----

----

|   | FORM      10-Q |   |
|--------|----------------|--------|

| x | QUARTERLY      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|---|---------------------------------------------------------------------------------------------------|

|   | OR |
|--------|----|

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

| Delaware(State      or other jurisdictionof      incorporation or organization)                      |   | 95-2078752(I.R.S.      EmployerIdentification      Number) |
|------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------|
|                                                                                                 |   |                                                       |
| 1330      Post Oak Blvd., Suite 2000Houston,      Texas(Address      of Principal Executive Offices) |   | 77056(Zip      Code)                                       |

| Large      accelerated filer o | Accelerated      filer o | Non-accelerated      filer o | Smaller      reporting company x |
|--------------------------------|--------------------------|------------------------------|----------------------------------|

----

----

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Table of Contents

|                                                       | TABLE OF CONTENTS                                                                              |   |
|------------------------------------------------------------|------------------------------------------------------------------------------------------------|--------|
|                                                       |                                                                                           | Page   |
| PART      I. –      FINANCIAL INFORMATION            |                                                                                           |
|                                                       |                                                                                           |   |
|                                                       |                                                                                           |   |
| Item 1.                                                    | Financial Statements    (unaudited):                                                           | 3      |
|                                                       | Condensed Consolidated Balance      Sheets                                                     | 4      |
|                                                       | Condensed Consolidated Statements of      Operations                                           | 5      |
|                                                       | Condensed Consolidated Statements of Cash      Flows                                           | 6      |
|                                                       | Condensed Notes to Unaudited Consolidated Financial      Statements                            |   |
|                                                       |                                                                                           |   |
| Item 2.                                                    | Management's Discussion and Analysis of Financial Condition      andResults of      Operations | 20     |
|                                                       |                                                                                           |   |
| Item 3.                                                    | Quantitative and Qualitative Disclosures About Market      Risk                                | *      |
|                                                       |                                                                                           |   |
| Item 4.                                                    | Controls and Procedures                                                                        | 29     |
|                                                       |                                                                                           |   |
|                                                       |                                                                                           |   |
| PART      II. –      OTHER INFORMATION               |                                                                                           |
|                                                       |                                                                                           |   |
|                                                       |                                                                                           |   |
|              Item 1.    | Legal Proceedings                                                                              | 30     |
|              Item 1A.   | Risk Factors                                                                                   | 30     |
|              Item 2.    | Unregistered Sales of Equity Securities and Use of      Proceeds                               | 30     |
|              Item 3.    | Defaults Upon Senior Securities                                                                | 30     |
|              Item 6.    | Exhibits                                                                                       | 31     |
|              Signatures |                                                                                           | 32     |
|                                                       |                                                                                           |   |
|                                                       |                                                                                           |   |
| APPENDIX A – GLOSSARY OF      DEFINED TERMS          |                                                                                           |

----

Table of Contents

| MAXXAM INC. AND SUBSIDIARIES                                                                                                                                                                                                           |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                   |   |   |   |   |   |   |
| CONDENSED      CONSOLIDATED BALANCE SHEETS                                                                                                                                                                                             |   |
| (In      millions of dollars, except share information)                                                                                                                                                                                |   |
|                                                                                                                                                                                                                                   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                   |   | March      31,2009 |   |   | December      31,2008 |   |
|                                                                                                                                                                                                                                   |   | (Unaudited) |   |
|                                                                                                                                                                                                                                   |   |   |   |   |   |   |
| Assets                                                                                                                                                                                                                                 |   |   |   |   |   |   |
| Current      assets:                                                                                                                                                                                                                   |   |   |   |   |   |   |
| Cash and cash      equivalents                                                                                                                                                                                                         |   | $ | 41.3 |   |   | $ | 59.6 |   |
| Marketable securities and other      short-term investments                                                                                                                                                                            |   |   | 6.9 |   |   |   | 2.5 |   |
| Receivables:                                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| Trade, net of allowance for      doubtful accounts of $1.0 and $0.9, respectively                                                                                                                                                      |   |   | 1.8 |   |   |   | 1.5 |   |
| Other                                                                                                                                                                                                                                  |   |   | 1.4 |   |   |   | 1.4 |   |
| Real estate    inventory                                                                                                                                                                                                               |   |   | 2.7 |   |   |   | 2.7 |   |
| Prepaid expenses and other current      assets                                                                                                                                                                                         |   |   | 6.2 |   |   |   | 6.8 |   |
| Restricted cash                                                                                                                                                                                                                        |   |   | 1.2 |   |   |   | 0.5 |   |
| Total current      assets                                                                                                                                                                                                              |   |   | 61.5 |   |   |   | 75.0 |   |
| Property,      plant and equipment, net of accumulated depreciation of$111.2and $108.8,      respectively                                                                                                                              |   |   | 209.6 |   |   |   | 210.4 |   |
| Real      estate inventory                                                                                                                                                                                                             |   |   | 59.4 |   |   |   | 58.1 |   |
| Deferred      income taxes                                                                                                                                                                                                             |   |   | 41.6 |   |   |   | 41.6 |   |
| Deferred      financing costs                                                                                                                                                                                                          |   |   | 4.1 |   |   |   | 4.2 |   |
| Investments      in limited partnerships                                                                                                                                                                                               |   |   | 0.3 |   |   |   | 0.5 |   |
| Investments      in joint ventures                                                                                                                                                                                                     |   |   | 3.6 |   |   |   | 3.8 |   |
| Other      long-term assets and investments                                                                                                                                                                                            |   |   | 3.0 |   |   |   | 3.1 |   |
| Restricted      cash and certificates of deposit                                                                                                                                                                                       |   |   | 5.5 |   |   |   | 3.6 |   |
|                                                                                                                                                                                                                                   |   | $ | 388.6 |   |   | $ | 400.3 |   |
| Liabilities      and Stockholders’      Deficit                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Current      liabilities:                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |
| Accounts payable                                                                                                                                                                                                                       |   | $ | 4.7 |   |   | $ | 5.4 |   |
| Short-term borrowings and current      maturities of long-term debt                                                                                                                                                                    |   |   | 6.2 |   |   |   | 6.1 |   |
| Accrued interest                                                                                                                                                                                                                       |   |   | 0.9 |   |   |   | 0.9 |   |
| Accrued compensation and related      benefits                                                                                                                                                                                         |   |   | 1.4 |   |   |   | 1.8 |   |
| Accrued defense costs and      settlement of Wilson      actions                                                                                                                                                                       |   |   | 10.4 |   |   |   | 6.1 |   |
| Accrued taxes                                                                                                                                                                                                                          |   |   | 1.5 |   |   |   | 1.2 |   |
| Deferred income                                                                                                                                                                                                                        |   |   | 3.6 |   |   |   | 2.9 |   |
| Other accrued      liabilities                                                                                                                                                                                                         |   |   | 5.6 |   |   |   | 7.1 |   |
| Total current      liabilities                                                                                                                                                                                                         |   |   | 34.3 |   |   |   | 31.5 |   |
| Long-term      debt, less current maturities                                                                                                                                                                                           |   |   | 204.7 |   |   |   | 205.7 |   |
| Accrued      pension and other postretirement benefits                                                                                                                                                                                 |   |   | 19.4 |   |   |   | 19.4 |   |
| Other      noncurrent liabilities                                                                                                                                                                                                      |   |   | 45.4 |   |   |   | 46.5 |   |
| Losses      in excess of investment in Debtors                                                                                                                                                                                         |   |   | 484.2 |   |   |   | 484.2 |   |
| Total    liabilities                                                                                                                                                                                                                   |   |   | 788.0 |   |   |   | 787.3 |   |
| Commitments      and contingencies                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |
| Stockholders’      deficit:                                                                                                                                                                                                      |   |   |   |   |   |   |   |   |
| Preferred stock, $0.50 par value;      $0.75 liquidation preference, 2,500,000 sharesauthorized; Class A $0.05      Non-Cumulative Participating Convertible PreferredStock, 668,964 shares issued      and 668,119 shares outstanding |   |   | 0.3 |   |   |   | 0.3 |   |
|                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |   |
| Common stock, $0.50 par value;      13,000,000 shares authorized; 10,063,359 sharesissued; 4,559,637 shares      outstanding                                                                                                           |   |   | 5.0 |   |   |   | 5.0 |   |
| Additional paid in      capital                                                                                                                                                                                                        |   |   | 225.3 |   |   |   | 225.3 |   |
| Accumulateddeficit                                                                                                                                                                                                                     |   |   | (447.8 | ) |   |   | (435.3 | ) |
| Accumulated other comprehensive      loss                                                                                                                                                                                              |   |   | (14.4 | ) |   |   | (14.5 | ) |
| Treasury stock, at cost (shares      held; preferred – 845; common – 5,503,722)                                                                                                                                            |   |   | (167.8 | ) |   |   | (167.8 | ) |
| Total stockholders’      deficit                                                                                                                                                                                                 |   |   | (399.4 | ) |   |   | (387.0 | ) |
|                                                                                                                                                                                                                                   |   | $ | 388.6 |   |   | $ | 400.3 |   |

