $6,000,000 was used to repay
an existing mortgage on the property.  The resulting gain will be recorded as
an adjustment to Stockholders' Equity in accordance with generally accepted
accounting principles applicable to a quasi-reorganization which the Company
effected as of June 30, 1993.


(4)   INVESTMENTS

      At September 30, 1997, the Company had approximately $4,100,000 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 amounts held for
unclaimed ticketholder winnings. 

(5)   RESERVE ESCROW DEPOSITS

      At September 30, 1997, $15,168,872 was held in various reserve cash
escrow deposit accounts that were established in connection with the Company's
two-year $55 million credit facility with Credit Suisse First Boston Mortgage
Capital LLC ("Credit Suisse").  The financing agreement provided for reserve
accounts to be held by LaSalle National Bank ("the Depository").  The Company
is currently in default with respect to the Credit Suisse credit facility and
could apply any remaining escrow amounts to any outstanding borrowings. 
Therefore, all balances in the Reserve Escrow Deposits have been classified as
current assets.  On the maturity date of the facility, any amounts remaining on
deposit shall, at Credit Suisse's option, be applied against outstanding
borrowings or returned to the Company.

       Interest Reserve Account. $10,000,000 of the loan proceeds were
deposited in a Interest Reserve Account to fund the monthly interest due on the
$55 million credit facility (approximately $588,000 per month).

      El Rancho Reserve Account. $3,759,615 of the loan proceeds were deposited
to reimburse the Company for expenditures in connection with the development
and carrying costs of the El Rancho property.  Through September  30, 1997, the
Company has been reimbursed $1,465,000 from this account.

      Working Capital Account. $760,000 of the loan proceeds were deposited for
working capital purposes.  Subsequent to September 30, 1997, upon the sale of
certain Garden State property, the Company deposited an additional $1,370,120
in this account. (See Note 3)

      Tax and Insurance Account. $916,898 of the loan proceeds were deposited
into a Tax and Insurance Reserve Account.  Each month the Company will make
deposits equal to one-twelfth, or approximately $300,000, of the amount
reasonably estimated by Credit Suisse to be sufficient to pay all taxes,
general and special assessments, water and sewer rents and other similar
charges levied against certain of the Company's properties. 

(5)   RESERVE ESCROW DEPOSITS (CONTINUED)

      Deferred Maintenance Account. $500,000 of the loan proceeds were
deposited to be used to reimburse the Company's racetracks for maintenance
expenditures.

      Environmental Remediation Account.$1,000,000 of the loan proceeds were
deposited to be used to reimburse the Company for expenditures made in
connection with approved environmental remediation expenditures.

The Escrow Accounts are summarized below: 

<TABLE>
<S>                       <C><C>
Account                       September 30, 1997

Interest Reserve          $            8,045,029
El Rancho Reserve                      3,759,615
Working Capital                          760,000
Tax and Insurance                      1,104,228
Deferred Maintenance                     500,000
Environmental Remediation              1,000,000

Total                     $           15,168,872
</TABLE>


(6)   NOTES AND MORTGAGES PAYABLE

           Notes and Mortgages Payable are summarized below:
<TABLE>
<S>                    <C>                   <C><C>          <C><C>
                                             September 30, 1997

                       Interest %  Per Annum      Current      Long-Term

INTERNATIONAL THOROUGHBREDBREEDERS INC.:                      
                                                              

Credit Suisse             LIBOR Rate plus 7%  $    55,000,000 $     -0-
 First Boston(A)                  (9/30/97                  
                                 rate 12.66%)                 

Other                              Various            139,123       -0-

FREEHOLD  RACEWAY:                                            

Kenneth R. Fisher (B)    80% of Prime (not to                 
                                   exceed 6%)         625,000  10,625,000
                            (9/30/97 rate 6%)                 

Kenneth R. Fisher (C)            80% of Prime                 
                          (9/30/97 rate 6.6%)         225,000   1,737,220

Other                                                  44,696         -0-

GARDEN STATE PARK:                                            

Sun National Bank(D)    Prime (9/30/97 rate 8.5%)   6,000,000         -0-

Other                                 Various         426,082     631,912

    Totals                                    $    62,459,901$ 12,994,132
</TABLE>
The effective LIBOR Rate and the Prime Rate at September 30, 1997
was 5.66% and 8.50%, respectively.                     

 (A) On May 23, 1997, the Company entered into a two-year $55 million
credit facility with Credit Suisse secured by a pledge of certain of the
personal and real property of the Company and its subsidiaries (the "Credit
Suisse Credit Facility").  Proceeds of this facility were used to repay in full
the Company's $30 million credit facility with Foothill Capital Corporation and
will also provide funds for working capital and other general corporate
purposes, including, but not limited to, preliminary development of the El
Rancho property.  Interest under the Credit Suisse Credit Facility is payable
monthly in arrears at 7% over the London Interbank Offered Rate ("LIBOR"). The
scheduled maturity date of the facility is June 1, 1999.  Of the remaining
facility borrowings, approximately $16.8 million was placed in escrow accounts,
financing and closing fees of $4.3 million were incurred and $3.9 million was
used by the Company for general corporate purposes and repayment of certain
financial obligations.

 The Credit Suisse Credit Facility is evidenced by a convertible
promissory note (the "Credit Suisse Note") pursuant to which up to $10 million
of the aggregate principal amount of the Credit Suisse Note can be converted,
in certain circumstances, including upon the maturity date of the Credit Suisse
Note, upon the prepayment of $10 million in aggregate principal amount of the
Credit Suisse Note or upon the acceleration of the Credit Suisse Note, at the
option of Credit Suisse, into shares  of the Company's Common Stock at a
conversion price of $8.75 per share (subject to adjustment in certain events). 
In addition, Credit Suisse was granted warrants to purchase 1,044,000 shares at
an exercise price of $4.375 per share (subject to adjustment in certain
events).  The warrants to purchase 546,847 shares are immediately exercisable,
have been valued at approximately $1.6 million and have been recorded as
original issue discount.  The warrants to purchase 497,153 shares become
exercisable at such time as Credit Suisse delivers to the Company a firm
commitment for additional funding of no less than $50 million to the Company in
connection with the development of the El Rancho property.

