SECURITIES AND EXCHANGE COMMISSION
                        WASHINGTON, D.C. 20549
                                             

                              FORM 10-K

                  FOR ANNUAL AND TRANSITION REPORTS
               PURSUANT TO SECTIONS 13 OR 15(D) OF THE
                   SECURITIES EXCHANGE ACT OF 1934


(Mark One)
 x  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the fiscal year ended JUNE 30, 1998 

          OR

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

For the transition period from              to              


                    Commission file number 0-9624
                INTERNATIONAL THOROUGHBRED BREEDERS, INC.
        (Exact name of registrant as specified in its charter)


               DELAWARE                 22-2332039        
          (State or other jurisdiction of           (I.R.S. Employer
            incorporation or organization)          Identification No.)
                    
           ROUTE 70 AND HADDONFIELD ROAD
           CHERRY HILL, NEW JERSEY                       08034   
         (Address of principal executive offices)       (Zip Code)


Registrant's telephone number, including area code:  (609) 488-3838

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act:  

   COMMON STOCK, $2.00 PAR VALUE                                      
  
   SERIES A CONVERTIBLE PREFERRED STOCK, $100 PAR VALUE                       
         

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

   Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.    [ ]

Based on the closing sale price on October 13, 1997 (the last day the
Registrant's stock was traded on the American Stock Exchange), the aggregate
market value of the voting stock held by nonaffiliates of the Registrant was
$29,660,365.

The number of shares outstanding of the Registrant's Common Stock was
13,978,104 at September 30, 1998.


                              PART I

Item 1 - Business

General

     International Thoroughbred Breeders, Inc. ("ITB"), a Delaware
corporation, is a holding company incorporated on October 31, 1980. 
Through its operating subsidiaries, ITB is primarily engaged in (i) the
ownership and operation of standardbred and thoroughbred racetracks in
New Jersey (the "Racetrack Operations") and (ii) the ownership of a non-
operating casino property in Las Vegas, Nevada (the "Casino Development
Operations").  ITB owns and operates Garden State Park in Cherry Hill,
New Jersey (through its wholly-owned subsidiary Garden State Race Track,
Inc.) and Freehold Raceway and certain nearby properties in Freehold,
New Jersey (through its wholly-owned subsidiaries Freehold Racing
Association, Atlantic City Harness, Inc. and Circa 1850, Inc.).  ITB
also owns the non-operating former El Rancho Hotel and Casino (the "El
Rancho Property") in Las Vegas, Nevada (through its wholly-owned
subsidiary Orion Casino Corporation).   As used in this Form 10-K, the
term "Company" includes ITB and its wholly-owned subsidiaries.

     In April 1998, the Company's Board of Directors (the "Board")
authorized the exploration of strategic opportunities for the Company,
including a possible merger or sale of all of the Company's assets and
prior to June 30, 1998, the Company decided to dispose of its
racetracks.  On July 2, 1998, the Company entered into an asset purchase
agreement for the sale of all of the real property and related assets at
Freehold Raceway and the lease of the real property and related assets
at Garden State Park to Greenwood New Jersey, Inc. ("Greenwood"), a
wholly-owned subsidiary of Greenwood Racing, Inc., which is the operator
of Philadelphia Park.  See "Racing Operations" below.  Accordingly,
operating results of the Company's racetrack subsidiaries have been
segregated and reported as discontinued operations in the accompanying
financial statements for the three years ended June 30, 1998, 1997 and
1996. In addition, the Company has determined to dispose of the El
Rancho Property as part of the Delaware Settlement described below and
is currently under an agreement of sale with an unrelated third party. 
There can be no assurance that either or both the sale/lease of the
racetracks and the sale of the El Rancho Property will be consummated or
as to the timing thereof.  See "Casino Development Operations" and
"Legal Proceedings-Delaware Settlement."  

     The Company's loss from continuing operations for the fiscal year
ended June 30, 1998 ("Fiscal 1998") was ($25,468,850) as compared to a
loss from continuing operations for the fiscal year ended June 30, 1997
("Fiscal 1997") of ($15,144,053), an increase in the loss of
$10,324,797.  This increase in the loss from continuing operations is
primarily the result of: (a) an increase in general and administrative
expenses of $6,073,388, principally attributable to (i) the accrual of
the estimated charge of $3,748,000 associated with the acquisition of
2,904,016 shares of the Company's Common Stock and the termination of
certain agreements upon the consummation of the Delaware Settlement, as
described below, and (ii) an increase in legal expenses of $2,400,000
primarily associated with various director and stockholder lawsuits; (b)
an increase in interest expenses of $5,517,093, principally due to
higher indebtedness levels and that a substantial amount of interest was
capitalized in 1997; (c) an increase in amortization of finance costs of
$1,910,674; and (d) the estimated impairment loss in connection with the
adjustment to fair market value of the El Rancho Property of $3,429,251. 
The increases were offset by: (i) the write-off in Fiscal 1997 of
$2,585,000 in non-refundable deposits associated with the termination of
an option to purchase a parcel of land adjoining the El Rancho Property;
(ii) the write-off of $2,543,968 in Fiscal 1997 associated with the
termination of the Starship Orion concept for the future development of
the El Rancho Property;  (iii) a decrease of $799,460 in El Rancho
Property carrying costs from $1,773,627 in Fiscal 1997 to $974,167 in
Fiscal 1998; and (iv) an increase in interest income of $677,181.  See
"Management's Discussion and Analysis of Financial Conditions and
Results of Operations."

     Income from discontinued operations was $7,207,633 for Fiscal 1998
as compared to income of $1,594,096 for Fiscal 1997, an increase of
$5,613,537.  During Fiscal 1998, revenue from racetrack operations
increased at Freehold Raceway and at Garden State Park for an aggregate
increase of $204,568 from the prior fiscal year.  Racetrack operating
expenses decreased by $5,488,444 during the same period, primarily as a
result of a decrease in wages, benefits and outside services at the
racetracks.  See "Management's Discussion and Analysis of Financial
Conditions and Results of Operations."  

     During Fiscal 1998, the Company incurred a net loss of
($18,261,217) as compared to a net loss of ($17,387,583) for Fiscal
1997.  The increase in net loss of $873,634 is the result of the
differences described above, as well as a decrease in a loss on early
extinguishment of debt recognized in Fiscal 1997 in the amount of
$3,837,625.  See "Management's Discussion and Analysis of Financial
Conditions and Results of Operations."

     As of October 1, 1998, ITB employed ten full-time corporate
executive, administrative and clerical personnel.  In addition, the
Company employed consultants primarily relating to its casino
development projects.

     In connection with Racetrack Operations, the Company directly
employs (i) at Garden State Park, approximately 345 persons during
thoroughbred racing meets and 265 persons during harness racing meets
and (ii) at Freehold Raceway, approximately 250 persons during harness
racing meets.  Such personnel include pari-mutuel machine tellers,
security personnel, admissions, cleaning, maintenance and parking
personnel, most of whom are presently represented by unions with which
the Company has existing contracts.  Non-union racing department
officials and starters are also employed during each meet.  In addition,
the Company employs approximately 100 additional full-time persons in
connection with Racetrack Operations, who provide information, media,
marketing, executive, administrative and clerical services and support
for the tracks.

     The Company has entered into a Stipulation and Agreement of
Compromise, Settlement and Release dated July 2, 1998 (the "Delaware
Stipulation") to settle certain pending lawsuits brought by certain
minority Board members and stockholders (the "Delaware Settlement"). 
See "Legal Proceedings."  As a result of the Delaware Settlement, this
Director Litigation (as defined herein) is at a standstill.  The
Delaware Settlement provides for, among other things, the dismissal of
such litigation with prejudice, the disposition of the El Rancho
Property, the repurchase of approximately 2.9 million shares of the
Company's Common Stock owned by NPD, Inc., a company owned by the
Company's Chairman and Chief Executive Officer, the retirement of an
additional approximately 2.1 million shares of the Company's Common
Stock owned by Las Vegas Entertainment Network, Inc. ("LVEN"), the
resignation of certain of the Company's Board members and the
termination of various agreements.  The terms of the Delaware Settlement
were approved by the Delaware Court of Chancery after notice to all
stockholders.  The Delaware Settlement is also subject to a number of
other conditions.  There can be no assurance that such conditions will
be satisfied and thus, that a final settlement will be achieved.

     In the Director Litigation, the plaintiffs, minority board members
and certain stockholders, have challenged the authorization and
enforceability of certain actions taken and agreements entered into by
the Company, including, among other things, the Company's $55 million
credit facility and related agreements.  In the event a final settlement
is not achieved and the plaintiffs prevail in such litigation, such
actions and agreements may be subject to modification, termination or
revision, the impact of which on the Company cannot be foreseen.  There
can be no assurance as to the outcome of the Director Litigation if the
Delaware Settlement is not consummated, or as to the impact the Director
Litigation itself or any resolution thereof may have on the Company's
operations, financial position, results of operations or cash flows. 
See "Legal Proceedings" and "Management's Discussion and Analysis of
Financial Conditions and Results of Operations."

     The Company is currently in default under certain non-financial
covenants of its $55 million credit facility.  There can be no assurance
that the lender will continue to forebear with respect to the exercise
of its rights under the credit facility, including its right to
accelerate the loan.  The Company has had discussions with such lender
regarding the grant of waivers of such defaults in connection with the
Delaware Settlement.  There can be no assurance that such waivers will
be granted.  See "Management's Discussion and Analysis of Financial
Conditions and Results of Operations" and "Developments During the Last
Fiscal Year."

     Effective August 7, 1998, the Company's Common Stock and its
Series A Convertible Preferred Stock ("Preferred Stock") were delisted
from trading on the American Stock Exchange ("AMEX") for the failure to
meet certain AMEX listing criteria.  Neither the Common Stock nor the
Preferred Stock has been traded on AMEX since October 13, 1997 when it
was suspended because the Company had not filed its Annual Report on
Form 10-K for Fiscal 1997 within the Securities and Exchange
Commission's ("SEC") prescribed time period.  Application is being made
to initiate quotation of the Common Stock and the Preferred Stock on the
OTC Bulletin Board.  In the interim, the stock is listed for quotation
on the NQB Pink Sheets.

Racetrack Operations

     The Company entered into an asset purchase agreement dated July 2,
1998 (the "Greenwood Agreement") with Greenwood for the sale of the real
property and related assets at Freehold Raceway and a lease of the real
property and related assets at Garden State Park (the "Greenwood
Transaction").  The Greenwood Agreement is subject to the satisfaction
of a number of conditions, including without limitation, approval of the
Company's stockholders, receipt by the Company of a fairness opinion
from an independent investment banker and receipt by Greenwood of
approval from applicable regulatory authorities.  The purchase price
under the Greenwood Transaction is $45 million, consisting of $33
million in cash and a seven-year non-contingent promissory note in the
amount of $12 million, with an additional $10 million in contingent
promissory notes becoming effective upon, among other things, New
Jersey's approval of off-track betting facilities or telephone account
pari-mutuel wagering on horse racing.  The purchase price would be
further increased if certain additional regulatory gaming changes are
approved in New Jersey in the future.  Greenwood Racing, Inc. will
guarantee the performance by Greenwood of all obligations under the
notes.

     If the Greenwood Transaction is not completed by December 31,
1998, either party has the right to terminate.  Subject to various
conditions, including Greenwood's right of first refusal, the Company's
Board has the right, at any time prior to closing, to accept a superior
proposal for the sale of Freehold Raceway and Garden State Park.  The
Board is continuing to consider all of the Company's strategic options
to maximize stockholder value.  The initial cash proceeds from the
Greenwood Transaction would be used to reduce the Company's outstanding
debt.  Upon the sale of Freehold Raceway and the lease or sale of Garden
State Park, the Company would withdraw from any gaming business
regulated by New Jersey.  There can be no assurance, however, that the
Greenwood Transaction will be consummated or as to the timing thereof.

Garden State Park

     Garden State Park is owned and operated by the Company's wholly-
owned subsidiary, Garden State Race Track, Inc. ("GSRT").  Garden State
Park is located on approximately 216 acres of land in Cherry Hill, New
Jersey.  Cherry Hill forms part of the Philadelphia metropolitan area
and is approximately eight miles from downtown Philadelphia.

     The Company purchased the site of Garden State Park on March 15,
1983 following a fire which destroyed the original racetrack facility. 
Following such purchase, the Company undertook an extensive
reconstruction of the racetrack facility, as well as the construction of
a separate pavilion (completed in 1986).  On April 1, 1985, Garden State
Park reopened for horse racing.  

     The reconstructed grandstand and clubhouse is an approximately
500,000 square foot, seven level, steel frame, glass enclosed, fully
heated and air-conditioned facility (the "Clubhouse") with an adjacent
multi-level glass covered thoroughbred paddock area. The Clubhouse can
accommodate up to 24,000 spectators, including seating for approximately
9,500 spectators, and contains three sit-down restaurants as well as 17
food concession stands.  The Company is not currently using a portion of
the Clubhouse due to a decrease in business levels at Garden State Park
over the last few years as a result of year-round simulcasting and less
live racing at Garden State Park.  The backstretch area includes 27
barns and stables capable of accommodating approximately 1,500 horses, a
harness paddock, a training track, dormitories, cafeteria and recreation
buildings for backstretch personnel, an administration building, and
other service buildings. Reconstruction also included restoration of the
main dirt and turf tracks, installation of lighting for nighttime
racing, paving of parking facilities to accommodate approximately 4,000
automobiles, landscaping, fencing and other amenities.  The
approximately 56,000 square foot, 1-1/2 story pavilion (the "Pavilion")
is used by the Company for closed circuit television events (racing as
well as other sporting and non-sporting events), wagering, concerts,
special events, concessions and other conveniences.  The Pavilion has
seating capacity for approximately 1,500 spectators.

     GSRT's operations are regulated by the New Jersey Racing
Commission (the "Racing Commission") and the New Jersey Casino Control
Commission (the "CCC").  See "Government Regulation."

Operations

     Racing Dates.  Garden State Park's racing dates consist
principally of night racing. For Fiscal 1998, Garden State Park
conducted (i) standardbred harness racing (the "Harness Meet") from
September 5, 1997 through December 12, 1997 for a total of 51 racing
dates and (ii) thoroughbred racing (the "Thoroughbred Meet") from
January 1, 1998 through May 23, 1998 for a total of 63 racing dates. 
For Fiscal 1997, the Company conducted the Harness Meet from September
6, 1996 through December 14, 1996 for a total of 55 racing dates and
conducted the Thoroughbred Meet from January 1, 1997 through May 23,
1997 for a total of 62 racing dates.

     Simulcasting.  Simulcasting is defined as the television
transmission of live horse racing from one racetrack (the "Sending
Track") to another (the "Receiving Track").  Typically, pari-mutuel
wagering is conducted at the Receiving Track with a percentage of the
Receiving Track's commission on the wagering being shared with the
Sending Track.  For New Jersey intra-state simulcasts, a portion of the
Receiving Track wagering must be used for purses at the Sending and
Receiving Tracks.  In such situations when Garden State Park is the
Sending Track, a portion of the Receiving Track wagering is required to
be used for purses at Garden State Park during the current live race
meeting.  In cases where Garden State Park is the Receiving Track, it is
required to remit a percentage of its pari-mutuel wagering to the
Sending Track and is required to pay a portion of the commission to
purses if live racing is being conducted, or at the next live race
meeting if live racing is not in progress at the time of simulcasting. 
Garden State Park conducts day and night year-around simulcasting.



     Attendance and Wagering.  The following table summarizes average
daily attendance and wagering at Garden State Park and races simulcast
to other racing facilities during the past three fiscal years:


                   Approximate                         
                    Commission                         
                    % of                               
                   Wagering*              DAILY AVERAGES           

THOROUGHBRED MEETS                   Fiscal Year Ended June 30,       
                                                       
                                      1998        1997       1996

Attendance                           2,994       2,929      2,891

Live Wagering            12.8%    $124,169    $154,407   $164,381

Simulcast Sending                                      
Signal:                                                

New Jersey Tracks         3.3%    $174,767    $201,584   $261,560
(Avg.)                                                 

Atlantic City             4.4%     $21,585     $24,272    $29,227
Casinos                                                

Out-of-State              1.5%    $695,454    $635,876   $840,328
Tracks                                                 
                                                       

Combined Wagering               $1,015,974  $1,016,139 $1,295,497

Number of Live RaceDays                 63          62         64
                                                       


                  Approximate Commission               
                   % of                                
                   Wagering*                           
                                         DAILY AVERAGES           
                                                       

HARNESS MEETS                        Fiscal Year Ended June 30,       
                                                       
                                      1998        1997       1996

Attendance                           1,959       2,206      2,434

Live Wagering           13.9%     $133,862    $154,242   $182,103

Simulcast Sending                                      
Signal:                                                

New Jersey Tracks        4.0%     $345,536    $342,124   $391,232
(Avg.)                                                 

Atlantic City            4.6%      $28,236     $25,609    $36,553
Casinos                                                

Out-of-State             1.5%   $1,094,223    $888,891   $929,190
Tracks                                                 
                                                       

Combined Wagering               $1,601,856  $1,410,867 $1,539,079

Number of Live RaceDays                 51          55         53
                                                       

 
*  Amounts equal the portion received by the track after payment of
purses to horsemen.

     The following table summarizes average wagering experienced by
Garden State Park in connection with receiving simulcasts during the
past three fiscal years:


      AVERAGE DAILY SIMULCAST WAGERING    (RECEIVING TRACK)

                                   FISCAL YEAR ENDED JUNE 30,          
         
                              1998                1997             1996   


From Tracks *:       # of              #of              #of 
                     days     ($)      days    ($)      days      ($)   
                         
New Jersey                                                  
Tracks:                                          

Atlantic City  (T)   33     32,072     36     42,065      52     45,916
                                                            
Freehold       (H)  196     19,638    208     23,027     201     27,225
                                                            
Meadowlands  (T,H)  220     49,882    232     56,762     234     71,182
                                                            
Monmouth       (T)   72     48,176    72      54,951      74     66,255
                                                            
Out-of-State (T,H)  364    258,460   364      244,099    360    244,024
Tracks                                           

                                                                       
TOTAL ANNUAL          $113,429,494       $112,281,224      $117,267,914
RECEIVING WAGERING                                          
                                                            


(T) = Thoroughbred, (H) = Harness  
* The commission percentage of wagering received by Garden State Park is
approximately 9.9% after the payment of purses  to horsemen.



     Other Operations.  In November 1983, Garden State Park and an
unaffiliated third party, the Servomation Corporation (now Service
America Corporation ("Service America")), entered into an agreement (the
"Service America Vendor Agreement") pursuant to which Service America
was granted a fifteen year exclusive right to operate all food and
retail services at the racetrack facility commencing with the 1985
opening of the racetrack.  Under the Service America Vendor Agreement,
Service America agreed to invest $7,000,000 in the concession facilities
at Garden State Park.  Service America depreciates such investment on a
straight line basis over the term of the Service America Vendor
Agreement. Upon termination of the Service America Vendor Agreement,
Garden State Park is obligated to pay Service America an amount equal to
the undepreciated balance, if any, and will acquire title to the
improvements.  As of September 1, 1998, the undepreciated balance was
approximately $788,800.  The Service America Vendor Agreement requires
that Service America pay a monthly concession fee to Garden State Park
based on a percentage of adjusted gross sales of beverages, food and
other items.  In addition, Service America is required to pay Garden
State Park a percentage of net profits, if any, with respect to the
operations of Garden State Park's Phoenix Restaurant.  Garden State Park
is responsible for any net operating losses of the Phoenix Restaurant. 
For the twelve months ended June 30, 1998, the Phoenix Restaurant
incurred an operating loss of $34,023.  Service America has obtained a
license to permit the sale of alcoholic beverages at the racetrack. 
Garden State Park has a right of first refusal (subject to regulatory
approval) to purchase the liquor license at the expiration or other
termination of the Service America Vendor Agreement.

     Prior to 1995, the annual New Jersey State Fair was held at Garden
State Park.  In 1995, the Company contracted with another fair operator
to hold a similar fair.  In 1996, the Company entered into an agreement
permitting the annual New Jersey State Fair (under new ownership) to be
held at Garden State Park (the "State Fair Agreement") during July
and/or August from 1996 until 1998.  The State Fair Agreement provides
that the Company will receive a fixed fee and a percentage of the
receipts from admissions, concessions, and other amenities received by
the operator of the State Fair.  The Company has the option, at its sole
discretion, to renew the agreement to conduct the state fair during the
calendar year 1999.  The New Jersey State Fair was held at Garden State
Park in August 1997 and 1998 for a period of eleven days each year. 

     On January 1, 1994, the Company granted a license (the "TTI
License") to Ten Tables, Inc. ("TTI") pursuant to which TTI has the
right to conduct a flea market on the Garden State Park property.  The
flea market is conducted on a section of property not normally used by
the Company for racing operations.  The TTI License is for an initial
term of five years, with an extension provision for an additional five
years.  The Company receives a fixed fee for each day the flea market is
conducted (approximately 80 days per year) plus parking revenue.  In
connection with the sale on October 20, 1997 of the 56 acre site where
the flea market had previously been held, the flea market has been
relocated to another site on the Garden State Park property.  See
"Developments During the Last Fiscal Year."
     
Freehold Raceway

       Freehold Raceway is owned by Freehold Racing Association
("FRA"), a wholly-owned subsidiary of the Company, and is operated by
FRA and Atlantic City Harness, Inc. ("ACH"), also a wholly-owned
subsidiary of the Company.  Freehold Raceway is located on a 51 acre
site in western Monmouth County, New Jersey and is the nation's oldest
harness track.  Daytime racing has been conducted at Freehold Raceway
since 1853; pari-mutuel wagering commenced in 1941.

     Freehold Raceway was acquired by the Company in January 1995 for a
purchase price of $17,800,000, of which approximately $12,500,000 was
represented by a promissory note (the "Freehold Note").  The Freehold
Note matures in January 2003 and bears interest at 80% of the prevailing
prime rate (not to exceed 6% per annum).  The Freehold Note is secured
by a mortgage on the land and buildings at Freehold Raceway and certain
other collateral. 

      The grandstand is an approximately 150,000 square foot, five
level, steel frame, enclosed, fully heated and air conditioned facility
constructed in 1986 (the "Grandstand"). The Grandstand can accommodate
up to 10,000 spectators, including seating for approximately 2,500
spectators, and has a sit-down restaurant as well as seven food
concession stands.  Additional facilities include receiving barns with
an adjacent paddock area, parking lots to accommodate approximately
2,500 vehicles and a two story administration building.

     The operations of ACH and FRA are regulated by the Racing
Commission.  See "Government Regulation."  The Company holds two racing
permits for harness racing at Freehold Raceway through ACH and FRA.

Operations

     Racing Dates.  Freehold Raceway's racing dates consist solely of
daytime harness racing dates. FRA conducted a Harness Meet (the "FRA
Harness Meet") from August 14, 1997 through December 31, 1997 for a
total of 99 racing dates.  ACH conducted a Harness Meet (the "ACH
Harness Meet") from January 1, 1998 through May 25, 1998 for a total of
97 racing dates.  For Fiscal 1997, the Company conducted the FRA Harness
Meet from August 13, 1996 through December 31, 1996, with 100 racing
dates and the ACH Harness Meet from January 1, 1997 through May 26,
1997, with 106 racing dates.

     Simulcasting.  Freehold Raceway hosts full-card simulcast betting
on thoroughbred and harness racing from numerous tracks in North
America.   For New Jersey intra-state simulcasts, a portion of the
Receiving Track wagering must be used for purses at the Sending and
Receiving Tracks.  In such situations when Freehold Raceway is the
Sending Track, a portion of the Receiving Track wagering is required to
be used for purses at Freehold Raceway during the current live race
meeting.  In cases where Freehold Raceway is the Receiving Track, it is
required to remit a percentage of its pari-mutuel wagering to the
Sending Track and is required to pay a portion of the commission to
purses if live racing is being conducted, or at the next live race
meeting if live racing is not in progress at the time of simulcasting. 
Freehold Raceway conducts day and night year-around simulcasting.


     Attendance and Wagering.  The following table summarizes average
daily attendance and wagering at Freehold Raceway and races simulcast to
other racing facilities during the past three fiscal years:




                  Approximate Commission             
                    % of                             
                   Wagering*  
                                    DAILY AVERAGES         

ACH HARNESS  MEETS             Fiscal Year Ended June 30,        
                                                     
                                    1998        1997         1996

Attendance                         2,061       2,099        2,085

Live Wagering            9.4%   $205,386    $214,126     $252,058

Simulcast Sending                                    
Signal:                                              

New Jersey Tracks        3.7%   $155,463    $167,642     $181,929
(Avg.)                                               

Atlantic City            4.5%    $18,044     $22,467      $23,073
Casinos                                              

Out-of-State             1.5%   $448,940    $391,500     $389,771
Tracks                                               
                                                     

Combined Wagering               $827,833    $795,735     $846,831

Number of Live RaceDays               97         106          102
                                                     




                  ApproximateCommission              
                  % of                               
                  Wagering*                          

                              DAILY AVERAGES         
                                                     

FRA HARNESS MEETS                   Fiscal Year Ended June 30,     
                                    1998       1997          1996

Attendance                         2,090      2,161         2,286

Live Wagering            9.4%   $216,629   $248,819      $283,361

Simulcast Sending                                    
Signal:                                              

New Jersey Tracks        3.7%   $159,591   $166,714      $170,226
(Avg.)                                               

Atlantic City            4.5%    $21,320     $23,547      $23,937
Casinos                                              

Out-of-State             1.5%   $408,915    $347,626     $392,704
Tracks                                               

Combined Wagering               $806,455    $786,706     $870,228

Number of Live RaceDays               99         100           99
                                                     


*  Amounts equal the portion received by the track after payment of
purses to horsemen.

   The following table summarizes average wagering experienced by
Freehold Raceway in connection with receiving simulcasts during the past
three fiscal years:

COMBINED HARNESS MEETS


       AVERAGE DAILY SIMULCAST WAGERING   (Receiving Track)


                     Fiscal Year Ended June 30,          
                     1998            1997           1996 
                                            

From Tracks *:        # of            # of          # of 
                      days    ($)     days   ($)    days   ($)  
                                                             
New Jersey                                               
Tracks:                                                  

Atlantic City  (T)        33  17,642     36  24,626    52  34,270
                                                         
                                                         

Garden State   (T,H)     114  44,584    117  45,919   117  50,563
Park                                                     

Meadowlands    (T,H)     221  89,167    232  88,848   234 100,776
                                                         

Out-of-State   (T,H)     362 280,035    362 252,033   330 230,995
Tracks                                                   

TOTAL ANNUAL                                             
RECEIVING                $126,743,196  $118,107,660  $107,507,691
WAGERING                                                 


(T) = Thoroughbred, (H) = Harness    
*The commission percentage of the wagering received by Freehold Raceway
is approximately 8.2% after the payment of purses to horsemen.



    Other Operations.  In December 1985, Freehold Raceway and an
unaffiliated third party, Sportservice, Inc. ("Sportservice"), entered
into an agreement (the "Sportservice Vendor Agreement") pursuant to
which Sportservice was granted the exclusive right to operate all food
concessions at the racetrack facility.  The Sportservice Vendor
Agreement requires that Sportservice pay a monthly concession fee to
Freehold Raceway based on a  percentage of adjusted gross receipts from
the food services.  The Sportservice Vendor Agreement terminates in June
2002.  Sportservice holds a license to permit the sale of alcoholic
beverages at Freehold Raceway.  Upon the termination of the Sportservice
Vendor Agreement, Sportservice has agreed to transfer such liquor
license to Freehold Raceway at no charge to Freehold Raceway.
    
Competition

      Freehold Raceway conducts all of its live harness racing during
the day.  Garden State Park's live thoroughbred and harness racing has
been conducted primarily at night, although day racing (in whole or
part) may be conducted in the future.  The Company intends to conduct
live harness racing at night at Garden State Park on some dates when
daytime live harness racing is being conducted at Freehold Raceway. 

    On most days during the year, Garden State Park and Freehold
Raceway each conduct simulcasting in competition with live and simulcast
racing being conducted at the other's facility.  In addition, at various
times, each track receives simulcasts of thoroughbred and harness races
from other tracks while the same type of racing is being conducted live
at the other track.

    Garden State Park and Freehold Raceway face direct competition
from year-round, daytime, thoroughbred racing at Philadelphia Park in
Bucks County, Pennsylvania ("Philadelphia Park"), as well as from five
off-track betting parlors in the Philadelphia area operated by
Philadelphia Park.  Management believes that telephone wagering to
Philadelphia Park placed from locations in Pennsylvania and areas
outside Pennsylvania (including New Jersey) which allows residents to
place wagers from their homes and businesses, has had and will continue
to have a significant adverse impact on attendance and wagering at the
Company's racetracks.  The Company expects that one additional off-track
betting parlor may be opened by Philadelphia Park in the Philadelphia
area, which is expected to directly compete with the Company's
facilities.

    The Company's racetrack facilities also face competition from (i)
Delaware Park near Wilmington, Delaware (day thoroughbred racing and
year-round simulcasting), (ii) Monmouth Park (summer day thoroughbred
racing and year-round simulcasting) and (iii) The Meadowlands
(principally night thoroughbred and harness racing and year-round
simulcasting).  With the exception of Monmouth (with respect to Freehold
Raceway), these tracks lie a greater distance from either Garden State
Park and Freehold than does Philadelphia Park.  Atlantic City Race
Course, which previously held summer day thoroughbred racing and year-
round simulcasting, reduced its 1998 meet to five days in May and has
indicated that it will discontinue live horse racing.  Atlantic City
Race Course has also indicated that it has entered into an agreement to
sell its racetrack site to a developer, while retaining the right to
develop an on-site simulcasting facility in the future if New Jersey law
permits.  The Company's racetracks also face competition from racetracks
in New York, Delaware, Maryland and Pennsylvania, most of which tracks
have larger purses which enable the tracks to attract better quality
horses and greater attendance.  In 1997, the Maryland lottery donated $5
million towards enhancing that state's total purse distribution, and
that amount is expected to double in 1998.

    Garden State Park and Freehold Raceway simulcast some or all of
their racing to, and receive simulcasting of some or all of their racing
from, all of the above New Jersey racetracks.  A New Jersey state law
enacted in 1992 which permits Garden State Park, Freehold Raceway, other
New Jersey racetracks and the Atlantic City Casinos to receive entire
race cards from out-of-state tracks via simulcasting may have had, and
may have in the future, the effect of increasing the competition the
Company's racetracks face in New Jersey.  In addition, off-track
wagering and full card simulcasting are conducted in Pennsylvania, New
York and Maryland, full card simulcasting is conducted in Delaware, and
telephone wagering is available in Pennsylvania and New York.  New
Jersey law does not permit off-track wagering or telephone wagering.

    Since September 1995, Delaware racetracks have offered slot
machines to their patrons.  This may have had, and may have in the
future, the effect of increasing the competition the Company's
racetracks face from legalized gaming in other Mid-Atlantic states. 
Competition from off-track betting, casino gambling (in Atlantic City),
various state lotteries and other forms of gambling and entertainment,
including professional and collegiate sporting events, may also have
had, and may have in the future, a material adverse effect on racetrack
attendance, wagering and thus profitability at Garden State Park and
Freehold Raceway. From time to time, legislation has been introduced in
New Jersey and neighboring states which would further expand gambling
opportunities. Approval of such legislation could have the effect of
increasing competition for the Company in the future.  

    On January 16, 1998, the nineteen member Racing Industry Study
Commission appointed by the Governor of New Jersey issued its report on
the horse racing industry in New Jersey, including existing statutes and
regulations, in-state competition for gambling dollars and legislation
in neighboring states.  The Commission concluded that the long-term
health of the New Jersey racing industry was dependent upon a purse
structure which would be sufficient to support breeders and owners,
attract quality horses to New Jersey racetracks, and protect New Jersey
green acres by keeping farms economically viable.  Accordingly, the
Commission recommended, among other things, an infusion of $25 million
to $50 million of state funds annually to augment racetrack purses and
revenue and regulatory reform of the racing industry to allow off-track
betting and wagering through telephones, the Internet and other
locations.  The Commission's recommendations are under consideration by
the Governor.  There can be no assurance that any or all of the
Commission's recommendations will be adopted by the Governor or the New
Jersey legislature.  Certain of the recommendations would also require
an amendment to the New Jersey constitution, and there can be no
assurance that any amendment will be approved.  A referendum will be
placed on the November 1998 ballot for New Jersey voters to decide
whether to amend the New Jersey constitution to allow the legislature to
pass laws authorizing the acceptance of wagers at racetracks placed by
telephone or other electronic means, the acceptance of wagers at off-
track betting facilities and the conduct of other gambling at New Jersey
racetracks.

Government Regulation 
    
    The Company's operations at Garden State Park and Freehold
Raceway are subject to regulation (i) under the Racing Act of 1940, as
amended and supplemented (the "Racing Act") and the rules and
regulations of the Racing Commission and (ii) by the CCC.

    Under the Racing Act, all pari-mutuel employees and all others
who are connected with the training of horses or the conduct of races,
must be licensed by the Racing Commission.  In addition, no person may
hold or acquire, directly or indirectly,  beneficial ownership of more
than 5% of the voting securities of the Company without the approval of
the Racing Commission.  The issuance by the Company of 2,093,868 shares
of its Common Stock to LVEN required Racing Commission approval as it
exceeded the 5% threshold.  See "Developments During the Last Fiscal
Year" for a description of that stock issuance.  Due to the Company's
failure to seek prior approval for the issuance of the shares to LVEN,
the Company agreed to pay the Racing Commission a $60,000 penalty.  In
connection with pending litigation, the minority directors have
challenged the authorization and enforceability of certain agreements
and actions taken by the Company, including the issuance of the above
shares to LVEN.  See "Legal Proceedings."

    At least 85% of the persons employed by the Company at Garden
State Park and Freehold Raceway must be residents of New Jersey
(excluding jockeys, drivers or apprentices, exercise boys, owners,
trainers, clockers and governing and managing officials).  The Racing
Commission has the authority to require the Company to discharge any
employee who: (i) fails or refuses for any reason to comply with the
rules and regulations of the Racing Commission; (ii) in the opinion of
the Racing Commission is guilty of fraud, dishonesty or incompetency;
(iii) has been convicted of a crime involving moral turpitude; or (iv)
fails or refuses for any reason to comply with any of the provisions of
the Racing Act.

    Additional restrictions and/or requirements imposed by the Racing
Commission on the Company's racetrack operations include, but are not
limited to, the setting of the admission price required to be charged by
the Company, a requirement that the Company (and all other racetracks
operating in New Jersey) must schedule at least one race per day limited
to registered New Jersey-bred foals and the methods the Company may use
to distribute pari-mutuel pools and "breaks" (the odd cents remaining
after computing the amount due holders of winning pari-mutuel tickets). 
The Racing Commission also regulates the manner of keeping of certain of
the Company's books and records.

    The Racing Commission is also responsible for the allocation of
racing dates. With regard to Freehold Raceway, each licensee operating
there (FRA and ACH) shall be entitled to race the same dates they did in
the preceding year, when it is in the public interest to do so, or for
such other dates, not exceeding 100 days in the aggregate, as the Racing
Commission shall designate; provided, however that if another permit
holder rejects any of the dates to which they may be entitled the Racing
Commission may allot those dates among other permitholders.

    In the case of Garden State Park, by law the Racing Commission is
to grant not less than 100 racing dates for thoroughbred racing after
January 21 and prior to July 1 in any year and not less than 100 racing
dates for harness racing after August 31 and prior to January 1 of the
following year, if and to the extent that application is made therefor.

    Furthermore, the Racing Commission shall allot equally among the
four thoroughbred permit holders in the state an additional 100 days, in
any proportion it deems fit when it is in the public interest to do so. 
For more information regarding racing dates at each of Garden State Park
and Freehold Raceway, see "Garden State Park - Operation - Racing Dates"
and "Freehold Raceway - Operations - Racing Dates" above.

    Because the Company simulcasts to Atlantic City casinos, the
Company's simulcasting agreements are required to be filed with and
approved by the CCC.  In addition, the Company is required to be
approved and licensed by the CCC as a non-gaming related casino service
industry.  Certain of the Company's employees and its directors and
significant stockholders are also required to be approved by the CCC. 
As of the date hereof, all of the Company's employees required to be
approved have been approved by the CCC or have filed applications
seeking such approval.  Although most of the Company's directors and
significant stockholders have filed applications seeking approval from
the CCC, one of the Company's directors did not file an application. 
There can be no assurance that all parties seeking CCC approval will
obtain such approval, of the effect on the Company of the director's
failure to file an application, or the effect on the Company if such
approvals are not obtained.

