--------------------------------------------------------------------------------




                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                           ---------------------------



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

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999

                         Commission File Number 33-67738

                           SAM HOUSTON RACE PARK, LTD.
             (Exact name of Registrant as Specified in its Charter)


                                      TEXAS
                          (State or other jurisdiction
                        of incorporation or organization)

                                   76-0313877
                                (I.R.S. Employer
                             Identification Number)


                              ONE SAM HOUSTON PLACE
                       7575 NORTH SAM HOUSTON PARKWAY WEST
                                 HOUSTON, TEXAS
                    (Address of Principal Executive Offices)


                                      77064
                                   (Zip Code)


       Registrant's telephone number, including area code: (281) 807-8700


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




                           SAM HOUSTON RACE PARK, LTD.

                                      INDEX



PART I. - FINANCIAL INFORMATION

   Item 1. Financial Statements
      Consolidated Balance Sheets at September 30, 1999 and December 31, 1998
      Consolidated Statements of Operations for the three and nine months ended
         September 30, 1999 and 1998
      Consolidated Statements of Cash Flows for the nine months ended September
         30, 1999 and 1998
      Condensed Notes to Consolidated Financial Statements
   Item 2. Management's Discussion and Analysis of Financial Condition and
                   Results of Operations

PART II. - OTHER INFORMATION
   Item 1. Legal Proceedings
   Item 6. Exhibits and Reports on Form 8-K
   Signature




                           SAM HOUSTON RACE PARK, LTD.

                           CONSOLIDATED BALANCE SHEETS
                            (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>



                                                                                       SEPTEMBER 30,  DECEMBER 31,
                                                                                            1999          1998
                                                                                        -----------   ------------
                                                                                         (Unaudited)
<S>                                                                                     <C>           <C>

                                        ASSETS
Current assets:
   Cash and cash equivalents..........................................................  $     7,002   $      3,764
   Restricted cash....................................................................        4,154          3,608
   Accounts receivable, net of allowance for doubtful accounts
      of $51 and $51, respectively....................................................          763          2,126
   Prepaid expenses and other current assets, net of accumulated amortization of
      $23 and $14, respectively.......................................................          480            492
                                                                                        -----------   ------------
      Total current assets............................................................       12,399          9,990
                                                                                        -----------   ------------

Property and equipment, net of accumulated depreciation of
      $3,804 and $2,989, respectively.................................................       25,188         25,499
                                                                                        -----------   ------------
                                                                                        $    37,587   $     35,489
                                                                                        ===========   ============

                           LIABILITIES AND PARTNERS' DEFICIT

Current liabilities:
   Accounts payable...................................................................  $     1,477   $      2,232
   Property taxes payable.............................................................          788          1,040
    Amounts due to horsemen ..........................................................        3,054          2,295
   Other liabilities..................................................................        1,731          1,938
                                                                                        -----------   ------------
      Total current liabilities.......................................................        7,050          7,505
                                                                                        -----------   ------------

Long-term liabilities:
   Notes payable......................................................................       47,931         41,081
   Deferred management fees...........................................................        3,604          2,826
                                                                                        -----------   ------------
      Total liabilities...............................................................       58,585         51,412
                                                                                        -----------   ------------

Commitments and contingencies (Notes 1 and 6)

Partners' deficit.....................................................................      (20,998)       (15,923)
                                                                                        -----------   ------------
                                                                                        $    37,587   $     35,489
                                                                                        ===========   ============

<FN>

The accompanying condensed notes are an integral part of these financial statements.
</FN>
</TABLE>





                           SAM HOUSTON RACE PARK, LTD.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                            (IN THOUSANDS OF DOLLARS)


