**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **Washington,
        D.C. 20549**
 
 **FORM
        10-QSB**
 
 (Mark
        One)
 
 x**QUARTERLY
        REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
        1934**
 
 For
        the
        quarterly period ended September 30, 2007
 
  ̈**TRANSITION
        REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT**
 
 For
        the
        transition period from

        to
 
 Commission
        file number: 333-112603
 
 CATSKILL
                  LITIGATION TRUST(Exact
                  name of small business issuer as specified in its
                  charter)
 
 DELAWARE
              16-6547621(State
                  or other jurisdiction of incorporation or organization)
              (IRS
                  Employer Identification No.)
 
 C/O
                  CHRISTIANA BANK & TRUST COMPANY
                1314
                  King Street
                Wilmington,
                  Delaware(Address
                  of principal executive offices)
 
 (302)
                  888-7400(Issuer’s
                  telephone number)(Former
                  name, former address and former fiscal year, if changed since last
                  report)
 
 Check
        whether the issuer (1) filed all reports required to be filed by Section
        13 or
        15(d) of the Exchange Act during the past 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
 ̈
 
 Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act).     Yes  ̈     No
x
  As
        of
        November 19, 2007, 43,825,738 Units of beneficial interest were
        outstanding.
  Transitional
        Small Business Disclosure Format (check one):    Yes  ̈     No
x


Table
          of Contents






CATSKILL
        LITIGATION TRUST
  FORM
        10-QSB
  INDEX
 PART
                    I - FINANCIAL INFORMATION
                PageITEM
                    1. CONDENSED FINANCIAL STATEMENTS (unaudited)Condensed
                    Balance Sheet as of September 30,
                    2007
                3Condensed
                    Statements of Operations for the
                    Three and Nine Months Ended  September 30, 2007 and September
                    30, 2006
                4Condensed
                    Statements of Cash Flows for the Nine Months
                    Ended September 30, 2007 and September 30, 2006
                5Notes
                    to Condensed Financial
                    Statements
                6-12ITEM
                    2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OR
                    PLAN OF OPERATION
                13-17ITEM
                    3.  CONTROLS AND
                    PROCEDURES
                18PART
                    II - OTHER INFORMATIONITEM
                    1.  LEGAL
                    PROCEEDINGS
                19-21ITEM
                    6.  EXHIBITS
                21SIGNATURES
                21




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PART  I
      - FINANCIAL INFORMATION




**Item
      1.FINANCIAL STATEMENTS**






**CATSKILL
                LITIGATION TRUST**
            ******CONDENSEDBALANCE
                SHEET**
            ******September
                30, 2007**
            ******(Unaudited)**ASSETSCurrent
                AssetsCash
                and Cash Equivalents
            
            $
            442,978Total
                Current Assets
            
            
            442,978Intangible
                Assets, net
            
            
            17,128,559TOTAL
                ASSETS
            
            $
            17,571,537LIABILITIES
                AND TRUST EQUITYCurrent
                LiabilitiesAccrued
                expenses
            
            $
            112,660Accounts
                payable
            
            
            309,511Line
                of credit-related party
            
            
            2,500,000Total
                Liabilities
            
            
            2,922,171Trust
                EquityUnits
                of Beneficial Interest: 43,825,738authorized,
                issued and outstanding, stated as
            
            
            17,791,261Accumulated
                deficit
            
            
            (3,141,895
            )Total
                Trust Equity
            
            
            14,649,366TOTAL
                LIABILITIES AND TRUST EQUITY
            
            $
            17,571,537








The
      accompanying notes are an integral part of these condensed financial
      statements.








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**CATSKILL
                LITIGATION TRUST**
            ******STATEMENTSOF
                OPERATIONS**
            ******(Unaudited)**For
                the
            
            
            For
                the
            
            
            For
                the
            
            
            For
                theThree
                Months Ended
            
            
            Three
                Months Ended
            
            
            Nine
                Months Ended
            
            
            Nine
                Months EndedSeptember
                30, 2007
            
            
            September
                30, 2006
            
            
            September
                30, 2007
            
            
            September
                30, 2006General
                and Administrative Expenses:Litigation
                Trustee Fees
            
            $
            30,000
            
            
            $
            30,000
            
            
            $
            90,000
            
            
            $
            90,000Administrative
                Trustee Fees
            
            
            1,500
            
            
            
            1,500
            
            
            
            4,500
            
            
            
            4,500Consulting
                and Advisory Fees
            
            
            19,500
            
            
            
            1,500
            
            
            
            26,667
            
            
            
            4,500Legal
                Fees
            
            
            235,799
            
            
            
            71,413
            
            
            
            876,525
            
            
            
            206,181Accounting
                Fees
            
            
            16,750
            
            
            
            7,000
            
            
            
            38,500
            
            
            
            26,000Interest
                Expense
            
            
            43,058
            
            
            
            24,716
            
            
            
            109,614
            
            
            
            67,063Amortization
                of Intangible Assets
            
            
            365,215
            
            
            
            -
            
            
            
            401,736
            
            
            
            -Other
            
            
            24,709
            
            
            
            815
            
            
            
            47,041
            
            
            
            3,989Total
                General and Administrative Expenses
            
            
            736,531
            
            
            
            136,944
            
            
            
            1,594,583
            
            
            
            402,233Dividend
                Income
            
            
            2,428
            
            
            
            742
            
            
            
            6,282
            
            
            
            1,263Net
                Loss
            
            $
            (734,103
            )
            
            $
            (136,202
            )
            
            $
            (1,588,301
            )
            
            $
            (400,970
            )Loss
                per unit outstanding
            
            $
            (0.02
            )
            
            $
            (0.01
            )
            
            $
            (0.05
            )
            
            $
            (0.02
            )Weighted
                average number of units outstandng
            
            
            43,825,738
            
            
            
            21,912,869
            
            
            
            29,969,071
            
            
            
            21,912,869






The
      accompanying notes are an integral part of these condensed financial
      statements.










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**CATSKILL
                LITIGATION TRUST**
            ******STATEMENTOF
                CASH FLOWS**
            ******(Unaudited)**For
                the
            
            
            For
                theNine
                Months Ended
            
            
            Nine
                Months EndedSeptember
                30, 2007
            
            
            September
                30, 2006Cash
                flow from operating activitiesNet
                loss
            
            $
            (1,588,301
            )
            
            $
            (400,970
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Imputed
                interest expense
            
            
            109,614
            
            
            
            67,063Amortization
                of intangible assets
            
            
            401,736
            
            
            
            -Changes
                in operating assets and liabilites:Accounts
                payable
            
            
            309,511Accrued
                expenses
            
            
            105,465
            
            
            
            -Net
                cash used in operating activities
            
            
            (661,975
            )
            
            
            (333,907
            )Cash
                flow from financing activitiesIncrease
                in line of credit-related party
            
            
            985,000
            
            
            
            355,000Increase
                in Cash and Cash Equivalents
            
            
            323,025
            
            
            
            21,093Cash
                and Cash Equivalents - beginning of period
            
            
            119,953
            
            
            
            17,235Cash
                and Cash Equivalents - end of period
            
            $
            442,978
            
            
            $
            38,328Non
                cash investing and financing activities:Intangible
                assets acquired in exchange forissuance
                of units of beneficial interest
            
            $
            17,530,295
            
            
            $
            -





The
      accompanying notes are an integral part of these condensed financial
      statements.















