SECURITIES AND EXCHANGE COMMISSION
                     WASHINGTON, D. C. 20549
                                      

                           FORM 10-Q/A
                                      

                AMENDMENT TO APPLICATION OR REPORT
            FILED PURSUANT TO SECTION 12, 13 or 15(d) 
              OF THE SECURITIES EXCHANGE ACT OF 1934


            INTERNATIONAL THOROUGHBRED BREEDERS, INC.
        (Exact name of registrant as specified in charter)

                  Commission File Number: 0-9624

                         AMENDMENT NO. 1

     The undersigned registrant hereby amends it's the following items of its
Quarterly Report for the quarter ended March 31, 1997 on Form 10-Q as set
forth in the pages attached hereto and by deleting the previously filed
Accountants Review Reports.
Amending Part I

Item I - Financial Statements

Item II - Managements Analysis of Financial Condition and Results of Operation


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

                         International Thoroughbred Breeders, Inc.
                                      [Registrant]


                         By/s/Anthony Coelho                              
                                  
                           Anthony Coelho, Chairman of the Board

                                                
                         By/s/Nunzio P. DeSantis                          
                              
                           Nunzio P. DeSantis, President and Chief
                              Executive Officer 


                         By/s/William H. Warner                           
                         
                           William H. Warner, Principal
                              Financial and Accounting Officer
Date: May 22, 1998


                 INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                             AND SUBSIDIARIES

                        CONSOLIDATED BALANCE SHEETS
                  AS OF MARCH 31, 1997 AND JUNE 30, 1996


                                  ASSETS
<TABLE>
<S><C><C>                               <C><C>           <C><C>
                                           March 31,      
                                             1997            June 30,
                                          (UNAUDITED)          1996

CURRENT ASSETS:                                             

  Cash and Cash Equilvalent             $       3,090,202  $     4,216,356
  Restricted Cash and Investments               1,980,960        2,971,538
  Prepaid Expenses                                583,014        1,205,951
  Accounts Receivable                           4,001,846        1,892,941
  Other Current Assets                            155,861          366,656
  Land and Improvements                                     
    Held for Sale, Net                          6,754,459                0

       TOTAL CURRENT ASSETS                    16,566,342       10,653,442
                                                            

LAND, BUILDINGS AND EQUIPMENT:                              

  Land and Buildings                           69,212,388       69,093,719
  Construction In Progress                     51,831,385       48,736,200
  Equipment                                     5,562,806        4,376,889

                                              126,606,579      122,206,808

  LESS: Accumulated Depreciation                
         and Amortization                       3,943,965        2,858,439

       TOTAL LAND, BUILDINGS                                
         AND EQUIPMENT, NET                   122,662,614      119,348,369

LAND AND IMPROVEMENTS                                       
  HELD FOR SALE, NET                                    0        6,719,327

OTHER ASSETS:                                               

  Deposits and Other Assets                       262,027          340,507
  Deferred Financing Costs, Net                 4,452,260        4,667,415
  Goodwill, Net                                 3,068,928        3,151,872

       TOTAL OTHER ASSETS                       7,783,215        8,159,794

TOTAL ASSETS                            $     147,012,171  $   144,880,933

See Notes to Consolidated Financial Statements.             
</TABLE>

                 INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                             AND SUBSIDIARIES

                        CONSOLIDATED BALANCE SHEETS
                  AS OF MARCH 31, 1997 AND JUNE 30, 1996

                   LIABILITIES AND SHAREHOLDERS' EQUITY


<TABLE>
<S><C>                                  <C><C>           <C><C>
                                          March 31,       
                                            1997              June 30,
                                         (UNAUDITED)             1996

CURRENT LIABILITIES:                                        

  Accounts Payable                      $       5,955,874  $     4,837,191
  Accrued Expenses                              5,434,358        3,056,236
  Purses Payable                                  379,400        1,963,150
  Current Maturities of                                     
    Long-Term Debt                             10,836,787        3,214,100
  Deferred Revenue                              1,144,879        1,499,449

       TOTAL CURRENT LIABILITIES               23,751,298       14,570,126

LONG-TERM DEBT,                                             
   Net of Current Portion                      50,484,920       50,992,702

COMMITMENTS AND CONTINGENCIES                   -                 -

SHAREHOLDERS' EQUITY:                                       

  Series A Preferred Stock                                  
    $100.00 Par Value,                                      
    Authorized 500,000 Shares,                              
      Issued and Outstanding,                               
    362,468 and 362,462 Shares,                             
      Respectively                             36,246,775       36,246,175

  Common Stock $2.00 Par Value,                             
    Authorized 25,000,000 Shares,                           
    Issued and Outstanding, 11,651,528                      
    and 11,651,487 Shares,                                  
    Respectively                               23,303,055       23,302,973

  Capital in Excess of Par                     16,489,380       16,111,652

  Retained Earnings (Deficit)                               
     (subsequent  to June 30, 1993,                         
     date of quasi-reorganization)            (3,219,090)        3,829,336

       TOTAL                                   72,820,120       79,490,136

  LESS: Deferred Compensation, Net                 44,167          172,031

       TOTAL SHAREHOLDERS' EQUITY              72,775,953       79,318,105

TOTAL LIABILITIES AND                                       
   SHAREHOLDERS' EQUITY                 $     147,012,171  $   144,880,933
                                                            

See Notes to Consolidated Financial Statements.             
</TABLE>

                 INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                             AND SUBSIDIARIES

              CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                 FOR THE NINE MONTHS ENDED MARCH 31, 1997
                           (UNAUDITED)


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

BALANCE - JUNE 30, 1996                           362,462  $    36,246,175


   Financing Costs for Warrants Issued                      
       in Connection with Debt Financing       ---               ---

   Shares Issued for Fractional                             
      Exchanges With Respect to the                         
      One-for-twenty Reverse Stock                          
      Split effected on March 13, 1992                  6              600

   Amortization of Deferred                                 
    Compensation Costs                         ---               ---

   Cancellation of Options Granted for                      
      Deferred Compensation                                 
   Net Loss for the Nine Months                             
      Ended March 31, 1997                     ---               ---

BALANCE - MARCH 31, 1997                          362,468  $    36,246,775


                                              Common        
                                            Number of       
                                              Shares            Amount