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Table of Contents

| MAXXAM      INC. AND SUBSIDIARIES                            |   |
|--------------------------------------------------------------|--------|
|                                                         |   |   |   |   |   |   |
| CONDENSED      CONSOLIDATED STATEMENTS OFOPERATIONS          |   |
| (In      millions of dollars, except per share information)  |   |
|                                                         |   |   |   |   |   |   |
|                                                         |   | Three      Months EndedMarch      31, |   |
|                                                         |   | 2009 |   |   | 2008 |   |
|                                                         |   |        (Unaudited) |   |
|                                                         |   |   |   |   |   |   |
| Sales:                                                       |   |   |   |   |   |   |
| Real estate                                                  |   | $ | 7.4 |   |   | $ | 8.9 |   |
| Racing                                                       |   |   | 8.3 |   |   |   | 12.8 |   |
|                                                         |   |   | 15.7 |   |   |   | 21.7 |   |
|                                                         |   |   |   |   |   |   |   |   |
| Cost      and expenses:                                      |   |   |   |   |   |   |   |   |
| Cost of sales and      operations:                           |   |   |   |   |   |   |   |   |
| Real estate                                                  |   |   | 3.2 |   |   |   | 4.2 |   |
| Racing                                                       |   |   | 7.1 |   |   |   | 11.0 |   |
| Selling, general and      administrative expenses            |   |   | 7.1 |   |   |   | 10.8 |   |
| Depreciation, depletion and      amortization                |   |   | 2.5 |   |   |   | 2.8 |   |
| Settlement of Wilson      actions                            |   |   | 4.0 |   |   |   | - |   |
|                                                         |   |   | 23.9 |   |   |   | 28.8 |   |
|                                                         |   |   |   |   |   |   |   |   |
| Operating      income (loss):                                |   |   |   |   |   |   |   |   |
| Real estate                                                  |   |   | 0.1 |   |   |   | (1.2 | ) |
| Racing                                                       |   |   | (0.7 | ) |   |   | (0.8 | ) |
| Corporate                                                    |   |   | (7.6 | ) |   |   | (4.6 | ) |
| Forest products                                              |   |   | - |   |   |   | (0.5 | ) |
|                                                         |   |   | (8.2 | ) |   |   | (7.1 | ) |
|                                                         |   |   |   |   |   |   |   |   |
| Other      income (expense):                                 |   |   |   |   |   |   |   |   |
| Investment, interest and other      income (expense), net    |   |   | (0.2 | ) |   |   | (2.6 | ) |
| Interest expense                                             |   |   | (3.9 | ) |   |   | (4.1 | ) |
| Amortization of deferred      financing costs                |   |   | (0.2 | ) |   |   | (0.1 | ) |
| Loss      before income taxes                                |   |   | (12.5 | ) |   |   | (13.9 | ) |
| Benefit      (provision) for income taxes                    |   |   | - |   |   |   | - |   |
| Net      loss                                                |   | $ | (12.5 | ) |   | $ | (13.9 | ) |
|                                                         |   |   |   |   |   |   |   |   |
| Basic      net loss per common and common equivalent share   |   | $ | (2.74 | ) |   | $ | (2.72 | ) |
|                                                         |   |   |   |   |   |   |   |   |
| Diluted      net loss per common and common equivalent share |   | $ | (2.74 | ) |   | $ | (2.72 | ) |
|                                                         |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding - Basic and Diluted |   |   | 4,559,637 |   |   |   | 5,112,732 |   |