<TABLE>
<CAPTION>


                                                        THREE MONTHS ENDED             NINE MONTHS ENDED
                                                           SEPTEMBER 30,                 SEPTEMBER 30,
                                                     ------------   -----------   ------------   ------------
                                                         1999           1998         1999            1998
                                                     ------------   -----------   ------------   ------------
                                                                                   (Unaudited)
<S>                                                  <C>            <C>            <C>           <C>
Revenues:
   Pari-mutuel commissions, net..................... $      4,157   $     3,834    $    13,453   $     11,156
   Food and beverage sales..........................        1,510         1,275          3,341          2,847
   Admissions, parking and other....................        1,166         1,086          2,948          2,748
                                                     ------------   -----------    -----------   ------------
                                                            6,833         6,195         19,742         16,751
                                                     ------------   -----------    -----------   ------------
Costs and expenses:
   Cost of pari-mutuel operations...................          501           550          1,429          1,342
   Cost of food and beverage operations.............          694           594          1,596          1,380
   Other operating..................................          737           772          2,136          2,226
   Salaries and wages...............................        2,435         2,285          6,431          5,955
   Management and other professional fees...........          405           380          1,394          1,277
   Marketing and advertising........................          887           600          1,689          1,329
   Utilities........................................          352           365            912            958
   Property taxes...................................          289           313            852            918
   Depreciation and amortization....................          283           246            824            727
   General and administrative.......................          254           261            694            725
                                                     ------------   -----------    -----------   ------------
                                                            6,837         6,366         17,957         16,837
                                                     ------------   -----------    -----------   ------------

Income (loss) from operations.......................           (4)         (171)         1,785            (86)

Other income (expense):
   Interest income..................................           96            61            222            143
   Interest expense.................................       (2,443)       (1,970)        (7,082)        (5,721)
                                                     ------------   -----------    -----------   ------------
                                                           (2,347)       (1,909)        (6,860)        (5,578)
                                                     ------------   -----------    -----------   ------------



Net loss............................................ $     (2,351)  $    (2,080)   $    (5,075)  $     (5,664)
                                                     ============   ===========    ===========   ============

<FN>

The accompanying condensed notes are an integral part of these financial statements.
</FN>
</TABLE>





                           SAM HOUSTON RACE PARK, LTD.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (IN THOUSANDS OF DOLLARS)


<TABLE>
<CAPTION>


                                                                                             NINE MONTHS ENDED
                                                                                               SEPTEMBER 30,
                                                                                            1999          1998
                                                                                        -----------   ------------
                                                                                                (Unaudited)
<S>                                                                                     <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss...........................................................................  $    (5,075)  $     (5,664)
   Adjustments to reconcile net loss to net cash provided by operating activities:
      Depreciation and amortization...................................................          824            727
      Amortization of discounts on long-term debt.....................................        2,400          1,562
      (Increase) decrease in restricted cash..........................................         (546)           980
      Decrease in accounts receivable.................................................        1,363            748
      Decrease (increase) in prepaid expenses and other current assets................            3            (94)
      Decrease in accounts payable....................................................         (755)          (764)
      Increase in deferred management fees............................................          778            716
      Increase in accrued interest....................................................        4,458          4,009
      Decrease in property taxes payable..............................................         (252)          (255)
      Increase (decrease) in amounts due to horsemen..................................          759           (683)
      (Decrease) increase in other liabilities........................................         (207)            99
                                                                                        -----------   ------------
        Net cash provided by operating activities.....................................        3,750          1,381
                                                                                        -----------   ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Additions to property and equipment................................................         (504)          (539)
                                                                                        -----------   ------------
        Net cash used for investing activities........................................         (504)          (539)
                                                                                        -----------   ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Payments on notes payable..........................................................           (8)           (12)
                                                                                        -----------   ------------
        Net cash used for financing activities........................................           (8)           (12)
                                                                                        -----------   ------------

INCREASE IN CASH AND CASH EQUIVALENTS.................................................        3,238             830
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD......................................        3,764           2,728
                                                                                        -----------   -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD............................................  $     7,002   $       3,558
                                                                                        ===========   =============

<FN>

The accompanying condensed notes are an integral part of these financial statements.
</FN>
</TABLE>





                           SAM HOUSTON RACE PARK, LTD.

              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            (IN THOUSANDS OF DOLLARS)
                                   (UNAUDITED)


