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




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 JUNE 30, 1997

Commission File Number 33-67738

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


TEXAS                              76-0313877
(State or other jurisdiction       (I.R.S. Employer
of incorporation or                Identification Number)
organization)


ONE SAM HOUSTON PLACE              77064
7575 NORTH SAM HOUSTON PARKWAY     (Zip Code)
WEST
HOUSTON, TEXAS
(Address of Principal
Executive Offices)


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 /  /




---------------
<PAGE>
                                   INDEX


                                                                       PAGE
PART I. - FINANCIAL INFORMATION

     Item 1.   Financial Statements
               Consolidated Balance Sheet at June 30, 1997 and 
                 December 31, 1996                                       3
               Consolidated Statement of Operations for the three 
                 and six months ended June 30, 1997 and 1996             4
               Consolidated Statement of Cash Flows for the 
                 six months ended June 30, 1997 and 1996                 5
               Condensed Notes to Consolidated Financial Statements      6
     Item 2.   Management's Discussion and Analysis of Financial 
                 Condition and Results of Operations                    10

PART II. - OTHER INFORMATION

     Item 1.   Legal Proceedings                                        13
     Item 6.   Exhibits and Reports on Form 8-K                         13
     Signature                                                         S-1
<PAGE>
                        CONSOLIDATED BALANCE SHEETS
                         (IN THOUSANDS OF DOLLARS)

<TABLE>

                                                    June 30,  December 31,
                                                      1997        1996    
                                                  ----------- ------------
                                                  (Unaudited)
<S>                                               <C>         <C>
                     ASSETS
Current assets:
     Cash and cash equivalents                    $    3,111  $     2,634 
     Restricted cash                                   2,468        3,559 
          
     Accounts receivable, net of allowance for
doubtful accounts 
          of $283 and $276, respectively                 227        1,031 
     Prepaid expenses and other current assets           430          573 
                                                  ----------- ------------
          Total current assets                         6,236        7,797 
                                                  ----------- ------------

Property and equipment, net                           25,833       26,140 
                                                  ----------- ------------
                                                  $   32,069  $    33,937 
                                                  =========== ============

        LIABILITIES AND PARTNERS' DEFICIT

Current liabilities:
     Accounts payable                             $    1,198  $     1,545 
     Property taxes payable                              606        1,194 
     Other liabilities                                 1,082        1,363 
     Amounts due to horsemen                           1,634        2,273 
     Current portion of notes payable                     43           81 
                                                  ----------- ------------
          Total current liabilities                    4,563        6,456 
                                                  ----------- ------------

Long term liabilities:
     Notes payable                                    30,107       27,162 
     Deferred management fees                          1,409          978 
                                                  ----------- ------------

          Total liabilities                           36,079       34,596 
                                                  ----------- ------------

Commitments and contingencies (Notes 1 and 6)
Partners' deficit                                     (4,010)        (659)
                                                  ----------- ------------
                                                  $    32,069 $     33,937
                                                  =========== ============

</TABLE>
<PAGE>
                   CONSOLIDATED STATEMENTS OF OPERATIONS
                         (IN THOUSANDS OF DOLLARS)
                                (UNAUDITED)

<TABLE>

                                     Three Months Ended   Six Months Ended
                                          June 30,            June 30,     
                                     ------------------  -----------------
                                       1997       1996   
                                                            1997   1996    
                                     --------  --------- --------- -------  
                                                           