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Table of Contents

| MAXXAM      INC. AND SUBSIDIARIES                                                   |   |
|-------------------------------------------------------------------------------------|--------|
|                                                                                |   |   |   |   |   |   |
| CONDENSED      CONSOLIDATED STATEMENTS OF CASHFLOWS                                 |   |
| (In      millions of dollars)                                                       |   |
|                                                                                |   |   |   |   |   |   |
|                                                                                |   | Three      Months EndedMarch      31, |   |
|                                                                                |   | 2009 |   |   | 2008 |   |
|                                                                                |   |        (Unaudited) |   |
| Cash      flows from operating activities:                                          |   |   |   |   |   |   |
| Net loss                                                                            |   | $ | (12.5 | ) |   | $ | (13.9 | ) |
| Adjustments to reconcile net loss      to net cash used foroperating    activities: |   |   |   |   |   |   |   |   |
| Depreciation, depletion and      amortization                                       |   |   | 2.5 |   |   |   | 2.8 |   |
| Non-cash stock-based      compensation expense                                      |   |   | 0.8 |   |   |   | 1.8 |   |
| Net losses from      investments                                                    |   |   | - |   |   |   | 3.4 |   |
| Amortization of deferred      financing costs                                       |   |   | 0.2 |   |   |   | 0.1 |   |
| Equity losses in joint      ventures, net of dividends                              |   |   | 0.2 |   |   |   | - |   |
| Increase (decrease) in cash      resulting from changes in:                         |   |   |   |   |   |   |   |   |
| Receivables                                                                         |   |   | (0.3 | ) |   |   | (1.0 | ) |
| Inventories                                                                         |   |   | - |   |   |   | (7.2 | ) |
| Prepaid expenses and other      assets                                              |   |   | 0.6 |   |   |   | 0.1 |   |
| Accountspayable                                                                     |   |   | (0.7 | ) |   |   | (0.8 | ) |
| Other accrued      liabilities                                                      |   |   | 3.4 |   |   |   | (0.9 | ) |
| Long-term assets and long-term      liabilities                                     |   |   | (2.9 | ) |   |   | 0.9 |   |
| Other                                                                               |   |   | - |   |   |   | (0.4 | ) |
| Net cash used for operating      activities                                         |   |   | (8.7 | ) |   |   | (15.1 | ) |
|                                                                                |   |   |   |   |   |   |   |   |
| Cash      flows from investing activities:                                          |   |   |   |   |   |   |   |   |
| Maturities of marketable      securities and other investments                      |   |   | - |   |   |   | 11.6 |   |
| Sales of marketable securities and      other investments                           |   |   | 0.2 |   |   |   | 19.7 |   |
| Purchases of marketable securities      and other investments                       |   |   | (4.6 | ) |   |   | (9.7 | ) |
| Net proceeds from (contributions      to) restricted cash                           |   |   | (2.6 | ) |   |   | 2.1 |   |
| Capital    expenditures                                                             |   |   | (1.7 | ) |   |   | (0.5 | ) |
| Net cash provided by (used for)      investing activities                           |   |   | (8.7 | ) |   |   | 23.2 |   |
|                                                                                |   |   |   |   |   |   |   |   |
| Cash      flows from financing activities:                                          |   |   |   |   |   |   |   |   |
| Principal payments on long-term      debt                                           |   |   | (1.3 | ) |   |   | (1.1 | ) |
| Borrowings under long-term      debt                                                |   |   | 0.4 |   |   |   | - |   |
| Treasury stock      purchases                                                       |   |   | - |   |   |   | (20.1 | ) |
| Net proceeds from refundable      deposits                                          |   |   | - |   |   |   | 0.2 |   |
| Net cash used for financing      activities                                         |   |   | (0.9 | ) |   |   | (21.0 | ) |
|                                                                                |   |   |   |   |   |   |   |   |
| Net      decrease in cash and cash equivalents                                      |   |   | (18.3 | ) |   |   | (12.9 | ) |
| Cash      and cash equivalents at beginning of the period                           |   |   | 59.6 |   |   |   | 67.8 |   |
| Cash      and cash equivalents at end of the period                                 |   | $ | 41.3 |   |   | $ | 54.9 |   |
|                                                                                |   |   |   |   |   |   |   |   |
| Supplemental      disclosure of cash flow information:                              |   |   |   |   |   |   |   |   |
| Interest paid                                                                       |   | $ | 3.9 |   |   | $ | 4.1 |   |

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Table of Contents

CONDENSED NOTES 

| (i)   | the      ultimate outcome of the Bankruptcy      Cases discussed in Note 10, |
|-----------------|------------------------------------------------------------------------------|

| (ii)   | recoveries,      if any, from insurers related to the Wilson actions      discussed in Note 9, |
|------------------|------------------------------------------------------------------------------------------------|

| (iii)   | the      ultimate outcome of the tax examinations discussed in Note    7, |
|-------------------|---------------------------------------------------------------------------|

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Table of Contents

| (iv)   | estimates      used to determine projected pension obligations and the expected value of      pension plan assets, |
|------------------|--------------------------------------------------------------------------------------------------------------------|

| (v)   | projected      future cash flows and estimated fair values used in the evaluation of      long-lived assets for possible impairment,and |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------|

| (vi)   | the      value of the Company’s investmentportfolio. |
|------------------|------------------------------------------------------------|

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Table of Contents

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Table of Contents

|                                                                           |   | ReportableSegments            |   |   |   |   |   |            |   |   |      |   |
|--------------------------------------------------------------------------------|--------|-------------------------------|--------|--------|--------|--------|--------|-----------------|--------|--------|-----------|--------|
|                                                                           |   | Real      Estate              |   |   | Racing |   |   | MGI             |   |   | Corporate |   |   | ConsolidatedTotal |   |
|                                                                           |   | (In      millions of dollars) |   |
| Investment,      interest andother income for thethree monthsended:            |   |                          |   |   |   |   |   |            |   |   |      |   |   |   |   |
| March 31, 2009                                                                 |   | $                             | -      |   |   | $      | -      |            |   | $      | -         |   |   | $ | (0.2 | ) |   | $ | (0.2 | ) |
| March 31, 2008                                                                 |   |                          | 0.2    |   |   |   | -      |            |   |   | -         |   |   |   | (2.8 | ) |   |   | (2.6 | ) |
|                                                                           |   |                          |   |   |   |   |   |            |   |   |      |   |   |   |   |   |   |   |   |   |
| Selling,      general andadministrativeexpensefor the three months      ended: |   |                          |   |   |   |   |   |            |   |   |      |   |   |   |   |   |   |   |   |   |
| March 31, 2009                                                                 |   | $                             | 2.0    |   |   | $      | 1.5    |        (2) |   | $      | -         |   |   | $ | 7.6 |        (3) |   | $ | 11.1 |   |
| March 31, 2008                                                                 |   |                          | 3.5    |   |   |   | 2.2    |            |   |   | 0.5       |   |   |   | 4.6 |   |   |   | 10.8 |   |
| Operating      income (loss) for thethree monthsended:                         |   |                          |   |   |   |   |   |            |   |   |      |   |   |   |   |   |   |   |   |   |
| March 31, 2009                                                                 |   | $                             | 0.1    |   |   | $      | (0.7   | )      (2)      |   | $      | -         |   |   | $ | (7.6 | )      (3) |   | $ | (8.2 | ) |
| March 31, 2008                                                                 |   |                          | (1.2   | )      |   |   | (0.8   | )               |   |   | (0.5      | )      |   |   | (4.6 | ) |   |   | (7.1 | ) |
|                                                                           |   |                          |   |   |   |   |   |            |   |   |      |   |   |   |   |   |   |   |   |   |
| Interest      expense for thethree months ended (1):                           |   |                          |   |   |   |   |   |            |   |   |      |   |   |   |   |   |   |   |   |   |
| March 31, 2009                                                                 |   | $                             | 4.1    |   |   | $      | -      |            |   | $      | -         |   |   | $ | - |   |   | $ | 4.1 |   |
| March 31, 2008                                                                 |   |                          | 4.2    |   |   |   | -      |            |   |   | -         |   |   |   | - |   |   |   | 4.2 |   |
|                                                                           |   |                          |   |   |   |   |   |            |   |   |      |   |   |   |   |   |   |   |   |   |
| Depreciation,      depletionand amortization for      thethree monthsended:    |   |                          |   |   |   |   |   |            |   |   |      |   |   |   |   |   |   |   |   |   |
| March 31, 2009                                                                 |   | $                             | 2.1    |   |   | $      | 0.4    |            |   | $      | -         |   |   | $ | - |   |   | $ | 2.5 |   |
| March 31, 2008                                                                 |   |                          | 2.4    |   |   |   | 0.4    |            |   |   | -         |   |   |   | - |   |   |   | 2.8 |   |
|                                                                           |   |                          |   |   |   |   |   |            |   |   |      |   |   |   |   |   |   |   |   |   |
| Loss      before income taxesfor the three months      ended:                  |   |                          |   |   |   |   |   |            |   |   |      |   |   |   |   |   |   |   |   |   |
| March 31, 2009                                                                 |   | $                             | (4.0   | )      |   | $      | (0.7   | )               |   | $      | -         |   |   | $ | (7.8 | ) |   | $ | (12.5 | ) |
| March 31, 2008                                                                 |   |                          | (5.2   | )      |   |   | (0.8   | )               |   |   | (0.5      | )      |   |   | (7.4 | ) |   |   | (13.9 | ) |
|                                                                           |   |                          |   |   |   |   |   |            |   |   |      |   |   |   |   |   |   |   |   |   |
| Capital      expendituresfor the three months      ended:                      |   |                          |   |   |   |   |   |            |   |   |      |   |   |   |   |   |   |   |   |   |
| March 31, 2009                                                                 |   | $                             | 0.1    |   |   | $      | 1.6    |            |   | $      | -         |   |   | $ | - |   |   | $ | 1.7 |   |
| March 31, 2008                                                                 |   |                          | 0.1    |   |   |   | 0.4    |            |   |   | -         |   |   |   | - |   |   |   | 0.5 |   |
|                                                                           |   |                          |   |   |   |   |   |            |   |   |      |   |   |   |   |   |   |   |   |   |
| Total      assets as of:                                                       |   |                          |   |   |   |   |   |            |   |   |      |   |   |   |   |   |   |   |   |   |
| March 31, 2009                                                                 |   | $                             | 264.1  |   |   | $      | 36.3   |            |   | $      | -         |   |   | $ | 88.2 |   |   | $ | 388.6 |   |
| December 31,    2008                                                           |   | $                             | 267.3  |   |   | $      | 38.1   |            |   | $      | -         |   |   | $ | 94.9 |   |   |   | 400.3 |   |

