----

| 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 x | Non-accelerated      filer o |
|--------------------------------|--------------------------|------------------------------|

----

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

----

| MAXXAM      INC. AND SUBSIDIARIES                                                                                                                                                                                                                                                                                                                 |               |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|
| CONDENSED CONSOLIDATED BALANCE    SHEETS                                                                                                                                                                                                                                                                                                          |               |
| (In      millions of dollars, except share information)                                                                                                                                                                                                                                                                                           |               |
|                                                                                                                                                                                                                                                                                                                                              |               |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                              | March      31,2008 |   |   | December      31,2007 |   |
|                                                                                                                                                                                                                                                                                                                                              | (Unaudited)        |   |
|                                                                                                                                                                                                                                                                                                                                              |               |   |   |   |   |   |
| Assets                                                                                                                                                                                                                                                                                                                                            |               |   |   |   |   |   |
|         Current assets:                                                                                                                                                                                                                                                                                                                 |               |   |   |   |   |   |
|            Cash and cash equivalents                                                                                                                                                                                                                                                                                     |               | $ | 54.9 |   |   | $ | 67.8 |   |
|            Marketable securities and other short-term investments                                                                                                                                                                                                                                                        |               |   | 19.8 |   |   |   | 46.2 |   |
|            Receivables:                                                                                                                                                                                                                                                                                                  |               |   |   |   |   |   |   |   |
|               Trade, net of allowance for doubtful accounts of $0.5 and $0.5,      respectively                                                                                                                                                                                                           |               |   | 3.7 |   |   |   | 3.0 |   |
|               Other                                                                                                                                                                                                                                                                                       |               |   | 1.9 |   |   |   | 1.6 |   |
|            Inventories:                                                                                                                                                                                                                                                                                                  |               |   |   |   |   |   |   |   |
|               Lumber                                                                                                                                                                                                                                                                                      |               |   | 5.1 |   |   |   | - |   |
|               Logs                                                                                                                                                                                                                                                                                        |               |   | 2.1 |   |   |   | - |   |
|            Real estate inventory                                                                                                                                                                                                                                                                                         |               |   | 4.3 |   |   |   | 3.9 |   |
|            Prepaid expenses and other current assets                                                                                                                                                                                                                                                                     |               |   | 2.5 |   |   |   | 2.9 |   |
|            Restricted cash                                                                                                                                                                                                                                                                                               |               |   | 0.3 |   |   |   | 2.3 |   |
|               Total current assets                                                                                                                                                                                                                                                                        |               |   | 94.6 |   |   |   | 127.7 |   |
| Property,      plant and equipment, net of accumulated depreciation of$101.7   and      $99.1, respectively                                                                                                                                                                                                                        |               |   | 217.5 |   |   |   | 219.8 |   |
| Real      estate inventory                                                                                                                                                                                                                                                                                                                        |               |   | 53.4 |   |   |   | 52.7 |   |
| Deferred      income taxes                                                                                                                                                                                                                                                                                                                        |               |   | 94.7 |   |   |   | 94.7 |   |
| Deferred      financing costs                                                                                                                                                                                                                                                                                                                     |               |   | 4.7 |   |   |   | 4.9 |   |
| Long-term      receivables and other assets                                                                                                                                                                                                                                                                                                       |               |   | 15.0 |   |   |   | 15.5 |   |
| Restricted      cash                                                                                                                                                                                                                                                                                                                              |               |   | 3.6 |   |   |   | 3.6 |   |
|                                                                                                                                                                                                                                                                                                                                              |               | $ | 483.5 |   |   | $ | 518.9 |   |
| Liabilities      and Stockholders’      Deficit                                                                                                                                                                                                                                                                                             |               |   |   |   |   |   |   |   |
|         Current liabilities:                                                                                                                                                                                                                                                                                                            |               |   |   |   |   |   |   |   |
|            Accounts payable                                                                                                                                                                                                                                                                                              |               | $ | 5.8 |   |   | $ | 6.5 |   |
|            Accrued interest                                                                                                                                                                                                                                                                                              |               |   | 0.9 |   |   |   | 0.9 |   |
|            Accrued compensation and related benefits                                                                                                                                                                                                                                                                     |               |   | 2.0 |   |   |   | 2.3 |   |
|            Accrued development costs                                                                                                                                                                                                                                                                                     |               |   | 1.6 |   |   |   | 1.6 |   |
|            Accrued other taxes                                                                                                                                                                                                                                                                                           |               |   | 2.0 |   |   |   | 1.3 |   |
|            Deferred revenue                                                                                                                                                                                                                                                                                              |               |   | 1.0 |   |   |   | 0.7 |   |
|            Other accrued liabilities                                                                                                                                                                                                                                                                                     |               |   | 12.4 |   |   |   | 14.0 |   |
|            Short-term borrowings and current maturities of long-term    debt                                                                                                                                                                                                                                             |               |   | 5.5 |   |   |   | 5.3 |   |
|               Total current liabilities                                                                                                                                                                                                                                                                   |               |   | 31.2 |   |   |   | 32.6 |   |
| Long-term      debt, less current maturities                                                                                                                                                                                                                                                                                                      |               |   | 209.9 |   |   |   | 211.2 |   |
| Accrued      pension and other postretirement benefits                                                                                                                                                                                                                                                                                            |               |   | 7.0 |   |   |   | 7.0 |   |
| Other      noncurrent liabilities                                                                                                                                                                                                                                                                                                                 |               |   | 47.3 |   |   |   | 45.1 |   |
| Losses      in excess of investment in Debtors                                                                                                                                                                                                                                                                                                    |               |   | 484.2 |   |   |   | 484.2 |   |
|               Total liabilities                                                                                                                                                                                                                                                                           |               |   | 779.6 |   |   |   | 780.1 |   |
| Commitments      and contingencies (see Note 8)                                                                                                                                                                                                                                                                                                   |               |   |   |   |   |   |   |   |
| Stockholders’      deficit:                                                                                                                                                                                                                                                                                                                 |               |   |   |   |   |   |   |   |
|          Preferred stock, $0.50 par value; $0.75 liquidation preference; 2,500,000      shares       authorized;      Class A $0.05 Non-Cumulative Participating Convertible      Preferred Stock;                 668,964 shares issued and 668,119 sharesoutstanding |               |   | 0.3 |   |   |   | 0.3 |   |
|                                                                                                                                                                                                                                                                                                                                              |               |   |   |   |   |   |   |   |
|          Common stock, $0.50 par value; 13,000,000 shares authorized; 10,063,359      shares           issued; 4,561,237 and  5,248,717 shares outstanding,      respectively                                                                                                                   |               |   | 5.0 |   |   |   | 5.0 |   |
|         Additional capital                                                                                                                                                                                                                                                                                                              |               |   | 225.3 |   |   |   | 225.3 |   |
|         Accumulated deficit                                                                                                                                                                                                                                                                                                             |               |   | (356.8 | ) |   |   | (342.9 | ) |
|         Accumulated other comprehensive loss                                                                                                                                                                                                                                                                                            |               |   | (2.1 | ) |   |   | (1.2 | ) |
|         Treasury stock, at cost (shares held; preferred – 845; common – 5,502,122      and           4,814,642, respectively)                                                                                                                                                                      |               |   | (167.8 | ) |   |   | (147.7 | ) |
|               Total stockholders’      deficit                                                                                                                                                                                                                                                      |               |   | (296.1 | ) |   |   | (261.2 | ) |
|                                                                                                                                                                                                                                                                                                                                              |               | $ | 483.5 |   |   | $ | 518.9 |   |
|                                                                                                                                                                                                                                                                                                                                              |               |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                              |               |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                              |               |   |   |   |   |   |   |   |
| The      accompanying notes are an integral part of these financial      statements.                                                                                                                                                                                                                                                              |               |   |

