`================================================================================
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 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 March 31, 2006

     /_/  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 Declaration of Trust)

            DELAWARE                                     16-6547621
----------------------------------       ---------------------------------------
(State or Other Jurisdiction of             (I.R.S. Employer Identification No.)
 Incorporation or Organization)


                       C/O CHRISTIANA BANK & TRUST COMPANY
                                1314 King Street
                           Wilmington, Delaware 19801
--------------------------------------------------------------------------------
                    (Address of Principal Executive Offices)


                                 (302) 888-7400
--------------------------------------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)


--------------------------------------------------------------------------------
              (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 Catskill  Litigation  Trust 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 May 11, 2006, 22,702,896 Units of beneficial interest were outstanding.

        Transitional Small Business Disclosure Format (check one): Yes No

================================================================================







                            CATSKILL LITIGATION TRUST


                                   FORM 10-QSB


                                      INDEX

PART I - FINANCIAL INFORMATION                                             Page

         ITEM 1. CONDENSED FINANCIAL STATEMENTS (unaudited)

         Condensed Balance Sheet as of March 31, 2006                      3

         Condensed Statements of Operations for the Three Months
         ended March 31, 2006 and March 31, 2005                           4

         Condensed Statements of Cash Flows for the Three Months
         ended March 31, 2006 and March 31, 2005                           5

         Notes to Condensed Financial Statements                           6-9

         ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS
         OR PLAN OF OPERATION                                              10-12

         ITEM 3.  CONTROLS AND PROCEDURES                                  12-13

PART II - OTHER INFORMATION

         ITEM 1.  LEGAL PROCEEDINGS                                        14

         ITEM 6.  EXHIBITS                                                 15

SIGNATURES                                                                 15






                                       2





                              FINANCIAL INFORMATION



ITEM 1. FINANCIAL STATEMENTS



                            CATSKILL LITIGATION TRUST
                             CONDENSED BALANCE SHEET
                                 March 31, 2006
                                   (Unaudited)

ASSETS
   Current Assets
         Cash and Cash Equivalents                                  $   17,295
                                                                    ----------
   Total Current Assets                                                 17,295
                                                                    ----------
TOTAL ASSETS                                                        $  17,295
                                                                    ==========


LIABILITIES AND TRUST DEFICIENCY
      Current Liabilities
           Accrued expenses                                         $    7,500
           Accounts payable                                             53,697
           Line of credit-related party                              1,010,000
                                                                    ----------
      Total Current Liabilities                                      1,071,197
                                                                    ----------
      Trust Deficiency
           Units of Beneficial Interest: authorized 22,702,896;
           issued and outstanding 22,702,896; stated as                 79,900
      Accumulated deficit                                           (1,133,802)
                                                                    ----------
      Total Trust Deficiency                                        (1,053,902)
                                                                    ----------
TOTAL LIABILITIES AND TRUST DEFICIENCY                              $   17,295
                                                                    ==========





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



                                       3



                                CATSKILL LITIGATION TRUST
                            CONDENSED STATEMENTS OF OPERATIONS
                                       (Unaudited)


                                                    For the              For the
                                              Three Months Ended     Three Months Ended
                                                 March 31, 2006        March 31, 2005
                                              ------------------------------------------

General and Administrative Expenses:
Litigation Trustee Fees                       $         30,000       $         30,000
Administrative Trustee Fees                              1,500                  1,500
Consulting Fees                                          1,500                  1,500
Legal Fees                                              14,368                156,250
Accounting Fees                                         12,000                 10,000
Interest                                                22,911                  6,875
Other                                                    1,830                  2,187
                                              ------------------------------------------
Total General and Administrative Expenses               84,109                208,312
Other Income                                                61                    954
Net Loss                                      $        (84,048)      $       (207,358)
                                              ==========================================
Loss per unit outstanding                     $          (0.00)      $          (0.01)
                                              ==========================================
Units outstanding                                   22,702,896             22,702,896
                                              ==========================================