    The New Jersey Division of Gaming Enforcement ("DGE") has
conducted an investigation in accordance with their statutory obligation
to determine the qualification of the Company and its directors and
significant stockholders in connection with Garden State Park's and
Freehold Raceway's licenses with the CCC and the Racing Commission.  The
DGE issued a report to the CCC in September 1998 in which it objected to
the qualification of the one director who did not file an application
and requested hearings for three stockholders.  The director and one of
the three stockholders have requested hearings with the CCC and if the
Delaware Settlement is consummated, the other two stockholders will no
longer be required to qualify.  The DGE also reserved the right to
continue its investigation as to additional directors in the event the
Delaware Settlement is not consummated.  As a result of such report and
subject to the consummation of the Delaware Settlement, the CCC and/or
the Racing Commission may undertake further proceedings which could
potentially jeopardize the Company's racing licenses and ability to
conduct business with any casino licensees, including simulcasting to
Atlantic City casinos.  See "Management's Discussion and Analysis of
Financial Conditions and Results of Operations."

Casino Development Operations
    
El Rancho Property

    On January 24, 1996, the Company purchased the nonoperating El
Rancho Property from  LVEN.  The El Rancho Property is an approximately
21 acre property bounded (i) on the west by Las Vegas Boulevard South
(Las Vegas strip with approximately 735 feet of frontage), (ii) on the
south by the Algiers Hotel and Riviera Boulevard, (iii) on the east by
an undeveloped lot and (iv) on the north by a "Wet and Wild" attraction. 
The El Rancho Property, which has not operated since July 1992, consists
of a vacant hotel building with 1,008 rooms, an approximately 90,000
square foot casino and ancillary area, a 52-lane bowling alley, a
swimming pool and a parking garage.  The El Rancho Property was one of
the first large scale hotel casinos built in Las Vegas and previously
operated under an old west theme. 

    In February 1996, the Company announced its intention to develop
the El Rancho Property using the theme "Starship Orion."  In February
1997, the Company announced that it would develop the property under a
more modest country and western theme to be known as "CountryLand". 
These plans included the development of a 34 story tower addition
containing 380 hotel rooms, a showroom with seating for approximately
1,800 spectators, a 450 seat bullring, a country western dance hall, a
swimming pool, shopping mall and new restaurants.  In connection with
the Delaware Settlement, the Company has provided for the disposition of
the El Rancho Property.

    Upon consummation of the Delaware Settlement, the Company will
deposit title to the El Rancho Property into escrow for a period of up
to 270 days to permit LVEN to sell the El Rancho Property.  LVEN will
have the exclusive right to sell the El Rancho Property until November
10, 1998, 120 days after the date the notice of the Delaware Settlement
was mailed to the Company's stockholders, and up to an additional 60
days thereafter upon the occurrence of certain events.  Both LVEN and
the Company will have the right to sell the El Rancho Property between
November 10, 1998 and April 9, 1999, 270 days of after the mailing of
the notice, upon the payment of at least $44.2 million to the Company. 
If, within 30 days prior to the end of the escrow period, LVEN obtains a
$44.2 million loan for the benefit of the Company, LVEN will have a non-
exclusive right to sell the El Rancho Property for an additional year,
upon the payment of $44.2 million to the Company.  See "Legal
Proceedings - Delaware Stipulation."  

    On March 27, 1998, LVEN entered into an agreement for the sale of
the El Rancho Property for $62.5 million.  If consummated, the Company
would realize proceeds of $44.2 million as provided in the Delaware
Stipulation.  Of the remaining proceeds, $4.375 million will be paid to
an unrelated party for a structuring fee, $7.1 million will be paid to
Nunzio P. DeSantis (less any amounts previously paid to Mr. DeSantis
pursuant to the Delaware Stipulation), $1 million will be paid to Joseph
Zappala (less $200,000 Mr. Zappala has agreed pursuant to the Delaware
Stipulation to pay the Company in settlement of certain compensation
issues) and the balance will be paid to LVEN.  There can be no assurance
that this transaction or any other contract for the sale of the El
Rancho Property will be consummated or as to the timing thereof.  See
"Legal Proceedings - Delaware Settlement."  

    As of September 30, 1998, the Company had expended approximately
$50,864,000 (including the initial acquisition cost of $43.5 million) in
acquisition and development costs related to the El Rancho Property.  As
the Company now intends to dispose of the El Rancho Property, work at
the property is currently limited to normal maintenance and emergency
repairs.

Developments During the Last Fiscal Year

    On May 23, 1997, the Company and certain of its subsidiaries
entered into a two-year $55 million credit facility with Credit Suisse
First Boston Mortgage Capital, LLC ("CSFB"), secured by a pledge of
certain of the personal and real property of the Company (the "CSFB
Credit Facility").  Interest under the CSFB Credit Facility is payable
monthly in arrears at 7% over the London Interbank Offered Rate
("LIBOR").  The scheduled maturity date of the CSFB Credit Facility is
June 1, 1999, at which time all outstanding principal and interest are
payable in full.  The CSFB Credit Facility is evidenced by a convertible
promissory note (the "CSFB Note") and loan agreement (the "CSFB Loan
Agreement").  Pursuant to the terms of the CSFB Note, $10 million in
aggregate principal amount of the CSFB Note may, in certain
circumstances, including upon the maturity date of the CSFB Note, upon
the prepayment of $10 million in aggregate principal amount of the CSFB
Note or upon acceleration of the CSFB Note, at the option of CSFB, be
converted by CSFB into shares of the Company's Common Stock at a
conversion price of $8.75 per share (subject to adjustment in certain
events).  In addition, pursuant to the CSFB Loan Agreement, CSFB was
granted warrants to purchase up to 1,044,000 shares of Common Stock at
an exercise price of $4.375 per share (subject to adjustment upon the
occurrence of certain events).  Warrants to purchase 546,847 shares of
Common Stock are immediately exercisable by CSFB and warrants to
purchase 497,153 shares become exercisable at any time prior to May 23,
2002, upon delivery to the Company by CSFB of a firm commitment to
provide additional funding in connection with the El Rancho Property of
at least $50 million.  The Company has granted certain registration
rights to CSFB with respect to the warrants and the warrant shares.  

    The proceeds of the CSFB Credit Facility were used by the Company
to repay the Company's existing $30 million credit facility with
Foothill Capital Corporation and to provide funds for working capital
and other general corporate purposes, including, but not limited to,
preliminary development of the El Rancho Property.  The Company is in
violation of certain non-financial covenants of the CSFB Loan Agreement
and related loan documents.  There can be no assurance that CSFB will
continue to forbear with respect to the exercise of its rights under the
CSFB Loan Agreement and related documents, including its right to
accelerate the loan.  The Company has had discussions with CSFB
regarding the grant of waivers of such defaults in connection with the
Delaware Settlement.  See "Management's Discussion and Analysis of
Financial Conditions and Results of Operations."  In connection with the
Director Litigation, which is currently stayed and will be dismissed
with prejudice if the Delaware Settlement is consummated, the minority
Board members have challenged the authorization and enforceability of
certain agreements, including the CSFB Credit Facility.  See "Legal
Proceedings."

    Under the terms of an agreement among the Company, CSFB and LVEN
in connection with the CSFB Credit Facility (the "Tri-Party Agreement"),
and subject to, among other things, an independent valuation of Casino-
Co, receipt of a fairness opinion from an independent investment banking
firm and the approval of the Board and the Company's stockholders, the
Company agreed to acquire Casino-Co (which holds as its principal asset
a $160 million profit participation note) in exchange for shares of
Common Stock (the "Casino-Co Transaction").  The $160 million profit
participation note was granted to Casino-Co in connection with the
Company's purchase of the El Rancho Property in January 1996.  In
connection with the CSFB Loan Agreement, CSFB has the right to receive
shares equal to 10% of the Common Stock consideration paid by the
Company with respect to the Casino-Co Transaction upon consummation of
the Transaction, in consideration for CSFB's consent and for certain
advisory services.  LVEN has agreed to grant Mr. DeSantis an irrevocable
proxy to vote any or all of the shares to be issued to it in the Casino-
Co Transaction until the occurrence of certain events, including, among
other things, the repayment of the CSFB loan or the distribution of the
shares to LVEN's stockholders generally.  The Company has granted CSFB
and LVEN certain registration rights with respect to the shares.  In
connection with the Director Litigation, which is currently stayed and
will be dismissed with prejudice if the Delaware Settlement is
consummated, the minority Board members have challenged the
authorization and enforceability of certain agreements, including the
Tri-Party Agreement.  However, upon consummation of the Delaware
Settlement, the Tri-Party Agreement and the $160 million profit
participation note will be terminated.  See "Legal Proceedings."

    The $160 million profit participation note provides that Casino-
Co would receive, as additional consideration for the sale of the El
Rancho Property to the Company, an interest in the "adjusted cash flow"
of the El Rancho Property in the amount of 50% for the first six years
following the opening of the casino and 25% thereafter until such time
as Casino-Co has received $160 million, but only after (a) the Company
has recouped (i) the aggregate amount of cash payments applied to the
purchase price, (ii) payments made under the $6.5 million note and/or
the $10.5 million note, (iii) $2 million and (iv) any amounts that the
Company invested in the El Rancho Property after the purchase, together
with interest at 8% per annum from the date of the investment; (b)
Casino-Co has (i) received payment of all principal and interest, if
any, remaining outstanding under the $6.5 million note and/or the $10.5
million note and (ii) recouped $4 million plus any amount invested in
the El Rancho Property after the purchase and approved by the Company,
together with interest thereon at a rate of 8% per annum from the date
of investment; and (c) the Company has received an additional $2
million, together with interest thereon at the rate of 8% per annum from
the date of the purchase.  The term "adjusted cash flow" is defined as
cash flow from the El Rancho Property before taxes, less the payment of
any debt requirements and capital lease payments and less certain fees
received or accrued for certain initial rent or lease payments.  In
connection with the CSFB Credit Facility, the Company and LVEN entered
into a Bi-Lateral Agreement (the "Bi-Lateral Agreement") which fixed the
amount the Company could recoup prior to Casino-Co receiving
consideration under the $160 million profit participation note at $35
million.  In addition, the Bi-Lateral Agreement set the maximum debt
service to be netted against cash flow from operations of the El Rancho
Property in computing "adjusted cash flow" at $65 million, with a
further limitation to $27 million in the event that additional financing
over $55 million is not required for the development of the El Rancho
Property.  In connection with the Director Litigation, which is
currently stayed and will be dismissed with prejudice if the Delaware
Settlement is consummated, the minority Board members have challenged
the authorization and enforceability of certain agreements, including
the Bi-Lateral Agreement.  However, upon consummation of the Delaware
Settlement, the Bi-Lateral Agreement will be terminated.  In connection
with the Delaware Settlement, the Company has decided to dispose of the
El Rancho Property and it is currently under an agreement of sale with
an unrelated third party.  There can be no assurance, however, that the
Delaware Settlement will be consummated, that the sale of the El Rancho
Property will occur or as to the timing of either.  See "Legal
Proceedings."

    On July 1, 1997, the Company made a non-refundable payment of
$600,000 to purchase an option to acquire the leasehold interests from
D&C Gaming Corporation ("D&C"), a company owned equally by the Company's
Chief Executive Officer and President and by the Chairman of LVEN to
acquire operating leases for two New Mexico racetracks.  Subsequently,
the option agreement has been terminated by the Company and D&C.  In the
Director Litigation, the minority Board members have challenged the
authorization and enforceability of certain agreements, including the
option agreement.  In connection with the Delaware Settlement, the
$600,000 has been considered as part of the purchase price for NPD's
shares.  See "Legal Proceedings."

    On July 10, 1997, the Company executed an agreement to lease
office space in Albuquerque, New Mexico for a five-year period, expiring
on July 31, 2002.  The lease provides for a current monthly rent of
$8,580, increasing to $9,935 when the space is fully occupied.  See
"Certain Relationships and Related Transactions."  In connection with
the Director Litigation, which is currently stayed and will be dismissed
with prejudice if the Delaware Settlement is consummated, the minority
Board members have challenged the authorization and enforceability of
certain agreements, including the Albuquerque lease.  However, upon
consummation of the Delaware Settlement and pursuant thereto, the
Albuquerque lease will be assumed by AutoLend Group, Inc. ("AutoLend"),
a Delaware corporation of which Mr. DeSantis is the Chairman, chief
executive officer and principal stockholder and Mr. Coelho is a
director.  See "Legal Proceedings."

    Effective June 27, 1997, in accordance with the Tri-Party
Agreement, the Company exchanged an aggregate of 2,326,520 shares of
Common Stock (based on a value of $5.00 per share) for the cancellation
by Casino-Co of a secured promissory note (the "Casino-Co Note") in the
principal amount of $10.5 million, plus accrued interest of
approximately $1.1 million, issued by ITB and its Orion Casino
Corporation subsidiary ("Orion") to Casino-Co in connection with the
acquisition of the El Rancho Property.  Of such shares, 2,093,868 shares
were issued to Casino-Co (the "Conversion Shares") and 232,652 shares
were issued to CSFB in consideration for its consent and for certain
advisory services in connection with the transaction.  Casino-Co has
granted Mr. DeSantis an irrevocable proxy to vote any or all of such
Conversion Shares until the occurrence of certain events, including the
repayment of the CSFB loan or the distribution of the Conversion Shares
to LVEN's stockholders generally.   See "Certain Relationships and
Related Party Transactions" and "Notes to Financial Statements."  In
connection with the Director Litigation, the minority Board members have
challenged the authorization and enforceability of certain agreements,
including the Tri-Party Agreement and the issuance of the Conversion
Shares.  However, upon consummation of the Delaware Settlement, the Tri-
Party Agreement will be terminated and the Conversion Shares will be
retired.  See "Legal Proceedings."

    On or about September 10, 1997, Messrs. Quigley and Leo, two
directors of the Company, and The Family Investment Trust (Robert
Brennan's family trust) filed a derivative claim in the Delaware
Chancery Court against Directors Nunzio DeSantis, Anthony Coelho, and
Joseph Zappala, former directors Michael Abraham and Kenneth Scholl and
LVEN and its Chairman, Joseph Corazzi, and the Company, alleging, inter
alia, that certain purported "super-majority" voting provisions of the
Company's By-laws remain in full force and effect (the "Director
Litigation").  In addition, on or about the same date, James Rekulak, an
individual stockholder, filed a virtually identical derivative claim to
that filed by Messrs. Quigley and Leo and The Family Investment Trust. 
The Company filed a counterclaim in the Director Litigation on November
18, 1997 alleging that Director Robert Quigley and former Director Frank
Leo, together with Director Francis Murray and former Director Charles
Dees, breached their fiduciary duty to the Company by, among other
things, adopting and subsequently refusing to recognize the repeal of
the "super-majority" voting provisions.  See "Legal Proceedings."  The
"super-majority" voting provisions were adopted by the Board of
Directors at its December 20, 1996 Board meeting and required the
approval of a super-majority (75% or seven of nine members) of the Board
in order to authorize the Company to undertake certain actions,
including, inter alia:  effecting a merger or acquisition or the
purchase or sale of assets with proceeds of $1 million, individually or
in the aggregate; issuing capital stock, or options, warrants or
securities convertible into shares of capital stock; entering into
employment, consulting or similar agreements with officers, directors,
consultants or key employees; borrowing $3 million or more, individually
or in the aggregate; filling vacancies on the Board of Directors;
determining management's list of nominees for election to the Board of
Directors by stockholders; and making future changes to the By-laws.

    The majority of the Company's Board believe that the By-laws were
amended at the March 14, 1997 Board meeting to remove the "super-
majority" provisions upon the occurrence of certain conditions relating
to the receipt of a commitment letter from CSFB for a loan.  The
minority directors dispute that belief in the Director Litigation.  See
"Legal Proceedings."  In the event the minority directors ultimately
prevail on this issue, certain transactions completed by the Company
with a simple majority approval by the Board may be subject to
modification, termination or revision, including without limitation, the
CSFB Credit Facility, the Tri-Party Agreement, the Bi-Lateral Agreement,
the D&C option agreement, the Albuquerque lease and the issuance of the
Conversion Shares.  In addition, the continued existence of the "super-
majority" provisions would be a default under the CSFB Loan Agreement
and could result in acceleration of the CSFB loan by CSFB.  See
"Management's Discussion and Analysis of Financial Conditions and
Results of Operations."

    The Director Litigation is at a standstill as the parties entered
into the Delaware Stipulation on July 2, 1998, which terms were
disclosed in a July 23, 1998 notice to all stockholders.  See "Legal
Proceedings - Delaware Settlement" below for a summary of the terms of
the Delaware Settlement.  Although the parties believe that the
conditions to the Delaware Settlement will be satisfied, there can be no
assurance that such conditions will be satisfied and thus, that a final
settlement will be achieved.  In the event a condition of the Delaware
Settlement is not met, there can be no assurance as to the outcome of
the Director Litigation or as to the impact the Director Litigation
itself or any resolution thereof may have on the Company's operations,
financial position, results of operations and cash flows.  In the
Director Litigation, the plaintiffs, minority Board members and certain
stockholders, have challenged the authorization and enforceability of
certain actions taken and agreements entered into by the Company.  In
the event the plaintiffs prevail in the Director Litigation, such
actions and agreements may be subject to modification, termination or
revision.  See "Legal Proceedings" and "Management's Discussion and
Analysis of Financial Conditions and Results of Operations."

    On October 15, 1997, the Company terminated the employment of Mr.
Quigley as President of the Company and an officer of its racetrack
subsidiaries.  See "Termination and Severance Agreements."

    Effective October 20, 1997, the Company consummated the sale of a
56 acre parking lot tract at Garden State Park to an unaffiliated third
party for a sales price of $9 million.  Of the proceeds, $6 million was
used to pay off an existing mortgage loan on the property.  See "Notes
to Financial Statements."

    On July 2, 1998, the Company entered into an agreement with
Greenwood for the sale of the real property and related assets at
Freehold Raceway and the lease for a period of seven years of the real
property and related assets at Garden State Park.  The agreement is
subject to the satisfaction of a number of conditions, including without
limitation, Company stockholder approval, the receipt by the Company of
a fairness opinion from an independent investment banker and the receipt
by Greenwood of approval from applicable regulatory authorities.  The
purchase price is $45 million, consisting of $33 million in cash and a
seven year non-contingent promissory note  in the amount of $12 million,
with an additional $10 million in contingent promissory notes which
would become effective upon, among other things, New Jersey's approval
of off-track betting facilities or telephone account pari-mutuel
wagering on horse racing.  There can be no assurance that the Company
will complete the Greenwood Transaction or as to the timing thereof. 
Upon consummation of the Greenwood Transaction, the Company will no
longer have an operating business.  The Board is considering
alternatives for the Company's future, including the acquisition of one
or more operating businesses.

    Effective August 7, 1998, the Company's Common Stock and its
Preferred Stock were delisted from trading on AMEX for the failure to
meet certain AMEX listing criteria.  Neither the Common Stock nor the
Preferred Stock has been traded on AMEX since October 13, 1997, when it
was suspended because the Company had not filed its Annual Report on
Form 10-K for Fiscal 1997 within the SEC's prescribed time period. 
Application is being made to initiate quotation of the Common Stock and
the Preferred Stock on the OTC Bulletin Board.  In the interim, the
stock is listed for quotation on the NQB Pink Sheets.


Item 2 - Properties

    In addition to Garden State Park, Freehold Raceway and the El
Rancho Property described above, the Company owns a condominium unit and
an ownership interest in the Ocala Jockey Club located in Reddick,
Florida.  The Company, through its Circa 1850, Inc. subsidiary, owns
seven properties, including six single family homes and a condominium
adjacent to Freehold Raceway.  These properties are held for the purpose
of generating rental income.


Item 3 - Legal Proceedings
    
    On or about September 10, 1997, three actions were filed in the
Delaware Court of Chancery in and for New Castle County (the "Delaware
Chancery Court"), each of which named the Company as a nominal defendant
and one of which was subsequently dismissed (collectively, the "Delaware
Actions").  Additionally, two actions were filed in New Jersey naming
the Company as a nominal defendant (collectively, the "New Jersey
Actions"), one of which is a derivative action filed on or about
February 24, 1998 in the United States District Court for the District
of New Jersey (the "New Jersey District Court"), and the other is a
purported class action filed on or about July 15, 1998 in the Superior
Court of New Jersey (the "New Jersey Superior Court").  As described
more fully below, pursuant to the terms of a Stipulation and Agreement
of Compromise, Settlement and Release dated July 2, 1998 (the "Delaware
Stipulation"), upon satisfaction of certain conditions set forth in the
Delaware Stipulation, the Delaware Actions are to be fully and finally
dismissed with prejudice, and the parties are to provide mutual releases
of all claims related to the actions thereunder (the "Delaware
Settlement").  See "Delaware Settlement."  Further, pursuant to a
memorandum of understanding entered into on August 18, 1998 (the "New
Jersey Memorandum"), upon satisfaction of certain conditions, the New
Jersey Actions are to be fully and finally dismissed with prejudice, and
the parties are to provide mutual releases of all claims related to the
actions thereunder (the "New Jersey Settlement").  See "New Jersey
Settlement."

Mariucci, et al. v. DeSantis, et al.  

    The first Delaware Action, captioned John Mariucci, Robert J.
Quigley, Charles R. Dees, Jr., James J. Murray, Francis W. Murray, Frank
A. Leo and The Family Investment Trust (Henry Brennan as Trustee) v.
Nunzio P. DeSantis, Michael Abraham, Anthony Coelho, Kenneth W. Scholl,
Joseph Zappala and International Thoroughbred Breeders, Inc., C.A.
No.15918NC ("Mariucci"), alleged, among other things, that (i) NPD had
breached the terms of the NPD Acquisition Agreement by failing to fund a
line of credit, (ii) as a result of such breach, the resignations of
John Mariucci, James Murray and Frank Koenemund from the Board were
ineffective and (iii) Messrs. DeSantis, Abraham, Coelho, Scholl and
Zappala (the "New Directors") were misusing the assets of the Company
for their personal benefit.  The Mariucci complaint sought an order (a)
pursuant to Section 225 of the Delaware General Corporation Law,
determining that (1) the New Directors were not validly appointed or
elected to the Board and (2) Frank Koenemund, John Mariucci and James
Murray, notwithstanding their written resignations upon the NPD
Acquisition and the acceptance of those resignations by the Company's
Board, continued as directors of the Company (the "Section 225 Claims")
and (b) preserving the status quo pending a final adjudication of the
Section 225 Claims.  On September 18, 1997, the plaintiffs filed an
amended complaint.  On September 26, 1997, the New Directors and the
Company filed a motion to dismiss, or in the alternative, to strike
allegations of the amended complaint.  The Delaware Chancery Court
granted the motion to dismiss by opinion dated October 14, 1997.  The
time for appeal of the Delaware Chancery Court Order has expired and no
appeal has been taken by the plaintiffs.

Quigley, et al. v. DeSantis, et al.  

    The second Delaware Action, captioned Robert J. Quigley, Frank A.
Leo, and The Family Investment Trust (Henry Brennan as Trustee) v.
Nunzio P. DeSantis, Michael Abraham, Anthony Coelho, Kenneth W. Scholl,
Joseph Zappala, Joseph A. Corazzi, Las Vegas Entertainment Network, Inc.
and International Thoroughbred Breeders, Inc., C.A. No.15919NC
("Quigley" or "Director Litigation"), is a derivative suit brought by
two then Directors (Messrs. Quigley and Leo) and the Family Investment
Trust (collectively, the "Quigley Plaintiffs") which alleges, among
other things, that the New Directors have breached their fiduciary
duties to the Company, usurped corporate opportunities belonging to the
Company and incorrectly stated minutes of Board meetings to omit
material discussions.  The Quigley complaint alleges that the New
Directors entered into certain agreements on behalf of the Company in
violation of the "super-majority" voting provisions of the Company's By-
laws and their fiduciary duty to the Company, including but not limited
to, the CSFB Loan Agreement, the Tri-Party Agreement, the Bi-Lateral
Agreement, the D&C Gaming option agreement, the DeSantis employment
agreement and consulting agreements with Messrs. Coelho and Zappala. 
The Quigley complaint seeks (i) a declaratory judgment that (a) certain
actions taken by the New Directors are null and void and (b) the "super-
majority" By-law provisions remain in full force and effect, (ii)
rescission of certain actions taken by the New Directors and (iii)
damages as a result of the allegedly unauthorized and unlawful conduct
of the defendants.  See "Developments During the Last Fiscal Year."  On
November 7, 1997, the New Directors and the Company filed answers to the
Quigley complaint denying all of the material allegations contained in
the Quigley complaint.

    On November 18, 1997, the Company filed an amended answer and
counterclaim (the "Counterclaim") against Messrs. Quigley, Leo, Francis
Murray and Dees (collectively, the "Counterclaim Defendants").  The
Counterclaim alleges that the Counterclaim Defendants have breached
their fiduciary duties to the Company by (i) adopting, and subsequently
refusing to recognize the repeal of certain "super-majority" By-law
provisions in order to aid Brennan in retaining control of the Company's
business affairs and jeopardizing the Company's licenses and
registrations, (ii) interfering in the Company's hiring of new
independent auditors thereby causing the Company to be delinquent in its
required filings with the SEC and causing the suspension of trading in
the Company's stock on AMEX, (iii) using corporate funds for their
personal uses and (iv) usurping corporate opportunities properly
belonging to the Company.  The Counterclaim seeks injunctive relief
enjoining the Counterclaim Defendants from, among other things,
interfering in the Company's day-to-day business operations, the
establishment of a constructive trust over certain assets of the
Counterclaim Defendants, a declaratory judgment that the "super-
majority" voting provisions have been repealed and money damages.  The
Counterclaim Defendants filed an answer to the Counterclaim on January
12, 1998 denying all of the material allegations and, in addition, Mr.
Murray asserted a wrongful discharge claim and seeks monetary damages.

    Subsequent to the scheduling of the Director Litigation for
trial, the parties reached an agreement in principle to settle the
litigation which resulted in the Delaware Stipulation.  As described
more fully below under "Delaware Settlement," upon satisfaction of the
conditions set forth in the Delaware Stipulation, the Delaware
Litigation will be fully and finally dismissed with prejudice, and the
parties will provide mutual releases of all claims related to such
action.  See "Delaware Settlement."

Rekulak v. DeSantis, et al.  

    The third Delaware Action, captioned James Rekulak v. Nunzio P.
DeSantis, Michael Abraham, Anthony Coelho, Kenneth W. Scholl, Joseph
Zappala, Las Vegas Entertainment Network, Inc. and Joseph A. Corazzi and
International Thoroughbred Breeders, Inc., C.A. No. 15920 ("Rekulak"),
is a derivative suit which in essence repeats the allegations contained
in the Quigley complaint and seeks similar relief.  The Rekulak action
was consolidated with the Quigley action pursuant to a stipulation and
order dated January 13, 1998.  

    The Trustee of Brennan's Bankruptcy Estate, as well as the SEC,
have participated to a limited extent in discovery in the litigation of
the Quigley and Rekulak actions.  

    As described more fully below under "Delaware Settlement," upon
satisfaction of the conditions set forth in the Delaware Stipulation,
the Rekulak action will be fully and finally dismissed with prejudice. 
See "Delaware Settlement."

Rekulak v. DeSantis, et al.  

    On or about October 8, 1997, James Rekulak filed a complaint in
the Delaware Chancery Court captioned Rekulak v. DeSantis, et al., C.A.
No. 15978, which purports to be a complaint under Section 225 of the
Delaware General Corporation Law and contains substantive allegations
that are virtually identical to those in the complaint in the Mariucci
action described above.  The plaintiff in this action sought to have his
complaint consolidated with the complaint in the Mariucci action and
represented to the Court that he was willing to be bound by the Delaware
Chancery Court's decision on defendants' motion to dismiss the Mariucci
action.  As set forth above, the Mariucci action was dismissed by the
Delaware Chancery Court's opinion dated October 14, 1997, and
thereafter, this action was dismissed with prejudice by a stipulation
and order dated February 9, 1998.

Delaware Settlement

    The Quigley and Rekulak actions, and the NPD and Green actions
described more fully below, are currently at a standstill as the parties
have entered into the Delaware Stipulation to settle such litigation. 
Upon consummation of the Delaware Settlement, the Quigley, Rekulak, NPD
and Green actions are to be fully and finally dismissed with prejudice,
and the parties are to provide mutual releases of all claims related to
the actions.

    Upon the satisfaction of certain conditions to the Delaware
Settlement, the Company will purchase for $4.6 million cash, and the
assumption by the Company of the $5.8 million note issued by NPD and
held by Brennan's Trustee in Bankruptcy, the approximately 2.9 million
shares of the Company's stock owned by NPD.  Simultaneous with such
purchase, all contracts (including option grants and employment and
consulting agreements) between the Company, Messrs. DeSantis, Coelho,
Zappala, Scholl and Abraham, will be cancelled, and effective upon such
purchase, Messrs. DeSantis, Coelho and Zappala will resign from the
Company's Board.  Messrs. Scholl, Abraham, Leo and Dees resigned from
the Company's Board on July 23, 1998 upon the mailing of the Delaware
Stipulation to the Company's stockholders.

    Upon satisfaction of certain conditions to the Delaware
Settlement, the Company will deposit title to the El Rancho Property
into escrow for a period of up to 270 days to permit LVEN to sell the El
Rancho Property.  LVEN will have the exclusive right to sell the El
Rancho Property until November 10, 1998, 120 days after the date the
notice of the Delaware Settlement was mailed to the Company's
stockholders, and up to an additional 60 days thereafter upon the
occurrence of certain events.  Both LVEN and the Company will have the
right to sell the El Rancho Property between November 10, 1998 and April
9, 1999, 270 days after the mailing of the notice, upon the payment of
at least $44.2 million to the Company.  If, within 30 days prior to the
end of the escrow period, LVEN obtains a $44.2 million loan for the
benefit of the Company, LVEN will have a non-exclusive right to sell the
El Rancho Property for an additional year, upon the payment of $44.2
million to the Company.

    Upon consummation of the Delaware Settlement, certain agreements
to which the Company is a party will be terminated, including without
limitation, all agreements with LVEN (including the entertainment
management agreement and the $160 million profit participation note),
the Bi-Lateral Agreement, the Tri-Party Agreement (other than rights of
CSFB thereunder), the D&C option agreement, the Albuquerque lease, Mr.
DeSantis' employment agreement and the consulting agreements with
Messrs. Coelho, Zappala and Scholl.

    Pursuant to the Delaware Stipulation, the Company's By-laws have
been amended to reduce the authorized number of directors to six, and in
connection with such reduction, Messrs. Abraham, Scholl, Dees and Leo
resigned from the Company's Board.  Until all of the transactions
contemplated by the Delaware Settlement are consummated or the Delaware
Settlement is terminated according to its terms, (a) the Company will
not approve, amend or terminate any agreement or incur any additional
liabilities, expenses or obligations in excess of $10,000 without the
prior written approval of directors Coelho and Quigley, and (b) the
Company and its subsidiaries will not take any significant action,
including any merger, purchase or sale of assets for $50,000 or more,
issue any securities, approve or amend employment or consulting
agreements, borrow $50,000 or more, fill any vacancy on the Company's
Board, proceed with any meeting of stockholders, declare or pay any
dividend or other distribution, consummate any tender offer,
restructuring, recapitalization or reorganization, or amend the
Company's By-laws without the unanimous consent of the Company's Board.

    The Delaware Settlement is subject to numerous conditions,
including without limitation, the Delaware Court dismissal order
becoming final, the approval of CSFB or any alternative lender, and
certain approvals by the United States Bankruptcy Court handling the
Brennan bankruptcy proceedings.  The approvals of the Delaware Court and
AutoLend Bankruptcy Court have been obtained.  The consummation of the
Delaware Settlement will not result in the release by the Company of any
claims against CSFB or Standard Capital Group.  In the event that a new
financing agreement is approved by the Company and CSFB, CSFB will
obtain a release of claims from the Company.

Harris v. DeSantis, et al.  

    The first New Jersey Action, filed on February 24, 1998 in the
New Jersey District Court, captioned Myron Harris, derivatively on
behalf of International Thoroughbred Breeders, Inc. v. Nunzio P.
DeSantis, Anthony Coelho, Kenneth W. Scholl, Michael Abraham, Joseph
Zappala, Frank A. Leo, Robert J. Quigley, Charles R. Dees, Jr. and
Francis W. Murray ("Harris-Federal"), C.A. No. 98-CV-517(JBS), is a
derivative suit brought by a stockholder of the Company.  The factual
allegations and claims asserted in the Harris-Federal complaint are
virtually identical to the claims asserted in the Quigley complaint and
in the Counterclaim asserted by the Company in the Quigley action.

    On May 4, 1998, all defendants filed a motion to dismiss or, in
the alternative, a motion to stay the Harris-Federal action, pending
resolution of the Quigley action.  The New Jersey District Court has not
ruled on that motion.  On May 4, 1998, the plaintiff filed an amended
complaint to, among other things, add another stockholder as an
additional plaintiff. 

    As described more fully below, pursuant to the New Jersey
Memorandum and the satisfaction of certain conditions set forth therein,
the Harris-Federal action is to be fully and finally dismissed with
prejudice, and the parties are to provide mutual releases of all claims
related to the action.  See "New Jersey Settlement."

Harris v. DeSantis, et al.

    The most recent New Jersey Action, filed on July 15, 1998 in the
New Jersey Superior Court, captioned Myron Harris and Howard Kaufman v.
Nunzio P. DeSantis, Anthony Coelho, Kenneth W. Scholl, Michael Abraham,
Joseph Zappala, Frank A. Leo, Robert J. Quigley and Charles R. Dees, Jr.
("Harris-State"), Cam-L-5534-98, is a purported class action suit
brought by the same plaintiffs as the Harris-Federal action.  The
complaint alleges that the Harris-State defendants breached their
fiduciary duties to the Company's stockholders by failing to file timely
audited financial statements for the fiscal year ended June 30, 1997,
resulting in the indefinite suspension of trading of the Company's stock
on AMEX.

    Prior to filing pleadings in response to the Harris-State
complaint, the defendants entered into the New Jersey Memorandum
pursuant to which the Harris-State action is to be fully and finally
dismissed with prejudice, and the parties are to provide mutual releases
of all claims related to the action.  See "New Jersey Settlement."
 
New Jersey Settlement

    The New Jersey Actions are currently at a standstill as the
parties have entered into the New Jersey Memorandum.  Subject to the
approval of the court, the defendants and the Company will pay the
aggregate sum of $150,000 for plaintiffs' counsel fees and expenses in
the New Jersey Litigation and any incentive award to plaintiffs Harris
and Kaufman would be paid out of this $150,000 sum.  Pursuant to the New
Jersey Settlement, following the implementation of the Delaware
Settlement, the defendants will restructure the Audit Committee of the
Company so as to facilitate the procurement and timely filing of audited
financial statements in the future.  Further, the Company will take all
appropriate actions necessary to promptly initiate the quotation of the
Company's Common Stock and Preferred Stock on the OTC Bulletin Board.
 
    Pursuant to the New Jersey Settlement, the plaintiffs agreed not
to file objections to the Delaware Settlement. In addition, pursuant to
the New Jersey Settlement, upon consummation of the Delaware Settlement
the plaintiffs will move for a dismissal, with prejudice, of the Harris-
Federal action, and will provide releases to the defendants and the
Company and all others acting on the Company's behalf for any claims
that were asserted or could have been asserted in the Harris-Federal
action.  For settlement purposes only, a class will be certified for
Harris-State action consisting of all holders of the Company's stock
between October 13, 1997 (the date AMEX suspended trading of the
Company's stock) and the date the Company's stock is quoted for trading
on the OTC Bulletin Board.  The plaintiffs and the class members will
release the defendants and the Company and all others acting on the
Company's behalf from any claims that were asserted or could have been
asserted in the Harris-State action.

Other Litigation

    In November 1997, two separate actions were filed in the New
Jersey District Court against various directors of the Company and other
affiliated parties.  The Company is not a party to either of these
actions, both of which are summarized below:

NPD, Inc. v. Quigley, et al.  