<S>                                  <C>       <C>       <C>       <C>
Revenues:
     Pari-mutuel commissions, net    $ 3,101   $  3,595  $  7,375  $ 6,570 
     Food and beverage sales             696        996     1,587    1,632 
     Admissions, parking and other       737      1,079     1,557    2,066 
                                     --------  --------- --------- -------
                                       4,534      5,670    10,519   10,268 
                                     --------  --------- --------- -------
Costs and expenses:
     Cost of pari-mutuel operations      378        475       862      840 
     Cost of food and beverage           300        410       665      696 
operations
     Other operating                     565        661     1,210    1,243 
     Salaries and wages                1,778      2,200     4,006    4,139 
     Management and other                606        523     1,224    1,056 
professional fees
     Marketing and advertising           555        602       994    1,138 
     Utilities                           266        327       557      651 
     Property taxes                      231        316       565      633 
     Depreciation and amortization       234        217       461      431 
     General and administrative          196        252       397      487 
                                     --------  --------- --------- -------
                                       5,109      5,983    10,941   11,314 
                                     --------  --------- --------- -------

     
Loss before reorganization items and
other income (expense)                  (575)      (313)     (422)  (1,046)

Reorganization expenses                    -        (15)        -      (44)
                                     --------  --------- --------- -------

Loss from operations                    (575)      (328)     (422)  (1,090)

Other income (expense):
     Interest income                      67         52        97      103 
     Interest expense                 (1,592)    (1,283)   (3,026)  (2,437)
                                     --------  --------- --------- -------
                                      (1,525)    (1,231)   (2,929)  (2,334)
                                     --------  --------- --------- -------



Net loss                             $(2,100)  $ (1,559) $ (3,351) $
                                                                   ((3,424)
                                     ========  ========= ========= =======

</TABLE>
<PAGE>
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                         (IN THOUSANDS OF DOLLARS)
                                (UNAUDITED)

<TABLE>

                                                         Six Months Ended
                                                             June 30,       
                                                      -------------------
                                                         1997       1996   
                                                      ---------- ----------
<S>                                                   <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss                                         $  (3,351) $  (3,424)
     Adjustments to reconcile net loss to net cash   
       used for operating activities:
          Depreciation and amortization                     461        431 
          Amortization of discounts on long-term     
            debt                                            583        269 
          Decrease in restricted cash                     1,091      1,243 
          (Increase) decrease in accounts receivable        804        (84)
          (Increase) decrease in prepaid expenses    
           and other                                        150       (170)
          Increase (decrease) in accounts payable          (347)       463 
          Increase in deferred management fees              431        357 
          Increase in accrued interest                    2,378      2,128 
          Decrease in amounts due to horsemen              (639)      (936)
          Increase (decrease) in other liabilities         (869)        53 
          Reorganization items:
               Decrease in accrued reorganization             -       (526)
              costs                                   ---------- ----------
               Net cash provided by (used for)              692       (196)
            operating activities                      ---------- ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Additions to buildings and equipment                  (161)      (241)
                                                      ---------- ----------
               Net cash used for investing                 (161)      (241)
       activities                                     ---------- ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Payments on notes payable, net                         (54)       (41)
                                                      ---------- ----------
               Net cash used for financing                  (54)       (41)
       activities                                     ---------- ----------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS            477       (478)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD          2,634      4,434 
                                                      ---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD            $   3,111  $   3,956 
                                                      ========== ==========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
     Reorganization items paid:
          Professional fees                           $       -  $     570 

</TABLE>
<PAGE>
            CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (IN THOUSANDS OF DOLLARS)


1.   BASIS OF PRESENTATION AND FUTURE CASH REQUIREMENTS AND IMPACT OF
RECENT LEGISLATION

     BASIS OF PRESENTATION

          The accompanying consolidated financial statements include the
accounts of Sam Houston Race Park, Ltd. (the "Partnership"), a Texas
limited partnership, and its wholly owned subsidiary, New SHRP Capital
Corp. ("New Capital").  The Partnership operates a pari-mutuel horse racing
facility (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 June
30, 1997, wholly owned subsidiaries of MAXXAM held, directly or indirectly,
a 23.7% general partner interest (including a 22.7% interest by virtue of
its ownership of 68.2% of the common stock of the Additional General
Partner) and a 64.8% limited partner interest in the Partnership.

          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, 1996 (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.  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 June 30, 1997, the consolidated results of its
operations for the three and six months ended June 30, 1997 and 1996, and
its consolidated cash flows for the six months ended June 30, 1997 and
1996.