| (1) | Interest      expense includes amortization of deferred financing  costs. |
|-----|---------------------------------------------------------------------------|

| (2) | Includes      net business interruption insurance recoveries of $1.4 million related to      the damage at Sam Houston Race Park caused by Hurricane Ike (see Note      14). |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Includes      $4.0 million for settlement of the Wilson      actions. |
|-----|-----------------------------------------------------------------------|

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Table of Contents

|                                                                        |   | March      31,2009 |   |   | December      31,2008 |   |
|-----------------------------------------------------------------------------|--------|--------------------|--------|--------|-----------------------|--------|
| Current:                                                                    |   |               |   |   |                  |   |
| Cash and cash      equivalents                                              |   | $                  | 41.3   |   |                  | $      | 59.6 |   |
| Marketable securities -      other                                          |   |               | 6.9    |   |                  |   | 2.5 |   |
| Restricted cash                                                             |   |               | 1.2    |   |                  |   | 0.5 |   |
| Total current                                                               |   |               | 49.4   |   |                  |   | 62.6 |   |
|                                                                        |   |               |   |   |                  |   |   |   |
| Non-Current:                                                                |   |               |   |   |                  |   |   |   |
| Marketable securities - auction      rate securities      (1)               |   |               | 1.5    |   |                  |   | 1.5 |   |
| Restricted cash and certificates      of deposit                            |   |               | 5.5    |   |                  |   | 3.6 |   |
| Total    non-current                                                        |   |               | 7.0    |   |                  |   | 5.1 |   |
|                                                                        |   |               | 56.4   |   |                  |   | 67.7 |   |
| Less:  restricted      amounts                                    |   |               | (6.7   | )      |                  |   | (4.1 | ) |
| Total      unrestricted cash, cash equivalents and marketable    securities |   | $                  | 49.7   |   |                  | $      | 63.6 |   |
|                                                                        |   |               |   |   |                  |   |   |   |

| (1) | Included in other long-term      assets and investments on the Consolidated Balance      Sheets. |
|-----|--------------------------------------------------------------------------------------------------|

|                                                                                           |   | March      31,2009 |   |   | December      31,2008 |   |
|------------------------------------------------------------------------------------------------|--------|--------------------|--------|--------|-----------------------|--------|
|                                                                                           |   |               |   |   |                  |   |
| Funds      held in escrow for the Palmas Country Club, Inc. notes  (see      Note 6) |   | $                  | 3.2    |   |                  | $      | 3.3 |   |
| Certificate      of deposit - insurance collateral (see Note 6)                                |   |               | 2.0    |   |                  |   | - |   |
| Horsemen      custodial accounts                                                               |   |               | -      |   |                  |   | 0.2 |   |
| Other                                                                                          |   |               | 1.5    |   |                  |   | 0.6 |   |
| Total      restricted cash                                                                     |   | $                  | 6.7    |   |                  | $      | 4.1 |   |

----

Table of Contents

|                                         | March      31, 2009    |   |
|----------------------------------------------|------------------------|--------|
|                                         | CarryingValue          |   | AggregateFair      Value |   | Net      Gainsin      AOCL |   | Net      Lossesin      AOCL |   |
|                                         |                   |   |   |   |   |   |   |   |   |   |   |   |
| Debt      securities                         |                   |   |   |   |   |   |   |   |   |   |   |   |
| Maturies      of less than one year          |                   | $      | 3.2 |   |   | $ | 3.2 |   |   | $ | - |   |   | $ | - |   |
| Maturies      of one to five years           |                   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Maturies      of greater than five years     |                   |   | 1.2 |   |   |   | 1.2 |   |   |   | - |   |   |   | - |   |
| Equity      securities and other investments |                   |   | 2.5 |   |   |   | 2.5 |   |   |   | - |   |   |   | (1.2 | ) |
| Auction      rate securities                 |                   |   | 1.5 |   |   |   | 1.5 |   |   |   | - |   |   |   | - |   |
| Total                                        |                   | $      | 8.4 |   |   | $ | 8.4 |   |   | $ | - |   |   | $ | (1.2 | ) |
|                                         |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                         | December      31, 2008 |   |
|                                         | CarryingValue          |   | AggregateFair      Value |   | Net      Gainsin      AOCL |   | Net      Lossesin      AOCL |   |
|                                         |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity      securities and other investments |                   | $      | 2.5 |   |   | $ | 2.5 |   |   | $ | - |   |   | $ | (1.3 | ) |
| Auction      rate securities                 |                   |   | 1.5 |   |   |   | 1.5 |   |   |   | - |   |   |   | - |   |
| Total                                        |                   | $      | 4.0 |   |   | $ | 4.0 |   |   | $ | - |   |   | $ | (1.3 | ) |