    On November 18, 1997, NPD (the Company's largest stockholder and
whose stockholders are Messrs. DeSantis and Coelho), filed a complaint
captioned NPD, Inc. v. Robert J. Quigley, Francis W. Murray, Frank A.
Leo, Charles R. Dees, Jr., John Mariucci, Frank Koenemund and James J.
Murray, C.A. 97-CV-5657 ("NPD"), in the New Jersey District Court.  The
complaint alleges, among other things, that Messrs. Quigley, Francis
Murray, Leo and Dees, each of whom was at the time a director of the
Company, and Messrs. Mariucci, Koenemund and James Murray, each of whom
is a former director of the Company, conspired with one another and
Brennan to defraud NPD by (i) approving and subsequently concealing from
NPD the existence of the "super-majority" voting provision of the
Company's By-laws and (ii) purporting to repeal such provision and
subsequently filing suit in an effort to restore such provision, all of
which has had the effect of attempting to deprive NPD of control of the
Company and perpetuating the control of Brennan and his associates.  The
NPD suit seeks compensatory and punitive damages.  On January 8, 1998,
the defendants served a motion to dismiss NPD's complaint.  The NPD
action is at a standstill as the parties have entered into the Delaware
Stipulation.  Upon satisfaction of the conditions set forth in the
Delaware Stipulation, the NPD action is to be fully and finally
dismissed with prejudice, and the parties are to provide mutual releases
of all claims related to such action.  The Company is not a party to the
NPD action.

Green v. DeSantis, et al.  

    Certain officers, directors and affiliates of the Company are
parties to an action filed on November 30, 1997 by Robert William Green
("Green"), a stockholder of the Company, captioned Robert William Green
v. Nunzio DeSantis, Joseph Corazzi, Anthony Coelho, Las Vegas
Entertainment Network, Inc. and NPD, Inc., C.A. 97-5359(JHR), in the New
Jersey District Court.  The complaint alleges, among other things, that
the defendants have usurped certain corporate opportunities at the
expense of the Company, have diluted Green's interest in the Company
through the issuance of shares of stock and have conspired to deprive
him of certain rights under an option granted to him by NPD (the "Green
Option").  See "Developments During the Last Fiscal Year."  Subject to
regulatory approval, the Green Option grants Green the right to purchase
approximately 50% of the shares of the Company's Common Stock which are
held by NPD.  The expiration date of the Green Option was January 15,
1998 and Green did not exercise the option by such date.  Green seeks
(i) compensatory and punitive damages, (ii) an order enjoining
defendants from transferring, encumbering or alienating the Company's
Common Stock subject to the Green Option, (iii) an order declaring the
issuance of certain shares of Common Stock to be a nullity, and (iv)
reformation of the Green Option to extend the termination date.  This
action also raises claims substantially similar to those made in the
Quigley action.  The parties to the Green action have stipulated to take
no action in the case pending consummation of the Delaware Settlement. 
Upon satisfaction of the conditions set forth in the Delaware
Stipulation, the Green action is to be fully and finally dismissed with
prejudice, and the parties are to provide mutual releases of all claims
related to such action.  The Company is not a party to the Green action.

Item 4 - Submission of Matters to a Vote of Security Holders

    No matters were submitted to a vote of security holders by the
Company during the quarter ended June 30, 1998.  The last annual meeting
of stockholders was held on February 21, 1996.

                             PART II


Item 5 - Market for the Registrant's Common Equity and Related
Stockholder Matters

Market Information

    From April 4, 1985 until October 13, 1997, the Company's Common
Stock and Preferred Stock were traded on AMEX under the symbol "ITB." 
On October 13, 1997, AMEX suspended trading in the Common Stock and the
Preferred Stock because the Company had not filed its Annual Report on
Form 10-K for Fiscal 1997 within the SEC's prescribed time period.  The
Company has since filed the 1997 Form 10-K and is current on all of its
filings with the SEC.  Effective August 7, 1998, the Company's Common
Stock and Preferred Stock were delisted from trading on AMEX for the
failure to meet certain listing criteria.

    Application is being made to initiate quotation of the Common
Stock and the Preferred Stock on the OTC Bulletin Board.  In the
interim, the stock is listed for quotation on the NQB Pink Sheets.

    The following table indicates the high and low sales prices for
the Common Stock on the AMEX on a quarterly basis for the year ended
June 30, 1997 and the two quarters ended December 31, 1997, based upon
information supplied by AMEX:

                                       Sales          Price
Quarter Ended                          High           Low

September 30, 1996                     $4.13         $3.50
December 31, 1996                      $3.88         $2.63
March 31, 1997                         $5.13         $2.81
June 30, 1997                          $5.06         $4.00

September 30, 1997                     $4.56         $3.50
December 31, 1997                      $3.88         $3.44

(Through October 13, 1997, the date trading was suspended.
The last sale price on October 13, 1997 was $3.50)

    Since October 13, 1997, there has been no established trading
market for the Company's Common Stock, notwithstanding that the Common
Stock is listed for quotation on the NQB Pink Sheets.

Holders

    As of June 30, 1998, there were 31,077 recordholders of the
Company's Common Stock. 


Dividends

    The Company has not paid any dividends on its Common Stock since
its inception.  Anticipated capital requirements of the Company make it
unlikely that any dividends will be declared in the foreseeable future. 
Furthermore, 25% of the "net racetrack earnings" from Garden State Park
are required to be paid by the Company in dividends on its Preferred
Stock and thus, would not be available for payment as dividends on the
Common Stock.  Additionally, the Company's ability to pay dividends in
cash or property or by obligation is limited by the terms of the CSFB
Credit Facility.



ITEM 6 - SELECTED FINANCIAL DATA

              INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                           AND SUBSIDIARIES

<TABLE>
<S>                                <C><C>         <C><C>
Item 6 - SELECTED FINANCIAL DATA                     

                                      Years Ended    Years Ended

                                       June 30,       June 30,

                                         1998           1997

                                                     

(Loss) Income from Continuing                        
 Operations (2)(6)                   $(25,468,850)  $(15,144,053)

Income From Discontinued                             
 Operations (1)                      $   7,207,633  $   1,594,096

(Loss) Income  Before                                
 Extraordinary Item                  $(18,261,217)  $(13,549,957)

Net (Loss) Income  (4)               $(18,261,217)  $(17,387,582)

                                                     

Per Common Share:                                    
                                                
(Loss) Income Before                                 
  Discontinued Operations and                        
  Extraordinary Item                 $      (1.82)  $      (1.29)

Income From Discontinued                             
 Operations                          $        0.51  $        0.14

(Loss) Income Before                                 
 Extraordinary Item                  $      (1.31)  $      (1.15)

Net (Loss) Income                    $      (1.31)  $      (1.48)

Weighted Average Number of Shares       13,978,086     11,715,256

                                                     

                                                     

                                        June 30,       June 30,

                                          1998           1997

                                                     

Working Capital (Deficiency)         $(36,744,740)  $(41,300,996)

Total Assets                         $ 120,252,901  $ 164,694,029

Long-Term Debt                       $           0  $  13,131,003

Stockholders' Equity (5)             $  59,913,361  $  75,651,933

                                                     

                                                     

                                      Years Ended    Years Ended

                                       June 30,       June 30,

                                         1996          1995 (3)

                                                     

(Loss) Income from Continuing                        
 Operations (2)(6)                   $ (2,779,987)  $     386,966

Income From Discontinued                             
 Operations (1)                      $   1,710,276  $   2,011,485

(Loss) Income  Before                                
 Extraordinary Item                  $ (1,069,712)  $   2,398,452

Net (Loss) Income  (4)               $ (1,069,711)  $   2,398,452

                                                     

Per Common Share:                                    
                                                    
(Loss) Income Before                                 
  Discontinued Operations and                        
  Extraordinary Item                 $      (0.26)  $        0.04

Income From Discontinued                             
 Operations                          $        0.16  $        0.21

(Loss) Income Before                                 
 Extraordinary Item                  $      (0.10)  $        0.25

Net (Loss) Income                    $      (0.10)  $        0.25

Weighted Average Number of Shares       10,536,414      9,551,369

                                                     

                                                     

                                        June 30,       June 30,

                                          1996           1995

                                                     

Working Capital (Deficiency)         $ (3,916,684)  $   7,740,788

Total Assets                         $ 144,880,933  $  97,469,045

Long-Term Debt                       $  50,992,702  $  15,599,097

Stockholders' Equity (5)             $  79,318,105  $  72,206,437

                                                     

                                                     

                                      Years Ended    

                                       June 30,      

                                         1994        

                                                     

(Loss) Income from Continuing                        
 Operations (2)(6)                   $   1,681,878   

Income From Discontinued                             
 Operations (1)                      $     818,717   

(Loss) Income  Before                                
 Extraordinary Item                  $   2,500,595   

Net (Loss) Income  (4)               $   2,500,595   

                                                     

Per Common Share:                                    
                                                     
(Loss) Income Before                                 
  Discontinued Operations and                        
  Extraordinary Item                 $        0.18   

Income From Discontinued                             
 Operations                          $        0.09   

(Loss) Income Before                                 
 Extraordinary Item                  $        0.27   

Net (Loss) Income                    $        0.26   

Weighted Average Number of Shares        9,547,900   

                                                     

                                                     

                                        June 30,     

                                          1994       

                                                     

Working Capital (Deficiency)         $  16,038,454   

Total Assets                         $  74,433,411   

Long-Term Debt                       $    -0-        

Stockholders' Equity (5)             $  69,807,985   

                                                     

                                                     

  (1)  Prior to June 30, 1998, the Company decided to sell its
        racing operations.  As a result, such operations have been
        classified as discontinued operations for all periods presented.
  (2)  As a result, the (loss) income from continuing operations
        primarily consists of corporate expenses, charges and write-offs
        For the years subsequent to June 30,1995.    
        The years ended June 30, 1995 and 1994 reflect investment income      
        of approximately $3.4 million and $3.3 million, respectively, reduced 
        by corporate expenses and charges.           
                                                    
  (3)  On January 1, 1995, the Company completed its purchase of Freehold  
        Raceway.  The results of operations include the results of
        Freehold Raceway from such date.             

  (4)  Net Loss for the fiscal year ended June 30, 1997 is after an       
        extraordinary loss on early extinguishment of debt in the amount      
        of $3,837,625.                               

  (5)  The Company did not pay cash dividends during any of the fiscal
        years shown above.                           

  (6)  See Management's Discussion and Analysis of Financial Conditions
        and Results of Operations and the consolidated financial statements    
        and the notes thereto for additional information for each of the      
        three years in the period ended June 30, 1998.
</TABLE>

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS

 Liquidity and Capital Resources

     The Company's working capital, as of June 30, 1998, was a deficit
of ($36,744,740) which represents a decrease in the deficit of
approximately $4,560,000 from the June 30, 1997 working capital deficit
of ($41,300,997).  The decrease in the deficit was caused in part by the
re-classification of certain assets and current liabilities in
connection with the discontinued racetrack operations, offset by losses
incurred from operations.  On May 23, 1997, the Company obtained a
credit facility from CSFB.  This two-year $55 million facility was
secured by a pledge of certain of the personal and real property of the
Company and its subsidiaries.  Proceeds of the CSFB Credit Facility were
used to repay in full the Company's $30 million credit facility with
Foothill Capital Corporation ("Foothill") and were used to provide funds
for working capital and other general corporate purposes, including, but
not limited to, preliminary development of the El Rancho Property. 
Interest under the CSFB Credit Facility is payable monthly in arrears at
7% over the LIBOR.  Of the remaining facility borrowings, approximately
$16.8 million was placed in various escrow accounts ( including $10
million in an interest reserve account, which balance at June 30, 1998
was $2,753,752), financing and closing fees of $4.3 million were paid
and $3.9 million was used by the Company for general corporate purposes
and repayment of certain financial obligations.  At June 30, 1998, the
interest rate on the CSFB Credit Facility was 12.67%.  The Company is
not in compliance with certain non-financial covenants of the CSFB
Credit Facility.  As a result of not receiving waivers of these
violations, CSFB could accelerate the $55 million loan at anytime.  The
loan matures June 1, 1999.

     The CSFB Credit Facility is evidenced by a convertible promissory
note (the "CSFB Note") pursuant to which $10 million of the aggregate
principal amount of the CSFB Note can be converted in certain
circumstances, including on the maturity date of the CSFB Note, upon the
prepayment of at least $10 million in an aggregate principal amount of
the CSFB Note or upon acceleration of the CSFB Note, at the option of
CSFB, into shares of the Company's Common Stock at a conversion price of
$8.75 per share (subject to adjustment in certain events).  In addition,
pursuant to the CSFB loan agreement, CSFB was granted warrants to
purchase 1,044,000 shares of Common Stock at an exercise price of $4.375
per share (subject to adjustment in certain events).  Warrants to
purchase 546,847 shares of Common Stock are immediately exercisable and
warrants to purchase 497,153 shares of Common Stock become exercisable
upon certain events.

     The net loss for Fiscal 1998 was ($18,261,217).  Cash flows used
in operating activities amounted to approximately $5,654,000.  The net
loss incurred by the Company  includes approximately $12,600,000 of non-
cash expenses during the year.

       Cash provided by investing activities was $7,128,211 during
Fiscal  1998, primarily the result of proceeds of approximately
$8,450,000 from the sale of land at Garden State Park, offset by a non-
refundable payment of $600,000 to purchase an option to acquire certain
leasehold interests, relating to two New Mexico racetracks, El Rancho
Property development costs of approximately $240,000, capital
expenditures at the Company's racetracks of approximately $212,000, and
other capital expenditures of approximately $280,000.
 
     Cash used in financing activities was $1,878,513 during the Fiscal
1998, consisting principally of principal payments made to Sun Bank in
the amount of $6,000,000 and escrow deposits of $1,370,120 to CSFB as a
result of the sale of land at Garden State Park, and payments made on
various short and long term notes of $2,169,011, partially offset by
amounts drawn from the CSFB interest escrow account in the amount of
$7,683,063.

     The Company's scheduled principal payment on debt service are
expected to be approximately $56,410,000  during the twelve months
ending June 30, 1999.  Additionally, the Company may be obligated to
repay additional indebtedness of approximately $11,500,000 in connection
with Freehold Raceway if a sale of such facility is consummated.  (See
discussion below).
     
     Capital expenditures were approximately $732,000 during Fiscal
1998 and are expected to be insignificant in Fiscal 1999 due to the
pending sale of Freehold Raceway and lease of Garden State Park and the
discontinuance of construction at the El Rancho site.  Interest on the
CSFB Credit Facility was approximately $7,080,000 during Fiscal 1998 and
could be lower for Fiscal 1999 depending on the timing of the sale of
the discontinued operations. Expenses in connection with the El Rancho
Property for carrying costs, including real estate taxes, utilities,
security and maintenance were $974,167 in Fiscal 1998 and are expected
to be approximately $1,000,000 during Fiscal 1999.
  
     Provided CSFB does not make a demand for payment on the CSFB Note,
and continues to release funds in the interest reserve account, the
Company currently estimates that the funds made available from the CSFB
Credit Facility and placed in the interest reserve account, together
with cash generated from the Company's operations prior to the sale of
the discontinued operations, will be sufficient to finance its current
operations and expected expenditures and carrying costs of the El Rancho
Property until February 1999. 

     Prior to June 30, 1998, the Company determined to sell its
racetracks.  On July 2, 1998 the Company announced that it had entered
into an asset purchase agreement with Greenwood New Jersey, Inc.
("Greenwood"), a wholly-owned subsidiary of Greenwood Racing, Inc. which
owns Philadelphia Park racetrack, the Turf Clubs and Phonebet, for the
sale of the real property and related assets at Freehold Raceway and the
lease for a period of seven years of the real property and related
assets at Garden State Park (the "Greenwood Agreement").  The Greenwood
Transaction  is subject to the satisfaction of a number of conditions,
including without limitation, approval of the Company's stockholders,
the receipt by the Company of a fairness opinion from an independent
investment banker, and the receipt by Greenwood of approval from
applicable regulatory authorities.  The purchase price is $45 million,
consisting of $33 million in cash and a seven-year non-contingent
promissory note in the amount of $12 million, with an additional $10
million in contingent promissory notes becoming effective upon, among
other things, New Jersey's approval of off-track betting facilities or
telephone account pari-mutuel wagering on horse racing.  Further
adjustments could be made to increase the purchase price if certain
additional regulatory gaming changes are approved in New Jersey in the
future.  Greenwood Racing, Inc. will guarantee the performance by
Greenwood of all obligations under the notes.

     If the Greenwood Transaction is not completed by December 31,
1998, either party has the right to terminate.  Subject to various
conditions, including Greenwoods' right of first refusal, the Company's
Board has the right, at any time prior to the closing, to exercise its
fiduciary duties and accept a superior proposal for the sale and/or
lease of Freehold Raceway and Garden State Park.   The Company's Board
is continuing to consider all of the Company's strategic options to
maximize stockholder value.  Upon the sale of Freehold Raceway and the
lease or sale of Garden State Park, the Company will withdraw from any
gaming business regulated by the State of New Jersey.  The Company's
Board is considering alternatives for the Company's future, including
the acquisition of one or more operating businesses.

     On July 2, 1998, the Company entered into the Delaware Stipulation
to resolve the pending stockholder derivative litigation in the Delaware
Court of Chancery.  The Delaware Settlement is subject to a number of
conditions, including, without limitation, an agreement with CSFB or an
alternate lender. The Delaware  Settlement will result in the Company's
purchase from NPD of approximately 2.9 million shares of the Company's
Common Stock for $4.6 million, plus the assumption by the Company of
NPD's $5.8 million promissory note now held by Robert E. Brennan's
Bankruptcy Trustee, the retirement of approximately 2.1 million
additional shares of the Company's Common Stock owned by LVEN, the
resignation of certain of the Company's Board members and the
termination of various agreements.  The Delaware Settlement also
contemplates the disposition of the Company's non-operating El Rancho
Property.  The Delaware Settlement will not result in the release by the
Company of any claims against CSFB or Standard Capital Group.

     The timing of the events stated above cannot be estimated at this
time (however, it is expected that the racetrack properties will be sold
or leased within one year of June 30, 1998) and will materially affect
the liquidity of the Company.  When the sale and lease of the racetrack
properties occurs as outlined above, a portion of cash proceeds from the
Greenwood Transaction and sale of the El Rancho Property will be used to
reduce the Company's outstanding debt; the Company does not know how
much, if any,  of such proceeds will be available to the Company after
repayment of its debt.  Due to the materiality of these outstanding
events, the timing and the proceeds to be received from the asset sales,
and the timing of the consummation of the Delaware Settlement, it is
impossible to estimate the liquidity needs of the Company at this time. 
In the event the Company and its lenders are unable to agree upon
satisfactory terms, the Company will need to complete a financing
arrangement with an alternative lender in order to complete the
anticipated Delaware Settlement and to provide liquidity beyond February
1999.
     
     The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern.  As discussed in
Footnote 1 to the consolidated financial statements, the Company is in
violation of several loan covenants with its major lender, is party to
various legal proceedings and their proposed settlement and has
sustained a loss of approximately $18.3 million for the year ended June
30, 1998, all of which raise substantial doubt about its ability to
continue as a going concern.  Management's plans in regard to these
matters are also described in Footnote 1 to the consolidated financial
statements.  The consolidated financial statements do not include any
adjustments that might result from the outcome of these uncertainties.

Seasonality and Effect of Inclement Weather

     Because horse racing is conducted outdoors, a number of variables
contribute to the seasonality of the business, most importantly the
weather.  Weather conditions, particularly during the winter months,
sometimes cause cancellations of races or severely curtail attendance,
which reduces both live racing and simulcast wagering at on-site and
off-site facilities. 

     In addition, a disproportionate amount of the Company's revenue is
received during the period September through May of each year because
Garden State Park and Freehold Raceway conduct only simulcast receiving
(not live racing) during the summer months.  As a result, the Company's
revenue has been the greatest in the second and third quarters of its
fiscal year.

Impact of Year 2000 on the Company's Systems

     The year 2000 issue is the result of computer programs being
written using two digits rather than four to define the applicable year,
which may result in systems failures and disruptions to operations at
January 1, 2000.  Management is in the process of determining whether
all of the Company's accounting and operational systems are year 2000
compliant.  The Company has initiated formal communications with its
suppliers of the racetrack pari-mutuel computer systems to determine the
extent to which the Company is vulnerable to those third parties'
failure to remediate their own Year 2000 issue.  Although there can be
no assurance, management does not expect the costs associated with any
required conversions of systems to ensure year 2000 compliance to be
significant and expects to be year 2000 compliant by its fiscal 1999
year end.

Inflation

     To date, inflation has not had a material effect on the Company's
operations.

Results of Operations for the Fiscal Years Ended June 30, 1998 and 1997 

     Prior to June 30, 1998, the Company determined to sell its
racetracks.  On July 2, 1998, the Company entered into the Greenwood
Agreement.  Accordingly, the operating results of the racetrack
subsidiaries have been segregated and reported as discontinued
operations for each of the three years in the period ended June 30,
1998.  Also, on the same date, the Company entered into the Delaware
Stipulation to settle certain pending litigation.  Among other actions,
the Delaware Settlement contemplates the disposition of the El Rancho
Property. 

      The Company's Fiscal 1998 loss from continuing operations was
($25,468,850) as compared to a loss from continuing operations for the
prior fiscal year of ($15,144,053), an increase in the loss of
$10,324,797. This increase in the loss from continuing operations was
primarily the result of: (a)  an increase in general and administrative
expenses of $6,073,387; (b) an increase in interest expense of
$5,517,093; (c) an increase in amortization of financing costs of
$1,910,674; and (d) the estimated loss in connection with the adjustment
to fair market value of the El Rancho Property of $3,429,251.  The
increase in the loss was offset by (i) a write-off in Fiscal 1997 of
$2,585,000 in non-refundable deposits associated with the termination of
an option to purchase a parcel of land adjoining the El Rancho Property, 
(ii) a write-off of $2,543,968 in Fiscal 1997 associated with the
termination of the Starship Orion concept for the future development of
the El Rancho Property, which costs were expensed in Fiscal 1997, (iii)
a decrease of $799,460 in El Rancho Property carrying costs from
$1,773,627 in Fiscal 1997 to $974,167 in Fiscal 1998 and (iv) an
increase in interest income of $677,181.

     General and administrative expenses of $11,615,972 for Fiscal 1998
increased $6,073,387 or 110% from the prior fiscal year amount of
$5,542,585.  The increase in general and administrative expenses was
principally attributable to: (1) the accrual of an estimated charge of
$3,748,000 the Company will incur in connection with the purchase of the
2,904,016 shares from NPD and the termination of certain agreements upon
consummation of the Delaware Settlement; the charge of $3,748,000
represents the difference between the amount the Company will pay for
the shares and their estimated fair value; (2) an increase in legal
expenses of $2,400,000 from $900,000 in Fiscal 1997 to $3,300,000 in
Fiscal 1998, primarily as the result of legal expenses associated with
the various director and stockholder lawsuits; (3) an increase in
officer and corporate administrative salaries and benefits of $470,000;
and (4) an increase in non-employee option expenses of $337,500;  offset
by decreases in (i) taxes of $400,000, (ii) rental expense of $360,000
and (iii) various executive travel and related expenses of $262,000. In
the absence of a public market for the Company's Common Stock,
management has determined the estimated fair value fo the Common Stock
referred to in clause (1) above to be the anticipated book value
attributable to the Common Stock after taking into account the estimated
operating results until the disposition of the racetrack operations
assumed to occur on December 31, 1998, the disposal of the racetrack
assets and the El Rancho Property, and other transactions contemplated
in the Delaware Settlement.  There can be no assurance that all of these
transactions will occur or if they will occur at the estimated amounts.

     The increase in interest expenses of $5,517,093 was principally
attributable to higher interest rates and higher indebtedness levels of
the Company and the fact that interest was expensed during Fiscal 1998
as compared to a portion of the interest being capitalized and a portion
being expensed during Fiscal 1997, offset by an increase in interest
income of $677,181 on the CSFB escrow funds. The increase in
amortization of finance costs of $1,910,674 was principally due to the
increased cost of the CSFB loan as compared to the cost of the Foothill
loan. 

     Income from discontinued operations was $7,207,633 for Fiscal 1998
as compared to income from discontinued operations for Fiscal 1997 of
$1,594,096, an increase of $5,613,537.  During Fiscal 1998, revenue from
racetrack operations at Freehold Raceway and Garden State Park increased
by an aggregate of $204,568 from the prior fiscal year and racetrack
operating expenses decreased by $5,408,969 during the same period,
primarily as a result of a decrease in wages and benefits and outside
services at the two facilities.  See the separate results for Garden
State Park and Freehold Raceway below.  

     During Fiscal 1998, the Company incurred a net loss of
($18,261,217) as compared to a net loss of ($17,387,583) for Fiscal
1997.  The increase in net loss of $873,634 was the result of those
differences described above and a decrease in a loss on early
extinguishment of debt recognized in Fiscal 1997 in the amount of
$3,837,625.

     The New Jersey Division of Gaming Enforcement ("DGE") has
conducted an investigation of the Company and its directors and
significant stockholders in connection with Garden State Park's and
Freehold Raceway's licenses with the Casino Control Commission ("CCC")
and the Racing Commission.  The DGE issued a report to the CCC in
September 1998 in which it objected to the qualification of one director
who did not file an application and requested hearings for three
stockholders.  The director and one of the stockholders have requested
hearings with the CCC and if the Delaware Settlement is consummated, the
other two stockholders will no longer be required to qualify.  The DGE
also reserved the right to continue its investigation as to additional
directors in the event the Delaware Settlement is not consummated.  As a
result of the DGE's report and subject to the consummation of the
Delaware Settlement, the CCC and/or Racing Commission may undertake
further proceedings which potentially could jeopardize the Company's
racing licenses and ability to conduct business with any casino
licensees, including simulcasting to Atlantic City casinos, which could
have a significant negative impact on the Company's operations until the
racetracks are sold or leased.


     Garden State Park   

     During Fiscal 1998, Garden State Park ran its Harness Meet from
September 5,1997 through December 12, 1997 (51 dates) and its
Thoroughbred Meet from January 1, 1998 through May 23, 1998 (63 dates).
During these race meetings, Garden State Park simulcasts its live racing
to other racetracks, other licensed venues and certain Atlantic City
casinos.  Simulcasting into the racetrack from other racetracks
continues throughout the year.

     During Fiscal 1998, Garden State Park's revenue increased $142,246
from $31,019,129 in Fiscal 1997 to 31,161,375 in Fiscal 1998, primarily
a result of net increases in simulcasting revenues generated during the
period of $784,000, partially offset by lower wagering and attendance
from live racing throughout the year.   Total expenses decreased
$3,066,595 or 9% in Fiscal 1998,primarily as a result of a decrease in
wages and benefits of $1,439,000 or 12%.  Additional savings were
realized by reducing outside services, advertising and promotions,
insurance, materials and supplies and real estate taxes as a result of a
settlement of a tax appeal filed effective January 1, 1998. As a net
result, Garden State Park realized operating income of $1,303,717 during
Fiscal 1998 as compared to an operating loss during Fiscal 1997 of
($1,905,124), a change of $3,208,841.  

     The Fiscal 1998 Harness Meet (51 days) resulted in operating
income of approximately $1,228,000, compared with the Fiscal 1997
Harness Meet (55 days) operating income of approximately $365,000. 
Daily on-track attendance and wagering at the track's Fiscal 1998
Harness Meet averaged 1,959 and $133,862, respectively, as compared to
2,206 and $154,242, respectively, during the Fiscal 1997 Harness Meet. 
The increase in operating income of $828,000 was principally attributed
to a reduction in operating expenses as mentioned above.

     The Fiscal 1998 Thoroughbred Meet (63 days) had an operating loss
of approximately ($285,000) compared to the Fiscal 1997 Thoroughbred
Meet (62 days) operating loss of approximately ($1,955,000).  The
decrease in operating loss of $1,635,000 from Fiscal 1997 was
principally attributed to a reduction in operating expenses during the
period.  Daily on-track attendance and wagering at Garden State Park's
1998 Thoroughbred Meet averaged 2,994 and $124,169, respectively. 
During the Fiscal 1997 Thoroughbred Meet, daily on-track attendance
wagering averaged 2,929 and $154,407, respectively.  Although the
attendance at the Fiscal 1998 Thoroughbred Meet was approximately the
same as compared to the Fiscal 1997 meet, the Company's revenue from
simulcast receiving increased and wagering on live racing decreased
during such period.  Revenue from simulcast sending decreased $28,000 or
1% in 1998. 

     During Fiscal 1998, the track had an operating income of
approximately $360,000 during the non-racing periods as compared to an
operating loss of approximately ($315,000) in the prior fiscal year's
non-racing periods.  The increase in the operating profit (from a loss
to a profit)  was primarily attributable to a reduction in operating
expenses during the period.

     Simulcasting during Fiscals 1998 and 1997, both to and from other
New Jersey racetracks, as well as out-of-state racetracks and casinos,
accounted for approximately 84% and 82%, respectively, of revenue, while
live racing and other income accounted for approximately 16% and 18%,
respectively,  of revenue at Garden State Park during Fiscals 1998 and
1997. 

     Freehold Raceway    

     During Fiscal 1998, Freehold Raceway ran its Freehold Racing
Association (FRA) Harness Meet from August 14, 1997 through December 31,
1997 for a total of 99 days.  Freehold's Atlantic City Harness (ACH),
ran its Harness Meet from January 1, 1998 through May 25, 1998 for a
total of 97 days.  During both race meets, Freehold Raceway simulcasts
its live racing to other racetracks, other licensed venues and certain
Atlantic City casinos.  Simulcasting into the racetrack from other
racetracks continues throughout the fiscal year.

     For Fiscal 1998, Freehold Raceway realized operating income of
$5,903,916, an increase of $2,404,697 or 69% as compared to operating
income of $3,499,219 for the prior fiscal year.  During Fiscal 1998,
Freehold Raceway's revenue was $37,475,074, a slight increase when
compared to the corresponding period in the prior Fiscal year of
$37,412,752.  Expenses decreased $2,342,375 or 7% from Fiscal 1997
primarily as a result of a decrease in salary and benefit expense
principally resulting from the Company's effort to cut overhead and
operating costs, partially offset by an accrual for an executive
terminated in the third quarter of Fiscal 1997.  The decrease in
expenses primarily accounted for the racetrack realizing income of
$5,903,916 for Fiscal 1998 as compared to income of $3,499,219 for
Fiscal 1997.

     The Fiscal 1998 FRA Harness Meet conducted August 14, 1997 through
December 1997, (99 days) resulted in operating income of approximately
$2,280,000 as compared to the Fiscal 1997 FRA Harness Meet (100 days)
which resulted in operating income of approximately $1,425,000.  Daily 
on-track attendance and wagering at the Fiscal 1998 FRA meet averaged
2,090 and $217,000, respectively, as compared to 2,161 and $248,819,
respectively, for Fiscal 1997.  The average simulcast handle during the
six  months ended December 31, 1997 averaged $332,000 as compared to
$309,000 for the prior year.  The increase in simulcast wagering offset
the decrease in live wagering income.  The increase in operating income
is attributable to a reduction in operating expenses during the period.

     The Fiscal 1998 ACH Harness Meet (97 days) resulted in operating
income of approximately $2,850,000 as compared to the Fiscal 1997
Harness Meet (106 days) which resulted in income of $1,825,000.  Daily
on-track attendance and wagering at the Fiscal 1998 ACH meet averaged
2,061 and $205,389, respectively, as compared to 2,099 and $214,126,
respectively, for Fiscal 1997.  The average simulcast handle during the
six months ended June 30, 1998, averaged $369,000 as compared to
$344,000 for the prior year.  The increase in simulcast wagering offset
the decrease in live wagering income.  The increase in operating income
is attributable to a reduction in operating expenses during the period.

     During  Fiscals 1998 and 1997, Freehold Raceway had operating
income of approximately $770,000 and $250,000, respectively, during the
non-live racing periods.  During Fiscals 1998 and 1997, the track
conducted simulcasting each day during the summer months when it was
previously restricted.  The increase in operating income during this
period is attributable to an increase in the simulcast receiving handles
during the non-live racing periods and a reduction in operating expenses
during the period.

     Simulcasting during Fiscals 1998 and 1997, both to and from other
New Jersey racetracks as well as out-of-state racetracks and casinos,
accounted for approximately 74% and 70%, respectively, of revenue, while
live racing and other income accounted for approximately 26% and 30%,
respectively,  of revenue at Freehold Raceway during Fiscals 1998 and
1997.

Results of Operations for the Fiscal Years Ended June 30, 1997 and 1996 

     The Company's Fiscal 1997 loss from continuing operations was
($15,144,053) as compared to a loss from continuing operations for the
prior fiscal year of ($2,779,987), an increase in the loss of
$12,364,066.  The increase in loss from continuing operations was
primarily the result of: (a) an increase in general and administrative
expenses of $2,723,912; (b) an increase in interest expense of
$1,532,800; (c) an increase in amortization of financing costs of
$1,142,909; (d) carrying costs of $1,773,627 of the El Rancho Property
during Fiscal 1997, including real estate taxes, insurance and
utilities; (e) a write-off of $2,585,000 in non-refundable deposits
associated with the termination of an option to purchase a parcel of
land adjoining the El Rancho Property in Las Vegas made during the
second quarter of Fiscal 1997; and (f) a write-off of $2,543,968 during
the fourth quarter of Fiscal 1997 of costs associated with the
termination of the Starship Orion concept for the future development of
the El Rancho Property.

     General and administrative expenses of $5,542,585 for Fiscal 1997
increased $2,723,912, or 97%, from the prior fiscal year amount of
$2,818,673.  The increase in general and administrative expenses is
principally attributable to: (1) non-employee option expense increases
of $460,000; (2) a net increase in officer and corporate administrative
salaries and benefits of $233,000; (3) severance amounts paid to, or
accrued for, terminated officers of $452,000; (4) legal, accounting and
professional fee increases of $267,000; (5) corporate insurance expense
increases of $220,000; and (6) an increase of $390,000 in travel and
related expenses in connection with corporate business opportunities,
financing activities and executive travel.  

     Interest expenses increased in Fiscal 1997 by $1,532,880
principally as a result of higher indebtedness levels incurred by the
Company.  The amortization of financing costs in Fiscal 1997 of
$1,142,909 primarily reflects the cost associated with the Credit Suisse
Credit Facility.  El Rancho Property carrying costs were $1,773,627 for
Fiscal 1997 which reflects the purchase of the property in January 1996. 

     Income from discontinued operations was $1,594,096 for Fiscal 1997
as compared to income for Fiscal 1996 of $1,710,276, a decrease of
$116,180.  During Fiscal 1997, revenue from racetrack operations
decreased at Garden State Park and increased at Freehold Raceway for a
net combined decrease of $103,761 from the prior fiscal year.  Racetrack
operating expenses increased $12,420 during the same period. 

     During Fiscal 1997, the Company incurred a net loss of
($17,381,582) as compared to a net loss of ($1,069,711) for Fiscal 1996. 
The increase in net loss of $16,317,872 is the result of those
differences described above and a loss on early extinguishment of debt
recognized in Fiscal 1997 in the amount of $3,837,625.

     Garden State Park   

     During Fiscal 1997, Garden State Park ran its Harness Meet from
September 6, 1996 through December 14, 1996 (55 dates) and its
Thoroughbred Meet from January 1, 1997 through May 23, 1997 (62 dates).
During these race meets, Garden State Park simulcasts its live racing to
other racetracks, other licensed venues and certain Atlantic City
casinos.  Simulcasting into the racetrack from other racetracks
continues throughout the year.

     During Fiscal 1997, Garden State's revenue decreased $1,273,714 or
4%  when compared to the prior fiscal year, reflecting net decreases in
simulcasting revenues generated during the period of $950,000, in
addition to lower wagering and attendance throughout the year which
contributed to reduced revenue from live racing.   The cost of revenues,
primarily purse expenses and operating expenses, decreased approximately
$1,750,000 or 5% when compared to the prior fiscal year, primarily as a
result of the decreases in purses of $1,200,000 attributable to the
reduced wagering. As a net result, Garden State Park incurred an
operating loss of $1,905,124 during Fiscal 1997 compared to an operating
loss during the Fiscal year ended June 30, 1996 of $2,328,092.  