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



                                       4



                                 CATSKILL LITIGATION TRUST
                         CONDENSED STATEMENTS OF CASH FLOWS
                (Unaudited)


                                                                       For the               For the
                                                                 Three Months Ended     Three Months Ended
                                                                   March 31, 2006         March 31, 2005
                                                                 -----------------------------------------
Cash flows from operating activities
Net loss                                                         $         (84,048)     $        (207,358)
   Adjustments to reconcile net loss to net cash provided by (used in) operations:
      Imputed interest expense                                              22,911                  6,875
      Accounts payable                                                      53,697                (84,122)
      Accrued  expenses                                                      7,500                 68,329
                                                                 -----------------------------------------
Net cash provided by (used in) operating activities                             60               (216,276)

Decrease (increase) in Cash and Cash Equivalents                                60               (216,276)
                                                                 -----------------------------------------
Cash and Cash Equivalents - beginning of period                             17,235                222,493
                                                                 -----------------------------------------
Cash and Cash Equivalents - end of period                        $          17,295      $           6,217
                                                                 =========================================



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




                                       5



                            CATSKILL LITIGATION TRUST

       Notes to Condensed Financial Statements--March 31, 2006 (Unaudited)

NOTE 1 - THE TRUST

          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"),  MRDC, 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").
          Messrs.  Bernstein  and  deBary  are  hereinafter  referred  to as the
          "Litigation Trustees"

          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  (hereinafter  referred  to,
          collectively with the PPE case, as the  "Litigation").  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.

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.  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, 2005.

          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,
          2005.

          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.   Actual  results  could  differ  from  those
          estimates.

                                       6


          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.

NOTE 3 - LINE OF CREDIT-RELATED PARTY

          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 March 31, 2006,  $1,010,000  had been drawn  against the line of
          credit. On April 3, 2006, an additional  $80,000 was drawn against the
          line of credit.

          The  Litigation  Trust  imputed  interest on the  borrowings at Empire
          Resorts'  borrowing rate (8.00% per annum at March 31, 2006). Prior to
          July 1, 2005,  Empire  Resorts'  borrowing  rate was  5.50%.  Interest
          expense for the three  months  ended March 31, 2006 and March 31, 2005
          amounted to $22,911 and $6,875, respectively. Imputed interest expense
          is deemed contributed capital to the Litigation Trust.

NOTE 4 - 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  their  fees  arising  from
          litigation settlements or awards. (See Note 5.)

          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 5 - COMMITMENTS AND CONTINGENCIES

          COMPENSATION OF LITIGATION TRUSTEES

                                       7


          Each of the two Litigation Trustees 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 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 0.5%
          per  annum on the  first  $10,000,000  of fair  value  and 3.0% on the
          excess and reimbursement for certain fees and expenses.

          EXPENSES PAID PRIOR TO THE FORMATION OF THE LITIGATION TRUST

          As  discussed in Note 4, 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 4, the  expenses  of the  Litigation  Trust are
          expected to be paid from draws under the line of credit. Amounts drawn
          under the line of credit are to be repaid  from any  amounts  received
          from litigation settlements or awards.

          ADDITIONAL AMOUNTS PAYABLE TO APPEALS COUNSEL

          Under the terms of the  Litigation  Trust's  arrangement  with the law
          firm handling its appeal,  additional fees in an aggregate  amount not
          to exceed $100,000 may be payable to that firm.

          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.

NOTE 6 - CERTAIN RELATIONSHIPS

          The Litigation  Trustees are both currently members of Empire Resorts'
          Board of Directors.