|                         |   | Fair      Value Measurements as ofMarch      31, 2009 |   |
|------------------------------|--------|-------------------------------------------------------|--------|
|                         |   | Total                                                 |   |   | Level      1 |   |   | Level      2 |   |   | Level      3 |   |
|                         |   |                                                  |   |   |   |   |   |   |   |   |   |   |
| Description:                 |   |                                                  |   |   |   |   |   |   |   |   |   |   |
|                         |   |                                                  |   |   |   |   |   |   |   |   |   |   |
| Short-term      investments  |   | $                                                     | 6.9    |   |   | $ | 6.9 |   |   | $ | - |   |   | $ | - |   |
|                         |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Auction rate      securities |   |                                                  | 1.5    |   |   |   | - |   |   |   | - |   |   |   | 1.5 |   |
|                         |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                        |   | $                                                     | 8.4    |   |   | $ | 6.9 |   |   | $ | - |   |   | $ | 1.5 |   |

|                                                                            |   | AuctionRateSecurities |   |
|---------------------------------------------------------------------------------|--------|-----------------------|--------|
|                                                                            |   |                  |   |
| Carrying      value as of January 1, 2009                                       |   | $                     | 1.5    |   |
| Settlements                                                                     |   |                  | -      |   |
| Impairment      charge included in theConsolidated Statement of      Operations |   |                  | -      |   |
| Carrying      value as of March 31, 2009                                        |   | $                     | 1.5    |   |

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Table of Contents

| 6. | Debt |
|----|------|

|                                                                                                            |   | March      31,2009 |   |   | December      31,2008 |   |
|-----------------------------------------------------------------------------------------------------------------|--------|--------------------|--------|--------|-----------------------|--------|
|                                                                                                            |   |               |   |   |                  |   |
| 7.56%      Lakepointe Notes due June 8, 2021                                                                    |   | $                  | 109.5  |   |                  | $      | 110.0 |   |
| 7.03%      Motel Notes due May 1, 2018                                                                          |   |               | 40.9   |   |                  |   | 41.4 |   |
| 6.08%      Beltway Notes due November 9, 2024                                                                   |   |               | 27.0   |   |                  |   | 27.2 |   |
| 7.12%      PCCI Notes due December 20, 2030                                                                     |   |               | 27.7   |   |                  |   | 27.7 |   |
| Prime      + 0.5% EN Facility due October 29, 2011                                                              |   |               | 1.0    |   |                  |   | 0.6 |   |
| Other      notes and contracts, primarily secured by receivables,      buildings,real estate and      equipment |   |               | 4.8    |   |                  |   | 4.9 |   |
| Total principal      outstanding                                                                                |   |               | 210.9  |   |                  |   | 211.8 |   |
|                                                                                                            |   |               |   |   |                  |   |   |   |
| Less:  Short-term      borrowings and current maturities                                              |   |               | (6.2   | )      |                  |   | (6.1 | ) |
|                                                                                                            |   | $                  | 204.7  |   |                  | $      | 205.7 |   |

----

|                                           |   | Pension      Benefits             |   |   | Medical/Life |   |
|------------------------------------------------|--------|-----------------------------------|--------|--------|--------------|--------|
|                                           |   | Three      Months Ended March 31, |   |
|                                           |   | 2009                              |   |   | 2008         |   |   | 2009 |   |   | 2008 |   |
|                                           |   |                              |   |   |         |   |   |   |   |   |   |   |
| Components      of net periodic benefit costs: |   |                              |   |   |         |   |   |   |   |   |   |   |
| Service cost                                   |   | $                                 | -      |   |         | $      | - |   |   | $ | - |   |   | $ | - |   |
| Interest cost                                  |   |                              | 0.5    |   |         |   | 0.5 |   |   |   | - |   |   |   | - |   |
| Expected return on      assets                 |   |                              | (0.6   | )      |         |   | (0.6 | ) |   |   | - |   |   |   | - |   |
| Recognized net actuarial      loss             |   |                              | 0.1    |   |         |   | - |   |   |   | - |   |   |   | - |   |
| Amortization of prior service      costs       |   |                              | -      |   |         |   | - |   |   |   | - |   |   |   | - |   |
| Net periodic benefit      costs                |   |                              | -      |   |         |   | (0.1 | ) |   |   | - |   |   |   | - |   |
| Curtailments, settlements and      other       |   |                              |   |   |         |   | - |   |   |   | - |   |   |   | - |   |
| Adjusted net periodic benefit      costs       |   | $                                 | -      |   |         | $      | (0.1 | ) |   | $ | - |   |   | $ | - |   |

----

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----

Table of Contents

|   | Deconsolidation      of Palco and its Subsidiaries and Potential Impact on the Company and      Certain Related Entities |
|--------|--------------------------------------------------------------------------------------------------------------------------|

----

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----

Table of Contents

|                          |   | Three      Months EndedMarch      31, |
|-------------------------------|--------|---------------------------------------|
|                          |   |                                  | 2009 |   | 2008 |
|                          |   |                                  |   |   |   |
| Expected      volatility      |   |                                  | 45% |   | 26% |
| Expected      dividends       |   |                                  | - |   | - |
| Expected      term (in years) |   |                                  |            7.27 |   |            7.44 |
| Risk-free      rate           |   |                                  | 1.67% |   | 2.46% |

----

Table of Contents

|                               |   | Options                                                                                                                                                                                                                   |   | WeightedAverageExercise      Price |                                                                                                                                                                                                                                              | WeightedAverageRemainingContractualTerm      (in years) |                                                                                                                         |   | AggregateFair      Value(in      millions) |
|------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|
|                               |   |                                                                                                                                                                                                                      |   |                               |                                                                                                                                                                                                                                              |                                                    |                                                                                                                         |   |                                       |   |
| Balance      at January 1, 2009    |   |                            1,052,182                                                                             |   | $                                  |                                  21.04                                       |                                                    |                                                                                                                         |   |                                       |   |
| Granted                            |   |                                          - |   |                               |                                              - |                                                    |                                                                                                                         |   |                                       |   |
| Exercised                          |   |                                     - |   |                               |                                              - |                                                    |                                                                                                                         |   |                                       |   |
| Forfeited      or expired          |   |                           (32,500                                                       | )      |                               |                                       55.00                                       |                                                    |                                                                                                                         |   |                                       |   |
| Balance at March 31,      2009     |   |      1,019,682                                                                                                                                                                                   |   |  $                            |            19.96                                                                                                                                                                           |                                                    |                     5.10 |   | $                                          |                  0.1 |
| Exercisable      at March 31, 2009 |   |         753,197                                                                                                                                                                   |   |  $                            |            19.88                                                                                                                                                                           |                                                    |                     3.90 |   | $                                          |                  0.1 |