1.      BASIS OF PRESENTATION AND ORGANIZATION AND FUTURE CASH REQUIREMENTS

BASIS OF PRESENTATION AND ORGANIZATION

      The accompanying consolidated financial statements include the accounts of
Sam Houston Race Park, Ltd. (the "PARTNERSHIP"), a Texas limited partnership,
and its wholly owned subsidiaries, New SHRP Capital Corp. ("NEW CAPITAL") and
SHRP Valley LLC ("SHRP VALLEY"). The Partnership operates a pari-mutuel horse
racing facility in Houston, Texas (the "RACE PARK"). The managing general
partner of the Partnership is SHRP General Partner, Inc. (the "MANAGING GENERAL
PARTNER"), a wholly owned subsidiary of MAXXAM Inc. ("MAXXAM"). The Partnership
is also comprised of an additional general partner, SHRP Equity, Inc. (the
"ADDITIONAL GENERAL PARTNER") and limited partner interests. As of September 30,
1999, wholly owned subsidiaries of MAXXAM held, directly or indirectly, an
aggregate 98.3% interest in the Partnership, consisting of a 33.5% general
partner interest (including a 32.5% interest by virtue of its ownership of 97.5%
of the common stock of the Additional General Partner) and a 64.8% limited
partner interest.

      The information contained herein is condensed from that which would appear
in the annual financial statements; accordingly, the consolidated financial
statements included herein should be reviewed in conjunction with the
consolidated financial statements and related notes thereto contained in the
Annual Report on Form 10-K filed by the Partnership with the Securities and
Exchange Commission for the fiscal year ended December 31, 1998 (the "FORM
10-K"). Any capitalized terms used but not defined herein have the same meaning
given to them in the Form 10-K. Accounting measurements at interim dates
inherently involve greater reliance on estimates than at year end. The results
of operations for the interim periods presented are not necessarily indicative
of the results which can be expected for the entire year. Certain
reclassifications of prior period information were made to conform to the
current presentation. All significant intercompany transactions have been
eliminated in consolidation. The accompanying financial information is
unaudited; however, the information includes all adjustments of a normal
recurring nature which are, in the opinion of management, necessary to present
fairly the consolidated financial position of the Partnership at September 30,
1999, the consolidated results of its operations for the three and nine months
ended September 30, 1999 and 1998, and its consolidated cash flows for the nine
months ended September 30, 1999 and 1998.

FUTURE CASH REQUIREMENTS

      Although the Partnership incurred a loss from operations of $4 during the
three month period ended September 30, 1999, the Partnership has generated
income from operations of $1,785 and cash flow from operations of $3,750 during
the first nine months of 1999. In addition, the Partnership had cash and cash
equivalents of $7,002 and a $1,700 line of credit at September 30, 1999
available to fund the operating activities of the Partnership. Also, the
Partnership is able to defer cash interest payments on the Extendible Notes
until September 1, 2001 or until certain conditions are met, and to defer the
payment of management fees until two consecutive interest payments on the
Extendible Notes have been paid in cash. The deferral of these items has
significantly improved the liquidity of the Partnership.

      The Partnership is continuing to put forth marketing efforts to increase
attendance and pari-mutuel handle at the Race Park in order to generate
additional income. Further, management is analyzing various proposals to develop
new forms of businesses at the Race Park and elsewhere in an effort to raise new
sources of income and to draw additional attendance to the Race Park.
Nonetheless, there can be no assurance that any of these efforts will be
successful.

      The Extendible Notes, together with accrued interest, must be retired in
September 2001, unless the applicable extension provisions apply. To the extent
the Partnership is unable to repay or refinance the Extendible Notes,
alternative sources of funding will be necessary. Although 97.5% of the
Extendible Notes are owned by MAXXAM, there can be no assurance that the
Partnership will be able to repay or refinance the Extendible Notes or that
alternative sources of funding will be available to the Partnership, if needed.

2.      RESTRICTED CASH

      The Partnership's restricted cash, as shown on the accompanying
consolidated balance sheet at September 30, 1999 and December 31, 1998, includes
deposits held for the benefit of horsemen for purses, stakes and awards and
amounts reserved for the payment of property taxes.

3.      RACING OPERATIONS

      The Race Park offers pari-mutuel wagering on live thoroughbred or quarter
horse racing during meets and on simulcast horse and greyhound racing throughout
the year. The Race Park earns revenues on live racing and on simulcast racing as
both a guest and host track. Under the Racing Act, the Partnership's net
commission revenue on live racing is a designated portion of the pari-mutuel
handle. The Race Park receives broadcasts of live racing from other racetracks
under various guest simulcasting agreements and provides broadcasts of live
racing conducted at the Race Park to other wagering outlets under various host
simulcasting agreements. Under these agreements, the Partnership receives
pari-mutuel commissions of varying percentages of simulcast pari- mutuel handle.