NOTE 7 - RECENT ACCOUNTING PRONOUNCEMENTS

          In February 2006, the Financial  Accounting  Standards  Board ("FASB")
          issued Statement of Financial Accounting Standard 155 - Accounting for
          Certain  Hybrid  Financial   Instruments   ("SFAS  No.  155"),   which
          eliminates  the  exemption  from applying SFAS No. 133 to interests in
          securitized financial assets so that similar instruments are accounted
          for similarly regardless of the form of the instruments.  SFAS No. 155
          also allows the election of fair value measurement at acquisition,  at
          issuance,  or when a previously  recognized  financial  instrument  is
          subject to  re-measurement.  Adoption is effective  for all  financial
          instruments acquired or issued after the beginning of the first fiscal
          year  that  begins  after  September  15,  2006.   Early  adoption  is
          permitted.  The  adoption  of SFAS No. 155 is not  expected  to have a
          material effect on the Litigation Trust's financial position,  results
          of operations or cash flows.

          In March  2006,  the FASB issued  Statement  of  Financial  Accounting
          Standard 156 - Accounting for Servicing of Financial Assets ("SFAS No.
          156"), which requires all separately  recognized  servicing assets and
          servicing  liabilities be initially  measured at fair value.  SFAS No.
          156  permits,  but does not require,  the  subsequent  measurement  of
          servicing assets and servicing  liabilities at fair value. Adoption is
          required  as of the  beginning  of the first  fiscal  year that begins
          after September 15, 2006. Early adoption is permitted. The adoption of
          SFAS  No.  156 is  not  expected  to  have a  material  effect  on the
          Litigation Trust's financial  position,  results of operations or cash
          flows.

                                       8


NOTE   8- SUBSEQUENT EVENTS

          Following the decision of the Court of Appeals for the Second  Circuit
          determining that there was no jurisdiction  over two of the plaintiffs
          in the PPE  case and  remanding  the case 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,  the  District  Court held a hearing on April 30, 2006 and
          established a briefing schedule that calls for all briefs on the issue
          to be completed by the end of July, 2006. Assuming that the Court does
          not require  additional  briefs, a decision may be rendered in the 3rd
          or 4th quarter of 2006,  after which the Court of Appeals  will likely
          assign the PPE case to a new panel of judges. In addition to the costs
          and delays  associated  with the  proceedings  in the District  Court,
          additional  briefs and oral  arguments  may be  required in the Second
          Circuit.  It is  unlikely  that a  further  decision  by the  Court of
          Appeals will be issued prior to the first quarter of 2007.




                                       9




ITEM 2.  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  consolidation 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 consolidation,
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. The plaintiffs 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  their future  casino  development  efforts
exclusively to Park Place Entertainment  Corporation.  That agreement conflicted
with the Mohawk Tribe's agreements with Catskill, MRDC and Mohawk.

         There  is  one  lawsuit   pending   and  one  lawsuit   that  has  been
discontinued.  The  first  lawsuit  is  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.  (Civil Action
No. 00CIV8660 (CM) (GAY)) (United States District Court Southern District of New
York)  referred to herein as the "PPE case".  This  lawsuit had  initially  been
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  has  been  taken  and a brief  has  been  filed  by the
Litigation  Trust.  The  respondent's  brief  was  filed on June 9, 2005 and the
Litigation Trust's reply brief was filed on July 12, 2005. Oral arguments on the
appeal were heard on October 17,  2005.  On March 8, 2006,  the Court of Appeals
for the Second  Circuit  vacated the judgment in the case.  It  determined  that
there was no  jurisdiction  over two of the plaintiff's in the case and 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


                                       10


that plaintiff with respect to contracts  entered into by the other  plaintiffs.
The District  court held a hearing on April 30, 2006 and  established a briefing
schedule  that calls for all briefs on the issue to be  completed  by the end of
July. Assuming that the court does not require additional briefs, a decision may
be rendered in the 3rd or 4th quarter of 2006,  after which the Court of Appeals
will  assign  the case to a new  panel of  judges.  Additional  briefs  and oral
arguments may be required.  It is unlikely that a decision on the appeal will be
issued prior to the first quarter of 2007.