BALANCE - JUNE 30, 1996                        11,651,487  $    23,302,973

   Financing Costs for Warrants Issued                      
       in Connection with Debt Financing       ---               ---

   Shares Issued for Fractional                             
      Exchanges With Respect to the                         
      One-for-twenty Reverse Stock                          
      Split effected on March 13, 1992                 41               82

   Amortization of Deferred                                 
    Compensation Costs                         ---               ---

   Cancellation of Options Granted for                      
      Deferred Compensation                                 
   Net Loss for the Nine Months                             
      Ended March 31, 1997                     ---               ---

BALANCE - MARCH 31, 1997                       11,651,528  $    23,303,055


                                             Capital           Retained
                                            in Excess          Earnings
                                              of Par          (Deficit)

BALANCE - JUNE 30, 1996                 $      16,111,652  $     3,829,336

   Financing Costs for Warrants Issued                      
       in Connection with Debt Financing          498,150        ---

   Shares Issued for Fractional                             
      Exchanges With Respect to the                         
      One-for-twenty Reverse Stock                          
      Split effected on March 13, 1992              (682)        ---

   Amortization of Deferred                                 
    Compensation Costs                         ---               ---

   Cancellation of Options Granted for                      
      Deferred Compensation                     (119,740)   

   Net Loss for the Nine Months                             
      Ended March 31, 1997                     ---             (7,048,426)

BALANCE - MARCH 31, 1997                $      16,489,380  $   (3,219,090)
                                                            

                                             Deferred       
                                         Compensation           Total

BALANCE - JUNE 30, 1996                 $       (172,031)  $    79,318,105

   Financing Costs for Warrants Issued                      
       in Connection with Debt Financing       ---                 498,150

   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                              8,124            8,124

   Cancellation of Options Granted for                      
      Deferred Compensation                       119,740              (0)

   Net Loss for the Nine Months                             
      Ended March 31, 1997                     ---             (7,048,426)

                                                            

BALANCE - MARCH 31, 1997                $        (44,167)  $    72,775,953
                                                            

See Notes to Consolidated Financial Statements.             
</TABLE>

                 INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                             AND SUBSIDIARIES

                   CONSOLIDATED STATEMENTS OF OPERATIONS
             FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 1997 AND 1996
                               (UNAUDITED)

<TABLE>
<S><C><C>                               <C><C>           <C><C>
                                                Three Months Ended 
                                                      March 31,       
                                               1997              1996

REVENUES:                                                   

  Revenue from Operations               $      18,660,172  $    17,867,272
  Investment Income                               291,673          115,368

     TOTAL REVENUES                            18,951,845       17,982,640
                                                            

EXPENSES:                                                   

  Cost of Revenues:                                         

    Purses                                      6,832,124        6,697,856
    Operating Expenses                         10,180,900        9,979,873
    Depreciation & Amortization                   398,902          356,872
  General & Administrative Expenses             2,765,394        1,803,087
  El Rancho Property Development                            
     Carrying Costs                               117,232                0

     TOTAL EXPENSES                            20,294,552       18,837,688
                                                            

OPERATING (LOSS) INCOME                       (1,342,708)        (855,048)
                                                            

OTHER EXPENSES:                                             

  Interest Expense                                488,510          275,834
  Amortization of Financing Costs                 206,623                0
  Write Off of Deposits on Land                         0                0

     TOTAL OTHER EXPENSES                         695,133          275,834


(LOSS) INCOME BEFORE                                        
 INCOME TAXES                                 (2,037,841)      (1,130,882)

  Income Tax Expense                               31,617           20,650

NET (LOSS) INCOME                             (2,069,458)      (1,151,532)

NET (LOSS) INCOME PER SHARE             $          (0.18)  $        (0.10)

WEIGHTED AVERAGE COMMON                                     
  SHARES OUTSTANDING                           11,651,527       11,451,462


                                                 Nine Months Ended  
                                                      March 31,       
                                               1997              1996

REVENUES:                                                   

  Revenue from Operations               $      52,835,248  $    52,016,059
  Investment Income                               421,049          218,998

     TOTAL REVENUES                            53,256,297       52,235,057
                                                            

EXPENSES:                                                   

  Cost of Revenues:                                         

    Purses                                     18,239,389       17,905,973
    Operating Expenses                         27,068,663       26,936,914
    Depreciation & Amortization                 1,187,550        1,087,128
    General & Administrative                                  
     Expenses                                   7,742,252        5,612,162
    El Rancho Property Development                            
     Carrying Costs                               699,902                0

     TOTAL EXPENSES                            54,937,756       51,542,177
                                                            

OPERATING (LOSS) INCOME                       (1,681,459)          692,880


OTHER EXPENSES:                                             

  Interest Expense                              2,042,610          844,487
  Amortization of Financing Costs                 610,930                0
  Write Off of Deposits on Land                 2,585,000                0

     TOTAL OTHER EXPENSES                       5,238,540          844,487
                                                            

(LOSS) INCOME BEFORE                                        
 INCOME TAXES                                 (6,919,999)        (151,607)
  Income Tax Expense                              128,427          142,925
                                                            

NET (LOSS) INCOME                             (7,048,426)        (294,532)


NET (LOSS) INCOME PER SHARE             $          (0.60)  $        (0.03)


WEIGHTED AVERAGE COMMON                                     
  SHARES OUTSTANDING                           11,651,510       10,214,702
                                                            

See Notes to Consolidated Financial Statements.             
</TABLE>

                 INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                             AND SUBSIDIARIES

                   CONSOLIDATED STATEMENTS OF CASH FLOWS
             FOR THE NINE MONTHS ENDED MARCH 31, 1997 AND 1996
                             (UNAUDITED)

<TABLE>
<S><C><C>                               <C><C>           <C><C>
                                                 Nine Months Ended  
                                                      March 31,       
                                               1997              1996

CASH FLOWS FROM OPERATING                                   
ACTIVITIES:                                                 

  NET (LOSS)                            $     (7,048,426)  $     (294,532)

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

     Depreciation and Amortization              1,798,480        1,087,128
     Compensation for Options
      and Warrants Granted                        498,150                0
     Write-Off of Deposits on Land              2,585,000                0
     Other                                              0          (8,314)
     Changes in Assets and                                  
      Liabilities -                                         
        Decrease in Restricted Cash                         
        Cash and Investments                      990,578          544,066
        (Increase) in Accounts                              
         Receivable                           (2,108,905)      (1,208,213)
        Decrease (Increase) in                              
         Other Assets                             210,795        (127,938)
        Decrease in Prepaid Expenses              930,674          904,150
        Increase in Accounts and Purses                     
         Payable and Accrued Expenses           1,913,055        3,297,873
       (Decrease) in Deferred Revenue           (354,570)        (412,328)