 Credit Suisse also received 232,652 shares of Common Stock upon the
conversion into Common Stock of a $10.5 million promissory note issued by the
Company to LVEN  in consideration for Credit Suisse's consent and for certain
advisory services in connection with this  transaction.  Credit Suisse has the
right to receive further shares upon the consummation of a proposed related
acquisition by the Company of Casino-Co., a subsidiary of LVEN, equal to 10% of
the stock consideration paid by the Company for such acquisition.  The Company
has granted Credit Suisse certain registration rights with respect to the
warrants and the shares.

 The Credit Suisse Credit Facility also provides for both affirmative and
negative covenants, including financial covenants such as tangible net worth,
as defined in the Credit Facility.  The Company is not in compliance with
certain non-financial covenants.  As a result of not obtaining waivers of these
violations, its $55 million credit facility has been classified as a current
liability and could be demanded immediately.

 In connection with pending litigation, the minority Board members have
challenged the authorization and enforceability of certain agreements entered
into and actions taken by the Company, including the Credit Facility and 
certain related agreements and related actions. (See Note 8). 

 (B) On February 2, 1995, the Company entered into an agreement with the
former owner of Freehold Raceway whereby the $12.5 million balance of the
purchase price of the Freehold Raceway was financed by an eight year promissory
note at 80% of the prevailing prime rate, not to exceed 6%.  Yearly principal
and interest payments during the first five (5) years commencing January 1,
1996 is based upon a twenty (20) year principal amortization schedule.  During
each of the next three (3) years, commencing January 1, 2001, yearly principal
and interest payments shall be based upon a ten (10) year amortization
schedule.  On January 1, 2003, the entire unpaid principal balance, together
with any accrued interest, becomes due and payable.  The note is secured by a
mortgage on the land and buildings at Freehold Raceway. 

 (C) On February 2, 1995, the seller of Freehold Raceway  advanced to
Freehold Raceway $2,584,549 towards the retirement of $5.2 million of existing
debt on Freehold Raceway.  The seller received from Freehold Raceway in  fiscal
1995, a promissory note evidencing the indebtedness secured by a mortgage on
the racetrack property and other collateral.  Equal monthly principal
installments of $18,750 beginning on February  1, 1995 is paid to the seller
together with accrued interest.  Interest is calculated at 80% of the prime
rate at January 1 of each year.  The note is secured by a mortgage on the land
and buildings at Freehold Raceway.

 (D) In June 1997, the Company received financing of $6,000,000 from Sun
National Bank (which was used to pay two $3,000,000 mortgage notes), by issuing
a $6,000,000 mortgage note.  On October 20, 1997, the Company retired the
$6,000,000 mortgage note with proceeds from the sale of a portion of the Garden
State property.  The note was originally due in December 1998.  Interest due on
the note was paid by the purchaser of certain property from Garden State Park. 

(7)   INCOME TAX EXPENSE
 
 The Company's income tax expense for the three month periods ending
September 30, 1997 and 1996 relates to New Jersey income taxes for its Freehold
Raceway operations.


(8)   COMMITMENTS AND CONTINGENCIES 

 During January 1996 the Company purchased the El Rancho property from
LVEN.  The original agreement provided that, following the development of the
property, LVEN would receive, as additional consideration, an interest in the
"adjusted cash flow" in the amount of 50% for the first six (6) years following
the opening of a casino and 25% thereafter until such time as LVEN had received
$160,000,000, but only after (a) the Company recouped: 1) the aggregate amount
of cash payments applied to the purchase price; 2) payments made under the $6.5
million note and the $10.5 million note;   3) $2 million;   and  4) any amounts
that the Company invested in the property after the purchase,  together with
interest at eight percent (8%) per annum from the date of the investment; (b)
LVEN has:   1) received payment of all principal and interest, if any,
remaining outstanding under the $6.5 million note and/or the 
$10.5 million note;   and 2) recouped $4 million plus any amount invested in
the El Rancho property after the purchase and approved by the Company, together
with interest thereon at a rate of 8% per annum from the date of investment; 
and (c) the Company has received an additional $2 million, together with
interest thereon at the rate of 8% per annum from the date of the purchase. 
This agreement was amended on May 23, 1997 by the Bi-Lateral Agreement between
the Company and LVEN to limit to $35 million the aggregate amount for which the
Company is entitled to recover under (a) and (c) above.

 The term "adjusted cash flow", as defined, refers to cash flow from the
property before taxes, less the payment of any debt retirements and capital
lease payments and less certain fees received or accrued for certain initial
rent or lease payments.  The Bi-Lateral Agreement, signed in connection with
the $55 million Credit Suisse Credit Facility, limited the maximum debt service
to be netted against cash flow from operations of the El Rancho property in
computing "adjusted cash flow" to $65 million, with a further limitation to $27
million in the event that additional financing over the $55 million is not
required for the development of the El Rancho property. 

  On May 23, 1997, the original agreement with LVEN was also amended by a
Tri-Party Agreement among the Company, LVEN and Credit Suisse whereby the
Company is required to acquire Casino-Co, a wholly owned subsidiary of LVEN,
whose principal asset is the $160 million profit participation note described
in the preceding paragraphs.  The acquisition may be accomplished by the
purchase of all the stock of Casino-Co or a merger of the companies.  The
Company would be required to issue its stock, the price of which will be
subject to fairness opinions from independent investment banking firms
independently representing the Company and LVEN, to:  1) LVEN in an amount
equal to 90% of the greater of the fairness opinions obtained by the Company
and LVEN;   and to 2) Credit Suisse in an amount equal to 10% of the greater of
the fairness opinions obtained by the Company and LVEN.  If this acquisition is
approved by the Company's stockholders and Board of Directors, and completed,
the Company's requirement for the sharing of cash flow, described above, will
be canceled.

 In connection with the purchase of the El Rancho property, Las Vegas
Communications Corporation ("LVCC"), a subsidiary of LVEN,  retained the
exclusive right to manage all aspects of the property's entertainment
activities.   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 LVCC shall have the option to renew the agreement for two (2)
consecutive five year terms.  The agreement provides LVCC with an annual fee of
$800,000 subject to annual increases and other additional amounts. Pursuant to
the Bi-Lateral Agreement entered into by the Company and LVEN in connection
with the Credit Suisse Credit Facility, the parties agreed to amend the
entertainment management agreement to provide for a lease by the Company to
LVCC of space within the El Rancho Property on or from which all food, beverage
and retail activities will be conducted (exclusive of the mezzanine space, the
rights to which will be retained by the Company).  The terms of such lease
arrangements have not been finalized.
 
 In connection with pending litigation, the minority Board members have
challenged the authorization and enforceability of certain agreements entered
into and actions taken by the Company, including the Credit Facility and
certain related agreements and related actions. 