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CATSKILL
      LITIGATION TRUST




Notesto
      Condensed Financial Statements—September 30,
      2007 (Unaudited)




NOTE
      1 -
      THE TRUST AND MANAGEMENT’S PLANS AND LIQUIDITY




The
      Catskill Litigation Trust is a Delaware statutory trust (the “Litigation Trust”)
      formed by Empire Resorts, Inc. (“Empire Resorts”), Monticello Raceway
      Management, Inc., (“MRMI”), Monticello Casino Management, L.L.C., Monticello
      Raceway Development Company, L.L.C. (“MRDC”) and Mohawk Management, L.L.C.
      (“Mohawk”).  On January 12, 2004, 22,702,896 units of beneficial
      interest were issued to the members and stockholders of those
      entities.  At that time, Empire Resorts, Catskill Development, L.L.C.
      (“Catskill”), MRMI, Mohawk, Joseph E. Bernstein, Paul A. deBary and Christiana
      Bank and Trust Company (the “Administrative Trustee”) entered into the
      Declaration of Trust of Catskill Litigation Trust (the “Declaration of
      Trust”).  Pursuant to Amendment No. 1 to the Declaration of Trust,
      dated as of November 15, 2004, the number of units issued was reduced to
      21,912,869.




In
      the
      Declaration of Trust, Catskill, MRDC and Mohawk assigned to the Litigation
      Trust
      all of their claims under or related to the alienation and frustration of their
      agreements and business relations with the St. Regis Mohawk Tribe and their
      rights to any judgment or settlement that may arise from any litigation relating
      to two litigations entitled Catskill Development, L.L.C., Mohawk Management
      L.L.C. and Monticello Raceway Development Company L.L.C., Plaintiffs v. Park
      Place Entertainment Corporation, Defendant (the “PPE Case”) and Catskill
      Development, L.L.C., Mohawk Management, L.L.C., Monticello Raceway Development
      Company, L.L.C., Plaintiffs v. Gary Melius, Ivan Kaufman, Walter Horn, President
      R.C. - St. Regis Management Company, et al, Defendants (the “President RC
      Case”). If at any time the Litigation Trustees determine, in their absolute
      discretion, that the assets of the Litigation Trust are not sufficient to
      justify its continuance, the Litigation Trustees are authorized to terminate
      the
      Litigation Trust. In addition, the Litigation Trust is to terminate on the
      date
      that all litigation has been fully prosecuted to final judgment or dismissal,
      including all appeals, and all Litigation Trust assets have been distributed
      to
      the Litigation Trust’s beneficiaries.




In
      June
      2006, two of the plaintiffs in the PPE Case were dismissed without prejudice
      on
      jurisdictional grounds as a result of a finding that these parties lacked
      diversity of citizenship.  A new complaint was subsequently filed by
      the Trustees on behalf of these plaintiffs.  Pursuant to a stipulation
      entered into by all parties to the PPE Case, the parties accepted all previous
      determinations of the trial court as applicable to the new complaint and the
      case was consolidated with that of the remaining plaintiff, essentially
      restoring the parties to the status that had existed prior to the
      dismissal.  Accordingly, references to the “PPE Case” subsequent to
      the consolidation refer to the consolidated case.




On
      January 24, 2007, the Litigation Trust entered into an agreement (the “Joint
      Alliance Agreement”) with the St. Regis Mohawk Tribe providing for the
      assignment to the Litigation Trust of certain claims of Tribal members against
      Park Place Entertainment, Inc. and Clive Cummis, former General Counsel of
      Park
      Place Entertainment, Inc.  The Joint Alliance Agreement provided that
      the claims were to be assigned in exchange for a certificate evidencing the
      ownership by the Tribal members of 21,912,869 Units in the Litigation Trust
      (representing a 50% beneficial interest in the Litigation Trust). The Trustees
      of the Litigation Trust then obtained the consent of the holders of more than
      66
      2/3% of the units of the Litigation Trust to an amendment of the Declaration
      of
      Trust to implement the Joint Alliance Agreement, including an increase in the
      authorized number of units to 43,825,738 units. In accordance with its terms,
      this amendment (“Amendment No. 2”) became effective upon satisfaction of the
      condition that the claims of the Tribal members were duly and properly assigned
      to the Litigation Trust in accordance with the Joint Alliance Agreement. On
      June
      21, 2007, pursuant to the Joint Alliance Agreement, the trustees of the Catskill
      Litigation Trust, in exchange for the delivery of 21,912,869 newly issued units
      of the Litigation Trust, received an assignment of a judgment rendered against
      PPE in connection with certain claims of members of the St. Regis Mohawk Tribe
      against Park Place Entertainment
      and Clive Cummis. The assignment was previously approved by the St Regis Mohawk
      Tribal Court.







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As
      a
      result of the assignment to consummate the Joint Alliance Agreement, an
      aggregate of 43,825,738 units are issued and outstanding. In addition, in
      connection with Amendment No. 2, Mr. Dennis Vacco agreed to serve as a
      Litigation Trustee of the Litigation Trust and Mr. Paul A. deBary, who had
      previously served as a Litigation Trustee, agreed to serve as Litigation Trustee
      Advisor (See Note 6). References to the “Litigation Trustees” herein refer to
      Messrs. Bernstein and deBary prior to June 21, 2007 and to Messrs. Bernstein
      and
      Vacco thereafter.




On
      June
      22, 2007, Dennis Vacco and Joseph Bernstein, acting in their capacities as
      Litigation Trustees of the Litigation Trust, filed an enforcement action (the
      “Judgment Enforcement Case”) in the United States District Court for the
      Northern District of New York. The enforcement action was filed against Harrah’s
      Operating Company, Inc. (a wholly owned subsidiary of Harrah’s Entertainment,
      Inc. (HET)), as successor to Park Place Entertainment, Inc., and Clive Cummis
      to
      enforce an order of default judgment issued by the St. Regis Mohawk Tribal
      Court
      on March 20, 2001. The order of default judgment ordered the defendants to
      pay
      $1.782 billion of actual damages and $5 million of punitive damages. On July
      12,
      2007, pursuant to a duly noticed motion, the St. Regis Mohawk Tribal Court
      issued an order that clarified that, under Tribal law, the annual rate of nine
      percent provided for in sections 5003 and 5004 of the New York Civil Practice
      Law and Rules applies for the purpose of calculating interest on any unsatisfied
      amount of the Tribal Court judgment that the Trust is seeking to enforce in
      the
      Judgment Enforcement Case. No portion of the judgment has currently been
      satisfied. There can be no assurance that the Litigation Trust will receive
      any
      net proceeds from this judgment. A previous suit to enforce the default judgment
      was dismissed, without prejudice to the recommencement of the suit, after the
      Judge had not heard further from the parties concerning efforts to settle the
      case. Harrah’s Entertainment, Inc., the parent of Harrah’s operating company,
      has indicated in its public filings that it believed that the case had been
      settled and intends to vigorously defend any attempt to enforce the judgment.
      On
      August 13, 2007, the defendants in the Judgment Enforcement Case filed a motion
      to dismiss the action on the grounds that the case had been previously settled
      and that the Trustees did not have standing to sue because the assignment of
      the
      judgment to the Trustees violates New York law.  The Trustees have
      opposed the motion to dismiss on the grounds that there was no settlement of
      the
      claims brought in the action and that New York law does not apply to the
      assignment, and would not be violated by the assignment even if it
      did.  The PPE Case, the President RC Case and the Judgment Enforcement
      Case are herein collectively referred to as the “Litigations”.




As
      discussed in Note 4, Empire Resorts, a related party, has provided the
      Litigation Trust with a line of credit of up to $2,500,000 to pay all expenses
      of the Litigation Trust permitted under the Declaration of Trust.  The
      line of credit expires upon the termination of the Litigation
      Trust.  As of September 30, 2007, all amounts permitted under the line
      of credit have been drawn down. In addition, as also discussed in Note 4, the
      Litigation Trust has also entered into separate lines of credit in the aggregate
      amount of $250,000 with two of its unitholders.  Subsequent to
      September 30, 2007, the entire amount provided for in each of these separate
      lines of credit has also been drawn down.  There have been no
      repayments of any of the lines of credit and there can be no assurance that
      other sources will be available in future to fund expenses of the Litigation
      Trust in excess of its available cash.




There
      is
      no assurance that the Litigation Trust will have sufficient liquidity to cover
      its operations. Although funds currently available to the Litigation Trust
      are
      deemed sufficient to cover its operations in connection with the appeal of
      the
      PPE case, it is anticipated that the Litigation Trust will need to raise
      additional funds in order to complete a trial in the PPE case, proceed with
      discovery and other matters in connection with the Judgment Enforcement Case
      or
      recommence the President RC case in the event that the appeal is successful
      or
      if the District Court denies the defendant’s motion to dismiss the Judgment
      Enforcement Case.