      A summary of the pari-mutuel operations for the three and nine months
ended September 30, 1999 and 1998 is as follows:

<TABLE>
<CAPTION>

                                                     THREE MONTHS ENDED            NINE MONTHS ENDED
                                                        SEPTEMBER 30,                SEPTEMBER 30,
                                                 ---------------------------  ---------------------------
                                                     1999           1998          1999          1998
                                                 -------------  ------------  ------------  -------------

<S>                                              <C>            <C>           <C>           <C>
Number of live race days.........................           44            43           101             92

Live handle......................................$       7,830  $      5,977  $     18,923  $      15,343
Guest simulcasting handle........................       29,227        30,181        90,448         81,027
Host simulcasting handle.........................       25,855        15,459       152,108        100,535
                                                 -------------  ------------  ------------  -------------
                                                 $      62,912  $     51,617  $    261,479  $     196,905
                                                 =============  ============  ============  =============

Net commissions from live racing.................$       1,018  $        707  $      2,475  $       1,828
Net commissions from guest simulcasting..........        2,691         2,841         8,081          7,375
Net commissions from host simulcasting...........          448           286         2,897          1,953
                                                 -------------  ------------  ------------  -------------
                                                 $       4,157  $      3,834  $     13,453  $      11,156
                                                 =============  ============  ============  =============

</TABLE>



4.      NOTES PAYABLE

      Notes payable consist of the following:

<TABLE>
<CAPTION>

                                                                                   September 30, December 31,
                                                                                       1999          1998
                                                                                   -----------   -----------

<S>                                                                                <C>           <C>
11% Senior Secured Extendible Notes due September 1, 2001 (net of
   unamortized discount of $10,285 in 1999 and $12,684 in 1998)..................  $    44,702   $    39,436
Accrued interest to be paid in-kind..............................................        3,024         1,433
                                                                                   -----------   -----------
                                                                                        47,726        40,869
Unsecured promissory notes.......................................................          190           197
Payable to Limited Partners......................................................           23            23
                                                                                   -----------   -----------
   Total.........................................................................       47,939        41,089
Less current portion included in other liabilities...............................           (8)           (8)
                                                                                   -----------   -----------
                                                                                   $    47,931   $    41,081
                                                                                   ===========   ===========
</TABLE>

      The Partnership is amortizing the difference between the aggregate
principal amount of the Extendible Notes and their estimated fair value as of
the date of implementation of the reorganization of the Partnership as
additional interest expense using the effective interest method.

      The Extendible Notes are non-recourse to the partners; however, they are
secured by virtually all of the Partnership's property, including rents,
revenues, profits and income from the operation of the Race Park. In addition,
the Class 1 racing license for the Race Park is subject to a negative pledge in
favor of the trustee for the Extendible Notes.

5.      RELATED PARTY TRANSACTIONS

      Management and other professional fees include $264 and $244 for the three
months ended September 30, 1999 and 1998, respectively, and $778 and $716 for
the nine months ended September 30, 1999 and 1998, respectively, in management
fees due to the Managing General Partner. Such amounts include interest of $77
and $56 for the three months ended September 30, 1999 and 1998, respectively,
and $216 and $153 for the nine months ended September 30, 1999 and 1998,
respectively. Payment of management fees, including accrued interest, is
deferred until two consecutive interest payments on the Extendible Notes have
been paid in cash; accordingly, these fees have been shown on the accompanying
consolidated balance sheet as deferred management fees under long-term
liabilities.

      The Partnership incurred service fees and related costs of $115 and $72
for the three months ended September 30, 1999 and 1998, respectively, and $375
and $338 for the nine months ended September 30, 1999 and 1998, respectively,
related to costs incurred for services provided by MAXXAM and certain of its
subsidiaries. Included in accounts payable at September 30, 1999 and December
31, 1998 were obligations to MAXXAM for such costs of $46 and $45, respectively.
The Partnership also incurred fees of $14 and $18 during the three months ended
September 30, 1999 and 1998, respectively, and $56 and $77 during the nine
months ended September 30, 1999 and 1998, respectively, for legal and other
consulting services performed by other affiliates.