  NET CASH (USED IN) PROVIDED BY                            
  OPERATING ACTIVITIES                          (585,169)        3,781,892


CASH FLOWS FROM INVESTING                                   
 ACTIVITIES:                                                

    Purchase and Development of                             
    El Rancho Property and costs                            
       incurred in connection with                          
       Starship Orion Theme                   (3,054,053)     (13,904,759)
    Deposits on Purchase of Land              (2,115,000)                0
    Capital Expenditures                                    
      at Racetracks                             (960,543)      (1,341,577)
    Decrease (Increase) in                                  
      Other Investments                            78,479        (104,320)

  NET CASH (USED IN) INVESTING                              
   ACTIVITIES                                 (6,051,117)     (15,350,656)
                                                            

CASH FLOWS FROM FINANCING                                   
 ACTIVITIES:                                                

    Sale of Common Stock                                0        5,438,162
    Proceeds from issuance of
      Long Term Notes                             827,891        6,000,000
    Proceeds from Line of Credit-     
      Foothill                                  9,138,680                0
    Deferred Refinancing Costs                (1,146,525)                0
    Principal Payments on                                   
      Short Term Notes                          (728,224)      (6,500,000)
    Principal Payments on                                   
      Long Term Notes                         (2,581,689)      (1,198,978)

  NET CASH PROVIDED BY                                      
   FINANCING  ACTIVITIES                        5,510,132        3,739,184
                                                            

NET (DECREASE) IN CASH AND                                  
CASH EQUIVALENTS                              (1,126,154)      (7,829,580)
                                                            

  CASH AND CASH EQUIVALENTS                                 
  AT BEGINNING OF YEAR                          4,216,356       11,801,294


  CASH AND CASH EQUIVALENTS                                 
  AT END OF PERIOD                      $       3,090,202  $     3,971,714


  Supplemental Disclosures of                               
  Cash Flow Information:                                    

     Cash paid during the period for:                       
     Interest                           $       3,239,198  $       638,942
     Income Taxes                       $             710  $        23,400

  Supplemental Schedule of Non-Cash                         
   Investing and Financing Activities:                      

  During the nine months ended                              
    March 31, 1997 and 1996,                                
    the Company recorded unrealized losses                  
    of $80,000 and $40,000,                                 
    respectively, on trading securities.                    

  During the nine months ended                              
    March 31, 1997 and 1996,                                
    the Company issued 200,000 and 400,000                  
    warrants  to purchase Common Stock                      
    at a fair value of $324,000 and $682,000,               
    respectively, in connection with                        
    financing agreements.                                   
                                                            

See Notes to Consolidated Financial Statements.             
</TABLE>

                                     
(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 of
legalized 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 nine months ended March 31, 1996 have been
reclassified from the direct to the indirect method to conform with the 1997
presentation.

     (D) Allowance for Bad Debts - The Company recognizes bad debts on the
allowance method. Bad debt allowance at March 31, 1997 and 1996 was $20,000.

     (E) Construction in Progress - Construction in progress includes the
purchase price as well as construction costs in conjunction with the
development of the El Rancho.  These amounts include land and building
acquisition costs, interest, consulting and other development costs in
connection with the project.  Such costs, aggregating approximately
$51,831,385 at March 31, 1997, include real property acquisitions costs in the
amount of approximately $43,500,000 capitalized interest and other development
costs. 

     (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 March 31, 1997
was $528,701. 

     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
$3,482,022 associated with the debt incurred to fund the purchase of the El
Rancho property and $970,238 associated with warrants issued in connection
with the purchase and financing of the casino project, net of amortization of
$434,005 and $176,925, respectively, as of March 31, 1997.  These costs of
$4,452,260, net of amortization of $610,930, 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 March 31, 1997, 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 March 31, 1997, the Company had approximately $2,500,000 on deposit in 6
institutions with an average of $315,000 at each institution that was subject
to such risk. In addition, repurchase agreements of approximately $1,900,000
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
nine months ended March 31, 1997 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:

<TABLE>
<S>                  <C>           <C><C>       <C><C>
                                   March 31, 1997  
                       Interest %      Current       Long-Term

ITB:                                               

Foothill Mortgage (A)    Prime plus                
                              2.75% $  2,250,000  $   11,750,000
                      (current rate                
                            11.25%)                

Foothill  Line of Credit(A)            
                         Prime plus
                              2.75%    1,200,000      14,776,000
                      (current rate                
                           11.25%)                 

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

ITG:                                               

Notes -Insurance            Various       59,967             -0-
Contracts                                          

FREEHOLD  RACEWAY:                                 

Seller's Mortgage      80% of Prime                
                            (not to                             
                         exceed 6%)      625,000      10,625,000
                      (current rate                
                                6%)                

Seller's Mortgage      80% of Prime                
                      (current rate      225,000       1,872,050
                              6.6%)                

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

Notes - Telephone (B)       Various        3,521          21,709

GARDEN STATE PARK:                                 

Mortgage Note Payable           10%    3,000,000            -0- 
  (See Note 12-A)
                                                   

Note Payable                    10%    3,000,000            -0- 
  (See Note 12-A)                                                   

Notes-Insurance               Various     
 Contracts                    Various     50,833            -0- 

Notes - Telephone (B)       Various       25,992          65,802

Notes - Equipment (C)       Various      204,807         682,692

    Totals                          $ 10,836,787  $   50,484,920
</TABLE>
Prime Rate at March 31, 1997 was 8.50%   
The weighted average interest rate on
short-term borrowings outstanding as of
March 31, 1997 was 9.4%.

     (A) On June 4, 1996, the Company closed on the financing of $30,000,000
from Foothill Capital Corporation ("Foothill") of Los Angeles, California. 
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
includes a $16,000,000 revolving credit line and a $14,000,000 Term Loan
Mortgage.  At March 31, 1997 the line of credit was drawn down in the amount
of $15,976,000. 