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NOTE
      2 -
      BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
      POLICIES




Basis
      of Presentation




These
      unaudited condensed financial statements have been prepared in accordance with
      accounting principles generally accepted in the United States of America
      (“GAAP”), and with Form 10-QSB and Item 310 of Regulation S-B of the Securities
      and Exchange Commission (the “SEC”).  In the opinion of the Litigation
      Trustees, the accompanying unaudited condensed financial statements contain
      all
      the adjustments necessary (consisting only of normal recurring accruals) for
      a
      fair presentation. The interim results are not necessarily indicative of the
      results that would be expected for the full year and do not contain all
      information included in the Litigation Trust’s annual financial statements and
      notes for the year ended December 31, 2006.




Certain
      information and footnote disclosures normally included in financial statements
      prepared in accordance with accounting principles generally accepted in the
      United States of America have been condensed or omitted. It is suggested that
      these financial statements be read in conjunction with the audited financial
      statements and notes thereto included in the report on Form 10-KSB for the
      year
      ended December 31, 2006.




Use
      of
      Estimates in the Financial Statements




The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires the Litigation
      Trustees to make estimates and assumptions that affect the reported amounts
      of
      assets and liabilities and disclosure of contingent assets and liabilities
      at
      the date of the financial statements and the reported amounts of revenues and
      expenses during the reporting period.  Significant estimates include
      the fair value of intangible assets, as described in Note 3.  Actual
      results could differ from those estimates.




Cash
      and Cash Equivalents





Cash
      and
      cash equivalents include cash on account, demand deposits and certificates
      of
      deposit with original maturities of three months or less at acquisition and
      money market funds. From time to time, the Litigation Trust maintains
      significant cash balances in excess of the amounts covered by the Federal
      Deposit Insurance Corporation.  The Litigation Trust has not incurred
      any losses in such accounts and the Litigation Trustees believe it is not
      exposed to any significant credit risk on cash.




Income
      Taxes




For
      federal income tax purposes, the Litigation Trust is treated as a grantor trust.
      Under the grantor trust rules, each holder of a unit of beneficial interest
      is
      treated as the owner of his or her share of the Litigation Trust's assets.
      The
      treatment of income and expense items under GAAP may differ from the tax
      treatment of such items.  Expenses incurred by the Litigation Trust
      are capitalized for tax purposes.




The
      Litigation Trust has adopted the provisions of Financial Accounting Standards
      Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in Income
      Taxes - an interpretation of FASB Statement No. 109” (“FIN 48”), on January 1,
      2007.  FIN 48 clarifies the accounting for uncertainty in income taxes
      recognized in an enterprise’s financial statements in accordance with SFAS No.
      109, “Accounting for Income Taxes,” and prescribes a recognition threshold and
      measurement process for financial statement recognition and measurement of
      a tax
      position taken or expected to be taken in a tax return.  FIN 48 also
      provides guidance on derecognition, classification, interest and penalties,
      accounting in interim period, disclosure and transition.







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The
      Litigation Trust’s policy for recording interest and penalties associated with
      audits is to record such items as a component of income before income
      taxes.  Penalties are recorded in other expense and interest paid or
      received is recorded in interest expense or interest income, respectively,
      in
      the statement of operations.  There were no amounts accrued for
      penalties or interest as of or during the three and nine months ended September
      30, 2007.  The Litigation Trust has performed an evaluation and
      determined that it is not required to file Federal tax returns due to its
      Grantor Trust status.  Accordingly, the Trust does not expect its
      unrecognized tax benefit position to change during the next twelve
      months.  The Litigation Trustees are currently unaware of any issues
      under review that could result in significant payments, accruals or material
      deviations from its position.




NOTE
      3 -
      INTANGIBLE ASSETS




As
      described in Note 1, on June 21, 2007, the Litigation Trust received an
      assignment of a judgment rendered against Park Place Entertainment Corporation,
      Inc. and Clive Cummis. This judgment was assigned to the Litigation Trust in
      exchange for the issuance of 21,912,869 units.  The Litigation Trust
      has estimated the fair value of the judgment to be $17,530,295 on the date
      of
      the transaction. This value was based on the estimated fair value of the units
      issued in exchange for the judgment.  For purposes of determining the
      fair value of a unit, the Litigation Trustees applied the per unit price
      reflected in a transaction in 2005 in which a limited number of units were
      purchased from a unitholder by a third party at a price of $0.80 per unit.
      As an
      active market for shares of the units did not exist at the time and continues
      not to exist at this time, this transaction may not reflect the price at which
      a
      unitholder would be able to obtain for their shares at any given point in time.
      However, it is the most recent information available to the Litigation Trustees
      concerning sales of units and represents the Litigation Trustees’ best estimate
      of the fair value that should be assigned to the judgment for financial
      reporting purposes.  The Litigation Trustees are continuing their
      efforts to assess the fair value of the judgments, including efforts to obtain
      a
      more recent third party valuation.  The final value is dependent on
      those efforts and may differ significantly from the currently estimated amount.
      The estimated life of the asset is considered to be twelve years, based on
      the
      applicable statute of limitations and the potential duration of enforcement
      efforts and/or settlement terms. The asset will be amortized on a straight
      line
      basis over the estimated life. Amortization expense was $365,215 and $401,736
      for the three months and nine months ended September 30, 2007.




NOTE
      4 -
      LINES OF CREDIT-RELATED PARTIES




As
      discussed in Note 1, Empire Resorts, a related party, has provided the
      Litigation Trust with a line of credit of up to $2,500,000.  The line
      of credit can be used to pay all expenses of the Litigation Trust permitted
      under the Declaration of Trust, including but not limited to professional fees
      and the fees and expenses of the Litigation and Administrative
      Trustees.  The line of credit is non-interest bearing and is to be
      repaid from any amounts received from litigation settlements or
      awards.  The line of credit expires upon the termination of the
      Litigation Trust.




As
      of
      September 30, 2007, $2,500,000 had been drawn against the line of
      credit.




The
      Litigation Trust imputed interest on the borrowings at Empire Resorts’ borrowing
      rate (8.00% per annum at September 30, 2007).  Interest expense for
      the three and nine months ended September 30, 2007 amounted to $43,058 and $109,614,
      respectively.  Imputed interest expense is deemed contributed capital
      to the Litigation Trust.




On
      June
      21, 2007, the Litigation Trust entered into separate lines of credit with two
      of
      its unitholders, Robert Berman and Ralph Bernstein, each of which provides
      for
      advances of up to $125,000 upon written demand of the Litigation
      Trust.  Repayment of such advances, with interest at the rate of 10%
      per annum, is to be made solely from amounts available in the Recovery Fund
      held
      by the Administrative Trustee under the Declaration of Trust. As of September
      30, 2007, no amounts had been drawn under these
      agreements.  Subsequent to September 30,2007, the full amount
      available under each of these lines of credit was drawn down.







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NOTE
      5 -
      DISTRIBUTIONS




The
      distribution of any net proceeds from litigation settlements or awards, after
      amounts are applied to cover all current or expected expenses of the Litigation
      Trust, is to be made at the sole discretion of the Litigation Trustees and
      will
      be distributed as follows:




First:  To
      pay the Litigation Trustees and the Litigation Trustee advisor their fees
      arising from litigation settlements or awards. (See Note 6.)




Second:  To
      reimburse $7,500,000 to Empire Resorts for expenses incurred in connection
      with
      the Litigation prior to the formation of the Litigation Trust and, in addition,
      to repay Empire Resorts any amounts outstanding under the line of
      credit.




Third:
      If
      any amount remains after the above requirements are met, such amount remaining
      is to be divided among the beneficiaries of the Litigation Trust in proportion
      to their ownership of units as of the date the distribution is
      made.