         The second lawsuit is Catskill Development,  L.L.C., Mohawk Management,
L.L.C., and Monticello Raceway Development Company,  L.L.C.,  Plaintiffs against
Gary Melius,  Ivan Kaufman,  Walter Horn,  President R.C. - St. Regis Management
Company,  et al,  Defendants.  (Index No. 891/03) (Supreme Court of the State of
New York  County of  Sullivan).  This  lawsuit  has been  discontinued  under an
agreement that permits it to be refiled at a future date without being barred by
the statute of  limitations.  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 are currently estimated to be approximately $200,000 per
year,  comprised  of the fees of the  litigation  and  administrative  trustees,
auditors  and  accountants  and other  support  services.  Legal  fees and other
expenses  involved in 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.

         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 the additional  expenses  related to a trial (which is
itself dependent on the outcome of the appeal) until at least the second quarter
of 2007.

         On June 1,  2004,  we  filed a  Voluntary  Discontinuance  and  Tolling
Agreement  with  respect to the second  lawsuit.  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.

RESULTS OF OPERATIONS

For the three months  ended March 31, 2006,  we reported a net loss of $ 84,048.
Included in these net losses are legal fees of $14,368,  administrative expenses
of $46,830 and imputed  interest of $22,911,  offset by dividend  income of $61,
but no proceeds from any litigation.  For the three months ended March 31, 2005,
we reported a net loss of $207,358.  Included in this net loss are legal fees of
$156,250,  administrative  expenses of $45,187  and imputed  interest of $6,875,
offset by dividend income of $954, but no proceeds from any litigation.

The  decrease in legal fees  reflects the reduced  activity  between the date of
oral arguments and decision of the Court of Appeals for the Second Circuit.  The
results for the first  quarter of 2005  reflect  the  increased  legal  expenses
relating  to the  preparation  of briefs for the appeal.  On March 8, 2006,  the
Court of Appeals for the Second  Circuit  vacated the  judgment in the case.  It
determined that there was no jurisdiction over two of the plaintiff's in the PPE
case and 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.  This will  increase  the expense  involved and result in
additional delay in prosecuting the Litigation Trust's claims.

                                       11


Administrative  expenses,  excluding legal fees, increased slightly in the first
quarter  of 2006 as  compared  with the first  quarter  of 2005 due to  expenses
associated  with  the  implementation  of a web  site  for  the  benefit  of our
unit-holders and an increase of $2,000 in accounting fees.

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 March 31, 2006).
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 an amount  necessary 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.  We may  reborrow  any  amounts
repaid.  Our line of credit  will  remain in full  force  and  effect  until our
termination.

         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 operating  revenue of  approximately  $9.7, $45 and
$86.8  million for the fiscal years ended  December 31, 2003,  2004 and 2005 and
sustained net operating losses of  approximately  $6.5, $12.7 and $18.5 million,
respectively,   during  such  periods.  Although  Empire  Resorts  significantly
increased its level of operations  during 2005, 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 its  obligations  under our line of
credit.

ITEM 3.  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 A. 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  deBary  have  concluded  that  the  Litigation  Trust's


                                       12


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.



                                       13


PART  II -  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         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.  We 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 their future  casino  development  efforts  exclusively  to Park
Place  Entertainment  Corporation.  That  agreement  conflicted  with the Mohawk
Tribe's agreements with Catskill MRDC and Mohawk.