----

| MAXXAM      INC. AND SUBSIDIARIES                                                    |   |
|--------------------------------------------------------------------------------------|--------|
|                                                                                 |   |
| CONDENSED CONSOLIDATED STATEMENTS OF      OPERATIONS                                 |   |
| (In      millions of dollars, except per share information)                          |   |
|                                                                                 |   |   |   |   |   |   |
|                                                                                 |   | Three      Months EndedMarch      31, |   |
|                                                                                 |   | 2008 |   |   | 2007 |   |
|                                                                                 |   | (Unaudited) |   |
|                                                                                 |   |   |   |   |   |   |
| Sales:                                                                               |   |   |   |   |   |   |
|         Real estate                                                        |   | $ | 8.9 |   |   | $ | 11.6 |   |
|         Racing                                                             |   |   | 12.8 |   |   |   | 12.7 |   |
|         Forest products, net of discounts                                  |   |   | - |   |   |   | 4.4 |   |
|                                                                                 |   |   | 21.7 |   |   |   | 28.7 |   |
| Costs      and expenses:                                                             |   |   |   |   |   |   |   |   |
|    Cost      of sales and operations:                                 |   |   |   |   |   |   |   |   |
|            Real estate                                      |   |   | 4.2 |   |   |   | 5.3 |   |
|            Racing                                           |   |   | 11.0 |   |   |   | 10.8 |   |
|            Forest products                                  |   |   | - |   |   |   | 4.3 |   |
|    Selling,      general and administrative expenses                  |   |   | 10.8 |   |   |   | 10.0 |   |
|    Gains      on sales of other assets                                |   |   | - |   |   |   | (0.1 | ) |
|         Depreciation, depletion and amortization                           |   |   | 2.8 |   |   |   | 4.5 |   |
|                                                                                 |   |   | 28.8 |   |   |   | 34.8 |   |
| Operating      loss:                                                                 |   |   |   |   |   |   |   |   |
|          Real estate                                                  |   |   | (1.2 | ) |   |   | (0.6 | ) |
|          Racing                                                       |   |   | (0.8 | ) |   |   | (0.6 | ) |
|          Forest products                                              |   |   | (0.5 | ) |   |   | (3.0 | ) |
|          Corporate                                                    |   |   | (4.6 | ) |   |   | (1.9 | ) |
|                                                                                 |   |   | (7.1 | ) |   |   | (6.1 | ) |
| Other      income (expense):                                                         |   |   |   |   |   |   |   |   |
|          Investment, interest and other income (expense)              |   |   | (2.6 | ) |   |   | 1.2 |   |
|          Interest expense                                             |   |   | (4.1 | ) |   |   | (7.1 | ) |
|    Amortization      of deferred financing costs                      |   |   | (0.1 | ) |   |   | (0.3 | ) |
| Loss      before income taxes                                                        |   |   | (13.9 | ) |   |   | (12.3 | ) |
| Benefit      (provision) for income taxes                                            |   |   | - |   |   |   | - |   |
| Net      loss                                                                        |   | $ | (13.9 | ) |   | $ | (12.3 | ) |
|                                                                                 |   |   |   |   |   |   |   |   |
| Basic      loss per common and common equivalent share                               |   | $ | (2.58 | ) |   | $ | (2.33 | ) |
|                                                                                 |   |   |   |   |   |   |   |   |
| Diluted      loss per common and common equivalent share                             |   | $ | (2.58 | ) |   | $ | (2.33 | ) |
|                                                                                 |   |   |   |   |   |   |   |   |
|                                                                                 |   |   |   |   |   |   |   |   |
|                                                                                 |   |   |   |   |   |   |   |   |
|                                                                                 |   |   |   |   |   |   |   |   |
|                                                                                 |   |   |   |   |   |   |   |   |
|                                                                                 |   |   |   |   |   |   |   |   |
|                                                                                 |   |   |   |   |   |   |   |   |
|                                                                                 |   |   |   |   |   |   |   |   |
|                                                                                 |   |   |   |   |   |   |   |   |
|                                                                                 |   |   |   |   |   |   |   |   |
|                                                                                 |   |   |   |   |   |   |   |   |
|                                                                                 |   |   |   |   |   |   |   |   |
|                                                                                 |   |   |   |   |   |   |   |   |
|                                                                                 |   |   |   |   |   |   |   |   |
|                                                                                 |   |   |   |   |   |   |   |   |
|                                                                                 |   |   |   |   |   |   |   |   |
|                                                                                 |   |   |   |   |   |   |   |   |
| The      accompanying notes are an integral part of these financial      statements. |   |   |