6.      COMMITMENTS AND CONTINGENCIES

      During March 1999, the Race Park formed SHRP Valley, a wholly-owned
limited liability company, which then entered into, among other things, a
six-year lease, a management agreement, and a pledge agreement with a group of
companies that own a greyhound track located in Harlingen, Texas. The lease also
provides SHRP Valley with an option to purchase the equity of the company that
owns the greyhound track and the wagering license during the term of the lease,
subject to certain conditions. If the agreements are honored (as described
below) and if the Texas Racing Commission approves the management agreement,
SHRP Valley intends to reopen the facility and conduct year-round horse and dog
simulcasting and a season of live greyhound racing at the track.

   SHRP Valley believes that the owners of the track have not used best efforts,
as required by the agreements, to obtain Texas Racing Commission approval of the
management agreement. Furthermore, the owners of the track have informed SHRP
Valley that they are in negotiations to sell the track to another party. SHRP
Valley believes that this is in violation of the agreement with the owners and
is in the process of evaluating its legal rights under the agreements, and may
take legal action against the owners of the greyhound track and/or any
interfering party.

      The Partnership is involved in claims and litigation arising in the
ordinary course of business. While uncertainties are inherent in the final
outcome of such matters and it is presently impossible to determine the actual
costs that ultimately may be incurred, management believes that the resolution
of such uncertainties and the incurrence of such costs should not have a
material adverse effect upon the Partnership's consolidated financial position,
results of operations or liquidity.

      Also, see Note 1 for a discussion of the future cash requirements of the
Partnership.


ITEM 2.         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                RESULTS OF OPERATIONS

      The following should be read in conjunction with the unaudited
consolidated financial statements contained elsewhere herein and in the Form
10-K. Any capitalized terms used but not defined herein have the same meaning
given to them in the Form 10-K.

      This section contains statements which constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such statements can be identified by the use of forward- looking
terminology such as "believes," "expects," "may," "estimates," "will," "should,"
"plans" or "anticipates" or the negative thereof or other variations thereof or
comparable terminology, or by discussions of strategy. Readers are cautioned
that any such forward-looking statements are not guarantees of future
performance and involve significant risks and uncertainties, and that actual
results may vary materially from those in the forward-looking statements as a
result of various factors. These factors include the effectiveness of
management's strategies and decisions, general economic and business conditions,
new or modified statutory or regulatory requirements, and changing prices and
market conditions. This section and the Partnership's Form 10-K identify other
factors that could cause such differences. No assurance can be given that these
are all of the factors that could cause actual results to vary materially from
the forward-looking statements.

RESULTS OF OPERATIONS

      Results of operations between periods are generally not comparable due to
the timing, varying lengths and types of racing meets held; accordingly, results
of operations for interim periods are not necessarily indicative of the results
which can be expected for the entire year. Historically, the Race Park has
derived a significant amount of its annual net pari-mutuel commissions from live
racing and host simulcasting. Therefore, net pari- mutuel commissions have
typically been highest during the first and fourth quarters of the year.

      The following table presents selected attendance and wagering information
for the three and nine months ended September 30, 1999 and 1998:

<TABLE>
<CAPTION>
                                                                    THREE MONTHS ENDED         NINE MONTHS ENDED
                                                                       SEPTEMBER 30,             SEPTEMBER 30,
                                                                  -----------------------  ------------------------
                                                                     1999         1998        1999         1998
                                                                  -----------  ----------  -----------  -----------

<S>                                                               <C>          <C>         <C>          <C>
Number of live race days..........................................         44          43          101           92
Number of simulcast only days.....................................         48          49          172          181
Average daily attendance - live race days.........................      4,777       4,213        3,870        3,657
Average daily attendance - simulcast only days....................        762         815          957          809


Average live per capita wager.................................... $        37  $       33  $        48  $        46
Average combined live and guest per capita gross wager - live
   race days......................................................        123         138          156          157
Average guest per capita gross wager - simulcast only days........        304         281          301          294

                      (AMOUNTS IN THOUSANDS)
Live handle.......................................................$     7,830  $    5,977  $    18,923  $    15,343
Guest simulcasting handle - horses................................     23,431      23,825       73,225       72,718
Guest simulcasting handle - greyhounds............................      5,796       6,356       17,223        8,309
Host simulcasting handle..........................................     25,855      15,459      152,108      100,535
                                                                  -----------  ----------  -----------  -----------
                                                                  $    62,912  $   51,617  $   261,479  $   196,905
                                                                  ===========  ==========  ===========  ===========