     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 is payable monthly at a rate
of 2.75% above the current published prime lending rate per annum. The Term
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 a 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 a default in 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.   At March 31, 1997, the Company did not meet the net worth
ratio, however, Foothill subsequently waived the event of default. (See Note
11-C) 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, an annual facility fee of $300,000 and 200,000 shares of the
Company's Common Stock.

     The total principal balance of the Revolving Credit Line and the Term
Loan Mortgage as of March 31, 1997 was $29,976,000.  For the nine month period
ended March 31, 1997, interest of $1,638,909 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 March 31, 1997,
$29,513 was classified as short term and $87,511 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 two 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 March 31,
1997, $204,807 was classified as short term and $682,692 was classified as
long term.  Interest expense on the note for the nine month period ended March
31, 1997 was $26,153.


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

     (E) During the quarter ended March 31, 1997, the Company paid and
capitalized $1,000,000 of fees associated with new financing for the
development of the El Rancho Property and for working capital. These fees will
be expensed over the life of the loan.  (See Note 12-B)

(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
carry forwards 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
nine months ended March 31, 1997 and does not have the benefit of any state
income tax loss carry forwards to offset this liability.  A provision of
$31,617 and $128,427 was made for the respective three and nine 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>
<S>                     <C><C>       <C><C>        <C><C>     <C><C>
                       Three Months ended          Nine Months ended 
                           March 31,                  March 31, 
                           1997            1996       1997       1996


Income Taxes at the                                             
Federal Statutory Rate   $        -0-  $        -0-  $     -0-  $     -0-

Utilization of Tax               
Depreciation                      -0-           -0-        -0-        -0-       

State Income Tax -                  
 Net of Federal Tax 
 Benefit                         31,617        20,650    128,427     142,925

Provisions for Income     
Taxes                      $     31,617 $      20,650 $  128,427 $   142,925
</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
$171,600,000 at March 31, 1997, 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 carry
forwards.  Because of the uncertainty that the Company will generate income in
the future sufficient to fully or partially utilize these carry forwards,
however, any deferred tax asset of approximately $53,500,000 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 ITG's subsidiary, 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 $43.5
million 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 paid in fiscal 1996;  2)
assumption of a $14 million first mortgage note due on December 20, 1996,
which was also paid 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 i)Orion's receipt of proceeds
of any debt financing of the El Rancho property in excess of $55 million;   
ii)the sale of the El Rancho property, prior to opening a casino on the
property, with proceeds sufficient enough to cover:  a) all principal,
interest and other amounts and costs of whatever nature owing under the
outstanding loans on the property; and  b) the amount of all cash payments
comprising a part of the purchase price plus $2 million and any and all
reasonable documented costs, expenses and any additional investment in, or
debt incurred in the furtherance of the development of, the property after
ITB's purchase, together with an accrued return thereon in the amount of eight
percent (8%) per annum;   and iii) the holder's right to receive payments of
"Adjusted Cash Flow", as defined in the purchase agreement dated January 22,
1996. According to the agreement, the holder has the right to receive these
payments only after Orion has first received: 1) one hundred percent (100%) of
Adjusted Cash Flow until such time as it has recouped the aggregate amount of
cash payments applied to the purchase price and payments, if any, made under
the $6.5 million note and/or the $10.5 million note;   2) $2 million plus any
amounts that are invested in the property after International Thoroughbred
Breeders, Inc.'s ( the "Company") purchase;   and  3)  interest at eight
percent (8%) per annum from the date of the investment on the investment and
the $2 million.  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.  It was estimated that the total cost of completion of "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. 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.

     The Company engaged certain professional, legal, architectural and
consulting services in  connection with the Company's casino development. 
Capitalized costs of $51,831,385 as of March 31, 1997 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 $1,000,000 have been executed 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 acquisition of this parcel of land.  The Company reported
an expense  for the six months ended December 31, 1996 of $2,585,000
associated with this decision.

     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's
Countryland USA entertainment 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 agreement originally called for a purchase
price of $11 million for the property, subject to normal closing adjustments
and 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).  Closing 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.  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 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.  In May 1997,
the agreement was further amended to reflect that:  1) the closing to take
place on or before July 21, 1997; 2)  deposits totaling $500,000 are deemed
non-refundable;  3) all fees and out of pocket expenses associated with the
proposed Sun National Bank refinancing of the $6,000,000 mortgage loans
secured by the property plus interest through August 21, 1997, shall be paid
by the purchaser;  4) in the event the closing does not occur by July 21,
1997, all fees and expenses, up to $75,000,  in connection with any subsequent
refinancing of the Sun National Bank loan will be paid by the purchaser.  The
Company anticipates that the net proceeds from the sale will be approximately
$2,300,000 after the $6,000,000 Sun note is paid.  (See Notes 3 & 12-A)

     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, 1996, the
ruling against Mr. Brennan 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.

     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 apprized of the settlement by the Casino Control Commission and
stated that it considered it a resolution of its concerns. 

     On June 4, 1996, the Company closed on the financing of $30,000,000 from
Foothill.  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 includes a $16,000,000 revolving credit line and a
$14,000,000 Term 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 was restricted by $3,000,000 until such time that an approved
settlement agreement had been reached concerning the shares of Common Stock
then owned by Robert E. Brennan, the Company's former chairman.  The
restriction was released following the approved sale of Mr. Brennan's shares
on January 15, 1997.  The revolving credit line requires that the Company make
quarterly principal payments of $400,000 beginning July 1, 1997.  Interest on
the  outstanding balance is payable monthly at a rate of 2.75% above the
current published prime lending rate per annum. The Term 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 is
payable monthly 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 March 31, 1997, the Company's
tangible net worth was $71,449,078);  and (ii) liabilities to tangible net
worth ratio of not more than one to one (as of March 31, 1997, the Company's
liability to tangible net worth ratio was 1.034 to 1.0).  At March 31, 1997,
the Company did not meet the liabilities to net worth ratio, however, Foothill
subsequently waived the non-compliance. (See Note 12-C) The credit facility
also requires that additional purchase money financing and/or capital leases
cannot exceed an aggregate $3,000,000.