NOTE
      6 -
      COMMITMENTS AND CONTINGENCIES




Compensation
      of Litigation Trustees




Each
      of
      the two Litigation Trustees and the Litigation Trustee Advisor is entitled
      to
      annual compensation of $60,000 plus reimbursement of expenses incurred carrying
      out the purpose of the Litigation Trust. In addition, one Litigation Trustee
      is
      entitled to 4.0%, and the other 2.0%, and the Litigation Trustee Advisor is
      entitled to 1.0%, of any litigation settlements or awards.




Compensation
      of the Administrative Trustee




The
      Administrative Trustee is entitled to a monthly administrative fee of $500.
      In
      addition, the Administrative Trustee is entitled to a custody fee on certain
      cash balances and marketable securities of 0.05% per annum on the first
      $10,000,000 of fair value and 0.03% on the excess and reimbursement for certain
      fees and expenses.




Expenses
      Paid Prior to the Formation of the Litigation Trust




As
      discussed in Note 5, the Litigation Trust is obligated to pay to Empire Resorts
      up to $7,500,000.  This amount represents expenses incurred prior to
      the formation of the Litigation Trust.  The amount is payable solely
      from the proceeds of litigation settlements or awards.




Repayments
      of Amounts Drawn Under the Line of Credit-Related Party




As
      discussed in Note 5, the expenses of the Litigation Trust have been paid from
      draws under its lines of credit. The amounts drawn under these lines of credit
      are to be repaid from any amounts received from litigation settlements or
      awards.




Additional
      Amounts Payable to Counsel




Under
      the
      terms of the Litigation Trust’s arrangement with one of the law firms handling
      its appeal, additional fees in an aggregate amount not to exceed $100,000 may
      be
      payable to that firm. In addition, the lead law firm handling the Judgment
      Enforcement Case has agreed to cap its quarterly fees at $75,000 per quarter,
      commencing February 1, 2007.  To the extent that such fees exceed the
      cap, the fees may be carried forward and are
      to be
      repaid with a bonus equal to 200% of the amount carried forward in the event
      of
      a successful conclusion of the Judgment Enforcement Case.







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The
      exact
      amount payable in the event of a reversal of the decision by the trial court
      will vary from $50,000 to $100,000 depending on the precise nature of the
      outcome.




Contingent
      Fee Payable to Consultant




On
      January 24, 2007, the Litigation Trust retained the services of JAF Management,
      LLC (“JAF”) to serve as a consultant to the Litigation Trust concerning
      strategic and structuring alternatives, capital market and industry conditions
      and financial valuations relating to potential settlement opportunities or
      active settlement negotiations.  The term of the consulting agreement
      was to expire on March 31, 2008.  As compensation for the services of
      JAF, the Litigation Trust agreed to pay a success fee in connection with any
      out-of-court settlement or termination arrangement with respect to any of the
      litigations equal to three percent (3%) of the amount by which the gross
      realizable value of such settlement or termination arrangement exceeds $200
      million. This consulting agreement was terminated, without cause, upon notice
      as
      permitted in accordance with its terms, on July 28, 2007.




NOTE
      7 -
      CERTAIN RELATIONSHIPS




The
      Litigation Trustee Advisor is currently a member of Empire Resorts’ Board of
      Directors. Mr. Bernstein, one of the Litigation Trustees, was also a member
      of
      the Empire Resorts' Board of Directors, but resigned from his position as a
      director of Empire Resorts on June 21, 2007.




Dennis
      Vacco, one of the Litigation Trustees, is of counsel to the firm of Crane,
      Parente & Cherubin. Crane, Parente and Cherubin served as counsel to the St.
      Regis Mohawk Tribal Council prior to the time that Mr. Vacco became a Litigation
      Trustee and performed certain services that were paid for by the Litigation
      Trust pursuant to the Joint Alliance Agreement.  As of September 30,
      2007, the Litigation Trust had fees payable of $45,288 to Crane, Parente and
      Cherubin attributable to the three months ended September 30, 2007. For the
      three and nine months ended September 30, 2007, the Litigation Trust incurred
      expenses of $90,976 and $364,028 for fees payable to Crane, Parente and
      Cherubin.




NOTE8
-RECENT
      ACCOUNTING
      PRONOUNCEMENTS




In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS
      No. 157”).  This Statement defines fair value, establishes a framework
      for measuring fair value and expands disclosure of fair value
      measurements.  SFAS No. 157 applies under other accounting
      pronouncements that require or permit fair value measurements and accordingly,
      does not require any new fair value measurements.  SFAS No. 157 is
      effective for financial statements issued for fiscal years beginning after
      November 15, 2007.  The Litigation Trust does not expect adoption of
      SFAS No. 157 to have an impact on the results of operations and financial
      condition of the Litigation Trust.




In
      September 2006, the staff of the SEC issued Staff Accounting Bulletin No. 108
      ("SAB 108") which provides interpretive guidance on how the effects of the
      carryover or reversal of prior year misstatements should be considered in
      quantifying a current year misstatement. SAB 108 is effective for fiscal years
      ending on or after November 15, 2006. Adoption of SAB 108 did not have a
      material impact on the Litigation Trust's consolidated financial position,
      results of operations or cash flows.







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In
      February 2007, the FASB issued Statement of Financial Accounting Standards
      No.
      159, The Fair Value Option for Financial Assets and Financial Liabilities ("SFAS
      159"), to permit all entities to choose to elect, at specified election dates,
      to measure eligible financial instruments at fair value. An entity shall report
      unrealized gains and losses on items for which the fair value option has been
      elected in earnings at each subsequent reporting date, and recognize upfront
      costs and fees related to those items in earnings as incurred and not deferred.
      SFAS 159 applies to fiscal years beginning after November 15, 2007, with early
      adoption permitted for an entity that has also elected to apply the provisions
      of SFAS 157, Fair Value Measurements. An entity is prohibited from
      retrospectively applying SFAS 159, unless it chooses early adoption. SFAS 159
      also applies to eligible items existing at November 15, 2007 (or early adoption
      date). The adoption of the SFAS 159 did not have a material impact on the
      financial statements of the Litigation Trust.




NOTE
      9 –
SUBSEQUENT EVENTS




On
      October 25, 2007, a case management conference for the Judgment Enforcement
      Case, originally scheduled for November, 2007 was rescheduled for January 18,
      2008, due to the pending motion to dismiss which was filed on August 13,
      2007,  A hearing on the motion to dismiss the Judgment Enforcement
      Case was scheduled for September 28, 2007 but was deemed unnecessary by the
      Court. A dismissal as a result of this motion would not affect the transactions
      providing for the issuance of units to the enrolled members of the St. Regis
      Mohawk Tribe entered into in connection with the assignment of the judgment,
      but
      would be expected to result in an impairment of substantially all the estimated
      fair value of this intangible asset.  Unless otherwise determined by
      the Court, case management plans are currently scheduled to be filed by January
      14, 2008.







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**ITEM2.  MANAGEMENT’S
      DISCUSSION AND ANALYSIS OR PLAN
      OF OPERATION**




FORWARD-LOOKING
      STATEMENTS




This
      Report on Form 10-QSB contains “forward-looking statements” within the meaning
      of Section 27A of the Securities Act of 1933, as amended and Section 21E of
      the
      Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements
      other than statements of historical facts included in this Report, including
      without limitation, the statements under “General,” and “Liquidity and Capital
      Resources,” are forward-looking statements. All subsequent written and oral
      forward-looking statements attributable to the Litigation Trust or persons
      acting on its behalf are expressly qualified in their entirety by the cautionary
      statements.




The
      following discussions should be read in conjunction with our financial
      statements and the related notes thereto and other financial information
      appearing elsewhere in this report.  The following discussion contains
      forward-looking statements that involve risks and uncertainties.  Our
      actual results could differ materially from those anticipated in the
      forward-looking statements as a result of various factors, including those
      discussed elsewhere in this report.