     FUTURE CASH REQUIREMENTS AND IMPACT OF RECENT LEGISLATION

          Although the Partnership has sustained substantial operating
losses since it began operations in April 1994, the reorganization of the
Partnership's principal indebtedness resulting in the issuance of the 11%
Senior Secured Extendible Notes (the "Extendible Notes") in exchange for
the 11-3/4% Senior Secured Notes (the "Original Notes") significantly
improved the Partnership's liquidity by providing for the deferral of cash
interest payments until certain conditions are met.  Additionally, the
payment of management fees is deferred until two consecutive interest
payments on the Extendible Notes have been paid in cash.  The Partnership
continues to project a loss from operations for the foreseeable future.  At
June 30, 1997, the Partnership had cash and cash equivalents of $3,111 and
a $1,700 line of credit which management believes will be adequate to fund
the operating activities of the Partnership for at least the next year.  
<PAGE>
          Management is continuing to undertake marketing efforts to
increase attendance and pari-mutuel handle at the Race Park in order to
generate additional income.  Also, in accordance with the strategy
established during the reorganization of the Partnership, management
undertook significant legislative efforts attempting to legalize additional
forms of gaming at the Race Park in order to increase revenues.  However,
the Texas Legislature did not consider legislation permitting any other
form of gaming at Class 1 horse racing facilities.  Legislation authorizing
additional forms of gaming cannot be presented until the Texas legislature
convenes again.  The next regular session is scheduled to begin in January
of 1999.  The Partnership has not decided on its future course of action
with respect to legislative initiatives, and there can be no assurance that
gaming legislation favorable to the Partnership will be enacted in the
future.  

          During the 1997 session of the Texas Legislature, the Texas
Racing Act was amended to, among other things, increase the pari-mutuel
wagering tax on guest simulcasting from 1% to 1.25%.  The legislation also
authorizes cross-breed simulcasting between horse tracks and greyhound
tracks at Texas pari-mutuel facilities.  These provisions become effective
as of September 1, 1997.  The Partnership estimates that, based on the
current level of guest wagering, net pari-mutuel commissions will decrease
by approximately $200 when the increased wagering tax becomes effective. 
While the net impact of cross-breed simulcasting cannot be determined with
certainty, the Partnership believes that it may have a negative overall
impact on the Partnership's share of pari-mutuel commissions generated from
on-track wagering due to the presence of a greyhound track in the greater
Houston market area that will now be able to directly compete with the
Partnership for horse racing customers.  Additionally, the legislation
includes provisions to increase the purse allocation from guest
simulcasting and to eliminate the pari-mutuel wagering tax on the first
$100,000 wagered on live racing.  These provisions are not effective until
January 1, 1999.  The Partnership estimates that when these additional
provisions become effective, the Partnership's net pari-mutuel commissions
will decrease by approximately $1,000 annually based on current levels of
wagering.  

          To the extent the remaining cash and line of credit are not
sufficient to support the cash flow requirements of the Partnership,
alternative sources of funding will be necessary.  Although 68.2% of the
Extendible Notes are owned by MAXXAM, the Partnership is still required to
retire the Extendible Notes and related accrued interest on September 1,
2001, unless the applicable extension provisions apply.  To the extent the
Partnership is unable to generate sufficient cash flows from operations to
meet these additional obligations or the Partnership is unable to refinance
the Extendible Notes, alternative sources of funding will be necessary. 
There can be no assurance that the Partnership will be able to 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 June 30, 1997 and December 31, 1996, includes
deposits held for the benefit of horsemen for purses, stakes and awards and
amounts reserved for the payment of property taxes.