     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 prior
contractual relationship.  In connection with the termination of the
agreement, the Company paid Standard Capital all outstanding fees and expenses
totaling $120,000 as of August 14, 1996.  The Company, which had previously
provided 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, provided
Standard Capital in connection with such termination with an additional
200,000 warrants, each identical to the initial warrants. Financing costs of
$324,000 have been accounted for and expensed during the first half of fiscal
1997 for these warrants.  During the quarter ended March 31, 1997, the Company
paid $1,000,000 to 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. (See Note 12)

     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. (See Note 3-B)

     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 accepted $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 paid in January 1997; 2) $15,000
per month from February 1997 until December 1997; and 3) a  payment of $12,000
in June 1997.  At March 31, 1997, $147,000 has been accrued for these
payments.

      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 was duly elected and qualified were: 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 was named as the Company's
Chairman and Mr. DeSantis was named the Company's Chief Executive Officer. 

     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.  The Company believes that it is unlikely that the line of credit
will be utilized due to restrictions in existing financing arrangements.  
     
     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 previous thirteen years.  As conditions of the termination
of his five year employment contract with the Company, Mr. Winkler:  1) will
be paid $200,000 over a twenty month period, $100,000 of which was paid on the
effective date and $5,000 to be paid per month, commencing on February 1, 1997
until September 1, 1998;   2) surrendered 125,000 stock options previously
granted to him at an exercise price of $5.875 per share; and  3) retained
200,000 options previously granted to him at an exercise price of $4.00 per
share.  (See Note 6).  The Company  expensed the entire compensation package
of approximately $200,000 during the three months ended March 31, 1997.


(6)  STOCK OPTIONS AND WARRANTS

     (A)  EMPLOYEE AND  NON-EMPLOYEE OPTIONS
     
     In December 1994, the Company's Board of Directors and shareholders
adopted and approved the 1994 Employees' Stock Option Plan ("Plan").  The Plan
permits the grant of options to purchase up to 475,000 shares of common stock,
at a price per share no less than 100% of the fair market value of the Common
Stock on the date the option is granted.  The price would be no less than 110%
of fair market value in the case of an incentive stock option granted to any
individual who owns more than 10% of the Company's outstanding Common Stock. 
The Plan provides for the granting of both incentive stock options intended to
qualify under section 422 of the Internal Revenue Code of 1986, and non-
qualified stock options which do not qualify.  No option may have a term
longer than 10 years (limited to five years in the case of an option granted
to a 10% or greater stockholder of the Company).  Options under the Plan are
non-transferable except in the event of death and are only exercisable by the
holder while employed by the Company. Unless the Plan is terminated earlier by
the Board of Directors, the Plan will terminate in June 2004.

     In addition, the Company has also granted non-qualified stock options
for the purchase of Common Stock to employees and directors of the Company
that are not part of the above mentioned plan.  These options have been
granted with terms of five and ten years.  These options have been granted at
prices per share that have been below, equal to or above the fair market value
on the grant date.
     
     On January 15, 1997, the Company granted 375,000 options to certain
employees.  On February 1, 1997, Mr. Winkler surrendered 125,000 stock options
previously granted to him at an exercise price of $5.875 per share.   At March
31, 1997, total employee options outstanding were 1,525,000.  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)   On January 15, 1997, the Company granted
75,000 options to certain directors.  At December 31, 1996, total non-employee
options outstanding were 300,000.

    During 1995, the Financial Accounting Standards Board adopted Statement
of Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting for Stock-
Based Compensation", which has recognition provisions that establish a fair
value based method of accounting for stock-based employee compensation plans
and established fair value as the measurement basis for transactions in which
an entity acquires goods or services from nonemployees in exchange for equity
instruments.  SFAS 123 also has certain disclosure provisions.  Adoption of
the recognition provisions of SFAS 123 with regard to these transactions with
nonemployees was required for all such transactions entered into after
December 15, 1995, and the Company adopted these provisions as required.  The
recognition provision with regard to the fair value based method of accounting
for stock-based employee compensation plans is optional.  Accounting
Principles Board Opinion No. 25 "Accounting for Stock Issued to Employers"
("APB 25") uses what is referred to as an intrinsic value based method of
accounting.  The Company has decided to continue to apply APB 25 for its
stock-based employee compensation arrangements.  Accordingly, 
no compensation cost has been recognized.  The Company estimates the fair
value of each option and warrant granted on the date of grant using the Black-
Scholes option-pricing model with the following assumptions: a weighted
average risk-free interest rate of 6.3%, a weighted average expected life of 5
years based on Company expectations, and a weighted average expected
volatility of 56.29%. 

     (B)  WARRANTS  
     
     The fair value of warrants issued during the nine months ended March 31,
1997 and 1996 was $324,000 and $682,000, respectively.  At March 31, 1997,
total warrants outstanding were 1,125,000 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. 

(7)  INVESTMENTS
     
     Short term investments, classified as cash equivalents, consist of
trading securities.  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. 
At March 31, 1997, $40,000 was classified as short term investments.

     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 March 31, 1997, the Company held approximately $1,980,960, 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
ticket holder winnings, all of which are classified as accounts payable. 

     Investment income for the three months ended March 31, 1997 includes an
unrealized loss of $80,000 on trading securities.  Investment income for the
three months ended March 31, 1996 includes an unrealized holding gain of
$40,000 on trading securities.  Investment income for the nine months ended
March 31, 1997 includes a net unrealized holding loss of $40,000 which
consists of an unrealized holding loss of $80,000 on trading securities
recognized during the third quarter of the fiscal year  offset by unrealized
holding gains of $35,000 and $5,000 recognized during the first and second
respective quarters of the fiscal year.   Investment income for the nine
months ended March 31, 1996 includes a net unrealized holding loss of $140,000
which consists of an unrealized holding loss of $230,000 on trading securities
recognized during the second quarter of the 1996 fiscal year offset by
unrealized holding gains of $50,000 and $40,000 recognized during the first
and third respective quarters of the 1996 fiscal year.  Interest income for
the three and nine months ended March 31, 1997 was $371,673 and $461,049,
respectively, and $75,368 and $358,998 for the respective three and nine month
periods in fiscal 1996.

(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 (loss) per share for the three and nine month periods ended March
31, 1997 and 1996 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 2,950,000 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 11,651,527 and 11,451,462 for the three
months ended March 31, 1997 and 1996, respectively and for the respective nine
month periods were 11,651,510 and 10,214,702.

(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 $53 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.