 Effective January 15, 1997, the Company entered into a ten-year
employment contract with Nunzio P. DeSantis, the Company's Chief Executive
Officer.  The contract provides for annual compensation of $450,000, adjusted
annually by increases, if any, in certain Consumer Price Indexes.  Mr. DeSantis
will also receive a performance bonus for each fiscal year during the term of
the agreement equal to the excess of the amount, if any, by which the pre-tax
income of the Company exceeds $2 million, limited to an amount equal to his
base salary.  As part of his contract, Mr. DeSantis was awarded options,
subject to stockholder approval, to purchase 5,000,000 shares of the Company's
Common Stock at $4 per share.  Upon obtaining stockholder approval for the
awarding of the options, the Company may need to record as compensation an
expense calculated by multiplying the number of shares covered by the option by
the difference between the intrinsic value of each share and the exercise price
at the measurement date.  An expense would only be recorded if the exercise
price is below the market price at the measurement date.  Options to purchase
500,000 shares of Common Stock would be exercisable immediately and options to
purchase an additional 500,000 shares of  Common Stock would become exercisable
on each succeeding anniversary of the effective date of the agreement, 
provided, however, that all options shall be fully vested if Mr. DeSantis
resigns for good reason (as defined in the agreement), resigns upon a change of
control, or if he is discharged without cause.  Mr. DeSantis is entitled to
additional fringe benefits, including the use of a private jet, in connection
with the performance of his duties. This contract is a subject of the pending
litigation discussed below. 

 Effective January 15, 1997, the Company entered into a consulting
contract with Anthony Coelho, the Company's Chairman of the Board, that
provides for $10,000 per month in consulting fees on a month-to-month basis,
$2,500 for each director's meeting he attends and other fringe benefits.  As
part of this contract, Mr. Coelho was awarded options, subject to stockholder
approval, to acquire 1,000,000 shares of the Company's Common Stock at an
exercise price of $4 per share.  100,000 shares would become exercisable
immediately and options to acquire 100,000 shares would become exercisable on
each succeeding anniversary of the effective date of the agreement.  Upon
obtaining stockholder approval for the awarding of these options, the Company
will need to record an expense calculated by using the fair value of the
options at that date. This contract is a subject of the pending litigation
discussed below.

 During July 1997, the Company executed an agreement to lease office space
in Albuquerque, New Mexico for a five year period, expiring on July 31, 2002.  
The lease provides for a monthly rent of approximately $10,000 when the space
is fully occupied.  In connection with this lease, the Company has sub-leased a
portion of the premises to AutoLend Group, Inc. ("AutoLend"), for $600 per
month.  The sublease is terminable on 30 days written notice.  Mr. DeSantis is
the Chairman, Chief Executive Officer and a principal stockholder of AutoLend
and Mr. Coelho is a director. 
                                                             
      
 During October 1997, the Company terminated the employment of the
Company's President, Robert J. Quigley.  The severance package approximating
$300,000, payable through December 1998, will be expensed in the second quarter
of fiscal 1998. 

 The New Jersey Division of Gaming Enforcement ("DGE") is currently
investigating in accordance with its statutory obligation to determine the
qualification of the Company and its directors and significant stockholders in
connection with Garden State Park's and Freehold Raceway's licenses with the
Casino Control Commission ("CCC") and the Racing Commission.  The Company has
no information with respect to the potential outcome of such investigation.  In
the event that the DGE concludes that one or more of such individuals are not
qualified, the CCC and/or the Racing Commission may require any such
stockholder to divest his interests and any such director may be asked to
resign.  Failure of such individuals to comply with such requests could
jeopardize the Company's racing licenses and ability to conduct business with
any casino licensees, including simulcasting to Atlantic City casinos.


 LEGAL PROCEEDINGS

 On or about September 10, 1997, three actions were filed in Delaware
Court of Chancery in and for New Castle County (the "Chancery Court"), each of
which named the Company as a nominal defendant (collectively, the "Delaware
Actions").  Additionally, on or about February 24, 1998, another action was
filed in the United States District Court for the District of New Jersey (the
"New Jersey District Court") naming
the Company as a nominal defendant.  These actions are summarized below:

Mariucci et. al. v. DeSantis et. al.

 The first Delaware Action, captioned John Mariucci, Robert J. Quigley,
Charles R. Dees, Jr., James J. Murray, Francis W. Murray, Frank A. Leo, and The
Family Investment Trust (Henry Brennan as Trustee) v. Nunzio P. DeSantis,
Michael Abraham, Anthony Coelho, Kenneth W. Scholl and Joseph Zappala and
International Thoroughbred Breeders, Inc., C.A. No. 15918NC ("Mariucci"),
alleged, among other things, that (i) NPD had breached the terms of the NPD
Acquisition Agreement by failing to fund a line of credit, (ii) as a result of
such breach, the resignations of Messrs. Mariucci, James Murray and Keonemund
(the "Old Directors") were ineffective and (iii) Messrs. DeSantis, Coelho,
Abraham, Scholl and Zappala ( the "New Directors") were misusing the assets of
the Company for their personal benefit.  The Mariucci complaint sought an order
(a) pursuant to Section 225 of the Delaware Business Corporation Law,
determining that (1) the New Directors were not validly appointed or elected to
the Board and (2) Frank Koenemund, John Mariucci and James Murray,
notwithstanding their written resignations upon the NPD Acquisition and the
acceptance of those resignations by the Company's Board, continued as directors
of the Company (the "Section 
225 Claims") and (b) preserving the status quo pending a final adjudication of
the Section 225 Claims.  On September 
18, 1997, the plaintiffs filed an amended complaint.  On September 26, 1997,
the New Directors and the Company filed a motion to dismiss, or in the
alternative, to strike allegations of the amended complaint (the "Motion to
Dismiss").  The Chancery Court granted the motion to dismiss by opinion dated
October 14, 1997.  The time for appeal of the Chancery Court order has expired
and no appeal has been taken by the plaintiffs.

Quigley et. al. v. DeSantis et. al.