----

| MAXXAM      INC. AND SUBSIDIARIES                                                                                                               |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                            |   |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH      FLOWS                                                                                            |   |
| (In      millions of dollars)                                                                                                                   |   |
|                                                                                                                                            |   |   |   |   |   |   |
|                                                                                                                                            |   | Three      Months EndedMarch      31, |   |
|                                                                                                                                            |   | 2008 |   |   | 2007 |   |
|                                                                                                                                            |   | (Unaudited) |   |
|                                                                                                                                            |   |   |   |   |   |   |
|                                                                                                                                            |   |   |   |   |   |   |
| Cash      flows from operating activities:                                                                                                      |   |   |   |   |   |   |
|         Net loss                                                                                                                      |   | $ | (13.9 | ) |   | $ | (12.3 | ) |
|         Adjustments to reconcile net loss to net cash provided by           (used for) operating activities: |   |   |   |   |   |
|            Depreciation, depletion and amortization                                                                    |   |   | 2.8 |   |   |   | 4.5 |   |
|            Non-cash stock-based compensation expense                                                                   |   |   | 1.8 |   |   |   | 0.5 |   |
|            Gains on sales of other assets                                                                              |   |   | - |   |   |   | (0.1 | ) |
|            Net losses (gains) from marketable securities                                                               |   |   | 3.4 |   |   |   | (0.3 | ) |
|            Amortization of deferred financing costs                                                                    |   |   | 0.1 |   |   |   | 0.3 |   |
|            Increase (decrease) in cash resulting from changes in:                                                      |   |   |   |   |   |   |   |   |
|               Receivables                                                                                    |   |   | (1.0 | ) |   |   | 6.6 |   |
|               Inventories                                                                                    |   |   | (7.2 | ) |   |   | 0.8 |   |
|               Prepaid expenses and other assets                                                         |   |   | 0.1 |   |   |   | 0.4 |   |
|               Accounts payable                                                                          |   |   | (0.8 | ) |   |   | 0.2 |   |
|               Accrued and deferred income taxes                                                         |   |   | - |   |   |   | (0.1 | ) |
|               Other accrued liabilities                                                                 |   |   | (0.9 | ) |   |   | (4.5 | ) |
|               Accrued interest                                                                          |   |   | - |   |   |   | 2.7 |   |
|               Long-term assets and long-term liabilities                                                |   |   | 0.9 |   |   |   | (1.1 | ) |
|               Other                                                                                     |   |   | (0.4 | ) |   |   | (0.2 | ) |
|                 Net cash used for operating activities                                        |   |   | (15.1 | ) |   |   | (2.6 | ) |
|                                                                                                                                            |   |   |   |   |   |   |   |   |
| Cash      flows from investing activities:                                                                                                      |   |   |   |   |   |   |   |   |
|         Maturities of marketable securities and other investments                                                                     |   |   | 11.6 |   |   |   | 66.1 |   |
|         Sales of marketable securities and other investments                                                                          |   |   | 19.7 |   |   |   | 9.3 |   |
|         Purchases of marketable securities and other investments                                                                      |   |   | (9.7 | ) |   |   | (80.9 | ) |
|         Net proceeds from restricted cash                                                                                             |   |   | 2.1 |   |   |   | 0.1 |   |
|         Capital expenditures                                                                                                          |   |   | (0.5 | ) |   |   | (0.3 | ) |
|         Decrease in cash due to deconsolidation of Debtors                                                                            |   |   | - |   |   |   | (1.1 | ) |
|               Net cash provided by (used for) investing activities                                      |   |   | 23.2 |   |   |   | (6.8 | ) |
|                                                                                                                                            |   |   |   |   |   |   |   |   |
| Cash      flows from financing activities:                                                                                                      |   |   |   |   |   |   |   |   |
|         Redemptions and repurchase of, and principal payments on long-term      debt                                                  |   |   | (1.1 | ) |   |   | (1.2 | ) |
|         Borrowings under revolving and short-term creditfacilities                                                                    |   |   | - |   |   |   | 2.3 |   |
|         Treasury stock purchases                                                                                                      |   |   | (20.1 | ) |   |   | (0.2 | ) |
|         Net proceeds from refundable deposits                                                                                         |   |   | 0.2 |   |   |   | 0.3 |   |
|               Net cash provided by (used for) financing activities                                      |   |   | (21.0 | ) |   |   | 1.2 |   |
|                                                                                                                                            |   |   |   |   |   |   |   |   |
| Net      decrease in cash and cash equivalents                                                                                                  |   |   | (12.9 | ) |   |   | (8.2 | ) |
| Cash      and cash equivalents at beginning of the period                                                                                       |   |   | 67.8 |   |   |   | 34.8 |   |
| Cash      and cash equivalents at end of the period                                                                                             |   | $ | 54.9 |   |   | $ | 26.6 |   |
|                                                                                                                                            |   |   |   |   |   |   |   |   |
| Supplemental      disclosure of cash flow information:                                                                                          |   |   |   |   |   |   |   |   |
|          Interest paid                                                                                                           |   | $ | 4.1 |   |   | $ | 4.1 |   |
|                                                                                                                                            |   |   |   |   |   |   |   |   |
|                                                                                                                                            |   |   |   |   |   |   |   |   |
|                                                                                                                                            |   |   |   |   |   |   |   |   |
|                                                                                                                                            |   |   |   |   |   |   |   |   |
|                                                                                                                                            |
| The      accompanying notes are an integral part of these financial      statements.                                                            |   |   |

----

NOTES TO UNAUDITED CONDENSED CONSOLIDATEDFINANCIAL STATEMENTS

|                                                                     |   | Three      Months Ended March 31,                    |   |
|--------------------------------------------------------------------------|--------|------------------------------------------------------|--------|
|                                                                     |   | 2008                                                 |   |   | 2007 |   |
|                                                                     |   | (In      millions of dollars,except      share data) |   |
|                                                                     |   |                                                 |   |   |   |   |
| Sales                                                                    |   | $                                                    | 21.7   |   |   | $ | 24.3 |   |
| Costs      and expenses                                                  |   |                                                 | (28.8  | ) |   |   | (28.1 | ) |
| Operating      loss                                                      |   |                                                 | (7.1   | ) |   |   | (3.8 | ) |
| Other      income (expense)                                              |   |                                                 | (2.6   | ) |   |   | 1.1 |   |
| Interest      expense, including amortization of deferred financingcosts |   |                                                 | (4.2   | ) |   |   | (4.3 | ) |
| Loss      before income taxes                                            |   |                                                 | (13.9  | ) |   |   | (7.0 | ) |
| Benefit      (provision) for income taxes                                |   |                                                 | -      |   |   |   | - |   |
| Net      loss                                                            |   | $                                                    | (13.9  | ) |   | $ | (7.0 | ) |
|         Net loss per share:                                    |   |                                                 |   |   |   |   |   |   |
|            Basic                                |   | $                                                    | (2.58  | ) |   | $ | (1.33 | ) |
|            Diluted                              |   | $                                                    | (2.58  | ) |   | $ | (1.33 | ) |

----

|   | Potential      Impact on the Company and Certain Related  Entities |
|--------|--------------------------------------------------------------------|

|   | Level      2 - Observable inputs other than Level 1 prices such as quoted prices for      similar assets or liabilities; quoted prices in markets that are not      active; or other inputs that are observable or can be corroborated by      observable market data for substantially the full term of the assets or      liabilities. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Level      3 -  Unobservable inputs that are supported by little or no market      activity and that are significant to the fair value of the assets or      liabilities. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                         |   | Fair      Value Measurements as ofMarch      31, 2008 |   |
|------------------------------|--------|-------------------------------------------------------|--------|
|                         |   | Total                                                 |   |   | Level      1 |   |   | Level      2 |   |   | Level      3 |   |
|                         |   |                                                  |   |   |   |   |   |   |   |   |   |   |
| Description:                 |   |                                                  |   |   |   |   |   |   |   |   |   |   |
|                         |   |                                                  |   |   |   |   |   |   |   |   |   |   |
| Short-term      investments  |   | $                                                     | 4.1    |   |   | $ | 4.1 |   |   | $ | - |   |   | $ | - |   |
|                         |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Auction      rate securities |   |                                                  | 7.1    |   |   |   | - |   |   |   | - |   |   |   | 7.1 |   |
|                         |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                        |   | $                                                     | 11.2   |   |   | $ | 4.1 |   |   | $ | - |   |   | $ | 7.1 |   |

|                                      |   | Auction      Rate Securities |   |
|-------------------------------------------|--------|------------------------------|--------|
|                                      |   |                         |   |
| Carrying      Value as of January 1, 2008 |   |  $                      | 11.5   |   |
| Settlements                               |   |                         | (2.6   | ) |
| Losses      included in earnings          |   |  $                      | (1.8   | ) |
| Carrying      Value as of March 31, 2008  |   |                         | 7.1    |   |