     The Fiscal 1997 Harness Meet (55 days) resulted in operating
income of approximately $365,000, compared with fiscal 1996 Harness Meet
(53 days) operating income of approximately $852,000.  Daily on-track
attendance and wagering at the track's Fiscal 1997 Harness Meet averaged
2,206 and $154,242, respectively, as compared to 2,434 and $182,103,
respectively, during the Fiscal 1996 Harness Meet.  The decrease in
operating income of $452,000 is principally attributed to lower revenues
on live racing and simulcast sending and receiving in Fiscal 1997
resulting from (i) increased competition principally from telephone
wagering in Pennsylvania, (ii)  several off-track-betting parlors
located in close proximity to Garden State Park and (iii) racetracks in
Delaware which offer slot machines.

     The Fiscal 1997 Thoroughbred Meet (62 days) had an operating loss
of approximately ($1,955,000) compared to the Fiscal 1996 Thoroughbred
Meet (64 days) operating loss of approximately ($2,388,000).  Daily
on-track attendance and wagering at Garden State Park's Fiscal 1997
Thoroughbred Meet averaged 2,929 and $154,407, respectively.  During the
Fiscal 1996 Thoroughbred Meet, daily on-track attendance and wagering
averaged 2,891 and $164,381, respectively.  Although the attendance at
the Fiscal 1997 Thoroughbred Meet was approximately the same as compared
to the Fiscal 1996 meet, the Company's revenue from simulcast receiving
increased and wagering on live racing decreased during such period. 
Revenue from simulcast sending decreased $700,000 or 24% in Fiscal 1997,
which was partially offset by reductions in purses, outside services and
utility expenses.

     During Fiscal 1997, the track had an operating loss of
approximately ($315,000) during the non-racing periods as compared to an
operating loss of approximately ($782,000) in the prior fiscal year's
non-racing periods.  The decrease in the operating loss was primarily
attributable to an increase in outside event income of $350,000 during
Fiscal 1997.

     Simulcasting during both Fiscals 1997 and 1996, both to and from
other New Jersey racetracks, as well as out-of-state racetracks and
casinos, accounted for approximately 82% of revenue while live racing
and other income accounted for approximately 18% of revenue at Garden
State Park during both Fiscals 1997 and 1996. 

     Freehold Raceway    

     During Fiscal 1997, Freehold Raceway ran its Freehold Racing
Association (FRA) Harness Meet from August 15, 1996 through December 31,
1996 for a total of 100 days.  Freehold's Atlantic City Harness (ACH),
ran a Harness Meet ran from January 1, 1997 through May 26, 1997 for a
total of 106 days.  During both race meets, Freehold Raceway simulcasts
its live racing to other racetracks, other licensed venues and certain
Atlantic City casinos.  Simulcasting into the racetrack from other
racetracks continues throughout the fiscal year.

     For Fiscal 1997, Freehold Raceway realized operating income of
$3,499,219, a reduction of $539,149  as compared to operating income of
$4,038,368 for the prior fiscal year.   During Fiscal 1997, Freehold
Raceway's revenue increased $1,169,953 or 3.3%  when compared to the
prior fiscal year, primarily, as a result of a 5 day increase in the
total number of race days in Fiscal 1997 as compared to Fiscal 1996, a
15 day increase in the number of simulcast receiving days, along with
higher simulcast receiving wagering.  The cost of revenues, primarily
purse expenses, simulcasting commissions and operating expenses,
increased $1,525,000 or 5% when compared to Fiscal 1996,  primarily as a
result of the increase in the number of race days and simulcast days.
General and administrative expenses increased $560,000 as compared to
the prior fiscal year primarily as a result of increased telephone
expenses associated with the increased simulcast receiving, and an
increase in real estate taxes. 

     The Fiscal 1997 FRA Harness Meet (100 days) resulted in operating
income of approximately $1,425,000 as compared to the Fiscal 1996 FRA
Harness Meet (99 days) which resulted in operating income of
approximately $2,243,000.  Daily  on-track attendance and wagering at
the Fiscal 1997 FRA Harness Meet averaged 2,161 and $248,819,
respectively, as compared to 2,286 and $283,361, respectively, for
Fiscal 1996.  The decrease in operating income and wagering is, in part,
attributable to increased competition from Monmouth Park, a racetrack 20
miles from Freehold.  During the fall of Fiscal 1996, simulcasting at
Monmouth Park was restricted (5 days per week and closed between
Thanksgiving and Christmas), whereas in Fiscal 1997 Monmouth Park
received simulcasting most days.

     The Fiscal 1997 ACH Harness Meet (106 days) resulted in operating
income of approximately $1,825,000 as compared to the Fiscal 1996 Meet
(102 days) which resulted in income of $1,620,000.  The increase in
income was primarily the result of additional simulcast receiving during
live days.  Daily on-track attendance and wagering at the Fiscal 1997
ACH Harness Meet averaged 2,099 and $214,126, respectively, as compared
to 2,085 and $252,058, respectively, for Fiscal 1996.  Although
attendance was relatively stable, wagering on simulcast receiving
increased in Fiscal 1997 to the detriment of live on-track wagering.

     During Fiscals 1997 and 1996, Freehold Raceway had operating
income of approximately $250,000 and $175,000, respectively,  during the
non-racing periods.  During Fiscal 1997, the track conducted
simulcasting each day during the summer months, whereas simulcasting was
restricted during the summer in Fiscal 1996.

     Simulcasting during Fiscals 1997 and 1996, both to and from other
New Jersey racetracks as well as out-of-state racetracks and casinos,
accounted for approximately 70% and 66%, respectively, of revenue, while
live racing and other income accounted for approximately 30% and 34%,
respectively,  of revenue at Freehold Raceway during Fiscals 1997 and
1996.

     IMPORTANT FACTORS RELATING TO FORWARD LOOKING STATEMENTS

     This Report contains certain 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, and is
subject to the safe-harbor created by such sections.  Such statements
concern the Company's operations, economic performance and financial
condition, including the impact on the Company's operations of the sale
and lease of the Company's racetracks, the disposition of the El Rancho
Property, the Delaware Settlement, the Company's defaults under the CSFB
Credit Facility, the results of certain litigation involving the Company
and certain of its directors and stockholders if the Delaware Settlement
is not consummated, and the competitive effect of off-track wagering and
other forms of gaming, and the impact of the DGE report on the Company's
licenses with the CCC and the Racing Commission, and the forward-looking
statements in this Report involve known and unknown risk, uncertainties
and other factors that may cause the actual results, performance, or
achievements expressed or implied by such forward-looking statements. 
Such factors include, among others, the following: general economic and
business conditions; changes in law regarding gaming activities in New
Jersey and neighboring states; competition; changes in business
strategy; the indebtedness of the Company; quality of management;
business abilities and judgment of the Company's personnel; the
availability, terms and deployment of capital; and various other factors
referenced in the Report.  The forward-looking statements are made as of
the date of this Report, and the Company assumes no obligation to update
the forward-looking statements or to update the reasons why actual
results could differ from those projected in the forward-looking
statements.

ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
     
     Nothing of this item impacts the Company.


ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
     Attached.

     
       REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of
International Thoroughbred Breeders, Inc.
Cherry Hill, New Jersey 


     We have audited the accompanying consolidated balance sheets of
International Thoroughbred Breeders, Inc. and subsidiaries as of June
30, 1998 and 1997, and the related consolidated statements of
operations, stockholders' equity and cash flows for the years then
ended. These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.

     We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position
of International Thoroughbred Breeders, Inc. and its subsidiaries as of
June 30, 1998 and 1997, and the results of their operations and their
cash flows for the years then ended in conformity with generally
accepted accounting principles.

     The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern.  As discussed in Note
1 to the financial statements, the Company is in violation of several
loan covenants with its major lender, is party to various legal
proceedings and their proposed settlements and has sustained a loss of
approximately $18.3 million for the year ended June 30, 1998, all of
which raise substantial doubt about its ability to continue as a going
concern.  Management's plans in regard to these matters are also
described in Note 1.  The financial statements do not include any
adjustments that might result from the outcome of these uncertainties.
     
     We also audited the adjustments described in Note 1 relating to
discontinued operations that were applied to restate the consolidated
statement of operations and cash flows for the year ended June 30, 1996. 
In our opinion, such adjustments are appropriate and have been properly
applied.


                                             BDO SEIDMAN, LLP
                                             

Philadelphia, Pennsylvania
October 9, 1998


       REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of
International Thoroughbred Breeders, Inc.
 


     We have audited the accompanying consolidated statement of
operations and cash flows prior to the restatement relating to
discontinued operations described in Note 1, and stockholders' equity of
International Thoroughbred Breeders, Inc. for the year ended June 30,
1996. These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audit.

     We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated results
of operations, cash flows and stockholders' equity of International
Thoroughbred Breeders, Inc. for the year ended June 30, 1996, in
conformity with generally accepted accounting principles.

     



                                   MOORE STEPHENS, P.C.
                                   Certified Public Accountants

Cranford, New Jersey
August 23, 1996

              INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                           AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS
                     AS OF JUNE 30, 1998 AND 1997

                                ASSETS

<TABLE>
<S><C>                             <C><C>        <C><C>
                                      June 30,        June 30,

                                        1998            1997

CURRENT ASSETS:                                    

 Cash and Cash Equivalents         $      213,795 $     3,784,895

 Restricted Cash and                               
 Investments                                    0       3,730,323

 Reserve Escrow Deposits               10,460,881      16,773,824

 Accounts Receivable                       36,838       1,497,254

 Prepaid Expenses                         322,313       1,396,766

 Other Current Assets                     325,756         664,226

 Net Assets of Discontinued                        

 Operations - Current                  12,235,217               0

 Land and Improvements                             

 Held for Sale, Net                             0       6,762,809

      TOTAL CURRENT ASSETS             23,594,800      34,610,097

                                                   

                                                   

NET ASSETS OF DISCONTINUED                         

OPERATIONS - Long Term                 45,626,944               0
                                                  

PROPERTY HELD FOR SALE                 47,434,670               0
                                                   

LAND, BUILDINGS AND                                

EQUIPMENT:                                         

 Land and Buildings                       214,097      69,255,937

 Construction In Progress                       0      50,624,333

 Equipment                                814,927       5,261,367

                                        1,029,024     125,141,637

 LESS: Accumulated Depreciation                    

 and Amortization                         308,162       4,278,754
                                                 
                                                   
      TOTAL LAND, BUILDINGS                        

      AND EQUIPMENT, NET                  720,862     120,862,883

                                                   

                                                   

OTHER ASSETS:                                      

 Deposits and Other Assets                  3,172         272,337

 Deferred Financing Costs, Net          2,872,453       5,907,432

 Goodwill, Net                                  0       3,041,280

      TOTAL OTHER ASSETS                2,875,625       9,221,049
                                                 
                                                  
TOTAL ASSETS                       $  120,252,901 $   164,694,029

                                                   

See Notes to Consolidated Financial Statements.    
</TABLE>


              INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                           AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS
                     AS OF JUNE 30, 1998 AND 1997

                 LIABILITIES AND SHAREHOLDERS' EQUITY

<TABLE>
<S><C>                             <C><C>         <C><C>
                                       June 30,       June 30,

                                         1998           1997

CURRENT LIABILITIES:                                

 Accounts Payable                  $       278,786 $    3,984,638

 Accrued Expenses                        4,852,328      5,228,655

 Purses Payable                                  0      1,984,050

 Current Maturities of                              
 Long-Term Debt                         55,208,426     62,963,178

 Deferred Revenue                                0      1,750,572

      TOTAL CURRENT LIABILITIES         60,339,540     75,911,093

                                                   
LONG-TERM DEBT, Net of                              
Current Portion                                  0     13,131,003
                                                    

COMMITMENTS AND CONTINGENCIES             -               -

                                                   
STOCKHOLDERS' EQUITY:                               

 Series A Preferred Stock,                          
   $100.00 Par Value,                               
   Authorized 500,000 Shares,                       
   Issued and Outstanding,                          
   362,480 and 362,470 Shares,                      
   Respectively                         36,247,975     36,246,975
                                                    
 Common Stock, $2.00 Par Value,                     
  Authorized 25,000,000 Shares,                     
  Issued and Outstanding,                           
  13,978,099 and 13,978,060                         
  Shares, Respectively                  27,956,197     27,956,119
                                                   
 Capital in Excess of Par               25,878,224     25,048,752
                                                  
 (Deficit) (subsequent to                           
  June 30, 1993, date of                            
  quasi-reorganization)               (30,132,368)   (13,558,246)

      TOTAL                             59,950,028     75,693,600

 LESS: Deferred Compensation, Net           36,667         41,667

      TOTAL STOCKHOLDERS' EQUITY        59,913,361     75,651,933

                                                   
TOTAL LIABILITIES AND                               
STOCKHOLDERS' EQUITY               $   120,252,901 $  164,694,029

See Notes to Consolidated Financial Statements.    
</TABLE>



              INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                           AND SUBSIDIARIES

      CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED
                     JUNE 30, 1998, 1997 AND 1996

<TABLE>
<S><C>                                <C><C>       <C><C>
                                            Year Ended June 30,

                                           1998          1997

                                                     

EXPENSES:                                            

 General & Administrative Expenses    $  11,615,972  $  5,542,585
 (including legal fees of $3,306,877,                
  $896,729, and $637,229,                            
  respectively, and the estimated                    
  charge in connection with the                      
  repurchase of the NPD shares of                    
  $3,748,000 for the 1998 year)                      

 Interest Expense                         7,084,968     1,567,875

 Interest Income                          (689,092)      (11,911)

 Amortization of Financing Costs          3,053,583     1,142,909

 El Rancho Property Carrying Costs          974,167     1,773,627

 Impairment Loss of El Rancho Property    3,429,251             0

 Write Off of Deposits on Land                    0     2,585,000

 Write Off of Starship Orion Costs                0     2,543,968
                                                    

(LOSS) FROM CONTINUING OPERATIONS                    
   BEFORE DISCONTINUED OPERATIONS                    
  AND EXTRAORDINARY ITEM                (25,468,850) (15,144,053)

                                                     

INCOME FROM DISCONTINUED OPERATIONS                  

 Income from operations of discontinued              
   racetrack operations (less                        
   applicable income taxes of                        
   $135,100, $55,617 and $227,512)        7,207,633     1,594,096

                                                    
(LOSS) BEFORE EXTRAORDINARY ITEM        (18,261,217) (13,549,957)
                                                    

EXTRAORDINARY ITEM -                                 

 (Loss) on Early Extinguishment                      
 of Debt                                          0   (3,837,625)
                                                     
NET (LOSS)                             $(18,261,217) $(17,387,582)

                                                     

BASIC PER SHARE DATA:                                
                                                    
(LOSS) BEFORE DISCONTINUED                           
 OPERATIONS AND EXTRAORDINARY ITEM     $     (1.82) $      (1.29)
                                                    
INCOME FROM DISCONTINUED OPERATIONS            0.51          0.14
                                                    
EXTRAORDINARY ITEM                           -             (0.33)
                                                     
NET (LOSS)                             $     (1.31) $      (1.48)

                                                     

WEIGHTED AVERAGE COMMON SHARES                       
OUTSTANDING                              13,978,086    11,715,256

                                                     

See Notes to Consolidated Financial Statements.      

                                                     

                                        Year Ended June 30,

                                           1996      

                                                     

EXPENSES:                                            

 General & Administrative Expenses        2,818,673  
 (including legal fees of $3,306,877,                
  $896,729, and $637,229,                            
  respectively, and the estimated                    
  loss in connection with the                        
  repurchase of the NPD shares of                    
  $3,148,000 for June 30, 1998)                      

 Interest Expense                            34,995  

 Interest Income                           (73,681)  

 Amortization of Financing Costs                  0  

 El Rancho Property Carrying Costs                0  

 Write Down of El Rancho Property                 0  

 Write Off of Deposits on Land                    0  

 Write Off of Starship Orion Costs                0  
                                                     

(LOSS) FROM CONTINUING OPERATIONS                    
   BEFORE DISCONTINUED OPERATIONS                    
  AND EXTRAORDINARY ITEM                (2,779,987)  
                                                    

INCOME FROM DISCONTINUED OPERATIONS                  

 Income from operations of discontinued              
   racetrack operations (less                        
   applicable income taxes of                        
   $135,100, $55,617 and $227,512)        1,710,276  
                                                     
(LOSS) BEFORE EXTRAORDINARY ITEM        (1,069,711)  
                                                     
EXTRAORDINARY ITEM -                                 

 (Loss) on Early Extinguishment                      
 of Debt                                          0  
                                                     
NET (LOSS)                             $(1,069,711)  

                                                     
BASIC PER SHARE DATA:                                
                                                    
(LOSS) BEFORE DISCONTINUED                           
 OPERATIONS AND EXTRAORDINARY ITEM     $     (0.26)  
                                                     
INCOME FROM DISCONTINUED OPERATIONS            0.16  
                                                     
EXTRAORDINARY ITEM                           -       
                                                     
NET (LOSS)                             $     (0.10)  

                                                     
WEIGHTED AVERAGE COMMON SHARES                       
OUTSTANDING                              10,536,414  

                                                     

See Notes to Consolidated Financial Statements.      
</TABLE>


              INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                           AND SUBSIDIARIES

    CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY FOR THE YEARS
                  ENDED JUNE 30, 1997, 1996 AND 1995


<TABLE>
<S>                                <C><C>         <C><C>
                                               Preferred

                                      Number of    

                                        Shares         Amount

BALANCE - JUNE 30, 1995                    362,450$    36,244,975
                                                   
   Common Shares Issued -                          
    Reg S Offering                       ---            ---
   Shares Issued in Connection                     
    with Debt Financing                  ---            ---
   Deferred Compensation for                       
    Options Granted to Employees         ---            ---
   Financing Costs for Warrants in                 
    Connection with Debt Financing       ---            ---
   Shares Issued for Fractional                    
    Exchanges With Respect to the                  
    One-for-twenty Reverse Stock                   
    Split effected on March 13, 1992            12          1,200
   Amortization of Deferred                        
    Compensation Costs                   ---            ---
   Net (Loss) for the                              
    Year Ended June 30, 1996             ---            ---
                                                  
BALANCE - JUNE 30, 1996                    362,462     36,246,175

                                                   

   Shares Issued in Connection with                
    Retirement of Debt                             
   Compensation for Options Granted                
    to Non-Employees                     ---            ---
   Financing Costs for Warrants                    
    Issued in Connection with                      
    Debt Financing                       ---            ---
   Shares Issued for Fractional                    
    Exchanges With Respect to the                  
    One-for-twenty Reverse Stock                   
    Split effected on March 13, 1992             8            800
   Amortization of Deferred                        
    Compensation Costs                   ---            ---
   Cancellation of Options Granted                 
    for Deferred Compensation            ---            ---
   Net (Loss) for the                              
    Year Ended June 30, 1997             ---            ---
                                                   
BALANCE - JUNE 30, 1997                    362,470     36,246,975

                                                   

   Compensation for Options Granted                
    to Non-Employees                     ---            ---
   Shares Issued for Fractional                    
    Exchange With Respect to the                   
    One-for-twenty Reverse Stock                   
    Split effected on March 13, 1992            10          1,000
   Amortization of Deferred                        
    Compensation Costs                   ---            ---
   Gain on Sale of Land                  ---            ---
   Net (Loss) for the                              
    Year Ended June 30, 1998             ---            ---
                                                   
BALANCE - JUNE 30, 1998                    362,480$    36,247,975
                                                   

See Notes to Consolidated Financial Statements.    

                                                   

                                                   

                                            Common 

                                      Number of    
                                        Shares         Amount

BALANCE - JUNE 30, 1995                  9,551,386$    19,102,771
                                                   
   Common Shares Issued -                          
    Reg S Offering                       1,900,000      3,800,000
   Shares Issued in Connection                     
    with Debt Financing                    200,000        400,000
   Deferred Compensation for                       
    Otions Granted to Employees          ---            ---
   Financing Costs for Warrants in                 
    Connection with Debt Financing       ---            ---
   Shares Issued for Fractional                    
    Exchanges With Respect to the                  
    One-for-twenty Reverse Stock                   
    Split effected on March 13, 1992           101            202
   Amortization of Deferred                        
    Compensation Costs                   ---            ---
   Net (Loss) for the                              
    Year Ended June 30, 1996             ---            ---
                                                   
BALANCE - JUNE 30, 1996                 11,651,487     23,302,973

                                                   

   Shares Issued in Connection                     
    with Retirement of Debt              2,326,520      4,653,040
   Compensation for Options Granted                
    to Non-Employees                     ---            ---
   Financing Costs for Warrants                    
    Issued in Connection with                      
    Debt Financing                       ---            ---
   Shares Issued for Fractional                    
    Exchanges With Respect to the                  
    One-for-twenty Reverse Stock                   
    Split effected on March 13, 1992            53            106
   Amortization of Deferred                        
    Compensation Costs                   ---            ---
   Cancellation of Options Granted                 
    for Deferred Compensation            ---            ---
   Net (Loss) for the                    ---            ---
    Year Ended June 30, 1997                       
                                                   
BALANCE - JUNE 30, 1997                 13,978,060     27,956,119

                                                   

   Compensation for Options Granted                
    to Non-Employees                     ---            ---
   Shares Issued for Fractional                    
    Exchanges With Respect to the                  
    One-for-twenty Reverse Stock                   
    Split effected on March 13, 1992            39             78
   Amortization of Deferred                        
    Compensation Costs                   ---            ---
   Gain on Sale of Land                  ---            ---
   Net (Loss) for the                              
    Year Ended June 30, 1998             ---            ---
                                                   
BALANCE - JUNE 30, 1998                 13,978,099$    27,956,197

                                                   

See Notes to Consolidated Financial Statements.    

                                                 
                                                  
                                                   

                                       Capital        Retained
                                      in Excess       Earnings
                                        of Par       (Deficit)

BALANCE - JUNE 30, 1995            $    11,959,643$     4,899,048
                                                   
   Common Shares Issued -                          
    Reg S Offering                       1,638,162      ---
   Shares Issued in Connection with                
    with Debt Financing                    400,000      ---
   Deferred Compensation for                       
    Options Granted to Employees           175,000      ---
   Financing Costs for Warrants in                 
    Connection with Debt Financing       1,940,250      ---
   Shares Issued for Fractional                    
    Exchanges With Respect to the                  
    One-for-twenty Reverse Stock                   
    Split effected on March 13, 1992       (1,402)      ---
   Amortization of Deferred                        
    Compensation Costs                   ---            ---
   Net (Loss) for the                              
    Year Ended June 30, 1996             ---          (1,069,712)
                                                   
BALANCE - JUNE 30, 1996                 16,111,652      3,829,336

                                                   

   Shares Issued in Connection                     
    with Retirement of Debt              6,671,245 
   Compensation for Options Granted                
    to Non-Employees                       493,050      ---
   Financing Costs for Warrants                    
    Issued in Connection with                      
    Debt Financing                       1,893,451      ---
   Shares Issued for Fractional                    
    Exchanges With Respect to the                  
    One-for-twenty Reverse Stock                   
    Split effected on March 13, 1992         (906)      ---
   Amortization of Deferred                        
    Compensation Costs                   ---            ---
   Cancellation of Options Granted                 
    for Deferred Compensation            (119,741)      ---
   Net (Loss) for the                              
    Year Ended June 30, 1997             ---         (17,387,582)
                                                   
BALANCE - JUNE 30, 1997                 25,048,752   (13,558,246)

                                                   

   Compensation for Options Granted                
    to Non-Employees                       830,550      ---
   Shares Issued for Fractional                    
    Exchanges With Respect to the                  
    One-for-twenty Reverse Stock                   
    Split effected on March 13, 1992       (1,078)      ---
   Amortization of Deferred                        
    Compensation Costs                   ---            ---
   Gain on Sale of Land                  ---            1,687,095
   Net (Loss) for the                              
    Year Ended June 30, 1998             ---         (18,261,216)
                                                   
BALANCE - JUNE 30, 1998            $    25,878,224$  (30,132,368)

                                                   

See Notes to Consolidated Financial Statements.    

                                                   

                                                   

                                                   

                                       Deferred    
                                    Compensation       Total

BALANCE - JUNE 30, 1995            $             0$    72,206,437
                                                   
   Common Shares Issued -                          
    Reg S Offering                       ---            5,438,162
   Shares Issued in Connection                     
    with Debt Financing                  ---              800,000
   Deferred Compensation for                       
    Options Granted to Employees         (175,000)              0
   Financing Costs for Warrants in                 
    Connection with Debt Financing       ---            1,940,250
   Shares Issued for Fractional                    
    Exchanges With Respect to the                  
    One-for-twenty Reverse Stock                   
    Split effected on March 13, 1992     ---            ---
   Amortization of Deferred                        
    Compensation Costs                       2,969          2,969
   Net (Loss) for the                              
    Year Ended June 30, 1996             ---          (1,069,712)
                                                   
BALANCE - JUNE 30, 1996                  (172,031)     79,318,105

                                                   

   Shares Issued in Connection                     
    with Retirement of Debt                            11,324,285
   Compensation for Options Granted                
    to Non-Employees                     ---              493,050
   Financing Costs for Warrants                    
    Issued in Connection with                      
     Debt Financing                      ---            1,893,451
   Shares Issued for Fractional                    
    Exchanges With Respect to the                  
    One-for-twenty Reverse Stock                   
    Split effected on March 13, 1992     ---            ---
   Amortization of Deferred                        
    Compensation Costs                      10,623         10,623
   Cancellation of Options Granted                 
    for Deferred Compensation              119,741      ---
   Net (Loss) for the                              
    Year Ended June 30, 1997             ---         (17,387,582)
                                                   
BALANCE - JUNE 30, 1997                   (41,667)     75,651,933

                                                   

   Compensation for Options Granted                
    to Non-Employees                     ---              830,550
   Shares Issued for Fractional                    
    Exchanges With Respect to the                  
    One-for-twenty Reverse Stock                   
    Split effected on March 13, 1992     ---            ---
   Amortization of Deferred                        
    Compensation Costs                       5,000          5,000
   Gain on Sale of Land                                 1,687,095
   Net (Loss) for the                              
    Year Ended June 30, 1998             ---         (18,261,216)
                                                   
BALANCE - JUNE 30, 1998            $      (36,667)$    59,913,361
                                                   

See Notes to Consolidated Financial Statements.    
</TABLE>



              INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                           AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS
                  ENDED JUNE 30, 1998, 1997 AND 1996

<TABLE>
<S><C><C>                             <C><C>       <C><C>
                                           Years Ended June 30,
                                           1998          1997

CASH FLOWS FROM OPERATING ACTIVITIES:                
 (LOSS) FROM CONTINUING OPERATIONS     $(25,468,850) $(18,981,678)

 Adjustments to reconcile                            
 (loss) to net cash (used)                           
 provided by operating activities:                   

      Income from discontinued                       
      racetrack operations                7,207,633     1,594,096

      Depreciation and Amortization       3,125,272     2,775,194

      Compensation for Options Granted      830,550       493,050

      Loss on Disposal of Fixed Assets       31,666             0

      Write-Off of Deposits on Land               0     2,585,000

      Estimated charge in connection                 
      with the repurchase                            
        of the NPD shares                 3,748,000             0

      Estimated loss in connection                   
      with the adjustment to                         
        fair market value of the                     
        El Rancho Property                3,429,251             0

      Write-Off of Starship Orion Costs           0     2,543,968

      Extraordinary Item - Loss on                   
       Early Extinguishment of Debt               0     3,837,625

      Other                                 303,002         (783)

      Changes in Assets and                          

         Liabilities -                               

         Decrease in Restricted Cash                 
          and Investments                         0     (758,785)

         (Increase) Decrease in                      
          Accounts Receivable              (31,455)       395,687

         (Increase) in Other Assets       (282,609)     (297,570)

         (Increase) Decrease in                      
          Prepaid Expenses                  239,628     (190,815)

         (Decrease) Increase in Accounts             
          and Purses Payable                         
          and Accrued Expenses            (771,010)     1,340,766

         Increase (Decrease) in                      
          Deferred Revenue                        0       251,123

 CASH (USED IN)CONTINUING                            
  OPERATING ACTIVITIES                  (7,638,921)  

                                                     

 CASH PROVIDED BY DISCONTINUED                       
  OPERATING ACTIVITIES                    1,985,024  

 NET CASH (USED) PROVIDED BY                         
  OPERATING ACTIVITIES                 $(5,653,898) $ (4,413,122)

                                                     

CASH FLOWS FROM INVESTING ACTIVITIES:                

    Purchase and Development of                      
     El Rancho Property and costs                    
     incurred in connection with                     
     Starship Orion Theme              $  (239,588) $ (2,016,133)

    Purchase of Land at                              
     Freehold Raceway                             0             0

    Deposits on New Mexico                           
     Racetrack Options                    (600,000)             0

    Deposits on Purchase of Land                  0   (2,115,000)

    Capital Expenditures                  (284,271)   (1,428,227)

    (Increase) Decrease in                           
     Other Investments                       27,405        68,170

 CASH (USED IN)                                      
  CONTINUING INVESTING ACTIVITIES       (1,096,454)  

 CASH PROVIDED BY DISCONTINUED                       
  INVESTING ACTIVITIES                    8,224,665  

 NET CASH PROVIDED BY (USED IN)                      
  INVESTING ACTIVITIES                    7,128,211   (5,491,190)

                                                     

CASH FLOWS FROM FINANCING ACTIVITIES:                

    Sale of Common Stock                          0             0

    Proceeds from issuance of                        
     Long Term Notes                              0       827,891

    Proceeds from Line of                            
     Credit - Foothill                            0     9,138,690

    Proceeds from Foothill Financing              0             0
    Proceeds from Credit Suisse                      
     Financing                                    0    55,000,000

    Proceeds from Sun Bank Refinance                 
     of Foreign Notes                             0     6,000,000

    Deferred Financing Costs               (22,445)   (4,926,943)

    Escrow Deposits Utilized              7,683,063  (16,762,059)

    Proceeds from Land Sale to                       
     Reserve Escrow Deposits            (1,370,120)             0

    Increase (Decrease) in                           
     Balances Due To/From                            
     Discontinued Subsidiaries            8,376,135             0

    Principal Payments on                            
     Foreign Notes                                0   (6,000,000)

    Principal Payments on                            
     Sun Bank Note                                0             0

    Principal Payments on                            
     Foothill Notes                               0  (29,976,010)

    Principal Payments on                            
     Short Term Notes                     (303,020)     (836,874)

    Principal Payments on                            
     Long Term Notes                              0   (2,991,844)

 CASH PROVIDED BY                                    
  CONTINUING FINANCING ACTIVITIES        14,363,613  

 CASH (USED IN) DISCONTINUED                         
  FINANCING ACTIVITIES                  (16,242,126) 

 NET CASH (USED IN) PROVIDED BY                      
  FINANCING ACTIVITIES                  (1,878,513)     9,472,851

                                                     

NET DECREASE IN CASH AND                             
 CASH EQUIVALENTS                         (404,200)     (431,461)

 CASH AND CASH EQUIVALENTS AT                        
  BEGINNING OF YEAR                                  
  LESS CASH AND CASH EQUIVALENTS BEGINNING OF YEAR   
  FROM DISCONTINUED OPERATIONS
  BEGINNING OF YEAR                     (3,166,900)           -

 CASH AND CASH EQUIVALENTS AT                        
  BEGINNING OF YEAR                                  
  FROM CONTINUING OPERATIONS              3,784,895     4,216,356

                                                     

 CASH AND CASH EQUIVALENTS AT                        
  END OF PERIOD                        $    213,795 $   3,784,895

                                                     

 Supplemental Disclosures of Cash Flow Information:  
      Cash paid during the period for:               
      Interest                         $  7,936,680 $   4,849,949
      Income Taxes                     $    200,000 $           0

                                                     

                                                     

                                        Years Ended June 30,
                                           1996      

CASH FLOWS FROM OPERATING ACTIVITIES:                

 NET (LOSS)                            $(2,779,987)  

 Adjustments to reconcile net                        
 (loss) to net cash (used)                           
 provided by operating activities:                   

      Income from discontinued                       
      racetrack operations                1,710,276  

      Depreciation and Amortization       1,543,841  

      Compensation for Options Granted            0  

      Loss on Disposal of Fixed Assets            0  

      Write-Off of Deposits on Land               0  

      Estimated charge in connection                 
      with the repurchase                            
        of the NPD shares                         0  

      Estimated loss in connection                   
      with the adjustment to                         
        fair market value of the                     
        El Rancho Property                        0  

      Write-Off of Starship Orion Costs           0  

      Extraordinary Item - Loss on                   
       Early Extinguishment of Debt               0  

      Other                                  16,652  

      Changes in Assets and                          
         Liabilities -                               

         Decrease in Restricted Cash                 
          and Investments                 (820,127)  

         (Increase) Decrease in                      
          Accounts Receivable               262,851  

         (Increase) in Other Assets       (213,861)  

         (Increase) Decrease in                      
          Prepaid Expenses                 (62,944)  

         (Decrease) Increase in Accounts             
          and Purses Payable                         
          and Accrued Expenses            3,063,264  

         Increase (Decrease) in                      
          Deferred Revenue                 (51,002)  

 CASH (USED) PROVIDED BY CONTINUING                  
  OPERATING ACTIVITIES                               

                                                     

 CASH PROVIDED BY DISCONTINUED                       
  OPERATING ACTIVITIES                               

 NET CASH (USED) PROVIDED BY                         
  OPERATING ACTIVITIES                 $  2,668,963  

                                                     

CASH FLOWS FROM INVESTING ACTIVITIES:                

    Purchase and Development of                      
     El Rancho Property and costs                    
     incurred in connection with                     
     Starship Orion Theme              $(18,033,745) 

    Purchase of Land at                              
     Freehold Raceway                     (400,000)  

    Deposits on New Mexico                           
     Racetrack Options                            0  

    Deposits on Purchase of Land          (470,000)  

    Capital Expenditures                (1,594,384)  

    (Increase) Decrease in                           
     Other Investments                       57,023  

 CASH (USED IN) PROVIDED BY                          
  CONTINUING INVESTING ACTIVITIES                    

 CASH PROVIDED BY DISCONTINUED                       
  INVESTING ACTIVITIES                               

 NET CASH PROVIDED BY (USED IN)                      
  INVESTING ACTIVITIES                  (20,441,106) 

                                                     

CASH FLOWS FROM FINANCING ACTIVITIES:                

    Sale of Common Stock                  5,438,162  

    Proceeds from issuance of                        
     Long Term Notes                      6,000,000  

    Proceeds from Line of                            
     Credit - Foothill                    6,597,794  

    Proceeds from Foothill Financing     14,000,000  

    Proceeds from Credit Suisse                      
     Financing                                    0  

    Proceeds from Sun Bank Refinance                 
     of Foreign Notes                             0  

    Deferred Financing Costs                      0  

    Escrow Deposits Utilized                      0  

    Proceeds from Land Sale to                       
     Reserve Escrow Deposits                      0  

    Increase (Decrease) in                           
     Balances Due To/From                            
     Discontinued Subsidiaries                    0  

    Principal Payments on                            
     Foreign Notes                                0  

    Principal Payments on                            
     Sun Bank Note                      (14,000,000) 

    Principal Payments on                            
     Foothill Notes                               0  

    Principal Payments on                            
     Short Term Notes                   (6,500,000)  

    Principal Payments on                            
     Long Term Notes                    (1,348,751)  

 CASH PROVIDED BY (USED IN)                          
  CONTINUING FINANCING ACTIVITIES                    

 CASH (USED IN) DISCONTINUED                         
  FINANCING ACTIVITIES                               

 NET CASH (USED IN) PROVIDED BY                      
  FINANCING ACTIVITIES                   10,187,205  

                                                     

NET INCREASE IN CASH AND                             
 CASH EQUIVALENTS                         7,584,938  

 CASH AND CASH EQUIVALENTS AT                        
  BEGINNING OF YEAR                                  

  LESS CASH AND CASH EQUIVALENTS BEGINNING OF YEAR   
  FROM DISCONTINUED OPERATIONS BEGINNING OF YEAR      -

 CASH AND CASH EQUIVALENTS AT                        
  BEGINNING OF YEAR                                  
  FROM CONTINUING OPERATIONS             11,801,294  

                                                     

 CASH AND CASH EQUIVALENTS AT                        
  END OF PERIOD                           4,216,356  

                                                     

 Supplemental Disclosures of Cash Flow Information:  
      Cash paid during the period for:               
      Interest                         $  1,915,571  
      Income Taxes                     $    291,531  

                                                     

 Supplemental Schedule of Non-Cash Investing and Financing Activities:

 During the years ended June 30, 1998, 1997 and 1996, the Company
   recorded unrealized losses of $19,174, $40,000 and $160,000, 
   respectively, on trading securities.              