     The FASB has issued SFAS No. 128, "Earnings Per Share".  SFAS No. 128
simplifies the computation of EPS by replacing the presentation of primary EPS
with a presentation of basic EPS.  It requires dual presentation of basic and
diluted EPS by entities with complex capital structures.  SFAS No. 128 is
effective for financial statements issued for periods ending after December
15, 1997.  Adoption of SFAS No. 128 is not expected to have a material impact
on the Company's financial statements.

     The FASB has issued SFAS No. 129, "Disclosure of Information about
Capital Structure".  SFAS No. 129 is applicable to all entities, whether or
not they have publicly held stock. SFAS No. 129 contains no change in
disclosure requirements for companies that were subject to the previously
existing requirements found in APB Opinion No. 15, Earnings Per Share, and
FASB Statement No. 47, Disclosure of Long-Term Obligations.  However, the
requirements have been consolidated in SFAS No. 129.  SFAS No. 129 is
effective for financial statements issued for periods ending after December
15, 1997. 

(11) SUBSEQUENT EVENTS

          A.   In May 1997 various amendments were executed to the
agreement to sell a 56 acre parking lot tract at Garden State Park to The Four
B's of Vineland, New Jersey, including the extension of the closing until July
21, 1997 and the non-refundable status of the deposits of $500,000. (See Note
5)  In consideration for  amending the agreement, the purchaser has agreed to
a refinancing with Sun National Bank ("SUN") of the $6,000,000 foreign notes
on the tract of land.  The Company anticipates that, subject to the receipt of
certain consents from the Company's existing and potential new lenders, that
the refinancing with SUN will close shortly.  The Company anticipates that the
net proceeds from the sale will be approximately $2,300,000 after the
$6,000,000 SUN note is paid.  (See Notes 3 & 5)

          B.   The Company is negotiating a loan with Credit Suisse First
Boston Mortgage Capital LLC for $55,000,000.  The Company expects to close the
Credit Suisse loan shortly.  The Company will use the proceeds of the loan for
the purpose of refinancing various loans, including Foothill,  affecting the
Company's properties, funding certain working capital needs, and funding
certain development costs of the El Rancho property.  (See Notes 3 & 5)

          C.   On May 19, 1997, the Company was advised by Foothill that it
waived the Company's non-compliance with financial covenants for the fiscal
quarter ended March 31, 1997.  The waiver is effective until May 31, 1997, at
which time, if the obligations owed to Foothill have not been paid in full by
the Company, Foothill reserves its rights to take additional action.

ITEM 2.   MANAGEMENTS ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF

OPERATIONS

Results of Operations for the Three Months Ended March 31, 1997

     For the three months ended March 31, 1997, the Company's operating loss
was ($1,342,708) as compared to an operating loss for the prior year of
($855,048) an increase in the operating loss of $487,660.  Revenue from
operations increased at Freehold Raceway and at Garden State Park for a
combined increase of $830,723 from the prior year.  Total operating expenses
increased $1,456,864 or 8%.  Direct operating expenses, cost of revenues and
depreciation and amortization increased less than 1%.  General and
administrative expenses of $2,765,394 increased $962,307 or 53% from the prior
year amount of $1,803,087.  The increase in General and Administrative
expenses is attributable to an increase in the legal, professional and
consulting fees associated with the Company's casino project and termination
of the Company's Chairman of the Board in November, 1997.  Carrying costs of
$117,232 were incurred for the El Rancho property.

     During the three months ended March 31, 1997, the Company incurred a net
loss of ($2,069,458) in comparison to a net loss of ($1,151,532) for the prior
year.  The increase in losses of $917,926 primarily resulted from the effects
of: 1) an increase of $212,676 in interest expense which reflects higher
indebtedness levels incurred by the Company; 2) an increase of the
amortization of financing costs of $206,623 which reflects the cost associated
with the Company's new indebtedness and 3) negative change of $487,660 in the
operating loss as described above.

Results of Operations for the Nine Months Ended March 31, 1997

     For the nine months ended March 31, 1997, the Company's operating loss
was ($1,681,459) as compared to operating profits for the prior year of
$692,880, a decrease of $2,374,339.  Revenue from operations increased at
Freehold Raceway and declined at Garden State Park for a net combined increase
of $918,202 from the prior year.  Total operating expenses increased
$3,395,579 or 7%.  Direct operating expenses, cost of revenues and
depreciation and amortization increased less than 1%.  General and
administrative expenses of $7,742,252 increased $2,130,090, or 38% from the
prior fiscal year amount of $5,612,162.  The increase in General and
Administrative expenses is attributable to an increase in the legal,
professional and consulting fees associated with the Company's casino project
and termination of the Company's Chairman of the Board
and additional executive salary accrued effective January 15, 1997 in
November, 1997. Carrying costs of $699,902 were incurred for the El Rancho
property.

     During the nine months ended March 31, 1997,  the Company incurred a net
loss of ($7,048,426)) in comparison to a net loss of ($294,532) for the prior
year.  The increase in losses of $6,753,894 primarily resulted from the
effects of; 1) an increase of $1,198,123 in interest expense which reflects
higher indebtedness levels incurred by the Company; 2) an increase of the
amortization of financing costs of $610,930 which reflects the cost associated
with the Company's new indebtedness; 3) a write-off of $2,585,000 in non-
refundable deposits associated with the option to purchase a parcel of land
adjoining the El Rancho property in Las Vegas;  and 4) a negative change of
$2,374,339 in the operating loss as described above.

Garden State Park:

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

<TABLE>
<S>         <C><C><C>       <C><C>         <C><C>
                Net Income (Loss)            Net Increase

                Fiscal 1997    Fiscal 1996    (Decrease)

1st Quarter    $   (122,928)$        66,313 $    (189,241)

2nd Quarter          356,070        187,723        168,347

3rd Quarter      (1,839,523)    (1,567,751)      (271,772)

Year to Date   $ (1,606,381) $  (1,313,715) $    (292,666)
</TABLE>

     During the fiscal quarter ended March 31, 1997, Garden State's revenue
increased $167,298 or 2% from $7,794,056 for the third quarter of fiscal 1996
to $7,961,354 for the comparable quarter in fiscal 1997, primarily as a result
of the net effect of the increased revenues associated with the increased
number of race dates as compared to the same quarter in fiscal 1996 when
severe weather conditions forced the cancellation of 10 scheduled days
partially offset by a decrease in revenues generated by live on-track racing
and simulcasting. Total expenses for the third quarter of fiscal 1997
increased $439,070 or 5% from $9,361,807 for the third quarter of fiscal 1996
to $9,800,877 for the comparable quarter in fiscal 1997 primarily as a result
of the increase in the number of live racing dates.  The net effect of
increased revenues and expenses primarily accounted for the track's net loss
of $1,839,523 for the three months ended March 31, 1997, an increased loss of
$271,772 from a loss of $1,567,751 during the three months ended March 31,
1996.