GENERAL




We
      are a
      statutory trust created under Delaware law. Our formation was a condition to
      the
      merger of Empire Resorts, Inc. (“Empire Resorts”), Monticello Raceway
      Management, Inc., (“MRMI”), Monticello Casino Management, L.L.C. (“MCM”),
      Monticello Raceway Development Company, L.L.C. (“MRDC”) and Mohawk Management,
      L.L.C. (“Mohawk”).  Also as a condition to that merger, each of
      Catskill Development, L.L.C. (“Catskill”), MRDC, and Mohawk, agreed to assign to
      us all of their claims under or related to the alienation and frustration of
      their agreements and business relations with the St. Regis Mohawk Tribe. That
      assignment included rights to any proceeds from any settlement or award that
      may
      arise from any litigation relating to that claim.  We currently maintain a
      web site at www.catskilltrust.com to facilitate communications and
      provide a convenient source of more detailed information for our unit-holders
      and other interested parties.




Our
      litigation claims arise from the efforts of each of Catskill, MRDC, and Mohawk
      to develop with the St. Regis Mohawk Tribe a gaming casino in Monticello, New
      York. These entities spent several years and substantial funds to develop and
      obtain required approvals for the casino. Subsequently, Park Place Entertainment
      Corporation, the world’s largest gaming corporation and Atlantic City’s largest
      casino operator, entered into an agreement providing for the St. Regis Mohawk
      Tribe to commit its future casino development efforts exclusively to Park Place
      Entertainment Corporation.  That agreement conflicted with the Mohawk
      Tribe’s agreements with Catskill, MRDC and Mohawk.




Several
      lawsuits were commenced as a result of these circumstances.  The first
      was commenced by certain members of the St. Regis Mohawk Tribe in the St. Regis
      Mohawk Tribal Court. The defendants refused to recognize the validity of the
      court and a default judgment was entered. The Litigation Trustees are now
      seeking to enforce this judgment in the United States District Court for the
      Northern District of New York.  This case is referred to herein as the
“Judgment Enforcement Case”. Two other lawsuits were commenced on behalf of the
      original business entities who were working to develop the casino. One of these
      was brought against Park Place Entertainment, Inc. (“PPE”) in the United States
      District Court for the Southern District of New York and was dismissed after
      summary judgment was rendered for the defendant. This lawsuit is referred to
      herein as the “PPE Case”. The other was brought in the Sullivan County Supreme
      Court of the State of New York Court against certain business partners of PPE
      and has been discontinued, under an agreement that permits it to be re-filed
      at
      a future date without being barred by the statute of limitations, pending
      resolution of the issues in the PPE Case. This case is referred to herein as
      the
“President RC Case”.







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The
      PPE
      Case was initially dismissed on a motion for summary judgment.  However,
      the trial court subsequently vacated the earlier decision granting summary
      judgment to Park Place Entertainment, in order to consider new evidence and
      allow additional discovery proceedings. After these proceedings were
      completed, the dismissal was reinstated. An appeal was taken in the PPE Case
      in
      late 2004.  In January of 2005, the Litigation Trust was created to
      pursue claims in the PPE Case and subsequently filed briefs on the
      appeal.   Oral arguments on this appeal were initially heard on
      October 17, 2005.  On March 8, 2006, however, the Court of Appeals for
      the Second Circuit vacated the judgment in the case because it determined,
      based
      on information brought to the attention of the Court by the plaintiffs, that
      there was no jurisdiction over two of the plaintiffs in the case.  The
      case was then remanded to the District Court for additional findings as to
      the
      jurisdiction over the remaining plaintiff and as to the possible third party
      beneficiary status of that plaintiff with respect to contracts entered into
      by
      the other plaintiffs.




Consistent
      with the determination of the Court of Appeals, the District Court dismissed
      Catskill Development and Mohawk Management from the case. Following the
      dismissal, the Trustees of the Litigation Trust filed a new complaint on behalf
      of the beneficiaries of the Trust against Harrah’s Operating Company, the
      successor in interest to Park Place Entertainment, Inc. with respect to the
      claims of Catskill Development and Mohawk Management.  The state
      citizenship of the Trustees of the Trust, which had received the claims of
      the
      two non-diverse parties by assignment, entitled them to claim jurisdiction
      in
      the federal court. The parties to the case had previously agreed that all
      parties to the newly filed case would be subject to the decisions made in the
      original case.  This allowed the Judge to consolidate the two cases,
      re-enter its original decision granting summary judgment and dismiss the
      consolidated case. This effectively restored the case to the status it had
      been
      at the time the appeal was filed, with all parties and all claims represented
      and all of the decisions made in the case applicable to all the
      parties.




On
      November 20, 2006, the District Court issued a decision on the third party
      beneficiary issue presented by the 2nd Circuit's remand.  As a
      consequence of the consolidation process, the issue of third party beneficiary
      status becomes less important to a proper resolution of the
      appeal.  However, as requested by the 2nd Circuit, the District Court
      addressed the question of whether Monticello Raceway Development, the one
      plaintiff whose claim to federal diversity jurisdiction in the original case
      had
      not been in question, would be a third party beneficiary of any of the contracts
      entered into by the other plaintiffs.  The plaintiffs argued that all
      of the contracts were clearly interdependent as part of an overall structure
      designed to accomplish the development and operation of the casino and that,
      in
      particular, the Land Purchase Agreement contained an express obligation to
      support the approval process for the other contracts.  However, the
      Court found that the references made in the Land Purchase Agreement and other
      documents to the development agreement between Monticello Raceway Development
      and the Tribal Gaming Authority were too vague to form the basis for a third
      party beneficiary claim, particularly in light of express language in the
      development agreement that she believed indicated that it was intended to stand
      on its own. Accordingly, the District Court determined that there were no third
      party beneficiary rights under the development agreement.




Following
      the issuance of this decision and order, the plaintiffs have filed a new appeal
      to the 2nd Circuit.  Since the restoration of the claims of the two
      non-diverse plaintiffs to the case has resulted in all of the issues remaining
      the same as on the previous appeal, it was anticipated by the parties that
      the
      2nd Circuit would be able to review the original briefs in the case as they
      were
      originally filed, and that the only additional briefing that will be necessary
      would be supplemental briefs to deal with cases and other developments that
      have
      arisen since those briefs were issued.  The ultimate decision on this
      question rests with the Court, however. There is also no assurance that the
      original panel that was assigned to the appeal last year will be assigned
      again.  Whether or not a new panel is assigned, it is likely that
      additional oral arguments will be heard.







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On
      June
      1, 2004, we filed a Voluntary Discontinuance and Tolling Agreement with respect
      to the President RC Case.  Since there are many issues of fact and law
      in the PPE Case which relate to matters that are also at issue in the second
      lawsuit, we believe that, as long as the right to recommence the suit without
      regard to the statute of limitations was preserved, the discontinuance of this
      suit was appropriate in order to avoid the cost of maintaining two separate
      lawsuits.





On
      January 24, 2007, the Litigation Trust assumed responsibility for the Judgment
      Enforcement Case pursuant to an agreement (the “Joint Alliance Agreement”) with
      the original litigants in the Tribal Court litigation against PPE and Clive
      Cummis. That lawsuit pursued claims on behalf of enrolled members of the St.
      Regis Mohawk Tribe that are similar to the claims that the Litigation Trust
      is
      pursuing on behalf of its beneficiaries.  The lawsuit resulted in a
      $1.787 billion judgment against PPE, which was rendered in the St. Regis Mohawk
      Tribal Court (the “Tribal Court”) on March 20, 2001. An enforcement action by
      the plaintiffs to enforce that judgment in a federal district court was
      subsequently dismissed, without prejudice.  At the time of the
      enforcement action, the validity of the Tribal Court was in question and the
      matter was the subject of other judicial and administrative
      proceedings.