 During the years ended June 30, 1998, 1997 and 1996, respectively,
   the Company issued  warrants to purchase 300,000 shares,
   746,847 shares and 925,000 shares of Common Stock at fair            
   values of $830,550, $1,893,451 and $1,930,250, respectively,
   in connection with financing agreements.          

 During the year ended June 30, 1997, the Company exchanged debt
   totaling $10.5 million plus accrued interest of approximately
   $1.1 million for 2,326,520 shares of Common Stock.

 During the year ended June 30, 1996, Land and Improvement at a
   total cost of $31,975,000 was financed through short and                
   long term notes.                                  
                                                    

See Notes to Consolidated Financial Statements.      
</TABLE>


(1) BASIS OF PRESENTATION

     Prior to June 30, 1998, the Company determined to sell its
racetracks.  Accordingly, the operating results of the racetrack
subsidiaries have been segregated and reported as discontinued
operations for each of the three years in the period ended June 30,
1998.  Additionally, on July 2, 1998 the Company announced thatit had
entered into an asset purchase agreement to sell the real property and
related assets at Freehold Raceway and to lease the real property and
related assets of Garden State Park for $100,000 per year over a period
of seven years, subject to various approvals.  The purchase price for
Freehold Raceway is $45 million, consisting of $33 million in cash and a
seven-year non-contingent promissory note in the amount of $12 million,
with an additional $10 million in contingent promissory notes becoming
effective upon, among other things, New Jersey's approval of off-track
betting facilities or telephone account pari-mutuel wagering on horse
racing.  Further adjustments could be made to increase the purchase
price if certain additional regulatory gaming changes are approved in
New Jersey in the future.  If the Company accepts a superior proposal
prior to the closing of this agreement, it will be obligated to pay $1
million to terminate this agreement if the initial purchaser does not
exercise its right of first refusal.

     The accompanying consolidated financial statements have been
prepared assuming  International Thoroughbred Breeders, Inc. and
subsidiaries (collectively, the "Company"), will continue as a going
concern.  As discussed in Note 9, the Company is in violation of several
non-financial loan covenants with its major lender.  Accordingly,
payments could be demanded immediately.  The Company is continuing
discussions with this lender as to the grant of waivers or other
remedies that could be reached in connection with the litigation
settlement described below.  Additionally, the Company is considering
alternative financing sources.  However, there can be no assurance that
the Company will be successful in such endeavors.

     The Company and certain of its directors and stockholders are
involved in various legal proceedings,  as more fully described in Note
11.  On July 2, 1998, the Company entered into a Stipulation and
Agreement of Compromise, Settlement and Release ("Delaware Stipulation")
to resolve the pending stockholder derivative litigation in the Delaware
Court of Chancery.  The settlement (the "Delaware Settlement") is
subject to number of conditions, including without limitation, Delaware
court approval (which was issued on October 6, 1998), the consent of the
Company's primary lender and the grant of certain approvals  by the U.S.
bankruptcy courts.  The Delaware Settlement will result in, among other
things, the Company's purchase from NPD, Inc. ("NPD"), a company owned
by the Company's Chief Executive Officer and Chairman, of approximately
2.9 million shares of the Company's Common Stock, the retirement of
approximately 2.1 million shares of the Company's Common Stock owned by
Las Vegas Entertainment Network, Inc. ("LVEN") and the termination of
various agreements.  There can be no assurance that conditions to the
Delaware Settlement will be satisfied and thus, that a final settlement
will be achieved.  In the event the Delaware Settlement is not
consummated, it is not possible to determine with any precision the
probable outcome of the pending litigation or the amount of liability,
if any, and the resultant effects on the Company's financial position,
results of operations or cash flows.

     The Company has sustained losses of approximately $18.3 million
and $17.4 million during fiscals 1998 and 1997, respectively.  The
Company believes its projected cash flows from its current operations
will be sufficient until February 1999, and there can be no assurances
beyond that date.  These projections do not reflect the impact of its
default under the above mentioned credit facility or the effects of the
above mentioned litigation or settlemnt.

     The financial statements do not include any adjustments that might
result from the outcome of these uncertainties.  

     In connection with the proposed sale and/or lease of the Company's
racetrack operations, the Company is considering the acquisition of one
or more operating businesses.


(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     (A) Nature of Operations - The Company conducts live race meetings
for Thoroughbred and Harness (Standardbred) horses and participates in
intrastate and interstate simulcast wagering as a host and receiving
track in Cherry Hill ("Garden State Park") and Freehold ("Freehold
Raceway"),  New Jersey.  The Company's racetrack operations are
dependent upon continued governmental acceptance of racing as a form of
legalized gambling.  The Company competes for gaming revenue, not only
with other racetracks, but also with other forms of gaming activities,
such as, off-track betting parlors, telephone wagering, casino gambling
in Atlantic City, New Jersey, slot machines at other racetracks, and
various state lotteries, both from within the State of New Jersey and
from neighboring states (Pennsylvania and Delaware in particular).  From
time to time, legislation has been introduced in New Jersey and
neighboring states which would further expand gambling opportunities and
increase competition.  Severe inclement weather, which can affect the
northeastern portion of the United States in the winter months, can also
adversely affect operations.  The Company is required to annually renew
its racing permits with the New Jersey Racing Commission in order to
operate.

     (B) Principles of Consolidation -   The accounts of all
subsidiaries are included in the consolidated financial statements. All
significant intercompany accounts and transactions have been eliminated
in consolidation.

     (C) Classifications - Certain prior years' amounts have been
reclassified to conform with the current years' presentation. 

     (D) Goodwill, Depreciation and Amortization - Goodwill is the
excess of the cost of acquired net assets at Freehold over their fair
value and is being amortized over 30 years under the straight line
method.  Accumulated amortization at June 30, 1998 and 1997  was
$666,941 and $556,349, respectively.  At June 30, 1998, the Goodwill was
reclassified to "Net Assets of Discontinued Operations - current", as it
is anticipated that the sale of Freehold Raceway will be consummated
within one year.

     Management of the Company evaluates the recoverability  of
goodwill quarterly or more frequently whenever events and circumstances
warrant revised estimates, and considers whether the goodwill should be
completely or partially written-off or the amortization period
accelerated.  

     Depreciation of property and equipment and amortization of 
building improvements were computed by the straight-line method at rates
adequate to allocate their cost or adjusted fair value in accordance
with accounting principles applicable to a quasi-reorganization over the
estimated remaining useful lives of the respective assets.  

     The Company adopted the provisions of Statement of Financial
Accounting Standards No. 121 ("SFAS 121") "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" during
the year ended June 30, 1996.   SFAS 121 establishes accounting
standards for the impairment of long-lived assets, certain identifiable
intangibles and goodwill related to those assets to be held and used for
long-lived assets and certain identifiable intangibles to be disposed
of.  The Company reviews the carrying values of its long-lived and
identifiable intangible assets for possible impairment whenever events
or changes in circumstances indicate that the carrying amount of the
assets may not be recoverable based on undiscounted estimated future
operating cash flows.  As of June 30, 1998, the Company has determined
that an impairment has occurred.  (See E below).

     (E) Construction in Progress and Property Held for Sale - As of
June 30, 1997, construction in progress included the purchase price as
well as construction  costs in conjunction with the development of the
El Rancho Property. These amounts  included real property acquisition
costs in the amount of approximately $43,500,000, capitalized interest
of $4,182,007 (in fiscals 1996 and 1997), consulting and other
development costs.  As of July 1997, development of the El Rancho
Property has been suspended.  On July 2, 1998, the Company entered into
the Delaware Stipulation.  As part of the Delaware Stipulation, the
Company has provided for the sale of the El Rancho Property.  As of June
30, 1998, the El Rancho Property has been reclassified to "Property held
for Sale" after recording an impairment charge during the fourth quarter
of fiscal 1998 of approximately $3,430,000 to adjust to fair value,
after taking into account the estimated fair value of the reversion of
the LVEN shares. In the absence of a public market for the Company's
Common Stock, management has determined the estimated fair value fo the
Common Stock to be the anticipated book value attributable to the Common
Stock after taking into account the estimated operating results until
the disposition of the racetrack operations assumed to occur on December
31, 1998, the disposal of the racetrack assets and the El Rancho
Property, and other transactions contemplated in the Delaware
Settlement.  There can be no assurance that all of these transactions
will occur or if they will occur at the estimated amounts. (See Note 11)

     (F)  In June 1997, the Financial Accounting Standards Board
issued two new disclosure standards as described below.  The Company's
results of operations and financial position will be unaffected by
implementation of these new standards.

     Statement of Financial Accounting Standards No. 130, Reporting
Comprehensive Income ("SFAS 130"), establishes standards for reporting
and display of comprehensive income, its components and accumulated
balances.  Comprehensive income is defined to include all changes in
equity except those resulting from investments by owners and
distributions to owners.  Among other disclosures, SFAS 130 requires
that all items that are required to be recognized under current
accounting standards as components of comprehensive income be reported
in a financial statement that is displayed with the same prominence as
other financial statements.

     Statement of Financial Accounting Standards No. 131, "Disclosure
about Segments of a Business Enterprise" ("SFAS 131"), establishes
standards for the way that public enterprises report information about
operating segments in annual financial statements and requires reporting
of selected information about operating segments in interim financial
statements issued to the public.  It also establishes standards for
disclosures regarding products and services, geographic areas and major
customers.  SFAS 131 defines operating segments as components of an
enterprise about which separate financial information is available that
is evaluated regularly by the chief operating decision maker in deciding
how to allocate resources and in assessing performance.

     In February 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 132, "Employers
Disclosures about Pension and Other Postretirement Benefits" ("SFAS
132").  SFAS 132 revised employers' disclosures about pension and other
post-retirement benefit plans but does not change measurement or
recognition of those plans. Also, SFAS 132 requires additional
information on changes in the benefit obligations and fair values of
plan assets.

     The Company believes that adoption of SFAS 130, 131 and 132 will
have no impact on its financial statements or disclosures.

     In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Account Standards No. 133, "Accounting for
Derivative Instruments" ("SFAS 133").  SFAS 133 establishes accounting
and reporting standards for derivative instruments and for hedging
activities.  SFAS 133 requires that an entity recognize all derivatives
as either assets or liabilities and measure those instruments at fair
market value.  Under certain circumstances, a portion of the
derivative's gain or loss is initially reported as a component of other
comprehensive income and subsequently reclassified into income when the
transaction affects earnings.  For a derivative not designated as a
hedging instrument, the gain or loss is recognized in income in the
period of change.  Presently, the Company does not use derivative
instruments either in hedging activities or as investments. 
Accordingly, the Company believes that the adoption of SFAS 133 will
have no impact on its financial position or results of operations.

     (G) Deferred Financing Costs - Deferred financing costs at June
30, 1998 include those amounts associated with its May 23, 1997
financing agreement with Credit Suisse First Boston Mortgage Capital
LLC("Credit Suisse").  (See Note 9).  These costs of $5,926,035, less
amortization of $3,053,582, are being expensed over the two year life of
the loan. 

     (H) Revenue Recognition - The Company recognizes the revenues
associated with horse racing at Garden State Park and Freehold Raceway
as they are earned.  Both Garden State Park and Freehold Raceway operate
as satellite wagering sites for both thoroughbred and harness racing
meets conducted at other racetracks. The tracks receive broadcasts of
live racing from other racetracks under various simulcasting agreements. 
The tracks also provide broadcasts of live racing conducted at the
Company's facilities to other racetracks under various host simulcasting
agreements.  Under these contracts, the Company receives or pays pari-
mutuel commissions of varying percentages of simulcast pari-mutuel
wagering.  Costs and expenses associated with horse racing revenues are
charged against income in those periods in which the horse racing
revenues are recognized.  Other costs and expenses, including
advertising, are recognized as they actually occur throughout the year. 
Deferred revenue primarily consists of prepaid purse amounts. 
     
     (I) Income Taxes - The Company has adopted the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes" ("SFAS 109").  SFAS 109 requires a company to recognize
deferred tax liabilities and assets for the expected future tax
consequences of events that have been recognized in a its financial
statements or tax returns.  Under this method, deferred tax liabilities
and assets are determined based on the difference between the financial
statement carrying amounts and tax bases of assets and liabilities using
enacted tax rates in effect in the years in which the differences are
expected to reverse.

     (J) Cash and Cash Equivalents - The Company considers all highly
liquid investments with an original  maturity of three months or less to
be cash equivalents.

     (K) Concentrations of Credit Risk - Financial instruments which
potentially subject the Company to concentrations of credit risk are
cash and cash equivalents.  The Company places its cash investments with
high credit quality financial institutions and currently invests
primarily in U.S. government obligations that have maturities of less
than 3 months.  The amount on deposit in any one institution that
exceeds federally insured limits is subject to credit risk.  The Company
does not require collateral for its financial instruments.  In addition,
at June 30, 1998 the Company had approximately $10.4 million of cash in
reserve escrow accounts, which substantially exceeded federally insured
limits.

     (L) Use Of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the dates of the financial statements and the
reported amounts of revenues and expenses during the reporting periods. 
Actual results could differ from those estimates. 

     (M) Net Loss per Common Share - Recent Accounting Pronouncements -
In March 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS
128").  SFAS 128 provides a different method of calculating earnings per
share than is currently used in APB Opinion 15.  SFAS 128 provides for
the calculation of basic and diluted earnings per share.  Basic earnings
per share includes no dilution and is computed by dividing income
available to common stockholders by the weighted average number of
common shares outstanding for the period.  Diluted earnings per share
reflects the potential dilution of securities that could share in the
earnings of an entity, similar to existing fully diluted earnings per
share.  The Company adopted and retrospectively applied the provisions
for computing earnings per share set forth in SFAS 128 in December 1997
and its adoption and retroactive application has not had a material
effect on the calculation of earnings per share. 

     Loss per common share is computed by dividing net loss by the
weighted average number of shares of common stock outstanding.  Options
and warrants to purchase 3,271,847, 3,271,847, and 2,200,000 shares of
Common Stock at various prices per share, for the years ended  June 30,
1998, 1997 and 1996, respectively, were not included in the computation
of diluted loss per share as their effect would be anti-dilutive.

(3)  DISCONTINUED OPERATIONS

     Prior to June 30, 1998, the Company determined to sell its
racetracks. On July 2, 1998, the Company announced that it had entered
into an asset purchase agreement to sell the real property and related
assets at Freehold Raceway and to lease the real property and related
assets of Garden State Park for a seven year period.  (See Note 1).

     The discontinued operations are summarized as follows:
<TABLE>
<S>                    <C><C>         <C><C>      <C><C>
                       Years Ended June 30,          

Discontinued Racetrack       1998          1997         1996
Operations:                                          

Revenue                $  68,636,449  $ 68,431,882 $ 68,535,642

Expenses:                                            

Cost of Revenues:                                    

Purses                      22,370,695  23,120,176   23,309,829
Operating Expenses          31,794,410  35,531,034   35,737,265
Depreciation
 & Amortization              1,665,206   1,579,903    1,426,407              
General &              
 Administrative Expenses     4,607,984   5,606,265    5,018,683               
Interest Expenses              855,421     944,791    1,105,670

Total Expenses              61,293,716  66,782,160   66,597,854

Income From DiscontinuedRacetrack                                         
Operations Before Taxes      7,342,733   1,649,713    1,937,788

Income Tax Expense             135,100      55,617      227,512

Net Income From                                      
 Discontinued                                                   
 Racetrack            
 Operations            $     7,207,633$  1,594,096 $  1,710,276
                                           
</TABLE>
     The net assets of the operations to be disposed of included in the
accompanying consolidated balance sheets as of June 30, 1998 consist of the
following:          
<TABLE>
<S>                              <C><C>           <C><C>
                                      Freehold      Garden State
Classified As:                         Raceway          Park
                                       Current       Non-Current

Current Assets                   $       3,012,149$     5,616,972

Land, Building and Equipment, Net       22,286,218     46,053,579

Other Assets                             2,950,688        228,142

Total Assets                            28,249,055     51,898,693

                                                   
Current Liabilities                      4,441,788      5,845,068

Long-Term Debt, Net of Current Portion     11,572,049      426,682

Total Liabilities                       16,013,837      6,271,750

Net Assets of Discontinued Operations$     12,235,217$   45,626,943
</TABLE>

     The Company anticipates realizing a gain in connection with a sale of the
Freehold net assets. Such gain will be deferred and applied as a reduction of
the carrying value of the Garden State Park net assets.  The Company
anticipates that the ultimate disposition of the Garden State Park net assets,
after application of anticipated Freehold gain, will result in a recovery in
excess of such adjusted amount.

Cash flows from discontinued operations for the year ended June 30, 1998
consist of
the following:
<TABLE>
<S><C><C><C>                                     <C><C>
                                                 June 30, 1998

Cash Flows From Discontinued Operating Activities: 

   Income                                        $     7,207,633

   Adjustments to reconcile income to net cash provided by discontinued
    operatingactivities                                               
                                                 
     Depreciation and Amortization                     1,665,206

     Loss on Disposal of Fixed Assets                      1,007

     Changes in Assets and Liabilities             

         Decrease in Restricted Cash and Investments      277,040

         Decrease in Accounts Receivable                 287,694

         Decrease in Other Assets                        140,165

         Decrease in Prepaid Expenses                    534,625

         Decrease in Accounts and Purses           
         Payable and Accrued                       
         Expenses                                      (940,299)

         Increase in Deferred Revenue                     19,587

   Net Cash Provided by Discontinued 
     Operating Activities   (Excluding Income)         1,985,024
                                                      
                                                  

                                                   
Cash Flows from Discontinued Investing Activities: 

   Proceeds from Sale of Land                          8,449,904

   Capital Expenditures                                (212,227)

   (Decrease) in Other Investments                      (13,012)

   Net Cash Provided by Discontinued 
     Investing Activities                             8,224,665
                                                   

Cash Flows from Discontinued Financing Activities: 

   Principal Payments on Sun Mortgage                (6,000,000)

   Principal Payments on Short Term Notes              (733,719)

   Decrease in Balances Due To/From 
      Continuing Operations                          (8,376,135)

   Principal Payments on Long Term Notes             (1,132,272)

   Net Cash (Used In) Discontinued 
     Financing Activities                           (16,242,126)

                                                   

   Net Increase in Cash and Cash Equivalents 
        From Discontinued Operations                   1,175,195

     Cash and Cash Equivalents at Beginning of Year
        From Discontinued Operations                   1,991,705
                                                   

     Cash and Cash Equivalents at End of Period 
        FromDiscontinued Operations              $     3,166,900

</TABLE>


(4)  ACQUISITIONS AND DISPOSITIONS

          Fiscal 1998

     On July 1, 1997, the Company made a non-refundable payment of $600,000
to purchase an option to acquire the leasehold interests from D&C Gaming
Corporation ("D&C"), a company owned equally by the Company's CEO and
President and by the Chairman of Las Vegas Entertainment Network, Inc.
("LVEN"), to acquire operating leases for two New Mexico racetracks. 
Subsequently, the option agreement has been terminated by the Company
and D&C.  In the pending litigation, the minority Board members have
challenged the authorization and enforceability of certain agreements,
including the option agreement.  In connection with the Delaware
Settlement, the $600,000 has been included in the calculation of the
purchase price of the NPD shares.  (See Note 11).
     
     On October 20, 1997, the Company sold a parcel of land contiguous to
Garden State Park for $9,000,000 exclusive of closing costs of
approximately $545,190.  The carrying value of such property  was
$6,767,715. $6,000,000 of such sales proceeds was used to repay an
existing mortgage on the property.  The resulting gain was recorded as
an adjustment to Stockholders' Equity in accordance with accounting
principles applicable to a quasi-reorganization.


          Fiscal 1997

     The Company executed an agreement to purchase 15 acres of unimproved
land in Las Vegas, Nevada in fiscal 1996.  The Company made non-
refundable deposits aggregating $2,585,000 through fiscal 1997.  The
land  is located contiguous to the El Rancho Property.  The Company
could not arrange the necessary financing to finalize the purchase.  As
a result, these deposits were forfeited during December 1996.
                    
          Fiscal 1996

     During January 1996, the Company purchased the El Rancho Property from
LVEN for the development of a casino gaming and entertainment complex.
The purchase price was for approximately $43.5 million in cash and
notes, plus contingent consideration of up to $160 million, dependent on
future "adjusted cash flows" as contractually defined.  The purchase
price of approximately $43.5 million consisted of approximately $12.5
million paid in cash with the balance financed by:  1) a $6.5 million
unsecured seller note;  2) the assumption of a $14 million first
mortgage note;   and 3) a $10.5 million second mortgage seller note,
payable only to the extent that certain contingent events occur.
Effective June 27, 1997, the Company  issued 2,093,868 shares of its
Common Stock to a subsidiary of the seller and 232,652 shares to Credit
Suisse, the Company's prime lender, for its consent and for certain
advisory services on the transaction, in exchange for cancellation of
the $10.5 million note and accrued interest amounting to approximately
$1.1 million.  A proxy to vote the 2,093,868 shares has been granted to
the Company's CEO/President by the holder.  The 2,326,520 shares were
valued at $5 per share, the approximate fair market value at the date of
the transaction.  No material gain or loss was realized.   Upon
satisfaction of certain conditions to the Delaware Settlement, the
2,093,868 shares will revert to the Company and will be retired and the
$160 million contingent consideration will be terminated.




(5)  INVESTMENTS

     At June 30, 1998 and 1997, the Company had approximately $3,453,000
and $3,730,000, respectively, which was classified as restricted cash
and  investments.  These funds are primarily cash received from horsemen
for nomination and entry fees to be applied to upcoming racing meets,
purse winnings held in trust for horsemen and amounts held for unclaimed
ticketholder winnings. The balance at June 30, 1998 of $3,453,000 has
been reclassified to "Net Assets of Discontinued Operations".

     Interest income for the fiscal years ended June 30, 1998, 1997, and
1996 was $689,092, $11,911, and $73,681, respectively.  Realized gains
resulting from the sale of trading securities for fiscals 1998, 1997 and
1996 were -0-, -0- and $7,500, respectively.

(6)  RESERVE ESCROW DEPOSITS

     At June 30, 1998, $10,460,881 was held in various reserve cash escrow
deposit accounts that were established in connection with the Company's
two-year $55 million credit facility with Credit Suisse.  The financing
agreement provided for reserve accounts to be held by LaSalle National
Bank (the "Depository").  The Company is currently in default with
respect to the Credit Suisse credit facility (See Note 9) and, as a
result, Credit Suisse could apply any remaining escrow amounts to any
outstanding borrowings.  On the maturity date of the credit facility,
any amounts remaining on deposit shall, at Credit Suisse's option, be
applied against outstanding borrowings or returned to the Company.
     
      Interest Reserve Account. $10,000,000 of the loan proceeds was
deposited in an Interest Reserve Account to fund the monthly interest
due on the $55,000,000 loan (approximately $588,000 per month).

 El Rancho Reserve Account.$3,759,615 of the loan proceeds was
deposited to reimburse the Company for expenditures in connection with
the development and carrying costs of the El Rancho Property.  Through
September 30, 1998, the Company has been reimbursed $1,465,949 from this
account.

 Working Capital Account. $760,000 of the loan proceeds was deposited
for working capital purposes.  In October 1997,  upon the sale of
certain Garden State property, the Company deposited an additional
$1,370,122 in this account.

 Tax and Insurance Reserve Account. $916,898 of the loan proceeds was
deposited into a Tax and Insurance Reserve Account.  Each month the
Company makes deposits equal to one-twelfth, or approximately $300,000,
of the amount reasonably estimated by Credit Suisse to be sufficient to
pay all taxes, general and special assessments, water and sewer rents
and charges and other similar charges levied against certain of the
Company's properties. 

 Deferred Maintenance Account. $500,000 of the loan proceeds was
deposited to be used to reimburse the Company for maintenance
expenditures at its racetracks.

 Environmental Remediation Account.$1,000,000 of the loan proceeds was
deposited to be used to reimburse the Company for approved environmental
remediation expenditures.




The Escrow Accounts at June 30, 1998 are summarized below: 
<TABLE>
<S>                       <C><C>
Account                     

Interest Reserve          $       2,753,752
El Rancho Reserve                 2,293,666
Working Capital                   2,130,122
Tax and Insurance Reserve         1,874,475
Deferred Maintenance                408,866
Environmental Remediation         1,000,000

Total                     $      10,460,881
</TABLE>
          Such amounts have been classified as current assets, as the
related debt obligation is classified as a current liability (See
Note 9.)

(7) LAND AND IMPROVEMENTS HELD FOR SALE - NET
   
 On October 20, 1997, the Company sold a parcel of land
contiguous to Garden State Park for $9,000,000, exclusive of
closing costs of approximately $545,190.  The carrying value of
such property  was $6,767,715. Of the proceeds, $6,000,000 was
used to repay an existing mortgage on the property.  The resulting
gain was recorded as an adjustment to Stockholders' Equity in
accordance with accounting principles applicable to a quasi-
reorganization.

(8) LAND, BUILDINGS AND EQUIPMENT

 Land, buildings and equipment acquired prior to June 30, 1993
are carried at their adjusted fair value in accordance with
accounting principles applicable to a quasi-reorganization which
was completed on that date.  The property assets acquired with the
acquisition of Freehold Raceway in January 1995 were recorded at
their fair values as required under the purchase method of
accounting.  All other property assets are recorded at cost. 
Depreciation is being computed over the estimated remaining useful
lives using the straight-line method. 

Major classes of land, buildings and equipment consist of the
following:

<TABLE>
<S>                    <C>      <C><C>        <C><C>
                       Estimated Useful        June 30,             
                                                
                                                

                        Lives in  Years         
                                      1998          1997
                                                

Land                      ---     $        -0- $  40,432,500

Buildings and                                   
Improvements             15-40         214,097    28,823,437

Construction in Progress   ---             -0-    50,624,333

Equipment                5-15          814,927     5,261,367

Totals                               1,029,024   125,141,637

Less Accumulated                                
Depreciation                                                
 and Amortization                      308,162     4,278,754

                                $      720,862 $ 120,862,883
</TABLE>


 As of June 30, 1998, Land, Buildings and Improvements,
Construction in Progress and Equipment relating to the racetrack
operations and the El Rancho Property have been classified as "Assets
Held For Sale", "Net Assets of Discontinued Operations - Current", and
"Net Assets of Discontinued Operations - Long Term".
(9) NOTES AND MORTGAGES PAYABLE
         Notes and Mortgages Payable are summarized below:
<TABLE>
<S>            <C>        <C><C>       <C><C>        <C><C>      <C><C>
               Interest %       June 30, 1998               June 30, 1997
                Per Annum     Current     Long-Term     Current   Long-Term

International                                                     
Thoroughbred                                                      
Breeders, Inc.:                                                   

Credit Suisse   LIBOR Rate                                        
First Boston (A)    plus 7%                                                  
                 (6/30/98                                                   
               rate 12.67%) $ 55,000,000 $         -0-$  55,000,000$       -0-
                                                                  

Other              Various       208,426           -0-      258,851        -0-

Freehold                                                          
Raceway:                                                          

Kenneth R. Fisher(B)80% of Prime (not to                       
                exceed 6%)                                                  
                  (6/30/98                                                  
                  rate 6%)                                                  
                                625,000    10,000,000       625,000 10,625,000

Kenneth R. Fisher(C)80% of Prime   (6/30/98                       
                rate 6.6%)                                                  
                                225,000     1,572,049       225,000  1,815,800

Other                               -0-           -0-        42,537        -0-

GARDEN STATE                                                      
PARK:                                                             

Sun National         Prime                                        
Bank(D)           (6/30/97                                                  
                rate 8.5%)          -0-           -0-    6,000,000        -0-

Other              Various      351,429       426,682      781,806     690,203

ORION CASINO                                                      
CORP:                                                             

Other              Various          -0-           -0-       29,984        -0-

    Totals                 $ 56,409,855 $  11,998,731$  62,963,178$ 13,131,003

Less Amounts                                                      
Reclassified to: Net Assets of                                              
Discontinued                                                                
                                                                            
  Operations -                                                              
Current                       (850,000)  (11,572,049)         -0-        -0-
                                                                  

 Net Assets of                                                    
Discontinued                                                                
  Operations -                                                              
Long Term                     (351,429)     (426,682)         -0-        -0-

TOTALS                     $ 55,208,426 $         -0-$  62,963,178$ 13,131,003
</TABLE>

The effective LIBOR Rate and the Prime Rate at June 30, 1998 were 5.72% and
8.50%, respectively. 
There was no short term borrowings outstanding as of June 30, 1998 and 1997.
  
  (A) On May 23, 1997, the Company entered into a two-year $55
million credit facility with Credit Suisse secured by a pledge of
certain of the personal and real property of the Company and its
subsidiaries (the "Credit Suisse Credit Facility").  Proceeds of this
facility were used to repay in full the Company's $30 million credit
facility with Foothill Capital Corporation and will also provide funds
for working capital and other general corporate purposes, including, but
not limited to, preliminary development of the El Rancho Property. 
Interest under the Credit Suisse Credit Facility is payable monthly in
arrears at 7% over the London interbank offered rate ("LIBOR"). The
scheduled maturity date of the facility is June 1, 1999.  Of the
remaining facility borrowings, approximately $16.8 million was placed in
escrow accounts, financing and closing fees of $4.3 million were
incurred and $3.9 million was used by the Company for general corporate
purposes and repayment of certain financial obligations.

  The Credit Suisse Credit Facility is evidenced by a convertible
promissory note (the "Credit Suisse Note") pursuant to which up to $10
million of the aggregate principal amount can be converted, in certain
circumstances, including upon the maturity date of the Credit Suisse
Note upon the prepayment of $10 million in aggregate principal amount of
the Credit Suisse Note or upon acceleration of the Credit Suisse Note,
at the option of Credit Suisse, into shares of the Company's Common
Stock at a conversion price of $8.75 per share (subject to adjustment in
certain events). In addition, Credit Suisse was granted warrants to
purchase 1,044,000 shares at an exercise price of $4.375 per share
(subject to adjustment in certain events).  The warrants to purchase
546,847 shares are immediately exercisable, have been valued at
approximately $1.6 million and have been recorded as original issue
discount.  The warrants to purchase 497,153 shares become exercisable at
such time as Credit Suisse delivers to the Company a firm commitment for
additional funding of no less than $50 million in connection with the
development of the El Rancho Property.

  Credit Suisse also received 232,652 shares of Common Stock upon
the conversion of a $10.5 million promissory note issued by the Company
to LVEN into Common Stock in consideration for Credit Suisse's consent
and advisory services in connection with this  transaction.  Credit
Suisse has the right to receive further shares upon the consummation of
a proposed related acquisition by the Company of Casino-Co Corporation
("Casino-Co"), a wholly-owned subsidiary of LVEN, equal to 10% of the
stock consideration paid by the Company for such acquisition.  The
Company has granted Credit Suisse certain registration rights with
respect to the warrants and the shares.

  The Credit Suisse Credit Facility also provides for both
affirmative and negative covenants, including financial covenants such
as tangible net worth, as defined in the Credit Suisse Credit Facility.  
The Company is not in compliance with certain non-financial covenants. 
As a result of not obtaining waivers of these violations, this amount 
could be demanded immediately.
  
  In connection with pending litigation which is currently stayed
and will be dismissed if the Delaware Settlement is consummated, the
minority Board members have challenged the authorization and
enforceability of certain agreements entered into and actions taken by
the Company, including the Credit Suisse Credit Facility and certain
related agreements and related actions.  Consummation of the Delaware
Settlement will not result in any release of claims by the Company
against Credit Suisse, absent any new financing agreement acceptable to
the Company and Credit Suisse.
  
  (B) On February 2, 1995, the Company entered into an agreement
with the former owner of Freehold Raceway whereby the $12.5 million
balance of the purchase price of the Freehold Raceway was financed by an
eight (8) year promissory note at 80% of the prevailing prime rate, not
to exceed 6%.  Yearly principal and interest payments during the first
five (5) years commencing January 1, 1996 are based upon a twenty (20)
year principal amortization schedule.  During each of the next three (3)
years, commencing January 1, 2001, yearly principal and interest
payments shall be based upon a ten (10) year amortization schedule.  On
January 1, 2003, the entire unpaid principal balance, together with any
accrued interest becomes due and payable.  The note is secured by a
mortgage on the land and buildings at Freehold Raceway.   For fiscal
1998, this note has been netted against "Net Assets of Discontinued
Operations - Current".

  (C) On February 2, 1995, the seller of Freehold Raceway  advanced
to Freehold Raceway $2,584,549 towards the retirement of $5.2 million of
existing debt on Freehold Raceway.  The seller received from Freehold
Raceway in fiscal 1995, a promissory note evidencing the indebtedness
secured by mortgage on the racetrack property and other collateral. 
Equal monthly principal installments of $18,750 beginning on February 
1, 1995 is paid to the seller together with accrued interest.  Interest
is calculated at 80% of the prime rate at January 1 of each year.  The
note is secured by a mortgage on the land and buildings at Freehold
Raceway.  For fiscal 1998, this note has been netted against "Net Assets
of Discontinued Operations - Current".

  (D) In June 1997, the Company received financing of $6,000,000
from Sun National Bank (which was used to pay  two $3,000,000 mortgage
notes), by issuing a $6,000,000 mortgage note. On October 20, 1997, the
Company retired the $6,000,000 mortgage note with proceeds from the sale
of a portion of the Garden State property.  (See Note 7.)  The note was
originally due in December 1998.  Interest due on the note was paid by
the purchaser of a portion of the Garden State property.

(10)   INCOME TAX EXPENSE

  In the event the Company incurs income taxes in the future, any
future income tax benefits resulting from the utilization of net
operating losses and other carryforwards existing at June 30, 1993 to
the extent resulting from a quasi-reorganization of the Company's assets
effective June 30, 1993, will be excluded from the results of operations
and credited to paid in capital. 

  The Company's income tax expense for each of the years in the
three year period ending June 30, 1998 relates to New Jersey income
taxes for its Freehold Raceway operations.

  At June 30, 1993, the Company effected a quasi-reorganization in
conformity with generally accepted accounting principles.  The effect of
the quasi-reorganization was to decrease asset values for financial
reporting, but not for Federal income tax purposes.  Accordingly,
depreciation expense for Federal income tax purposes continues to be
based on amounts that do not reflect the accounting quasi-
reorganization.

  The Company has net operating loss carryforwards aggregating
approximately $218,000,000 at June 30, 1998 expiring in the years June
30, 2002 through June 30, 2013.  SFAS No. 109 requires the establishment
of a deferred tax asset for all deductible temporary differences and
operating loss carryforwards.  Because of the uncertainty that the
Company will generate income in the future sufficient to fully or
partially utilize these carryforwards, however, the deferred tax asset
of approximately $87,000,000 is offset by a valuation allowance of the
same amount.  Accordingly, no deferred tax asset is reflected in these
financial statements.

  Certain amounts of the net operating loss carryforward may be
limited due to possible changes in the Company's stock ownership.  In
addition, the sale of Common Stock by the Company to raise additional
operating funds, if necessary, could  limit the utilization of the
otherwise available net operating loss carryforwards.  The grant and/or
exercise of stock options by others would also impact the number of
shares which could be sold by the Company or by significant stockholders
without affecting the net operating loss carryforwards.

The Company has the following carryforwards to offset future taxable
income at June 30, 1998:
<TABLE>
<S>                         <C>
     Net Operating Loss          Year End
       Carryforwards         Expiration Dates

        $47,800,000             6/30/2002
         26,400,000             6/30/2003
         19,900,000             6/30/2004
         15,600,000             6/30/2005
         11,800,000             6/30/2006
         96,500,000             6/30/2007
        $218,000,000         through 6/30/2013
</TABLE>


(11)   COMMITMENTS AND CONTINGENCIES

  (A)  On July 2, 1998, the Company entered into the Delaware
Stipulation to resolve the pending stockholder derivative litigation in
the Delaware Court of Chancery.  The Delaware Settlement is subject to a
number of conditions, including without limitation, Delaware court
approval (which was issued on October 6, 1998), the consent of the
Company's primary lender and the grant of certain approvals by the U.S.
bankruptcy courts.  The Delaware Settlement will result in, among other
things, the dismissal of the pending litigation with prejudice, the
Company's purchase from NPD of approximately 2.9 million shares of the
Company's Common Stock for $4.6 million plus the assumption by the
Company of NPD's $5.8 million promissory note now held by Robert E.
Brennan's Bankruptcy Trustee and the termination of the Company's option
agreement with D&C in the amount of $600,000.   As a result, during the
fourth quarter of fiscal 1998, the Company has recorded a charge of
approximately $3.7 million based on the estimated fair value of $2.50
per share. (See Note 2E)

  Upon the mailing of the settlement notice to the Company's
stockholders on July 23, 1998, Michael C. Abraham, Charles R. Dees, Jr.,
Frank A. Leo and Kenneth S. Scholl resigned from the Company's Board of
Directors.  Upon the purchase of the NPD shares by the Company, Anthony
Coelho, Nunzio P. DeSantis and Joseph Zappala will also resign from the
Board and terminate their employment and consulting agreements with the
Company.