         There  is one  lawsuit  now  pending  and one  lawsuit  that  has  been
discontinued.  The  first  lawsuit  is  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.  (Civil Action
No. 00CIV8660  (CM)(GAY)) (United States District Court Southern District of New
York).  This  lawsuit  had  initially  been  dismissed  on a motion for  summary
judgment. However, the trial court vacated the earlier decision granting summary
judgment to Park Place  Entertainment,  in order to allow  consideration  of new
evidence and  additional  discovery  proceedings.  Following  those  proceedings
judgment in favor of the defendant was reinstated.  An appeal has been taken and
briefs  have been  filed by the  Litigation  Trust.  In  preparing  the brief on
appeal,  our counsel became aware of a case that was decided  shortly before the
plaintiffs  brought  the  original  complaint.  The  effect of this case is that
jurisdiction may not be found to exist for two of the three plaintiff  entities.
We made the Court of Appeals aware of this circumstance. If the Court determines
that the federal courts lack  jurisdiction  over these  plaintiffs,  they may be
required to pursue their claims in the New York courts.  This could increase the
expense  involved,  and result in additional delay, in prosecuting their claims.
The  respondent's  brief was filed on June 9,  2005 and the  Litigation  Trust's
reply brief was filed on July 12, 2005.  Oral arguments on the appeal were heard
on October 17, 2005. At that time,  one member of the panel  questioned  whether
there were factual issues that needed to be determined before the jurisdictional
issues could be resolved.  On March 8, 2006,  the  Litigation  Trust  received a
Summary  Order from the United  States  Court of Appeals for the Second  Circuit
with  regard  to  the  Litigation   Trust's  appeal  in  the  case  of  Catskill
Development,   L.L.C.,   Mohawk  Management,   L.L.C.,  and  Monticello  Raceway
Development  Company,  L.L.C.,  Plaintiffs.  v.  Harrah's  Entertainment,  Inc.,
Defendant.

         The  unpublished  order  remands  the case to the  District  Court  for
additional  development  of the record.  In the  appeal,  the  Litigation  Trust
brought to the  attention  of the court a recent  decision  which  measured  the
diversity of a limited  liability  company  according to the  citizenship of its
individual  members,  rather  than the state of its  organization.  If this were
found to be a  precedent,  the  Litigation  Trust  conceded  that  diversity  of
citizenship sufficient to establish subject matter jurisdiction in the case with
respect to Catskill and Mohawk would not exist.  However,  the Litigation  Trust
argued that this procedure has been inconsistently  applied and therefore should
not be  followed.  The Court of Appeals  has  rejected  the  Litigation  Trust's
arguments in this respect.

         The Litigation Trust also requested the Court to preserve  jurisdiction
in the case by dismissing the  non-diverse  plaintiffs and proceeding to rule on
the  issues on appeal as they apply to the  remaining  plaintiff.  However,  the
Court found the record to be  insufficient to determine the ownership of MRDC on
the date of the  commencement  of the  action.  Moreover,  the  Court  felt that


                                       14


additional findings of fact were required for the court to determine whether the
dismissal of the non-diverse  plaintiffs would result in prejudice to any of the
parties.

         In  remanding  the case,  the Court of  Appeals  vacated  the  original
judgment,  directing  that if the  District  Court  determined  that  MRDC was a
diverse party whose jurisdiction should be preserved,  it could consider whether
to  reinstate  all or part of its  prior  judgment.  In  addition,  the Court of
Appeals indicated that the trial court should make a determination as to whether
the remaining plaintiff would be a third party beneficiary of the contracts made
with the non-diverse parties under New York law.

         The second lawsuit is Catskill Development,  L.L.C., Mohawk Management,
L.L.C., and Monticello Raceway Development Company, L.L.C., Plaintiffs.  against
Gary Melius,  Ivan Kaufman,  Walter Horn,  President R.C. - St. Regis Management
Company,  et al,  Defendants.  (Index No. 891/03) (Supreme Court of the State of
New York  County of  Sullivan).  This  lawsuit  has been  discontinued  under an
agreement that permits it to be refiled at a future date without being barred by
the statute of  limitations.  Our purposes are the prosecution of our claims now
through the recovery of any settlement or final  judgments and the  distribution
of the net amount of any such recoveries to our beneficiaries.

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:  May 11, 2006            By: /s/ Joseph E. Bernstein
                                  -----------------------------------
                                  Joseph E. Bernstein
                                  Litigation Trustee



DATE:  May 11, 2006           By: /s/ Paul A. deBary
                                  ------------------------------------
                                  Paul A. deBary
                                  Litigation Trustee`