As
      a
      result of the common interests of the Litigation Trust’s beneficiaries and the
      class of enrolled tribal members, the parties to the Joint Alliance Agreement
      agreed to work together to merge their respective interests and share in any
      recoveries of their respective claims.  The Joint Alliance Agreement
      provided that the claims were to be assigned in exchange for a certificate
      evidencing the ownership by the Tribal members of 21,912,869 Units in the
      Litigation Trust (representing a 50% beneficial interest in the Litigation
      Trust). The Trustees of the Litigation Trust then obtained the consent of the
      holders of more than 66 2/3% of the units of the Litigation Trust to an
      amendment of the Declaration of Trust to implement the Joint Alliance Agreement,
      including an increase in the authorized number of units to 43,825,738. In
      accordance with its terms, this amendment (“Amendment No. 2”) became effective
      upon satisfaction of the condition that the claims of the Tribal members were
      duly and properly assigned to the Litigation Trust in accordance with the Joint
      Alliance Agreement. On June 21, 2007, pursuant to the Joint Alliance Agreement,
      the trustees of the Catskill Litigation Trust, in exchange for the delivery
      of
      21,912,869 newly issued units of the Litigation Trust, received an assignment
      of
      certain claims of members of the St. Regis Mohawk Tribe against Park Place
      Entertainment and Clive Cummis. The assignment was previously approved by the
      St
      Regis Mohawk Tribal Court.





As
      a
      result of the assignment to consummate the Joint Alliance Agreement, an
      aggregate of 43,825,738 units of the Litigation Trust are issued and
      outstanding. In addition, in connection with Amendment No. 2, Mr. Dennis Vacco
      agreed to serve as a Litigation Trustee of the Litigation Trust and Mr. Paul
      A.
      deBary, who had previously served as a Litigation Trustee, agreed to serve
      as
      Litigation Trustee Advisor References to the “Litigation Trustees” herein refer
      to Messrs. Bernstein and deBary prior to June 21, 2007 and to Messrs. Bernstein
      and Vacco thereafter.





On
      June 22, 2007, Dennis Vacco and Joseph Bernstein, acting in their capacities
      as
      Litigation Trustees of the Litigation Trust, filed an enforcement action (the
      “Judgment Enforcement Case”) in the United States District Court for the
      Northern District of New York. The enforcement action was filed against Harrah’s
      Operating Company, Inc. (a wholly owned subsidiary of Harrah’s Entertainment,
      Inc. (HET)), as successor to Park Place Entertainment, Inc., and Clive Cummis
      to
      enforce an order of final judgment issued by the St. Regis Mohawk Court on
      March
      20, 2001. The order of default judgment ordered the defendants to pay $1.782
      billion of actual damages and $5 million of punitive damages On July 12, 2007,
      pursuant to a duly noticed motion, the St. Regis Mohawk Tribal Court issued
      an
      order that clarified that, under Tribal law, the annual rate of nine percent
      provided for in sections 5003 and 5004 of the New York Civil Practice Law and
      Rules, will apply for the purpose of calculating interest on any unsatisfied
      amount of the order of final judgment issued by the Tribal Court.  No
      portion of the judgment has currently been satisfied and there is no assurance
      that the Litigation Trust will receive any net proceeds as a result of the
      enforcement of the judgment. A previous suit to enforce the default
      judgment





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was
      dismissed, without prejudice to the recommencement of the suit, after the Judge
      had not heard further from the parties concerning efforts to settle the case.
      Harrah’s Entertainment, Inc., the parent of Harrah’s operating company, has
      indicated in its public filings that it believed that the case had been settled
      and intends to vigorously defend any attempt to enforce the judgment. The PPE
      Case, the President RC Case and the Judgment Enforcement Case are herein
      collectively referred to as the “Litigations”.  On August 13, 2007,
      the defendants in the Judgment Enforcement Case filed a motion to dismiss the
      action on the grounds that the case had been previously settled and that the
      Trustees were not proper parties to the case because the assignment of the
      judgment to the Trustees violates New York law.  The Trustees have
      opposed the motion to dismiss on the grounds that there was no settlement of
      the
      claims brought in the action and that New York law does not apply to the
      assignment, and would not be violated by the assignment even if it did.As of November 19,
      2007, the motion to dismiss was still pending decision by the District
      Court.





As
      a
      result of the acquisition of the claims of the class action Plaintiffs in the
      Judgment Enforcement Case, the enrolled members of the St. Regis Mohawk Tribe,
      as beneficial owners of the new units issued in conjunction with the transfer,
      will be entitled to share in any future recovery or settlement in all litigation
      currently being prosecuted by the Litigation Trust.  Similarly, the
      existing unitholders will be entitled to share in any future recovery or
      settlement relating to the new claims that the Litigation Trust
      acquired.





Our
      purposes are the prosecution of our litigation claims through the recovery
      of
      any settlement or final judgments and the distribution of the net amount of
      any
      such recoveries to our beneficiaries.  The administration of our
      Litigation Trust will involve the authentication and payment of fees and
      expenses for legal and related services in connection with our litigation
      claims, reporting and regulatory compliance and the maintenance of litigation,
      financial and unit-holder records.  Administrative expenses, exclusive of
      imputed interest and legal fees, are currently estimated to be approximately
      $300,000 per year, comprised of the fees and expenses of the litigation and
      administrative trustees and advisors, auditors and accountants and other support
      services.  Legal fees and other expenses involved in pursuing our
      litigation claims are impossible to predict with any degree of accuracy. 
No assurance can be given that the amounts available to us for the payment
      of
      such expenses under our line of credit will be sufficient to carry our
      litigation claims through to a successful conclusion or that alternative funds
      will be available for such purpose.




The
      Litigation Trust is not engaged in settlement negotiations with respect to
      any
      of the claims at this time.  The defendants have raised numerous
      defenses to the various claims in the litigations and have pursued them
      vigorously resulting in dismissals or judgments in their favor.  The
      ability of the Litigation Trust to prevail in the various litigations will
      depend on a number of factors, including the ability to obtain reversals in
      the
      appellate courts and to pursue the litigations successfully in the trial courts
      notwithstanding potential defenses to the claims and the St. Regis Mohawk Tribal
      Court judgment, including the alleged invalidity of the Tribal
      Court.





Our
      unit-holders will only be entitled to the net proceeds from any settlement
      or
      award, if any, of our litigation claims after the payment of our expenses,
      the
      fees of our litigation trustees, any amounts outstanding under our line of
      credit and $7,500,000 to Empire Resorts for reimbursement of prior expenses
      incurred in connection with our litigation claims.




Under
      our
      agreement with counsel arguing the appeal, a portion of the fees related to
      arguing the appeal will be contingent on the resulting decision. However, these
      contingent fees do not relate to the additional matters relating to jurisdiction
      that arose subsequent to the initial briefing of the case. As a result, we
      currently expect significant additional expenses related to the appeal. We
      do
      not expect additional expenses related to a trial in the PPE Case (which is
      itself dependent on the outcome of the appeal) until at least the second quarter
      of 2008.





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RESULTS
        OF OPERATIONS




The
      expenditures for legal fees in the first nine months of 2007, as compared with
      the comparable period for 2006, reflect the considerably increased level of
      activity necessary to make submissions of briefs to the Court of Appeals for
      the
      Second Circuit as well as to consummate the Joint Alliance Agreement and
      commence the prosecution of the Judgment Enforcement Case. Administrative
      expenses, excluding legal fees, also increased in the first nine months of
      2007,
      as compared with the first nine months of 2006, due principally to expenses
      associated with the implementation of the Joint Alliance Agreement, including
      printing and mailing fees associated with notifying unitholders in connection
      with Amendment No. 2 to the Declaration of Trust. Imputed interest expense
      has
      increased significantly due to the additional withdrawals on the line of credit.
      In addition, our net loss has increased significantly due to the amortization
      of
      the default judgment assigned to the Litigation Trust as an intangible
      asset.





For
      the
      three months ended September 30, 2007, we reported a net loss of $734,103. 
Included in net loss are legal fees of $235,799, administrative expenses of
      $92,459, amortization expense of$365,215and imputed interest of $43,058, offset by dividend income of
      $2,428. For the three months ended September 30, 2006, we reported a net loss
      of
      $136,202.  Included in these net losses are legal fees of $71,413,
      administrative expenses of $40,815 and imputed interest of $24,716, offset
      by
      dividend income of $742.