Net pari-mutuel commissions:
   Live racing....................................................$     1,018  $      707  $     2,475  $     1,828
   Guest simulcasting - horses....................................      2,001       2,058        6,048        6,252
   Guest simulcasting - greyhounds................................        690         783        2,033        1,123
   Host simulcasting..............................................        448         286        2,897        1,953
                                                                  -----------  ----------  -----------  -----------
Total net pari-mutuel commissions.................................$     4,157  $    3,834  $    13,453  $    11,156
                                                                  ===========  ==========  ===========  ===========
</TABLE>

     Revenues. The Partnership's principal source of revenue is from pari-mutuel
commissions generated from wagering on live races and simulcast races as both a
guest and host track. The Race Park conducted one and nine more live racing
performances during the three and nine months ended September 30, 1999,
respectively, compared to the same periods of 1998, which contributed to the
increase in live and host pari-mutuel handle and commissions. Live and host
simulcasting handle and net pari-mutuel commissions increased significantly
during the three and nine months ended September 30, 1999, as compared to the
same periods in 1998.

      Live handle increased by 31% and 23% and live commissions increased by 44%
and 35% for the three and nine months ended September 30, 1999, respectively,
over the same periods in 1998 due, in part, to the addition of the one and nine
live racing days, respectively. The live net pari-mutuel commissions increased
at a greater percentage rate than live handle due primarily to the elimination
of the one percent state pari-mutuel wagering tax on the first $100 million of
live handle, which became effective on January 1, 1999. Another factor
contributing to the increase in live attendance and live pari-mutuel handle and
commissions for the three and nine months ended September 30, 1999 verses 1998
was an increase in marketing efforts, including direct mail campaigns and
promotion of a Friday country music concert series during the summer quarter
horse meet.

      Host simulcasting handle increased by 67% and 51% and host commissions
increased by 57% and 48% for the three and nine months ended September 30, 1999,
respectively. A significant factor for the three and nine months increase was an
increase in the number of racetracks and off-track wagering facilities receiving
the Race Park's quarter horse simulcast signal. In particular, a southern
California racetrack, including its off-track wagering facilities, significantly
increased the number of the Race Park's quarter horse races made available to
its customers during 1999, resulting in an increase in host handle of
approximately $6,000,000 for the three months ended September 30, 1999, versus
the same period in 1998. Also a factor for the nine months ended September 30,
1999, was an increase in wagering at most of the racetracks and off-track
wagering facilities receiving the Race Park's thoroughbred simulcast signal. The
increases in host simulcasting handle and commissions were also due in part to
the additional live racing days. Net commissions on host simulcasting as a
percentage of handle decreased slightly due to a change in how amounts are
allocated to purses for winning horsemen in accordance with the Texas Racing
Commission Rules of Racing effective January 1, 1999.

      The 7% decrease in average daily attendance on simulcast only days and
similar decrease in simulcast attendance on live days for the three months ended
September 30, 1999, resulted in a corresponding decrease in total handle and net
pari-mutuel commissions from guest simulcasting compared to the same period in
1998. In total, guest commissions increased for the nine months ended September
30, 1999 over 1998, primarily due to the addition of cross-breed simulcasting.
However, for the nine months ended September 30, 1999, average daily attendance
on simulcast only days is up 18% compared to the same period in 1998 as a result
of the impact of a full nine months of in-state and out-of-state cross-breed
simulcasting during 1999 versus approximately three months of in-state only and
six months of both during 1998. See the following paragraph for additional
background on cross-breed simulcasting. Net commissions on guest horse
simulcasting decreased slightly due to a change in how amounts are allocated to
purses for winning horsemen in accordance with the Texas Racing Act.

      During March 1998, the Partnership began offering wagering on greyhound
racing broadcasts from Corpus Christi Greyhound and in September 1998, the
Partnership began offering wagering on races broadcast from certain out-of-state
greyhound tracks. This cross-breed wagering has been well received by Race Park
patrons and has resulted in increased simulcast attendance as well as guest
simulcast handle and net pari-mutuel commissions. Average daily wagering on
simulcast greyhound signals approximated $63,000 per day for the three and nine
months ended September 30, 1999, respectively. It is uncertain how the
introduction of crossbreed wagering impacted guest simulcasting on horses and to
what extent, if any, its growth has been slowed by greyhound wagering.