  The Delaware Settlement also contemplates the disposition of the
Company's non-operating El Rancho hotel and casino site in Las Vegas,
Nevada.  Of the proceeds, a minimum of $44.2 million will be used to
reduce the Company's outstanding debt to the Company's primary lender. 
As part of the Delaware Settlement, LVEN will return to the Company for
cancellation approximately 2.1 million shares of the Company's Common
Stock and will terminate all of its contractual arrangements with the
Company.

  The consummation of the Delaware Settlement will have a material
effect on the Commitments and Contingencies disclosed below:   

  As discussed in Notes 2, 3  and 4, during January 1996 the Company
purchased the El Rancho Property from LVEN.  The original agreement
provided that, following the development of the property, LVEN would
receive as additional consideration an interest in the "adjusted cash
flow" in the amount of 50% for the first six (6) years following the
opening of a casino and 25% thereafter until such time as LVEN has
received $160,000,000, but only after (a) the Company recouped: 1) the
aggregate amount of cash payments applied to the purchase price; 2)
payments made under the $6.5 million note and the $10.5 million note;  
3) $2 million;   and 4) any amounts that the Company invested in the
property after the purchase,  together with interest at eight percent
(8%) per annum from the date of the investment; (b) LVEN has (i)
received payment of all principal and interest, if any, remaining
outstanding under the $6.5 million note and/or the $10.5 million note
and (ii) recouped $4 million plus any amount invested in the El Rancho
Property after the purchase and approved by the Company, together with
interest thereon at a rate of 8% per annum from the date of investment;
and (c) the Company has received an additional $2 million, together with
interest thereon at the rate of 8% per annum from the date of the
purchase.  This agreement was amended on May 23, 1997 by the Bi-Lateral
Agreement between the Company and LVEN to limit to $35 million the
aggregate amount for which the Company is entitled to recover above.

  The term "adjusted cash flow," as defined, refers to cash flow
from the property before taxes, less the payment of any debt retirements
and capital lease payments and less certain fees received or accrued for
certain inital rent or lease payments.  The Bi-Lateral Agreement, signed
in connection with the $55 million Credit Suisse Credit Facility,
limited the maximum debt service to be netted against cash flow from
operation of the El Rancho Property in computing "adjusted cash flow" to
$65 million, with a further limitation to $27 million in the event that
additional financing over the $55 million is not required for the
development of the El Rancho Property. 

  Upon consummation of the Delaware Settlement, the Company will
deposit title to the El Rancho Property into escrow for a period of up
to 270 days to permit LVEN to sell the El Rancho Property.  LVEN will
have the exclusive right to sell the El Rancho Property until November
10, 1998, 120 days after the date the notice of the Delaware Settlement
was mailed to the Company's stockholders, and up to an additional 60
days thereafter upon the occurrence of certain events.  Both LVEN and
the Company will have the right to sell the El Rancho Property between
November 10, 1998 and April 9, 1999, 270 days after the mailing of the
notice, upon the payment of at least $44.2 million to the Company.  If,
within 30 days prior to end of the escrow period, LVEN obtains a $44.2
million loan for the benefit of the Company, LVEN will have a non-
exclusive right to sell the El Rancho Property for an additional year,
upon the payment of $44.2 million to the Company.  On March 27, 1998,
LVEN entered into an agreement for the sale of the El Rancho Property
for a sales price of $62,500,000.  If consummated, the Company would
realize proceeds of $44,200,000 as provided in the Delaware Stipulation,
and of the remaining proceeds, $4,375,000 will be paid to an unrelated
party for a structuring fee, $7,100,000 will be paid to Nunzio P.
DeSantis (less any amounts previously paid to him pursuant to the
Delaware Stipulation), $1,000,000 will be paid to Joseph Zappala (less
$200,000 Mr. Zappala has agreed to pay the Company in settlement of
certain compensation issues pursuant to the Delaware Stipulation) and
the balance will be paid to LVEN.  There can be no assurance that this
contract or any other contract  for the sale of the El Rancho Property
will be consummated.

   On May 23, 1997, the original agreement with LVEN was also
amended by a Tri-Party Agreement among the Company, LVEN and Credit
Suisse whereby the Company is required to acquire Casino-Co, whose
principal asset is the $160 million profit participation note described
in the preceding paragraphs.  The acquisition may be accomplished by the
purchase of all the stock of Casino-Co or a merger of the companies. 
The Company would be required to issue its stock, the price of which
will be subject to fairness opinions from independent investment banking
firms independently representing the Company and LVEN, to:  i) LVEN in
an amount equal to 90% of the greater of the fairness opinions obtained
by the Company and LVEN; and to  ii) Credit Suisse in an amount equal to
10% of the greater of the fairness opinions obtained by the Company and
LVEN.  If this acquisition is approved by the Company's stockholders and
Board of Directors, and completed, the Company's requirement for the
sharing of cash flow, described above, will be canceled.

  In connection with the purchase of the El Rancho Property, Las
Vegas Communications Corporation ("LVCC"), a wholly-owned subsidiary of
LVEN retained the exclusive right to manage all aspects of the
property's  entertainment activities.   The term of the agreement is for
ten (10) years commencing on the date which is six (6) months prior to
the projected opening date of the property, and LVCC shall have the
option to renew the agreement for two (2) consecutive five year terms. 
The agreement provides LVCC with an annual fee of $800,000 subject to
annual increases and other additional amounts. Pursuant to the Bi-
Lateral Agreement entered into by the Company and LVEN in connection
with the Credit Suisse Credit Facility, the parties agreed to amend the
entertainment management agreement to provide for a lease by the Company
to LVCC of space within the El Rancho Property on or from which all
food, beverage and retail activities will be conducted (exclusive of the
mezzanine space, the rights to which will be retained by the Company).  
The terms of such lease arrangement have not been finalized.

  In connection with the pending litigation which will be dismissed
with prejudice if the Delaware Settlement is consummated, the minority
Board members have challenged the authorization and enforceability of
certain agreements entered into and actions taken by the Company
including the Credit Suisse Credit Facility, and certain related
agreements and related actions.

  Upon consummation of the Delaware Settlement, the Bi-Lateral
Agreement, Tri-Party Agreement, $160 million profit participation note
and entertainment management agreement will be terminated.

  On December 5, 1996, NPD entered into an agreement with Robert E.
Brennan, a former Chairman and director of the Company,  to purchase
2,904,016, or 24.9% of the Company's Common Stock, representing all of
the Company's Common Stock owned by Mr. Brennan ("NPD acquisition").  
The NPD acquisition closed on January 15, 1997. 

  Effective January 15, 1997, the Company entered into a ten-year
employment contract with Nunzio P. DeSantis, the Company's Chief
Executive Officer.  The contract provides for annual compensation of
$450,000, adjusted annually by increases, if any, in certain Consumer
Price Indexes.  Mr. DeSantis will also receive a performance bonus for
each fiscal year during the term of the agreement equal to the excess of
the amount, if any, by which the pre-tax income of the Company exceeds
$2 million, limited to an amount equal to his base salary.  As part of
his contract, Mr. DeSantis was awarded options, subject to stockholder
approval, to purchase 5,000,000 shares of the Company's common stock at
$4 per share.  Upon obtaining stockholder approval for the awarding of
the options, the Company may need to record as compensation an expense
calculated by multiplying the number of shares covered by the option by
the difference between the intrinsic value of each share and the
exercise price at the measurement date.  An expense would only be
recorded if the exercise price is below the market price at the
measurement date.  Options to purchase 500,000 shares of Common Stock
would be exercisable immediately and options to purchase an additional
500,000 shares of Common Stock shall become exercisable on each
succeeding anniversary of the effective date of the agreement, 
provided, however, that all options shall be fully vested if Mr.
DeSantis resigns for good reason (as defined in the agreement), resigns
upon a change of control, or is discharged without cause.  Mr. DeSantis
is entitled to additional fringe benefits including the use of a private
jet in connection with the performance of his duties.  During fiscals
1998 and 1997, the Company's cost associated with such aircraft, was
approximately $12,208 and $217,000, respectively.  Such aircraft is
operated by a Company owned by Mr. DeSantis' son and was partially
financed by Mr. DeSantis and the Chairman of the Board of LVEN.  In the
pending litigation, which is currently stayed and will be dismissed with
prejudice upon consummation of the Delaware Settlement, the minority
Board members have challenged the authorization and enforceability of
certain agreements, including Mr. DeSantis' employment agreement.  Under
the terms of the Delaware Settlement, neither the Company nor any of its
affiliates are to make any payments to Mr. DeSantis except for his base
salary and automobile allowance and continuation of his insurance
benefits under the terms set forth in the employment agreement.  Upon
consummation of the Delaware Settlement, Mr. DeSantis' employment
agreement will be terminated and his options will be cancelled.  

  Effective January 15, 1997 the Company entered into  a consulting
contract with Anthony Coelho, the Company's Chairman of the Board,  that
provides for $10,000 per month in consulting fees on a month-to-month
basis, $2,500 for each director's meeting he attends and other fringe
benefits.  As part of this contract, Mr. Coelho was awarded options,
subject to stockholder approval, to acquire 1,000,000 shares of the
Company's Common Stock at $4 per share.  Options to purchase 100,000
shares would become exercisable immediately and options to purchase an
additional 100,000 shares would become exercisable on each succeeding
anniversary of the effective date of the agreement.  Upon obtaining
stockholder approval for the awarding of these options, the Company will
need to record an expense calculated by using the fair value of the
options at that date.  In the pending litigation, which is currently
stayed and will be dismissed with prejudice upon consummation of the
Delaware Settlement, the minority Board members have challenged the
authorization and enforceability of certain agreements, including Mr.
Coelho's consulting agreement.  Under the terms of the Delaware
Settlement, neither the Company nor its subsidiaries shall pay to Mr.
Coelho more than $10,000 per month as consulting fees and payment of
regular directors fees and upon consummation of the Delaware Settlement,
Mr. Coelho's consulting agreement will be terminated and his options
will be cancelled.   

  On January 15, 1997, the Company obtained a commitment for a
$5,000,000 revolving line of credit from Mr. DeSantis.  The line of
credit has not been drawn upon and it is unlikely that it will be
utilized in the future.  The line of credit is a subject of the pending
litigation, which is currently stayed and will be dismissed with
prejudice upon consummation of the Delaware Settlement.  Upon
consummation of the Delaware Settlement, the line of credit will be
terminated.

  (B) During October 1997, the Company terminated the employment of
the Company's then President, Robert J. Quigley.  The severance package
approximating $300,000, payable through December 1998, was expensed in
the second quarter of fiscal 1998.

  (C)  The Company has entered into lease agreements for certain
equipment and maintenance contracts at Garden State Park and Freehold
Raceway.  Two of these agreements are based upon the daily average of
the total amount wagered and number of live racing days at  the
Company's racetracks.  Minimum rental payments for the next  five years
are based on projected racing dates.   During July 1997, the Company
executed an agreement to lease office space in Albuquerque, New Mexico
for a five year period, expiring on July 31, 2002.  The lease provides
for a monthly rent of approximately $10,000 when the space is fully
occupied.  In connection with this lease, the Company has sub-leased a
portion of the premises to AutoLend Group Inc. ("AutoLend"), a company
in which Nunzio P. DeSantis is the Chairman, President and principal
stockholder and Anthony Coelho is a director, for $600 per month.  The
sublease is terminable on 30 days written notice.  Equipment lease and
rent expense for the years ended June 30, 1998, 1997 and 1996 was
$1,683,451, $1,927,081 and $2,201,346, respectively.  In connection with
the pending litigation, which is currently stayed and will be dismissed
with prejudice if the Delaware Settlement is consummated, the minority
Board members have challenged the authorization and enforceability of
certain agreements, including the Albuquerque lease.  However, upon
consummation of the Delaware Settlement, the Albuquerque lease will be
assumed by AutoLend.

  The following summarizes  commitments on non-cancelable contracts
and leases as of June 30, 1998
                                               
<TABLE>
<S>        <C><C>    <C><C>    <C><C>    <C><C>    <C><C>   <C><C>    <C><C>
           YEAR ENDED JUNE 30,                                         

                                                                THERE- 
                 1999      2000    2001        2002     2003     AFTER     TOTAL

Employee                                                               
Contracts                                                                       
(excluding                                                                      
severance                                                                       
agreements)$  931,000 $688,000 $ 688,000 $ 608,000 $528,000$ 2,112,000$5,555,000
                                
Operating                                                              
Leases (1)  2,336,000 1,476,000  566,000   246,000   10,000     -0-   4,634,000

El Rancho                                                              
ConstructionContracts                                                           
              217,000       -0-       -0-       -0-      -0-       -0-   217,000
                                                                       

Total   $3,484,000 $2,164,000 $1,254,000 $ 854,000 $538,000$2,112,000$10,406,000
</TABLE>

(1) The majority of the operating leases will be transferred to the
buyer of Freehold Raceway and lessor of Garden State Park when the
transaction is consummated.  The lease for the office space in New
Mexico will be assumed by AutoLend upon consummation of the Delaware
Settlement.     

  (D)  Garden State Park has granted the exclusive right to operate
all food and retail services and to sell or rent all food products and
merchandise sold or rented at the racetrack facility to Service America
Corporation. The term of the agreement is for the 15 year period
terminating during March 2000. Service America agreed to invest
$7,000,000 in the concession premises at the racetrack facility.  As of
June 30, 1998, the Company is contingently liable for approximately
$900,000, the undepreciated value of the equipment Service America
installed at the track, if this agreement were to be terminated. At the
end of the agreement or upon termination, Garden State Park would take
title to such equipment.

  (E)  The New Jersey Division of Gaming Enforcement ("DGE") has
conducted an investigation of the Company and its directors and
significant stockholders in connection with Garden State Park's and
Freehold Raceway's licenses with the Casino Control Commission ("CCC")
and the Racing Commission.  The DGE issued a report to the CCC in
September  1998 in which it objected to the qualification of the one
director who did not file an application and requested hearings for
three stockholders.  The director and one of the three stockholders
have requested hearings with the CCC and if the Delaware Settlement is
consummated, the other two stockholders will no longer be required to
qualify.  The DGE also reserved the right to continue its investigation
as to additional directors in the event the Delaware Settlement is not
consummated.  As a result of such report and subject to the
consummation of the Delaware Settlement, the CCC and/or the Racing
Commission may undertake further proceedings which could potentially
jeopardize the Company's racing licenses and ability to conduct
business with any casino licensees, including simulcasting to Atlantic
City casinos.

  LEGAL PROCEEDINGS

  On or about September 10, 1997, three actions were filed in
Delaware Chancery Court in and for New Castle County (the"Delaware
Chancery Court"), each of which named the Company as a nominal
defendant and one of which was subsequently dismissed (collectively,
the "Delaware Actions").  Additionally, two actions were filed in New
Jersey naming the Company as a nominal defendant (collectively, the
"New Jersey Actions"), one of which is a derivative action filed on or
about February 24, 1998 in the United States District Court for the
District of New Jersey (the "New Jersey District Court"), and the other
is a purported class action filed on or about July 15, 1998 in the
Superior Court of New Jersey (the "New Jersey Superior Court").  As
described more fully below, pursuant to the terms of the Delaware
Stipulation dated July 2, 1998, upon satisfaction of certain conditions
set forth in the Delaware Stipulation, the Delaware Actions are to be
fully and finally dismissed with prejudice, and the parties are to
provide mutual releases of all claims related to the actions thereunder
(the "Delaware Settlement").  See "Delaware Settlement."  Further,
pursuant to a memorandum of understanding entered into on August 18,
1998 (the "New Jersey Memorandum"), upon satisfaction of certain
conditions, the New Jersey Actions are to be fully and finally
dismissed with prejudice, and the parties are to provide mutual
releases of all claims related to the actions thereunder (the "New
Jersey Settlement").  See "New Jersey Settlement."

Mariucci, et al. v. DeSantis, et al.

  The first Delaware Action, captioned John Mariucci, Robert J.
Quigley, Charles R. Dees, Jr., James J. Murray, Francis W. Murray,
Frank A. Leo, and The Family Investment Trust (Henry Brennan as
Trustee) v. Nunzio P. DeSantis, Michael Abraham, Anthony Coelho,
Kenneth W. Scholl and Joseph Zappala and International Thoroughbred
Breeders, Inc., C.A. No. 15918NC ("Mariucci"), alleged, among other
things, that (i) NPD had breached the terms of the NPD Acquisition
Agreement by failing to fund a line of credit, (ii) as a result of such
breach, the resignations of Messrs. Mariucci, James Murray and
Keonemund from the Board were ineffective and (iii) Messrs. DeSantis,
Coelho, Abraham, Scholl and Zappala (the "New Directors") were misusing
the assets of the Company for their personal benefit.  The Mariucci
complaint sought an order (a) pursuant to Section 225 of the Delaware
General Corporation Law, determining that (1) the New Directors were
never validly appointed or elected to the Board and (2) Frank
Koenemund, John Mariucci and James Murray, notwithstanding their
resignations upon the NPD Acquisition, were directors of the Company
(the "Section 225 Claims") and (b) preserving the status quo pending a
final adjudication of the Section 225 Claims.  On September 18, 1997,
the plaintiffs filed an amended complaint.  On September 26, 1997, the
New Directors and the Company filed a motion to dismiss, or in the
alternative to strike allegations of the amended complaint.  The
Delaware Chancery Court granted the motion to dismiss by opinion dated
October 14, 1997.  The time for appeal of the Delaware Chancery Court
Order has expired and no appeal has been taken by the plaintiffs.

Quigley, et al. v. DeSantis, et al.

  The second Delaware Action, captioned Robert J. Quigley, Frank A.
Leo , and The Family Investment Trust (Henry Brennan as Trustee) v.
Nunzio P. DeSantis, Michael Abraham, Anthony Coelho, Kenneth W. Scholl,
Joseph Zappala, Joseph A. Corazzi and Las Vegas Entertainment Network,
Inc. and International Thoroughbred Breeders, Inc., C.A. No. 15919NC
("Quigley"), is a derivative suit brought by two then Directors
(Messrs. Quigley and Leo) and the Family Investment Trust
(collectively, the "Quigley Plaintiffs") which alleges, among other
things, that the New Directors have breached their fiduciary duties to
the Company, usurped corporate opportunities belonging to the Company
and incorrectly stated minutes of Board meetings to omit material
discussions.  The Quigley complaint alleges that the New Directors
entered into certain agreements on behalf of the Company in violation
of the "super-majority" voting provisions of the Company's By-laws and
their fiduciary duty to the Company, including but not limited to, the
Credit Suisse loan agreement, the Tri-Party Agreement, the Bi-Lateral
Agreement, the D&C option agreement, Mr. DeSantis' employment agreement
and consulting agreements with Messrs. Coelho and Zappala.  The Quigley
complaint seeks (i) a declaratory judgement that (a) certain actions
taken by the New Directors are null and void and  (b) the "super-
majority" By-law  provisions  remain in full force and effect, (ii)
recission of certain actions taken by the New Directors and (iii)
damages as a result of the allegedly unauthorized and allegedly
unlawful conduct of the defendants.  On November 7, 1997, the New
Directors and the Company filed  answers to the Quigley complaint
denying all allegations contained in the Quigley complaint.

  On November 18, 1997, the Company filed an amended answer and
counterclaim (the "Counterclaim") against Messrs. Quigley, Leo, Francis
Murray and Dees (collectively, the "Counterclaim Defendants").  The
Counterclaim alleges that the Counterclaim Defendants have breached
their fiduciary duty to the Company by  (i) adopting, and subsequently
refusing to recognize the repeal of certain "super-majority" By-law
provisions in order to aid Brennan in retaining control of the Company's
business affairs and jeopardizing the Company's licenses and
registrations, (ii) interfering in the Company's hiring of new
independent auditors thereby causing the Company to be delinquent in its
required filings with the SEC and causing the suspension of trading in
the Company's stock on AMEX, (iii) using corporate funds for their
personal uses and (iv) usurping corporate opportunities properly
belonging to the Company.  The Counterclaim seeks injunctive relief
enjoining the Counterclaim Defendants from, among other things,
interfering in the Company's day-to-day business operations, the
establishment of a constructive trust over certain assets of the
Counterclaim Defendants, a declaratory judgement that the "super-
majority" voting provisions have been repealed and money damages.  The
Counterclaim Defendants filed an answer to the Counterclaim on January
12, 1998 denying all of the material allegations and, in addition, Mr.
Murray asserted a wrongful discharge and seeks monetary damages.

  Subsequent to the scheduling of the Director Litigation for trial,
the parties reached an agreement in principle to settle the litigation
which resulted in the Delaware Stipulation.  As described more fully
below under "Delaware Settlement," upon satisfaction of the conditions
set forth in the Delaware Stipulation, the Director Litigation will be
fully and finally dismissed with prejudice, and the parties will provide
mutual releases of all claims related to such action.  See "Delaware
Settlement."

Rekulak v. DeSantis, et al.

  The third Delaware Action captioned James Rekulak v. Nunzio P.
DeSantis, Michael Abraham, Anthony Coelho, Kenneth W. Scholl, Joseph
Zappala, Las Vegas Entertainment Network, Inc. and Joseph A. Corazzi and
International Thoroughbred Breeders, Inc., C.A. No. 15920 ("Rekulak"),
is a derivative suit which in essence repeats the allegations contained
in the Quigley complaint and seeks similar relief.  The Rekulak action
was consolidated with the Quigley action pursuant to a stipulation and
order dated January 13, 1998.

  The trustee of Brennan's Bankruptcy Estate, as well as the SEC,
have participated to a limited extent in discovery in the litigation of
the Quigley and Rekulak actions.  

  As described more fully below under "Delaware Settlement," upon
satisfaction of the conditions set forth in the Delaware Stipulation,
the Rekulak action will be fully and finally dismissed with prejudice. 
See "Delaware Settlement."

Rekulak v. DeSantis, et al.

  On or about October 8, 1997, James Rekulak filed a complaint in
the Delaware Chancery Court captioned Rekulak v. DeSantis, et al., CA
No. 15978, which purports to be a complaint under Section 225 of the
Delaware General Corporation Law and contains substantive allegations
that are virtually identical to those in the complaint in the Mariucci
action described above.  The plaintiff in this action sought to have his
complaint consolidated with the complaint in the Mariucci action and
represented to the Court that he was willing to be bound by the Delaware
Chancery Court's decision on defendants' motion to dismiss the Mariucci
action.  As set forth above, the Mariucci action was dismissed by the
Delaware Chancery Courts opinion dated October 14, 1997, and thereafter,
this action was dismissed with prejudice by a stipulation and order
dated February  9, 1998.

Delaware Settlement

  The Quigley and Rekulak actions, and the NPD and Green actions
described more fully below, are currently at a standstill as the parties
have entered into the Delaware Stipulation to settle such litigation. 
Upon consummation of the Delaware Settlement, the Quigley, Rekulak, NPD
and Green actions are to be fully and finally dismissed with prejudice,
and the parties are to provide mutual releases of all claims related to
the actions.

  Upon the satisfaction of certain conditions to the Delaware
Settlement, the Company will purchase for $4.6 million cash and the
assumption by the Company of the $5.8 million note issued by NPD and
held by Brennan's Trustee in Bankruptcy, the approximately 2.9 million
shares of the Company's stock owned by NPD.  Simultaneous with such
purchase, all contracts (including option grants and employment and
consulting agreements) between the Company, Messrs. DeSantis, Coelho,
Zappala, Scholl and Abraham, will be canceled, and effective upon such
purchase, Messrs. DeSantis, Coelho and Zappala will resign from the
Company's Board.  Messrs. Scholl, Abraham, Leo and Dees resigned from
the Company's Board on July 23, 1998 upon the mailing of the Delaware
Stipulation to the Company's stockholders.

  Upon satisfaction of certain conditions to the Delaware
Settlement, the Company will deposit title to the El Rancho Property
into escrow for a period of up to 270 days to permit LVEN to sell the El
Rancho Property.  LVEN will have the exclusive right to sell the El
Rancho Property until November 10, 1998, 120 days after the date the
notice of the Delaware Settlement was mailed to the Company's
stockholders and up to an additional 60 days thereafter upon the
occurrence of certain events.  Both LVEN and the Company will have the
right to sell the El Rancho Property between November 10, 1998 and April
9, 1999, 270 days after the mailing of the notice, upon the payment of
at least $44.2 million to the Company.  If, within 30 days prior to the
end of the escrow period, LVEN obtains a $44.2 million loan for the
benefit of the Company, LVEN will have a non-exclusive right to sell the
El Rancho Property for an additional year, upon the payment of $44.2
million to the Company.

  Upon consummation of the Delaware Settlement, certain agreements
to which the Company is a party will be terminated, including without
limitation, all agreements with LVEN (including the entertainment
management agreement and the $160 million profit participation note),
the Bi-Lateral Agreement, the Tri- Party Agreement (other than rights of
CSFB thereunder), the option agreement with D&C, the Albuquerque lease,
Mr. DeSantis' employment agreement and the consulting agreements with
Messrs. Coelho, Zappala and Scholl.

  Pursuant to the Delaware Stipulation, the Company's By-laws have
been amended to reduce the authorized number of directors to six, and in
connection with such reduction, Messrs. Abraham, Scholl, Dees and Leo
resigned from the Company's Board.  Until all of the transactions
contemplated by the Delaware Settlement are consummated or the Delaware
Settlement is terminated according to its terms, (a) the Company will
not approve, amend or terminate any agreement or incur any additional
liabilities, expenses or obligations in excess of $10,000 without the
prior written approval of directors Coelho and Quigley, and (b) the
Company and its subsidiaries will not take any significant action,
including any merger, purchase or sale of assets for $50,000 or more,
issue any securities, approve or amend employment or consulting
agreements, borrow $50,000 or more, fill any vacancy on the Company's
Board, proceed with any meeting of stockholders, declare or pay any
dividend or other distribution, consummate any tender offer,
restructuring, recapitalization or reorganization, or amend the
Company's By-laws without the unanimous consent of the Company's Board.

  The Delaware Settlement is subject to numerous conditions,
including without limitation, the Delaware Court dismissal order
becoming final, the approval of Credit Suisse  or an alternative lender,
and certain approvals by the United States Bankruptcy Court handling the
Brennan bankruptcy proceedings.  The approvals of the Delaware Court and
AutoLend Bankruptcy Court have been obtained.  The consummation of the
Delaware Settlement will not result in the release by the Company of any
claims against Credit Suisse or Standard Capital Group.  However, in the
event that a new financing agreement is approved by the Company and
Credit Suisse, Credit Suisse will obtain a release of claims from the
Company.

Harris v. DeSantis, et al.

  The first New Jersey Action, filed on February 24, 1998 in the New
Jersey District Court, captioned Myron Harris, derivatively on behalf of
International Thoroughbred Breeders, Inc. v. Nunzio P. DeSantis, Anthony
Coelho, Kenneth W. Scholl, Michael Abraham, Joseph Zappala, Frank A.
Leo, Robert J. Quigley, Charles R. Dees, Jr. and Francis W. Murray
("Harris-Federal"), C.A. No. 98-CV-517(JBS), is a derivative suit
brought by a stockholder of the Company.  The factual allegations and
claims asserted in the Harris-Federal complaint are virtually identical
to the claims asserted in the Quigley complaint and in the Counterclaim
asserted by the Company in the Quigley action.

  On May 4, 1998, all defendants filed a motion to dismiss, or, in
the alternative, a motion to stay the Harris-Federal action, pending
resolution of the Quigley action.  The New Jersey District Court has not
ruled on that motion.  On May 4, 1998, the plaintiff filed an amended
complaint to, among other things, add another stockholder as an
additional plaintiff.

  As described more fully below, pursuant to the New Jersey
Memorandum and the satisfaction of certain conditions set forth therein,
the Harris-Federal action is to be fully and finally dismissed with
prejudice, and the parties are to provide mutual releases of all claims
related to the action.  See "New Jersey Settlement."

Harris v. DeSantis, et al.

  The most recent New Jersey Action, filed on July 15, 1998 in the
New Jersey Superior Court, captioned Myron Harris and Howard Kaufman v.
Nunzio P. DeSantis, Anthony Coelho, Kenneth W. Scholl, Michael Abraham,
Joseph Zappala, Frank A. Leo, Robert J. Quigley and Charles R. Dees, Jr.
("Harris-State"), Cam-L-5534-98, is a purported class action suit
brought by the same plaintiffs as the Harris-Federal action.  The
complaint alleges that the Harris-State defendants breached their
fiduciary duties to the Company's stockholders by failing to file timely
audited financial statements for the fiscal year ended June 30, 1997,
resulting in the indefinite suspension of trading of the Company's stock
on AMEX.

  Prior to filing pleadings in response to the Harris-State
complaints, the defendants entered into the New Jersey Memorandum
pursuant to which the Harris-State action is to be fully and finally
dismissed with prejudice, and the parties are to provide mutual releases
of all claims related to the action.  See "New Jersey Settlement."

New Jersey Settlement

  The New Jersey Actions are currently at a standstill as the
parties have entered into the New Jersey Memorandum.  Subject to the
approval of the court, the defendants and the Company will pay the
aggregate sum of $150,000 for plaintiffs' counsel fees and expenses in
the New Jersey Litigation and any incentive award to plaintiffs Harris
and Kaufman would be paid out of this $150,000 sum.  Pursuant to the New
Jersey Settlement, following the implementation of the Delaware
Settlement, the defendants will restructure the Audit Committee of the
Company so as to facilitate the procurement and timely filing of audited
financial statements in the future.  Further, the Company will take all
appropriate actions necessary to promptly initiate the quotation of the
Company's Common Stock and Preferred Stock on the OTC Bulletin Board.

  Pursuant to the New Jersey Settlement, the plaintiffs agreed not
to file objections to the Delaware Settlement.  In addition, pursuant to
the New Jersey Settlement, upon consummation of the Delaware Settlement
the plaintiffs will move for a dismissal, with prejudice, of the Harris-
Federal action, and will provide releases to the defendants and the
Company and all others acting on the Company's behalf for any claims
that were asserted or could have been asserted in the Harris-Federal
action.  For settlement purposes only, a class will be certified for
Harris-State action consisting of all holders of the Company's stock
between October 13, 1997 (the date AMEX suspended trading of the
Company's stock) and the date the Company's stock is quoted for trading
on the OTC Bulletin Board.  The plaintiffs and the class members will
release the defendants and the Company and all others acting on the
Company's behalf from any claims that were asserted or could have been
asserted in the Harris-State action.

Other Litigation

  In November 1997, two separate actions were filed in the New
Jersey District Court against various directors of the Company and other
affiliated parties.  The Company is not a party to either of these
actions, both of which are summarized below:


NPD, Inc. v. Quigley, et al.

  On November 18, 1997, NPD (the Company's largest stockholder and
whose stockholders are Messrs. DeSantis and Coelho), filed a complaint
captioned NPD, Inc. v. Robert J. Quigley, Francis W. Murray, Frank A.
Leo, Charles R. Dees, Jr., John Mariucci, Frank Koenemund and James J.
Murray, C.A. 97-CV-5657 ("NPD"), in the New Jersey District Court.  The
complaint alleges, among other things, that Messrs. Quigley, Francis
Murray, Leo and Dees, each of whom was at the time a director of the
Company, and Messrs. Mariucci, Koenemund and James Murray, each of whom
is a former director of the Company, conspired with one another and
Brennan to defraud NPD by (i) approving and subsequently concealing from
NPD the existence of the "super-majority" voting provision of the
Company's By-laws and (ii) purporting to repeal such provision and
subsequently filing suit in an effort to restore such provision, all of
which has had the effect of attempting to deprive NPD of control of the
Company and perpetuating the control of Brennan and his associates.  The
NPD suit seeks compensatory and punitive damages.  On January 8, 1998,
the defendants served a motion to dismiss NPD's complaint.  The NPD
action is at a standstill as the parties have entered into the Delaware
Stipulation.  Upon satisfaction of the conditions set forth in the
Delaware Stipulation, the NPD action is to be fully and finally
dismissed with prejudice, and the parties are to provide mutual releases
of all claims related to such actions.  The Company is not a party to
the NPD suit.

Green v. DeSantis, et al.

  Certain officers, directors and affiliates of the Company are
parties to an action filed on November 30, 1997 by Robert William Green
("Green"), a stockholder of the Company, captioned Robert William Green
v. Nunzio DeSantis, Joseph Corazzi, Anthony Coelho, Las Vegas
Entertainment Network, Inc. and NPD, Inc., C.A. 97-5359(JHR), in the New
Jersey District Court.  The complaint alleges, among other things, that
the defendants have usurped certain corporate opportunities at the
expense of the Company, have diluted Green's interest in the Company
through the issuance of shares of stock and have conspired to deprive
him of certain rights under an option granted to him by NPD (the "Green
Option").   Subject to regulatory approval, the Green Option grants
Green the right to purchase approximately 50% of the shares of the
Company's Common Stock which are held by NPD.  The expiration date of
the Green Option was January 15, 1998 and Green did not exercise the
option by such date.  Green seeks (i) compensatory and punitive damages,
(ii) an order enjoining defendants from transferring, encumbering or
alienating the Company's Common Stock subject to the Green Option, (iii)
an order declaring the issuance of certain shares of Common Stock to be
a nullity, and (iv) reformation of the Green Option to extend the
termination date.  This action also raises claims substantially similar
to those made in the Quigley action.  The parties to the Green action
have stipulated to take no action in the case pending consummation of
the Delaware Settlement.  Upon satisfaction of the conditions set forth
in the Delaware Stipulation, the Green action is to be fully and finally
dismissed with prejudice, and the parties are to provide mutual releases
of all claims related to such actions.  The Company is not a party to
the Green action.

  The Company is a defendant in various other lawsuits incidental to
the ordinary course of business.  It is not possible to determine with
any precision the probable outcome or the amount of liability, if any,
under these lawsuits: however, in the opinion of the Company and its
counsel, the disposition of these lawsuits will not have material
adverse effect on the Company's financial position, results of
operations, or cash flows.
  
(12)   FAIR VALUE OF FINANCIAL INSTRUMENTS

  As of June 30, 1998, in assessing the fair value of financial
instruments, the Company has used a variety of methods and assumptions,
which were based on estimates of market conditions and loan risks
existing at that time.  For certain instruments, including cash and cash
equivalents, restricted cash and investments, non-trade accounts
receivable and loans, and short-term debt, it was estimated that the
carrying amount approximated fair value for the majority of these
instruments because of their short-term maturity.  Quoted market prices
for the same instrument were used for trading securities.  Estimated
discounted value of future cash flows, has been used to determine fair
value for long term debt.  The carrying amounts of long term debt
approximate fair value since the Company's interest rates approximate
current interest rates.

(13)   RETIREMENT PLANS

  The Company maintains a Retirement Plan under the provisions of 
section 401(k) of the Internal Revenue Code of 1986, as amended (the
"Code") covering all its non-union full time employees who have
completed one year of service. The Company's basic contribution under
the plan is 4% of each covered employee's compensation for such calendar
year. In addition, the Company contributes up to an additional 50% of
the first 4% of compensation contributed by any covered employee to the
plan (an employee's maximum contribution is $9,500 factored for
inflation annually).  The Company's expense totaled $216,848, $238,201
and $229,187 for the fiscal years ended June 30, 1998, 1997 and 1996,
respectively.

  For collectively bargained, multi-employer pension plans,
contributions are made in accordance with negotiated labor contracts and
generally are based on the number of hours worked.  With the passage of
the Multi-Employer Pension Plan Amendments Act of 1980 (the "Act"), the
Company may, under certain circumstances, become subject to liabilities
in excess of contributions made under collective bargaining agreements. 
Generally, these liabilities are contingent upon the termination,
withdrawal, or partial withdrawal  from the plans.  Total contributions
charged to expense under all collectively bargained multi-employer
pension plans were $1,089,070, $1,106,906 and $1,070,549, in fiscals
1998, 1997 and 1996, respectively.
  