|                                                                                                          | Reportable      Segments |   |   |   |   |   |      |   |   | Total                  |   |   | Reportable      Segments                                                 |    |   |   |
|---------------------------------------------------------------------------------------------------------------|--------------------------|--------|--------|--------|--------|--------|-----------|--------|--------|------------------------|--------|--------|-------------------------------------------------------------------------------|--------------|--------|--------|
|                                                                                                          | Real      Estate         |   | Racing |   | MGI    |   | Corporate |   |   | Excluding      Debtors |   |   |                 Debtors (1) |         |   |   |   |   | Consolidated      Total |   |
|                                                                                                          |                     |   |   |   |   |   |      |   |   |                   |   |   |                                                                          |         |   |   |   |   |   |   |   |   |   |   |
| Investment,      interest and        other income for the        three months ended:      |                     |   |   |   |   |   |      |   |   |                   |   |   |                                                                          |
|            March 31, 2008                                                            |                     | $      | 0.2    |   |   | $      | -         |   |   | $                      | -      |   |                                                                          | $            | (2.8   | )      |   | $ | (2.6 | ) |   |  $ |   | (2)  |   |   |   |   | $ | (2.6 | ) |
|            March 31, 2007                                                            |                     |   | 0.2    |   |   |   | -         |   |   |                   | -      |   |                                                                          |         | 0.8    |   |   |   | 1.0 |   |   |   | 0.2 |   | (3)  |   |   |   |   |   | 1.2 |   |
|                                                                                                          |                     |   |   |   |   |   |      |   |   |                   |   |   |                                                                          |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling,      general and       administrative expense       for the three months       ended: |                     |   |   |   |   |   |      |   |   |                   |   |   |                                                                          |         |   |   |
|            March 31, 2008                                                            |                     | $      | 3.5    |   |   | $      | 2.2       |   |   | $                      | 0.5    |   |                                                                          | $            | 4.6    |   |   | $ | 10.8 |   |   |  $ |   |   | (2)  |   |   |   |   | $ | 10.8 |   |
|            March 31, 2007                                                            |                     |   | 3.9    |   |   |   | 2.1       |   |   |                   | 0.7    |   |                                                                          |         | 1.8    |   |   |   | 8.5 |   |   |   | 1.5 |   |  (3)  |   |   |   |   |   | 10.0 |   |
|                                                                                                          |                     |   |   |   |   |   |      |   |   |                   |   |   |                                                                          |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      loss for the       three months ended:                                                    |                     |   |   |   |   |   |      |   |   |                   |   |   |                                                                          |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|            March 31, 2008                                                            |                     | $      | (1.2   | )      |   | $      | (0.8      | )      |   | $                      | (0.5   | )      |                                                                          | $            | (4.6   | )      |   | $ | (7.1 | ) |   |  $ |   |   | (2)  |   |   |   |   | $ | (7.1 | ) |
|            March 31, 2007                                                            |                     |   | (0.6   | )      |   |   | (0.6      | )      |   |                   | (0.7   | )      |                                                                          |         | (1.9   | )      |   |   | (3.8 | ) |   |   | (2.3 | ) | (3)  |   |   |   |   |   | (6.1 | ) |
|                                                                                                          |                     |   |   |   |   |   |      |   |   |                   |   |   |                                                                          |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense for the       three months ended (4):                                              |                     |   |   |   |   |   |      |   |   |                   |   |   |                                                                          |         |   |   |   |   |   |   |   |   |   |   |   |
|            March 31, 2008                                                            |                     | $      | 4.2    |   |   | $      | -         |   |   | $                      | -      |   |                                                                          | $            | -      |   |   | $ | 4.2 |   |   |  $ |   |   | (2)  |   |   |   |   | $ | 4.2 |   |
|            March 31, 2007                                                            |                     |   | 4.3    |   |   |   | -         |   |   |                   | -      |   |                                                                          |         | -      |   |   |   | 4.3 |   |   |   | 3.1 |   | (3)  |   |   |   |   |   | 7.4 |   |
|                                                                                                          |                     |   |   |   |   |   |      |   |   |                   |   |   |                                                                          |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation,      depletion       and amortization       for the three months       ended:    |                     |   |   |   |   |   |      |   |   |                   |   |   |                                                                          |         |   |   |
|            March 31, 2008                                                            |                     | $      | 2.4    |   |   | $      | 0.4       |   |   | $                      | -      |   |                                                                          | $            | -      |   |   | $ | 2.8 |   |   |  $ |   |   | (2)  |   |   |   |   | $ | 2.8 |   |
|            March 31, 2007                                                            |                     |   | 3.1    |   |   |   | 0.4       |   |   |                   | -      |   |                                                                          |         | 0.1    |   |   |   | 3.6 |   |   |   | 0.9 |   | (3)  |   |   |   |   |   | 4.5 |   |
|                                                                                                          |                     |   |   |   |   |   |      |   |   |                   |   |   |                                                                          |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      before income taxes for the      three months ended:                                           |                     |   |   |   |   |   |      |   |   |                   |   |   |                                                                          |         |   |   |   |   |   |   |   |   |   |   |   |
|            March 31, 2008                                                            |                     | $      | (5.2   | )      |   | $      | (0.8      | )      |   | $                      | (0.5   | )      |                                                                          | $            | (7.4   | )      |   | $ | (13.9 | ) |   |  $ |   |   | (2)  |   |   |   |   | $ | (13.9 | ) |
|            March 31, 2007                                                            |                     |   | (4.7   | )      |   |   | (0.6      | )      |   |                   | (0.7   | )      |                                                                          |         | (1.1   | )      |   |   | (7.1 | ) |   |   | (5.2 | ) | (3)  |   |   |   |   |   | (12.3 | ) |
|                                                                                                          |                     |   |   |   |   |   |      |   |   |                   |   |   |                                                                          |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital      expenditures  for      the three months       ended:                              |                     |   |   |   |   |   |      |   |   |                   |   |   |                                                                          |         |   |   |   |   |   |   |   |   |   |   |   |
|            March 31, 2008                                                            |                     | $      | 0.1    |   |   | $      | 0.4       |   |   | $                      | -      |   |                                                                          | $            | -      |   |   | $ | 0.5 |   |   |  $ |   |   | (2)  |   |   |   |   | $ | 0.5 |   |
|            March 31, 2007                                                            |                     |   | 0.1    |   |   |   | 0.2       |   |   |                   | -      |   |                                                                          |         | -      |   |   |   | 0.3 |   |   |   | - |   | (3)  |   |   |   |   |   | 0.3 |   |
|                                                                                                          |                     |   |   |   |   |   |      |   |   |                   |   |   |                                                                          |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      assets as of:                                                                                      |                     |   |   |   |   |   |      |   |   |                   |   |   |                                                                          |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|            March 31, 2008                                                            |                     | $      | 278.0  |   |   | $      | 37.7      |   |   | $                      | -      |   |                                                                          | $            | 167.8  |   |   | $ | 483.5 |   |   |  $ |   |   | (2)         |   |  |   |   | $ | 483.5 |   |
|            December 31, 2007                                                         |                     |   | 281.5  |   |   |   | 36.0      |   |   |                   | -      |   |                                                                          |         | 201.4  |   |   |   | 518.9 |   |   |   |   |   | (2)   |   |   |   |   |   | 518.9 |   |

| (1) | Excludes      MGI. |
|-----|--------------------|

| (2) | As      a result of the deconsolidation of the Debtors, their data is not included      in the consolidated results of operations for the three months ended March      31, 2008 or in consolidated total assets as of March 31, 2008 or December      31, 2007. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | These      amounts are for the period from January 1, 2007 through January 18,      2007. |
|-----|------------------------------------------------------------------------------------------------|

| (4) | Interest      expense also includes amortization of deferred financing      costs. |
|-----|------------------------------------------------------------------------------------|