3.        PARI-MUTUEL OPERATIONS

          The Race Park offers pari-mutuel wagering on live thoroughbred or
<PAGE>
quarter horse racing during meets and simulcast racing throughout the year. 
The Race Park earns revenues on live racing and on simulcasting 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.
<PAGE>
          A summary of the pari-mutuel operations for the three and six
months ended June 30, 1997 and 1996 is as follows:

<TABLE>

                                   Three Months Ended    Six Months Ended
                                        June 30,             June 30,      
                                  -------------------  ------------------
                                     1997       1996      1997      1996   
                                  ---------  --------- --------- ---------
<S>                               <C>        <C>       <C>       <C>
Number of live race days                 20         38        78  
                                                                        64

Live handle                       $   3,372  $   7,968 $  11,161 $  13,327
Guest simulcasting handle            25,469     22,816    47,216    44,418
Host simulcasting handle             22,240     38,381    91,315    59,528
                                  ---------  --------- --------- ---------
                                  $  51,081  $  69,165 $ 149,692 $ 117,273
                                  ---------  --------- --------- ---------

Net commissions from live racing  $     398  $     945 $   1,324 $   1,581
Net commissions from guest            2,253      2,045     4,186     4,054
simulcasting
Net commissions from host               450        605     1,865       935
simulcasting                      ---------  --------- --------- ---------
                                  $   3,101  $   3,595 $   7,375 $   6,570
                                  ---------  --------- --------- ---------

</TABLE>

4.        NOTES PAYABLE

          Notes payable consist of the following:
<TABLE>

                                                 June 30,  December 31,
                                                   1997        1996    
                                               ---------   ------------
                                               (Unaudited)
<S>                                            <C>         <C>
     
11% Senior Secured Extendible Notes due
September 1, 2001 (net of unamortized
discount of $15,719 in 1997 and $16,302
in 1996)                                       $   28,667  $    25,770 
Accrued interest to be paid in-kind                 1,221        1,157 
                                               ----------- ------------
                                                   29,888       26,927 
Unsecured promissory notes                            216          240 
Equipment leases                                       23           53 
Payable to Limited Partners                            23           23 
                                               ----------- ------------
          Total                                    30,150       27,243 
Less current portion                                  (43)         (81)
                                               ----------- ------------
                                               $   30,107  $    27,162 
                                               =========== ============

</TABLE>

          The Partnership is amortizing the difference between the
<PAGE>
aggregate principal amount of the Extendible Notes and their estimated fair
value as of the 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.




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

5.        RELATED PARTY TRANSACTIONS

          Management and other professional fees include $188 for the three
months ended June 30, 1997 and 1996, respectively, and $375 for the six
months ended June 30, 1997 and 1996, respectively, in management fees due
to the Managing General Partner.  Payment of management fees 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 $121
and $167 for the three months ended  June 30, 1997 and 1996, respectively,
and $252 and $345 for the six months ended June 30, 1997 and 1996,
respectively, related to the costs incurred for services provided by MAXXAM
and certain of its subsidiaries.  The Partnership also incurred fees of $74
and $30 during the three months ended June 30, 1997 and 1996, respectively,
and $157 and $68 for the six months ended June 30, 1997 and 1996,
respectively, for legal and other consulting services performed by other
affiliates.

6.        CONTINGENCIES

          The Partnership is involved in claims and litigation arising in
the ordinary course of business.  While there are uncertainties inherent in
the ultimate outcome of such matters and it is impossible to presently
determine the ultimate costs that may be incurred, management believes that
the outcome of such matters 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.
<PAGE>
ITEM 2.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND THE RESULTS OF OPERATIONS

          The following should be read in conjunction with the unaudited
consolidated financial statements contained elsewhere herein and 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 thereon 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.