  The Company has approximately 74% of its labor force covered by
collective bargaining agreements at June 30, 1998; 52% of its labor
force is covered by collective bargaining agreements that will expire
during fiscal 1999.

(14)   STOCK OPTIONS AND WARRANTS

  (A)  EMPLOYEE AND NON-EMPLOYEE OPTIONS

  In December 1994, the Company's Board of Directors and
stockholders adopted and approved the 1994 Employees' Stock Option Plan
("Plan").  The Plan permits the grant of options to purchase up to
475,000 shares of Common Stock, at a price per share no less than 100%
of the fair market value of the Common Stock on the date the option is
granted.  The price would be no less than 110% of fair market value in
the case of an incentive stock option granted to any individual who
owns more than 10% of the Company's outstanding Common Stock.  The Plan
provides for the granting of both incentive stock options intended to
qualify under section 422 of the Code, and non-qualified stock options
which do not qualify.  No option may have a term longer than 10 years
(limited to five years in the case of an option granted to a 10% or
greater stockholder of the Company).  Options under the Plan are non-
transferable except in the event of death and are only exercisable by
the holder while employed by the Company. Unless the Plan is terminated
earlier by the Board, the Plan will terminate in June 2004.

  In addition, the Company has also granted non-qualified stock
options for the purchase of Common Stock to employees and directors of
the Company that are not part of the above mentioned Plan.  These
options have been granted with terms of five and ten years.  These
options have been granted at prices per share that have been below,
equal to or above the fair market value on the grant date.    

  The following table contains information on stock options for
options granted from the Plan and options granted outside the Plan for
the three year period ended June 30, 1998:

<TABLE>
<S>                      <C>         <C><C>          <C>
                         Stock Options               
                         ____________                              

                                          Exercise      Weighted
                            Number       Price Range    Average
                          of Shares       Per Share      Price
                                                     
                         __________________________________________

Outstanding at June 30, 1995   1,475,000$5.875 -         $14.10
                                        $24.00       

Granted                     1,200,000   $4.00 - $4.875    $ 4.14

Canceled                   (1,400,000)  $4.00 - $24.00    $14.22

Outstanding at 
 June 30, 1996              1,275,000   $4.00 - $5.875    $ 4.59

Granted                       875,000   $4.00 - $5.00    $ 4.51

Canceled                    (550,000)   $4.00 - $5.875    $ 4.43

Outstanding at
  June 30, 1997            1,600,000    $4.00 - $5.875    $ 4.59

Granted                      300,000    $4.00            $ 4.00

Outstanding at 
   June 30, 1998           1,900,000    $4.00 - $5.875    $ 4.50
</TABLE>


<TABLE>
<S>                        <C>         <C><C>          <C><C>
                                            Exercise        Weighted
                                          Price Range       Average
                              Option       Per Share         Price
                              shares                     

Exercisable at June 30:                                  

1996                         875,000     $4.00 - $5.875      $4.86

1997                        1,600,000    $4.00 - $5.875      $4.59

1998                        1,900,000    $4.00 - $5.875      $4.50

                                                         

Options available for futuregrant under the Plan at      
June 30:                                   1994 Plan     
                                                         

1996                                        150,000      

1997                                        275,000      

1998                                        275,000      
</TABLE>

The following table summarizes information about stock options outstanding at
June 30, 1998:

<TABLE>
<S>                              <C>        <C>        <C><C>
                                 Ranges                      Total

Range of exercise prices             $4.00 -    $5.00 -        $4.00 -
                                       4.625      5.875          5.875

Outstanding options:                                      

   Number outstanding at June              
      30, 1998                     1,275,000    625,000      1,900,000        

   Weighted average remaining           8.32       5.25         7.25
contractual life (years)                                  

   Weighted average exercise price     $4.11     $ 5.28         $4.50

                                                          

Exercisable options:                                      

   Number outstanding at June      
       30, 1998                    1,275,000    625,000      1,900,000        

   Weighted average exercise price      $4.11      $5.28         $4.50
                                                       
                                                       
                                                          
                                                          
                                             Weighted     
Weighted Average Fair Value of OptionsGranted Number of  Average  Weighted
                                   Shares    Exercise     Average Fair   Value
                                               Price      

During Fiscal Year Ended:                                 

June 30, 1996:                                            

    Below Market                   400,000     $4.00         $2.15

    At Market                      250,000     $4.65         $2.58

    Above Market                   550,000     $4.00         $1.98

                                 1,200,000               

June 30, 1997:                                            

    Below Market                     --         --             --

    At Market                        --         --             --

    Above Market                   875,000     $4.51         $1.78

                                   875,000                

                                             Weighted     
                                  Number of   Average       Weighted
June 30, 1998:                     Shares    Exercise     Average Fair   Value
                                               Price      

    Below Market                   300,000     $4.00         $2.62

    At Market                        --         --             --

    Above Market                     --         --             --

                                   300,000                
</TABLE>

  Options to purchase an aggregate of 6,000,000 shares of Common
Stock have been granted, subject to stockholder approval, to the
Company's Chief Executive Officer and Chairman of the Board and are not
reflected in the above tables.   On August 21, 1997, the Company granted
non-qualified stock options to purchase an aggregate of 300,000 shares
of Common Stock to certain directors.  Upon consummation of the Delaware
Settlement, options to purchase an aggregate of 6,300,000 shares of
Common Stock will be terminated.  (See Note 11.)

  During 1995, the Financial Accounting Standards Board adopted
Statement of Financial Accounting Standards No. 123 ("SFAS 123"),
"Accounting for Stock-Based Compensation," which has recognition
provisions that establish a fair value based method of accounting for
stock-based employee compensation plans and established fair value as
the measurement basis for transactions in which an entity acquires goods
or services from non-employees in exchange for equity instruments.  SFAS
123 also has certain disclosure provisions.  Adoption of the recognition
provisions of SFAS 123 with regard to these transactions with non-
employees was required for all such transactions entered into after
December 15, 1995, and the Company adopted these provisions as required. 
The recognition provision with regard to the fair value based method of
accounting for stock-based employee compensation plans is optional. 
Accounting Principles Board Opinion No. 25 "Accounting for Stock Issued
to Employers" ("APB 25") uses what is referred to as an intrinsic value
based method of accounting.  The Company has decided to continue to
apply APB 25 for its stock-based employee compensation arrangements. 
Accordingly, no compensation cost has been recognized.  The Company
estimates the fair value of each option and warrant granted on the date
of grant using the Black-Scholes option-pricing model with the following
assumptions: a weighted average risk-free interest rate of 6.3%, a
weighted average expected life of 5 years based on Company expectations,
and a weighted average expected volatility of 56.29%.  Had compensation
cost for the Company's employee stock option plan been determined based
on the fair value at the grant date for awards under the Plan consistent
with the method of SFAS 123, the Company's net loss and net loss per
share would have been increased to the pro forma amounts indicated
below:

<TABLE>
<S>              <C><C>           <C><C>         <C><C>
                                                   
                    Years Ended June 30,           

                         1998           1997           1996

Net (Loss): As                                     
Reported                                           

(Loss) Before                                      
Discontinued                                                    
Operations &                                                    
Extraordinary Item  $  (25,468,850) $ (15,144,053) $  (2,779,987)

Income from                                        
Discontinued                                                    
Operations               7,207,633      1,594,096      1,710,276

Extraordinary Item             -0-    (3,837,625)            -0-

Net (Loss)         $  (18,261,217) $ (17,387,582) $  (1,069,711)

Pro Forma Net                                      
(Loss)                                             

(Loss) Before                                      
Discontinued                                                    
Operations &                                                    
Extraordinary Item $  (25,468,850)  $ (16,090,903) $  (3,904,487)

Income from                                        
Discontinued                                                    
Operations               7,207,633      1,594,096      1,710,276

Extraordinary Item             -0-    (3,837,625)            -0-

Net (Loss)         $  (18,201,217) $ (18,334,432) $  (2,194,211)

Net (Loss) Per                                     
Share: As Reported                                 

(Loss) Before                                      
Discontinued                                                    
Operations &                                                    
Extraordinary Item         ($1.82)        ($1.29)         ($.26)

Income from                                        
Discontinued                                                    
Operations                    0.51            .14            .16

Extraordinary Item             -0-          (.33)            -0-

Net (Loss)                 ($1.31)        ($1.48)         ($.10)

Pro Forma Net                                      
(Loss) Per Share                                   

(Loss) Before                                      
Discontinued                                                    
Operations &                                                    
Extraordinary Item         ($1.82)        ($1.38)         ($.37)

Income From                                        
Discontinued                                                    
Operations                    0.51            .14            .16

Extraordinary Item             -0-          (.33)            -0-

Net (Loss)                 ($1.31)        ($1.57)         ($.21)
</TABLE>

  (B)  WARRANTS

  During the fiscal year ended June 30, 1996, the Company issued
warrants to purchase 925,000 shares of  Common Stock in connection with
its financing activities and the purchase of the El Rancho Property. 
During the fiscal year ended June 30, 1997, the Company issued warrants
to purchase 746,847 shares of Common Stock in connection with its
financing activities, including the Credit Suisse Credit Facility.  The
Company did not issue any warrants in fiscal 1998.

  The fair value of warrants issued during the years ended June 30,
1997 and 1996 was $1,893,451 and $1,930,250, respectively, and has been
accounted for as deferred financing costs and costs associated with the
acquisition of the El Rancho Property.  The deferred financing costs are
being amortized over the terms of the related indebtedness.  The fair
value of the warrants issued in connection with the acquisition of the
El Rancho Property has been capitalized and would be amortized if and
when the facility became operational; however, the Company has
determined to dispose of the El Rancho Property.  

  Certain deferred financing costs recorded by the Company in
connection with the Foothill and other financing agreements were
expensed during the fiscal year ended June 30, 1997.  Total expense
recorded by the Company during the fiscal year ended June 30, 1997
associated with these warrants amounted to $1,287,258.

  Warrants have been granted to acquire Common Stock at various
prices above, below and at fair market value at the date of grant.  The
following table contains information on warrants for the three year
period ended June 30, 1998:
                                                                   
                         Warrants                  
                                                   

                                       Exercise     Weighted
                           Number     Price Range   Average
                          Of Shares    Per Share     Price
                          ___________________________________

Outstanding at June 30, 1995      -0-              

Granted                        925,000 $4.00 - $5.25    $4.76

Outstanding at  June 30, 1996  925,000 $4.00 - $5.25    $4.76

Granted                        746,847 $4.375- $5.00    $4.54

Outstanding at June 30,                            
1997 and 1998                1,671,847 $4.00 - $5.25    $4.66


(15)   DIVIDENDS

     The Company is required to pay to the holders of the
Company's Series A Convertible Preferred Stock ("Preferred
Stock") a cash dividend from any net racetrack earnings, as
defined,  of Garden State Park.  No dividends were required for
fiscals 1998, 1997 and 1996.  The Preferred Stock has
liquidation rights of $100 per share plus accrued dividends, if
any.

(16) RELATED PARTY TRANSACTIONS

     Mr. DeSantis and Mr. Joseph Corazzi, President and
Chairman of LVEN, each own one-half of the stock of D&C.  On
July 1, 1997, the Company paid for an option to acquire certain
leasehold interests relating to two New Mexico racetracks for a
non-refundable deposit of $600,000 which was to be credited
towards the purchase price.  The option agreement has been
terminated.  In the pending litigation, the minority Board
members have challenged the authorization and enforceability of
certain agreements, including the option agreement.  In
connection with the Delaware Settlement, the $600,000 has been
included as part of the calculation of the purchase price for
the NPD shares.  (See Note 11).

     In connection with the NPD acquisition, NPD borrowed the
sum of $2,900,000 from Casino-Co, from whom the Company
purchased the El Rancho Property and with whom the Company has
various contractual obligations with respect to the purchase of
the El Rancho Property including, but not limited to, a profit
participation note and an entertainment management contract. 
Upon consummation of the Delaware Settlement, the profit
participation note and the entertainment management contract
will be terminated.  The Casino-Co loan, together with accrued
interest, was repaid in July 1997.  Mr. DeSantis holds options
to acquire 1,500,000 shares of LVEN's common stock at an
exercise price of $1.00 per share.  Mr. DeSantis was also paid
a commitment fee by LVEN of $110,000 in connection with a
standby financing commitment he made to LVEN on October 31,
1996 as replacement financing for the El Rancho Property.  This
standby financing commitment was never drawn upon and was
terminated in January 1997.  Mr. DeSantis is a 25% owner in
Electric Media Company, Inc., ("EMC"), a Delaware corporation
and subsidiary of LVEN, for which investment Mr. DeSantis paid
$375,000.

      Mr. DeSantis owned 80% of Nordic Gaming Corporation, an
Ontario corporation which purchased the Fort Erie Racetrack in
Fort Erie, Canada on August 27, 1997.  The Company was offered,
but The Executive Committee rejected, the opportunity to make
this investment because of the demands on cash flow.  Nordic
Gaming borrowed $182,000 from LVEN for a deposit on the
purchase which was repaid to LVEN at the closing.  LVEN has
also provided Nordic Gaming with a $1.3 million secured line of
credit to fund operating losses at the Fort Erie Racetrack.  On
May 15, 1998, Mr. DeSantis sold his Nordic Gaming shares to
Erie Gaming Organization, Inc., an Ontario corporation which
holds the other 20% interest in Nordic Gaming.  In
consideration for his shares, Mr. DeSantis received $10.00 and
each of Nordic Gaming, Mr. DeSantis and Erie Gaming exchanged
mutual general releases.  In the pending litigation, the
minority Board members challenged the decision of The Executive
Committee to reject the opportunity to purchase the Fort Erie
Racetrack.

     Pursuant to the Tri-Party Agreement executed in
connection with the Credit Suisse Credit Facility, the Company
issued an aggregate of 2,326,520 shares of Common Stock (based
on a value of $5.00 per share) in exchange for cancellation of
the Casino-Co Note plus accrued interest.  Of such shares,
2,093,868 shares were issued to Casino-Co (the "Conversion
Shares") and 232,652 shares were issued to Credit Suisse in
consideration for its consent and for certain advisory services
on the transaction.  In accordance with the Tri-Party
Agreement, the Company has also agreed, subject to, among other
things, an independent valuation, receipt of a fairness opinion
from an independent investment banking firm and Board and
stockholder approval, to complete the Casino-Co transaction. 
LVEN and Casino-Co granted Mr. DeSantis a proxy to vote any or
all of the Conversion Shares until the occurrence of certain
events and have agreed to grant Mr. DeSantis a proxy to vote
any or all of the shares to be issued to LVEN in the Casino-Co
transaction.  In the pending litigation, the minority Board
members have challenged the authorization and enforceability of
certain agreements, including the Tri-Party Agreement.  Upon
consummation of the Delaware Settlement, the Tri-Party
Agreement will be terminated and the Conversion Shares will be
retired.

     In connection with the Credit Suisse Credit Facility, the
Company and LVEN entered into the Bi-Lateral Agreement which
set the amount the Company could recoup prior to Casino-Co
receiving consideration under the $160 million profit
participation note at $35 million.  In addition, the Bi-Lateral
Agreement fixed the maximum debt service to be netted against
cash flow from operations of the El Rancho Property in
computing "adjusted cash flow" under the $160 million profit
participation note at $65 million.  In the pending litigation,
the minority Board members have challenged the authorization
and enforceability of certain agreements, including the Bi-
Lateral Agreement.  The Bi-Lateral Agreement and the $160
million profit participation note will be terminated upon
consummation of the Delaware Settlement.

     During fiscals 1998 and 1997, the Company paid $12,200
and $217,000 respectively, to  Southwest Jet Group in
connection with the use of  a private jet by certain officers
and directors of the Company including Mr. DeSantis, for
Company business.  Southwest Jet Group is a Nevada corporation,
owned by Mr. DeSantis' son, ,which operates  private jets,
including one which was partially financed by Messrs. DeSantis
and Corrazzi.  Messrs DeSantis and Corazzi used private jets
operated by Southwest Jet Group for certain personal matters
for which the Company advanced approximately $177,000 and
$160,000 during fiscals 1998 and 1997, respectively, and which
LVEN has agreed to reimburse the Company.

     Effective January 15, 1997, the Company entered into an
employment agreement with Nunzio P. DeSantis, the Company's
Chief Executive Officer, for a ten-year term at an initial
annual base salary of $450,000.  In the pending litigation,
which is currently stayed and will be dismissed with prejudice
upon consummation of the Delaware Settlement, the minority
Board members have challenged the authorization and
enforceability of certain agreements, including Mr. DeSantis'
employment agreement.  Under the terms of the Delaware
Settlement, neither the Company nor any of its affiliates are
to make any payments to Mr. DeSantis except for his base salary
and automobile allowance and continuation of his insurance
benefits under the terms set forth in the employment agreement. 
Upon consummation of the Delaware Settlement, Mr. DeSantis'
employment agreement will be terminated and options granted to
him in the employment agreement will be cancelled.

     During fiscal 1998, the Company paid $120,000 in
consulting fees, $22,500 for director fees,  $6,000 for an auto
allowance and $44,500 in expense reimbursements to Anthony
Coelho, the Company's Chairman, pursuant to an agreement
effective January 15, 1997.   During fiscal 1997, the Company
paid $55,000 in consulting fees, $18,000 for director fees and
$2,750 for an auto allowance to Mr. Coelho.  Mr. Coelho's
consulting agreement is month to month, under which he is to be
paid $10,000 per month for ongoing consulting services, $2,500
for each board meeting he attends and a $500 monthly automobile
allowance.  In the pending litigation, which is currently
stayed and will be dismissed with prejudice upon consummation
of the Delaware Settlement, the minority Board members have
challenged the authorization and enforceability of certain
agreements, including Mr. Coelho's consulting agreement.  Under
the terms of the Delaware Settlement, neither the Company nor
its subsidiaries shall pay to Mr. Coelho more than $10,000 per
month as consulting fees and payment of regular directors fees
and upon consummation of the Delaware Settlement, Mr. Coelho's
consulting agreement will be terminated and options granted to
him in the consulting agreement will be cancelled.   

     Kenneth Scholl, a director of the Company until July 23,
1998, provides consulting services to LVEN and certain of its
subsidiaries through the Stanford Company of which he is the
president.  Until December 31, 1997, LVEN paid Stanford Company
$10,000 per month for consulting services, including Mr.
Scholl's services as project manager for the El Rancho
Property.  Effective January 1, 1998, the Company began paying
Mr. Scholl $10,000 per month for ongoing consulting services as
project manager for the El Rancho Property.  Additionally, Mr.
Scholl was paid director fees of $10,000 for each of fiscal
1998 and 1997.  Upon consummation of the Delaware Settlement,
Mr. Scholl's consulting arrangement will be terminated.  Mr.
Scholl is currently the Secretary of Casino-Co and was
President and a director of Casino-Co from March 1996 to May
19, 1997.  

     During fiscal 1998, the Company paid approximately
$110,000 in consulting fees and of  $38,000 reimbursed expenses 
to Joseph Zappala, a director of the Company.   The Company
pays $10,000 per month to Mr. Zappala for ongoing consulting
services. During fiscal 1997, the Company paid approximately
$15,000 in consulting fees, and $4,757 of reimbursed expenses
to Mr. Zappala.  Upon consummation of the Delaware Settlement,
Mr. Zappala's consulting arrangement will be terminated.  Mr.
Zappala also provided consulting services to EMC during fiscal
1997 pursuant to which he was paid $100,000.

     During fiscal 1998, the Company made payments for legal
fees in the amount of $759,755 on behalf of the following
current and former directors: Robert J. Quigley, Frank A. Leo,
Francis W. Murray, Charles R. Dees, Jr., John Mariucci, and
James J. Murray.  These amounts were for legal fees in
connection with the various lawsuits brought against the
Company.  (See Note 11).

     During fiscals 1998, 1997 and 1996, the Company paid
$141,350 , $128,000 and $68,000 respectively, to Public
Strategies, L.L.C., a company owned by Roger A. Bodman, a
former director of the Company, in consideration for ongoing
consulting services pursuant to an agreement which expired in
December 1997.  Public Strategies is continuing to provide
consulting services to the Company on a month-to-month  basis.

     During fiscal 1998, the Company made payment for legal
fees in the amount of $148,342 on behalf of The Family
Investment Trust, a trust for the benefit of Mr. Brennan's
children and of which Mr. Brennan's brother is the trustee, in
connection with the pending litigation.

     During fiscals 1997 and 1996, the Company paid
approximately $75,300 and $160,000, respectively, for the legal
services of Sterns and Weinroth, a law firm partially owned by
Joel H. Sterns, the Company's former chairman.

     During fiscals 1997 and 1996, the Company paid $35,685
and $35,000, respectively, in consulting fees to Goldman, Beale
Associates, a company partially owned by Clifford Goldman, a
former director of the Company.

     During fiscal 1997, the Company agreed to pay and paid
approximately $102,000 to Robert E. Brennan (the Company's
former Chairman and a significant stockholder until January 15,
1997) for reimbursement of Mr. Brennan's legal fees in
connection with the investigation by New Jersey regulatory
authorities which oversee the casino and horse racing
industries in the state.

     During fiscal 1997, the Company paid LVEN  $150,000 
under a letter agreement executed in connection with the
purchase of the El Rancho Property, which provides for a
$25,000 per month fee with respect to maintenance and
supervision of the property prior to and during development. 
The Company terminated the letter agreement on December 17,
1997.

     During fiscal 1997 and 1996, the Company paid
approximately $118,800 and $37,800, respectively, to Francis W.
Murray, a director of the Company, for legal fees and
reimbursed expenses and for consulting fees prior to his
becoming an employee.  Commencing July 2, 1998 upon execution
of the Delaware Stipulation, the Company began compensating Mr.
Murray as an employee at a rate of $120,000 per year.

     The Company subleased a portion of its office space in
Albuquerque, New Mexico to AutoLend Group, Inc. for $600 per
month, which sublease is terminable on 30 days' notice.  Mr.
DeSantis is the Chairman, Chief Executive Officer and a
principal stockholder of AutoLend and Mr. Coelho is a director. 
The Company also reimbursed AutoLend for $150,000 it paid to
Communications Associates for investment advisory services in
connection with locating a potential financing source for the
Company.  Communications Associates is a consulting firm owned
by Mr. Corazzi, the Chairman of LVEN.  LVEN also subleases an
office from the Company in Albuquerque.  In exchange for its
first year's rent, LVEN provided certain furniture for the
executive and reception areas of the Company's Albuquerque
office space.  In connection with the pending litigation, which
is currently stayed and will be dismissed with prejudice if the
Delaware Settlement is consummated, the minority Board members
have challenged the authorization and enforceability of certain
agreements, including the Albuquerque lease.  However, upon
consummation of the Delaware Settlement, the Albuquerque lease
will be assumed by AutoLend.

     The Company has contracted, through Keystone National
Companies, Inc. ("KNC"), to purchase general liability
insurance, excess liability insurance, athletic participants
coverage, workers compensation, automobile damage and
garagekeepers liability insurance for Garden State Park,
Freehold Raceway and the El Rancho Property as well as
corporate insurance.  The premium amounts associated with this
insurance coverage are considered normal in the industry. 
George E. Norcross III, a director of the Company from November
1995 until April 1996, is the owner of KNC.  The Company paid
insurance premiums in the approximate amount of $1,290,000 and
$1,140,000 during fiscals 1997 and 1996, respectively, for the
above referenced insurance coverages.

     During fiscal 1996, the Company paid an aggregate
$400,000 for a fee in connection with the purchase of the
El Rancho Property to KNC. The Company also issued ten-
year warrants exercisable to purchase 275,000 shares of
its Common Stock at an exercise price of $4.00 per share
to George E. Norcross III or his designee in connection
with the purchase of the El Rancho Property.

     During the first quarter of fiscal 1996, the
Company purchased and sold securities and conducted
investment and financial consulting activities, both
directly and through its wholly-owned Olde English
Management, Inc., ("OEM") subsidiary.  The Company's then
Chairman of the Board and Chief Executive Officer, Robert
E. Brennan, directed such activities. In fiscal 1996 the
Company and OEM paid an aggregate $725,000 (which
includes accrued expenses of $350,000 from fiscal 1995),
to Power Forward, Inc.,  ("PFI") a corporation wholly-
owned by Mr. Brennan,  in reimbursement for $365,500 of
expenses during fiscal 1996 and $9,500 due to PFI from
the prior year.

     For additional information regarding related party
transactions see Footnotes 4 and 11 in the Consolidated
Financial Statements.

(17) LOSS FROM RETIREMENT OF DEBT

     During the fourth quarter of fiscal 1997, the
Company recorded an extraordinary loss of $3,837,625 for
the early retirement of debt.  The extraordinary losses
consist primarily of write-offs of deferred finance costs
associated with the retired indebtedness.

(18) SUBSEQUENT EVENTS

     Effective August 7, 1998, the Company's Common Stock
and its Preferred Stock were delisted from trading on the
American Stock Exchange ("AMEX")for the failure to comply
with certain listing criteria.  Neither the Common Stock
nor the Preferred Stock has been traded on AMEX since
October 13, 1997 when it was suspended because the Company
had not filed its Annual Report on Form 10-K for fiscal
1997 within the Securities and Exchange Commission's
prescribed time period.  Application is being made to
initiate quotation of the Common Stock and the Preferred
Stock on the OTC Bulletin Board.  In the interim, the
stock is listed for quotation on the NQB Pink Sheets.  

Item 9- Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 

     During the year ended June 30, 1998, the Company adopted and
retroactively applied Statement of Financial Accounting Standards No.
128, Earnings Per Share and its adoption and retroactive application has
not had a material effect on the calculations of earnings per share. 
See Footnote 2M to the Consolidated Financial Statement.

     On August 6, 1997, the Company informed the accounting firm of
Moore Stephens, P.C. ("Moore Stephens") that the Company would not
retain it to audit the Company's financial statements for Fiscal 1997. 
Moore Stephens had been the Company's principal accountants since the
fiscal year ended June 30, 1981.  The report of Moore Stephens on the
consolidated financial statements of the Company for the two most recent
fiscal years did not contain an adverse opinion or a disclaimer of
opinion, and was not qualified or modified as to uncertainty, audit
scope or accounting principles.  The Company has had no disagreements
with its former principal accountants on any matter of accounting
principles or practices, financial statement disclosure or auditing
scope or procedure which disagreements, if not resolved to the
satisfaction of the former principal accountants, would have caused it
to make reference to the subject matter of the disagreements in
connection with its report relating to the audits for the fiscal years
ended June 30, 1995 and 1996 or during the period from July 1, 1996 to
August 6, 1997.

     The Company's decision not to retain Moore Stephens was not based
on the expectation that any disagreement would arise in connection with
the audit of its financial statements for Fiscal 1997.  The decision not
to retain Moore Stephens was made by the Executive Committee of the
Company's Board pursuant to the authority granted to the Executive
Committee, upon the recommendation of the Audit Committee, in connection
with the change in management of the Company and the belief that a
larger, nationwide firm would be more able to service the Company in the
future.  Moore Stephens has expressed a disagreement as to the grounds
for its termination, although the Company considers the
characterizations of its former auditor with respect to its termination
unfounded.  Moore Stephens had not commenced its review of the fourth
quarter in connection with an audit for Fiscal 1997 prior to its
termination and, as a result, was not consulted by the Board or any
committee thereof concerning matters in connection with the year-end
audit.  The Company has provided its new auditor all information
concerning any matters in connection with that audit.

     On October 14, 1997, the Company engaged the accounting firm of
BDO Seidman, LLP as its principal accountants.



                             PART III

Item 10 - Directors and Executive Officers of the Registrant

Board of Directors  

     The directors of the Company are:

Name                   Age       Director SincePosition

Anthony Coelho         56        January 1997  Chairman of theBoard and
                                               Director
Nunzio P. DeSantis     47        January 1997  Chief Executive Officer,
                                               President and Director
Francis W. Murray      56        May 1996      Director

Robert J. Quigley      69        October 1980  Director

Joseph Zappala         65        January 1997  Director
     

     Set forth below is certain biographical information with respect
to each director set forth above, including his principal occupation and
employment during the past five years.

     Anthony Coelho.   Mr. Coelho has served as a consultant to Tele-
Communications, Inc. since October 1997.   From October 1995 to
September 1997, he served as Chairman and Chief Executive Officer of ETC
w/tci, Inc., an education and training technology company.  Mr. Coelho
served as Chairman and Chief Executive Officer of Coelho Associates,
L.L.C., an investment advisory firm, from July 1995 to July 1997.  From
1989 to June 1995, Mr. Coelho was a Managing Director of the New York
investment banking firm Wertheim Schroder & Company, and from 1990 to
1995 he also served as President and Chief Executive Officer of Wertheim
Schroder Investment Services.  Mr. Coelho served as a Director of Circus
Circus Enterprises, Inc. until February 1997.  He is a director of NPD,
Inc., AutoLend Group, Inc., ICF Kaiser International, Inc., Cyberonics,
Inc., Service Corporation International and TEI, Inc.  In addition, Mr.
Coelho is a member of Fleishman-Hillard, Inc.'s international advisory
board.  Since his appointment by President Clinton in 1994, Mr. Coelho
has also served as Chairman of the President's Committee on Employment
of People with Disabilities.  In 1998, Mr. Coelho was appointed as Co-
Chair to the U.S. Census Monitoring Board.  He is also the U.S.
Commissioner General to the 1998 World Exposition in Lisbon, Portugal. 
Mr. Coelho is a former U.S. Representative from California and Majority
Whip of the U.S. House of Representatives.  Mr. Coelho is a member of
the Executive Committee and the Compensation and Stock Options Committee
and has served on such committees since February 12, 1997.

     Nunzio P. DeSantis.   Mr. DeSantis is the Chairman of the Board
and Chief Executive Officer of NPD.  Mr. DeSantis also is Chairman of
the Board and Chief Executive Officer of AutoLend, positions he has held
since September 1996.  On November 1, 1996, an involuntary petition in
bankruptcy was filed against AutoLend which was dismissed effective
April 7, 1997.  On September 22, 1997, AutoLend filed a petition in
bankruptcy under Chapter 11 of the U.S. Bankruptcy Code
(Reorganization).  Prior to September 1995 and for more than five years,
Mr. DeSantis was Chairman of the Board and Chief Executive Officer of
Diagnostek, Inc., a New York Stock Exchange pharmacy benefit management
company which was sold to Value Health, Inc. in July 1995.  Mr. DeSantis
has been a member of the Executive Committee since February 12, 1997.

     Francis W. Murray.  From time to time from November 1995 until May
1997, Mr. Murray served as President of the Company's subsidiaries
International Thoroughbred Gaming Development Corporation ("ITG") and
Orion Casino Corporation.  From November 1993 through June 1995, Mr.
Murray served as a General Partner of Healthcare Properties, a
partnership operating nursing homes in New Jersey and as a consultant to
ITG.  From December 1992 through November 1993, Mr. Murray was the
President of the St. Louis NFL Partnership, which attempted to obtain an
expansion NFL franchise for St. Louis.  Mr. Murray has been a member of
the Executive Committee and the Compensation and Stock Options Committee
since January 19, 1998.  Mr. Murray has previously served on the
Executive Committee from February 21, 1996 to July 9, 1996 and from
December 20, 1996 to February 12, 1997.

     Robert J. Quigley.  From February 1996 until October 15, 1997, Mr.
Quigley served as President of the Company.  Mr. Quigley also served as
President of the Company from 1988 until July 1992.  Between November
1995 and May 1996, Mr. Quigley served as Chairman of the Board and
acting Chief Executive Officer of the Company.  From July 1992 until
November 1995, Mr. Quigley was President and Chief Operating Officer of
Retama Park Association, Inc., a racetrack facility in San Antonio,
Texas.  Mr. Quigley has previously served as a member of the Executive
Committee from July 9, 1996 to December 20, 1996.  Mr. Quigley has been
a member of the Audit Committee since July 31, 1998.

     Joseph Zappala.  Mr. Zappala has served as Chairman of the Board
of CarePlus, LLC since its inception in 1996.  For the past 30 years, he
has been the Chairman and President of Joseph Zappala Investments, an
investment and land development company located in Boca Raton, Florida. 
Mr. Zappala is a part owner and director of Associated Industrial Supply
Company headquartered in Columbia, South Carolina and serves as a
director of Miami Subs Corp.  From February 1989 until February 1992,
Mr. Zappala served as U.S. Ambassador to Spain.  Mr. Zappala owns an
interest in and is an officer of Tucson Greyhound Park and holds an
Arizona Gaming License.  Mr. Zappala has been a member of the Executive
Committee since January 19, 1998 and a member of the Audit Committee and
the Compensation and Stock Options Committee since February 12, 1997.
     
Committees of the Board

     Executive Committee.  The Executive Committee is authorized to
exercise all of the authority of the Board in the management of the
Company's business affairs between Board meetings except as otherwise
provided by the Company's By-laws or applicable corporate law.  Messrs.
Coelho, DeSantis, Murray and Zappala are the current members of the
Executive Committee.

     Audit Committee. The Audit Committee provides general financial
oversight.  The committee periodically meets and confers with the
Company's independent auditors concerning the Company's accounting
systems and the maintenance of its books and records, reviews the scope
of the audit of the Company's financial statements, and the results
thereof, and performs other services.  Messrs. Zappala and Quigley are
the current members of the Audit Committee.

     Compensation and Stock Options Committee.  The Compensation and
Stock Options Committee establishes director and executive compensation
levels and is responsible for the administration of the employee stock
option plan.  Messrs. Coelho, Murray and Zappala are the current members
of the Compensation and Stock Options Committee.

     The following is a summary of the composition of these committees
during Fiscal 1998:

                                               
Effective      Executive         Audit Committee    Compensation and Stock
Date           Committee                            Options Committee
                                               
July 1, 1997   Anthony Coelho    Michael Abraham    Anthony Coelho
               Nunzio P.         Frank A. Leo       Joseph Zappala
               DeSantis          Joseph Zappala     
               Kenneth S.                         
               Scholl                             

                                               
January 19,    Anthony Coelho  Michael            Anthony Coelho
1998           Nunzio P.       Abraham(1)         Francis W. Murray
               DeSantis        Charles R. Dees,   Kenneth S. Scholl(1)
               Frank A. Leo(1) Jr.(1)             Joseph Zappala
               Francis W.      Joseph Zappala     
               Murray                             
               Joseph Zappala                     
                                               

                                               
July 31,       Anthony Coelho      Robert J. Quigley  Anthony Coelho
1998           Nunzio P.           Joseph Zappala     Francis W. Murray
               DeSantis                               Joseph Zappala
               Francis W. Murray                         
               Joseph Zappala                     
                                               
(1) Resigned on July 2, 1998.



Executive and Other Key Officers

    The executive and other key officers of the Company, in addition to
Messrs. Coelho and DeSantis, are:

Name               Age       Position

William H.         53        Treasurer
Warner                       

Richard E.         45        Vice President - Racing Operations
Orbann                       

Edward Ryan        56        General Manager - Freehold Raceway
                             
Christopher C.     47        Secretary and General Counsel
Castens

    Set forth below is certain biographical information with respect to
each such executive and other key officers:

    William H. Warner.  Mr. Warner is a certified public accountant and
has been employed by the Company since September 1983.  Mr. Warner has
served as Treasurer of the Company since December 1983.  Prior to joining
the Company, Mr. Warner was employed in public accounting for 11 years.

    Richard E. Orbann.  Mr. Orbann has been the Vice President - Racing
Operations at the Company since October 1997.  In such capacity, he
oversees all racing matters at the Company.  From 1992 until October 1997,
Mr. Orbann served as General Manager of Garden State Park and continues in
this role in addition to his other duties with the Company.  Prior to
1992, Mr. Orbann served as Assistant General Manager at Garden State Park.

    Edward Ryan.  Mr. Ryan has served as Vice President and General
Manager of Freehold Raceway since 1990.  Mr. Ryan has been an employee of
Freehold Raceway since 1965.  From 1988 to 1989, he served as Assistant
General Manager and from 1977 to 1987, he served as General Superintendent
of Freehold Raceway.

    Christopher C. Castens.  Mr. Castens has been General Counsel to the
Company since December 1986.  Prior to joining the Company, Mr. Castens
served as in-house counsel and assistant to the Executive Vice President
of Harness Tracks of America.