----

|                                                                                             |   | March      31,2008 |   |   | December      31,2007 |   |
|--------------------------------------------------------------------------------------------------|--------|--------------------|--------|--------|-----------------------|--------|
|                                                                                             |   |               |   |   |                  |   |
| Current:                                                                                         |   |               |   |   |                  |   |
|         Cash and cash equivalents (including restricted amounts)                       |   | $                  | 58.8   |   |                  | $      | 73.7 |   |
|         Auction rate securities                                                        |   |               | -      |   |                  |   | 5.5 |   |
|         Marketable securities                                                          |   |               | 4.1    |   |                  |   | 19.5 |   |
|         Investments in limited partnerships                                            |   |               | 15.7   |   |                  |   | 21.3 |   |
|            Total current                                                |   |               | 78.6   |   |                  |   | 120.0 |   |
|                                                                                             |   |               |   |   |                  |   |   |   |
| Non      Current:                                                                                |   |               |   |   |                  |   |   |   |
|         Auction rate securities                                                        |   |               | 7.1    |   |                  |   | 6.0 |   |
|    Investments      in limited partnerships                                       |   |               | 1.4    |   |                  |   | 2.8 |   |
|            Total non current                                            |   |               | 8.5    |   |                  |   | 8.8 |   |
|                                                                                             |   |               |   |   |                  |   |   |   |
| Less:  restricted      amounts                                                         |   |               | (3.9   | )      |                  |   | (5.9 | ) |
| Total      unrestricted cash, cash equivalents, marketable securities and other      investments |   | $                  | 83.2   |   |                  | $      | 122.9 |   |

|                                                   |   | March      31,2008 |   |   | December      31,2007 |   |
|--------------------------------------------------------|--------|--------------------|--------|--------|-----------------------|--------|
|                                                   |   |               |   |   |                  |   |
| Current:                                               |   |               |   |   |                  |   |
|         Restricted cash and cash equivalents |   | $                  | 0.3    |   |                  | $      | 2.3 |   |
|                                                   |   |               |   |   |                  |   |   |   |
| Non-Current:                                           |   |               |   |   |                  |   |   |   |
|         Long-term restricted amounts         |   |               | 3.6    |   |                  |   | 3.6 |   |
|                                                   |   |               |   |   |                  |   |   |   |
| Total      restricted cash and cash equivalents        |   | $                  | 3.9    |   |                  | $      | 5.9 |   |

|                                         |   | March      31, 2008(1) |   |
|----------------------------------------------|--------|------------------------|--------|
|                                         |   | CarryingValue          |   |   | AggregateFair      Value |   |   | Net      Gainsin      AOCI |   |   | Net      Lossesin      AOCI |   |
|                                         |   |                   |   |   |   |   |   |   |   |   |   |   |
| Auction      rate securities                 |   | $                      | 7.1    |   |   | $ | 7.1 |   |   | $ | - |   |   | $ | - |   |
| Equity      securities and other investments |   |                   | 4.1    |   |   |   | 4.1 |   |   |   | 0.5 |   |   |   | (2.6 | ) |
|            Total    |   | $                      | 11.2   |   |   | $ | 11.2 |   |   | $ | 0.5 |   |   | $ | (2.6 | ) |

|  (1) | There      were no investments in a continuous unrealized loss position for 12 months      or longer. |
|-----------|-------------------------------------------------------------------------------------------------------|

----

|                                               |   | December      31, 2007 |   |
|----------------------------------------------------|--------|------------------------|--------|
|                                               |   | CarryingValue          |   |   | AggregateFair      Value |   |   | Net      Gainsin      AOCI |   |   | Net      Lossesin      AOCI |   |
|                                               |   |                   |   |   |   |   |   |   |   |   |   |   |
| Debt      securities:                              |   |                   |   |   |   |   |   |   |   |   |   |   |
|         Maturities of less than one year |   | $                      | 6.3    |   |   | $ | 6.3 |   |   | $ | - |   |   | $ | - |   |
|         Maturities of one to five years  |   |                   | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |
|         Auction Rate Securities          |   |                   | 11.5   |   |   |   | 11.5 |   |   |   | - |   |   |   | - |   |
| Equity      securities and other investments       |   |                   | 13.2   |   |   |   | 13.2 |   |   |   | 0.4 |   |   |   | (1.7 | ) |
|            Total          |   | $                      | 31.0   |   |   | $ | 31.0 |   |   | $ | 0.4 |   |   | $ | (1.7 | ) |

| 5. | Debt |
|----|------|

|                                                                                                                              |   | March      31,2008 |   |   | December      31,2007 |   |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|--------|--------|-----------------------|--------|
|                                                                                                                              |   |               |   |   |                  |   |
| 7.56%      Lakepointe Notes due June 8, 2021                                                                                      |   | $                  | 111.4  |   |                  | $      | 111.8 |   |
| 7.03%      Motel Notes due May 1, 2018                                                                                            |   |               | 42.9   |   |                  |   | 43.3 |   |
| 6.08%      Beltway Notes due November 9, 2024                                                                                     |   |               | 27.8   |   |                  |   | 27.9 |   |
| 7.12%      Palmas Notes due December 20, 2030                                                                                     |   |               | 28.2   |   |                  |   | 28.2 |   |
| Other      notes and contracts, primarily secured by receivables, buildings, real      estate   and      equipment |   |               | 5.1    |   |                  |   | 5.3 |   |
| Total      principal outstanding                                                                                                  |   |               | 215.4  |   |                  |   | 216.5 |   |
|                                                                                                                              |   |               |   |   |                  |   |   |   |
| Less:  Short-term      borrowings and current maturities                                                                |   |               | (5.5   | )      |                  |   | (5.3 | ) |
|                                                                                                                              |   | $                  | 209.9  |   |                  | $      | 211.2 |   |

----

|                                                                          |   | Pension      Benefits             |                                                    |   | Medical/Life |
|-------------------------------------------------------------------------------|--------|-----------------------------------|---------------------------------------------------------|--------|--------------|
|                                                                          |   | Three      Months Ended March 31, |
|                                                                          |   | 2008                              |                                                    | 2007   |         |   | 2008 |   | 2007 |
|                                                                          |   |                              |                                                    |   |         |   |   |   |   |   |   |   |   |
| Components      of net periodic benefit costs:                                |   |                              |                                                    |   |         |   |   |   |   |   |   |   |   |
|         Service cost                                                |   | $                                 |          - |   | $            |          - |   |   | $ |          - |   | $ |          - |
|         Interest cost                                               |   |                              |       0.5                 |   |         |       0.5 |   |   |   |          - |   |   |          - |
|         Expected return on assets                                   |   |                              |     (0.6)                           |   |         |     (0.5) |   |   |   |          - |   |   |          - |
|         Recognized net actuarial loss                               |   |                              |          - |   |         |          - |   |   |   |          - |   |   |          - |
|         Amortization of prior service costs                         |   |                              |          - |   |         |          - |   |   |   |          - |   |   |          - |
|         Net periodic benefit costs                                  |   |                              |     (0.1)                           |   |         |          - |   |   |   |          - |   |   |          - |
|         Curtailments, settlements and other                         |   |                              |          - |   |         |          - |   |   |   |          - |   |   |          - |
|             Adjusted net periodic benefit costs |   | $                                 |     (0.1)                           |   | $            |          - |   |   | $ |          - |   | $ |          - |

|                          |   | Three      Months EndedMarch      31, |
|-------------------------------|--------|---------------------------------------|
|                          |   |                                  | 2008 |   | 2007 |
|                          |   |                                  |   |   |   |
| Expected      volatility      |   |                                  | 26% |   | 30% |
| Expected      dividends       |   |                                  | - |   | - |
| Expected      term (in years) |   |                                  |          7.44 |   |          7.27 |
| Risk-free      rate           |   |                                  | 2.46% |   | 4.50% |