 The second Delaware Action, captioned Robert J. Quigley, Frank A. Leo ,
and The Family Investment Trust (Henry Brennan as Trustee) v. Nunzio P.
DeSantis, Michael Abraham, Anthony Coelho, Kenneth W. Scholl, Joseph Zappala,
Joseph A. Corazzi and Las Vegas Entertainment Network, Inc. And International
Thoroughbred Breeders, Inc., C.A. No. 15919NC ("Quigley"), is a derivative suit
brought by two of the Old Directors (Messrs. Quigley and Leo) and the Family
Investment Trust (collectively, the "Quigley Plaintiffs") which alleges, among
other things, that the New Directors have breached their fiduciary duties to
the Company, usurped corporate opportunities belonging to the Company and
incorrectly stated minutes of Board meetings to omit material discussions.  The
Quigley complaint alleges that the New Directors entered into certain
agreements on behalf of the Company in violation of the "super-majority" voting
provisions of the Company's By-laws and their fiduciary duty to the Company,
including but not limited to, the Credit Suisse Loan Agreement,
the Tri-Party Agreement, the Bi-Lateral Agreement, the D&C Gaming option
agreement, the DeSantis employment agreement and Coelho consulting
agreement.  The Quigley complaint seeks (i) a declaratory judgment that
(a) certain actions taken by the New Directors are null and void and 
(b) the "super-majority" provisions of the Company's By-laws remain in full
force and effect, (ii) recission of certain actions taken by the Company's
Board and (iii) damages as a result of the allegedly unauthorized and
allegedly unlawful conduct of the defendants. 
On November 7, 1997, the New Directors and the Company filed  answers to the
Quigley complaint denying all of the material allegations contained in the
Quigley complaint.


 On November 18, 1997, the Company filed an amended answer and
counterclaim (the "Counterclaim") against Messrs. Quigley, Leo, Francis Murray
and Dees (collectively, the "Counterclaim Defendants").  The Counterclaim
alleges that the Counterclaim Defendants have breached their fiduciary duty to
the Company by  (i) adopting, and subsequently refusing to recognize the repeal
of certain "super-majority" By-law provisions in order to aid Brennan in
retaining control of the Company's business affairs and jeopardizing the
Company's licenses and registrations, (ii) interfering in the Company's hiring
of new independent auditors thereby causing the Company to be delinquent in its
required filings with the Securities and Exchange Commission ("SEC") and
causing the suspension of trading in the Company's stock on the American Stock
Exchange, (iii) using corporate funds for their personal uses and (iv) usurping
corporate opportunities properly belonging to the Company.  The Counterclaim
seeks injunctive relief enjoining the
Counterclaim Defendants from, among other things, interfering in the Company's
day-to-day business operations, the establishment of a constructive trust over
certain assets of the Counterclaim Defendants, a declaratory judgement that 
the "super-majority" voting provisions have been repealed and money damages. 
On December 4, 1997, the Quigley plaintiffs filed a motion to conduct a
separate expedited trial on the "super-majority" By-law issues, which motion
was withdrawn by the Quigley plaintiffs at a February 10, 1998 scheduling
conference.  At the February 8 scheduling conference, the Chancery Court
scheduled this matter for trial commencing May 20, 1998.  The Counterclaim
Defendants answered the Counterclaim on January 12, 1998 (the "Counterclaim
Answer") and, in the Counterclaim Answer, Mr. Murray asserted a wrongful
discharge and seeks monetary damages.

Rekulak et. al. v. DeSantis et. al.

 The third Delaware Action, captioned James Rekulak v. Nunzio P. DeSantis,
Michael Abraham, Anthony Coelho, Kenneth W. Scholl, Joseph Zappala, Las Vegas
Entertainment Network, Inc. and Joseph A. Corazzi and International
Thoroughbred Breeders, Inc., C.A. No. 15920 ("Rekulak"), is a derivative suit
which in essence repeats the allegations contained in the Quigley complaint and
seeks similar relief.  The Rekulak action was consolidated with the Quigley
action pursuant to a stipulation and order dated January 13, 1998.  
      
 The trustee of Brennan's Bankruptcy Estate, as well as the SEC, have
participated to a limited extent in discovery in the litigation of the Quigley
and Rekulak actions.  The Trustee and the SEC's involvement is predicated upon
overseeing any possible interests of the Bankruptcy Estate and the SEC.

Rekulak v. DeSantis et. al.

 On or about October 8, 1997, James Rekulak filed a complaint in the 
Chancery Court captioned Rekulak v. DeSantis, et al.,  Civil Action No. 15978,
which purports to be a complaint under Section 225 of the Delaware General
Corporation Law and contains substantive allegations that are virtually
identical to those in the complaint in the Mariucci action described above.  On
October 8, 1997, the plaintiff in this action sought to have his complaint
consolidated with the complaint in the Mariucci action and represented to the
Chancery Court that he was willing to be bound by the Chancery Court's decision
on defendants' Motion to Dismiss the Mariucci action.  As set forth above, the
Mariucci action was dismissed by the Chancery Court's opinion dated October 14,
1997, and thereafter, this action was dismissed with prejudice by a stipulation
and order dated February 9, 1998.   

Harris v. DeSantis, et al.

 The most recent action, filed on February 24, 1998 in the
New Jersey District Court, captioned Myron
Harris, derivatively on behalf of International Thoroughbred Breeders, Inc., a
Delaware corporation v. Nunzio, P. DeSantis, Anthony Coelho, Kenneth W. Scholl,
Michael Abraham, Joseph Zappala, Frank A. Leo, Robert J. Quigley, Charles R.
Dees, Jr. and Francis W. Murray ("Harris"), C.A. No. 98-CV-517 (JBS), is a
derivative suit brought by a stockholder of the Company.  The factual
allegations and claims asserted in the Harris complaint are virtually identical
to the claims asserted in the Quigley complaint and in the Counterclaim
asserted by the Company in the Quigley action.

 The Harris action has been assigned to The Honorable Jerome B. Simandle,
United States District Judge.  On April 28, 1998, all defendants in the Harris
action filed a Motion for Reassignment, seeking that the Harris case be
reassigned to The Honorable Joseph H. Rodriguez, United States District Judge,
as Judge Rodriguez had already been assigned two related cases involving
members of the Board.  See NPD v. Quigley, et al. and Green v. DeSantis, et
al., discussed below.  On May 4, 1998, all defendants filed a motion to dismiss
or in the alternative a motion to stay the Harris action, pending a resolution
of the Quigley action.  The plaintiff's response will be due thirty days
subsequent to the filing of the motion.  On May 4, 1998, the plaintiff filed an
amended complaint to, among other things, add another stockholder as an
additional plaintiff.