Item 11 - Executive Compensation

    The following table sets forth information concerning the
compensation paid or accrued by the Company during the years ended June
30, 1998, 1997 and 1996 to (i) the Company's Chief Executive Officer, (ii)
the Company's four most highly compensated executive officers (other than
the Chief Executive Officer) who were serving in such capacity at the end
of Fiscal 1998 and (iii) a former executive officer of the Company who was
not serving in such capacity at the end of Fiscal 1998.



                      SUMMARY COMPENSATION TABLE                        
                                                  

                                          Long-Term
                 Annual Compensation     Compensation

                                                          
Name and                             Other     Securities     All
Principal         Year  Salary       Annual    Underlying     Other
Position                          Compensation  Options       Compensation      
                                                  
Nunzio P.         1998  $450,000  $78,000(2)      -0-            $-0-  
DeSantis (1)      1997  $204,231  $39,000      5,000,000(3)      $-0-
Chief Executive
Officer of
the Company   

Robert J.
Quigley(4)        1998   220,000    -0-           -0-          11,160(5)    
Former President  1997   210,000    -0-           -0-          10,971 
of the Company    1996    71,923    -0-          100,000        1,969

Christopher C.    1998   123,830    -0-           -0-           8,060(6)
Castens           1997    89,039    -0-           -0-           6,577
Secretary of      1996    79,012    -0-           -0-           6,228
the Company

William H.        1998   125,693    -0-           -0-           9,498(7)
Warrner           1997   120,000    -0-           -0-           9,360
Chief Financial   1996   111,300    -0-           -0-           8,411
Officer of
the Company

Richard E.        1998   188,093    -0-           -0-          11,420(9)     
Orbann(8)         1997   124,723    -0-           -0-           9,494
Vice President -  1996   118,500    -0-           -0-           8,454          
Racing Operations                                                  

Edward Ryan       1998   128,200    -0-           -0-          12,287(10) 
General Manager-  1997   123,508    -0-          50,000        12,278
Freehold Raceway  1996   112,654    -0-           -0-          10,520

(1) Mr. DeSantis became Chief Executive Officer of the Company on
    January 15, 1997 following the NPD Acquisition.

(2) Consists of $5,000 per month nonaccountable expense allowance and
    $1,500 per month automobile allowance pursuant to an employment
    agreement effective January 15, 1997.  See "Employment Agreements"
    below.

(3) Subject to stockholder approval at the Company's next annual
    meeting, Mr. DeSantis was granted options to purchase 5,000,000
    shares at an exercise price of $4.00 per share.  If approved by
    stockholders, options to purchase 1,000,000 shares will vest
    immediately and options to purchase 500,000 shares will vest on
    January 15, 1999 and on each anniversary thereof until January 15,
    2007.  See "Legal Proceedings."

(4) Mr. Quigley served as President until October 15, 1997.  Mr. Quigley
    remains a director of the Company.  For a description of the terms
    of Mr. Quigley's termination agreement, see "Termination and
    Severance Agreements" below.

(5) Fiscal 1998 amounts consist of $1,593 of life insurance premiums
    paid by the Company with respect to term life insurance payable to
    beneficiaries designated by Mr. Quigley and $9,567 contributed by
    the Company under the Company's 401(k) plan.

(6) Fiscal 1998 amounts include $2,016 of life insurance premiums paid
    by the Company with respect to term life insurance payable to
    beneficiaries designated by Mr. Castens and $6,044 contributed by
    the Company under the Company's 401(k) plan.

(7) Fiscal 1998 amounts include $2,160 of life insurance premiums paid
    by the Company with respect to term life insurance payable to
    beneficiaries designated by Mr. Warner and $7,338 contributed by the
    Company under the Company's 401(k) plan.

(8) Mr. Orbann became Vice President-Racing Operations on October 16,
    1997.  From 1992 to October 16, 1997, Mr. Orbann served as General
    Manager-Garden State Park.

(9) Fiscal 1998 amounts include $2,160 of life insurance premiums paid
    by the Company with respect to term life insurance payable to
    beneficiaries designated by Mr. Orbann and $9,260 contributed by the
    Company under the Company's 401(k) plan.

(10)Fiscal 1998 amounts include $4,960 of life insurance premiums paid
    by the Company with respect to term life insurance payable to
    beneficiaries designated by Mr. Ryan and $7,307 contributed by the
    Company under the Company's 401(k) plan.


Stock Options

Options Granted in Last Fiscal Year

    The Company did not grant any options during the fiscal year ended
June 30, 1998 to any of the persons named in the Summary Compensation
Table.

Aggregate Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values

    The following table indicates the outstanding stock options held at
June 30, 1998 by each person named in the Summary Compensation Table.  No
options were exercised during Fiscal 1998 by any of the named executive
employees.



                   Number of Securities       Value of Unexercised
                  Underlying Unexercised     In-the-Money Options at
                         Options               Fiscal Year End (1)
                    At Fiscal Year End           Exercisable/
                        Exercisable/             Unexercisable
Name                    Unexercisable     

                                         
Nunzio P. DeSantis     -0-/5,000,000(2)             -0-/-0-

                                         
Robert J. Quigley       100,000/-0-                 -0-/-0-

                                         
William H. Warner        75,000/-0-                 -0-/-0-

                                         
Richard E. Orbann        75,000/-0-                 -0-/-0-

                                         
Edward Ryan              50,000/-0-                 -0-/-0-
                                                   

Christopher C.           50,000/-0-                 -0-/-0-
Castens                                  

                            
(1)  The price of the Company's Common Stock was $3.50 per share on
     October 13, 1997, the last day the Common Stock was traded on AMEX. 
     Since October 13, 1997, there has been no established trading market
     for the Company's Common Stock, notwithstanding that the Common
     Stock is listed for quotation on the NQB Pink Sheets.  As a result
     of the absence of an established trading market and infrequent and
     unconfirmed offers, the Company believes that the market price of
     the Common Stock is below the exercise price of such options.

(2)  Such options were granted to Mr. DeSantis subject to stockholder
     approval at next annual meeting of stockholders.  These options will
     be cancelled upon consummation of the Delaware Settlement.  See
     "Legal Proceedings."


Compensation of Directors

     Outside directors are provided compensation of $1,000 for each
regular or special meeting of the Board in which each outside director
participates either in person or by telephone.  Under the terms of his
consulting agreement with the Company, Mr. Coelho receives $2,500 per
Board meeting in which he participates.

Employment Agreements
     
     Nunzio DeSantis - Chief Executive Officer and President.  Effective
January 15, 1997, Mr. DeSantis and the Company entered into a ten-year
employment agreement pursuant to which Mr. DeSantis serves as the
Company's Chief Executive Officer at an initial annual base salary of
$450,000.  Beginning January 1, 1998, the agreement provides for annual
increases equal to any increase in the consumer price index for the
Albuquerque, New Mexico area for the preceding calendar year.  The
Agreement also provides for a performance bonus each year equal to the
amount, if any, by which the net income of the Company (before deduction
of federal and state income taxes) exceeds $2 million.  The maximum amount
of such performance bonus for any fiscal year is limited to the amount of
Mr. DeSantis' base salary for such year.   Subject to stockholder approval
at the Company's next annual meeting,  Mr. DeSantis was granted options to
purchase up to 5,000,000 shares of the Company's Common Stock at an
exercise price of $4.00 per share.  If approved by the Company's
stockholders, options exercisable for 1,000,000 shares of Common Stock
will be exercisable immediately and the remaining options become
exercisable in eight equal annual installments commencing on January 15,
1999.  If Mr. DeSantis is discharged without cause or resigns for good
reason, all options vest immediately and Mr. DeSantis is entitled to
receive an amount equal to his then base salary for the remaining term of
the agreement or eighteen months, whichever is greater.  Upon a change of
control (as defined in the agreement) and Mr. DeSantis' resignation in
connection therewith, all options vest immediately and Mr. DeSantis is
entitled to receive an amount equal to his then base salary for the
remaining term of the agreement or three years, whichever is lesser. In
the event of the death of Mr. DeSantis, his estate will receive a lump sum
payment of $1 million.  Mr. DeSantis also receives a monthly automobile
expense allowance and a non-accountable expense account in an aggregate
amount of $6,500.  For a period of two years following the termination of
the agreement or while he is receiving severance payments from the
Company, Mr. DeSantis is bound by the terms of a non-competition clause. 
See "Summary Compensation."  In the Director Litigation, the minority
Board members have challenged the  authorization and enforceability of
certain agreements, including Mr. Desantis' employment agreement and
options.  Under the terms of the Delaware Settlement, neither the Company
nor any of its affiliates is to make any payments to Mr. DeSantis except
for his base salary and automobile allowance and continuation of his
insurance benefits under the terms set forth in the employment agreement. 
Upon consummation of the Delaware Settlement, Mr. DeSantis' employment
agreement will be terminated and his options will be canceled.  See "Legal
Proceedings."

     William H. Warner - Treasurer.  The Company and Mr. Warner are
parties to an employment agreement pursuant to which Mr. Warner serves as
the Company's treasurer at an annual salary of $125,693.  This agreement
expires on December 31, 1998.  In addition to other customary and usual
terms, Mr. Warner's agreement provides that upon termination, the Company
will pay Mr. Warner six months salary and the cash surrender value of a
life insurance policy the Company owns on Mr. Warner's behalf in the
approximate amount of $50,000.

     Richard E. Orbann - Vice President-Track Operations.  The Company
and Mr. Orbann entered into an amended and restated employment agreement
pursuant to which Mr. Orbann is employed as the Vice President - Track
Operations at an annual salary of $188,093.  Unless earlier terminated,
the term of the agreement extends until December 31, 2001 and is
automatically renewable by the Company for additional two-year terms,
unless terminated by either party on six months notice before the end of
the then current term.  In the event that the agreement is not renewed at
the end of the initial or any renewal term, Mr. Orbann would be entitled
to a lump sum payment equal to his base salary for six months and certain
other benefits.  The agreement also provides that the Company may
terminate his agreement without cause by paying him an amount equal to the
greater of six months salary or his salary for the remaining contract
term.  In addition, in the event of a change of control (as defined in the
agreement), Mr. Orbann would be entitled to a lump sum payment equal to
his base salary for the balance of the term of the agreement. 

     Edward Ryan - General Manager-Freehold Raceway.  The Company and Mr.
Ryan are parties to an employment contract pursuant to which Mr. Ryan
serves as the general manager of Freehold Raceway at an annual salary of
$128,200.  Unless renewed by the Company, this agreement expires on
December 31, 1998.  In addition to other customary and usual terms, Mr.
Ryan's agreement provides that the Company may terminate his contract
without cause by paying him an amount equal to the greater of six months
salary or his salary for the remaining contract term.

     Christopher C. Castens - Secretary and General Counsel.  The Company
and Mr. Castens are parties to an employment agreement pursuant to which
Mr. Castens serves as the Company's Secretary and General Counsel at an
annual salary of $123,830.  Unless renewed by the Company, this agreement
expires on December 31, 2000.  In addition to other customary and usual
terms, Mr. Castens's agreement provides that the Company may terminate his
contract without cause by paying him an amount equal to the greater of six
months salary or his salary for the remaining contract term.  

Termination and Severance Agreements

     Robert J. Quigley - Former President.   Mr. Quigley's employment
contract with the Company terminated upon his termination as President of
the Company on October 15, 1997.  Under the terms of such employment
contract, the Company is obligated to pay Mr. Quigley an amount equal to
the greater of six months salary or his salary for the remaining contract
term.  Pursuant to such agreement, the Company expects to pay an aggregate
amount of $300,000, including benefits.

Compensation Committee Interlocks and Insider Participation
     
     The compensation of the Company's executive officers is determined
by the Company's Compensation and Stock Options Committee, which consists
of Messrs. Coelho, Murray and Zappala.  No officer or employee of the
Company participated in deliberations of the Compensation and Stock
Options Committee.

     During Fiscal 1998, the Company paid $120,000 in consulting fees and
$6,000 for an auto allowance to Anthony Coelho, the Company's Chairman,
pursuant to an agreement effective January 15, 1997.  Mr. Coelho's
consulting agreement is month to month, under which he is to be paid
$10,000 per month for ongoing consulting services, $2,500 for each Board
meeting he attends and a $500 monthly automobile allowance.  In the
Delaware Litigation, the minority Board members have challenged the
authorization and enforceability of certain agreements, including Mr.
Coelho's consulting agreement.  Under the terms of the Delaware
Settlement, neither the Company nor its subsidiaries shall pay to Mr.
Coelho more than $10,000 per month as consulting fees and payment of
regular directors' fees and upon consummation of the Delaware Settlement,
Mr. Coelho's consulting agreement will be terminated and his options will
be cancelled.  See "Legal Proceedings."

     During Fiscal 1998, the Company paid approximately $148,000 in
consulting fees and reimbursed expenses to Joseph Zappala, a director of
the Company.  The Company pays Mr. Zappala approximately $10,000 per month
in which he provides consulting services.  Upon consummation of the
Delaware Settlement, Mr. Zappala's consulting arrangement will be
terminated.  See "Legal Proceedings."

     Kenneth Scholl, a former director of the Company, provided
consulting services to LVEN and certain of its subsidiaries through the
Stanford Company of which he is the president.  Until December 31, 1997,
LVEN paid Stanford Company $10,000 per month for consulting services,
including Mr. Scholl's services as project manager for the El Rancho
Property.  Effective January 1, 1998, the Company began paying Mr. Scholl
$10,000 per month for ongoing consulting services as project manager for
the El Rancho Property.  Upon consummation of the Delaware Settlement, Mr.
Scholl's consulting arrangement will be terminated.  See "Legal
Proceedings."  Mr. Scholl is currently the Secretary of Casino-Co and was
President and a director of Casino-Co from March 1996 to May 19, 1997.

     Commencing July 2, 1998 upon execution of the Delaware Stipulation,
the Company began compensating Mr. Murray as an employee at a rate of
$120,000 per year retroactive to June 1997.

     The Company subleased a portion of its office space in Albuquerque,
New Mexico to AutoLend for $600 per month, which sublease is terminable on
30 days' notice.  Under the terms of the Delaware Settlement, AutoLend
will assume the Company's lease for the Albuquerque office space and the
parties have agreed to use their best efforts to obtain a release from the
landlord for the Company from any liability under the lease following such
assumption.  Upon such assumption of the lease, AutoLend will return to
the Company all equipment purchased by the Company for use at the
Albuquerque office.  Mr DeSantis is the Chairman, Chief Executive Officer
and a principal stockholder of AutoLend and Mr. Coelho is a director.  See
"Legal Proceedings."

Item 12 - Security Ownership of Certain Beneficial Owners and Management

     The following table sets forth, as of September 30, 1998, the number
of shares of the Company's Common Stock owned beneficially by (i) each
beneficial owner of more than 5% of such Common Stock, (ii) each named
executive officer and director of the Company and (iii) all executive
officers and directors of the Company as a group (calculated in accordance
with Rule 13d-3 under the Exchange Act).  In the case of persons other
than executive officers and directors of the Company, such information is
based solely on a review of Schedules 13D and 13G filed with the SEC. 
Except as otherwise noted below, each person or entity has sole voting and
dispositive power with respect to the shares of Common Stock listed below. 
As of September 30, 1998, the Company had 13,978,104 shares of Common
Stock issued and outstanding.  In addition to the Common Stock, the
Company has 362,480 shares of Preferred Stock issued and outstanding.  The
Preferred Stock is not convertible into Common Stock and has no voting
rights.

Name and Address of      Amount and          Percent of      
5% Beneficial Owner      Nature of              Class       
                         Beneficial           
                         Ownership(1)       

Nunzio P. DeSantis       4,997,884(2)           35.8%           

Anthony Coelho           2,904,016(3)           20.8%           

Casino-Co. Corporation   2,093,868(4)           15.0%                      
1801 Century Park East                      
Los Angeles, CA  90067          

NPD, Inc.                2,904,016(5)           20.8%                          
600 Central Ave. SW                         
Albuquerque, NM 87102           
                                                

                                            

The Family Investment
Trust(Henry Brennan,
Trustee)340 North Avenue
Cranford, NJ  07016      1,090,731(6)            7.8%                        
                                            
Credit Suisse First      2,419,509(7)           14.9%           
Boston Mortgage                             
Capital LLC                                 
Eleven Madison Avenue                       
New York, NY 10010                          

Frank A. Leo               732,201(8)            5.2%           
                                            
Francis W. Murray          300,000(9)            2.1%           
                                            
Robert J. Quigley          105,830(10)             *            
                                            
Joseph Zappala             100,000(11)             *            

Christopher C. Castens      50,200(12)             *            

Richard E. Orbann           75,000(9)              *            
                                            
Edward Ryan                 50,000(9)              *            
                                            
William H. Warner           75,124(13)             *
                                            
All Executive Officers         
and Directors as a
Group(9 persons)         5,804,039              41.5%    
(1)(2)(3)(9)(10)(11)(12)(13)                 
                      
The above persons have sole voting and investment power, unless otherwise
indicated below.

*     Less than 1%.

(1)   With respect to each stockholder, includes any shares issuable
      upon exercise of any options held by such stockholder that are or
      will become exercisable within sixty days of September 30, 1998.

(2)   Includes 2,904,016 shares owned of record by NPD, as to which Mr.
      DeSantis may be deemed to be the beneficial owner and 2,093,868
      shares owned of record by Casino-Co as to which Mr. DeSantis holds
      a proxy to vote all or a portion of the shares until the
      occurrence of certain events.  Does not include 5,000,000 shares
      of Common Stock issuable upon exercise of options granted subject
      to stockholder approval at the next annual meeting, of which
      options issuable with respect to 1,000,000 shares would be
      immediately exercisable.  Upon consummation of the Delaware
      Settlement, the NPD shares will be repurchased by the Company, the
      Casino-Co shares will be retired and Mr. DeSantis' options will be
      cancelled.  See "Developments During the Last Fiscal Year" and
      "Legal Proceedings."

(3)   Consists of 2,904,016 shares owned of record by NPD, as to which
      Mr. Coelho may be deemed to be the beneficial owner.  Does not
      include 1,000,000 shares of Common Stock issuable upon exercise of
      options granted subject to stockholder approval at the next annual
      meeting, of which options issuable with respect to 200,000 shares
      would be immediately exercisable.  Upon consummation of the
      Delaware Settlement, the NPD shares will be repurchased by the
      Company and Mr. Coelho's options will be cancelled.  See "Legal
      Proceedings."

(4)   Such shares are subject to a proxy granted to Mr. DeSantis to vote
      all or a portion of the shares until the occurrence of certain
      events.  Upon consummation of the Delaware Settlement, these
      shares will be retired.  See "Developments During the Last Fiscal
      Year" and "Legal Proceedings." 

(5)   Upon consummation of the Delaware Settlement, these shares will be
      repurchased by the Company. See "Legal Proceedings."

(6)   Henry Brennan is the brother of Robert E. Brennan, whose adult
      sons are the beneficiaries of the trust. 

(7)   Includes 1,044,000 shares of Common Stock issuable upon exercise
      of warrants and 1,142,857 shares of Common Stock issuable upon
      conversion of the CSFB Note.  See "Developments During the Last
      Fiscal Year" and "Legal Proceedings."

(8)   Includes 200,000 shares of Common Stock issuable upon exercise of
      options.

(9)   Consists of shares of Common Stock issuable upon exercise of
      options.  

(10)  Includes 100,000 shares of Common Stock issuable upon exercise of
      options.  

(11)  Consists of shares of Common Stock issuable upon exercise of
      options.  Upon consummation of the Delaware Settlement, these
      options will be cancelled.  See "Legal Proceedings."

(12)  Includes 50,000 shares of Common Stock issuable upon exercise of
      options and 200 shares of Common Stock owned of record by Mr.
      Castens' wife, as to which Mr. Castens may be deemed to be the
      beneficial owner.

(13)  Includes 75,000 shares of Common Stock issuable upon exercise of
      options.


Item 13 - Certain Relationships and Related Transactions

   Mr. DeSantis and Mr. Joseph Corazzi, President and Chairman of LVEN,
each own one-half of the stock of D&C.  On July 1, 1997, the Company paid
for an option to acquire certain leasehold interests relating to two New
Mexico racetracks for a non-refundable deposit of $600,000 which was to be
credited towards the purchase price.  The option agreement has been
terminated.  In the Director Litigation, the minority Board members have
challenged the authorization and enforceability of certain agreements,
including the option agreement.  In connection with the Delaware
Settlement, the $600,000 has been considered as part of the purchase price
for NPD's shares.  See "Legal Proceedings."

   Pursuant to the Tri-Party Agreement executed in connection with the
CSFB Credit Facility, the Company issued an aggregate of 2,326,520 shares
of Common Stock (based on a value of $5.00 per share) in exchange for
cancellation of the Casino-Co Note plus accrued interest.  Of such shares,
2,093,868 shares were issued to Casino-Co (the "Conversion Shares") and
232,652 shares were issued to CSFB in consideration for its consent and
for certain advisory services in connection with the transaction.  In
accordance with the Tri-Party Agreement, the Company has also agreed,
subject to, among other things, an independent valuation, receipt of a
fairness opinion from an independent investment banking firm and Board and
stockholder approval, to complete the Casino-Co Transaction.  LVEN and
Casino-Co granted Mr. DeSantis an irrevocable proxy to vote any or all of
the Conversion Shares until the occurrence of certain events and have
agreed to grant Mr. DeSantis a similar proxy to vote any or all of the
shares to be issued to LVEN in the Casino-Co Transaction.  See
"Developments During the Last Fiscal Year."  In the Director Litigation,
the minority Board members have challenged the authorization and
enforceability of certain agreements, including the Tri-Party Agreement. 
Upon consummation of the Delaware Settlement, the Tri-Party Agreement will
be terminated and the Conversion Shares will be retired.  See "Legal
Proceedings."

   In connection with the CSFB Credit Facility, the Company and LVEN
entered into the Bi-Lateral Agreement which set the amount the Company
could recoup prior to Casino-Co receiving consideration under the $160
million profit participation note at $35 million.  In addition, the Bi-
Lateral Agreement fixed the maximum debt service to be netted against cash
flow from operations of the El Rancho Property in computing "adjusted cash
flow" under of the $160 million profit participation note at $65 million. 
See "Developments During the Last Fiscal Year."  In the Director
Litigation, the minority Board members have challenged the authorization
and enforceability of certain agreements, including the Bi-Lateral
Agreement.  The Bi-Lateral Agreement and the $160 million profit
participation note will be terminated upon consummation of the Delaware
Settlement.  See "Legal Proceedings."

   Mr. DeSantis owned 80% of Nordic Gaming Corporation, an Ontario
corporation which purchased the Fort Erie Racetrack in Fort Erie, Canada
on August 27, 1997.  The Company was offered, but the Executive Committee
rejected, the opportunity to make this investment because of the demands
on cash flow.  Nordic Gaming borrowed $182,000 from LVEN for a deposit on
the purchase, which was repaid to LVEN at the closing.  LVEN has also
provided Nordic Gaming with a $1.3 million secured line of credit to fund
operating losses at the Fort Erie Racetrack.  On May 15, 1998, Mr.
DeSantis sold his Nordic Gaming shares to Erie Gaming Organization, Inc.,
an Ontario corporation which holds the other 20% interest in Nordic
Gaming.  In consideration for his shares, Mr. DeSantis received $10 and
each of Nordic Gaming, Mr. DeSantis and Erie Gaming exchanged mutual
general releases.  In the Director Litigation, the minority Board members
challenged the decision of the Executive Committee to reject the
opportunity to purchase the Fort Erie Racetrack.  See "Legal Proceedings."

   The Company paid LVEN an aggregate of $150,000 to date under a
letter agreement executed in connection with the purchase of the El Rancho
Property, which provides for a $25,000 per month fee with respect to
maintenance and supervision of the property prior to and during
development.  The Company terminated the letter agreement on December 17,
1997.

   During Fiscal 1998, the Company paid approximately $12,200 to
Southwest Jet Group in connection with the use of a private jet by certain
officers and directors of the Company, including Mr. DeSantis, for Company
business.  Southwest Jet Group is a Nevada corporation, owned by Mr.
DeSantis' son, which operates private jets, including one which was
partially financed by Messrs. DeSantis and Corazzi.  Messrs. DeSantis and
Corazzi used private jets operated by Southwest Jet Group for certain
personal matters for which the Company advanced approximately $177,000
during Fiscal 1998, and which LVEN has agreed to reimburse to the Company.

   Mr. Corazzi has been using an office at the Company's Albuquerque
office, although no sublease has been executed for such office.

   On March 27, 1998, LVEN entered into an agreement for the sale of
the El Rancho Property for $62.5 million.  If consummated, the Company
would realize proceeds of $44.2 million as provided in the Delaware
Stipulation.  Of the remaining proceeds, $7.1 million will be paid to Mr.
DeSantis (less any amounts previously paid to him pursuant to the Delaware
Stipulation) and $1 million will be paid to Joseph Zappala (less $200,000
Mr. Zappala has agreed pursuant to the Delaware Stipulation to pay the
Company in settlement of certain compensation issues pursuant to the
Delaware Stipulation).  See "Casino Development Operations" and "Legal
Proceedings."

   On July 2, 1998, the Company entered into the Delaware Stipulation
in settlement of certain pending litigation among the Company, certain
current and former directors and certain of its stockholders.  See "Legal
Proceedings - Delaware Settlement."

   During Fiscal 1998, the Company made payments for legal fees in the
amount of $148,342 on behalf of The Family Investment Trust, a trust for
the benefit of Robert E. Brennan's (the Company's former Chairman and a
significant stockholder until January 15, 1997) children and of which Mr.
Brennan's brother is the trustee, in connection with the pending
litigation. 

   During Fiscal 1998, the Company made payments for legal fees in the
amount of $759,755 on behalf of the following current and former
directors:  Robert J. Quigley, Frank A. Leo, Francis W. Murray, Charles R.
Dees, Jr., John Mariucci and James J. Murray.  These amounts were for
legal fees in connection with various lawsuits brought by such individuals
against the Company.

   See also "Item 11 - Compensation Committee Interlocks and Insider
Participation."

                              PART IV

Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K

(A) Exhibits           

Exhibit                                      
Number    Description of Exhibit                  

3.1       Certificate of Incorporation, as amended (incorporated by
          reference to Exhibit 3(A) to the Registrant's Registration
          Statement on Form S-1, File No. 2-70153, filed December 5,
          1980)

3.2       Amendment to the Certificate of Incorporation (incorporated by
          reference to Exhibit 3(a)(11) to Amendment No. 3 to the
          Registrant's Registration Statement on Form S-1, File No. 2-
          70153)

3.3       Amended and Restated By-Laws of the Registrant (incorporated
          by reference to Exhibit 3.3 to the Registrant's Annual Report
          on Form 10-K for the Fiscal Year Ended June 30, 1997)

4.1       Warrant No. 1 dated May 23, 1997 to purchase 546,847 shares of
          the Registrant's Common Stock (incorporated by reference to
          Exhibit 10.2 to the Registrant's Current Report on Form 8-K
          dated May 23, 1997)

4.2       Warrant No. 2 dated May 23, 1997 to purchase 497,153 shares of
          the Registrant's Common Stock (incorporated by reference to
          Exhibit 10.3 to the Registrant's Current Report on Form 8-K
          dated May 23, 1997)

4.3       Convertible Promissory Note dated May 23, 1997 from the
          Registrant to CSFB (incorporated by reference to Exhibit 4.3
          to the Registrant's Annual Report on Form 10-K for the Fiscal
          Year Ended June 30, 1997)

10.1      Stipulation and Agreement of Compromise, Settlement and
          Release dated July 2, 1998 (incorporated by reference to
          Exhibit 10.1 of the Registrant's Current Report on Form 8-K
          dated July 2, 1998)

10.2      Asset Purchase Agreement dated as of July 2, 1998 by, between
          and among Greenwood New Jersey, Inc., Garden State Race Track,
          Inc., Freehold Raceway Association, Atlantic City Harness,
          Inc., Circa 1850 and International Thoroughbred Breeders, Inc.
          together with exhibits thereto (incorporated by reference to
          Exhibit 10.2 on Form 8-K dated July 2, 1998)

10.3      Loan Agreement dated May 23, 1997 by and among CSFB and the
          Company and certain of its subsidiaries (incorporated by
          reference to Exhibit 10.1 to the Registrant's Current Report
          on Form 8-K dated May 23, 1997)


                         

10.4      Registration Rights Agreement dated as of May 23, 1997 between
          the Registrant and CSFB (incorporated by reference to Exhibit
          10.4 to the Registrant's Current Report on Form 8-K dated May
          23, 1997)

10.5      Proxy dated October 31, 1997 of LVEN and Casino-Co granted to
          Nunzio P. DeSantis (incorporated by reference to Exhibit 10.3
          to the Registrant's Annual Report on Form 10-K for the Fiscal
          Year Ended June 30, 1997)

10.6      Registration Rights Agreement dated July 1, 1997 between the
          Registrant and Casino-Co (incorporated by reference to Exhibit
          10.2 to the Registrant's Current Report on Form 8-K dated July
          1, 1997)

10.7      Letter Agreement dated as of January 22, 1996 among LVEN, the
          Registrant and Orion Casino Corporation (incorporated by
          reference to Exhibit 10.1 to the Registrant's Current Report
          on Form 8-K dated January 24, 1996) 

10.8      Stock Purchase Agreement made as of January 1, 1995 for the
          acquisition by the Registrant of all the outstanding capital
          stock of Freehold Raceway (incorporated by reference to
          Exhibit 10.6 to the Registrant's Form 10-K for the year ended
          June 30, 1996)

10.9      Tri-Party Agreement by and among the Registrant, CSFB and
          LVEN, dated as of May 23, 1997 (incorporated by reference to
          Exhibit 10.7 to the Registrant's Form 10-K for the year ended
          June 30, 1997)

10.10     Bi-Lateral Agreement by and between the Registrant and LVEN,
          dated as of May 23, 1997 (incorporated by reference to Exhibit
          10.8 to the Registrant's Form 10-K for the year ended June 30,
          1997)

10.11*    Employment Agreement by and between the Registrant and Nunzio
          DeSantis, dated as of January 15, 1997 (incorporated by
          reference to Exhibit 10.9 to the Registrant's Form 10-K for
          the year ended June 30, 1997)

10.12*    Consulting Agreement by and between the Registrant and Anthony
          Coelho, dated as of January 15, 1997 (incorporated by
          reference to Exhibit 10.10 to the Registrant's Form 10-K for
          the year ended June 30, 1997)

10.13*    Amended and Restated Employment Agreement by and between the
          Registrant and Richard E. Orbann, dated as of October 16, 1997
          (incorporated by reference to Exhibit 10.11 to the
          Registrant's Form 10-K for the year ended June 30, 1997)

10.14*    Employment Agreement by and between the Registrant and
          Christopher C. Castens, dated as of January 1, 1996
          (incorporated by reference to Exhibit 10.2 to the Registrant's
          Form 10-K for the year ended June 30, 1996)

10.14.1*  Amendment No. 2 to Employment Agreement, dated as of October
          16, 1997

21        Subsidiaries


27        Financial Data Schedule
___________________
*  Constitutes a management contract or compensation plan.


(B)  Financial Statements                                      Page

     Reports of independent certified public accountants.        39
     Consolidated Balance Sheets as of June 30, 1998 and 1997.   41
     Consolidated Statements of Operations for the Years
       Ended June 30, 1998, 1997 and 1996.                       43
     Consolidated Statements of Stockholders' Equity for the Years    
       Ended June 30, 1998, 1997 and 1996.                       44
     Consolidated Statements of Cash Flows for the Years Ended        
       June 30, 1998, 1997 and 1996.                             45
     Notes to Consolidated Financial Statements.                 47
   
(C)  Reports on Form 8-K

  No reports were filed on Form 8-K during the last quarter of the fiscal
year covered by this report.


             INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                         AND SUBSIDIARIES

                            EXHIBIT 21


     The following table indicates the subsidiaries of International
Thoroughbred Breeders, Inc. and their states of incorporation. All of such
subsidiaries are wholly owned.

Name                 State of
Incorporation

Atlantic City Harness, Inc.                       New Jersey

Circa 1850, Inc.                                  New Jersey

Freehold Racing Association                       New Jersey

Garden State Race Track, Inc.                     New Jersey

International Thoroughbred Breeders
Management, Inc.                                  New Jersey

International Thoroughbred Gaming
Development Corporation                           New Jersey

Olde English Management Co., Inc.                 New Jersey

Orion Casino Corporation                          Nevada

                            SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
Report to be signed on its behalf by the undersigned, thereunto duly
authorized, on October 13, 1998.

                                   INTERNATIONAL THOROUGHBRED
                                        BREEDERS, INC.
                              

                                   By:  /s/ Nunzio P. DeSantis      
                                               
                                      Nunzio P. DeSantis, Chief     
                                      Executive Officer
                                      and President

     Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.

Name                          Title                    Date

By:/s/ Anthony Coelho         Chairman of the Board    October 13, 1998
     Anthony Coelho

By:/s/ Nunzio P. DeSantis    Executive Officer,        October 13, 1998
     Nunzio P. DeSantis      President and Director
                             (Principal Executive Officer)

By:/s/ William H. Warner      Treasurer (Principal     October 13, 1998
     William H. Warner        Financial and
                              Accounting Officer)

By:/s/ Francis W. Murray      Director            October 13, 1998
     Francis W. Murray        

By:/s/ Robert J. Quigley      Director            October 13, 1998
     Robert J. Quigley        

By:/s/ Joseph Zappala         Director            October 13, 1998
     Joseph Zappala





EXHIBIT 10.14-1

     This Amendment No. 2 (the "Second Amendment") is made and entered into
as of the 16th day of October, 1997 and as hereafter stated modifies an
Employment Agreement (the "Agreement") made and entered into as of the 1st day
of January, 1996 by an between International Thoroughbred Breeders, Inc.
("ITB") and Christopher C. Castens (the "Employee") and originally modified by
Amendment No. 1 (the "Amendment") made and entered into as of the 14th day of
May 1996.

WITNESSETH;

     WHEREAS, ITB desires to extend the term and increase the compensation of
the Employee's employment agreement pursuant to the Agreement and the
Amendment on the following terms and conditions; and

     WHEREAS, the Employee agrees to an extension of the term of his
employment and increase in his compensation pursuant to the Agreement and the
Amendment on said terms and conditions;

     NOW THEREFORE, in consideration of the mutual covenants herein contained
and intending to be legally bound hereby, the parties hereto agree as follows:


     A.  TERM OF EMPLOYMENT - Section 2 of the Agreement and the Amendment is
hereby further amended to read in its entirety as follows:

"2.  TERM OF EMPLOYMENT

     The employment of the Employee pursuant to this Agreement and the
Amendment shall commence on January 1, 1996 and shall end five years later on
December 31, 2000 (the "Initial Term").  The term of this Agreement shall also
be subject to renewal pursuant to Section 5 herein."

     B. COMPENSATION - Section 3.1 of the Agreement is hereby amended to read
in its entirety as follows:

"3.1 Salary - $120,000 per annum, effective as of the date of this Second
     Amendment."

     C. RENEWAL PROVISIONS - Section 5 of the Agreement is hereby amended to
read in its entirety as follows:




"5   RENEWAL PROVISIONS

     ITB shall have the right to renew the Employment Agreement for up to two
additional two-year terms on the same terms and conditions as shall be in
existence at the end of the term (except for a 10% increase in compensation
during each additional two-year term) by giving the Employee notice of its
intention to renew the Employment Agreement no later than six months prior to
the then termination date.  At the end of the initial term of the Agreement
(if ITB terminates the Employment Agreement effective at such date) or any
renewal term, ITB shall assign and transfer to the Employee all rights to any
life insurance policies insuring the life of the Employee and all rights under
any Employee Benefit Plan (including ITB's 401 (k) Plan) in which the Employee
is vested at the effective date of such termination, and in lieu of all other
amounts and benefits which may be required to be paid or made available
hereunder after such termination, ITB shall

     (i) pay the Employee severance pay equal to six month's salary (plus
unused vacation and sick leave) as in effect at such termination date in a
lump sum or in equal weekly installments over six months at the Employee's
option; and

     (ii) shall transfer title to the Company car to the Employee at no cost
to the Employee."

     D.  The parties hereby confirm that the Agreement continues to be in
full force and effect in accordance with each of its original terms, except as
amended above and pursuant to the Amendment

     IN WITNESS WHEREOF, the parties hereto have each duly executed this
Amendment as of the date first above written

                    EMPLOYER:

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.


                    By: ________________________________________
                           Tony Coelho, Chairman

                    EMPLOYEE:



                    _____________________________________________
                    Christopher C. Castens