----

|                               |   | Options                                                                                                                   |   | Weighted      Average Exercise Price |                                                                                              | Weighted      Average Remaining Contractual Term (in years) |                                                                                                                         |   | Aggregate      Intrinsic Value (in millions) |
|------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|---------------------------------------------------------------------------------------------------|-------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|
|                               |   |                                                                                                                      |   |                                 |                                                                                              |                                                        |                                                                                                                         |   |                                         |   |
| Balance      at January 1, 2008    |   |      1,019,086                                                                                   |   |  $                              |            24.11                           |                                                        |                                                                                                                         |   |                                         |   |
| Granted                            |   |                     - |   |                                 |                 - |                                                        |                                                                                                                         |   |                                         |   |
| Exercised                          |   |                     - |   |                                 |                 - |                                                        |                                                                                                                         |   |                                         |   |
| Forfeited      or expired          |   |         (50,000)                                                                  |   |                                 |            50.50                           |                                                        |                                                                                                                         |   |                                         |   |
| Balance      at March 31, 2008     |   |         969,086                                                                   |   |  $                              |            22.75                           |                                                        |                     5.35 |   | $                                            |                10.4 |
| Exercisable      at March 31, 2008 |   |         718,420                                                                   |   |  $                              |            20.85                           |                                                        |                     4.36 |   | $                                            |                  9.3 |

|                                                              |   | Three      Months EndedMarch      31, |      |
|-------------------------------------------------------------------|--------|---------------------------------------|-----------|
|                                                              |   | 2008                                  |      |   | 2007 |   |
|                                                              |   |                                  |      |   |   |   |
| Weighted      average number of common shares outstanding-basic:  |   |                                  | 5,384,702 |   |   |   | 5,255,331 |   |
|                                                              |   |                                  |      |   |   |   |   |   |
|         Effect of dilution(1):                          |   |                                  |      |   |   |   |   |   |
|         Conversion of Class A Preferred Stock           |   |                                  | -         |   |   |   | - |   |
|         Exercise of stock options                       |   |                                  | -         |   |   |   | - |   |
|                                                              |   |                                  |      |   |   |   |   |   |
| Weighted      average number of common shares outstanding-diluted |   |                                  | 5,384,702 |   |   |   | 5,255,331 |   |

| (1) | The      Company had a loss for the three months ended March 31, 2008 and      2007.  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, 2008 and 2007 would be 668,119 and 668,119, respectively, and      the number of dilutive options for the three months ended March 31, 2008      and 2007 would be 280,122 and 271,134,  respectively. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                |   | Three      Months EndedMarch      31, |   |
|---------------------------------------------------------------------|--------|---------------------------------------|--------|
|                                                                |   | 2008                                  |   |   | 2007 |   |
|                                                                |   |                                  |   |   |   |   |
| Net      loss                                                       |   | $                                     | (13.9  | ) |   | $ | (12.3 | ) |
| Other      comprehensive loss:                                      |   |                                  |   |   |   |   |   |   |
|         Unrealized loss on available-for-sale investments |   |                                  | (0.9   | ) |   |   | - |   |
|            Total comprehensive loss        |   | $                                     | (14.8  | ) |   | $ | (12.3 | ) |

----

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

|                                                                     |   | Three      Months EndedMarch      31, |
|--------------------------------------------------------------------------|--------|---------------------------------------|
|                                                                     |   | 2008                                  |   | 2007 |
|                                                                     |   |                                  | (In      millions of dollars) |
|                                                                     |   |                                  |   |   |   |   |
| Sales                                                                    |   | $                                     |         21.7 |   | $ |           24.3 |
| Costs      and expenses                                                  |   |                                  |       (28.8) |   |   |         (28.1) |
| Operating      loss                                                      |   |                                  |         (7.1) |   |   |           (3.8) |
| Other      income (expense)                                              |   |                                  |         (2.6) |   |   |             1.1 |
| Interest      expense, including amortization of deferred financingcosts |   |                                  |         (4.2) |   |   |           (4.3) |
| Loss      before income taxes                                            |   |                                  |       (13.9) |   |   |           (7.0) |
| Benefit      (provision) for income taxes                                |   |                                  |             - |   |   |                - |
| Net      loss                                                            |   | $                                     |       (13.9) |   | $ |           (7.0) |
|                                                                     |   |                                  |   |   |   |   |
| Revenues      by segment as a percentage of total:                       |   |                                  |   |   |   |   |
|         Real estate                                            |   |                                  | 41.1% |   |   | 47.7% |
|         Racing                                                 |   |                                  | 58.9% |   |   | 52.3% |
|                                                                     |   |                                  | 100.0% |   |   | 100.0% |

----

----

|                                                                          |   | Three      Months EndedMarch      31, |   |
|-------------------------------------------------------------------------------|--------|---------------------------------------|--------|
|                                                                          |   | 2008                                  |   |   | 2007 |   |
|                                                                          |   | (In      millions of dollars)         |   |
|                                                                          |   |                                  |   |   |   |   |
| Sales:                                                                        |   |                                  |   |   |   |   |
|         Real estate:                                                |   |                                  |   |   |   |   |
|            Fountain Hills                            |   | $                                     | 0.5    |   |   | $ | 2.6 |   |
|            Palmas                                    |   |                                  | 0.1    |   |   |   | 0.1 |   |
|               Total                   |   |                                  | 0.6    |   |   |   | 2.7 |   |
|                                                                          |   |                                  |   |   |   |   |   |   |
|         Resort, commercial and other:                               |   |                                  |   |   |   |   |   |   |
|            Fountain Hills                            |   |                                  | 1.0    |   |   |   | 1.2 |   |
|            Palmas                                    |   |                                  | 2.7    |   |   |   | 3.1 |   |
|            Commercial lease properties               |   |                                  | 4.6    |   |   |   | 4.6 |   |
|              Total                         |   |                                  | 8.3    |   |   |   | 8.9 |   |
|                                                                          |   |                                  |   |   |   |   |   |   |
|    Total      sales                                            |   | $                                     | 8.9    |   |   | $ | 11.6 |   |
|                                                                          |   |                                  |   |   |   |   |   |   |
| Operating      income (loss):                                                 |   |                                  |   |   |   |   |   |   |
|         Fountain Hills                                              |   | $                                     | (0.9   | ) |   | $ | 0.2 |   |
|         Mirada                                                      |   |                                  | (0.1   | ) |   |   | (0.1 | ) |
|         Palmas                                                      |   |                                  | (3.0   | ) |   |   | (2.9 | ) |
|         Commercial lease properties                                 |   |                                  | 3.3    |   |   |   | 2.6 |   |
|         Other                                                       |   |                                  | (0.5   | ) |   |   | (0.4 | ) |
|              Total operating income (loss) |   | $                                     | (1.2   | ) |   | $ | (0.6 | ) |
|                                                                          |   |                                  |   |   |   |   |   |   |
| Investment,      interest and other income:                                   |   |                                  |   |   |   |   |   |   |
|         Other                                                       |   |                                  | 0.2    |   |   |   | 0.2 |   |
|                                                                          |   | $                                     | 0.2    |   |   | $ | 0.2 |   |
|                                                                          |   |                                  |   |   |   |   |   |   |
| Interest      expense                                                         |   | $                                     | (4.2   | ) |   | $ | (4.3 | ) |
|                                                                          |   |                                  |   |   |   |   |   |   |
| Loss      before income taxes                                                 |   | $                                     | (5.2   | ) |   | $ | (4.7 | ) |