          The following table presents selected attendance and wagering
information for the three and six months ended June 30, 1997 and 1996:

<TABLE>

                                      Three Months Ended   Six Months Ended
                                          June 30,        
                                                              June 30      
                                   ---------------------  ----------------- 
                                                                 
                                      1997        1996    
                                                            1997   
                                                                     1996  
                                   ----------  ---------- -------- -------- 
                                                                      
<S>                                <C>         <C>        <C>      <C>
Number of live race days                   20          38       78      64 
Number of simulcast only days              71          53      103     117 

Average daily attendance - live    
race days                               3,835       3,829    2,838   3,653 
Average daily attendance -    
simulcast days                            830         720      716     753 
     
Average live and guest per capita
gross wager - live race days       $      140  $      143 $    164 $   146 
     
Average guest per capita gross
wager - simulcast days                    307         260      300     257 

       (Amounts in millions)
Live handle                        $      3.4  $      7.9 $   11.2 $  13.3 
<PAGE>
Guest simulcasting handle                25.5        22.8     47.2    44.4 
Host simulcasting handle                 22.2        38.4     91.3    59.5 
                                   ----------  ---------- -------- --------
                                   $     51.1  $     69.2 $  149.7 $  117.3
                                   ==========  ========== ======== ========

Net commissions from live racing   $       .4  $       .9 $    1.3 $   1.6 
Net commissions from guest                2.3         2.1      4.2     4.1 
simulcasting
Net commissions from host                  .4          .6      1.9      .9 
simulcasting                       ----------  ---------- -------- --------
Total net pari-mutuel commissions  $      3.1  $      3.6 $    7.4 $   6.6 
                                   ==========  ========== ======== =======

</TABLE>

               Revenues.  The Partnership's principal source of revenue is
from pari-mutuel commissions generated on live races and simulcast races as
both a guest and host track.  Net pari-mutuel commissions from live racing
and host simulcasting decreased during the three months ended June 30, 1997
compared to the three months ended June 30, 1996 principally due to the
decrease in the number of live race days.  Although the live and guest per
capita wager on live race days for the six months ended June 30, 1997
increased by 12% compared to the six month ended June 30, 1996, net pari-
mutuel commissions from live racing decreased during the during the six
months ended June 30, 1997 compared to the six months ended June 30, 1996. 
This decrease is primarily due to a lower average daily attendance and a
decrease in the live per capita wager on live race days.  This overall
decrease in attendance for the six month period was partially due to
unusually heavy rainfall during the first four months of 1997, which
negatively impacted attendance on live race days.  Net pari-mutuel
commissions from host simulcasting increased by 111% due to a number of
factors, including an increase in the number of live race days during the
six month period, an increase in the number of race tracks and off-track
wagering facilities receiving the Partnership's simulcast signal, as well
as the new host fee arrangement which became effective January 1, 1997
under the contract between the Partnership and the recognized horsemen's
organization.  Overall, total net pari-mutuel commissions for the three
months ended June 30, 1997 decreased by 14% due to the decrease in the
number of live race days.  Total net pari-mutuel commissions for the six
months ended June 30, 1997 increased by 12% due to the increase in the
number of live race days and the growth of host simulcasting handle.

          Food and beverage and other revenues for the three months ended
June 30, 1997 decreased from those of the comparable period of 1996 due to
the decrease in the number of live race days.  Food and beverage and other
revenues for the six months ended June 30, 1997 decreased slightly from the
comparable period of 1996 primarily due to an overall decrease in
attendance for the six month period.  Other revenues also decreased for the
six month period due to a decrease in revenues from the sales of luxury
suites and sponsorships.

          Loss from Operations.  The loss from operations for the three
months ended June 30, 1997 increased compared to the three months ended
June 30, 1996 primarily due to a decrease in revenue, partially offset by a
decrease in operating expenses, both of which are associated with a
decreased number of live race days.  The loss from operations for the six
months ended June 30, 1997 was an improvement from that of the comparable
period of 1996 due to an increase in revenues, primarily from net pari-
mutuel commissions discussed above, combined with a decrease in costs and
<PAGE>
expenses as management continued to focus on reducing expenditures
associated with operating the Race Park.  Management and other professional
fees for the three and six months ended June 30, 1997 were above those of
the comparable period of 1996 due to the costs associated with the
legislative efforts discussed below and in Note 1 to the Consolidated
Financial Statements.  