|                                                              |   | Three      Months EndedMarch      31, |      |
|-------------------------------------------------------------------|--------|---------------------------------------|-----------|
|                                                              |   | 2009                                  |      |   |           2008 (1)      (2) |   |
|                                                              |   |                                  |      |   |   |   |
| Weighted      average number of common shares outstanding-basic:  |   |                                  | 4,559,637 |   |   |   | 5,112,732 |   |
|                                                              |   |                                  |      |   |   |   |   |   |
| Effect of dilution (3):                                           |   |                                  |      |   |   |   |   |   |
| Conversion of Class A Preferred      Stock                        |   |                                  | -         |   |   |   | - |   |
| Exercise of stock      options                                    |   |                                  | -         |   |   |   | - |   |
|                                                              |   |                                  |      |   |   |   |   |   |
| Weighted      average number of common shares outstanding-diluted |   |                                  | 4,559,637 |   |   |   | 5,112,732 |   |

| (1) | In      the second quarter of 2008, a mathematical error was discovered in the      calculation of the weighted average number of shares used to determine      basic and diluted shares outstanding for the first quarter of      2008.  As a result, earnings per share for the three months      ended March 31, 2008 was incorrectly reported as a loss of $2.58 per      share, rather than a loss of $2.72 pershare. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | In      March 2008, MAXXAM Parent purchased 687,480 shares of its Common Stock      from two affiliated institutional holders in a privately negotiated      transaction for an aggregate cost of $20.1  million |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | The      Company had a loss for the three months ended March 31, 2009 and      2008.  The Class A Preferred Stock and options were therefore      not included in the computation of earnings per share for the period as      the effect would be anti-dilutive.  If the Company was required      to include dilutive shares in its per share calculations, the number of      dilutive shares of Class A Preferred Stock for the three months ended      March 31, 2009 and 2008 would be 668,119 and 668,119, respectively, and      the number of dilutive options for the three months ended March 31, 2009      and 2008 would be 0 and 280,122,respectively. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table of Contents

|                                                                    |   | Three      Months EndedMarch      31, |   |
|-------------------------------------------------------------------------|--------|---------------------------------------|--------|
|                                                                    |   | 2009                                  |   |   | 2008 |   |
|                                                                    |   |                                  |   |   |   |   |
| Net      loss                                                           |   | $                                     | (12.5  | ) |   | $ | (13.9 | ) |
| Other      comprehensive loss:                                          |   |                                  |   |   |   |   |   |   |
| Change in unrealized gain (loss)      on available-for-sale investments |   |                                  | 0.1    |   |   |   | (0.9 | ) |
| Total comprehensive      loss                                           |   | $                                     | (12.4  | ) |   | $ | (14.8 | ) |

|                               |   | Three      Months Ended |   |
|------------------------------------|--------|-------------------------|--------|
|                               |   | March      31, 2009     |   |   | December      31, 2008 |   |
|                               |   |                    |   |   |   |   |
| Property      damage               |   | $                       | -      |   |   | $ | 4.8 |   |
| Business      interruption         |   |                    | 1.4    |   |   |   | 0.8 |   |
|                               |   |                    |   |   |   |   |   |   |
| Net      impacts reflected in the  |   |                    |   |   |   |   |   |   |
| statement of      operations       |   | $                       | 1.4    |   |   | $ | 5.6 |   |
|                               |   |                    |   |   |   |   |   |   |
| Recoveries      not yet recognized |   | $                       | 0.3    |   |   | $ | 0.6 |   |

----

| ITEM      2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION      AND RESULTS OF OPERATIONS |
|--------------|--------------------------------------------------------------------------------------------------|

|                                                                     |   | Three      Months EndedMarch      31,            |   |
|--------------------------------------------------------------------------|--------|--------------------------------------------------|--------|
|                                                                     |   | 2009                                             |   |   | 2008 |   |
|                                                                     |   |          (In millions of dollars) |   |
|                                                                     |   |                                             |   |   |   |   |
| Sales                                                                    |   | $                                                | 15.7   |   |   | $ | 21.7 |   |
| Costs      and expenses                                                  |   |                                             | (23.9  | ) |   |   | (28.8 | ) |
| Operating      loss                                                      |   |                                             | (8.2   | ) |   |   | (7.1 | ) |
| Other      income (expense)                                              |   |                                             | (0.2   | ) |   |   | (2.6 | ) |
| Interest      expense, including amortization of deferred financingcosts |   |                                             | (4.1   | ) |   |   | (4.2 | ) |
| Loss      before income taxes                                            |   |                                             | (12.5  | ) |   |   | (13.9 | ) |
| Benefit      (provision) for income taxes                                |   |                                             | -      |   |   |   | - |   |
| Net      loss                                                            |   | $                                                | (12.5  | ) |   | $ | (13.9 | ) |
|                                                                     |   |                                             |   |   |   |   |   |   |
| Revenues      by segment as a percentage of total:                       |   |                                             |   |   |   |   |   |   |
| Real estate                                                              |   |                                             | 47.1   | % |   |   | 41.1 | % |
| Racing                                                                   |   |                                             | 52.9   | % |   |   | 58.9 | % |
|                                                                     |   |                                             | 100.0  | % |   |   | 100.0 | % |

----

Table of Contents

|                                                     |   | Three      Months EndedMarch      31, |   |
|----------------------------------------------------------|--------|---------------------------------------|--------|
|                                                     |   | 2009                                  |   |   | 2008 |   |
|                                                     |   |        (In millions of dollars)  |   |
|                                                     |   |                                  |   |   |   |   |
| Money      market accounts and other investments         |   | $                                     | 0.3    |   |   | $ | 0.6 |   |
| Auction      rate securities                             |   |                                  | -      |   |   |   | (1.8 | ) |
| Marketable      securities                               |   |                                  | (0.3   | ) |   |   | (0.5 | ) |
| Investments      in limited partnerships                 |   |                                  | -      |   |   |   | (1.0 | ) |
| Joint      ventures                                      |   |                                  | (0.2   | ) |   |   | - |   |
| Other                                                    |   |                                  | -      |   |   |   | 0.1 |   |
| Investment      interest and other income (expense), net |   | $                                     | (0.2   | ) |   | $ | (2.6 | ) |