----

|                                                                   |   | Three      Months EndedMarch      31, |   |
|------------------------------------------------------------------------|--------|---------------------------------------|--------|
|                                                                   |   | 2008                                  |   |   | 2007 |   |
|                                                                   |   | (In      millions of dollars)         |   |
|                                                                   |   |                                  |   |   |   |   |
| Number      of live racing days:                                       |   |                                  |   |   |   |   |
|         Sam Houston Race Park                                |   |                                  | 41     |   |   |   | 39 |   |
|         Valley Race Park                                     |   |                                  | 66     |   |   |   | 62 |   |
|                                                                   |   |                                  |   |   |   |   |   |   |
| Handle:                                                                |   |                                  |   |   |   |   |   |   |
|         Sam Houston Race Park:                               |   |                                  |   |   |   |   |   |   |
|            On-track handle                    |   | $                                     | 31.0   |   |   | $ | 30.8 |   |
|            Off-track handle                   |   |                                  | 66.7   |   |   |   | 71.9 |   |
|              Total                  |   | $                                     | 97.7   |   |   | $ | 102.7 |   |
|                                                                   |   |                                  |   |   |   |   |   |   |
|          Valley Race Park:                              |   |                                  |   |   |   |   |   |   |
|            On-track handle                    |   | $                                     | 5.8    |   |   | $ | 5.5 |   |
|            Off-track handle                   |   |                                  | 2.7    |   |   |   | 2.6 |   |
|         Total                  |   | $                                     | 8.5    |   |   | $ | 8.1 |   |
|                                                                   |   |                                  |   |   |   |   |   |   |
| Sales:                                                                 |   |                                  |   |   |   |   |   |   |
|          Sam Houston Race Park:                         |   |                                  |   |   |   |   |   |   |
|       Gross      pari-mutuel commissions |   | $                                     | 8.8    |   |   | $ | 8.9 |   |
|            Other revenues                     |   |                                  | 2.1    |   |   |   | 1.9 |   |
|              Total                  |   |                                  | 10.9   |   |   |   | 10.8 |   |
|          Valley Race Park:                              |   |                                  |   |   |   |   |   |   |
|            Gross pari-mutuel commissions      |   |                                  | 1.5    |   |   |   | 1.4 |   |
|            Other revenues                     |   |                                  | 0.4    |   |   |   | 0.5 |   |
|              Total                  |   |                                  | 1.9    |   |   |   | 1.9 |   |
|         Total sales                                          |   | $                                     | 12.8   |   |   | $ | 12.7 |   |
|                                                                   |   |                                  |   |   |   |   |   |   |
| Operating      loss:                                                   |   |                                  |   |   |   |   |   |   |
|          Sam Houston Race Park                          |   | $                                     | (0.6   | ) |   | $ | (0.3 | ) |
|          Valley Race Park                               |   |                                  | (0.1   | ) |   |   | (0.2 | ) |
|         Other                                                |   |                                  | (0.1   | ) |   |   | (0.1 | ) |
|            Total operating loss               |   | $                                     | (0.8   | ) |   | $ | (0.6 | ) |
|                                                                   |   |                                  |   |   |   |   |   |   |
| Loss      before income taxes                                          |   | $                                     | (0.8   | ) |   | $ | (0.6 | ) |

----

|                                | Three      Months EndedMarch      31, |   |
|-------------------------------------|---------------------------------------|--------|
|                                | 2008                                  |   | 2007 |   |
|                                | (In      millions of dollars)         |   |
|                                |                                  |   |   |   |   |   |
| Operating      loss                 |                                  | $      | (4.6 | ) |   | $ | (1.9 | ) |
| Loss      before income taxes  |                                  |   | (7.4 | ) |   |   | (1.1 | ) |

|                          |   | Three      Months EndedMarch      31, |
|-------------------------------|--------|---------------------------------------|
|                          |   | 2008                                  |   | 2007 |
|                          |   | (In      millions of dollars)         |
|                          |   |                                  |   |   |   |   |
| Operating      loss           |   | $                                     |     (0.5) |   | $ |     (0.7) |
| Loss      before income taxes |   |                                  |     (0.5) |   |   |     (0.7) |