          Net loss.  Net loss reflects the loss from operations as
described above, interest income and interest expense, including
amortization of the discount on the Extendible Notes.

     LIQUIDITY AND CAPITAL RESOURCES

          At June 30, 1997, the Partnership had cash and cash equivalents
of $3.1 million compared to $2.6 million at December 31, 1996.  The
increase in cash and cash equivalents is primarily attributable to the
collection of simulcast receivables from other racetracks related to host
simulcasting.  At June 30, 1997, the Partnership also had restricted cash
of $2.5 million compared to $3.6 million at December 31, 1996.  The decline
in restricted cash is due to the annual payment of property taxes in the
first quarter along with the payment of amounts due to horsemen for purses,
stakes and awards related to the spring thoroughbred meet.

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

     LEGISLATIVE RESULTS
     
          During the 1997 legislative session, the Texas Racing Act was
amended to, among other things, change the structure of the Texas Racing
Commission (the "TRC"), increase the regulatory and enforcement powers of
the TRC and increase the pari-mutuel wagering tax on guest simulcasting
from 1% to 1.25%.  The Partnership estimates that when the increased
wagering tax on guest simulcasting becomes effective on September 1, 1997,
net pari-mutuel commissions will decrease by approximately $200,000 per
year based on the current level of guest wagering.  The legislation also
includes provisions to increase the purse allocation from guest
simulcasting and to eliminate the pari-mutuel wagering tax on the first
$100 million wagered on live racing.  These provisions are effective as of
January 1, 1999.  The Partnership estimates that when all of the provisions
listed above become effective, the Partnership's net pari-mutuel
commissions will decrease by approximately $1 million annually based on
current levels of wagering.

          Additionally, the bill authorizes cross-breed simulcasting at
Texas pari-mutuel facilities, which will allow greyhound tracks to display
and accept wagers on races at horse tracks and horse tracks to display and
accept wagers on races at greyhound tracks. This provision is effective as
of September 1, 1997.  While the net impact of cross-breed simulcasting
cannot be determined with certainty, the Partnership believes that it may
have a negative overall impact on the Partnership's share of pari-mutuel
commissions generated from on-track wagering due to the presence of a
greyhound track in the greater Houston market area that will now be able to
directly compete with the Partnership for horse racing customers.

          During the Texas legislative session, legislation was introduced
in the House and Senate that would have allowed card games (i.e. poker and
blackjack) at Class 1 horse racing facilities.  This legislation was
supported by the Partnership; however, neither this legislation nor any
other gaming legislation had the widespread support of the pari-mutuel
<PAGE>
horse racing industry.  While the Partnership undertook a significant
lobbying effort, the legislation did not receive a committee hearing. 
Moreover, the Texas Legislature did not consider legislation permitting any
other form of gaming at Class 1 horse racing facilities.  Legislation
authorizing additional forms of gaming cannot be presented until the Texas
legislature convenes again. The next regular session is scheduled to begin
in January of 1999.  The Partnership has not decided on its future course
of action with respect to legislative initiatives and there can be no
assurance that gaming legislation will be enacted in the future or, if
gaming legislation is enacted that it will be favorable to the Partnership.
<PAGE>
                        PART II - OTHER INFORMATION


ITEM 1.        LEGAL PROCEEDINGS

          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:

          10.1      Amendment to Agreement dated December 30, 1993 between
the Partnership and International Sound Corporation.        

          B.   REPORTS ON FORM 8-K:

                    The Partnership filed a current report on Form 8-K
dated June 26, 1997, describing under Item 5. the results of the 1997 Texas
legislative session.
<PAGE>
                                 SIGNATURES


          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: August 11, 1997         By: ------------------------------ 
                                       Michael J. Vitek
                                 Vice President of Accounting
<PAGE>
                                 SIGNATURES


          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: August 11, 1997         By:    /S/  MICHAEL J. VITEK       
                              ----------------------------------
                                       Michael J. Vitek
                                 Vice President of Accounting
<PAGE>