  The litigation in the Quigley, Rkulkak and NPD actions is at a standstill as
the parties are in the final stages of settlement negotiations.  Although the
parties believe that a settlement is imminent, there can be no assurance that
a settlement will be reached or as to the terms thereof.  In the event a
settlement cannot be reached, there can be no assurance as to the outcome of 
such litigation and the impact the litigation itself or any resolution
thereof may have on the Company's financial position, results of operations
or cash flows.  As discussed above, the Quigley, Rekulak and Green actions
challenge the authorization and enforceability of certain actions taken and 
agreements entered into by the Company, including the Credit Suisse Credit
Facility and related documents.  In the event plaintiffs prevail in such
litigation, such actions and agreements may be subject to modification,
termination or revision, the impact of which on the Company cannot be
predicted.

  As part of the proposed settlement, it is the Company's intention to
dispose of the El Rancho property.  However, there can be no assurance
that the settlement and subsequent sale of the El Rancho property can be
completed or as to the terms thereof.

  In November 1997, two separate actions were filed in the New Jersey
District Court against various directors of the Company and other affiliated
parties.  The Company is not a party to either of these actions, both of
which are summarized below.
  

NPD, Inc. v. Quigley, et. al.

 On November 18, 1997, NPD (the Company's largest stockholder and whose
stockholders are Messrs. DeSantis and Coelho), filed a complaint captioned NPD,
Inc. v. Robert J. Quigley, Francis W. Murray, Frank A. Leo, Charles R. Dees,
Jr., John Mariucci, Frank Koenemund and James J. Murray, C.A. 97-CV-5657
("NPD"), in the United States District Court for the District of New Jersey. 
The complaint alleges, among other things, that Messrs. Quigley, Francis W.
Murray, Leo and Dees, each of whom is currently a director of the Company, and
Messrs. Mariucci, Koenemund and James Murray, each of whom is a former director
of the Company, conspired with one another and Robert E. Brennan ("Brennan") to
defraud NPD by (i) approving and subsequently concealing from NPD the existence
of the "super-majority" voting provision of the Company's By-laws and (ii)
purporting to repeal such provision and subsequently filing suit in an effort
to restore such provision, all of which has had the effect of attempting to
deprive NPD of control of the Company and perpetuating the control of Brennan
and his associates.  The NPD suit seeks compensatory and punitive damages.  On
January 8, 1998, the defendants served a motion to dismiss NPD's complaint. 
NPD has not yet responded to that motion.  The Company is not a party to the
NPD suit.

Green v. DeSantis, et. al.

 Certain officers, directors and affiliates of the Company are parties to
an action filed on November 30, 1997 by Robert William Green ("Green"), a
stockholder of the Company and Chief Executive Officer of Philadelphia Park,
captioned Robert William Green v. Nunzio DeSantis, Joseph Corazzi, Anthony
Coelho, Las Vegas Entertainment Network, Inc. and NPD, Inc., C.A. 97-5359(JHR),
in the New Jersey District Court.  The complaint alleges, among other things,
that the defendants have usurped certain
corporate opportunities at the expense of the Company, have diluted Green's
interest in the Company though the issuance of shares of stock and have
conspired to deprive him of certain rights under an option granted to him by
NPD (the "Green Option").   Subject to regulatory approval, the Green Option
grants Green the right to purchase approximately 50% of the shares of the
Company's Common Stock which are held by NPD.  The Green Option terminated by
its terms on January 15, 1998 and Green did not exercise the option by such
date.  Green seeks (i) compensatory and punitive damages, (ii) an order
enjoining defendants from transferring, encumbering or alienating the Company's
Common Stock subject to the Green Option, (iii) an order declaring the issuance
of certain shares of Common Stock to be a nullity, and (iv) reformation of the
Green Option to extend the termination date.  The defendants have not yet filed
a response to the complaint.  The Company is not a party to this action.

 The Company is a defendant in various other 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.


(9)   DEFERRED FINANCING COSTS

  Deferred financing costs at September 30, 1997 include those amounts
associated with the Credit Suisse Credit Facility.  (See Note 6).   These costs
of $6,250,666, net of amortization of $1,073,901, are being expensed over the
two year life of the loan.   Amortization expense for the three months ended
September 30, 1997 was $761,204.

(10)  STOCK OPTIONS AND WARRANTS

 (A)  EMPLOYEE AND  NON-EMPLOYEE OPTIONS
 
 On August 21, 1997, the Company granted non-qualified stock options to
purchase an aggregate of 300,000 shares of Common Stock to certain directors.  
The fair value of options issued recognized as non-employee option costs during
the three months ended September 30, 1997 and 1996 was $797,138 and $28,350,
respectively.  At September 30, 1997, total employee options outstanding were
1,300,000 and total non-employee options outstanding were 600,000.  Options to
purchase an aggregate of 6,000,000 shares of Common Stock have been granted,
subject to stockholder approval, to the Company's Chief Executive Officer and
its Chairman of the Board and are not reflected in the above numbers. 

 (B)  WARRANTS  
 
 The fair value of warrants issued during the three months ended September
30, 1997 and 1996 was $-0- and $324,000, respectively.  At September 30, 1997,
total warrants outstanding were 1,671,847 and have been accounted for as
deferred financing costs and costs associated with the acquisition of the El
Rancho property.  The deferred financing costs are being amortized over the
terms of the related indebtedness.  The fair value of the warrants issued in
connection with the acquisition of the El Rancho property has been capitalized
and will be amortized when the facility becomes operational. 


(11)  RELATED PARTY TRANSACTIONS

  In connection with the NPD acquisition, NPD borrowed the sum of
$2,900,000 from Casino-Co. Mr. Nunzio DeSantis, the Company's Chief Executive
Officer, holds options to acquire 1,500,000 shares of LVEN's common stock at an
exercise price of $1.00 per share.  Mr. DeSantis was also paid a commitment fee
by LVEN of $110,000 in connection with a standby financing commitment he made
to LVEN on October 31, 1996 as replacement financing for the El Rancho
property.  This standby financing commitment was never drawn upon and was
terminated in January 1997.  Mr. DeSantis is a 25% owner in Electric Media
Company, Inc., a subsidiary of LVEN.