----

|                                                                                                                                       |   |  Real      Estate              |                                                                |  Racing |   |  MGI                                         |   |  Corporate |   |  Total                                                                                                                           |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|---------------------------------------------------------------------|--------------|--------|---------------------------------------------------|--------|-----------------|--------|---------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                       |   |  (In      millions of dollars) |
|                                                                                                                                       |   |                                |                                                                |         |   |                                              |   |            |   |                                                                                                                                  |   |   |   |   |   |   |
| Debt and credit facilities   (excluding intercompany   notes)                                                |   |                                |                                                                |         |   |                                              |   |            |   |                                                                                                                                  |   |   |   |   |   |   |
| Short-term      borrowings and current      maturities of   long-term      debt:                                       |   |                                |                                                                |         |   |                                              |   |            |   |                                                                                                                                  |   |   |   |   |   |   |
| March      31, 2008                                                                                                                        |   | $                                   |         5.4                 |         | $      |       0.1           |   |            | $      |                       - |   | $ |           - |   | $ |           5.5 |
| December      31, 2007                                                                                                                     |   |                                |         5.2                 |         |   |       0.1           |   |            |   |                            - |   |   |           - |   |   |           5.3 |
|                                                                                                                                       |   |                                |                                                                |         |   |                                              |   |            |   |                                                                                                                                  |   |   |   |   |   |   |
| Long-term      debt, excluding   current      maturities and   discounts:                                    |   |                                |                                                                |         |   |                                              |   |            |   |                                                                                                                                  |   |   |   |   |   |   |
| March      31, 2008                                                                                                                        |   | $                                   |     209.1                                       |         | $      |       0.8           |   |            | $      |                            - |   | $ |           - |   | $ |       209.9 |
| December      31, 2007                                                                                                                     |   |                                |     210.4                                       |         |   |       0.8           |   |            |   |                            - |   |   |           - |   |   |       211.2 |
|                                                                                                                                       |   |                                |                                                                |         |   |                                              |   |            |   |                                                                                                                                  |   |   |   |   |   |   |
| Cash, cash equivalents,   marketable securities   and other investments                                      |   |                                |                                                                |         |   |                                              |   |            |   |                                                                                                                                  |   |   |   |   |   |   |
| March      31, 2008                                                                                                                        |   |                                |                                                                |         |   |                                              |   |            |   |                                                                                                                                  |   |   |   |   |   |   |
| Current      restricted amounts                                                                                                            |   | $                                   |         0.2                 |         | $      |       0.1           |   |            | $      |                            - |   | $ |           - |   | $ |           0.3 |
| Other      current amounts                                                                                                                 |   |                                |         8.1                 |         |   |       4.3           |   |            |   |                            - |   |   |      62.3 |   |   |         74.7 |
|                                                                                                                                       |   |                                |         8.3                 |         |   |       4.4           |   |            |   |                            - |   |   |      62.3 |   |   |         75.0 |
|                                                                                                                                       |   |                                |                                                                |         |   |                                              |   |            |   |                                                                                                                                  |   |   |   |   |   |   |
| Long-term      unrestricted investments                                                                                                    |   |                                |         3.0                 |         |   |         - |   |            |   |                            - |   |   |        5.5 |   |   |           8.5 |
| Long-term      restricted   amounts                                                                                         |   |                                |         3.6                 |         |   |         - |   |            |   |                            - |   |   |           - |   |   |           3.6 |
|                                                                                                                                       |   | $                                   |       14.9                            |         | $      |       4.4           |   |            | $      |                            - |   | $ |      67.8 |   | $ |         87.1 |
|                                                                                                                                       |   |                                |                                                                |         |   |                                              |   |            |   |                                                                                                                                  |   |   |   |   |   |   |
| Changes in cash and cash   equivalents                                                                                      |   |                                |                                                                |         |   |                                              |   |            |   |                                                                                                                                  |   |   |   |   |   |   |
|                                                                                                                                       |   |                                |                                                                |         |   |                                              |   |            |   |                                                                                                                                  |   |   |   |   |   |   |
| Capital      expenditures:                                                                                                                 |   |                                |                                                                |         |   |                                              |   |            |   |                                                                                                                                  |   |   |   |   |   |   |
| March      31, 2008                                                                                                                        |   | $                                   |         0.1                 |         | $      |       0.4           |   |            | $      |                            - |   | $ |           - |   | $ |           0.5 |
| March      31, 2007                                                                                                                        |   |                                |         0.1                 |         |   |       0.2           |   |            |   |                            - |   |   |           - |   |   |           0.3 |
|                                                                                                                                       |   |                                |                                                                |         |   |                                              |   |            |   |                                                                                                                                  |   |   |   |   |   |   |
| Net      proceeds from dispositions   of      property and investments:                                                     |   |                                |                                                                |         |   |                                              |   |            |   |                                                                                                                                  |   |   |   |   |   |   |
| March      31, 2008                                                                                                                        |   | $                                   |            - |         | $      |         - |   |            | $      |                            - |   | $ |           - |   | $ |              - |
| March      31, 2007                                                                                                                        |   |                                |            - |         |   |         - |   |            |   |                       - |   |   |           - |   |   |              - |
|                                                                                                                                       |   |                                |                                                                |         |   |                                              |   |            |   |                                                                                                                                  |   |   |   |   |   |   |
| Borrowings      (repayments) of   debt      and credit facilities,   net      of financing costs:            |   |                                |                                                                |         |   |                                              |   |            |   |                                                                                                                                  |   |   |   |   |   |   |
| March      31, 2008                                                                                                                        |   | $                                   |       (1.1)                           |         | $      |         - |   |            | $      |                            - |   | $ |           - |   | $ |          (1.1) |
| March      31, 2007                                                                                                                        |   |                                |       (1.0)                           |         |   |     (0.1)                     |   |            |   |                            - |   |   |           - |   |   |          (1.1) |
| Dividends      and advances, including   interest      paid and tax sharing   payments      received (paid): |   |                                |                                                                |         |   |                                              |   |            |   |                                                                                                                                  |   |   |   |   |   |   |
| March      31, 2008                                                                                                                        |   | $                                   |         2.6                 |         | $      |       4.0           |   |            | $      |                            - |   | $ |       (6.6) |   | $ |              - |
| March      31, 2007                                                                                                                        |   |                                |         0.4                 |         |   |         - |   |            |   |                       (0.4                            | )  |   |           - |   |   |              - |

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUTMARKET RISK

----

CONTROLS AND PROCEDURES

----

PART II.  OTHERINFORMATION

LEGAL PROCEEDINGS

RISK FACTORS

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OFPROCEEDS

| Issuer      Purchases of Equity Securities |   |                                         |    |   |                                  |   |
|--------------------------------------------|--------|----------------------------------------------|---------|--------|---------------------------------------|--------|
| Period                                     |   | Total      Number ofShares      Purchased(1) |    |   | Average      PricePaid      Per Share |   |
|                                       |   |                                         |    |   |                                  |   |
| January      1-31, 2008                    |   |                                         | -       |   |                                  | $      | - |   |
|                                       |   |                                         |    |   |                                  |   |   |   |
| February      1-29, 2008                   |   |                                         | -       |   |                                  | $      | - |   |
|                                       |   |                                         |    |   |                                  |   |   |   |
| March      1-31, 2008                      |   |                                         | 687,480 |   |                                  | $      | 29.25 |   |
|                                       |   |                                         |    |   |                                  |   |   |   |
| Total                                      |   |                                         | 687,480 |   |                                  | $      | 29.25 |   |

| (1) | The      Company currently has no publicly-announced plans or programs to      repurchase shares of its CommonStock. |
|-----|----------------------------------------------------------------------------------------------------------------------|

----

DEFAULTS UPON SENIOR SECURITIES

EXHIBITS

|   | 10.1 | 2008      Bonus Criteria adopted on March 28, 2008 for the MAXXAM Chief Executive      Officer under the Company's Executive Bonus Plan adopted on March 28, 2008      (incorporated herein by reference to Exhibit 10.1 to the Company’s Current      Report on Form 8-K filed on April 3,2008) |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.2 | 2008      Bonus Criteria adopted on March 28, 2008 for the MAXXAM President under      the Company's Executive Bonus Plan adopted on March 28, 2008 (incorporated      herein by reference to Exhibit 10.2 the Company’s Current Report on Form      8-K filed on April 3, 2008) |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.3 | 2008      Bonus Criteria adopted on March 28, 2008 for the MAXXAM General Counsel      under the the Company's Executive      Bonus Plan adopted on March 28, 2008 (incorporated herein by reference to      Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on April 3,      2008) |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.4 | Stock      Purchase Agreement, dated March 11, 2008, among the Company, Luxor Capital      Partners, LP and Luxor Capital Partners Offshore, Ltd. (incorporated      herein by reference to Exhibit 10.1 to the Company’s Current Report on      Form 8-K filed on March 17, 2008) |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

SIGNATURES

| Date:           May  12,      2008 | By:    | /S/      M.      EMILY MADISON                                                                                                   |
|-----------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                |   | M.      Emily MadisonVice      President, Finance andChief      Financial Officer(Principal      Accounting Officer andPrincipal      Financial Officer)  |

----

----