For
      the
      nine months ended September 30, 2007, we reported a net loss of
      $1,588,301.  Included in this net loss are legal fees of $876,525,
      administrative expenses of $206,708, amortization expense of$401,736and imputed interest
      of $109,614, offset by dividend income of $6,282. For the nine months ended
      September 30, 2006, we reported a net loss of $400,970.  Included in
      these net losses are legal fees of $206,181, administrative expenses of $128,989
      and imputed interest of $67,063, offset by dividend income of
      $1,263.




LIQUIDITY
      AND CAPITAL RESOURCES




Empire
      Resorts has provided us with an irrevocable line of credit of up to $2,500,000
      to provide funds to pay any and all of our expenses permitted under the
      Declaration of Trust. Although no interest is payable on amounts advanced under
      our line of credit, the Litigation Trust imputes interest on the borrowings
      at
      Empire Resorts borrowing rate (8% per annum at September 30,
      2007).  Amounts outstanding under our line of credit are to be repaid
      by us from proceeds received from any settlement or award in connection with
      our
      litigation claims after payment of the amount necessary to provide for future
      anticipated expenses and to pay our Litigation Trustees the fees for their
      services as set forth in the Declaration of Trust.  Repayments of
      amounts outstanding under our line of credit may be made as a whole or in part
      from time to time at any time without notice. No repayments have been made
      to
      date. We may re-borrow any amounts repaid.  Our line of credit will
      remain in full force and effect until our termination. As of September 30,
      2007,
      all $2,500,000 had been drawn down and was outstanding under this line of
      credit.




Empire
      Resorts is a holding company, owning all the capital stock or membership
      interests of certain other entities.  Empire Resorts is therefore
      dependent on these other entities to pay dividends or make distributions in
      order to generate internal cash flow and to satisfy its obligations, including
      its obligations under our line of credit.  There can be no assurance,
      however, that these other entities will generate enough revenue to pay cash
      dividends or make cash distributions.  In addition, these entities may
      enter into contracts that limit or prohibit their ability to pay dividends
      or
      make distributions.




Empire
      Resorts had no operating revenue during the fiscal year ended December 31,
      2003
      and operating revenue of $45.0 million, $86.8 million and $98.1 million for
      the
      fiscal years ended December 31, 2004, 2005 and 2006 and sustained net losses
      of
      approximately $6.5 million, $12.7 million, $18.5 million and $7.1 million,
      respectively, during such periods.  Although Empire Resorts
      significantly increased its level of operations during 2005
      and
      2006, it has yet to demonstrate that such operations can be profitable.
      Therefore, there can be no assurance that Empire Resorts will have the ability
      to meet any future obligations that may arise under our line of
      credit.







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On
      June
      21, 2007, the Litigation Trust entered into separate agreements with two of
      its
      unitholders, Robert Berman and Ralph Bernstein, each of which provides for
      advances of up to $125,000 upon written demand of the Litigation
      Trust.  Repayment of such advances is to be made solely from amounts
      available in the Recovery Fund held by the Administrative Trustee under the
      Declaration of Trust. The full amount available under these agreements was
      drawn
      down on November 13, 2007.  There can be no assurance that additional
      lines of credit or other funding agreements will be available in the event
      required by the Litigation Trust to meet its expenses.




CRITICAL
      ACCOUNTING ESTIMATES




The
      Trustees use estimates and assumptions in preparing our financial statements
      in
      preparing our financial statements in accordance with generally accepted
      accounting principles (United States). These estimates and assumptions affect
      the reported amounts of assets and liabilities and reported revenues and
      expenses. The fair value of our cash and equivalents approximates their carrying
      value.




OFF
      BALANCE SHEET ARRANGEMENTS




As
      of
      November 19, 2007, the Litigation Trust does not have any off balance sheet
      arrangements.




**ITEM3.  CONTROLS
      AND PROCEDURES**




(a)  The
      Litigation Trust carried out an evaluation, under the supervision and with
      the
      participation of the Litigation Trust’s management, including Joseph E.
      Bernstein (acting Chief Executive Officer) and Paul deBary (acting Chief
      Financial Officer), the Litigation Trust’s Litigation Trustees, of the
      effectiveness of the design and operation of the Litigation Trust’s “disclosure
      controls and procedures”, as such term is defined in Exchange Act Rule 15d-15e,
      as of the end of the period covered by this report.  Based upon that
      evaluation, Messrs. Bernstein and Paul deBary have concluded that the Litigation
      Trust’s disclosure controls and procedures were effective as of the end of the
      periods covered by this report to provide reasonable assurance that information
      required to be disclosed by the Litigation Trust in reports that it files or
      submits under the Exchange Act is recorded, processed, summarized and reported
      within the time periods specified in SEC rules and forms.




(b)  There
      have been no significant changes in the Litigation Trust’s internal controls or
      in other factors that could significantly affect the Litigation Trust’s internal
      controls subsequent to the date the Litigation Trust carried out this
      evaluation, including any corrective actions with regard to significant
      deficiencies and material weaknesses.




A
      control
      system, no matter how well conceived and operated, can provide only reasonable,
      not absolute assurance that the objectives of the control system are
      met.  Because of the inherent limitations in all control systems, no
      internal controls can provide absolute assurance that all control issues and
      instances of fraud, if any, within a company have been detected.







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PART  I
        I - OTHER INFORMATION
  **Item
        1.**  **LegalProceedings**


We
      are a
      statutory trust created under Delaware law. Our formation was a condition to
      the
      consolidation of Empire Resorts with MRMI, MCM, MRDC, and
      Mohawk.  Also, as a condition to that consolidation, each of Catskill,
      MRDC and Mohawk, agreed to assign to us all of their claims under or related
      to
      the alienation and frustration of their agreements and business relations with
      the St. Regis Mohawk Tribe.  That assignment included rights to any
      proceeds from any settlement or award that may arise from any litigation
      relating to that claim.  Our litigation claims arise from the efforts
      of each of Catskill, MRDC, and Mohawk to develop with the St. Regis Mohawk
      Tribe
      a gaming casino in Monticello, New York. These entities spent several years
      and
      substantial funds to develop and obtain required approvals for the casino.
      Subsequently, Park Place Entertainment Corporation, the world’s largest gaming
      corporation and Atlantic City’s largest casino operator, entered into an
      agreement providing for the St. Regis Mohawk Tribe to commit its future casino
      development efforts exclusively to Park Place Entertainment
      Corporation.  That agreement conflicted with the Mohawk Tribe’s
      agreements with Catskill, MRDC and Mohawk.




Several
      lawsuits were commenced as a result of these circumstances.  The first
      was commenced against PPE and Clive Cummis, its General Counsel, by certain
      members of the St. Regis Mohawk Tribe in the St. Regis Mohawk Tribal Court.
      The
      defendants refused to recognize the validity of the court and a default judgment
      was entered. In the Judgment Enforcement Case, the Litigation Trustees are
      now
      seeking to enforce this judgment of the Tribal Court in the United States
      District Court for the Northern District of New York, as more fully described
      below.  Two other lawsuits were commenced on behalf of the original
      business entities who were working to develop the casino. The first was the
      PPE
      Case, which was brought against PPE in the United States District Court for
      the
      Southern District of New York in 2001. The Presidents RC Case was brought in
      the
      Sullivan County Supreme Court of the State of New York Court against Presidents,
      RC, Inc. and certain of its principals and other alleged partners of PPE and
      has
      been discontinued, under an agreement that permits it to be re-filed at a future
      date without being barred by the statute of limitations, pending resolution
      of
      the issues in the PPE Case.