  Mr. DeSantis owned 80% of Nordic Gaming Corporation, an Ontario
corporation, which purchased the Fort Erie Racetrack in Fort Erie, Canada on
August 27, 1997.  The Company was offered, but rejected, the opportunity to
make this investment because of the demands on cash flow.  Nordic Gaming
borrowed $182,000 from LVEN for a deposit on the purchase.  LVEN has also
provided Nordic Gaming with a $1.3 million secured line of credit to fund
operating losses at the Fort Erie Racetrack.  On May 15, 1998, Mr. DeSantis
sold his Nordic Gaming shares to Erie Gaming Organization, Inc., an Ontario
corporation which holds the other 20% interest in Nordic Gaming.  In
consideration for his shares, Mr. DeSantis received $10.00 and each of Nordic
Gaming, Mr. DeSantis and Erie Gaming exchanged mutual general releases.  In
connection with the pending litigation, the minority Board members have
challenged the decision to reject the opportunity to purchase 
the Fort Erie Racetrack.  (See Note 8).

 During fiscal 1997, the Company paid approximately $217,000, and in the
first quarter of fiscal 1998 paid an additional $12,200, to Southwest Jet Group
in connection with the use of a private jet by certain officers and directors
of the Company, including Mr. DeSantis, for Company business.  Southwest Jet
Group is a Nevada corporation, owned by Mr. DeSantis' son, which operates
private jets, including one which was partially financed by Messrs. DeSantis
and Corazzi.  Messrs. DeSantis and Corazzi used private jets operated by
Southwest Jet Group for certain personal matters for which the Company advanced
approximately $220,000 from January 15, 1997 to September 30, 1997, and which
LVEN has agreed to reimburse to the Company.

  Mr. DeSantis and Mr. Joseph Corazzi, President and Chairman of LVEN, are
the sole stockholders of D&C Gaming Corporation, a Delaware corporation
("D&C").  On July 1, 1997, the Company paid for an option to acquire certain
leasehold interests relating to two New Mexico racetracks from D&C for a non-
refundable deposit of $600,000 which is to be credited towards the purchase
price.  The option agreement has been terminated and D&C has agreed to repay
the $600,000 deposit.  In the pending litigation, the minority directors have
challenged the authorization and enforceability of certain agreements,
including the option agreement.  (See Note 8).

 During the three months ended September 30, 1997, the Company paid
$30,000 in consulting fees and $1,500 for an auto allowance to Anthony Coelho,
the Company's Chairman, pursuant to an agreement effective January 15, 1997. 
Mr. Coelho's consulting agreement is month to month, under which he is to be
paid $10,000 per month for ongoing consulting services, $2,500 for each board
meeting he attends and a $500 monthly automobile allowance. (See Note 8).

 Kenneth Scholl, a director of the Company, provides consulting services
to LVEN and certain of its subsidiaries through the Stanford Company of which
he is the President.  Until December 31, 1997,  LVEN paid Mr. Scholl $10,000
per month through Stanford Company,  for consulting services, including his
services as project manager for the El Rancho property.  Mr. Scholl is
currently the Secretary of Casino-Co and was its President from March 1996 to
May 19, 1997.  Effective January 1, 1998, the Company began paying Mr. Scholl
$10,000 per month for consulting services as project manager for its El Rancho
property. 
 
 During the three months ended September 30,  1997, the Company paid
approximately $38,000 in consulting fees and reimbursed expenses to Joseph
Zappala, a director of the Company.  Subsequent to September 30, 1997, the
Company has paid approximately $10,000 per month plus expenses to Mr. Zappala
for ongoing consulting services.  
 The Company paid LVEN $75,000 in September 1997 under a letter agreement
executed in connection with the purchase of the El Rancho property, which
provides for a $25,000 per month fee with respect to maintenance and
supervision of the property prior to and during development.  The Company
terminated the letter agreement on December 17, 1997.


 The Company subleased a portion of its office space in Albuquerque, New
Mexico to AutoLend Group, Inc. for $600 per month, which sublease is terminable
on 30 days' notice.   Mr. DeSantis is the Chairman, Chief Executive Officer and
a principal stockholder of AutoLend and Mr. Coelho is a director.  Mr. Corazzi
has been using an office at the Company's Albuquerque office, although no
sublease has been executed for such office.

 For additional information regarding related party transactions, see
Footnotes 3 and 8 above.  

INTERNATIONAL THOROUGHBRED BREEDERS, INC.
AND SUBSIDIARIES

MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997

           
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS  OF OPERATIONS

 Liquidity and Capital Resources
           
 The Company's working capital, as of September 30, 1997, was a deficit
($43,499,328) which represents an increase in the deficit of approximately
$40,040,000 from the September 30, 1996 working capital deficit of
($3,459,720).  On May 23, 1997, the Company obtained a Credit Facility from
Credit Suisse First Boston Mortgage Capital LLC ("Credit Suisse").  This two-
year $55 million facility was secured by a pledge of certain of the personal
and real property of the Company and its subsidiaries (the "Credit Suisse
Credit Facility").  Proceeds of this facility were used to repay in full the
Company's $30 million credit facility with Foothill Capital Corporation
("Foothill") and were to provide funds for working capital and other general
corporate purposes, including, but not limited to, preliminary development of
the El Rancho property.  Interest under the Credit Suisse Credit Facility is
payable monthly in arrears at 7% over the London Interbank Offered Rate
("LIBOR").  Of the remaining facility borrowings, approximately $16.8 million
was placed in escrow accounts (including $10 million in an interest reserve
account which balance at September 30, 1997 was $7,464,950 after payment of
interest), financing and closing fees of $4.3 million were paid and $3.9
million was used by the Company for general corporate purposes and repayment of
certain financial obligations.  At September 30, 1997, the interest rate on the
Credit Suisse Credit Facility was 12.66%.  The Company is not in compliance
with certain non-financial covenants of the Credit Suisse Credit Facility.  As
a result of not receiving waivers of these violations, Credit Suisse could
accelerate the $55 million loan at anytime and therefore, the loan has been
classified as a current liability.  Additionally, all escrow amounts have been
classified as current assets.  

 In connection with pending litigation, the minority Board members have
challenged the authorization and enforceability of certain agreements entered
into and actions taken by the Company, including the Credit Facility
and certain related agreements and related actions. (See Note 8 to the
consolidated financial statements). 

  The net loss for the quarter ended September 30, 1997 was ($3,043,882). 
Cash flows provided by operating activities amounted to approximately $50,424. 
The net loss incurred by the Company includes approximately $2,000,000 of other
non-cash expenses.

  Cash used in investing activities was $988,886 during the quarter ended
September 30, 1997, consisting of   El Rancho development costs of
approximately $53,000, capital expenditures of approximately $302,000 and a
deposit payment of $600,000 to purchase an option to acquire certain leasehold
interests (See Note 3 to the consolidated financial statements).