     Food and beverage revenues increased by 18% and 17% during the three and
nine months ended September 30, 1999, respectively, compared to the same periods
in 1998. Admissions, parking and other revenue also increased for the three and
nine months ended September 30, 1999 versus 1998. These increases were primarily
due to the increase in the number of live race days and to the increases in
average daily attendance on live race days.

     Income (loss) from Operations. The loss from operations for the three
months ended September 30, 1999 was $4,000 versus a loss of $171,000 for the
same period in 1998 as revenues increased by 10% while costs and expenses rose
only 7%. Income from operations for the nine months ended September 30, 1999 was
$1,785,000 compared to a loss of $86,000 for the same period in 1998, as
revenues increased by 18% while costs and expenses increased by only 7%. In
addition to the factors affecting revenues between the periods discussed above,
cost of operations and salaries and wages declined as a percent of revenue from
68% to 64% and from 65% to 59% for the three and nine months ended September 30,
1999, respectively, as compared to the same periods in 1998. Overall, costs and
expenses generally increased with the increase in attendance and related sales
and with the increase in live racing days.

      Net Loss. Net loss reflects the income from operations as described above,
interest income and interest expense, including amortization of the discount on
the Extendible Notes. Interest expense increased during the three and nine
months ended September 30, 1999 as compared to the prior periods due to the
continuing increase in the balance of Extendible Notes as accrued interest is
paid in-kind with additional Extendible Notes.

LIQUIDITY AND CAPITAL RESOURCES

      At September 30, 1999, the Partnership had cash and cash equivalents of
$7,002,000 compared to $3,764,000 at December 31, 1998. The increase in cash and
cash equivalents is due to the accumulation of cash generated from operating
activities, offset by capital expenditures made during the period. At September
30, 1999, the Partnership also had restricted cash of $4,154,000 compared to
$3,608,000 at December 31, 1998. The increase in restricted cash was due to the
accumulation of amounts due to horsemen for purses, stakes and awards related to
the fall thoroughbred meet offset by the annual payment of property taxes. The
balance of Extendible Notes has increased during the nine months ended September
30, 1999 due to the issuance of additional Extendible Notes as payment in-kind
for accrued interest and the amortization of the discount on the Extendible
Notes as described in Note 4 to the Consolidated Financial Statements included
in Item 1.

      See Note 1 to the Consolidated Financial Statements for a discussion of
the future cash requirements of the Partnership.

YEAR 2000 PREPAREDNESS

      The "Year 2000" issue is the result of computer programs that were written
using two digits rather than four to define the applicable year in
date-dependent systems. If computer programs with date sensitive functions are
not Year 2000 compliant, they may be unable to distinguish the year 2000 from
the year 1900. This could result in system failure or miscalculations leading to
a disruption of business operations.

      Some of the Partnership's operations are dependent upon computer systems
and applications. These systems are either directly owned and controlled by the
Partnership or are provided under contract by third party service providers.
Management has categorized the Year 2000 issues into four general areas.

      Systems Owned by the Partnership. The first area is related to systems
that are owned by the Partnership. These systems include application software
and dedicated hardware that are relied upon in running the principal operations
of the Partnership. In addition, there are numerous applications that provide
administrative support and management reporting functions. Some of these
applications were developed internally and other applications were purchased.

     Management has identified hardware, including embedded chip technology that
was not Year 2000 compliant and replaced it as part of the routine upgrading of
computer equipment. Most hardware requiring replacement was upgraded during the
first three quarters of 1999. As of October 1999, the Partnership believes that
all owned hardware and equipment with embedded chip technology have been
identified and either certified as Year 2000 compliant by manufacturers or
scheduled to be replaced or upgraded prior to the end of the year.

      Application software compliance with the Year 2000 has been certified
through a combination of consultations with and certifications from the software
developers, and testing. Applications developed internally have been written
with Year 2000 compliance in mind, using software programs that are Year 2000
compliant. The Partnership has received reports from third parties on Year 2000
compliance for financial reporting, payroll, operations control and reporting
and internal communications applications. Year 2000 compliance is required with
regard to any software upgrades.

      Based on the schedule outlined above, it is expected that the
Partnership's owned systems will be Year 2000 complaint prior to the year 2000.
However, even though the planned modifications to internally owned hardware and
software should adequately address Year 2000 issues, there can be no assurance
that unforeseen difficulties will not arise.