----

Table of Contents

|                                                               |   | Three      Months EndedMarch      31,      |   |
|--------------------------------------------------------------------|--------|--------------------------------------------|--------|
|                                                               |   | 2009                                       |   |   | 2008 |   |
|                                                               |   |         (In millions of dollars) |   |
|                                                               |   |                                       |   |   |   |   |
| Sales:                                                             |   |                                       |   |   |   |   |
| Real estate:                                                       |   |                                       |   |   |   |   |
| Fountain Hills                                                     |   | $                                          | -      |   |   | $ | 0.5 |   |
| Mirada                                                             |   |                                       | -      |   |   |   | - |   |
| Palmas                                                             |   |                                       | -      |   |   |   | 0.1 |   |
| Total                                                              |   |                                       | -      |   |   |   | 0.6 |   |
|                                                               |   |                                       |   |   |   |   |   |   |
| Resort, commercial and      other:                                 |   |                                       |   |   |   |   |   |   |
| Fountain Hills                                                     |   |                                       | 0.6    |   |   |   | 1.0 |   |
| Palmas                                                             |   |                                       | 2.2    |   |   |   | 2.7 |   |
| Commercial lease      properties                                   |   |                                       | 4.6    |   |   |   | 4.6 |   |
| Other                                                              |   |                                       | -      |   |   |   | - |   |
| Total                                                              |   | $                                          | 7.4    |   |   | $ | 8.3 |   |
|                                                               |   |                                       |   |   |   |   |   |   |
| Total sales                                                        |   | $                                          | 7.4    |   |   | $ | 8.9 |   |
|                                                               |   |                                       |   |   |   |   |   |   |
| Operating      income (loss):                                      |   |                                       |   |   |   |   |   |   |
| Fountain Hills                                                     |   | $                                          | (0.9   | ) |   | $ | (0.9 | ) |
| Mirada                                                             |   |                                       | -      |   |   |   | (0.1 | ) |
| Palmas                                                             |   |                                       | (2.3   | ) |   |   | (3.0 | ) |
| Commercial lease      properties                                   |   |                                       | 3.3    |   |   |   | 3.3 |   |
| Other                                                              |   |                                       | -      |   |   |   | (0.5 | ) |
| Total operating income      (loss)                                 |   | $                                          | 0.1    |   |   | $ | (1.2 | ) |
|                                                               |   |                                       |   |   |   |   |   |   |
| Investment,      interest and other income:                        |   |                                       |   |   |   |   |   |   |
| Equity in earnings (losses) from      real estate joint ventures   |   | $                                          | (0.2   | ) |   | $ | - |   |
| Other                                                              |   |                                       | 0.2    |   |   |   | 0.2 |   |
|                                                               |   | $                                          | -      |   |   | $ | 0.2 |   |
|                                                               |   |                                       |   |   |   |   |   |   |
| Interest      expense and amortization of deferred financing costs |   |                                       | (4.1   | ) |   |   | (4.2 | ) |
|                                                               |   |                                       |   |   |   |   |   |   |
| Income      (loss) before income taxes                             |   | $                                          | (4.0   | ) |   | $ | (5.2 | ) |

----

Table of Contents

|                               |   | Three      Months EndedMarch      31, |   |
|------------------------------------|--------|---------------------------------------|--------|
|                               |   | 2009                                  |   |   | 2008 |   |
|                               |   |  (In      millions of dollars)   |   |
|                               |   |                                  |   |   |   |   |
| Number      of live racing days:   |   |                                  |   |   |   |   |
| Sam Houston Race    Park           |   |                                  | -      |   |   |   | 41 |   |
| Valley Race Park                   |   |                                  | 65     |   |   |   | 66 |   |
|                               |   |                                  |   |   |   |   |   |   |
| Handle:                            |   |                                  |   |   |   |   |   |   |
| Sam Houston Race    Park:          |   |                                  |   |   |   |   |   |   |
| On-track handle                    |   | $                                     | 25.9   |   |   | $ | 31.0 |   |
| Off-trackhandle                    |   |                                  | -      |   |   |   | 66.7 |   |
| Total                              |   | $                                     | 25.9   |   |   | $ | 97.7 |   |
|                               |   |                                  |   |   |   |   |   |   |
| Valley Race Park:                  |   |                                  |   |   |   |   |   |   |
| On-track handle                    |   | $                                     | 5.8    |   |   | $ | 5.8 |   |
| Off-trackhandle                    |   |                                  | 2.5    |   |   |   | 2.7 |   |
| Total                              |   | $                                     | 8.3    |   |   | $ | 8.5 |   |
|                               |   |                                  |   |   |   |   |   |   |
| Sales:                             |   |                                  |   |   |   |   |   |   |
| Sam Houston Race    Park:          |   |                                  |   |   |   |   |   |   |
| Gross pari-mutuel      commissions |   | $                                     | 5.7    |   |   | $ | 8.8 |   |
| Concertrevenues                    |   |                                  | 0.1    |   |   |   | - |   |
| Other revenues                     |   |                                  | 0.5    |   |   |   | 2.1 |   |
| Total                              |   |                                  | 6.3    |   |   |   | 10.9 |   |
| Valley Race Park:                  |   |                                  |   |   |   |   |   |   |
| Gross pari-mutuel      commissions |   |                                  | 1.5    |   |   |   | 1.5 |   |
| Other revenues                     |   |                                  | 0.5    |   |   |   | 0.4 |   |
| Total                              |   |                                  | 2.0    |   |   |   | 1.9 |   |
| Total sales                        |   | $                                     | 8.3    |   |   | $ | 12.8 |   |
|                               |   |                                  |   |   |   |   |   |   |
| Operating      loss:               |   |                                  |   |   |   |   |   |   |
| Sam Houston Race    Park           |   | $                                     | (0.6   | ) |   | $ | (0.6 | ) |
| Valley Race Park                   |   |                                  | -      |   |   |   | (0.1 | ) |
| Other                              |   |                                  | (0.1   | ) |   |   | (0.1 | ) |
| Total operating      loss          |   | $                                     | (0.7   | ) |   | $ | (0.8 | ) |
|                               |   |                                  |   |   |   |   |   |   |
| Loss      before income taxes      |   | $                                     | (0.7   | ) |   | $ | (0.8 | ) |

----

Table of Contents

|                                                 |   | Three      Months EndedMarch      31, |   |
|------------------------------------------------------|--------|---------------------------------------|--------|
|                                                 |   | 2009                                  |   |   | 2008 |   |
|                                                 |   | (In      millions of dollars)         |   |
|                                                 |   |                                  |   |   |   |   |
|                                                 |   |                                  |   |   |   |   |
| Corporate      expenses, including legal fees        |   | $                                     | (4.4   | ) |   | $ | (2.8 | ) |
| Settlement      of Wilson      actions               |   |                                  | (4.0   | ) |   |   | - |   |
| Stock-based      compensation                        |   |                                  | 0.8    |   |   |   | (1.8 | ) |
| Operating      loss                                  |   |                                  | (7.6   | ) |   |   | (4.6 | ) |
| Investment,      interest and other income (expense) |   |                                  | (0.2   | ) |   |   | (2.8 | ) |
| Loss      before income taxes                        |   | $                                     | (7.8   | ) |   | $ | (7.4 | ) |

|                          | Three      Months EndedMarch      31, |   |
|-------------------------------|---------------------------------------|--------|
|                          | 2009                                  |   | 2008 |   |
|                          | (In      millions of dollars)         |   |
|                          |                                  |   |   |   |   |   |
| Operating      loss           |                                  | $      | - |   |   | $ | (0.5 | ) |
| Loss      before income taxes |                                  |   | - |   |   |   | (0.5 | ) |