 Cash provided by financing activities was $943,259 during the quarter
ended September 30, 1997 consisting of $1,604,952 drawn from the Credit Suisse
escrow accounts and costs associated with debt financing in the amount of
$661,693.

 Restricted cash and investments of $4,099,583 as of September 30, 1997
consisted of horsemen's deposits held by the racetracks for race nominations, 
purse winnings,  and funds held for uncashed mutuel ticket sales due to the
patrons or government authorities.  As restricted cash, these cash funds are
not available for other Company operations.

 The Company's scheduled principal payment on debt service, excluding the
acceleration of the Credit Suisse Note, is expected to be approximately
$7,459,900 during the next twelve months.  This amount includes $6,000,000
which was retired with proceeds received in connection with  the sale on
October 20, 1997 of an approximately 56 acre parking lot tract contiguous to
the Company's Garden State Racetrack.
 
 Capital expenditures were approximately $302,000 during the first three
months of fiscal 1998 and are expected to be approximately $625,000 in fiscal
1998.  Interest on the Credit Suisse Credit Facility was approximately
$1,775,000 for the first three months of fiscal 1998.  Expenses in connection
with the El Rancho property for carrying costs, including real estate taxes,
utilities, security and maintenance were $375,000 in the three months ended
September 30, 1997.  Additionally, professional fees for consultants, legal and
on-going architectural work in connection with the El Rancho were approximately
$53,000 in the three months ended September 30, 1997.

 The Company currently estimates that the funds made available from the
$55 million Credit Suisse Credit Facility and placed in the interest reserve
and El Rancho project escrow accounts will be sufficient to finance the
Company's operations and the expected expenditures and carrying costs of the El
Rancho property at least through March 31, 1999.  The Company believes that
additional financing in the amount of $50 million will be sufficient to
complete the development of the El Rancho property under the "CountryLand"
theme.  The Company has also considered expanding the CountryLand project to
the extent that the development costs could increase by an additional $25
million.  If the Company is successful in obtaining the necessary funding, it
anticipates that once construction is fully under way at the El Rancho
property, it would take approximately eighteen months to complete and commence
gaming operations.  However, due to the pending litigation discussed 
in Note 8 to the consolidated financial statements, it is unlikely
that any additional funding will be obtained in order to develop the
El Rancho property.

 The Company is involved in various lawsuits brought by certain minority
Board members and believes that while such litigation is pending, it is
unlikely that Credit Suisse or another major lending institution will provide
additional funding to the Company.  The Company's inability to obtain such
additional funding by March 31, 1999 could have a serious financial impact upon
the Company and its results of operations.  If the Company is unsuccessful in
obtaining such additional funding, whether from Credit Suisse or another
lender, by the end of calendar year 1998, it may be necessary to either, (i)
establish a joint venture relationship with respect to the El Rancho property
and/or other Company property or (ii) sell the El Rancho property and/or other
corporate assets in order to satisfy the outstanding Credit Suisse debt in the
amount of $55 million, becoming due on June 1, 1999, if no extension is granted
and also to provide funds for working capital purposes beyond such date.

 The accompanying consolidated financial statements have been prepared
assuming the Company will continue as a going concern.  As discussed in Note 6
to the consolidated financial statements, the Company is in violation of
several non-financial loan covenants with Credit Suisse. As a result of not
obtaining waivers of these violations, its $55 million credit facility has been
classified as a current liability and payment could be demanded immediately. 
The Company is continuing discussions with this lender as to the granting of
waivers or other remedies that could be reached in connections with the
litigation settlement negotiations described below.  (See Note 8 to the
consolidated financial statements). 

 The Company and certain of its officers and directors are involved in
various legal proceedings  as more fully described in Note 8 to the
consolidated financial statements.   Several of these actions are at a
standstill as the parties are in the final stages of settlement negotiations. 
Although the parties believe a settlement is imminent, there can be no
assurance that a settlement will be reached or as to the terms thereof.  In the
event a settlement cannot be reached, it is not possible to determine with any
precision the probable outcome or the amount of liability, if any, and the
resultant effects on the Company's financial position, results of operations or
cash flows.

 Additionally, the Company has a net loss of approximately $17.4 million
and $1.1 million during fiscals 1997 and 1996, respectively, and a net loss of
$3,043,882 through September 30, 1997.  While the Company believes its
projected cash flows from operations will be sufficient to meets its operating
needs through March 1999, there can be no assurances beyond that date.  These
projections do not reflect the impact of its default under the Credit Suisse
Credit Facility or the effects of the above mentioned litigation.

 While the Company is continuing to monitor and reduce its operating
expenses, including payroll, it is also considering the sale of certain assets
or operations, including the El Rancho property, as part of the litigation
settlement negotiations described above and all or some of its racing
operations.     

Seasonality and Effect of Inclement Weather

 Because horse racing is conducted outdoors, 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 live and
simulcast wagering both on site and off site. 



 In addition a disproportionate amount of the Company'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 has been
greatest in the second and third quarters of the year.

Impact of Year 2000 on the Company's Systems

 Management is in the process of determining whether all of the Company's
accounting and operational systems are year 2000 compliant.  Although there can
be no assurances, management does not expect the costs associated with any
required conversions of systems to ensure year 2000 compliance to be
significant.


Results of Operations for the Three Months Ended September 30, 1997 and 1996

 Total revenues for the three months ended September 30, 1997 and 1996
were $14,549,800 and $14,330,962, respectively.  The increase of $218,838 is
primarily the net result of a slight increase in revenues generated by Garden
State Park and Freehold Raceway, as is more fully described below, partially
offset by a decrease in investment income for the three month period of
$31,950.

 For the first quarter of fiscal 1998, the Company realized an operating
loss of ($430,105) as compared to an operating loss of ($438,145) for the
corresponding quarter in the preceding year, a decrease of $8,040.   Total
operating expenses increased $210,798.  Direct operating expenses, cost of
revenues and depreciation and amortization decreased $545,721, or 5%, due to
reduced expenses at the racetracks primarily associated with decreased wages
and benefits.  General and administrative expenses of $2,412,211 increased
$8,362 from the prior year amount of $2,403,849 primarily as a result of:  1)
an increase in the legal, professional and consulting fees associated with the
various actions filed in Chancery Court and the DGE investigation;   2) an
executive officer hired on January 15, 1997;   and 3) corporate,
administrative, rent and travel expenses associated with establishing an
executive office in New Mexico offset by 4) a decrease of $324,000 in financing
costs from options granted.  Amortization  of non-employee options of $797,138
increased $768,788 over the prior year amount, which included options issued to
several directors of the Company.  Carrying costs of $372,494, including real
estate taxes, insurance, security and utilities, were incurred for the El
Rancho property during the quarter, as compared to $393,125 for the prior
year's corresponding quarter.