     During the nine months ended March 31, 1997 Garden State's revenue
decreased $586,781 or 2% when compared to the same period last year, primarily
reflecting a decrease in  revenues generated by live on-track racing and
simulcasting partially offset by the net increase in revenues from the
increase in race dates during the third quarter as discussed above.  Expenses
decreased $294,115 for the nine months ending March 31, 1997 when compared to
the same period last year.  Garden State Park realized a loss, before interest
due to the parent, of $1,606,381 for the nine month period ended March 31,
1997 as compared to a loss of $1,313,715 for the nine months ended March 31,
1996.

     On-track wagering during the 1997 Thoroughbred Meet, through March 31,
1997, averaged $148,999 over 39 dates of live racing.  During the 1996
Thoroughbred Meet, through March 31, 1996, on-track wagering averaged $163,000
over 33 dates of live racing.

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
nine month fiscal periods from July 1, 1996 thru March 31, 1997 and July 1,
1995 thru March 31, 1996:

<TABLE>
<S>                      <C>              <C><C>        <C><C>
                            Approximate                   
                            Commission     DAILY AVERAGES 
                            % of handle                   

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% $     342,124 $        391,232

    Atlantic City Casinos              4.4% $      25,609 $         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

THOROUGHBRED MEETS                                        

Attendance                                          2,857            2,745

Live Handle                           12.5% $     148,999 $        163,000

Simulcast Sending Signal:                                 

New Jersey Tracks (Avg. %)             3.4% $     187,954 $        269,913
                                                          

    Atlantic City Casinos              4.4% $      22,319 $         29,276

      Out-of-State Tracks              1.5% $     588,668 $        923,388

Combined Handles                            $     947,942 $      1,385,576

Number of Live Race Days                              39               33
</TABLE>



The following summarizes average handles experienced by Garden State Park in
connection with receiving simulcasts for the nine month fiscal periods from
July 1, 1996 thru March 31, 1997 and July 1, 1995 thru March 31, 1996:

<TABLE>
<S>                  <C>     <C>       <C>         <C><C>    <C>
AVERAGE DAILY SIMULCAST HANDLES                              

                             Fiscal 1997             Fiscal 1996
_____________________________                                            

From Tracks *:               # of days    ( $)         # of      ( $)  
                                                       days  
_____________________________                                            

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)            167      23,340       160      27,628

          Meadowlands(S)            106      57,481       103      71,769

Out-of-State Tracks  (T,S)          274     237,951       269     241,856

TOTAL RECEIVING HANDLE                   83,127,833            87,046,749

(T) = Thoroughbred, (S) = Standardbred*The commission percentage of handle
averaged approximately 11.3% of total handles on
simulcasting received during the                                          
nine months ended March 31, 1997.                            
                                                             
                                                             
</TABLE>

     Garden State Park's 1996 Thoroughbred Meet began on January 1, 1997 and
is scheduled to run through May 23, 1997.  Racing was conducted three times a
week during the month of January, Friday and Saturday nights and Sunday and
holiday Monday afternoons until April 3, 1997 when the Sunday afternoon race
days were discontinued and replaced by Thursday night racing which is
scheduled to continue for the remainder of the 63 date race meet.

     The Company has received approval from the New Jersey Racing Commission
to run a 51 night harness meet from September 5 through December 12, 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 months ended March 31, 1997, Freehold Raceway's
revenue increased $663,425 or 7% when compared to the same period last year,
primarily reflecting the net effect of:   1) increased revenues associated
with the increased number of race dates as compared to the same quarter in
fiscal 1996 when severe weather conditions forced the cancellation of 6
scheduled days;   2) an increase in revenues generated from the simulcasting 
into Freehold from out-of-state racetracks;  partially offset by 3) 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;   and 
4) a decrease in revenues generated by simulcasting into Freehold from other
New Jersey racetracks.  Expenses increased $243,490 or 3% for the three months
ending March 31, 1997 when compared to the same period last year primarily as
a result of an increase in operating expenses associated with the increase in
the number of race days.  The increase in revenues and in expenses primarily
accounted for the racetrack realizing net income from operations of $1,527,869
for the three months ended March 31, 1997 as compared to income of $1,107,934
during the three months ended March 31, 1996. 

     During the nine months ended March 31, 1996 Freehold Raceway's revenue
increased $1,504,983 or 5% when compared to the same period last year,
primarily reflecting the net effect of: 1) the increase in the number of race
days during the third quarter of this fiscal year;   2) an increase in
revenues generated from the simulcasting into Freehold from out-of-state
racetracks;   partially offset by  3) the decrease in revenues generated by
simulcasting and live on-track racing as discussed above.  Expenses increased
$1,198,211 or 5% for the nine months ending March 31, 1997 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 $3,945,622 for the nine months ended March 31, 1997 as
compared to income of $3,638,850 for the comparable period in fiscal 1996. 

     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:
<TABLE>
<S>           <C><C>            <C><C>          <C><C>
                Net Income                      Net Increase
                  Fiscal 1997      Fiscal 1996   (Decrease)
              __                                               

1st Quarter    $       1,242,275 $       786,069$       456,206
                                                  
2nd Quarter            1,175,478       1,744,847      (569,369)

3rd Quarter            1,527,869       1,107,934        419,935

Year-to-Date   $       3,945,622 $     3,638,850$       306,772
                                                  
</TABLE>


     During Fiscal 1997, Freehold Raceway will race under two separate
identities.  FRA raced 100 days from August 15, 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 nine month fiscal periods from July 1, 1996 thru March 31,
1997 and July 1, 1995 thru March 31, 1996:

<TABLE>
<S>                         <C>              <C><C>         <C><C>
                                  Approximate                
                                  Commission  DAILY  AVERAGES
                                  % of handle                

FRA HARNESS MEETS                                Fiscal 1997      Fiscal
                                                                    1996