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|                                                                                                                               |   |  Real      Estate              |                                                                      |  Racing |   |  MGI                                               |   |  Corporate |   |  Total                                       |
|------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|---------------------------------------------------------------------------|--------------|--------|---------------------------------------------------------|--------|-----------------|--------|---------------------------------------------------|
|                                                                                                                               |   |  (In      millions of dollars) |
|                                                                                                                               |   |                                |                                                                      |         |   |                                                    |   |            |   |                                              |   |   |   |   |   |   |
| Debt and credit facilities(excluding intercompanynotes)                                                                            |   |                                |                                                                      |         |   |                                                    |   |            |   |                                              |   |   |   |   |   |   |
| Short-term      borrowings andcurrent maturities oflong-term debt:                                                                 |   |                                |                                                                      |         |   |                                                    |   |            |   |                                              |   |   |   |   |   |   |
| March 31, 2009                                                                                                                     |   | $                                   |          6.0                 |         | $      |       0.2                 |   |            | $      |         - |   | $ |             - |   | $ |         6.2 |
| December 31, 2008                                                                                                                  |   |                                |          5.9                 |         |   |       0.2                 |   |            |   |         - |   |   |             - |   |   |         6.1 |
|                                                                                                                               |   |                                |                                                                      |         |   |                                                    |   |            |   |                                              |   |   |   |   |   |   |
| Long-term      debt, excludingcurrent maturitiesanddiscounts:                                                                      |   |                                |                                                                      |         |   |                                                    |   |            |   |                                              |   |   |   |   |   |   |
| March 31, 2009                                                                                                                     |   | $                                   |      204.1                                       |         | $      |       0.6                 |   |            | $      |         - |   | $ |             - |   | $ |     204.7 |
| December 31, 2008                                                                                                                  |   |                                |      205.0                                       |         |   |       0.7                 |   |            |   |         - |   |   |             - |   |   |     205.7 |
|                                                                                                                               |   |                                |                                                                      |         |   |                                                    |   |            |   |                                              |   |   |   |   |   |   |
| Cash, cash equivalents,marketable securitiesand other      investments                                                             |   |                                |                                                                      |         |   |                                                    |   |            |   |                                              |   |   |   |   |   |   |
| March 31, 2009                                                                                                                     |   |                                |                                                                      |         |   |                                                    |   |            |   |                                              |   |   |   |   |   |   |
| Current restricted      amounts                                                                                                    |   | $                                   |             - |         | $      |       0.2                 |   |            | $      |         - |   | $ |          1.0 |   | $ |         1.2 |
| Other current      amounts                                                                                                         |   |                                |          3.5                 |         |   |       4.7                 |   |            |   |         - |   |   |        40.0 |   |   |       48.2 |
|                                                                                                                               |   |                                |          3.5                 |         |   |       4.9                 |   |            |   |         - |   |   |        41.0 |   |   |       49.4 |
|                                                                                                                               |   |                                |                                                                      |         |   |                                                    |   |            |   |                                              |   |   |   |   |   |   |
| Long-term unrestricted      investments                                                                                            |   |                                |             - |         |   |          - |   |            |   |         - |   |   |          1.9 |   |   |         1.9 |
| Long-term restrictedamounts                                                                                                        |   |                                |          3.5                 |         |   |          - |   |            |   |         - |   |   |          2.0 |   |   |         5.5 |
|                                                                                                                               |   | $                                   |          7.0                 |         | $      |       4.9                 |   |            | $      |         - |   | $ |        44.9 |   | $ |       56.8 |
|                                                                                                                               |   |                                |                                                                      |         |   |                                                    |   |            |   |                                              |   |   |   |   |   |   |
| Changes in cash and cashequivalents                                                                                                |   |                                |                                                                      |         |   |                                                    |   |            |   |                                              |   |   |   |   |   |   |
|                                                                                                                               |   |                                |                                                                      |         |   |                                                    |   |            |   |                                              |   |   |   |   |   |   |
| Capital      expenditures for the year ended:                                                                                      |   |                                |                                                                      |         |   |                                                    |   |            |   |                                              |   |   |   |   |   |   |
| March 31, 2009                                                                                                                     |   | $                                   |          0.1                 |         | $      |       1.6                 |   |            | $      |         - |   | $ |   |   | $ |         1.7 |
| March 31, 2008                                                                                                                     |   |                                |          0.1                 |         |   |       0.4                 |   |            |   |         - |   |   |             - |   |   |         0.5 |
|                                                                                                                               |   |                                |                                                                      |         |   |                                                    |   |            |   |                                              |   |   |   |   |   |   |
| Net      proceeds from dispositions of propertyand investments for      the  year ended:                                 |   |                                |                                                                      |         |   |                                                    |   |            |   |                                              |   |   |   |   |   |   |
| March 31, 2009                                                                                                                     |   | $                                   |             - |         | $      |          - |   |            | $      |         - |   | $ |             - |   | $ |           - |
| March 31, 2008                                                                                                                     |   |                                |             - |         |   |          - |   |            |   |         - |   |   |             - |   |   |           - |
|                                                                                                                               |   |                                |                                                                      |         |   |                                                    |   |            |   |                                              |   |   |   |   |   |   |
| Borrowings      (repayments) of debt and credit facilities,net of financing costs, for      the  year ended:             |   |                                |                                                                      |         |   |                                                    |   |            |   |                                              |   |   |   |   |   |   |
| March 31, 2009                                                                                                                     |   | $                                   |        (0.9                            | )            | $      |          - |   |            | $      |         - |   | $ |             - |   | $ |       (0.9) |
| March 31, 2008                                                                                                                     |   |                                |        (1.1                            | )            |   |          - |   |            |   |         - |   |   |             - |   |   |       (1.1) |
| Dividends,      advances (including interest paid)and tax sharing payments received      (paid)for the  year      ended: |   |                                |                                                                      |         |   |                                                    |   |            |   |                                              |   |   |   |   |   |   |
| March 31, 2009                                                                                                                     |   | $                                   |          1.2                 |         | $      |          - |   |            | $      |         - |   | $ |         (1.2 | ) | $ |           - |
| March 31, 2008                                                                                                                     |   |                                |          2.6                 |         |   |       4.0                 |   |            |   |         - |   |   |         (6.6 | ) |   |           - |

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QUANTITATIVE AND QUALITATIVE

CONTROLS AND

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LEGAL PROCEEDINGS

RISK

UNREGISTERED SALES 

DEFAULTS 

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EXHIBIT

|   | 10.1 | Amendment,      dated March 31, 2009,  to the Company’s Executive Bonus Plan      (incorporated herein by reference to Exhibit 10.1 to the Company’s Current      Report on Form 8-K filed on April 3,2009) |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.2 | 2009      Bonus Criteria adopted on March 31, 2009 for the MAXXAM Chief Executive      Officer under the Company’s Executive Bonus Plan , (incorporated herein by      reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K      filed on April 7, 2009) |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.3 | 2009      Bonus Criteria adopted on March 31,      2009 for the MAXXAM President under the Company’s Executive Bonus Plan      (incorporated herein by reference to Exhibit 10.3 to the Company’s Current      Report on Form 8-K filed on April 7,2009) |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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SIGNATURES

|                                                 |   | MAXXAM      INC.                                                                                                     |
|------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------|
| Date:     May      12, 2009 | By:    | /S/      M.      EMILY MADISON                                                                   |
|                                                 |   | M.      Emily MadisonVice      President, Finance(Principal      Accounting Officer andPrincipal      Financial Officer)  |

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Glossary of Defined Terms

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