 For the first quarter of fiscal 1998, the Company incurred a net loss of
($3,043,882) in comparison to a net loss of ($1,371,234) for the same quarter
of the prior fiscal year.  The increase in net loss of $1,672,648  primarily
resulted from the effects of: 1) an increase of $1,108,620 in interest expense
which reflects higher indebtedness levels incurred by the Company; 2) an
increase of the amortization of financing costs of $561,163 which reflects the
cost associated with the Company's new indebtedness; and 3) a negative change
of $8,040 in the operating loss as described above.

 The New Jersey Division of Gaming Enforcement ("DGE") is currently
investigating in accordance with its statutory obligation to determine the
qualification of the Company and its directors and significant stockholders in
connection with Garden State Park's and Freehold Raceway's licenses with the
Casino Control Commission ("CCC") and the Racing Commission.  The Company has
no information with respect to the potential outcome of such investigation.  In
the event that the DGE concludes that one or more of such individuals are not
qualified, the CCC and/or the Racing Commission may require any such
stockholder to divest his interests and any such director may be asked to
resign.  Failure of such individuals to comply with such requests could
jeopardize the Company's racing licenses and ability to conduct business with
any casino licensees, including simulcasting to Atlantic City casinos, which
could have a significant negative impact on the Company's future operations.
                     
 Garden State Park:  

 Garden State Park's fiscal 1998 Harness Meet began September 5, 1997 and
ran 50 days until December 31, 1997.  Garden State Park has received approval
from the New Jersey Racing Commission to run a 63 day Thoroughbred Meet from
January 1, 1998 to May 23, 1998 and a 51 day fiscal 1999 Harness Meet from
September 4, 1998 to December 12, 1998.

 During the three months ended September 30, 1997, Garden State Park's
revenue of $6,353,787 increased $253,838 from the $6,099,949 for the
corresponding three month period, primarily reflecting the effect of an
increase in revenues generated from simulcasting to other racetracks, partially
offset by a decrease in live wagering income. Expenses decreased $548,059  or
9% for the three months ending September 30, 1997.  Wages and benefits
decreased $388,000 or 15% as a result of the Company's effort to cut overhead
and operating costs.  Additional savings were realized by reducing outside
services during simulcast periods and a reduction in utilities, insurance and
materials and supplies.  As a result of the increased revenues and decreased
expenses, Garden State Park realized net income  of $662,723, as compared to a
net loss of ($122,928) in the same quarter of the prior fiscal year.

 During the three month period of harness racing ending September 30,
1997, the average live wagering at Garden State Park was $151,090, a 7%
decrease from the corresponding prior period.  During each of the first
quarters of fiscals 1998 and 1997, 14 live days of wagering were conducted. 
During the periods of live racing, Garden State Park also simulcasted its
racing signal to other race tracks around the country.   The average simulcast
wagering at these tracks increased 22% over the prior year.  During the period
of live racing and most other days, Garden State Park receives simulcasts from
other racetracks during the day and evening.  The average daily wagering on
simulcasts was $299,581 for the three months ended September 30, 1997, a 3%
decrease from the corresponding prior period amount of $308,035.
 
 Freehold Raceway:

 The Company conducts its Harness Meet through Freehold Racing
Association, Inc. ("FRA") and Atlantic City Harness, Inc. ("ACH"), the
operating companies of  Freehold Raceway.   FRA ran its fiscal 1998 Harness
Meet for 99 days from August 14, 1997 thru December 31, 1997.  ACH has received
approval from the New Jersey Racing Commission to run its fiscal 1998 Harness
Meet for 97 days from January 1, 1998 through May 28,  1998.  FRA received
approval from the New Jersey Racing Commission to run its fiscal 1999 Harness
Meet for 92 days from August 13, 1998 through December 31, 1998.  

  During the three months ended September 30, 1997, Freehold Raceway's
revenue was $8,188,499, a slight increase from the corresponding  three month
period of the prior year, primarily reflecting the result of an increase in
revenues from receiving simulcasting, partially offset by  a decrease in
revenues as a result of a decrease in average wagering from live racing. 
Expenses decreased $77,375 or 1% for the three months ending September 30, 1997
when compared to the same period last year, primarily as a result of the
decrease in purse expenses associated with the decrease in live wagering and a
decrease in wages and related benefits.  As a result of the overall increased
revenues and decreased expenses, Freehold Raceway realized income before taxes
of $1,063,542 as compared to income after taxes of $1,203,898 in the same
quarter last year.  
 
 During the three month period of harness racing ended September 30, 1997,
the average live wagering at Freehold Raceway was $230,573, a 19% decrease from
the corresponding prior period amount of $283,019.  During  the three month
period ended September 30, 1997, 37 live days of wagering were conducted and 36
days were conducted in the corresponding prior period.  During the periods of
live racing, Freehold Raceway also simulcasted its racing signal to other race
tracks around the country.  The average simulcast wagering at these tracks
decreased 4% over the prior year.  During periods of live racing and most other
days, Freehold Raceway receives simulcasts from other racetracks during the day
and evening.  The average daily wagering on simulcasts was $312,880 for the
three months ended September 30, 1997, a 5% increase from the corresponding
prior period amount of $299,098.

            INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                         AND SUBSIDIARIES


                             Part II

                        OTHER INFORMATION


Item 6.

 During the quarter ended September 30, 1997, the registrant filed the
following Current Reports on Form 8-K:

 
Date                 Subject Matter
           
 July 1, 1997        Issuance of shares of the Company's Common Stock
                     in exchange for cancellation of a $10.5 million
                     note
 August 6, 1997      Change of the Company's Accountants
 August 20, 1997     Change of the Company's Accountants


            INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                         AND SUBSIDIARIES
               
                            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.




May 22, 1998         /s/Nunzio P, DeSantis                    
             Nunzio P. DeSantis, President,   
             Chief Executive Officer and Director
             (Principal Executive Officer)
             


May 22, 1998         /s/William H. Warner                 
             William H. Warner
             Treasurer
             (Principal Financial and Accounting Officer)