      Services Provided to the Partnership Under Contract by Third Parties. The
second area is services provided to the Partnership by third parties. Many of
these services are critical to the operations of the Partnership and could
materially impact the Partnership should the systems upon which the services are
dependent be unable to function.

      The Partnership places significant reliance on the totalisator system
which is required for pari-mutuel wagering in the State of Texas. The system is
provided and supported by an outside vendor. Totalisator services include the
calculation of amounts wagered and amounts owed to winning ticket holders. The
Partnership has received assurances from this vendor certifying that the system
which supports the Race Park is Year 2000 compliant. However, if the software
modifications are not functional, the Year 2000 issue could have a material
impact on the operations of the Partnership.

      Video services provided by two outside vendors are also important to the
Partnership's operations. Video services include the production and transmission
of the television signal for distribution to customers located on the premises
and to customers located at remote outlets throughout the country. The
Partnership is working closely with the vendor that produces the video signal to
ensure the software applications that provide the graphical enhancements and
other distinguishing features to the televised signal are Year 2000 compliant.
The vendor that provides transmission services has already certified Year 2000
compliance.

      The Partnership purchases data and statistical information from an outside
vendor for resale to the public. This information is included in printed
programs made available to customers to assist them in their wagering decisions.
This vendor has implemented a Year 2000 remediation plan which they certified as
having been completed during the third quarter of 1999.

      A variety of other smaller and less critical technology service providers
are involved with the Partnership's product. The Partnership has received
assurance letters from a majority of these suppliers and will continue to work
to receive assurances from those remaining.

      In the event that any of the key third party service providers discussed
above do not successfully and timely achieve Year 2000 compliance, and the
Partnership is unable to replace them with alternate service providers, it could
have a material adverse effect on the Partnership's business, financial
condition and results of operations.

      Industry-wide Issues. Because the Partnership derives a significant
portion of its revenues from customers at other racing organizations that are
confronted with the same technological issues, including totalisator, video and
statistical information services, the Partnership has been actively
participating in an industry-wide assessment and remedial efforts to address the
Year 2000 issue. Reports received to date indicate that these systems are or
will be compliant prior to year end.

      Control and Regulating Systems. A variety of the newer control and
regulating systems are date sensitive. Environmental control systems,
elevator/escalator systems, fire control and security systems utilize date
sensitive software or embedded chip technology for correct operation. The
Partnership has systems that perform each of these functions, and it is
determining whether any of these systems employ technology that may not be Year
2000 compliant. The Partnership has been working closely with manufacturers of
these products developing a remedial plan to assure Year 2000 compliance to the
extent that any problems have been identified. Management expects that all such
systems will be Year 2000 compliant by the end of 1999.

      Cost and Contingency Planning. To date, the total cost to remediate Year
2000 compliance issues is estimated to be less than $100,000. Management
believes that any future costs to remediate Year 2000 compliance issues will not
be material to the Partnership's financial position or results of operations.
Management has evaluated other third party providers of services and equipment
and believes that it will have time to implement alternative information
technology systems or manual systems by the end of 1999, which should reduce the
risk of non-compliance to the Partnership.


                           PART II - OTHER INFORMATION

ITEM 1.         LEGAL PROCEEDINGS

      This section contains statements which constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. See Part I, Item 2 "Management's Discussion and Analysis of Financial
Condition and Results of Operations" for cautionary information with respect to
such forward- looking statements.

      The Partnership is involved in various claims, lawsuits and other
proceedings. While uncertainties are inherent in the final outcome of such
matters and it is presently impossible to determine the actual costs that
ultimately may be incurred, management believes that the resolution of such
uncertainties and the incurrence of such costs should not have a material
adverse effect on the Partnership's consolidated financial position, results of
operations or liquidity.

ITEM 6.         EXHIBITS AND REPORTS ON FORM 8-K

      A.        EXHIBITS:

           27      Financial Data Schedule

      B.   REPORTS ON FORM 8-K:

           None.

                                    SIGNATURE

      Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, who has signed this
report on behalf of the Registrant and as the principal financial and accounting
officer of the Registrant.



                                          SAM HOUSTON RACE PARK, LTD.





Date: November 12, 1999        By:           /S/ MICHAEL J. VITEK
                                  -------------------------------------------
                                               Michael J. Vitek
                                         Vice President of Accounting