The
      PPE
      Case was initially dismissed on a motion for summary judgment.  However,
      the trial court subsequently vacated the earlier decision granting summary
      judgment to Park Place Entertainment, in order to consider new evidence and
      allow additional discovery proceedings. After these proceedings were
      completed, the dismissal was reinstated. An appeal was taken in the PPE Case
      in
      late 2004.  In January of 2005, the Litigation Trust was created to
      pursue claims in the PPE Case and subsequently filed briefs on the
      appeal.   Oral arguments on this appeal were initially heard on
      October 17, 2005.  On March 8, 2006, however, the Court of Appeals for
      the Second Circuit vacated the judgment in the case because it determined,
      based
      on information brought to the attention of the Court by the plaintiffs, that
      there was no jurisdiction over two of the plaintiffs in the case.  The
      case was then remanded it to the District Court for additional findings as
      to
      the jurisdiction over the remaining plaintiff and as to the possible third
      party
      beneficiary status of that plaintiff with respect to contracts entered into
      by
      the other plaintiffs.




Consistent
      with the determination of the Court of Appeals, the District Court dismissed
      Catskill Development and Mohawk Management from the case. Following the
      dismissal, the Trustees of the Litigation Trust filed a new complaint on behalf
      of the beneficiaries of the Trust against Harrah’s Operating Company, the
      successor in interest to Park Place Entertainment, Inc. with respect to the
      claims of Catskill Development and Mohawk Management.  The state
      citizenship of the Trustees of the Trust, which had received the claims of
      the
      two non-diverse parties by assignment, entitled them to claim jurisdiction
      in
      the federal court. The parties to the case had previously agreed that all
      parties to the newly filed case would be subject to the decisions made in the
      original case.  This allowed the Judge to consolidate the two cases,
      re-enter its original decision granting summary judgment and dismiss the
      consolidated case. This effectively restored the case to the status it had
      been
      at the time the appeal was filed, with all parties and all claims represented
      and all of the decisions made in the case applicable to all the
      parties.







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Following
      the issuance of this decision and order, the plaintiffs have filed a new appeal
      to the 2nd Circuit.  Since the restoration of the claims of the two
      non-diverse plaintiffs to the case has resulted in all of the issues remaining
      the same as on the previous appeal, it was anticipated by the parties that
      the
      2nd Circuit would be able to review the original briefs in the case as they
      were
      originally filed, and that the only additional briefing that will be necessary
      would be supplemental briefs to deal with cases and other developments that
      have
      arisen since those briefs were issued.  The ultimate decision on this
      question rests with the Court, however.  There is also no assurance
      that the original panel that was assigned to the appeal last year will be
      assigned again.  Whether or not a new panel is assigned, it is likely
      that additional oral arguments will be heard.




On
      June
      1, 2004, we filed a Voluntary Discontinuance and Tolling Agreement with respect
      to the President RC Case.  Since there are many issues of fact and law
      in the PPE Case which relate to matters that are also at issue in the second
      lawsuit, we believe that, as long as the right to recommence the suit without
      regard to the statute of limitations was preserved, the discontinuance of this
      suit was appropriate in order to avoid the cost of maintaining two separate
      lawsuits.





The
      Litigation Trust assumed responsibility for the Judgment Enforcement Case
      pursuant to an agreement (the “Joint Alliance Agreement”) with the original
      litigants in the Tribal Court litigation against PPE and Clive Cummis. That
      lawsuit pursued claims on behalf of enrolled members of the St. Regis Mohawk
      Tribe that are similar to the claims that the Litigation Trust is pursuing
      on
      behalf of its beneficiaries.  The lawsuit resulted in a $1.787 billion
      judgment against PPE, which was rendered in the St. Regis Mohawk Tribal Court
      (the “Tribal Court”) on March 20, 2001. An enforcement action by the plaintiffs
      to enforce that judgment in a federal district court was subsequently dismissed,
      without prejudice.  At the time of the enforcement action, the
      validity of the Tribal Court was in question and the matter was the subject
      of
      other judicial and administrative proceedings.





As
      a
      result of the common interests of the Litigation Trust’s beneficiaries and the
      class of enrolled tribal members, the parties to the Joint Alliance Agreement
      agreed to work together to merge their respective interests and share in any
      recoveries of their respective claims.  The Joint Alliance Agreement
      provided that the claims were to be assigned in exchange for a certificate
      evidencing the ownership by the Tribal members of 21,912,869 Units in the
      Litigation Trust (representing a 50% beneficial interest in the Litigation
      Trust). The Trustees of the Litigation Trust then obtained the consent of the
      holders of more than 66 2/3% of the units of the Litigation Trust to an
      amendment of the Declaration of Trust to implement the Joint Alliance Agreement.
      In accordance with its terms, this amendment (“Amendment No. 2”) became
      effective upon satisfaction of the condition that the claims of the Tribal
      members were duly and properly assigned to the Litigation Trust in accordance
      with the Joint Alliance Agreement. On June 21, 2007, pursuant to the Joint
      Alliance Agreement, the trustees of the Catskill Litigation Trust received
      an
      assignment of certain claims of members of the St. Regis Mohawk Tribe against
      Park Place Entertainment and Clive Cummis. The assignment was previously
      approved by the St Regis Mohawk Tribal Court.





On
      June 22, 2007, Dennis Vacco and Joseph Bernstein, acting in their capacities
      as
      Litigation Trustees of the Litigation Trust, filed a new complaint in the
      Judgment Enforcement Case in the United States District Court for the Northern
      District of New York. The enforcement action was filed against Harrah’s
      Operating Company, Inc. (a wholly owned subsidiary of Harrah’s Entertainment,
      Inc. (HET)), as successor to Park Place Entertainment, Inc., and Clive Cummis
      to
      enforce an order of default judgment issued by the St. Regis Mohawk Court on
      March 20, 2001. The order of default judgment ordered the defendants to pay
      $1.782 billion of actual damages and $5 million of punitive damages On July
      12,
      2007, pursuant to a duly noticed motion, the St. Regis Mohawk Tribal Court
      issued an order that clarified that under Tribal law sections 5003 and 5004
      of
      the New York Civil Practice Law and Rules apply an annual rate of nine percent
      for the purpose of calculating interest on any unsatisfied amount of the Tribal
      Court judgment that the Trust is seeking to enforce in the Judgment Enforcement
      Case. No portion
      of the judgment has currently been satisfied. A previous suit to enforce the
      default judgment was dismissed, without prejudice to the recommencement of
      the
      suit, after the Judge had not heard further from the parties concerning efforts
      to settle the case. Harrah’s Entertainment, Inc., the parent of Harrah’s
      operating company, has indicated in its public filings that it believed that
      the
      case had been settled and intends to vigorously defend any attempt to enforce
      the judgment.





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On
      August
      13, 2007, Harrah’s filed a motion to dismiss the Judgment Enforcement Case on
      the grounds that the Litigation Trustees were not proper parties to maintain
      the
      suit because the assignment of the judgment to the Litigation Trust violated
      New
      York law and that the case had been previously settled.  The Trustees
      have opposed the motion to dismiss on the grounds that there was no settlement
      of the claims brought in the action and that New York law does not apply to
      the
      assignment, and would not be violated by the assignment even if it did.A hearing on the motion
      to
      dismiss the Judgment Enforcement Case was scheduled for September 28, 2007,
      but
      was deemed unnecessary by the Court.  As of November 19, 2007, the
      motion to dismiss was still pending decision by the District Court.







**Item
      6.  Exhibits**




a:  Exhibits




*31.1
            Certification
                of Acting Chief Executive Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002.




*31.2
            Certification
                of Acting Chief Financial Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002.




*32.1
            Certification
                of the Acting Chief Executive Officer pursuant to 18 U.S.C. Section
                1350
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.




*32.2
            Certification
                of the Acting Chief Financial Officer pursuant to 18 U.S.C. Section
                1350
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.




*Filed
                herewith









SIGNATURES





In
      accordance with the requirements of the Exchange Act,
      Catskill  Litigation Trust caused this report to be signed on its
      behalf by the undersigned, thereunto duly authorized.




CATSKILL
                LITIGATION TRUST(Registrant)DATE:  November
                19, 2007
            By:
            /s/
              Joseph
              E. BernsteinJoseph
                E. BernsteinLitigation
                Trustee






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