Attendance                                             2,161       2,286

Live Handle                              9.3%$       248,819$    283,361

Simulcast Sending Signal:                                    

  New Jersey Tracks (Avg. %)             3.6%$       154,472$    170,226

       Atlantic City Casinos             4.4%$        23,947$     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

ACH HARNESS MEETS                                            

Attendance                                             2,032       1,971

Live Handle                              9.3%$       209,956$    241,099

Simulcast Sending Signal:                                    

  New Jersey Tracks (Avg. %)             3.6%$       165,345$    175,620

       Atlantic City Casinos             4.4%$        21,035$     22,430

         Out-of-State Tracks             1.5%$       393,277$    383,131

Combined Handles                             $       789,613$    822,280

Number of Live Race Days                                  65          61
</TABLE>



     The following summarizes average handles experienced by Freehold Raceway in
connection with receiving simulcasts for the nine month fiscal periods from
July 1, 1996 thru March 31, 1997 and July 1, 1995 thru March 31, 1996:

<TABLE>
<S>                  <C>     <C>       <C>        <C><C>     <C>
AVERAGE DAILY SIMULCAST HANDLES                              

                             Fiscal 1997            Fiscal 1996
_____________________________                                            

From Tracks *:               # of days    ( $)      # of days    ( $)  
_____________________________                                            

New Jersey Tracks:                                           

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

    Garden State Park(T)             39     23,412         33      24,664

          Meadowlands(S)            106    109,296        103     123,087

          Meadowlands(T)             68     42,204         66      51,717

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

Out-of-State Tracks  (T,S)          271    259,958        258     218,907

TOTAL RECEIVING HANDLE                  88,064,190             79,111,631

(T) = Thoroughbred, (S) = Standardbred*The commission percentage of handle
averaged approximately 11.0% of total handles on
simulcasting received during the                                          
nine months ended March 31, 1997.                            
                                                             
                                                             
</TABLE>

      
LIQUIDITY AND FINANCIAL RESOURCES

      The Company's working capital (deficit), on a consolidated basis, as of
March 31, 1997, was ($7,184,956) which represents an increase of approximately
$12,500,000 from the March 31, 1996 working capital (deficit) of
($19,646,510).  This working capital deficit decrease is primarily the result
of  the refinance of a $14,000,000 short term mortgage associated with the
purchase of the El Rancho Hotel into long term debt which has the effect of
classifying $12,500,000 of the previous short term liability as long term.

      The Company's cash flows used by operations were ($585,169) during the
nine months ended March 31, 1997 compared to cash provided from operations of
$3,781,892 for the comparable period in fiscal 1996.  The increase of
$4,367,061 was primarily the result of increases in the administrative
expenses, including legal costs, associated with management changes during the
period,  carrying costs incurred for the El Rancho property and the cost of
options granted to directors in addition to increased operating losses during
the nine months ended March 31, 1997.

        Cash used for investing activities was $6,051,117 during the nine
months ended March 31, 1997 compared to $15,350,656 for the comparable period
in fiscal 1996.  The decrease was primarily the result of a decrease in
expenditures for casino development of $10,850,706 in addition to $2,115,000
for deposits associated with the forfeited option to purchase additional land
adjoining the El Rancho project and a decrease of $381,034 in cash used for
improvements at the two racetrack properties.

      Cash provided by financing activities was $5,510,132 for the nine
months ended March 31, 1997 compared to cash provided during the comparable
period in fiscal 1996 by financing activities of $3,739,184. During the first
nine months of fiscal 1997, net cash was generated from debt financing of
$7,992,155 primarily associated with the revolving credit line with Foothill
Capital Corporation and from note proceeds of $1,024,037 in borrowings in
connection with new air conditioning equipment at Garden State Park.  Also
during the first nine months of fiscal 1997, there was an increase in long
term principal payments of $1,382,711 primarily as a result of a final payment
of $1,405,000 on a note previously executed by Freehold Raceway and $728,224
of principal payments made on short term financing. 

      Restricted Cash and Investments of $1,980,960 as of March 31, 1997
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 June 4, 1996, the Company closed on the financing of  $30,000,000
from Foothill.  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 includes a $16,000,000 revolving credit line and a
$14,000,000 Term 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 was restricted by $3,000,000 until such time that an approved
settlement agreement had been reached concerning the shares of Common Stock
then owned by Robert E. Brennan, the Company's former chairman.  The
restriction was released following the approved sale of Mr. Brennan's shares
on January 15, 1997.  The revolving credit line requires that the Company make
quarterly principal payments of $400,000 beginning July 1, 1997.  Interest on
the  outstanding balance is payable monthly at a rate of 2.75% above the
current published prime lending rate per annum. The Term 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 is
payable monthly 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 March 31, 1997, the Company's
tangible net worth was $71,449,078);  and (ii) liabilities to tangible net
worth ratio of not more than one to one (as of March 31, 1997, the Company's
liability to tangible net worth ratio was 1.034 to 1.0).  At March 31, 1997,
the Company did not meet the liabilities to net worth ratio, however, Foothill
subsequently waived the non-compliance.  The credit facility also requires
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.  The Company believes that it is unlikely that the line of credit
will be utilized due to restrictions in outside financing arrangements. 

      In May 1997 various amendments were executed to the agreement to sell a
56 acre parking lot tract at Garden State Park to The Four B's of Vineland,
New Jersey, including the extension of the closing until July 21, 1997 and the
non-refundable status of the deposits of $500,000.  In consideration for 
amending the agreement, the purchaser has agreed to a refinancing with Sun
National Bank ("SUN") of the $6,000,000 foreign notes on the tract of land. 
The Company anticipates that, subject to the receipt of certain consents from
the Company's existing and potential new lenders, that the refinancing with
SUN will close shortly.  The Company anticipates that the net proceeds from
the sale will be approximately $2,300,000 after the $6,000,000 Sun note is
paid.

      The Company is negotiating a loan with Credit Suisse First Boston
Mortgage Capital LLC for $55,000,000.  The Company expects to close the Credit
Suisse loan shortly.  The Company will use the proceeds of the loan for the
purpose of refinancing various loans, including Foothill,  affecting the
Company's properties, funding certain working capital needs, and funding
certain development costs of the El Rancho property. 

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 wagering
and live racing and simulcast signals.  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 simulcasting during the summer months.  As a
result, the company's revenue 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.